Court Opinion

ID: 4397852
Source: CourtListenerOpinion
Date Created: 2019-05-17 00:47:28.132249+00
Date Added: 2024-06-11T14:52:15.349976
License: Public Domain

NO. 12-18-00317-CV

                          IN THE COURT OF APPEALS

               TWELFTH COURT OF APPEALS DISTRICT

                                     TYLER, TEXAS

 ROBBINS RANCH SUBDIVISION                         §      APPEAL FROM THE
 HOMEOWNERS' ASSOCIATION AND
 WILLIAM A. RHYNE, ET UX,
 INDIVIDUALLY,
 APPELLANTS
                                                   §      COUNTY COURT AT LAW NO. 2
 V.

 PARTNERS OF BENCHMARK
 PROPERTIES, L.P., ET AL,
 APPELLEES                                         §      GREGG COUNTY, TEXAS

                                  MEMORANDUM OPINION
       Robbins Ranch Subdivision Homeowner’s Association (Robbins Ranch) and William
Rhyne, et ux, Individually (Rhyne) appeal the trial court’s grant of a directed verdict in favor of
Partners of Benchmark Properties, L.P. (Benchmark). We affirm.

                                          BACKGROUND
       Benchmark is the developer of the Robbins Ranch Subdivision, Phase 2, in Gregg County,
Texas. Benchmark is a limited partnership. The general partner is Benchmark Properties, L.C.,
and the limited partners are Henry Boswell, III and Robert Farrell. Boswell and Farrell are also
members of Farrell and Boswell Realty, L.C. (Farrell and Boswell Realty), a real estate firm. In
that capacity, Boswell and Farrell each hold broker’s real estate licenses.
       Rhyne and his wife purchased a lot in the subdivision from Benchmark. The unimproved
property contract lists Rhyne and his wife as the purchasers and Benchmark as the seller. It also
identifies Farrell and Boswell Realty as the seller’s real estate broker. The contract states that
membership in the property owner’s association is mandatory and the buyer agrees to be bound by
the Declaration of Restrictions, Covenants, and Conditions. Those Declarations state that the
private road shown on the subdivision plat shall be owned and maintained by Robbins Ranch.
        After Rhyne purchased the property, a dispute arose as to the condition of the private road.
According to Robbins Ranch and Rhyne, the road is of “questionable standards” and the use of the
road by oilfield vehicles has compromised the road’s surface. They alleged that the road’s
condition impacted home values and the enjoyment of the subdivision by the members of Robbins
Ranch. Benchmark contended that Robbins Ranch is responsible for maintaining the road. When
an agreement could not be reached, Robbins Ranch and Rhyne sued Benchmark, Chinn
Exploration, Inc., and Trivium Operating L.L.C. Their petition included causes of action for fraud
by non-disclosure, breach of formal and/or informal fiduciary relationship, breach of implied
warranty, and violations of the Deceptive Trade Practices Act (DTPA) against Benchmark. They
also alleged Chinn was liable for breach of contract and nuisance and that Trivium was liable for
nuisance. Prior to trial, Chinn obtained a summary judgment dismissing the breach of contract
claim. Robbins Ranch and Rhyne withdrew the causes of action for fraud by non-disclosure and
breach of implied warranty.
        At trial, following the presentation of evidence, the trial court granted a directed verdict on
the fiduciary duty and nuisance causes of action. The jury found in favor of Benchmark on the
DTPA claim, and the trial court entered judgment in accordance with the jury’s verdict. 1 This
appeal followed.

                                           DIRECTED VERDICT
        In their sole issue, Robbins Ranch and Rhyne contend the trial court erred when it granted
Benchmark’s motion for directed verdict. Specifically, they argue legally sufficient evidence was
presented that Benchmark owed Robbins Ranch a formal or informal fiduciary duty.
Standard of Review
        In reviewing the grant or denial of a directed verdict, an appellate court follows the
standards for assessing the legal sufficiency of the evidence. Hunter v. PriceKubecka, PLLC, 339
S.W.3d 795, 802 (Tex. App.—Dallas 2011, no pet.). This requires a determination of whether there

        1
          Only the directed verdict in favor of Benchmark is currently before us. On March 12, 2019, this Court
granted an agreed motion to dismiss the appeal with respect to Chinn and Trivium. See Robbins Ranch Subdivision
Homeowner’s Ass’n v. Partners of Benchmark Properties, L.P., et al., No. 12-18-00317-CV, 2019 WL 1141775
(Tex. App.—Tyler Mar. 12, 2019, no pet) (mem. op.). Accordingly, they are no longer parties to this appeal.

                                                      2
is any evidence of probative force to raise a fact issue on the question presented. Id. In reviewing
the legal sufficiency of the evidence, we view the evidence in the light most favorable to the fact
finding, crediting favorable evidence if reasonable persons could, and disregarding contrary
evidence unless reasonable persons could not. Id. A directed verdict is proper if a party fails to
present evidence raising a fact issue essential to the right of recovery or if the party either admits
or the evidence conclusively establishes a defense to the cause of action. Id. A reviewing court
may affirm a directed verdict even if the trial court’s rationale for granting the directed verdict is
erroneous, provided the directed verdict can be supported on another basis. Id.
Applicable Law
       A viable breach of fiduciary duty claim requires the following proof: (1) a fiduciary
relationship between the plaintiff and the defendant, (2) a breach of the fiduciary duty to the
plaintiff, and (3) injury to the plaintiff (or benefit to the defendant) as a result of the breach.
Flagstar Bank, FSB v. Walker, 451 S.W.3d 490, 499 (Tex. App.—Dallas 2014, no pet.). At issue
in this case is whether a fiduciary relationship existed between Benchmark and Robbins Ranch,
including its members.
       Texas courts are reluctant to recognize a fiduciary relationship because it requires a person
to place someone else’s interests above his own. See Lindley v. McKnight, 349 S.W.3d 113, 124
(Tex. App.—Fort Worth 2011, no pet.). The term “fiduciary” applies to any person who occupies
a position of peculiar confidence towards another and can arise in formal and informal
relationships. See Lee v. Hasson, 286 S.W.3d 1, 14 (Tex. App.—Houston [14th Dist.] 2007, pet.
denied). A fiduciary relationship exists when “the parties are under a duty to act for or give advice
for the benefit of another upon matters within the scope of the relationship.” Tex. Bank & Trust
Co. v. Moore, 595 S.W.2d 502, 507 (Tex. 1980). Fiduciary duties may arise from formal and
informal relationships. Formal fiduciary relationships, such as attorney-client, partnership, and
trust relationships, arise as a matter of law. See Crim Truck & Tractor v. Navistar Int’l Transp.
Corp., 823 S.W.2d 591, 594 (Tex. 1992), superseded by statute on other grounds as noted in
Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 225–26 (Tex. 2002). A real
estate broker owes a fiduciary duty while acting on behalf of a client. 22 TEX. ADMIN. CODE
§ 531.1.
       Informal fiduciary relationships, sometimes referred to as “confidential relationships,” may
give rise to a fiduciary duty where one person trusts in and relies on another, whether the relation

                                                  3
is a moral, social, domestic, or purely personal one. See Thigpen v. Locke, 363 S.W.2d 247, 253
(Tex.1962); Lee, 286 S.W.3d at 14. An informal fiduciary relationship exists where influence has
been acquired and abused, and confidence has been reposed and betrayed. Prime Prods., Inc. v.
S.S.I. Plastics, Inc., 97 S.W.3d 631, 638 (Tex. App.—Houston [1st Dist.] 2002, pet. denied).
However, in the context of a business transaction, to impose an informal fiduciary duty, the special
relationship of trust and confidence must exist prior to, and apart from, any agreement made the
basis of the suit. Meyer v. Cathey, 167 S.W.3d 327, 331 (Tex. 2005). Courts do not create such
relationships lightly. Id.; Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 177 (Tex.
1997).
         A party claiming the existence of an informal fiduciary relationship (confidential
relationship) must have been accustomed to being guided by the judgment or advice of the other.
Thigpen, 363 S.W.2d at 253; see also Lee, 286 S.W.3d at 14 (citations omitted). The existence of
an informal fiduciary relationship is generally a question of fact. Lee, 286 S.W.3d at 14. But the
issue is a question of law when the facts are undisputed or there is no evidence to show the
existence of an informal fiduciary relationship. See Meyer, 167 S.W.3d at 330–31; Trostle v.
Trostle, 77 S.W.3d 908, 914–15 (Tex. App.—Amarillo 2002, no pet.). To determine whether a
fiduciary relationship exists, courts review the actualities of the relationship between the parties
involved. See Thigpen, 363 S.W.2d at 253. Not every relationship involving a high degree of trust
and confidence rises to the stature of a fiduciary relationship. Meyer, 167 S.W.3d at 330.
Claims Through Real Estate Act
         Robbins Ranch and Rhyne urge that because Boswell and Farrell did not keep their real
estate company, Boswell and Farrell Realty, completely separate and apart from the development
company, Benchmark, they owed the members of Robbins Ranch the same fiduciary duty as if
they were acting as real estate agents. 2
         Barbara Tarin, who has over fifty years of real estate experience, testified as an expert at
trial. According to Tarin,

         The defendants, Benchmark Partners, LP, the partners in that -- in that organization were Mr. Farrell
         … the two partners, that Farrell and Boswell also were a real estate organization that listed the

         2
             Robbins Ranch and Rhyne did not allege theories of alter-ego, vicarious liability, or piercing the corporate
veil.

                                                            4
       development that they -- that is in question, Robbins Ranch. And they took -- the relationship was
       between a development entity and a real estate licensed organization or individuals.

       ...

       The two licensees, Mr. Farrell and Mr. Boswell, as licensees, real estate licensees, have an obligation
       to act through the standards of the Texas Real Estate License Act, which is the Texas Occupations
       Code 1101.651. The fact that they were a development company, but they were also involved as
       two real estate licensees, bound them by those -- by that Occupations Code. They have certain duties
       under that code to clients that they deal with.

       ...

       Basically, not to hold their personal interest above the interest of any client, whatever side of the
       transaction they’re on. To treat all parties to a transaction truthfully and honestly, and to have full
       disclosure of anything that impacts the acquisition of a real estate asset that might affect someone’s
       decision to purchase or not purchase a particular real estate asset.

When asked if Farrell and Boswell were relieved of their fiduciary duties as real estate agents
because they had created a development company, Tarin responded:

       No. If they had maintained total separation of duties and functions, it would be one thing, but Mr.
       Farrell and Mr. Boswell, along with Benchmark Partners, did not keep everything separate and apart.
       As licensees, they are not relieved from following the standards of the Texas Occupations Code.

       On appeal, Robbins Ranch posits that Tarin’s testimony is sufficient to defeat the motion
for directed verdict. Benchmark urges that the trial court properly disregarded Tarin’s testimony
because it is incorrect and contrary to Texas law. Benchmark further urges that it owed no
fiduciary duty to the members of Robbins Ranch because its partners did not act as a real estate
agent for anyone other than themselves.
       Rhyne’s property contract listed Benchmark as the seller of the property and lists Farrell
and Boswell Realty as the broker for the seller. This fact is insufficient to establish a formal or
informal fiduciary relationship. Benchmark is not a real estate broker and Farrell and Boswell
Realty did not represent Rhyne (or the other buyers).                    Consequently, no formal fiduciary
relationship existed between Benchmark and Appellants. See 22 TEX. ADMIN. CODE § 531.1.
       Furthermore, the record contains no evidence of a confidential relationship between the
buyers and Benchmark. The extent of the relationship between Benchmark and Rhyne is that of
buyer and seller. This is not the type of relationship in which one person trusts in and relied on
another. See Thigpen, 363 S.W.2d at 253. Nor is it the type of relationship in which influence

                                                         5
has been acquired and abused and confidence reposed and betrayed. See Prime Prods., Inc., 97
S.W.3d at 638. Furthermore, no evidence was admitted to make the requisite showing of a prior
relationship of trust and confidence between Benchmark and Rhyne before Rhyne purchased his
property in the subdivision. See Meyer, 167 S.W.3d at 331. As a result, despite Tarin’s testimony,
no evidence of an informal fiduciary relationship via the Texas Real Estate Act was presented.
Claim Through Covenants
       Robbins Ranch and Rhyne further allege that evidence was presented to demonstrate the
creation of an informal fiduciary relationship through the covenants and restrictions.
       Under the Declarations of Covenants, Conditions, and Restrictions, Benchmark retained
control over Robbins Ranch until all lots of the development were sold to a first purchaser. The
evidence showed that Benchmark purchased the land for the development of a subdivision. This
included configuration and construction of roads in conjunction with Chinn. Chinn held an oil and
gas lease and began drilling five wells on the property in accordance with that lease. Benchmark
sold lots to purchasers, including Rhyne, who were members of Robbins Ranch. Farrell and
Boswell Realty represented Benchmark in those transactions.
       No evidence was presented at trial showing that Rhyne or any other purchaser had any
dealings, connection, or relationship with Benchmark, Boswell, or Farrell prior to contacting
Boswell and Farrell Realty concerning the purchase of lots in the subdivision. Nor was evidence
introduced showing any dealings, connection, or relationship between Rhyne or any other
purchaser and Benchmark as developer of the subdivision before they became members of Robbins
Ranch. For an informal fiduciary duty to exist in a business transaction, the special relationship
of trust and confidence must exist prior to, and apart from, any agreement made the basis of the
suit. Meyer, 167 S.W.3d at 331; Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d
276, 288 (Tex. 1998); see Envtl. Procedures, Inc. v. Guidry, 282 S.W.3d 602, 628 (Tex. App.—
Houston [14th Dist.] 2009, pet. denied). Here, the evidence demonstrates that no such relationship
existed apart from the contract. As a result, the evidence would not enable reasonable and fair-
minded people to conclude that a confidential relationship existed between Robbins Ranch, Rhyne,
and Benchmark prior to the transaction that is the subject of Robbins Ranch and Rhyne’s claims.
Conclusion
       Based on the foregoing, we hold that no formal or informal fiduciary duty existed between
Benchmark and the members of Robbins Ranch and Rhyne as a matter of law. See Meyer, 167
6
S.W.3d at 330–31. Because the trial court properly granted a directed verdict in favor of
Benchmark on breach of fiduciary duty, Robbins Ranch’s and Rhyne’s sole issue is overruled.

                                                  DISPOSITION
         Having overruled Robbins Ranch’s and Rhyne’s sole issue, we affirm the judgment of the
trial court.

                                                                BRIAN HOYLE
                                                                   Justice

Opinion delivered May 15, 2019.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.

                                                   (PUBLISH)

                                                          7
                                   COURT OF APPEALS

      TWELFTH COURT OF APPEALS DISTRICT OF TEXAS

                                           JUDGMENT

                                              MAY 15, 2019

                                         NO. 12-18-00317-CV

            ROBBINS RANCH SUBDIVISION HOMEOWNERS' ASSOCIATION
                 AND WILLIAM A. RHYNE, ET UX, INDIVIDUALLY,
                                  Appellants
                                     V.
               PARTNERS OF BENCHMARK PROPERTIES, L.P., ET AL,
                                  Appellees

                            Appeal from the County Court at Law No. 2
                       of Gregg County, Texas (Tr.Ct.No. 2015-251-CCL2)

                       THIS CAUSE came to be heard on the appellate record and briefs filed
herein, and the same being considered, it is the opinion of this court that there was no error in the
judgment.
                       It is therefore ORDERED, ADJUDGED and DECREED that the judgment
of the court below be in all things affirmed, and that all costs of this appeal are hereby adjudged
against     the   Appellants,     ROBBINS          RANCH          SUBDIVISION     HOMEOWNERS'
ASSOCIATION AND WILLIAM A. RHYNE, ET UX, INDIVIDUALLY, for which execution
may issue, and that this decision be certified to the court below for observance.
                    Brian Hoyle, Justice.
                    Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.