In 2006, Capco Energy, Inc. bought some oil and gas rights in the Gulf of Mexico from Tana Exploration Co. Before the contract was signed, seller Capco provided buyer Tana with some geophysical analysis that it had commissioned from an engineering company.
In the contract, Capco the buyer acknowledged that Tana the seller made no warranties about the geophysical information. Capco also agreed that it would rely on solely on its own independent due-diligence investigation and not on any warranties outside the contract itself.
It turned out, though, that there wasn’t as much oil there as everyone had thought. Capco the buyer sued everyone in sight for fraud (among other things).
Capco had no luck with its lawsuit: The court granted summary judgment dismissing its claim. The appeals court affirmed, distinguishing prior cases in which buyers had not expressly disclaimed reliance:
Here, not only does the [contract] provide that [seller] Tana expressly disclaimed any representation of accuracy with respect to previous information provided to [buyer] Capco, but also Capco specifically represented in the PSA that it had relied solely on its own due diligence investigation and had not relied on any representations made by Tana ….
Because the PSA contains a clear intent to disclaim reliance, the lower courts correctly held that Capco is unable to claim fraudulent inducement based on the prior representations of Tana ….
Amco Energy, Inc. f.k.a. Capco Energy, Inc. v. Tana Exploration Co., No. 11-20264, slip op. at 15-17 (5th Cir. Jan. 30, 2012) (affirming summary judgment dismissing claims) (extra paragraphing added).