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Although the court in Prudential held that an as-is agreement negated causation that was essential to the plaintiff’s recovery for fraud, it also pointed out that the plaintiff did not assert fraud in the inducement, and noted that a buyer is not bound by an as-is agreement that he is induced to make because of the seller’s fraudulent representation or concealment of information. Click here for the full text of this decision FACTS:Philip Nelson negotiated with Adnan Ali Najm for Najm to purchase the Texaco gas station Nelson had operated in Houston for 30 years. Nelson informed Najm that there were four underground gas storage tanks, but denied orally and in writing the existence of an underground waste oil tank. Najm sought to inspect the property and conduct tests, but Nelson dissuaded him from doing so and assured him that he had not had any problems in 30 years. Najm bought the property for $175,000. He paid $100,000 and executed a note on the rest. The contract included a provision that Najm was accepting the property “as is.” Another provision stated that the sale was contingent on Najm’s approval of a contamination inspection. Shortly after closing on the property, Najm went overseas for several months because his mother died. Nelson ran the station while Najm was gone, but when Najm returned, the company that had supplied gas told him it would no longer service him. Another company refused to service the station, too, saying the soil was contaminated. The second company also told Najm at this time of the existence of the waste oil storage tank. Najm asked Nelson to pay the $60,000 it would take to bring the station into compliance with environmental regulations, but Nelson refused. Najm never reopened the station. Instead, he sold the property to a buyer for $125,000 and stopped paying on the note to the Nelsons, so the Nelsons foreclosed on the property and eventually reacquired it. Nelson removed the oil storage tank at this time. Najm filed suit against Nelson for fraud and wrongful foreclosure. He noted that, under state environmental regulations, Nelson was supposed to have disclosed the existence of the oil storage tanks and to have implemented modifications to assure the integrity of underground tanks and pipe systems. Nelson was also supposed to install spill prevention equipment. Nelson denied ever having been apprised of these requirements, thought the Texas Natural Resource Conservation Commission said it regularly sent out compliance notices to all gas stations and Nelson admitted that he had at least received annual dues notices from TNRCC. In a bench trial, the trial court awarded Najm $100,000 in damages. Nelson appeals the amount of damages awarded. He also appeals the legal and factual sufficiency of the evidence that he made a material representation, and he says the “as is” and “independent inspection” clauses negate all of Najm’s claims. HOLDING:Affirmed. Also noting that Texas law has long imposed a duty to abstain from inducing another to enter into a contract through fraudulent means, the court refutes Nelson’s reliance on Prudential Insurance v. Jefferson Associates, 896 S.W.2d 156 (Tex. 1995), which he says absolves him of the duty to disclose the information in light of Najm’s opportunity to conduct a “reasonable investigation” and because of the “as is” clause. As for the inspection argument, Nelson had a statutory duty to disclose the tank’s existence, and he then thwarted Najm’s attempts to inspect the property. Further, Nelson’s claims that he did not know about his duties under the environmental regulations must not have been credible in the court’s eyes since he admitted to receiving dues notices from the TNRCC over the 30 years he operated the station. As for the “as is” clause, the court holds that “[a]lthough the court in Prudential held that an as-is agreement negated causation that was essential to the plaintiff’s recovery for fraud, it also pointed out that the plaintiff did not assert fraud in the inducement, and noted that a buyer is not bound by an as-is agreement that he is induced to make because of the seller’s fraudulent representation or concealment of information.” The court observes that in fraud cases, the prevailing plaintiff is entitled to either the full benefit of the bargain or rescission of the contract to make him whole. Since the sale price was $175,000 and the trial court awarded Najm $100,000, it’s clear he didn’t receive the benefit of the bargain. The earnest money contract was $100,000, so by refunding that, the court effected a rescission of the contract by putting Najm in the position he would have occupied had he not been involved in the fraudulent transaction. OPINION:Keyes, J.; Radack, C.J., Keyes and Alcala, JJ.

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