Larsen v. Carlene Langford & Associates Inc., 10-99-122-CV

Citation41 S.W.3d 245
Decision Date07 March 2001
Docket NumberNo. 10-99-122-CV,10-99-122-CV
Parties(Tex.App.-Waco 2001) DAVID LARSEN AND PATRICIA LARSEN, Appellants v. CARLENE LANGFORD & ASSOCIATES, INC., Appellee
CourtCourt of Appeals of Texas

Before Chief Justice Davis, Justice Vance, and Justice Gray

OPINION

GRAY, Justice

This case involves "as is" language found in documents utilized in a real estate transaction involving the sale of an historic home. David and Patricia Larsen, purchasers of the home, appeal the summary judgment granted to Carlene Langford & Associates, Inc. Because we conclude the "as is" language conclusively negates the element of causation that is essential for each of the Larsens' claims, we affirm the judgment.

Factual & Procedural History

In 1996, David and Patricia Larsen began searching for real estate outside the Dallas area. David, a real estate licensee, had access to the Multiple Listing Service, a real estate database, where he found information regarding a house in Corsicana, Texas. The home was described as historic, built in 1913, with 6,400 square feet, a library in the master bedroom, the original chandelier in the hallway, and a seven-year-old pool with a hot tub. The listing stated that the price of the home was $75,000 and that the home needed work. The seller of the house was Billi and Roland Barrera. Rose Lahon, a sales associate with Carlene Langford & Associates, Inc., had the listing on the property.

The Purchase

After viewing a photo of the home and the listing information, David contacted Langford's office, identified himself as a real estate agent, and requested to see the home. During the first visit, no one from the Langford office accompanied the Larsens to the home. Then, after several visits, the Larsens entered into a residential earnest money contract with the Barreras to purchase the home for $65,000 through the assumption of the loan obligation of Barrera. Langford served as the seller's broker, and David acted on his and his wife's behalf as a real estate agent/sales person, by and through his then employer, Doc Blanchard Realty.

The Larsens, pursuant to a rental agreement, lived in the home for approximately two months after signing the real estate contract and before closing. The Larsens admit that they learned of many of the problems with the home while they lived there before closing. Additionally, the Larsens admit receiving the seller's disclosure form before closing and before signing the final inspection and disclosure form. David admits that he noticed the Barreras did not fill out some parts of the seller's disclosure form, however, he never requested that they complete the form.

The Lawsuit

After closing, the Larsens determined that given the extent of the repair needed to the home and the instability of exterior brick walls, the home was economically irreparable and presently not safe for occupancy. The Larsens sued Langford & Associates, Billi and Roland Barrera, and Horvath's House Moving & Leveling to recover losses arising out of their purchase of the Barrera home. Against Langford, the Larsens asserted claims of common-law fraud, statutory fraud under Section 27.01 of the Texas Business and Commerce Code, negligent misrepresentation, violations of the DTPA, and violations of the Real Estate License Act.1 Langford filed both a traditional and a "no evidence" motion for summary judgment. The trial court granted Langford's motion for summary judgment on all claims. Then Langford filed a motion to sever, which was granted, and the Larsens' claims against Langford were severed from the initial lawsuit making Langford's summary judgment final.

The Appeal

In their sole issue, the Larsens argue that the trial court erred in granting Langford's motion for summary judgment because: (1) Langford did not prove its defensive issues of waiver and release as a matter of law; (2) Langford failed to negate the Larsens' common law, statutory fraud, negligent misrepresentation and DTPA claims; or alternatively (3) the Larsens marshaled sufficient evidence to show genuine issues of material fact as to Langford's alleged commission of common law and statutory fraud, negligent misrepresentation, and violations of the DTPA.

Standard of Review

The standard of review for a summary judgment is well established: (i) the movant for summary judgment has the burden of showing there is no genuine issue of material fact and is entitled to summary judgment as a matter of law: (ii) in deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the nonmovant will be taken as true; and (iii) every reasonable inference must be indulged in favor of the nonmovant and any doubts resolved in its favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex. 1985). The function of summary judgment is not to deprive litigants of the right to trial by jury, but to eliminate patently unmeritorious claims and defenses. Gulbenkian v. Penn, 151 Tex. 412, 252 S.W.2d 929, 931 (Tex. 1952).

For a defendant to prevail on summary judgment, he must show there is no genuine issue of material fact concerning one or more essential elements of the plaintiff's cause of action or establish each element of an affirmative defense as a matter of law. Black v. Victoria Lloyds Ins. Co., 797 S.W.2d 20, 27 (Tex. 1990). "When the trial court does not specify the basis for its summary judgment, the appealing party must show it is error to base it on any ground asserted in the motion." Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995).

Claims Made - Elements

The Larsen's four claims against Langford are for common law fraud, statutory fraud, negligent misrepresentation, and violations of the DTPA.

Common Law Fraud

To recover on an action for fraud, the Larsens must show that:

1. a material representation was made;

2. which was false;

3. which was known to be false when made or was made recklessly as a positive assertion without knowledge of its truth;

4. which was intended to be relied upon;

5. which was relied upon; and

6. which caused injury.

Green Intern., Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997).

Statutory Fraud

The Larsens can establish a statutory fraud claim under section 27.01 of the Business and Commerce Code by showing:

1. a representation of a material fact;

2. which was false:

3. made to induce a person to enter a contract;

4. which was relied upon by that person in entering the contract; and

5. which caused injury.

See Scott v. Sebree, 986 S.W.2d 364, 371 (Tex. App.--Austin 1999, pet. denied); Tex. Bus. & Com. Code Ann. § 27.01 (Vernon 1987). "The statutory cause of action differs from the common law only in that it does not require proof of knowledge or recklessness as a prerequisite to the recovery of actual damages." Id. at 77. (See element three under common law fraud above).

Negligent Misrepresentation

The Larsens also allege a claim for negligent misrepresentation. The elements of negligent misrepresentation are:

1. a defendant provides information in the course of his business, or in a transaction in which he has a pecuniary interest;

2. the information supplied is false;

3. the defendant did not exercise reasonable care or competence in obtaining or communicating the information;

4. the plaintiff justifiably relies on the information; and 5. the plaintiff suffers damages proximately caused by the reliance.

See Steptoe v. Merrill True, No. 14-99-00618-CV (Tex. App.--Houston [14th Dist.] January 18, 2001, n.w.h.); Federal Land Bank Ass'n v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991). Unlike common law fraud, negligent misrepresentation does not require knowledge of the falsity or reckless disregard of the truth or falsity of the representation at the time it was made. See Milestone Properties, Inc., v. Federated Metals Corp., 867 S.W.2d 113, 119 (Tex. App.--Austin 1993, no writ). To prevail on a claim for negligent misrepresentation, the Larsens must prove that Langford's misrepresentation was a proximate cause of their damages. See Greenstein, Logan & Co. v. Burgess Mktg., Inc., 744 S.W.2d 170, 189 (Tex. App.--Waco 1987, writ denied). The components of proximate cause are (1) cause in fact and (2) forseeability. Travis v. City of Mesquite, 830 S.W.2d 94, 98 (Tex. 1992).

Violations of the DTPA

Lastly, the Larsens have also alleged various DTPA violations. Generally, to prevail on their DTPA claim, the Larsens must establish that Langford violated a specific provision of the Act and that such violation was a producing cause of their injury. Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 649 (Tex. 1996); Tex. Bus. & Com. Code Ann. § 17.46 (Vernon Pamp. 2001). The elements of a DTPA action are:

1. the plaintiff is a consumer (a person who seeks or acquires goods or services by purchase or lease);

2. the defendant engaged in a false, misleading, or deceptive act (laundry list); and

3. the act constituted a producing cause of the consumer's damages.

Doe v. Boys Clubs of Greater Dallas, 907 S.W.2d 472, 478 (Tex. 1995).

The Larsens have alleged four laundry list violations as the second element listed above. These four violations are:

1) Failure to disclose. To prevail on a DTPA claim for failure to disclose, the Larsens must show the following:

a. a failure to disclose information concerning goods and services;

b. which was known at the time of the transaction;

c. which was intended to induce them into a transaction; and

d. that they would not have entered into the transaction if the information had been disclosed.

See Ford Motor Co. v. Sheldon, 22 S.W.3d 444, 448 (Tex. 2000); Tex. Bus. & Com. Code Ann. § 17.46(b)(23) (Vernon Pamp. 2001);

2) A representation that "goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not...

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