13331279v2
Where Is “As Is, Where Is”
in Texas?
_____________________________
The Confusing State of the Impact
of Contract Disclaimers
on Tort Claims in Texas
Neil Kenton Alexander
Partner
(713) 226-6614 Telephone
kalexander@porterhedges.com
PORTER HEDGES LLP
1000 Main Street, 36th Floor
Houston, TX 77002
© PORTER HEDGES LLP 2022
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13331279v2
Table of Contents
Introduction ..................................................................................................................................... 1
1. Prototypical Contract Situations ......................................................................................... 3
A. Fact Pattern 1 – Tractor Sale ................................................................................... 6
B. Fact Pattern 2 – Real Estate Lease .......................................................................... 6
C. Fact Pattern 3 – Construction Contract ................................................................... 6
2. Seller’s Potential Options for Avoiding Buyer Claims Based on
Misrepresentations or Non-Disclosure ............................................................................... 7
A. Make full disclosure of material facts ..................................................................... 7
B. Make no disclosures at all ....................................................................................... 7
C. Contractually require Buyer to assume risk or release future claims based
on misrepresentation or non-disclosure .................................................................. 7
D. Contractually require Buyer to limit certain remedies ............................................ 8
3. Statutory Limitations on Seller’s Contractual Ability to Allocate Risks to Buyers ........... 8
A. Texas Deceptive Trade Practices Act ..................................................................... 8
B. Texas Solid Waste Disposal Act (Texas version of CERCLA) .............................. 9
4. Innocent or Negligent Misrepresentation by Seller ............................................................ 9
5. Is Silence a Defense to Fraud? .......................................................................................... 10
6. Intentional or Reckless Misrepresentation or Non-Disclosure by Seller .......................... 11
A. Dallas Farm Machinery Co. v. Reaves, 307 S.W.2d 233 (Tex. 1957) ................. 11
(1) Facts .......................................................................................................... 11
(2) Procedural history ..................................................................................... 11
(3) Discussion ................................................................................................. 12
B. Prudential Ins. Co. of America v. Jefferson Assoc., Ltd., 896 S.W.2d 156
(Tex. 1995) ............................................................................................................ 13
(1) Facts .......................................................................................................... 13
(2) Procedural history ..................................................................................... 13
(3) Discussion ................................................................................................. 13
C. Schlumberger Technology Corp. v. Swanson, 959 S.W.2d 171 (Tex. 1997) ....... 14
(1) Facts .......................................................................................................... 14
(2) Procedural history ..................................................................................... 15
(3) Discussion ................................................................................................. 15
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D. Forest Oil Corp. v. McAllen, 268 S.W.3d 51 (Tex. 2008) .................................... 16
(1) Facts .......................................................................................................... 16
(2) Procedural history ..................................................................................... 17
(3) Discussion ................................................................................................. 17
E. Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of America, 341
S.W.3d 323 (Tex.2011) ......................................................................................... 18
(1) Facts .......................................................................................................... 18
(2) Procedural history ..................................................................................... 19
(3) Discussion ................................................................................................. 19
F. Allen v. Devon Energy Holdings, 367 S.W.3d 355 (Tex. App.—Houston
[1st Dist.] 2012), pet. granted, judgment set aside and remanded by agm’t,
2013 WL 273026 (Tex. 2013)) ............................................................................. 22
(1) Procedural history ..................................................................................... 22
(2) Facts .......................................................................................................... 22
(3) Discussion ................................................................................................. 23
a. Was there a disclaimer of reliance? .............................................. 23
b. Rees-Jones and/or Chief’s Statements and Representations
(Id. 372-76.) .................................................................................. 24
(4) The Forest Oil factors ............................................................................... 27
G. JPMorganChase Bank, N.A. v. Orca Assets G.P., L.L.C., 546 S.W.3d 648
(Tex. 2018) ............................................................................................................ 29
(1) Facts .......................................................................................................... 29
(2) Procedural History .................................................................................... 30
(3) Discussion ................................................................................................. 30
H. International Business Machines Corp. v. Lufkin Industries, LLC, 573
S.W.3d 224 (Tex. 2019) ........................................................................................ 33
I. The Chickens Come Home to Roost: Pogue v. Williamson, 605 S.W.3d
656 (Tex. App. – Houston [1st Dist.] 2020) .......................................................... 35
7. Contract Assumptions of Risk -- El Paso Field Services v. MasTec North
America, 389 SW3d 802 (Tex. 2013) ............................................................................... 37
(1) Facts .......................................................................................................... 37
(2) Procedural history ..................................................................................... 38
(3) Discussion ................................................................................................. 39
