Opinion ID: 25900
Heading Depth: 1
Heading Rank: 4

Heading: promissory estoppel and fraud

Text: We apply Texas law to plaintiffs’ remaining claims of promissory estoppel and fraud.15 Texas 13 Harbor Ins. Co. v. Urban Constr. Co., 990 F.2d 195, 199 (5th Cir. 1993); KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). 14 988 S.W.2d at 749. 15 Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). 7 Soil claims that Intercargo, through its authorized representatives, promised that the indemnity bond would be renewed and that Texas Soil relied upon that representation to its detriment. In its claim for fraud, Texas Soil argues that Cheri Davis and Craig Johnston made misrepresentations as to material facts upon which Texas Soil relied and, as a result, sustained damages. The only written contract that existed between Texas Soil and Intercargo, and the only basis for any obligation of Intercargo to issue a bond to Texas Soil, was the General Agreement of Indemnity (GAI). Rather than convey a promise to renew the bond, the GAI specifically stated that Intercargo had “the right, at its option and in its sole discretion, to issue or cancel or decline the execution of any Bond, or renewal thereof, including a final Bond, when it has furnished a bid Bond.” We focus, therefore, on Texas Soil’s claim that Rose-Tillmann had the authority to bind Intercargo beyond the authority specifically noted in the 1993 “Limited Power of Attorney.” Unless Texas Soil can demonstrate a principal-agent relationship between Intercargo and Rose-Tillmann beyond the specific power of attorney attached to the 1993 bond, Intercargo cannot be held liable as a principal for the actions or omissions of Rose-Tillmann.16 Under Texas law, an agent is someone authorized by a person or entity to transact business or manage some affair for that person or entity.17 Generally, an agent has only such authority as the principal has either expressly or impliedly conferred on the agent.18 Without actual or apparent 16 See Henry v. Lane, 128 F. 243, 255 (5th Cir. 1904) (holding that if agents exceed their authority in signing a contract on behalf of a principal, it plainly does not bind him and there is no basis in law or equity for sustaining a suit against him). 17 First Valley Bank of Los Fresnos v. Martin, 55 S.W.3d 172, 183 (Tex. App.--Corpus Christi 2001). 18 3 Tex. Jur. 3d Agency § 37 (1996). 8 authority, an agent may not bind a principal.19 The appointment of an attorney-in-fact creates an agency relationship.20 But powers of attorney have to be st rictly construed and under no circumstances will the principal be bound beyond the plain import of the instrument.21 The indemnity bond became effective on February 12, 1993 and ended on February 12, 1994. The 1993 bond was signed by Steve Hecht for Texas Soil and Cheri Davis as Attorney-in-Fact for Intercargo. It bears the corporate seal of Intercargo and states that “[t]his obligation may be extended from year to year at the option of Surety, by issuing a new bond.” As the trial judge recognized, “The core issue here turns on the authority afforded by Intercargo to Rose-Tillmann employees such as Craig Johnson and Cheri Davis.” The record indicates that Texas Soil had notice and knew of Rose-Tillmann’s limited authority pursuant to the Limited Power of Attorney. The language of the limited power of attorney explicitly did not give the Rose-Tillmann employees authority to bind Intercargo to a renewal agreement without a signature; nor did it give Rose-Tillmann employees authority to bind Intercargo to an oral promise to sign a renewal agreement. The district court was correct in granting summary judgment on the claims for promissory estoppel and fraud because there is no genuine issue as to the fact that Rose-Tillmann lacked authority to bind Intercargo to renew Texas Soil’s bond.