Court Opinion

ID: 2871059
Source: CourtListenerOpinion
Date Created: 2015-09-06 03:54:50.815018+00
Date Added: 2024-06-11T13:29:56.323446
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

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                                      NO. 03-05-00461-CV
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                                     Carol Sims, Appellant

                                                 v.

           Century 21 Capital Team, Inc. and Thelma Stark Sorgman, Appellees

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   FROM THE DISTRICT COURT OF TRAVIS COUNTY, 261ST JUDICIAL DISTRICT
       NO. GN500412, HONORABLE SCOTT H. JENKINS, JUDGE PRESIDING
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                            MEMORANDUM OPINION

               Carol Sims sued Century 21 Capital Team, Inc., and Thelma Stark Sorgman, one of

its real estate agents (together “appellees”), for violations of the Deceptive Trade Practices Act

(DTPA), fraud, and misrepresentation after Sims purchased real property that, she alleges, contains

abandoned underground mines. See Tex. Bus. & Com. Code Ann. §§ 17.41-.63 (West 2002 & Supp.

2005) (DTPA); Tex. Bus. & Com. Code Ann. § 27.01 (West 2002) (fraud). The trial court granted

summary judgment in favor of appellees.1 In two issues, Sims asserts that the summary judgment

       1
         Sims’s action against the seller, James Pilchiek, was severed after the trial court granted
summary judgment as to the appellees, thereby making the trial court’s judgment final and
appealable.
evidence does not entitle appellees to judgment as a matter of law or conclusively negate the

existence of a genuine issue of material fact. We affirm the judgment.

                      FACTUAL AND PROCEDURAL BACKGROUND

               On December 12, 2001, Sims executed a contract to purchase real property located

in Bastrop County from James Pilchiek. The contract, a standard residential real estate contract form

promulgated by the Texas Real Estate Commission (TREC), contained section seven, titled,

“property condition.” Section 7D stated,

       ACCEPTANCE OF PROPERTY CONDITION: (check one box only):

       [x] (1) In addition to any earnest money deposited with escrow agent, Buyer has
               paid seller $ 100 (the “Option Fee”) for the unrestricted right to terminate
               this contract by giving notice of termination to Seller within 10 days after
               the effective date of this contract. If Buyer gives notice of termination
               within the time specified, the Option Fee will not be refunded, however, any
               earnest money will be refunded to Buyer. If Buyer does not give notice of
               termination within the time specified, Buyer will be deemed to have
               accepted the Property in its current condition and the Option Fee [x] will
               . . . be credited to the Sales Price at closing.

       [x] (2) Buyer accepts the Property in its present condition; provided Seller, at
               Seller’s expense shall complete the following repairs and treatment: [none
               listed].

(Emphasis added.) According to Sorgman’s deposition testimony, Sims’s real estate agent checked

both boxes, despite the form’s instructions to the contrary, and typed the figures into the blank spaces

in section 7D as shown.

               In her petition, Sims stated that after purchasing the property, she discovered

underground mines. She alleged that appellees did not disclose to her that there were underground

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mines located on the property, and that she would not have purchased the property had she known

of their existence. She further alleged that these structures reduce the value of the property and

present a risk to her and her family.

               Appellees moved for summary judgment on the grounds that Sims purchased the

property “as is.” Appellees attached the contract and the affidavits of Mike Gharbi, the owner of

Century 21, and Sorgman. In response to appellees’ motion, Sims presented excerpts of the

deposition testimony of Gharbi and Sorgman.

               The trial court granted summary judgment in favor of appellees. The order did not

specify the grounds on which the court relied. Sims perfected this appeal.

                                           ANALYSIS

               In her first issue, Sims contends that the trial court erred in granting summary

judgment because material fact issues exist concerning whether she knowingly agreed to purchase

the property “as is.” In her second issue, Sims contends that appellees’ affidavits were not

competent summary judgment proof.

               Appellees respond that Sims’s agreement to buy the property “as is” conclusively

negated the reliance element that is essential to recovery on all of her theories. Citing Prudential

Insurance Company of America v. Jefferson Associates, Ltd., appellees contend that when Sims

purchased the residence “as is,” she agreed to make her own evaluation of the bargain and accepted

the risk that she may have been wrong. 896 S.W.2d 156, 161 (Tex. 1995). Appellees further

respond that Sorgman’s uncontroverted affidavit was competent summary judgment evidence

                                                 3
because it could have been effectively countered by opposing evidence. See Trico Techs. Corp. v.

Montiel, 949 S.W.2d 308, 310 (Tex. 1997).

Standard of Review

               The standards for reviewing a motion for summary judgment are well established:

(1) the movants for summary judgment have the burden of showing that no genuine issue of material

fact exists and that they are entitled to judgment as a matter of law; (2) in deciding whether there is

a disputed material fact issue precluding summary judgment, evidence favorable to the nonmovant

will be taken as true; and (3) every reasonable inference must be indulged in favor of the non-movant

and any doubts resolved in the non-movant’s favor. Nixon v. Mr. Prop. Mgmt. Co. 690 S.W.2d 546,

548-49 (Tex. 1985); see Tex. R. Civ. P. 166a(c).

“In the current condition”

               We construe the TREC-promulgated contract used here, in which Sims agreed to

accept the property “in its current condition,” as binding Sims to purchase the property “as is.”2

When evaluating a contract, we look to its language to ascertain and give effect to the intentions of

the parties as expressed in the instrument. See Lenape Res. Corp. v. Tennessee Gas Pipeline Co.,

925 S.W.2d 565, 574 (Tex. 1996). We construe contracts from a “utilitarian standpoint” bearing in

       2
          Although Sims contends in a footnote that there is some question as to which one of the
mutually exclusive paragraphs—7D(1) or 7D(2)—controls here, we do not agree. Sorgman testified
that even though Sims’s real estate agent checked both boxes, despite the form’s instructions to the
contrary, the Pilchieks received $100, and this allowed Sims ten days to change her mind. Further,
Sims’s response to appellees’ motion for summary judgment states, “The closing documents suggest
that [Sims] chose option 1 rather than option 2,” and includes as evidence a settlement statement that
reflects payment by Sims of the $100 option fee.

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mind the particular business activity sought to be served. Frost Nat’l Bank v. L&F Distribs., 165
S.W.3d 310, 311 (Tex. 2005).

                In Texas, a real estate licensee is bound to use TREC form contracts in most

transactions, 22 Tex. Admin. Code § 537.11(b) (2006), and is prohibited from giving advice or

opinions as to the legal effect of any of its provisions, id. § 537.11(c). In this context, “in its current

condition” is a plain English equivalent to “as is,” and as such allows this provision of the contract

to be understood by those who must comply with it. See Black’s Law Dictionary 108-09 (7th ed.

1999) (“as is” defined as “In the existing condition without modification.”). Our analysis is

supported by the determination of our sister court in Waco that buyers purchased property “as is”

when they signed an earnest money contract, promulgated by the TREC, wherein they bound

themselves to accept the property “in its present condition.” Larsen v. Langford, 41 S.W.3d 245,

251 (Tex. App.—Waco 2001, pet. denied); see also Fletcher v. Edwards, 26 S.W.3d 66, 75 (Tex.

App.—Waco 2000, pet. denied) (earnest money contract stated that the buyers accepted the property

“in its present condition”). Our holding is consistent with Texas law recognizing that “‘as is,’ ‘with

all faults,’ or other language that ‘in common understanding calls the buyer’s attention to the

exclusion of warranties and makes plain that there is no implied warranty’” may be used to disclaim

warranties. See Tex. Bus. & Com. Code Ann. § 2.316 (West 1994) (emphasis added); Turner v.

Conrad, 618 S.W.2d 850, 853 (Tex. Civ. App.—Fort Worth 1981, writ denied) (involving resale of

real estate); see also Prudential, 896 S.W.2d at 161 (explaining the “as is” provision of a real estate

contract by referencing section 2.316 of the Texas Business and Commerce Code).

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Totality of the Circumstances

                Sims contends that the “as is” clause is not binding because the clause was a boiler-

plate provision and was not an important part of the basis of the bargain. See Prudential, 896
S.W.2d at 162. In Prudential, the supreme court recognized that aspects of a transaction may make

an “as is” agreement unenforceable, and stated that “the nature of the transaction and the totality of

the circumstances surrounding the agreement must be considered” when determining if an “as is”

agreement is enforceable. Id. The supreme court further stated, “Where the ‘as is’ clause is an

important part of the basis of the bargain, not an incidental or ‘boiler-plate’ provision, and is entered

into by parties of relatively equal bargaining position, a buyer’s affirmation and agreement that he

is not relying on representations by the seller should be given effect.” Id. Although Prudential

involved commercial property, courts have applied the Prudential analysis to residential property.

See Bynum v. Prudential Residential Servs. Ltd. P’ship, 129 S.W.3d 781, 792 (Tex. App.—Houston

[1st Dist.] 2004, pet. denied).

                We find that this “as is” clause meets the requirements of Prudential. See Prudential,
896 S.W.2d at 162. Section 7D(1) of the TREC contract has two blank spaces in its text

corresponding with the amount of the option fee and the number of days that the buyer has the

“unrestricted right to terminate this contract by giving notice of termination to the Seller.” The

numbers “100.00” and “10” were typed into the first and second blank spaces, respectively. These

terms are by their nature negotiable, and not boilerplate contractual terms. See Black’s Law

Dictionary 167 (7th ed. 1999) (“boilerplate” defined as “Fixed or standardized contractual language

that the proposing party views as relatively nonnegotiable.”). Further, Gharbi and Sorgman stated

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in their affidavits that Sims employed her own real estate agent, and Sorgman testified in her

deposition that Sims’s agent chose the two numbers and typed them into section 7D(1). We,

therefore, determine that there is no material fact issue about whether the contract should be enforced

under the Prudential test.3

Fraudulent Concealment

               Relying on this Court’s opinion in Pairett v. Gutierrez, 969 S.W.2d 512, 517 (Tex.

App.—Austin 1998, pet. denied), Sims contends that a material fact issue exists about whether she

disavowed her reliance on appellees’ alleged fraudulent failure to disclose the existence of the

subsurface mines. Sims argues that Pairett stands for the proposition that a buyer’s agreement to

accept the property “in its present condition” does not disavow the buyer’s reliance on the seller’s

misrepresentations.

               In Pairett, the buyers purchased a house “in its present condition” and received an

owner disclosure statement, signed by the sellers, stating that the sellers were not aware of defects

in the foundation. Id. at 514. Although the buyers were allowed to inspect and evaluate the home,

they chose not to and waived repair rights by doing so. Id. Shortly after closing, the buyers

       3
           Although Sims complains that there is an inconsistency between the affidavits and
deposition testimony of Sorgman and Gharbi, this does not create a material fact issue. In their
affidavits, both Sorgman and Gharbi state that the reduction of the price of the property from
$142,000 to $132,000 “indicates the active participation by the buyer and her agent in fashioning the
terms of the contract.” However, in his deposition testimony, Gharbi states that the reduction in the
sales price happened without the input of Sims and her agent. In Sorgman’s deposition testimony
she states that the price reduction occurred before Sims became interested in the property. Any
perceived inconsistency regarding the sales price reduction is not relevant to the “as is” issue that
Sims challenges on appeal.

                                                  7
discovered a crack in the foundation. Id. The buyers sued the sellers for violations of the DTPA,

fraud, and misrepresentation, and the trial court granted summary judgment in favor of sellers. Id.

at 513-14. This Court reversed and remanded for further proceedings, finding that the summary

judgment evidence, consisting of controverting affidavits, raised an inference that the sellers were

aware of problems with the foundation yet made an affirmative representation that they did not know

of the problems, and that the buyers relied on the sellers’ representations in purchasing the house.

Id. at 517.

               Pairett is not dispositive of the issues in the instant case because the summary

judgment evidence here does not raise an issue of fraudulent concealment by appellees—the real

estate broker and agent. A seller has no duty to disclose facts she does not know, nor is a seller

liable for failing to disclose what she only should have known. Prudential, 896 S.W.2d at 162.

Here, the seller’s agent, Sorgman, stated in her affidavit, “I have never had any knowledge regarding

the existence of any subsurface structures in the property that was sold to Carol Sims by our client.

Indeed, to the present day I don’t know if subsurface structures are in the property.” In Sorgman’s

deposition testimony she describes her interactions with Sims, from Sims’s first telephone call to

Sorgman’s receipt of her commission upon the completion of the sale, without mentioning assistance

from other agents, except to note that at one point another agent took a telephone message from Sims

and relayed the information to Sorgman. Sorgman’s signature appears on the last page of the

contract as the only “listing associate” and “seller’s agent” and on the mediation addendum on behalf

of Century 21. Thus, we find that the summary judgment evidence does not raise an issue of

fraudulent concealment.

                                                 8
               We overrule Sims’s first issue.

Summary Judgment Evidence

               In her second issue, Sims contends that the statements in appellees’ affidavits

concerning their subjective awareness of the underground mines are not competent summary

judgment proof because they are self-serving, cannot be readily controverted, and involve matters

of credibility. Sims further contends that appellees’ affidavits contain improper legal opinions.

Summary judgment based on the uncontroverted affidavit of an interested witness is proper if the

evidence is clear, positive, direct, otherwise credible, free from contradictions and could have been

readily controverted. Trico Techs. Corp., 949 S.W.2d at 310; see also Tex. R. Civ. P. 166a(c).

“‘Could have been readily controverted’ does not mean that the summary judgment evidence could

have been easily and conveniently rebutted, but rather indicates that the testimony could have been

effectively countered by opposing evidence.” Trico Techs. Corp., 949 S.W.2d at 310.

               Sims complains that Sorgman’s affidavit testimony that “I have never had any

knowledge regarding the existence of any subsurface structures in the property that was sold to Carol

Sims by our client” was improper summary judgment evidence. We disagree. Sorgman’s statement

could have been readily controverted by evidence that someone told Sorgman about the condition

or she otherwise had reason to be aware of the condition. Sims made no attempt to controvert the

affidavit through deposition testimony, interrogatories, or other discovery. We conclude that the

statement was competent summary judgment evidence.

               Sims also complains that Gharbi’s affidavit testimony that “No realtor sponsored by

me has particular knowledge of subsurface structures or underground mines” was improper summary

                                                 9
judgment evidence. We agree with the trial court that this statement lacks foundation, and find that

the trial court properly disallowed it.

                As to Sims’s contention that appellees’ affidavits contain improper legal opinions,

to the effect that Sims had the duty to inspect because of the “as is” nature of the contract, we find

that Sims waived that complaint by failing to object at the trial court and obtain a ruling. See

Archambault v. Archambault, 846 S.W.2d 359, 361 (Tex. App.—Houston [14th Dist.] 1992, no

writ); see also Nugent v. Pilgrim’s Pride Corp., 30 S.W.3d 562, 567 (Tex. App.—Texarkana 2000,

pet. denied).

                We overrule Sims’s second issue.

                                          CONCLUSION

                Appellees met their burden of showing that no genuine issue of material fact existed

and that they were entitled to judgment as a matter of law, and we conclude that the trial court

properly granted summary judgment in their favor. Having overruled Sims’s two issues on appeal,

we affirm the trial court’s summary judgment.

                                               _________________________________________

                                               Jan P. Patterson, Justice

Before Chief Justice Law, Justices Patterson and Pemberton

Affirmed

Filed: September 8, 2006

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