Opinion issued December 22, 2015

In The

Court of Appeals 

For The 

First District of Texas 

————————————

NO. 01-14-00764-CV

———————————

MAGNOLIA FINLAY & ANDREW FINLAY, Appellants

V.

ELIZABETH BLANTON, Appellee

On Appeal from the County Civil Court at Law No. 1

Harris County, Texas

Trial Court Case No. 1047130

MEMORANDUM OPINION

This lawsuit involves a dispute between parties to a residential lease. The 

trial court entered a take-nothing judgment in landlord’s favor on the tenants’

claim that landlord did not return the tenants’ security deposit or provide an 

accounting of deductions from deposit within 30 days of the tenants vacating the
2

premises. We reverse and render in part, and remand to the trial court for further 

proceedings. 

BACKGROUND

On March 28, 2012, plaintiffs-appellants Magnolia Finlay and Andrew 

Finlay entered into a one-year residential lease to rent a house on Hadrian Drive 

from defendant-appellee Elizabeth Blanton. 

A. Justice Court Proceedings

On May 5, 2014, the Finlays filed suit against Blanton in Justice Court 

alleging that they paid a $1,500 security deposit, and that Blanton “did not return 

the security deposit or made improper deductions to the security deposit.” As 

damages, the Finlays sought the return of their deposit and, pursuant to section 

92.109 of the Texas Property Code, $100.00 as a penalty, three times the 

wrongfully withheld $1,500.00 security deposit, and court costs. 

Blanton filed an answer outlining the various ways that the Finlays allegedly 

failed to comply with their lease obligations and contending that she was actually 

owed $9,975 from the Finlays for late rent payment fees and other breaches. The 

correspondence attached revealed the crux of the parties’ dispute in large part 

centered around the Finlays mailing their rent check to Blanton in California three 

times, instead of depositing the funds directly to Blanton’s bank account.
3

On March 24, 2014, the Justice Court entered judgment in the Finlays’

favor, awarding them $4,600.00 plus court costs. Blanton’s motion for new trial 

was denied, with the court’s handwritten notation that Blanton had violated her 

statutory duty to timely provide a written notice of deductions from the Finlays’

security deposit, thereby forfeiting her right to retain the deposit. Blanton appealed 

to County Court. 

B. County Court Proceedings 

In the County Court proceedings, Blanton pleaded the following affirmative 

defenses to the Finlay’s section 92.109 claims: (1) “Plaintiffs’ own acts or 

omissions proximately caused or contributed to Plaintiffs’ injuries, if any,” (2) 

“failure to mitigate damages,” (3) “unclean hands,” (4) “Defendant acted in good 

faith at all times in retaining Plaintiffs’ security deposit for late charges in an 

amount in excess of the deposit resulting from Plaintiffs’ intentional and willful 

failure to adhere to the terms of the Lease Agreement,” and (5) “entitlement to 

credits and offsets to any damages.” 

On August 12, 2014, the County Court ordered that the Finlays take nothing 

against Blanton, and that Blanton take nothing against the Finlays. The Finlays 

appealed here. Blanton did not appeal the trial court’s take-nothing judgment on 

her counterclaim.
4

ISSUES ON APPEAL

 The Finlays raise the following five issues in their appeal:

“ISSUE 1: Whether the trial court clearly abused its discretion misapplying 

Texas Property Code § 192.103 and 192.109, in a manner so 

arbitrary, subjective, unreasonable, or based on so gross and 

prejudicial an error of law under unfunded, untrue and 

inapplicable allegations to justify the landlord keeping the 

security deposit by:

A. Allowing Blanton to calculate her 20-day vacation time, as 22–day 

late rent payment fees, on the basis that the check was in her 

mailbox, not deposited into her checking account, although rent 

payment was early, and the lease agreement states her physical 

address, as a second place of payment?

B. Allowing Blanton to justify being an amateur landlord for failing 

to return the deposit and to furnish the required written itemization 

within 30 days after the property had been properly surrendered?

C. Allowing Blanton to rebut bad faith without evidence presented to 

do so. Blanton did not suffer damages for not having the money 

deposited into her account at that particular time?”

“ISSUE 2: Whether the trial court failed to consider Plaintiff’s claims 

regarding Defendant’s violation of Tex. Prop. Code Ann. § 

92.052?”

“ISSUE 3: Blanton committed perjury by lying in trial and forgery by 

altering the contract.”

“ISSUE 4: Judicial Bias and Fraud. The trial court abused its discretion by 

excluding several Finlay’s Exhibits, as hearsay, and by not 

allowing (discriminating) Mr. Finlay to object it because of his 

slow speech due to his health condition. The Court Reporter 

missing key evidence, and dialogues.”

“ISSUE 5: Errors in the Lease Agreement and Breach of Contract 

Automatically Debunking Blanton’s claims.”

Blanton raises the following “response to appellants’ issues presented”:
5

1. “The trial court did not err in entering a take nothing judgment.”

2. “The trial court did not err in excluding inadmissible evidence and

testimony.”

3. “Appellants did not raise the issues of untimely repairs, forgery, or 

errors in the lease in the trial court; therefore, these issues are 

improper on appeal.”

APPLICABLE LAW

The Texas Property Code provides that a landlord is generally obligated to 

refund a tenant’s security deposit within 30 days of the tenant vacating the 

premises, with statutorily prescribed penalties for failure to do so:

§ 92.103. Obligation to Refund

(a) Except as provided by Section 92.107 [obligating tenant to 

provide forwarding address], the landlord shall refund a 

security deposit to the tenant on or before the 30th day after the 

date the tenant surrenders the premises.

(b) A requirement that a tenant give advance notice of surrender as 

a condition for refunding the security deposit is effective only if 

the requirement is underlined or is printed in conspicuous bold 

print in the lease.

(c) The tenant’s claim to the security deposit takes priority over the 

claim of any creditor of the landlord, including a trustee in 

bankruptcy.

TEX. PROP. CODE ANN. § 92.103 (West 2014). 

§ 92.104. Retention of Security Deposit; Accounting

(a) Before returning a security deposit, the landlord may deduct 

from the deposit damages and charges for which the tenant is 

legally liable under the lease or as a result of breaching the 

lease.
6

(b) The landlord may not retain any portion of a security deposit to 

cover normal wear and tear.

(c) If the landlord retains all or part of a security deposit under this 

section, the landlord shall give to the tenant the balance of the 

security deposit, if any, together with a written description and 

itemized list of all deductions. The landlord is not required to 

give the tenant a description and itemized list of deductions if:

(1) the tenant owes rent when he surrenders possession of the 

premises; and

(2) there is no controversy concerning the amount of rent 

owed.

TEX. PROP. CODE ANN. § 92.104 (West 2014). 

§ 92.109. Liability of Landlord

(a) A landlord who in bad faith retains a security deposit in 

violation of this subchapter is liable for an amount equal to the 

sum of $100, three times the portion of the deposit wrongfully 

withheld, and the tenant’s reasonable attorney’s fees in a suit to 

recover the deposit.

(b) A landlord who in bad faith does not provide a written 

description and itemized list of damages and charges in 

violation of this subchapter:

(1) forfeits the right to withhold any portion of the security 

deposit or to bring suit against the tenant for damages to 

the premises; and

(2) is liable for the tenant’s reasonable attorney’s fees in a 

suit to recover the deposit.

(c) In an action brought by a tenant under this subchapter, the 

landlord has the burden of proving that the retention of any 

portion of the security deposit was reasonable.

(d) A landlord who fails either to return a security deposit or to 

provide a written description and itemization of deductions on 
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or before the 30th day after the date the tenant surrenders 

possession is presumed to have acted in bad faith.

TEX. PROP. CODE ANN. § 92.109 (West 2014).

“A tenant may establish a prima facie case of bad faith by showing that the 

landlord failed to refund the deposit within 30 days or that it failed to provide the 

itemized list of deductions within 30 days.” Hardy v. 11702 Memorial, Ltd, 176 

S.W.3d 266, 271 (Tex. App.—Houston [1st Dist.] 2004, no pet.) (citing Wilson v. 

O’Connor, 555 S.W.2d 776, 780–81 (Tex. Civ. App.—Dallas 1977, writ dism’d)). 

Bad faith implies an intention to deprive the tenant of a lawfully due refund. Id. 

“To defeat the presumption, the landlord must prove his good faith, i.e., ‘honesty 

in fact in the conduct or transaction concerned.’” Id. (citing Wilson, 176 S.W.2d at 

780–81). Absent rebutting evidence, the presumption that the landlord acted in bad 

faith by failing to return the deposit or provide a written description and 

itemization of deductions within 30 days after surrender compels a finding of bad 

faith. Id.

STANDARD OF REVIEW

Although couched in numerous subparts, the Finlays’ first issue rests upon 

the two questions, i.e., (1) whether Blanton carried her burden of rebutting the 

presumption of bad faith in retaining the Finlays’ security deposit without 

providing a timely accounting of deductions, and (2) whether the Blanton carried 

her burden of demonstrating that the retention of the Finlays security deposit was 
8

reasonable. By rendering a take-nothing judgment against the Finlays, the trial 

court implicitly found that Blanton rebutted the presumption of bad faith and that 

the Blanton proved that retention of the deposit was reasonable. The Finlays argue 

that these findings are “against the great weight and preponderance of the 

evidence, and is clearly wrong and unjust.” Their prayer requests that we reverse 

and render judgment in their favor. Interpreting this as a challenge to the legal and 

factual sufficiency of the evidence, we accordingly analyze whether the trial 

court’s implied findings are supported under both standards.

When the trial court acts as a fact-finder, we review its findings under the 

legal and factual sufficiency standards. In re Doe, 19 S.W.3d 249, 253 (Tex. 

2000); Vongontard v. Tippit, 137 S.W.3d 109, 112 (Tex. App.—Houston [1st 

Dist.] 2004, no pet.). When, as here, a party who does not have the burden of 

proof at trial challenges the legal sufficiency of the evidence, we consider all of the 

evidence in the light most favorable to the prevailing party, indulging every 

reasonable inference in that party’s favor and disregarding contrary evidence 

unless a reasonable fact-finder could not. City of Keller v. Wilson, 168 S.W.3d 

802, 827 (Tex. 2005); City of Houston v. Hildebrandt, 265 S.W.3d 22, 27 (Tex. 

App.—Houston [1st Dist.] 2008, pet. denied) (citing Assoc. Indem. Corp. v. CAT 

Contracting, Inc., 964 S.W.2d 276, 285–86 (Tex. 1998)). “If there is any evidence 

of probative force to support the finding, i.e., more than a mere scintilla, we will 
9

overrule the issue.” Hildebrandt, 265 S.W.3d at 27 (citing Haggar Clothing Co. 

v. Hernandez, 164 S.W.3d 386, 388 (Tex. 2005)).

In reviewing a factual sufficiency challenge, we examine the entire record 

and consider and weigh all the evidence, both in support of, and contrary to, the 

challenged finding. See Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996); 

Vongontard, 137 S.W.3d at 112. Having considered and weighed all the evidence, 

we should set aside the verdict only if the evidence is so weak, or the finding is so 

against the great weight and preponderance of the evidence, that it is clearly wrong 

and unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986). We cannot merely 

substitute our opinion for that of the trier of fact and determine that we would 

reach a different conclusion. Hollander v. Capon, 853 S.W.2d 723, 726 (Tex.

App.—Houston [1st Dist.] 1993, writ denied).

EVIDENCE1

In addition to the admission of several trial exhibits, three witnesses testified 

at trial: (1) plaintiff Mrs. Finlay, (2) defendant Ms. Blanton, and (3) Blanton’s 

attorney (as to his attorney’s fees).

 

1

“The Finlays filed an appendix to their brief containing exhibits that they 

acknowledge are not in the record, and they “pray that this Court consider th[is] 

sworn evidence.” We do not, however, “consider documents attached to an 

appellate brief that do not appear in the record.” Till v. Thomas, 10 S.W.3d 730, 

733 (Tex. App.—Houston [1st Dist.] 1999, no pet.). 
10

A. The Lease

The parties’ lease, which was introduced at trial, was executed on March 23, 

2012 and provides a term from March 28, 2012 through March 30, 2013. The 

lease provides that monthly rent of $1,500.00 will be paid “so that the Landlord

receives the monthly rent on or before . . . the first day of each month during this 

lease.” 

Under “Place of Payment,” there is a typed physical address listed for 

Blanton in San Diego, California, as well as bank name handwritten beside it, 

“USAA Federal Savings Bank,” with routing and account number.2 Under 

“Method of Payment,” there is a handwritten notation stating “see above,” with an 

arrow pointing to the the previous section. 

The “Late Charges” section of the lease provides that if “Landlord does not 

actually receive a rent payment in the full amount at the designated place of 

payment by the 1st day of each month at 11:59pm, Tenant will pay Landlord for 

each late payment (1) an initial late charge equal to . . . $50, and (2) additional late 

charges of $25 per day thereafter until rent and late charges are paid in full.” 

Section 10 of the lease sets forth terms related to the security deposit, and its 

payment and return:

 

2 There is email correspondence between the Finlays and Blanton’s relator 

indicating that the handwritten bank account information was added after the lease 

was signed because Blanton wanted “to keep her banking information private until 

[she had] the deposit in hand.” 
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SECURITY DEPOSIT:

A. Security Deposit: On or before execution of this lease, Tenant 

will pay a security deposit to Landlord in the amount of $ 

1.500.00. “Security deposit” has the meaning assigned to that 

term in §92.102, Property Code.

B. Interest: No interest or income will be paid to Tenant on the 

security deposit. Landlord may place the security deposit in an 

interest-bearing or income-producing account and any interest 

or income earned will be paid to Landlord or Landlord’s 

representative.

C. Refund: Tenant must give Landlord at least thirty (30) days 

written notice of surrender before Landlord is obligated to 

refund or account for the security deposit. 

Notices about Security Deposits:

(1) §92.108, Property Code provides that a tenant may not withhold 

payment of any portion of the last month’s rent on grounds that the 

security deposit is security for unpaid rent.

(2) Bad Faith violations of §92.108 may subject a tenant to liability up 

to 3 times the rent wrongfully withheld and the landlord’s 

reasonable attorney’s fees. 

(3) The Property Code does not obligate a landlord to return or account 

for the security deposit until the tenant surrenders the Property and 

gives the landlord a written statement of the tenant’s forwarding 

address, after which the landlord has 30 days in which to account. 

. . . . 

D. Deductions

(1) Landlord may deduct reasonable charges from the security deposit 

for:

(a) damages to the Property, excluding normal wear and tear, and all 

reasonable costs associated to repair the Property;

(b) costs for which Tenant is responsible to clean, deodorize, 

exterminate, and maintain the Property;

(c) unpaid or accelerated rent;
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(d) unpaid late charges;

(e) unpaid utilities and utility expenses Landlord incurs to maintain 

utilities to the Property as required by this Lease;

(f) unpaid pet charges;

(g) replacing unreturned keys, garage door openers, security devices, 

or other components;

(h) the removal of unauthorized locks or fixtures installed by Tenant;

(i) Landlord’s cost to access the Property if made inaccessible by 

Tenant;

(j) missing or burned-out light bulbs and fluorescent tubes (at the 

same location and of the same type and quality that are in the 

Property on the Commencement Date);

(k) packing, removing, and storing abandoned property;

(I) removing abandoned or illegally parked vehicles;

(m) costs of reletting (as defined in Paragraph 27), if Tenant is in 

default;

(n) attorney’s fees, costs of court, costs of service, and other 

reasonable costs incurred in any legal proceeding against Tenant;

(o) mailing costs associated with sending notices to Tenant for any 

violations of this lease;

(p) any other unpaid charges or fees or other items for which Tenant is 

responsible under this lease; and

(q) cost to restore walls, flooring, landscaping or any alteration to the 

Property not approved in writing by Landlord.

(2) If deductions exceed the security deposit, Tenant will pay to Landlord 

the excess within 10 days after Landlord makes written demand.

The lease contains a “Default” section providing that “If Landlord fails to 

comply with this lease, Tenant may seek any relief provided by law.” The default 

section also grants permission to the Landlord to terminate the lease and accelerate 

unpaid rents, as well as seek damages for repairs and reletting. The Finlays moved 
13

out on June 18, 2013, after Blanton gave them notice that they needed to pay 

accrued late payment fees or move out. 

Six days before the Finlays moved out, they provided their forwarding 

address by email and requested their security deposit be returned. Twelve days 

after they moved out, they sent Blanton a certified letter again requesting return of 

their deposit. That letter cited section 92.109 of the Texas Property Code and 

informed Blanton that the Finlays would be seeking penalties under that section 

equivalent to three times the amount of the security deposit if they did not timely 

receive a return of their deposit or an itemized list of deductions Blanton was 

retaining. It is undisputed that Blanton did not return the Finlays’ security deposit 

or provide an itemized accounting detailing reasons for withholding funds. 

B. Plaintiffs’ Testimony

Mrs. Finlay testified that she and her husband insisted that there be a lease 

clause permitting deposits into a bank account rather than mailing a check. After 

Blanton provided information for an account with USAA, Mrs. Finlay requested 

that Blanton instead open an account with Houston branches, such as Bank of 

America. 

Mrs. Finlay testified that she understood from the terms of the lease that they 

had agreed to pay the rent each month into Blanton’s account at USAA Federal 

Savings Bank. She testified that the Finlays made their first month’s rent payment
14

(April 2012) timely into the USAA account from their Bank of America account, 

but had to pay fees to Bank of America. The second and third months (May & 

June 2012), they mailed a check to Blanton’s San Diego address, as they 

understood that to be an acceptable secondary method of payment under the lease. 

In the meantime, the parties continued to correspond about bank accounts. 

The Finlays again requested that Blanton open a bank account with Bank of 

America so that they could make a local Houston deposit. Several email chains 

related to this issue were entered into evidence, in which the Finlays complained 

that they had trouble transferring money from Bank of America to Blanton’s 

USAA account and again reiterating their unwillingness to incur bank transfer fees. 

The Finlays informed Blanton that if she was unwilling to come up with a solution, 

they would continue to mail their rent, rather than directly deposit it. 

In June, 2012, Mrs. Finlay requested that Blanton open a Wells Fargo 

checking account to receive the Finlays’ rent payments

The record contains a July 13, 2012 email from Blanton providing her Wells 

Fargo bank account number and stating that she would send a lease addendum 

stating that the Finlays can pay their rent into her Wells Fargo account on or before 

the 1st of each month beginning in August to “avoid late charges and default 

issues.” Mrs. Finlay stated that the parties signed the addendum permitting the 

Finlays to use a Wells Fargo account as the designated payment location, although 
15

there is not a copy in the trial court record. With the exception of October 2012, 

the Finlays’ rent payments from August 2012 through June 2013 were made 

through deposit into Blanton’s Wells Fargo account. 

Mrs. Finlay testified that the Finlays paid the rent late one time—in February 

2013— because “there was apparently a discrepancy between payments with —

our bank.” Although she arranged to pay the rent on time that month, it was 

received by Blanton three days late, so the Finlays “decided to pay the hundreddollar late fee” for that incident. She did not believe that any other valid late 

charge was ever incurred under the lease. 

C. Defendant’s Testimony

Blanton testified that she is an amateur lessor who has never been a landlord 

before. When she bought the Hadrian Drive property in 2010, she was not aware 

of the Texas Property Code provision requiring that a detailed itemized deduction 

list be provided explaining deductions from a tenant’s security deposit. 

Blanton spends a lot of time out of the country, so when Mrs. Finlay told her 

that she would start mailing checks to Blanton’s address if Blanton would not open 

a Bank of America account, Blanton gave the Finlays account information for an 

LLC bank account at Wells Fargo and sent them a lease addendum permitting rent 

to be paid at Wells Fargo. Blanton testified that the addendum was never returned 

to her signed by the Finlays, despite email reminders. Blanton testified that at one 
16

time she began eviction proceedings, but abandoned them after realizing that 

would adversely impact the Finlays’ credit score. 

Blanton also testified that she regularly sent emails to the Finlays regarding 

the amounts that she believed they owed in late fees under the lease. Pursuant to 

the lease, Blanton applied the Finlays’ payments first to late fees ($50 for first late 

day, and $25 for each day thereafter) and then to rent, such that the Finlays were 

never caught up. She calculated that, because of unpaid late fees, the Finlays owed 

$9,416.66 in unpaid rent when they moved out, calculated as follows:

Month Rent

Due

Initial 

Late 

Fee

Other Late 

Fees (#days 

x $25)

Credits Amount 

Paid

Balance 

Forward 

Owed

Payment 

Location

Apr. 

2012

$1,500 $0 $0 $0 $1,500 $0 Realtor

May 

2012

$1,500 $0 $0 -$150 

cleaning 

credit

$1,350 $0 USAA

June 

2012

$1,500 $50 28x$25=$700 $1,500 $750 Mailed

July 

2012

$1,500 $50 29x$25=$725 $1,500 $1,525 Mailed

Aug. 

2012

$1,500 $50 29x$25=$725 $1,500 $2,300 Wells 

Fargo

Sept. 

2012

$1,500 $50 28x$25=$700 $1,500 $3,050 Wells 

Fargo

Oct. 

2012

$1,500 $50 29x$25=$725 $1,500 $3,825 Wells 

Fargo

Nov. 

2012

$1,500 $50 28x$25=$700 $1,500 $4,575 Wells 

Fargo

Dec. 

2012

$1,500 $50 29x$25=$725 $1,500 $5,350 Wells 

Fargo

Jan. 

2013

$1,500 $50 29x$25=$725 $1,500 $6,125 Wells 

Fargo
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Feb.

2013

$1,500 $50 26x$25=$650 -$100 

late fee 

paid

$1,600 $6,725 Wells 

Fargo

Mar. 

2013

$1,500 $50 29x$25=$725 $1,500 $7,500 Wells 

Fargo

Apr. 

2013

$1,500 $50 28x$25=$700 $1,550 $8,200 Wells 

Fargo

May 

2013

$1,500 $50 29x$25=$725 $1,550 $8,925 Wells 

Fargo

June 

2013

$1,500 $50 19x$25=$475 $1,033.34 $9,416.66 Wells 

Fargo

 

The monthly late fees stem from Blanton’s position that the payments were 

not received at the “designated payment location” in June and July 2012. Then, for 

each subsequent month, Blanton applied rent checks first to the accrued late fees, 

resulting in additional late fees for the portions of the $1,500 payments that were 

not applied to rent. 

The chart above was entered into evidence and Blanton testified that it “is a 

fair and accurate itemization.” The calculations differ, however, from some of 

Blanton’s email correspondence.3 

 

3 For example, on June 17, 2012, Blanton wrote an email to Mrs. Finlay 

indicating that she had June’s rent in hand at least by June 17, 2012, and that she would 

not charge a late fee for June, but would on future mailed checks:

I have been out of the country and per my instructions, the USPS held my 

mail during my absence. To my dismay, when I returned home I found 

your check in my on-hold mail instead of my USAA account for automatic 

payment of bills. 

Therefore, your June payment was late according to the Residential Lease 

(page 2, 5 A & C), which you signed. This is the last time I will allow a 

deviation.
18

Blanton testified that she was not claiming any deductions from the Finlays’

security deposit for damages to the house, only for accrued late charges that 

resulted in unpaid rent because she applied each rent payment first to late charges. 

Blanton testified to her belief that she “gave fair notice to the Finlays during the 

course of the lease that they were incurring late charges” and that she did not act 

“purposely, willfully or intentionally to cause the Finlays harm” or to harass them 

in failing to provide an accounting of deductions from their security deposit. 

Blanton’s attorney also provided testimony that she incurred $5,057.96 in 

reasonable and necessary attorneys’ fees. 

A. Sufficiency of the Evidence

Blanton does not dispute that the bad-faith presumption in section 92.109 of 

 

Late charges will apply from now on as stipulated in the Residential Lease. 

In a July 21, 2012 email to the Finlays, Blanton states, with regard to the 

June and July 2012 rent checks mailed to her house, “I had every legal right to charge late 

fees for all the days your payment was not in my USAA account, but I chose to simply 

remind you of your signed agreement.” 

In July 2012, the Finlays gave notice to Blanton that they would be out of 

the country in October, so they would be mailing their rent to Blanton on October 1, 2012 

rather than depositing it at Wells Fargo. On October 24, 2012, Blanton wrote Mrs. Finlay 

an email stating that she was out of town on the first of October and was charging the 

Finlays 23 days of late fees for October, because that is how long it took her to return 

home, receive the check, and put it in the bank. 

The information in these emails is at odds with the chart entered into evidence, 

which indicates Blanton assessed the Finlays late charges for 29 and 30 days in June and 

July, and that October 2012 rent was deposited in Wells Fargo (rather than received in the 

mail), and assessed a 30-day late fee. 
19

the Texas Property Code applies here. But she argues that the trial court properly 

found that she rebutted the presumption of bad faith in retaining the Finlays’ 

security deposit and failing to provide an accounting because (1) “she had reason 

to believe she was entitled to retain [the] security deposit to recover reasonable 

damages,” (2) she “is an amateur lessor—because the residence is her only rental 

property—and the landlord has no knowledge of the requirement to submit an 

itemized list of deductions,” and (3) she believed she “gave fair notice to the 

Finlays during the course of the lease that they were incurring late charges.” She 

also contends that, because the Finlays “owed over nine thousand dollars in back 

rent and late fees,” the retention of their security deposit was reasonable.

1. Reasonableness of Retention of Security Deposit

A landlord has the statutory burden to prove that retention of a tenant’s 

security deposit was reasonable. TEX. PROP. CODE ANN. § 92.109(c) (“In an action 

brought by a tenant under this subchapter, the landlord has the burden of proving 

that the retention of any portion of the security deposit was reasonable.); Pulley v. 

Milberger, 198 S.W.3d 418, 431 (Tex. App.—Dallas 2006, pet. denied) (“As it 

relates to the [tenants’] claims for bad faith failure to return the security deposit 

under section 92.109(a), which seeks, in part, to recover their security deposit, we 

will address the issue as a challenge to the trial court’s implied finding of fact that 

[the landlord’s] retention of the security deposit was reasonable under section 
20

92.109(c)”). 

Deductions from a security deposit are reasonable for items the tenant is 

legally liable for under the lease or by statute. Hardy, 176 S.W.3d at 273–75 (Tex. 

App.—Houston [1st Dist.] 2004, no pet.). In this case, Blanton concedes that the 

entire basis of her withholding the Finlays’ security deposit is the Finlays mailing 

the rent to her California address rather than depositing in her bank account for 

months two and three of the lease term. Blanton did not testify that these payments 

arrived late, but rather that she was out of the country when they were mailed and 

thus was unable to deposit them until her return. Given that the California address 

is listed as one of the places of payment permitted in the parties’ lease, we 

conclude that there no evidence to support the trial court’s implied finding that 

Blanton’s retention of the Finlays’ deposit based on their mailing the rent 

payments rather than directly depositing them was reasonable. Hardy, 176 S.W.3d

at 275 (“We conclude that there is no more than a scintilla of evidence that 

landlord was entitled to any of the deductions taken from the security deposit” 

because the “deductions were attempts to recover for items the tenant was not 

legally liable for under the lease or Property Code”). Accordingly, we reverse the 

portion of the trial court’s take-nothing judgment that denies recovery of Finlays’ 

security deposit, and render judgment that the Finlays recover their $1,500 security 

deposit from Blanton.
21

2. Bad Faith

“A landlord who fails either to return a security deposit or to provide a 

written description and itemization of deductions on or before the 30th day after 

the date the tenant surrenders possession is presumed to have acted in bad faith.” 

TEX. PROP. CODE ANN. § 92.109(d) (West 2014). Evidence that a landlord failed to 

refund the deposit within 30 days or that it failed to provide the itemized list of 

deductions within 30 days makes out a prima facie case of bad faith. Hardy, 176 

S.W.3d at 271 (citing Wilson, 555 S.W.2d 780–81). Bad faith implies an intention 

to deprive the tenant of a lawfully due refund. Id. at 271. “To defeat the 

presumption, the landlord must prove his good faith, i.e., ‘honesty in fact in the 

conduct or transaction concerned.’” Id. (citing Wilson, 176 S.W.2d at 780–81). 

Absent rebutting evidence, the presumption that the landlord acted in bad faith by 

failing to return the deposit or provide a written description and itemization of 

deductions within 30 days after surrender compels a finding of bad faith. Id.

Blanton contends that her evidence rebutted the bad faith presumption that 

she retained the Finlays’ deposit in bad faith. She testified that she is an “amateur 

lessor” and that she had been “[m]ore than accommodating” to the Finlays during 

the course of their lease. Specifically, she tried to help them work out how to pay 

rent to her USAA account and then allowed them to deposit money into her Wells 

Fargo account. She started, and then stopped, proceedings to evict the Finlays 
22

because she read “where it could adversely affect their credit score and [she] didn’t 

want to do that.” She testified that she had no “ill-will or malice towards the 

Finlays” and that she believed that it was the Finlays that broke the lease by 

mailing two rent checks. She believed that because the “payments were not 

received to the designated payment location,” the Finlays incurred late fees that 

snowballed as she deemed every additional rent payment to be late and short, as it 

went first to paying initial late fees. Finally, although she acknowledged that she 

did not account for her retention of Finlays’ security deposit within 30 days of their 

moving out, she testified to her belief that she “gave fair notice to the Finlays 

during the course of the lease that they were incurring late charges.” She stated 

she never acted purposefully to cause the Finlays harm or harass them. 

The Finlays point out that, although Blanton testified that she was an 

amateur landlord and cites, in her appellee’s brief, her testimony that she “had no 

knowledge of the requirement that you needed to submit an itemized list of 

deductions,” there is evidence that she was aware of the statutory requirement at 

the relevant times and simply chose not to comply with it. She testified that “when 

she bought the property and became a landlord” (emphasis added), she was not 

“aware of this statute in the Texas Property Code that required you to send an 

itemized deduction 30 days after.” However, the lease Blanton entered with the 

Finlays states “The Property Code does not obligate a landlord to return or account 
23

for the security deposit until the tenant surrenders the Property and gives the 

landlord a written statement of the tenant’s forwarding address, after which the 

landlord has 30 days in which to account.” (emphasis added). 

Blanton acknowledged that she received a certified letter from the Finlays 

within 30 days of them moving out—i.e., during the window that she still had time 

to comply with the requirement that she return the deposit or provide an 

accounting—specifically citing section 92.109, and putting her on notice that the 

Finlays would seek the statutory treble damages if she did not comply. When 

asked why, after receiving that letter, she did not provide the Finlays an 

accounting, Blanton responded “Because everything I sent [the Finlays], they 

ignored.” She also stated that she did not comply because the Finlays “owed [her] 

much more than the deposit.”

The parties agree that, because of an issue with a bank transfer, the Finlays’ 

February 2013 rent was received by Blanton three days late. The Finlays 

accordingly paid a $100 late fee pursuant to the lease ($50 for the first day, and 

$25 for subsequent days). The entire basis for Blanton’s calculation that the 

Finlays owed over $9,000—thereby justifying her belief that she was entitled to 

retain the Finlays’ deposit—was based upon rent in June and July 2012 being sent 

physically to her California address, which is a designated “Place of Payment” 

under the lease. Because of those two mailed payments—which were in 
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compliance with the lease terms (despite both parties preferring electronic bank 

transfers)—Blanton assessed late charges for every single day for 13 months. 

Contrary to Blanton’s representation to the Finlays in an email that she 

would not charge them late fees for mailing the rent checks in June and July of 

2012, she assessed late fees for every day of both months (despite having received 

the rent), which set off a chain of daily late charges for remainder of the Finlays’ 

tenancy. 

We have already concluded that, under the terms of the parties’ lease, the 

trial court erred in finding that Blanton’s retention of the Finlays’ security deposit 

was reasonable. Given the conflicting evidence on bad faith, we remand the 

Finlays’ claim for statutory damages for bad faith retention of the security deposit 

for additional proceedings in light of our holding that the deposit was wrongfully 

withheld. 

We sustain the Finlays’ first issue in part and overrule it in part. 

ADMISSION OF EXHIBITS AND TESTIMONY

In their fourth issue, the Finlays complain that the court excluded several 

exhibits as hearsay. These exhibits include copies of payment receipts, bank 

account statements, receipts for repairs, letters from Wells Fargo, screen shots of 

bank transactions, United State post office certified mail delivery receipts, and 

correspondence with the court reporter about the record. There was a discussion of 
25

these exhibits off the record, and then the court resumed with: “We are now back 

on the record. I am admitting Plaintiffs’ Exhibits A, B, H, I, and J. And I am 

sustaining the hearsay objection to C, D, E, F, G.” 

The trial court’s decision to admit or exclude evidence is reviewed under an 

abuse of discretion standard. In re E.A.K., 192 S.W.3d 133, 140 (Tex. App.—

Houston [14th Dist.] 2006, pet. denied). A trial court abuses its discretion when it 

rules without regard for any guiding rules or principles. Owens–Corning Fiberglas 

Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998). We must uphold a trial court’s 

evidentiary ruling if there is any legitimate basis for the ruling. Id. Hearsay is a 

statement, other than one made by the declarant while testifying at the trial or 

hearing, offered in evidence to prove the truth of the matter asserted. TEX. R. EVID.

801(d). The proponent of hearsay has the burden of showing that the testimony fits 

within an exception to the general rule prohibiting the admission of hearsay 

evidence. Volkswagen of Am., Inc. v. Ramirez, 159 S.W.3d 897, 908 n.5 (Tex.

2004). 

Here, there is no record of the hearing to discuss whether this evidence 

should be admitted. The Finlays provide no argument or authority for their 

assertion that the trial court’s exclusion of these documents was an abuse of 

discretion, nor do they claim that they presented to the trial court an exception to 

the hearsay rule for any of these exhibits. In light of this, we will not hold that the 
26

trial court abuse its discretion in excluding these exhibits. 

Relatedly, the Finlays claim that the trial court improperly limited Mr. 

Finlay’s objections and testimony. Specifically, they complain about the trial court 

admonishing Mr. Finlay that he could not speak from the gallery of the courtroom 

during his wife’s testimony (while she was on the stand) to answer a question that 

was posed to her. They also complain that the court would not let Mr. Finlay 

testify through “objections” while others were on the stand. Finally, they argue 

that, while Mr. Finlay was cross-examining Blanton, the trial court improperly 

limited his questions. Again the Finlays do articulate how the trial court allegedly 

erred, nor how they were harmed. And again they cite no authority in support of 

their argument. We will not hold that the trial court acted outside its discretion by 

disallowing side-bar testimony or limiting Mr. Finlay’s cross-examination time. 

We overrule the Finlays’ fourth issue. 

ISSUES RAISED FOR THE FIRST TIME ON APPEAL

In their second, third, and fifth issues, the Finlays raise arguments that were 

not raised in trial court. Specifically they complain that Blanton did not make 

timely repairs, Blanton made false statements at trial, Blanton submitted different 

late fee calculations in the Justice Court than in the County Court, and that Blanton 

committed forgery by adding an email address to the lease after the Finlays moved 

out. We overrule the Finlays’ second, third, and fifth issues, as we do not consider 
27

such issues raised for the first time on appeal. E.g., Wells Fargo Bank, N.A. v. 

Leath, 425 S.W.3d 525, 540 (Tex. App.—Dallas 2014, pet. denied) (holding claim 

not raised in the trial court was waived, absent authority that would allow party to 

raise issue for the first time on appeal); Haden v. David J. Sacks, P.C., 332 S.W.3d 

503, 520 n.13 (Tex. App.—Houston [1st Dist.] 2009, pet. denied) (“We may not 

address this contention because it was never presented to the trial court.”); In re 

Marriage of Lendman, 170 S.W.3d 894, 898 (Tex. App.—Texarkana 2005, no 

pet.) (“It is improper to present a new issue on appeal.”). 

CONCLUSION

We reverse the trial court’s take-nothing judgment as the Finlays’ claim for 

return of their security deposit and render judgment that the Finlays recover their 

$1,500 deposit. We reverse and remand the remainder of the trial court’s judgment 

for further proceedings. 

Sherry Radack

Chief Justice

Panel consists of Chief Justice Radack and Justices Bland and Huddle.