Ebby Halliday Real Estate, Inc. v. Kevin Dugas

Court of Appeals of Texas·Decided April 9, 2019·No. 05-17-01028-CV·Published

Opinion

REVERSE and RENDER; and Opinion Filed April 9, 2019.

In The

Court of Appeals

Fifth District of Texas at Dallas No. 05-17-01028-CV

EBBY HALLIDAY REAL ESTATE, INC., Appellant V.

KEVIN DUGAS, Appellee

On Appeal from the County Court at Law No. 3 Dallas County, Texas

Trial Court Cause No. CC-15-04871-C

MEMORANDUM OPINION

Before Justices Brown, Schenck, and Pedersen, III Opinion by Justice Pedersen, III This appeal arises from the sale of a condominium unit. The buyer, Kevin Dugas, claims

the seller’s agent, Ebby Halliday Real Estate, Inc. (Ebby), misrepresented the property’s square footage. Ebby appeals a jury verdict awarding Dugas damages. Among other issues, Ebby challenges the legal sufficiency of the evidence to support the jury’s finding that Ebby made a false representation. We conclude the evidence is legally insufficient to support the jury’s finding. We therefore reverse and render.

BACKGROUND

The seller, Elizabeth McLarry, retained Ebby to put her condominium unit on the market.

Karen Estes, a salesperson employed by Ebby, listed the property on the Multiple Listing Service

(MLS).1 The MLS database contains a drop-down menu from which the listing agent can select “appraisal,” “builder,” “tax,” or “other” as the source of the subject home’s square-footage information. Estes selected “tax” for the unit in question, as do most agents when listing properties. Based on this selection, the MLS database accessed the unit’s square footage from Dallas Central Appraisal District (DCAD) records and uploaded this information into the MLS listing. The listing noted the property’s square footage as “1,178 / Tax.” The listing also contained a narrative field prepared by Estes in which she described the property as a “[d]arling 1,178 sq. ft.” unit. The foregoing descriptions were consistent with DCAD’s records, which list both the “[l]iving [a]rea” and the “[t]otal [a]rea” of the unit as 1,178 square feet. However, this is not the unit’s “livable” square footage. This number includes the balcony and garage.

Dugas’s agent, Lisa DeWaal, gave him a copy of the MLS listing. Dugas was a first time home buyer, and he relied on the listing’s description of the property’s square footage in deciding to make an offer to purchase the property. Dugas purchased the condominium in March 2015 for $130,000. Although a buyer’s lender typically requires an appraisal of the property, in this case Dugas borrowed the purchase money from his father. Thus, no appraisal was performed. After the transaction closed, Dugas measured the unit and discovered that its “livable” square footage—i.e., the interior climate-controlled space excluding the balcony and garage—was only 885 square feet. In other words, the unit was approximately twenty-five percent smaller than Dugas had understood it to be.

Dugas sued Ebby and Estes and asserted claims for (i) violations of the Deceptive Trade Practices Act (DTPA), see TEX. BUS. & COM. CODE ANN. §§ 17.41–.63, (ii) statutory fraud, see id. § 27.01, and (iii) negligent misrepresentation. Dugas also asserted a claim against Ebby for its

1 It is undisputed that “[a]t all times relevant to the claims in this lawsuit,” Estes “was acting on behalf of and as an agent of [Ebby] and in the course and scope of her agency for [Ebby’s] benefit.”

negligent supervision and training of Estes. The defendants generally denied Dugas’s claims, and they also pleaded section 17.506 of the Business Commerce Code. Id. § 17.506(a)(1)–(2). This section provides an affirmative defense to a DTPA claim if the defendant gave reasonably and timely written notice to the plaintiff of the defendant’s reliance on written information from official government records or other sources that, if false, the defendant did not know and could not reasonably have known of such falsity. Id.

Dugas’s DTPA and statutory fraud claims against Ebby were tried before a jury in April 2017.2 At the conclusion of the trial, the jury found that Ebby engaged in false, misleading, or deceptive trade practices and committed statutory fraud. The jury awarded Dugas $32,335.48, which is the amount that he claims he overpaid for the subject unit, plus additional sums for attorney’s fees. However, in response to Question 2 of the charge, the jury found for Ebby regarding its DTPA affirmative defense.

Following the jury’s verdict, Dugas filed a motion for entry of judgment and to disregard certain answers in the verdict. Ebby countered by filing a motion for judgment notwithstanding the verdict. On June 26, 2017, the court held a hearing on both motions. A little over a month later, on July 31, the court rendered judgment awarding Dugas $32,335.48, plus additional sums for attorney’s fees. The judgment also awarded Dugas pre- and post-judgment interest and costs. Moreover, the judgment stated the court had disregarded the jury’s answer to Question 2 because no evidence supported this answer. Ebby then filed this appeal.

2 Dugas’s negligent misrepresentation and negligent supervision and training claims were not submitted to the jury, nor were any of his claims against Estes. However, the court’s judgment, rendered on July 31, 2017, “finally dispose[d] of all parties and claims.”

ANALYSIS

I. Statutory Fraud Ebby raises eight issues, two of which relate to Dugas’s DTPA claim, four of which relate to his statutory fraud claim, and two of which relate to other topics. It appears that the court’s judgment awarded damages to Dugas based on his statutory fraud claim.3 Therefore, we will begin by considering Ebby’s issues related to Dugas’s fraud claim. Question 5 of the court’s charge asked whether Ebby “committed statutory fraud” against Dugas. According to the charge, statutory fraud occurs when, among other elements, “there is a false representation of a past or existing material fact.” See TEX. BUS. & COM. CODE ANN. § 27.01(a)(1) (providing statutory basis for the foregoing definition). The jury answered “yes” to Question 5. It also found, in response to Question 6, that Ebby was not actually aware that the subject representation was false. See id. § 27.01(c) (providing for exemplary damages if a defendant makes a false representation with actual awareness of such falsity). Ebby’s third issue challenges the legal sufficiency of the evidence to support the jury’s finding that Ebby misrepresented the size of the condominium unit.

To prevail on this issue, Ebby must demonstrate that no evidence supports the jury’s finding. Graham Central Station, Inc. v. Pena, 442 S.W.3d 261, 263 (Tex. 2014) (per curiam). “We will sustain a legal sufficiency challenge if the evidence offered to prove a vital fact is no more than a scintilla.” Id. (citation and internal quotation marks omitted). In conducting this analysis, “we credit evidence that supports the verdict if reasonable jurors could have done so and disregard contrary evidence unless reasonable jurors could not have done so.” Id. (citation and internal quotation marks omitted). We must determine “‘whether the evidence at trial would enable

3 Specifically, the judgment did not reduce Dugas’s damages award despite the jury’s finding that Dugas was sixteen percent responsible for his damages and DeWaal was forty percent responsible for Dugas’s damages. The fact that Dugas’s damages were not reduced suggests that his statutory fraud claim was the basis for the judgment’s damages award. See LandAmerica Commonwealth Title Co. v. Wido, No. 05–14-00036-CV, 2015 WL 6545685, at *11 (Tex. App.—Dallas Oct. 29, 2015, no pet.) (mem. op.) (“[P]roportionate responsibility does not apply to statutory fraud.”).

reasonable and fair-minded people to reach the verdict under review.’” Id. (quoting City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005)).

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