Court Opinion

ID: 9894828
Source: CourtListenerOpinion
Date Created: 2023-11-03 11:09:42.291036+00
Date Added: 2024-06-11T09:10:49.392061
License: Public Domain

IN THE
                         TENTH COURT OF APPEALS

                                No. 10-23-00134-CV

MARCUS BLALOCK,
                                                          Appellant
v.

CASA LATINAS, LLC AND NIDIA SALDIVAR,
                                                          Appellees

                          From the 13th District Court
                            Navarro County, Texas
                         Trial Court No. D22-30215-CV

                          MEMORANDUM OPINION

      Marcus Blalock appeals from a summary judgment rendered against him in his

suit against Casa Latinas, LLC and Nidia Saldivar in a dispute arising from his purchase

of a home. In two issues, Blalock asserts the judgment should be reversed and the cause

remanded because he was fraudulently induced into entering the contract. We affirm.
                                       Background

        Blalock purchased a home from Appellees in April 2020.               Thereafter, he

experienced numerous problems with the home. Alleging that Appellees made multiple

misrepresentations and failed to disclose defects in the home, he sued them for violations

of the Texas Deceptive Trade Practices Act (DTPA) and fraud in connection with a real

estate transaction pursuant to Chapter 27 of the Texas Business and Commerce Code.

        Appellees filed a traditional motion for summary judgment asserting there is no

genuine issue of material fact as to the causation element of Blalock's DTPA and statutory

fraud causes of action because the "as is" clause in the sales contract negates that element.

Further, they asserted that there is no genuine issue of material fact as to any exception

that would negate the application of the "as is" clause. The trial court granted the motion

and ordered that Blalock take nothing from Appellees.

                                     The As Is Clause

        In his first issue, Blalock contends Appellees fraudulently induced him into

purchasing the residence by concealing material information concerning the condition

and circumstances of the home. He contends Appellees knew there were deficiencies in

the plumbing and electrical systems which they failed to disclose. He also asserts they

failed to disclose that a room had been added to the residence after construction of the

home was completed and that the residence had been occupied before Blalock entered

into the contract to purchase it.

Blalock v. Casa Latinas, LLC                                                           Page 2
        In his second issue, Blalock contends the contract's "as is" clause is not binding on

him because it is a product of fraud. He asserts that he was induced to enter the

agreement by Appellees' fraudulent misrepresentations and failure to disclose required

material information.          He further argues that the totality of the circumstances

surrounding the purchase of the residence precludes binding him to the "as is" clause.

He claims that Appellees were more sophisticated in real estate transactions than he was,

and the "as is" clause was just boiler plate language in a standard form purchase

agreement that could not have been negotiated.

STANDARD OF REVIEW

        We review the trial court's decision to grant summary judgment de novo. Eagle

Oil & Gas Co. v. TRO-X, L.P., 619 S.W.3d 699, 705 (Tex. 2021). The movant for traditional

summary judgment has the burden of showing that there is no genuine issue of material

fact, and it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); Eagle Oil &

Gas Co., 619 S.W.3d at 705. A defendant who conclusively negates at least one of the

essential elements of the cause of action or conclusively establishes an affirmative defense

is entitled to summary judgment. Frost Nat'l Bank v. Fernandez, 315 S.W.3d 494, 508 (Tex.

2010). Once the movant establishes its right to summary judgment as a matter of law, the

burden shifts to the nonmovant to present evidence sufficient to raise a genuine issue of

material fact, thereby precluding summary judgment. Lujan v. Navistar, Inc., 555 S.W.3d

79, 84 (Tex. 2018).

Blalock v. Casa Latinas, LLC                                                           Page 3
        To determine if the nonmovant has raised a fact issue, we review the evidence in

the light most favorable to the nonmovant, crediting evidence favorable to that party if

reasonable jurors could, and disregarding contrary evidence unless reasonable jurors

could not. B.C. v. Steak N Shake Operations, Inc., 512 S.W.3d 276, 279 (Tex. 2017). We

indulge every reasonable inference in favor of the nonmovant and resolve any doubts in

his favor. Eagle Oil & Gas Co., 619 S.W.3d at 705. The evidence raises a genuine issue of

fact if reasonable and fair-minded jurors could differ in their conclusions in light of all

the summary judgment evidence. Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754,

755 (Tex. 2007) (per curiam).

ANALYSIS

        Causation

        In their motion, Appellees asserted that they carried their initial summary

judgment burden by producing evidence that Blalock purchased the property subject to

an "as is" clause in the contract, which negates the causation element of all of Blalock's

claims. Under paragraph 7D(1) of the parties' contract, Blalock agreed to accept the

property "as is." Paragraph 7D provides:

                ACCEPTANCE OF PROPERTY CONDITION: "As is" means the present
                condition of the Property with any and all defects and without warranty
                except for the warranties of title and the warranties in this contract.
                Buyer's agreement to accept the Property As Is under Paragraph 7D(1) or
                (2) does not preclude Buyer from inspecting the Property under
                Paragraph 7A, from negotiating repairs or treatments in a subsequent
                amendment, or from terminating this contract during the Option Period,
                if any.
                (Check one box only)

Blalock v. Casa Latinas, LLC                                                              Page 4
                [X] (1) Buyer accepts the Property As Is.
                [ ] (2) Buyer accepts the Property As Is provided Seller, at Seller's expense,
                shall     complete       the     following     specific      repairs      and
                treatments:______________________________________________________
                (Do not insert general phrases, such as "subject to inspections" that do not
                identify specific repairs and treatments.)

        Buyers who contract to purchase something "as is" agree to make their own

appraisal of the bargain and to accept the risk that they may be wrong. Prudential Ins. Co.

of Am. v. Jefferson Assocs., Ltd., 896 S.W.2d 156, 161 (Tex. 1995). Generally, an "as is"

agreement negates the causation essential to recovery for a DTPA violation and fraud.

See id. The sole cause of a buyer's injury in such circumstances is the buyer himself. Id.

Accordingly, because the parties' contract contains an "as is" clause, Appellees showed

entitlement to summary judgment by conclusively negating the causation element of

Blalock's claims. See Fernandez, 315 S.W.3d at 508. The burden then shifted to Blalock to

raise a genuine issue of fact precluding summary judgment. See Lujan, 555 S.W.3d at 84.

        Exceptions

        1. Circumstances

        Blalock contends the "as is" clause is not binding. The Prudential court identified

exceptions to the enforcement of an "as is" clause. See Prudential, 896 S.W.2d at 162.

When determining the enforceability of an "as is" clause, we examine the nature of the

transaction and totality of the circumstances.                 See id.    Blalock contends he lacked

sophistication in real estate matters.             Blalock was a first-time home buyer, while

Appellees owned and operated four rental properties. Although Saldivar testified that

Blalock v. Casa Latinas, LLC                                                                     Page 5
she had bought "homes that were in auction," she did not have those homes constructed.

There is no evidence of the actual expertise of either side in real estate matters. Moreover,

both sides were represented by a realtor through which the parties engaged in an arms-

length transaction.

        The parties used a standard Texas Real Estate Commission form that included a

provision setting out two options regarding buyer's acceptance of the property's

condition. Blalock could have accepted the property subject to the seller's completion of

certain repairs, or, as chosen, Blalock could agree to accept the property in its current

condition. See Van Duren v. Chife, 569 S.W.3d 176, 185-86 (Tex. App.—Houston [1st Dist.]

2018, no pet.). Because the contract required the parties to choose from two options, the

"as is" clause is not, as Blalock asserts, boilerplate language. Id. at 187. Here, the "as is"

clause is an important part of the basis of the bargain, not an incidental or boilerplate

provision, and was entered into by parties of relatively equal bargaining position.

Blalock's agreement in paragraph 7D that he accepts the property in its present condition,

without reliance on statements by the seller, should be given effect. See Prudential, 896

S.W.2d at 162. Reviewing the evidence in the light most favorable to Blalock, we conclude

he did not present evidence indicating there is a fact question regarding the relative

sophistication of the parties, whether the parties freely negotiated the contract at arm's

length, or whether any other circumstances of the transaction invalidate the "as is"

Blalock v. Casa Latinas, LLC                                                            Page 6
agreement. Blalock has not raised any fact questions on application of this exception to

the determinative effect of the "as is" clause. See id.

        2. Fraudulent Inducement

        Additionally, Blalock argues that he is not bound by the purchase contract due to

the fraudulent inducement exception set out in Prudential. Under that exception, an "as

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

seller's fraudulent representation or concealment of information. Id. 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. Larsen v. Carlene Langford & Assocs.,

Inc., 41 S.W.3d 245, 253 (Tex. App.—Waco 2001, pet. denied); see also Fryar v. Mees, No.

10-06-00135-CV, 2007 Tex. App. LEXIS 3204, at *6 (Tex. App.—Waco April 25, 2007, no

pet.) (mem. op). The buyer must present competent evidence creating a material issue of

fact on each element of a simple fraud claim. Larsen, 41 S.W.3d at 253.

        Fraudulent inducement is a species of common-law fraud that arises only in the

context of a contract. Int'l Bus. Machs. Corp. v. Lufkin Indus., LLC, 573 S.W.3d 224, 228 (Tex.

2019). A fraudulent-inducement claim requires proof that: (1) the defendant made a

material misrepresentation; (2) the defendant knew at the time that the representation

was false or made it recklessly without any knowledge of its truth; (3) the defendant

intended that the plaintiff should rely or act on the misrepresentation; (4) the plaintiff

relied on the misrepresentation; and (5) the plaintiff's reliance on the misrepresentation

Blalock v. Casa Latinas, LLC                                                             Page 7
caused injury. Id. Failure to disclose information may be the equivalent of a false

representation where there is a duty to disclose the information and the party deliberately

remains silent. Bradford v. Vento, 48 S.W.3d 749, 755 (Tex. 2001). Additionally, the plaintiff

has to show that its reliance on the misrepresentation or omission was justifiable.

JPMorgan Chase Bank, N.A. v. Orca Assets G.P., L.L.C., 546 S.W.3d 648, 653-54 (Tex. 2018).

        Electrical and Plumbing Systems

        Blalock asserts that, after closing, he learned that the house's electrical and

plumbing systems are defective.        At the heart of his argument regarding alleged

omissions about the electrical and plumbing systems is an inspection report prepared by

Texans First Inspection Services, dated December 31, 2019, which was prepared for a

prior potential buyer of the property. The inspector noted: there are no arc fault breakers

present and there is a double lugged wire that could lead to fire, smoke alarms need to

be finished out and batteries added, there are no GFCI's on the back porch, and some

walls are missing outlets. The Texans First report indicates that the master shower failed

the pan test and needs to be replaced, and there is a loose shower handle and a small leak

in a hose bib. The inspector noted that he could not inspect the drain lines. He

recommended having a plumber scope the lines with a camera. Because of the contents

of this report, Blalock asserts that Appellees knew, and failed to disclose, that there were

defects in the electrical system and there was a problem with sewer lines backing up.

Blalock v. Casa Latinas, LLC                                                            Page 8
        In his response to the summary judgment motion, Blalock argued that the court

must take as true his statement that he relied on Saldivar's honesty, and that statement

proves detrimental reliance. In his affidavit, Blalock stated that he relied on Saldivar's

honesty in complying with the law for disclosing any defects to the property.1 Prior to

closing, they amended the contract to provide that "Seller shall pay $4,000 to the buyer

upon closing for repair of bathroom showers." In his affidavit, he stated that the contract

was amended without any prior consultation with him, and he denied authorizing the

electronic signature on the amendment.                He stated that, during closing, "Saldivar

explained to [him] that the shower pan had failed a test during inspection by Texas (sic)

First" but that neither she nor anyone else disclosed any other defects before he signed

the final documents at closing.

        Appellees contend Blalock's argument fails because there were no omissions.

They assert that he saw the report before closing and, therefore, he knew of any

deficiencies identified in the report. In her affidavit, Saldivar explained that, after

receiving the inspection report, she "became aware of the shower pan issue as well as

other minor issues discussed in the report . . . ." Saldivar testified in her deposition that

she received a copy of the inspection report and then negotiated the amendment to

address the shower pan problem. She also stated in her affidavit that Blalock was

        1 The trial court sustained Appellees' objections to specific paragraphs of Blalock's affidavit and

that ruling is not challenged on appeal. These paragraphs are not considered in our review.

Blalock v. Casa Latinas, LLC                                                                        Page 9
provided a copy of the inspection report as "evidenced by the fact he produced a copy of

the same in response to [her] discovery in this case and the fact that [she] paid him $4000

at closing for repair of the defective shower pan identified in the report."

        A plaintiff relying on fraudulent inducement as a defense must show his reliance

was justifiable. See JPMorgan Chase Bank, N.A., 546 S.W.3d at 653-54. Blalock admitted

that, during closing, Saldivar disclosed a defect that had been discovered during the 2019

inspection by Texans First Inspection Services.       Even if reasonable jurors believed

Blalock's assertion that Saldivar did not disclose any other defects, he knew of the 2019

report, and that report was a "red flag" indicating that reliance on Saldivar's honesty was

not warranted. See id. at 655. At that point, he knew of the existence of the report and

was on notice of the possibility that other defects were named in the same report. See

Nat'l Prop. Holdings, L.P. v. Westergren, 453 S.W.3d 419, 423-24 (Tex. 2015) (per curiam)

(plaintiff did not justifiably rely on defendant's statements about contents of release when

plaintiff had opportunity to read release but did not do so). Mere confidence in her

honesty does not excuse Blalock's failure to exercise reasonable diligence to examine the

report in its entirety. See JPMorgan Chase Bank, N.A., 546 S.W.3d at 654. In this arm's

length transaction, it would not be a reasonable inference to say Blalock was justified in

relying on Saldivar's honesty and integrity. Id.

        In his affidavit, Blalock never stated that he did not read the 2019 report before

closing. To support his argument, that fact would have to be supplied by inference. In

Blalock v. Casa Latinas, LLC                                                         Page 10
light of the fact Blalock knew before closing was complete that there was an inspection

report, and it revealed a $4,000 defect, reasonable jurors could disregard the inference

that he never saw or read the report itself. See Eagle Oil & Gas Co., 619 S.W.3d at 705.

Blalock did not raise a fact issue on the element of reliance as to the alleged omissions

regarding the electrical and plumbing systems.

        Furthermore, Blalock asserted that, after he purchased the home, the toilets would

not drain out properly, instead they backed up into the home. He contends Appellees

failed to disclose this defect. Blalock hired a plumber who used a camera to inspect the

lines. The plumber determined that the sewer lines were improperly installed and the

cost to repair them would be $38,000. An element of fraudulent inducement is the

defendant's knowledge of the misrepresentation or omission. See Int'l Bus. Machs. Corp.,

573 S.W.3d at 228. The 2019 inspection report did not indicate there was a problem with

the sewer lines. The inspector did not inspect the lines. Blalock did not meet his burden

to produce evidence raising a fact question as to whether Appellees knew of this builder's

defect before Blalock purchased the house. See Lujan, 555 S.W.3d at 84.

        Additional Room

        Blalock contends Appellees had an obligation to disclose that a room had been

added to the residence after construction was completed but failed to do so. Saldivar

testified that the home was completed between September and October 2018. But a

January 7, 2019 invoice reflects that Saldivar requested the contractor to "add an

Blalock v. Casa Latinas, LLC                                                       Page 11
additional room" at the back of the house for an office, which he did. On her disclosure

notice, she indicated that she was not aware of any room additions made without

necessary permits, with unresolved permits, or not in compliance with building codes.

        Blalock argues that a post-construction room addition is material information,

raising issues of foundation separation and cracks in the foundation. Material means a

reasonable person would attach importance to and would be induced to act on the

information in determining his choice of actions. Italian Cowboy Partners v. Prudential Ins.,

341 S.W.3d 323, 337 (Tex. 2011). The record does not clarify how the additional room was

added. An addition might be material if it required a new permit or was not built in

compliance with building codes. Nothing in the record suggests a separate slab was

poured or that the roofline was extended. Blalock did not provide evidence of any

structural modifications or alterations made without necessary permits or not in

compliance with building codes. Further, Blalock presented no evidence that Saldivar

knew that her request to add a room constituted a structural modification not in

compliance with building codes. See Int'l Bus. Machs. Corp., 573 S.W.3d at 228.

        Appellees presented a report generated by Geohazards Engineering and Geology,

dated September 14, 2021, made in response to an insurance claim by Blalock. The

engineer noted interior surface irregularities and cracks and, on the exterior, separation

between the mortar and concrete slab. He observed a repair to the concrete slab. He

explained that interior surface irregularities "were consistent with irregularities from the

Blalock v. Casa Latinas, LLC                                                          Page 12
finishing of the joints between wall panels." He also indicated that the cause of cracks in

the concrete slab were initial post-construction shrinkage of the concrete during the

curing process which was common and may be anticipated to occur.

        Appellees also presented a March 5, 2022 report created by ARIEL Inspections &

Engineering prepared at Blalock's request. The engineer stated that "[n]o cracks were

noted in foundation perimeter" and the "[f]oundation is performing as intended."

However, he also determined that the "[f]oundation is not level and mortar was used to

align brick veneer – poor workmanship." Considering the evidence in the light most

favorable to Blalock, it indicates that he purchased a home that was not built in the best

workmanlike manner. But neither engineer mentioned a post-construction add-on and

none of their findings hint at the possibility that any noted deficiencies resulted from such

an add-on. We conclude that the evidence did not raise a fact question as to the

materiality of the alleged omission or whether the alleged omission caused Blalock's

damages. See Mayes, 236 S.W.3d at 755.

        Prior Occupant

        Blalock asserts that Appellees failed to disclose that someone had lived in the

house before he purchased it. Saldivar testified that she built the house for herself, spent

a lot of time there, but never lived in the house. She spent two or three nights there

sleeping on the floor. On two occasions, two of her sisters spent the night there with her.

She said no one has ever rented the home.

Blalock v. Casa Latinas, LLC                                                          Page 13
        Blalock presented records of the B & B Water Company to support his contention

that someone had lived in the home before he purchased it.                               In the affidavit

accompanying the records, the affiant explained that an application for water service was

tendered on August 22, 2018, and a second one was made on December 5, 2018. There

was continuous water usage under the name of the second application until March 24,

2020. A reasonable juror could infer that the builder first applied for water service and

Saldivar was the second to apply. While there was a significant amount of water usage

in some months, and a reasonable juror could infer that Saldivar paid for it, Saldivar

denied that anyone lived there. The record shows usage varied most months from

January 2019 through March 2020 from "Usage of 0 Water" to "Usage of 8300 Water" at

the highest point.2 There was no pattern or uniformity in usage. In consecutive months

it started at 4900 for two months in a row, then plummeted to 0, then bounced to 4700,

3500, 2900, 6700, 8300, 3300, and 3100 before dropping to between 100 and 300 for five

months. There was no water use in April 2020, the month the parties closed on the sale.

        A third application was made on May 5, 2020 and was continuous to February

2023. It is reasonable to infer that Blalock was the third applicant. Usage during this time

period was not entirely consistent. It once rose to 2800, and once dropped to 700.

Normally, it remained between 1300 and 2500. However, the numbers are more uniform

2Neither the report, the business record affidavit supporting it, nor Blalock provides clarification as to the
unit of measure. We assume usage is measured in gallons.
Blalock v. Casa Latinas, LLC                                                                          Page 14
than those of the previous applicant and the evidence shows Blalock was living in the

home during this time period.       Comparing usage during the two time periods, a

reasonable juror could infer that water usage during the period from January 2019 to

March 2020 cannot be attributed to normal household usage by an inhabitant of the home.

A reasonable juror could infer that Saldivar paid for water at a home she owned and used

it for some undisclosed purpose, although no one lived there.

        Blalock provided no evidence in support of his contention that the home had

previously been occupied except the water company records, and they do not raise a fact

question regarding whether someone was living in the house. Furthermore, Blalock did

not raise a fact question addressing whether an undisclosed previous occupant was a

material omission. See Lujan, 555 S.W.3d at 84.

        Regarding each of the alleged omissions, Blalock failed to raise a fact question on

one or more elements of fraudulent inducement. Therefore, he has not shown entitlement

to the fraudulent inducement exception to the "as is" clause. See Prudential Ins. Co., 896

S.W.2d at 162; Larson, 41 S.W.3d at 253.

                                              Conclusion

        Because the parties' contract includes an "as is" clause, Appellees conclusively

negated the causation element of Blalock's causes of action. Blalock did not raise a

genuine issue of fact as to any exception precluding the "as is" clause's enforceability. We

overrule Blalock's first and second issues.

Blalock v. Casa Latinas, LLC                                                         Page 15
          We affirm the trial court's judgment.3

                                                   STEVE SMITH
                                                   Justice

Before Chief Justice Gray,
       Justice Johnson, and
       Justice Smith
(Chief Justice Gray concurs.)
Affirmed
Opinion delivered and filed November 2, 2023
[CV06]

3   All pending motions are dismissed as moot.
Blalock v. Casa Latinas, LLC                                     Page 16