Kenneth H. Hughes Interests, Inc. v. Westrup

879 S.W.2d 229, 1994 Tex. App. LEXIS 1225, 1994 WL 221124
CourtCourt of Appeals of Texas
DecidedMay 19, 1994
Docket01-92-01014-CV
StatusPublished
Cited by31 cases

This text of 879 S.W.2d 229 (Kenneth H. Hughes Interests, Inc. v. Westrup) 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
Kenneth H. Hughes Interests, Inc. v. Westrup, 879 S.W.2d 229, 1994 Tex. App. LEXIS 1225, 1994 WL 221124 (Tex. Ct. App. 1994).

Opinion

OPINION

DUGGAN, Justice.

The appellees have filed a motion for rehearing. We overrule the motion, but with *231 draw our previous opinion, and issue this one in its stead. 1

The appellees obtained a jury verdict against the appellants in a lawsuit brought for violations of the Deceptive Trade Practices Act 2 (DTPA) and breach of warranty. We affirm in part, reverse and render in part, and remand in part.

The Facts

In 1986, Shari and William Westrup (the Westrups) opened Shartrue’s, a ladies’ upscale shoe store. Shartrue’s, Inc., was a Texas corporation. The Westrups were shareholders; Shari was president and William was vice-president. The store was located in a shopping center close to the Pavilion shopping center (the Pavilion) on South Post Oak in Houston.

In 1988, the AEW Trust (AEW) purchased the Pavilion. AEW and Kenneth H. Hughes Interests, Inc. (Hughes), a real estate developer, began to develop and refurbish the Pavilion. Desiring to add an elegant, stylish shoe store to the Pavilion’s assortment of shops, AEW and Hughes approached the Westrups about moving Shartrue’s to the Pavilion. The Westrups were receptive to the overtures.

In developing the Pavilion, AEW and Hughes contracted with Hayman Construction (Hayman) for construction work. Hay-man hired T.D. Mechanical, Inc. (TDM), as a mechanical subcontractor.

Some time in mid-1988, unknown to any of the parties to this lawsuit, a construction accident occurred in the development. A Hayman employee operating a backhoe struck a storm sewer drain pipe, shattering part of it. The employee covered the broken section of pipe with dirt and proceeded with his job. The damage was not repaired.

On November 7, 1988, AEW and Shar-true’s, Inc. entered into a lease providing for Shartrue’s, Inc.’s use of retail space at the Pavilion. The lease lists “Shartrue’s, Inc., a Texas corporation” as the tenant. The lease is signed for the tenant, again listed over the signature line as “Shartrue’s, Inc., a Texas corporation,” by William Westrup, as “its [Shartrue’s, Inc.’s] vice-president.”

In January 1989, William Westrup noticed water bubbling up through a crack in the slab at the Pavilion. The crack was in the Pavilion’s hall outside a vacant store space next to Shartrue’s, Inc.’s space. A wet spot appeared on Shartrue’s carpet. Westrup reported the problem, and was told by Kenneth Hughes that it would be fixed.

In an attempt to discover the reason for the water’s emergence, a hole was broken in the slab in the vacant lease space next to Shartrue’s. The attempt was unsuccessful. The hole in the slab, however, was not repaired. The Westrups were not told that the problem had not been corrected.

On January 23, 1989, Shartrue’s opened for business at the Pavilion. On May 17, and again on May 18, the store flooded. The water flowed from the pipe broken by the backhoe, traveled up through the hole in the lease space next door, and entered Shar-true’s. The water damaged parts of the store.

The Westrups rebuilt part of Shartrue’s interior. William Westrup was told that the flooding problem was being corrected. The cause of the flooding, however, was still not detected.

On June 26, 1989, the store flooded again. The interior was damaged again and the store had to be rebuilt. The cause of the flooding was finally located, and the pipe repaired.

Shartrue’s reopened in September 1989. However, the store, unable to recover from its setbacks, ceased operation in March 1990. Shartrue’s, Inc. and the Westrups sued AEW, Hughes, Hayman, and TDM, alleging DTPA violations, breach of the warranty of commercial habitability, and negligence. On the day before trial, Shartrue’s, Inc. and the Westrups settled with Hayman and TDM.

Shartrue’s, Inc. and the Westrups proceeded to trial against AEW and Hughes on their DTPA and breach of warranty causes of *232 action. The jury found that AEW and Hughes committed false, misleading, or deceptive acts or practices, and did so knowingly; that AEW and Hughes breached the warranty of commercial habitability, and did so knowingly; and that Shartrue’s, Inc. and the Westrups did not waive the warranty. The jury awarded Shartrue’s, Inc. $23,000 for its repair costs and expenses, and awarded each of the Westrups $250,000 for lost investments. The jury also awarded attorneys’ fees.

Point of Error One: Indemnity

In their first point of error, AEW and Hughes contend that the trial court erred in denying them “contractual indemnity from [Hayman].”

AEW and Hughes pled for contractual indemnity from Hayman. The contract between AEW, who, it is undisputed, was represented by Hughes, and Hayman was admitted into evidence at trial. It states in relevant part:

Contractor agrees to [ ] indemnify ... each of Owner, Owner’s Representative ... from and against any and all claims, liens, demands, and causes of action of every kind and character ... arising out of, or in anywise incident to, the performance of the Work to be performed by Contractor under the Contract Documents .... [T]he indemnity provided for ... is indemnity ... from the consequences of the negligence of Owner, Owner’s Representative ... except insofar as ... any claim arises out of the sole and gross negligence or willful misconduct of Owner....

(Emphasis added.)

AEW and Hughes argue that the indemnity clause “clearly satisfies the express negligence test making the contract enforceable and is conspicuous enough to give fair notice of its existence as it is set forth in a separate paragraph entitled ‘Indemnity.’ ” We agree that the indemnity clause is enforceable and conspicuous enough to give Hayman fair notice of its existence. The question, though, is whether the clause’s language, while enforceable, does in fact entitle AEW and Hughes to indemnity from Hay-man under the facts of this case. The clause exempts a claim “aris[ing] out of the ... gross negligence of’ AEW and Hughes. As noted above, the jury found that AEW and Hughes committed false, misleading, or deceptive acts or practices, and did so knowingly, and that AEW and Hughes breached a warranty of commercial habitability, and did so knowingly.

In addressing this issue, both sides refer to Luna v. North Star Dodge Sales, Inc., 667 S.W.2d 115 (Tex.1984). AEW and Hughes argue that, under Luna, a finding that acts were committed “knowingly” is not equivalent to a finding that acts were “willful misconduct,” one standard that AEWs and Hughes’ acts had to meet in order to preclude indemnity. Shartrue’s, Inc. and the Westrups argue that, because AEW and Hughes were not entitled to indemnity for gross negligence, they also cannot be so entitled for conduct that was committed “knowingly,” because, under Luna, “knowingly” is a more culpable standard than gross negligence.

We agree with Shartrue’s, Inc. and the Westrups. In Luna,

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Cite This Page — Counsel Stack

Bluebook (online)
879 S.W.2d 229, 1994 Tex. App. LEXIS 1225, 1994 WL 221124, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kenneth-h-hughes-interests-inc-v-westrup-texapp-1994.