Joel A. Ramsey and Marla K. Ramsey v. James R. Spray and Marianne Spray

Court of Appeals of Texas·Decided December 23, 2009·No. 02-08-00129-CV·Published

Opinion

COURT OF APPEALS

SECOND DISTRICT OF TEXAS

FORT WORTH

NO. 2-08-129-CV

JOEL A. RAMSEY AND APPELLANTS

MARLA K. RAMSEY

V.

JAMES R. SPRAY AND APPELLEES

MARIANNE SPRAY

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FROM THE 362ND DISTRICT COURT OF DENTON COUNTY

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MEMORANDUM OPINION (footnote: 1)

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In five issues, appellants Joel A. and Marla K. Ramsey appeal the award of damages to appellees James R. and Marianne Spray on the Sprays’  Deceptive Trade Practices-Consumer Protection Act (DTPA) claim arising from the sale and purchase of a house.  We affirm in part, reverse and render in part, and reverse and remand in part for further proceedings consistent with this opinion.

I.     BACKGROUND

In 2002, appellants Joel A. and Marla K. Ramsey decided to sell their house in Flower Mound, Texas, and hired Sharon Hodnett of Keller Williams/DFW as their agent.

More than ten months before entering into a contract for sale of their house to James R. and Marianne Spray, the Ramseys completed a sellers’ disclosure notice.  Approximately five months before the sale closed on May 23, 2003, the Ramseys discovered water damage in the kitchen caused by a leaky roof.  The Ramseys, however, did not supplement or amend their sellers’ disclosure notice to reflect the house’s faulty roof or the water damage.  The Sprays’ home inspector, James Wood, identified various minor needed repairs but did not identify any water damage or a faulty roof.

After purchasing the house, the Sprays began to experience problems associated with water penetration due to the house’s faulty roof.  Mrs. Spray discovered standing water in one of the kitchen drawers in approximately July 2003.  In December 2003, the Sprays hired a contractor to investigate and fix the problem.  The contractor found multiple leaks due to improper roof installation.  The leaks resulted in water damage throughout the house, including damaged roof decking, exterior wall studs, interior walls, and wooden flooring.  The total cost to repair the damage to the house was $190,445.70.

The Sprays sued the Ramseys, Hodnett, Keller Williams/DFW, and Wood for negligence, fraud, breach of warranty, violations of the DTPA, and unconscionable or knowing conduct.  The Sprays sought judgment against all defendants “jointly and severally” for actual, exemplary, punitive, statutory, treble, and mental anguish damages, attorney’s fees, interest, and costs.

On November 3, 2006, the Sprays settled and released all claims with Hodnett, Keller Williams/DFW, and Wood for a collective amount of $400,000.

The case proceeded to trial against the Ramseys on May 21, 2007.  During trial, the Ramseys introduced the settlement agreement for the purpose of obtaining a settlement credit, and it was admitted without objection.

The jury returned a verdict finding the Ramseys liable for fraud and DTPA violations.  The jury awarded the Sprays $200,000 actual damages for the costs of repair to the house, mental anguish damages of $100,000 each,  $2,000,000 in “additional” damages, (footnote: 2)  and $50,000 in attorney’s fees through trial.

On December 21, 2007, the trial court rendered final judgment on the DTPA verdict, awarding the Sprays $190,445.70 in actual damages, $571,337.10 in “additional” damages, (footnote: 3) $100,000 each to the Sprays for mental anguish, plus attorney’s fees, interest, and costs.  After judgment was rendered, the Ramseys filed a motion for new trial, asserting, among other complaints, that the trial court erred by not applying the $400,000 settlement amount as a credit against the damages award and by awarding “excessive” actual damages.  The motion for new trial was overruled by operation of law.  This appeal followed.

II.     ISSUES

The Ramseys bring the following five issues on appeal:

1) The trial court abused its discretion by failing to apply as a settlement credit against the damages award the $400,000 that the Sprays received in settlement from Hodnett, Keller Williams/DFW, and Wood.

2) The trial court erred by awarding as additional damages under the DTPA four times the amount of actual damages.

3) The trial court erred in calculating pre- and post-judgment interest, resulting in an excessive and usurious interest award.

4) The Sprays’ awards of mental anguish damages are not supported by legally sufficient evidence.

5) The actual damages award is not supported by legally or factually sufficient evidence because it includes $15,000 in repair costs that are unrelated to the Sprays’ DTPA claims.

III.     SETTLEMENT CREDIT

In their first issue, the Ramseys complain that the trial court abused its discretion by failing to credit against the damages award the $400,000 the Sprays received in settlement.

A. Standard of Review

A trial court’s determination of the existence or amount of a settlement credit is reviewed for an abuse of discretion. (footnote: 4)  To determine whether a trial court abused its discretion, we must decide whether the trial court acted without reference to any guiding rules or principles; in other words, we must decide whether the act was arbitrary or unreasonable. (footnote: 5)  An appellate court cannot conclude that a trial court abused its discretion merely because the appellate court would have ruled differently in the same circumstances. (footnote: 6)

An abuse of discretion does not occur when the trial court bases its decisions on conflicting evidence. (footnote: 7)  Furthermore, an abuse of discretion does not occur as long as some evidence of substantive and probative character exists to support the trial court’s decision. (footnote: 8)

B. Law Governing Settlement Credits

Texas Civil Practice and Remedies Code Chapter 33 governs settlement credits in all tort and DTPA actions. (footnote: 9)  Section 33.012(b) of the code provides:

If the claimant has settled with one or more persons, the court shall further reduce the amount of damages to be recovered by the claimant with respect to a cause of action by the sum of the dollar amounts of all settlements. (footnote: 10)

This statute is mandatory. (footnote: 11)  Because section 33.012(b) calls for settlement credits to apply to “damages to be recovered by the claimant,” the credit is applied to the amount of damages awarded in the judgment, not the amount of damages found by the jury. (footnote: 12)

A nonsettling defendant has the burden to prove the existence and amount of a settlement credit, and may do so by placing the settlement agreement or some other evidence of the settlement amount in the record. (footnote: 13)  The burden then shifts to the plaintiff to show that all or a portion of this settlement amount should not be credited. (footnote: 14)

A nonsettling defendant is not entitled to cr

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Joel A. Ramsey and Marla K. Ramsey v. James R. Spray and Marianne Spray, (Tex. Ct. App. 2009).

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