418 S.W.3d 342
Tex. App.2013Background
- Marriott and Miller negotiated the sale and management of the unfinished JW Marriott San Antonio Hill Country Resort; agreements executed July 31, 2007 included a Purchase Agreement, a Management Agreement, and a Technical Services and Pre-Commencement Addendum (TSA).
- The TSA incorporated “Approved Plans,” but also contained Schedule 4 (two dozen pages listing ~200 “Unapproved Elements”) and Schedule 7 (required submittals), identifying many missing plans/specs and systems that still needed design or approval.
- The Purchase Agreement contained a broad “As‑Is Sale” disclaimer expressly negating and disclaiming any prior representations or warranties outside the written agreements; the Management Agreement included a merger clause and acknowledged both parties’ sophistication and participation in negotiations.
- Miller alleged post‑closing cost overruns of roughly $90 million and sued for fraudulent inducement, negligent misrepresentation, professional negligence, contractual indemnification, and breach of contract (later nonsuited). Marriott moved for summary judgment arguing the contracts negated justifiable reliance.
- The trial court granted summary judgment dismissing Miller’s tort and indemnity claims; Miller appealed. The court of appeals affirmed, holding the contracts disproved justifiable reliance as a matter of law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Fraudulent inducement / Negligent misrepresentation: whether Miller can show justifiable reliance on Marriott’s alleged pre‑contract representations that plans were essentially complete and budget adequate | Miller says it relied on Marriott’s firm representations about plan completeness and budget sufficiency when agreeing to buy | Marriott says the written agreements (Approved Plans, Unapproved Elements, TSA, As‑Is clause, merger clause) contradict any reliance on extra‑contractual statements and expressly disclaim outside representations | Court held Miller could not justifiably rely as a matter of law; summary judgment affirmed |
| Professional negligence: whether Miller may recover without proving reliance | Miller argues reliance is not an element of professional negligence and its claim survives even if tort reliance proof fails | Marriott argues proximate cause requires the alleged negligence be a substantial factor in causing Miller’s losses, which here depends on Miller having relied on Marriott’s statements | Court held causation depended on reliance here, so absence of justifiable reliance defeats the professional negligence claim |
| Contractual indemnification (Pre‑Development Agreement §5.3(b)): whether Miller may recover under indemnity for Marriott’s alleged fraud/willful misconduct | Miller contends Marriott’s alleged pre‑closing fraud and willful misconduct trigger indemnity for Miller’s losses | Marriott contends indemnity cannot apply because Miller’s asserted losses did not arise from compensable misrepresentations (no justifiable reliance) and indemnity can’t be used to circumvent contractual allocation of cost overruns | Court held Miller’s indemnity claim fails because the alleged “Prohibited Acts” (misrepresentations) did not cause recoverable losses as a matter of law; summary judgment affirmed |
Key Cases Cited
- Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323 (Tex. 2011) (contractual language must be clear and unequivocal to disclaim reliance; court contrasted facts where contract directly contradicted alleged misrepresentations)
- Haase v. Glazner, 62 S.W.3d 795 (Tex. 2001) (fraud requires proof of reliance)
- Prudential Ins. Co. of Am. v. Jefferson Assocs., Ltd., 896 S.W.2d 156 (Tex. 1995) (give effect to freely negotiated "as‑is" provisions between sophisticated parties)
- Dresser Indus., Inc. v. Page Petroleum, Inc., 853 S.W.2d 505 (Tex. 1993) (definition and effect of indemnity agreements)
- F.D.I.C. v. Ernst & Young, 967 F.2d 166 (5th Cir. 1992) (proximate cause requires foreseeability and cause in fact; cause in fact requires act be a substantial factor)
- Palmer v. Espey Huston & Assocs., Inc., 84 S.W.3d 345 (Tex. App.—Corpus Christi 2002, pet. denied) (professional negligence requires proximate cause)
- Simpson v. Woodbridge Props., L.L.C., 153 S.W.3d 682 (Tex. App.—Dallas 2005, no pet.) (when contract directly contradicts alleged misrepresentations, justifiable reliance cannot exist)