Opinion ID: 26606
Heading Depth: 3
Heading Rank: 3

Heading: Preemption of Lyn-Lea’s Affirmative Defense

Text: Lyn-Lea next contends that the trial court erred by dismissing, as preempted, its fraudulent inducement defense to the enforcement of the Sabre CRS agreement.12 Noting that Wolens confined courts “to the parties’ bargain, with no enlargement or enhancement based on state laws or policies external to the agreement,” the court determined that Lyn-Lea’s fraudulent inducement defense would impermissibly enhance Lyn-Lea’s rights apart from the Sabre CRS agreement under state law. Indeed, Wolens cautioned, when it decided that enforcement of air carriers’ contracts is not preempted, “‘some state-law principles of contract law . . . might well be preempted to the extent they seek to effectuate the State’s public policies, rather than the intent of 12 Lyn-Lea contends that three of its affirmative defenses (fraudulent inducement, breach of the duty of good faith and fair dealing, and estoppel) were improperly dismissed on the basis of ADA preemption. The court determined that the breach of the duty of good faith and fair dealing and estoppel defenses had been insufficiently pleaded and dismissed both defenses. Lyn-Lea has not challenged this ruling. Therefore, Lyn-Lea’s fraudulent inducement defense is the only defense dismissed on the basis of preemption. 13 the parties.’” Wolens, 513 U.S. at 233 n.8, 115 S.Ct. at 826. We disagree, however, with the magistrate judge’s conclusion that Lyn- Lea’s fraudulent inducement defense attempts to enhance or enlarge the Sabre CRS Agreement on the basis of state policies external to the agreement. When pleaded as a defense to a contract, fraudulent inducement is related to the fundamental issue in contract actions: is there an enforceable agreement? A fraudulently induced party has not assented to an agreement because the fraudulent conduct precludes the requisite mutual assent. See RESTATEMENT (SECOND) OF CONTRACTS § 164 (1979). Fraudulent inducement is an elementary concept in the law of contracts, and is intended to shield a party from liability in a contract action only when another party has procured the alleged contract wrongfully. United States v. Texarkana Trawlers, 846 F.2d 297, 304 (5th Cir. 1988). The Court reasoned in Wolens that because contract law is, at its “core,” uniform and non-diverse, there is little risk of inconsistent state adjudication of contractual obligations. 513 U.S. at 219 n.8, 115 S.Ct. at 826. Fraudulent inducement is among those core concepts as it relates to the validity of mutual assent. The defense does not reflect a state policy seeking to expand or enlarge the 14 parties’ agreement. Therefore, Lyn-Lea’s fraudulent inducement defense is not preempted by the ADA.13