Rosalie Graf Schneider v. Charles Whatley and Virginia Whatley ( 2017 )

COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
ROSALIE GRAF SCHNEIDER,1 §
No. 08-14-00300-CV
Appellant, §
Appeal from the
v. §
County Court at Law Number Five
CHARLES WHATLEY AND VIRGINIA §
WHATLEY, of El Paso County, Texas
§
Appellees. (TC# 2014-CCV00803)
§
§
OPINION
Charles Andrew Whatley and Virginia Graf Whatley sought relief against Rosalie Graf
Schneider pursuant to Texas Property Code Section 92.109, which permits recovery from a
landlord who in bad faith retains a security deposit. Schneider counterclaimed for breach of
contract. TEX.PROP.CODE ANN. § 92.109(a) (West 2014). After a bench trial, and as authorized
by Section 92.109, the trial court entered judgment against Schneider, holding her liable for the
sum of $100 plus three times $1,990, the balance of the wrongfully withheld security deposit
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Although the trial court judgment identifies Schneider’s first name as “Rosalie,” Schneider’s signature and the
signature block on the lease identify her as “Roselie.”
balance, and awarded the Whatleys reasonable attorneys’ fees of $3,000. TEX.PROP.CODE ANN.
§ 92.109(a) (West 2014).
In a single issue, Schneider contends the evidence is legally insufficient to support a finding
that she acted in bad faith as required under Section 92.109(a). TEX.PROP.CODE ANN. § 92.109(a)
(West 2014). For the following reasons, we affirm.
FACTUAL SUMMARY
The Lease, Security Deposit, and Landlord’s Notice of Retention
In June 2012, the Whatleys leased Schneider’s El Paso house while she lived out of state.
They paid a security deposit of $2,650, and on April 19, 2013, gave written notice of their intention
to move on June 30, 2013. Schneider had a new tenant move in on July 1, 2013.
After the Whatleys moved, Schneider sent written notice dated July 10, 2013, which
included a list of repairs for which she had obtained estimates. The list included removal of
stapled cables on the floor, door, molding and walls of the house; preparation and painting of walls
and alcoves through the house; “touch up” of walls throughout the house; removal of towel bars
in the bathrooms and window blinds in the office; patching and painting; removal of shelves from
garage walls; repair of a garage wall; removal of a satellite dish; repair of roof damage; and the
repair of “elastomeric paint from speaker area.” Schneider included estimates totaling $3,142.56,
and after deducting the security deposit of $2,650, she informed the Whatleys they owed her
$492.56.
The Whatleys’ attorney notified Schneider that with her knowledge, they had made
improvements to the home at their own expense as permitted by the terms of the lease. The letter
also noted that as late as April 2013, Schneider had expressed her gratitude and appreciation for
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the Whatleys “taking such good care” of the home. The Whatleys suggested that the reasonable
cost of reimbursement for repairs would be approximately $300 to $400. Pursuant to Sections
92.102 and 92.103 of the Property Code, the Whatleys demanded that Schneider refund their
security deposit less itemized repair charges on or before thirty days of the date on which the
Whatleys had surrendered the property and gave Schneider a forwarding address supported by
receipts for the repair work performed. See TEX.PROP.CODE ANN. §§ 92.102, 92.103 (West 2014).
Trial De Novo
In December 2013, the case proceeded to trial in the justice court, and concluded with a
judgment entered against Schneider. Schneider appealed, and the case proceeded to a de novo
bench trial in county court in August 2014. TEX.R.CIV.P. 506.3. The trial court heard evidence
from seven witnesses. Charles acknowledged that the terms of the lease permitted deductions of
reasonable charges from the security deposit for restoration of walls, flooring, landscaping or any
alterations not approved in writing by the landlord, and agreed that Schneider had not approved
changes in writing but noted that she had thanked them in writing. The Whatleys claimed they
had made changes to the house with Schneider’s permission, which was expressed to them either
verbally or by email. They had subsequently recapped with Schneider the modifications that had
been made.
Schneider admitted that the Whatleys would inform her of the work performed but noted
that they would present it “like it was a good thing[.]” Schneider felt that she could not change
completed additions. After the Whatleys vacated the home, Schneider preferred that the house be
returned to its original state. She secured estimates which formed the basis of her retention and
demand letter to the Whatleys. With the exception of the bathroom towel bars that the Whatleys
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had installed and the cleaning of the garage “carpet,” Schneider alleged that all repair work in the
house had been performed but the security deposit was insufficient to cover the actual cost of
repairs in the sum of $3,065, which she believed to be reasonable.
Charles acknowledged that under the terms of the lease, he and Virginia were prohibited
from removing any fixtures they installed at the house because the lease provided that all fixtures
would become the property of the landlord. He described the relationship with Schneider as
friendly until the Whatleys’ attempts to obtain financing to purchase the home had been rejected.
Having considered this and other evidence and testimony, including photographs,
estimates, and the terms of the lease, the trial court ruled that Schneider could properly retain $660
spent to repair certain alterations, but she was not entitled to compensation or retention of the
security deposit for repairs made due to normal wear and tear, and would be required to return the
remainder to the Whatleys. The trial court also expressly found Schneider to be “in violation of
the Property Code . . . in not returning the remainder [of the security deposit], which would have
been $1,990.” After it assessed damages of “$100 plus three times the amount that should have
been returned in the amount of $1,990” the trial court awarded attorneys’ fees to the Whatleys and
declared that Schneider take nothing. In its written findings of fact and conclusions of law, the
trial court failed to make an express finding that Schneider acted in bad faith.
SUFFICIENCY OF THE EVIDENCE
In her sole issue, Schneider challenges the legal sufficiency of the evidence to support the
trial court’s implied finding that she acted in bad faith. See TEX.PROP.CODE ANN. § 92.109(a)
(West 2014).
Standard of Review
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We will sustain a challenge to the legal sufficiency of the evidence only if: (1) the record
discloses a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or
of evidence from giving weight to the only evidence offered to prove a vital fact; (3) the evidence
offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence establishes
conclusively the opposite of a vital fact. Ford Motor Co. v. Castillo, 444 S.W.3d 616, 620 (Tex.
2014). We must consider evidence favorable to the finding if a reasonable fact finder could and
disregard evidence contrary to the finding unless a reasonable fact finder could not. Cent. Ready
Mix Concrete Co. v. Islas, 228 S.W.3d 649, 651 (Tex. 2007); City of Keller v. Wilson, 168 S.W.3d
802, 807, 827 (Tex. 2005). The trial court, as fact finder, is the sole judge of the credibility of the
witnesses in a bench trial. Sw. Bell Media, Inc. v. Lyles, 825 S.W.2d 488, 493 (Tex.App.--Houston
[1st Dist.] 1992, writ denied). The judge may take into consideration all the facts and surrounding
circumstances in connection with the testimony of each witness and accept or reject all or any part
of the testimony. Lemus v. Aguilar, 491 S.W.3d 51, 59 (Tex.App.--San Antonio 2016, no pet.).
Applicable Law
The Texas Property Code provides that a landlord “shall refund a security deposit to the
tenant on or before the 30th day after the date the tenant surrenders the premises,” provided the
tenant has given the landlord a written statement of their forwarding address for purposes of
refunding the security deposit. TEX.PROP.CODE ANN. §§ 92.103, 92.107 (West 2014). With
limited exceptions, if the landlord retains any part of the security deposit, she must give the tenant
a written description and an itemized list of all deductions along with the balance of the
deposit. TEX.PROP.CODE ANN. § 92.104 (West 2014).
When a tenant brings a cause of action to recover a wrongfully held security deposit, the
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landlord has the burden of proving that the retention of any portion of the security deposit was
reasonable. TEX.PROP.CODE ANN. § 92.109(c) (West 2014). When there are no permanent
damages to the premises, the landlord is entitled to the reasonable cost of repairs as the proper
measure of damages if she waits until after the term of the lease has expired to seek damages. See
Pulley v. Milberger, 198 S.W.3d 418, 429 (Tex.App.--Dallas 2006, pet. denied). However, the
landlord is not permitted to retain any portion of a security deposit to cover normal wear and tear.
TEX.PROP.CODE ANN. § 92.104(b) (West 2014). Wear and tear is defined as deterioration that
results from the intended use of a dwelling including breakage or malfunction due to age or
deteriorated condition, but does not include deterioration that results from negligence,
carelessness, accident, or abuse of the premises. See TEX.PROP.CODE ANN. § 92.001(4) (West
2014).
The Property Code further provides that a landlord who in bad faith retains a security
deposit in violation of this subchapter is liable for an amount equal to the sum of $100, three times
the portion of the deposit wrongfully withheld, and the tenant’s reasonable attorney’s
fees. TEX.PROP.CODE ANN. § 92.109(a) (West 2014). A landlord is presumed to have acted in
bad faith if she fails either to return a security deposit or to provide a written description and
itemization of deductions on or before the 30th day after the date a tenant surrenders possession.
TEX.PROP.CODE ANN. § 92.109(d) (West 2014).
Analysis
Most cases brought under Section 92.109 involve circumstances in which a presumption
of bad faith exists. The statutory presumption of bad faith does not apply here because the
evidence established that Schneider provided a written description and itemization of deductions
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to the Whatleys on or before the 30th day after the date they surrendered possession of the house.
TEX.PROP.CODE ANN. § 92.109(d) (West 2014).
Because no presumption of bad faith exists, it is an element of the cause of action that the
Whatleys were required to establish at trial. A residential landlord acts in bad faith if she either
“acts in dishonest disregard of the tenant’s rights or intends to deprive the tenant of a lawfully due
refund.” Johnson v. Waters at Elm Creek, L.L.C., 416 S.W.3d 42, 47 (Tex.App.--San Antonio
2013, pet. denied). A landlord’s mere intentional retention of the security deposit beyond the
thirty day statutory period does not establish the landlord’s dishonest intent to deprive the tenant
of the deposit. Shamoun v. Shough, 377 S.W.3d 63, 72 (Tex.App.--Dallas 2012, pet. denied),
quoting A.B. Inv. Corp. v. Dorman, 604 S.W.2d 506, 508 (Tex.Civ.App.--Dallas 1980, no writ).
In its findings of fact, the trial court found that Schneider could properly deduct from the
security deposit $495 for repair to the roof, $75 to remove television cables, $25 for repairs to the
kitchen, and $65 for repairs to the office, thus implicitly finding these expenses to be reasonable.
The trial court also found that Schneider had “wrongfully withheld” the balance of the security
deposit in the amount of $1,990. Among its conclusions of law, the trial court declared that the
Whatleys had performed all conditions of the lease and had performed all requirements necessary
to be entitled to a refund of their security deposit, including efforts to clean, repair, and restore the
property to the same or better condition.
Findings of fact filed by the trial court shall form the basis of the judgment upon all grounds
of recovery and of defense embraced therein. TEX.R.CIV. P. 299. When a court makes findings
of fact but inadvertently omits an essential element of a ground of recovery or defense, the
presumption of validity will supply by implication any omitted, unrequested element that is
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supported by evidence. See TEX.R.CIV.P. 299. When a party fails to timely request additional
findings of fact, she is deemed to have waived the right to complain on appeal of the court’s failure
to enter additional findings. Briargrove Park Property Owners, Inc. v. Riner, 867 S.W.2d 58, 62
(Tex.App.--Texarkana 1993, writ denied); Cities Services Co. v. Ellison, 698 S.W.2d 387, 390
(Tex.App.--Houston [14th Dist.] 1985, writ ref’d n.r.e.). Further, where the original findings omit
a finding of a specific ground of recovery which is crucial to the appeal, failure to request an
additional finding will constitute a waiver of the issue. Poulter v. Poulter, 565 S.W.2d 107, 111
(Tex.Civ.App.--Tyler 1978, no writ). Here, the record reflects a deemed finding of bad faith.
Schneider failed to ask for additional fact findings to avoid this waiver.
Because the current tenants were using the towel bars, Schneider had authorized the
contractor to allow the current tenants’ belongings to remain on the towel racks. Schneider
wanted the bathroom towel bars removed, in essence, because she had no need for them and did
not use them. Although Schneider had authorized the Whatleys to paint the house a neutral color
at their expense, she preferred the original colors of the home, which included black, and she
sought to recover the cost to repaint the house. Although the house had a garage, Schneider
thought it was merely possible that the Whatleys would park their cars in it, and wanted to recover
cleaning costs of the garage carpet that was stained. She also wanted to recover the expense of
removing the professionally-installed garage shelves because she personally did not want them in
the garage, despite the fact that there was unrefuted testimony that her items were stored on them
and photographs showed the current tenants were using them. Schneider’s negative testimony
regarding the installation of window blinds was countered by her congratulatory email. She sent
another email to the Whatleys thanking them for making repairs to the exterior speakers at their
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own expense.
As fact finder, the trial court was permitted to consider all the facts and surrounding circumstances
in connection with the testimony of each witness, and to accept or reject all or any part of the
testimony. Lemus, 491 S.W.3d at 59. This evidence, in part or in whole, supports a
determination that Schneider acted in dishonest disregard of the Whatleys’ rights or intended to
deprive the Whatleys of a lawfully due refund, and therefore supports the deemed finding of bad
faith. See TEX.R.CIV.P. 299; Waters at Elm Creek, L.L.C., 416 S.W.3d at 47. The sole issue on
appeal is overruled.
The judgment of the trial court is affirmed.
ANN CRAWFORD McCLURE, Chief Justice
November 29, 2017
Before McClure, C.J., Rodriguez, and Hughes, JJ.
Hughes, J., not participating
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