Opinion ID: 6111185
Heading Depth: 1
Heading Rank: 3

Heading: String-Along Fraud

Text: By a conditional cross-point of error, Lufkin argues that if we reverse the award for fraudulent inducement we should reinstate the trial court's alternative judgment awarding $ 6 million for common-law fraud. Characterizing this as a claim for string-along fraud, Lufkin argued-and the jury agreed-that IBM committed fraud after the parties entered into the Statement of Work by repeatedly and knowingly misrepresenting that its Express Solution system would meet Lufkin's needs if Lufkin would agree to delay the go-live date and pay more money. Lufkin contends that, by relying on these post-contractual misrepresentations, it suffered costly delays and damages through the $ 6.6 million it agreed to add to the original price. The jury found for Lufkin on this theory and awarded $ 6 million in damages, and the trial court's judgment conditionally awarded those damages, in the event that the fraudulent-inducement award were reversed on appeal. The court of appeals upheld the fraudulent-inducement award but reversed the conditional string-along-fraud award, concluding that it was based on the same misrepresentations and same injuries and thus subsumed within the fraudulent-inducement claim. 564 S.W.3d at 33 . In this Court, Lufkin argues that its so-called string-along-fraud claim is based on different misrepresentations and sought different damages than its fraudulent-inducement claim. In reality, Lufkin's string-along-fraud claim is also a fraudulent-inducement claim, because it asserts that IBM's continued misrepresentations induced Lufkin to agree to IBM's project change requests. We conclude that the disclaimers bar Lufkin's string-along-fraud claim for the same reasons they bar Lufkin's fraudulent-inducement claim. Lufkin argues that the disclaimers do not apply to the misrepresentations IBM made after they signed the Statement of Work because the disclaimers state only that the parties did not rely on representations when entering into the Statement of Work. But each time Lufkin authorized a change by signing a project change request, it agreed that the parties' complete agreement would include that change authorization, all prior change authorizations, the Statement of Work, and the Customer Agreement. And section 2 of the Statement of Work characterizes changes resulting from the agreed Project Change Control Procedure as [c]hanges to this [Statement of Work]. So with each change authorization, Lufkin reaffirmed that it was not relying on IBM's representations in entering into the Statement of Work, which then included the change authorization. Lufkin argues, however, that its string-along fraud claim is based on IBM's breach of a common law, not contractual, duty not to misrepresent its continuing performance and a common-law duty to disclose information to correct earlier misrepresentations. While we agree that  fraud is a common-law creation, we do not see how that invalidates Lufkin's reaffirmations of the disclaimer of reliance in the project change requests. Lufkin's argument that IBM's string-along fraud breached a common law duty to disclose information to correct earlier misrepresentations also fails. Lufkin cannot maintain a claim that it reasonably relied on any earlier misrepresentations when it disclaimed reliance on such misrepresentations in the Statement of Work and the project change requests. We thus conclude that Lufkin cannot recover on its string-along-fraud claim.