No. 12

- 14

- 00007 -CV

In the Court of Appeals Twelfth Court of Appeals District Tyler, Texas

REX SMITH and NANCY SMITH, Appellants

v.

KELLY DAVIS AND AMBER DAVIS Appellees

Appealed from the 294th Judicial District Court Van Zandt County, Texas

APPELLEES’ MOTION FOR REHEARING OF OPINION ON REHEARING RENDERED APRIL 22, 2015

ATTORNEY FOR APPELLEES: S. Gary Werley Law Office of S. Gary Werley Texas State Bar No. 21187000 1840 Acton Highway, Suite 102 Granbury, Texas 76049 817

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- 7710 - fax sgwerley@werleylaw.com ACCEPTED 12-14-00007-CV TWELFTH COURT OF APPEALS

TYLER, TEXAS 4/27/2015 1:29:18 PM CATHY LUSK CLERKTO THE HONORABLE JUDGE S OF SAID COURT:

NOW COMES, Kelly Davis and Amber Davis, Appellees, and files this

Motion for Rehearing of the Court’s Opinion Rendered on April 22 , 2015, and for

same would show unto the Court the following:

I.

Appellees requested the Court re view its opinion of April 22, 2015 and reverse

its ruling on the amount of the reimbursement to be paid to the Davis’, contrary to

the amount as found by the jury and by Trial Court in its Judgment. Appellant did

not raise an issue as to the amount of the reimbursement, only wheth er or not the

re scission was due.

The Court of Appeals erred in making a finding of fact that “Rex applied the

amount of the principal the Davises had paid on lot 9 ($3,700.00) to lot 7”. The

Court of Appeals is not a fact finder; this statement is contrar y to the evidence, the

jury finding and the judgment entered by the Trial Court.

In the Appellant Brief and the original motion for rehearing

, the

Appellant/Defendant Smith did not object to the amount of actual damages.

Notwithstanding same

, the Court mo dified its opinion and judgment.

The jury question on actual damages was:

“What sum of money, if any, if paid now in cash, would fairly and reasonably

compensate Kelly Davis and Amber Davis for their damages, if any, that resulted

from such fraud?”

Appellee’s Motion for Rehearing Page 1T he jury was instructed to “ Consider the amount of money received by Rex

Smith from Kelly and Amber Davis and the taxes paid by the Davises on the

property”

. (CR 319)

.
The Jury found the amount of $33,664.41

.
Plaintiffs’ Exhibit 1 shows a down payment of $1,000.00. Plaintiffs’ Exhibit

5 shows payments of $472.00 on Tract 9 for 25 payments. Kelly Davis testified that

the monies paid on Tract 9 would be applied to Tract 7. ( RR Vol. 2, p. 74)

. Plaintiffs’ Exhibit 5 shows payments of $565.00 on Tract 7. Plaintiffs’ Exhibit 3

shows a down payment of $3,700.00, and that payments beg i n on April 22, 2005.

Plaintiffs’ Exhibit 5 shows some, but not all payments from April 2005 to November

2007. Amber Davis testified that the Exhibit was not complete and had gaps. (RR

33). Mr. Davis testified that they paid the prope rty taxes on the properties. ( RR Vol.

2, p. 53, 66)

. The taxes for one year, on Tract 9, a smaller tract than Tract 7, were

$250. 00. (Plaintiffs’ Exhibit 5)

. The facts of this lawsuit covered five years, from

2003 through 2007.

Down payment 2003, Pl. Exh. 1 $ 1,000.00 Down payment 2005, Pl. Exh. 3 $ 3,700.00 25 monthly payments Tract 7 , Pl. Exh. 1, 2, 5 $11,800.00 32 monthly payments Tract 9, Pl. Exh. 3, 4, 5 $18,080.00 Minimum taxes 03 (partial)

- 09 $ 1,680.00 TOTAL $36,260.00

Appellee’s Motion for Rehearing Page 2The answer by the jury to the question was supported by the evidence and is not

against the overwhelming weight and preponderance of the evidence so as to be

manifestly unjust. The Courts judgment is supported by the evidence.

Re s c i ssion damages should start at $33,664.41 , as found by the jury and the

Trial Court ’ s judgment affirmed in that regard

.

II.

Appellees request a rehearing on the right to attorney’s fees §5.0 69 , §5.07 0

,

and §5.0 72 of the Texas Property Code . Each of the above

- stated Code sections

provide that a violation (failure to provide information required by § 5.069 (a); failure

to provide information required by §5.070 ( a); failure to provide notice required by

§5.072(d)) is false

, misleading or deceptive, or practice within the meaning of

§17.46 , Business & C ommerce Code and is actionable thereunder. Pursuant to the

statutory requirements, Plaintiffs’ Second Amended Pet ition alleged in paragraphs

IV, V, and VI violation s of §5.069, §5.07 0 , and §5.072 , and that each one of the

above acts were a “false, misleading or deceptive act or practice within the meaning

of the Deceptive Trade Practice

- Consumer Protection Act and allows a purchaser to

cancel and rescind executory contract and receive a full refund of all payments made

to the Defendants. (CR 16 4 ). There were no special exceptions filed against the

Petition or heard by the Court

. The Property Code sections state t hat the conduct

constitutes a false, misleading, or deceptive act within the meaning of Section 17.46,

and allows the remedies to flow therefrom. No other jury questions need to be

Appellee’s Motion for Rehearing Page 3requested; same would be redundant and asking a legal question: i.e.

, “ Do you find

the conduct to be false, misleading or deceptive as stated by the Legislature a nd

signed into law by the Governor ? ” T here was a finding by the jury of a violation of

the Texas Property Code, which is also a violation of the Texas Deceptive Trade

P ractice

- Consumer Protection Act. P ursuant to §17

. 50(d) of the Texas Business &

Commerce Code, the Appellees are entitled to attorney’s fees.

The Court stated “however, as in Morton

, that the Davis’ d id not recover under

the DTPA.” Morton v. Nyugen , 412 S.W.3d 506, 509

- 10 (Tex. 2013) was a bench

trial. The Da vis’ did recover under the DTPA. T he law in Texas is that if there is a

finding on an element of a cause of action and judgment is rendered thereon, any

missing element is an implied finding b y the Court. As there was no objection to

the charge on this issue, this Court must presume that the trial court made implied

findings on any missing element to support the judgment. Nacogdoches Memorial

Hospital v. Justice , 694 S.W.2d 404, 207 (Tex.App.

- Tyler 1985). See Skelly Oil

Company v. Medical & Surgical Clinic, 418 S.W.2d 574, 578 (Tex.Civ.App.

- Tyler

1967) which stated that Rule 279 of the Texas Rules of Civil Procedure provides the

grounds for recovery or defense consist of one or more element; that is, requires

more than one (1) issue to submit them, and the Courts submits some of the elements

and omits others and there is no objections to the failure to submit same, the parties

are placed in the same position of having agreed to waive a jury tr ial on the

unsubmitted elements and to have submitted them to Court for his determination.

Appellee’s Motion for Rehearing Page 4Under the r ule of i mplied f indings

, the jury verdict and the j udgm ent rendered by

the Court require the award of attorney’s fees on rehearing

. The award and amoun t

of the attorney’s fees should be affirmed as stated in the judgment.

The pleadings filed by Plaintiff stated that violations of the sections of the

Texas Property Code, in several instances, allowed for attorney’s fees under the

DTPA. For instance, §5.0 69 provides that the Seller shall provide the Purchaser a

survey. §5.070, not addressed by Appellant, provides that the Seller shall provide

the Purchaser tax certificates. These items were not provided as found by the jury

in response to Jury Questions . Both Sections state that the “failure to provide the

information required by this Section is a false, misleading or deceptive act or practice

within the Deceptive Trade Practice Act, and entitles the Purchaser to cancel and

rescind the Executory Contrac t and receive full refund of all payments made to the

Seller.

Either one of these disclosures would have disclosed that the property

described as Lot 7 of the Tall Oaks Estates Subdivision, Van Zandt County, did not

exist . (Pl’s Exh. 3, Def’s Exh 7A, RR 94). The jury found that as a result of the

failure to provide a survey and/or tax certificates for the property that did not exist,

the Davis’ relied upon these misrepresentations, and subsequently suffered damages

in excess of $33,000.00. As a resu lt the actions of Mr. Smith, attorney’s fees are

due.

Appellee’s Motion for Rehearing Page 5III.

Application of Chapter 41 of the Texas Civil Practice & Remedies Code to

§5.077 of the Texas Property Code.

Defendant did not plead the unconstitutionality of any statute and therefor

waived same as an affirmative defense. (T.R.C.P. Rule 92). Defendant did not raise

any issue on this question in pretrial or post

- trial motion filed with the Court. Failure

to br ing this issue to the Court’s attention before the appeal is a waiver of this issue.

After the decision of Flores v. Millennium Interests, Ltd. , 185 S.W.3d 427,

429 (Tex. 2005) the legislature amended §5.077 of the Texas Property Code to place

a cap on d amages. This Court’s opinion as stated in 2014 WL 4104167 was a correct

application of the statute, which stated as follows:

“ APPLICABILITY OF TEXAS CIVIL PRACTICE AND REMEDIES CODE CHAPTER 41 In their third issue, the Smiths contend that the trial court was required to apply Texas Civil Practice and Remedies Code Chapter 41 in awarding damages under Texas Property Code Section 5.077 and it failed to do so.

Standard of Review and Applica ble Law The meaning of a statute is a question of law, which we review de novo to ascertain and give effect to the legislature’s intent. Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex.2009) ; Hong Kong Dev., Inc. v. Nguyen, 229 S.W.3d 415, 457 (Tex.App.

- Houston [1st Dist.] 2007, no pet.) . When construing a statute, we begin with its language. Our primary objective is to determine the legislatu re’s intent, which, when possible, we discern from the plain meaning of the words chosen. State v. Shumake, 199 S.W.3d 279, 284 (Tex.2006) . We presume the legislature intended a just and reasonable result b y enacting the statute. City of Rockwall v. Hughes, 246 S.W.3d 621, 626 (Tex.2008) . Where text is clear, it is

Appellee’s Motion for Rehearing Page 6determinative of that intent. Entergy Gulf St ates, 282 S.W.3d at 437 . When a statute’s language is clear and unambiguous, it is inappropriate to resort to rules of construction or extrinsic aids to construe the language. City of Rockwall, 246 S.W.3d a t 626

.

Discussion The Smiths contend that the trial court was required to apply Chapter 41 because of the Texas Supreme Court’s holding in Flores v. Millennium Interests, Ltd., 185 S.W.3d 427 (Tex.2005) . They also contend that we should consider th e discussion on this issue in Henderson v. Love, 181 S.W.3d 810 (Tex.App.

- Texarkana 2005, no pet.) . The Davises reply that these two cases involve a prior version of Texas Property Code Section 5.077 , and therefore are not applicable to the fa cts of this

case.

The current version of Section 5.077 states as follows:

§ 5.077 . Annual Accounting Statement

(a) The seller shall provide the purchaser with an annual statement in January of each year for the term of the executory contract. If the seller mails the statement to the purchaser, the statement must be postmarked no t later than January 31.

(b) The stateme nt must include the following information:

(1) The amount paid under the contract;

(2) The remaining amount owed under the contract;

(3) The number of payments remaining under the contract;

(4) The amounts paid to taxing authorities on the purchaser’s behalf if collected by the seller;

(5) The amounts paid to insure the property on the purchaser’s behalf if collected by the seller;

*5 (6) If the property has been damaged and the seller has received insurance proceeds, an accounting of the proceeds applied to the property; and

Appellee’s Motion for Rehearing Page 7(7) If the seller has changed insurance coverage, a legible copy of the current policy, binder, or other evidence that satisfies the requirements of Section 5.070(a)(2).

(c) A seller who conducts less than two tr ansactions in a 12

– month period under this section who fails to comply with Subsection (a) is liable to the purchaser for:

(1) Liquidated damages in the amount of $100 for each annual statement the seller fails to provide to the purchaser within the time required by subsection (a); and

(2) Reasonable attorney’s fees.

(d) A seller who conducts two or more transactions in a 12

– month period under this section who fails to comply with Subsection(a) is liable to the purchaser for:

(1) Liquidated damages i n the amount of $250 a day for each day after January 31 that the seller fails to provide the purchaser with the statement, but not to exceed the fair market value of the property; and

(2) Reasonable attorney’s fees.

TEX. PROP.CODE ANN. § 5.077 (West Supp.2014). The pre

– 2005 version of Section 5.077 did not include the limitation in (d)(1), which states “but not to exceed the fair market value of the property.” See Act of June 18, 2005, 79th Leg., R.S., c h. 978, § 5, 2005 Tex. Gen. Laws 3282, 3284.

In Flores, the Texas Supreme Court answered certified questions from the United States Court of Appeals for the Fifth Circuit. The c ourt concluded that (1) Section 5.077 is penal in nature, (2) a deficient annual statement representing a good faith effort to provide the statement does not trigger the liquidated damages provision in Section 5.077 , and (3) that if the provision is triggered, the sta tutory damages do not require actual harm as a predicate to recovery. See Flores, 185 S.W.3d at 434 . The

c ourt went on to state that “because the incomplete annual statement here did not invoke the liquidat ed damages provision of Section 5.077(c) , we decline to decide at this time whether these statutory damages are also ‘exemplary damages’ within the meaning of Chapter 41.” Id. Since the court did not decide whether Chapter 4 1 applied in this circumstance, Flores is not instructive in our analysis.

In Henderson, the Texarkana C ourt of A ppeals determined that the pre

– 2005 “liquidated damages” version of Section 5.077 without any limitation on the amount

Appellee’s Motion for Rehearing Page 8of damages fell squarely within Chapter 41’s definition of exemplary damages. Henderson, 181 S.W.3d at 817

. Unlike Henderson, however, the current version of Section 5 .077 applies to this case. 3 Texas Civil Practice and Remedies Code Section 41.002 s tates in pertinent part that

(a) This chapter applies to any action in which a claimant seeks damages relating to a cause of action.

(b) This chapter establishes the maximum damages that may be awarded in an action subject to this chapter, including a n action for which damages are awarded under another law of this state. This chapter does not apply to the extent another law establishes a lower maximum amount of damages for a particular claim.

*6 TEX. PRAC. & REM.CODE ANN. § 41.002(a)

, (b) (West 2008). In accordance with Section 41.002(b) , the current version of Section 5.077 is “another law” that “establishes a lower maximum amount of damages” for t his “particular claim.” For that reason, Henderson does not apply to the facts of this

case.

At trial, Rex Smith testified that the fair market v alue of lot seven was $65,100 . The jury found that the Smiths failed to provide the annual statements to the Davises in 2006, 2007, and 2008. The evide nce established that the $250 per day payment was applicable to the Smiths. The jury answered in special issue number 17 that the value of lot seven at the time of sale was $65,100 . The trial court rendered judgmen t for damages under Section 5.077 in the amount of $65,100

. This complies with Section 5.077(d)(1)

.
Under Chapter 41, exemplary damages are limited to the greater of (1) twice the amount of economic damages plus an amount equal to noneconomic damages found by the jury, not to exceed $750,000; or (2) $200,000. TEX. CIV. PRAC. & REM.CODE ANN. § 41.008(b) (West Supp.2014). Since twice the amount of economic damages plus noneconomic dam ag es here is less than $750,000 , the cap on exemplary damages in this case if Chapter 41 applied would be $200,000. See id. As we have sta ted, the jury awarded $65,100 for the Section 5.077 violations , which is less than $200,000

.

Because S ection 5.077 is “another law” establishing a lower amount of damages for this “particular claim,” the damages provision in Section 5.077 controls, and Chapter 41 is inapplicable to this suit. See TEX. PROP.CODE ANN. § 5.077(d)(1) ; TEX. CIV. PRAC. & REM.CODE ANN. § 41.002(b) ; see also In re Dodson, No. 06

–

Appellee’s Motion for Rehearing Page 911952

– CAG, 2008 WL 4621293, at *9

– 11 (Bankr.W.D.Tex. Oct. 16, 2008) (mem.op.) (applying same analysis).

The Smiths’ third issue is overruled. ”

This application of the law to the facts was correct and should now be applied

to this case awarding the damages and attorney’s fees found by the jury. The opinion

on rehearing failed to discuss the amendment and cap on damages. As Chapter 41 is

not applicable

, there is no requirement of a unanimous verdict based on clear and

convincing evidence; in the alternative

, the requirement of unanimous verdict on

clear and convincing evidence was either waived by the defendant by failure to

object to the trial court

, or placed in the hands of the trial court under the rule of

implied findings as discussed above.

WHEREFORE, PREMISES CONSIDERED, Appellee requests that this

Court revise its Opinion on Rehearing rendered on April 22, 20 15

, and affirm the

T rial C ourt’s Judgment

, as r endered

, in all respects.

LAW OFFICES OF S. GARY WERLEY

BY:___ /s/ S. Gary Werley

______________ S. GARY WERLEY State Bar No. 21187000

1840 Acton Highway, Suite 102 Granbury, Texas 76049 (Telephone) 817

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- 7700 (Facsimile) 817

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ATTORNEY FOR APPELLEES

Appellee’s Motion for Rehearing Page 10WORD COUNT

I hereby certify that the word count for this brief i s 2, 740

.

BY: ___/s/ S. Gary Werley

___________ _ S. GARY WERLEY

CERTIFICATE OF SERVICE

I do hereby certify that a true and correct copy of Appellees ’ Motion for Rehearing has been forwarded to the follow ing attorney s of record on th e date of efiling :

Jeffrey C. Irion P. O. Box 5527 Gun Barrel City, TX 75147

- 5012 Jirionattorney@aol.com

Greg Smith Ramey & Flock, PC 100 E. Ferguson, Suite 500 Tyler, Texas 75202 GregS@rameyflock.com BY: __/s/ S. Gary Werley______________ S. GARY WERLEY

Appellee’s Motion for Rehearing Page 11