Court Opinion

ID: 4351159
Source: CourtListenerOpinion
Date Created: 2018-12-17 15:48:28.129589+00
Date Added: 2024-06-11T14:34:31.383344
License: Public Domain

DISSENT; and Opinion Filed December 13, 2018

                                           S   In The
                                  Court of Appeals
                           Fifth District of Texas at Dallas
                                        No. 05-16-01472-CV

                    SAMUEL ADAM AFLALO, Appellant
                                 V.
        DEVIN LAMAR HARRIS AND MEGHAN THERESA HARRIS, Appellees

                           On Appeal from the 95th Judicial District Ct
                                     Dallas County, Texas
                              Trial Court Cause No. DC-16-00247

                                DISSENTING OPINION
                                    Before the En Banc Court
                               Dissenting Opinion by Justice Francis
         The majority concludes the failure of a seller in a residential real estate contract to

 produce a document that “exceeded the minimum required by the Texas Property Code,” but

 was required by the seller’s own disclosure notice, did not constitute a breach justifying

 termination of the contract by the buyers for inadequate notice. Based on the same general

 contract law and principles of statutory interpretation cited by the majority to support its decision,

 I conclude, as did the trial court, that such failure was a breach allowing termination. Therefore,

 I respectfully dissent.

       Seller Aflalo and the Harrises entered into a real estate contract on November 20, 2015,

 with a closing date of December 18. Under section 7B(2) of the contract, seller Aflalo had three

 days to provide a Seller’s Disclosure Notice “pursuant to” section 5.008 of the property code. If
 he failed to provide the notice, the Harrises could terminate the contract prior to closing and have

 their earnest money returned to them. If Aflalo delivered the notice, the Harrises could terminate

 for any reason within seven days after receiving the notice or before the closing date, whichever

 occurred first, and have their earnest money returned to them. If either party defaulted, the other

 party was entitled to enforce specific performance or terminate the contract and receive the

 earnest money.

        On the same day the contract was signed, Aflalo provided the Harrises a Seller’s

 Disclosure Notice using the TAR-1406 form from the Texas Association of Realtors. The form

 is, as the majority terms it, a “fill-in-the-blanks-and-check-the-boxes form,” just like the real

 estate contract executed in this case and every other form at issue here. At the top of the form,

 in bold writing, it states: “This form complies with and contains additional disclosures which

 exceed the minimum disclosures required by the [Property] Code.” As relevant here,

 section 5.008 of the property code requires a seller of residential real property to provide the

 purchaser of the property “a written notice as prescribed by this section or a written notice

 substantially similar to the notice prescribed by this section which contains, at a minimum, all

 of the items in the notice prescribed by this section.” TEX. PROP. CODE ANN. § 5.008(a)

 (Supp.) (emphasis added).

       Specifically, section 5.008 requires a seller to disclose if he is aware of numerous

conditions on the property, including whether the property is in a 100-year floodplain and has

present flood insurance coverage. Id. § 5.008(b)4. If the seller answers “yes” to the conditions,

the statute requires him to explain and “[a]ttach additional sheets if necessary.” Id. The form

used by Aflalo asked whether the property was located in a 100-year floodplain, was located in

a floodway, and had present flood insurance coverage. Like the statute, the form provided that if

the seller answered “yes” he was to “explain” any condition and “[a]ttach additional sheets if

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necessary[.]” But, in addition to the statute, if the seller answered “yes” to the condition

regarding present flood insurance coverage, the form directed the seller to “attach TAR-1414,”

a three-page document that provides information to the buyer about flood zones, special hazard

areas, flood insurance, and FEMA. The relevant portion of the TAR-1406 form completed by

Aflalo provides:

        Aflalo answered “yes” that the property was located in a floodway and had present flood

 insurance and previous roof repairs. Aflalo also provided the following handwritten explanation:

 “I have flood insurance. My lender told me that it was recently added to a flood area.” He did

 not, however, attach the TAR-1414 form as directed.

        Four days after the TAR-1406 notice was delivered, the Harrises’ agent sent an email to

 Aflalo’s agent requesting the missing TAR-1414 form. Aflalo did not respond and did not provide

 the requested form. One day before closing, the Harrises notified Aflalo they were terminating

 the contract under section 7B(2) requiring the seller’s disclosure notice. Aflalo relisted his

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property and made demand on the Harrises to perform according to the agreement. Three weeks

later, he sued the Harrises for breach of contract seeking specific performance. The TAR-

1414 form was ultimately provided during discovery after this lawsuit was filed. Aflalo alleged

he timely provided the Harrises with the seller’s disclosure notice because neither the contract

he signed nor the property code required that he attach the TAR-1414 form, regardless of

directives included in the TAR-1406 form chosen by him.

       The majority concludes the trial court erred by granting the Harrises’ motion for

summary judgment because the undisputed facts established Aflalo provided the required

seller’s disclosures, rendering the Harrises’ termination untimely and a breach of the agreement.

The majority holds Aflalo was not required to provide a TAR-1414 form to perform under the

contract. I disagree.

       In construing a written contract, the primary concern of the court is to ascertain the true

intentions of the parties as expressed in the instrument. Valence Operating Co. v. Dorsett, 164

S.W.3d 656, 662 (Tex. 2005). To achieve this objective, courts should examine and consider

the entire writing in an effort to harmonize and give effect to all provisions of the contract so

that none will be rendered meaningless. Id. We presume the parties to a contract intend every

clause to have some effect. Ogden v. Dickinson State Bank, 662 S.W.2d 330, 331 (Tex. 1983).

We give terms their plain, ordinary, and generally accepted meanings unless the contract itself

shows them to be used in a technical or different sense. Valence Operating, 164 S.W.3d at

662. We enforce an unambiguous document as written. Heritage Res., Inc. v. NationsBank, 939

S.W.2d 118, 121 (Tex. 1996).

       Section 7 of the sales contract is entitled “PROPERTY CONDITION.” Subsection B

is entitled, “SELLER’S DISCLOSURE NOTICE PURSUANT TO § 5.008, TEXAS

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 PROPERTY CODE (Notice)” followed by three subsections. The Harrises checked the box

 to subsection 7B(2), which stated:

       (2) Buyer has not received the Notice. Within         3       days after the effective
       date of this contract, Seller shall deliver the Notice to Buyer. If Buyer does not
       receive the Notice, Buyer may terminate this contract at any time prior to the
       closing and the earnest money will be refunded to Buyer. If Seller delivers the
       Notice, Buyer may terminate this contract for any reason within 7 days after Buyer
       receives the Notice or prior to the closing, whichever first occurs, and the earnest
       money will be refunded to Buyer.

       The majority, citing only general authority, concludes the above notice requirement was

limited to information required to be disclosed under section 5.008 of the property code and,

because neither the property code nor the sales contract mentions the TAR-1414 form, Aflalo was

not required to provide one under the contract. The majority concludes that “[b]ecause form TAR-

1406 as completed by Aflalo was not exchanged information between the parties at the time of

the contract, it was not a part of the contract when the parties entered into their contract.” The

majority cites no authority, other than general principles of contract and statutory interpretation,

to support this conclusion.

         Aflalo argues, and the majority agrees, the sample form provided in section 5.008 only

 required he answer “yes” or “no” to whether he was aware of “Present Flood Insurance

 Coverage,” and if so, to “explain” and “[a]ttach additional sheets if necessary,” which he said he

 did. As support, Aflalo relies on Sherman v. Elkowitz, 130 S.W.3d 316 (Tex. App.—Houston

 [14th] Dist. 2004, no pet.), for the proposition that the use of “varying forms should not alter the

 obligations of a party under the Property Code.” While the majority fails to mention the Sherman

 case, Aflalo reads too much into the Houston court’s opinion. I find it relevant and specific to

 this discussion.

         In Sherman, the buyers purchased a home and then discovered various defects in the

 property. They learned the sellers had sued the prior owner for failing to disclose these same

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 alleged defects. Id. at 318. Neither the defects nor the lawsuit had been disclosed in the seller’s

 disclosure notice. The buyers sued the sellers, the sellers’ agent, and the realty company for

 alleged misrepresentations and nondisclosures in the disclosure notice. The buyers obtained

 a favorable judgment against the sellers, but the trial court granted a directed verdict in favor of

 the sellers’ agent and the realty company. Id. at 319.

       On appeal, the buyers argued they presented evidence that the listing agent knew of the

 earlier lawsuit and could be held liable for failing to disclose that fact. Id. at 323. The question

 before the Houston court was whether the buyers were entitled to disclosure of the earlier lawsuit.

 As in this case, the sellers’ disclosure notice varied from the statute. Id. But, unlike here,

 that variance arguably narrowed the scope of the disclosures required by section 5.008, so the

 court used the broader, statutory requirements to determine the sellers’ disclosure obligations.

 See id. The court’s analysis showed the buyers were not entitled to relief because the disclosure

 of a lawsuit that was not pending was not required by either the statute or the disclosure form

 used in that case. Nothing in Sherman suggests that varying forms can never broaden the

 disclosure obligations of sellers. If anything, the case supports only the proposition that such

 forms cannot reduce the seller’s disclosure obligations set out in the statute.

       While I hesitate to attempt a dissection of the majority’s depiction of the facts to benefit its

conclusions, I must identify a couple of troubling points. First, the majority characterizes the sales

contract as requiring Aflalo to simply make the disclosures required by section 5.008 of the property

code. This is not accurate. The sales contract specifically required Aflalo to provide the Harrises

with a seller’s disclosure notice “pursuant to” section 5.008, meaning Aflalo had to provide a notice

containing at least certain statutory information. The sales contract did not limit the information

Aflalo was to provide in the disclosure notice. Contrary to the majority’s apparent position, a

completed seller’s disclosure notice was not a requirement of a “third party such as the Texas

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Association of Realtors.” Nor was it a “post-contract, unilateral desire for information” by the

Harrises. Rather, a completed disclosure notice was an implicit, if not explicit term of the sales

contract. Because Aflalo did not provide the Harrises with a completed seller’s disclosure notice

within the time allotted, Aflalo breached the sales contract, which allowed the Harrises to terminate.

       Second, the majority attempts to bolster its position by mischaracterizing the structure of

the TAR-1406 form used by Aflalo (chart included above). The majority describes it as listing the

section dealing with “attaching additional sheets as necessary” as appearing directly below

“Present Flood Ins. Coverage,” which suggests submitting additional information about flood

insurance was discretionary. But the form actually reads “If yes, attach TAR-1414” directly below

the insurance coverage line, thereby requiring the form to be provided if the relevant box is

checked. I agree Aflalo made handwritten comments about having flood insurance, that his lender

told him “it was recently added to a flood area,” and that he made roof repairs. But these notations

at the end of section three do not replace the requirement that he attach a TAR-1414 form. While

the majority has briefed the issue exhaustively, I do not dispute section 5.008 does not require the

information contained in the TAR-1414 form. This is simply not pertinent to the discussion

because the sales contract required a seller’s disclosure notice and the seller’s disclosure notice

required the information.

         Third, the majority goes through extensive detail about the contents of the TAR-1414

 form only to dismiss it as unnecessary, general information. While the majority does not say so

 directly, the import of this discussion is that the form is immaterial. I agree the form does not

 provide property-specific information, but it does provide critical information to buyers

 purchasing a potentially flood-prone property. The TAR-1414 form provides notice to buyers

 about special flood hazard areas as designated by FEMA. It addresses high-flood-risk areas and

 discusses the availability and advisability of flood insurance and the importance of determining

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elevation information and certificates. While information about flood areas, flood insurance,

and FEMA may not be of paramount importance in all areas of Texas, many parts of this State

have been devastated by flooding, and potential purchasers in those areas might feel strongly

about requiring and receiving disclosure of flood hazard information.

       By using the TAR-1406 form to fulfill his contractual obligations, Aflalo did not

undertake an onerous burden. Looking at the substance of the TAR-1406 form, six of the eleven

sections of the form require the attachment of additional sheets as necessary where an

explanation might reasonably be needed. But in the entire five pages of the TAR-1406 form,

only three property conditions require that a different, specifically-numbered TAR form be

attached. The property conditions that required forms were: (1) the Present Flood Ins. Coverage

condition (TAR-1414), (2) the Information About On-Site Sewer Facility (TAR-1407) (which

seller Aflalo checked “unknown” and was not required to submit an attachment), and (3) lead-

based paint hazards (TAR-1906) (which Aflalo also checked “unknown”).

       To meet his contractual obligation, Aflalo chose to use a TAR-1406 form that required

him to provide a TAR-1414 form once he stated he had present flood insurance coverage. When

Aflalo did not attach the form to the disclosure notice provided to the Harrises, the Harrises’ agent

asked for the additional information. Aflalo did not respond. By failing to provide the TAR-

1414 form, he failed to fully comply with his obligation under the sales contract regarding the

seller’s disclosure notice and the Harrises therefore were allowed to terminate the contract at any

time. Because the Harrises established as a matter of law that Aflalo did not perform his

obligations and they did not breach the contract, the trial court did not err by granting the

Harrises’ motion for summary judgment and rendering a take-nothing judgment on Aflalo’s

breach of contract claim.

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         For these reasons, I dissent.

                                                     /Molly Francis/
                                                     MOLLY FRANCIS
                                                     JUSTICE

Wright, C.J. and Brown, J., join in this dissent

161472DF.P05

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