Opinion ID: 63256
Heading Depth: 3
Heading Rank: 1

Heading: Violation of the Texas Business and Commerce Code

Text: Dorsey alleged in his complaint that H. Barnes, J. Barnes, and the corporations under their domination and control violated section 27.01 of the Texas Business and Commerce Code, entitled Fraud in Real Estate and Stock Transactions. That section states: Fraud in a transaction involving real estate or stock in a corporation or joint stock company consists of a (1) false representation of a past or existing material fact, when the false representation is (A) made to a person for the purpose of inducting that person to enter into a contract; and (B) relied upon by that person in entering into that contract. TEX. BUS. & COM.CODE ANN. § 27.01(a)(1). That statute, by its own terms, applies only to fraud in real estate or stock transactions. See id.; Burleson State Bank v. Plunkett, 27 S.W.3d 605, 611 (Tex.App. 2000). A loan transaction, even if secured by land, is not considered to come under the statute. Burleson State Bank, 27 S.W.3d at 611; see also Greenway Bank & Trust of Houston v. Smith, 679 S.W.2d 592, 596 (Tex.App.1984) (The statute makes no mention of any application to guaranty agreements, secured by real estate, or to a party who `merely' loaned money for the purchase of real estate.). Because Dorsey did not allege facts to show that the Defendants induced him to participate in a transaction for the transfer of real estate or stock, his claims against all defendants fail as a matter of law.