Gilad Lutfak and Oren Lutfak v. Jeff Gainsborough, 01-15-01068-CV

Background

Buyer Jeff Gainsborough leased then agreed to buy a townhome from seller Gilad Luftak (adjoining unit owned by Gilad’s brother Oren). The written resale contract stated buyer accepted the property “in its present condition.”
Contract gave a 10‑day termination option and right to inspect; buyer conducted an inspection within that option period, which disclosed water penetration and other defects. The parties executed a contract amendment requiring certain repairs and an escrow agreement holding $2,500 to secure repairs.
The closing deed conveyed the property “AS IS, WHERE IS, AND WITH ALL FAULTS” and disclaimed all representations and warranties. Seller did not complete the agreed repairs; buyer recovered the $2,500 from escrow, moved in, and later spent money on repairs.
Buyer sued Gilad and Oren for fraud, DTPA violations, negligent misrepresentation, implied‑warranty breaches, and conspiracy; the jury found for buyer on multiple claims and for conspiracy; trial court entered judgment for buyer against both brothers.
On appeal, the court considered whether the “as is” clause and buyer’s post‑contract inspection defeat reliance/causation for fraud/DTPA/negligent‑misrepresentation claims, and whether evidence supports implied‑warranty and conspiracy findings.

Issues

Issue	Plaintiff's Argument (Gainsborough)	Defendant's Argument (Lutfak)	Held
Does TREC language "in its present condition" operate as an "as‑is" clause that defeats reliance/causation for fraud, DTPA, negligent‑misrepresentation claims?	The amendment and escrow superseded or otherwise made the "as‑is" clause ineffective; alternatively, the clause was fraudulently induced.	The contract’s "in its present condition" is an "as‑is" clause; buyer’s independent inspection and continued closing negate reliance/causation.	Clause treated as "as‑is"; buyer’s inspection and amendment did not negate it; not fraudulently induced—precludes reliance/causation, so those claims fail.
Did the contract amendment and escrow agreement nullify the "as‑is" term or show inducement?	The amendment/escrow show seller promised repairs and thus superseded the "as‑is" acceptance or demonstrate inducement.	Amendment/escrow only created an obligation to attempt repairs and an escrow remedy; they did not remove buyer’s acceptance of property "in its present condition."	Amendment/escrow imposed limited repair obligations/payment mechanics but did not erase the "as‑is" acceptance.
Were implied warranties of habitability and workmanship breached by Gilad or Oren?	The homes were defectively constructed and sellers (as builders or principal actors) breached implied warranties.	Gilad was a resale purchaser (not the original buyer/builder); implied builder warranties apply only from builder to original purchaser.	Evidence established Gilad was not the original purchaser; jury charge required original purchaser finding; evidence legally insufficient for implied‑warranty verdicts.
Can Oren be liable for civil conspiracy based on the jury’s findings?	Oren conspired with Gilad to sell the defective home and cause injury to buyer.	Conspiracy is derivative—requires actionable underlying tort; if underlying claims fail, conspiracy fails.	Because underlying tort/statutory claims and warranty claims fail, there is no actionable basis for conspiracy; judgment against Oren reversed.

Key Cases Cited

Ritchey v. Pinnell, 324 S.W.3d 815 (Tex. App.—Texarkana 2010) (TREC "present condition" treated as "as‑is")
Williams v. Dardenne, 345 S.W.3d 118 (Tex. App.—Houston [1st Dist.] 2011) (buyer inspection and "as‑is" clause negate reliance for DTPA/fraud/negligent‑misrep)
Prudential Ins. Co. of Am. v. Jefferson Assocs., Ltd., 896 S.W.2d 156 (Tex. 1995) (fraudulently induced "as‑is" clauses may be invalidated)
Centex Homes v. Buecher, 95 S.W.3d 266 (Tex. 2002) (builder implied warranties of habitability and workmanship)
City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (legal‑sufficiency review standard)
Osterberg v. Peca, 12 S.W.3d 31 (Tex. 2000) (when no charge objection, sufficiency measured against unobjected jury charge)