Great American Homebuilders, Inc. v. Gerhart

708 S.W.2d 8, 1986 Tex. App. LEXIS 12004
CourtCourt of Appeals of Texas
DecidedJanuary 30, 1986
Docket01-85-0252-CV
StatusPublished
Cited by23 cases

This text of 708 S.W.2d 8 (Great American Homebuilders, Inc. v. Gerhart) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Great American Homebuilders, Inc. v. Gerhart, 708 S.W.2d 8, 1986 Tex. App. LEXIS 12004 (Tex. Ct. App. 1986).

Opinion

OPINION

JACK SMITH, Justice.

This is a Deceptive Trade Practices Act (DTPA) suit in which the appellee alleged that the appellants failed to build the appel-lee’s home in a workmanlike manner and refused to cure certain deficiencies.

The appellee alleged that the appellant, Great American Homebuilders, Inc. (GAH) was a sham corporation and that the appellant, Joseph Fogarty, president of GAH, had made representations to the appellee in his individual capacity and should be held personally liable for the losses she sustained.

After a non-jury trial, the court entered judgment against the appellants and awarded the appellee damages of $3,547.00, plus $2,000.00 under the DTPA treble damages provision, and attorney’s fees. The court’s judgment also denied any relief to the appellee against three other individual defendants who had been involved with the corporation.

In August of 1980, the appellee entered into an earnest money contract with GAH for the purchase of a home. An addendum was attached to the contract which provided that certain repairs, changes, or additions were to be made prior to the closing date; however, the work was not completed. In addition thereto, after the appellee moved into her home, other defects were *10 discovered. Numerous phone calls and personal conversations between the appel-lee and Fogarty occurred. In several of these conversations, Fogarty gave his personal assurance that he would take care of these matters. These contacts between the appellee and Fogarty continued until Fo-garty would no longer return her phone calls.

In their first four points of error, the appellants complain of the trial court’s finding that GAH was a sham corporation and that Fogarty was individually liable for the damages sustained by the appellee. They allege that there was no evidence and insufficient evidence to support these findings.

In reviewing no evidence contentions, an appellate court must only consider the evidence and inferences that tend to support the findings and disregard any evidence and inferences to the contrary. Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965). In reviewing a factual insufficiency point, however, the court must consider and weigh all of the evidence. In re King’s Estate, 150 Tex. 662, 664-65, 244 S.W.2d 660, 661 (1951).

Generally, courts will not disregard the corporate fiction and hold an individual officer, director, or stockholder liable for a corporation’s obligations except where it appears that the individual is using the corporate entity as a sham to perpetrate a fraud, to avoid personal liability, to avoid the effect of a statute, or in a few other exceptional situations. Torregrossa v. Szelc, 603 S.W.2d 803, 804 (Tex.1980).

The evidence concerning whether GAH was a sham corporation is meager. The record shows that GAH was incorporated on July 9,1976; however, when it ceased to operate is disputed. Fogarty’s affidavit, in response to a request for production, stated that GAH became inactive in 1978 and that its charter was revoked in 1979 for its failure to pay franchise taxes. At trial, he stated that all the corporate records had been lost and that his affidavit was based upon his ability to recall facts which were proven later to be incorrect. He stated that the true facts were that the corporate charter was forfeited in 1981. Fogarty’s testimony was buttressed by the fact that a letter from the Texas Secretary of State was admitted into evidence which showed that GAH’s charter was forfeited on March 16, 1981. However, the letter also stated that GAH’s “RTDS” was forfeited on September 15, 1980. There is nothing in the record that explains what “RTDS” represents.

Fogarty also testified that GAH kept corporate minutes, maintained its own bank account, filed its own tax returns, employed its own attorney and C.P.A., and was engaged in the development, construction, and sale of residential homes. He further testified that he was president of GAH and signed the earnest money contract involved in the instant lawsuit in that capacity.

In the instant case, there is no evidence that Fogarty was attempting to use GAH to avoid liability for any of the reasons set forth in Torregrossa. We agree with the appellants that there is insufficient evidence to support the trial court’s finding that GAH was a sham corporation.

On the other hand, there is evidence in the record that Fogarty gave his personal assurances to the appellee that the deficiencies would be repaired. The appellee testified that on one occasion when she was complaining about door frames to Fogarty he told her that “times are tough and I’ll get over there and I’ll get it resolved.” On another occasion, when she was complaining about her yard and the drainage situation at her home, she said he told her that, “he’d get some guys over there and put some dirt down to try to level it off — so the garage wouldn’t leak so badly.” On still a third occasion, when she was complaining to Fogarty about painting and other matters, he said, “he’d get somebody over there one of these days and finish up the paint.”

It is well settled law in Texas that a corporate agent who knowingly partid- *11 pates in a tortious or fraudulent act may be held individually liable, even though he performed an act as agent for the corporation. Kinkler v. Jurica, 84 Tex. 116, 19 S.W. 259 (1892); Seale v. Baker, 70 Tex. 283, 7 S.W. 742 (1888); Barclay v. Johnson, 686 S.W.2d 334, 336 (Tex.App.-Houston [1st Dist.] 1985, no writ). Furthermore, when an agent of a corporation makes a misrepresentation, proof of fraud, trickery, artifice, or device is not required under the DTPA. Tex.Bus. & Com.Code Ann. sec. 17.46(b)(7) (Vernon Supp.1986). Proof of intent is not necessary, the representation itself is deemed to be a deceptive act. Weitzel v. Barnes, 691 S.W.2d 598, 600 (Tex.1985).

In the instant case, Fogarty’s continuous personal assurances that the work would be done, when followed by his failure to do the work or have it done, is evidence from which the trial court could have reasonably concluded that the representations by Fogarty were actually all misrepresentations. We hold that there is sufficient evidence to support the trial court’s holding that Joe Fogarty was personally liable for the damages sustained by the appellee.

Although the appellants contend that the appellee’s pleadings and the court’s findings of fact do not support the court’s judgment, we disagree. The appellee’s petition alleged violations of the DTPA by GAH, Fogarty, and other individual stockholders and directors. The court found that Fogarty was notified of the defects in the appellee’s home and that he, in his individual capacity, would repair, correct and cure the defects. The court found that the defects were not repaired or cured.

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Bluebook (online)
708 S.W.2d 8, 1986 Tex. App. LEXIS 12004, Counsel Stack Legal Research, https://law.counselstack.com/opinion/great-american-homebuilders-inc-v-gerhart-texapp-1986.