Court Opinion

ID: 4574571
Source: CourtListenerOpinion
Date Created: 2020-10-08 18:00:29.076981+00
Date Added: 2024-06-11T08:47:21.318358
License: Public Domain

Case: 19-20530       Document: 00515594364             Page: 1     Date Filed: 10/08/2020

              United States Court of Appeals
                   for the Fifth Circuit                                  United States Court of Appeals
                                                                                   Fifth Circuit

                                                                                 FILED
                                                                           October 8, 2020
                                      No. 19-20530
                                                                            Lyle W. Cayce
                                                                                 Clerk

   Brooke Adams; Weston Piper,

                                                                  Plaintiffs—Appellees,

                                           versus

   Fan Chen; Ruikun Tao Tao,

                                                              Defendants—Appellants.

                    Appeal from the United States District Court
                        for the Southern District of Texas
                             USDC No. 4:18-CV-3948

   Before Stewart, Dennis, and Haynes, Circuit Judges.
   PER CURIAM:*

           Brooke Adams and Weston Piper (“tenants”) were evicted from their
   rented townhome and sued Fan Chen and Riukun Tao (“landlords”) for
   retaliation under Texas law and for housing discrimination under the federal
   Fair Housing Act (“FHA”). After the tenants voluntarily dismissed their
   claims, the district court held a two-day bench-trial on the landlords’

          *
             Pursuant to 5TH CIRCUIT RULE 47.5, the court has determined that this opinion
   should not be published and is not precedent except under the limited circumstances set
   forth in 5TH CIRCUIT RULE 47.5.4.
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                                    No. 19-20530

   counterclaim against the tenants for breach of the lease agreement and ruled
   in favor of the tenants. For the following reasons, we VACATE and
   REMAND.
        I.     FACTUAL AND PROCEDURAL BACKGROUND
   A. Facts
           In February 2017, Brooke Adams and Weston Piper leased and moved
   into a townhouse that was owned by the appellants, Fan Chen and Ruikun
   Tao. The lease term was for twelve months. Along with paying the security
   deposit for themselves, the tenants also paid a $250 deposit for their pet dog.
   In relevant part, Section 9 of the Lease Agreement (“lease”), entitled
   “PETS,” states, “[u]nless the parties agree otherwise in writing, Tenant
   may not permit, even temporarily, any pet on the Property (including but not
   limited to any mammal, reptile, bird, fish, rodent, or insect).” That section
   further states: “If Tenant violates this Paragraph 9 or any agreement to keep
   a pet on the property, Landlord may take all or any of the following action
   [sic]: (1) declare Tenant to be in default of this lease and exercise landlord’s
   remedies under Paragraph 27.” Paragraph 27 states, in relevant part: “If
   Tenant . . . fails to comply with this lease, Tenant will be in default and: (1)
   Landlord may terminate Tenant’s right to occupy the Property by providing
   Tenant with at least one day written notice to vacate.”
          On December 4, 2017, the couple brought a second dog, Waffles, into
   the townhome. Adams registered Waffles as an emotional support animal
   (“ESA”) the same day. The next day, the landlords found out about Waffles
   and contacted the tenants via text message to inquire about the second dog.
   The landlords referred the tenants back to the relevant provisions in the
   “mutually agreed and signed lease” to let them know that the lease had been
   violated, and they urged the tenants to carefully read the lease to decide how
   to handle the violation. The text conversation turned sour rather quickly. In
   her response, Adams stated, “But either way be prepared to tell me who
   came to you about us because that makes me not comfortable in my home.
   My birthday was yesterday and that’s when the dog came. He was my gift . .

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   . Either way it will get resolved and nothing was intentional.” On this same
   day, Adams reached out to her friend who is a nurse, Crystal Janke, to have
   her write a note saying that she was prescribed an emotional support animal.
   On December 6, 2017, Adams texted the landlords pictures of Waffle’s ESA
   registration certificate. In that text thread, she explained that she had been
   speaking to someone about adjusting her medication for her postpartum
   depression and anxiety diagnoses and that, as a former real estate agent, she
   understood her rights under the FHA.
          On December 7, 2017, the landlords placed a notice to vacate sign on
   the door of the townhome informing the tenants that they had one day to
   vacate the premises. The tenants refused. During this time, Adams provided
   the landlords a signed letter from Janke explaining that Adams was prescribed
   an ESA. A few weeks later, on or around December 20, 2017, Chen posted
   another eviction notice on the door of the townhouse and then initiated an
   eviction action against the tenants on December 22, 2017. The tenants
   moved out of the townhome on December 31, 2017. A few weeks later, in
   January 2018, Chen filed a second eviction lawsuit that was dismissed as
   moot because the tenants had already moved out of the home. Shortly after
   this, Tao began threatening Adams’s business associates with legal action for
   photographs that were taken at the townhouse.
   B. Procedural History
           The tenants filed suit in Texas state court a month after vacating the
   townhouse alleging that Chen failed to return their security deposit and
   withheld it in bad faith. Chen answered with defenses and counterclaims,
   among them an allegation that the tenants breached Sections 9, 12D, and 14
   of the lease. During the course of these proceedings, (a) Tao filed a complaint
   in April 2018 with Child Protective Services claiming that Adams sexually
   abused her one-year-old son, sold sex for profit, and other unbecoming acts;
   (b) Tao also filed a complaint with the Texas Medical Board against Janke,
   which coincidentally resolved when, in concert with the landlords’ lawyers,
   Janke submitted a sworn affidavit retracting the statements in the letter that

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   she wrote on Adams’s behalf; and (c) Tao found and contacted the tenants’
   new landlord and told him that she and her husband evicted the couple from
   their townhome and were engaged in ongoing litigation with them.
       The tenants amended their suit to add Tao as a defendant and included
   claims for intentional infliction of emotional distress, harassment, and an
   allegation that Tao violated the FHA in engaging in such conduct. The
   landlords then removed the case to federal court pursuant to 28 U.S.C. §
   1441(a) and asserted an additional counterclaim of malicious prosecution.
   The district court issued a management order requiring the parties to confer
   with each other to try to reach a settlement. As agreed to by the parties, the
   tenants subsequently voluntarily withdrew their claims, including their FHA
   claim, against the landlords. However, they maintained their defenses
   (retaliation, prior material breach, and estoppel/laches) and affirmative
   defenses (failure to mitigate damages) against the landlords’ counterclaims.
       After a two-day bench trial, the district court ruled in favor of the tenants,
   finding that they did not breach the lease but that the landlords breached it.
   Additionally, the district court awarded the tenants $45,627.69 in attorney’s
   fees and the return of their security deposit. At the end of the second day of
   trial, the district court orally issued a permanent injunction against the
   landlords to enjoin them from contacting the tenants, their employers, and
   anyone associated with them. The landlords timely appealed.
                       II.    STANDARD OF REVIEW
           Following a bench trial, appellate courts review legal issues de novo
   and findings of fact for clear error. See Guzman v. Hacienda Records and
   Recording Studio, Inc., 808 F.3d 1031, 1036 (5th Cir. 2015) (quotations
   omitted). A finding is clearly erroneous when the reviewing court, on the
   whole of the evidence, is left with the definite and firm conviction that a
   mistake has been committed though there may be evidence to support the
   district court’s finding. Id. (quotations omitted). However, “great
   deference” is owed to the district court’s findings; when “there are two

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   permissible views of the evidence, the factfinder’s choice between them
   cannot be clearly erroneous.” Id. (quoting In re Luhr Bros., Inc., 157 F.3d 333,
   338 (5th Cir. 1998)).
           When factual findings are based on credibility determinations, “Rule
   52(a) demands even greater deference to the trial court’s findings; for only
   the trial judge can be aware of the variations in demeanor and tone of voice
   that bear so heavily on the listener’s understanding of and belief in what is
   said.” Anderson v. City of Bessemer City, 470 U.S. 564, 575 (1985). This
   deference does not insulate the district court’s findings from review merely
   because the district court calls them “credibility determinations.” Id.
   “Documents or objective evidence may contradict the witness’ story; or the
   story itself may be so internally inconsistent or implausible on its face that a
   reasonable factfinder would not credit it.” Id. In the face of such factors, “the
   court of appeals may well find clear error even in a finding purportedly based
   on a credibility determination.” Id. But, if the finding is based on the court’s
   decision to credit one of two or more witnesses that have all told “coherent
   and facially plausible stor[ies] that [are] not contradicted by extrinsic
   evidence,” that finding can virtually never be clear error. Id.
                             III.   DISCUSSION
   A. Jurisdiction
           “A district court has ‘wide discretion’ in deciding whether it should
   retain jurisdiction over state law claims once all federal claims have been
   eliminated.” Enochs v. Lampasas Cty., 641 F.3d 155, 161 (5th Cir. 2011)
   (quoting Guzzino v. Felterman, 191 F.3d 588, 595 (5th Cir. 1999)). At bottom,
   this is a straightforward landlord-tenant dispute. The case was removed to
   federal court prior to the tenants’ voluntary dismissal of their claims. Despite
   the voluntary dismissal, the district court decided not to remand this case
   back to the state trial court. Thus, we retain jurisdiction over the matter.
    B. The district court incorrectly found that the tenants did not breach
   the lease agreement.

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           The landlords argue that the tenants did not properly exercise their
   rights under the FHA because the tenants presented the ESA documents
   after they had already been caught with Waffles in the home without the
   landlords’ express written permission. Accordingly, they argue that the
   tenants violated Section 9 of the lease agreement. The tenants counter that
   they did not breach the lease agreement because they exercised their rights
   under the FHA to bring Waffles into the home as an emotional service
   animal. An action for a breach of lease requires a plaintiff to show (1) the
   existence of a valid lease agreement, (2) that the plaintiff performed or
   tendered performance, (3) that the defendant breached an obligation under
   the lease, and (4) damages that resulted from the breach. See Dupree v. Boniuk
   Interests, Ltd., 472 S.W.3d 355, 364 (Tex. App.—Houston [1st Dist.] 2015, no
   pet.). We agree with the landlords that they conclusively proved that the
   tenants breached the lease.
           Regarding the first two prongs, the validity of the lease and the
   landlords’ performance of the lease, i.e., the tenants’ possession of the
   townhome for ten months, are undisputed. As for the third prong, it is clear
   from the record and from the district court’s own findings that the tenants
   breached Section 9 of the lease because Waffles was brought into the home
   prior to receiving express written permission from the landlords. As for the
   final prong, the landlords assert that this requirement is satisfied in the form
   of their loss of unauthorized pet rent, unpaid rent, and the re-letting fee paid
   to the leasing agent. While the extent of these damages may be disputed,
   there is no doubt that the tenants breached the lease. Likewise, we need not
   decide whether there were other violations of other lease provisions. Now,
   we must decide whether the tenants’ breach was excusable.
            Section 92.331(a)(1) of the Texas Property Code prohibits a landlord
   from taking certain specified retaliatory actions against a tenant “because the
   tenant in good faith exercises or attempts to exercise against a landlord a right
   . . . granted to the tenant by . . . federal or state statute.” In relevant part,
   subsection (b) specifies such prohibited retaliatory conduct such as “(1) filing

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   an eviction proceeding . . .; (2) depriving the tenant of the use of the premises,
   except for reasons authorized by law; . . . (4). . . terminating the tenant’s
   lease; or (5) engaging, in bad faith, in a course of conduct that materially
   interferes with the tenant’s rights under the tenant’s lease.” TEX. PROP.
   CODE § 92.331(b)(1)–(2), (4)– (5). Retaliation by a landlord can be asserted
   as a defense in an eviction suit. Id. at § 92.335.
            Notwithstanding that this is not an eviction suit, we determine that
   the retaliation defense is inapplicable here because we are not convinced that
   the tenants made a good faith attempt to exercise their rights under the FHA.
   See Id. at § 92.331(a)(1). The record shows that Adams did not text Tao
   pictures of Waffles’ ESA certification until two days after she brought
   Waffles into the home. Additionally, the prerequisite actions requested by
   the landlords in order for the tenants to have an additional pet in the home
   was not a blanket prohibition such that a reasonable accommodation under
   the FHA was compulsory. See Chavez v. Aber, 122 F. Supp. 3d 581, 593–97
   (W.D. Tex. 2015) (finding that the plaintiffs’ requested accommodation to
   have the blanket “no pets policy” waived for her emotional service dog was
   reasonable under the FHA). The landlords only required their prior express
   written permission to have an additional pet in the home—the tenants did
   not have that permission.
          Regarding the landlords’ post-eviction conduct, the landlords argue
   that those actions (i.e., contacting Child Protective Services, contacting the
   tenants’ subsequent landlord, etc.) do not touch on Adams’s and Piper’s
   rights under the Lease. We decline to opine whether other claims are
   available. For the purposes of this appeal, these actions simply do not provide
   the tenants with a defense to the landlords’ claim that they breached the
   terms of the lease.
          In sum, we vacate the district court’s finding in favor of the tenants
   on the breach of lease claim. Accordingly, we vacate the permanent
   injunction issued against the landlords. We remand for the district court to
   determine in the first instance whether Landlords have demonstrated

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   damages sufficient to make out a claim for breach of lease and the amount of
   damages that should be awarded. See Dupree, 472 S.W.3d at 364 (requiring
   plaintiff to prove “damages that resulted from the breach” to succeed on a
   breach-of-lease claim); see also Great Am. Ins. Co. v. AFS/IBEX Fin. Servs.,
   Inc., 612 F.3d 800, 808 (5th Cir. 2010) (remanding to the district court to
   reconsider in the first instance issue that it “never opined on the merits of”).
   The record shows that at the trial level, the tenants pled as an affirmative
   defense that the landlords failed to mitigate damages. See McGraw v. Brown
   Realty Co., 195 S.W.3d 271, 277–78 (Tex. App. 2006) (citing Austin Hill
   Country Realty, Inc. v. Palisades Plaza, Inc., 948 S.W.2d 293, 300 (Tex. 1997)).
   The tenants’ evidence of the landlords’ failure to mitigate must show the
   amount by which the landlord could have reduced his damages. Id. at 277.
   Accordingly, on remand, the district court should also determine whether the
   landlords sufficiently mitigated their damages incurred by the tenants’
   breach.
   C. The district court improperly found that the landlords violated the
   Fair Housing Act.
          The district court’s finding that the landlords violated the federal
   FHA is immaterial to whether the tenants breached the lease. In turn, we
   vacate. The record clearly shows that the tenants’ FHA claim was voluntarily
   dismissed shortly after the case was removed to federal court. Because the
   FHA claim was not before the court, we vacate.
                            IV.    CONCLUSION
          For the foregoing reasons, we VACATE the district court’s
   judgment and REMAND for reconsideration of the issue of the landlords’
   mitigation of damages and attorney’s fees, consistent with this opinion.

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