Court Opinion

ID: 3091131
Source: CourtListenerOpinion
Date Created: 2015-10-16 03:59:36.082158+00
Date Added: 2024-06-11T09:52:30.812100
License: Public Domain

IN THE
                          TENTH COURT OF APPEALS

                                 No. 10-10-00298-CV

WESLEY CARL RETHERFORD, JR., D/B/A
WHOLE HOUSE INSPECTION COMPANY,
                                                            Appellant
v.

FRANK CASTRO AND TERRI CASTRO,
                                                            Appellee

                          From the County Court at Law
                             Coryell County, Texas
                             Trial Court No. 09-8860

                                     OPINION

      Wesley Retherford, a TREC-licensed professional home inspector, appeals from a

judgment entered against him pursuant to the Deceptive Trade Practices Act. TEX. BUS.

& COM. CODE Ch. 17 (West 2011). Retherford was sued pursuant to the DTPA and for

negligent misrepresentation. After a bench trial, the trial court entered a judgment for

violations of the DTPA only. Retherford complains that the trial court failed to properly

apply the professional services exemption to the DTPA and that the evidence was

legally insufficient for the trial court to find that he had violated the DTPA. Because we
find that the professional services exemption applies and no exceptions to that

exemption were met, we reverse the judgment of the trial court and remand for a new

trial on the issue of negligent misrepresentation.

Factual Background

       Retherford, a TREC-licensed professional real estate inspector, was hired by

Frank and Terri Castro to perform a home inspection of a residence that they had

signed a contract to purchase. Retherford completed the inspection in March of 2008

and noted in the “Roof Structure and Attic” section that it was “Not Functioning or in

Need of Repair” because there was water damage in the attic and also observed that

there was water damage in two rooms of the house, but believed that the water damage

was caused by condensation from the metal roof resulting from a lack of ventilation.

Retherford indicated that the water damage was not a serious issue in his inspection

report, although he included photos of the relevant areas. In the report, Retherford also

gave the Castros advice on how to fix the ventilation issues in the attic. Retherford

noted that the roof covering was inspected but stated “No problems were noted.” The

Castros purchased the house “as is.”

       In October of 2008, in the first big rain after the Castros’ purchase, approximately

three inches of rain fell and water started running down the wall of Castro’s residence

in the same place where the water damage was noted on the inspection report. The

Castros went up on the roof to look for problems and discovered loose screws on the

roof, some of which were visibly noticeable and could be turned with their fingers. In

Retherford v. Castro                                                                 Page 2
November of 2008, Castro took photographs of the roof from the attic which showed

the same damage Retherford had included in his report.

       The Castros repaired the roof in April of 2009 but could not afford to replace the

roof entirely as recommended. Prior to having the roof repaired, in March of 2009, the

Castros had a second TREC-licensed professional home inspector to inspect the roof

and ascertain why the roof was leaking. This inspector determined that many of the

screws on the roof were loose and found black discoloration stains around the screw

shanks in the attic, which he contended showed long-term water damage of more than

twelve months’ age. The inspector observed screws that were sticking up out of the

roof from the ground which he also believed had been in that state for at least a year.

       The second inspector explained the proper method to inspect a metal roof and

opined that the leaks would have been discovered if Retherford had the necessary

experience and knowledge to properly inspect the roof, although he did not know

Retherford or anything about his qualifications.      Further, pursuant to TREC rules

regarding home inspections the cause of the moisture was not required to be disclosed

but that adequate ventilation would not have solved the problem of the moisture

because it was actually caused by a leaking roof.

       The individual who repaired the roof also testified that the black discoloration he

observed in the wooden beams in the attic had to have been there for longer than

twelve months and that he found approximately 200 screws of varying degrees of

looseness on the roof out of approximately 1500 on the entire roof when his company

repaired the roof.

Retherford v. Castro                                                                Page 3
       The Castros ultimately sued Retherford and alleged violations of the DTPA and a

claim for negligent misrepresentation. At the trial before the court, the trial court found

that Retherford represented that his services had characteristics, uses, and benefits

which they did not have and that he represented that his services were of a particular

standard or quality when they were not. The trial court entered judgment for the cost

of the repairs and attorney’s fees.

Professional Services Exemption

       The DTPA was designed to “protect consumers against false, misleading, and

deceptive business practices, unconscionable actions, and breaches of warranty and to

provide efficient and economical procedures to secure such protection.” TEX. BUS. &

COM. CODE ANN. § 17.44(a) (West 2011). However, the DTPA provides an exemption

from liability to those who render professional services when the essence of that service

is based on providing advice, judgment, or opinion. TEX. BUS. & COM. CODE ANN. §

17.49(c) (West 2011), amended by Act of May 28, 2011, 82d Leg., R.S., ch. 189, § 17.49, 2011

Tex. Sess. Law Serv. (West). A professional service is one that arises “out of acts

particular to the individual’s specialized vocation.” Nast v. State Farm Fire & Cas. Co., 82
S.W.3d 114, 122 (Tex. App.—San Antonio 2002, no pet.). “An act is not a professional

service merely because it is performed by a professional; rather, it must be necessary for

the professional to use his specialized knowledge or training.” Id.

       Once an individual is determined to have provided “professional services,” there

are several exceptions for which the exemption does not apply, such as

misrepresentations of fact, failures to disclose information in violation of section

Retherford v. Castro                                                                  Page 4
17.46(b)(24), unconscionable actions or courses of action; breaches of an express

warranty, or violations of section 17.46(b)(26).                 TEX. BUS. & COM. CODE ANN. §

17.49(c)(1)-(5) (West 2011).

        What professions are included in the professional services exemption was not

statutorily defined. Generally, lawyers, accountants, and doctors have qualified for this

exemption as long as the conduct at issue involves the giving of advice, judgments, or

opinions. See, e.g., Pipkin v. Henry & Peters. P.C. (In re R & C Petroleum, Inc.), 236 B.R.
355, 361 (Bankr. E.D. Tex. 1999) (“[The Exemption] clearly excludes professional service

providers such as attorneys, doctors, and accountants, among other licensed

professionals.”). What other professionals are included or what criteria should be used

to determine who is a professional for purposes of the DTPA has not been established

with any degree of certainty and rarely has been addressed, much less squarely

decided, by the appellate courts.1             When the professional services exemption was

1 See, e.g., Rangel v. Lapin, 177 S.W.3d 17, 2005 Tex. App. LEXIS 318 (Tex. App.—Houston [1st Dist.] 2005)
(exemption applies to legal services); Murphy v. Campbell, 964 S.W.2d 265, 268-69 (Tex. 1997) (applying
exemption to accounting services); Tyler v. F. A. Bartlett Tree Expert Co., 2006 U.S. Dist. LEXIS 60160 (W.D.
Tex. Aug. 11, 2006) (certified arborist qualifies under professional services exemption); Omni Metals, Inc.
v. Poe & Brown of Tex., Inc., No. 14-00-01081-CV, 2002 Tex. App. LEXIS 4334, 2002 WL 1331720, at *8-9
(Tex. App.—Houston [14th Dist.] June 13, 2002, pet. denied) (not designated for publication) (insurance
agent and insurer not providing advice, judgment, opinion, or other similar skill by faxing certificate of
insurance); Nast v. State Farm Fire & Cas. Co., 82 S.W.3d 114, 122 (Tex. App.—San Antonio 2002, no pet.)
(contention that insurance agent made misrepresentation of fact regarding whether a house was in a
flood plain so whether exemption applied was not decided); Shands v. Texas State Bank, No. 04-00-00133-
CV, 2001 Tex. App. LEXIS 109, 2001 WL 21490, at *10 (Tex. App.—San Antonio Jan. 10, 2001, no pet.) (not
designated for publication) (bank provided services as trustee and qualified for the exemption); Trusky v.
Holoway, No. 14-04-00196-CV, 2005 Tex. App. LEXIS 3727, 2005 WL 1150033, at *3 (Tex. App.—Houston
[14th Dist.] May 17, 2005, no pet.) (surveyor did not establish based on the facts provided that he
qualified for the exemption as a matter of law so whether surveyors qualify was not decided); Cole v.
Cent. Valley Chems., Inc., 9 S.W.3d 207, 210 (Tex. App.—San Antonio 1999, pet. denied) (holding that
professional advice from an agronomist-working as a salesman in an agricultural products store-did not
constitute professional services for purposes of the exemption; the court did not rule on whether the

Retherford v. Castro                                                                                  Page 5
enacted, the Legislature could not agree on a definition and therefore, did not include

one and left the language vague. See David Skeels, The DTPA Professional Services

Exemption: Let ‘em be Doctors and Lawyers and Such, 55 BAYLOR L. REV. 783, 805 & n.97

(2003) (discussion of the legislative history of the exemption).

        There are other causes of action that have addressed what constitutes

“professional services,” such as insurance policy coverage claims and negligent

misrepresentation causes of action. In a case relating to insurance policy exclusions for

professional services, the Eastland Court of Appeals has suggested that a professional:

(1) engages in work involving mental or intellectual rather than physical labor, (2)

requires special education to be used on behalf of others, and (3) earns profits

dependent mainly on these considerations.                See Duncanville Diagnostic Ctr., Inc. v.

Atlantic Lloyd's Ins. Co., 875 S.W.2d 788, 790 (Tex. App.—Eastland 1994, writ denied);

Md. Cas. Co. v. Crazy Water Co., 160 S.W.2d 102, 104-05 (Tex. Civ. App.—Eastland 1942,

no writ).

        A cause of action against individuals in certain professions for negligent

representation could be compared with those to be considered to be providing

“professional services” for purposes of the exemption. This is because a cause of action

for negligent representation relates to representations made in the course of a

defendant’s business or in a transaction in which he has a pecuniary interest wherein he

salesperson was a professional, but instead found that the consumer’s complaint was based on the
purchase of the product, not the rendering of advice); Serv. Corp. Int’l Mgmt. Corp. v. Galvan, No. 13-99-
468-CV, 2001 Tex. App. LEXIS 747, at 15 (Tex. App.—Corpus Christi Jan. 18, 2001, no pet.) (not
designated for publication) (funeral service provider qualifies for the exemption but little analysis
provided).

Retherford v. Castro                                                                               Page 6
supplies “false information” for the guidance of others in their business, which has been

applied to professionals in various occupations. Fed. Land Bank Ass'n of Tyler v. Sloane,

825 S.W.2d 439, 442 (Tex. 1991); see also RESTATEMENT (SECOND) OF TORTS § 552 (1977);

McCamish, Martin, Brown & Loeffler v. F.E. Appling Interests, 991 S.W.2d 787, 791 (Tex.

1999) (acknowledging the application of section 552 to other professionals, including

auditors, physicians, real-estate brokers, securities placement agents, accountants,

surveyors, and title insurers and extending the application to attorneys).

       The Occupations Code defines a real estate inspection as “a written or oral

opinion as to the condition of the improvements to real property, including structural

items, electrical items, mechanical systems, plumbing systems, or equipment.” TEX.

OCC. CODE ANN. § 1102.001(9) (West 2004). These inspections may be performed by a

professional inspector, who is “a person who represents to the public that the person is

trained and qualified to perform a real estate inspection and who accepts employment

to perform a real estate inspection for a buyer or seller of real property.” TEX. OCC.

CODE ANN. § 1102.001(8) (West 2004).

       In order to qualify as a professional real estate inspector, a person must have

held a real estate inspector’s license for twelve months, have performed at least 175 real

estate inspections with indirect supervision, completed at least 30 more hours of “core

real estate inspection courses” in addition to those required to qualify as a real estate

inspector, completed 8 classroom hours studying the “standards of practice, legal

issues, or ethics related to the practice of real estate inspecting,” and pass an exam. TEX.

OCC. CODE ANN. § 1102.109 (West 2004).

Retherford v. Castro                                                                  Page 7
       To qualify as a real estate inspector, a person must have held an apprentice home

inspector’s license for three months, have completed at least 25 inspections under direct

supervision, completed 90 classroom hours of “core real estate inspection courses,” be

sponsored by a professional real estate inspector, and pass an exam. TEX. OCC. CODE

ANN. § 1102.108 (West 2004). There are no educational or other requirements beyond

age, citizenship, and character in order to qualify as an apprentice inspector. TEX. OCC.

CODE ANN. § 1102.107 (West 2004).

       There have been other specific statutes enacted that protect other “professions”

who provide “professional services” enacted by the Legislature since the adoption of

the exemption, such as architects and engineers. See, e.g., TEX. CIV. PRAC. & REM. CODE

ANN. Ch. 150 (West 2011) (architects, engineers, and surveyors).           However, the

professions covered by those statutes are specifically defined by statute. See TEX. CIV.

PRAC. & REM. CODE ANN. § 150.001(1) (West 2011) (includes a licensed architect, licensed

professional engineer, registered professional land surveyor, or registered landscape

architect). Section 17.49 of the DTPA was amended recently to specifically exclude

brokers and sellers of real estate included in Chapter 1101 of the Occupations Code

from liability under the DTPA for advice or opinions while acting as a broker or seller,

with exceptions to the exclusion for misrepresentations of fact, failures to disclose, and

unconscionability. TEX. BUS. & COM. CODE ANN. § 17.49(i) (West 2011), amended by Act

of May 28, 2011, 82d Leg., R.S., ch. 189, § 17.49, 2011 Tex. Sess. Law Serv. (West).

Licensed professional home inspectors are not included in Chapter 1101 of the

Retherford v. Castro                                                                Page 8
Occupations Code, but are addressed in Chapter 1102. See TEX. OCC. CODE ANN. Ch.

1102 (West 2004).

       Retherford cites to one case that he contends classifies a home inspector as a

professional under the DTPA. See Head v. U. S. Inspect DFW, Inc., 159 S.W.3d 731 (Tex.

App.—Fort Worth 2005, no pet.) However, in Head the specific issue of whether the

report prepared by the home inspector qualifies as professional services was “assumed”

by the parties and the court specifically did not address whether the home inspection

constituted professional services. Head, 159 S.W.3d at 740 (“Head does not argue that

the inspection and report furnished by Appellees did not constitute professional

services, and we will not address that issue.”).

       Before 1981, there were no requirements for real estate inspectors. To address

this, the Legislature enacted legislation to require inspectors to register with the State

and post a surety bond. See Act of 1981, 67th Leg. R.S., ch. 121 (S.B. 478), § 1, effective

August 31, 1981. Then, in 1985, the Legislature created the requirement of licensure for

real estate inspectors. Act of 1985, 69 Leg. R.S., ch. 404 (H.B. 2182), § 1, effective August

31, 1985, formerly TEX. REV. CIV. STAT. ANN. art. 6573a, §23. The creation of the current

three levels of inspectors was established in 1991. See Act of 1991, 72nd Leg. R.S., ch.

553 (S.B. 432), §§ 1.01-1.15, 2.01, 4.01, effective September 1, 1991. However, at that

time, the top level of inspector was entitled “real estate inspector.”         In 1993, the

Legislature amended the three levels and renamed them, with the top level becoming

the “professional real estate inspector” and the “real estate inspector” a level beneath

that. See Act of 1993, 73rd Leg., ch. 843 (H.B. 991), §§ 1-15, effective September 1, 1993.

Retherford v. Castro                                                                   Page 9
The real estate inspector was then required to work under the indirect supervision of a

professional real estate inspector.

       The professional services exemption was added to the DTPA in 1995. See Act of

1995, 74th Leg., ch. 414 (H.B. 668), § 4, effective September 1, 1995.

       The title of “professional real estate inspector” is similar to that of a “licensed

professional engineer” or “registered professional land surveyor” as used in Chapter

150 of the Civil Practice and Remedies Code. We believe that the amendments to

Chapter 1102 of the Occupations Code changing the title of the highest level of real

estate inspector from “real estate inspector” to “professional real estate inspector”

indicates that the Legislature regarded achieving that level to demonstrate a higher

degree of specialization.

       We believe that another indicator of professional status to be that the Legislature

has imposed a requirement of carrying liability insurance with a minimum limit of

$100,000 per occurrence to protect against a violation of Subchapter G of Chapter 1102

of the Occupations Code, which refers to prohibited acts, including negligence,

dishonesty, and violating any statutes or rules. Act of 2001, 77th Leg., ch. 1421 (H.B.

2813), § 2, effective June 1, 2003; amended by Act of 2007, 80th Leg., ch. 1411 (S.B. 914), §

38, effective September 1, 2007. Additionally, the Legislature established the Real Estate

Inspection Recovery Fund for the specific purpose of collecting claims against

inspectors for violations of statutes or rules in Subchapter G. See TEX. OCC. CODE ANN.

Ch. 1102, Subch. H (West 2004).           Subchapter I includes discipline procedures,

administrative, and criminal penalties for prohibited acts in certain circumstances. See

Retherford v. Castro                                                                  Page 10
TEX. OCC. CODE ANN. Ch. 1102, Subch I (West 2004). These requirements and provisions

indicate that the Legislature has placed significance on the role of the home inspector.

       In order to fulfill the broad objectives of the DTPA and yet give full meaning to

the exemption for professional services from its application it is necessary to draw the

line somewhere regarding who is a professional, preferably an objective one. We agree

with the Eastland Court of Appeals’ definition that a professional: (1) engages in work

involving mental or intellectual rather than physical labor, (2) requires special

education to be used on behalf of others, and (3) earns profits dependent mainly on

these considerations. See Duncanville Diagnostic Ctr., Inc. v. Atlantic Lloyd’s Ins. Co., 875
S.W.2d 788, 790 (Tex. App.—Eastland 1994, writ denied); Md. Cas. Co. v. Crazy Water Co.,

160 S.W.2d 102, 104-05 (Tex. Civ. App.—Eastland 1942, no writ).             We find that a

professional real estate inspector fits these qualifications.

       Upon determining that an individual is a professional, we must next determine

whether the conduct complained of involved services that the essence of which is

providing advice, judgment, or an opinion. Clearly the contents of the real estate

inspection report constituted the inspector’s opinion as to the condition of the house, as

it has been statutorily defined as such. See TEX. OCC. CODE ANN. § 1102.001(9) (West

2004). Further, the essence of an inspector’s service is providing that opinion. We find

that the professional services exemption applies to the report of professional real estate

inspectors.

       Our inquiry then shifts to a determination of whether any of the exceptions to the

exemption applies.      The trial court found that Retherford’s representations were

Retherford v. Castro                                                                  Page 11
“representations of fact which cannot be characterized as advice, judgment or opinion.”

The representations were that Retherford’s services had characteristics, uses, and

benefits which they did not have and that his services were of a particular standard or

quality when they were not.

          No findings of fact or conclusions of law were requested by either party. In the

absence of written findings, we imply that the trial court made all necessary findings

and we will uphold the judgment on any legal theory supported by the evidence.

Worford v. Stamper, 801 S.W.2d 108, 109 (Tex. 1990).

           The Castros complained that Retherford was unqualified to inspect a metal roof,

that he did not perform the inspection according to TREC rules, he did not inspect the

screws on the roof, and went beyond the scope of the inspection when he gave his

opinion as to the cause of the water damage in the attic. In determining whether the

Castros’ misrepresentation claim is barred by the professional services exemption or

meets one of the exceptions to the exemption, we look to the underlying nature of the

claim, which ultimately is a breach of contract and negligence in rendering the

inspection services. See Head v. U.S. Inspect DFW, Inc., 159 S.W.3d 731, 742 (Tex. App.—

Fort Worth 2005) (citing Chemd, Inc. v. KPMG Peat Marwick, L.L.P., No. 05-00-00816-CV,

2001 Tex. App. LEXIS 5402, 2001 WL 893989, at *6 (Tex. App.—Dallas Aug. 9, 2001, pet.

denied) (not designated for publication) (holding that to determine whether claim was

barred by professional services exemption, court would look to nature of underlying

claim).

Retherford v. Castro                                                               Page 12
       The facts and claims alleged in Head v. U.S. Inspect DFW, Inc. are similar in nature

to those asserted by the Castros. In Head, the complaints were that the inspection report

did not disclose a leaking roof and that the inspection was completed in part by an

apprentice inspector, neither of which fit an exception to the professional services

exemption. Head, 159 S.W.3d at 741-43. We agree with the analysis in Head that the

findings contained in the inspection report were the opinions of Retherford and were

not representations of fact.    Additionally, Retherford’s qualifications and how he

performed the inspection cannot be pursued as a DTPA claim, but are claims for breach

of contract, which is not actionable under the DTPA. We find that the trial court erred

by finding that the professional services exemption did not preclude the Castros’ claims

because they did not constitute misrepresentations of fact.       We sustain issue one.

Because of this holding, we do not reach Retherford’s second issue.

Negligent Misrepresentation

       The Castros contend that we may affirm the judgment based on a theory of

negligent representation if we sustain Retherford’s DTPA issue because there was

sufficient evidence to support a judgment on that basis. The elements of negligent

misrepresentation are: (1) a defendant provided information in the course of his

business, or in a transaction in which he had a pecuniary interest; (2) the information

supplied was false; (3) the defendant did not exercise reasonable care or competence in

obtaining or communicating the information; (4) the plaintiff justifiably relied on the

information; and (5) the plaintiff suffered damages proximately caused by the reliance.

Larsen v. Carlene Langford & Assocs., 41 S.W.3d 245, 249-50 (Tex. App.—Waco 2001, pet.

Retherford v. Castro                                                                Page 13
denied); see McCamish, Martin, Brown & Loeffler v. F.E. Appling Interests, 991 S.W.2d 787,

791 (Tex. 1999).

       We review the trial court’s conclusions of law de novo. See BMC Software Belg.,

N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). The judgment will be sustained on

any legal theory the evidence supports. See Stable Energy, L.P. v. Newberry, 999 S.W.2d
538, 547 (Tex. App.—Austin 1999, pet. denied); see also Fulgham v. Fischer, No. 05-10-

00097-CV, 2011 Tex. App. LEXIS 5865, at *6 (Tex. App.—Dallas July 29, 2011, no pet. h.).

As such, incorrect conclusions of law do not require reversal if the controlling findings

of fact support the judgment under a correct legal theory. See Westech Eng’g, Inc. v.

Clearwater Constructors, Inc., 835 S.W.2d 190, 196 (Tex. App.—Austin 1992, no writ); see

also Fulgham, 2011 Tex. App. LEXIS 5865, at *6.

       However, the trial court’s judgment did not refer to the negligent

misrepresentation cause of action or contain any conclusions of law regarding those

elements. Additionally, because no findings of fact were requested, we are unable to

determine whether or not the trial court would have made the findings to support a

judgment based on negligent misrepresentation. As such, and in the interest of justice,

we find that the appropriate remedy is to reverse the judgment of the trial court and

remand for a new trial on the issue of negligent misrepresentation. See TEX. R. APP. P.

43.3(b); 44.1.

Retherford v. Castro                                                               Page 14
Conclusion

       Because we have found that the professional services exemption applies in this

case, we reverse the judgment of the trial court and remand for a new trial on the issue

of negligent misrepresentation.

                                        TOM GRAY
                                        Chief Justice

Before Chief Justice Gray,
       Justice Davis, and
       Justice Scoggins
Reversed and Remanded
Opinion delivered and filed January 4, 2012
[CV06]

Retherford v. Castro                                                             Page 15