COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-12-00050-CV
Helmut Volmich and Petra Volmich § From the 30th District Court
§ of Wichita County (167,840-A)
v.
§ March 14, 2013
Richard Braden Neiman and Traci L.
Neiman § Opinion by Justice Gardner
JUDGMENT
This court has considered the record on appeal in this case and holds that
there was no error in the trial court’s judgment. It is ordered that the judgment of
the trial court is affirmed.
It is further ordered that appellants Helmut Volmich and Petra Volmich
shall pay all costs of this appeal, for which let execution issue.
SECOND DISTRICT COURT OF APPEALS
By_________________________________
Justice Anne Gardner
COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-12-00050-CV
HELMUT VOLMICH AND PETRA APPELLANTS
VOLMICH
V.
RICHARD BRADEN NEIMAN AND APPELLEES
TRACI L. NEIMAN
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FROM THE 30TH DISTRICT COURT OF WICHITA COUNTY
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MEMORANDUM OPINION1
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I. Introduction
Appellants Helmut and Petra Volmich appeal the trial court’s summary
judgment in favor of Appellees Richard Braden Neiman and Traci L. Neiman.
The Volmiches contend in two issues that the trial court erred by granting
1
See Tex. R. App. P. 47.4.
2
summary judgment because the “as-is” clause in the parties’ sale contract does
not as a matter of law defeat their affirmative claims or establish the Neimans’
affirmative defenses. We affirm.
II. Factual and Procedural Background
The Neimans, as part of the process of listing their home for sale,
executed a Seller’s Disclosure Notice concerning the home’s condition on
February 11, 2005. The Neimans moved from the property in approximately May
2005 but kept the home listed for sale.
In February 2006, the Neimans entered into a contract with the Volmiches
for the sale of the home. Mr. Volmich had viewed the property on multiple
occasions with his realtor before making an offer to purchase the property. As
part of the contract, the Volmiches had the unrestricted right to terminate the
contract during a ten-day period. The ten-day termination period was extended
an additional three days by agreement of the parties.
In the interim, Mr. Volmich hired Accurate Inspections to conduct an
inspection of the home. Don Crook conducted the inspection on February 19,
2006. The inspection report stated that the roof covering was “not functioning or
in need of repair”; that the roof showed signs of previous repairs, which may
have been the location of prior leaks; that there was moisture-related damage to
the plywood decking; that there were moisture stains observed on the “back side
of the roof decking/framing”; and that the interior and exterior walls were “not
functioning or in need of repair.” The report also stated that there were moisture
3
stains on the upper laundry closet wall that appeared to be the result of a
possible water heater leak, that the walls showed a substantial increase in
moisture content in the stained area, that there was moisture-related
deterioration around the front plant-room windows and at the base of the garage
door frame, and that the ceilings and floors were “not functioning or in need of
repair.” Finally, the report stated that moisture stains on the ceiling in the garage
mechanical room appeared to be the result of a previous roof leak.
The parties closed on the property on March 28, 2006. On February 8,
2008, the Volmiches filed suit against the Neimans, Andy Lundgren, and Domain
Real Estate Services, Inc.2 In the lawsuit, the Volmiches alleged that the
Neimans (1) failed to disclose information concerning the real property that was
known at the time of the transaction; (2) breached an implied warranty that the
premises would be in good condition as represented; (3) negligently marketed
and sold the real property; (4) breached an implied warranty of merchantability;
(5) failed to disclose defects in the property; and (6) breached their contract.
On September 16, 2011, the Neimans filed a traditional motion for
summary judgment. The Neimans first raised the affirmative defense of estoppel
by contract, asserting that the Volmiches contractually accepted the property “as
is” at the time of sale, thereby waiving the right to claim alleged damages. The
Neimans also raised the affirmative defense of waiver, arguing that the
2
Andy Lundgren and Domain Real Estate Services, Inc. were dismissed as
defendants and are not parties to this appeal.
4
Volmiches had hired independent inspectors and had relied on the inspectors’
professional judgment and not on the Neimans’ representations. Lastly, the
Neimans moved for summary judgment on each of the Volmiches’ claims. The
Neimans asserted that because the Volmiches had obtained their own inspection
that disclosed the problems the Volmiches later complained about, the inspection
superseded any alleged wrongdoing on the Neimans’ part.
In their response to the motion for summary judgment, the Volmiches
asserted that the sales contract did not contain “as is” language and that the
contractual clause at issue was predicated upon the Neimans’ truthful disclosure.
The Volmiches also asserted that reliance on an independent inspection was not
enough to constitute a new and independent basis for the purchase of the home
and did not supersede the Neimans’ non-disclosure. The Volmiches finally
asserted that all of the alleged defects were not listed in the inspection report.
The trial court granted the Neimans’ motion for traditional summary
judgment on November 2, 2011. The trial court’s order reflects that it granted the
Neimans’ motion for summary judgment in its entirety, stating that there was no
genuine issue of material fact as to the Neimans’ affirmative defenses of estoppel
by contract and waiver, that the Neimans were entitled to summary judgment
thereon, and that the Neimans disproved at least one element of each of the
Volmiches’ claims. Only the Volmiches’ fraudulent inducement and DTPA claims
are at issue in this appeal.
5
III. Standard of Review
We review a summary judgment de novo. Travelers Ins. Co. v. Joachim,
315 S.W.3d 860, 862 (Tex. 2010). We consider the evidence presented in the
light most favorable to the nonmovant, crediting evidence favorable to the
nonmovant if reasonable jurors could, and disregarding evidence contrary to the
nonmovant unless reasonable jurors could not. Mann Frankfort Stein & Lipp
Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We indulge every
reasonable inference and resolve any doubts in the nonmovant’s favor. 20801,
Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008). A defendant who conclusively
negates at least one essential element of a cause of action is entitled to
summary judgment on that claim. Frost Nat’l Bank v. Fernandez, 315 S.W.3d
494, 508 (Tex. 2010); see Tex. R. Civ. P. 166a(b), (c). Also, a defendant is
entitled to summary judgment on an affirmative defense if the defendant
conclusively proves all the elements of the affirmative defense. Frost, 315
S.W.3d at 508–09; see Tex. R. Civ. P. 166a(b), (c). To accomplish this, the
defendant-movant must present summary judgment evidence that conclusively
establishes each element of the affirmative defense. See Chau v. Riddle, 254
S.W.3d 453, 455 (Tex. 2008).
IV. Discussion
The Volmiches present two issues on appeal. They inquire in their first
issue whether a “boiler-plate ‘as-is’ clause” supersedes a seller’s nondisclosure
when the buyer relies upon an independent inspection. In their second issue,
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they ask whether a “boiler-plate ‘as-is’ clause” conclusively establishes estoppel
by contract and waiver as affirmative defenses when a party is fraudulently
induced to enter a contract because of nondisclosure of material facts. Because
these issues are interrelated under the circumstances of this case, we discuss
them together.
The parties used a standard contract form prepared by the Texas Real
Estate Commission (TREC) for the transaction. In the contract, the Volmiches
contractually bound themselves to accept the property “in its present condition.”
The relevant contract provision states:
ACCEPTANCE OF PROPERTY CONDITION: Buyer accepts
the Property in its present condition; provided Seller, at Seller’s
expense, shall complete the following specific repairs and
treatments: treat for termites if inspection deems necessary.
Texas courts have interpreted contract language stating “in its present condition”
to be an agreement to purchase the property “as is.” See Cherry v. McCall, 138
S.W.3d 35, 39 (Tex. App.—San Antonio 2004, pet. denied) (construing “in its
present condition” as an “as is” agreement); Larsen v. Carlene Langford &
Assocs., Inc., 41 S.W.3d 245, 251 (Tex. App.—Waco 2001, pet. denied)
(construing to be “as is” certain contract language stating that “[b]uyer accepts
the Property in its present condition. Buyer shall pay for any repairs designated
by a lender”); Fletcher v. Edwards, 26 S.W.3d 66, 75 (Tex. App.—Waco 2000,
pet. denied) (construing “in its present condition” in earnest money contract to be
an agreement to purchase the property “as is”); Smith v. Levine, 911 S.W.2d
7
427, 431 (Tex. App.—San Antonio 1995, writ denied) (construing “in its present
condition” to be an agreement to purchase the property “as is”); see also Sims v.
Century 21 Capital Team, Inc., No. 03-05-00461-CV, 2006 WL 2589358, at *2
(Tex. App.—Austin Sept. 8, 2006, no pet.) (mem. op.) (construing “in its current
condition” as the plain-English equivalent to “as is”).
A valid “as is” agreement prevents a buyer from holding a seller liable if the
thing sold turns out to be worth less than the price paid. Prudential Ins. Co. of
Am. v. Jefferson Assocs., Ltd., 896 S.W.2d 156, 161 (Tex. 1995). When
considering the enforceability of an “as is” clause, courts should consider the
totality of the circumstances, including (1) the sophistication of the parties and
whether they were represented by counsel, (2) whether the contract was an
arm’s length transaction, (3) the relative bargaining power of the parties and
whether the contractual language was freely negotiated, and (4) whether that
language was an important part of the parties’ bargain as opposed to being a
“boilerplate” provision. Id. at 162.
In this case, both parties were represented by real estate agents.
Additionally, although the Volmiches are German citizens, Mr. Volmich had
worked as a project manager for wind farms in both Idaho and Texas before
deciding to purchase a home in Wichita Falls. Neither party was represented by
counsel, but the circumstances do not suggest any disparity of bargaining power
that would affect the enforceability of the “as is” clause. Indeed, although the “as
is” language was contained within the standard TREC contract form, the parties
8
negotiated that specific part of the sales contract by adding that the Neimans
would pay to have the property treated for termites if the inspection revealed the
need for such a treatment. The parties had also previously negotiated to extend
the initial ten-day termination period for an additional three days. The totality of
the circumstances therefore leads us to conclude that the “as is” clause in this
contract is enforceable as an arm’s length transaction between parties with equal
bargaining strength. See Larsen, 41 S.W.3d at 252.
Although the clause is enforceable standing alone, the Volmiches are not
bound by the “as is” clause if they were induced into the contract because of a
fraudulent representation or concealment of information by the Neimans. See
Prudential, 896 S.W.2d at 162. A party claiming fraud in the inducement must
demonstrate that: (1) the defendant made a representation to the plaintiff; (2) the
representation was material; (3) the representation was false; (4) when the
defendant made the representation, the defendant (a) knew the representation
was false; or (b) made the representation recklessly, as a positive assertion with
the intent that the plaintiff act on it; (5) the defendant made the representation
with the intent that the plaintiff act on it; (6) the plaintiff relied on the
representation; and (7) the representation caused the plaintiff injury. Exxon
Corp. v. Emerald Oil & Gas Co., 348 S.W.3d 194, 217 (Tex. 2011) (op. on reh’g).
The summary judgment evidence establishes that the Neimans executed
the Seller’s Disclosure Notice on February 11, 2005, and that they indicated on
the form that they were not aware of any roof defects or malfunctions. The
9
summary judgment evidence also establishes that the Volmiches and the
Neimans had no direct communication or contact prior to the closing. Further,
Mr. Volmich testified that he reviewed the inspection report prior to the closing
and prior to the expiration of the termination period. Mr. Volmich asserted in his
deposition that he had observed the section of the roof that had been identified in
the inspection report as having been repaired but that the leak at issue in this
case was in a different section of the roof.
Also in the summary judgment record is deposition testimony by two
witnesses, Derek Ellis and Jeffrey Garey, who testified that they had once
observed Mrs. Neiman cleaning water from the floor of the home in October or
November 2005, several months after the Neimans had moved out of the home
in May 2005. Garey testified that he mowed the Neimans’ yard during the six-
month period before the property sold in February 2006. He testified that he saw
Mrs. Neiman at the house cleaning water from the hardwood floor in the area
between the den and the living room after it had rained in October or November
2005. He testified that that was the only time he saw water on the floor of the
house prior to the sale of the home.3 Garey further testified that, on that same
occasion, Mrs. Neiman asked him to make sure that the leaves did not build up
on the awning over the deck because it created a dam that would back up and
3
Garey also testified that he continued to provide lawn care for the
Volmiches after they had purchased the home and that he had, after the
Volmiches had purchased the home, observed buckets and “kiddie pools” in the
home in the area between the living room and the den to catch water after it had
rained.
10
cause water to leak inside the home.4 Lastly, there is evidence that a note from
Mrs. Neiman was delivered to the Volmiches after closing. The note states in
relevant part, “F.Y.I.–Make sure to keep roof of awning over deck clean of tree
debris. The live oak tree constantly drops old leaves [and] they will collect [and]
can cause water to leak indoors.”
Based on this summary judgment evidence, the Volmiches argue that they
are not bound by their agreement to purchase the property “as is” because the
Neimans induced them to make the agreement by concealing the roof defects.
The Neimans respond that they did not make any false representations, that the
Volmiches were fully aware of the home’s condition at the time of the purchase
because they obtained their own inspection, and that the inspection disclosed the
problems of which the Volmiches now complain. The Neimans argue that if a
party obtains his or her own inspection, and if that inspection discloses the nature
and extent of the problems later complained about, the inspection provides the
basis for the purchase and supersedes any alleged wrongdoing on the seller’s
part as a matter of law.
The Volmiches’ fraudulent inducement claim requires a showing of
reliance. Eagle Props., Ltd. v. Scharbauer, 807 S.W.2d 714, 723 (Tex. 1990).
Texas courts have held that when false and fraudulent representations are made
concerning the subject matter of a contract but when the person to whom they
4
Ellis corroborated this testimony.
11
are made conducts an independent investigation into the matters covered by the
representations before closing, it is presumed that reliance is placed on the
information acquired by such investigation and not on the representations made
to him and that he therefore cannot seek relief because the bargain later proves
unsatisfactory. Marcus v. Kinabrew, 438 S.W.2d 431, 432 (Tex. Civ. App.—Tyler
1969, no writ); see also Kolb v. Tex. Emprs’ Ins. Ass’n, 585 S.W.2d 870, 872
(Tex. Civ. App.—Texarkana 1979, writ ref’d n.r.e.); Lone Star Mach. Corp. v.
Frankel, 564 S.W.2d 135, 138 (Tex. Civ. App.—Beaumont 1978, no writ); M.L.
Mayfield Petroleum Corp. v. Kelly, 450 S.W.2d 104, 109–10 (Tex. Civ. App.—
Tyler 1970, writ ref’d n.r.e.). “The common thread of the decisions reaching this
conclusion is that, regardless of the result of his investigation, the buyer’s
decision to undertake such an investigation indicates that he or she is not relying
on the seller’s representations about the property.” Bartlett v. Schmidt, 33
S.W.3d 35, 38 (Tex. App.—Corpus Christi 2000, pet. denied).
Similarly, the Volmiches’ DTPA claim requires proof of producing cause.
See Prudential, 896 S.W.2d at 161 (“For DTPA violations, only producing cause
must be shown.”) (citing Tex. Bus. & Com. Code Ann. § 17.50(a)). Producing
cause under the DTPA “requires proof that an act or omission was a substantial
factor in bringing about injury which would not otherwise have occurred.” Id.
(citing McClure v. Allied Stores of Tex., Inc., 608 S.W.2d 901, 903 (Tex. 1980)).
Texas courts have held that if a defendant can demonstrate that a new and
independent basis for the plaintiff’s cause of action exists, that proof may negate
12
that the defendant’s acts were the producing cause of the plaintiff’s injury.
Bartlett, 33 S.W.3d at 39; Dubow v. Dragon, 746 S.W.2d 857, 860 (Tex. App.—
Dallas 1988, no writ). Reliance on external assessments of the feasibility of
purchasing land has been held to introduce a new and independent cause of the
buyer’s damages in several DTPA cases, thus negating the producing cause
element of a DTPA claim. Bartlett, 33 S.W.3d at 40; Camden Mach. & Tool, Inc.
v. Cascade Co., 870 S.W.2d 304, 313 (Tex. App.—Fort Worth 1993, no writ);
Dubow, 746 S.W.2d at 860.
This court has previously considered a similar case and held that an
independent inspection precluded fraud and DTPA claims as a matter of law.
See Camden, 870 S.W.2d at 311, 313. In Camden, the summary judgment
evidence revealed that Camden sought to purchase a building from appellee
Cascade Company and agreed to take the property “as is.” Id. at 307. Camden
obtained an appraisal that revealed a crack in the concrete slab. Id. at 307–08.
Camden viewed the crack shortly after receiving the appraisal and also noticed a
two-inch crack that ran the length of the building. Id. at 308. Camden contacted
the seller who represented that the crack was purely cosmetic, that the crack had
been previously inspected by an engineer, and that the crack was from settling.
Id. Camden then had contractors and a facilities engineer inspect the crack, and
received bids to repair the crack. Id. After Camden unsuccessfully attempted to
negotiate a price reduction, the parties closed on the property. Id. Shortly after
13
closing, the seller sent a letter to Camden disclosing that the foundation had
been repaired six years earlier. Id. at 308–09.
Camden filed suit under the DTPA and for fraud, and the trial court granted
summary judgment for the seller. Id. at 309. Addressing Camden’s fraud claim,
this court held that when a person makes his own investigation into the facts and
knows the representations to be false, he cannot, as a matter of law, be said to
have relied upon the misrepresentations of another. Id. at 311 (citing Laughlin v.
Fed. Deposit Ins. Corp., 657 S.W.2d 477, 483 (Tex. App.—Tyler 1983, no writ)).
This court applied similar reasoning to the producing cause element of Camden’s
DTPA claim and held that representations of another are not the producing cause
of the injury when the buyer conducts his own investigation prior to purchasing
property. Id. at 312–13.
The Dallas Court of Appeals similarly held that, as a matter of law, a
buyer’s inspection of a house’s condition constituted a new and independent
basis for the purchase of the property, which intervened and superseded the
seller’s alleged wrongful act. Dubow, 746 S.W.2d at 860. In Dubow, the
appellants sought to purchase a home from the appellees. Id. at 858. The
appellants obtained an inspection report that revealed several problems with the
home, they confronted the sellers, and the sellers assured them that the home
was a good home with no problems. Id. at 858–59. The parties then
renegotiated and modified the contract. Id. at 859. The appellants subsequently
sued the sellers, and the court’s producing cause inquiry focused on whether the
14
sellers’ statements about the home were the producing cause of the buyers’
damages or whether the buyers’ reliance on their own inspection of the home’s
condition constituted a new and independent basis for the purchase. Id. at 860.
The court determined that the buyers’ reliance on the professional opinions
expressed as part of the inspection was the sole cause of their actual damages.
Id.
Here, the Neimans met their traditional summary judgment burden by
presenting evidence that they had no knowledge of any roof leaks, that the
Volmiches obtained and reviewed an inspection of the home before purchasing
the home, and that the sales contract contained an “as is” clause. That evidence
conclusively proved the Neimans’ entitlement to summary judgment on the
Volmiches’ fraudulent inducement and DTPA claims. See Camden, 870 S.W.2d
at 311, 313; Dubow, 746 S.W.2d at 860; see also Bartlett, 33 S.W.3d at 38–39.
Because the Neimans met their summary judgment burden, the summary
judgment burden then shifted to the Volmiches to present evidence raising fact
issues. See Van v. Pena, 990 S.W.2d 751, 753 (Tex. 1999) (“Once the movant
produces evidence entitling it to summary judgment, the burden shifts to the
nonmovant to present evidence that raises a fact issue.”) (citing Walker v. Harris,
924 S.W.2d 375, 377 (Tex. 1996)). But there are at least two deficiencies in the
Volmiches’ summary judgment evidence. First, the Volmiches have no evidence
that the Neimans knew of the alleged roof leak when they completed the Seller’s
Disclosure Notice in February 2005, meaning that there is no evidence that the
15
Neimans knowingly or recklessly made a false statement or failed to disclose the
existence of a roof leak when they completed the disclosure notice and that the
Volmiches did not contradict the Neimans’ evidence that they did not make a
false statement or fail to disclose a roof leak. But even if the evidence of the
alleged roof leak in the fall of 2005—several months after the Neimans had
moved away from the home and even longer after the Neimans had completed
the disclosure notice—is evidence of a misrepresentation or failure to disclose,
the independent inspection the Volmiches commissioned and reviewed before
deciding to purchase the home supersedes, under the facts of this case, any
alleged misrepresentation or failure to disclose by the Neimans. The inspection
revealed numerous existing or past problems with the home, including previous
roof repairs, leaks, and moisture damage and moisture-related deterioration
throughout the house.
On this record, we are constrained to hold that the trial court did not err by
granting the Neimans’ traditional motion for summary judgment. While the
Neimans, according to the summary judgment record, allegedly knew of the roof
leak at issue during the fall of 2005, the summary judgment evidence does not
present a genuine issue of material fact as to whether the Neimans knew of the
leak at the time they completed the Seller’s Disclosure Notice in February 2005,
and the Volmiches do not argue that the Neimans had a duty to amend the
disclosure statement once they allegedly became aware of the leak in the fall of
16
2005.5 Nor have the Volmiches, in the face of the Neimans’ summary judgment
evidence, shown that fact issues exist as to whether they should not be bound by
their contractual agreement to purchase the house “as-is” in light of their own
independent inspection of the property.
We do not hold that an independent inspection will always bar DTPA and
fraudulent inducement claims. Rather, we hold only that, under the facts and
circumstances of this case, the Neimans met their traditional summary judgment
burden, and the Volmiches did not meet their burden of presenting evidence to
create genuine issues of material fact on each element of their fraudulent
inducement and DTPA claims or on an element of the Neimans’ affirmative
defenses. We therefore hold that the trial court did not err by granting the
Neimans’ traditional motion for summary judgment, and we overrule each of the
Volmiches’ issues.
5
Because the issue of a duty to amend the disclosure notice is not raised in
the summary judgment motion, the summary judgment response, or the parties’
briefs on appeal, we express no opinion on the matter.
17
V. Conclusion
Having overruled each of the Volmiches’ two issues, we affirm the trial
court’s judgment.
ANNE GARDNER
JUSTICE
PANEL: GARDNER, MCCOY, and MEIER, JJ.
DELIVERED: March 14, 2013