Court Opinion

ID: 2990423
Source: CourtListenerOpinion
Date Created: 2015-09-23 02:59:48.969917+00
Date Added: 2024-06-11T11:45:03.350468
License: Public Domain

Reversed and Remanded and Majority and Dissenting Opinions filed February 28,
2012.

                                         In The

                         Fourteenth Court of Appeals
                                ___________________

                                 NO. 14-10-01000-CV
                                ___________________

                       ARLINGTON HOME, INC., Appellant

                                           V.

    PEAK ENVIRONMENTAL CONSULTANTS, INC. D/B/A LIVE OAK
ENVIRONMENTAL CONSULTANTS AND SANDION LTD. D/B/A COLDWELL
              BANKER UNITED REALTORS, Appellees

                       On Appeal from the 113th District Court
                               Harris County, Texas
                         Trial Court Cause No. 2006-47620

                          DISSENTING OPINION

      I agree with the majority opinion as to the attorney fee issues for Coldwell Banker
and the requirement that Live Oak segregate its attorney‘s fees if Live Oak ultimately
prevails. I also agree with the majority opinion as to Arlington‘s negligence claim. I
disagree,   however,   with   the   majority‘s   disposition   of   Arlington‘s   negligent
misrepresentation and DTPA claims. I would therefore continue to analyze the other
grounds underlying the JNOV. Accordingly, I respectfully dissent.

A.     The email is an actionable misrepresentation.

       The majority concludes that the following email from Live Oak is either true as a
matter of law or contains no actionable misrepresentations and will not support either a
negligent misrepresentation claim or a DTPA misrepresentation claim. I disagree. The
email at issue reads as follows:

       Just received the lab results for the subject property. It passed. No
       Stachybotrys (―toxic black mold‖) or Chaetomium spores; these are the
       primary indicators of a moisture problem.
       The interpretation of the lab data coupled with the observations made at the
       time of the inspection indicate no significant mold amplification expected to
       pose a threat to the subject property or its occupants.
       A complete written report, with copies of the laboratory results will be
       issued.
       Martens sent this email to Young. Young forwarded the email to Harres. Harres
relied on the email and did not back out of the purchase of the property. The majority
parses the email into three representations when it really contains four.        The four
representations are:

       1. It passed.

       2. No Stachybotrys (―toxic black mold‖) or Chaetomium spores.

       3. These [spores] are the primary indicators of a moisture problem.

       4. No significant mold amplification expected to pose a threat to the subject
       property or its occupants.

       The only true representation was that there were no Stachybotrys or Chaetomium
spores shown in the samples. In fact, the house did contain Stachybotrys spores, based on
testing done later. There is evidence in the record to support a jury verdict that the
remaining three representations are false.

                                             2
       The majority summarily concludes that representations one and four ―do not rise to
the level of existing fact,‖ citing Transport Insurance Co. v. Faircloth, 898 S.W.2d 269,
276 (Tex. 1995). In Faircloth, the plaintiff sued an insurance company for representing
that a settlement offer was ―top dollar.‖ Id. at 276. While the court did state that ―a pure
expression of opinion will not support an action for fraud,‖ it qualified this statement,
adding that ―[w]hether a statement is an actionable statement of ‗fact‘ or merely one of
opinion depends on the circumstances in which a statement is made.‖ Id. The relevant
circumstances include the speaker‘s knowledge, the comparative levels of the speaker‘s
and the hearer‘s knowledge, and whether the statement relates to the present or future. Id.
An opinion may also be treated as an actionable statement of fact when the opinion is based
on or buttressed by false facts. Id. at 277. Or it may be treated as an actionable basis of
fact if it is made by one who should know another party is justifiably relying on the
speaker‘s superior knowledge. Id.

       The Supreme Court returned to this issue in a more recent opinion, Italian Cowboy
Partners, Ltd. v. Prudential Insurance Co. of America, 341 S.W.3d 323 (Tex. 2011). In
Italian Cowboy, the court analyzed a property manager‘s statement that there had been ―no
problems‖ with the building and that the building was in ―perfect condition.‖ See id. at
328. The court concluded that those statements were actionable misrepresentations of
fact, rather than mere opinions. Id. at 338. Among the factors that the court reviewed
were the superior knowledge of the property manager, that the facts underlying the opinion
were not equally available to both sides, and that the statement was intertwined with other
true facts. Id. at 338–39.

       Using these principles, I would conclude that the email is an actionable
misrepresentation of existing fact. As to the first representation—―it passed‖—this is not
simply an opinion but a statement of fact. When a student takes a class on a pass/fail basis
and receives a passing grade, we know that the professor has established criteria that a
student must meet, showing mastery of the course, before the student receives a passing

                                             3
grade. It is not a mere opinion of the professor. When a lawyer passes the bar, she has
met objective criteria to become licensed. Similarly, a house passes an inspection because
it meets certain objective criteria.

       As to the third and fourth representations, these are actionable statements of opinion
under Italian Cowboy. Martens had superior knowledge while both Young and Haress
did not. Young had never dealt with a home with mold issues at the time of this sale, nor
had Haress. Martens knew that the potential buyer would rely on his statements and
Haress did in fact rely on the email. Martens knew that the buyer still had the ability to
back out of buying the house. Although Martens did not remember whether he knew of
the potential health issues for Ms. Kaki, Young testified that he told Martens that the
occupant of the house had health issues. Martens characterized the email as a ―positive
recommendation‖ for buying the house. Martens‘s email contained some true facts—that
there were no Stachybotrys (―toxic black mold‖) or Chaetomium spores present in the
house based on his air samples—and stated that Martens had inspected the house and
reviewed the air samples.

       There is some evidence in the record to support the jury verdict that the
representations in the email are false. Industrial hygienist Robert Reda testified, based on
the levels of Aspergillus mold in the Live Oak samples, that the home did not pass its
inspection and that the samples showed a potential mold problem. He concluded that the
email was extremely misleading, not only for what it said but for what it did not include.
Reda testified that there was mold amplification expected to cause a threat to the property
or its occupants. Reda and two other experts testified that the mold existed in the house at
the time of the inspection and needed to be removed—in other words, it was a threat to the
property. While no one contended that Ms. Kaki‘s health was actually at risk, Martens
identified studies that concluded that Aspergillus mold is the second most common mold
requiring hospitalization in the United States.

                                             4
B.    The DTPA claim, as submitted to the jury, included both affirmative
misrepresentations and a failure to disclose.
       The majority opinion focuses on only one of four DTPA claims submitted to the
jury—failure to disclose—and concludes that there is no evidence that Live Oak intended
to induce Arlington into the transaction. The DTPA question listed the following four
types of false, misleading or deceptive acts or practices:

       (1) representing that the real estate in question had or would have
       characteristics that it did not have;

       (2) representing that Gary Martens had or would have qualifications that he
       did not have;

       (3) representing that the real estate in question is or will be of a particular
       quality if it, was of another;

       (4) failing to disclose information about the real estate in question that was
       known at the time of the transaction with the intention to induce Arlington
       Home into a transaction it otherwise would not have entered into if the
       information had been disclosed (emphasis added).

       As discussed above, in my opinion the email was an actionable misrepresentation,
supporting a ―yes‖ answer under either (1) or (3) above.1 Arlington was not required to
prove that the affirmative misrepresentation induced him into buying the house. It only
had to prove that it relied on the misrepresentation to its detriment. Haress testified that he
did not back out of the purchase of the property because it had passed inspection—in other
words, he relied on the email to Arlington‘s detriment.

       The majority opinion confuses the ―intent to induce‖ (by Live Oak) requirement in
the failure-to-disclose issue (sub-point (4)) with the reliance requirement for affirmative
misrepresentations.        The majority then summarily holds that there was no ―direct

       1
           There is no evidence that Live Oak represented anything about Martens qualifications to Haress.
                                                    5
evidence‖ of the intent to induce by Live Oak, citing Red Roof Inns, Inc. v. Jolly, No.
14-10-00344-CV, 2011 WL 6288147, at *8 (Tex. App.—Houston [14th Dist.] Dec. 15,
2011, no pet. h.). In Red Roof, the court did not hold2 that there must be direct evidence of
the ―intent to induce‖ requirement, but instead rejected an argument that the court should
presume that a material non-disclosure was made with an intent to induce the transaction.
See id. Nothing in Red Roof should be construed to hold that circumstantial evidence of
the ―intent to induce‖ requirement is insufficient. Just as intent to defraud is not usually
susceptible to direct proof but can be shown through circumstantial evidence, intent to
induce can also be shown circumstantially. See Tony Gullo Motors I, L.P. v. Chapa, 212
S.W.3d 299, 305 (Tex. 2006); Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 435 (Tex.
1986).

         Because I believe that the jury could have properly answered ―yes‖ under either
sub-point (1) or (3) above, I do not reach the issue of whether there was legally sufficient
circumstantial evidence that Live Oaks‘s failure to disclose information was intended to
induce Arlington to complete the purchase of the house.

         Because   the    majority opinion       has     incorrectly analyzed       the   negligent
misrepresentation and DTPA misrepresentation issues and has incorrectly imposed a new
burden of proof as to the DTPA failure-to-disclose issue, I respectfully dissent.

                                                       /s/    Tracy Christopher
                                                              Justice

Panel consists of Chief Justice Hedges and Justices Christopher and McCally. (Hedges,
C.J., majority).

         2
          Red Roof was a three-way split decision of this court, with only one justice advancing this
proposition of law.
                                                 6