Shawn Holloway and Stephanie Holloway v. Flutobo, Inc. D/B/A Keller Williams Realty Northeast , 419 S.W.3d 622 ( 2013 )

In Cause No. 14-12-00104-CV Reversed and Rendered, In Cause No. 14-12-
00170-CV Affirmed, and Opinion filed November 26, 2013.
In The
Fourteenth Court of Appeals
NO. 14-12-00104-CV
FLUTOBO, INC. D/B/A KELLER WILLIAMS REALTY NORTHEAST,
Appellant
V.
SHAWN HOLLOWAY AND STEPHANIE HOLLOWAY, Appellees
On Appeal from the 164th District Court
Harris County, Texas
Trial Court Cause No. 2009-43155
NO. 14-12-00170-CV
SHAWN HOLLOWAY AND STEPHANIE HOLLOWAY, Appellants
V.
JUDY HOPKINS, Appellee
On Appeal from the 164th District Court
Harris County, Texas
Trial Court Cause No. 2009-43155-B
OPINION
In this case we examine a real estate company’s liability to buyers in the
context of the sale of a home owned by one of the company’s salespersons in a
transaction in which the company was both the buyer’s agent and the seller’s
agent. After the sale, the buyers of the home discovered termite damage and sued
the termite inspector, the seller, the real estate company, and the real estate broker
designated by the company as the company’s agent for purposes of the Texas Real
Estate License Act. The buyers settled their claims against the inspector. The trial
court severed the claims against the seller after she filed for bankruptcy protection.
The trial court granted summary judgment in favor of the real estate broker and
severed these claims to make the judgment final. The claims against the real estate
company were tried to a jury, which found liability and damages under various
claims. In consolidated appeals, we conclude that the evidence is legally
insufficient to support a finding that (1) the company is liable for the seller’s
conduct, (2) the company knew of any unrepaired termite damage before the
Holloways’ discovery of this damage; or (3) any remaining allegedly actionable
conduct of the company caused the buyers damage. Accordingly, we reverse the
trial court’s judgment against the real estate company and render judgment that the
buyers take nothing against the real estate company. Because the trial court did not
err in granting summary judgment, we affirm the trial court’s judgment in the
severed case.
2
I. FACTUAL AND PROCEDURAL BACKGROUND
Shawn and Stephanie Holloway decided to move from their home in
Summerwood to Kingwood in the Spring of 2009. To assist them in selling their
home and purchasing a new one, they enlisted the help of Jeremy Williams
(hereinafter “Williams”), a licensed real estate salesperson associated with Flutobo,
Inc. d/b/a Keller Williams Realty Northeast, a licensed real estate broker
(hereinafter “Keller Williams”).1 As to Williams’s services regarding their efforts
to purchase a house, the Holloways and Williams had an oral contract.
In April 2009, the Holloways were progressing towards closing on the sale
of their home and purchasing a property in Kingwood (hereinafter “the River Falls
House”). The Holloways entered into a contract to buy the River Falls House.
Williams recommended two inspection companies for use in inspecting the River
Falls House. The Holloways selected one of them, Clint Simon d/b/a Sherlock
Pest & Sherlock Spec (hereinafter “Simon”), who performed both the home
inspection and termite inspection on the River Falls House. After these inspections
were performed, the Holloways decided not to buy the River Falls House and
exercised their right to terminate the contract.
Around the same time as the Holloways were deciding not to buy the River
Falls House, Williams learned that Jennifer Blalock, another licensed real estate
salesperson associated with Keller Williams, was planning to sell the Kingwood
house in which she lived.2 Before Blalock listed her home for sale, she let
Williams know that she was trying to sell her house. Williams sent the Holloways
1
People often use the term “real estate agent” to refer to a licensed real estate salesperson or a
licensed real estate broker who represents a buyer or a seller of real estate. In this opinion, we
use the terms “broker” and “salesperson,” which correspond to the terminology used in
applicable statutes. See Tex. Occ. Code Ann. 1101.002(1),(7) (West 2013).
2
At the time of the occurrence made the basis of this suit her name was Jennifer Blalock. Her
name is now Jennifer Snyder.
3
an email with information about the house Blalock wanted to sell (hereinafter the
“Property”). Two days later, Williams showed the Property to the Holloways with
Blalock present. The Holloways decided they were interested in the Property and
wanted to make an offer to buy it. According to Shawn Holloway, Williams told
them while they were looking at the Property that if the Holloways liked the
Property they needed to act “pretty quickly” and that Blalock had told Williams
that she had “three or four people already lined up to see the house.”
Because Keller Williams had a policy that a real estate salesperson
associated with Keller Williams could not serve as the salesperson associated with
Keller Williams on the listing of the salesperson’s own house for sale, in
documents related to this transaction, Tina Martin, a real estate salesperson
associated with Keller Williams, was designated as the salesperson associated with
the listing broker, Keller Williams. Williams sent the Holloways an “Intermediary
Relationship Notice” confirming that Keller Williams was serving as both the
buyer’s agent for the Holloways and the seller’s agent for Blalock. According to
this notice, Keller Williams appointed Martin as the salesperson to communicate
with Blalock, carry out Blalock’s instructions, and provide opinions and advice to
Blalock during negotiations, and Keller Williams appointed Williams as the
salesperson to perform the same services for the Holloways. Nonetheless,
Williams testified that he negotiated directly with Blalock and that he
communicated with Martin “very little” regarding this transaction.
Blalock provided the Holloways with a “Seller’s Disclosure Notice,” in
which Blalock stated that she was not aware of (1) active infestation of termites or
other wood destroying insects, (2) previous termite or wood-destroying-insect
“damage repaired,” or (3) termite or wood-destroying-insect damage needing
repair. Blalock disclosed that she was aware of previous treatment for termites or
wood destroying insects. The Holloways soon entered into a contract for sale of
4
the Property. The contract reflected that Keller Williams was a broker serving as
both buyer’s agent and seller’s agent, that the salesperson associated with Keller
Williams regarding the Holloways was Williams, and that the salesperson
associated with Keller Williams regarding Blalock was Martin. The Holloways
had a ten-day period during which they could terminate the contract, thus allowing
them time to inspect the Property.
The Holloways hired Simon to perform both the home inspection and the
termite inspection of the Property. Simon had a scheduling problem and did not
perform the home inspection, but he did perform the termite inspection. Before
Simon performed the inspection, Shawn Holloway instructed Williams to give
Simon a copy of Blalock’s Seller’s Disclosure Notice. Williams did not do so. In
his report, Simon stated that his inspection revealed no visible evidence of an
active infestation or a previous infestation of termites or wood destroying insects in
or on the structure. Simon also stated that his inspection revealed visible evidence
in or on the structure of previous treatment for subterranean termites, but not such
evidence of previous treatment for other types of termites or wood destroying
insects.
The Holloways did not exercise their option to terminate the contract and
closed on the purchase of the Property. Neither Keller Williams nor Martin
received any commission regarding Martin’s services for Blalock. Keller Williams
and Williams received a commission regarding Williams’s services for the
Holloways. Soon after the closing, the Holloways hired contractors to start some
renovations to the Property. The contractors discovered extensive termite damage,
substantial enough to cause the Holloways to move out of the newly purchased
home.
The Holloways filed suit asserting various claims against Blalock, Simon,
5
and Keller Williams. The Holloways filed a separate lawsuit in which they
asserted various claims against Judy Hopkins, the real estate broker designated by
Keller Williams as its agent for purposes of the Texas Real Estate License Act.
This lawsuit was consolidated in the trial court with the Holloways’ lawsuit against
Blalock, Simon, and Keller Williams. During discovery, Keller Williams
produced a Seller’s Disclosure Notice from the sale of the Property to Blalock
(hereinafter the “Mackey Disclosure”); the person at Keller Williams who was
involved in that sale was not involved in the Holloways’ purchase of the Property
from Blalock. In the Mackey Disclosure, the previous owners disclosed to Blalock
that they were aware of previous treatment for termites or other wood-destroying
insects and of previous damage repaired. The previous owners stated that termite
treatment had been done before 1993 and that treatment and small repairs were
done in approximately 1995. The prior owners stated that they were not aware of
any active infestation or damage needing repair.
Before trial the Holloways settled their claims against Simon for $200,000.
The trial court severed the claims against Blalock after she filed for bankruptcy
protection. The trial court granted summary judgment in favor of Hopkins and
severed these claims to make the judgment final. In the trial of the claims against
Keller Williams, the jury found liability against Keller Williams based on claims
for breach of contract, breach of fiduciary duty, violations of the Texas Deceptive
Trade Practices Consumer Protection Action (“DTPA”), common-law fraud, and
statutory fraud. In response to Question 11, the jury made actual damage findings
as to all of the Holloways’ claims. In response to Question 12, the jury made
findings regarding mental anguish damages as to the Holloways’ DTPA claims.
After a bench trial regarding attorney’s fees, the trial court rendered judgment
based upon the jury’s verdict and its attorney’s fees findings. The Holloways
elected to recover based upon their breach-of-contract claim. The trial court
6
rendered judgment awarding the Holloways’ actual damages, prejudgment interest,
and trial and appellate attorney’s fees.
Keller Williams has appealed from the adverse judgment, and the Holloways
have appealed from the trial court’s summary judgment in favor of Hopkins in the
severed case. We have consolidated these appeals and address both in this
opinion.3
II. ISSUES PRESENTED ON APPEAL
On appeal, Keller Williams argues that the evidence is legally and factually
insufficient to support several jury findings regarding the Holloways’ breach-of-
contract claim, including the finding that Keller Williams’s breach of contract
proximately caused damage to the Holloways. Keller Williams also challenges the
other claims that were not made a basis of the trial court’s judgment but that might
be elected as a basis for recovery under the Boyce Iron Works case.4 See Boyce
Iron Works, Inc. v. Southwestern Bell Telephone Co., 747 S.W.2d 785, 787 (Tex.
1988) (“When the jury returns favorable findings on two or more alternative
theories, the prevailing party need not formally waive the alternative findings. That
party may seek recovery under an alternative theory if the judgment is reversed on
appeal”). Keller Williams asserts that the evidence is legally insufficient to
3
In Cause No. 14-12-00104-CV, Keller Williams is the appellant/defendant and the Holloways
are the appellees/plaintiffs. In Cause No. 14-12-00170-CV, the Holloways are the
appellants/plaintiffs and Hopkins is the appellee/defendant.
4
If, on original submission, a plaintiff bringing an appeal briefs issues relating to the plaintiff’s
election of alternative theories of recovery under the Boyce Iron Works case, this court may
address these issues on original submission. See Hatfield v. Solomon, 316 S.W.3d 50, 60 n.3
(Tex. App.—Houston [14th Dist.] 2010, no pet.) (stating that a Boyce Iron Works election of
alternative theory of recovery may be addressed on original submission if briefed by the parties).
The parties have briefed issues regarding the Holloways’ other claims, and we have decided to
address these issues on original submission. See Hatfield, 316 S.W.3d at 60 n.3.
7
support the jury’s finding that the company’s actionable conduct proximately
caused the Holloways’ damages. Keller Williams asserts various legal and factual
insufficiency challenges to the jury findings regarding the Holloways’ claims.
Keller Williams also asserts other issues in which it challenges the trial court’s
failure to apply a settlement credit, several of the actual damage awards, and the
trial court’s award of attorney’s fees.
In their appeal, the Holloways assert that the trial court erred in granting
summary judgment because Hopkins did not establish that as a matter of law she
has no liability for the acts of Williams, Blalock, or Keller Williams and because
the Holloways raised fact issues regarding their claims against Hopkins.
III. STANDARDS OF REVIEW
When reviewing the legal sufficiency of the evidence, we consider the
evidence in the light most favorable to the challenged finding and indulge every
reasonable inference that would support it. City of Keller v. Wilson, 168 S.W.3d
802, 823 (Tex. 2005). We must credit favorable evidence if a reasonable factfinder
could and disregard contrary evidence unless a reasonable factfinder could not. See
id. at 827. We must determine whether the evidence at trial would enable
reasonable and fair-minded people to find the facts at issue. See id. The factfinder
is the only judge of witness credibility and the weight to give to testimony. See id.
at 819.
In a traditional motion for summary judgment, if the movant’s motion and
summary-judgment evidence facially establish its right to judgment as a matter of
law, the burden shifts to the nonmovant to raise a genuine, material fact issue
sufficient to defeat summary judgment. M.D. Anderson Hosp. & Tumor Inst. v.
Willrich, 28 S.W.3d 22, 23 (Tex. 2000). In reviewing a no-evidence summary
judgment, we ascertain whether the nonmovant pointed out summary-judgment
8
evidence raising a genuine issue of fact as to the essential elements attacked in the
no-evidence motion. Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 206–
08 (Tex. 2002). In our de novo review of a trial court’s summary judgment, we
consider all the evidence in the light most favorable to the nonmovant, crediting
evidence favorable to the nonmovant if reasonable jurors could, and disregarding
contrary evidence unless reasonable jurors could not. Mack Trucks, Inc. v. Tamez,
206 S.W.3d 572, 582 (Tex. 2006). The evidence raises a genuine issue of fact if
reasonable and fair-minded jurors could differ in their conclusions in light of all of
the summary-judgment evidence. Goodyear Tire & Rubber Co. v. Mayes, 236
S.W.3d 754, 755 (Tex. 2007). When, as in this case, the order granting summary
judgment does not specify the grounds upon which the trial court relied, we must
affirm the summary judgment if any of the independent summary-judgment
grounds is meritorious. FM Props. Operating Co. v. City of Austin, 22 S.W.3d
868, 872 (Tex. 2000).
IV. ANALYSIS
In analyzing Keller Williams’s appeal, we first address whether any
actionable conduct by Blalock provides a basis for affirming the trial court’s
judgment against Keller Williams. Then, we determine whether the evidence is
legally sufficient to support a finding that Keller Williams knew of the unrepaired
termite damage on the Property before the Holloways’ discovery of this damage.
Having concluded that the answer to these questions is no, we finally address
whether the evidence is legally sufficient to support the jury’s findings that the
Holloways’ damages were caused by Keller Williams’s allegedly actionable
conduct, except for any alleged liability for Blalock’s conduct and any alleged
liability based upon Keller Williams’s knowledge of the unrepaired termite
damage on the Property before the Holloways’ discovery of this damage.
9
In analyzing the Holloways’ appeal, we first address whether Hopkins’s
status as designated agent for Keller Williams as to its broker’s license makes her
vicariously liable for any actionable conduct of Keller Williams’s salespersons or
for the conduct of any agent of Keller Williams. We then address whether the
Holloways have adequately briefed the remaining appellate issues.
A. Is Keller Williams liable for Blalock’s conduct?
In the jury charge, the trial court submitted questions about Keller Williams,
Blalock, and Simon separately. The trial court did not ask any separate questions
regarding Williams or Martin. Nor did the trial court ask the jury to make any
finding as to whether Keller Williams was liable for Blalock’s conduct. Keller
Williams argues that, because the jury made no such finding, Keller Williams may
not be held liable for Blalock’s conduct. We presume, without deciding, that (1)
whether Keller Williams was liable for Blalock’s conduct was an element of the
Holloways’ claims against Keller Williams; (2) there was no objection to the
omission from the jury charge of a question on this issue; (3) no written finding
was made by the trial court on that element; and (4) there is a deemed finding of
this omitted element in such a manner as to support the trial court’s judgment. See
Service Corp. Int’l v. Guerra, 348 S.W.3d 221, 228–29 (Tex. 2011). But, even
under this four-part presumption, for Keller Williams to be liable for Blalock’s
conduct, there must be legally sufficient evidence to support such a deemed
finding. See id.; Foley v. Capital One Bank, N.A., 383 S.W.3d 644, 648 (Tex.
App.—Houston [14th Dist.] 2012, no pet.).
Under the unambiguous language of Blalock’s Independent Contractor
Agreement with Keller Williams, which was admitted into evidence at trial, Keller
Williams engaged Blalock as an independent contractor to perform services as a
real estate salesperson. Absent actual or apparent authority, an agent cannot bind a
10
principal. Huynh v. Nguyen, 180 S.W.3d 608, 622 (Tex. App.—Houston [14th
Dist.] 2005, pet. denied). We presume for the sake of argument that the jury found
that Blalock’s acts and omissions regarding the Property bound Keller Williams
under either actual authority or apparent authority. Both actual and apparent
authority are created through conduct of the principal communicated either to the
agent (actual authority) or to a third party (apparent authority). Id. at 622–23.
Actual authority denotes authority that the principal intentionally confers upon the
agent, or intentionally allows the agent to believe he has, or by want of ordinary
care allows the agent to believe himself to possess. Id. at 623. In determining
whether apparent authority exists, the acts of the principal are examined to
ascertain whether those acts would lead a reasonably prudent person using
diligence and discretion to suppose the agent had the authority to act on behalf of
the principal. Id. Only the conduct of the principal may be considered;
representations made by the agent of his authority have no effect. Id.
Furthermore, the principal either must have taken affirmative action to hold the
agent out as possessing the authority or the principal knowingly and voluntarily
must have permitted the agent to act in an unauthorized manner. Id.
In the Real Estate License Act, the Texas Legislature defines a “broker” in
pertinent part as “a person who, in exchange for a commission or other valuable
consideration or with the expectation of receiving a commission or other valuable
consideration, performs for another person one of the following acts: (i) sells,
exchanges, purchases, or leases real estate; (ii) offers to sell, exchange, purchase,
or lease real estate; (iii) negotiates or attempts to negotiate the listing, sale,
exchange, purchase, or lease of real estate; (iv) lists or offers, attempts, or agrees to
list real estate for sale, lease, or exchange . . . .” Tex. Occ. Code Ann. 1101.002(1)
(emphasis added). The Texas Legislature defines a “salesperson” as “a person who
11
is associated with a licensed broker for the purpose of performing an act described
by [section 1101.002(1) of the Texas Occupations Code].” It is undisputed that
Keller Williams, at all material times, was a licensed broker and that Blalock, at all
material times, was a licensed real estate salesperson associated with Keller
Williams for the purpose of performing acts described by section 1101.002(1) of
the Texas Occupations Code. See Tex. Occ. Code Ann. 1101.002.
But, owners of real property in Texas can sell their own property without
being a licensed real estate broker. See id. §§1101.002, 1101.004, 1101.351. A
person acts as a real estate broker if the person performs one or more specified
services for another person. See Gamble v. Norton, 893 S.W.2d 129, 137 (Tex.
App.—Houston [1st Dist.] 1995, no writ); Xarin Real Estate, Inc. v. Gamboa, 715
S.W.2d 80, 84–85 (Tex. App.—Corpus Christi 1986, writ ref’d n.r.e.). Acts
performed regarding the sale of one’s own property are not acts described by
section 1101.002(1) of the Texas Occupations Code. See Tex. Occ. Code Ann. §
1101.002(1),(7); Gamble, 893 S.W.2d at 137; Xarin Real Estate, Inc., 715 S.W.2d
at 84–85. Thus, a real estate salesperson does not associate with a licensed real
estate broker for the purpose of performing such acts regarding the salesperson’s
own property. See Tex. Occ. Code Ann. § 1101.002(1),(7); Gamble, 893 S.W.2d
at 137; Xarin Real Estate, Inc., 715 S.W.2d at 84–85.
Under the unambiguous language of Blalock’s Independent Contractor
Agreement, Keller Williams engaged Blalock as an independent contractor to
perform services as a real estate salesperson. All of the documents regarding
Blalock’s sale of the Property to the Holloways reflect that Blalock is the owner of
the Property; they do not reflect that she is acting as a real estate salesperson or
broker on behalf of the seller. Keller Williams was the broker for both Blalock as
the seller and the Holloways as the buyers. Keller Williams appointed Williams as
12
the salesperson associated with Keller Williams regarding the services for the
Holloways and Martin as the salesperson associated with Keller Williams
regarding the services for Blalock.
There was evidence at trial that Williams negotiated directly with Blalock
and that he communicated with Martin “very little” regarding this transaction. The
Holloways argue that, although Martin was shown as Blalock’s listing agent and
the salesperson appointed by Keller Williams to provide services to Blalock as the
seller, Blalock effectively represented herself in the transaction. Presuming that
Blalock offered the Property for sale, negotiated the sale of the Property, and sold
the Property for herself, she did not do so “for another person.” See Tex. Occ.
Code Ann. § 1101.002. Therefore, Blalock’s acts in doing so are not those of a
real estate salesperson for the seller and were not within the scope of Blalock’s
agreement with Keller Williams.5
The Holloways emphasize the testimony of Judy Hopkins, the broker
designated by Keller Williams as its agent for purposes of the Texas Real Estate
License Act and one of the shareholders of Keller Williams. According to the
Holloways, in this testimony, Hopkins agreed that Keller Williams authorized all
of Blalock’s conduct and all of this conduct was within the scope of her work as a
salesperson associated with Keller Williams. The Holloways assert that Hopkins’s
testimony raises a fact issue as to whether Keller Williams is responsible for
Blalock’s conduct.
5
The Holloways assert that Keller Williams is liable for Blalock’s conduct under section
1101.803 of the Texas Occupations Code, which states that “[a] licensed broker is liable to the
commission, the public, and the broker's clients for any conduct engaged in under this chapter by
the broker or by a salesperson associated with or acting for the broker.” Tex. Occ. Code Ann. §
1101.002 (West 2013). But, as to a salesperson’s conduct, this statute is limited in scope to
conduct engaged in under Chapter 1101 by a salesperson associated with or acting for the broker.
See id.
13
Hopkins testified in pertinent part that (1) Keller Williams is responsible for
everything Williams does while Williams is wearing his “real estate hat” and
performing acts authorized by Keller Williams; (2) Blalock was authorized to give
a “pocket listing” to Williams to pass on to the Holloways; (3) Blalock was not
authorized to sell her home acting as the listing agent; (4) Blalock was authorized
to sell her home as the seller; (5) Keller Williams has a policy that Keller Williams
salespersons cannot sell their own homes through Keller Williams without a person
other than the owner serving as the salesperson associated with the listing agent;
(6) this policy did not prohibit salespersons from acting as sellers of their own
property; (7) Blalock did not perform any acts that were not authorized by Keller
Williams; she was allowed to sell her home; (8) as far as Hopkins knows,
everything Blalock did she was authorized to do by Keller Williams; and (9) no
person from Keller Williams was going to testify at trial that Blalock’s acts were
not authorized by Keller Williams. In context, we conclude that under the familiar
legal-sufficiency standard of review, this evidence would not enable reasonable
and fair-minded people to find that Blalock’s acts were within the scope of her
service as a Keller Williams salesperson. Rather, in this testimony, Hopkins
indicated that, according to a policy of Keller Williams, Blalock could not serve as
the salesperson associated with Keller Williams as listing agent, and that, despite
this policy, Blalock was allowed to sell her own property with Keller Williams as
the listing agent and seller’s agent. It is not reasonable to find that this testimony
shows that Blalock’s actions in selling the Property were undertaken as a Keller
Williams salesperson. Hopkins testified that Keller Williams authorized Blalock to
sell her own property through Keller Williams, not that Keller Williams authorized
Blalock to work as a Keller Williams salesperson on this transaction.
The Holloways also assert that Keller Williams is liable for Blalock’s
14
conduct under two regulations from the Texas Administrative Code. See 22 Tex.
Admin. Code § 535.2(a) (2003) (“[A] broker is responsible for the authorized acts
of the broker’s salespersons, but the broker is not required to supervise the
salespersons directly. If a broker permits a sponsored salesperson to conduct
activities beyond the scope explicitly authorized by the broker, those too will be
deemed to be authorized acts for which the broker is responsible.”); 22 Tex.
Admin. Code § 535.141(c) (2008) (“[a] real estate broker is responsible for all acts
and conduct performed by a real estate salesperson associated with or acting for the
broker.”). One regulation is in a subchapter entitled “General Provisions Relating
to the Requirements of Licensure,” and the other regulation is in a subchapter
entitled “Suspension and Revocation of Licensure.” See 22 Tex. Admin. Code §
535.2(a); 22 Tex. Admin. Code § 535.141(c).
As explained above, there is legally insufficient evidence that Blalock was
acting as a salesperson in this transaction. Yet, even if these regulations could be
interpreted to cover her acts as an owner, the parties have not cited and research
has not revealed any cases addressing whether these regulations provide legal
standards that apply in claims by private plaintiffs seeking monetary damages. If
these regulations provided a standard for such claims, that standard would conflict
with applicable precedent regarding actual and apparent authority. See Gaines v.
Kelly, 235 S.W.3d 179, 182–85 (Tex. 2007). For violations of these regulations,
the Texas Real Estate Commission may suspend or revoke a license, assess
administrative penalties, or take other disciplinary action. See 22 Tex. Admin.
Code § 535.191. The mere fact that an administrative agency promulgates a rule
or regulation does not require the courts to accept it as a standard for civil liability.
See Hicks v. Humble Oil & Refining Co., 970 S.W.2d 90, 94 (Tex. App.—Houston
[14th Dist.] 1998, pet. denied). Courts in civil cases must decide whether to adopt
15
an administrative rule or regulation as a standard for determining civil liability.
See id. at 94–95. We decline to adopt the standards in these administrative
regulations for use in determining the civil liability of litigants in damage claims.
After reviewing all of the trial evidence under the applicable standard of
review, we conclude that the trial evidence is legally insufficient to support a
finding of conduct by Keller Williams that would make Blalock’s knowledge, acts,
or omissions binding on Keller Williams based on either actual authority or
apparent authority. See Gaines, 235 S.W.3d at 182–85; Huynh, 180 S.W.3d at
622–23. Likewise, we conclude the evidence is legally insufficient to support a
finding that Blalock’s conduct was within the scope of her work as a Keller
Williams salesperson or that Keller Williams is liable for Blalock’s conduct. See
Gaines, 235 S.W.3d at 182–85; Huynh, 180 S.W.3d at 622–23. Accordingly, any
actionable conduct by Blalock does not provide a basis for affirming the trial
court’s judgment against Keller Williams. See Service Corp. Int’l, 348 S.W.3d at
229–31; Huynh, 180 S.W.3d at 622–23.
B. Is the evidence legally sufficient to support a finding that Keller
Williams knew of the unrepaired termite damage on the Property?
The Holloways do not assert on appeal that Williams or Martin—the Keller
Williams salespersons for this transaction—knew of the unrepaired termite damage
on the Property before the Holloways’ discovery of this damage. In the Mackey
Disclosure, the previous owners revealed to Blalock that they were aware of
previous treatment for termites or other wood-destroying insects and of previous
damage repaired. The previous owners stated that termite treatment had been done
before 1993 and that treatment and small repairs were done in approximately 1995.
The previous owners stated that they were not aware of any active infestation or
any damage needing repair. Even if Williams or Martin had been aware of the
16
Mackey Disclosure, or even if Keller Williams itself were charged with knowledge
of the disclosure because the document was preserved in a file on a prior sale (an
issue we need not decide), that disclosure did not state that there was any existing
termite damage on the Property in 2002 (when Blalock bought the Property), or in
2009 (when she sold it to the Holloways).6
As to Williams, Martin, and any other Keller Williams broker or salesperson
involved in that capacity in the sale to the Holloways, after reviewing the trial
evidence under the applicable standard of review, we conclude that the evidence is
legally insufficient to support a finding that any of these people knew of the
unrepaired termite damage in the house on the Property before the Holloways’
discovery of this damage. See Pfeiffer v. Ebby Halliday Real Estate, Inc., 747
S.W.2d 887, 889–91 (Tex. App.—Dallas 1988, no writ). Thus, the evidence is
legally insufficient to support a finding that Keller Williams knew of the
unrepaired termite damage on the Property before the Holloways’ discovery of this
damage. See id.
C. Is the evidence legally sufficient to support the jury’s findings that the
Holloways’ damages were caused by the remaining actionable conduct
of Keller Williams?
Except for Question 12 regarding mental anguish damages for the DTPA
claim, the trial court submitted a single actual damages question (Question 11) for
all of the Holloways’ claims that were submitted to the jury. In Question 11, the
trial court asked the jury what sum of money, if paid now in cash, would fairly and
6
Keller Williams and amici curiae Texas Association of Realtors and Houston Association of
Realtors assert that Keller Williams had no duty to make known to the Holloways the Mackey
Disclosure because no Keller Williams broker or sales representatives involved in this
transaction knew of the existence of the Mackey Disclosure. We need not and do not address
this issue, nor do we decide whether, as to the Holloways’ claims, Keller Williams is charged
with knowledge of the Mackey Disclosure.
17
reasonably compensate the Holloways for their damages, if any, that were
proximately caused by the conduct found by the jury in its responses to the liability
questions. The trial court instructed the jury as follows:
“Proximate cause” means that cause which, in a natural and
continuous sequence, produces an event, and without which cause
such event would not have occurred. In order to be a proximate
cause, the act or omission complained of must be such that a person
using the degree of care required of him would have foreseen that the
event, or some similar event, might reasonably result therefrom. There
may be more than one proximate cause of an event.
At the charge conference, no party objected to the form of this damages question.
Therefore, this court measures the sufficiency of the evidence using the charge
given, regardless of whether the charge accurately reflects Texas law. See
Osterberg v. Peca, 12 S.W.3d 31, 55 (Tex. 2000) (holding that appellate court
could not review the sufficiency of the evidence based on a particular legal
standard because that standard was not submitted to the jury and no party objected
to the charge on this ground or requested that the jury be charged using this
standard); Hirschfeld Steel Co. v. Kellogg Brown & Root, Inc., 201 S.W.3d 272,
283–86 (Tex. App.—Houston [14th Dist.] 2006, no. pet.) (reviewing sufficiency of
evidence based on unobjected-to jury instruction and rejecting various arguments
based on different legal standards). All of the elements of damages submitted in
Question 11 are based on damages the Holloways sustained as a result of their
purchase of the Property with termite damage.
In response to Question 12 the jury found the amount of money that would
fairly and reasonably compensate the Holloways for their past and future mental
anguish that resulted from Keller Williams’s allegedly actionable conduct. At the
charge conference, no party voiced any objection to the form of this damages
question. Thus, we measure the sufficiency of the evidence according to the
18
charge the trial court gave, regardless of whether that charge is a fair reflection of
Texas law. See Osterberg, 12 S.W.3d at 55; Hirschfeld Steel Co., 201 S.W.3d at
283–86. The testimony regarding the Holloways’ mental anguish is based upon
the mental anguish they suffered as a result of buying the Property with termite
damage.
We presume, without deciding, that, except for the bases for liability
addressed in subsections A and B, above, the actionable conduct of Keller
Williams found by the jury is a basis for liability, and we focus on the evidence
that this actionable conduct caused the Holloways the damages found by the jury,
all of which are based upon the Holloways’ purchase of the Property with termite
damage.
The Holloways complain of Keller Williams’s failure to make known to
them the Mackey Disclosure from the 2002 sale of the Property to Blalock. 7 In the
Mackey Disclosure, the previous owners revealed to Blalock that they were aware
of previous treatment for termites or other wood-destroying insects and of previous
damage repaired. The previous owners stated that they were not aware of any
active infestation or any damage needing repair but that termite treatment had been
done before 1993, and that treatment and small repairs were done in approximately
1995.
There is no evidence that the failure to give the Holloways the Mackey
Disclosure caused their damages. The Mackey Disclosure reflects termite
treatment and minor repairs of termite damage in 1995, fourteen years before the
Holloways bought the house, as well as termite treatment before 1993. The record
contains no trial evidence that the termite infestation that caused the damage
7
As stated above, we need not and do not address whether Keller Williams had a duty to make
known the Mackey Disclosure to the Holloways.
19
repaired in 1995 also caused the damage the Holloways discovered in 2009.
Though Shawn Holloway testified he would have liked to have known the
information in the Mackey Disclosure and that he would not have ignored the
information in that disclosure, he did not testify that the Holloways would not have
bought the Property had they been aware of this information. Nor did Stephanie
Holloway provide any such testimony. On termite issues, the Holloways relied
upon the work of Simon, who testified that he did not see any termite damage
during his inspection of the Property and that knowledge of prior repairs for
termite damage would not have affected the termite inspection he performed on the
Property, though he would have mentioned the prior repairs in his report.
The Holloways also complain of Williams’s alleged failure to follow a
Keller Williams policy to provide the Holloways with the names of three different
inspectors. Simon performed the home inspection and termite inspection for the
Holloways regarding the River Falls House. The record contains evidence that the
Holloways wanted Simon to perform the termite inspection on the Property, even
though he had a scheduling conflict and Williams offered to provide the Holloways
with the name of another inspector. Even if the jury did not credit this testimony,
there was no trial evidence from which a reasonable jury could find that, if
Williams had given the Holloways the names of two other inspectors along with
Simon’s name, the Holloways’s purchase of the termite-damaged house would not
have occurred.
The Holloways also asserted that (1) contrary to their instructions, Williams
failed to forward Blalock’s disclosure notice to Simon before Simon conducted the
termite inspection; (2) Martin failed to provide services that normally would be
provided by the salesperson associated with the listing agent or the seller’s agent
and thus there was one fewer “set of eyes” reviewing the transaction; (3) Williams
20
incorrectly indicated in the Intermediary Relationship Notice that Martin was the
salesperson associated with Keller Williams who would be providing services to
Blalock, when at the time Williams drafted this document, Martin had not signed
the listing agreement; and (4) Williams falsely informed the Holloways that
Blalock had told him there were three or four other potential buyers already
waiting to see the Property. Presuming that Martin and Williams engaged in this
conduct, there was no trial evidence from which a reasonable jury could find that,
but for this conduct, the Holloways would not have purchased the termite-damaged
house.
We presume, without deciding, that, except for the bases for liability
addressed in subsections A and B, above, the allegedly actionable conduct of
Keller Williams is a basis for liability. Even under this presumption, a review of
the trial evidence under the applicable standard of review shows that the evidence
is legally insufficient to support a finding that without this conduct, the Holloways
would not have purchased the termite-damaged house. See Voye v. Ragan, 616
S.W.2d 673, 675 (Tex. Civ. App.—Corpus Christi 1981, no writ) (holding the
evidence was legally insufficient to show that allegedly actionable conduct of real
estate agents caused damages of buyers who bought building with termite
damage). Thus, the evidence is legally insufficient to show causation as to the
remaining actionable conduct of Keller Williams. See id.
For the foregoing reasons, the evidence is legally insufficient to support a
recovery by the Holloways against Keller Williams on any of their claims that
were submitted to the jury. Accordingly, in Cause No. 14-12-00104-CV, we
reverse the trial court’s judgment and render judgment that the Holloways take
21
nothing.8
D. Did the trial court err in granting Hopkins’s motion for summary
judgment?
In the Holloways’ appeal, they assert in two issues that the trial court erred
in granting Hopkins’s motion for traditional and no-evidence summary judgment.
This appeal involves statutory-interpretation issues. We review the trial court’s
interpretation of applicable statutes de novo. See Johnson v. City of Fort Worth,
774 S.W.2d 653, 655B56 (Tex. 1989). In construing a statute, our objective is to
determine and give effect to the Legislature’s intent. See Nat’l Liab. & Fire Ins.
Co. v. Allen, 15 S.W.3d 525, 527 (Tex. 2000). If possible, we must ascertain that
intent from the language the Legislature used in the statute and not look to
extraneous matters for an intent the statute does not state. Id. If the meaning of the
statutory language is unambiguous, we adopt the interpretation supported by the
plain meaning of the provision's words. St. Luke’s Episcopal Hosp. v. Agbor, 952
S.W.2d 503, 505 (Tex. 1997). We must not engage in forced or strained
construction; instead, we must yield to the plain sense of the words the Legislature
chose. See id.
A corporate entity may be licensed as a real estate broker. See Tex. Occ.
Code Ann. §§ 1101.002(1), 1101.355. For a corporate entity to act as a licensed
broker, the entity must designate one of its managing officers as its agent for
purposes of the Texas Real Estate License Act, and that officer must be a licensed
broker in active status and good standing according to the commission’s records.
See id. § 1101.002(1), 1101.351, 1101.355. The summary-judgment evidence
conclusively proves that Keller Williams, a corporation, is a licensed broker and
that it has designated Hopkins, a licensed broker, as its agent for purposes of the
8
We need not and do not address Keller Williams’s various other appellate arguments.
22
Texas Real Estate License Act.
A licensed real estate salesperson must be associated with a licensed broker.
See id. § 1101.002(7), 1101.351(c). The summary-judgment evidence proves as a
matter of law that Williams, Blalock, and Martin all are licensed real estate
salespersons who—to the extent they were acting as licensed real estate
salespersons—were associated with licensed broker Keller Williams at all material
times. The Holloways assert that Hopkins, as designated agent for Keller Williams
as to its broker’s license, is vicariously liable for the conduct of all of the
salespersons associated with Keller Williams. The Holloways base this assertion
on various grounds.
First, the Holloways point to two regulations from the Texas Administrative
Code. See 22 Tex. Admin. Code § 535.2(a) (2003); 22 Tex. Admin. Code §
535.141(c) (2008). But, we already have concluded that these regulations do not
create liability for brokers in claims by private litigants, so these regulations are
not a basis for liability.9
The Holloways also rely upon section 1101.803 of the Texas Occupations
Code, entitled “General Liability of Broker,” which states that “[a] licensed broker
is liable to the commission, the public, and the broker’s clients for any conduct
engaged in under this chapter by the broker or by a salesperson associated with or
acting for the broker.” Tex. Occ. Code Ann. § 1101.002 (West 2013). But, as to a
salesperson’s conduct, this statute is limited in scope to conduct engaged in under
Chapter 1101 by a salesperson associated with or acting for the broker. See id.
The summary-judgment evidence conclusively proves that at all material times
9
In any event, these regulations address a “broker’s salespersons,” a “sponsored salesperson,”
and “a real estate salesperson associated with or acting for the broker.” And, Williams, Blalock,
and Martin are licensed real estate salespersons associated with and acting for Keller Williams.
They are sponsored salespersons of Keller Williams, not of Hopkins.
23
when Williams, Blalock, and Martin were acting as licensed real estate
salespersons, they were licensed real estate salespersons associated with and acting
for Keller Williams, not for Hopkins.
The Holloways also rely upon expert testimony that a designated agent for a
corporate broker as to its broker’s license is vicariously liable for the conduct of all
of the salespersons associated with the corporate broker. But, the testimony of an
expert as to his opinion regarding the law is improper and does not bind the courts,
nor does it preclude summary judgment under the proper legal standard, even if it
is different from the standard espoused by the expert. See Anderson v. Snider, 808
S.W.2d 54, 55 (Tex. 1991); Greenberg Traurig of New York, P.C. v. Moody, 161
S.W.3d 56, 94 (Tex. App.—Houston [14th Dist.] 2004, no pet.).
The Holloways argue that brokers and salespersons owe an “extraordinary
fiduciary duty” to their clients, and therefore, the corporate veil should not protect
Hopkins from liability. No case or statute cited by the Holloways supports the
proposition that corporate veils should be ignored in all cases involving a broker’s
fiduciary duty. We decline to so hold.
We conclude that, as a matter of law, Hopkins’s status as the broker
designated by Keller Williams as its agent for purposes of the Texas Real Estate
License Act does not make her vicariously liable for any actionable conduct of
Keller Williams’s salespersons or agents. To the extent that the Holloways seek to
hold Hopkins vicariously liable for such conduct based upon this status (hereinafter
“Designated Agent Theory”), the trial court did not err in granting summary
judgment.
To the extent that the Holloways seek to hold Hopkins liable based upon a
vicarious-liability theory other than the Designated Agent Theory or based upon
direct liability for her own conduct, we conclude that the Holloways have not
24
adequately briefed these issues on appeal. In its no-evidence motion for summary
judgment, Keller Williams attacked each of the essential elements of the
Holloways’ claims against Hopkins for negligence, negligent misrepresentation,
common-law fraud, statutory fraud, breach of contract, breach of fiduciary duty,
and DTPA violations. On appeal, the Holloways are required to attack each of
these no-evidence grounds. In their appellants’ brief, as to at least one element of
each of their claims, they have failed to provide any argument, analysis, or
citations showing how the summary-judgment evidence raised a fact issue on this
element of the claim against Hopkins based upon direct liability for her own
conduct or based upon a vicarious-liability theory other than the Designated Agent
Theory. Even construing the Holloways’ brief liberally, we cannot conclude they
have adequately briefed these issues. See San Saba Energy, L.P. v. Crawford, 171
S.W.3d 323, 337 (Tex. App.—Houston [14th Dist.] 2005, no pet.). Thus, the trial
court did not err in granting summary judgment as to the Holloways’ claims
against Hopkins based upon direct liability for her own conduct or based upon a
vicarious-liability theory other than the Designated Agent Theory. See Fish v.
Marsters, Co., No. 14-06-00129-CV, 2007 WL 1438555, at *5 (Tex. App.—
Houston [14th Dist.] May 17, 2007, pet. denied) (mem.op.) (affirming summary
judgment regarding claims for which appellant failed to present argument attacking
all of the independent summary-judgment grounds).10
10
In any event, even if the Holloways had briefed all of these issues, we still would affirm the
trial court’s summary judgment.
25
In Cause No. 14-12-00170-CV, we overrule the Holloways’ appellate issues
and affirm the trial court’s summary judgment in favor of Hopkins.
/s/ Kem Thompson Frost
Chief Justice
Panel consists of Chief Justice Kem Thompson Frost, Justice Jeffrey Brown, and
Justice J. Brett Busby. (Justice Jeffrey Brown not participating).11
11
After oral argument in this case but before the court issued this opinion, Justice Jeffrey Brown
was appointed to the Supreme Court of Texas and is no longer a justice on the Fourteenth Court
of Appeals. The remaining two justices have decided the case. See Tex. R. App. P. 41.1(b).
26