Opinion
No. 10-06-00135-CV
Opinion delivered and filed April 25, 2007.
Appeal From the 82nd District Court Falls County, Texas Trial Court No. 33,841.
Before Chief Justice Gray, Justice Vance, and Justice Reyna.
MEMORANDUM OPINION
Appellant Gloria Ann Fryar sued Appellee Nicholas Mees, d/b/a Mees Auto Repair, in connection with damages relating to the purchase of an automobile. The trial court granted Mees's Original Motion for Summary Judgment. This Court reversed the judgment and remanded the cause to the trial court. Mees filed a Second Amended Motion for Summary Judgment. The trial court granted the summary judgment in favor of Mees; Fryar appeals that judgment.
Background
Fryar purchased a 1990 Lincoln automobile from Mees. Before the purchase, Fryar drove the car twice, and Mees assured her that it was a "good car." Mees stated that it was his wife's car, and disclosed that the transmission overdrive gear was defective but that Fryar "should not have to replace anything for at least two years or so." With this knowledge, Fryar entered into negotiations to purchase the car.
The parties agreed to an installment purchase agreement which Fryar executed in addition to an "as is" agreement and a warranty disclaimer. The "as is" clause was printed in large type on a separate form. It stated: "AS IS — NO WARRANTY — You will pay all costs for any repairs. The dealer assumes no responsibility for any repairs regardless of any oral statements about this vehicle." The warranty disclaimer stated that the automatic transmission was defective at the time of purchase and that the price of the car had been adjusted to allow for repairs that may have been caused by the defect. In the margin of this document, Fryar made the following handwritten note: "Overdrive unit is bad, can drive in drive with no problem for at least two years."
Shortly after Fryar purchased the car, she encountered problems with the transmission. She subsequently defaulted on the installment contract, and Mees repossessed the car in accordance with the sales contract.
Following the repossession of the car, Fryar filed suit against Mees for fraudulent misrepresentation under the Texas Deceptive Trade Practices Act, breach of express warranty, fraud, wrongful repossession, and sale of a vehicle in violation of Texas Finance Code Section 348.412.
Standard of Review
We review the decision to grant or deny a summary-judgment motion de novo. See Provident Life Accident Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). The standards for reviewing a traditional motion for summary judgment are well established. Nixon v. Mr. Property Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). The movant has the burden of showing that no genuine issue of material fact exists and that he is entitled to summary judgment as a matter of law. American Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997); Ash v. Hack Branch Distributing Co., 54 S.W.3d 401, 413 (Tex.App.-Waco 2001, pet. denied). The reviewing court must accept all evidence favorable to the non-movant as true. Nixon, 690 S.W.2d at 549; Ash, 54 S.W.3d at 413. Every reasonable inference must be indulged in favor of the non-movant and all doubts resolved in his favor. American Tobacco, 951 S.W.2d at 425; Ash, 54 S.W.3d at 413.
Fryar brings three issues on appeal.
"AS IS" Agreement
In her first issue, Fryar argues that the trial court erred in granting Mees's summary judgment because the "as is" agreement was not enforceable.
The validity of an "as is" agreement is determined in light of the sophistication of the parties, the terms of the "as is" agreement, whether the "as is" clause is freely negotiated, whether it was an arm's length transaction, and whether there was a knowing misrepresentation or concealment of a known fact. Prudential Ins. Co. of Am. v. Jefferson Assocs., Ltd., 896 S.W.2d 156, 160-62 (Tex. 1995).
When viewed in the light most favorable to Fryar, the summary judgment evidence shows that the "as is" clause was freely negotiated and was an arm's length transaction. Although Fryar was not as knowledgeable about cars as Mees, she had an opportunity to have the car inspected and her son, an auto mechanics student, accompanied her to drive the car before the purchase. Fryar admitted that she understood that the car was defective at the time of purchase, and that she understood that she was purchasing the car "as is."
In Prudential, the court stated that in determining the validity of an "as is" clause, a reviewing court must also look to the terms of the agreement itself. The terms of the agreement in Prudential stated that the purchaser agreed to take the property "as is" with any and all latent and patent defects. Prudential, 896 S.W.2d at 160. The Prudential agreement also stated that the purchaser acknowledged that it was relying upon its own examination of the property. Id. It is not necessary that the terms of an "as is" agreement be as specific as the Prudential terms if the contract leaves no doubt exactly what the parties agreed to. Larsen v. Langford, 41 S.W.3d 245, 252 (Tex.App. — Waco 2001, pet. denied). The terms of the present agreement are clear. By signing the agreement with the "as is" language and signing the warranty disclaimer, there was no doubt that Fryar intended to rely solely on the statements in the contract.
Viewing the evidence in the light most favorable to Fryar, we find that the parties actively negotiated the terms of the contract and conducted the transaction at arms length. Fryar received the benefit of a reduced price because of the defect. She signed two documents which stated that she was purchasing the car without any warranties, and she made a handwritten notation which indicated that she understood that the transmission was defective. Accordingly, we hold that the agreement contained a valid "as is" clause which negates causation unless Fryar established that she was fraudulently induced to enter the agreement.
Fraudulent Inducement
An otherwise valid "as is" agreement will not negate the causation element of a claim if the buyer can prove fraudulent inducement such as a knowing misrepresentation or concealment of a known fact. Prudential, 896 S.W.2d at 162. In the context of a summary judgment proceeding, fraudulent inducement is in the nature of a counter-defense responding to the defense raised by the seller. Larsen, 41 S.W.3d at 253. To successfully raise this counter-defense, the buyer must present some summary judgment evidence that "but for" the representations of the seller regarding the condition of the subject of the contract, the buyer would not have assented to a contract which contained an "as is" clause. Id. This is established by presenting evidence to raise a fact issue on each element of a simple fraud claim. Id. ( citing Fletcher v. Edwards, 26 S.W.3d 66, 77 (Tex.App.-Waco 2000, pet. ref'd)). The elements of simple fraud are:
(1) a material representation;
(2) which is false;
(3) which was known to be false when made or was made recklessly as a positive assertion without knowledge of its truth;
(4) which was intended to be relied upon;
(5) which was relied upon; and
(6) which caused injury.
Id.
Fryar argues that Mees represented that the car was "good" and that she should not have to replace anything for two years. With regard to the representation, it must be a material representation regarding the condition of the subject of the contract before it will raise the issue of fraudulent inducement to enter into the contract. Larsen, 41 S.W.3d at 254. With regard to the statement by Mees that it was "a good car," we hold that this statement, like the statements in Prudential that the property was "superb" and "super fine," was not a misrepresentation of material fact, but merely "puffing" or opinion, and thus, could not constitute fraud. Id.
Further, we do not find that Mees's statement that the car would not need repairs for two years was a misrepresentation of material fact. A statement is not fraudulent unless the maker knew it was false when made or made it recklessly without knowledge of the truth. Id. (citing DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex. 1990)). Although Fryar may have attached significance to this statement, there is no evidence that Mees knew or had any reason to suspect that this information was incorrect. Accordingly, in the absence of any evidence that Fryar was fraudulently induced, we hold that the "as is" clause was valid. We overrule Fryar's first issue.
Validity of Installment Sales Contract
In her second issue, Fryar argues that the trial court erred in granting summary judgment in favor of Mees because the retail installment contract violated Texas Finance Code sections 348.412(a)(1)(B) and (a)(2). Section 348.412(a)(1)(B) provides: "A retail installment contract may not provide for a waiver of the retail buyer's rights of action against the holder or a person acting on the holder's behalf for an illegal act committed in the repossession of the motor vehicle. TEX. FIN. CODE ANN. § 348.412(a)(1)(B) (Vernon 2006). Section 348.412(a)(2) provides that "[a] retail installment contract may not provide that the retail buyer agrees not to assert against the holder a claim or defense arising out of the sale." Id. § 348.412(a)(2).
The provision of the contract at issue states:
I agree that I will not keep any personal property of any great value in said automobile during the term of this loan, but in the event that I do, I assume any and all responsibility for any personal property left in the car by me or by other persons, should that property be lost or missing for any reason from said car after it has been taken back by you and stored in a reasonably safe place.
Fryar argues that this provision invalidates the contract because it waives the buyer's right of action against Mees for any act in connection with the personal property gathered during the repossession. Mees relies on Martens v. General Motors Acceptance for the proposition that the contract complies with the Finance Code. Martens v. General Motors Acceptance Corp., 584 S.W.2d 941 (Tex.Civ.App.-Dallas 1979, no writ.).
In Martens, the retail installment contract provided that, upon repossession of the automobile, "[s]eller may take possession of any other property in the . . . motor vehicle at time of repossession, wherever such other property may be therein, and hold same for buyer at buyer's risk without liability on the part of seller." The court held that, even construing the statute broadly to effectuate its intent, the provision does not violate the Code. Id. at 944. It found that no provision of the contract expressly waived any of the buyer's rights of action for illegal acts of the seller during repossession. Id. The contract in the present case contains a similar provision, and we hold that the provision does not violate Section 348.412(a)(1)(B). See TEX. FIN. CODE ANN. § 348.412(a)(1)(B). Further, we find that this provision merely defines the bailor-bailee relationship in the event personal property not subject to the mortgage is in the vehicle when it is repossessed. See Martens, 584 S.W.2d at 943. It does not foreclose Fryar's rights to "assert against the holder a claim or defense arising out of the sale." See TEX. FIN. CODE ANN. § 348.412(a)(2). We overrule Fryar's second issue.
Commercially Reasonable Sale
Fryar's third issue contends that the trial court erred in granting Mees's summary judgment motion because he failed to show there were no genuine issues of material fact as to whether the sale of the car was commercially reasonable.
The disposition of collateral is made in a commercially reasonable manner if the disposition is made:
(1) in the usual manner on any recognized market;
(2) at the price current in any recognized market at the time of the disposition; or
(3) otherwise in conformity with reasonable commercial practices among dealers in the type of property that was the subject of the disposition.
TEX. BUS. COM. CODE ANN. § 9.627 (Vernon 2002). Mees stated in his summary judgment affidavit that he sold the vehicle by offering it for sale at his car dealership, as he does all automobiles he has for sale; he was paid $4,495 for the car, a price "within the range of the reasonable market value of a vehicle of that type in its condition;" and that he sold the vehicle in accordance with the customary practice of dealers in used automobiles in Falls County at the time of the sale.
Fryar argues that Mees's affidavit was not sufficient summary judgment evidence because Mees is an interested witness. Summary judgment may be based on the affidavit of an interested witness "if the evidence is clear, positive and direct, otherwise credible and free from contradictions and inconsistencies, and could have been readily controverted." TEX. R. CIV. P. 166a(c). The types of facts that traditionally have been held to be invulnerable to contravention are those that are not objectively verifiable, such as self-serving statements of knowledge and intent. Ash, 54 S.W.3d at 410. Mees's affidavit refers to ascertainable facts regarding the commercial practices of dealers of used cars and the current price of such a vehicle in the recognized market. Such statements could have been readily controverted; however, Appellant failed to do so. Accordingly, we overrule her third issue.
Conclusion
Having overruled Fryar's three issues, we affirm the judgment of the trial court.
Affirmed