Maya Walnut LLC ran a grocery store in a shopping center owned by Walnut Creek Center, Inc. under a lease, assumed in 2008, that was due to expire on September 30, 2019 and guaranteed neither renewal, exclusive negotiation nor advance notice of non-renewal.¹ Renewal talks began in 2016 and stalled in 2018, and in June 2018 Walnut Creek's representative, Brian Ly, told Maya's representative that the owners "just need to get you the final numbers on the lease," while in July Walnut Creek signed a lease of the same space to Maya's competitor El Rancho at a higher rent.² On August 1 Ly said the owners had agreed to renegotiate the next year, Maya heard that El Rancho had a "big surprise" coming in June 2019 and grew suspicious it concerned the location, and in December 2018 Ly said the parties agreed on all terms except rent, yet Maya never asked Walnut Creek whether it was negotiating with anyone else until January 2019.³ Maya lost the location, which a jury valued at more than $11 million in lost business value, and says it would have pursued a backup location earlier had it known.⁴

Maya sued Walnut Creek, Ly and the owners for fraud, negligent misrepresentation, conspiracy, promissory estoppel and equitable estoppel, and the jury found for Maya, and for Walnut Creek on its breach-of-contract counterclaim, and the trial court awarded Maya $20,855,917.¹ The Fifth Court of Appeals (Dallas) reversed and rendered a take-nothing judgment, holding that Maya's reliance could not be justified as a matter of law under the red-flag doctrine.² The Supreme Court heard argument on December 2, 2025, and on June 26, 2026 affirmed.³

Petition for review from the Fifth Court of Appeals (Dallas); argued December 2, 2025; opinion by Justice Busby issued June 26, 2026.⁴

• Maya:¹ whether the red-flag doctrine defeats reliance on fraudulent statements that, upon inquiry, were repeatedly reaffirmed by the defendant who controlled the hidden information, and whether the court of appeals substituted its judgment for the jury's.
• Walnut Creek and the Lys:² whether Maya, a sophisticated commercial tenant in arm's-length negotiations, could have justifiably relied on any actionable misrepresentation, and whether its reliance is negated by its failure to exercise any diligence despite red flags.

Justifiable reliance usually presents a question of fact, but it can be negated as a matter of law when circumstances show that reliance could not be justified.¹

Whether Maya's reliance was justifiable.

Maya Walnut (Petitioner): The court of appeals erred in holding that its reliance was unjustified, because Walnut Creek, which controlled the critical information, repeatedly reaffirmed its statements, and the court substituted its judgment for the jury's.¹

Walnut Creek and the Lys (Respondents): The court of appeals properly reversed because Maya was a sophisticated tenant represented by a real-estate expert, it knew it had no right to renewal, exclusivity or notice, and the only thing it was promised was that renewal "could be" achieved, and it exercised no diligence despite red flags.²

Maya petitioned for review of the take-nothing judgment, challenging the holding that the red-flag doctrine negated its justifiable reliance as a matter of law and arguing that the court of appeals substituted its judgment for the jury's.¹

• Red flags. Asked how the red-flag doctrine applies, Maya's counsel said it has been applied where red flags are overwhelming; here there was at most one, a competitor's "big surprise" announcement. (Oral Argument, 0:08:14; 0:11:56)
• Plan B. Asked whether a landlord must tell a tenant it is now plan B, respondents' counsel said no, and that this is the exact question the case presents. (Oral Argument, 0:23:51)
• Nothing to discover. Asked what ordinary care would have revealed, Maya's counsel said nothing, because there are no public records of leases to check. (Oral Argument, 0:14:46; 0:15:34)
• Unreliable statements. Asked what to do if there are red flags but not overwhelming ones, respondents' counsel pointed first to Barrow-Shaver and the inherently unreliable statements. (Oral Argument, 0:27:51)
• Landlord's incentive. Asked what incentive Walnut Creek had to help El Rancho, Maya's counsel said it viewed El Rancho as very valuable, paying significantly more rent. (Oral Argument, 0:04:16)
• Not concealment. Asked about the rule that tenants may rely on landlords not to actively conceal, respondents' counsel said this is not a concealment case. (Oral Argument, 0:35:42)
• Market rates. Asked why El Rancho would pay 50 percent more, respondents' counsel said those were market rates, and Maya's 1960s lease was an incredible deal. (Oral Argument, 0:40:12)
• Damages. Maya's counsel said its damages are lost profits from the loss of its business, a challenge the court of appeals did not reach. (Oral Argument, 0:06:35)

None noted

Holding

Maya's reliance on the representations that the property was available and that the parties agreed on all terms but rent was not justifiable as a matter of law, because when a sophisticated party engaged in arm's-length negotiations becomes suspicious that a representation may be false, its blind reliance without further investigation is unjustifiable.¹

Reasoning

Walnut Creek made no actionable promise to execute a new lease or to negotiate exclusively with Maya, since agreements to negotiate are not enforceable, so the Court assumed without deciding that the statements about availability and agreement on terms were false.² Under the red-flag doctrine a person may not justifiably rely on a representation if red flags show reliance is unwarranted, courts view the circumstances holistically and do not tally flags, sophistication and arm's-length dealing are a lens and not red flags themselves, and Maya's awareness of El Rancho's "big surprise" and its suspicion that it concerned the property was a red flag.³ A reasonably prudent party would have asked Walnut Creek whether the property was still available, the lease was not public record, and whatever the answer, Maya's doubt would have been eliminated or confirmed, so by not asking it is charged with the knowledge it would have obtained.⁴ Chief Justice Blacklock, concurring in the judgment, would rest on materiality instead, because no reasonable business owner would stake the business on a non-committal statement that property is "available".⁵

Disposition

Court of appeals' judgment affirmed that Maya take nothing on its fraud claim, and the case remanded to the trial court to render judgment for Walnut Creek on its breach-of-contract claim.⁶

Vote Breakdown

Majority Opinion by Justice Busby

Joined by Bland, Devine, Hawkins, Huddle, and Young, JJ.

Concurrence by Chief Justice Blacklock

Joined by Lehrmann and Sullivan, JJ.

Justifiable reliance is ordinarily a fact question for the jury but can be negated as a matter of law under the red-flag doctrine.¹

Justice Busby delivered the opinion, joined by Justices Devine, Bland, Huddle, Young and Hawkins, and Chief Justice Blacklock, joined by Justices Lehrmann and Sullivan, concurred in the judgment.¹