Appeals court asked whether settlement agreement's "no knowledge" language creates a contractual warranty

John Yip, counsel for appellant M.O. Chang, told the appellate panel the central question on the contract claim is whether language in a settlement agreement that "represents that he has no actual knowledge of any material facts or defects regarding the property other than those previously disclosed" functions as a contractual warranty.

"The 1st issue is whether the settlement agreement, gives rise to a breach of contract claim against salawites when they represented that they have no knowledge of undisclosed material facts, but the evidence since discovered after closing show otherwise," Yip said during oral argument, pressing the court to reverse summary judgment and remand the breach claim. He argued the representation was incorporated into the parties' agreement and pointed to case law holding that material representations can operate as warranties.

Respondents, represented by Victoria Molina of Burns Keller Cromwell, countered that the purchase-and-sale agreement's as-is clause remains operative and that the settlement agreement was contextual to closing logistics rather than a vehicle to alter property-condition allocations. "The as is clause is disclaiming everything about the property," Molina said, arguing that a general no-knowledge statement is not the kind of specific positive warranty that would override an as-is bargain.

The panel questioned whether finding a warranty in this phrasing would require further fact-finding about parties' intent and whether summary judgment was the right procedural vehicle. The court took the case under advisement after argument; no ruling was issued.