Levi and Michelle McKenzie v. Community National Bank
04-14-00540-CV
| Tex. App. | Feb 6, 2015Background
- Levi and Michelle McKenzie contracted J.H. Storey to build a house and obtained an interim construction loan from Community National Bank (CNB) in March 2011.
- Loan documents signed at closing expressly: (a) placed responsibility on the McKenzies to investigate and monitor the contractor and quality of work; (b) disclaimed CNB liability for contractor workmanship; and (c) stated CNB had the right but not the obligation to inspect and need not verify that draw funds paid subcontractors.
- During construction the McKenzies approved multiple draw requests (certifying subcontractor payments); later they discovered defective work and unpaid subcontractors and locked out the builder.
- The McKenzies sued CNB for negligence (including negligent partial-disclosure), breach of implied duty of good faith and fair dealing, and fraudulent inducement based on CNB employee statements that the builder was a "good builder" and CNB’s alleged knowledge of the builder’s prior banking default.
- CNB moved for traditional and no-evidence summary judgment; the trial court granted judgment for CNB, dismissing all claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether negligence claims survived despite loan contract | McKenzie: CNB had a duty based on partial disclosures about the builder's reputation | CNB: economic-loss rule bars negligence and estoppel by contract binds plaintiffs to loan terms | Court: negligence barred by economic-loss rule and estoppel by contract |
| Whether an implied duty of good faith and fair dealing exists | McKenzie: special relationship/disparity of bargaining power gave rise to duty | CNB: no special fiduciary relationship; lender–borrower alone insufficient | Court: no special relationship; no implied duty |
| Whether CNB committed fraudulent inducement by partial, non‑disclosure | McKenzie: CNB’s statements that builder was "good" plus nondisclosure of prior default were materially misleading | CNB: statements were opinion/sales talk; prior default concerned banking, not builder competence, and was immaterial; disclosure would violate customer confidentiality | Court: statements were non‑actionable opinion and nondisclosure immaterial; fraud claim fails |
Key Cases Cited
- Nabors Drilling, U.S.A., Inc. v. Escoto, 288 S.W.3d 401 (Tex. 2009) (elements of negligence)
- Bradford v. Vento, 48 S.W.3d 749 (Tex. 2001) (discussion of partial disclosure and fraud)
- Ralston Purina Co. v. McKendrick, 850 S.W.2d 629 (Tex. App.—San Antonio 1993) (duty to disclose before consummation of transaction)
- Federal Deposit Ins. Co. v. Coleman, 795 S.W.2d 706 (Tex. 1990) (no implied good-faith duty in ordinary lender–borrower relationships)
- Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of America, 341 S.W.3d 323 (Tex. 2011) (opinion statements are not actionable representations of fact)
- Fleming v. Tex. Coastal Bank of Pasadena, 67 S.W.3d 459 (Tex. App.—Houston [14th Dist.] 2002) (partial disclosure context; banks not required to disclose another customer's private banking information)