Rick Lovelady Carpets, Inc. v. G.R. Chapman Limited Partnership and George R. Chapman A/K/A G.R. Chapman, 07-15-00340-CV

Background

RLCI (Rick Lovelady Carpets, Inc.) and George Chapman formed I-40 Development, LLC in Jan 2008; each took 50% membership interest. RLCI contributed $200,000 cash; Chapman purportedly contributed an undivided half-interest in a vacant lot and the LLC purchased the remaining half from Chapman.
Lovelady alleges Chapman represented he purchased the entire lot for $400,000 and would ‘‘let [RLCI] in for half…$200,000,’’ inducing RLCI to invest.
Years later (2013), after repeated requests, Lovelady obtained closing documents showing Chapman actually paid $174,319 for the lot.
RLCI sued for common-law and statutory fraud, fraudulent inducement, breach of fiduciary duty, breach of contract, unjust enrichment, and sought an accounting and constructive trust; RLCI pleaded discovery rule and fraudulent concealment to toll limitations.
Chapman moved for summary judgment (traditional and no-evidence) on all claims, asserting lack of justifiable reliance, lack of damages, and that claims were time-barred; the trial court granted summary judgment.
The court of appeals reversed, holding genuine fact issues exist on reliance, damages measure, and accrual/discovery of fraud; summary judgment was improper and case remanded.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Justifiable reliance on Chapman's alleged misrepresentation of purchase price	Lovelady relied on Chapman’s repeated statements that Chapman paid $400,000 and would accept $200,000 for half; reliance was reasonable here	Chapman argued Lovelady’s business experience and familiarity with local property values and ‘‘red flags’’ made reliance unjustifiable	Court: genuine fact issue exists; on summary judgment Lovelady’s evidence must be accepted and reliance was not conclusively negated
Damages measure for fraud/fraudulent inducement	RLCI seeks benefit-of-the-bargain/out‑of‑pocket recovery based on Chapman’s misrepresented purchase price (difference between $200,000 paid and Chapman’s actual price)	Chapman argued RLCI lacked evidence of diminished value of the half-interest and thus no recoverable damages under benefit-of-the-bargain	Court: Some evidence of recoverable damages exists (court accepts Garrison-style measure may apply); disputed factual issues preclude summary judgment
Statute of limitations / accrual and discovery rule	RLCI contends fraud accrued when it discovered (or reasonably could have discovered) the falsity in 2013; alleged fraudulent concealment and discovery rule tolling	Chapman argued claims accrued earlier and limitations bars suit; pointed to Lovelady’s deposition answers	Court: Chapman failed to conclusively prove limitations as a matter of law; reasonable-diligence/discovery is a factual issue here
Evidentiary sufficiency for summary judgment (credibility of conversations)	RLCI contends telephone representations created fact issues about inducement and fraud	Chapman asserted he never said purchase price, and the transactions/supporting testimony make RLCI’s story implausible	Court: Credibility disputes over the parties’ oral statements create material fact issues; summary judgment inappropriate

Key Cases Cited

Kachina Pipeline Co. v. Lillis, 471 S.W.3d 445 (Tex. 2015) (summary-judgment evidence must be viewed in the light most favorable to nonmovant)
State v. Ninety Thousand Two Hundred Thirty-Five Dollars & No Cents in U.S. Currency, 390 S.W.3d 289 (Tex. 2013) (when trial court does not specify ground, affirm if any asserted ground is meritorious)
Zorrilla v. Aypco Constr. II, LLC, 469 S.W.3d 143 (Tex. 2015) (elements of common-law fraud and fraudulent inducement)
Haase v. Glazner, 62 S.W.3d 795 (Tex. 2001) (fraudulent inducement is a species of fraud that requires a contract)
Formosa Plastics Corp. United States v. Presidio Eng’rs & Contrs., 960 S.W.2d 41 (Tex. 1998) (discussion of out-of-pocket vs. benefit-of-the-bargain damages measures)
KPMG Peat Marwick v. Harrison Cty. Hous. Fin. Corp., 988 S.W.2d 746 (Tex. 1999) (burden on movant to conclusively prove limitations defense on summary judgment)
Hooks v. Samson Lone Star, Ltd. P’ship, 457 S.W.3d 52 (Tex. 2015) (discovery rule for fraudulent-inducement accrual; reasonable-diligence standard)
City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (conclusiveness of evidence standard on summary judgment)
Tilton v. Marshall, 925 S.W.2d 672 (Tex. 1996) (measure of damages in fraud is plaintiff’s actual loss proximately caused by fraud)