Bradley litigation attorneys from our Houston and Birmingham offices won an important victory for clients Cutten Development L.P. and Davis Development Inc. in a $33 million lawsuit related to the sale of an apartment complex in Houston.
Community Management, LLC, alleges that it purchased the complex from Cutten in August 2007. By summer 2010, tenants in half of the apartment buildings had reported water leaks. Community alleged several fraud-based claims against Cutten and Davis, asserting that they had misrepresented and omitted certain facts about the property’s condition.
Besides providing a “feasibility period” before the contract was final, during which Community was to inspect the property and determine whether it was satisfactory, the sales contract also included an “as is” and “disclaimer of reliance” provision:
Except for the representations and warranties expressly set forth above in Section 8.1.1, the Property is expressly purchased and sold “AS IS,” “WHERE IS,” and “WITH ALL FAULTS.” The Purchase Price and the terms and conditions set forth herein are the result of arm's-length bargaining between entities familiar with transactions of this kind, and said price, terms and conditions reflect the fact that Purchaser shall have the benefit of, and is not relying upon any information provided by Seller or Broker or statements, representations, or warranties, express or implied, made by or enforceable directly against Seller or Broker….
Bradley attorneys made a motion for summary judgment, arguing that Community’s fraud claims, including fraudulent inducement, were invalid because the agreement included the “as is” and “disclaimer of reliance” clause. The Texas state trial court granted summary judgment in favor of Cutten and Davis, determining, among other grounds, that Community had contractually denied reliance on any alleged misrepresentations and/or omissions.
Community appealed, contending that the trial court erred by granting summary judgment based on the “as is” and “waiver of reliance” provisions. After the Court of Appeals (Texas’ intermediate appellate court) upheld the summary judgment ruling, Community hired additional appellate counsel to handle the appeal to the Texas Supreme Court. Community’s counsel filed a petition for review with the Texas Supreme Court on December 14, 2016.
The Texas Supreme Court denied review of the petition on June 9, 2017.
Bradley’s Houston-based team – Ian Faria, Jared Caplan and Ryan Kinder in our Litigation and Construction Practice Groups – handled the matter in the trial court and intermediate appellate court. When the plaintiff petitioned the Texas Supreme Court, Marc Ayers and Nick Danella in Birmingham’s Appellate Litigation Group joined the Houston team for the response.
Because Texas Supreme Court review is discretionary, Bradley’s attorneys filed an extensive response, arguing that the summary judgment ruling should stand. This “disclaimer of reliance” issue was a hot issue in Texas at the time, with the Texas Supreme Court considering several similar cases on discretionary review.
On top of our clients being thrilled about winning this high-exposure case, the matter demonstrates how well Bradley can cross-service our clients over the course of a case.