A-TX Property Management v. Jesus Rodriguez and Sandra Rodriguez ( 2013 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-11-00655-CV
A-TX Property Management, Appellant
v.
Jesus Rodriguez and Sandra Rodriguez, Appellees
FROM THE COUNTY COURT AT LAW NO. 1 OF TRAVIS COUNTY,
NO. C-1-CV-11-005496, HONORABLE J. DAVID PHILLIPS, JUDGE PRESIDING
MEMORANDUM OPINION
A-TX Property Management appeals the county court’s judgment in favor of
Jesus Rodriguez and Sandra Rodriguez,1 acting pro se, that A-TX withheld a security deposit in bad
faith in violation of section 92.109 of the Texas Property Code. See Tex. Prop. Code § 92.109(a)
(landlord who in bad faith retains security deposit liable for amount equal to sum of $100, three
times amount wrongfully withheld, and tenant’s attorney’s fees). A-TX challenges the legal and
factual sufficiency of the evidence and the amount of damages awarded. For the reasons that follow,
we affirm the county court’s judgment conditioned on remittitur.
1
We refer to the Rodriguezes individually by their first names for clarity.
FACTUAL AND PROCEDURAL BACKGROUND
In January 2009, the Rodriguezes leased a home from Shamrock Property
Management and paid a security deposit in the amount of $1,200. The written lease agreement
contained a provision titled “Move-In Condition” requiring the tenant to complete an “Inventory and
Condition Form” (Move-In Report) within five days after the commencement date of the lease. The
lease further provided that if the tenant failed to timely deliver a Move-In Report assessing the
condition of the premises, the property would be deemed to be free of damages. The lease had an
original expiration date of January 31, 2010. On February 1, 2010, the Rodriguezes and Shamrock
entered into a lease extension, changing the expiration date to June 30, 2010. At some point,
Shamrock transferred management responsibility to another company, which subsequently
transferred management to A-TX. In August 2010, the Rodriguezes moved out, and a dispute arose
regarding the refund of the security deposit. A-TX provided an itemized list of charges made against
the security deposit and refunded the balance of $54.92. The Rodriguezes contended that A-TX
wrongfully withheld the security deposit.
The Rodriguezes filed a claim in small claims court, and a default judgment was
rendered in their favor in the amount of $2,770. After the small claims court denied A-TX’s motion
for new trial, A-TX appealed to the county court. In a do novo bench trial, the county court heard
the testimony of the Rodriguezes, A-TX’s office manager, and two A-TX employees who conducted
property inspections of the Rodriguezes’ home. The parties also offered exhibits including
photographs, inspection reports, A-TX’s itemized list of charges, invoices for repairs, a letter from
Shamrock regarding the condition of the house, and the lease. The itemized list included charges
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for replaced blinds, paint, drywall, doorstops, outlet covers, replaced sheetrock, painting of the whole
house, trimming of bushes, ant care, replaced smoke detectors and light bulbs, pest control for
roaches, and two $100 charges for holdover rent.
Sandra testified generally regarding the condition of the home when she and Jesus
moved in and when they moved out. She offered into evidence a letter from Shamrock dated
May 2011 stating that when a Shamrock representative took the Rodriguezes to see the house, they
discovered that it had been vandalized and “the window had been broken[, . . .] there were holes
punched in the walls and other damage.” Sandra further testified that there were roaches in the home
when they moved in and they battled them the entire time they lived there. She offered two
photographs of a shrub near the front door—one taken when they moved out and the second one
taken one month later—and stated that the shrub looked the same one month later as when they
moved out and did not appear to have been trimmed. She stated that there was damaged sheetrock
caused by a leak behind the washer in a pipe for which Shamrock was responsible and Shamrock had
pulled the sheetrock out and provided a metal vent to cover the hole. Sandra also stated she had
removed a smoke detector and did not contest that charge. She testified that there were broken
blinds, so they purchased new blinds and left them in the house but did not hang them. She further
testified that she had the carpet professionally cleaned when they moved out but that some red stains
from her daughter’s spilled Kool-Aid remained and she did not dispute that additional cleaning was
needed. She also testified that she received a refund check from A-TX in the amount of $54 but did
not cash it and received a subsequent accounting indicating that the Rodriguezes owed A-TX money.
3
On cross-examination, Sandra testified that she and Jesus had completed a Move-In
Report and provided it to Shamrock in compliance with the lease but did not retain a copy. She also
testified that one plank in the fence had been blown down by the wind. She stated that despite a
letter from A-TX indicating that the two charges for holding over two months after the expiration
of the lease were refunded, she did not receive a refund of those amounts.
Jesus testified that during the inspection A-TX performed before he and Sandra
moved out, he informed Sean Smith, one of the inspectors, that they had asked Shamrock to repair
the fence because the wind repeatedly blew a board down, but Shamrock did not repair it. He also
testified that Shamrock had provided a letter stating that the house had not been painted since 2006,
but he did not offer the letter into evidence. Although Jesus did not testify regarding the vandalism,
A-TX offered a letter he wrote to them stating that there was writing on the walls and eggs had been
thrown on the walls.
Sean Smith testified concerning the inspection he conducted prior to the Rodriguezes’
moving out. He stated that the carpet was in “bad shape” and had red, yellow, and black stains and
the walls were “very bad” and had spots “like when you rub the walls with your hands.” He testified
that Jesus informed him “it was from eggs, but, I mean, from what proof.” He stated that he had not
been in the house prior to conducting the inspection. Smith also testified that there was bird feces
on the carpet and wall next to the bird cage. A-TX offered Smith’s inspection report that indicated,
and Smith testified, that he had rated the carpet as “fair” and the walls as “fair” and “poor.” The
report also reflected Smith’s comment that the carpet had “minor spots” and the fence needed to
be repaired.
4
Harold Croson testified regarding the final inspection that he conducted after the
Rodriguezes moved out. He stated that the carpet and walls were in poor condition, there was “a
little dirt around,” and live insects. He also stated that the condition of the walls was “more than
normal wear and tear” but observed that the upstairs was “not as bad.” Croson also testified that
there were “about three blinds [that] needed to be replaced” and there were new blinds in packages
but not hung and he was not sure they were the right size. He testified that Jesus “had the
neighborhood child come over while [he] was there and cut the yard” even though he had given up
possession of the property at that time. A-TX offered Croson’s inspection report, which generally
reflected the comments in his testimony, including that the carpet needed stains removed.
Jessica Bullock testified that she was office manager and vice-president of A-TX.
She stated that she had unsuccessfully attempted to locate the Move-In Report from Shamrock. She
explained that Shamrock informed her that it had transferred all of its records to the subsequent
property manager, who then informed her that it had transferred all of the records to A-TX. Bullock
testified that the lease required her to go by the Move-In Report and that without it the Rodriguezes
had offered no proof of the condition at the time they moved in. She further testified that the cost
to “paint the entire house and fix everything” was $1,200 and she divided that between the owner
and the tenants. The county court questioned Bullock concerning an invoice A-TX offered into
evidence that stated: “Repainted rooms due to extensive marks, damages. Replaced sheetrock,
replaced door stops, repainted baseboards from extensive nicks and damages” for a total charge of
$600. Bullock stated it was not her understanding that the cost was only $600 and added that some
5
follow-up work had to be done but did not refer to another invoice. Bullock also testified that A-TX
did a lot of work that was not charged to the Rodriguezes because it was normal wear and tear.
Following testimony, the county court found that A-TX was entitled to deduct for the
labor of installing the blinds and for replacing the smoke detector, doorstops, and outlet covers for
a total of $80.96 and that the remaining $1,119.04 should have been refunded. The county court
further found that A-TX had failed to prove that the Rodriguezes caused the remainder of the
damages charged against them and concluded that A-TX’s withholding of the security deposit
without any evidence that the Rodriguezes caused the damages was bad faith. The county court
awarded $100 and three times the amount wrongfully withheld, for a total of $3,457.12. See id. This
appeal followed.
DISCUSSION
Applicable Law
The return of security deposits in connection with residential tenancies is governed
by subchapter C of Chapter 92 of the Property Code. See id. §§ 92.101–.109. Under subchapter C,
a landlord is required to refund a security deposit to a tenant within 30 days after the tenant
surrenders the property, id. § 92.103(a), and may deduct only those “damages and charges for which
the tenant is legally liable,” id. §92.104(a). If a landlord violates this provision in bad faith, the
statute provides a remedy of three times the amount wrongfully withheld, $100, and attorney’s fees.
Id. § 92.109(a).2 “A landlord acts in bad faith when he retains the security deposit in dishonest
2
The county court did not award attorney’s fees, and the Rodriguezes do not raise that issue
on appeal.
6
disregard of the tenant’s rights.” Pulley v. Milberger, 198 S.W.3d 418, 428 (Tex. App.—Dallas,
2006, pet. denied) (citing Reed v. Ford, 760 S.W.2d 26, 30 (Tex. App.—Dallas 1988, no writ)). Bad
faith implies an intent to deprive the tenant of a refund that is lawfully due. Shamoun v. Shough,
377 S.W.3d 63, 72 (Tex. App.—Dallas 2012, pet. denied); Pulley, 198 S.W.3d at 428; Hardy
v. 11702 Memorial, Ltd., 176 S.W.3d 266, 271 (Tex. App.—Houston [1st Dist.] 2004, pet. dism’d).
It is the landlord’s burden to prove that the retention of the security deposit was reasonable. Tex.
Prop. Code § 92.109(c).
Standard of Review
A-TX challenges the legal and factual sufficiency of the evidence to support the
county court’s judgment. In reviewing the legal sufficiency of the evidence, we view the evidence
in the light most favorable to the judgment, crediting favorable evidence if a reasonable fact finder
could and disregarding contrary evidence unless a reasonable fact finder could not. City of Keller
v. Wilson, 168 S.W.3d 802, 807 (Tex. 2005). A legal sufficiency challenge may be sustained when
the record discloses one of the following situations: (i) a complete absence of evidence of a vital
fact; (ii) the court is barred by rules of law or of evidence from giving weight to the only evidence
offered to prove a vital fact; (iii) the evidence offered to prove a vital fact is no more than a mere
scintilla; or (iv) the evidence establishes conclusively the opposite of the vital fact. Id. at 810. The
test is “whether the evidence at trial would enable reasonable and fair-minded people to reach the
[judgment] under review.” Id. at 827. In reviewing factual sufficiency of the evidence, we consider
and weigh all of the evidence in the record, and we may overturn a judgment only if it is so against
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the great weight and preponderance of the evidence as to be clearly wrong and manifestly unjust.
Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986).
In a bench trial, the trial judge passes on the witnesses’ credibility and the weight to
be given their testimony and can accept or reject any witness’s testimony in whole or in part.
Bocquet v. Herring, 972 S.W.2d 19, 22 (Tex. 1998). The trial court may believe one witness,
disbelieve others, and resolve inconsistencies in any witness’s testimony. McGalliard v. Kuhlmann,
722 S.W.2d 694, 697 (Tex. 1986) (Baker, J. dissenting) (citing Texas W. Oil & Gas Corp. v. El Paso
Gas Trans. Co., 631 S.W.2d 521, 524 (Tex. App.—El Paso 1982, writ ref’d n.r.e.); Seasha Pools,
Inc. v. Hardister, 391 S.W.3d 635, 639 (Tex. App.—Austin 2012, no pet.). We may not substitute
our judgment for that of the trier of fact merely because we reach a different conclusion. Herbert
v. Herbert, 754 S.W.2d 141, 144 (Tex. 1988); Westech Eng’g, Inc. v. Clearwater Constructors, Inc.,
835 S.W.2d 190, 196 (Tex. App.—Austin 1992, no writ).
Legal Sufficiency of the Evidence
In its first issue, A-TX contends that the evidence was legally insufficient to support
the county court’s judgment. A-TX argues that the contractual obligation of the Rodriguezes to
provide a Move-In Report is necessary contextual evidence that we are required to consider under
City of Keller, even though it is not favorable to the county court’s judgment. See 168 S.W.3d at 811
(review of contrary contextual evidence may be necessary to discern lack of supporting evidence).
In light of the lease obligation to provide the Move-In Report, A-TX contends, the Rodriguezes’
claim that A-TX withheld their deposit is no evidence of the unreasonableness of the charges or that
8
such charges were made in bad faith. A-TX also cites Sandra’s admission that she was responsible
for certain damages.
Initially, we observe that in City of Keller, the supreme court clarified that we are to
disregard contrary evidence only when a reasonable factfinder could do so. See id. In any event, we
do not construe the contractual obligation to report prior damages in a Move-In Report as evidence
contrary to the county court’s judgment. Sandra testified that she and Jesus completed the Move-In
Report and provided it to Shamrock. In addition, Sandra and Jesus offered testimony and evidence
regarding the damages to the home prior to move-in and the charges A-TX made against the deposit.
Smith testified that Jesus informed him that there was damage to the walls from eggs. Shamrock’s
letter describing vandalism at the home when it was shown to the Rodriguezes supports the
Rodriguezes’ testimony.
Further, in arguing that the Rodriguezes failed to prove that the charges were
unreasonable, A-TX inverts the burden of proof with regard to the reasonableness of charges
assessed by A-TX. Under section 92.109(c), A-TX had the burden to prove that the charges
underlying its retention of the security deposit were reasonable. See Tex. Prop. Code § 92.109(c);
see also Hardy, 176 S.W.3d at 273 (question under section 92.109(a) is whether landlord proved
each charge was made in good faith). The only evidence A-TX cites to support the reasonableness
of the charges against the deposit was the lease provision requiring a Move-In Report. A-TX
contends that in the absence of such a report, A-TX was entitled under the lease to presume there
was no damage to the property when the Rodriguezes moved in. However, A-TX offered no
evidence to establish the condition of the home when the Rodriguezes moved in or that the
9
Rodriguezes caused the damage, evidence necessary to meet its burden of proving the reasonableness
of charging the Rodriguezes for repair work. See Tex. Prop. Code § 92.109(c); Hardy, 176 S.W.3d
at 273; Shamoun, 377 S.W.3d at 74. Nor did it offer any evidence to contradict Sandra’s testimony
that she and Jesus provided the Move-In Report, the Rodriguezes’ testimony regarding the
pre-move-in vandalism and other causes of damage, or the Shamrock letter supporting their
testimony. The county court, acting as factfinder, was the sole judge of the credibility of the
witnesses and the weight to be given to their testimony and could have reasonably believed the
Rodriguezes’ testimony, especially in light of the Shamrock letter. McGalliard, 722 S.W.2d at 696;
Seasha Pools, 391 S.W.3d at 639.
Viewing the evidence in the light most favorable to the county court’s judgment, we
conclude that there was legally sufficient evidence to support the county court’s determination that
the charges A-TX assessed against the Rodriguezes3 were unreasonable—with one exception. See
City of Keller, 168 S.W.3d at 807; Miro v. Garner, 52 S.W.3d 407, 411 (Tex. App.—Corpus Christi
2001, pet. denied) (evidence legally sufficient to support finding that landlord wrongfully retained
deposit where there was no evidence extensive damage was fault of tenant); cf. Pulley, 198 S.W.3d
at 422, 432 (evidence of no damage prior to move-in and installation of new carpet several months
prior to move-in sufficient to support finding of reasonableness of charges). Contrary to her
testimony regarding the other charges, Sandra testified that her daughter had caused the
3
The Rodriguezes do not complain on appeal of the county court’s determination that the
charges for installing the blinds and replacing the smoke detector, doorstops, and outlet covers were
reasonable, and we reach no conclusion as to the evidence to support that determination. See Tex.
R. App. P. 47.1.
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hard-to-remove red stains, and she did not dispute the charge for carpet cleaning. We therefore
conclude that the evidence conclusively establishes that the Rodriguezes caused the stains and was
legally insufficient to support the county court’s determination that the $107.71 charge for carpet
cleaning was unreasonable. See City of Keller, 168 S.W.3d at 807.
We further conclude—with the same exception for the carpet cleaning charge— that
the evidence was legally sufficient to support the county court’s determination that A-TX wrongfully
withheld the security deposit. Moreover, the lack of evidence of the condition of the home at
move-in or proof that the Rodriguezes caused the damages was sufficient to support the county
court’s finding of bad faith. See Tex. Prop. Code § 92.109(d) (presumption of bad faith); City of
Keller, 168 S.W.3d at 807; Miro, 52 S.W.3d at 410–11 (evidence legally sufficient to support finding
of bad faith where no evidence damages caused by tenant); see also Hardy, 176 S.W.3d at 275 (bad
faith found where no more than scintilla of evidence landlord was entitled to deductions from
security deposit). A-TX, a professional management company, relied solely on the absence of
documentation from its own twice-transferred records, attempted to place the burden on the
Rodriguezes to prove that they had not caused the damages, and then disregarded the statements of
the Rodriguezes and Shamrock regarding the Move-In Report and vandalism to the home. A-TX
thus failed to establish that the home was not damaged prior to the Rodriguezes’ moving in, that it
had reason to believe the Rodriguezes caused the damage, and that it was entitled to retain the
deposit. Cf. Pulley, 198 S.W.3d at 431 (no bad faith where evidence showed amateur landlord
believed he was entitled to retain portion of deposit for extensive damages caused by tenant);
Leskinen v. Burford, 892 S.W.2d 135, 138 (Tex. App.—Houston [14th Dist.] 1994, no writ) (no bad
11
faith where evidence showed amateur landlord believed he was entitled to retain portion of deposit
for damages he believed tenant caused and made many repairs himself to save money). We sustain
A-TX’s first issue as to the charge for carpet cleaning and overrule it as to the remainder of
the charges.
Factual Sufficiency of the Evidence
In its second issue, A-TX argues that the evidence was factually insufficient to
support the county court’s judgment. As evidence of the reasonableness of the charges, A-TX cites
to the testimony of Smith, Croson, and Bullock regarding the damage to the home, repairs that were
done, photographs admitted as exhibits, and the lease. Again, A-TX inverts the burden of proof and
argues that the Rodriguezes produced no evidence that the charges were unreasonable. See Tex.
Prop. Code § 92.109(c). A-TX further contends that “the only relevant piece of evidence” the
Rodriguezes offered was the Shamrock letter, which is “irrelevant” in light of the lease provision
requiring the Move-In Report. Finally, A-TX argues that its failure to establish the condition of the
home prior to move-in is irrelevant because of the Rodriguezes’ obligation to report conditions in
the Move-In Report.
Having concluded that the evidence was legally insufficient to support the county
court’s finding as to the charge for carpet cleaning, we also conclude that the evidence was factually
insufficient. See Cain, 709 S.W.2d at 176. As to the county court’s determination regarding the
remainder of the damages, we disagree with A-TX’s assertion that the lease provision regarding the
Move-In Report renders irrelevant its statutory burden under section 92.109(c) to prove the
reasonableness of the charges. See Tex. Prop. Code § 92.109(c); Pulley, 198 S.W.3d at 426.
12
Assuming without deciding that A-TX could have reasonably charged the Rodriguezes for all of the
repairs had the Rodriguezes failed to complete a Move-In Report, A-TX did not establish that they
failed to submit the report. Rather, the uncontroverted testimony was that they did submit the report,
and A-TX offered no evidence to rebut that testimony. Nor did it establish the condition of the home
at move-in or that the Rodriguezes caused the damages. Considering the entire record, we hold that,
except as to the charge for carpet cleaning, the evidence was factually sufficient to support the county
court’s determination that the charges A-TX assessed against the Rodriguezes were unreasonable
and that A-TX wrongfully withheld the security deposit. We further hold that the lack of evidence
of the condition of the home at move-in or proof that the Rodriguezes caused the damages was
factually sufficient to support the county court’s finding of bad faith. See Tex. Prop. Code
§ 92.109(d); Cain, 709 S.W.2d at 176; Hardy, 176 S.W.3d at 275 (bad faith established where
evidence did not support charges deducted from security deposit); Miro, 52 S.W.3d at 410–11
(evidence factually sufficient to support finding of bad faith where no evidence damages caused by
tenant). We sustain A-TX’s second issue as to the charge for carpet cleaning and overrule it as to
the remainder of the charges.
Amount of Damages
In its third issue, A-TX argues that the damage award was excessive and seeks
remittitur on three grounds. First, A-TX argues that the county court erred in including the $54.92
A-TX refunded in its calculation of treble damages and seeks remittitur in the amount of $164.76.
A-TX also contends that because the evidence was factually insufficient to support the county court’s
determination that the $107.17 charge for carpet cleaning was unreasonable, the county court erred
13
in including that amount in calculating treble damages and seeks remittitur in the amount of $321.15
based on that charge. Finally, A-TX argues that there was no evidence to support the statutory award
of triple damages as to any of the charges because there was no evidence of bad faith.
We analyze a complaint of excessive damages using the same standard of
review applicable to other factual sufficiency challenges. Maritime Overseas Corp. v. Ellis,
971 S.W.2d 402, 406 (Tex. 1998); Memon v. Shaikh, 401 S.W.3d 407, 417, (Tex. App.—Houston
[14th Dist.] 2013, no pet.). A court of appeals may exercise its power to suggest a remittitur when
an appellant complains that there is insufficient evidence to support an award and the court
of appeals agrees but finds that there is sufficient evidence to support a lesser award. Tex. R.
App. P. 46.3; Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. National Dev. & Research Corp.,
299 S.W.3d 106, 123–24 (Tex. 2009); Bechtel Corp. v. CITGO Prods. Pipeline Co., 271 S.W.3d
898, 922 (Tex. App.—Austin 2008, no pet.).
In this case, the evidence is factually sufficient to support an award including the
amount purportedly refunded. Sandra’s uncontroverted testimony was that she received the refund
check but did not cash it and later received an accounting indicating that the Rodriguezes owed
A-TX money. We overrule A-TX’s third issue as to the alleged refund amount. Further, as we have
already determined, the evidence is also factually sufficient to support a finding of bad faith, which
in turn supports an award of treble damages. See Tex. Prop. Code § 92.109(a). However, for the
reasons discussed above, we agree with A-TX that the evidence is factually insufficient to support
the county court’s finding that the charge for carpet cleaning was unreasonable. Consequently, the
evidence is factually insufficient to support the county court’s finding of bad faith as to that charge
14
or its inclusion of that charge in the calculation of treble damages. See id. (landlord who retains
security deposit in bad faith liable for $100 plus “three times the portion of the deposit wrongfully
withheld”) (emphasis added). We therefore sustain A-TX’s third issue as to the portion of the treble
damages awarded that was based on the $107.17 charge for carpet cleaning and overrule it as to the
remainder of the damage award.
CONCLUSION
We affirm the county court’s judgment conditioned on the Rodriguezes’ filing a
remittitur in the county court within thirty days of the date of this opinion, reducing the award of
damages by an amount equal to three times the charge for carpet cleaning, or $321.51, and notifying
this Court of the filing. See Tex. R. App. P. 46.3; Swinnea v. ERI Consulting Eng’rs, Inc.,
364 S.W.3d 421, 422 (Tex. App.—Tyler 2012, pet. denied) (suggesting remittitur of award for lost
profits where evidence was factually insufficient to support award); Springs Window Fashions Div.,
Inc. v. Blind Maker, Inc., 184 S.W.3d 840, 889–90 (Tex. App.—Austin 2006, pet. granted, judgm’t
vacated w.r.m.) (suggesting remittitur of difference between jury’s award and highest amount of
damages supported by evidence). If the remittitur is filed within thirty days of the date of this
opinion, we will reform the county court’s judgment and affirm as reformed. Otherwise, we will
reverse the county court’s judgment and remand this cause for redetermination of treble damages.
See Tex. R. App. P. 46.3.
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__________________________________________
Melissa Goodwin, Justice
Before Chief Justice Jones, Justices Rose and Goodwin
Affirmed Conditioned on Remittitur
Filed: October 17, 2013
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