Affirmed and Opinion Filed April 30, 1997

In The Qltfurt of Appeals iTtf tlf Ststrtrt at dkxas at Ballas

No. 05-95-01569-CV

C & A INVESTMENTS, INC., Appellant

V. BONNET RESOURCES CORP. and BANK ONE, TEXAS, N.A., Appellees On Appeal from the 44th District Court Dallas County, Texas Trial Court Cause No. 94-10887-B

OPINION Before Justices Chapman, Morris, and Hankinson Opinion By Justice Hankinson C &A Investments is a sophisticated purchaser of real estate assets. It contracted to purchase aloan from Bank One. Bonnet Resources Corporation acted as Bank One's disclosed agent handling this sale. Relying on one statementincluded in abid document and several post-contract statements by Bonnet's vice-president, C&Aclaims that Bank One contracted to deliver a "performing" loan but did not. In this case, we must decide whether C&Amay rely on those statements to prove that Bank One breached the contract andfV^^^i^'^ife^^^*^^'**^^

committed fraud. The trial court determined it could not and granted summary judgment. Because C &A knew statements about the loan's value might beinaccurate and promised itwouldindependently evaluate the loan's value withoutrelying on any information provided by Bank One and Bonnet, we agree with the trial court and affirm.
Background Bank One acquired a portfolio of commercial real estate loans from the Federal 

### Deposit Insurance Corporation as receiver for certain MBanks. In April 1994, Bonnet, as Bank One's agent, began solicitingbids on loan packages from this portfolio. John Harris,
one ofBonnet's assistant vice-presidents, oversaw the loan sale. Initially, Harris sent to all 

### prospective bidders, including C&A, certain bid documents: aPurchaser Eligibility Certificate, aBidder QualificationCertificate, aConfidentialityAgreement, an Invitationto Bid and Instructions and Conditions ofBid, aSchedule ofLoans, aBid Form, and aLoan

Sale Agreement. 

### C&A regularly bids on, and purchases, loans like those offered for sale by Bank One and has bid onmore than one thousandloans. Afterreceiving the bid documents from 

### Harris, C&A entered the bid process. According to C& A, the Schedule ofLoans it received from Harris "expressly represented that [Loan Ewas] 'performing'." Relying on 

## this representation, andbefore doinganydue diligence, C&A submittedanirrevocablebid
for Loan E that Bank One accepted. 

### C&Aand Bank One executed an agreement entitled "Loan Sale Agreement" in 

### which C&A agreed to purchase Loan E. This agreement obligated C&A to tender

-2-earnest money equal to the lesser of one percent ofthe bid or$100,000. C &Amade the required payment. C&Aand Bank One then amended the Loan Sale Agreement. C& A tendered an additional $26,578 in earnest money pursuant to this amendment. After C&Asigned the Loan Sale Agreement and the first amendment, Dave Krunic 

### (C & A's vice-president) performed due diligence on Loan EatBonnet's Dallas office. He met with Harris on June 16, 1994 and asked Harris whether Loan Ewas in default. Harris told Krunic that Loan Ewas current as of June 16, 1994. Contrary to Harris's comment, 

### however, the June 1,1994loan paymenthad notbeen made. No later payments were made

either. 

### One day before closing, Krunic contacted Harris and requested the closing date be extended because C&Ahad not yet obtained financing. Responding to Krunic's inquiry 

### at ameeting attendedby Krunic, Harris, and Harris's supervisor DavidWiley, Harris again said that Loan E"remained current." C&Aand Bank One then amended the Loan Sale 

### Agreement asecond time, extending the closing date, and C&A tendered an additional
$26,578 in earnest money. 

### Yet again, on the day before the scheduled closing, C&Acontacted Harris to 

### extend the closing date. After another meeting between the parties' representatives, Bank One and C&A amended the Loan Sale Agreement athird time, extending the closing date 

## and requiring an additional $46,844 in earnest money. Again, C&A paid the additional

earnest money. 

### Krunic later contacted Harris to arrange closing. Krunic claims that only then did

-3-Harris disclose that Loan E was not performing. C & A then notified Bank One that it would not purchase Loan E. Relying on its assertion that Bank One failed to advise it accurately ofLoan E's status, C&Ademanded that Bank One return its earnest money. Bank One refused, notifying C&Athat itintended to terminate the Loan Sale Agreement
and retain the earnest money as damages. C&Afiled this suit torecover its earnest money, alleging that Bank One and Bonnet breached the Loan Sale Agreement by failing to deliver aperforming loan as represented in the Schedule of Loans. It also asserted that Bank One and Bonnet committed fraud because C&Arelied on the Schedule ofLoans and Harris's statements regarding Loan E's condition to enter into the Loan Sale Agreement and each later amendment. BankOne and Bonnet moved for summaryjudgment on both causes of action. C&Afiled no response. 

### The trial court granted Bank One and Bonnet summaryjudgment. This appeal followed.

Discussion Preliminary Arguments 

### According to C& A, two preliminary arguments dispose ofthis matter. First, C& Acontends that the summaryjudgment must be reversed because Bank One and Bonnet 

### admitted they breached the Loan Sale Agreement and committed fraud. To prove this claim, C&Arelies on a statement in Bank One and Bonnet's motion for summary 

## judgment in which they "assume the truth ofthe allegations set forth in Plaintiffs Second Amended Original Petition." In that pleading, C&Aalleges Bank One and Bonnet breached the Loan Sale Agreement and committed fraud. We disagree with C&A's

-4-

### argumentbecause "parties cannotvalidly stipulate to legal conclusions to be drawnfrom the facts ofthe case. Such stipulations are without effect and bind neither the parties nor the court."1 Consequently, because they are legal conclusions drawn from this case's facts, we will not give effect to the admissions C &Aidentifies. Second, C &A argues that the Schedule of Loan's absence from the summary 

### judgmentrecordprecludes asummaryjudgmentruling thatno breach ofcontractoccurred. We disagree because we assume, as we must at the summaryjudgment stage, the truth of the facts pleadedby C& A.2 Therefore, we assume the Schedule ofLoans represented that LoanE was performing. Having disposed ofC& A's preliminaryarguments, we now review the trial court's summaryjudgment de novo to determine whether Bank One and Bonnet 

### established theirright to prevail as amatter oflaw.3 We follow well-established procedures when reviewing this summary judgment.4 Breach of Contract 

### In its first two points of error, C&Aclaims the trial court erroneously granted 

### summaryjudgment for Bank One and Bonnet on its breach ofcontract claim. To support 

### its breach ofcontract claim, C&A asserts atwo-fold argument. First, C&A claims that the Schedule ofLoans, which was part ofthe invitation to bid package Harris forwarded to 1

Martinez v. Hardy, 864 S.W.2d 767, 770 (Tex. App.-Hou.ton [14th Dist.] 1993, no writ) (citations omitted). 2

See Sasser v. Dantex Oil & Gas, Inc., 906 S.W.2d 599, 604 (Tex. App.-San Antonio 1995, writdenied). 3

See American States Ins. Co. v. Arnold, 930 S.W.2d 196,199 (Tex. App.-Dallas 1996, writ denied). 4

See Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex. 1985).

-5-it, specifically stated that Loan Ewas performing. Second, C&Arelies on paragraph 25 of the Loan Sale Agreement, which provides that every covenant, term, representation, warranty, and agreement made by Bank One under the Loan Sale Agreement and in all bid documents survives closing and is independently enforceable. From these two provisions, C &A concludes that the statement in the Schedule of Loans was a representation that became a term in the parties' contract, survived closing, and is now independently enforceable. Accordingly, when Bank One (through its agent Bonnet) indicated before the final closing date that it intended to transfer nonperforming Loan E, Bank One and Bonnet
breached the Loan Sale Agreement. Bank One argues instead that the bid documents and the Loan Sale Agreement C 

### &A executed precluded any statements in the Schedule ofLoans from becoming aterm of 

### the parties' bargain or an enforceable representation. Therefore, the Schedule ofLoan's statement that Loan Ewas performing did not become part of the parties' contract and Bank One did not breach the Loan Sale Agreement by delivering a nonperforming loan. 

### Because neitherparty claims the Loan SaleAgreementis ambiguous, contractinterpretation 

### is alegal question for the Court.5 After reviewing the summaryjudgmentrecord, we agree with Bank One's interpretation of the Loan Sale Agreement and the bid documents. The bid documents, circulated with the Schedule of Loans, contemporaneously advised C&A that statements in the Schedule ofLoans pertaining to the quality, character, See Buys vBuys 924 S.W.2d369, 372 (Tex. 1996); Richardson LifestyleAss'nv. Houston, 853 S.W.2d796 800 (Tex. £LL'Jdenied^ (dtin. Praegerv. Wilson,721 S.W.2d597, 600 (Tex. App.-FortWorth 1986, wntrefd n.r.e.)). App.-Dallas 1993, writ denied) (citing Praeger

-6-

### or value ofLoan Ewere not reliable and thus could not become aterm of the Loan Sale 

### Agreement. In the Invitationto Bid, which C&A executed and returned to Bank One, C &A expressly acknowledgedthatinformationinthe Schedule ofLoans mightbe inaccurate: 8 T nan Information and Review Process: ASchedule of Loans is attached hereto as Schedule A. This information has been obtained from the files of the former MBanks or Realty. The information contained on the schedule of Loans may be materially INACCURATE or INCOMPLETE and Bidders are encouraged to review the files related to each loan

... to confirm this and other matters relevant to the value of each
loan. 

### In both the Confidentiality Agreement and the Invitation to Bid, C & A 

### acknowledged that Bank One made no representations, warranties, promises, covenants, 

## agreements, or guaranties regarding the accuracy ofany information forwarded to C&A or as to the quality, character, or value ofLoan E. And, further, in the Confidentiality 

## Agreement, C&A promised that it did not rely on any warranties or representations. Instead, when it executed the Bidder Qualification Certificate, C&A agreed to rely solely 

## upon its own investigation regarding the quality and character ofLoan E and "not on any information, statement, representation or promise made or to be made by Bank One or 

## Bonnet in connection with the Loans." By executing these bid documents, C&A 

## acknowledgedthat statements inthe Schedule ofLoans maybeinaccurate and assentednot 

## to rely on them as bindingrepresentations, covenants, or terms ofthe parties' agreement. The Loan Sale Agreement reinforces this conclusion. In this agreement, C&A 

## expressly acknowledged in paragraph 10.7 that, rather than performing, Loan E "maybe

### subject to adefault, apending foreclosure, or petition seeking reliefunder the provisions ofthe United States Bankruptcy Code." As to any information to the contrary included in the Schedule ofLoans, Bank One informed C&Ain the same paragraph that it "has not 

### undertaken to correct any misinformation or omissions of information which might be 

### necessary to make any information disclosed to Purchaser not misleading in any respect." Knowing these facts, C&A nevertheless agreedto purchaseLoanE"onthebasis ofits own 

### independent investigation and credit evaluation" and again represented in paragraph 10.8 that it had "not sought or relied upon any representations, information, covenants, or 

## agreements" ofBankOne. Expandingthese statements, inparagraph27, C&A reiterated that BankOne made no representations orwarranties regarding Loan E's value, quality, or 

### condition; thatitdidnotrely on anyrepresentations orwarranties regardingLoanE'svalue, 

## quality, or condition; and that it agreed to acceptLoan E"as is" and "with all faults." From these documents, we conclude that at the time C&Asigned the Loan Sale 

### Agreement, it acknowledged that the statement in the Schedule of Loans was not a 

### representation that couldbe reliedupon; expressly agreed not to rely upon that statement; 

## and, in fact, did not rely on that statement. Instead, C&A agreed to buy an admittedly 

## riskyloan andto take thatloan "asis" and "with allfaults." Thus, despitethe statementin the Schedule ofLoans, C&A did not contract to purchase aperforming loan from Bank 

## One; therefore, BankOne's failure to tender a performingloancannot, as a matteroflaw,

be a breach of contract. 

### Nor did the trial court err when it granted summaryjudgment for Bonnet. As C&A itself recognizes, Bonnet acted only as Bank One's agent in handling Loan E's sale. Bonnet did not sign the Loan Sale Agreement in any capacity and is not aparty to the Loan Sale Agreement.6 Thus, as amatter of law, C&Acannot maintain abreach of contract action against an entity not aparty to the contract.7 Accordingly, the trial court properly 

### granted summaryjudgment for Bonnet on C& A's breach ofcontract claim. We overrule C & A's first and second points of error.
Fraud In its third through sixth points oferror, C&Aargues that the trial court erroneously 

### granted Bank One andBonnet summaryjudgment on its fraud claim. Advocating its fraud allegations, C&A contends thatBankOne and Bonnetinitially misrepresentedLoanE was 

### performing in the Schedule of Loans and that Harris repeated and reinforced this misrepresentation when he told Krunic on three occasions that- Loan E was current. 

### According to C& A, it relied on these misrepresentations when it originally entered the Loan Sale Agreement and when it agreed to each amendment. Absent these 

### misrepresentations, C&A argues it would not have deposited any escrow funds with Bank One and Bonnet. C&Aclaims these actions constitute fraud.8 Bank One and Bonnet moved for summaryjudgment, asserting two grounds. First, 6

SeeShank, Irwin, Conant, & Williamson v. Durant, Mankoff, Davis, Wolens & Francis, 748 S.W.2d494, 499 (Tex. App.-Dallas 1988, nowrit). 7

SeeBernardJohnson, Inc. v. ContinentalConstructors, Inc., 630S.W.2d365, 368 (Tex. App.-Austin 1982,writrefd n.r.e.). 8

See Tilton v. Marshall 925 S.W.2d 672, 684 (Tex. 1996) (orig. proceeding) (stating the elements offraud).

-9-they argued that because C&A agreed to purchase Loan E "as is" and "with all faults," as
a matter oflaw, none oftheir actions could have caused C & A damage.9 Second, they argued that because C & A knew the information in the Schedule of Loans was not trustworthy, and because C&Apromised not to rely on their current orfuture statements regarding Loan E's value, C & A could not have justifiably relied on the identified statements. The trial court, without stating its reasons, granted summary judgment. We affirm ifeither ground supports the judgment.10 In its fourth point of error, C &A argues that Bank One and Bonnet failed to establish as a matter oflaw that it did notjustifiably rely on the statement in the Schedule of Loans and on Harris's statements. But both the bid documents and the Loan Sale 

### Agreement expressly informed C&Athat any current or future statements by Bank One and Bonnet regarding Loan E's condition or value were neither trustworthy nor reliable. Further, when C&Aexecuted these documents, it contractually agreed not to rely on any statements ofthis kind. Consequently, the contractual documents C&Asignedvitiated any reliance C&Amay have placed on statements attributable to Bank One and Bonnet. 

### We agree with Bank One and Bonnet thatAirborne Freight v. C.R. Lee Enterprises, Inc.,11 compels this conclusion. InAirborne, the plaintiffcontracted with Airborne Freight 

### to provide delivery services. The parties executed awritten agreement that contained a 9See Prudential Ins. Co. v. Jefferson Assocs., Ltd., 896 S.W.2d 156, 161-63 (Tex. 1995). 10 See State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 380 (Tex. 1993). 11 847 S.W.2d 289 (Tex. App.-El Paso 1992, writ denied).

-10-clause allowing Airborne to terminate the agreement on thirty days' written notice without
cause. The plaintiff also contractually agreed that "no representations have been made

. .

. about the duration ofthe Agreement" and then disclaimed "any reliance on any definite duration of this Agreement."12 During the course of the contractual relationship, one of Airborne's agents promised the plaintiffthat "as long as you do yourjob, you'll have ajob." Relying on this statement, the plaintiff expanded his business, incurring debt. When Airborne exercised its contractual right to terminate the agreement with thirty days notice, the plaintiff sued, arguing that the agent's statements constituted fraud. After atrial, thejury found Airborne defrauded the plaintiff. But the El Paso Court 

### ofAppeals reversed, concluding that the "written contract signed by [plaintiff's president], vitiated any reliance [plaintiff] might have placed in the sweeping, off-hands statement of [defendant's agent]."13 Significantly, the court recognized that "[t]he written contract contained ample cautionary language which would preclude exclusive reliance by a reasonable businessperson on verbal statements contradicting the written agreement," and that "the disclaimers contained in the contract clearly gave notice that any conditional or oral 

### promise would not control."14 Concluding that "a binding written agreement was entered by the parties and controlled their actions," the appellate court held that "[t]he terms ofthe

12 Id. at 291-92.
13 Id. at 297.
14 Id.

•11-written contract simply belie any reliance on [defendant's agent's] verbal assurance."15 So, too, in this case do the terms of the parties' agreement belie reliance on the statement in the Schedule ofLoans and Harris's statements. We have already summarized the controlling documents' provisions that: informed C&Athat Bank One and Bonnet's statements should not be relied upon; contractually obligated C&Anot to rely on any of these statements; and assured Bank One and Bonnet that, in fact, C&Adid not rely on these statements. But several provisions deserve more attention. First, in the Bidder Qualification Certificate, C&A's promise not to rely on "any 

### information, statement, representation orpromise" made byBankOne orBonnetregarding Loan E extended not only to then-existing statements but also to any statements "to be 

### made" in the future. Thus, C&A's promise covered statements that existed when it executed the bid documents—like the one in the Schedule of Loans—as well as to statements made after it executed the Loan Sale Agreement-like Harris's statements. 

### Second, in the Invitation to Bid and the Loan Sale Agreement, C&Alearned that the information in the Schedule of Loans might be inaccurate and misleading and that Bank 

### One and Bonnet had not undertaken to correct any erroneous information. Third, in the 

### Loan Sale Agreement, C&A agreed to rely only on its own evaluation and investigation ofLoanE's value. Fourth, andfinally, C& A, inmultiple documents, promised not to rely 

## onanyBankOneorBonnetstatementswhenitagreedto purchaseLoanE "asis" and "with

15 Id. at 298.

-12-all faults." As in Airborne, these documents contain ample cautionary language precluding any reliance C & A might have placed on the statement in the Schedule ofLoans or on

Harris's statements. Nevertheless, C & A argues Airborne does not apply because it "was not a summary judgment case." In making this point, C&Aignores the essential fact that the appellate court found no evidence supported the jury's fraud finding. Consequently, after reviewing the evidence, the court determined that "as amatter of law" the plaintiffcould notjustifiably rely on Airborne's agent's comments.16 We perform essentially the same analysis here. Thus, this distinction lacks merit. In another attempt to distinguishAirborne, C&Aclaims that case applies only when the oral representations contradict the written materials. Since in this case the statements involved do not contradict the Loan Sale Agreement, C&AarguesAirborne does not apply. We disagree because the fact that the representations contradicted the written contract was but one factor the Airborne court considered. In that case, the court relied more on the portion of the parties' contract that warned the plaintiff not to rely on oral statements. Here, as in Airborne, the Loan Sale Agreement and other bid documents contain equally 

### compelling cautionary language. Consequently, we find the El Paso court's reasoning 

### persuasive inthis case and conclude, as amatter oflaw, that C&A couldnotjustifiablyrely on any statements by Bank One or Bonnet. We overrule C& A's fourth point oferror.

16 Id. at 297.

-13-In C & A's fifth point oferror, it argues that the trial court erroneously granted summaryjudgmentfor Bonnetbecause fact issues exist as to whether Bonnet independently defrauded C &A. In its sixth point oferror, C & A argues Bank One should be liable vicariously for its agent's independent fraud. To support both points of error, C&A maintains that Bonnet cannot claim the protection of the contractual provisions already discussed because it is not aparty to the Loan Sale Agreement. Notwithstanding this fact, C&Acontractually agreed that the quoted contractual provisions protect not only Bank 

### One, but also Bonnet. Bank One, aparty to the Loan Sale Agreement, obviously included 

### in the agreement contract terms intended to benefit its agent, Bonnet. Thus, Bonnet need 

### not be aparty to the Loan Sale Agreement to claim its protection.17 We overrule C& A's fifth and sixth points of error. 

### Finally, in addition to the six points oferror in which C&Aargues specifically why the trial court erroneously granted summaryjudgment, it asserts aseventh omnibus point 

### of error. In this point of error, C&Aclaims generally that "[t]he trial court erred in 

### granting the motion of Bank One and Bonnet for Summary Judgment" and, as support, incorporates its earlier arguments. We overrule point oferror seven for the same reasons we overruled C& A's earlier points of error. We need not reach C& A's third point of 

### error, which challenges the summaryjudgment ground that, as amatter oflaw, Bank One 

### and Bonnet's allegedwrongful conduct couldnothave caused C&A damage. See Tex. R. 17 See Corpus Christi Bank & Trust v. Smith, 525 S.W.2d 501, 503-04 (Tex. 1975) (recognizing that under certain circumstances, contract terms may inure to benefit of entity not aparty to the contract).

-14-App. P. 90(a). We affirm the trial court's judgment.

Publish Tex. R. App. P. 90 951569F.P05

-15- fe<_<4L»c~_*?1<_> DEBORAH G. HANKINSON JUSTICE