Fraudulent Inducement in Texas

What Is Fraudulent Inducement?

Background

“Fraudulent inducement is a cause of action based on the principle that a person has a duty to refrain from inducing another to enter into a contract by using a false representation.” (See Haase v. Glazner (2001) 62 S.W.3d 795, 798; ROYCE BANE v. MCGINN, No. 12-07-00262-CV, at *1 (Tex. App. Sep. 24, 2008).)

“We recognize that an action for fraud may lie where one is induced by false statements into signing an agreement without reading it.” (See Hankins v. Griffith (1989) 773 S.W.2d 589, 591-92.)

General Information for Complaints and Motions

“The elements of the cause of action [for fraudulent inducement] are the following:

The defendant made a representation to the plaintiff;
The representation was material;
The representation was false;
When the defendant made the representation, the defendant knew the representation was false or made the representation recklessly, as a positive assertion, and without knowledge of its truth;
The defendant made the representation with the intent that the plaintiff act on it;
The plaintiff relied on the representation; and
The representation caused the plaintiff injury.”

(See In re First Merit Bank (2001) 52 S.W.3d 749, 758; ROYCE BANE v. MCGINN, No. 12-07-00262-CV, at *1 (Tex. App. Sep. 24, 2008).)

Standard of Review and Burdens of Proof

“We review a summary judgment de novo.” (See Harkins v. Wal-Mart Stores Tex., LLC, No. 02-21-00201-CV, at *9 (Tex. App. June 23, 2022).)

“The movant for summary judgment has the burden of showing there is no genuine issue of material fact and it is entitled to judgment as a matter of law.” (See Nixon v. Mr. Property Management Co. (1985) 690 S.W.2d 546, 548; Powell v. Foxall (2001) 65 S.W.3d 756, 758.)

“In deciding whether a disputed material fact issue precludes summary judgment, evidence favorable to the non-movant is taken as true.” (See id.)

“Every reasonable inference in favor of the non-movant is indulged and any doubts are resolved in its favor.” (See id.)

“The movant must either disprove at least one element of each of plaintiff's theories of recovery or conclusively establish each essential element of an affirmative defense.” (See City of Houston v. Clear Creek Basin Auth. (1979) 589 S.W.2d 671, 678; Powell v. Foxall (2001) 65 S.W.3d 756, 758.)

“If the movant conclusively proves all essential elements of his defense, the burden shifts to the non-movant.” (See Powell v. Foxall (2001) 65 S.W.3d 756, 758.)

“The non-movant must answer that affirmative defense for summary judgment purposes.” (See id.)

The Court’s Decisions

It is well settled that “the statute defines fraud as a false representation made to a person for the purpose of inducing that person to enter into a contract which was both relied upon and resulted in harm.” (See Casstevens v. Smith (2008) 269 S.W.3d 222, 233.)

It is also well settled that “when one individual fraudulently induces another to enter into a contract, no contract results because the one who was fraudulently induced gave no real consent to the agreement.” (See Hameed Agencies v. J.C. Penney, No. 11-05-00140-CV, at *1 (Tex. App. Feb. 8, 2007).)