Miller Global
Properties, LLC v. Marriott International, Inc.
Dallas Court of Appeals, No. 05-12-00822-CV (Dec. 3, 2013)
Justices O’Neill, Francis, and Evans (Opinion)
Miller Global Properties sued Marriott for fraud and negligent misrepresentation in connection with the development of the JW Marriott Hill Country Resort near San Antonio. Applying and distinguishing the Texas Supreme Court’s Italian Cowboy decision, the Dallas Court of Appeals affirmed a summary judgment dismissing Miller’s claims on the grounds that the parties’ written contract, which directly contradicted the alleged misrepresentations, negated justifiable reliance as a matter of law.
Miller entered into negotiations and a series of contracts with Marriott for the development, ownership, and management of the Hill Country Resort, culminating in a Purchase Agreement and a Management Agreement in July 2007. When Miller learned in 2008 that the cost of the project would exceed its budget by more than $90 million, it filed suit, alleging that Marriott had fraudulently or negligently misrepresented that the plans and specifications were essentially complete and that the $460 million budget would be adequate to complete construction. The trial court granted summary judgment dismissing Miller’s misrepresentation claims on the grounds that the parties’ written contracts negated the element of reliance, and refused to reconsider its ruling after the Texas Supreme Court issued its opinion in Italian Cowboy. The Court of Appeals affirmed, based on a detailed analysis of the contract terms. Unlike the contract at issue in Italian Cowboy, which stated that no extra-contractual representations or promises had been made, Marriott’s Purchase Agreement expressly “negated and disclaimed” any representations not included in the contract. More importantly, the Court found, because the contract in Italian Cowboy did not address the subject matter of the alleged misrepresentations, the Supreme Court focused on whether reliance had been disclaimed, not whether it was justifiable. In contrast, the Management Agreement between Miller and Marriott thoroughly addressed the disputed subjects, and directly contradicted the alleged misrepresentations on which Miller claimed to have relied. As a matter of law, therefore, Miller could not have justifiably relied on the alleged extra-contractual misrepresentations.
Miller then argued it could recover on a theory of professional negligence, because that claim does not require proof of reliance. The Court held, however, that Miller’s inability to prove reliance on the alleged misrepresentations meant it could not show that the same representations proximately caused its losses. Finally, the Court rejected Miller’s attempt to invoke a contractual indemnity provision, which was intended to protect against claims by third parties. Even if the provision could be applied to claims between the principals, the Court held, Miller could not use a contractual indemnity provision to circumvent both its inability to show justifiable reliance on Marriott’s alleged misrepresentations and its contractual obligations to pay for cost overruns.
