Brandon Giacomo v. Jimmy Smith, Individually and D/B/A Flair Real Estate

• Court: Court of Appeals of Texas
• Decided: November 16, 2006
• Docket: 09-06-00159-CV
• Status: Published

Opinion

In The

Court of Appeals

Ninth District of Texas at Beaumont

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NO. 09-06-159 CV

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BRANDON GIACOMO, Appellant

V.

JIMMY SMITH, INDIVIDUALLY AND

D/B/A FLAIR REAL ESTATE, Appellee

On Appeal from the County Court at Law No. 1

Orange County, Texas

Trial Cause No. 16166

MEMORANDUM OPINION

Brandon Giacomo appeals the trial court's judgment awarding attorney's fees in favor of Jimmy Smith, individually and d/b/a Flair Real Estate, pursuant to Section 17.50(c) of the Texas Business and Commerce Code. See Tex. Bus. & Com. Code Ann. § 17.50(c) (Vernon Supp. 2006). We affirm the judgment.

Giacomo, along with his fiancé at the time, searched for a new house with the assistance of real estate agent Adam DeCorte. DeCorte, a licensed agent and independent contractor for Flair Real Estate, showed the couple several houses. The couple purchased a house in Vidor, Texas. During the couple's first tour of the house prior to purchase, Giacomo noticed discoloration on the outside of the utility room wall and asked DeCorte if the house had ever flooded. Giacomo testified DeCorte answered, "No." DeCorte, however, testified he answered he did not know and suggested they return to his office to look at the seller's disclosure notice.

The couple toured the house again with Giacomo's grandparents. Giacomo's grandmother, Jalle Porter, testified she asked DeCorte if the house "ever had water in it." She said DeCorte answered, "No." DeCorte testified he remembered Giacomo's grandfather asked about flooding and that DeCorte answered, "According to the Seller's Disclosure Notice, no, it hasn't."

Pamela Porter, Giacomo's mother, testified she looked at the house with her son and his fiancé. Porter explained that the first time she looked at the house she noticed discoloration on the wall of the utility room, twice asked DeCorte whether the house had water damage, and DeCorte responded, "No" both times. Giacomo stated he asked the agent numerous times whether the house had ever flooded and every time DeCorte answered, "No."

The couple signed an earnest money contract and later closed on the home, though Giacomo knew from growing up in Vidor that the "front" portion of the street often flooded. Giacomo and his fiancé first saw the seller's disclosure notice five days before they initiated the earnest money contract. On the second page of the seller's disclosure notice, the seller did not indicate by marking either the "yes" or "no" box whether the property had previously flooded. The seller did indicate that the improvements had not previously flooded. Giacomo testified he initialed the second page of the seller's disclosure notice and then signed the document. Giacomo stated he did not ask the seller at closing if the home had flooded because he thought it would be rude to ask, considering the seller was in such poor health that he appeared unable to talk.

Several months after the couple moved into the home, Giacomo noticed water around the back door from a previous rain. He could not determine from where the water originated. The next time water entered the house -- the water damage made the basis of the lawsuit -- the water damage to the dining room, kitchen, and utility room. He then realized the water entering the house was water that had "pooled up" beneath the porch. He removed a portion of the deck and discovered boards underneath sitting flat on the ground, causing the water to enter the house. Giacomo claims when he removed the baseboards, he found evidence of prior water damage. Giacomo produced no evidence the house had flooded due to rising water; rather, Giacomo's proof was that a wooden deck caused an area to retain water, which then flooded into the house. The house had previously been rented, and the record does not reflect who built the deck or whether the seller knew of the condition.

Giacomo did not sue the seller or DeCorte. Giacomo filed suit against the owner of Flair Real Estate. His pleadings asserted violations of the Texas Deceptive Trade Practices Act, fraud, and negligent misrepresentation.

The jury did not find that DeCorte engaged in any false, misleading, or deceptive act or practice, or made any negligent misrepresentation upon which Giacomo justifiably relied. The trial court's charge also asked the jury to determine a reasonable and necessary fee for the services of Jimmy Smith's attorney, and the jury answered "$8,150.00." The trial court stated in its final judgment that after examination of the pleadings, the evidence, and arguments of counsel, the court found Giacomo's lawsuit was groundless and brought in bad faith. Giacomo filed a motion for new trial, or in the alternative, motion to modify the judgment. The trial court denied Giacomo's motion after a hearing.

Section 17.50(c) of the Texas Deceptive Trade Practices Act provides that "[o]n a finding by the court that an action under this section was groundless in fact or law or brought in bad faith, or brought for the purpose of harassment, the court shall award to the defendant reasonable and necessary attorneys' fees and court costs." Tex. Bus. & Com. Code Ann. § 17.50(c). "Groundless" under the DTPA means a claim has no basis in law or fact, and is not warranted by any good faith argument for extension, modification, or reversal of existing law. Donwerth v. Preston II Chrysler-Dodge, Inc., 775 S.W.2d 634, 637 (Tex. 1989). The trial court determines whether an action brought under the DTPA is groundless or brought in bad faith. Id. The trial court must consider the totality of the tendered evidence to determine if an arguable basis exists in fact and law for the consumer's claim. Splettstosser v. Myer, 779 S.W.2d 806, 808 (Tex. 1989). An appellate court reviews a trial court's determination under an abuse of discretion standard. Donwerth, 775 S.W.2d at 637 n.3.

Giacomo argues the trial court erred in awarding attorney's fees to Smith without first conducting a separate hearing to determine if the lawsuit was groundless or brought in bad faith. He also contends insufficient evidence supports the trial court's finding. We address both issues together, as briefed by the parties.

At the hearing on Giacomo's motion for new trial, Giacomo's counsel explained the motion only complained of the portion of the judgment awarding attorney's fees to Smith. Giacomo's counsel maintained that for Smith to recover attorney's fees, the trial court must hold a hearing, and the evidence or testimony at that hearing must prove that the lawsuit was groundless or brought in bad faith. He argued that the court must examine the facts available to the litigant and the circumstances at the time the lawsuit was filed. He told the court Giacomo initially came to him with his grandfather, and based on the grandfather's representations regarding conversations he had with DeCorte, counsel took the case. He anticipated calling Giacomo's grandfather as a witness at trial, but Giacomo's grandfather was unable to testify due to health problems.

In determining whether the action was groundless or brought in bad faith, a trial court must examine the facts available to the litigant and the circumstances that existed when the litigant filed the action. Davila v. World Car Five Star, 75 S.W.3d 537, 544 (Tex. App.--San Antonio 2002, no pet.). Refusing to allow a party to introduce evidence denies the party an opportunity to be heard in a meaningful manner. See id. Here, the trial court considered the attorney's representations at the hearing on the motion for new trial. Although the requested hearing should have been held before the initial determination was made, Giacomo was given an opportunity to be heard.

The only explanation Giacomo's counsel offered for filing the lawsuit was that he took the case based on anticipated testimony by Giacomo's grandfather. Giacomo had an opportunity to provide any other existing circumstance that would suggest the lawsuit was not groundless. We assume the trial court considered the factor Giacomo did present. While the explanation was presented after the finding, the trial court considered the information, but was not persuaded to change the finding.

Under the DTPA, the plaintiff must prove that the defendant's malfeasance was the producing cause of his damages. See Peeler v. Hughes & Luce, 909 S.W.2d 494, 498 (Tex. 1995) (citing Tex. Bus. & Com. Code Ann. § 17.50). A producing cause is "an efficient, exciting, or contributing cause, which in a natural sequence of events, produces injuries or damages." Brown v. Bank of Galveston, Nat'l Assoc., 963 S.W.2d 511, 514 (Tex. 1998). There can be more than one producing cause of an injury. See id. Producing cause includes cause-in- fact, which means that the defendant's conduct was a substantial factor in bringing about an injury which would not otherwise have occurred. See Union Pump Co. v. Allbritton, 898 S.W.2d 773, 775 (Tex. 1995).

The trial judge presided over the trial and heard the evidence. In his pleading, Giacomo alleged "the home in question flooded" in May, 2004. Although he admitted on cross-examination the petition misstated the date of the flooding as May 2004 instead of September 2003, he produced no evidence of a flood in either month. Instead, he proved the water damage was due to a pooling problem caused by the deck.

Giacomo testified he noticed water in the area of the backdoor on a prior occasion but could not determine the cause. It was not until water entered his home a second time that he determined that boards lying underneath the decking "caus[ed] the water to run back into the house." Essentially, the water damage was due to a structural and maintenance problem, and not rising flood waters. A failure to properly maintain the deck and prevent the pooling of the water caused the damage to the house.

Giacomo received and reviewed the seller's disclosure notice on which DeCorte relied. He had an opportunity at closing to ask the seller questions about the house or water damage and did not take the opportunity. He presented no evidence DeCorte or Smith knew about the deck problem, knew the problem had caused water damage, or had any information different from what the seller provided on the disclosure notice. The trial court considered Giacomo's pleadings, the evidence presented at trial, and the attorney's representations made at the hearing on Giacomo's motion for new trial, and found no arguable basis for Giacomo's claim. See Splettstosser, 779 S.W.2d at 808. Under the circumstances we do not see an abuse of discretion by the trial court. Appellant's issues are overruled.

The judgment is affirmed.

AFFIRMED.

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DAVID GAULTNEY

Justice

Submitted on September 14, 2006

Opinion Delivered November 16, 2006

Before McKeithen, C.J., Gaultney and Kreger, J.J.