Opinion issued August 13, 2026
In The
Court of Appeals
For The
First District of Texas
NO. 01-24-00614-CV
MC HOTELS, LLC, Appellant
V.
YELUH, LLC, Appellee
On Appeal from the 434th District Court
Fort Bend County, Texas
Trial Court Case No. 20-DCV-274779
MEMORANDUM OPINION
This case involves a sale of real property, an “as-is” clause, and problems with
the property after the sale. We have seen this fact pattern before. We have seen a
variety of troubled properties that changed hands pursuant to an as-is clause:
• A residence with stucco siding problems. Hammond v. Hanser, No. 01-22-00707-CV, 2024 WL 4628675 (Tex. App.—Houston [1st Dist.] Oct.
31, 2024, pet. denied) (mem. op.).
• An apartment complex with stucco siding problems. TL II Apartments,
LLC v. A&A Masonry, Inc., No. 01-22-00807-CV, 2024 WL 3349090
(Tex. App.—Houston [1st Dist.] July 9, 2024, pet. denied) (mem. op.).
• A residence with roof leaks. Wischnewsky v. Marsh, No. 01-21-00152-CV, 2022 WL 3588941 (Tex. App.—Houston [1st Dist.] Aug. 23, 2022,
no pet.) (mem. op.).
Everyone agrees that as-is clauses are valid as a general rule. See, e.g., Prudential
Ins. Co. of Am. v. Jefferson Assocs., Ltd., 896 S.W.2d 156, 161 (Tex. 1995); Williams
v. Dardenne, 345 S.W.3d 118, 124 (Tex. App.—Houston [1st Dist.] 2011, pet.
denied). But the general rule has some exceptions, such as for cases of fraudulent
inducement. See Van Duren v. Chife, 569 S.W.3d 176, 185 (Tex. App.—Houston
[1st Dist.] 2018, no pet.). Today we encounter yet another as-is clause and water
leaks. A newly built hotel had leaky windows and thus too much moisture inside
the walls. According to the buyer, the leaks came from installing the wrong kind of
window, and the repair costs came to $1.6 million. According to the seller, the buyer
bought the hotel as-is and thus has no case.
The trial court sent the case to a jury, which sided with the buyer. The jury
found fraud, statutory fraud, and breach of contract; with actual damages of $1.6
million and exemplary damages of $2 million. The seller appeals.
2
We render judgment that the buyer take nothing on its claims and affirm the
remainder of the judgment.
Background
In 2016, Defendant MC Hotels, LLC (MC) bought a tract of land in Missouri
City for the construction of a Holiday Inn Express. To permit the use of the Holiday
Inn name, MC entered into a license agreement with InterContinental Hotels Group
(IHG), the parent company that manages several hotel brands including Holiday Inn.
It also hired Paragan Solutions as the architect to draw up the construction plans.
MC then had NP Construction—an entity owned by MC’s managing member—do
the actual construction over the next couple of years.
As the hotel neared completion, MC’s real estate broker CBRE put out an
offering memorandum for the hotel’s sale. The offering memorandum caught the
attention of Michael Ye, one of the members in Yeluh, LLC. On January 26, 2018,
Yeluh and MC entered a letter of intent for Yeluh to buy the property for $9,700,000.
Yeluh and MC negotiated the terms of the deal, and on March 12, 2018, they
executed a Purchase and Sale Agreement (PSA). The PSA contains an as-is clause
that MC sees as wholly dispositive, but the PSA contains more provisions than that.
The key clauses for purposes of this appeal include the following:
• 2.1 The Property. Subject to the terms, provisions and conditions
hereinafter set forth, Seller agrees to sell and convey to Purchaser, and
Purchaser agrees to purchase from Seller, the Property for the Purchase
Price and other consideration stated herein. The Property includes a
3
fully equipped operational Holiday Inn Express Hotel with adequate
supplies for immediate operation.
• 6.1 Conditions to Closing. Purchaser’s obligations under this
Agreement are specifically contingent upon the fulfillment and
satisfaction or the written waiver thereof by purchaser of the following
conditions precedent:
***
(c) Delivery of the Property. At Closing the Property will be delivered
as a fully operating and functional Holiday Inn, to Holiday Inn
standards.
• 9.1 Seller Representations and Warranties. Seller makes the following
representations and warranties, as of the date of this Agreement:
***
(d) Limitation of Seller’s Representations and Warranties. . . . Seller
makes no representation or warranty other than those expressly set forth
herein and, except for the warranties and representations expressly set
forth herein, the sale of the Property is made on an “as-is” basis, without
warranty.
• 9.2 Purchaser Representations. Purchaser makes the following
representations and warranties, as of the date of this Agreement and
through Closing:
***
(C) EXCEPT FOR THE PROPERTY BEING CONSTRUCTED AND
FULLY EQUIPPED AS AN OPERATIONAL HOLIDAY INN
EXPRESS HOTEL WITH ADEQUATE SUPPLIES FOR
IMMEDIATE OPERATION, PURCHASER ACCEPTS THE
PROPERTY AS IS, WHERE IS, AND WITH ALL FAULTS, AND
WITHOUT ANY REPRESENTATIONS OR WARRANTIES
WHATSOEVER, EXPRESS OR IMPLIED, WRITTEN OR ORAL,
INCLUDING, BUT NOT LIMITED TO, ANY AND ALL EXPRESS
OR IMPLIED REPRESENTATIONS AND WARRANTIES AS TO (1)
THE CONDITION OF THE PROPERTY . . . .
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• 11.4 Disclaimer. . . . PURCHASER AGREES AND
ACKNOWLEDGES THAT PURCHASER HAS NOT RELIED UPON
ANY REPRESENTATION OF BROKER IN CONNECTION WITH
PURCHASER’S PURCHASE OF THE PROPERTY.
• 13.6 Total Agreement. This Agreement constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements and
understandings of the parties in connection therewith. No
representation, warranty, covenant, agreement or condition not
expressed in this Agreement shall be binding upon the parties hereto or
shall affect or be effective to interpret, change or restrict the provisions
of this Agreement.
The parties would eventually close on the property in late August 2018, but before
reaching that point, they encountered some bumps along the way.
We will touch on these challenges without going into detail. First, Yeluh
worried about the level of competition in the area’s hotel market, especially in light
of certain representations that it felt were made. Second, Yeluh had some concerns
about certain plants, bushes, and air conditioning. In light of its concerns, Yeluh
wanted the purchase price lowered by $500,000. The parties amended the PSA to
reduce the price by $390,000, and the parties tried to work through some of the
concerns.
IHG approved the hotel to open in early August 2018. On August 2, 2018,
Yeluh and MC executed a First Amendment to Purchase and Sale Agreement, which
was a 2-page document that preserved the PSA except for the specific items being
modified, such as the reduced purchase price and the repositioning of four air
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conditioning units. Also in August, the parties agreed to execute an escrow
agreement. It provided for $30,000 of the sale proceeds to be held by the title
company in escrow “pending satisfaction” of a punch list.
The punch list became increasingly controversial in the months after closing.
By the spring of 2019, both sides were frustrated. MC felt that it had gone beyond
the call of duty (so it quit doing additional work), whereas Yeluh felt that MC had
more to do. In early 2020, Yeluh sued MC and the broker CBRE.
Yeluh alleged fraud, statutory fraud, breach of the PSA, civil conspiracy, and
negligent failure to construct the hotel in a good and workmanlike manner. Yeluh
later settled with CBRE for $50,000, nonsuited CBRE, and left MC as the lone
defendant. MC felt that it had earned the $30,000 held in escrow and counterclaimed
for breach of contract and unjust enrichment.
The as-is clause came up often before the case went to the jury
MC raised the “as is” clause before trial in a Rule 166(g) motion. It argued
that the as-is language appears in the PSA as well as the deed, into which the PSA
should be deemed to merge. See Chicago Title Ins. Co. v. Cochran Invs., Inc., 602
S.W.3d 895, 906–07 (Tex. 2020).
MC also filed a summary judgment motion, largely arguing that if the as-is
clause has effect, Yeluh will not have much basis for its claims. In response, Yeluh
countered that MC could not prove the clause’s elements: “It is an affirmative
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defense. They have to prove it. They have to prove all elements of the as-is clause.”
Yeluh also argued that an “as-is clause is defeated by fraud.” In other words, “if
there is fraud, the as-is clause cannot defeat the fraud claim.” The court denied
summary judgment.
The case went to trial on the claims for fraud, statutory fraud, and breach of
contract, as well as the counterclaims for breach of the escrow agreement and unjust
enrichment. The parties skirmished again about the as-is clause at the start of trial,
when Yeluh brought it up in its motion in limine. The motion’s item #1 highlighted
the following topic as having the potential to confuse the jury:
1. Any suggestion, argument, reference or insinuation that an “as
is” clause bars any claim of Plaintiff. The Court makes legal
determinations and any such suggestion, argument, reference or
insinuation would confuse and prejudice the jury.
MC countered that the trial would have to include words in the very contract being
sued upon: “That as-is clause is part of the contract, Your Honor. So it can’t not be
mentioned. It has to be mentioned. I mean, they’ve got a breach of contract claim
about the property condition. The as-is clause says, here’s what the proper condition
is contractually required to be.”
Yeluh acknowledged that the contractual words are what they are, but it
insisted that confusion would ensue if the jury were drawn into the legal effects of
those words: “I mean, arguing to the jury legal questions that is heavily disputed and
will be briefed, I’m sure, extensively is just going to cause confusion to the jury.”
7
This issue of jury confusion resurfaced the next day, when Yeluh amended its
motion in limine to cover the following:
1. Any suggest[ion] or argument in the presence of the jury that an
“as is” clause defeats a claim for breach of contract or fraud. An
interpretation of the legal effect of the “as is” clause is the matter
of law for the Court. For counsel to make such suggestion or
argument to the jury would confuse and prejudice the jury.
MC acquiesced in the limine item but proposed to insert several words at the end of
the first sentence, to make it read: “Any suggestion or argument in the presence of
the jury that an as-is clause defeats the claim for breach of contract or fraud as a
matter of law.”
Yeluh resisted because of the specter of jury confusion:
The problem I have, Your Honor, is if they tell the jury that the as-is
clause can be determined by them to bar the claim, which is I think what
they want to be allowed to do, that gets into confusion because that
determination is not made by the jury. There is no jury question on
anything I’ve ever looked at. I—I researched it last night. There is no
jury question that says, do you find the as-is clause bars a—that—the
Plaintiff’s claim for breach of contract or Plaintiff’s claim for fraud. So
that creates confusion, and it’s unfairly prejudicial.
The court sided with Yeluh.
In opening statement, Yeluh said that the construction strayed from the plans:
“The plans that were submitted to IHG specified a specific window. The plans that
were approved by Missouri City required a specific type of windows, which required
a pocket construction. The actual windows were not in compliance—they are
different—it’s not a pocket construction installation. It was a different
8
manufacturer.” Yeluh then asserted that the water leaks manifested shortly after
closing: “Now, just three days after closing—closing occurred on August 28th, 2018.
Just three days after closing, my client discovered water leaks.”
MC’s opening statement pointed out the as-is clause. MC also referred to
inspections along the way:
[T]he property was inspected both before the PSA was signed and after
the PSA was signed. And in total, it was about at least ten times that
the property was inspected. You’re going to hear that Yeluh had the
opportunity to hire an inspector and hire as many people as they wanted
to come and look at the property, and they had some people come and
look at the property.
Yeluh’s expert testified to water problems: “There was a very high level of
water into the wood. Every material has some water on it. And wood is allowed to
have water, but it exceeded that level by a lot. And that’s why it is rotting.” The
expert attributed those problems, at least in part, to the use of finned windows (rather
than the punched windows described in the prototype plans). The expert opined that
“[t]he cause of the damage was due to not following the architect recommendation
of having a continuous weather barrier, and the architect also referred to the
manufacturer which also required the same thing, continuous weather barrier.”
Yeluh’s principal, Michael Ye, testified that he understands as-is clauses,
because he had seen them before in prior real estate deals. He said that he had bought
or sold roughly five to ten apartment complexes before buying this property. But he
sought to parry the as-is clause by citing section 6.1(c), which conditioned the
9
buyer’s contractual obligations on delivery of the property “as a fully operating and
functional Holiday Inn, to Holiday Inn standards.” He read those standards as
requiring (among other things) certain kinds of windows. “That’s the promise here,
that he would follow IHG standard, he would follow whatever standard is. I mean,
then I have the trust that he would deliver this quality.”
To Ye, MC’s promise to construct the hotel to IHG standards made the as-is
clause palatable: “The most important is that he was following the standard, the
Holiday Inn standard. That’s critical part. And the reason I can accept it as-is, you
know, because he promised to—in the PSA, to follow it as the standard.” MC’s
counsel asked why Ye agreed to the as-is clause:
Q. Right. So what I want to ask you is: If you were expecting the
property to comply with every single one of IHG’s brand
standards, Formula Blue, every one of the prototype plans, the
entire brand standards manual, why did you agree to accept the
property as-is?
A. Because we thought he follow[ed] everything, the standards.
But rather than MC following the standards, “It was all fraud. That’s his fraud. His
fraud. That’s the problem.” “You know, that a promise, his promise to build IHG
standard. And he can’t get both ways. We keep back and forth on this. Yes, there
is no warranty, but we are looking for the promise and the quality IHG hotel.”
On redirect, Ye was asked about the as-is clause’s legal effect, which quickly
led to an objection:
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Q. Now, there’s been some discussions about your understanding of
an as-is clause. Do you have an understanding that a buyer
would not be bound by agreement to purchase something as-is
that he was induced to make because of a fraudulent
representation or concealment of information by the seller?
A. Yes—
MC objected to getting into legal matters, so the court restricted the discussion to
Ye’s understanding of as-is law, rather than as-is law per se. An awkward colloquy
then ensued.
As the end of trial approached, Yeluh worried that the jury had been dragged
into a dispute about the law: “[W]e in our motion in limine tried to argue that that is
a legal determination that cannot be made before the jury. And it has been dragged
into this lawsuit, so now the jury has got to determine whether the as-is clause is
enforceable.” Similar sentiments came up in the charge conference.
The jury charge asked 13 questions. The verdict can be summarized with the
following diagram:
1. Did MC fail to comply with the PSA? Yes.
2. Was the failure excused? No.
3. Damages (cost to repair) = $1,656,758.54.
4. Did Yeluh agree to purchase the property “as is”? No.
5. Did Yeluh fail to comply with the Escrow Agreement? No.
6. Did MC complete the punch list attached to the Escrow Agreement?
No.
7. Did MC perform compensable work for which it was not paid? No.
8. Damages = [not answered]
9. Did MC commit fraud against Yeluh? Yes.
10. Did MC commit statutory fraud against Yeluh? Yes.
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11. Damages for fraud or statutory fraud = $1,656,758.54.
12. Did the harm to Yeluh result from MC’s fraud? Yes.
13. Exemplary damages = $2,000,000.
Many of the questions follow the Pattern Jury Charge (PJC). But Question 4 has no
counterpart in the PJC. We will quote Question 4 verbatim, because MC contends
that it tainted the answers to other questions:
QUESTION NO. 4:
Did Yeluh agree to purchase the Property “as is”?
“As is” means the seller gives no assurances, express or
implied, concerning the value or condition of the thing sold.
A buyer is not bound by an agreement to purchase something
“as is” that he is induced to make because of a fraudulent
representation or concealment of information by the seller.
Answer “Yes” or “No.”
Answer: No
The trial court rendered judgment on the verdict for Yeluh. It awarded actual and
exemplary damages for fraud, and it awarded attorney’s fees to Yeluh under the
PSA’s prevailing party clause.
MC appeals.
Analysis
MC’s issues on appeal assert insufficiency of the evidence and jury charge
error in the submission of the question about the as-is clause. The four issues can
be restated as follows:
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1. The evidence is insufficient to support the findings that MC committed
common-law and statutory fraud.
2. The evidence is insufficient to support the finding that MC breached
the contract.
3. The evidence conclusively proved MC’s counterclaims for breach of
the escrow contract and unjust enrichment (or alternatively, the jury’s
No answers are against the great weight of the evidence).
4. The trial court erred in submitting Question 4, which asked about the
“as is” clause.
The sufficiency of the evidence complaints come under the normal standards of
review for reviewing factual findings. See City of Keller v. Wilson, 168 S.W.3d 802,
827 (Tex. 2005) (legal sufficiency); Pool v. Ford Motor Co., 715 S.W.2d 629, 635
(Tex. 1986) (op. on reh’g) (factual sufficiency). Charge complaints are reviewed for
abuse of discretion. See Sw. Energy Prod. Co. v. Berry-Helfand, 491 S.W.3d 699,
727 (Tex. 2016).
A. Issue One: Fraud
MC starts by challenging the fraud findings. MC reasons that the fraud
findings must fail if the as-is clause survives, and that the only way around the as-is
clause would be evidence of fraudulent inducement.
We start with the background rules about as-is clauses. “Texas strongly favors
parties’ freedom of contract.” Gym-N-I Playgrounds, Inc. v. Snider, 220 S.W.3d
905, 912 (Tex. 2007). For this reason, as-is clauses are generally enforceable, as we
13
have explained on many occasions.1 See Hammond, 2024 WL 4628675, at *7; TL
II Apartments, 2024 WL 3349090, at *8.
“A buyer who purchases property ‘as is’ chooses ‘to rely entirely upon his
own determination’ of the property’s value and condition without any assurances
from the seller.” Williams, 345 S.W.3d at 123 (quoting Prudential Ins. Co., 896
S.W.2d at 161); see also MacPherson v. Aglony, No. 09-21-00004-CV, 2022 WL
4374998, at *11 (Tex. App.—Beaumont Sept. 22, 2022, no pet.) (mem. op.) (stating
that buyer who purchases something “as is” agrees to make his own appraisal of
bargain and accepts risk that he may be wrong).
“‘The seller gives no assurances, express or implied, concerning the value or
condition of the thing sold[,]’ and the buyer chooses to rely completely on his own
determination of the condition and value of the purchase, removing the possibility
that the seller’s conduct will cause him damage.” MacPherson, 2022 WL 4374998,
at *11 (quoting Rohrs v. Hartz, No. 09-19-00196-CV, 2021 WL 2677422, at *12
(Tex. App.—Beaumont June 29, 2021, no pet.) (mem. op.), and Prudential Ins. Co.,
1
Additionally, we point out that both MC and Yeluh were sophisticated parties
dealing with each other in an arm’s length transaction, and the PSA reflects that they
were both represented by counsel. Ye, in particular, testified that he was familiar
with as-is clauses, and he was also familiar with purchasing commercial properties,
as he had purchased between five to ten apartment complexes before this
transaction. See Prudential Ins. Co. of Am. v. Jefferson Assocs., Ltd., 896 S.W.2d
156, 162 (Tex. 1995) (“[A]n ‘as is’ agreement freely negotiated by similarly
sophisticated parties as part of the bargain in an arm’s-length transaction has a
different effect than a provision in a standard form contract which cannot be
negotiated and cannot serve as the basis of the parties’ bargain.”).
14
896 S.W.2d at 161). In other words, the as-is clause “negates the element of
causation necessary to recover on claims regarding the physical condition of the
property.”2 TL II Apartments, 2024 WL 3349090, at *8; see Prudential Ins Co., 896
S.W.2d at 161; Pogue v. Williamson, 605 S.W.3d 656, 665 (Tex. App.—Houston
[1st Dist.] 2020, no pet.) (stating that “as-is” clause severs causal link between
alleged misrepresentation and damages).
But the general rule has exceptions, such as for fraudulent inducement.
Prudential Ins. Co., 896 S.W.2d at 162 (“A buyer is not bound by an agreement to
purchase something ‘as is’ that he is induced to make because of a fraudulent
representation or concealment of information by the seller. A seller cannot have it
both ways: he cannot assure the buyer of the condition of a thing to obtain the buyer’s
agreement to purchase ‘as is,’ and then disavow the assurance which procured the
‘as is’ agreement.” (internal citations omitted)); Pogue, 605 S.W.3d at 665 (“A buyer
is not bound by an ‘as-is’ clause if she demonstrates that she was induced to enter
2
Because this case involves the construction and sale of commercial property, as
opposed to residential property, this is not a situation involving an implied warranty
that can only be waived in limited circumstances, such as the implied warranty of
habitability. See Lennar Homes of Tex. Land & Constr., Ltd. v. Whiteley, 672
S.W.3d 367, 379 (Tex. 2023) (“Unlike the implied warranty of workmanlike
construction, the warranty of habitability focuses on the state of the completed
structure and can be waived only to the extent that defects are adequately disclosed.”
(quotations omitted)); see also Gym-N-I Playgrounds, Inc. v. Snider, 220 S.W.3d
905, 912 (Tex. 2007) (“Prudential stands for the proposition that—absent fraud in
the inducement—an ‘as is’ provision can waive claims based on a condition of the
property.”).
15
the agreement by fraudulent representation or concealment of information by the
seller.”).
With that legal background in mind, we now turn to the issue of fraudulent
representations. If the as-is clause is to be overcome by evidence of fraudulent
inducement, what might the fraudulent representations be? At one point, Yeluh
indicated that the representations fall into two categories: (1) representations about
the hotel quality, and (2) representations about not having to compete with nearby
properties: “MC Hotels represented and promised that it would construct and deliver
a hotel built to IHG standards and would execute and record a non-competition
agreement in the real property records prohibiting the construction, ownership or
operation of a hotel or motel business on the Vacant Adjacent Tract for a period of
five years from the closing date of the transaction.”
But Yeluh ultimately has backed away from the second category and falls
back to the PSA. It acknowledges that any representations about competition were
taken care of in the deal to drop the price by $390,000. Further, the damage model—
and the damage finding of “reasonable and necessary cost to repair the property”—
had nothing to do with competition and everything to do with hotel quality. A false
promise to sign a non-compete would have no causal connection to the cost to repair
anything. Such a statement cannot support this verdict, which doubtless explains
16
why Yeluh does not seriously rely on that kind of evidence. We therefore focus on
the affirmative representations about hotel quality.
Yeluh maintains that MC’s two principals (Nupen Patel and Bijal Patel)
admitted promising to construct and deliver a hotel that was built to IHG standards.
Nupen Patel was asked about the PSA and whether that document legally committed
MC to comply with those standards:
Q. Now, do you agree with me that under the purchase and sale agreement
that you just signed on March 12, 2018, MC Hotels had an obligation
to deliver a hotel built to Holiday Inn standards to the purchaser?
A. Yes.
***
Q. Well, let—let me—let me preface it first. You agree with me that MC
Hotels told my client that they would be getting a Holiday Inn Hotel
built to Holiday Inn standards, true?
A. Yes.
Likewise, when Bijal Patel took the stand, he was repeatedly asked about the PSA
and whether that document legally obligated MC to construct the hotel to IHG
standards:
Q. Okay. You recall at the time seeing this Purchase and Sale
Agreement, right?
A. Yes.
Q. And you weren’t here for Mr. Nupen’s testimony, but if he
testified or admitted that it was an obligation of MC Hotels to
deliver a hotel built to Holiday Inn standards to Yeluh, would
you have any reason to dispute that testimony?
A. No.
17
MR. ANDERSON: Objection, Your Honor; I think that misstates the
testimony.
THE COURT: Rephrase, Counsel.
Q. (By Mr. Mai) Let me ask you then: Do you agree with me, sir,
that MC Hotels had an obligation to deliver a hotel built to
Holiday Inn standards to Yeluh?
A. Yes.
***
Q. And do you agree with me that that commitment to deliver a hotel
built to Holiday Inn standards, do you agree with me that was a
promise made to—that was a promise made to Yeluh?
A. Yep.
Nupen then retook the stand and was asked again about section 6.1 as being the
actionable misrepresentation:
Q. Now, let’s go to another section in the contract. Another one we
showed ad nauseam, Section 6.1. Did you hear Bijal’s testimony
that he agreed that this was a promise also made to Yeluh?
A. Yes.
Q. Okay. Do you agree to what your partner testified to that this
was a promise made to Yeluh that at closing they would be
delivered a fully operating and functional Holiday Inn built to
Holiday Inn standards?
A. Yes.
With all this testimony about section 6.1, Yeluh concludes that MC not only made
written representations about hotel quality, but that its two main witnesses conceded
doing so: “MC Hotels admitted that it represented to Yeluh that it would deliver a
hotel built to IHG standards.”
18
Contrary to this line of argument, section 6.1 makes no representation at all.
Section 6.1 merely lists what it calls “conditions precedent.” One such condition
precedent appears in section 6.1(c), which speaks of delivering a “fully operating
and functional Holiday Inn, to Holiday Inn standards.” This condition precedent
does not assert or promise anything. If anything, it suggests the exact opposite by
indicating that the buyer has a right to walk away if the condition does not come to
pass. One cannot transform a condition precedent into an actionable representation.
See Schwarz-Jordan, Inc. of Houston v. Delisle Constr. Co., 569 S.W.2d 878, 881
(Tex. 1978) (“Terms such as ‘if,’ ‘provided that,’ or ‘on condition that,’ usually
indicate an intent that the provision be a condition precedent rather than a promise.”).
If there are any actionable representations at all, they can only be the ones
found in Article IX. That article makes clear in section 9.1(d) that the seller “makes
no representation or warranty other than those expressly set forth herein and, except
for the warranties and representations expressly set forth herein, the sale of the
Property is made on an ‘as-is’ basis, without warranty.”
To be sure, MC had no right to induce Yeluh to sign the PSA by making
fraudulent misrepresentations. If MC had fraudulently induced Yeluh to sign, we
would have a different case. But Yeluh needs evidence of such misrepresentations,
and it offers none. Yeluh’s principal was asked whether MC said anything to him
other than what is in the PSA, and he answered in the negative: “Nothing from MC
19
Hotels.” He stated that the only representations from MC’s side came through MC’s
broker, CBRE, but the PSA expressly disclaims reliance on any statements by the
broker.
So Yeluh’s evidence of misrepresentation reduces to the words of section 6.1,
where the PSA sets forth the conditions precedent to Yeluh’s obligation to close.
Although Nupen and Bijal Patel both described section 6.1 as a representation, that
does not make it one. The contract’s terms do not change merely because of the way
in which a witness describes them. See Edwards v. Fed. Nat’l Mortg. Ass’n, 545
S.W.3d 169, 180 (Tex. App.—El Paso 2017, pet. denied) (“A witness cannot by
parol evidence add to, vary, or contradict the terms of an unambiguous contract.”).
Parol evidence to vary an unambiguous writing will be treated as no evidence.
See City of Keller, 168 S.W.3d at 812 (stating that incompetent evidence is legally
insufficient to support judgment); Russell v. Russell, 132 Tex. 73, 76, 120 S.W.2d
793, 794 (Tex. [Comm’n Op.] 1938) (rejecting attempt to use parol evidence to vary
terms of deed); see also City of Mission v. Popplewell, 156 Tex. 269, 277, 294
S.W.2d 712, 717 (1956) (“Parol evidence in the form of opinions and conclusions
without documentary basis is inadmissible to establish such title, and even if
admitted without objection is of no probative force.”). “Doing otherwise increases
the likelihood of disturbing the risk allocation to which [the parties] agreed.” Am.
20
Midstream (Alabama Intrastate), LLC v. Rainbow Energy Mktg. Corp., 714 S.W.3d
572, 580 (Tex. 2025).
Either the contract contains an actionable representation or it does not, but its
words will not change just because of what witnesses say about it on the stand. No
matter how often Nupen or Bijal Patel characterized section 6.1(c) as a
representation that MC would build the hotel up to IHG standards, their testimony
cannot make it so.3 Such testimony constitutes “no evidence” because it runs afoul
of the parol evidence principles laid down by the cases cited earlier, thus falling
within the second kind of no-evidence situation described in Chief Justice Calvert’s
1960 article about sufficiency of the evidence. In the words of his article, such
testimony is classified as no evidence because a rule of law bars its consideration.
See Robert W. Calvert, “No Evidence” and “Insufficient Evidence” Points of Error,
38 TEX. L. REV. 361, 362–63 (1960). With no evidence of fraudulent inducement to
overcome the as-is clause, the fraud claim necessarily fails. That result in turn
defeats the follow-up finding of clear and convincing evidence of fraud, and
3
For this same reason, evidence that Nupen had purchased windows that were not
fabricated by one of the two manufacturers specified in the IHG brand standards
and Paragan’s architectural plans in July 2017, eight months before MC and Yeluh
signed the PSA, does not constitute evidence of fraudulent inducement. Yeluh relies
on this evidence as proof that at the time the parties signed the PSA, MC knew that
it would not comply with the requirement that it construct the hotel to Holiday Inn
standards because it had already purchased non-conforming windows. However,
this evidence does not transform section 6.1(c) from a condition precedent to an
actionable misrepresentation.
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therefore no basis for recovering exemplary damages remains. See TEX. CIV. PRAC.
& REM. CODE § 41.003(a)(1); Twin City Fire Ins. Co. v. Davis, 904 S.W.2d 663, 665
(Tex. 1995) (“[A]ctual damages sustained from a tort must be proven before punitive
damages are available.”). We reverse that part of the judgment awarding recovery
of actual and exemplary damages for common-law and statutory fraud, and we
render a take-nothing judgment on those allegations.
B. Issue Two: Breach of the PSA
The trial court’s judgment did not award any recovery for breach of contract,
but the removal of the fraud recovery means that the contract arguments come into
play as a backup. Largely for the reasons just given, the claim for breach of the PSA
must fail. See Prudential, 896 S.W.2d at 161; Williams, 345 S.W.3d at 123–24;
Pogue, 605 S.W.3d at 665.
Although MC asks for a remand to put on evidence of attorney’s fees as a
litigant who has become a prevailing party under the contract, the time to prove such
fees came and went in the trial court. The record contains no evidence of any fees
on MC’s part, so there is no basis for permitting proof of fees at this late date. Fee
evidence during the trial is a prerequisite to recovery. In re Lesikar, 285 S.W.3d
577, 586 (Tex. App.—Houston [14th Dist.] 2009, orig. proceeding) (concluding that
party waived her claim to appellate attorney’s fees on remand “because in the initial
trial, she failed to request appellate fees, present any evidence to support an award
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of appellate fees, or procure a finding or judgment on fees for appellate legal
services”); Koval v. Henry Kirkland Contractors, Inc., No. 01-06-00067-CV, 2008
WL 458295, at *7 (Tex. App.—Houston [1st Dist.] Feb. 15, 2008, no pet.) (mem.
op.) (concluding that party waived right to pursue appellate attorney’s fees “by
failing to present evidence or to obtain a ruling on those fees in the trial court”). It
cannot be deferred until after appeal. See Lesikar, 285 S.W.3d at 586; Koval, 2008
WL 458295, at *7; see also Varner v. Cardenas, 218 S.W.3d 68, 69–70 (Tex. 2007)
(per curiam) (refusing invitation “to change Texas procedure to allow post-judgment
fees [for which no evidence was offered during trial] to be determined after appeal
by remand to the trial court”).
We assume that the parties could have stipulated around this background legal
requirement—of submitting fee evidence in the trial court before appeal—but they
did not do so. Their pretrial stipulation in fact referred to “both” sides submitting
fee evidence to the court by affidavit: “[W]e have a stipulation on attorney fees. We
can submit both attorneys’ fees by affidavits. And Your Honor can make a
determination after trial.” MC could have submitted evidence of its fees, but its
briefing has not directed our attention to any such evidence, and we know of none.
For this reason, the right to recover fees as a prevailing party fails.
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C. Issue Three: MC’s Counterclaims
The jury found against MC on its counterclaims for breach of the escrow
agreement and “compensable work for Yeluh for which it was not compensated.”
Specifically, the jury said No to Question 5 (which asked about Yeluh failing to
comply with the escrow agreement), No to Question 6 (which asked whether MC
completed the items on the punch list), and No to Question 7 (which asked about
MC doing compensable work). The No answer to Question 7 then kept the jury from
reaching the ensuing damage question, which was conditioned on a Yes answer.
MC contends that all these answers were wrong, either as a matter of law or
as a matter of the great weight of the evidence. This contention lacks merit. The
evidence about the punch list was conflicting. Contrary to MC’s position, Michael
Ye testified that several items on the punch list remained incomplete: “[T]hey have
not finished it.” The punch-list items “[w]ere not completed. There were several.”
The jury thus had a rational basis for saying No to Questions 5 and 6. The premise
of MC’s argument for the $30,000 in escrow funds is completion of the punch list,
but in view of the evidence that completion did not occur, the argument fails.
As for compensable work for which it was not paid, MC does not offer any
independent reason for overturning the No answer to Question 7. That question
came with an instruction requiring evidence that “Yeluh was reasonably notified that
MC Hotels expected to be compensated for the services or materials,” but MC
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identifies no such evidence. Given the state of the trial record, nothing required the
jury to answer the question in the affirmative.
Conclusion
We reverse the portion of the judgment that awards a recovery to Yeluh and
render judgment that Yeluh take nothing on its claims against MC Hotels. Because
we conclude that MC Hotels should take nothing on its claims against Yeluh,
including its claim for attorney’s fees, we affirm this portion of the trial court’s
judgment.
David Gunn
Justice
Panel consists of Justices Guerra, Gunn, and Morgan.
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