Ocra Assets, G.P., LLC v. JP Morgan Chase Bank, N.A., 2015 Tex. App. LEXIS 8396 (Tex.App. Dallas, 2015)
JP Morgan leased mineral rights in DeWitt County to GeoSouthern. Subsequently, it leased the same lands to Orca with a “Negation of Warranty” provision. When Orca sued, the court held that this provision negated any breach of contract claim but did not preclude a claim of fraud or negligent misrepresentation.
When Orca met with representatives of JP Morgan concerning the mineral rights, Orca contended that JP Morgan represented that the acreage was “open.” The clause at issue provided: “This lease is made without warranties of any kind, either express or implied, and without recourse against Lessor in the event of failure of title . . .” When the error was discovered, JP Morgan offered to return the consideration paid, but Orca refused the payment and sued for $400 million for alleged lost profits.
The court held that the above language negating a warranty precluded the breach of contract claim. JP Morgan contended that the language also precluded a reliance claim. However, the court concluded that the language was not sufficient to show that Orca had disclaimed reliance on JP Morgan’s alleged assurance that the lands were “open.” Thus the case was remanded to permit Orca to pursue its fraudulent reliance claim.