Jose Duran and Maria Duran v. JB Goodwin Realtors and Xuan Le

• Court: Court of Appeals of Texas
• Decided: August 29, 2014
• Docket: 03-13-00179-CV
• Status: Published

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-13-00179-CV

Jose Duran and Maria Duran, Appellants

v.

JB Goodwin Realtors and Xuan Le, Appellees

FROM THE COUNTY COURT AT LAW NO 2 OF TRAVIS COUNTY NOS. C-1-CV-12-012278 & C-1-CV-12-003023, HONORABLE J. DAVID PHILLIPS, JUDGE PRESIDING

MEMORANDUM OPINION

Jose Duran and his wife Maria Duran entered into a written contract to purchase real

property from Michael O. Price. The Durans sued JB Goodwin Realtors and its agent Xuan Le

(collectively, “Goodwin”) based upon representations Goodwin made at a time that preceded the real

estate transaction, when Goodwin had the property listed for sale. Goodwin filed a motion for

summary judgment, which the trial court granted. The Durans appeal. We will affirm.

BACKGROUND

Considering the evidence in the light most favorable to the Durans, the record reflects

the following. Michael O. Price owned approximately one acre of land and sought to sell one-half

acre of that property. Price retained Goodwin to advertise and market his property for sale, and they

entered into an exclusive listing agreement that provided for Goodwin to receive a commission from the sale. From September 1, 2010, to January 31, 2011, Goodwin listed Price’s property for sale for

$50,000. At some point early on, Goodwin became aware that Price’s property was not in fact

subdivided, but supposedly the process of subdividing was underway. Goodwin listed the property

in the Multiple Listing Service with a notation in the Agents’ section stating, “Lots will

be subdivided.”

Xuan Le posted a “for sale” sign at the property along with a holder containing

printed advertising flyers. The printed advertisement stated that a buyer would “own your own

land,” that the land was “ready for utilities,” that the land was “ready for your new home or mobile

home,” and suggesting the possibility of owner financing. The flyer did not mention any lien and

did not state whether the property had been subdivided. When the listing expired, Goodwin did not

renew the listing because the property still had not been subdivided.

In November 2010, while the property was still listed by Goodwin, the Durans

obtained one of the flyers posted at the property. Mr. Duran, who speaks limited English, never

spoke to Xuan Le. Mrs. Duran called the realtor to inquire about the property. She asked Le whether

the owner owed anything on the property. She says Le told her that there were no liens on the

property, which Le denies, and that they could work on owner financing. In January 2011,

Mrs. Duran again called to inquire whether the property was still available. Le told Mrs. Duran that

she and her husband could let themselves onto the property if they wanted to see it. Le never met

the Durans, and they never discussed whether the property was subdivided. Goodwin’s listing

expired January 31, 2011, and Goodwin’s connection to the property terminated at that time.

2 On March 1, 2011, three or four months after the Durans first saw a flyer and a month

after the listing agreement expired, the Durans decided to purchase the property. The property was

no longer listed for sale with a realtor, and apparently no commission would be owed. The Durans

negotiated directly with the seller. They signed a real estate purchase contract with Price to purchase

one-half acre of his property for $37,000. There were no other parties to the contract. The Durans

contend that, in entering into the transaction, they relied on Goodwin’s prior representations that the

property could be conveyed, that it would serve their purpose, and that it was unencumbered by debt.

The Durans did not hire an attorney, legal professional, real estate professional, or title company to

assist them with the purchase because they “believed, trusted, and relied” upon Goodwin’s false

representations, “both express and implied.”

The evidence is undisputed that, other than the contact stated above, Goodwin was

not involved with encouraging or persuading the Durans to purchase the property, negotiating the

transaction, determining the contract price or terms, selecting the form of the contract, preparing the

contract document, filling out the form, or presenting the contract to Price, and there is no suggestion

that Goodwin received any fee from the transaction. Neither the Durans nor Price was represented

by an attorney or by a realtor, agent or broker.

When the Durans decided to purchase the property, they retained the services of

Azalea Flores, a notary public who was not a lawyer or realtor. They paid her to draft the purchase

contract. She downloaded a contract from the Internet and filled it out for them. Some important

contract terms and blanks were left empty or not written to the Durans’ benefit. Flores met with the

Durans and Price when they signed the contract. At the meeting, the Durans presented Price with

3 a written list of their expenses in connection with the purchase, including the fee to Flores and the

cost for them to obtain a survey. The purchasers did not obtain a survey or title policy, although the

contract provided for the same. They did not retain the services of a title company, obtain a title

commitment, or utilize an escrow agent aside from Price. Ms. Flores stated in her deposition that

she advised the Durans to go to a title company to make sure that there were no liens on the property.

They did not do so. Instead, the Durans gave Price $10,000 cash and a vehicle valued at $14,000,

and commenced making installment payments to Price for the $13,000 balance. Price never

executed a deed or any conveyance to the Durans, and a closing date was never set. The purchase

contract gave the Durans 720 days to obtain a survey. Price testified that he had conversations with

the Durans about subdividing the property and getting a survey, that they knew the property had not

yet been subdivided, and that the lengthy period of time was to enable them to survey and subdivide

the property, which the Durans deny.

The Durans did some work improving the land, including clearing trees and brush,

fencing, and the like. In April, the Durans had a survey done so that they could erect a boundary

fence. The record does not reflect how they knew where to place the location of the boundary line.

The Durans allege that when they attempted to obtain utility hookups in July, their application was

denied. They discovered that the property had never been legally subdivided and, therefore, they

could not obtain separate utilities.

The Durans sought help from a real estate attorney to recover their money and vehicle

from Price, but their efforts were unsuccessful. Through the attorney, the Durans discovered that

Price’s property was encumbered by $170,000 in liens.

4 The Durans sued Price and the Goodwin parties under the Texas Deceptive Trade

Practices-Consumer Protection Act (DTPA). See Tex. Bus. & Com. Code §§ 17.41-.63. The Durans

contend that they stood as consumers under the DTPA as to Goodwin as well as to the seller, and

that Goodwin’s conduct violated the DTPA. The Durans allege that they suffered damages from

entering into a transaction with Price in reliance on representations made to them by Goodwin, and

that they would not have entered into the contract but for these representations. They also allege that

Goodwin committed fraud, because a search of the Travis County real estate database would have

revealed to Le that the property was not subdivided and that there were liens against the property,

which she failed to disclose. In the alternative, the Durans allege that Goodwin’s conduct was

negligent, grossly negligent, and reckless and was a proximate cause of their damages.

Goodwin moved for summary judgment on the grounds that (1) Goodwin had no

connection to or involvement with the transaction between the Durans and Price; (2) the Durans were

not consumers as to Goodwin because they acquired no goods or services from Goodwin; (3) the

contract between Price and the Durans, as well as the Durans’ other independent acts, superseded

any statement or act by Goodwin that preceded the contract; and (4) Goodwin’s conduct as a matter

of law was not a producing cause or proximate cause of the Durans’ damages. Goodwin contends

that any economic damage suffered by the Durans occurred solely as a result of their contract and

transaction with Price, not because of any act or omission by Goodwin. The trial court rendered

summary judgment for Goodwin. This action was severed from the claims against Price to allow

the Durans to appeal.

5 STANDARD OF REVIEW

Whether summary judgment is proper is a question of law that we review de novo.

FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000). A traditional summary

judgment is proper if (1) there are no genuine issues of material fact, and (2) the movant is entitled

to judgment as a matter of law. Tex. R. Civ. P. 166a(c). Once the movant establishes the right to

judgment, the burden shifts to the nonmovant to raise a fact issue that would preclude summary

judgment. Virginia Indonesia Co. v. Harris Cnty. Appraisal Dist., 910 S.W.2d 905, 907 (Tex.

1995). A defendant who conclusively negates at least one essential element of a plaintiff’s cause of

action is entitled to summary judgment on that claim. IHS Cedars Treatment Ctr. of DeSoto, Tex.,

Inc. v. Mason, 143 S.W.3d 794, 798 (Tex. 2004). When reviewing a summary judgment, we take

as true all evidence favorable to the nonmovant, and we indulge every reasonable inference and

resolve any doubts in the nonmovant’s favor. Provident Life & Accident Ins. Co. v. Knott,

128 S.W.3d 211, 215-16 (Tex. 2003); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W. 2d 546, 548-49 (Tex.

1985). When the trial court does not state the basis for its ruling, the judgment can be affirmed on

any of the movant’s theories that have merit, and the appellate court can consider all grounds

preserved for appeal. Cincinnati Life Ins. Co. v. Cates, 927 S.W. 2d 623, 627 (Tex. 1996).

DISCUSSION

The Durans alleged that they suffered economic damages as a result of entering into

the March 1, 2011, real estate transaction with Price because Price never conveyed to them title to

a legal lot free from liens. They place the responsibility for their damages, however, on Goodwin.

The Durans rely on the advertising flyer Le posted at the property, Le’s telephone representation to

6 Mrs. Duran, the MLS listing for the property, and Goodwin’s failure to inform them that the property

was not subdivided and was encumbered by liens.

The Durans allege that the statements in the flyer were false misrepresentations

designed to induce them to purchase the property. They allege that Goodwin knew that the property

had not been legally subdivided and that it was encumbered by liens, but did not tell them. Although

Le posted information on the MLS web site that the property had not yet been subdivided, the Durans

assert that the area where it was posted is restricted and not available to the general public. They

also contend that Goodwin knew about or should have been able to discover the liens against the

property and withheld the information from them.

The Durans assert that they were injured by the transaction with Price; that they never

would have entered the transaction but for their reliance on the express and implied false

misrepresentations of Goodwin; that the misrepresentations and withholding of information were

made at a time when Goodwin was acting as Price’s agent; and that Goodwin’s actions were both

a producing cause and a proximate cause of their injuries. Goodwin concedes that the Durans

admittedly were consumers as to the seller under the DTPA but argues that the Durans were not

consumers under the DTPA as to Goodwin because they neither sought nor acquired goods or

services from Goodwin. Primarily, Goodwin argues that the written contract between the Durans

and Price superseded any of Goodwin’s acts; that Goodwin was not connected to the transaction; and

that nothing Goodwin did constituted a cause of the Durans’ economic damages. Goodwin also

asserts that the Durans relied on their own purchase contract that they prepared, not on the

advertising flyer, in pursuing the purchase, and it was the contract that controlled the transaction.

7 Finally, Goodwin contends it was not responsible for the fact that the Durans delivered their money

and property to the seller rather than to an independent escrow agent, did not utilize the services and

protection of a title company, and did not even take advantage of their rights and protections under

the terms of their contract. Goodwin asserts that its actions were not a producing or proximate cause

of any damages and, further, that the undisputed facts conclusively establish several intervening new

and independent causes of any damages. In short, any damages the Durans suffered resulted solely

from their contract and independent actions and not from reliance upon any actions or

representations made by Goodwin.

Likewise, Goodwin further asserts that the Durans cannot recover against Goodwin

for common law fraud, because it was the real estate contract that they relied upon for the purchase,

and Goodwin had no connection with the contract or the purchase. For the same reasons otherwise

alleged, Goodwin contends there is no factual support to recover on a claim for negligence, gross

negligence, or recklessness. Goodwin argues that the Durans’ complaints on appeal challenging the

summary judgment all relate to one legal issue: whether Goodwin’s conduct was the cause of the

Durans’ damages.

The DTPA declares it unlawful to commit a false, misleading, or deceptive act or

practice in the conduct of any trade or commerce. Tex. Bus. & Com. Code §§ 17.41-.63. “Trade”

includes advertising or offering real property for sale. Id. § 17.45(6). A consumer may recover

economic damages caused by detrimental reliance on one of the false, misleading, or deceptive acts

enumerated in section 17.46(a). Id. § 17.50(a)(1), (b). “Consumer” is defined as one “who seeks

or acquires by purchase or lease, any goods or services.” Id. § 17.45(4). “Goods” include real

8 property. Id. § 17.45(1). “Services” include work, labor, or services furnished in connection with

the sale of goods, including real property. Id. § 17.45(2). Unlawful conduct includes failing to

disclose information concerning goods that was known at the time of the transaction, if the failure

to disclose such information was intended to induce the consumer into a transaction into which the

consumer would not have entered had the information been disclosed. Id. § 17.46(24). It also

includes representing that goods are of a particular standard, quality, or grade, if they are of another.

Id. § 17.46(7).

In order to recover under the DTPA, the plaintiff must prove the following elements:

(1) the plaintiff is a consumer; (2) the defendant can be sued under the DTPA; (3) the defendant

committed a false, misleading, or deceptive act or practice that was relied on by the plaintiff to the

plaintiff’s detriment; and (4) the defendant’s action was a producing cause of the plaintiff’s damages.

Tex. Bus. & Com. Code §§ 17.41-.63; Amstadt v. U. S. Brass Corp., 919 S.W.2d 644, 649 (Tex.

1996).

To qualify as a consumer, the Durans must show that it sought or acquired goods or

services by purchase or lease, and the goods or services purchased or leased must form the basis of

their complaint. Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 539 (Tex. 1981). The DTPA

does not restrict its application to deceptive acts committed by persons who furnish the goods or

services on which the complaint is based. Id. at 540. Application of the DTPA is not restricted by

any privity requirement. Id. at 541. A plaintiff establishes standing as a consumer in terms of the

plaintiff’s relationship to a transaction, not by proving a contractual relationship with the defendant.

The DTPA only requires that the goods or services sought or acquired by the consumer form the

9 basis of the complaint. Flenniken v. Longview Bank & Trust Co., 661 S.W.2d 705, 707 (Tex. 1983);

Cameron, 618 S.W.2d at 541. If, in the context of a transaction in goods or services, any person

engages in an unconscionable course of action which adversely affects a consumer, that person may

be subject to liability under the Act. There is no requirement that the unconscionable act or conduct

occur simultaneously with the sale. Flenniken, 661 S.W.2d at 707.

“Producing cause” is defined as

a substantial factor in bringing about an injury, and without which the injury would not have occurred, [this definition] is easily understood and conveys the essential components of producing cause that (1) the cause must be a substantial cause of the event in issue and (2) it must be a but-for cause, namely one without which the event would not have occurred.

Ford Motor Co. v. Ledesma, 242 S.W.3d 32, 46 (Tex. 2007). Producing cause, like proximate

cause, rests on proof of actual causation in fact; cause in fact is an element common to both.

General Motors Corp. v. Saenz, 873 S.W.2d 353, 357 (Tex. 1993). A producing cause requires that

the act be both a cause in fact and a substantial factor in causing the consumer’s injuries.

Alexander v. Turtur & Assocs., 146 S.W.3d 113, 117 (Tex. 2004); Brown v. Bank of Galveston,

963 S.W.2d 511, 514 (Tex. 1998). Thus, to prove the act was a producing cause of injury, a

consumer must prove that the defendant’s deceptive act or omission (1) was an actual cause in fact

of the plaintiff’s injury; (2) but for the defendant’s conduct, the plaintiff’s injury would not have

occurred; and (3) the act or omission was such a substantial factor in bringing about the plaintiff’s

injury that liability should be imposed on the defendant. Prudential Ins. v. Jefferson Assocs.,

896 S.W.2d 156, 161 (Tex. 1995); McClure v. Allied Stores of Tex., Inc., 608 S.W.2d 901, 903 (Tex.

1980). There can be more than one producing cause. Id. Further, the defendant’s deceptive act or

10 practice must have been committed in connection with the plaintiff’s transaction in purchasing goods

or services. Amstadt, 919 S.W.2d at 650. A plaintiff can show the connection by showing that a

representation made by the defendant reached the plaintiff. See, e.g., Todd v. Perry Homes,

156 S.W.3d 919, 922 (Tex. App.—Dallas 2005, no pet.). The fact that a consumer’s own acts may

be a cause of the buyer’s damages does not preclude finding that another’s act is also a producing

cause. Danny Darby Real Estate, Inc. v. Jacobs, 760 S.W.2d 711, 716 (Tex. App.—Dallas 1988,

writ denied).

Applying these rules of law to the facts of this case, we must determine whether

Goodwin proved that Goodwin could not be liable for the Durans’ injuries as a matter of law. The

Durans were admittedly consumers with respect to their transaction with Price. The Durans may

have been damaged as a result of their real estate transaction, and they may have been consumers in

their relationship to the transaction. Goodwin, however, had no involvement with this transaction,

and the trial court correctly concluded that, under these facts, the Durans were not consumers

vis-à-vis Goodwin as a matter of law.

Even assuming the Durans were consumers with respect to Goodwin, however, the

Durans were still required to show that the conduct they characterize as Goodwin’s deceptive acts

and omissions were a producing cause of their damages. They must prove that Goodwin’s conduct

was connected to the Duran-Price real estate transaction; that Goodwin’s conduct was the actual

cause in fact of the Durans’ injury; that but for Goodwin’s conduct their injury would not have

occurred; and that Goodwin’s act or omission was such a substantial factor in bringing about their

injury that liability should be imposed. See Prudential, 896 S.W.2d at 161.

11 Goodwin advertised Price’s property by listing it on MLS and by posting a sign with

written flyers. The Durans obtained the advertising flyer, and Le answered Mrs. Duran’s inquiries

when she called, possibly twice. The Durans allege that the information in the flyers and given by

phone was false and was designed to induce them to purchase the property.

The undisputed evidence shows that the Goodwin listing expired a month before the

Durans contracted with Price. Once the listing expired, Goodwin had no more connection with the

property, and any connection Goodwin might have had to any subsequent purchase transaction was

broken. Goodwin’s actions did not lead in a natural sequence to the Durans’ contracting directly

with Price or to the damages that the Durans incurred as a result. The Durans complain that there

was only a short gap in time before they bought the property, but their position necessarily assumes

that Goodwin’s connection would continue indefinitely and that Goodwin’s conduct would have

been the cause of their injuries, absent more, regardless of how long they waited to buy.

In their transaction with Price, the Durans clearly did not receive a legal lot free from

liens. But Goodwin was omitted from that transaction. Unless there is evidence that Goodwin

caused the Durans’ damages and that the evidence satisfies the requirement of actual causation in

fact, however, they cannot recover against Goodwin on any of their claims.

On their own initiative, the Durans dealt directly with Price. They prepared a contract

for Price and signed it, then gave Price property of value, without knowing what specific property

they were buying, where its boundaries lay, and without receiving a deed or other confirmation of

conveyance. These were the acts that caused their damages. Goodwin’s alleged “false advertising”

and other representations were not a producing cause or proximate cause of the Durans’ damages.

12 The Durans relied on their contract with Price, which they prepared. No action by Goodwin was a

substantial factor in causing the Durans’ damages and thus was not a producing cause of the Durans’

economic damages. As a matter of law, Goodwin’s actions were not a substantial factor that caused

the Durans’ economic damages.

For the same reasons, the Durans could not prevail on their fraud claim or on their

allegations of negligence, gross negligence, or reckless conduct.

CONCLUSION

We overrule the appellants’ complaints on appeal and affirm the trial

court’s judgment.

_____________________________________________

Marilyn Aboussie, Justice

Before Justices Puryear, Rose, and Aboussie*

Affirmed

Filed: August 29, 2014

* Before Marilyn Aboussie, Chief Justice (retired), Third Court of Appeals, sitting by

assignment. See Tex. Gov’t Code § 74.003(b).