COURT OF APPEALS SECOND DISTRICT OF TEXAS FORT WORTH
NO. 02-11-00332-CV
ATLAS PROPS, INC. APPELLANT F/K/A AR BLAKE, INC.
V.
REPUBLIC WASTE SERVICES OF APPELLEE TEXAS, LTD. D/B/A ALLIED WASTE SERVICES
----------
FROM THE 342ND DISTRICT COURT OF TARRANT COUNTY
MEMORANDUM OPINION1 ----------
Appellant Atlas Props, Inc. appeals the trial court‟s summary judgment in
favor of Appellee Republic Waste Services of Texas, Ltd. d/b/a Allied Waste
Services (Allied Waste). We affirm.
1 See Tex. R. App. P. 47.4. Background Facts
In September 2009, Atlas purchased the Historic Electric Building, a
residential center in Fort Worth, Texas. Atlas‟s President, Adam Blake,
contacted the previous owner‟s trash services provider, Allied Waste, to discuss
continuing their trash services for the building. On September 14, 2009, Blake
met with Noel Clark, an account representative for Allied Waste, and expressed
his concerns about Allied Waste‟s pricing being too expensive. Blake stated in
his sworn affidavit that Clark told him the contract had to be signed in order for
Allied Waste to continue providing service. Blake testified that he agreed to sign
on the condition that the contract be month-to-month so that pricing could be
renegotiated “shortly thereafter.” Clark gave Blake a contract that listed the basic
monthly rate as $592.72 and the term as thirty-six months. Blake signed the
contract.
Blake waited eight months before meeting again with Clark in May 2010 to
discuss Allied Waste‟s pricing, but Clark refused to reduce the price. Atlas
terminated its agreement with Allied Waste and began using a different company
for its trash service. After Allied Waste‟s payment demands were unsuccessful,
Allied Waste filed suit against Atlas for breach of contract.
Allied Waste then moved for summary judgment. Atlas responded, raising
affirmative defenses of duress and fraudulent inducement. The trial court
granted Allied Waste‟s motion for summary judgment. This appeal followed.
2 Discussion
In its sole issue on appeal, Atlas argues that the trial court erred by
granting summary judgment for Allied Waste because Atlas‟s affirmative defense
of fraudulent inducement raises a fact issue as to the terms of the contract.
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 plaintiff is entitled to
summary judgment on a cause of action if it conclusively proves all essential
elements of the claim. See Tex. R. Civ. P. 166a(a), (c); MMP, Ltd. v. Jones, 710
S.W.2d 59, 60 (Tex. 1986). If the nonmovant relies on an affirmative defense, he
must come forward with summary judgment evidence sufficient to raise an issue
of fact on each element of the defense to avoid summary judgment. Brownlee v.
Brownlee, 665 S.W.2d 111, 112 (Tex. 1984).
To establish fraudulent inducement as an affirmative defense to a breach
of contract claim, the party asserting fraudulent inducement must prove that (1)
there was a material representation made that was false; (2) the party who made
the representation knew that it was false or made it recklessly as a positive
3 assertion without any knowledge of its truth; (3) the party making the
representation intended to induce action upon the representation; and (4) the
representation was actually and justifiably relied upon, thereby causing injury.
Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001).
The issue of justifiable reliance is usually a question of fact. 1001 McKinney Ltd.
v. Credit Suisse First Bos. Mortg. Capital, 192 S.W.3d 20, 30 (Tex. App.—
Houston [14th Dist.] 2005, pet. denied). However, a party cannot justifiably rely
on oral statements that are directly contradicted by the express, unambiguous
terms of the written agreement as a matter of law. DRC Parts & Accessories,
L.L.C., v. VM Motori, S.P.A., 112 S.W.3d 854, 858 (Tex. App.—Houston [14th
Dist.] 2003, pet. denied) (en banc) (op. on reh‟g) (noting that a party who enters
into a written contract while relying on a contrary oral argument has “entered into
the written contract with an intent not to perform it”).
Atlas contends that it relied on Clark‟s alleged oral agreement with Blake
that the contract would be month-to-month. However, the front side of the
agreement Blake signed states, “TERM: THE INITIAL TERM OF THIS
AGREEMENT SHALL START ON THE DATE OF THIS AGREEMENT AND
CONTINUE FOR 36 MONTHS THEREAFTER.” This is a clear, unambiguous
term. Thus, Atlas could not have justifiably relied on an oral representation that
the term was for anything other than thirty-six months. See id.
4 Atlas argues that DRC Parts contradicts the supreme court‟s rejection of a
bright line rule barring parol evidence in all cases of fraudulent inducement. See
Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 179 (Tex. 1997)
(holding that a disclaimer of reliance or merger clause will not always bar a
fraudulent inducement claim). Schlumberger, however, also reaffirmed that
certain contractual language can bar fraudulent inducement claims as a matter of
law. See id. at 179 (“Although recognizing that „fraud vitiates a contract,‟ we
concluded that the fraud must be something more than merely oral
representations that conflict with the terms of the written contract.”) (citing
Distribs. Inv. Co. v. Patton, 130 Tex. 449, 452, 110 S.W.2d 47, 48 (1937)). Thus,
we, like many of our sister courts, do not believe that DRC Parts runs afoul of
supreme court precedent. See, e.g., Rinard v. Bank of Am., 349 S.W.3d 148,
153 (Tex. App.—El Paso 2011, no pet.); Athey v. Mortg. Elec. Registration Sys.,
Inc., 314 S.W.3d 161, 165 (Tex. App.—Eastland 2010, pet. denied); Taft v.
Sherman, 301 S.W.3d 452, 458 (Tex. App.—Amarillo 2009, no pet.); Playboy
Enters., Inc. v. Editorial Caballero, S.A.
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COURT OF APPEALS SECOND DISTRICT OF TEXAS FORT WORTH
NO. 02-11-00332-CV
ATLAS PROPS, INC. APPELLANT F/K/A AR BLAKE, INC.
V.
REPUBLIC WASTE SERVICES OF APPELLEE TEXAS, LTD. D/B/A ALLIED WASTE SERVICES
----------
FROM THE 342ND DISTRICT COURT OF TARRANT COUNTY
MEMORANDUM OPINION1 ----------
Appellant Atlas Props, Inc. appeals the trial court‟s summary judgment in
favor of Appellee Republic Waste Services of Texas, Ltd. d/b/a Allied Waste
Services (Allied Waste). We affirm.
1 See Tex. R. App. P. 47.4. Background Facts
In September 2009, Atlas purchased the Historic Electric Building, a
residential center in Fort Worth, Texas. Atlas‟s President, Adam Blake,
contacted the previous owner‟s trash services provider, Allied Waste, to discuss
continuing their trash services for the building. On September 14, 2009, Blake
met with Noel Clark, an account representative for Allied Waste, and expressed
his concerns about Allied Waste‟s pricing being too expensive. Blake stated in
his sworn affidavit that Clark told him the contract had to be signed in order for
Allied Waste to continue providing service. Blake testified that he agreed to sign
on the condition that the contract be month-to-month so that pricing could be
renegotiated “shortly thereafter.” Clark gave Blake a contract that listed the basic
monthly rate as $592.72 and the term as thirty-six months. Blake signed the
contract.
Blake waited eight months before meeting again with Clark in May 2010 to
discuss Allied Waste‟s pricing, but Clark refused to reduce the price. Atlas
terminated its agreement with Allied Waste and began using a different company
for its trash service. After Allied Waste‟s payment demands were unsuccessful,
Allied Waste filed suit against Atlas for breach of contract.
Allied Waste then moved for summary judgment. Atlas responded, raising
affirmative defenses of duress and fraudulent inducement. The trial court
granted Allied Waste‟s motion for summary judgment. This appeal followed.
2 Discussion
In its sole issue on appeal, Atlas argues that the trial court erred by
granting summary judgment for Allied Waste because Atlas‟s affirmative defense
of fraudulent inducement raises a fact issue as to the terms of the contract.
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 plaintiff is entitled to
summary judgment on a cause of action if it conclusively proves all essential
elements of the claim. See Tex. R. Civ. P. 166a(a), (c); MMP, Ltd. v. Jones, 710
S.W.2d 59, 60 (Tex. 1986). If the nonmovant relies on an affirmative defense, he
must come forward with summary judgment evidence sufficient to raise an issue
of fact on each element of the defense to avoid summary judgment. Brownlee v.
Brownlee, 665 S.W.2d 111, 112 (Tex. 1984).
To establish fraudulent inducement as an affirmative defense to a breach
of contract claim, the party asserting fraudulent inducement must prove that (1)
there was a material representation made that was false; (2) the party who made
the representation knew that it was false or made it recklessly as a positive
3 assertion without any knowledge of its truth; (3) the party making the
representation intended to induce action upon the representation; and (4) the
representation was actually and justifiably relied upon, thereby causing injury.
Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001).
The issue of justifiable reliance is usually a question of fact. 1001 McKinney Ltd.
v. Credit Suisse First Bos. Mortg. Capital, 192 S.W.3d 20, 30 (Tex. App.—
Houston [14th Dist.] 2005, pet. denied). However, a party cannot justifiably rely
on oral statements that are directly contradicted by the express, unambiguous
terms of the written agreement as a matter of law. DRC Parts & Accessories,
L.L.C., v. VM Motori, S.P.A., 112 S.W.3d 854, 858 (Tex. App.—Houston [14th
Dist.] 2003, pet. denied) (en banc) (op. on reh‟g) (noting that a party who enters
into a written contract while relying on a contrary oral argument has “entered into
the written contract with an intent not to perform it”).
Atlas contends that it relied on Clark‟s alleged oral agreement with Blake
that the contract would be month-to-month. However, the front side of the
agreement Blake signed states, “TERM: THE INITIAL TERM OF THIS
AGREEMENT SHALL START ON THE DATE OF THIS AGREEMENT AND
CONTINUE FOR 36 MONTHS THEREAFTER.” This is a clear, unambiguous
term. Thus, Atlas could not have justifiably relied on an oral representation that
the term was for anything other than thirty-six months. See id.
4 Atlas argues that DRC Parts contradicts the supreme court‟s rejection of a
bright line rule barring parol evidence in all cases of fraudulent inducement. See
Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 179 (Tex. 1997)
(holding that a disclaimer of reliance or merger clause will not always bar a
fraudulent inducement claim). Schlumberger, however, also reaffirmed that
certain contractual language can bar fraudulent inducement claims as a matter of
law. See id. at 179 (“Although recognizing that „fraud vitiates a contract,‟ we
concluded that the fraud must be something more than merely oral
representations that conflict with the terms of the written contract.”) (citing
Distribs. Inv. Co. v. Patton, 130 Tex. 449, 452, 110 S.W.2d 47, 48 (1937)). Thus,
we, like many of our sister courts, do not believe that DRC Parts runs afoul of
supreme court precedent. See, e.g., Rinard v. Bank of Am., 349 S.W.3d 148,
153 (Tex. App.—El Paso 2011, no pet.); Athey v. Mortg. Elec. Registration Sys.,
Inc., 314 S.W.3d 161, 165 (Tex. App.—Eastland 2010, pet. denied); Taft v.
Sherman, 301 S.W.3d 452, 458 (Tex. App.—Amarillo 2009, no pet.); Playboy
Enters., Inc. v. Editorial Caballero, S.A. de C.V., 202 S.W.3d 250, 258 (Tex.
App.—Corpus Christi 2006, pet. denied).
Because Atlas could not have relied on Clark‟s alleged fraudulent
statements as a matter of law because they directly contradict the express and
unambiguous terms of the contract, and because Atlas does not argue that
5 another genuine issue of material fact exists,2 the trial court did not err by
granting summary judgment in favor of Allied Waste. We overrule Atlas‟s sole
issue.3
Conclusion
Having overruled Atlas‟s sole issue, we affirm the judgment of the trial
court.
LEE GABRIEL JUSTICE
PANEL: LIVINGSTON, C.J.; DAUPHINOT and GABRIEL, JJ.
DELIVERED: February 23, 2012
2 Atlas argued economic duress as an affirmative defense in its response to Allied Waste‟s motion for summary judgment, but it did not address duress on appeal. 3 Because we hold that Atlas cannot sustain its fraudulent inducement defense as a matter of law, we do not need to address its arguments regarding the validity of the contract‟s merger clause. See Tex. R. App. P. 47.1.