Procter v. RMC Capital Corp.

• Decision Date: 28 June 2001
• Docket Number: No. 09-00-161,09-00-161
• Citation: 47 S.W.3d 828
• Parties: (Tex.App.-Beaumont 2001) DOAK C. PROCTER III and COLLEGE STREET, LTD., Appellants v. RMC CAPITAL CORPORATION, RMC PROPERTIES I, LTD, RMC GENPAR I, INC., CATHERINE COX MULLEN, and C. MITCHELL COX, Appellees CV
• Court: Texas Court of Appeals

Page 828

47 S.W.3d 828 (Tex.App.-Beaumont 2001)

DOAK C. PROCTER III and COLLEGE STREET, LTD., Appellants v. RMC CAPITAL CORPORATION, RMC PROPERTIES I, LTD, RMC GENPAR I, INC., CATHERINE COX MULLEN, and C. MITCHELL COX, Appellees

No. 09-00-161 CV

Court of Appeals of Texas, Beaumont

Submitted March 8, 2001

Decided June 28, 2001

On Appeal from the 60th District Court Jefferson County, Texas Trial Cause No. B-159,909

[Copyrighted Material Omitted]

Before Walker, C.J., Burgess and Gaultney, JJ.

OPINION

WALKER, Chief Justice

This is an appeal from a summary judgment. Appellants filed suit against appellees alleging both common law fraud, and statutory fraud under Tex. Bus. & Com. Code Ann. § 27.01 (Vernon 1987). The underlying transaction involved the sale by appellees of a certain tract of income producing rental property to appellants. The appellees provided two bases for their motion for summary judgment, viz: (1) Appellants sustained no damages; and (2) "There can be no fraud as a matter of law because all warranties are disclaimed in the sale documents and the Plaintiffs, sophisticated purchasers in an arm's length transaction released any claims for misrepresentation in the contract of sale."

The record before us reflects that appellant-Doak Procter, III, was the president and corporate general partner of appellant-College Street, Ltd. The record also reflects that Procter negotiated the purchase and eventually executed the sale's contract on behalf of College Street, Ltd. for purchase of "certain income producing rental properties" from appellees. There is record evidence indicating appellees are also in the business of purchasing and selling commercial real estate. At any rate, neither side contests the fact that the transaction in question was negotiated at arms length and that both parties were knowledgeable and sophisticated business entities.

On appeal from the granting of a summary judgment, the reviewing court must determine whether the evidence establishes, as a matter of law, that there is no genuine issue of material fact. Rodriguez v. Naylor Indus., Inc., 763 S.W.2d 411, 413 (Tex. 1989). In deciding whether a disputed material fact issue exists, the evidence is viewed in favor of the non-movant, resolving all doubts and indulging all reasonable inferences in his favor; with the non-movant's evidence taken as true. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548 (Tex. 1985). Evidence that favors the movant's position will not be considered unless it is uncontroverted. Great American Reserve Ins. Co. v. San Antonio Plumbing Supply Co., 391 S.W.2d 41, 47 (Tex. 1965). A defendant as a movant must either: (1) disprove at least one element of each of plaintiff's theories of recovery; or (2) plead and conclusively establish each essential element of an affirmative defense. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 679 (Tex. 1979). Once the movant has established a right to summary judgment, the non-movant must expressly present any reasons seeking to avoid the movant's entitlement, and must support the reasons with summary judgment proof to establish a fact issue. Westland Oil Dev. Corp. v. Gulf Oil Corp., 637 S.W.2d 903, 907 (Tex. 1982).

Appellant's cause of action was grounded in both common law and statutory fraud. Under both types of fraud, reliance is an element. See Ins. Co. of North America v. Morris, 981 S.W.2d 667, 674 (Tex. 1998); Tex. Bus. & Com. Code Ann. § 27.01(a)(1)(B) (Vernon 1987). In the instant case, appellees' motion for summary judgment was based, inter alia, on disproving the element of reliance as a matter of law. In so doing, the appellees pointed to the very detailed language contained in the portion of the "Contract of Sale" (contract) signed by both parties, the pertinent portions of which we reproduce as follows:

ARTICLE VII

REPRESENTATIONS, WARRANTIES AND AND (sic) ACKNOWLEDGMENTS OF BUYER; DISCLAIMERS OF SELLER

7.1 Representations, Warranties and acknowledgments of Buyer. Buyer represents, warrants, covenants, and agrees with seller as of the Effective Date and as of the Closing Date, except where specific reference is made to another date or dates, that:

. . . .

(c) Buyer hereby acknowledges that:

(i) Buyer is purchasing the Property, and the Property shall be conveyed and transferred to Buyer, "AS IS, WHERE IS, AND WITH ALL FAULTS" and specifically and expressly without any warranties, representations, or guarantees, either express or implied, of any kind, nature, or type whatsoever from or on behalf of Seller, except for those expressly set forth herein and the warranty of title in the Deed. Buyer acknowledges that Buyer has not relied, and is not relying, on any information, document, sales brochures, or other literature, maps or sketches, projection, pro forma, statement, representation, guarantee, or warranty (whether express or implied, or oral or written, or material or immaterial) that may have been given by, or made by, or on behalf of, Seller;

(ii) SELLER HAS NOT, DOES NOT, AND WILL NOT WITH RESPECT TO THE PROPERTY, MAKE ANY WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW, INCLUDING, BUT IN NO WAY LIMITED TO, ANY WARRANTY OF CONDITION, MERCHANTABILITY, HABITABILITY, OR FITNESS FOR A PARTICULAR USE, OR WITH RESPECT TO THE VALUE, PROFITABILITY OR MARKETABILITY OF THE PROPERTY;

. . . .

(iv) Buyer has and will have, pursuit to this Contract, an adequate opportunity to make such legal, factual, and other inquiries and investigations as it deems necessary, desirable, or appropriate with respect to the Property. Such inquiries and investigations of Buyer shall be deemed to include, but shall not be limited to, any leases and contracts pertaining to the Property, the physical components of all portions of the Property, the condition of the Property, such state of facts as an accurate survey and inspection would show, the present and future zoning ordinances, resolutions, and regulations of the city, county, and state where the Property is located, and the value and marketability of the Property; and (v) Without in any way limiting the generality of the preceding subsections (i) through (iv), Buyer specifically acknowledges and agrees that Buyer hereby WAIVES, RELEASES, AND DISCHARGES any claim Buyer has, might have had, or may have against Seller with respect to the condition of the Property, whether such condition is patent or latent, Buyer's ability or inability to obtain or maintain building permits, either temporary or final certificates of occupancy, or other licenses for the use or operation of the Property and/or certificates of compliance for the Property, the actual or potential income or profits to be derived from the Property, the real estate taxes or assessments now or hereafter payable thereon, the compliance with any environmental protection, pollution or land use laws, rules, regulations or requirements, and any other state of facts which exist with respect to the Property. (all emphasis and capitalization in original)

Additional summary judgment evidence was attached to appellees' motion. The entire sales' contract appears. There is also an affidavit from Worth Williams, the owner of Worth Williams Properties, L.C., located in Dallas, Texas, which states that on November 19, 1999, Williams forwarded a real estate sales' contract to Procter and College Street, Ltd., offering to purchase the property in question for $1,300,000, payable in cash at closing. The offer remained open through December 15, 1999, however Procter did not respond with an acceptance, a counter-offer, or a rejection of the offer.

An affidavit from Gerald Richardson appears as the last exhibit attached to the summary judgment motion. Richardson, a licensed real estate broker, had worked in such capacity in the Beaumont, Texas, area for nine years. Mr. Richardson explained that while he was not an "appraiser" of commercial real estate per se, he was often called upon to evaluate the market value of commercial real estate in the Beaumont area. At that time, he had performed many such evaluations for his clients, which included appellees, in order to assist them in determining both sale and purchase prices for commercial property. Mr. Richardson then provided a detailed background of his involvement in the initial listing for sale, negotiations, and ultimate sale of the property in question.

Richardson entered into a listing agreement with appellees regarding the property on January 31, 1996. Included among the various business tenants on the property was Cox Video Corp., a video rental store. On March 14, 1997, Richardson prepared an opinion of value concerning the property with Richardson believing the property was worth $1,245,000. The property was listed for sale on March 27, 1997, at the price of $1,450,000. On April 8, 1997, Procter made an offer to purchase the property for $1,100,000. Richardson described Procter as known "to be an experienced real estate investor who owned numerous local real estate properties, including another retail center across the street from Parkdale Mall in Beaumont. I knew him to be very familiar with the market and informed [appellees] of that fact." Ultimately, appellees accepted a $1,125,000 offer from Procter for the property on approximately December 19, 1997.

Richardson then provided Procter with a copy of a Cox Video Corp. balance sheet dated "March 31, 1997." It had been forwarded to Richardson from appellee-C. Mitchell Cox. As far as Richardson was aware, appellees did not prepare the balance sheet or vouch for its accuracy. Richardson did discuss the contents of the balance sheet with Procter, including the reason for a large cash balance being shown on the sheet. Richardson recalled Procter to be satisfied with the information provided. Richardson was unaware how Procter intended to use the information contained on that sheet, if he used it at all for any...