Michael Calhoun & Shai Calhoun v. I-20 Team Real Estate, LLC.

NO. 12-18-00224-CV
IN THE COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT
TYLER, TEXAS
MICHAEL CALHOUN & SHAI § APPEAL FROM THE
CALHOUN,
APPELLANTS
§ COUNTY COURT AT LAW
V.
I-20 TEAM REAL ESTATE, LLC., § SMITH COUNTY, TEXAS
APPELLEE
MEMORANDUM OPINION
Michael Calhoun and Shae Calhoun appeal the dismissal of their negligence claim against
I-20 Team Real Estate, LLC (I-20 Team). In one issue, Appellants argue the trial court erred by
granting I-20 Team’s Rule 91a motion to dismiss because Appellants’ petition sufficiently alleged
a negligence cause of action against I-20 Team. We reverse and remand.
BACKGROUND
In 2015, Appellants decided to relocate to the Tyler, Texas, area from Oklahoma. Being
first time home buyers, Appellants retained Melissa Terry, a licensed real estate agent with I-20
Team, to assist them in the purchase of a home in Tyler. In that capacity, Terry accompanied
Appellants to a property listed by Rose Capital Realty, Inc. (Rose Capital) in September 2015.
During the visit, Terry provided Appellants a copy of the sellers’ disclosure notice which
indicated “yes” to “previous flooding into the structures,” but did not provide the required
explanation. Terry did not alert Appellants that the sellers were required to provide an explanation
which would have informed them as to the source of the water that caused previous flooding into
the structure. Appellants were unaware an explanation was required or that it was improper for an
explanation to be omitted. The disclosure indicated a “no” answer to “previous flooding onto the
property” and “water penetration.” Further, the boxes for the following items were not checked
on the disclosure: (1) improper drainage, (2) present flood insurance, (3) located in a hundred year
flood plain, or (4) located in floodway.
Because Rose Capital did not provide complete information regarding past flooding,
Appellants could not determine whether the previous flooding indicated on the disclosure was the
result of water intrusion into the home from outside or from a condition within the home itself.
Because I-20 Team did not tell Appellants that an explanation for the previous flooding was
required, they made no further inquiry as to the source of the water before agreeing to purchase
the home.
During a subsequent inspection, water markings were found in a crawlspace near the water
heater. The inspector opined that the previous flooding referred to on the disclosure was likely
referring to those water markings, which he deduced came from a leaking water line. Appellants
accepted the inspector’s opinion because Rose Capital failed to provide an explanation for the
previous flooding and I-20 Team did not tell Appellants that an explanation was required. As a
result, Appellants decided to purchase the home in October 2015.
Shortly after Appellants purchased the home, the area received heavy rainfall. During this
period, Appellants experienced water intrusion into the first floor of the home causing substantial
damage to the home’s structures and Appellants’ personal belongings. Subsequent water
intrusions during rainfall occurred in the following months. As a result, Appellants discovered
that the home had inadequate drainage to prevent water from entering the home during normal
rainfall. Appellants later learned that the home had had experienced flooding due to inadequate
drainage for years and had sustained damage from water intrusion on previous occasions.
Appellants sent a demand letter to the sellers for damages based on the sellers’ failure to
disclose the water damage and flooding issues. The sellers responded to the demand letter and
acknowledged the previous flooding and water damage. However, the sellers disavowed any
wrongdoing, and stated that they fully disclosed the information to Rose Capital, and instructed
Rose Capital to disclose the information. According to the sellers, Rose Capital completed the
disclosure form and intentionally withheld the information, other than indicating “yes” to the
question regarding “previous flooding into the structures.”
Appellants sued Rose Capital for violations of the DTPA, statutory and common law fraud,
fraud by nondisclosure, negligence, and negligent misrepresentation. Appellants also sued I-20
Team for negligently failing to advise them that the sellers’ disclosure was deficient.
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I-20 Team moved to dismiss the suit pursuant to Texas Rule of Civil Procedure 91a,
alleging that Appellants’ claims had no basis in law. The trial court granted the motion, and this
appeal followed.
DISMISSAL PURSUANT TO RULE 91A
In Appellants’ first issue, they argue the trial court erred in granting I-20 Team’s motion
to dismiss because Appellants’ pleadings sufficiently alleged a negligence claim against I-20
Team.
Standard of Review and Applicable Law
Rule 91a provides that “a party may move to dismiss a cause of action on the grounds that
it has no basis in law or fact.” TEX. R. CIV. P. 91a.1. Dismissal is appropriate under Rule 91a “if
the allegations, taken as true, together with inferences reasonably drawn from them, do not entitle
a claimant to the relief sought…[or] no reasonable person could believe the facts pleaded.” Id.
Evidence is not considered when a trial court rules on a Rule 91a motion. TEX. R. CIV. P. 91a.6.
To the contrary, a trial court looks only to the “pleading of the cause of action, together with any
pleading exhibits.” Id. The trial court construes the pleadings liberally in favor of the plaintiff,
looks to the pleader’s intent, and accepts the plaintiff’s factual allegations as true; and, if needed,
draws reasonable inferences from the factual allegations to determine if the cause of action has
basis in law or fact. TEX. R. CIV. P. 91a. 1.; see, e.g., Vasquez v. Legend Nat. Gas III, LP, 492
S.W.3d 448, 450 (Tex. App.—San Antonio 2016, pet. denied). We review the merits of a Rule
91a motion de novo because the availability of the remedy under the facts alleged is a question of
law and the rule’s factual plausibility standard is equivalent to a legal sufficiency review. City of
Dallas v. Sanchez, 494 S.W.3d 722, 724 (Tex. 2016).
Negligence claims require the existence of a legal duty, a breach of that duty, and damages
proximately caused by the breach. Gharda USA, Inc. v. Control Sols., Inc., 464 S.W.3d 338, 352
(Tex. 2015). To establish such a claim, the plaintiff must show the defendant’s acts or omissions
were a proximate cause of his damages. See Greater Houston Transp. Co. v. Phillips, 801 S.W.2d
523, 525 (Tex. 1990). There may be more than one proximate cause. See Lee Lewis Constr., Inc.
v. Harrison, 70 S.W.3d 778, 784 (Tex. 2001).
The two elements of proximate cause are cause in fact and foreseeability. City of
Gladewater v. Pike, 727 S.W.2d 514, 517 (Tex. 1987). “Cause in fact” means that the act or
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omission was a substantial factor in bringing about the injury, and without it, the harm would not
have occurred. Id. “Foreseeability” requires that the actor, as a person of ordinary intelligence,
would have anticipated the danger that his negligent act created for others. Id. The test for
foreseeability is whether the defendant, as a person of ordinary intelligence and prudence, should
have anticipated the danger to others created by his act, although he is not required to anticipate
just how the injuries will arise. Brown v. Edwards Transfer Co., 764 S.W.2d 220, 223 (Tex.
1988).
The Pleadings and Motion to Dismiss
Appellants’ petition alleges that I-20 Team, as Appellants’ broker, had a legal duty to use
reasonable care and diligence in its representation of Appellants in the purchase of the property.
Appellants allege that I-20 Team was obligated to use “its superior skill and knowledge to discover
facts that a reasonable and prudent real estate agent is expected to investigate for its clients.”
Appellants allege that I-20 Team breached this duty
by failing to discover facts concerning the [P]roperty’s and [H]ome’s flooding history when
reviewing the [S]eller’s [D]isclosure [N]otice and seeing that the sellers marked “[Y]es” for
“[P]revious [F]looding into the [S]tructures” yet failed to provide the required explanation. I-20
Team also breached its fiduciary duty by failing to advise Plaintiffs that the [S]eller’s [D]isclosure
[N]otice was improperly filled out.
With respect to proximate cause, Appellants alleged that
had…[Appellants] known the history of the Property’s and Home’s flooding, they would not have
purchased the [P]roperty. Had [they] been advised that the [S]eller’s [D]isclsoure [N]otice was
improperly filled out, they would have inquired into the [P]roperty’s and [H]ome’s history of
flooding and chosen not to purchase the [P]roperty.
I-20 Team moved to dismiss Appellants’ negligence claim against it arguing that it has no
basis in law. In their motion, I-20 Team argued that Appellants’ failed to plead a legally cognizable
claim because I-20 Team had no legal duty to inspect the property, and because Appellants’ failed
to establish that I-20 Team’s acts or omissions proximately caused Appellants’ damages.
Analysis
I-20 Team argues, in part, that the trial court properly granted its Rule 91a motion to
dismiss because I-20 Team had no duty to inspect the property prior to Appellants’ purchase of
the property. However, Appellants’ pleadings make clear that they allege I-20 Team breached its
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duty by failing to alert Appellants to the impropriety in the seller’s disclosure, i.e. the sellers’
failure to provide a written explanation in addition to answering “yes” to “previous flooding into
the structures.” See TEX. PROP. CODE ANN.§ 5.008(b)(4) (West Supp. 2018). At oral argument
before this Court, I-20 Team conceded that it did, in fact, have a duty to alert Appellants to the
sellers’ failure to provide the required explanation. Therefore, we conclude that Appellants’
pleadings sufficiently established the duty element of their negligence claim; thus, failure to
establish a legal duty cannot support the order of dismissal.
I-20 Team also argues that the trial court properly granted its motion to dismiss because its
acts or omissions did not proximately cause Appellants’ damages. I-20 Team argues that its failure
to alert Appellants to the impropriety in the sellers’ disclosure was not a substantial factor in
bringing about Appellants’ damages. I-20 Team points out that Appellants’ petition alleges that
Appellants were led to believe, by the other answers on the sellers’ disclosure and the inspection,
that the “previous flooding into the structures” was the result of an internal defect. Thus, I-20
Team argues, no act or omission of I-20 Team proximately caused Appellants to form this belief.
But there may be more than one proximate cause of a plaintiff’s damages. Lee Lewis
Constr., Inc., 70 S.W.3d at 784. Appellants alleged that Rose Capital proximately caused their
damages by withholding information in the sellers’ disclosure. However, Appellants also alleged
that I-20 Team proximately caused their damages by failing to alert them that it was improper for
the sellers to fail to provide a complete explanation in the disclosure in addition to checking “yes”
to the question “previous flooding into the structures.” Appellants allege that if I-20 Team had
done so, they would have chosen not to purchase the home. We must accept all of Appellants’
factual allegations as true. TEX. R. CIV. P. 91a.1; see also Vasquez¸492 S.W.3d at 450. In doing
so, we must conclude that Appellants sufficiently alleged that I-20 Team’s acts or omissions were
a substantial factor in bringing about their damages, because had they not purchased the home,
they would not have sustained damages. TEX. R. CIV. P. 91a.1; see also Vasquez, 492 S.W.3d at
450; Pike, 727 S.W.2d at 517.
I-20 Team further argues that the trial court correctly granted their motion to dismiss
because Appellants’ damages were not foreseeable:
[N]o person of ordinary intelligence should have anticipated that the failure of providing an
explanation regarding the “Yes” marking for “Previous Flooding into the Structures” on the Seller’s
Disclosure Notice, which was itself provided and reviewed by the Calhouns and caused the
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Calhouns to hire a professional Inspector to perform an inspection of the Property, would cause the
Calhouns to purchase the Property unaware of the extremely severe flooding alleged in the petition.
We disagree. Appellants were first time home buyers and had no reason to know that further
explanation was legally required beyond simply checking “yes” on the disclosure for “previous
flooding into the structures.” Appellants hired I-20 Team to represent and assist them in the
purchase of their home, and I-20 Team could reasonably have anticipated that their failure to alert
Appellants to the sellers’ failure to provide a complete explanation for the “previous flooding into
the structures” would result in Appellants purchasing a home with an unknown and unanticipated
defect that caused the previous flooding. See Edwards Transfer Co., 764 S.W.2d at 223; see also
Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 551 (Tex. 1985).
Accordingly, because we conclude that Appellants’ pleadings established duty and
proximate cause, the grounds on which I-20 Team sought dismissal under Rule 91a, dismissal was
inappropriate and the trial court erred by granting I-20 Team’s Rule 91a motion to dismiss. See
TEX. R. CIV. P. 91a.1. We sustain Appellants’ sole issue.
CONCLUSION
Having sustained Appellants’ sole issue, we reverse the trial court’s judgment dismissing
Appellants’ claim against I-20 Team, and we remand the case to the trial court for further
proceedings consistent with this opinion, including a determination of attorney’s fees to be
awarded to Appellants.
GREG NEELEY
Justice
Opinion delivered February 6, 2019.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
(PUBLISH)
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COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT OF TEXAS
JUDGMENT
FEBRUARY 6, 2019
NO. 12-18-00224-CV
MICHAEL CALHOUN & SHAI CALHOUN,
Appellant
V.
I-20 TEAM REAL ESTATE, LLC.,
Appellee
Appeal from the County Court at Law
of Smith County, Texas (Tr.Ct.No. 68617)
THIS CAUSE came to be heard on the oral arguments, appellate record and
the briefs filed herein, and the same being considered, because it is the opinion of this court that
there was error in the judgment of the court below, it is ORDERED, ADJUDGED and DECREED
by this court that the judgment be reversed and the cause remanded to the trial court for further
proceedings consistent with this opinion, including a determination of attorney’s fees to be
awarded to Appellants, and that all costs of this appeal are hereby adjudged against the Appellee,
I-20 TEAM REAL ESTATE, LLC, in accordance with the opinion of this court; and that this
decision be certified to the court below for observance.
Greg Neeley, Justice.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.