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Click here for the full text of this decision Appellants are not entitled to have the “as is” clause set aside on the grounds of fraudulent misrepresentation or concealment. FACTS:John and Susan McNamara hired Ray Kindsfather in 1999 to remodel two bathrooms in their house. Kindsfather added new sewer lines and extensive electrical and plumbing work was done. The McNamaras put their house up for sale in 2000. Their employer hired Prudential Residential Services to help them sell their home, and the McNamaras separately hired another real estate agency to list the house for sale. On Prudential’s “Homeowners Disclosure Statement,” the McNamaras answered “no” to the question asking if any structural additions, changes or repairs were made to the house without obtaining necessary permits or approvals. They answered “yes” to the question of whether they had made any structural additions, changes or repairs and noted “remodeled bathrooms.” They also answered “N/A” to the question asking, “have you obtained all necessary permits and governmental approvals?” Jimmy and Hillary Bynum were interested in buying the house. They were given two disclosure statements, one from Prudential and one from the McNamaras, required by Property Code �5.008. The McNamaras once again answered “no” to the question on whether repairs, alterations or additions were made without necessary permits. On the Prudential form, this question was marked out with an “X.” The Bynums entered into an earnest money contract offer for $341,000. The rider to the contract said that the property was being sold “as is.” It also allowed for the Bynums to terminate the contract within five days. With regard to the �5.008 disclosure statements, the rider said that the buyers agreed that they were not relying on the accuracy of the documents. Finally, the rider said if the buyers did not notify the seller in writing of defects by a certain day, future objections would be waived. The McNamaras accepted the offer, and before closing on the house, the Bynums had it inspected. No defects were reported. Several months after the closing, the Bynums discovered various problems with the bathrooms. Along with certain structural defects, the Bynums also discovered that prohibited PVC plastic pipe had been used in the construction and that toxic mold had begun to grow from the leak in the PVC pipe. The Bynums, on behalf of themselves and their children, sued the McNamaras, Prudential, Kindsfather and two others. Their claims against the McNamaras and Prudential were severed. Against these two, the Bynums asserted claims of breach of contract, breach of express and implied warranties, violation of deed restrictions, violations of the Deceptive Trade Practices Act, fraud, violations of Business and Commerce Code �27.01, negligence, negligence per se, negligent misrepresentation, failure to provide disclosures required by �5.008, and strict products liability. They sought rescission and a constructive trust. The trial court granted Prudential’s and the McNamaras’ no-evidence and traditional summary judgment motions. On appeal, the Bynums argue: 1. the “as-is” clause in the purchase agreement cannot be enforced against the Bynums; 2. there is an issue of material fact as to whether there was a breach of express and implied warranties; 3. there is an issue of material fact as to whether, under �5.008, they were entitled to terminate the purchase of their home and recover monies paid; 4. there is an issue of material fact as to whether the Bynums are entitled to the equitable relief of rescission under the doctrine of mistake; and 5. there is an issue of material fact as to where Prudential or the McNamaras engaged in statutory fraud or negligent misrepresentation. HOLDING:Affirmed. The court discusses the various issues related to the validity of the “as-is” clause: 1. it is an inconspicuous boiler-plate term entered into by parties of greatly disproportionate sophistication; 2. it is the product of fraudulent misrepresentation or concealment of information; 3. it cannot be used to release a party from intentional wrongful future conduct; 4. it cannot be used to waive DTPA claims; and 5. cannot be enforced against the Bynums’ minor children. The court confirms that according to Prudential Ins. Co. v. Jefferson Assocs. Ltd., 896 S.W.2d 156 (Tex. 1995), “as-is” clauses generally defeat the causation element in DTPA, fraud and negligence cases. There are exceptions, the court acknowledges, and the clauses must be examined within the totality of the situation. The court agrees that the “as-is” clause in this case is a standard boiler-plate clause, but the court says it is not convinced that the Bynums were so unsophisticated that enforcing the provision would be unfair. The Bynums had the house inspected, they were represented by a real estate broker, Jimmy Bynum said in his deposition that he had purchased and sold other properties, including property sold “as-is,” and that he worked for a company that sold salvaged goods “as-is.” Further, though the clause may have been inconspicuous, there is no doubt that the Bynums knew they were buying the house “as-is.” The court rejects the Bynums’ argument that Prudential and the McNamaras fraudulently misrepresented and concealed material facts, which would negate enforcement of the “as-is” clause. The McNamaras answers on the HDS were not fraudulent; the court does not even interpret them as inconsistent since a “yes” or “no” answer to the question they answered “N/A” on could have been interpreted as inaccurate. As for Prudential, even assuming that the McNamaras’ answers on the HDS should have alerted Prudential to irregularities, there is no evidence that Prudential itself had actual knowledge that the McNamaras had remodeled their home without the necessary permits. The Bynums say the following evidence proves the McNamaras made their disclosures without knowledge of their falsity: 1. the HDS shows that the McNamaras knew that they should have had permits; 2. Susan McNamara’s deposition indicates that she intentionally did not obtain approval for the remodeling from the Civic Association, which was required under the deed restrictions; 3. the McNamaras failed to inquire as to the qualifications of Kindsfather; 4. the McNamaras had heard of building permits; 5. the McNamaras’ neighbors remodeled their homes with building permits, and the permits are required to be posted in a window and visible from the street; and 6. Kindsfather allegedly stated to Jimmy Bynum that his standard policy was to tell homeowners about the options of proceeding either with or without building permits, and the consequences of either action. The court rejects all of these contentions, noting, for example that even if many of the contentions are true, they do not point to the conclusion that the McNamaras had actual knowledge that permits were required in their case. They might be considered careless, the court says, but there is no evidence the McNamaras actually knew they had remodeled their bathrooms without the necessary permits. The court holds the “as-is” clause can be used as a basis for summary judgment against a buyer bringing a DTPA claim or a negligence claim. The court goes on to rule that the Bynums’ children are not intended beneficiaries of the contract to purchase the home necessary to have standing under the DTPA. Even if they did, the Bynums have not cited authority for the proposition that the “as-is” clause would still not apply to them. Moving on to other issues, the court rules there is no issue of material fact over whether the defendants breached express or implied warranties. “As-is” clauses serve as recognition that the buyer is relying only on his own examination of the property, not on any express or implied warranty. Furthermore, because neither the McNamaras nor Prudential were the home’s builder or remodeler, there can be no action for a breach of the warranty that repairs or modifications of existing goods would be performed in a good and workmanlike manner, or of habitability. As for the alleged �5.008 violation, that section only requires the sellers to fill out the form to the best of their knowledge, and it does not require, as the Bynums suggest, the sellers to provide continuing updates on answers in the form. The court holds that even if the McNamaras were negligent per se in remodeling their home without the necessary permit (which the court says the McNamaras were not), the Bynums would still have to prove causation, which, as discussed above, they cannot. The court overrules the Bynums’ procedural arguments, too. OPINION:Radack, C.J.

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