Court Opinion

ID: 2979551
Source: CourtListenerOpinion
Date Created: 2015-09-22 18:53:29.319715+00
Date Added: 2024-06-11T12:41:29.282031
License: Public Domain

Reversed and Rendered and Opinion filed May 28, 2015.

                                      In The

                    Fourteenth Court of Appeals

                              NO. 14-14-00040-CV

                             DZM, INC., Appellant
                                        V.

                          RICHIE GARREN, Appellee

             On Appeal from the County Civil Court at Law No. 3
                           Harris County, Texas
                       Trial Court Cause No. 877,269

                               OPINION
      Appellee/plaintiff Richie Garren filed suit against appellant/defendant DZM,
Inc. alleging that DZM converted property Garren had leased to one of DZM’s
tenants. Garren alleged that DZM converted the property by locking the tenant out
of the leased premises and refusing to return the property Garren had leased to the
tenant. At trial, Garren submitted receipts for some of the items and stated in a
conclusory fashion that each item had a fair value market equivalent to its purchase
price. The jury found liability and damages in favor of DZM on its conversion
claim. We reverse the trial court’s judgment and render a judgment that Garren
take nothing.

                          I.     FACTUAL AND PROCEDURAL BACKGROUND

       DZM entered into a lease with a tenant for retail space in a shopping mall.
The tenant operated a social club on the leased premises. The tenant paid DZM
rent from August 2005 through October 2005, but did not pay rent in November.
When the tenant notified DZM that the tenant was filing for bankruptcy, DZM
locked the tenant out of the property, and asserted a claim in the tenant’s
bankruptcy proceeding.

       Garren asserts that he leased poker tables, chairs, poker supplies, electronics,
decorations, and other items to the social-club owner for the sum of $1,000 per
month and that DZM converted the property by locking the premises and refusing
to return the property. 1 At trial, Garren submitted receipts for many of the items he
alleged DZM converted. Garren testified that the property’s fair market value at
the time DZM was alleged to have converted the property equaled the purchase
price of the items. Based on Garren’s calculations, the fair market value of the
items was $30,568.00. The jury determined that DZM had converted Garren’s
property and found $12,500 in damages.

       On appeal, DZM asserts, among other things, legal and factual insufficiency
of the evidence of the fair market value of the property at the time of the
conversion. DZM asserts that the evidence is legally insufficient because the only
evidence of the fair market value is Garren’s testimony regarding the purchase
price of the items.

1
 In addition to asserting a claim for the leased items, Garren also asserted a claim for sheetrock,
which he did not lease to the tenant. Garren alleged that the tenant allowed Garren to store the
sheetrock on the tenant’s premises.

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    II.   LEGAL INSUFFICIENCY OF THE EVIDENCE OF FAIR MARKET VALUE

      When reviewing the legal sufficiency of the evidence, we consider the
evidence in the light most favorable to the challenged finding and indulge every
reasonable inference that would support it. City of Keller v. Wilson, 168 S.W.3d
802, 823 (Tex. 2005). We must credit favorable evidence if a reasonable factfinder
could and disregard contrary evidence unless a reasonable factfinder could not. See
id. at 827. We must determine whether the evidence at trial would enable
reasonable and fair-minded people to find the facts at issue. See id. The factfinder
is the only judge of witness credibility and the weight to give to testimony. See id.
at 819.

      Jury question four reads:
      What sum of money, if paid now in cash, would fairly and reasonably
      compensate Richie Garren for his damages, if any, proximately
      caused by the conversion of the property in question? Consider the
      following elements of damages, if any, and none other: The fair
      market value of the property in question at the time of the conversion.
The jury charge defined “Fair Market Value” as “the price that the property in
question would bring if it were offered for sale as of the date of the conversion, by
a willing but not obligated seller and purchased by a willing but not obligated
buyer.” The jury answered question four with a sum of $12,500.

      Under its fifth issue, DZM asserts the evidence is legally insufficient to
support a finding as to the fair market value of the property at the time of the
alleged conversion.    At the charge conference, DZM stated that it was not
objecting to the definition of “Fair Market Value” in the charge. Though DZM did
tender a requested damages question that the trial court rejected, this question was
similar to the charge actually submitted regarding the need for proof of the market

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value of the property at the time of the alleged conversion.2 DZM does not assert
that this court should review the sufficiency of the evidence in this regard under a
standard different from that actually submitted in the jury charge. Under these
circumstances, we measure the sufficiency of the evidence of damages against the
charge given to the jury. See Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex. 2000).

       The property-owner rule establishes that an owner is qualified to testify to
the value of his property; nonetheless, the Supreme Court of Texas requires that
such testimony meet the “same requirements as any other opinion evidence.”
Natural Gas Pipeline Co. of Am. v. Justiss, 397 S.W.3d 150, 156 (Tex. 2012)
(quoting Porras v. Craig, 675 S.W.2d 503, 504 (Tex. 1984)) (internal quotations
omitted). The property-owner rule falls under Texas Rule of Evidence 701, which
allows a lay witness to provide opinion testimony if it is (a) rationally based on the
witness’s perception and (b) helpful to a clear understanding of the witness’s
testimony or the determination of a fact in issue. See Tex. R. Evid. 701; Justiss,
397 S.W.3d at 157. Based on the presumption that an owner is familiar with the
owner’s property and its value, the property-owner rule is an exception to the
requirement that a witness must otherwise establish his qualifications to express an
opinion on land values. See Justiss, 397 S.W.3d at 157. Under the rule, an
owner’s valuation testimony fulfills the same role as expert testimony. See id.
       Because property-owner testimony is the functional equivalent of expert
testimony, it must be judged by the same standards. See id. at 159. Thus, as with
expert testimony, an owner’s property valuation may not be based solely on the

2
 In the tendered question, the trial court would have asked the jury to find the reasonable cash
market value of the property at the time of the alleged conversion, and “reasonable cash market
value” was not defined in the tendered charge. The commonly understood meaning of
“reasonable cash market value” is similar to the definition of “Fair Market Value” in the charge
actually submitted. See Lee v. Dykes, 312 S.W.3d 191, 194–95 (Tex. App.—Houston [14th Dist.]
2010, no pet.).

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owner’s ipse dixit. See id. An owner may not simply echo the phrase “fair market
value” and state a number to substantiate the owner’s claim; the property owner
must provide the factual basis on which the opinion rests. See id. This burden is
not onerous, particularly in light of the resources available today. See id. But, the
valuation must be substantiated; a naked assertion of “fair market value” is not
sufficient. See id. Even if unchallenged, the property owner’s testimony must
support the verdict, and conclusory or speculative statements do not. See id. In
addition, under this court’s precedent, evidence of the amount paid in the past to
purchase property, by itself, is legally insufficient to support a finding as to the
property’s market value at a later date. See Lee v. Dykes, 312 S.W.3d 191, 195–99
(Tex. App.—Houston [14th Dist.] 2010, no pet.).

       At trial, Garren testified that the fair market value of the various items was
equivalent to their purchase prices. Garren submitted a list he created of property
he alleged DZM converted. Next to each item, Garren listed the property’s fair
market value as equivalent to its purchase price.3 Garren testified that he knew the
fair market value of the property from being around people in the casino business
who gave him tips about where to buy the items. According to Garren, he had been
dealing antiques and collectibles on the Internet since the advent of Internet
auctioneering websites. 4 Garren also testified that he had “dealt” with auctions,
but he did not elaborate on the type of auctions or how recently he had engaged in

3
  For most of the items on the list, Garren submitted a receipt. For these items, Garren opined
that the fair market value was the purchase price of the property. For the items for which Garren
lacked receipts, he testified that he provided an estimate of the value based on the value at the
time of purchase.
4
  In spite of this testimony, when cross-examined about various televisions that he alleged DZM
converted, Garren testified that his ex-wife owned one of the televisions, and she thought the fair
market value of a television she owned was equivalent to the price she had paid to purchase the
item brand new. Garren did not explain his ex-wife’s qualifications, if any, for making that
determination nor did Garren offer any evidence of the condition of the wife’s television.

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this activity. Garren did not provide any testimony that he had researched the
prices for the used items he alleged were converted, nor did Garren offer any other
evidence that he had attended auctions or researched prices recently.

      Garren testified that most of the items DZM converted were originally
purchased for use at a social club that Garren had intended to run. After that
enterprise failed, Garren leased the items to DZM’s tenant. Garren stated that a
desk had never been opened, but the tenant had used most of the items for some
period of time. Garren did not testify regarding the wear and tear on these items or
offer other evidence regarding the condition of these items at the time of the
alleged conversion.    On cross-examination, Garren admitted that he was not
familiar with the used-furniture market in Houston.        When asked whether he
understood the concept of fair market value, Garren replied that at one point he had
received an offer to “buy all of the equipment that was actually higher than that
before,” but he did not further elaborate on this offer. We presume for the sake of
argument that by this vague statement Garren intended to state that at some point
he had received an offer from someone to purchase at least some of the property
for prices greater than the purchase prices of whichever property items Garren
considered equipment.     Garren did not explain when the offer was made or
otherwise indicate whether or not the offer was made before he leased the property,
nor did Garren state which property items he considered to be equipment.

      Garren submitted evidence of the past purchase price of various items of
property and made conclusory statements that either a particular sum was the fair
market value or that the purchase price was equal to the fair market value.
Evidence of the past purchase price alone is legally insufficient to support a finding
as to the property’s market value at a later date. See Lee, 312 S.W.3d at 195–99.
Although Garren stated that he knew individuals in the poker business and was

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familiar with auctions and Internet auctioneering of collectibles, he did not explain
the factual basis underlying his opinion.       Garren’s professional contacts and
familiarity with auctions and Internet auctions may have helped him ascertain the
fair market value of the property, but Garren did not explain how that knowledge
influenced his valuations. While Garren testified that he was familiar with Internet
auctions, for example, Garren did not state that he viewed similar collectible items
on any Internet auctioneering website or that his research revealed that the items
alleged to have been converted were selling at the price for which he purchased
them.    Furthermore, Garren did not explain how his familiarity with selling
collectibles enabled him to determine that the fair market value for all of his used
property (which ranged from collectibles to poker chips to computers and
televisions to a security surveillance system) was equivalent to the purchase prices.
To the contrary, some of the property at issue was used furniture and Garren
specifically admitted that he was unfamiliar with the used-furniture business.
Garren testified that most of the property had been used, but Garren did not explain
the condition of the used property at the time of the alleged conversion. Garren’s
various conclusory statements are without any explanation of the factual basis on
which they rest. Therefore, they are insufficient to substantiate Garren’s valuation
of the various items of property. Because Garren’s statements constitute naked
assertions of “fair market value” they are legally insufficient to support a finding of
the property’s fair market value. See Justiss, 397 S.W.3d at 155–61; Smirl v. State,
No. 01-12-00989-CV, 2014 WL 2507639, at *4–6 (Tex. App.—Houston [1st Dist.]
June 3, 2014, no pet.) (mem. op.).

        Garren relies on Burns v. Rochon, to argue that the jury was required to
accept his testimony regarding the fair market value of the property. See 190
S.W.3d 263 (Tex. App.—Houston [1st Dist.] 2006, no pet.). In Burns, the First

                                          7
Court of Appeals quoted the Tenth Court of Civil Appeals for the proposition that
“‘it is well settled that the owner of property can testify as to his opinion regarding
the value of his own property . . . even if the owner’s testimony is halting and
indefinite it nonetheless will be sufficient to sustain a verdict when there is no
controverting evidence.’” Id. at 270–71 (quoting Espinosa v. Schomberg, 601
S.W.2d 161, 164 (Tex. Civ. App.—Waco 1980, writ ref’d n.r.e.). The Burns court
held that the property owner’s testimony regarding the amounts the owner paid to
purchase the property in question, in the absence of any other evidence regarding
the fair market value or actual value of the property, was legally sufficient to
support the trial court’s damages finding based on the value of the property
converted.    See id. at 270–71. But, the Fourteenth Court of Appeals has
respectfully disagreed with this part of Burns, concluding that it conflicts with
authority from the Supreme Court of Texas that the purchase price alone is legally
insufficient evidence to establish market value at a later date and concluding that
the failure to object or to submit controverting evidence does not transform legally
insufficient evidence into legally sufficient evidence. See Lee, 312 S.W.3d at 196–
99. In addition, this part of Burns conflicts with the Supreme Court of Texas’s
subsequent opinion in the Justiss case. See Justiss, 397 S.W.3d at 156–59 (stating
that a property owner’s testimony under the property-owner rule is subject to the
same requirements as other opinion evidence and that conclusory statements by a
property owner are legally insufficient even if unchallenged).

      Because there is no legally sufficient evidence that the property in question
had any fair market value at the time of the alleged conversion, the proper course is
to reverse and render a take-nothing judgment. See Lee, 312 S.W.3d at 199; Smirl,
2014 WL 2507639, at *4–6.       Accordingly, we sustain DZM’s argument under its
fifth issue in which DZM asserts that there is legally insufficient evidence of the

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fair market value of the items at the time of the alleged conversion. 5 See Lee, 312
S.W.3d at 199; Smirl, 2014 WL 2507639, at *4–6. We reverse the judgment of the
trial court and render judgment that Garren take nothing. See Lee, 312 S.W.3d at
199; Smirl, 2014 WL 2507639, at *4–6.

                                    III.   CONCLUSION

       The evidence is legally insufficient to support either the jury’s damages
finding or a finding of any damages under jury question four. Therefore, we
reverse the judgment of the trial court and render a take-nothing judgment against
Garren.

                                    /s/            Kem Thompson Frost
                                                   Chief Justice

Panel consists of Chief Justice Frost and Justices Boyce and McCally.

5
 Because we determine that the evidence is legally insufficient, we need not address whether the
evidence is factually sufficient. See Lee, 312 S.W.3d at 199. Similarly, because we sustain
DZM’s argument that the evidence is legally insufficient and render a take-nothing judgment
against DZM, we need not address DZM’s remaining issues.

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