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 RENDERED FEBRUARY 18, 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 

817-573-7700 

817-573-7710 - fax 

sgwerley@werleylaw.com 

ACCEPTED

12-14-00007

TWELFTH COURT OF APPEALS

TYLER, TEXAS

3/2/2015 5:06:34 PM

CATHY LUSK

CLERK

 FILED IN 12th COURT OF APPEALS TYLER, TEXAS 3/2/2015 5:06:34 PM CATHY S. LUSK Clerk
Appellee’s Motion for Rehearing Page ii

TABLE OF CONTENTS

TABLE OF CONTENTS................................................................................................................ ii

INDEX OF AUTHORITIES.......................................................................................................... iii

RESPONSE ................................................................................................................................. 1-7

PRAYER .........................................................................................................................................7

CERTIFICATE OF COMPLIANCE...............................................................................................7

CERTIFICATE OF SERVICE ........................................................................................................8
Appellee’s Motion for Rehearing Page iii

INDEX OF AUTHORITIES

Cases Cited Page

Flores v. Millennium Interests, Ltd., 

185 S.W.3d 427, 429 (Tex. 2005)....................................................................4, 5, 6

Henderson v. Love, 

181 S.W.3d 810 (Tex.App.-Texarkana 2005), no pet.) .......................................4, 6

Morton v. Nyugen, 412 S.W.3d 506, 509-10 (Tex. 2013) ..................................................3

Nacogdoches Memorial Hospital v. Justice,

694 S.W.2d 404, 207(Tex.App.-Tyler 1985)...........................................................3

Skelly Oil Company v. Medical & Surgical Clinic,

418 S.W.2d 574, Tex.Civ.App.-Tyler 1967, p. 578) ...............................................3

Codes and Statutes Page

Texas Property Code §5.069................................................................................................2

Texas Property Code §5.070................................................................................................2

Texas Property Code §5.072................................................................................................2

Texas Property Code §5.072(d)...........................................................................................2

Texas Property Code §5.077................................................................................................4

Business & Commerce Code §17.46 ...................................................................................2

Texas Business & Commerce Code, §1750(d)....................................................................3

Texas Rules of Civil Procedure, Rule 279...........................................................................3

Texas Rules of Civil Procedure, Rule 92.............................................................................4
Appellees’ Motion for Rehearing Page 1

TO THE HONORABLE JUDGE OF SAID COURT:

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

Rehearing of the Court’s Opinion Rendered on February 18, 2015, and for same would show unto 

the Court the following:

I.

Appellees requested the Court view its opinion of February 18, 2015 and reverse its ruling 

on the amount of the reimbursement to be paid to the Davis’, as found by the Trial Court in its 

Judgment. Appellant did not raise an issue as to the amount of the reimbursement, only whether 

or not the refund was due. 

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?” 

The 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 

begin 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 property 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.
Appellee’s Motion for Rehearing Page 2

Down payment 2003, Pl. Exh. 1 $1,000.00

Down payment 2005, Pl. Exh. 3 $3,700.00

25 monthly payments Tract 9, 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

The 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. 

Recession damages should start at $33,664.41, as found by the jury and the Courts 

judgment affirmed in that regard. 

II.

Appellees request a rehearing on the right to attorney’s fees §5.069, §5.070, and §5.072 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 & Commerce Code and is actionable thereunder. Pursuant 

to the statutory requirements, Plaintiffs’ Second Amended Petition alleged in paragraphs IV, V, 

and VI violations of §5.069, §5.070, 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 PracticeConsumer 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 164). There were no special 

exceptions filed against the Petition or heard by the Court. The Property Code sections state that 

the conduct constitutes a false, misleading, or deceptive act within the meaning of Section 17.46, 
Appellee’s Motion for Rehearing Page 3

and allows the remedies to flow therefrom. No other jury questions need to be requested; 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 and signed into law by the Governor?” There 

was a finding by the jury of a violation of the Texas Property Code, which is also a violation of 

the Texas Deceptive Trade Practice-Consumer Protection Act. Pursuant 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’ did not recover under the DTPA.” 

Morton v. Nyugen, 412 S.W.3d 506, 509-10 (Tex. 2013) was a bench trial. The Davis’ did recover 

under the DTPA. The 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 by 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 trial on 

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

rule of implied findings, the jury verdict and the judgment rendered by the Court require the award 

of attorney’s fees on rehearing. The award and amount of the attorney’s fees should be affirmed 

as stated in the judgment.
Appellee’s Motion for Rehearing Page 4

III.

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 bring 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 damages. 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 Applicable 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 legislature’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 by enacting the statute. City of Rockwall v. Hughes, 246 S.W.3d 621, 

626 (Tex.2008). Where text is clear, it is determinative of that intent. Entergy Gulf States, 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 at 

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 the 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 facts 

of this case.
Appellee’s Motion for Rehearing Page 5

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 not later than January 31.

(b) The statement 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

(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 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 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 in 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., ch. 978, § 5, 2005 Tex. Gen. Laws 3282, 

3284.
Appellee’s Motion for Rehearing Page 6

In Flores, the Texas Supreme Court answered certified questions from the United States Court of 

Appeals for the Fifth Circuit. The court 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 

statutory damages do not require actual harm as a predicate to recovery. See Flores, 185 S.W.3d 

at 434. The court went on to state that “because the incomplete annual statement here did not 

invoke the liquidated 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 41 applied in this circumstance, Flores is not 

instructive in our analysis.

In Henderson, the Texarkana Court of Appeals determined that the pre–2005 “liquidated damages” 

version of Section 5.077 without any limitation on the amount of 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 states 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 an 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 this “particular claim.” For that reason, Henderson

does not apply to the facts of this case.

At trial, Rex Smith testified that the fair market value 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 evidence 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 judgment 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 damages 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 stated, the jury awarded $65,100 for the Section 5.077 violations, 

which is less than $200,000.

Because Section 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. § 
Appellee’s Motion for Rehearing Page 7

41.002(b); see also In re Dodson, No. 06–11952–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 February 18, 2015, and affirm the Trial Court’s Judgment, as 

rendered, 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) 817-573-7700

(Facsimile) 817-573-7710 

ATTORNEY FOR APPELLEES 

WORD COUNT

I hereby certify that the word count for this brief is 2,430.

___/s/ S. Gary Werley__________________

 S. GARY WERLEY
Appellee’s Motion for Rehearing Page 8

CERTIFICATE OF SERVICE

I do hereby certify that a true and correct copy of Appellees’ Motion for Rehearing has 

been forwarded to the following attorneys of record on this 2nd day of March, 2015:

Via email or efiling

Jeffrey C. Irion

P. O. Box 5527

Gun Barrel City, TX 75147-5012

Greg Smith

Ramey & Flock, PC

100 E. Ferguson, Suite 500

Tyler, Texas 75202

__/s/ S. Gary Werley__________________

 S. GARY WERLEY