McLernon v. Dynegy, Inc.
347 S.W.3d 315 | Texas Court of Appeals, 14th District (Houston) | 2011
What This Case Means for Subcontractors
An executive sued his former employer Dynegy for fraud, claiming he was misled into buying company stock through a loan program. Dynegy won the case because the severance agreement McLernon signed included a disclaimer stating he was not relying on any prior promises or statements. The court enforced the promissory note for $1.88 million. This matters to subcontractors because similar disclaimer clauses in contracts can block fraud claims, even if you believe you were deceived before signing.
Key Takeaways
- •Disclaimer of reliance clauses in contracts are powerful legal shields—courts will enforce them to bar fraud claims based on what was said before you signed, even if those statements were false.
- •Always read the fine print in settlement, severance, and payment agreements. A single clause can eliminate your right to sue for fraud or misrepresentation.
- •If you're pressured to sign a contract with a broad disclaimer, negotiate it out or get independent legal review first. Once signed, it's nearly impossible to escape.
Disclaimer of reliance bars fraudulent inducement claim as matter of law.
Frequently Asked Question
If I sign a contract with a disclaimer saying I'm not relying on promises made before signing, can I still sue for fraud?
No, not easily. Courts treat disclaimer of reliance clauses as a complete bar to fraudulent inducement claims. Once you sign a contract with this language, you've legally waived your right to claim you were deceived by prior statements, even if those statements were intentionally false. Always have an attorney review such clauses before signing.
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