Kupchynsky v. Nardiello

230 S.W.3d 685, 2007 WL 1617907

• Court: Court of Appeals of Texas
• Decided: September 12, 2007
• Docket: 05-05-01134-CV
• Status: Published

Opinions

OPINION

Opinion by

Justice FRANCIS.

In this case involving the sale of a private residence, appellees William V. Nar-diello and Laree Caramella sued appellants FGH Homebuilders, Inc., Ihor George Kupchynsky, and Melissa Twomey Kupchynsky in connection with construction defects in the house. The jury awarded damages in appellees’ favor. In four issues, appellants challenge the jury’s liability findings. In a fifth issue, FGH complains it was not a party to the sale of the house and therefore cannot be liable under the DTPA. We affirm.

FGH builds homes at the Enclave, a residential' development. George Kup-chynsky is the vice president of FGH. In May 2002, appellees contracted to purchase the two-and-a-half-year-old Kup-chynsky residence at the Enclave for $815,000. The residence featured two tiled balconies-one in the front and the other in the back of the house. According to Nar-diello, Kupchynsky told him he was the builder of the home.

Over the next eighteen days, appellees obtained home, foundation, and termite inspections. During the home inspection, Nardiello and the inspector found water on the front balcony tile although it was a sunny day. When the water was dried off, Nardiello said it would “leach right back up into the grout of the tile.” In his report, the inspector noted that moisture appeared to seep up between the joints of the tile floor. The inspector recommended appellees contact the builder for comment and noted “[r]epair may be needed.” To the side of the report, Nardiello wrote, “Call Builder.”

Nardiello contacted Kupchynsky, who told him “that was the design of the balcony per the blueprints” and suggested they meet with Darin Willard, who installed the pans for the balconies and could “tell us how those things were to work.” At that meeting, Willard told Nardiello that “[w]hat you’re seeing here is the way that the water gets out of the pan.” Nardiello asked if there was any other way for the water to get out, and Willard said, “No. It will evaporate back up through the grout, which is a porous material.” Willard said “it was designed that way,” like a “shower pan.” Similarly, Kupchynsky told him that “it was built that way.”

Appellees ultimately provided the Kup-chynskys with a list of thirteen items to be repaired; the items did not include the balcony drainage. The Kupchynskys agreed to make the repairs, and in exchange, appellees agreed that all contingencies had been satisfied or waived and that the $10,000 earnest money was immediately nonrefundable. Appellees then closed on the sale of the home.

Five months later, in October 2002, the back balcony began to leak in several places; in February 2008, the front balcony began to leak. Appellees had several people inspect the balconies to identify the reason for the leaks. After pulling up several tiles and removing the concrete mud, it appeared the balconies had been leaking “for quite some time.” The galvanized metal pans were rusted and had holes. When the buyers contacted the architect for the detailed plans on the balcony, they learned there were none.

Construction experts concluded the home was not built in a good and workmanlike manner. In reports offered as evidence, they found the number and locations of drains were not according to the builder’s plans; drainpipes were not installed according to the builder’s plans; the plans specified the balconies sloping away from the rear of the house, but the balconies were level; and the pans were made of galvanized metal with a lifetime of three to five years, instead of copper pans, which would last a lifetime. According to the experts, once the water seeped through to the tile grout and filled the pans, the water had no means of escape, rusted the pan joints, and began leaking through the substructure. The experts recommended appellees tear out and rebuild the balconies or potentially face structural damage to the home and mold problems. When appellants refused to pay the costs of the repairs, appellees sued the Kupchynskys and FGH.

Following a three-day trial, the jury found appellants engaged in false, misleading, or deceptive acts or practices that appellees relied on to their detriment and that were a producing cause of damages; the Kupchynskys made a negligent misrepresentation on which appellees justifiably relied; and George Kupchynsky and FGH were the builders of the residence and failed to design or construct the home in a good and workmanlike manner to appellees’ injury. The jury failed to find that appellants engaged in unconscionable, knowing, or intentional conduct. The jury awarded $52,695 in damages and also awarded attorney’s fees and court costs. The trial court rendered judgment on the jury’s verdict. This appeal ensued.

In their first and second issues, appellants complain the trial court erred in failing to direct a verdict or grant their motion for judgment notwithstanding the verdict on appellees’ DTPA and negligent misrepresentation claims.

A directed verdict is proper only under limited circumstances: (1) when the evidence conclusively establishes the right of the movant to judgment or negates the right of the opponent or (2) when the evidence is insufficient to raise a material fact issue. Prudential Ins. Co. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77 (Tex.2000).

A JNOV is proper when a directed verdict would have been proper. See Tex.R. Civ. P. 301; Fort Bend County Drainage Dist. v. Sbrusch, 818 S.W.2d 392, 394 (Tex.1991). A motion for JNOV should be granted when the evidence is conclusive and one party is entitled to recover as a matter of law or when a legal principle precludes recovery. Morrell v. Finke, 184 S.W.3d 257, 290 (Tex.App.-Fort Worth 2005, pet. abated); John Masek Corp. v. Davis, 848 S.W.2d 170, 173 (Tex.App.-Houston [1st Dist.] 1992, writ denied). We review the trial court’s determination under a legal sufficiency standard. County of Dallas v. Wiland, 124 S.W.3d 390, 401 (Tex.App.-Dallas 2003), rev’d on other grounds, 216 S.W.3d 344 (Tex.2007).

In a legal sufficiency review, we Anew the evidence in a light most favorable to the judgment and indulge every reasonable inference to support it, crediting favorable evidence if a reasonable jury could and disregarding contrary evidence unless a reasonable jury could not. City of Keller v. Wilson, 168 S.W.3d 802, 807, 822 (Tex.2005). Anything more than a scintilla of evidence is legally sufficient to support the finding. Cont’l Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444, 450 (Tex.1996).

In their first issue, appellants contend appellees’ independent inspections of the house and renegotiation of the sales contract “foreclose the element of reliance” as a matter of law. They argue this case is controlled by this Court’s opinion in Dubow v. Dragon, 746 S.W.2d 857 (Tex.App.Dallas 1988, no writ).

In Dubow, a couple contracted to purchase a house and had it inspected. The inspection report identified several existing problems and potential problems, including movement in the concrete slab. The buyers then hired a foundation specialist, who found additional problems attributable to differential foundation movement. The buyers also had an architect and a contractor look at certain aspects of the house prior to closing.

After receiving the reports on the condition of the house, the buyers were worried about the foundation and other problems. The buyers obtained estimates that the repairs would cost $4000 and demanded the sellers reduce the purchase price of the house. The sellers ultimately agreed to reduce the price of the house by $17,500, and the parties modified their contract to include the following language:

After careful inspection of the house, and with professional opinions, [w]e feel that the house will need extensive ongoing maintenance because of the site positioning, foundation and drainage. See attached inspection report. We will take the home as is, WITH ALL CONTINGENCIES REMOVED.

(emphasis in original) Dubow, 746 S.W.2d at 859.

After closing and taking possession of the house, the buyers encountered problems vfith the house and ultimately sued the sellers for failure to disclose the foundation problems and roof leaks. The trial court granted summary judgment in favor of the sellers, and the buyers appealed, arguing a fact issue existed because there was evidence they had confronted the sellers with concerns about the house, and the sellers assured them it was a good house with no problems.

This Court focused on the buyers’ reliance upon the experts’ opinions and the renegotiation of the contract to reject the buyers’ claims. Relying on the language of the contract modification, the court concluded that, as a matter of law, the buyers’ careful inspection of the house’s condition “constituted a new and independent basis for the purchase which intervened and superseded the [sellers’] alleged wrongful act.” Id. at 860. The court concluded any alleged statements or failures to disclose by the sellers were not a producing cause of any damages to the buyers. Id. As explained previously by this Court, “the crucial fact in Dubow was not the buyers’ procurement of an independent inspection; it was their express and exclusive reliance on the ‘professional opinions’ they received to renegotiate the sales contract that resulted in the sale of the house.” Fernandez v. Schultz, 16 S.W.3d 648, 652 (Tex.App.-Dallas 2000, no pet.).

Here, there is no evidence that ap-pellees relied solely on the opinion of the inspector in making their decision to purchase the home. To the contrary, Nardiel-lo followed the inspector’s recommendation and questioned Kupchynsky about the moisture that appeared to seep up between the joints of the balcony tile. Kup-chynsky, who had represented himself as the builder of the house, told Nardiello that the balconies drained as designed “per the blueprints.” Yet, the evidence showed there was no detailed blueprint for the balconies’ drainage system, and the only plans that did exist were not followed. Once they pulled up the tile, appellees found that the galvanized metal pan had already begun to corrode, a condition that was not ascertainable until the balcony tiles were removed.

In addition to the above, the contract in this case was never renegotiated in reliance on the inspection as it related to the balcony drainage system. Although the Kupchynskys agreed to repair the thirteen items listed on appellees’ repair list in exchange for appellees’ agreement that the earnest money would become nonrefundable immediately, this agreement is qualitatively different from that in Dubow, where the parties reduced the price of the house substantially and included a provision in the renegotiated contract directed at the foundation. Here, there was no reduction of the price of the house at all and no provision in the contract related to the balconies. Under these circumstances, we conclude that Dubow does not, as a matter of law, preclude appellees’ recovery on their claims against appellants, and the evidence is not legally insufficient to support the jury’s DTPA and negligent misrepresentation findings on that basis.

Alternatively, appellants assert in two sentences that the evidence is factually insufficient to show appellees relied on appellants’ representations regarding the balconies. Appellants make no separate argument with respect to this complaint. To the extent they rely on the previous argument, it is without merit. We overrule the first issue.

In their second issue, appellants argue appellees “assumed the risks of repairs to the [h]ome” because the sales contract included an “as is” provision that negates any causation as a matter of law. Here, they rely on Prudential Insurance Co. of America v. Jefferson Associates, Ltd., 896 S.W.2d 156, 161 (Tex.1995).

Prudential involved a commercial real estate transaction. The buyer purchased an office building. The contract he submitted contained the following provisions:

As a material part of the consideration for the Agreement, Seller and Purchaser agree that Purchaser is taking the Property “AS IS” with any and all latent and patent defects and that there is no warranty by Seller that the Property is fit for a particular purpose. Purchaser acknowledges that it is not relying on any representation, statement or other assertion with respect to the Property condition, but is relying upon its examination of the Property....

Prudential, 896 S.W.2d at 160.

Two years later, the buyer learned the building contained asbestos fireproofing and sued the seller. The court concluded that the buyer’s agreement to purchase the property “as is” precluded him from proving that the seller’s conduct caused him any harm. “By agreeing to purchase something ‘as is,’ ” the court explained, “a buyer agrees to make his own appraisal of the bargain and to accept the risk that he may be wrong. The seller gives no assurances, express or implied, concerning the value or condition of the thing sold.” Id. at 161.

But the court qualified its holding by emphasizing that this type of agreement would not have “this determinative effect in every circumstance.” Id. at 162. In particular, the court noted that a buyer would not be bound by an agreement to purchase something “as is” that he was induced to make because of a fraudulent representation or concealment of information by the seller. “A seller cannot have it both ways: he cannot assure the buyer of the condition of a thing to obtain the buyer’s agreement to purchase ‘as is’, and then disavow the assurance which procured the ‘as is’ agreement.” Id.

Finally, the court recognized that “other aspects” of a transaction may make an “as is” agreement unenforceable:

The nature of the transaction and totality of the circumstances surrounding the agreement must be considered. Where the “as is” clause is an important part of the basis of the bargain, not an incidental or “boiler plate” provision, and is entered into by parties of relatively equal bargaining position, a buyer’s affirmation and agreement that he is not buying on representations of the seller should be given effect.... We think it too obvious for argument that an “as is” agreement freely negotiated by similarly sophisticated parties as part of the bargain in an arm’s-length transaction has a different effect than a provision in a standard form contract which cannot be negotiated and cannot serve as the basis of the parties’ bargain.

Id.

Here, the provision relied on by appellants is distinctly different from that in Prudential. The provision in Prudential, as quoted above, was contained in a contract submitted by the buyer and contained specific language that the buyer took the property as is with all latent and patent defects.

In contrast, the provision here is contained in a standard, preprinted One to Four Family Residential Contract (Resale):

7. PROPERTY CONDITION

[[Image here]]

D. ACCEPTANCE OF PROPERTY CONDITION: Buyer accepts Property in its present condition; provided Seller at Seller’s expense shall complete the following specific repairs and treatments: correct some flag stone work next to front steps of home.

(The underlined portion was handwritten and was included in the contract before any inspections.)

Nardiello testified the provision was neither discussed nor negotiated. Likewise, Kupchynsky testified the clause was never discussed with appellees and was not a part of the original negotiations or renego-tiations. Rather, Kupchynsky acknowledged the clause was part of the boilerplate language in the contract. Even if we accept appellants’ assertion that the parties were of equal bargaining position, we cannot conclude in light of all circumstances that the clause was an “important basis of the bargain” that negated causation as a matter of law. See id.

Moreover, the evidence shows that when appellees asked Kupchynsky about the water on the balcony tile, he replied that the balcony was designed to drain that way according to plans. As previously stated, the evidence showed there were no detailed drainage plans for the balconies, and the balconies varied from the only plans that existed. There is evidence Kupchyn-sky knew, but did not disclose, that the pans used were galvanized metal, which other evidence showed was prone to corrosion in this application. Kupchynsky’s statement about the balcony drainage and nondisclosure of galvanized pans is significant not because he is the owner or seller of the house, but because he was the builder and therefore presumably would have more knowledge, and credibility, than an ordinary seller.

Given the totality of the circumstances and the nature of the transaction, we conclude the as-is clause in this case did not negate causation as a matter of law. In reaching this conclusion, we necessarily disagree with the dissent’s analysis. The dissent would reverse this issue by crafting an argument for appellants that they never briefed, argued, or otherwise urged in this appeal or in the trial court. We perceive a fundamental problem with the dissent’s suggestion that the buyers/plaintiffs’ proof in response to the as-is clause constituted affirmative defenses for which they needed to plead and request issues. In particular, we question how the buyers/plaintiffs were supposed to know to plead “affirmative defenses” to the as-is clause when the sellers/defendants never pleaded the clause as a defense in the first place.

As in Prudential, this case comes to us on a jury verdict in which no issues or instructions were requested by either party with respect to the as-is clause. In our review, we have addressed this issue exactly as it was briefed and argued by all parties. More importantly, we have examined the case exactly as did the court in Prudential, as we are bound to do, considering the various factors that the court noted could render such an agreement unenforceable. See Gym-N-I Playgrounds, Inc. v. Snider, 220 S.W.3d 905, 912, n. 10 (Tex., 2007).

Appellants alternatively assert that because they have conclusively established appellees assumed the risks associated with the balconies, the evidence is factually insufficient to support the jury’s DTPA and negligent misrepresentation findings. They do not make any separate argument. For the reasons previously stated, we reject this contention. We overrule the second issue.

In their third issue, appellants argue there is no evidence to support the jury finding that the Kupchynskys made a negligent misrepresentation. The jury charge defined negligent misrepresentation as follows:

Negligent misrepresentation occurs when—

(a) a party makes a representation in the course of his business or in a transaction in which he has a pecuniary interest,

(b) the representation supplies false information for the guidance of others in their business, and

(c) the party making the representation did not exercise reasonable care or competence in obtaining or communicating the information.

Appellants argue that because ap-pellees bought the home as a personal residence, there is no evidence that the Kupchynskys “made any representation for the guidance of the plaintiffs in their business.” Other than a general cite to one case stating the elements of the cause of action and the restatement of torts, appellants make no argument that the cause of action is so limited. Under these circumstances, we conclude this issue is inadequately briefed. See Tex.R.App. P. 38.1(h). Additionally, we have previously rejected appellants’ challenge to the legal and factual sufficiency of the evidence to sustain the jury’s DTPA finding in Question No. 1. Because the judgment can be supported on this theory, we need not address the merits of this claim. See Tex. R.App. P. 47.1. We overrule the third issue.

In their fourth issue, appellants argue the trial court erred in refusing to disregard the jury’s finding in Question No. 5 that George Kupchynsky was one of the builders of the house. Specifically, appellants argue that George was merely the vice president of FGH and FGH was the builder of the house. (Appellants do not challenge the finding in Question No. 5a that George and FGH failed “to design or construct the home in a good and workmanlike manner, to Plaintiffs injury!.]”)

The jury was charged that a builder “is one whose occupation is the building or erection of structures, the controlling and directing of construction, or the planning, constructing, remodeling and adapting to particular purposes buildings and other structures.”

Nardiello and appellants’ own expert, Keith Harvey, both testified that Kupchyn-sky told them he was the builder of the home. In addition to this evidence, Willard testified that it was his understanding at the time he installed the pans that Kupchynsky was the builder. Mitch Campbell, who was a job supervisor for FGH, testified that Kupchynsky “completed the home” from the time it was framed. He testified that Kupchynsky actually dealt with the subcontractors and did so differently on this house because it was his home. In fact, the architectural plans, dated a year before the Kupchynskys’ purchase of the home, stated they were for a residence for “George and Melissa Kup-chynsky,” not FGH. Finally, Kupchynsky signed documents with the City of Irving stating that he was the superintendent of the construction project.

We conclude a reasonable jury could find, given this evidence, that George Kup-chynsky was a builder of the home. With respect to appellants’ assertion that there can be only one builder of a home, the only case they referenced, Wiggins v. Overstreet, 962 S.W.2d Í98 (Tex.App.-Houston [14th Dist.] 1998, pet. denied), does not support their position. To the extent appellants argue the evidence is factually insufficient because they have conclusively shown the contrary, we reject the claim. We overrule the fourth issue.

In the fifth issue, FGH argues the trial court erred in denying its motion for instructed verdict and JNOV on appellees’ DTPA claims because FGH was not a party to the transaction. Relying solely on this Court’s opinion in Todd v. Perry Homes, 156 S.W.3d 919, 922 (Tex.App.-Dallas 2005, no pet.), FGH contends it was not a party to the sale and therefore cannot be held liable.

In Todd, subsequent purchasers of a house built by Perry Homes sued the horn-ebuilder over damages from alleged improper drainage. The trial court granted a no-evidence summary judgment on the Todds’ claims for breach of the implied warranty of habitability and unconscionable conduct under the DTPA; other claims, including a breach of the implied warranty of good workmanship, were resolved by jury trial. Todd, 156 S.W.3d at 921. The Todds appealed only the granting of the summary judgment.

This Court explained that the implied warranty of habitability extended only to latent defects, and there was no evidence of a latent defect. Id. With respect to the uneonseionability claim, this Court concluded there was no evidence that Perry Homes was connected to the Todds’ purchase of the home, that any representations Perry Homes made reached the Todds, or that Perry Homes benefited from the purchase. Thus, the Court concluded that without evidence of a connection between Perry Homes and sale of the home to the Todds, Perry Homes could not be held liable for unconscionable conduct. Id. at 922.

Appellants rely on the Court’s analysis of the unconscionable conduct claim. However, this case does not involve unconscionable conduct; rather, the jury found FGH and Kupchynsky breached the implied warranty of good and workmanlike manner. The Texas Supreme Court has held that the implied warranties of habitability and good workmanship are implicit in the contract between the builder/vendor and original purchaser and are automatically assigned to the subsequent purchaser. Gupta v. Ritter Homes, Inc., 646 S.W.2d 168, 169 (Tex.1983).

Todd is not instructive, and appellants have made no attempt to distinguish Gupta or analyze any of the law that has developed in this area since Gupta issued. It is not the duty of this Court to make arguments for either side. Given the argument presented, we conclude appellants have not shown reversible error. We overrule the fifth issue.

We affirm the trial court’s judgment.

MOSELEY, J., dissenting.