Suspicion, Red Flags, and Justifiable Reliance: Maya Walnut LLC v. Ly

The other party to a business deal made a representation I now know was false. I had some doubts at the time but went ahead anyway. Can I sue for fraud?

The Supreme Court of Texas addressed nearly that situation in Maya Walnut LLC v. Ly, No. 24-0171 (Tex. June 26, 2026). A Dallas grocery tenant negotiating a lease renewal was assured the space remained available; the landlord had in fact already leased it to a competitor. A jury found that the landlord had misrepresented the availability of the premises and awarded the tenant roughly $20.8 million, including exemplary damages. The court of appeals reversed, and the Supreme Court affirmed, holding that the tenant’s reliance on the landlord’s representations was not justifiable as a matter of law.

Justifiable reliance is an element of fraud in Texas, and the Court has held for some time that a sophisticated party dealing at arm’s length must exercise ordinary care for the protection of its own interests. Grant Thornton LLP v. Prospect High Income Fund, 314 S.W.3d 913, 923 (Tex. 2010); JPMorgan Chase Bank, N.A. v. Orca Assets G.P., L.L.C., 546 S.W.3d 648, 654 (Tex. 2018); Barrow-Shaver Res. Co. v. Carrizo Oil & Gas, Inc., 590 S.W.3d 471, 496–97 (Tex. 2019). Under those cases, “red flags” surrounding a representation may negate reliance as a matter of law when the circumstances make actual reliance extremely unlikely, although the question is ordinarily one for the fact-finder.

Maya Walnut appears to develop that doctrine in several respects. First, the Court did not require an accumulation of warning signs; it treated the tenant’s awareness of the competitor’s planned “big surprise” as sufficient on its own to call for inquiry. Second, the Court’s formulation focuses on the plaintiff’s actual state of mind: “When a sophisticated party engaged in arm’s-length negotiations becomes suspicious that a representation may be false, its blind reliance on that representation without further investigation is per se unjustifiable.” Third, the inquiry the Court described was modest — the tenant “easily could have asked Walnut Creek if the property remained available” — and the failure to ask was treated as dispositive. Finally, the tenant was a grocery operator negotiating its own lease rather than an institutional party of the kind involved in the earlier cases, which may suggest a broad reading of who counts as “sophisticated” in commercial dealings.

Chief Justice Blacklock, joined by Justices Lehrmann and Sullivan, concurred in the judgment but not in the red-flag analysis, reasoning instead that the landlord’s statements were non-committal and that no reasonable business would have relied on them to the extent the tenant did. The majority’s formulation therefore carries the Court’s authority, but the separate writing indicates some difference of view about how the doctrine should be framed, and later cases may test its limits — for example, where the suspicious party does ask and receives a further misrepresentation, or where the parties are not on equal footing.

The opinion does not change the elements of fraud, and it does not purport to reach consumers or relationships in which one party owes the other a duty of disclosure. What it does suggest is that, in a commercial negotiation in Texas, the point at which a party becomes uneasy may also be the point at which the law expects that party to ask a direct question and document the answer.

See also our earlier post, “Read Before Signing,” on the related principle that a party generally may not rely on the other side’s description of what a written document says.

Statute of limitations for claims under the Copyright Act

What is the limitations period for claims under the Copyright Act?

Copyright Act claims have a three year limitations period, beginning when an infringing act accrues. However, when a defendant has committed successive violations, the separate-accrual rule accompanying the Copyright Act states that each infringing act starts a new limitation period. Each infringement, however, is actionable only within three years of its occurrence. See Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S.Ct. 1962 (2014).

Limitations periods for trademark infringement

I own a business in Texas, and two years ago I discovered that someone else was using my trademark. Is it too late for me to take legal action in Texas?

Probably not. The Lanham Act (15 U.S.C. §§1125 et seq.) creates a civil claim for trademark infringement. Since the Lanham Act does not contain a specific statute of limitations period, the courts look to state law to determine the appropriate statute of limitations. Federal courts have typically dealt with this issue by applying the state’s limitations period for fraud claims to claims under the Lanham Act. Texas is no different. In Texas, the four year statute of limitations for fraud claims (Tex. Civ. Prac. & Rem. Code §16.004) is applied to claims under the Lanham Act. See Tinker, Inc. v. Poteet, 2017 WL 4351304 at *6 (N.D. Tex. Sept. 30, 2017).  This four year period begins when a plaintiff discovers the fraud or could have discovered the fraud by the exercise of reasonable diligence. See Tinker, Inc. v. Poteet, 2017 WL 4351304 at *6 (N.D. Tex. Sept. 30, 2017) citing S.V. v. R.V., 933 S.W.2d 1, 35 (Tex. 1996). Since you discovered this infringement only two years ago, the statute of limitations for your claims under the Lanham Act may not yet have expired.  You may also have claims under the common law. The statute of limitations will depend on the type of claim you have. For trademark-infringement claims, the statute of limitations is four years while the statute of limitations for unfair-competition claims based on trademark infringement is two years. See  Springboards to Education, Inc. v. Scholastic Book Fairs, Inc., 2018 WL 1806500 at *7 (N.D. Tex. April 17,2018) citing Derrick Mfg. Corp. v. Sw. Wire Cloth, Inc., 934 F. Supp. 796, 804-06 (S.D. Tex. 1996) (citing Tex. Civ. Prac. & Rem. Code § 16.003-.004). Unlike claims under the Lanham Act, in which the statute of limitations period begins when a plaintiff discovers or should have discovered the fraud, the statute of limitations period for common-law trademark claims does not accrue until the allegedly wrongful conduct ends. This is because Texas law treats common law trademark-infringement as a continuing tort. See  Springboards to Education, Inc. v. Scholastic Book Fairs, Inc., 2018 WL 1806500 at *7 (N.D. Tex. April 17,2018) citing Horseshoe Bay Resort Sales Co. v. Lake Lyndon B. Johnson Imp. Corp., 53 S.W.3d 799, 812 (Tex. App. – Austin 2001, pet. denied). However, the affirmative defense of laches may still apply.

Access to opponent's computers

If I were involved in a lawsuit in Texas, could I get access to my opponent’s computer’s hard drive?

Maybe. As a threshold to granting access to electronic devices, you (the requesting party) would have to show that the responding party somehow defaulted on its obligation to search its records and produce the data you requested. See In re Shipman, 540 S.W.3d 562, 568-69 (Tex. 2018) citing In re Weekley Homes, L.P., 295 S.W.3d 309, 317 (Tex.2009)(orig. proceeding). Courts do not rely on skepticism or bare allegation that a responding party failed to comply with its discovery duties to grant access to electronic devices, but rather evidence is needed. See In re Shipman, 540 S.W.3d at  568-69.

Contract Interpretation

I have a dispute about the meaning of a written agreement. How might a court in Texas go about resolving such a dispute?

Normally, a court will confine its interpretation to the agreement’s text, but a court’s willingness to consider outside evidence will depend on the facts of each case. Typically, the willingness of a court to consider evidence beyond what is stated directly in an agreement depends on the clarity of the agreement’s wording. If the language of an agreement is written in a way that allows for multiple reasonable interpretations of the text, then the agreement is considered ambiguous and thus, outside (i.e.,extrinsic) evidence may be considered in order to determine the meaning of the agreement’s language. However, if the agreement is worded in a way that gives its contents a direct or certain legal meaning, then it is not considered ambiguous and outside evidence cannot be used to inform the court’s interpretation of the agreement. This decision, concerning the ambiguity of an agreement, is made by the court. Nevertheless, there are limitations to the extent to which extrinsic evidence may be considered when reviewing an agreement, even if it is ruled ambiguous. As previously mentioned, outside evidence that is objective in nature may be admitted if an agreement is deemed to be ambiguous, however, it may only be admitted to determine the parties’ intent as expressed in the agreement, and cannot be relied upon to give the agreement a meaning different from the language it imports or to show what the parties probably meant, or could have meant, something other than what their agreement stated. See URI, Inc. v. Kleberg County, 543 S.W.3d 755 (2018) citing Anglo-Dutch Petrol. Int’l, Inc. v. Greenberg Peden, P.C., 352 S.W.3d 455,451 (Tex. 2011). The “facts and circumstances” in existence at the time an agreement is executed “may be consulted only to inform the meaning of the language the parties chose to effectuate their accord,” and when interpreting an unambiguous agreement or determining whether an ambiguity exists, courts may not consider the parties’ intent beyond the meaning the agreement’s language reasonably suggests when interpreted in context. See URI, Inc. v. Kleberg County, 543 S.W.3d 755, 763 (2018).