Fuad Khuri v. Roy Bell and Jingle Bell ( 1992 )

IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,

AT AUSTIN









NO. 3-90-255-CV





FUAD KHURI,

APPELLANT

vs.





ROY BELL AND JINGLE BELL,

APPELLEES

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 167TH JUDICIAL DISTRICT

NO. 423,330, HONORABLE JOE B. DIBRELL, JUDGE PRESIDING

This is an appeal from a suit involving misrepresentations in the sale of a condominium unit. The purchaser, Roy Bell, sued the condominium owner and seller, Fuad Khuri, for alleged violations of the Deceptive Trade Practices Act (DTPA). Tex. Bus. & Com. Code Ann. §§ 17.41-.63 (1987 & Supp. 1991). Following a jury trial, the district court rendered judgment against Khuri and he now appeals. We affirm the trial-court judgment.

BACKGROUND

In July of 1985, Roy Bell purchased a condominium in Lakeway Patio Homes, Section II, from Fuad Khuri. The condominium unit flooded in December of 1985, April of 1986, and May of 1987. Bell sued Khuri in July of 1987, alleging that Khuri violated the DTPA by misrepresenting that the property was not subject to flooding.

The jury found that Khuri engaged in false, misleading, or deceptive acts, and engaged in an unconscionable course of conduct in selling his condominium. The jury further found that the difference in value between the property as represented and as purchased was $12,500 and that the reasonable cost to repair the flood damage was $1363.63. The trial court rendered judgment against Khuri in the amount of $13,863.63, plus attorney's fees and $2,000 automatic additional damages. Khuri now appeals.

DISCUSSION

I. Offset of Damages.

In his first point of error, Khuri advances the novel theory that because Bell enjoyed the use of the condominium, Khuri should receive the value of this use. Thus, Khuri contends that the trial court erred in failing to offset the condominium's $57,000 rental value against the damage award. Khuri cites no authority in support of this proposition, and we find none.

Furthermore, Khuri has waived this point of error. The right of offset is an affirmative defense. Brown v. American Transfer & Storage Co., 601 S.W.2d 931, 936 (Tex. 1980), cert. denied, 449 U.S. 1015 (1980). The Texas Rules of Civil Procedure provide that a party pleading an affirmative defense shall affirmatively set forth that matter in his pleadings. Tex. R. Civ. P. Ann. 94 (Supp. 1991). Here, Khuri proceeded to trial with only a general denial on file. He made no pleadings and requested no jury instructions regarding offset, and raised the issue for the first time when he filed a motion for new trial. Accordingly, we overrule this point of error.

II. Sufficiency of the Evidence.

In his second and third points of error, Khuri argues that the evidence is legally and factually insufficient to support the jury's findings on two issues: (1) whether Khuri engaged in false, misleading, or deceptive acts which were a producing cause of damages to Bell; and (2) whether Khuri engaged in any unconscionable actions or courses of action which were a producing cause of damages to Bell.

A. Legal Sufficiency.

We must first consider Khuri's contention that the evidence presented at trial is legally insufficient to support the jury findings that Khuri committed deceptive trade practices and engaged in an unconscionable course of conduct in selling his condominium. See Glover v. Texas Gen. Indem. Co., 619 S.W.2d 400, 401 (Tex. 1981). In determining whether there is legally sufficient evidence to support a finding, we consider only the evidence and inferences tending to support the finding of the trier of fact, and disregard all evidence and inferences to the contrary. Alm v. Aluminum Co. of Am., 717 S.W.2d 588, 593 (Tex. 1986).

The record before us shows that although Khuri maintains that this condominium unit never flooded during his ownership, it flooded at least twice before Khuri bought it and three times within two years after he sold it to Bell. Ownership in the condominium unit also carries with it an ownership share in the common areas of the complex, and testimony presented at trial showed that these common areas had flooded on several occasions during Khuri's ownership.

Moreover, Khuri, who is a civil engineer, was a member of a committee formed by the Resident's Association in 1983 to address the flooding problems affecting Lakeway Patio Homes. As part of his committee duties, Khuri wrote a letter to the Lakeway Village street director in which Khuri stated that "the flooding of Lakeway Patio Homes, Section II, has become a serious and recurring problem." Despite his participation on that committee and his apparent knowledge of the problem, Khuri executed a multiple listing agreement in conjunction with the sale in which he certified that the condominium "had no known latent defects or other defects which would be a significant factor to a reasonable purchaser in making a decision to purchase" and that the property had never been "threatened or damaged by any natural disasters, such as flooding."

The record indicates that flooding in the area of Lakeway Patio Homes has caused a dramatic decline in that development's property values. The expert appraiser who, without knowledge of the history of flooding at Lakeway Patio Homes, had appraised Khuri's condominium at $140,000 at the time of sale, testified that he would have appraised it at $75,000 if Khuri had revealed the flood history to him. That same appraiser testified that the condominium was worth approximately $66,000 at the time of trial. Khuri had set the condominium's sale price at $135,000, but accepted Bell's offer of $125,000 without negotiation.

Another realtor testified that because of known flooding in the area, no condominium sales had occurred in Lakeway Patio Homes since Khuri sold his unit to Bell in 1985. The owner of the condominium unit next to Bell's is currently unable to lease the unit on a long-term basis because of the recurring floods.

Under the DTPA, "false, misleading, or deceptive acts or practices" include:

The failure to disclose information concerning goods or services which was known at the time of the transaction if such failure to disclose such information was intended to induce the consumer into a transaction into which the consumer would not have entered had the information been disclosed.

Tex. Bus. & Com. Code Ann. § 17.46(b)(23) (1987). We conclude that the jury could have found from the facts set out above that Khuri, by failing to disclose the flooding problems affecting the condominium development, intended to induce Bell to buy property Bell otherwise would not have purchased. Bell in fact testified that he would not have purchased the condominium if he had known of the flooding.

The DTPA defines an "unconscionable action or course of action" as:

An act or practice which, to a person's detriment:

(A) takes advantage of the lack of knowledge, ability, experience, or capacity of a person to a grossly unfair degree; or

(B) results in a gross disparity between the value received and consideration paid, in a transaction involving transfer of consideration.

Tex. Bus. & Com. Code Ann. § 17.45(5) (1987). We conclude that there is evidence concerning the condominium's value from which the jury could have found that Khuri followed an unconscionable course of action which resulted in a gross disparity between the consideration Bell paid for the condominium and the value received.

We must also determine if there is any evidence that Khuri's acts were the producing cause of Bell's damages. The court properly instructed the jury that "producing cause" means:

An efficient, exciting, or contributing cause, which, in a natural and continuous sequence, produces the damage or harm complained of, if any. There may be more than one producing cause.

See Rourke v. Garza, 530 S.W.2d 794, 801 (Tex. 1976). See also David F. Bragg, et al., Texas Consumer Litigation, § 10.08-.10, at 255-57 (2d ed. 1983). As noted, Bell testified that he would not have purchased the condominium if he had known of the flooding. The jury could well have found from this evidence that Khuri's failure to disclose the threat of flooding was the producing cause of Bell's damages.

We conclude that there is evidence in the record to support the jury's finding that Khuri committed false, misleading, or deceptive acts and that he engaged in an unconscionable course of conduct by failing to disclose his knowledge of the condominium development's flooding problems to Bell, and that these acts were the producing cause of Bell's damages. Accordingly, we overrule Khuri's legal-sufficiency points of error.

B. Factual Sufficiency.

Khuri also contends that the evidence presented at trial is factually insufficient to support the jury findings that Khuri committed deceptive trade practices and engaged in an unconscionable course of conduct in selling his condominium. In determining whether there is factually sufficient evidence to support the jury findings, we consider and weigh all of the evidence, and set aside the judgment only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986).

In addition to the facts set forth above, the record indicates that Khuri had hired a real estate agency to handle the sale of his condominium and had no direct contact with Bell until the closing date of the sale. Although Khuri had executed a multiple listing agreement with Lakeway Real Estate Corporation in which he represented that his property had never been threatened or damaged by flooding, Bell did not see the multiple listing agreement before he closed the sale on the condominium. Finally, Khuri maintains that his condominium unit never flooded during his ownership, and that he was not aware that it had flooded before he owned it.

After considering all of the evidence, we conclude that there is sufficient evidence from which the jury could have found that Khuri committed deceptive trade practices and engaged in an unconscionable course of conduct in selling his condominium by failing to disclose his actual knowledge of the flooding problems. Despite the evidence that Khuri was unaware of the actual flooding within the condominium unit he sold to Bell, we are not persuaded that the jury's findings are so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Accordingly, we overrule Khuri's factual-sufficiency points of error.

CONCLUSION

We affirm the trial-court judgment.

Jimmy Carroll, Chief Justice

[Before Chief Justice Carroll, Justices Aboussie and Kidd]

Affirmed

Filed: January 15, 1992

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