Court Opinion

ID: 3102610
Source: CourtListenerOpinion
Date Created: 2015-10-16 05:24:24.42419+00
Date Added: 2024-06-11T09:34:38.191602
License: Public Domain

COURT OF APPEALS
                         SECOND DISTRICT OF TEXAS
                              FORT WORTH

                              NO. 02-12-00428-CV

JINHUI CHEN                                                         APPELLANT

                                        V.

JODI JOHNSON AND JOSEPH                                             APPELLEES
JOHNSON

                                     ----------

          FROM COUNTY COURT AT LAW NO. 2 OF DENTON COUNTY

                                     ----------

                        MEMORANDUM OPINION1

                                     ----------

                                I. INTRODUCTION

      Appellant Jinhui Chen perfected this restricted appeal after a no-answer

default judgment was entered against him and in favor of Appellees Jodi Johnson

and Joseph Johnson. Chen raises four issues, claiming error on the face of the

record. For the reasons set forth below, we will modify the trial court judgment’s

      1
       See Tex. R. App. P. 47.4.
total damage award by reducing it from $8,600 to $4,600; we will recalculate the

prejudgment interest award; and we will affirm the trial court’s judgment as modified.

                   II. FACTUAL AND PROCEDURAL BACKGROUND

      Chen owned a home located at 1501 Carriage Lane in Savannah, Texas, and

the Johnsons filled out a rental application to lease the home.           Their rental

application was given to Angela Fowler with Region Realty, Inc.; Fowler

subsequently told the Johnsons to pay the application deposit of $1,500 online, and

they did so. The Johnsons’ plans changed, they no longer desired to lease the

home, and they sought return of the application deposit. Neither Chen nor Fowler

returned the application deposit, so the Johnsons sued them.

      Chen failed to file an answer. After a default hearing, the trial court entered a

default judgment for the Johnsons on their claims for breach of contract, fraud,

deceptive trade practices, property code violations, and attorney’s fees, awarding

$8,600 in damages; $380.52 in prejudgment interest; $5,000 in attorney’s fees; and

$561.55 in court costs.

                       III. SCOPE AND STANDARD OF REVIEW

      To prevail on a restricted appeal, an appellant must establish that (1) he filed

a notice of appeal within six months after the trial court signed the judgment; (2) he

was a party to the underlying suit; (3) he did not participate in the actual trial or

hearing that resulted in the judgment and did not timely file any postjudgment

motions or requests for findings of fact and conclusions of law; and (4) error is

apparent from the face of the record. See Tex. R. App. P. 26.1(c), 30; Alexander v.

                                          2
Lynda’s Boutique, 134 S.W.3d 845, 848 (Tex. 2004); Vespa v. Nat’l Health Ins. Co.,

98 S.W.3d 749, 751 (Tex. App.—Fort Worth 2003, no pet.). The face of the record,

for purposes of a restricted appeal, consists of all the papers on file in the appeal,

including the clerk’s record and the reporter’s record. Norman Commc’ns v. Tex.

Eastman Co., 955 S.W.2d 269, 270 (Tex. 1997).

       By failing to answer, a defendant admits all factual allegations in the plaintiff’s

petition except unliquidated damages. Morgan v. Compugraphic Co., 675 S.W.2d
729, 731 (Tex. 1984); Argyle Mech. Inc. v. Unigus Steel, Inc., 156 S.W.3d 685, 687

(Tex. App.—Dallas 2005, no pet.). Because a non-answering defendant admits all

factual allegations in the plaintiff’s petition regarding liability, a defendant’s liability in

a no-answer default case is conclusively established. Morgan, 675 S.W.2d at 731.

So long as the facts set out in the petition allege a cause of action, then the default

judgment conclusively establishes the defendant’s liability. Id. As a result, an

appellant is precluded from challenging the legal and factual sufficiency of the

evidence supporting liability in a no-answer default judgment. See Holt Atherton

Indus., Inc. v. Heine, 835 S.W.2d 80, 83 (Tex. 1992); Morgan, 675 S.W.2d at 731;

Adame v. Palisades Collection, L.L.C., No. 05-11-00793-CV, 2012 WL 2564717, at

*3–4 (Tex. App.—Dallas July 3, 2012, no pet.) (mem. op.); Texaco, Inc. v. Phan, 137
S.W.3d 763, 770 (Tex. App.—Houston [1st Dist.] 2004, no pet.); Norton v. Martinez,

935 S.W.2d 898, 901 (Tex. App.—San Antonio 1996, no pet.).

       When a no-answer default judgment is taken on an unliquidated claim, the

defendant may challenge on appeal the legal and factual sufficiency of the evidence

                                              3
supporting the unliquidated damages award. Heine, 835 S.W.2d at 83; Dawson v.

Briggs, 107 S.W.3d 739, 748 (Tex. App.—Fort Worth 2003, no pet.). This is

because when damages are unliquidated, the judge entering the default judgment

must hear evidence on the damages. Tex. R. Civ. P. 243; Heine, 835 S.W.2d at 83.

      When, however, a no-answer default judgment awards liquidated damages

proved by an instrument in writing attached to the plaintiff’s pleading, an appellant is

precluded from attacking the sufficiency of the evidence supporting the liquidated

damages award. See, e.g., Tex. R. Civ. P. 641; Heine, 835 S.W.2d at 83; Aavid

Thermal Techs. of Tex. v. Irving Indep. Sch. Dist., 68 S.W.3d 707, 711–12 (Tex.

App.—Dallas 2001, no pet.) (explaining that when damages are liquidated, in that

they can be accurately determined by the trial court from the petition and the

attached instruments in writing, an evidentiary hearing is not required prior to entry

of a default judgment). When a default judgment is entered on a liquidated claim,

―the rules of the procedure contemplate that the plaintiff be awarded the damages

without the necessity of a hearing or the presentation of evidence.‖ Taylor v. State,

293 S.W.3d 913, 916 (Tex. App.—Austin 2009, no pet.).

                  IV. NO DOUBLE RECOVERY OF ACTUAL DAMAGES

      Texas law does not permit a double recovery. See, e.g., Parkway Co. v.

Woodruff, 901 S.W.2d 434, 441 (Tex. 1995). A double recovery exists when a

plaintiff obtains more than one recovery for the same injury. Waite Hill Servs., Inc.

v. World Class Metal Works, Inc., 959 S.W.2d 182, 184 (Tex. 1998); Stewart Title

Guar. Co. v. Sterling, 822 S.W.2d 1, 7 (Tex. 1991).

                                           4
      In his first issue, Chen claims that the trial court erred––and that such error is

apparent on the face of the record––because the judgment signed by the trial court

awards the Johnsons a double or triple recovery. Chen points out that the actual

damages proved by the Johnsons constituted only the $1,500 application deposit

they sought to recover but that the trial court’s judgment awards separate damage

amounts to them for breach of contract, fraud, deceptive trade practices, property

code violations, and liability under the Texas Theft Liability Act.

      On appeal, the Johnsons concede that the highest dollar recovery of damages

to which they are entitled based on their pleadings is the liquidated damage amount

of $1,500 for the application deposit; plus statutory penalties in the amount of

$3,000; plus an additional $100 if the judgment is affirmed based on property code

section 92.354.2 See Tex. Prop. Code Ann. § 92.354 (West 2007). Thus, we

sustain Chen’s first issue that the judgment awards the same damages to the

Johnsons under multiple pleaded causes of action, all for the same injury. See, e.g.,

Waite Hill Servs., Inc., 959 S.W.2d at 184; Parkway, 901 S.W.2d at 441; Stewart

Title Guar. Co., 822 S.W.2d at 7.

             V. SUFFICIENCY OF THE EVIDENCE TO SUPPORT CONTRACT
                         AND PROPERTY CODE LIABILITY

      In his third and fourth issues, Chen complains, respectively, that the evidence

is insufficient to support the finding of a contract between the parties and to

      2
        Although the Johnsons’ brief is not clear on this issue, the Johnsons’ counsel
candidly represented to the court during oral argument that this was the highest
dollar amount to which the Johnsons are entitled.

                                          5
establish a violation of the property code. Chen asserts that these legal and factual

insufficiencies constitute error on the face of the record.

      Substantively, Chen cannot raise these complaints. See, e.g., Jackson v.

Biotectronics, Inc., 937 S.W.2d 38, 41–42 (Tex. App.—Houston [14th Dist.] 1996, no

writ) (op. on reh’g). The existence of a contract and breach of contract were

pleaded by the Johnsons.3 A cause of action asserting a property code violation by

failure to refund the application deposit was also pleaded by the Johnsons.4 And

Chen, by not filing an answer, admitted all of the liability facts pleaded by the

Johnsons concerning their causes of action for breach of contract and property code

violations; Chen cannot challenge the sufficiency of the evidence to support the

pleaded liability facts or contest his liability so long as the Johnsons’ pleadings state

a breach of contract cause of action and a cause of action for violation of the

property code.5 See Heine, 835 S.W.2d at 83; Morgan, 675 S.W.2d at 731;

      3
        A copy of the Johnsons’ petition is attached hereto as Appendix A to this
opinion. The breach of contract claim is set forth on pages 3–4 of the Johnsons’
petition.
      4
        The property code violation alleged is set forth on page 3 of the Johnsons’
petition and further elaborated on in Jodi’s attached affidavit.
      5
       To the extent Chen also attempts to challenge the sufficiency of the evidence
to show that Fowler with Region Realty, Inc. was Chen’s agent, Chen admitted this
fact by failing to file an answer. The Johnsons’ pleading states, ―At all times Ms
Fowler was acting as the agent of Region Realty and Jinhui Chen.‖ And this
material fact was admitted by Chen’s failure to file an answer. See U.S. Auto Ins.
Servs., Inc. v. Les Marks Chevrolet, No. 14-02-00644-CV, 2003 WL 22012670, at *2
(Tex. App.—Houston [14th Dist.] Aug. 26, 2003, no pet.) (mem. op.) (explaining that
claim on appeal that plaintiff failed to plead that ―Aranda was U.S. Auto’s agent‖ was
―unavailing‖ because the no-answer default judgment operated as an admission of
                                           6
Jackson, 937 S.W.2d at 41–42; see also, e.g., Texaco, Inc., 137 S.W.3d at 770;

Norton, 935 S.W.2d at 901; Adame, 2012 WL 2564717, at *3–4.

      To the extent Chen’s third and fourth issues complain about the adequacy of

the Johnsons’ pleadings to state a breach of contract cause of action and a cause of

action for violation of the property code, we have reviewed the Johnsons’ petition,

and it is sufficient to support the default judgment. Although a petition that serves as

the basis for a default judgment may contain defects in form or substance, the

default judgment will be held erroneous only if (1) the petition does not attempt to

state a cause of action that is within the jurisdiction of the court, (2) the petition does

not give fair notice to the defendant of the claim asserted, or (3) the petition

affirmatively discloses the invalidity of such claim. Stoner v. Thompson, 578 S.W.2d
679, 683 (Tex. 1979). In analyzing the sufficiency of a pleading to support a default

judgment, it has been stated that

      the averments of the pleadings are to be taken as proven or confessed;
      and, if the pleadings do not inform the court what judgment to render,
      that is, if it does not, with sufficient certainty, set forth the cause of
      action as to the name of parties, dates, amounts, etc., to enable the
      court to render judgment without information aliunde, it is not sufficient,
      and the judgment cannot be sustained. C & H Transportation Co., Inc.
      v. Wright, 396 S.W.2d 443 (Tex. Civ. App.—Tyler 1965, writ ref’d
      n.r.e.). It is unnecessary for a plaintiff to allege the evidence upon
      which he relies to establish his asserted cause of action; it is not
      requisite that a petition be technically sufficient to state a cause of
      action in order to sustain a default judgment if it does not show
      affirmatively that the plaintiff had no cause of action. Edwards Feed
      Mill v. Johnson, 158 Tex. 313, 311 S.W.2d 232 (1958).

the material facts alleged in the plaintiff’s petition and because the petition stated
that ―Aranda, who was U.S. Auto’s agent, confirmed there was coverage‖).

                                            7
First Nat’l Bank of Irving v. Shockley, 663 S.W.2d 685, 688 (Tex. App.—Corpus

Christi 1983, no writ); see also Davis v. Quality Pest Control, 641 S.W.2d 324, 328

(Tex. App.—Houston [14th Dist.] 1982, writ ref’d n.r.e.) (―The test is whether an

opposing attorney of reasonable competence, with the pleading before him, can

ascertain the nature and the basic issues of controversy and the testimony probably

relevant.‖).

      Here, the Johnsons’ petition may contain defects of form or substance, but it

does attempt to state causes of action within the jurisdiction of the court, does give

fair notice to Chen of the claims asserted, and does not affirmatively disclose the

invalidity of any such claim.6 We overrule Chen’s third and fourth issues.

               VI. SUFFICIENCY OF THE EVIDENCE TO MONETARY AWARDS

      In his second issue, Chen challenges the sufficiency of the evidence to

support the monetary awards made in the judgment.

                                A. Actual Damages

      The actual damage award, as modified above to total $1,500 and to delete

any double recovery, is based on liquidated damages—established by documents in

writing attached to the Johnsons’ petition. Thus, Chen, by not filing an answer,

admitted this amount of liquidated damages—which is also proved by documents

      6
        Chen argues that the lease application agreement is attached to the
Johnsons’ pleading and contains the acknowledgement required by the property
code so that the Johnsons’ pleading does affirmatively disclose the invalidity of their
property code claim. Chen overlooks the fact that liability under the property code
may attach despite the existence of the acknowledgement when there is a failure to
timely return the deposit. See Tex. Prop. Code Ann. § 92.354.

                                          8
attached to the Johnsons’ pleading—and Chen is precluded on appeal from

attacking the sufficiency of the evidence supporting the $1,500 liquidated damages

award. See, e.g., Tex. R. Civ. P. 641; Heine, 835 S.W.2d at 83; Aavid Thermal

Techs. of Tex., 68 S.W.3d at 711–12.

                       B. Statutory Property Code Penalty

      The default judgment awarded the Johnsons a statutory penalty for Chen’s

violation of the property code. This penalty constitutes unliquidated damages.

Accord Henry S. Miller Co. v. Hamilton, 813 S.W.2d 631, 634 (Tex. App.—Houston

[1st Dist.] 1991, no writ) (explaining that additional damages under the DTPA

constitute unliquidated damages); Fleming Mfg. Co. v. Capitol Brick, Inc., 734
S.W.2d 405, 409–10 (Tex. Civ. App.—Austin 1987, writ ref’d n.r.e.) (same). Chen is

entitled to challenge the sufficiency of the evidence to support unliquidated

damages. See, e.g., Heine, 835 S.W.2d at 83; Dawson, 107 S.W.3d at 748.

      When a defendant attacks the sufficiency of the evidence to support the trial

court’s determination of unliquidated damages in a default judgment, we must

review the evidence adduced in support of the judgment. Dawson, 107 S.W.3d at

748. In granting a default judgment, the trial court is permitted to consider affidavits,

like Jodi’s, that are filed with the court, and consideration of such affidavits may

satisfy the requirement that the plaintiff present proof of unliquidated damages. See

Tex. R. Civ. P. 243; Tex. Commerce Bank, Nat’l Ass’n v. New, 3 S.W.3d 515, 517

(Tex. 1999); Barganier v. Saddlebrook Apartments, 104 S.W.3d 171, 173 (Tex.

                                           9
App.––Waco 2003, no pet.).7 In reviewing the legal sufficiency of the evidence, we

view the evidence in the light most favorable to the default judgment entered,

crediting favorable evidence if reasonable jurors could. See City of Keller v. Wilson,

168 S.W.3d 802, 807, 827 (Tex. 2005). In a factual sufficiency review, we consider

all of the evidence and uphold findings by the factfinder unless the evidence is too

weak to support them or the findings are so against the overwhelming weight of the

evidence as to be manifestly unjust. Dow Chem. Co. v. Francis, 46 S.W.3d 237,

242 (Tex. 2001).

      To obtain the statutory property code penalty, a plaintiff must prove that a

landlord in bad faith failed to refund an application fee or deposit in violation of

subchapter I of the property code. See Tex. Prop. Code Ann. § 92.354. ―Bad faith‖

is not defined in the list of definitions found in subchapter I. See id. § 92.351 (West

Supp. 2012) (setting forth definitions applicable to subchapter I). A statutorily

undefined term is to be given its ordinary meaning,8 and it ―appears to have been

      7
        Chen argues that Jodi’s affidavit is conclusory so that it is substantively
defective, did not require him to object, and is not competent evidence. But the
affidavit’s statements that Chen identifies in his brief as being conclusory are
statements of fact––i.e., ―Chen has failed and refused to refund the Application
Deposit.‖ Chen argues that Jodi’s affidavit provides ―no supporting facts for the
[above quoted] conclusion that Chen failed or refused to refund the deposit.‖ These
complaints, couched as challenges to the purportedly conclusory statements in
Jodi’s affidavit, constitute an effort to avoid the long-standing rule that a non-
answering defendant admits all pleaded liability facts. Chen cannot circumvent this
rule by recasting his sufficiency of the evidence claims as challenges to statements
in Jodi’s affidavit on the ground that the statements are conclusory.
      8
       See, e.g., Tex. Lottery Comm’n v. First State Bank of DeQueen, 325 S.W.3d
628, 635 (Tex. 2010).

                                          10
decided by the great weight of authority that willful ignorance is the equivalent of bad

faith; and that bad faith may be shown by a willful disregard of and refusal to learn

the facts when available and at hand.‖ Fenner v. Am. Sur. Co. of N.Y., 156 S.W.2d
279, 282–83 (Tex. Civ. App.—Waco 1941, writ ref’d w.o.m.) (utilizing the above as

the ordinary meaning of ―bad faith‖ when that term is used, but not defined, in a

statute). Concerning a landlord’s failure to return a security deposit––as opposed to

the application deposit here––a landlord acts in bad faith when he retains the

security deposit in dishonest disregard of the tenant’s rights. See Reed v. Ford, 760
S.W.2d 26, 30 (Tex. App.—Dallas 1988, no writ).

      The evidence adduced in support of the unliquidated property code penalty

awarded to the Johnsons––evidence that was attached to the Johnsons’ pleading––

included the following: Jodi’s affidavit; the application completed by the Johnsons;

an August 24, 2011 letter to the Johnsons from Fowler; a September 9, 2011 letter

from the Johnsons’ attorney to Fowler; and two emails showing the Johnsons’

electronic payment of the application deposit and electronic request for its refund.

The Johnsons pleaded that Chen’s conduct in failing and refusing to return the

application deposit was in bad faith. The documentary evidence establishes that the

Johnsons paid the application deposit on August 10 and that a refund was

requested on August 14. Jodi’s affidavit avers that ―[n]owhere in this Application did

it state that an Application Deposit was non-refundable for any reason or that an

Application Deposit is a reservation of rent. Nor did Defendants inform Plaintiffs of

any of this orally before the Application was submitted or an Application Deposit was

                                          11
paid.‖ The evidence reflects that the Johnsons were given two contradictory

explanations for Chen and Region Realty’s failure to refund the application deposit.

First, they were told in Fowler’s August 24 letter that the application deposit was not

refundable because Chen and Region Realty had accepted the Johnsons’

application and had taken the house off the market to lease to the Johnsons. But

the application itself states that ―unless Landlord and Applicant enter into a separate

written agreement otherwise, the Property remains on the market until a lease is

signed by all parties.‖ Jodi’s affidavit attests that no such separate agreement

exists. Second, the Johnsons were told verbally that the application they had

completed was not a form furnished by Chen and Region Realty. But the Johnsons

were never provided with a different application. Finally, the September 9, 2011

letter from the Johnsons’ attorney expressly sets forth a demand for a refund of the

Johnsons’ $1,500 application deposit and details why a refund is mandated

pursuant to the terms of the property code. Yet, the Johnsons’ $1,500 application

deposit was not refunded.

      Viewing the facts in the light most favorable to the Johnsons, more than a

scintilla of evidence exits that a reasonable factfinder could have credited as

constituting a bad faith failure by Chen9 to refund the Johnsons’ application deposit.

      9
       To the extent that Chen claims he cannot be liable for the acts of his agent
Fowler, we note that—as set forth above—by failing to file an answer, Chen
admitted that Fowler was acting as his agent. See U.S. Auto Ins. Servs., Inc., 2003
WL 22012670, at *2. And furthermore, Fowler’s August 24 letter to the Johnsons
indicates that the Johnsons’ application deposit was submitted to the landlord (i.e.,
                                          12
See Tex. Prop. Code Ann. §§ 92.353 (West 2007), .354; accord Reed, 760 S.W.2d

at 29–30 (holding that trial court erred by granting a directed verdict for landlord on

issue of bad faith failure to return security deposit because evidence existed that

landlord suggested he would refuse refund of deposit unless tenant renewed lease

on landlord’s terms—an act of bad faith); Sunrizon Homes, Inc. v. Fuller, 747
S.W.2d 530, 534–35 (Tex. App.—San Antonio 1988, writ denied) (upholding default

judgment’s award of additional DTPA damages based on defendant’s knowing

conduct when evidence included letter from plaintiffs listing defect in the mobile

home; list of contacts between plaintiffs, defendant, and defendant’s sales agents;

written catalogue of personal contacts between plaintiffs and defendant’s factory

representatives; and DTPA notice letter sent by plaintiffs’ attorney). Likewise,

considering all of the evidence, it is not too weak to support the trial court’s

determination that Chen ―in bad faith fail[ed] to refund an application fee . . . in

violation of‖ subsection I of the property code. See Tex. Prop. Code Ann. §§

92.353, .354; Francis, 46 S.W.3d at 242. Thus, the evidence is legally and factually

sufficient to support the default judgment’s award of $3,100 in statutory penalties for

Chen’s violation of the property code.10

Chen) as lost rents; therefore, evidence exists in the record that Chen himself
retained and failed to refund the application deposit.
      10
        Having determined the the evidence is legally and factually sufficient to
support the statutory-property-code penalty awarded to the Johnsons in the trial
court’s default judgment and because the Johnsons concede that if the statutory-
property-code penalty is upheld they are not entitled to also recover the additional
damages awarded under the DTPA, we need not address the portion of Chen’s
                                           13
                                  C. Attorney’s Fees

      The default judgment awarded the Johnsons $5,000 in attorney’s fees. A

claim for attorney’s fees, absent a contract therefor, is a claim for unliquidated

damages. Shockley, 663 S.W.2d at 691. The Johnsons’ attorney made and filed an

―Affidavit of Attorney’s Fees,‖ setting forth his qualifications, the factors delineated in

Texas Disciplinary Rules of Professional Conduct Rule 1.04, the time spent on the

case, and his opinion that the work performed was reasonable and necessary in the

prosecution of the action and that the sum of $5,000 was a fair and reasonable

attorney’s fee. The Johnsons’ attorney’s affidavit is sufficient to support the trial

court’s award of $5,000 in attorney’s fees. See U.S. Auto Ins. Servs., Inc., 2003 WL
22012670, at *3.

      We overrule Chen’s second issue.

                                   VII. CONCLUSION

      Having overruled Chen’s second, third, and fourth issues, having sustained

Chen’s first issue that the Johnsons may recover liquidated damages in the amount

of only $1,500 for the application deposit, and having found that the evidence is

legally and factually sufficient to support the default judgment’s award to the

Johnsons of unliquidated damages in the amount of $3,100 under the property code

and $5,000 in attorney’s fees, we modify the default judgment to delete the $1,000

second issue challenging the sufficiency of the evidence to support the judgment’s
award of additional damages under the DTPA. See Tex. R. App. P. 47.1 (requiring
appellate court to address only issues necessary to disposition of the appeal).

                                            14
award based on Texas Civil Practice and Remedies Code section 134.005 and to

delete the $3,000 award based on violations of the DTPA. The trial court’s default

judgment, as modified, reflects an award to the Johnsons of $1,500 in liquidated

damages; plus $3,100 in unliquidated damages under the property code for total

damages of $4,600; plus prejudgment interest—recalculated on the modified award

of $4,600 at the rate of five percent from August 24, 2011 to July 12, 2012—of

$203.53; plus postjudgment interest on $4,600 at five percent per annum from July

12, 2012 until paid; plus $5,000 in attorney’s fees; plus $561.55 in court costs, which

were uncontested on appeal.        As modified, we affirm the trial court’s default

judgment awarding the Johnsons $10,365.08, plus postjudgment interest on $4,600

(the $4,600 is included in the $10,365.08) at five percent per annum from July 12,

2012, until paid.

                                               SUE WALKER
                                               JUSTICE

PANEL: GARDNER, WALKER, and MCCOY, JJ.

DELIVERED: May 30, 2013

                                          15
APPENDIX A

 PETITION

    16
                                        CV-2011·02750

JODI JOHNSON and                                   §   In the County
JOSEPH JOHNSON Plaintiff                           §
                                                   §
v.                                                 §
                                                   §   Court at Law No. 2
                                                   §
REGION REALTY, INC, and                            §
JINHUI CHEN Defendants                             §
                                                   §
                                                   §   Denton County, Texas

                      PLAINTIFF'S FIRST AMENDED PETITION

TO THE HONORABLE COURT

           Comes now, Plaintiffs, Jodi Johnson and Joseph Johnson, and file this
Petition and show the Court the following:

                                         Parties
1.   Plaintiff Jodi Johnson is a resident of 10769 Brighton Knoll Pkwy, Noblesville,
     TN 46060.
2.   Plaintiff Joseph Johnson is a resident of 10769 Brighton Knoll Pkwy, Noblesville,
     TN 46060

3.   Defendant Region Realty, Inc. is a Texas corporation ("Region Realty") whose
              address is 8551 Boat Club Rd., Ste. 121-163, Fort Worth,
     TX 76179-3638, which may be served with process by serving the Texas Secretary of
     State, 1019 Brazos Street, Austin, Texas 78701, as its agent for service because
     defendant is required by Texas Business Organizations Code section 5.201 to
     appoint and maintain a registered agent in Texas but it has failed to do so. The
     registered agent appointed by Region Realty has left the state and now lives In North
     Carolina.

4.   Defendant Jinhui Chen, an individual who is a nonresident of Texas, whose home is
     located at 968 W Ebony Dr., Chandler, AZ 85248-4327 may be served with process
     by serving the Texas Secretary of State at 1019 Brazos Street, Austin, Texas 78701,
     as Defendant's agent for service because Defendant engages in business in Texas
     but does not maintain a regular place of business in Texas or a designated agent for
     service of process, and this suit arose from Defendant's business in Texas.

        PLAINTIFFS' FIRST AMENDED PETITION                                  Page 1

                                              17
18
                              Discovery-Control Plan

 5.    Plaintiffs intend to conduct discovery under Level 1 of Texas Rule of
                                       Civil
      Procedure 190.2 because this suit involves only monetary relief totaling
      $50,000 or less, excluding court costs, prejudgment interest, and
      attorney fees.

                                       Facts

6.    In August of 2011, Jodi Johnson ("Mrs. Johnson") and her husband Joseph
      Johnson (collectively referred to as "Plaintiffs") sought to rent a home
      located at 1501 Carriage Lane, in Savannah, Texas 76227 (the "Property").
      On August 6, 2011, Plaintiffs filled out the Residential Lease Application (the
      "Application"), attached as Exhibit A.

7.    The Application was given to Angela Fowler ("Ms. Fowler"), in her capacity
      as the agent and realtor for Region Realty. At all times Ms. Fowler was
      acting as the agent of Region Realty and Jinhui Chen. The application was
      turned in with an application fee of $80. At no point was the Application
      returned to Mrs. Johnson by the Defendants to indicate that the Application
      had been accepted. See Exhibit A.

8.    The Application states that "unless Landlord and Applicant enter into a
      separate written agreement otherwise, the Property remains on the market
      until a lease is signed by all parties and Landlord may continue to show the
      Property to other prospective tenants and accept another offer." See Exhibit
      A.

9.    Nowhere in this Application did it state that an Application deposit was non-
      refundable for any reason or that an Application deposit is a reservation of
      rent. Nor did Defendants inform Plaintiffs of any of this orally before the
      Application was submitted or an Application deposit was paid.
10. On August 9, Mrs. Johnson was contacted by Ms. Fowler and told to pay
    the Application deposit ("Application deposit") online. On August 10, Mrs.
    Johnson did in fact pay a $1,500 Application deposit online, which was
    accepted by all Defendants, as shown by Exhibit B.
11. On August 14, Mrs. Johnson requested a refund through her own realtor,
    Samantha Wallace.

12. On August 15 and 16, Mrs. Johnson twice spoke to Ms. Fowler over the
    phone to inform Ms. Fowler that she was concerned that repairs would not
    be made to the property in time for her to move in, and that she may not be
    moving to the area after all. Mrs. Johnson requested the Application deposit
    be returned to her. At that point, Ms. Fowler stated that the Application was
    not a form furnished by Defendants, and was a general application not
    specific to Region Realty, Inc. or any Defendants. Defendants did not

 PLAINTIFFS' FIRST AMENDED PETITION                                         Page 2

                                         19
     45

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       thereafter furnish an application form that Defendants would accept.
       Defendants accepted the Application deposit on terms not disclosed in the
       Application, and in contravention of all oral and written communications to
       Plaintiff. The Defendants' "Deemed Rejection" of Plaintiffs is demonstrated by
       their failure to return the accepted Application.

13. It was not until August 24 that Defendants revealed to Plaintiffs that no refund
    was to be provided. See Exhibit C. On Monday, August 15, 2011, and
    September 9, 2011, Plaintiffs made a demand for the refund of the Application
    deposit, shown by Exhibit D and E.

14. Defendants have failed and refused to refund the Application deposit.

                         Violation of The Texas Property Code

15. Defendants' have violated the Texas Property Code by refusing to refund the
    Application deposit.

 16. All Defendants are Landlords within the definition of the Texas Property
    Code.

 17. Plaintiffs are applicants or rental applicants within the definition of the Texas
    Property Code.

 18. The $1,500 deposit paid in connection with the Application is an Application
    Deposit within the definition of the Texas Property Code.

19.     Plaintiffs were rejected as applicants by the Defendants, and are therefore
       entitled to a refund of the Application deposit. Defendants did not return the
       Application as accepted, did not furnish Plaintiffs a lease form, and in fact
       rejected Plaintiffs because she did not fill out the correct application form.

20.     Defendants' are liable to Plaintiffs for the Application deposit because they
       requested that the application deposit be mailed to them, at the address furnished
       by Plaintiffs, in accordance with the Texas Property Code.

 21. Defendants have in bad faith failed to refund the Application Deposit to
    Plaintiffs. Defendants are therefore liable for an amount equal to the sum of
    $100, three times the amount of the Application deposit. and Plaintiffs' reasonable
    attorney's fees in a suit to recover the Deposit.

                                   Breach of Contract

22.     In the alternative, and without waiving the foregoing, if the Application was
       accepted by Defendants, and therefore a valid Contract, Defendants are liable
       to Plaintiffs for breach of Contract.

      PLAINTIFFS' FIRST AMENDED                                                   Page 3
      PETITION
                                                                                            46
23. The Application provides that the applicant submit an application deposit,
    which was orally agreed to as $1,500.00.

24. The Application states that "Unless Landlord and Applicant enter into a separate
     written agreement otherwise, the Property remains on the market until a lease is
     signed by all parties and Landlord may continue to show the Property to other
     prospective tenants and accept another offer." Nowhere in this Application did it
     state that the Application deposit was non-refundable for any reason or that the
     Application deposit is a reservation of rent. Nor did Defendants inform Plaintiffs of
     any of this information orally or in writing before the Application was submitted or
     the Application deposit was paid.

25. Plaintiffs fully performed their obligations under the Application by providing the $80
     application fee and the $1,500 Application deposit.

 26. The Defendants breached the contract by not returned the Application
    Deposit.

27.     Defendants' breach caused injury to plaintiff, which resulted in the following
       damages: Loss of the Application deposit.

28. Plaintiffs seek unliquidated damages within the jurisdictional limits of this court.

29.     Plaintiffs are entitled to recover reasonable attorney fees under Texas Civil
       Practice & Remedies Code chapter 38 because this suit is for breach of a
       written contract. Plaintiffs retained counsel, who presented plaintiff's claim to
       Defendant Region Realty, Inc. and Angela Fowler, Defendant Jinhui Chen's agent.
       Defendants did not tender the amount owed within 30 days of when the claim
       was presented.

                                Fraud By Nondisclosure

30. In the alternative, and without waiving the foregoing, Defendants are liable to
    Plaintiffs because of fraud by nondisclosure.

31. Defendants concealed and failed to disclose material facts related to the
    Application: that the Application deposit would not be refundable for any reason
    whatsoever or that it was the practice of Defendants not to return application
    deposits.

32. Defendants had a duty to disclose the information to Plaintiffs because Defendants
     because Defendants' representations to Plaintiffs created a substantially false
     impression by concealing the Defendants' intent to not refund the Application fee.
     Defendants knew Plaintiffs were ignorant of the information and did not have an
     equal opportunity to discover the truth. Defendants' actions indicated to Plaintiffs
     that the Application deposit was refundable.

      PLAINTIFFS' FIRST AMENDED PETITION                                            Page
                                                                                    4
                                                                                              47
33. Defendants deliberately remained silent and did not disclose the information
    to Plaintiffs. By deliberately remaining silent, Defendants intended for
    Plaintiffs to act without the information.

34. The information was a material provision of the Application and the contract
    between Defendants and Plaintiff.

35. Plaintiffs justifiably relied on Defendants' deliberate silence.

36. By deliberately remaining silent, Defendants proximately caused injury to
    Plaintiffs, which resulted in the following damages: Loss of the Application
    deposit.

37. Plaintiffs seek unliquidated damages within the jurisdictional limits of this court.

38. Plaintiffs' injuries resulted from Defendants' actual fraud or malice, which entitles
    Plaintiffs to exemplary damages under Texas Civil Practice & Remedies Code
    section 41.003(a).

                               Deceptive Trade Practices

39. In the alternative, and without waiving the foregoing, Defendants are liable under
    the Texas Deceptive Trade Practices Act ("DTPA").

40. Plaintiffs are consumers under the DTPA because Plaintiffs are individuals who
    sought goods by lease.

41. Defendants are individuals and entities that can be sued under the DTPA

42. Defendants violated the DTPA when Defendants:

          a. engaged in false, misleading, or deceptive acts or practices that Plaintiffs
             relied on to Plaintiffs' detriment. Specifically, Defendants represented
             that that the Application's agreements conferred or involved rights,
             remedies, or obligations that it did not; and also failed to disclose
             information about goods or services that was known at the time of the
             Application and was intended to induce Plaintiffs into a transaction that
             Plaintiffs would not have entered into if the information had been
             disclosed.

          b. engaged in an unconscionable action or course of action that, to
             Plaintiffs' detriment, took advantage of Plaintiffs' lack of knowledge, ability,
             experience, or capacity to a grossly unfair degree. Specifically,
             Defendants took advantage of Plaintiffs' lack of knowledge of the
             "practices" of Defendants.

   PLAINTIFFS' FIRST AMENDED PETITION                                               Page 5

                                                                                                48
43. Plaintiffs gave Defendants notice of their claim.

44. Defendanfs wrongful conduct was a producing cause of plaintiffs injury, which
    resulted in the following damages: Loss of the Application deposit.

45. Plaintiffs seek unliquidated damages within the jurisdictional limits of this court.

46.     Defendants acted knowingly and intentionally, which entitles Plaintiffs to
       recover mental-anguish damages under Texas Business & Commerce Code
       section 17.50(b)(1).

47.     Defendants acted knowingly, which entitles Plaintiffs to recover treble
       economic damages under Texas Business & Commerce Code section
       17.50(b)(1).

48. Defendants acted intentionally, which entitles Plaintiffs to recover treble economic
    and mental anguish damages under Texas Business & Commerce Code
    section 17.50(b)(1).

49.     Plaintiffs are entitled to recover reasonable and necessary attorney fees for
       prosecuting this suit under Texas Business & Commerce Code section
       17.50(d).
                                          Theft

50. Pleading in the alternative, and without waiving the foregoing, Plaintiffs plead their
    claim under the Texas Theft Liability Act.

51. Plaintiffs bring this action under the Texas Theft Liability Act for an unlawful
    appropriation of property under Texas Penal Code§ 31.03.

52.    Plaintiffs were entitled to possession of the Application Deposit, in
       accordance with the Application and her demand under the Texas Property Code.

53. The Plaintiffs had a possessory right to the Application deposit.

54. Defendants unlawfully misappropriated the Application deposit by taking it into their
     own account for use and benefit without the Plaintiffs' effective consent.

55. Defendants' unlawful appropriation was made with the intent to deprive
    Plaintiffs of the property.

56. The Plaintiffs sustained damages as a result of the theft in excess of $1,500.

57. Upon proof of actual damages, Plaintiffs are entitled to additional statutory
    damages of up to $1,000 from Defendants under Texas Civil Practice &

      PLAINTIFFS' FIRST AMENDED PET!TION                                          Page 6

                                                                                             49
       Remedies Code section 134.005(a)(1).

58.     Plaintiffs seek unliquidated damages within the jurisdictional limits of this
       court.

                                       Jury Demand

  59. Plaintiffs demand a jury trial and tender the appropriate fee with this petition.

                                   Conditions Precedent

60. All conditions precedent to Plaintiffs' claim for relief have been performed or have
    occurred.

                                   Request for Disclosure

61.     Under Texas Rule of Civil Procedure 194, Plaintiffs request that Defendants
       disclose, within 50 days of the service of this request, the information or
       material described in Rule 194.2.

                                           Interest

62.     As a result of each of the Defendants' conduct, as hereinabove described,
       Plaintiffs have been damaged and are entitled to recover pre-judgment interest.
       Consequently, Plaintiffs seek pre-judgment interest at the maximum lawful rate
       from the date of injury until judgment to prevent the unjust enrichment of the
       Defendants who have had the use of money rightfully due to Plaintiffs during the
       period preceding this lawsuit, and during the pendency hereof. Additionally,
       Plaintiffs are entitled to recover, and seek, post-judgment interest at the maximum
       lawful rate from the date of judgment until paid

                                           Prayer

63. For these reasons, Plaintiffs ask that the court issue citation for Defendants to
    appear and answer, and that Plaintiffs be awarded a judgment against
    Defendants for the following:

 1. Actual damages in an amount in excess of the minimum jurisdictional limits of
    this Court;

  2. Three times actual damages;

  3. Exemplary damages;

  4. Additional statutory damages;

  5. All damages available under the DTPA;

      PLAINTIFFS' FIRST AMENDED PETITION                                            Page 7

                                                                                             50
6. Reasonable and necessary attorneys' fees for the prosecution of this action,
    together with additional awards in the event of appeals;

7, Pre-judgment interest thereon at the maximum lawful rate from the date of injury
    until judgment;

8. Post-judgment interest at the highest lawful rate from the date of judgment until
    paid;

9. Costs of suit; and

10. Such other and further relief to which Plaintiffs may be justly entitled.

                                            Respectfully submitted,
                                            LAW OFFICE OF DAN E. MARTENS

                                                    Dan E. Martens
                                                    State Bar No. 13050500
                                                    17101 Preston Road,
                                                    Suite 160S Dallas, TX
                                                    75248
                                                    Telephone: (972) 335-3888
                                                    Fax:       (972) 335-5805
                                                    ATTORNEY FOR PLAINTIFFS

   PLAINTIFFS' FIRST AMENDED                                                      Page 8
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EXHIBIT A

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