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Formosa Plastics Corporation USA v. Presidio Engineers and Contractors, Inc – Case Brief Summary (Texas)

In Formosa Plastics Corporation USA v. Presidio Engineers and Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998), the supreme court carved out a limited exception to that general rule, holding that a party may maintain an action for fraudulent inducement of a contract even where the only damages are contract damages. See id.

To establish a claim for fraudulent inducement, a party must show:

(1) a material representation which was false;

(2) which was either known to be false when made or was made without knowledge of its truth;

(3) which was intended to be acted upon;

(4) which was relied upon;

(5) caused injury. See id.

The Court concluded that Presidio failed to present legally sufficient evidence to support the entire amount of damages--$ 700,000--awarded.

The court also concluded that there was clearly legally sufficient evidence that Presidio suffered some damages as a result of Formosa's fraud, including an out-of-pocket damage award of $ 231,000 or a benefit-of-the-bargain damage award of $ 461,000. Id. at 51.

Because there was some evidence of the correct measure of damages and because the issue of damages was contested by Formosa, the supreme court could not render judgment in favor of Presidio for a lesser amount. Id.

Instead, the court reversed that judgment and remanded the cause for a new trial. See id.