PJC Business

PJC 105.2

F RAUD AND N EGLIGENT M ISREPRESENTATION

Justifiable. The word justifiably is in brackets in PJC 105.2 because some recent supreme court cases list it as an element of fraud while others do not. Compare Bar row-Shaver Resources Co. v. Carrizo Oil & Gas, Inc. , 590 S.W.3d 471, 496 (Tex. 2019) (requiring justifiable reliance); Mercedes-Benz USA, LLC v. Carduco, Inc. , 583 S.W.3d 553, 554 (Tex. 2019) (same); JPMorgan Chase Bank, N.A. v. Orca Assets G.P., L.L.C. , 546 S.W.3d 648, 653 (Tex. 2018) (same), with International Business Machines Corp. v. Lufkin Industries, LLC , 573 S.W.3d 224, 228 (Tex. 2019) (requiring reliance without stating whether it must be justifiable); Anderson v. Durant , 550 S.W.3d 605, 614 (Tex. 2018) (same); Zorrilla v. Aypco Construction II, LLC , 469 S.W.3d 143, 153 (Tex. 2015) (same). Justifiably as question of law or fact. “Justifiable reliance usually presents a question of fact. But the element can be negated as a matter of law when circum stances exist under which reliance cannot be justified.” Orca Assets , 546 S.W.3d at 654 (citations omitted). See also National Property Holdings L.P. v. Westergren , 453 S.W.3d 419, 424 (Tex. 2015) (holding that, as a matter of law, “a party to a written contract cannot justifiably rely on oral misrepresentations regarding the contract’s unambiguous terms”); Mercedes-Benz USA , 583 S.W.3d at 559 (same). If the evidence in the case presents a question of fact for the jury, a practitioner may wish to ask the court to include “justifiable” in the question. See Cho v. Kim , 572 S.W.3d 783, 803 (Tex. App.—Houston [14th Dist.] 2019, no pet.) (holding that when no party, either by objection or requested question, definition, or instruction, complained of the charge’s failure to require that the reliance was justifiable, the court would not consider whether there was sufficient evidence of justifiable reliance and instead affirmed the jury’s finding of reliance); Ghosh v. Grover , 412 S.W.3d 749, 756 (Tex. App.—Houston [14th Dist.] 2013, no pet.) (same). See also Harstan, Ltd. v. Si Kyu Kim , 441 S.W.3d 791, 799 (Tex. App.—El Paso 2014, no pet.) (because no objection was raised to the lack of “justifiable” in the statutory fraud question, the sufficiency of the evidence was measured by the charge as given). Contra Ginn v. NCI Building Systems, Inc. , 472 S.W.3d 802, 831 (Tex. App.—Houston [1st Dist.] 2015, no pet.) (inclusion of “reli ance” in fraud charge was sufficient, making “actually and justifiably relied” unneces sary). Due diligence. A number of supreme court cases discuss a party’s duty of due dil igence or due care in a fraud case. Beginning with Labbe v. Corbett , 69 Tex. 503, 509, 6 S.W. 808, 811 (1888), the court held: “When once it is established that there has been any fraudulent misrepresentation, by which a person has been induced to enter into a contract, it is no answer to his claim to be relieved from it to tell him that he might have known the truth by proper inquiry.” In Isenhower v. Bell , 365 S.W.2d 354, 357 (Tex. 1963), the court held: “Where one has been induced to enter into a contract by fraudulent representations, the person committing the fraud cannot defeat a claim for damages based upon a plea that the party defrauded might have discovered the truth by the exercise of proper care.” In Koral Industries v. Security-Connecticut Life Insurance Co. , 802 S.W.2d 650, 651 (Tex. 1990), the court held: “Failure to use due

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