law-fraud-vs-breach-of-contract | failure to perform promise | breach of contract elements | election of
theories / remedies |

Under Texas law, the "independent injury doctrine" distinguishes contract and tort causes of action.
Formosa Plastics, 960 S.W.2d at 45.
If the defendant's conduct . . . would give rise to liability independent of the fact that a contract exists
between the parties, the plaintiff's claim may also sound in tort. Conversely, if the defendant's conduct . .
. would give rise only to liability because it breaches the parties' agreement, the plaintiff's claim ordinarily
sounds only in contract. In determining whether the plaintiff may recover on a tort theory, it is also
instructive to examine the nature of the plaintiff's loss. When the only loss or damage is to the subject
matter of the contract, the plaintiff's action is ordinarily on the contract.
Southwestern Bell Telephone Co. v. DeLanney, 809 S.W.2d 493, 494 (Tex. 1991).
The Texas Supreme Court has rejected the application of the independent injury doctrine "to preclude
tort damages in fraud cases." Formosa Plastics, 960 S.W.2d at 46. The Texas Supreme Court has "well
established that the legal duty not to fraudulently procure a contract . . . is separate and independent
from the duties established by the contract itself." Id. The Texas Supreme Court has also recognized
"that a fraud claim can be based on a promise made with no intention of performing, irrespective of
whether the promise is later subsumed within a contract." Id. "[T]ort damages are not precluded simply
because a fraudulent representation causes only an economic loss." Id. at 47.

FRAUD VS. BREACH OF CONTRACT NOT NECESSARILY MUTUALLY EXCLUSIVE
| FRAUDULENT INDUCEMENT OF CONTRACT | FRAUDULENT REPRESENTATION IN
THE CONTRACT

Courts recognize claims of fraudulent inducement to enter into a contract and fraud claims based on a
representations made with no intention of performing, whether or not the representation is later
subsumed into a contract.  See Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, Inc., 960
S.W.2d 41, 46 (Tex. 1998).  In certain circumstances, the merger doctrine may apply to negate reliance
on representations made during negotiations that fraudulently induce a party to enter into a contract.  
See Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 177-81 (Tex. 1997); IKON Office
Solutions, Inc. v. Eifert, 125 S.W.3d 113, 126-28 (Tex. App.-Houston [14th Dist.] 2003, pet. denied).  
Accordingly, in IKON Office Solutions, this court distinguished between fraud claims based on certain
representations made before the contract at issue was executed, which it held were barred by the
merger doctrine, and claims based on representations that were ultimately included in the contract.  See
IKON Office Solutions, Inc., 125 S.W.3d at 128-32.
Christus Health v. Kone, Inc. (Tex.App.- Houston [14th Dist.] Jun. 25, 2009)(Brown)
(
fraud and fraud-in-the-inducement claims relating to a contract for elevator-maintenance services,
one-satisfaction rule does not apply here, pleading sufficiency, special exceptions, affidavit found to be
conclusory)
AFFIRMED: Opinion by
Justice Brown
Before Justices Anderson, Frost and Brown
14-07-00786-CV Christus Health and Christus Health Gulf Coast v. Kone, Inc
Appeal from 127th District Court of Harris County
Trial Court
Judge: Sharolyn P. Wood  


Also in his affidavit as well as in the cited deposition testimony, Sandhu claimed that Pinglia agreed to
make certain repairs and improvements to the property and has not done so.  "A promise of future
performance constitutes an actionable misrepresentation if the promise was made with no intention of
performing at the time it was made."  Formosa Plastics Corp. USA v. Presidio Eng'rs and Contractors,
Inc., 960 S.W.2d 41, 47-48 (Tex. 1998).  The party alleging fraud must present evidence the
misrepresentation was made with intent to deceive and with no intent to perform.  Id. at 48.  Sandhu did
not present evidence that Pinglia made a misrepresentation with the intent to deceive and with no intent
to perform the repairs and improvements.   
Sandhu v. Pinglia Investments of Texas, LLC (Tex.App.- Houston [14th Dist.] Jun. 25, 2009)(Seymore)
(
commercial real estate transaction: financing of purchase of shopping center, breach of promissory
note, summary judgment procedure, sufficiency of response to PMSJ, affirmative defenses not properly
asserted in response to Plaintiff's motion, proof of balance due and damages in note suit, challenges to
summary judgment evidence,
affidavit conclusory)
Decision: TRIAL COURT'S JUDGMENT AFFIRMED: Opinion by Justice Charles Seymore     
Panel members: Chief Justice Hedges, Justices Anderson and Seymore   
14-08-00184-CV Raghbir Sandhu v. Pinglia Investments of Texas, LLC and Sumer Pinglia  
Appeal from 164th District Court of Harris County  



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