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No Proof, No Case
by Ron Davis

The buyer of a Texas shopping center has failed to prove his charges that the center’s seller committed fraud and deception during the sales negotiations.

The shopping center is Woodforest North Plaza in Houston, and the buyer acquired the property after expressing to friends an interest in a real-estate investment shortly after moving to Houston from California. The friends referred him to a real-estate broker, who in turn referred him to an individual who was selling Woodforest North Plaza.

That shopping center contained rented retail space as well as a self-service laundry. Negotiations for the sale thus began and concluded with a deal. The buyer agreed to purchase the property for an amount to be paid within a 12-month period.

Some 14 months later, however, the seller concluded that the buyer had breached the sales agreement through failure to make any payments toward purchase of the shopping center. The seller then sued the buyer.

In response, the buyer claimed that the seller had misled him during sales negotiations. Specifically, the buyer claimed that the seller had agreed to make certain repairs and improvements to the property, but had not done so.

The buyer said the seller also overstated the income that would come from the self-service laundry. Finally, the buyer asserted that the seller gave him leases for the shopping center and that “one of the leases was fake, another lease was for an unoccupied space, and another lease had an incorrect amount of rent.”

To those accusations, the seller replied that the buyer had produced no evidence of such wrongdoing.

And a Texas court agreed with the seller and ruled in his favor. The shopping center’s buyer appealed that decision.

A Texas appellate court upheld the lower-court decision, explaining, “The buyer did not present evidence that the seller knew the representation was false or made it recklessly without knowledge of the truth or with the intent that it be relied upon by the buyer…. The buyer did not present evidence that the seller knew the leases were as the buyer alleged or that the seller recklessly gave him the leases without knowledge of the truth. The buyer also did not present evidence that the seller gave him the leases with intent that the buyer rely on the information when purchasing the shopping center.

“In sum,” the judge concluded, “the buyer failed to present evidence raising a fact issue on each element of his affirmative defense of fraud.” (Sandhu v. Pinglia Investments of Texas, L.L.C., 2009 WL 1795032 [Tex.App.-Hous. (14 Dist.)])

Decision: June 2009>BR> Published: June 2009



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