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Mead v. Gray

Court of Appeals of Texas, Second District, Fort Worth

May 4, 2017






         I. Introduction

         This is a summary-judgment appeal. Appellees Paul and Linda Gray built a large, lake-front home and about eight years later in May 2015 sold it to Appellants Benjamin and Claire Mead. Mead had been a licensed relator for over eight years at the time of the purchase. Before the sale, the Meads retained their own property inspector, whom Claire selected and whom she had used previously to inspect properties she had sold. The inspector performed an independent inspection of the home. His report noted, in part, "signs of minimal foundation settlement" in two areas of the home and documented "deficiencies" existed in the home, including hairline cracks and patching on interior walls, cracks in the exterior brick veneer, open caulk joints around the exterior sides of windows, a cracked floor tile, open grout joints and caulk separation in the kitchen's backsplash, and deficiencies in five interior and three exterior doors. The Meads ultimately purchased the home; their purchase contract contained an "as is" clause.

         After the Meads noticed cracks in the interior and exterior of the home, windows and doors that would not operate properly, and an unlevel floor upstairs, they contacted a foundation-repair contractor and, subsequently, sued the Grays for violations of the Deceptive Trade Practices Act (DTPA), for fraud in the inducement/fraud by nondisclosure, fraud in a real estate transaction, negligent misrepresentation, negligence, and gross negligence. The Grays filed a traditional motion for summary judgment asserting that, as a matter of law, the reliance and/or causation elements of all of the Meads' claims[2] were conclusively negated for two reasons: the Meads obtained their own independent inspection and report, and the purchase contract contained an "as is" clause. The trial court granted summary judgment for the Grays on all of the Meads' claims without stating the basis for the ruling and granted the Grays' summary-judgment motion for attorney's fees predicated on the purchase contract's provision that the prevailing party in a suit relating to the contract is entitled to attorney's fees.[3]

         The Meads perfected this appeal and raise three issues. The Meads argue in two issues that neither their independent inspection nor the purchase contract's "as-is" clause negate the reliance and/or causation elements of their claims. In their third issue, the Meads argue that the trial court erred by granting attorney's fees to the Grays because the trial court erred in granting summary judgment for the Grays. For the reasons set forth below, we will affirm.

         II. Standard of Review

         Courts review a traditional motion for summary judgment de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). A traditional motion for summary judgment is granted only when the movant establishes that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law on the grounds expressly set forth in the motion. Browning v. Prostok, 165 S.W.3d 336, 344 (Tex. 2005). When reviewing an order granting a traditional motion for summary judgment, courts take evidence favorable to the nonmovant as true and indulge every reasonable inference from the evidence in favor of the nonmovant. Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997).

         III. The Independent Inspection and Report Negated the Causation and Reliance Elements of the Meads' Claims[4]

         In support of their motion for summary judgment, the Grays offered deposition excerpts from the Meads in which they testified that they would not have purchased the Grays' property without having an independent inspection performed; Claire testified that she "trusted" her inspector. The inspector's report contains his professional expert observations, conclusions, and photographs, as well as warnings that when the report indicates a deficiency, it is "the client's" responsibility to obtain further evaluations and/or cost estimates and that such further evaluations could lead to the discovery of additional deficiencies, which may involve additional repair costs.

         The Meads concede in their brief that "Texas courts have consistently concluded that a buyer's independent inspection precludes a showing of causation and reliance if it reveals to the buyer the same information that the seller allegedly failed to disclose." As noted by the Meads, "This is consistent with the principle that a party who has actual knowledge of specific facts cannot have relied on a misrepresentation of the same facts." See, e.g., Birnbaum v. Atwell, No. 01-14-00556-CV, 2015 WL 4967057, at *8 (Tex. App.-Houston [1st Dist.] Aug. 20, 2015, pet. denied) (mem. op.); Volmich v. Neiman, No. 02-12-00050-CV, 2013 WL 978770, at *6 (Tex. App.-Fort Worth Mar. 14, 2013, no pet.) (mem. op.); Williams v. Dardenne, 345 S.W.3d 118, 126 (Tex. App.- Houston [1st Dist.] 2011, pet. denied); Camden Machine & Tool, Inc. v. Cascade Co., 870 S.W.2d 304, 311 (Tex. App.-Fort Worth 1993, no writ); Dubow v. Dragon, 746 S.W.2d 857, 860 (Tex. App.-Dallas 1988, no writ).

         To defeat application of this rule--that the Meads' (buyers') independent inspection precludes a showing of reliance and causation in their claims against the Grays (sellers) when the inspection reveals the same information that the buyers allege the sellers failed to disclose--the Meads raise two arguments. First, the Meads argue that the rule is inapplicable here because the Meads' independent "inspection report did not disclose problems with the house foundation, " which is the information the Meads contend the Grays, as sellers, failed to disclose or concealed. Second, the Meads argue that the Grays actively concealed information concerning prior foundation problems by failing to disclose prior problems in their "Seller's Disclosure Notice, " by failing to disclose photos they had submitted to the Denton County Appraisal District (DCAD) in an effort to lower the appraised value of the home, and by failing to disclose an addendum to a January 2011 termite-inspection report. The Meads argue that this concealment by the Grays renders the general rule inapplicable.

         In determining whether a buyer's independent inspection conclusively negates reliance and causation in a buyer's claim based on a seller's failure to disclose information, courts look to whether the buyer ultimately possessed the same information and knowledge as the seller. See, e.g., Birnbaum, 2015 WL 4967057, at *8; Williams, 345 S.W.3d at 125-26. That is, regardless of whether the seller failed to disclose information or concealed information, when the buyer ultimately possesses that same information (albeit from a different source than the seller) and nonetheless proceeds to purchase the home, then the buyer cannot have relied on the seller's failure to disclose or misrepresentation of those same facts in making the decision to purchase the home. Reliance and ...

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