Italian Cowboy Partners, Ltd., Francesco Secchi and Jane Secchi, Petitioners v. the Prudential Insurance Company Of…

Summary

The Texas Supreme Court held that a commercial lease's acknowledgment that no representations had been made outside the lease, together with an integration clause, constituted only a standard merger clause that did not disclaim reliance and therefore did not bar the tenant's fraudulent-inducement claim. It further held that the landlord's property manager's statements that the building was problem-free and a perfect restaurant site were actionable misrepresentations of material fact supported by legally sufficient evidence that they were known to be false, that the lease did not relieve the landlord of liability for breach of the implied warranty of suitability because curing the sewer-gas defect required alterations the tenant could not perform and implicated the landlord's maintenance duty, that the tenant did not ratify the lease, and that the $600,070.40 rescission-damages award stood with the pleading objection waived. The court reversed the court of appeals' take-nothing judgment, rendered judgment for the tenant on rescission premised on the warranty breach, and remanded for factual-sufficiency review of the fraud claims (a predicate for exemplary damages) and the rescission damages. Justice Hecht, joined by Justices Willett and Guzman, dissented, contending the tenant should be bound by its own lease statement that no outside representations were made and that the repair allocation precluded the warranty claim as well.