Mike and Geri Jones v. Robert and Patricia Zearfoss , 2015 Tex. App. LEXIS 25 ( 2015 )

Fourth Court of Appeals
San Antonio, Texas
OPINION
No. 04-14-00083-CV
Mike and Geri JONES,
Appellants
v.
Robert and Patricia ZEARFOSS,
Appellees
From the 25th Judicial District Court, Guadalupe County, Texas
Trial Court No. 12-00986-CV-A
Honorable W.C. Kirkendall, Judge Presiding
Opinion by: Patricia O. Alvarez, Justice
Sitting: Rebeca C. Martinez, Justice
Patricia O. Alvarez, Justice
Luz Elena D. Chapa, Justice
Delivered and Filed: January 7, 2015
AFFIRMED
This case involves alleged misrepresentations and nondisclosures made during the sale of
a residence. Mike and Geri Jones sued Robert and Patricia Zearfoss asserting DTPA, statutory
real estate fraud, common law fraud, negligent misrepresentation, and negligence claims.
Subsequently, the Zearfosses filed a motion for summary judgment, asserting both no-evidence
and traditional grounds. The trial court granted the Zearfosses’ motion for summary judgment and
this appeal ensued.
We affirm the trial court’s summary judgment.
04-14-00083-CV
BACKGROUND
In August of 2009, the Zearfosses’ two-story house was burglarized. The burglars
damaged an upstairs bathroom that caused water to flow through the floor joists, down the walls,
and onto the first floor of the house. The burglary was investigated the following day by the
Guadalupe County Sheriff’s Department. Two offense reports were generated following the
investigation.
On the day of the burglary, the Zearfosses were on vacation. That evening, a friend of the
Zearfosses, Robert Nelson, discovered the burglary. When Nelson entered the house, he noticed
signs of water damage. He then undertook efforts to clear the water from the second floor by
poking holes in the ceiling in several areas, putting down buckets to catch the water, mopping the
water, and drying the furniture. The following day, Nelson notified Mr. Zearfoss of the burglary
and the water damage.
Upon learning of the water damage, Mr. Zearfoss made a claim under his homeowner’s
insurance policy. After receiving notice of the claim, the insurance company arranged for two
separate professional companies to conduct water extraction and dry-out operations. The
insurance company also retained a construction company to perform repairs and reconstruction on
the house. The cost of remediation and reconstruction totaled over $40,000.
After the remediation and reconstruction of the house were completed, the Zearfosses
decided to sell their house. The Joneses showed an interest. The parties began negotiations
through their respective real estate agents. Before closing, two events occurred. First, the
Zearfosses provided the Joneses with a written Seller’s Disclosure Notice. This notice stated:
“[w]ater penetration: upstairs toilet leaked and caused water damage downstairs. Damage was
covered by insurance and was professionally corrected.” Second, the Joneses inspected the house
through an agent they chose and then executed a “Texas Association of Realtors Buyer’s Walk-
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Through and Acceptance Form.” In that form, the Joneses represented (1) the property was
inspected by an inspector of their choosing, (2) they reviewed the inspection report, (3) they
walked through and reviewed the property, and (4) they accepted “the Property in its present
condition.”
A day after the Joneses executed the “Walk-Through and Acceptance Form,” the parties
closed the sale. The “One to Four Family Residential Contract (Resale)” contract executed by the
parties at closing included an “as is” clause whereby the Joneses again “accept[ed] the Property in
its present condition.”
More than two years after they purchased the house, the Joneses discovered through a
retained expert, Dr. Donald Schaezler, and other sources that (1) more than 50,000 gallons of water
flowed through their house during the 2009 event, and (2) mold contamination resulted. The
Joneses filed suit against the Zearfosses.
DISCUSSION
The Joneses contend the trial court erred in granting the Zearfosses’ motion for summary
judgment in that (1) the Joneses presented evidence of misrepresentations, and (2) the Zearfosses
had a legal duty to fully disclose the facts surrounding the 2009 water event.
A. Standard of Review
A no-evidence motion for summary judgment entitles the movant to summary judgment
on the ground there is no evidence of one or more essential elements of a legal claim advanced by
the nonmovant. TEX. R. CIV. P. 166a(i). The nonmovant bears the burden of presenting evidence
raising a genuine issue of material fact on each challenged element. Mack Trucks, Inc. v. Tamez,
206 S.W.3d 572, 582 (Tex. 2006). If the nonmovant cannot identify and produce more than a
scintilla of evidence that raises a genuine issue of material fact, a no-evidence motion must be
granted. Id.; Trejo v. Laredo Nat’l Bank, 185 S.W.3d 43, 46–47 (Tex. App.—San Antonio 2005,
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no pet.). More than a scintilla of evidence exists if the evidence rises to a level that would enable
reasonable and fair-minded jurors to differ in their conclusions. City of Keller v. Wilson, 168
S.W.3d 802, 822 (Tex. 2005).
A traditional summary judgment is appropriate where there is no genuine issue of material
fact and the movant is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); Nixon v.
Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1994). The evidence favoring the nonmovant
must be taken as true and every reasonable inference drawn in his favor. Nixon, 690 S.W.2d at
548–49; see also City of Keller, 168 S.W.3d at 822 (crediting evidence). If the movant’s motion
and evidence establish the movant’s right to judgment as a matter of law, the burden shifts to the
nonmovant to raise a material fact issue sufficient to defeat summary judgment. City of Hous. v.
Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979).
We review both the no-evidence and the traditional motions for summary judgment de
novo. See Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). We address each
motion for summary judgment separately.
B. No-Evidence Motion For Summary Judgment
The Zearfosses’ no-evidence motion for summary judgment centers on the absence of
evidence of a material misrepresentation.
The Joneses challenge the no-evidence summary judgment asserting they offered evidence
of misrepresentations of the condition of the property. They contend their evidence, at a minimum,
raised fact questions as to the veracity of the Zearfosses’ disclosures.
1. Applicable Law
A material misrepresentation is an element common to causes of action for DTPA,
common law fraud, statutory fraud, and negligent misrepresentation. Miller v. Keyser, 90 S.W.3d
712, 716 (Tex. 2002) (noting misrepresentation actionable under DTPA); In re FirstMerit Bank,
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N.A., 52 S.W.3d 749, 758 (Tex. 2001) (orig. proceeding) (listing elements of common law fraud
as including a material misrepresentation); TEX. BUS. & COM. CODE ANN. § 27.01(a) (West 2013)
(listing false representation of material fact as an element of statutory fraud).
“A fact is material if it would likely affect the conduct of a reasonable person concerning
the transaction in question.” Fleming v. Curry, 412 S.W.3d 723, 736 (Tex. App.—Houston [14th
Dist.] 2013, pet. denied). Materiality centers on whether a “reasonable person would attach
importance to and would be induced to act on the information in determining his choice of actions
in the transaction in question.” Id. at 737 (citing Am. Med. Int’l, Inc. v. Giurintano, 821 S.W.2d
331, 338 (Tex. App.—Houston [14th Dist.] 1991, no writ) (op. on reh’g)).
2. Analysis
The Joneses argue (a) the quality of water remediation, (b) the origination of the water, and
(c) the minimization of the water event are evidence of a material misrepresentation precluding a
no-evidence summary judgment in favor of the Zearfosses on their causes of action.
a. Quality of Water Remediation
The Joneses argue a material fact exists on whether the Zearfosses deceptively described
the remediation as a “professional” job in the Seller’s Disclosure Notice when, in fact, the
remediation company failed to conduct mold testing. As evidence, the Joneses presented Dr.
Schaezler’s affidavit and reports, and Mr. Zearfoss’s deposition testimony. The Joneses direct us
to the following testimony: (1) Dr. Schaezler’s opinion that the moisture left from the 2009 water
event caused mold accumulation in the house, and (2) Mr. Zearfoss’s admission that he did not
direct the remediation technicians to perform mold testing and is not aware if any was done. Based
on this evidence, the Joneses assert the Zearfosses’ disclosure that the water damage “was
professionally corrected” was a material misrepresentation.
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In our review of the summary judgment evidence, we note (1) Dr. Schaezler does not testify
that, on the day of the sale of the house, mold was present; (2) there is no evidence that mold was
present on the day of the sale of the house; (3) Mr. Zearfoss testified he did not direct the
remediation company to do mold testing but was satisfied there was no mold growth in the house
after he witnessed a remediation technician performing humidity testing following the 2009 water
event; (4) there is no evidence that the remediation technicians were not “professionals”; (5) there
is no evidence that the remediation workmanship was faulty; and (6) there is no evidence that
testing would have prevented the accumulation of mold.
Mike Jones’s uncontroverted testimony, on the other hand, shows that (1) he provided no
evidence that the Zearfosses knew that the remediation company was not professionally
competent, and (2) there was nothing untruthful about the Zearfosses representing the contractors’
work as the corrective work of professionals in their fields.
We conclude the Joneses’ argument that the Zearfosses misrepresented remediation as
“professional” work is not supported by the evidence.
b. Origination of Water
The Joneses next assert that in the Seller’s Disclosure Notice, the Zearfosses
misrepresented the upstairs “toilet” as the source of water. In support, the Joneses direct us to
Nelson’s testimony that water could have come from the toilet, the sink, or both.
We note the Joneses’ claims are based on the damage to the house caused by the mold. As
such, we must determine whether a reasonable person would attach importance to whether the
water that allegedly gave rise to the mold was from the toilet or the sink. See id. at 736–37.
The record shows Nelson testified the source of water was the upstairs bathroom. He did
not remember if the water came from the sink or the toilet in that bathroom. Whether the source
of the water was the sink or the toilet located in the same bathroom is not a material fact to the
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presence of mold. See id. We therefore conclude the Joneses failed to present evidence of a
material misrepresentation.
c. Minimization of the Water Event
The Joneses contend that in the Seller’s Disclosure Notice, the Zearfosses misrepresented
the water event by minimizing it as a “leak” instead of describing it to be an “overflow.” They
argue that the words have different meanings, and it was misleading to use the word “leak” when
an “overflow” occurred. As evidence of the misrepresentation, they point to Mr. Zearfoss’s
deposition testimony where he stated the toilet “overflowed.”
The Zearfosses argue that whether the water event was classified as a “toilet leak” or an
“overflow” is immaterial because the Zearfosses disclosed that the water leak caused damage to
the downstairs area and that it was covered by insurance and professionally corrected. We agree
with the Zearfosses.
Standing alone, the information that water traveled from the second to the first floor would
induce a reasonable buyer to act on the information and perform mold testing before buying the
house. See id. at 737. Information pertaining to an insurance claim and subsequent remediation
work also would likewise induce a reasonable buyer to act on the information and perform mold
testing before committing to buy a house. Id. On the other hand, information only regarding an
overflow of water from a toilet would not induce a reasonable buyer to act on the information and
perform mold testing before buying the house. Id. For these reasons, information on whether the
toilet “leaked” or “overflowed” alone is not a material misrepresentation. Accordingly, the Joneses
failed to present evidence that the Zearfosses’ disclosure of a water “leak” was a material
misrepresentation in light of the disclosure made by the Zearfosses of water damage to the first
floor, the insurance claim, and the remediation work that followed.
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3. Conclusion
The Zearfosses’ no-evidence motion for summary judgment asserted the absence of
evidence of a material misrepresentation, an essential element of the Joneses’ DTPA, common law
fraud, statutory fraud, and negligent misrepresentation claims. The Joneses’ summary judgment
evidence failed to raise a genuine issue of material fact supporting a material misrepresentation.
See Mack Trucks, 206 S.W.3d at 582. Accordingly, the trial court did not err in granting the
Zearfosses’ motion for no-evidence summary judgment on the element of material
misrepresentation. See id.
B. Traditional Motion for Summary Judgment
The Zearfosses moved for a traditional summary judgment on the Joneses’ negligence
claim on the grounds they either had no duty to disclose or satisfied their duty to disclose. The
Joneses responded that the evidence showed a genuine issue of material fact because the Zearfosses
failed to fully disclose all important facts concerning the property’s condition.
1. Applicable Law on Duty to Disclose
Generally, to prove a negligence action, the plaintiff must establish the defendant had a
duty to the plaintiff. Nabors Drilling, U.S.A., Inc. v. Escoto, 288 S.W.3d 401, 404 (Tex. 2009).
“A seller of a house is charged only with [the duty to disclose] such material facts as to put a buyer
exercising reasonable diligence on notice of the condition of the house.” Cole v. Johnson, 157
S.W.3d 856, 860–61 (Tex. App.—Fort Worth 2005, no pet.). If a material fact known by the seller
is not discoverable by the exercise of ordinary care and diligence by the purchaser, then a seller is
under a duty to disclose that fact. Myre v. Meletio, 307 S.W.3d 839, 843 (Tex. App.—Dallas 2010,
pet. denied).
On the other hand, “[a] seller has no duty to disclose facts he does not know.” Prudential
Ins. Co. of Am. v. Jefferson Assoc., Ltd., 896 S.W.2d 156, 162 (Tex. 1995). Likewise, a seller is
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not liable for failing to disclose what he only should have known. Id.; Myre, 307 S.W.3d at 843–
44. This is because a seller has no duty to investigate any concerns he may have, nor is he is
required to disclose any of those concerns. Prudential Ins. Co., 896 S.W.2d at 162.
2. Analysis
The Zearfosses contend they disclosed all information they were required to disclose.
Therefore, they met their duty.
The Joneses contend (1) the Zearfosses’ disclosure of the water event was insufficient to
place them on notice, (2) the Zearfosses failed to disclose the mold contamination and the absence
of mold testing during the water remediation, and (3) the Zearfosses failed to disclose the property
flooded in the Seller’s Disclosure notice.
a. Did the Zearfosses Have a Duty to Describe the Water Event In Detail?
The Joneses contend the Zearfosses’ disclosure of the water event was inadequate as a
matter of law because they withheld important information related to the severity of the water
damage. Specifically, they allege they were not informed that (1) over 50,000 gallons of water
flowed overnight into the walls, floor joists, and ceiling of the house; and (2) the cost to repair the
water damage exceeded $40,000. The Joneses argue that any reasonable person would consider
these facts important and expect a seller to disclose them.
The Zearfosses contend they discharged their duty by disclosing sufficient facts about the
water damage to place the Joneses on notice. We agree.
The record before us shows the Zearfosses disclosed an upstairs water leak which caused
damage to the downstairs area requiring professional remediation. They also disclosed they had
an insurance claim. Because the disclosure placed the Joneses on sufficient notice of a water event,
the Zearfosses met their disclosure duty. With this information, the Joneses could have exercised
due diligence to obtain additional information on the extent of the water “leak.”
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b. Were the Zearfosses under a Duty to Disclose Unknown Mold and to Test
for Mold?
The Joneses next contend the Zearfosses failed to disclose the house was contaminated
with mold and failed to test for mold.
There is no summary judgment evidence the house was contaminated with mold at the time
the sale took place. There is likewise no evidence the Zearfosses had knowledge of the presence
of mold in the house at the time the sale took place. Although Mr. Zearfoss asked the remediation
technicians to ensure there was no mold, he had no duty to investigate whether mold was present
prior to selling the house to the Joneses. Prudential Ins. Co., 896 S.W.2d at 162. There is no duty
to disclose unknown conditions or concerns a seller has regarding a house. Id.
The Joneses further contend the Zearfosses had a duty to disclose that no mold testing was
done during the water remediation process. We disagree with this contention. First, Mr. Zearfoss
testified that he did not direct the remediation technicians to perform mold testing but was satisfied
that no mold was present when he witnessed humidity testing by the remediation technicians.
Second, the remediation disclosure gave the Joneses sufficient notice that water damage was
remediated. The Joneses, in exercising reasonable diligence, had an opportunity then to request
further information on the extent of remediation before buying the house. See Cole, 157 S.W.3d
at 860–61. Once the Zearfosses disclosed that water damage remediation took place, the
Zearfosses had no duty to disclose whether mold testing was performed on their house. The
Zearfosses’ duty to disclose was satisfied when they disclosed the water damage event and the
remediation, both material facts.
c. Did the Zearfosses Breach a Duty by not Disclosing “Previous Flooding
Into the Structures” in the Seller’s Disclosure Notice?
The Joneses next contend the Zearfosses did not disclose the flooding event or
misrepresented that there was no flooding into the structure of the house by marking “no” in the
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portion of the Seller’s Disclosure Notice that required information on “Previous Flooding Into the
Structures.”
The Zearfosses contend the Seller’s Disclosure Notice asked them to mark “Yes” if they
were aware of “Previous Flooding Into the Structures,” and “No” if they were not. The Zearfosses
argue the 2009 water event did not constitute “flooding” under Texas law nor did it constitute
“previous flooding into the structures.” Specifically, they argue (1) under Texas law, floodwaters
result from an overflowed river, stream, or natural water course; and (2) the 2009 water damage
was the result of water flowing from within the house and not from floodwater flowing into the
house from outside. We agree with the Zearfosses.
Under Texas law “[f]loodwaters are those which, generally speaking, have overflowed a
river, stream or natural water course and have formed a continuous body with the water flowing
in the ordinary channel.” Sun Underwriters Ins. Co v. Bunkley, 233 S.W.2d 153, 155 (Tex. App.—
Fort Worth 1950, writ ref’d). A natural watercourse is considered to have “bed, banks, and a
permanent source of water supply, although it is not essential that the water flow all the time.” Id.
at 155–56.
When an excessive flow of water does not come from the overflow of a river, creek, or
other watercourse, it cannot be brought within the definition of flooding. Id. at 156. When water
comes from within the plumbing system of a home, it does not constitute flooding. State Farm
Lloyds v. Marchetti, 962 S.W.2d 58, 61 (Tex. App.—Houston [1st Dist.] 1997, pet. denied).
The facts are undisputed that the 2009 water event occurred when an upstairs bathroom
was vandalized. The water event flowed from the home’s plumbing system and was not floodwater
that came “into” the structures. Therefore, the Zearfosses met their duty when they marked “No”
on the Seller’s Disclosure Notice’s entry relating to “previous flooding into the structures.” We
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also note that by marking “No,” they did not misrepresent the 2009 water event as alleged by the
Joneses.
3. Conclusion
The Zearfosses met their duty by describing the 2009 water event and the remediation
work. They did not have a duty to describe in detail the remediation work, the mold potential, or
any concern about mold contamination. Finally, the Zearfosses correctly stated in the Seller’s
Disclosure Notice that their house had not suffered “previous flooding into the structures.” By
doing so, they did not misrepresent the 2009 water event.
C. Acceptance of “The Property In Its Present Condition” Clause (or “As Is” Clause)
Because we affirm the summary judgment on the basis that there is no evidence of a
material representation and no duty on the part of the Zearfosses, we need not address the “as is”
clause in the “Walk-Through and Acceptance Form” and the “One to Four Residential Contract
(Resale).” See TEX. R. APP. P. 47.1.
CONCLUSION
In response to the Zearfosses’ motions for summary judgment, the Joneses did not present
evidence to raise genuine issues of material fact. The trial court did not err in granting the
Zearfosses’ motion for summary judgment on the Joneses’ DTPA, statutory real estate fraud,
common law fraud, negligent misrepresentation, and negligence claims. The trial court’s judgment
is affirmed.
Patricia O. Alvarez, Justice
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