Texas Case Law Update

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In an ongoing effort to update our financial institution clients about important developments in Texas jurisprudence that may impact them, we bring to your attention two recent decisions of particular import. Dallas trial associates Colin LeCroy and Minoo Sobhani contributed to this e-Alert.

Certain Merger Clauses Will Not Preclude Fraudulent Inducement Claims After Recent Texas Supreme Court Decision

In Italian Cowboy Partners, Ltd. v. The Prudential Ins. Co. ofAmerica, ___ S.W.3d ____, 2011 WL 1445950 (Tex. April 15, 2011), the Texas Supreme Court issued an opinion concluding that a fairly typical merger clause, absent an expressed clear and unequivocal intent to disclaim reliance or waive claims for fraudulent inducement, did not have the effect of precluding claims for fraudulent inducement. The Court narrowly construed the contract language at issue to permit the fraud claims to survive.

This dispute arose when the owners and operators of a restaurant, Italian Cowboy, terminated the restaurant’s lease because of a persistent sewer gas odor. In a suit against the landlord and its property manager, the tenant sought to rescind the lease and recover damages for fraud, among other things...

Loan Servicer Has Standing To Enforce Note Against BorrowerEven Though It Was Not the Holder of the Note

In ECF North Ridge Assocs., L.P. v. ORIX Capital Mkts., ____ S.W.3d____, 2011 WL 856902 (Tex. App.—Dallas March 14, 2011), the Dallas Court of Appeals held that a loan servicer (ORIX) had standing to sue the borrowers of a loan it serviced for breach of the loan agreement in spite of the fact that it was not the holder of the promissory note in question.....

Please see full alert below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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