Court Opinion

ID: 3104507
Source: CourtListenerOpinion
Date Created: 2015-10-16 05:39:12.108861+00
Date Added: 2024-06-11T11:51:51.693788
License: Public Domain

COURT OF APPEALS
                               SECOND DISTRICT OF TEXAS
                                    FORT WORTH

                                  NO. 02-12-00050-CV

Helmut Volmich and Petra Volmich           §    From the 30th District Court

                                           §    of Wichita County (167,840-A)
v.
                                           §    March 14, 2013
Richard Braden Neiman and Traci L.
Neiman                                     §    Opinion by Justice Gardner

                                     JUDGMENT

       This court has considered the record on appeal in this case and holds that

there was no error in the trial court’s judgment. It is ordered that the judgment of

the trial court is affirmed.

       It is further ordered that appellants Helmut Volmich and Petra Volmich

shall pay all costs of this appeal, for which let execution issue.

                                       SECOND DISTRICT COURT OF APPEALS

                                       By_________________________________
                                         Justice Anne Gardner
                       COURT OF APPEALS
                        SECOND DISTRICT OF TEXAS
                             FORT WORTH

                            NO. 02-12-00050-CV

HELMUT VOLMICH AND PETRA                                    APPELLANTS
VOLMICH

                                        V.

RICHARD BRADEN NEIMAN AND                                     APPELLEES
TRACI L. NEIMAN

                                     ----------

         FROM THE 30TH DISTRICT COURT OF WICHITA COUNTY

                                     ----------

                       MEMORANDUM OPINION1

                                     ----------

                                  I. Introduction

     Appellants Helmut and Petra Volmich appeal the trial court’s summary

judgment in favor of Appellees Richard Braden Neiman and Traci L. Neiman.

The Volmiches contend in two issues that the trial court erred by granting

     1
      See Tex. R. App. P. 47.4.

                                         2
summary judgment because the “as-is” clause in the parties’ sale contract does

not as a matter of law defeat their affirmative claims or establish the Neimans’

affirmative defenses. We affirm.

                    II. Factual and Procedural Background

      The Neimans, as part of the process of listing their home for sale,

executed a Seller’s Disclosure Notice concerning the home’s condition on

February 11, 2005. The Neimans moved from the property in approximately May

2005 but kept the home listed for sale.

      In February 2006, the Neimans entered into a contract with the Volmiches

for the sale of the home.    Mr. Volmich had viewed the property on multiple

occasions with his realtor before making an offer to purchase the property. As

part of the contract, the Volmiches had the unrestricted right to terminate the

contract during a ten-day period. The ten-day termination period was extended

an additional three days by agreement of the parties.

      In the interim, Mr. Volmich hired Accurate Inspections to conduct an

inspection of the home. Don Crook conducted the inspection on February 19,

2006. The inspection report stated that the roof covering was “not functioning or

in need of repair”; that the roof showed signs of previous repairs, which may

have been the location of prior leaks; that there was moisture-related damage to

the plywood decking; that there were moisture stains observed on the “back side

of the roof decking/framing”; and that the interior and exterior walls were “not

functioning or in need of repair.” The report also stated that there were moisture

                                          3
stains on the upper laundry closet wall that appeared to be the result of a

possible water heater leak, that the walls showed a substantial increase in

moisture content in the stained area, that there was moisture-related

deterioration around the front plant-room windows and at the base of the garage

door frame, and that the ceilings and floors were “not functioning or in need of

repair.” Finally, the report stated that moisture stains on the ceiling in the garage

mechanical room appeared to be the result of a previous roof leak.

      The parties closed on the property on March 28, 2006. On February 8,

2008, the Volmiches filed suit against the Neimans, Andy Lundgren, and Domain

Real Estate Services, Inc.2      In the lawsuit, the Volmiches alleged that the

Neimans (1) failed to disclose information concerning the real property that was

known at the time of the transaction; (2) breached an implied warranty that the

premises would be in good condition as represented; (3) negligently marketed

and sold the real property; (4) breached an implied warranty of merchantability;

(5) failed to disclose defects in the property; and (6) breached their contract.

      On September 16, 2011, the Neimans filed a traditional motion for

summary judgment. The Neimans first raised the affirmative defense of estoppel

by contract, asserting that the Volmiches contractually accepted the property “as

is” at the time of sale, thereby waiving the right to claim alleged damages. The

Neimans also raised the affirmative defense of waiver, arguing that the

      2
      Andy Lundgren and Domain Real Estate Services, Inc. were dismissed as
defendants and are not parties to this appeal.

                                          4
Volmiches had hired independent inspectors and had relied on the inspectors’

professional judgment and not on the Neimans’ representations.            Lastly, the

Neimans moved for summary judgment on each of the Volmiches’ claims. The

Neimans asserted that because the Volmiches had obtained their own inspection

that disclosed the problems the Volmiches later complained about, the inspection

superseded any alleged wrongdoing on the Neimans’ part.

      In their response to the motion for summary judgment, the Volmiches

asserted that the sales contract did not contain “as is” language and that the

contractual clause at issue was predicated upon the Neimans’ truthful disclosure.

The Volmiches also asserted that reliance on an independent inspection was not

enough to constitute a new and independent basis for the purchase of the home

and did not supersede the Neimans’ non-disclosure.            The Volmiches finally

asserted that all of the alleged defects were not listed in the inspection report.

      The trial court granted the Neimans’ motion for traditional summary

judgment on November 2, 2011. The trial court’s order reflects that it granted the

Neimans’ motion for summary judgment in its entirety, stating that there was no

genuine issue of material fact as to the Neimans’ affirmative defenses of estoppel

by contract and waiver, that the Neimans were entitled to summary judgment

thereon, and that the Neimans disproved at least one element of each of the

Volmiches’ claims. Only the Volmiches’ fraudulent inducement and DTPA claims

are at issue in this appeal.

                                          5
                            III. Standard of Review

      We review a summary judgment de novo. Travelers Ins. Co. v. Joachim,

315 S.W.3d 860, 862 (Tex. 2010). We consider the evidence presented in the

light most favorable to the nonmovant, crediting evidence favorable to the

nonmovant if reasonable jurors could, and disregarding evidence contrary to the

nonmovant unless reasonable jurors could not. Mann Frankfort Stein & Lipp

Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We indulge every

reasonable inference and resolve any doubts in the nonmovant’s favor. 20801,

Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008). A defendant who conclusively

negates at least one essential element of a cause of action is entitled to

summary judgment on that claim. Frost Nat’l Bank v. Fernandez, 315 S.W.3d
494, 508 (Tex. 2010); see Tex. R. Civ. P. 166a(b), (c). Also, a defendant is

entitled to summary judgment on an affirmative defense if the defendant

conclusively proves all the elements of the affirmative defense.      Frost, 315
S.W.3d at 508–09; see Tex. R. Civ. P. 166a(b), (c). To accomplish this, the

defendant-movant must present summary judgment evidence that conclusively

establishes each element of the affirmative defense. See Chau v. Riddle, 254
S.W.3d 453, 455 (Tex. 2008).

                                IV. Discussion

      The Volmiches present two issues on appeal. They inquire in their first

issue whether a “boiler-plate ‘as-is’ clause” supersedes a seller’s nondisclosure

when the buyer relies upon an independent inspection. In their second issue,

                                       6
they ask whether a “boiler-plate ‘as-is’ clause” conclusively establishes estoppel

by contract and waiver as affirmative defenses when a party is fraudulently

induced to enter a contract because of nondisclosure of material facts. Because

these issues are interrelated under the circumstances of this case, we discuss

them together.

      The parties used a standard contract form prepared by the Texas Real

Estate Commission (TREC) for the transaction. In the contract, the Volmiches

contractually bound themselves to accept the property “in its present condition.”

The relevant contract provision states:

            ACCEPTANCE OF PROPERTY CONDITION: Buyer accepts
      the Property in its present condition; provided Seller, at Seller’s
      expense, shall complete the following specific repairs and
      treatments: treat for termites if inspection deems necessary.

Texas courts have interpreted contract language stating “in its present condition”

to be an agreement to purchase the property “as is.” See Cherry v. McCall, 138
S.W.3d 35, 39 (Tex. App.—San Antonio 2004, pet. denied) (construing “in its

present condition” as an “as is” agreement); Larsen v. Carlene Langford &

Assocs., Inc., 41 S.W.3d 245, 251 (Tex. App.—Waco 2001, pet. denied)

(construing to be “as is” certain contract language stating that “[b]uyer accepts

the Property in its present condition. Buyer shall pay for any repairs designated

by a lender”); Fletcher v. Edwards, 26 S.W.3d 66, 75 (Tex. App.—Waco 2000,

pet. denied) (construing “in its present condition” in earnest money contract to be

an agreement to purchase the property “as is”); Smith v. Levine, 911 S.W.2d
7
427, 431 (Tex. App.—San Antonio 1995, writ denied) (construing “in its present

condition” to be an agreement to purchase the property “as is”); see also Sims v.

Century 21 Capital Team, Inc., No. 03-05-00461-CV, 2006 WL 2589358, at *2

(Tex. App.—Austin Sept. 8, 2006, no pet.) (mem. op.) (construing “in its current

condition” as the plain-English equivalent to “as is”).

      A valid “as is” agreement prevents a buyer from holding a seller liable if the

thing sold turns out to be worth less than the price paid. Prudential Ins. Co. of

Am. v. Jefferson Assocs., Ltd., 896 S.W.2d 156, 161 (Tex. 1995).             When

considering the enforceability of an “as is” clause, courts should consider the

totality of the circumstances, including (1) the sophistication of the parties and

whether they were represented by counsel, (2) whether the contract was an

arm’s length transaction, (3) the relative bargaining power of the parties and

whether the contractual language was freely negotiated, and (4) whether that

language was an important part of the parties’ bargain as opposed to being a

“boilerplate” provision. Id. at 162.

      In this case, both parties were represented by real estate agents.

Additionally, although the Volmiches are German citizens, Mr. Volmich had

worked as a project manager for wind farms in both Idaho and Texas before

deciding to purchase a home in Wichita Falls. Neither party was represented by

counsel, but the circumstances do not suggest any disparity of bargaining power

that would affect the enforceability of the “as is” clause. Indeed, although the “as

is” language was contained within the standard TREC contract form, the parties

                                          8
negotiated that specific part of the sales contract by adding that the Neimans

would pay to have the property treated for termites if the inspection revealed the

need for such a treatment. The parties had also previously negotiated to extend

the initial ten-day termination period for an additional three days. The totality of

the circumstances therefore leads us to conclude that the “as is” clause in this

contract is enforceable as an arm’s length transaction between parties with equal

bargaining strength. See Larsen, 41 S.W.3d at 252.

      Although the clause is enforceable standing alone, the Volmiches are not

bound by the “as is” clause if they were induced into the contract because of a

fraudulent representation or concealment of information by the Neimans. See

Prudential, 896 S.W.2d at 162. A party claiming fraud in the inducement must

demonstrate that: (1) the defendant made a representation to the plaintiff; (2) the

representation was material; (3) the representation was false; (4) when the

defendant made the representation, the defendant (a) knew the representation

was false; or (b) made the representation recklessly, as a positive assertion with

the intent that the plaintiff act on it; (5) the defendant made the representation

with the intent that the plaintiff act on it; (6) the plaintiff relied on the

representation; and (7) the representation caused the plaintiff injury.      Exxon

Corp. v. Emerald Oil & Gas Co., 348 S.W.3d 194, 217 (Tex. 2011) (op. on reh’g).

      The summary judgment evidence establishes that the Neimans executed

the Seller’s Disclosure Notice on February 11, 2005, and that they indicated on

the form that they were not aware of any roof defects or malfunctions.          The

                                         9
summary judgment evidence also establishes that the Volmiches and the

Neimans had no direct communication or contact prior to the closing. Further,

Mr. Volmich testified that he reviewed the inspection report prior to the closing

and prior to the expiration of the termination period. Mr. Volmich asserted in his

deposition that he had observed the section of the roof that had been identified in

the inspection report as having been repaired but that the leak at issue in this

case was in a different section of the roof.

      Also in the summary judgment record is deposition testimony by two

witnesses, Derek Ellis and Jeffrey Garey, who testified that they had once

observed Mrs. Neiman cleaning water from the floor of the home in October or

November 2005, several months after the Neimans had moved out of the home

in May 2005. Garey testified that he mowed the Neimans’ yard during the six-

month period before the property sold in February 2006. He testified that he saw

Mrs. Neiman at the house cleaning water from the hardwood floor in the area

between the den and the living room after it had rained in October or November

2005. He testified that that was the only time he saw water on the floor of the

house prior to the sale of the home.3 Garey further testified that, on that same

occasion, Mrs. Neiman asked him to make sure that the leaves did not build up

on the awning over the deck because it created a dam that would back up and
      3
        Garey also testified that he continued to provide lawn care for the
Volmiches after they had purchased the home and that he had, after the
Volmiches had purchased the home, observed buckets and “kiddie pools” in the
home in the area between the living room and the den to catch water after it had
rained.

                                         10
cause water to leak inside the home.4 Lastly, there is evidence that a note from

Mrs. Neiman was delivered to the Volmiches after closing. The note states in

relevant part, “F.Y.I.–Make sure to keep roof of awning over deck clean of tree

debris. The live oak tree constantly drops old leaves [and] they will collect [and]

can cause water to leak indoors.”

      Based on this summary judgment evidence, the Volmiches argue that they

are not bound by their agreement to purchase the property “as is” because the

Neimans induced them to make the agreement by concealing the roof defects.

The Neimans respond that they did not make any false representations, that the

Volmiches were fully aware of the home’s condition at the time of the purchase

because they obtained their own inspection, and that the inspection disclosed the

problems of which the Volmiches now complain. The Neimans argue that if a

party obtains his or her own inspection, and if that inspection discloses the nature

and extent of the problems later complained about, the inspection provides the

basis for the purchase and supersedes any alleged wrongdoing on the seller’s

part as a matter of law.

      The Volmiches’ fraudulent inducement claim requires a showing of

reliance. Eagle Props., Ltd. v. Scharbauer, 807 S.W.2d 714, 723 (Tex. 1990).

Texas courts have held that when false and fraudulent representations are made

concerning the subject matter of a contract but when the person to whom they

      4
       Ellis corroborated this testimony.

                                        11
are made conducts an independent investigation into the matters covered by the

representations before closing, it is presumed that reliance is placed on the

information acquired by such investigation and not on the representations made

to him and that he therefore cannot seek relief because the bargain later proves

unsatisfactory. Marcus v. Kinabrew, 438 S.W.2d 431, 432 (Tex. Civ. App.—Tyler

1969, no writ); see also Kolb v. Tex. Emprs’ Ins. Ass’n, 585 S.W.2d 870, 872

(Tex. Civ. App.—Texarkana 1979, writ ref’d n.r.e.); Lone Star Mach. Corp. v.

Frankel, 564 S.W.2d 135, 138 (Tex. Civ. App.—Beaumont 1978, no writ); M.L.

Mayfield Petroleum Corp. v. Kelly, 450 S.W.2d 104, 109–10 (Tex. Civ. App.—

Tyler 1970, writ ref’d n.r.e.). “The common thread of the decisions reaching this

conclusion is that, regardless of the result of his investigation, the buyer’s

decision to undertake such an investigation indicates that he or she is not relying

on the seller’s representations about the property.”      Bartlett v. Schmidt, 33
S.W.3d 35, 38 (Tex. App.—Corpus Christi 2000, pet. denied).

      Similarly, the Volmiches’ DTPA claim requires proof of producing cause.

See Prudential, 896 S.W.2d at 161 (“For DTPA violations, only producing cause

must be shown.”) (citing Tex. Bus. & Com. Code Ann. § 17.50(a)). Producing

cause under the DTPA “requires proof that an act or omission was a substantial

factor in bringing about injury which would not otherwise have occurred.” Id.

(citing McClure v. Allied Stores of Tex., Inc., 608 S.W.2d 901, 903 (Tex. 1980)).

Texas courts have held that if a defendant can demonstrate that a new and

independent basis for the plaintiff’s cause of action exists, that proof may negate

                                        12
that the defendant’s acts were the producing cause of the plaintiff’s injury.

Bartlett, 33 S.W.3d at 39; Dubow v. Dragon, 746 S.W.2d 857, 860 (Tex. App.—

Dallas 1988, no writ). Reliance on external assessments of the feasibility of

purchasing land has been held to introduce a new and independent cause of the

buyer’s damages in several DTPA cases, thus negating the producing cause

element of a DTPA claim. Bartlett, 33 S.W.3d at 40; Camden Mach. & Tool, Inc.

v. Cascade Co., 870 S.W.2d 304, 313 (Tex. App.—Fort Worth 1993, no writ);

Dubow, 746 S.W.2d at 860.

      This court has previously considered a similar case and held that an

independent inspection precluded fraud and DTPA claims as a matter of law.

See Camden, 870 S.W.2d at 311, 313. In Camden, the summary judgment

evidence revealed that Camden sought to purchase a building from appellee

Cascade Company and agreed to take the property “as is.” Id. at 307. Camden

obtained an appraisal that revealed a crack in the concrete slab. Id. at 307–08.

Camden viewed the crack shortly after receiving the appraisal and also noticed a

two-inch crack that ran the length of the building. Id. at 308. Camden contacted

the seller who represented that the crack was purely cosmetic, that the crack had

been previously inspected by an engineer, and that the crack was from settling.

Id. Camden then had contractors and a facilities engineer inspect the crack, and

received bids to repair the crack. Id. After Camden unsuccessfully attempted to

negotiate a price reduction, the parties closed on the property. Id. Shortly after

                                       13
closing, the seller sent a letter to Camden disclosing that the foundation had

been repaired six years earlier. Id. at 308–09.

      Camden filed suit under the DTPA and for fraud, and the trial court granted

summary judgment for the seller. Id. at 309. Addressing Camden’s fraud claim,

this court held that when a person makes his own investigation into the facts and

knows the representations to be false, he cannot, as a matter of law, be said to

have relied upon the misrepresentations of another. Id. at 311 (citing Laughlin v.

Fed. Deposit Ins. Corp., 657 S.W.2d 477, 483 (Tex. App.—Tyler 1983, no writ)).

This court applied similar reasoning to the producing cause element of Camden’s

DTPA claim and held that representations of another are not the producing cause

of the injury when the buyer conducts his own investigation prior to purchasing

property. Id. at 312–13.

      The Dallas Court of Appeals similarly held that, as a matter of law, a

buyer’s inspection of a house’s condition constituted a new and independent

basis for the purchase of the property, which intervened and superseded the

seller’s alleged wrongful act.   Dubow, 746 S.W.2d at 860.        In Dubow, the

appellants sought to purchase a home from the appellees.        Id. at 858. The

appellants obtained an inspection report that revealed several problems with the

home, they confronted the sellers, and the sellers assured them that the home

was a good home with no problems.            Id. at 858–59.    The parties then

renegotiated and modified the contract. Id. at 859. The appellants subsequently

sued the sellers, and the court’s producing cause inquiry focused on whether the

                                        14
sellers’ statements about the home were the producing cause of the buyers’

damages or whether the buyers’ reliance on their own inspection of the home’s

condition constituted a new and independent basis for the purchase. Id. at 860.

The court determined that the buyers’ reliance on the professional opinions

expressed as part of the inspection was the sole cause of their actual damages.

Id.

      Here, the Neimans met their traditional summary judgment burden by

presenting evidence that they had no knowledge of any roof leaks, that the

Volmiches obtained and reviewed an inspection of the home before purchasing

the home, and that the sales contract contained an “as is” clause. That evidence

conclusively proved the Neimans’ entitlement to summary judgment on the

Volmiches’ fraudulent inducement and DTPA claims. See Camden, 870 S.W.2d

at 311, 313; Dubow, 746 S.W.2d at 860; see also Bartlett, 33 S.W.3d at 38–39.

      Because the Neimans met their summary judgment burden, the summary

judgment burden then shifted to the Volmiches to present evidence raising fact

issues. See Van v. Pena, 990 S.W.2d 751, 753 (Tex. 1999) (“Once the movant

produces evidence entitling it to summary judgment, the burden shifts to the

nonmovant to present evidence that raises a fact issue.”) (citing Walker v. Harris,

924 S.W.2d 375, 377 (Tex. 1996)). But there are at least two deficiencies in the

Volmiches’ summary judgment evidence. First, the Volmiches have no evidence

that the Neimans knew of the alleged roof leak when they completed the Seller’s

Disclosure Notice in February 2005, meaning that there is no evidence that the

                                        15
Neimans knowingly or recklessly made a false statement or failed to disclose the

existence of a roof leak when they completed the disclosure notice and that the

Volmiches did not contradict the Neimans’ evidence that they did not make a

false statement or fail to disclose a roof leak. But even if the evidence of the

alleged roof leak in the fall of 2005—several months after the Neimans had

moved away from the home and even longer after the Neimans had completed

the disclosure notice—is evidence of a misrepresentation or failure to disclose,

the independent inspection the Volmiches commissioned and reviewed before

deciding to purchase the home supersedes, under the facts of this case, any

alleged misrepresentation or failure to disclose by the Neimans. The inspection

revealed numerous existing or past problems with the home, including previous

roof repairs, leaks, and moisture damage and moisture-related deterioration

throughout the house.

      On this record, we are constrained to hold that the trial court did not err by

granting the Neimans’ traditional motion for summary judgment.           While the

Neimans, according to the summary judgment record, allegedly knew of the roof

leak at issue during the fall of 2005, the summary judgment evidence does not

present a genuine issue of material fact as to whether the Neimans knew of the

leak at the time they completed the Seller’s Disclosure Notice in February 2005,

and the Volmiches do not argue that the Neimans had a duty to amend the

disclosure statement once they allegedly became aware of the leak in the fall of

                                        16
2005.5 Nor have the Volmiches, in the face of the Neimans’ summary judgment

evidence, shown that fact issues exist as to whether they should not be bound by

their contractual agreement to purchase the house “as-is” in light of their own

independent inspection of the property.

      We do not hold that an independent inspection will always bar DTPA and

fraudulent inducement claims. Rather, we hold only that, under the facts and

circumstances of this case, the Neimans met their traditional summary judgment

burden, and the Volmiches did not meet their burden of presenting evidence to

create genuine issues of material fact on each element of their fraudulent

inducement and DTPA claims or on an element of the Neimans’ affirmative

defenses.   We therefore hold that the trial court did not err by granting the

Neimans’ traditional motion for summary judgment, and we overrule each of the

Volmiches’ issues.

      5
        Because the issue of a duty to amend the disclosure notice is not raised in
the summary judgment motion, the summary judgment response, or the parties’
briefs on appeal, we express no opinion on the matter.

                                          17
                               V. Conclusion

      Having overruled each of the Volmiches’ two issues, we affirm the trial

court’s judgment.

                                               ANNE GARDNER
                                               JUSTICE

PANEL: GARDNER, MCCOY, and MEIER, JJ.

DELIVERED: March 14, 2013