Opinion ID: 2382064
Heading Depth: 2
Heading Rank: 3

Heading: Fraud, Fraudulent Concealment, Negligent Misrepresentation, and Express Warranty

Text: We turn next to the Grinnells' claims for fraudulent misrepresentation, fraudulent concealment, negligent misrepresentation, and express warranty. These claims are based on alleged misrepresentations in American's advertisements. The Grinnells allege that if American had revealed the health risks of smoking cigarettes, and had not deceived Grinnell by making false representations to the contrary, Grinnell never would have started smoking. The documents the Grinnells claim contained misrepresentations include (1) a 1953 press release by Paul Hahn, then American's president, (2) a promotional item entitled  A Frank Statement to Cigarette Smokers  released by the Tobacco Industry Research Committee, of which American was a member, and (3) an advertisement entitled  Why We're Dropping The New York Times.  All three of these documents stated that American and the tobacco industry still believed that smoking was not injurious to health and that no one had yet proved that lung cancer in any human being was directly traceable to smoking tobacco. These materials also implied that cigarettes were safe, fit for human consumption, free of contaminants, and not addictive. A fourth document the Grinnells allege contained affirmative misrepresentations is an advertisement stating that the longer Pall Mall cigarette naturally filters the smoke but does not filter out the Pall Mall flavor. This advertisement also stated that Pall Malls were friendly to a smoker's taste and that for flavor and mildness fine tobacco filters best. The Grinnells also contend that American intended consumers of its products to see and rely on the statements in its advertisements. They bolster this contention with the deposition testimony of Robert Heimann, one of American's former chief executive officers, who testified: There is no reason why [consumers] could not accept our position stated here and elsewhere that the products we make are not injurious to health. Similarly, Preston Leake, American's research and development officer, testified in his deposition that these are safe products. At the outset, we recognize that the fraud, fraudulent concealment, negligent misrepresentation, and express warranty claims all share the common element of reliance. In Texas, a plaintiff establishes actionable fraud if the defendant makes a material representation, that is false, either known to be false when made or is asserted without knowledge of its truth, that is intended to be and is relied upon, and that causes injury. Sears, Roebuck & Co. v. Meadows, 877 S.W.2d 281, 282 (Tex.1994); T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 222 (Tex.1992). Similarly, when circumstances impose upon a party a duty to speak and the party remains silent, the silence itself can be a false representation. Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 435 (Tex.1986); Smith v. National Resort Communities, Inc., 585 S.W.2d 655, 658 (Tex. 1979). Just as with affirmative misrepresentations, the allegedly defrauded party must have reasonably relied on the silence to his detriment. See Allgood, 80 F.3d at 171; Spoljaric, 708 S.W.2d at 435. Likewise, negligent misrepresentation claims require reasonable reliance on the representation. See Federal Land Bank Ass'n v. Sloane, 825 S.W.2d 439, 442 (Tex.1991). Though not a fraud-based claim, an express warranty claim also requires a form of reliance. The Uniform Commercial Code provides that an express warranty is created when [a]ny affirmation of fact or promise [is] made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain.  TEX. BUS. & COM.CODE § 2.313(a)(1) (emphasis added). Basis of the bargain loosely reflects the common-law express warranty requirement [11] of reliance. Southwestern Bell Tel. Co. v. FDP Corp., 811 S.W.2d 572, 575 & n. 2 (Tex.1991); see Morris v. Adolph Coors Co., 735 S.W.2d 578, 587 (Tex.App.-Fort Worth 1987, writ ref'd n.r.e.). Because all four of the representational claims asserted by the Grinnells require some form of reliance, summary judgment was proper on each if American negated reliance as a matter of law. We hold that American conclusively negated the element of reliance. The summary judgment record establishes a complete absence of reliance. Grinnell testified in his deposition that he specifically remembered seeing only R.J. Reynolds's advertisements, but that he might have also seen American's advertisements. The first time he remembered seeing any advertisements disputing the alleged link between smoking and lung cancer was in the early `80's and maybe late `70's, approximately thirty years after he began smoking. These advertisements from the 1970s and 1980s have not been produced, were not reviewed by Grinnell during his deposition, and were not included in the record. The materials on which the Grinnells actually base their claims, however, were all released in the 1950s and 1960s. Grinnell never testified that he relied on these advertisements and his own deposition testimony establishes that he began smoking because his friends smoked, and that he later changed brands from Lucky Strikes to Pall Malls to Pall Mall Golds based on taste, not because of advertisements. Of the various advertisements Grinnell remembered seeing and claimed to have relied on, only advertisements for Old Golds and Camels directly equated smoking with health. The Old Golds advertisements stated, For a Treat Instead of a Treatment ... Smoke Old Golds. The Camel advertisements stated More Doctors Smoke Camels Than Any Other Cigarette! Grinnell never smoked Camels or Old Golds and American never manufactured these brands of cigarettes. Reliance on these advertisements does not raise a fact issue in this case. Moreover, the parties do not dispute that neither Robert Heimann's nor Preston Leake's statements concerning American's intent or the safety of its products were included in advertisements or other materials disseminated to the public. In short, American's summary judgment evidence proves that Grinnell did not rely on any of American's advertisements from the 1950s and 1960s, and that, although he could have conceivably relied on the advertisements from the 1970s and 1980s, these advertisements were not included in the record and their content is subject to speculation. Speculation cannot create a fact issue. Duff v. Yelin, 751 S.W.2d 175, 176 (Tex.1988). Based on this record, we hold that American conclusively negated the element of reliance. Summary judgment was proper on the fraud, fraudulent concealment, negligent misrepresentation, and express warranty claims.