Court of Appeals (Tex.) Enforces Bank’s Dealer Agreement against Dealer who Leased Vehicle to Identity Thief

In Transworld Leasing Corp. v. Wells Fargo Auto Finance, LLC, 2012 WL 4578591 (Tex.App.-San Antonio 2012), the Texas Court of Appeals granted summary judgment to a Bank on its Dealer Agreement whose assigning dealer in a vehicle lease transaction had leased a vehicle to an identity thief.  The facts were as follows:

Transworld and Wells Fargo entered into a Master Dealer Agreement (“Agreement”) in 1997. The Agreement allows Transworld to assign vehicle leases and the leased vehicles to Wells Fargo for a sum to be agreed upon by the parties. On May 15, 2007, Transworld entered into a lease agreement for a 2007 Cadillac Escalade with a lessee purporting to be Petronila Tompong; however, the person who signed the lease had fraudulently used Tompong’s identity and forged her name. Unaware of the identity theft, Transworld assigned the lease to Wells Fargo. When the forgery was discovered, Wells Fargo made a demand that Transworld repurchase the lease because Transworld breached its contractual warranty that the lease was “executed by individuals duly authorized to do so by the parties other than Dealer obligated thereunder, each of which is a com-petent adult, and constitute the valid and binding obligations of the obligated parties.” When Transworld did not respond to the demand, Wells Fargo filed the underlying lawsuit, claiming breach of contract. Transworld answered, generally denying the allegations and asserting numerous defenses.  Wells Fargo subsequently filed a motion for summary judgment. Transworld appeals the trial court’s order granting the motion.

The Court of Appeals affirmed the trial court’s enforcement of the warranties in the Dealer Agreement:

Transworld argues that the warranty in (M) must be read in connection with the other warranties which only require Transworld to make a good faith effort to ascertain the identity of the person signing the lease. Transworld contends that because other warranties more specifically address the use of forgery to fraud-ulently obtain a leased vehicle or require specific actions to be taken to protect against forgery, the general warranty in (M) must be read more narrowly so as not to “negate and strip of effect” the other warranties. We disagree. ¶  In construing a contract, we must “give effect to all the provisions of the contract so that none will be rendered meaningless .” Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of America, 341 S.W.3d 323, 333 (Tex.2011). We are unaware of any case that holds that if a contract contains twenty-one specific warranties, only the more specific warranties will control if a situation arises in which more than one warranty could be breached. Construing a contract in this manner would render the more general warranty provisions meaningless, which is contrary to our rules of construction. See id. Moreover, the Agreement provides that Transworld agrees to repurchase the lease if it breaches “any” warranty contained in the Agreement. Accordingly, the summary judgment evidence conclusively established that Transworld warranted that the lease in question was executed by an individual duly authorized by Tompong and was the valid and binding obligation of Tompong.