Waterstone on Lake Conroe, Inc. and Steve Bowen v. Keith Dewberry and John T. Font
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Opinion
In The
Court of Appeals
Ninth District of Texas at Beaumont
________________
NO. 09-22-00020-CV ________________
WATERSTONE ON LAKE CONROE, INC. AND STEVE BOWEN, Appellants
V.
KEITH DEWBERRY AND JOHN T. FONT, Appellees ________________________________________________________________________
On Appeal from the 457th District Court Montgomery County, Texas Trial Cause No. 18-03-03990-CV ________________________________________________________________________
MEMORANDUM OPINION
The underlying litigation arises from a dispute over canals in the Waterstone
on Lake Conroe (“WOLC”) development, which had been marketed as a waterfront
community. WOLC property owners, Keith Dewberry and John T. Font
(collectively, “Appellees”), sued Steve Bowen and three entities he owned, WOLC,
Inc., My Green Homes, LLC, and Virgin Homes, Inc. (collectively, “Appellants”)
1 for statutory and common law fraud. 1 Dewberry and Font alleged that when WOLC
canals providing access to Lake Conroe became silted in after rain events in 2016,
Appellants failed to maintain the canals and return them to a navigable state. A jury
returned a verdict for Dewberry and Font. In five issues, Appellants challenge the
trial court’s judgment for Dewberry and Font. For the reasons discussed below, we
affirm the trial court’s judgment.
BACKGROUND AND TRIAL EVIDENCE
The Canals
The evidence at trial demonstrated that the WOLC development was marketed
as having six-foot center depth canal-front lots that provided boat access to Lake
Conroe. In 2008, WOLC was in “predevelopment,” and the digging of the canals
commenced, but the canals were not finished until 2010. Sometime around 2010, the
WOLC canals filled with water, but the lake level dropped up to nine feet during a
2011 drought, which impacted the canals. When the rains resumed, the canals
1While other Plaintiffs sued, they are not parties to this appeal, as some
arbitrated their claims and others nonsuited their claims. The Plaintiffs also sued unrelated Defendants, including Phillip LeFevre, LeFevre Development, Inc., and LeFevre Investments, Inc. The trial court granted the LeFevre Defendants’ Motion for Summary Judgment as to Dewberry’s and Font’s claims prior to trial, and they are not parties to this appeal. See Kozak v. LeFevre Dev., Inc., No. 09-18-00369-CV, 2019 WL 2220305, at *1 (Tex. App.—Beaumont May 23, 2019, no pet.) (mem. op.) (explaining that trial court granted summary judgment for LeFevre Defendants and severed those claims). The Final Judgment incorporated the arbitration award for the other Plaintiffs. 2 refilled. The evidence established that through 2015 (except for the 2011 drought),
the canals could be used by boats to access Lake Conroe, although the canals had
some shallow spots. Bowen testified there was a rain event in 2015 that required
work around the development’s peninsula, but the canals remained usable by boats.
In 2016, there were two significant rain events in close temporal proximity to
each other, one on Tax Day and the other on Memorial Day. The evidence
established that after the Memorial Day flood, the WOLC canals became unusable
by boats and no longer provided access to Lake Conroe and remained so through
trial in February 2020. Video and photographic evidence admitted at trial showed
the canals full of silt.
Steve Bowen’s Testimony
Bowen is the sole owner, president, and only officer of WOLC, Inc. Bowen
testified that he previously developed several other canal-front communities. Bowen
testified he told residents when they bought their properties that WOLC would
maintain the canals until a certain number of lots were sold, at which time the
maintenance of the canals would be turned over to the Property Owners’ Association
(“POA”) and that was always his intent. Bowen also represented to buyers that the
canals were supposed to be six feet deep in the center.
Bowen testified, “We didn’t promise that we would maintain them forever.
We said we would maintain the canals. We would dig them. We would create water
3 there. But the . . . events that happened is far beyond what we would normally do.”
According to Bowen, WOLC purchased a barge for $100,000 in 2014 to maintain
the canals. He bought the barge for general canal maintenance and cleanup, but it
was never intended to re-dredge or dig the canals. Bowen testified that he never had
a maintenance program for the canals, nor did he require anyone to regularly check
their condition or depth.
Bowen offered multiple explanations for why he had not cleaned the canals
and restored their navigability. First, he said that until another developer cleaned up
upstream and the City of Montgomery (“the City”) repaired the Buffalo Springs
Bridge upstream, the silt would just wash back down into the canals. The other
developer, LeFevre, began cleaning in 2018, and the City did not complete the bridge
repairs until 2018. Bowen then testified the Plaintiffs interfered with cleanup by
filing complaints with the Army Corps of Engineers and the Texas Commission on
Environmental Quality. Bowen testified that when they complained, he ceased all
work out of respect for the agencies and because the agencies scared him. He also
testified the lawsuit impeded repairing the canals. Bowen would not provide
information about his plans to remediate the canals but testified the damage was
temporary. He claimed he does not intend to leave them in their current condition,
he wants to fix them, and the plan is to provide “navigable” access to Lake Conroe.
Bowen also testified that the Plaintiffs could fix the canals themselves, but he
4 acknowledged it would be expensive and might cost as much as Dewberry’s and
Font’s properties. However, it should be noted that Bowen owned the canals, not the
adjacent property owners.
Jack Yates’s Testimony
Jack Yates was the City Administrator for the City from 2014 until 2019,
which included the period after the Tax Day flood and the Memorial Day flood. He
testified that after the storms, Bowen tried to get the City to repair the WOLC canals.
When Bowen asked if the City had a position about repairing the WOLC canals,
Yates told Bowen that the city council had discussed it. Yates explained that Bowen
owned the canals, so the City’s position was that it was not responsible for repairing
them. Yates added that the City never told Bowen he must wait to remediate the
canals until it completed the repairs on Buffalo Springs Bridge. He also testified that
Bowen acknowledged he was responsible for the WOLC canals.
Keith Dewberry’s Testimony
In July 2008, Dewberry bought a lot in WOLC during the “predevelopment”
phase for $123,900. When he purchased his lot, the canal was dug at the back of his
property but there was no water yet. Before purchasing it, Dewberry met with
Bowen, with whom he had a previous acquaintance, and asked about the canals.
Dewberry grew up with Bowen’s employee, Brock Jeffus, and Dewberry’s family
lived in another of Bowen’s developments.
5 During those pre-purchase discussions, Dewberry asked Bowen that since the
subdivision was marketed as a waterfront community, whether they would have lake
access, so he could get to his grandparents’ and parents’ home which were in a
different canal subdivision on Lake Conroe. Bowen confirmed that WOLC would
Free access — add to your briefcase to read the full text and ask questions with AI
In The
Court of Appeals
Ninth District of Texas at Beaumont
________________
NO. 09-22-00020-CV ________________
WATERSTONE ON LAKE CONROE, INC. AND STEVE BOWEN, Appellants
V.
KEITH DEWBERRY AND JOHN T. FONT, Appellees ________________________________________________________________________
On Appeal from the 457th District Court Montgomery County, Texas Trial Cause No. 18-03-03990-CV ________________________________________________________________________
MEMORANDUM OPINION
The underlying litigation arises from a dispute over canals in the Waterstone
on Lake Conroe (“WOLC”) development, which had been marketed as a waterfront
community. WOLC property owners, Keith Dewberry and John T. Font
(collectively, “Appellees”), sued Steve Bowen and three entities he owned, WOLC,
Inc., My Green Homes, LLC, and Virgin Homes, Inc. (collectively, “Appellants”)
1 for statutory and common law fraud. 1 Dewberry and Font alleged that when WOLC
canals providing access to Lake Conroe became silted in after rain events in 2016,
Appellants failed to maintain the canals and return them to a navigable state. A jury
returned a verdict for Dewberry and Font. In five issues, Appellants challenge the
trial court’s judgment for Dewberry and Font. For the reasons discussed below, we
affirm the trial court’s judgment.
BACKGROUND AND TRIAL EVIDENCE
The Canals
The evidence at trial demonstrated that the WOLC development was marketed
as having six-foot center depth canal-front lots that provided boat access to Lake
Conroe. In 2008, WOLC was in “predevelopment,” and the digging of the canals
commenced, but the canals were not finished until 2010. Sometime around 2010, the
WOLC canals filled with water, but the lake level dropped up to nine feet during a
2011 drought, which impacted the canals. When the rains resumed, the canals
1While other Plaintiffs sued, they are not parties to this appeal, as some
arbitrated their claims and others nonsuited their claims. The Plaintiffs also sued unrelated Defendants, including Phillip LeFevre, LeFevre Development, Inc., and LeFevre Investments, Inc. The trial court granted the LeFevre Defendants’ Motion for Summary Judgment as to Dewberry’s and Font’s claims prior to trial, and they are not parties to this appeal. See Kozak v. LeFevre Dev., Inc., No. 09-18-00369-CV, 2019 WL 2220305, at *1 (Tex. App.—Beaumont May 23, 2019, no pet.) (mem. op.) (explaining that trial court granted summary judgment for LeFevre Defendants and severed those claims). The Final Judgment incorporated the arbitration award for the other Plaintiffs. 2 refilled. The evidence established that through 2015 (except for the 2011 drought),
the canals could be used by boats to access Lake Conroe, although the canals had
some shallow spots. Bowen testified there was a rain event in 2015 that required
work around the development’s peninsula, but the canals remained usable by boats.
In 2016, there were two significant rain events in close temporal proximity to
each other, one on Tax Day and the other on Memorial Day. The evidence
established that after the Memorial Day flood, the WOLC canals became unusable
by boats and no longer provided access to Lake Conroe and remained so through
trial in February 2020. Video and photographic evidence admitted at trial showed
the canals full of silt.
Steve Bowen’s Testimony
Bowen is the sole owner, president, and only officer of WOLC, Inc. Bowen
testified that he previously developed several other canal-front communities. Bowen
testified he told residents when they bought their properties that WOLC would
maintain the canals until a certain number of lots were sold, at which time the
maintenance of the canals would be turned over to the Property Owners’ Association
(“POA”) and that was always his intent. Bowen also represented to buyers that the
canals were supposed to be six feet deep in the center.
Bowen testified, “We didn’t promise that we would maintain them forever.
We said we would maintain the canals. We would dig them. We would create water
3 there. But the . . . events that happened is far beyond what we would normally do.”
According to Bowen, WOLC purchased a barge for $100,000 in 2014 to maintain
the canals. He bought the barge for general canal maintenance and cleanup, but it
was never intended to re-dredge or dig the canals. Bowen testified that he never had
a maintenance program for the canals, nor did he require anyone to regularly check
their condition or depth.
Bowen offered multiple explanations for why he had not cleaned the canals
and restored their navigability. First, he said that until another developer cleaned up
upstream and the City of Montgomery (“the City”) repaired the Buffalo Springs
Bridge upstream, the silt would just wash back down into the canals. The other
developer, LeFevre, began cleaning in 2018, and the City did not complete the bridge
repairs until 2018. Bowen then testified the Plaintiffs interfered with cleanup by
filing complaints with the Army Corps of Engineers and the Texas Commission on
Environmental Quality. Bowen testified that when they complained, he ceased all
work out of respect for the agencies and because the agencies scared him. He also
testified the lawsuit impeded repairing the canals. Bowen would not provide
information about his plans to remediate the canals but testified the damage was
temporary. He claimed he does not intend to leave them in their current condition,
he wants to fix them, and the plan is to provide “navigable” access to Lake Conroe.
Bowen also testified that the Plaintiffs could fix the canals themselves, but he
4 acknowledged it would be expensive and might cost as much as Dewberry’s and
Font’s properties. However, it should be noted that Bowen owned the canals, not the
adjacent property owners.
Jack Yates’s Testimony
Jack Yates was the City Administrator for the City from 2014 until 2019,
which included the period after the Tax Day flood and the Memorial Day flood. He
testified that after the storms, Bowen tried to get the City to repair the WOLC canals.
When Bowen asked if the City had a position about repairing the WOLC canals,
Yates told Bowen that the city council had discussed it. Yates explained that Bowen
owned the canals, so the City’s position was that it was not responsible for repairing
them. Yates added that the City never told Bowen he must wait to remediate the
canals until it completed the repairs on Buffalo Springs Bridge. He also testified that
Bowen acknowledged he was responsible for the WOLC canals.
Keith Dewberry’s Testimony
In July 2008, Dewberry bought a lot in WOLC during the “predevelopment”
phase for $123,900. When he purchased his lot, the canal was dug at the back of his
property but there was no water yet. Before purchasing it, Dewberry met with
Bowen, with whom he had a previous acquaintance, and asked about the canals.
Dewberry grew up with Bowen’s employee, Brock Jeffus, and Dewberry’s family
lived in another of Bowen’s developments.
5 During those pre-purchase discussions, Dewberry asked Bowen that since the
subdivision was marketed as a waterfront community, whether they would have lake
access, so he could get to his grandparents’ and parents’ home which were in a
different canal subdivision on Lake Conroe. Bowen confirmed that WOLC would
have Lake Conroe boat access and he told Dewberry that WOLC would maintain
the canals until enough lots were sold in the subdivision at which time the
maintenance of the canals would be turned over to the newly created WOLC POA.
The only time he spoke with Bowen was in 2008 before he bought the lot. At the
time of trial, Bowen had not sold enough lots in the subdivision to allow him to turn
over the maintenance responsibility of the canals to the WOLC POA.
John Font’s Testimony
In 2014, John Font and his wife purchased their home in WOLC as a resale.
John testified that among other things, they wanted a waterfront house, so he would
have Lake Conroe access for his jet skis and boat and a place for his grandkids to
fish. He heard about the home from his friend and had seen advertisements for
WOLC. Font testified that before purchasing their home, he and his wife took their
jet skis up the canal from Lake Conroe. They were concerned that the canals were
shallow in spots with sandbars, and they had to “navigate through it.”
Font testified prior to purchasing his home, he investigated the canals’
maintenance and navigability by going to WOLC and meeting with Sonya Renteria,
6 who was Bowen’s employee and the sellers’ agent. Renteria then introduced Font to
Bowen. He expressed his concerns about the sandbars and low spots to Bowen.
Bowen told Font that he “purchased a dredger and that he was going to maintain and
dig it to where it would be approximately 6-foot deep in the center.” Font testified
that if the canals did not give him Lake Conroe access, then he did not need the house
and would not have purchased the property. Font described Bowen as “a very good
salesman” and said Bowen’s representations about maintaining the canals impacted
Font’s decision to buy the home. Font testified that Bowen “guaranteed me it would
be navigable to Lake Conroe.”
Sonya Renteria’s Testimony
Sonya Renteria, a sales manager who worked for Bowen at WOLC and in his
prior developments, testified. She explained that Bowen learned in his earlier canal
development at Grand Harbor, that digging and maintaining the canals was “way
more expensive than I think he thought it might be.” Renteria was the sellers’ agent
for the home the Fonts purchased and worked through Bowen’s real estate brokerage
company, Lake Conroe Waterfront Realty. She testified she earned a commission
when she sold the home to the Fonts, and Bowen and his brokerage company
obtained a benefit.
In terms of what they told prospective buyers about the depths of the canals,
Renteria explained that “we always told them whether it – when it filled up or not,
7 it was 250 above the bulkhead, 2 feet out, 4 foot, 6 foot, and then 8 foot in the center.
That is how we always cut all of our canals.” Renteria came to believe she was being
asked to tell residents things that were untrue. She said, “We kept telling them that
we were going to take care of things, and we didn’t. Even when . . . we got it to
where it was going to be affordable for us to do so, it still didn’t happen.”
Although she initially believed Bowen’s representations about the canals, she
later determined they were lying to the residents. Renteria said that sandbars in the
canals had grass growing on them, which made potential buyers question the depth.
Bowen instructed Renteria to tell customers who asked that “[w]e would take care
of any issues. We, meaning, Steve, me, the development.” She testified that Bowen
had workers go out in a canoe and remove visible grass. Renteria explained they did
so because, “People were questioning us about it. We’re telling them it’s navigable
all the way down.” Renteria eventually disbelieved that Bowen had ever intended to
fulfill his promises and learned he was trying to sell their three developments. She
also testified that Bowen purchased the dredger to sell back to the POA just for show.
Renteria agreed that Bowen told prospective purchasers whatever they needed to
hear to make the sale. At times, she heard Bowen try to say that other entities, like
the San Jacinto River Authority or the City owned the canals, but she learned that
was untrue.
8 Matthew Reibenstein’s Testimony
Matthew Reibenstein, another former WOLC employee who worked for
Bowen between 2010 and 2011, testified. He said they had problems with sandbars
or the canals being shallow, and the canals were not navigable to Lake Conroe.
Reibenstein overheard conversations between Bowen and Bill Martinez, a dirt
contractor. Reibenstein testified he heard Bowen tell Martinez to use his excavator
and long arm bucket to push dirt mounds that built up in WOLC’s canals under the
water level “so it couldn’t be seen[,]” and “it didn’t look like it was so shallow,”
during “a big sales weekend.” Reibenstein said that doing so did not improve the
canals but made the lots look more attractive to buyers.
Reibenstein also discussed his purchase of WOLC lots from Bowen in 2009
with his friend, Brock Jeffus–another WOLC employee. He explained, “It was
presented to me as a waterfront community on Lake Conroe. And that at the time
that it was undeveloped or partially developed and he would finish bulkheads. That
I would have navigable waterway to Lake Conroe. And it was expressed the whole
time that that is what I was buying was waterfront lots.” Reibenstein testified that he
became dissatisfied with Bowen’s promises regarding the purchase of his two lots.
Reibenstein told Bowen that he felt Bowen’s promises about the canals were untrue.
He complained about the depth of the canals and that you could not get a boat
through. Bowen assured him the issues would be resolved, but they never were.
9 Ultimately, the matter was resolved when Bowen refunded Reibenstein’s money for
the lots. Reibenstein testified that in his last conversation with Bowen about the lots,
Bowen told him he was going through a lot of financial things and that “I’m sorry I
screwed you.”
Brock Jeffus’s Testimony
Brock Jeffus testified that in 2008, he began working for Bowen as a WOLC
salesperson. Jeffus explained that in 2008, some canals were dug, and that “[t]he
canal system was a part of a total of four neighborhoods including Waterstone. It
would be Grand Harbor, Harborside, Grand View and then Waterstone. Waterstone
was the last on that canal system.” Dewberry was Jeffus’s best friend, and in 2008,
Jeffus sold Dewberry his lot. The selling points of WOLC that Jeffus provided to
Dewberry were canals six to eight feet deep, City water and sewer, no aerobic septic
systems, and concrete streets. Jeffus testified that Bowen closed every sale and
disputed testimony to the contrary. Jeffus said he was present when Dewberry
questioned Bowen about the canals.
He testified that when people went up the canals, they had questions about
getting to WOLC from Lake Conroe. Jeffus testified Bowen was responsible for
ensuring the canals remained navigable to Lake Conroe until he turned everything
over to the POA. Jeffus explained that prospective purchasers questioned Bowen
about whose responsibility it was to maintain navigability to Lake Conroe, and
10 Bowen responded that “everything would be dug 6 to 8 feet deep.” Bowen also told
purchasers that once he turned the POA over, it would be the POA’s responsibility.
Jeffus testified that his documents said it would be turned over to the POA when all
the lots in the first section were sold or 2018, whichever came first, but he did not
know if the deed restrictions had ever been amended. Jeffus had a dispute with
Bowen over the canals, which they ultimately resolved in 2013, when Bowen
returned his money for the lots.
Jeffus testified that he believed Bowen when he purchased his lots, but that
changed when Bowen’s “actions didn’t live up to the things that he said.” Jeffus
explained that Bowen’s broken promises involved the lack of water in the canals,
and he kept promising within sixty to ninety days he would have it bulkheaded and
dredged and they would have waterfront lots, but three years later, Jeffus realized it
was never going to happen.
Thomas Kozak’s Testimony
Dr. Thomas Kozak, another WOLC resident who sued but arbitrated his
claims, also testified. The canals were navigable when they bought their property,
and they were told the canals were eight feet deep in the center. When asked about
maintenance concerns and canal navigability, Kozak responded, “We made the
assumption that lots would continue to be navigable like they were around the rest
of the lake. And we visited those properties, too. We saw later on that there was a
11 dredger there that was purchased for this property, and we just assumed they would
be maintained as navigable.”
The Kozaks purchased their lot before the Memorial Day flood but had not
yet built their house. Kozak testified that after the Memorial Day flood, their
neighbors’ canal was occluded, but their canal remained navigable “for a little
while.” Before spending $425,000 to build his house, Kozak wanted to know the
canals would remain navigable. After the Memorial Day flood, Kozak asked Bowen
several times about the canals, and Bowen always responded they would take care
of it in two weeks. Kozak testified they would not have built their house if Bowen
had not assured them of canal access. In the Spring of 2017, his canal became
unnavigable. Although Bowen purchased a dredger, it never seemed to work, and
Bowen never fixed it.
Kozak testified that after Bowen represented to the owners that other entities
like FEMA, the Army Corps of Engineers, and the City would fix the canals, Bowen
finally agreed to fix them in the Spring of 2017. When Kozak asked these other
entities if they would fix the canals, they said they would not. Kozak testified they
are approaching five summers with the canal being occluded. Kozak testified he saw
work performed after the May 2016 storm but “nothing to remediate the problem”
and explained the work was only for property Bowen owned and not the residents.
12 Additional Evidence
Dewberry and Font also offered testimony regarding their damages, including
their opinions regarding the current market value of their properties. Daniel Lauw,
who rented Dewberry’s home between 2016 and 2018, also testified regarding the
condition of the canals and his reasons for not going through with a contract to
purchase the property. Real estate broker Melissa Seureau testified regarding
comparable properties in WOLC and her attempts to sell the Fonts’ vacant lot. We
detail this testimony in our discussion of damages below. Additional evidence
included, among other things: drone footage of the silted WOLC canals; photographs
of the WOLC canals before and after they became unnavigable; advertising
materials; Dewberry’s contract; documents showing rain events and disaster
declarations; a Lake Conroe Waterfront Realty printout showing Renteria’s earned
commissions including for the Fonts’ property; Font’s Facebook posting
complaining the WOLC property was not waterfront; 2015 invoices and payments
to contractor for dredging in an unspecified canal and bulkheading invoices and
payments; and amended WOLC plat.
Causes of Action, Defenses, and Remaining Parties
Dewberry sued for common law and statutory fraud. The Fonts sued for
common law fraud. Appellees pleaded the discovery rule applied and that Appellants
fraudulently concealed their deceitful conduct. Appellants raised the affirmative
13 defense of statute of limitations as to Dewberry’s claims. They also asserted the
affirmative defense of “act of God.” When the matter was given to the jury, only
Keith Dewberry’s and John Font’s claims against WOLC, Inc. and Bowen remained.
Appellants’ Motion for Directed Verdict
Bowen and WOLC, Inc. moved for directed verdict on multiple grounds. The
trial court granted in part and denied in part the motions. The trial court granted the
directed verdict as to the claims against My Green Homes and Virgin Homes. The
trial court also granted Appellants’ Motion for Directed Verdict as to Amy Font’s
claims.
The trial court denied all other motions for directed verdict, including but not
limited to the Defendants motion for directed verdict on Dewberry’s claims,
asserting that they were barred by the statute of limitations, the Defendants motion
for directed verdict arguing the injuries were temporary rather than permanent, and
no evidence supported the consideration of permanent injuries, and diminution in
market value was not the appropriate measure of damages.
Jury Charge
During trial, both sides objected to the submission of jury questions on
whether Dewberry’s and Font’s injuries were temporary or permanent and asserted
it was a matter of law for the court to decide rather than a question for the jury. The
Defendants argued that the injury was temporary, whereas the Plaintiffs asserted the
14 injury was permanent. The trial court overruled these objections to the charge and
submitted Questions 12 and 13, which read as follows:
QUESTION 12
Is the injury to Keith Dewberry’s property and John Font’s properties, if any, capable of being repaired, fixed, or restored?
Answer “Yes” or “No.”
Answer: NO
If you answered the above question “Yes,” then answer the following question. Otherwise, do not answer the following question.
QUESTION 13
Is the injury to Keith Dewberry’s property and John Font’s properties- -- 1. of such a character as to recur repeatedly, continually, and regularly, such that future injury can be reasonably evaluated?
or---
2. of such a character that any anticipated recurrence would be only occasional, irregular, intermittent, and not reasonably predictable, such that future injury could not be estimated with reasonable certainty?
Answer “1” or “2.”
Answer: _____________
Appellants complained that given the temporary nature of the injury, the jury should
not be allowed to consider diminution in fair market value as damages. They
contended that the appropriate measure of damages was loss of use, and asserted the
15 Appellees failed to present any evidence of those damages. The Appellants also
objected to questions that addressed Dewberry’s and Font’s damages and contended
no evidence supported any element of damages submitted, which the trial court
overruled. The questions in the court’s charge addressing the different elements of
damages for Dewberry and Font included loss of use and enjoyment, diminution in
market value, and out-of-pocket expenses.
Verdict
The jury found that Bowen and WOLC, Inc. committed common law fraud as
to both Plaintiffs and statutory fraud as to Dewberry. The jury also found that
Dewberry should have discovered the fraud with the exercise of reasonable diligence
by November 7, 2016. Although the jury found both Defendants committed fraud,
the jury apportioned 100% of the responsibility to Bowen. The jury awarded
diminution of market value damages for Dewberry of $142,000 and $60,000 for
Font. The jury also awarded Font $30,000 for loss of use and enjoyment and $10,000
for out-of-pocket expenses Font incurred. The Final Judgment awarded damages for
diminution in market value but did not include damages for loss of use or out-of-
pocket expenses.
Post-Verdict
Bowen and WOLC, Inc. did not complain that the jury’s verdict included
irreconcilable or fatal conflicts before the trial court released the jury. After the trial
16 court discharged the jury, Bowen and WOLC filed a Motion for Judgment
Notwithstanding the Verdict and a Motion for New Trial complaining that the
evidence was legally and factually insufficient. In these post-verdict motions,
Appellants also argued that some of the questions submitted to the jury were
immaterial, and that there were irreconcilable conflicts in the jury’s verdict.
ANALYSIS
Issues One and Two: Statute of Limitations
In issue one, Appellants contend that the statute of limitations on Dewberry’s
claims expired in 2012 since he purchased his property in 2008. Thus, the trial court
erred by submitting jury question regarding whether Bowen and WOLC, Inc.
committed fraud. In support of this, Appellants argue the cause of action accrued
when Bowen made the misrepresentation—in 2008, when Dewberry purchased his
property. In issue two, Appellants argue the discovery rule does not apply to
Dewberry’s claims, since his lot did not have lake access between 2008 and 2010
and in 2011.
When a cause of action accrues is normally a question of law. Provident Life
& Accident Ins. Co. v. Knott, 128 S.W.3d 211, 221 (Tex. 2003); see also Sw. Energy
Prod. Co. v. Berry-Helfand, 491 S.W.3d 699, 722 (Tex. 2016) (citations omitted)
(discussing accrual in the context of trade secret misappropriation); Exxon Corp. v.
Emerald Oil & Gas Co., 348 S.W.3d 194, 202 (Tex. 2011). Yet “reasonable
17 diligence is an issue of fact.[]” Berry-Helfand, 699 S.W.3d at 722 (citing Est. of
Stonecipher v. Est. of Butts, 591 S.W.2d 806, 809 (Tex. 1979)). The statute of
limitations for common law and statutory fraud is four years. See Tex. Civ. Prac. &
Rem. Code Ann. § 16.004(a)(4); Emerald Oil, 348 S.W.3d at 202. “Causes of action
accrue and statutes of limitations begin to run when facts come into existence that
authorize a claimant to seek a judicial remedy.” Emerald Oil, 348 S.W.3d at 202
(citing Knott, 128 S.W.3d at 221) (other citations omitted). Said another way, “a
cause of action accrues when a wrongful act causes a legal injury, even if the fact of
injury is not discovered until later, and even if all resulting damages have not
occurred.” Berry-Helfand, 491 S.W.3d at 721 (citing Trinity River Auth. v. URS
Consultants, Inc., 889 S.W.2d 259, 262 (Tex. 1994)); see also Woods v. William M.
Mercer, Inc., 769 S.W.2d 515, 517 (Tex. 1988) (“In an action for fraud, limitations
begins to run when the fraud is perpetrated, or if the fraud is concealed, from the
time it is discovered or could have been discovered by the exercise of reasonable
diligence.”). The Texas Supreme Court has “long held that ‘fraud prevents the
running of the statute of limitations until it is discovered, or by the exercise of
reasonable diligence might have been discovered.’” Hooks v. Samson Lone Star, Ltd.
P’ship, 457 S.W.3d 52, 57 (Tex. 2015) (quoting Ruebeck v. Hunt, 176 S.W.2d 738,
739 (1943)). Causes of action generally accrue and statutes of limitation begin to run
when facts come into existence authorizing a claimant to seek a judicial remedy. Id.
18 (quoting Emerald Oil, 348 S.W.3d at 202). However, one cannot be allowed to avoid
liability for his actions by deceitfully concealing wrongdoing until limitations has
run. Id. (quoting S.V. v. R.V., 933 S.W.2d 1, 6 (Tex.1996)).
Dewberry pleaded that Bowen concealed his failure to maintain navigable
canals and for application of the discovery rule. On March 28, 2018, Dewberry filed
suit, and the jury found that he, with the exercise of reasonable diligence, should
have discovered the fraud in November 2016. Since limitations is an affirmative
defense, Bowen and WOLC can overcome the jury’s finding only with conclusive
evidence that Dewberry knew or, with reasonable diligence, could have discovered
the fraud before March 28, 2014. See Berry-Helfand, 491 S.W.3d at 722 (discussing
overcoming jury’s date of discovery finding pertaining to a statute of limitations
defense in context of misappropriation of trade secrets); see also Tex. R. Civ. P. 94;
Assoc. Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 284 n.7 (Tex.
1998) (“To overcome the trial court’s adverse finding on a factual proposition for
which it bears the burden of proof, a party is required to establish on appeal that the
evidence conclusively establishes the proposition.”). In determining whether
conclusive evidence exists, we review all evidence supporting the jury’s verdict as
true and reject all contrary proof if a reasonable jury could. See Berry-Helfand, 491
S.W.3d at 722; City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005).
19 The record establishes that Dewberry purchased his lot in 2008 during the
predevelopment phase, and the canals were not filled with water yet. Before buying
the lot, Dewberry asked Bowen about the canals, whether they would have lake
access and whether WOLC would be a waterfront community, and whether he could
reach his parents’ and grandparents’ homes in a neighboring canal-front community.
Bowen represented that WOLC would maintain the canals until turned over to the
POA, at which point the POA would maintain them. At the time of trial, the canals
had not yet been turned over to the POA, which meant that Bowen and WOLC were
still responsible for canal maintenance.
When Dewberry entered into the lease-purchase agreement with Lauw in
March 2016, the canals were navigable. When the Memorial Day 2016 flood
occurred, the evidence showed that the canal became silted in, was occluded, and
unnavigable. Before that, the evidence showed that the canals were navigable, and
Dewberry had no reason to believe that Bowen was failing to maintain the canals as
he promised. The City Administrator testified that in November 2016, the City sent
a letter advising that it was not responsible for cleaning the WOLC canals and that
Bowen had acknowledged his responsibility for the canals.
We disagree with Appellants’ contention that the cause of action accrued in
2008 or 2011. A cause of action accrues when a wrongful act causes a legal injury.
See Berry-Helfand, 491 S.W.3d at 721. In 2008, WOLC was in predevelopment, and
20 the canals were not finished until 2010, so Dewberry had no knowledge that Bowen
and WOLC would not maintain them. Regarding 2011, the record demonstrates
there was a severe drought, and Lake Conroe dropped significantly. In fact, during
the drought Lake Conroe dropped nine feet. The canals refilled once the rain
resumed, and their unnavigable state had nothing to do with Bowen or WOLC’s
failure to maintain them.
Rather, it was Bowen’s and WOLC’s failure to maintain them in a navigable
state as promised that constituted the wrongful conduct. The evidence demonstrated
this became discoverable after the canals became occluded in the Memorial Day
2016 flood. The City Administrator’s testimony supports this timeframe. The
misrepresentation became evident when Bowen and WOLC refused to return them
to a navigable state, and he had taken steps prior to this to conceal his failure to
maintain them.
On March 26, 2018, Plaintiffs filed suit. Dewberry’s awareness that Bowen’s
wrongful conduct caused a legal injury occurred after the Memorial Day flood.
Therefore, Appellants have failed to provide evidence conclusively establishing that
Dewberry could have discovered the fraud with reasonable diligence before March
28, 2014. See id. at 722; see also Tex. R. Civ. P. 94; CAT Contracting, Inc., 964
S.W.2d at 284 n.7. Dewberry’s fraud claims are not barred because the evidence
21 shows he filed them within four years of discovery. See Tex. Civ. Prac. & Rem.
Code Ann. § 16.004(a)(4). We overrule issues one and two.
Issue Three: Temporary or Permanent Injury
In their third issue, Appellants argue that whether an injury is temporary or
permanent is a question of law. Thus, they contend the trial court erred by submitting
Questions 12 and 13 in the charge, which they assert asked the jury to decide whether
the injury was temporary or permanent. The judgment awarded Dewberry damages
of $142,000 and Font damages of $60,000 for diminution in market value. The
judgment did not include the additional loss of use and out-of-pocket damages the
jury found for Font.
“[W]hether an injury is temporary or permanent is a question of law for the
court to decide.” Gilbert Wheeler, Inc. v. Enbridge Pipelines (E. Tex.), L.P., 449
S.W.3d 474, 481 (Tex. 2014). As the Supreme Court of Texas has explained,
An injury to real property is considered permanent if (a) it cannot be repaired, fixed, or restored, or (b) even though the injury can be repaired, fixed, or restored, it is substantially certain that the injury will repeatedly, continually, and regularly recur, such that future injury can be reasonably evaluated. Conversely, an injury to real property is considered temporary if (a) it can be repaired, fixed, or restored, and (b) any anticipated recurrence would be only occasional, irregular, intermittent, and not reasonably predictable, such that future injury could not be estimated with reasonable certainty.
Id. at 480. A “consequence ‘need not be eternal’ or ‘perpetual’ to qualify as
permanent.” Id. (quoting Schneider Nat’l Carriers, Inc. v. Bates, 147 S.W.3d 264,
22 277 (Tex. 2004)). A consequence may be permanent “if it is ongoing, continually
happening, or occurring repeatedly and predictably.” Id. (citations omitted).
Temporary actions are those whose consequences “do not last for long periods of
time, are not ongoing, are not likely to occur again, occur only sporadically, or occur
unpredictably.” Id. (citations omitted). When the facts are disputed and must be
resolved to correctly evaluate the nature of the injury, upon proper request, the court
must present the issue to the jury relying on these definitions. Id. at 481.
The parties disputed whether the canals were reparable. Bowen and WOLC,
Inc. argued that Dewberry and Font could repair the canals themselves “if they
wanted to.” Dewberry and Font contended that they did not own the canals, could
not repair them, and Bowen and WOLC, Inc., as owners, were the only ones who
could repair the canals. Bowen was the legal owner of the canals, and he had the
responsibility and duty to maintain the canals where they were navigable and
allowed boat access to Lake Conroe. However, since Dewberry and Font were not
the legal owners of the canals, they did not have the legal responsibility, duty, or
ability to maintain the canals where they were navigable and allowed boat access to
Lake Conroe. The evidence demonstrated that the canals had been occluded and
unnavigable for years following the Memorial Day 2016 flood, and Bowen testified
at trial “he didn’t have plans he wanted to share” to return them to their navigable
state. Contrary to Appellants’ argument, the trial court did not ask the jury whether
23 the injury was temporary or permanent. Rather, the trial court submitted questions
to the jury to resolve the underlying disputed facts using the definitions provided in
Gilbert Wheeler, Inc. and asked whether the canals were “capable of being repaired,
fixed, or restored.” See id. at 480–81. This question substantially tracked the
language in the Texas Pattern Jury Charges for damage to property. See, e.g., State
Bar of Tex., Texas Pattern Jury Charges —General Negligence, Intentional Personal
Torts, & Workers’ Compensation PJC 11.5, 12.4 (2022). The jury resolved this
disputed fact issue by answering that the canals could not be repaired, fixed, or
restored, which was true as to Dewberry and Font. See Gilbert Wheeler, 449 S.W.3d
at 480–81.
In support of this issue, Appellants also assert that temporary and permanent
injuries are “mutually exclusive,” and a party may not obtain damages for both in
the same action, which is generally true. See Hous. Unlimited, Inc. Metal Processing
v. Mel Acres Ranch, 443 S.W.3d 820, 825–26 (Tex. 2014) (quoting Schneider Nat’l
Carriers, Inc., 147 S.W.3d at 276); Kraft v. Langford, 565 S.W.2d 223, 227 (Tex.
1978). Here, however, Appellants did not obtain damages for both. Although the
jury found that Font sustained out-of-pocket and loss of use and enjoyment damages,
the trial court did not include these damages in the Final Judgment. Consistent with
the jury’s factual finding that the injury was incapable of repair and the trial court’s
24 conclusion that it was permanent, the Final Judgment only included Font’s
diminution in market value damages.
The trial court did not submit a question to the jury asking if the injury was
temporary or permanent. Instead, it permissibly had the jury resolve the underlying
factual dispute over whether the canals could be repaired. See Gilbert Wheeler, 449
S.W.3d at 480–81. The trial court then determined, as a matter of law, the injury was
permanent as shown in the Final Judgment when it only awarded damages for
diminution in property value. We overrule issue three.
Issue Four: Irreconcilable Conflicts in the Jury’s Verdict
In their fourth issue, Appellants complain that irreconcilable conflicts exist in
the jury’s verdict. Specifically, Appellants contend that two fatal conflicts exist
because: (1) they jury awarded damages because the canals were unnavigable, yet
they determined the canals could not be repaired – in essence arguing the jury
punished Appellants for failing to repair the canals while determining the canals
were not capable of being repaired; and (2) the jury found both WOLC and Bowen
committed common law and statutory fraud but WOLC liable for 0% of the
damages, a requisite element of fraud.
A fatal conflict in jury answers exists when one answer requires a judgment
in one party’s favor while another answer requires a judgment in the opposing
party’s favor. Los Compadres Pescadores, L.L.C. v. Valdez, 622 S.W.3d 771, 787
25 (Tex. 2021) (citation omitted). “[T]o preserve error based on fatally conflicting jury
answers, parties must raise that objection before the trial court discharges the jury.”
USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479, 518 (Tex. 2018); see also
Valdez, 622 S.W.3d at 787; Gulf Coast Fiber Servs., LLC v. BMF Drilling, LLC, No.
09-20-00037-CV, 2022 WL 2975689, at *4 (Tex. App.—Beaumont July 28, 2022,
no pet.) (mem. op.) (noting same). When a jury’s answers to questions conflict, “the
court shall in writing instruct the jury in open court of the nature of the . . . conflict,
provide the jury such additional instructions as may be proper, and retire the jury for
further deliberations.” Tex. R. Civ. P. 295. Since Appellants did not object to the
allegedly conflicting answers before the trial court discharged the jury, they cannot
now complain the conflicting answers undermine the judgment based on the jury’s
verdict. See Valdez, 622 S.W.3d at 787–88; Menchaca, 545 S.W.3d at 518. We
overrule issue four.
Issue Five: Legal and Factual Sufficiency
In their fifth issue, Appellants argue the evidence is legally and factually
insufficient to support the jury’s verdict. Specifically, they contend there was
insufficient evidence to support the elements of a common law fraud claim and
Dewberry’s claim for statutory fraud. They also assert the evidence is insufficient to
support the awarded damages.
26 Standard of Review
In a legal sufficiency review, we must consider all the evidence “‘in the light
most favorable to the party in whose favor the verdict has been rendered,’” and
“‘every reasonable inference deducible from the evidence is to be indulged in that
party’s favor[.]’” Bustamante v. Ponte, 529 S.W.3d 447, 456 (Tex. 2017) (quoting
Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997)). Evidence
is legally insufficient to support a jury finding when: (1) the record discloses a
complete absence of evidence of a vital fact; (2) the court is barred by rules of law
or of evidence from giving weight to the only evidence offered to prove a vital fact;
(3) the evidence offered to prove a vital fact is no more than a mere scintilla; or (4)
the evidence establishes the opposite of a vital fact. Crosstex N. Tex. Pipeline, L.P.
v. Gardiner, 505 S.W.3d 580, 613 (Tex. 2016) (citation omitted). As the sole judges
of the witnesses’ credibility and the weight to give their testimony, the jurors may
choose to believe one witness and disbelieve another. City of Keller, 168 S.W.3d at
819. We “credit favorable evidence if reasonable jurors could, and disregard
contrary evidence unless reasonable jurors could not.” Id. at 827. “The final test for
legal sufficiency must always be whether the evidence at trial would enable
reasonable and fair-minded people to reach the verdict under review.” Id. “We will
uphold the jury’s finding if more than a scintilla of competent evidence supports it.”
Tanner v. Nationwide Mut. Fire Ins. Co., 289 S.W.3d 828, 830 (Tex. 2009); Herrera
27 v. Wendell Legacy Homes, LLC, 631 S.W.3d 441, 451 (Tex. App.—Beaumont 2021,
no pet.). We presume jurors made all inferences for the verdict, but only if reasonable
minds could do so. Serv. Corp. Int’l v. Guerra, 348 S.W.3d 221, 228 (Tex. 2011).
“Jurors may not simply speculate that a particular inference arises from the
evidence.” Id. (citing City of Keller, 168 S.W.3d at 821).
When challenging the factual sufficiency of the evidence supporting an
adverse finding on which the appellant did not have the burden of proof at trial, the
appellant must demonstrate that there is insufficient evidence to support the adverse
finding. Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex. 1983); Am. Interstate Ins.
Co. v. Hinson, 172 S.W.3d 108, 120 (Tex. App.—Beaumont 2005, pet. denied).
When reviewing a factual sufficiency challenge, we consider and weigh all the
evidence in support of and contrary to the jury’s finding. Mar. Overseas Corp. v.
Ellis, 971 S.W.2d 402, 406–07 (Tex. 1998). We set aside a finding only if it “is so
contrary to the overwhelming weight of the evidence as to be clearly wrong and
unjust.” Dyson v. Olin Corp., 692 S.W.2d 456, 457 (Tex. 1985).
Common Law Fraud
To prevail on a common law fraud claim, a plaintiff must prove that: (1) the
defendant made a material misrepresentation; (2) the defendant knew the
representation was false or made the representation recklessly without any
knowledge of its truth; (3) the defendant made the representation with the intent the
28 other party would act on it or intended to induce the party’s reliance on the
representation; and (4) the plaintiff suffered an injury by actively and justifiably
relying on defendant’s representation. See Emerald Oil, 348 S.W.3d at 217.
Dewberry and Font alleged that Bowen and WOLC, Inc. committed fraud by
misrepresenting that WOLC was a waterfront community and that residents would
have boat access to Lake Conroe via a canal system, which he would maintain until
enough lots were sold to turn the canal maintenance over to the POA. They alleged
that they relied on the misrepresentations and were induced to buy properties in
WOLC. Further, with respect to Dewberry, he alleged that the misrepresentations
constituted fraud in a real estate transaction. Finally, they alleged that Bowen
individually or on behalf of WOLC continually promised and represented that the
canals would be desilted and restored to navigability so they could enjoy the
amenities promised when they purchased their properties, and the false promises
amount to a continuing fraud.
Dewberry also alleged statutory fraud in a real estate transaction.
The elements of statutory fraud in a real estate transaction are a: “(1) false representation of a past or existing material fact, when the false representation is (A) made to a person for the purpose of inducing that person to enter into a contract; and (B) relied on by that person in entering into that contract; or (2) false promise to do an act, when the false promise is (A) material; (B) made with the intention of not fulfilling it; (C) made to a person for the purpose of inducing that person to enter into a contract; and (D) relied on by that person in entering into that contract.”
29 Grove v. Franke, No. 09-18-00119-CV, 2019 WL 5243152, at *3 (Tex. App.—
Beaumont Oct. 17, 2019, pet. denied) (mem. op.) (quoting Flynn v. Keller Williams
Inc., No. 04-12-00307-CV, 2013 WL 979196, at *2 (Tex. App.—San Antonio Mar.
13, 2013, no pet.) (mem. op.)); see also Tex. Bus. & Com. Code Ann. § 27.01(a). A
person who makes the false representation described by the statute commits fraud
and is liable to the person defrauded for actual damages. See Tex. Bus. & Com. Code
Ann. § 27.01(b).
In Spoljaric v. Percival Tours, Inc., the Court explained:
A promise to do an act in the future is actionable fraud when made with the intention, design and purpose of deceiving, and with no intention of performing the act. While a party’s intent is determined at the time the party made the representation, it may be inferred from the party’s subsequent acts after the representation is made. Intent is a fact question uniquely within the realm of the trier of fact because it so depends upon the credibility of the witnesses and the weight to be given to their testimony.
708 S.W.2d 432, 434 (Tex.1986) (citations omitted). Failure to perform, standing
alone, is no evidence of the intent not to perform when the promise was made, as
that fact is a circumstance to be considered with other facts to establish intent. Id. at
435; Texienne Oncology Ctrs., PLLC v. Chon, No. 09-19-00356-CV, 2021 WL
4994622, at *5 (Tex. App.—Beaumont Oct. 28, 2021, pet. denied) (mem. op.);
Morgan Bldgs. & Spas, Inc. v. Humane Soc’y of Se. Tex., 249 S.W.3d 480, 489 (Tex.
App.—Beaumont 2008, no pet.). “‘Material means a reasonable person would attach
importance to and would be induced to act on the information in determining his 30 choice of actions in the transaction in question.’” Italian Cowboy Partners, Ltd. v.
Prudential Ins. Co. of Am., 341 S.W.3d 323, 337 (Tex. 2011) (quoting Smith v. KNC
Optical, Inc., 296 S.W.3d 807, 812 (Tex. App.—Dallas 2009, no pet.)).
Sufficiency of Evidence as to Fraud
Appellants contend the evidence is legally and factually insufficient to support
the jury’s findings that Bowen made a material misrepresentation, as a positive
assertion knowing it was false, and that he did so with the intent that Dewberry and
Font would act on it. The evidence established that WOLC was marketed as a
waterfront canal community and that having navigable canals allowed residents to
access Lake Conroe. Dewberry and Font asked about the canals and who would
maintain them before purchasing their property. Bowen represented that WOLC
would maintain the canals to a depth of six feet until enough lots sold that the POA
would take over and guaranteed access to Lake Conroe. Both Dewberry and Font
explained why they desired waterfront property and navigable canals: for Dewberry,
it was having lake access and reaching family members who had homes in
neighboring communities on the lake; for Font, it was accessing the lake to use their
boat and jet skis. Font testified that he would not need the house if he could not get
his boat through the canals with access to the lake. Font said Bowen’s statements
impacted his decision, he was a “very good salesman,” and Font bought the house.
31 The evidence at trial demonstrated that Bowen had a practice of telling people
what he needed to make a sale, knew how expensive maintaining the canals could
be, and had problems with the canals in at least one prior development. His
employees testified that he purchased a dredger for show, and he never had a
maintenance program or had anyone regularly checking depth of the WOLC canals.
Employees also testified that Bowen did things to make the canals look appealing to
buyers without improving their condition, like removing grass from sandbars and
knocking dirt under the water before a big sales weekend, so it was not visible. There
was evidence presented to the jury that Bowen had not returned the canals to a
navigable state in the years between the Memorial Day flood and trial, despite
acknowledging he was responsible for the canals. Following the flood, Bowen told
people contradictory things like he was responsible for the canals and would fix them
but told others he did not own the canals.
The evidence of Bowen’s representations and promises made to Dewberry
and Font about the canals, as well as to other buyers, his failure to keep his promises,
including his failure to maintain the depth and condition of the canals after promising
he would do so, coupled with his other conduct to cover up the shallowness of the
canals as outlined above, provided evidence from which a reasonable jury could
conclude that he never intended to maintain the navigability of the canals when
Bowen made promises to induce Dewberry and Font to buy property within WOLC.
32 See Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960
S.W.2d 41, 48 (Tex. 1998) (“A promise of future performance constitutes an
actionable misrepresentation if the promise was made with no intention of
performing at the time it was made.”). “Proving that a party had no intention of
performing at the time a contract was made is not easy, as intent to defraud is not
usually susceptible to direct proof.” Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d
299, 305 (Tex. 2006) (citation omitted); see also Aquaplex, Inc. v. Rancho La
Valencia, Inc., 297 S.W.3d 768, 774–75 (Tex. 2009) (citations omitted). While
breach alone is not evidence of intent, “breach combined with ‘slight circumstantial
evidence’ of fraud” is enough evidence of fraudulent intent to support a
verdict. Aquaplex, 297 S.W.3d at 775 (quoting Chapa, 212 S.W.3d at 305). Such
circumstantial evidence includes the parties’ conduct after the representation is made
and is present in this record. See id. (citation omitted).
Viewing the evidence in the light most favorable to the jury’s findings, we
conclude there is more than a scintilla of evidence to support the jury’s finding that
Bowen made a material misrepresentation, that he knew was false, and he did so
with the intent that Dewberry and Font act on it by purchasing property in WOLC.
See Emerald Oil, 348 S.W.3d at 217 (setting forth elements of fraud); Grove, 2019
WL 5243152, at *3 (outlining elements of statutory fraud in a real estate transaction);
see also Bustamante, 529 S.W.3d at 456 (discussing standard of review); Tanner,
33 289 S.W.3d at 830 (directing courts to uphold a jury’s finding if supported by more
than a scintilla of evidence). Thus, the evidence was legally sufficient to support the
jury’s findings on the first three elements of fraud and statutory fraud. See Emerald
Oil, 348 S.W.3d at 217; Grove, 2019 WL 5243152, at *3; see also Bustamante, 529
S.W.3d at 456; Tanner, 289 S.W.3d at 830.
As to factual sufficiency and contradictory evidence, Bowen testified that he
intended to maintain the canals and purchased the barge to do so. He testified that
he could not have foreseen the storms. He also testified the canals were navigable
for a time after Dewberry and Font purchased their properties. Bowen also testified
the lawsuit interfered with his ability to fix the canals, and he was waiting on the
City to repair the bridge and another developer to clean his property upstream. He
explained that he still owned about ninety lots in WOLC, and he would benefit if the
canals were restored so he could sell the lots as waterfront. Bowen proffered
evidence showing that he paid a contractor hundreds of thousands of dollars for work
on the canals. Bowen’s intentions and whether he genuinely attempted to make
repairs to the canals was a disputed fact issue. The jury was free to weigh all the
evidence and could have believed some, all, or none of Bowen’s testimony. See City
of Keller, 168 S.W.3d at 819. In considering all the evidence in support of and
contrary to the jury’s fraud findings, we cannot conclude they are “so contrary to the
34 overwhelming weight of the evidence as to be clearly wrong and unjust.” See Ellis,
971 S.W.2d at 406–07; Dyson, 692 S.W.2d at 457.
Evidentiary Sufficiency to Support Damages
We next turn to the last element for fraud claims, which is harm caused by the
misrepresentation. See Emerald Oil, 348 S.W.3d at 217; Grove, 2019 WL 5243152,
at *3. Appellants assert the evidence is insufficient to support that Dewberry and
Font were harmed and to support the damages awarded and specifically, that “[t]here
was no evidence of any damages caused by Appellants’ purported fraud.”
Appellants acknowledge that consequential damages are recoverable in
certain fraud cases, but argue they are not recoverable here because the harm “caused
as a result of the storms” was unforeseeable and not directly traceable to Appellants.
“When properly pleaded and proved, consequential damages that are foreseeable and
directly traceable to the fraud and result from it might be recoverable.” Formosa
Plastics, 960 S.W.2d at 49 n.1. The evidence showed that it was not damages caused
by the storms that Dewberry and Font claimed, rather it was Bowen and WOLC’s
failure to maintain the canals in a navigable state and give them access to Lake
Conroe, which included returning them to that condition after the storm. The
evidence showed that the lots they purchased were no longer characterized as
“waterfront” by the Montgomery Central Appraisal District (MCAD) due to the
35 canals’ condition. Unnavigable canals and the resulting damage to property values
if proven, would be directly traceable and foreseeable to the fraud. See id.
Appellants next complain of the jury’s award of out-of-pocket and loss of use
damages, but we address only diminution in market value as that is the only measure
of damages the trial court’s judgment included. In support of this argument,
Appellants argue that Appellees failed to properly disclose their opinions under the
Property Owner Rule. Appellants also argue Appellees’ damages testimony was
conclusory and speculative.
“The Property Owner Rule falls under Texas Rule of Evidence 701, which
allows a lay witness to provide opinion testimony if it is (a) rationally based on the
witness’s perception and (b) helpful to a clear understanding of the witness’s
testimony or the determination of a fact in issue.” Nat. Gas Pipeline Co. of Am. v.
Justiss, 397 S.W.3d 150, 157 (Tex. 2012) (citing Tex. R. Evid. 701; Reid Rd. Mun.
Util. Dist. No. 2 v. Speedy Stop Food Stores, Ltd., 337 S.W.3d 846, 852 (Tex. 2011)).
The Property Owner Rule presumes an owner is familiar with his property and its
value and is an exception to the requirement that a witness must otherwise establish
his qualifications to express an opinion on land values. Id. Being subject to Rule
701, a property owner need not be disclosed or designated as an expert to testify
about the value of his property. See id. (noting Property Owner Rule falls under Rule
of Evidence 701, governing lay testimony); Teal Trading & Dev., LP v. Champee
36 Springs Ranches Prop. Owners Ass’n, 534 S.W.3d 558, 577 (Tex. App.—San
Antonio 2017) (agreeing that a property owner “need not necessarily be designated
or disclosed as an expert in order to testify about the value of his property”), aff’d,
593 S.W.3d 324 (Tex. 2020).
Bowen and WOLC’s argument that they failed to properly designate
Dewberry and Font as experts lacks merit. The record reflects that in August 2019,
about six months before trial, the Plaintiffs filed their Supplemental Responses to
Requests for Disclosure. The Supplemental Responses listed both Plaintiffs as
persons with knowledge of relevant facts and claimed diminution in property values
as a measure of damages. See Tex. R. Evid. 701; see also Justiss, 397 S.W.3d at 157;
Teal Trading, 534 S.W.3d at 577.
We now turn to Appellants’ contention that Appellees’ testimony was too
conclusory and speculative, thus insufficient to support the damages awarded.
Testimony provided under the Property Owner Rule serves the functional equivalent
of expert testimony and must be judged by the same standards. Justiss, 397 S.W.3d
at 159. An owner’s property valuations may not be based solely on their ipse
dixit. See id. An owner must provide the factual basis for his opinion and not simply
use the phrase “market value” with a number to substantiate a diminished value
claim. See id.; Royce Homes, L.P. v. Humphrey, 244 S.W.3d 570, 579–80 (Tex.
App.—Beaumont 2008, pet. denied) (concluding that property owner’s testimony he
37 arrived at post-flood value of his home by “pulling [it] out of the air[,]” was too
speculative to support estimated damages). Considering the resources available
today, “[t]his burden is not onerous.” Justiss, 397 S.W.3d at 159. “Evidence of price
paid, nearby sales, tax valuations, appraisals, online resources, and any other
relevant factors may be offered to support the claim.” Id.
The jury determined that the diminution in market value of Dewberry’s
property was $142,000. Dewberry testified that he purchased his lot in 2008 for
$123,900 and later spent $390,000 to build the home. He also paid $40,000 for an
outdoor patio and $7,000 for a wrought iron fence.
Dewberry and Daniel Lauw both testified that in March 2016, shortly before
the flood, Dewberry entered into a lease purchase agreement with Lauw, who agreed
to pay $430,000 for the home, and he paid a lump sum of $30,000 to rent the home
for a year before buying it. At that time, the canals were navigable to Lake Conroe.
The evidence showed that Lauw had a boat and was interested in access to Lake
Conroe, and he testified that navigability of the canals was “[e]xtremely” important
to him. Dewberry also testified that after the canals silted in, Lauw backed out of the
purchase but leased the home for another year at a reduced price. After the canals
were silted, Lauw renewed the lease and “tried to wait it out” with the intention that
if the property was “fixed,” he would buy it. Lauw testified that he ultimately
decided not to purchase Dewberry’s home since the issue with the canals was
38 unresolved, and it was not worth what it was before. In 2013 when the canals were
navigable, Dewberry listed the home for $479,000, but he testified that the price
reflected his need to sell due to his divorce, and he did not receive any offers at that
time, so he removed it from the market.
Dewberry testified that since the canals occluded, MCAD reduced the value
of his property to $300,000. Dewberry also explained that he consulted a realtor on
comparable sales in WOLC and was advised that after the flood, homes were being
sold for $106 per square foot, and his home was 3,000 square feet, which is how he
arrived at $318,000. Dewberry considered the devaluation of unimproved lots in
WOLC after the flood, which have been reduced from the mid $130,000’s to
$69,000. Dewberry ultimately opined that the current market value of his home was
$318,000. In arriving at that value, he explained that he considered the MCAD
valuation of $300,000, the realtor’s input that comparable homes were selling for
$106 per square foot, the fact that Lauw backed out of a contract to buy the home
for $430,000 before the canals became unnavigable, and the fact that WOLC lot
values have been cut in half. To support his damages, Dewberry testified about what
he paid, sales in WOLC, a realtor’s information, MCAD valuations, and the fact that
a prospective buyer backed out of a contract due in part to unnavigable canals. See
Justiss, 397 S.W.3d at 159 (discussing types of evidence that may support a property
owner’s valuation).
39 The jury awarded Font $60,000 for diminution in market value. Font testified
that as the property owner, he is familiar with the value. He testified that if he sold
his lot currently, the fair market value would be below $65,000, but if the canals
were in working order, it would probably be $130,000. Font described the
information he used to arrive at that opinion, including a comparable analysis on
surrounding lots that real estate broker Melissa Seureau performed. Font testified
that information included two lots in the neighborhood listed for $139,000 but were
on the market for $75,000 but still had not sold. Additionally, Font testified that the
tax appraisal value for his lot had been reduced from $130,000 to $75,000.
Font testified that the fair market value of his house was probably $315,000,
but he invested $560,000 in the house with the outdoor kitchen and upgrades to the
boat lifts. He said that houses in the neighborhood the same size as his with
swimming pools are listed currently with the unnavigable canals at $330,000 and
$360,000. He explained that the information he used to arrive at his opinion included
data Seureau provided “on the comps and I compared them,” and he considered the
current MCAD value of $300,000. Font said that the comparable properties had
swimming pools and were on the same canal as his, and one was 3,500 square feet
and the other was 3,600 square feet; his home is 3,475 square feet. The information
Seureau provided in June 2019 indicated the homes in WOLC were not selling but
listed at $116 per square foot. He also testified his home “was worth 512,000 when
40 I purchased it.” Font testified that Dewberry lives next door to him, and his lot is
similar in size and dimensions. Likewise, Font’s evidence to support his opinions of
market value included tax values, comparable sales listings, a real estate broker’s
analysis, and the amount he paid for his property and upgrades. See id.
Real estate broker Seureau also testified about her analysis of Font’s
properties. When Seureau showed the Fonts the house in WOLC, there was “lots of
water in the canal,” but since the canals silted up, the MLS listings for homes in
WOLC had the “waterfront portion” removed. Seureau testified that she would not
be comfortable currently listing the Fonts’ home as waterfront, because it would
“create a liability” for her “because there is no waterfront.” Seureau said the Fonts
paid $512,000 for their home plus upgrades.
Seureau also listed the vacant lot the Fonts’ owned next to their home, but it
never sold. She described her efforts to market the lot, which included removing the
waterfront information in the MLS. She thought the Fonts listed the lot in 2015 and
removed it in 2016, after the canals silted up. Seureau testified that nobody paid her
for her testimony, and she is not currently listing anything for the Fonts.
We conclude the testimony as outlined above provided a factual basis to
support Appellees’ diminution of fair market value opinions. See id. Having
presented more than a scintilla of evidence to support their damages, we conclude
the jury’s findings on diminution in value as to both Font and Dewberry were
41 supported by legally sufficient evidence. See Tanner, 289 S.W.3d at 830; Herrera,
631 S.W.3d at 451; see also Gicor, Inc. v. Brewer, No. 09-21-00222-CV, 2023 WL
4781217, at *14 (Tex. App.—Beaumont July 27, 2023, no pet.) (mem. op.)
(discussing expert testimony in property valuation case and concluding testimony
constituted “more than a scintilla of evidence to support the damages”).
Additionally, after considering all the evidence supporting and contradicting the
jury’s damages findings, we cannot conclude they are “so contrary to the
overwhelming weight of the evidence that the verdict is clearly wrong and unjust.”
See Ellis, 971 S.W.2d at 406–07; Dyson, 692 S.W.2d at 457. Therefore, the evidence
as to damages is factually sufficient.
We overrule Appellants’ fifth issue.
CONCLUSION
Having overruled each of Appellants’ issues, we affirm the trial court’s
judgment.
AFFIRMED.
W. SCOTT GOLEMON Chief Justice
Submitted on October 26, 2023 Opinion Delivered December 14, 2023
Before Golemon, C.J., Johnson and Wright, JJ.
Related
Cite This Page — Counsel Stack
Waterstone on Lake Conroe, Inc. and Steve Bowen v. Keith Dewberry and John T. Font, Counsel Stack Legal Research, https://law.counselstack.com/opinion/waterstone-on-lake-conroe-inc-and-steve-bowen-v-keith-dewberry-and-john-texapp-2023.