Jpmorgan Chase Bank, N.A. v. Orca Assets G.P., L. L.C., 546 S.W.3d 648

Background

Red Crest Trust (trustee: JPMorgan) owned extensive Eagle Ford mineral interests; JPMorgan employee Mettham handled leasing.
Orca (sophisticated oil-and-gas buyers) negotiated a letter of intent and then leases for 919 acres, paying $3.2 million in bonuses; leases included a new, explicit negation-of-warranty/no-recourse clause shifting title risk to lessee.
Mettham orally represented twice that the acreage was "open" (unleased); those representations were false because GeoSouthern had earlier leased much of the acreage and recorded its leases shortly after Orca signed the letter of intent.
Orca had performed preliminary record checks before the LOI, obtained a 30-day option to re-examine title, but ceased checking records during the option period and did not discover GeoSouthern's recorded leases; Orca nonetheless relied on Mettham’s oral assurances at closing.
Orca sued for fraud and negligent misrepresentation after JPMorgan refunded the bonus and Orca refused; the trial court granted judgment for JPMorgan under Tex. R. Civ. P. 166(g) (no fact issue on justifiable reliance), the court of appeals reversed on the tort claims, and the Texas Supreme Court granted review.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Was Orca's reliance on Mettham's oral statement that the tracts were "open" justifiable?	Orca relied on Mettham's assurances and the LOI's promise that the trust would not lease tracts during the option period; Orca had already done preliminary searches.	Orca was sophisticated, encountered multiple "red flags," and the LOI/leases expressly disclaimed warranties and allocated title risk to Orca; reliance was unjustifiable as a matter of law.	Reliance was not justifiable as a matter of law; judgment for defendants reinstated.
Can "red flags" negate justifiable reliance in commercial transactions?	Orca: red flags were not dispositive; Mettham's confirmations and the LOI justified reliance.	JPMorgan: multiple objective red flags (ambiguous statements, unusual warranty disclaimer, opportunity and duty to investigate, cessation of record checks) made reliance unreasonable.	Red flags, given parties' sophistication and circumstances, negated justifiable reliance as a matter of law.
Does a negation-of-warranty/no-recourse clause directly contradict an oral title representation and preclude reliance?	Orca: clause did not explicitly mention "leased/unleased" so it did not directly contradict oral statement; Italian Cowboy requires clear and unequivocal disclaimer to bar reliance.	JPMorgan: the no-recourse negation of title warranty directly contradicts any oral guarantee of title; a party cannot rely on oral representations contrary to unambiguous written terms.	The clause directly contradicted any oral title guarantee; a reasonable sophisticated party could not plausibly rely on the oral statement.
Was the Rule 166(g) disposition appropriate (legal sufficiency review)?	Orca contended factual disputes existed about reliance.	JPMorgan argued reasonable jurors could not find justifiable reliance under the record.	Court reviewed de novo and held reasonable jurors could not find justifiable reliance; Rule 166(g) disposition affirmed as to tort claims.

Key Cases Cited

Grant Thornton LLP v. Prospect High Income Fund, 314 S.W.3d 913 (Tex. 2010) ("red flags" can render reliance unjustifiable)
Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323 (Tex. 2011) (contractual disclaimers of reliance must be clear and unequivocal)
Nat'l Prop. Holdings, L.P. v. Westergren, 453 S.W.3d 419 (Tex. 2015) (a party cannot justifiably rely on oral statements that are contrary to an unambiguous written contract)
Lewis v. Bank of Am. N.A., 343 F.3d 540 (5th Cir. 2003) (recognizing ambiguous assurances and other circumstances as red flags requiring investigation)
Thigpen v. Locke, 363 S.W.2d 247 (Tex. 1962) (in arm's-length transactions parties must exercise ordinary care and diligence to protect their interests)