PRIOR HISTORY: ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE ELEVENTH DISTRICT OF TEXAS.
COUNSEL: For Italian Cowboy Partners, Ltd., PETITIONER: Mr. Luke Madole, Mr. Thomas Fenton Allen Jr., Mr. Charles Josef Blanchard, Carrington Coleman Sloman & Blumenthal, LLP, Dallas, TX; Mr. Ricardo Rochetti, Dallas, TX. For The Prudential Insurance Company of America, RESPONDENT: Mr. G. Luke Ashley, Mr. John A. Mackintosh Jr., Mr. Richard Barrett Phillips Jr., Thompson & Knight, L.L.P., Dallas, TX. JUDGES: JUSTICE Paul W. Green delivered the opinion of the Court in which CHIEF JUSTICE JEFFERSON, JUSTICE WAINWRIGHT, JUSTICE MEDINA, JUSTICE JOHNSON, and JUSTICE LEHRMANN joined. JUSTICE HECHT filed a dissenting opinion, in which JUSTICE WILLETT and JUSTICE GUZMAN joined. OPINION BY: Paul W. Green OPINION We render judgment in favor of the lessee on its claim for rescission premised on breach of the implied warranty of suitability. I. Facts This dispute arose when Jane and Francesco Secchi, owners and operators of a restaurant, Italian Cowboy, terminated the restaurant's lease because of a persistent sewer gas odor. In a suit against
the landlord, Prudential Insurance Company of America, and the property manager, Prizm Partners, the Secchis sought to rescind the lease and recover damages for fraud and breach of the implied warranty of suitability. The landlord maintains that rescission is not warranted and seeks to recover for breach of contract. The Secchis successfully owned and operated restaurants for more than twenty years. The Secchis identified Keystone Park, a Dallas shopping center owned by Prudential and managed by Prizm, as a possible site for a new restaurant, Italian Cowboy. Keystone Park housed three successful restaurants and had a vacant restaurant building available for lease. The Secchis began negotiating a potential lease of the vacant restaurant building with Prizm's property management director, Fran Powell. During the lease negotiations, Powell told the Secchis that the building was practically new and had no problems. In particular, Francesco Secchi testified that Powell told him "the building was in perfect condition, never a problem whatsoever." According to Secchi, Powell also said, "[T]his is my baby and I was here from the first day when they put the first brick until the last one. The size—it's in perfect condition. There is no problem whatsoever. . . . [It is] a perfect building." Similarly, Jane Secchi testified that Powell told her that "this was a very new building and she had been present at the very beginning of this building and watched it all the way through," that "[i]t was somewhat of her baby," and that "there had been nothing wrong with the place at all." The lease with Italian Cowboy contained the following relevant provisions: 14.18 Representations. Tenant acknowledges that neither Landlord nor Landlord's agents, employees or contractors have made any representations or promises with respect to the Site, the Shopping Center or this Lease except as expressly set forth herein. 14.21 Entire Agreement. This lease constitutes the entire agreement between the parties hereto with respect to the subject matter hereof, and no subsequent amendment or agreement shall be binding upon either party unless it is signed by each party. . . . The Secchis began remodeling the property after signing the lease. During this time, the Secchis first heard that a severe odor had plagued Hudson's Grill, the previous tenant. Francesco Secchi testified that a nearby…