Dallas Court of Appeals, No. 05-15-00395-CV (June 23, 2016)
Justices Lang, Brown, and Whitehill (Opinion)
Bishop bought a used car from Creditplex. The car had an “AS IS – NO WARRANTY” sticker on it, which the sale documents incorporated. When Creditplex acquired the car at auction, it was told the car had “frame/unibody damage.” Creditplex didn’t pass that information on to Bishop. A Creditplex salesperson did, however, tell Bishop that this was a good car and that she could “trade the car in for something bigger ‘after paying on it for about a year or so.’” When Bishop tried to do just that, the dealership refused to take her car in trade because of the unibody damage. Bishop sued Creditplex, alleging failure to disclose and unconscionable conduct under the DTPA, but the trial court granted a directed verdict based on the “AS IS” sticker. The Dallas Court of Appeals reversed.
A contractual “as is” clause, important to the bargain and negotiated between sophisticated parties, can conclusively negate the element of causation and defeat DTPA, fraud, and negligence claims. Prudential Insurance Co. v. Jefferson Associates, Ltd., 896 S.W.2d 156 (Tex. 1995). Here, however, the Court explained, the “as is” disclaimer was boilerplate rather than negotiated, the parties were not equally sophisticated and did not occupy equal bargaining positions, and the meaning of the “as is” disclaimer was somewhat unclear. With its “NO WARRANTY – YOU WILL PAY ALL COSTS FOR ANY REPAIRS” appendage, did it disclaim any obligation by the dealer to disclose the true condition of the car, or just disclaim the obligation to make repairs? Further, the salesperson’s representations about the “good car” that could be traded in a year later—made without disclosure of the “frame/unibody damage” known to the dealership—created a genuine issue of fact regarding fraudulent representation, an established exception to “as is” insulation. So, given all the circumstances, the Court of Appeals reversed and remanded.
