Jimmy Bynum & Hillary Bynum v. Prudential Relocation Services Limited Partnership

Citation: Not availableDocket: 01-02-00747-CV

Court: Court of Appeals of Texas; March 10, 2004; Texas; State Appellate Court

Original Court Document: View Document

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

On March 11, 2004, the Court of Appeals for the First District of Texas issued an opinion regarding the appeal by Jimmy and Hillary Bynum, who, along with their minor children, sued various Prudential entities and the McNamaras for multiple claims, including breach of contract, warranty violations, DTPA violations, fraud, negligence, and strict products liability. The trial court had granted summary judgment in favor of Prudential and the McNamaras, leading to the Bynums' appeal. 

The Bynums raised seven issues on appeal, primarily arguing that the "as is" clause in their purchase agreement should not be enforceable, that there were material factual disputes regarding breaches of warranties and statutory rights under the Texas Property Code, and that they were entitled to rescission due to mistakes. Additionally, they contended that the trial court erred in denying their motion for partial summary judgment on negligence per se and in denying their motion for a continuance. 

The court affirmed the trial court's decision, emphasizing that the facts must be viewed in favor of the Bynums. Background facts indicated that the McNamaras undertook significant remodeling of their home before selling it, with Prudential being engaged to assist in the sale process. The opinion withdrew a previous judgment from November 10, 2003, but the ultimate judgment remained unchanged.

The McNamaras submitted a Homeowners Disclosure Statement (HDS) to Prudential during the appraisal and purchase process, indicating no structural modifications were made by previous owners without permits. They acknowledged making changes by stating they remodeled the bathrooms and marked "N/A" for the permits question. The Bynums, who later purchased the home from Prudential, received two disclosure statements: one from the McNamaras and one from Prudential, which had sections regarding property condition marked out. The Bynums signed an earnest money contract for $341,000 and a rider stating that Prudential, as a relocation management company, had never lived on the property and that it was sold "as is." The rider included an option period for the Bynums to terminate the contract for any reason within five days, and if not exercised, they accepted the property in its current condition, agreeing not to rely on the accuracy of the disclosure statements. It also stipulated that failure to notify the seller of defects constituted acceptance of the property's condition and waived future claims. Prudential accepted the offer on May 8, 2000, and the contract was amended on May 20, 2000, to include terms for repairs at Prudential's expense. Prior to closing, the Bynums had the property inspected, but some modifications were concealed and not easily inspected. After moving in, the Bynums discovered sewer water leaking into the backyard when using the shower.

The Bynums discovered multiple serious issues in their home, including the absence of a vent pipe leading to sewer water accumulation under the master bath and in the backyard, soggy areas near the hall bathroom due to drainage problems, and the use of prohibited PVC piping in the attic, which resulted in a leak and potential toxic mold growth. Electrical connections in the bathrooms were ungrounded, posing an electrocution risk, and new framing after remodeling failed to adequately support the attic, causing a ceiling crack. The Bynums allege numerous violations of City of Houston codes during the remodeling, including the failure to obtain necessary permits and the use of unlicensed contractors. Due to these issues and mold exposure, they vacated the property and claim respiratory problems and financial inability to address the defects.

In terms of legal standards, a motion for summary judgment requires the movant to demonstrate no genuine issue of material fact exists and entitlement to judgment as a matter of law, with evidence favoring the nonmovant. A defendant can achieve summary judgment if they negate at least one element of the plaintiff's claims. The Bynums challenge the enforceability of the "as is" clause in their purchase agreement, arguing it cannot bar their claims due to factors such as inconspicuousness, fraudulent misrepresentation, and the inability to waive claims under the Texas Deceptive Trade Practices Act (DTPA). The Texas Supreme Court generally holds that "as is" clauses negate causation in claims of DTPA, fraud, and negligence, indicating that buyers assume the risk of misjudgment when agreeing to such terms.

Exceptions to the enforceability of “as is” clauses exist when fraudulent representation or concealment by the seller is involved. A buyer is not bound by such a clause if they can demonstrate the seller made affirmative misrepresentations or obstructed their ability to inspect the property. In assessing the enforceability of an “as is” clause, courts consider the overall circumstances, including the significance of the clause to the agreement and the relative bargaining power of the parties. 

In the case of the Bynums, despite claiming a lack of sophistication in purchasing property and arguing that the disclaimers were inconspicuous boiler-plate provisions, the court found that the Bynums were adequately informed and represented. They had prior experience with “as is” contracts and were assisted by a licensed real estate broker. Additionally, Mr. Bynum confirmed reading the clause before signing, which negated their claim of inconspicuousness. Therefore, the court concluded that the Bynums could not set aside the “as is” clause based on their alleged unsophistication or the argument that the clause was inconspicuous.

The Bynums are not entitled to set aside the “as is” clause and similar disclaimers, as these were deemed inconspicuous boilerplate provisions accepted by unsophisticated purchasers. They argue that Prudential and the McNamaras fraudulently misrepresented and concealed material facts regarding remodeling done without proper permits. However, to invalidate the “as is” clause based on fraudulent misrepresentation, the Bynums must demonstrate that Prudential had actual knowledge of such misrepresentation, which they failed to do. Although Prudential may have had reason to suspect issues with the property, there was no evidence of actual knowledge regarding the lack of permits.

The Bynums reference the Home Disclosure Statement (HDS) submitted by the McNamaras as evidence of knowledge about the remodeling permits. However, the McNamaras answered “no” to whether structural changes were made without permits and “yes” when asked if they remodeled bathrooms, marking “N/A” to whether all necessary permits were obtained. This response was interpreted as indicating they believed permits were not necessary for the admitted remodeling. The HDS responses align with the McNamaras' claim of being unaware of any unpermitted modifications.

Furthermore, analysis of the McNamaras' section 5.008 disclosure form showed they answered “no” regarding knowledge of any alterations made without necessary permits. The Bynums argue this disclosure was knowingly false, citing various factors, including the HDS indicating awareness of permit requirements, Mrs. McNamara's failure to obtain necessary approval, and their general knowledge of building permits due to neighboring renovations. Despite these claims, the evidence presented does not sufficiently establish that the McNamaras had actual knowledge of the need for permits when they made their disclosures.

Factors (1) and (6) do not provide evidentiary support for the Bynums. The McNamaras' "N/A" response on the HDS fails to imply that they knew permits were needed but did not obtain them. Furthermore, Kindsfather’s statement was not presented in opposition to the summary judgment motion but was part of the Bynums’ motion for continuance, thus lacking relevance. Under Texas Rule of Civil Procedure 166a(i), the trial court must grant a no-evidence motion for summary judgment if no genuine issue of material fact is raised by the respondent. The Bynums did not submit the affidavit as evidence supporting their claims; it was only related to their continuance motion. They also did not assert Kindsfather's statement in their responses to the motions for summary judgment from Prudential and the McNamaras, which precludes consideration of its evidentiary value on appeal.

Upon reviewing the remaining evidence, even if the Bynums’ claims regarding the McNamaras’ knowledge of permitting requirements are accepted as true, there remains insufficient evidence to demonstrate actual knowledge of remodeling without necessary permits. The cited case of Prudential illustrates that mere suspicion or carelessness does not equate to actual knowledge of wrongdoing. Consequently, without evidence of intentional misrepresentation or concealment by the McNamaras or Prudential, the Bynums cannot invalidate the 'as is' clause on these grounds. The Bynums also contend that the 'as is' clause does not protect Prudential or the McNamaras from liability for ongoing intentional wrongful conduct, specifically related to the failure to disclose material information, including the HDS provided to Prudential by the McNamaras.

A cause of action under the Texas Deceptive Trade Practices Act (DTPA) arises if a seller knowingly fails to disclose information about goods or services to induce a consumer into a transaction they would not have entered had the information been disclosed. However, the Bynums did not provide evidence that the McNamaras or Prudential had actual knowledge of any remodeling done without permits, thus precluding a finding of intentional wrongdoing.

The Bynums claim that even if the 'as is' clause in their agreement is enforceable, it cannot waive their DTPA claims since it does not meet the waiver requirements outlined in the DTPA. The court referenced a previous decision (Prudential) which clarified that the 'as is' clause does not constitute a waiver of DTPA rights but indicates that no basis exists for asserting such rights. Consequently, the 'as is' clause can serve as a basis for summary judgment against the Bynums’ DTPA claims without the need for compliance with waiver requirements.

Regarding the applicability of the 'as is' clause to the Bynums' minor children, the Bynums argued that their children, lacking the capacity to contract, should not be bound by this clause. Under the DTPA, standing as a consumer is determined by the relationship with the transaction rather than by a direct contractual relationship with the seller. A third-party beneficiary can assert a DTPA cause of action if intended to benefit from the transaction. However, even if the Bynum children are considered intended beneficiaries, there is no legal authority suggesting they would not be bound by the contract's terms, including the 'as is' clause. Generally, third-party beneficiaries do not have greater rights under a contract than the party who negotiated it.

A third-party beneficiary is limited to the rights outlined in a contract, meaning the Bynum children cannot challenge the 'as is' clause simply because they were not parties to the contract. The Bynums claim that Prudential and the McNamaras breached express and implied warranties concerning a disclosure form and remodeling details. However, under Texas law, purchasing a property 'as is' implies that no express or implied warranties exist, and buyers must rely on their own inspection. The court concludes that the Bynums cannot claim breach of express warranty due to this 'as is' agreement. Regarding implied warranties, while builders have an implied warranty of habitability for subsequent purchasers, this does not apply to non-builder sellers like the McNamaras and Prudential. Additionally, claims for implied warranties related to repairs cannot be pursued against them because the remodeling was performed by a different party, Kindsfather. Consequently, the Bynums are not entitled to recover damages from Prudential or the McNamaras for breach of implied warranties, leading to the overruling of their claims.

The Bynums contend they are entitled to terminate their home purchase and recover payments due to Prudential's non-compliance with Section 5.008 of the Texas Property Code, which mandates disclosure of any known alterations or repairs made without necessary permits. However, evidence shows neither the McNamaras nor Prudential had actual knowledge of such remodeling issues. The language of Section 5.008(d) clarifies that sellers only need to complete the notice based on their knowledge at the time of signing, negating the Bynums' claim of a continuing disclosure obligation. Consequently, without evidence of a violation, the Bynums are denied relief under this section.

In their claim for rescission based on a mutual or unilateral mistake regarding the home's condition, the Bynums failed to timely attempt rescission after moving in, which Prudential cited as a ground for summary judgment. The Bynums did not address this point on appeal, leading to the affirmation of summary judgment against them for rescission.

Regarding claims of negligent misrepresentation and statutory fraud under Section 27.01 of the Texas Business and Commerce Code, the Bynums argue there is a genuine issue of material fact. However, since their purchase agreement includes a valid 'as is' clause, which signifies a contractual disavowal of reliance on any representations made by Prudential or the McNamaras, the Bynums cannot demonstrate reliance. Thus, summary judgment against these claims was also deemed appropriate.

The Bynums contended that the trial court incorrectly denied their motion for partial summary judgment against the McNamaras, asserting negligence per se due to the McNamaras' remodeling without necessary permits. However, even assuming negligence per se, the Bynums were required to demonstrate causation to succeed. The existence of a valid 'as is' clause in the purchase agreement precluded claims of injury from the seller's negligent conduct, as it indicated that the Bynums relied solely on their own property inspection. Consequently, the court upheld the trial court's ruling, affirming the denial of the Bynums’ motion. 

Additionally, the Bynums challenged the denial of their motion for continuance but failed to provide legal authority to substantiate their claim, leading to a waiver of the issue due to inadequate briefing. Ultimately, the court affirmed the trial court's judgment.