Kenneth Jasek v. Texas Farm Bureau Underwriters ( 2021 )

Affirmed and Memorandum Opinion filed October 28, 2021.
In The
Fourteenth Court of Appeals
NO. 14-19-00759-CV
KENNETH JASEK, Appellant
V.
TEXAS FARM BUREAU UNDERWRITERS, Appellee
On Appeal from the County Civil Court at Law No. 2
Harris County, Texas
Trial Court Cause No. 1092419
MEMORANDUM OPINION
May a plaintiff prevail on common-law fraud and statutory causes of action
against the seller of a tractor when the plaintiff purchased the tractor from an
online auction and the seller did not write or create the listing on which the
plaintiff relied? We conclude the answer is no.
Appellant Kenneth Jasek challenges the trial court’s judgment
notwithstanding the verdict (“JNOV”) in favor of appellee, Texas Farm Bureau
Underwriters (Texas Farm Bureau), on Jasek’s claims of fraud and violations of
the Deceptive Trade Practices–Consumer Protection Act (DTPA). See Tex. Bus. &
Com. Code Ann. §§ 17.41–.63. In two issues, Jasek argues that the trial court erred
in rendering a JNOV. We affirm.
I. BACKGROUND
In April 2015, Jasek purchased a tractor from an online auction website,
SalvageSale.com. The online auction contained the following description of the
tractor and its condition:
On December 5, 2013, this unit was damaged when the operator hit a
stump. This unit will not start, run or operate in its current condition.
No work has been done to the unit. Damage includes but is not limited
to: undercarriage, housing, clutch, flywheel and driveshaft. Please
refer to the attached photos and bid accordingly.
....
This listing is sold AS IS WHERE IS with all faults and no warranties
expressed or implied.
The listing also contained sixteen photographs of the tractor. No inspection was
allowed before the online auction. However, the listing provided that at the time of
removal “if the item differs significantly from how it was represented in the lot
description, the Buyer must contact Customer Care prior to removing.” Jasek was
the highest bidder for the tractor. However, Jasek never inspected the tractor. He
arranged for a third party to pick up the tractor and deliver it to a repair shop,
which identified a large hole in the clutch housing that had not been depicted in the
listing photographs.
In April 2017, Jasek filed suit against Texas Farm Bureau, the seller of the
tractor. Testimony from Texas Farm Bureau’s employee claims adjuster revealed
that due to damage from hitting a stump, the tractor was considered a total loss.
Texas Farm Bureau paid the insured fair market value for the tractor. To recoup
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any value in the tractor, the adjuster was directed to sell the tractor through a
SalvageSale auction. The adjuster had never used SalvageSale, but sent
SalvageSale a “Loss Assignment Sheet,” the photographs from his claim file, and
the repair estimate provided by the prior owner. The Loss Assignment Sheet
provided the following information to SalvageSale:
SalvageSale then created the online listing, scheduled an auction, and forwarded
the proceeds from the sale to Texas Farm Bureau. SalvageSale was never included
as a party to this proceeding, nor was it designated as a responsible third party.
Following a one-day jury trial in May 2019, Jasek’s claims of fraud, fraud
by nondisclosure, and failure to disclose pursuant to the DTPA were submitted to
the jury. The jury returned a verdict in favor of Jasek on all his claims. Texas Farm
Bureau then filed a motion for JNOV, arguing Jasek’s claims (1) failed as a matter
of law and (2) failed because the evidence did not support the jury’s findings in
Jasek’s favor. The trial court granted the motion, rendered a take-nothing judgment
in favor of Texas Farm Bureau, and awarded Texas Farm Bureau recoverable court
costs as the prevailing party. Jasek timely appealed.
II. ANALYSIS
Jasek presents two issues on appeal. In issue 1, he argues that the trial court
erred in rendering JNOV because sufficient evidence supported the jury’s verdict.
Further, Jasek argues that the legal arguments advanced by Texas Farm Bureau in
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its motion for JNOV negating justifiable reliance and duty to disclose were not
meritorious. In issue 2, he argues that the trial court erred in rendering JNOV on
the basis that Jasek had the right to inspect the tractor after his purchase and failed
to do so.
A. Standard of Review
“[U]pon motion and reasonable notice the court may render judgment non
obstante veredicto if a directed verdict would have been proper, and provided
further that the court may, upon like motion and notice, disregard any jury finding
on a question that has no support in the evidence.” Tex. R. Civ. P. 301.
We review a JNOV under a no-evidence standard, crediting evidence
favoring the jury verdict if reasonable jurors could and disregarding contrary
evidence unless reasonable jurors could not. Tanner v. Nationwide Mut. Fire Ins.
Co., 289 S.W.3d 828, 830 (Tex. 2009) (citing City of Keller v. Wilson, 168 S.W.3d
802, 823, 827 (Tex. 2005)). We may affirm the JNOV only if there is no evidence
to support the jury’s verdict or if the evidence establishes a contrary answer as a
matter of law. Arlington Home, Inc. v. Peak Envtl. Consultants, Inc., 361 S.W.3d
773, 779 (Tex. App.—Houston [14th Dist.] 2012, pet. denied). We must uphold the
jury’s verdict if more than a scintilla of competent evidence supports it. Tanner,
289 S.W.3d at 830. Ultimately, the test is whether the evidence presented at trial
was sufficient for reasonable and fair-minded people to reach the verdict. Id.
Finally, because the trial court did not state the grounds on which it granted the
JNOV, Jasek must refute each of the arguments made in the motion for JNOV.
Fort Bend Cty. Drainage Dist. v. Sbrusch, 818 S.W.2d 392, 394 (Tex. 1991); see
also Guaranty Cty. Mut. Ins. Co. v. Reyna, 709 S.W.2d 647, 648 (Tex. 1986)
(holding that trial court’s judgment must be upheld on any correct legal theory
before it, even if court stated incorrect reason for judgment).
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Texas Farm Bureau put forward several theories in its motion supporting its
request for JNOV. Relying primarily on “as is where is language,” Texas Farm
Bureau first argued that all Jasek’s claims failed as a matter of law because Jasek
did not establish justifiable reliance or causation on any representation by Texas
Farm Bureau as a matter of law. Texas Farm Bureau also argued that Jasek’s fraud
claims were negated as a matter of law because it did not have a duty to disclose
additional information as a matter of law. Additionally, Texas Farm Bureau
challenged the legal sufficiency of the evidence supporting the jury verdict and
specifically identified there was (1) no evidence supporting the jury’s finding of an
affirmative misrepresentation, (2) no evidence Texas Farm Bureau failed to
disclose a material fact that it had a duty to disclose, and (3) no evidence Texas
Farm Bureau knowingly engaged in any fraudulent or deceptive conduct.
Because it is dispositive of Jasek’s issues on appeal, we begin with Texas
Farm Bureau’s argument that the verdict was not supported by legally-sufficient
evidence.
B. Applicable law
1. Fraud claims
Jasek alleged, and the jury considered, fraud by nondisclosure as well as
fraud by misrepresentation.1 To prevail on a common-law fraud claim, a plaintiff
must prove that “(1) the defendant made a false, material representation; (2) the
defendant ‘knew the representation was false or made it recklessly as a positive
assertion without any knowledge of its truth;’ (3) ‘the defendant intended to induce
1
In its motion for JNOV, Texas Farm Bureau argues that the jury should not have
received a charge reciting the elements of an affirmative material misrepresentation. Counsel for
Texas Farm Bureau did object to the charge overall arguing that “there is no evidence of
misrepresentation.” However, we need not address this issue in light of our determination of
Jasek’s issue 1. Tex. R. App. P. 47.1
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the plaintiff to act upon the representation;’ and (4) the plaintiff justifiably relied
on the representation, which caused the plaintiff injury.” Barrow-Shaver Res. Co.
v. Carrizo Oil & Gas, Inc., 590 S.W.3d 471, 496 (Tex. 2019) (quoting JPMorgan
Chase Bank, N.A. v. Orca Assets G.P., L.L.C., 546 S.W.3d 648, 653 (Tex. 2018));
see also Trenholm v. Ratcliff, 646 S.W.2d 927, 930 (Tex. 1983). The fourth
element has two requirements: the plaintiff must show (1) it actually relied on the
defendant’s representation and (2) such reliance was justifiable. Orca Assets, 546
S.W.3d at 653.
Fraud by omission or nondisclosure is simply a subcategory of fraud because
the omission or nondisclosure may be as misleading as a positive misrepresentation
of fact when a party has a duty to disclose. Schlumberger Tech. Corp. v. Swanson,
959 S.W.2d 171, 181 (Tex. 1997). To establish fraud by nondisclosure, the
plaintiff must show: (1) the defendant deliberately failed to disclose material facts;
(2) the defendant had a duty to disclose such facts to the plaintiff; (3) the plaintiff
was ignorant of the facts and did not have an equal opportunity to discover them;
(4) the defendant intended the plaintiff to act or refrain from acting based on the
nondisclosure; and (5) the plaintiff relied on the nondisclosure, which resulted in
injury. Bombardier Aerospace Corp. v. SPEP Aircraft Holdings, LLC, 572 S.W.3d
213, 219–20 (Tex. 2019); see Bradford v. Vento, 48 S.W.3d 749, 754–55 (Tex.
2001) (explaining there must be duty to disclose).
2. DTPA claim
“False, misleading, or deceptive acts or practices in the conduct of any trade
or commerce are . . . unlawful.” Tex. Bus. & Com. Code Ann. § 17.46. To prevail
on a claim for failure to disclose under the DTPA, as the jury was charged with
determining here, Jasek must prove (1) the defendant knew information regarding
the goods or services, (2) the information was not disclosed, (3) there was an intent
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to induce the consumer to enter into the transaction through the failure to disclose,
and (4) the consumer would not have entered into the transaction had the
information been disclosed. Tex. Bus. & Com. Code Ann. § 17.46(b)(24); see
Patterson v. McMickle, 191 S.W.3d 819, 827 (Tex. App.—Fort Worth 2006, no
pet.); Red Roof Inns, Inc. v. Jolly, No. 14-10-00344-CV, 2011 WL 6288147, at *7
(Tex. App.—Houston [14th Dist.] Dec. 15, 2011, no pet.). Mere nondisclosure of
material information is not enough to establish an actionable DTPA claim. See
Tex. Bus. & Com. Code Ann. § 17.46(b)(24).
Any false, misleading, or deceptive act must also be relied upon by the
consumer. Tex. Bus. & Com. Code Ann. § 17.50(a)(1)(B). However, in contrast to
a fraud cause of action, the DTPA does not require proof of justifiable reliance;
rather, the DTPA simply requires that the consumer’s detrimental reliance. See id.C. There was no evidence of any misrepresentation or disclosure made by
Texas Farm Bureau to Jasek
The crux of Jasek’s claims is his allegation that partial and misleading
disclosures were made to him during his purchase of the tractor. A fundamental
question that must be resolved in this appeal is who made disclosures to Jasek.
Texas Farm Bureau argued Jasek did not establish a failure to disclose material
information with the intention to induce Jasek into a transaction he otherwise
would not have entered had the information had been disclosed. Explaining that its
claims adjuster had provided all material information in its possession to
SalvageSale and had no direct communications with Jasek (or any potential buyer),
Texas Farm Bureau maintains that Jasek did not meet his burden to show that any
conduct on its part caused Jasek’s injuries.
Jasek describes the case as one of classic “internet seller fraud.” He argues
that Texas Farm Bureau should not be able to avoid its obligations to disclose
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information by “foist[ing] responsibility” onto SalvageSale. He also points out that
the online listing stated that “[a]ll information included in this lot description was
provided by the Seller. [SalvageSale] makes no representations or warranties as to
the completeness or accuracy of the information.” Jasek also cites to testimony
from a Texas Farm Bureau employee stating that Texas Farm Bureau was the seller
of the tractor.2
Though Jasek’s frustration is evident and understandable, the evidence at
trial did not establish Jasek’s common-law fraud and statutory claims as against
Texas Farm Bureau. First, Jasek did not establish that Texas Farm Bureau wrote or
created the online listing for the tractor on which he relied to his detriment. The
evidence at trial reflected that Texas Farm Bureau’s adjuster filled out a
SalvageSale form entitled “Loss Assignment Sheet.” The adjuster then emailed
that sheet along with the photos he had taken of the tractor and the repair estimate
to SalvageSale. Though there was no direct evidence at trial explaining who wrote
the listing, the factfinder could have determined that SalvageSale prepared the text
of the listing.
Second, the record provides no indication of the relationship between Texas
Farm Bureau and SalvageSale such that the factfinder could determine that
SalvageSale was acting as the agent of Texas Farm Bureau. Though neither party
developed the issue, SalvageSale was described by a Texas Farm Bureau
employee, in general, as a “vendor” or a “compan[y] to handle the salvage.” There
was also no contract between the two companies introduced into evidence. Without
2
This statement by a Texas Farm Bureau employee is at best a quasi-admission.
Mendoza v. Fid. & Guar. Ins. Underwriters, Inc., 606 S.W.2d 692, 694 (Tex. 1980).
Quasi-admissions are “merely some evidence, and they are not conclusive upon the admitter.” Id.Jasek does not argue on appeal that this statement was a judicial admission, nor does he attempt
to establish the requirements for treating a quasi-admission as a judicial admission. See id.Therefore, we do not consider the issue.
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such a connection in evidence, we cannot attribute disclosures or representations
on SalvageSale’s website to Texas Farm Bureau.
The only communication or disclosure made by Texas Farm Bureau in
connection with the sale of the tractor was in the “Loss Assignment Sheet.” There
is no evidence in the record that Jasek saw or relied on the “Loss Assignment
Sheet.” Rather, Jasek testified that he saw and relied on the SalvageSale listing.
Though the SalvageSale listing included a disclaimer that all the information in the
listing was provided by the Seller, this fact did not automatically transform the
SalvageSale listing to a communication or representation from Texas Farm Bureau
without more. Despite receiving the repair estimate, SalvageSale did not
incorporate any information from the estimate into the listing though other
information and statements were added to the listing that were not explicitly made
by Texas Farm Bureau to SalvageSale, e.g., “This unit will not start, run or operate
in its current condition” and “No work has been done to the unit.” The language
that Jasek specifically cited in his testimony describing his reliance on the
photographs to depict damage to the tractor—“Please refer to the attached photos
and bid accordingly”—was not written by Texas Farm Bureau.3 Though Texas
Farm Bureau was the owner of the tractor, the evidence did not conclusively
establish who was the “seller” of the tractor. The only evidence in the record
reflects that the representations and disclosure complained of, and relied on, by
Jasek were those of SalvageSale.
When evaluating whether the trial court erred, we look to whether Jasek was
able to establish the elements of his causes of action All his causes of action
require either a failure to disclose material information or a misrepresentation. See
3
Testimony at trial revealed that the date of damage to the tractor identified in the listing
was not only incorrect, but the Texas Farm Bureau adjuster had no idea where the date came
from.
9
Tex. Bus. & Com. Code Ann. § 17.46(24); Bombardier Aerospace, 572 S.W.3d at
219; Orca Assets G.P, 546 S.W.3d at 653. Because Jasek did not establish that he
relied on a representation from or failure to disclose by Texas Farm Bureau, he
could not prevail on any of his causes of action. Therefore, we conclude that the
trial court did not err in rendering JNOV. Having reached this conclusion, we need
not address the parties’ other arguments regarding justifiable reliance or the “as is
where is” language in the online listing. Tex. R. App. P. 47.1.
We overrule issue 1.
E. Trial court stated no specific grounds for granting the motion for JNOV
In issue 2, Jasek argues that the trial court erred in rendering JNOV on the
basis that Jasek had the right to inspect the tractor after purchase and failed to do
so. However, this reasoning was not identified by the trial court in its final order,
nor was it one of the grounds relied on by Texas Farm Bureau in its motion for
JNOV.
“When the trial court states no reason why judgment n.o.v. was granted, and
the motion for judgment n.o.v. presents multiple grounds upon which judgment
n.o.v. should be granted, the appellant has the burden of showing that the judgment
cannot be sustained on any of the grounds stated in the motion.” Sbrusch, 818
S.W.2d at 394; Garza v. Cantu, 431 S.W.3d 96, 101 (Tex. App.—Houston [14th
Dist.] 2013, pet denied). Because there is no indication that the trial court rendered
JNOV on the basis that Jasek had the right to inspect the tractor after purchase and
failed to do so, we overrule issue 2.
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III. CONCLUSION
We affirm the judgment of the trial court as challenged on appeal. Tex. R.
App. P. 43.2(a).
/s/ Charles A. Spain
Justice
Panel consists of Justices Bourliot, Zimmerer, and Spain.
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