Daniel and Trisha Mitchell v. D. R. Horton-Emerald, Ltd.

Opinion issued May 16, 2019
In The
Court of Appeals
For The
First District of Texas
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NO. 01-18-00755-CV
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DANIEL AND TRISHA MITCHELL, Appellants
V.
D. R. HORTON-EMERALD, LTD., Appellee
On Appeal from the 458th District Court
Fort Bend County, Texas
Trial Court Case No. 16-DCV-236938
OPINION
In this construction-defect case, homeowners Daniel and Trisha Mitchell
appeal from the trial court’s judgment, which holds that they are not entitled to
recover attorney and expert fees against contractor D.R. Horton—Emerald, Ltd.
The Mitchells contend that their fees are recoverable as damages under the
Residential Construction Liability Act. See TEX. PROP. CODE § 27.004(g)(3), (6).
The Act, however, “does not create a cause of action” for damages. Id. § 27.005. It
simply limits the types of damages recoverable under causes of action that already
exist. And here, the Mitchells have failed to assert a cause of action allowing for
the recovery of attorney or expert fees. Therefore, we affirm.
Background
In 2014, the Mitchells purchased a home built by the home construction
company D.R. Horton. Shortly after purchasing the home, the Mitchells discovered
defects with the home’s foundation. The Mitchells provided D.R. Horton with
written notice of the defects. See id. § 27.004(a). D.R. Horton did not respond to
the notice, and the Mitchells filed suit.
In their amended petition, the Mitchells asserted claims for breach of
implied warranties and negligent construction. They sought eight categories of
damages, including reasonable and necessary engineering and consulting fees.
They also sought reasonable and necessary attorney fees.
Before the case went to trial, the parties entered into a partial settlement
agreement. Under the agreement, D.R. Horton stipulated that its negligence
proximately caused a construction defect in the Mitchells’ home and that the
defect, in turn, caused the Mitchells to incur $60,000 in damages, not including
their attorney and expert fees. The parties agreed that D.R. Horton would pay the
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Mitchells $60,000 as partial settlement and that they would try the issue of fees to
the bench. D.R. Horton expressly preserved the right to assert that the Mitchells
were not entitled to recover attorney and expert fees as damages under the Act.
The case then went to trial. The issues were whether the Mitchells were
entitled to recover their attorney and expert fees and, if so, in what amount. At the
close of evidence, the Mitchells conceded that their sole basis for recovering their
fees was Section 27.004(g) of the Act. The trial court ruled that the Mitchells were
not entitled to recover attorney and expert fees as a matter of law because the Act
is not an independent basis for the recovery of such fees. The trial court ordered
that the Mitchells take nothing on their claim for attorney and expert fees.
The Mitchells appeal.
Recoverability of Fees under the Act
In a single issue, the Mitchells contend that the trial court erred in ruling that
they are not entitled to recover attorney and expert fees as damages under the Act.
The Mitchells contend that they are entitled to recover their attorney and expert
fees as damages under Section 27.004(g). According to the Mitchells, Section
27.004(g) allows a plaintiff to recover attorney and expert fees as damages in an
action arising from a construction defect regardless of whether the underlying
cause of action allows recovery of such fees. D.R. Horton responds that Section
27.004(g) is not an independent basis for the recovery of attorney and expert fees
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(or any other form of relief) but simply limits the relief available under existing
causes of action. And, because the Mitchells failed to prove a cause of action
allowing the recovery of attorney and expert fees, the trial court did not err in
ruling that they are not entitled to recover either type of fee.
A. Standard of review and applicable law
This appeal presents an issue of statutory interpretation, which we review de
novo. See Compass Bank v. Calleja-Ahedo, 569 S.W.3d 104, 108 (Tex. 2018). The
statute at issue is the Residential Construction Liability Act.
Codified as Chapter 27 of the Property Code, TEX. PROP. CODE §§ 27.001–
27.007, the Act was enacted as a response to construction industry claims that
homeowners had been using the Deceptive Trade Practices Act as a “sword” to
litigate against residential contractors, Timmerman v. Dale, 397 S.W.3d 327, 330
(Tex. App.—Dallas 2013, pet. denied). The Legislature’s intent was to establish an
“appropriate balance” between the interests of residential contractors and
homeowners in the resolution of construction disputes. Id.
The Act “applies to: (1) any action to recover damages or other relief arising
from a construction defect, except a claim for personal injury, survival, or
wrongful death or for damage to goods; and (2) any subsequent purchaser of a
residence who files a claim against a contractor.” TEX. PROP. CODE § 27.002(a).
However, the Act “does not create a cause of action or derivative liability.” Id.
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§ 27.005. Instead, courts have construed it as modifying causes of action that
already exist by providing defenses and limiting damages.1 See D.R. Horton-
Emerald, Ltd. v. Mitchell, No. 01-17-00426-CV, 2018 WL 542403, at *7 (Tex.
App.—Houston [1st Dist.] Jan. 25, 2018, no pet.) (mem. op.) (“[T]he RCLA does
not create a cause of action; rather, it limits and controls existing causes of action
for damages resulting from construction defects in residences.”); Vision 20/20, Ltd.
v. Cameron Builders, Inc., 525 S.W.3d 854, 856 (Tex. App.—Houston [14th Dist.]
2017, no pet.) (“The RCLA does not create a cause of action but provides defenses
and limitations on damages.”); Smith v. Overby, No. 04-15-00436-CV, 2016 WL
4444437, at *1 (Tex. App.—San Antonio Aug. 24, 2016, no pet.) (mem. op.) (“The
RCLA does not create a cause of action; rather, it modifies causes of action for
damages resulting from construction defects in residences by limiting and
controlling causes of action that otherwise exist.”); CS Custom Homes, LLC v.
Stafford, No. 03-13-00315-CV, 2015 WL 5684080, at *3 n.12 (Tex. App.—Austin
Sept. 23, 2015, no pet.) (mem. op.) (“[T]he RCLA does not purport to create a sui
generis cause of action or theory of recovery, but regulates claims and remedies
already provided by background law.”); Timmerman v. Dale, 397 S.W.3d 327, 330
(Tex. App.—Dallas 2013, pet. denied) (“The RCLA modifies causes of action for
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The Act also establishes the standard of causation and a pre-suit notice procedure
to encourage settlement of claims. See TEX. PROP. CODE §§ 27.004, 27.006.
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damages resulting from construction defects in residences by limiting and
controlling causes of action that otherwise exist.”); Sanders v. Constr. Equity, Inc.,
42 S.W.3d 364, 370 (Tex. App.—Beaumont 2001, pet. denied) (“The statute does
not create a cause of action, but instead simply limits and controls causes of action
that otherwise exist.”); see also TEX. PROP. CODE §§ 27.003, 27.004 (providing
defenses and limiting damages).
As relevant here, Section 27.004 limits the damages a plaintiff may recover
to the six specific categories. TEX. PROP. CODE § 27.004(g). Section 27.004
provides, in relevant part, as follows:
[I]n an action subject to this chapter the claimant may recover only the
following economic damages proximately caused by a construction
defect:
(1) the reasonable cost of repairs necessary to cure any construction
defect;
(2) the reasonable and necessary cost for the replacement or repair of
any damaged goods in the residence;
(3) reasonable and necessary engineering and consulting fees;
(4) the reasonable expenses of temporary housing reasonably
necessary during the repair period;
(5) the reduction in current market value, if any, after the construction
defect is repaired if the construction defect is a structural failure; and
(6) reasonable and necessary attorney’s fees.
Id.
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B. Analysis
To determine whether the Act serves as an independent basis for recovering
attorney and expert fees in an action arising from a construction defect, we begin
with the Act’s text. Agar Corp. v. Electro Circuits Int’l, LLC, No. 17-0630, 2019
WL 1495211, at *9 (Tex. Apr. 5, 2019); Compass Bank, 569 S.W.3d at 110.
Section 27.004(g) provides that “in an action subject to [the Act] the
claimant may recover only the [six categories of] damages” listed by the section.
TEX. PROP. CODE § 27.004(g). By providing that a claimant “may recover only”
those damages that are listed, Section 27.004(g) limits the damages recoverable “in
an action subject to” the Act. But it does not create a basis for recovering such
damages in the first place. Had the Legislature intended to do so, it could have
used the type of language typically invoked to create an affirmative right to relief,
e.g., “the claimant shall be able to recover” the categories of listed damages.
Instead, it used language that presupposes the existence of various underlying
causes of action (“in an action subject to [the Act]”) and then limits the damages
recoverable under such causes (“the claimant may recover only the [six categories
of listed] damages”). The text thus contemplates a plaintiff asserting a cause of
action that allows for the recovery of damages not listed in Section 27.004(g)—
e.g., treble damages under the DTPA or exemplary damages in a claim for
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negligence—and then limits the damages available under such a cause of action to
those categories that are listed.
This reading of Section 27.004 as limiting—but not creating a basis for
recovering—damages in a construction defect case is underscored when considered
in context with two other provisions of the Act. First, there is Section 27.002,
which establishes the causes of action to which the Act applies. Id. § 27.002(a). It
provides that the Act “applies to: (1) any action to recover damages or other relief
arising from a construction defect, except a claim for personal injury, survival, or
wrongful death or for damage to goods; and (2) any subsequent purchaser of a
residence who files a claim against a contractor.” Id. Second, there is Section
27.005, which clarifies that the Act “does not create a cause of action or derivative
liability.” Id. § 27.005. Sections 27.002 and 27.005, like Section 27.004, show that
the Act does not create any cause of action—or, by extension, any basis for the
recovery of damages—but rather limits and modifies the causes of action,
damages, and other relief that already exist.
This reading, moreover, accords with the Act’s purpose, which was to create
an “appropriate balance” between the interests of contractors and homeowners in
response to perceived litigation abuse by homeowners. See Timmerman, 397
S.W.3d at 330. And it accords with case law from other courts of appeals, which
uniformly holds that the Act does not create any cause of action but simply limits
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and modifies those causes of action that already exist. See, e.g., Mitchell, 2018 WL
542403, at *7; Vision 20/20, 525 S.W.3d at 856; Smith, 2016 WL 4444437, at *1;
Stafford, 2015 WL 5684080, at *3 n.12; Timmerman, 397 S.W.3d at 330; Sanders,
42 S.W.3d at 370.
Despite the Act’s text, the Act’s purpose, and the uniform case law, the
Mitchells insist that Section 27.004 creates an independent basis for the recovery
of attorney and expert fees in a construction-defect case. The Mitchells contend
that their proposed construction of Section 27.004 is supported by an opinion
issued by our sister court, D.R. Horton-Tex., Inc. v. Bernhard, 423 S.W.3d 532
(Tex. App.—Houston [14th Dist.] 2014, pet. denied). We disagree.
In Bernhard, a contractor moved to vacate an arbitration award, which
awarded the homeowner attorney fees as damages under the Act even though the
arbitration clause in the underlying sales contract provided that each party would
bear its own fees incurred in arbitration. Id. at 533. The issue on appeal was not
whether the arbitrator’s award was correct, but whether the arbitrator had authority
to make the award at all. Id. at 534. The court affirmed, holding that the arbitrator
did have authority to make the award while expressly declining to opine on
whether the arbitrator had correctly applied the Act to the facts of the case. Id. at
535–36. Because the court declined to decide whether the arbitrator’s application
of the Act was correct, Bernhard is inapposite.
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The Mitchells further contend that construing Section 27.004 as simply
limiting the damages recoverable in a construction defect case would render part of
the section superfluous, as “there is no underlying cause of action an RCLA
plaintiff may assert that would allow them to recover expert fees as damages or
even court costs.” Again, we disagree. We have little difficulty in concluding that
at least some claims subject to the Act’s provisions would allow for the recovery of
expert fees. An obvious example would be a claim for breach of contract in which
the contract allows the plaintiff to recover expert fees incurred in pursuing the
claim.
We hold that Section 27.004(g) does not permit a plaintiff to recover
attorney or expert fees in the absence of an underlying cause of action providing
for the recovery of such fees. Because the Mitchells failed to plead and prove a
cause of action allowing for the recovery of such fees, the trial court did not err in
ruling that the Mitchells were not entitled to recover such fees under the Act. We
overrule the Mitchells’ sole issue.
Conclusion
We affirm.
Laura Carter Higley
Justice
Panel consists of Justices Keyes, Higley, and Landau.
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