Court Opinion

ID: 3074909
Source: CourtListenerOpinion
Date Created: 2015-10-16 01:05:01.698041+00
Date Added: 2024-06-11T11:41:55.418105
License: Public Domain

In The

                               Court of Appeals
                   Ninth District of Texas at Beaumont
                            ____________________

                             NO. 09-13-00060-CV
                            ____________________

                   LBM INVESTMENTS, INC., Appellant

                                       V.

                CARIBE PROPERTIES, INC., Appellee
_________________________________         ______________________

                On Appeal from the 284th District Court
                      Montgomery County, Texas
                    Trial Cause No. 10-08-09369 CV
____________________________________________                      ____________

                         MEMORANDUM OPINION

      LBM Investments, Inc. (“LBM”) sued Caribe Properties, Inc. (“Caribe”) for

fraudulent misrepresentation, fraud in the inducement, fraud in a real estate

transaction, breach of contract, negligence, negligent misrepresentation, fraud by

nondisclosure, and breach of implied warranties arising out of LBM’s purchase of

real property from Caribe. Caribe filed a motion for traditional and no-evidence

summary judgment, which the trial court granted. In three appellate issues, LBM

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challenges the trial court’s summary judgment ruling. We affirm the trial court’s

judgment.

                                Factual Background

      In 2007, the parties entered a contract in which LBM agreed to purchase

property from Caribe. The contract provided that “Buyer accepts the [p]roperty in

its present condition[.]” The property was inspected in January 2008 and the

inspector classified the drainage as “Good” and found that the “[p]roperty appears

in excellent overall condition.” The inspector noted:

      A considerable amount of fill dirt was used to build up the site before
      the concrete slab was poured. At the rear of the building, the base of
      the foundation sits approximately 1 1/2 to three feet above the original
      land. Fill dirt, which extends approximately eight to ten feet from the
      edge of the foundation, is bare and is beginning to show significant
      erosion in some places. In completion of site preparation, to limit
      erosion, this area should be stabilized with plant material such as grass
      seeding or vegetation. If left unattended during the wet winter months,
      erosion could eventually compromise the foundation.

The parties closed on the property in March 2008.

      After taking possession of the property, LBM noticed pooling, improper

drainage, and defects in the slab and foundation of the building on the property. In

May 2009, LBM obtained a geotechnical exploration study, which revealed that

the soil was composed of silty sand and sand clay. The inspector explained that

“silty sands are highly permeable and can become susceptible to perched trapped

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groundwater conditions[]” and the “perched trapped water tends to soften the

sandy clays, which severely undermine the pavement integrity.” “[S]andy clays are

medium to high in plasticity” and “sandy clays with plasticity index larger than 25

are expected to experience shrink and swell movements that are associated with

seasonal changes in moisture content in the upper layer.” According to the

inspector, “[d]uring inclement (rainy) weather, the rainwater permeates through the

silty sands and ponds on top of the sandy clays, thus creating a perched (trapped)

groundwater condition.” Perched water tends to soften sandy clay, which severely

undermines the pavement’s integrity and may cause premature pavement failure.

The inspector stated that no positive drainage was found in the vicinity of the

paved area on the property. The inspector opined:

      [T]he combination of perched water which resulted from poor
      drainage, the lack of subgrade stabilization, and repeated dynamic
      loads by vehicular traffic [were] the major contributing factors to the
      pavement distress . . . . The repeated dynamic vehicular traffic loads
      usually liquefy the existing loose and wet silty sands. Once the silty
      sands liquefy, they lose their strength and become unable to transfer
      the loads to the surrounding subgrade[.]

      In an affidavit, Ty Odeh, president of LBM, stated that Caribe gave false and

incomplete information regarding the quality and condition of the pavement,

misrepresented the property’s drainage conditions, and failed to disclose the lack

of permitting and the lack of compliance with local ordinances. Odeh stated that he

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did not intend to purchase the improvements on the property “as-is” and he stated

that he never heard the parties mention or discuss the sale of the improvements

“as-is.” In her affidavit, Gail Moran, Caribe’s president, stated that she was

unaware of any “issues” with the property.

      In its traditional motion for summary judgment, Caribe argued that LBM

had purchased the property “as is” and could not recover on any of its claims

because the “as is” language in the contract negated causation and disclaimed

express or implied warranties. Caribe further argued that it had no duty to disclose

defects of which it was unaware. In the no-evidence portion of its motion, Caribe

contended that LBM lacked any evidence to substantiate the causation element of

its claims. The trial court’s summary judgment order does not state on which

grounds Caribe’s motion was granted.

                          Traditional Summary Judgment

      In issues one and two, LBM challenges the trial court’s decision to grant

Caribe’s traditional motion for summary judgment. We review a trial court’s ruling

on a traditional summary judgment motion de novo. Provident Life & Accident Ins.

Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). We “consider whether reasonable

and fair-minded jurors could differ in their conclusions in light of all of the

evidence presented.” Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 755

                                         4
(Tex. 2007) (per curiam). We “consider all the evidence in the light most favorable

to the nonmovant, indulging every reasonable inference in favor of the nonmovant

and resolving any doubts against the motion.” Id. at 756.

      Contract language stating that the buyer accepts the property in its present

condition constitutes an “as is” clause. Boehl v. Boley, No. 07-09-0269-CV, 2011

Tex. App. LEXIS 528, at *5 (Tex. App.—Amarillo Jan. 26, 2011, pet. denied)

(mem. op.); Cherry v. McCall, 138 S.W.3d 35, 39 (Tex. App.—San Antonio 2004,

pet. denied). When a buyer agrees to purchase something as is, he agrees to make

his own appraisal of the bargain and to accept the risk that he may be wrong.

Prudential Ins. Co. of Am. v. Jefferson Assocs., Ltd., 896 S.W.2d 156, 161 (Tex.

1995). When determining the enforceability of an as-is clause, we consider the

nature of the transaction and the totality of the circumstances, including (1)

whether the as-is clause is an important part of the basis of the bargain, not an

incidental or boilerplate provision, (2) the parties are sophisticated, of relatively

equal bargaining position, (3) the contract was freely negotiated, and (4) the

contract was an arm’s-length transaction. Id. at 162.

      LBM first contends that the as-is clause is incidental boilerplate language.

The contract in this case is a standard commercial contract from the Texas

Association of Realtors. However, the record does not indicate that the contract

                                          5
was non-negotiable. LBM does not dispute that the parties were sophisticated or of

relatively equal bargaining position, that the contract was freely negotiated, or that

the contract was an arm’s-length transaction. See id. Nor is there evidence that

LBM entered the contract from an unequal bargaining position or that the

transaction was not made at arm’s length. See Cherry, 138 S.W.3d at 39. In his

affidavit, Odeh stated that he was directly involved in the negotiations with Caribe.

The contract is signed by both Odeh and LBM’s attorney. LBM was not obligated

to assume the full risk of determining the value of the purchase, but could have

insisted that Caribe assume part or all of that risk. See Prudential, 896 S.W.2d at

161. The as-is clause is enforceable under the totality of the circumstances.

      LBM also contends that the as-is clause does not apply to improvements.

The contract describes the “property” as “that real property situated in

Montgomery County, Texas at 8774 Fawn Trail, Conroe, TX 77385 and that is

legally described . . . as . . . Northline Forest, Lot 33, 34, Acres 1.180.” The sale of

the property included “all buildings, improvements, and fixtures[.]” Because the

contract defines the property as “real property” and the definition does not

specifically mention improvements, LBM maintains that the as-is clause is limited

to the land. The definition of “real property” has been broadly construed to include

both the land and anything erected on, growing on, or affixed to the land. San

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Antonio Area Found. v. Lang, 35 S.W.3d 636, 640 (Tex. 2000); Tex. Real Estate

Comm’n v. Rodriguez, No. 04-09-00681-CV, 2010 Tex. App. LEXIS 4532, at *5

(Tex. App.—San Antonio June 16, 2010, pet. denied); Black’s Law Dictionary

1337 (9th ed. 2009) (Defining “real property” as “[l]and and anything growing on,

attached to, or erected on it[.]”). Because real property includes improvements, the

as-is clause applies to both the land and any improvements thereon. See Lang, 35
S.W.3d at 640; see also Rodriguez, 2010 Tex. App. LEXIS 4532, at *5; Black’s

Law Dictionary 1337.

      Finally, LBM argues that the as-is clause does not disclaim a fraudulent

inducement cause of action. Under the fraudulent inducement exception, an as-is

clause is not binding on a buyer who is induced to enter the clause because of the

seller’s fraudulent representation or concealment of information. Prudential, 896
S.W.2d at 162. A seller has no duty to disclose facts he does not know and is not

liable for failing to disclose what he only should have known. Id. A statement is

fraudulent when the maker knew it was false when he made it or made it recklessly

without knowledge of its truth. Id. at 163. “In the context of a summary judgment

proceeding, fraudulent inducement is in the nature of a counter-defense responding

to the defense raised by the seller.” Fryar v. Mees, No. 10-06-00135-CV, 2007

Tex. App. LEXIS 3204, at *6 (Tex. App.—Waco Apr. 25, 2007, no. pet.) (mem.

                                         7
op.). The buyer must present evidence that “but for” the seller’s representations

regarding the condition of the property, the buyer would not have assented to a

contract which contained an “as is” clause. Id. The buyer must present competent

evidence creating a material issue of fact. Boehl, 2011 Tex. App. LEXIS 528, at

*8; Fryar, 2007 Tex. App. LEXIS 3204, at *6.

      In his affidavit, Odeh states that the 2009 study demonstrates the defects in

the paved improvements. According to Odeh, to induce him to purchase the

property, Caribe provided false and incomplete information regarding the quality

and condition of the paved improvements, misrepresented the drainage conditions,

and failed to disclose the lack of permits and compliance with local ordinances.

However, Odeh’s affidavit does not state the facts underlying these assertions. See

LeBlanc v. Lamar State College, 232 S.W.3d 294, 301 (Tex. App.—Beaumont

2007, no pet.) (“Statements are conclusory if they fail to provide underlying facts

to support their conclusions.”); see also Aldridge v. De Los Santos, 878 S.W.2d
288, 296 (Tex. App.—Corpus Christi 1994, writ dism’d w.o.j.) (“Affidavits

containing conclusory statements unsupported by facts are not competent summary

judgment proof.”). LBM does not present evidence establishing what statements

Moran or Caribe made, that Caribe knew the condition of the improvements, or

that Caribe made any representations that were known to be false when made or

                                        8
that were made recklessly without knowledge of the truth. See Prudential, 896
S.W.2d at 163; see also Fryar, 2007 Tex. App. LEXIS 3204, at **7-8.

      Viewing the evidence in the light most favorable to LBM, we conclude that

there are no genuine issues of material fact, and Caribe was entitled to summary

judgment as a matter of law. See Tex. R. Civ. P. 166a(c); see also Mayes, 236
S.W.3d at 756; Knott, 128 S.W.3d at 215. We overrule issues one and two. Having

found that the trial court properly granted Caribe’s traditional motion for summary

judgment, we need not address LBM’s third issue challenging the no-evidence

summary judgment ruling. See Tex. R. App. P. 47.1. We affirm the trial court’s

judgment.

      AFFIRMED.

                                            ________________________________
                                                    STEVE McKEITHEN
                                                        Chief Justice

Submitted on September 16, 2013
Opinion Delivered October 17, 2013
Before McKeithen, C.J., Kreger and Horton, JJ.

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