Opinion ID: 6111185
Heading Depth: 2
Heading Rank: 2

Heading: The information-exchanged provision

Text: Lufkin alternatively argues that another provision specifies the misrepresentations on which its fraudulent-inducement claim relies. In this provision, which appears in the contract's introductory section, IBM explained that it based its proposal on information Lufkin had provided to IBM: IBM is pleased to submit this Statement of Work (SOW) to assist Lufkin Industries, Inc. (Lufkin Industries) with the implementation of SAP. We recognize the significance of this project and the importance of this solution to Lufkin Industries' business. We also recognize the effort Lufkin Industries' staff has expended over the past several months interacting with IBM to share information about the goals and objectives of this project, current business processes and supporting systems. This exchange is the basis of our understanding for this proposal. We bring years of experience to every project. We apply our experience gained in developing similar solutions for other customers to help develop your solution. We appreciate the opportunity to present this SOW for your approval. Lufkin argues that this provision's reference to our understanding refers to both IBM and Lufkin, and the information the parties exchanged during the months leading up to the proposal includes not only information Lufkin provided to IBM but also IBM's misrepresentations regarding the Express Solution system. The court of appeals agreed, holding that the information the provision refers to necessarily includes the representations made by IBM during the sales process, including its sales presentations, which are the same representations IBM argues that the reliance disclaimer provisions purport to negate. See 564 S.W.3d at 28 . Lufkin argues that it did not disclaim reliance on IBM's misrepresentations because this provision specifies those misrepresentations.  Again, we disagree. Within the context of the provision's repeated use of the plural we to refer only to IBM, its use of the plural our similarly refers only to IBM's understanding on which it based its proposal. We read the provision to explain that IBM based its proposal on its understanding of Lufkin's goals, objectives, processes, and systems, which IBM obtained from information Lufkin shared with IBM during the parties' exchange leading up to the proposal. The provision thus serves more as a recital than an operative term, stating the circumstances surrounding the contract's formation. See Furmanite Worldwide, Inc. v. NextCorp, Ltd. , 339 S.W.3d 326 , 336 (Tex. App.-Dallas 2011, no pet.) (defining recital as [a] preliminary statement in a contract or deed explaining the reasons for entering into it or the background of the transaction, showing the existence of particular facts) (quoting Recital , BLACK'S LAW DICTIONARY (8th ed. 2004) ). By contrast, Lufkin's reading of the information-exchanged provision improperly renders the two disclaimers superfluous. See URI, Inc. v. Kleberg Cty. , 543 S.W.3d 755 , 770 (Tex. 2018) ; U.S. Metals, Inc. v. Liberty Mut. Grp., Inc. , 490 S.W.3d 20 , 24 (Tex. 2015). Lufkin's construction would mean that the parties agreed that, in entering into the contract, they did not rely on any representations except those the parties made to each other before they entered into the contract. Of course, that would mean that they did not disclaim reliance on any representations at all. We cannot read the information-exchanged provision to contain any representations by IBM, other than the representation that it relied on Lufkin's information to prepare its proposal. It certainly does not specify any particular representations IBM made during the parties exchange, including representations that the Express Solution system provided an out-of-the-box solution that would meet eighty percent of Lufkin's requirements upon implementation. We conclude that the information-exchanged provision does not negate Lufkin's disclaimer of reliance on those misrepresentations.