Under both Texas and New York law, fraud in the inducement is a defense to enforcement of a contract. See Turner v. Houston Agricultural Credit Corp., 601 S.W.2d 61, 64 (Tex.Civ.App. — Houston [1st Dist.] 1980, writ ref'd n.r.e.); American Imagination Corp. v. W.R. Pierce Assocs., Inc., 601 S.W.2d 147, 148 (Tex.Civ.App.-El Paso 1980, no writ); Centronics Financial Corp. v. El Conquistador HotelCorp., 573 F.2d 779, 782 (2d Cir. 1978); Millerton Agway Coop., Inc. v. Briarcliff Farms, Inc., 17 N.Y.2d 57, 268 N.Y.S.2d 18, 21, 215 N.E.2d 341, 343 (1966). Accordingly, Plaintiffs' allegations of fraud in the inducement, if admissible, prevent summary judgment at this point in the litigation.
See TEX. R. CIV. P. 166a(c); see also Am. Imagination Corp. of Tex. v. W. R. Pierce & Assocs., Inc., 601 S.W.2d 147, 149 (Tex. App.—El Paso 1980, no writ) (holding that a general denial did not raise a genuine issue of material fact as to the reasonableness of fees claimed). Third, Montalvo claims that the trial court's granting of the Guerras' motion for summary judgment denied him due process because it ruled on the motion prior to a hearing.
Hooks v. Samson Lone Star, Ltd. P'ship , 457 S.W.3d 52, 57 (Tex. 2015) ; see alsoAm. Imagination Corp. of Tex. v. W.R. Pierce & Assocs., Inc. , 601 S.W.2d 147, 148 (Tex. Civ. App.—El Paso 1980, no writ) (recognizing fraud vitiates an otherwise apparently valid contract).Neither party cites authority that directly holds a party is bound by a contractual clause prohibiting recovery of exemplary damages when the party is fraudulently induced into entering the contract. Bombardier cites to cases that generally hold limitations of liability clauses are enforceable; however, none of the cases involve fraud by nondisclosure. For example, in Windsor Communications, Inc. v. Republic National Bank of New York , No. 05-93-01030-CV, 1994 WL 556847 (Tex. App.—Dallas Oct. 12, 1994, writ denied) this Court upheld a summary judgment involving claims for consequential, special, and punitive damages.
Thus, the parol evidence rule will not prevent the use of oral testimony to establish fraud or mutual mistake. American Imagination Corp. of Texas v. W. R. Pierce Associates, Inc., 601 S.W.2d 147, 148 (Tex.Civ.App.-El Paso 1980, no writ). Accordingly, even where oral evidence tends to vary, contradict, or add to the terms of a contract, courts have recognized that such evidence is admissible to show inducements for executing the written agreement.
As previously noted, the established rule provides that fraud is an exception to the parol evidence rule. See American Imagination Corp. of Texas v. W.R.Inc., 601 S.W.2d 147, 148 (Tex.Civ.App. — El Paso 1980, no writ); Anderson v. Havins, supra. We conclude that appellee's testimony regarding the life estate issue was properly admitted.