Gicor, Inc., Memo Express, L.L.C., and Florencio Guerra v. Wayne Brewer and Melinda Brewer

In The
Court of Appeals
Ninth District of Texas at Beaumont
__________________
NO. 09-21-00222-CV
__________________
GICOR, INC., MEMO EXPRESS, L.L.C., AND
FLORENCIO GUERRA, Appellants
V.
WAYNE BREWER AND MELINDA BREWER, Appellees
________________________________________________________________
On Appeal from the 457th District Court
Montgomery County, Texas
Trial Cause No. 17-10-12045-CV
__________________________________________________________________
MEMORANDUM OPINION
This lawsuit relates to a dispute over a townhome purchased by the Appellees,
Wayne and Melinda Brewer (“Appellees,” “Plaintiffs,” or “the Brewers”), located
in “Bellago,” a community on Lake Conroe. The Bellago Townhomes were
developed by Appellant Memo Express, L.L.C. (“Memo”) and designed and
constructed by Appellant Gicor, Inc. (“Gicor”), and Appellant Florencio Guerra
(“Guerra”), the President of Gicor and the sole member and Manager of Memo
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(collectively “Defendants” or “Appellants”). The Brewers purchased their
townhome in September 2016. The townhome was approximately one year old at
the time of purchase and the Brewers did not purchase the townhome directly from
the Defendants.
The Brewers filed suit against the Defendants alleging damages relating to
erosion, drainage, foundation, and related design and construction problems. After a
jury trial, the jury rendered a verdict in favor of the Brewers finding (1) violations
of the Texas Deceptive Trade Practices Act (“DTPA”), (2) knowing and intentional
violations of the DTPA, (3) negligence, (4) negligent misrepresentation, (5) gross
negligence, and (6) fraud. The jury also found that Defendants Memo and Guerra
were responsible for the conduct of Defendant Gicor, and that Defendant Guerra was
responsible for the conduct of Defendant Memo. The jury found that the Plaintiffs
were entitled to $67,500 for actual damages;1 and the jury awarded exemplary
1
In the charge, Question 13 and its instructions asked the Jury the following:
If you answered “Yes” to Question 1, 2, 3, 6, 7, or 9, then answer the
following question. Otherwise, do not answer the following question.
Question No. 13
What sum of money, if any, if paid now in cash, would fairly and
reasonably compensate Wayne and Melinda Brewer for their damages,
if any, that resulted from such conduct?
Consider the following element of damages, if any, and none other.
1. the reduction in current market value of the Property.
2
damages in the amount of $90,000 as to defendant Gicor, $90,000 as to defendant
Memo, and $90,000 as to defendant Guerra. The Brewers filed a motion for entry of
a judgment and sought a recovery under theories of negligence, negligent
misrepresentation, fraud, and gross negligence.2 The trial court rendered a Final
“Market value” means the amount that would be paid in cash by a
willing buyer who desires to buy, but is not required to buy, to a willing
seller who desires to sell, but is under no necessity of selling.
In answering questions about damages, answer each question
separately. Do not increase or reduce the amount in one answer because
of your answer to any other question about damages. Do not speculate
about what any party’s ultimate recovery may or may not be. Any
recovery will be determined by the court when it applies the law to your
answers at the time of judgment. Do not add any amount for interest on
damages, if any.
Answer separately in dollars and cents for damages, if any, for any of
the following questions you answered “Yes.”
1. the reduction in current market value of the Property:
For Question 1: Answer: $67,500
For Question 2: Answer: $67,500
For Question 3: Answer: $67,500
For Question 6: Answer: $67,500
For Question 7: Answer: $67,500
For Question 9: Answer: $67,500
2
The Brewers did not seek a judgment for a recovery of attorney’s fees even
though the Jury awarded them $156,915 for attorney’s fees. Presumably the Brewers
knew the claims on which they elected to seek a judgment would not allow for a
recovery of attorney’s fees. See MBM Fin. Corp. v. Woodlands Operating Co., L.P.,
292 S.W.3d 660, 667 (Tex. 2009) (attorney’s fees are not allowed for torts like
fraud); Brosseau v. Ranzau, 81 S.W.3d 381, 398 (Tex. App.—Beaumont 2002, pet.
denied) (“Generally, attorney’s fees are not recoverable in tort actions unless
provided by statute.”).
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Judgment awarding actual damages in the amount of $67,500, prejudgment interest
at 5%, together with exemplary damages in the amount of $90,000 from Gicor,
$90,000 from Memo, and $90,000 from Guerra. Appellants raise six issues on
appeal. We affirm.
Issues On Appeal
Appellants raise six issues on appeal, which they state as follows:
Issue One. Because Todd Rotholz’s appraisal impairment testimony is
unreliable, the evidence was legally insufficient and there was no
evidence to support the jury’s verdict of damages as to diminution in
value. Therefore, the trial court erred in awarding actual damages based
upon that testimony.
Issue Two. The trial court erred, in submitting to the Jury, Question 13
with respect to actual damages, because it was not the proper measure
of damages under Texas law, which is the difference in value, when
Appellees purchased the Townhome between the property as
represented, and the actual market value of the Townhome at that time.
Similarly, the trial court should not have overruled the submission of
the properly worded question, when Gicor, Memo, and Guerra
submitted it with respect to the actual damages issue. Similarly, the trial
court erred when it entered judgment on an improper measure of actual
damages.
Issue Three. Because Question 13 with respect to actual damages was
the improper measure of damages, the trial court erred in entering
judgment on that measure of damages, the Jury’s finding of which was
immaterial.
Issue Four. The trial court erred in permitting Appellees to amend their
pleadings post-trial and after entry of the final judgment, because the
amendment operated as a surprise which was severely prejudicial to
Gicor, Memo, and Guerra.
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Issue Five. The trial court erred in submitting exemplary damages
questions to the Jury, and in rendering final judgement thereon, because
there can be no exemplary damages, if there are no actual damages.
Issue Six. The trial court erred in awarding prejudgment interest in the
final judgment, because Appellees had not pled their claim for damages
until after the trial court had rendered a final judgment.
Procedural and Factual Background
The Brewers filed an Original Petition against Defendants in October 2017
complaining of issues associated with a townhome the Brewers purchased in
September 2016 (“unit 55”). They then filed a Second Amended Petition in July
2020. In September 2020, the Brewers filed a Third Amended Petition (“the
Petition”), which was the live petition at the time of trial.
According to the Petition, Guerra submitted a plat for the Bellago townhome
community and obtained a permit for construction. As a requirement for its permit,
Gicor submitted a drainage plan for controlling water flow toward Highway 105
West, which Montgomery County approved. In 2010 and 2011, Montgomery
County received complaints from the April Villas Homeowners’ Association, which
owned the property adjacent to Bellago, about surface water runoff allegedly caused
by “the sharp angled drop-off of the grading for fill soil used by Gicor.” The County
notified Gicor in May 2011 about the complaints and noted that certain elements of
the approved drainage had not been constructed. According to the Petition,
Defendants made some improvements to the drainage plan in February 2012.
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The Petition alleged that construction of the Bellago community included
bringing in sixty-six loads of fill dirt, which resulted in a steep grade behind the
townhomes, and the Defendants allegedly did nothing to reinforce the sloped
embankment. According to the Petition, Gicor built unit 55 in early 2015, which
Gicor sold to Joseph and Sherry Marinari. By June 2016, the homeowner’s
association for neighboring April Villas complained about drainage issues. The
Petition alleged that Defendants tried to fill foundation gaps with sand, the sand
washed away when it rained, they dug a swale and installed underground drainage,
but these efforts did not resolve the problems.
The Brewers alleged in the Petition that over twelve years, Defendants
repeatedly and intentionally failed to comply with industry standards, best practices,
municipal codes, and ordinary care. And in the Petition, they alleged that they were
unaware of this history when they started considering buying a new townhome at
Bellago in 2016. The Brewers alleged that when they met with Defendants about the
more recently built townhomes, the Defendants made representations about the
quality and reliability of homes constructed at Bellago, and based on this meeting
and the representations, the Brewers later purchased unit 55 from the Marinari
family, who had owned the unit for less than a year. According to the Petition, within
months after the Brewers bought unit 55 from the Marinaris, the Brewers noticed
visible signs of construction defects:
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There was erosion and damage to soil fill, especially after rainfall, due
to an improper drainage system. This erosion included development of
gaps in the soil along the grassy slope edge in the backyard (which
created the risk of tripping and/or falling in the backyard) as the soil
began to pull away from the foundation, the deterioration and migration
of the grassy slope every time it rained, and the resulting reduction of
the overall size of the Brewers’ already small backyard. Rainwater
runoff further eroded the soil, which led the Bellago Homeowners
Association (controlled by Defendants) to install a subterranean drain
line or French drain system. The slope of the soil was too steep. The
soil was relaxing and deforming, and continues to relax and affect the
bearing of the foundation.
In May 2017, the Brewers approached the City and County to attempt to resolve the
construction and drainage issues, but they alleged after they were unable to achieve
a resolution on their own, their attorney sent the Defendants a DTPA demand letter
on July 7, 2017.
The Brewers alleged that Gicor and Memo should be vicariously liable for
Guerra’s acts and omissions. They also requested to pierce the corporate veil and
impose direct liability on Guerra for acts and omissions of Gicor and Memo. The
Brewers asserted claims against the Defendants for violations of the Texas
Deceptive Trade Practices Act (“DTPA”), negligence, negligent misrepresentation,
gross negligence, fraud, fraud by non-disclosure, private nuisance, breach of the
implied warranty of habitability, and breach of the implied warranty of good and
workmanlike services. The Brewers sought to recover actual, economic,
consequential, compensatory, exemplary, treble, and mental anguish damages; the
reasonable cost of repairs needed to cure defects in construction and to replace any
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damaged goods in the home; engineering and consulting fees; temporary housing
during repairs; and damages for a “[r]eduction in current market value, if any, after
the construction defect is repaired if the construction defect is a structural failure;”
pre- and post-judgment interest; and attorney fees and costs.
The Defendants filed a general denial and claimed that comparative fault
barred the Plaintiffs’ claims. The Defendants also alleged that Memo and Guerra
were not liable in the capacity in which they were sued. After a jury trial in May
2021, the jury rendered a verdict in favor of the Brewers, finding violations of the
DTPA, knowing and intentional violations of the DTPA, negligence, negligent
misrepresentation, gross negligence, and fraud. The jury also found that Defendants
Memo and Guerra were responsible for the conduct of Defendant Gicor, and that
Defendant Guerra was responsible for the conduct of Defendant Memo. The jury
found that the Plaintiffs were entitled to $67,500 for actual damages, and it awarded
exemplary damages in the amount of $90,000 as to Defendant Gicor, $90,000 as to
Defendant Memo, and $90,000 as to Defendant Guerra.
Following the jury’s verdict, the Defendants filed a motion for judgment
notwithstanding the verdict, alleging the verdict was not supported by the pleadings.
In their response, Plaintiffs argued that their pleadings supported the jury’s verdict,
and alternatively they requested leave to file an amended petition that conforms to
8
the evidence. The trial court granted the Plaintiffs leave to file a Fourth Amended
Petition and signed the Final Judgment. Defendants timely filed a notice of appeal.
Evidence at Trial
Testimony of Melinda Brewer
Melinda testified that she and her husband looked at the Bellago townhome
community in the fall of 2016 because they were interested in buying a townhome.
The Brewers met with Mr. Guerra and Mr. Villalba at the Memo-Gicor office, and
their discussion included the development and construction process, the plans, and
the quality of the work. According to Melinda, Guerra and Villalba told the Brewers
that Bellago was “designed by licensed architects and engineers[,]” and that Villalba
was a licensed architect and was onsite during the construction to make sure that
codes and standards were followed. Melinda testified that they were shown “a
material list[,]” and she identified Plaintiffs’ Exhibit 100 as what the Brewers were
shown. Exhibit 100 is titled, “Bellago Townhomes[,] Material Specifications
Sheet[,]” and at the bottom of the page is the following statement: “Over 25 years of
experience in quality craftsmanship or several hundred new construction and
renovations of commercial and residential projects in Montgomery County Texas.
Building plans, specifications, and construction are completed by licensed
professionals in accordance with the International Building Codes.” Melinda also
testified that Guerra told them, “[f]rom dirt to the roof, you have licensed
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professionals on-site overseeing this work[.]” According to Melinda, Guerra did not
indicate that his statements only applied to the new townhomes being built at the
time.
Melinda testified that she and her husband Wayne were impressed to meet
with the owner, builder, and developer, and they felt reassured that if they bought a
home in Bellago, they would get a quality townhome. Melinda testified that they
told their realtor they wanted to “go with” new construction at Bellago because they
were impressed with the builder, but their realtor told them an existing unit—unit
55—was currently for sale and had upgrades the Brewers were interested in as well
as a boat lift and boat cover. Within a few days of meeting with Guerra, the Brewers
made an offer on unit 55. According to Melinda, the seller’s disclosure for unit 55
did not indicate any problems, and the inspection only identified a few minor repairs
to be made.
Melinda testified that she and her husband noticed that the townhomes were
built at “a significant amount of elevation[]” from the ground. After they moved in,
the Brewers noticed issues with the backyard, including a slope between the back
patio and a white fence, and some loss of land due to erosion. Melinda also testified
they noticed that “the land [was] actually pulling away from the foundation.”
According to Melinda, she became concerned about the voids between the grass and
slab, the loss of backyard area, and the slope movement. Melinda told Guerra about
10
these issues, she hired a civil engineer to inspect the property, and she contacted the
City of Conroe. The Brewers also poured play sand into the gaps between the
foundation and the ground about every six months, to try to fill the voids.
Melinda did not hear back from Guerra about her concerns, and later she
approached him at a Property Owners Association (“POA”) meeting and told him
they needed a retaining wall. According to Melinda, Guerra replied that a retaining
wall was not needed because the property “had been designed by a licensed engineer
and architect[.]” Melinda repeated the need for a retaining wall at another POA
meeting, and Guerra responded that “no one was going to dictate to him, that he
worked on his own time.” Melinda testified that downspouts and an underground
drain system were installed, and Guerra said this would solve the problem, but this
did not take care of the surface water that would flow off the roof and go into her
backyard, and water still collected in a low point next to the foundation of the
Brewers’ home. According to Melinda, after having tried to work with Guerra and
after contacting the City and County, the Brewers hired an attorney.
Melinda testified that cracks had developed in the stone on the home’s
exterior, cracks developed in the interior walls and corners, and cabinets and the
fireplace started to separate from the wall. She also testified there was a separation
between the patio and an exterior wall, there had been significantly more soil
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erosion, and the ground was at varying levels. Several photo exhibits were admitted
into evidence showing areas inside and outside of the Brewers’ townhome.
Melinda testified that based on the current conditions of their home, Melinda
did not believe that anything Guerra told them in their 2016 meeting was true. She
also testified that if the Brewers had not met with Guerra and listened to what he had
told them in 2016, they would not have purchased unit 55.
Testimony of Wayne Brewer
Melinda’s husband Wayne testified that Guerra told the Brewers in the
meeting in 2016 that the contractors he used were professional and licensed, and that
Guerra would be supervising the contractors. Wayne testified that when Guerra met
with the Brewers, Guerra did not differentiate between the then-existing units (such
as unit 55) and the ones that were being built. According to Wayne, the Brewers
would not have purchased unit 55 if they had not met with Guerra because Guerra
gave them a “comfort level” and because it meant a lot to them to talk with the
developer himself.
Wayne estimated that there had been a loss of one to two feet of the sloped
backyard after they bought the unit, and at the time of trial, the area was “half now
compared to what it was.” Wayne testified that he had observed gaps of an inch-and-
a-half to two inches between the end of the slab and the soil along the foundation.
Wayne testified that he put play sand in the void at the suggestion of Chris Bogert,
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who worked for the City and Wayne had observed a neighbor doing the same thing.
According to Wayne, he had used a tape measure and determined the gap went down
about sixteen inches into the fill soil.
Testimony of Florencio Guerra
Guerra testified that he is the president, manager, and sole member of Memo,
that Memo developed Bellago, and Gicor built the townhomes. Guerra also
explained that Mr. Villalba is the director of construction for Gicor, and Villalba was
construction superintendent at Bellago.
Guerra testified that he did not have records for unit 55 or other units that have
sold “because it would be just too much paperwork[,]” and he could not find the
records of soil sampling or geotechnical testing of the soil for the construction of
unit 55. According to Guerra, Rusty Tejcek was the contractor who did the soil
testing and provided fill dirt for unit 55. Guerra testified that because the County did
not require compliance with the International Building Code (“IBC”), Gicor decided
not to reference the IBC in connection with the construction of the townhomes.
Guerra recalled that he left it up to the contractors that Gicor hired to decide how to
pour the foundation on fill soil and how to build the adjacent slope. According to
Guerra, nothing was wrong with the construction of the Bellago townhomes because
everything was built according to the plans and requirements. Guerra testified that
Wanda Fick, who is an architect, drew the plans for Bellago.
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According to Guerra, at one point, the owner of unit 41 had complained about
water getting into the foundation, and Guerra hired a company to make an
underground drain. At another time, piers were placed under the foundation of units
54 and 55 to support the weight of the fire wall. After Guerra received complaints
about drainage from Melinda in April or May 2017, he contacted Stabilicore, who
recommended installing downspouts and an underground drain, and as far as Guerra
knew, the drainage issue was resolved. Guerra agreed that he had received
complaints from the City of Conroe about water drainage at Bellago but according
to Guerra “everything was corrected.” Guerra believes the state of the backyard
common area of the townhomes is a maintenance issue, not a construction issue, and
it is the POA’s responsibility. Guerra did not recall whether he had heard complaints
about the slope of the fill soil deteriorating and moving, nor did he recall hearing
any such complaint from Villalba.
Guerra testified that American Civil Engineers (“ACES”) designed the
drainage plan, and he did not know whether the plan called for using fill soil, but
using fill soil was a common practice. Guerra believed that the slope behind unit 55
had stabilized. Guerra also testified that April Villas, the neighboring development,
built the fence along the property line, and Guerra had not seen that fence move.
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Testimony of Dan Wilds
Dan Wilds testified that he is the First Assistant County Engineer for
Montgomery County where he reviews drainage plans to make sure they meet the
County’s criteria. He reviewed the drainage plan for Bellago, which was originally
submitted in 2005. According to Wilds, an initial concern with the Bellago drainage
plan was that it did not account for a detention pond to mitigate runoff to the
highway. After he reviewed the plans, he was not involved with drainage at Bellago
until there was a complaint. Wilds then went to look at the property and saw that the
site was not in compliance with the approved drainage plan because there was
supposed to be a swale or ditch along the eastern boundary of Bellago to bring the
water into a storm sewer pipe and into the lake, but the swale had not been
constructed. Wilds testified that he wrote a letter to Guerra in May 2011, which was
admitted into evidence as Plaintiffs’ Exhibit 2D, and another letter in November
2011, which was admitted as Exhibit 2E, that stated that the drainage work had not
been done. According to Wilds, the matter was referred to the County Attorney’s
office, and he believed the work was completed in early 2012. Wilds testified that
based on his visit to Bellago in April 2012, it appeared that the drainage at Bellago
was in substantial compliance with the approved drainage plan.
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Testimony of Luis Villalba
Luis Villalba testified that he is the director of construction for Gicor, that he
oversaw the construction at Bellago, and that Guerra is his boss. Villalba testified
that he is an architect licensed in Colombia but not in Texas, and that Fick, who
prepared the architectural plan, was a designer and he did not know if she was an
architect. Villalba testified that Exhibit 100, the Materials Specification Sheet,
should not be read to suggest that architects were used in the design of the structure.
According to Villalba, construction of buildings 4 and 5 at Bellago, which
includes unit 55, required the use of fill soil to be brought into the property to level
the ground. Villalba agreed that he was responsible for making sure the soil was
prepared before pouring the foundation, and that outside contractors did the actual
work. According to Villalba, Rusty Tejcek was the contractor who brought in the fill
soil, and Keelan Engineer designed the foundation. Villalba testified that Keelan
conducted an evaluation of the native soil before bringing in fill soil, and Keelan’s
report stated that the soil was “brown, sandy clay with scattered limey rocks[]” and
“soil is hard and brittle when dry, but somewhat plastic when moistened.” Villalba
testified that building 5, which includes unit 55, was built on fill soil and not on
native soil. Villalba also testified that it was not clear to him what the IBC required
for slope stability.
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According to Villalba, although Keelan’s plan, admitted as Exhibit 7, reflects
that Keelan required fill soil of eight inches, more than eight inches of fill soil was
placed in the area where building 55 was constructed, and the bottom of the porch
beam for unit 55 does not rest in native soil, but rather in fill soil material, which he
agreed does not comply with the specifications in Exhibit 7. Villalba calculated that
the fill soil under unit 55 on the porch beam side was between two and three feet.
According to Villalba, Stabilicore did not create a swale for drainage behind unit 55,
but they placed a pipe connection to reduce the hydraulic weight on the back part of
the unit. Villalba also testified that Stabilicore modified ACES’s drainage plan when
they installed downspouts and an underground drain, and that ACES was not
consulted about this modification.
Villalba testified that the POA was responsible for maintaining the area from
the back patio of building 5 to the white picket fence eastward, and that neither Gicor
nor Memo was responsible for the maintenance. Villalba also testified that in the
construction, he deviated from the drawings of the beams (per Exhibit 7) due to “lot
conditions[.]” According to Villalba, a photograph of the property admitted into
evidence depicted a slope of thirty-three to forty-five degrees, but he stated he does
not think the slope looks unstable. Villalba testified that, when he looked at the
Brewers’ home about a year before trial, he did not think the foundation looked like
it was failing nor did he see any cracks in the foundation, and he thought the cracks
17
inside the Brewers’ home could be caused by normal settling. Villalba testified that
the slope leading to the fence separating Bellago and April Villas was designed to
be thirty-three degrees, and he agreed it has eroded to a forty-five-degree slope.
Villalba agreed there had been issues with erosion of the slope for years. He also
testified that if Gicor wanted to build a retaining wall, it would require the permission
of the POA.
Testimony of Christopher Bogert
Christopher Bogert testified that he is the City engineer for the City of Conroe,
and his work includes reviewing site development work “from the ground down[.]”
Bogert recalled that the Bellago property was involuntarily annexed by the City, and
that two or three of the seven units were already constructed at the time of
annexation.
Bogert testified that he had been asked to look at a building on the east side
of the Bellago property. The City had received a complaint, and Bogert investigated
it to see whether the drainage plan had been complied with. Bogert identified Exhibit
3 as the drainage plan for Bellago. Bogert recalled meeting with Guerra and another
City inspector in August 2016, and the purpose of the meeting was to tell Guerra
that construction needed to comply with the drainage plans. Bogert told Guerra that
the construction did not comply, and Guerra indicated he would make sure it was
built according to the plans. Bogert recalled another contact with Guerra about a year
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later about a complaint from a neighbor. Bogert met with Guerra again in May 2017,
and Guerra said he would make corrections to address another drainage issue.
Testimony of James Drebelbis
James Drebelbis testified that he is a licensed professional engineer in Texas,
and he does forensic engineering to diagnose problems of construction and
sometimes causation of problems. His supplemental report was admitted as Exhibit
48. According to Drebelbis, when he visited the Bellago site in October 2018, he
knew there was concern about the foundation having moved, and he understood
there was a slope to the land before the townhomes were built. Upon visiting the site,
he saw that the slope was almost forty-five degrees, and he observed about a sixteen-
inch drop from the Brewers’ back porch to the ground, and another three-to-five feet
drop to the grade below. Drebelbis described the slope as “slightly failed[,]” and
testified that there was some shallow rotational failure in the slope. Drebelbis
testified that there was bulging in the soil that pushed the fence out and away from
the soil, which indicated to him that there was mass movement of the soil, and he
explained that such mass movement is a slow migration of clay soil material that
occurs because clay is “plastic[.]” According to Drebelbis, when a slope has both
rotational and mass movement failure, it means the slope is not stable, which may
occur when a slope is too steep. Drebelbis observed instances where the soil had
pulled away from the foundation of the Brewers’ townhome, which he testified may
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occur when there is mass movement of soil or when the soil shrinks. Drebelbis
testified that the steepness of the slope and rotational and mass movement failures
of the soil would typically manifest in the structure of the house, but it could take
years to occur. Drebelbis testified that “the most likely effect is that the resisting soil
that’s holding [] up the foundation is going to go away[,]” and ultimately there will
be settlement on the east side of the townhome and “[i]t’s going to start dropping on
that side.” He further testified to a reasonable degree of engineering certainty that as
the soil underneath the townhome continues to migrate to the east without anything
to support it, there will be progressive movement of soil underneath the foundation.
According to Drebelbis, the most common way to address such issues is to put in a
retaining wall, and without a retaining wall, the soil will continue to slough and move
to the east away from the foundation and will affect the foundation. Drebelbis
testified that, when he met with the Brewers in October 2018, they told him that the
POA had denied requests to install a retaining wall.
Testimony of Scott McCaslin
Scott McCaslin testified that he is an architect and construction manager, he
owns McCaslin Associates, Incorporated, and he is a licensed architect in Texas. He
testified that he was retained to provide a cost analysis based on Drebelbis’s report.
According to McCaslin, when he visited the Bellago site, he thought the problem
was that the site was sloping off, which he stated was “fairly common” when fill soil
20
is added around a building during construction. McCaslin proposed building a
retaining wall along the entirety of building 5 and beyond that would be a “terraced
wall with a rack-back system” with three levels of terrace, using precast materials
and soil anchors, which reduces the need for big equipment in the area, and including
an underground drain system with a sump pump. McCaslin testified that the total
project cost for the retaining wall would be $193,386, and he developed a second
estimate based on not moving the fence on the April Villas property and using one
retaining wall that was not terraced, and the cost estimate for this second plan was
$111,255.
McCaslin also testified that he reviewed Guerra’s and Villalba’s depositions,
and in McCaslin’s opinion, for a construction superintendent to admit he did not
know of nor follow the building code was “not very responsible construction.”
McCaslin’s report was admitted into evidence as Plaintiffs’ Exhibit 58, in which he
wrote, in part, “Many of these problems appear to have been the result of improper
or incomplete construction, that resulted from poor construction practices by Gicor.
Since Gicor did not have proper inspections[] during construction, which is required
and is standard practice.”
Testimony of Todd Rotholz
Todd Rotholz testified that he is a commercial real estate appraiser in the
Houston area, and he has been registered in Texas to appraise real estate for more
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than twenty years. Rotholz testified that he used the comparable sales approach in
this case, which looks at comparable sales and he makes adjustments for specific
characteristics of the property. According to Rotholz, he visited unit 55 in October
2018, when he did the original appraisal, and again in October 2020.
Rotholz described the property as generally “a very nice townhome[]” in
“very good condition.” In Rotholz’s opinion, fill dirt had been put in to raise the
townhome slabs to a certain level, and the main concern was at the rear of the
property where there was a “relatively severe drop” and “significant slope to the
property line.” He testified that there was “some undulation in the soil[,]” and the
property-line fence was “bowed out a little bit[]” with some “evidence of soil
movement.”
Rotholz testified that he looked at market data available through the MLS, as
well as information from the Montgomery County Appraisal District. In his 2020
report, he included information from three sales in Bellago. His 2020 evaluation
indicated a “Hypothetical Market Value Unencumbered[]” of $225,000 for unit 55,
which he explained would be the likely “list price” for the property, not adjusted for
any potential issues with the property. He testified that he used the Drebelbis report
to arrive at an encumbered value for the property, specifically regarding the steep
incline at the edge of the rear of the property, and the engineer’s opinion that a
retaining wall was necessary to stop soil movement. Then he
22
. . . simply evaluated [] the exposure or fear factor that a buyer would
be faced with, to determine at what point would a buyer be willing to
accept this risk, at what price point would he be able to accept this risk
and still move forward with the purchase, knowing the issue at hand.
In Rotholz’s opinion and based on his experience and training in the industry, the
Drebelbis report, and McCaslin’s estimated cost to repair, a thirty-percent
discount—or $67,500—would be enough of a discount to entice someone to risk
purchasing the unit. Rotholz testified that his opinion was subjective but based on
thousands of hours of appraisals, work experience, discussions with realtors, and
knowledge of how buyers and sellers act in the marketplace.
On cross-examination Rotholz was questioned about the source and basis of
his 30 percent reduction and estimate and the following exchange occurred:
Q. This number, you don’t -- you didn’t get from any comparably
impaired properties. Correct?
A. Correct.
Q. But this number, then, you apply to the other 38 pages of your report,
which gave you the fair market value appraisal. Correct?
A. Yes, sir.
Q. And so all you did was you took the sentence that I just read to you,
which is your entire analysis of getting the 30 percent as a specific
quantity, and you applied it to your appraisal, which is 38 pages long.
Correct?
A. Well, no. It’s -- I mean, our analysis covers more than a sentence.
We have --
Q. Well --
23
A. -- two pages right here that discusses it. So it’s just -- it’s not fair to
say we -- this was handled in a sentence. It’s not fair.
Q. Well, but okay. So let’s look, then, at page 38 of your report. Is there
anything on page 38 of your report that would give you a 30 percent
number specifically?
A. No. We don’t have -- we -- I’ve testified that we don’t have
comparable data that would -- that would be able to be extracted from
a market sale to come up with the 30 percent. It’s based on
circumstantial information, right, which is the environment of this
property, and the risks, absolutely, are considered in here and the costs
are absolutely considered in here, and most importantly, the inability
for the property owners to act individually to resolve this issue. Those
are all considered in the 30 percent that we discuss on both of these
pages.
Q. Okay. Well, if -- and so you would say, then, even on page 39, other
than the very last paragraph that starts with the words “In summary,”
there’s nothing that gives you a quantifiable number of .3, 30 percent,
or 30 of a hundred.
A. No, sir. That is strictly my opinion.
Q. And it’s an opinion that you pulled from the frische luft.[3] Isn’t that
right?
A. No. That is not correct, no.
On redirect, Rotholz explained he did not pull his 30% diminution number out
of thin air. He testified that his “opinion is based on thousands and thousands of
hours and thousands of appraisals and work experience of just evaluating properties,
3
Frische Luft is a German phrase that translates to “fresh air,” in English.
Interglot Translation Dictionary, https://www.interglot.com/dictionary (last visited
on July 18, 2023).
24
how they interact in the marketplace, and most importantly, how buyers and sellers
in the marketplace interact to problems that they incur or see during the process.”
Testimony of Jeremiah Jackson
Jeremiah Jackson testified that he had previously owned unit 42 in building 4
of Bellago. He agreed that there was a slope from unit 42 down to the original soil,
and he had observed issues with the foundation, including cracks in the sheetrock,
cracks in the trim, cracks in the caulk points, and doors and windows sticking.
Jackson testified that one of the reasons he decided to move out of the Bellago
community was because of “a lack of want-to with the [POA] and the developer to
repair things.” According to Jackson, when he brought up the foundation issue to
Guerra, “it was sort of swept under the rug[]” although Guerra told him “it would be
looked into and possibly fixed[.]” Jackson recalled that, at the time, Guerra had
majority voting rights in the POA. When Jackson listed his unit for sale in 2017, he
ended up pulling the listing because a potential buyer had identified foundation
issues during an inspection. After that buyer backed out, Jackson dropped the listing
price of $175,000, and the unit ultimately sold for $167,000.
Testimony of Julian Duron
Julian Duron testified that he had a home at unit 41 in the Bellago community,
which he bought in 2016. He agreed that the unit is built on a slab that is common
with other townhomes and that the soil slopes down to a lower level on the property.
25
Duron agreed he was aware of foundation issues when he purchased unit 41 and that
the price was reduced about $15,000 due to foundation issues. According to Duron,
after he moved into unit 41, he observed some doors that would not close completely,
cracks that had been painted over, and cracks outside the unit. Duron testified that at
the back of the home, he could “clearly see that the soil there had eroded[]” and
dropped.
Duron testified that he hired someone to inspect the foundation before he
bought unit 41, and after he bought it, he hired a company to place “14 to 16 piers”
to level the foundation, which cost about $12,000. Duron recalled that he spoke with
Guerra about three months after buying the home about the foundation issues to say
it was dropping and needed repair, and Guerra told him “he would take care of it.”
The second time he talked with Guerra, Guerra told him he thought that it could get
fixed with about four piers and his men could do the work. According to Duron, after
meeting with Guerra again, he “more or less figured out [Guerra] [] wasn’t going to
do” the work, and Guerra told him that because of business and financial issues, he
would not be able to do the work. 4
4
Plaintiffs’ attorney Jason Wagner testified about the legal fees that Plaintiffs
had incurred. His expert report, admitted as Plaintiffs’ Exhibit 95, reflects a total of
$116,297.04 in attorney and paralegal fees plus costs in connection with their claims
under the DTPA.
26
After the Plaintiffs rested their case, the defense then moved for a directed
verdict. The trial court granted a directed verdict on the Plaintiffs’ claim for private
nuisance but denied the motion on all other claims. The Plaintiffs withdrew their
claim on breach of habitability. The trial court also instructed the parties that he was
going to limit the damages to the diminution in value of the townhome.
Defendants’ Witnesses and Presentation of Evidence at Trial
Testimony of Florencio Guerra
Florencio Guerra testified again as a witness for the defense. He explained
that Gicor buys lots and builds homes in the Lake Conroe area. He testified that
GAM Enterprises is a holding company that owns Gicor, Memo Express, and several
convenience stores, and that GAM is owned by the Guerra Family Trust. According
to Guerra, Memo bought Bellago from some investors and then transferred
ownership to Gicor, who was the builder. Guerra testified that “Gicor, through Louis
Villalba[]” hired the soil engineers for Bellago and the trade workers. Guerra also
testified that the architect for Bellago was not required to be licensed.
Guerra recalled that he met with the Brewers in 2016 before they purchased a
townhome in Bellago. According to Guerra, he talked with the Brewers about unit
53, which was a new unit that was for sale at the time. Guerra testified that neither
Gicor, Memo, nor Guerra had anything to do with the real estate transaction in which
the Brewers bought unit 55. Guerra further testified that he would not have told the
27
Brewers that the City and County became involved due to drainage issues because
“those things were related with the drainage with the water that went into [] April
Villas, not related with problems with the Bellago project.” Guerra agreed that he
did not tell the Brewers that the foundation for unit 55 had not been built in
accordance with the plans that Keelan had designed, and he did not recall any
mention of drainage when he met with the Brewers.
Guerra testified that there are five people on the Bellago POA board, and he
occupies one seat. He also testified that there were forty-eight votes in the POA
because there are forty-eight lots, and Gicor owned thirteen of the forty-eight lots at
the time of trial. Guerra testified that he was not involved in any discussion about
how the Bellago POA opposed building a retaining wall, and that the first time he
learned of it was when he read the Drebelbis report in this lawsuit. Guerra agreed
that when he installed the gutters and connected drainage in 2017, it was necessary
to get the POA’s agreement.
Guerra agreed that the permit for construction of unit 55 was issued to Memo,
and he could not remember when ownership of the lot transferred from Memo to
Gicor. He agreed that he personally received the permit to build unit 55. Guerra
agreed that he trusted Villalba to get reports on the soil, but he did not have those
reports, and there was no way for him to tell what the nature of the soil was under
the foundation.
28
Testimony of George Gordon
George Gordon, an attorney licensed in Texas since 1976, testified that he was
asked to give an opinion on Plaintiffs’ attorney’s fees based on an assumption of
$67,500 in damages. After reviewing the billing records and the Third Amended
Petition, Gordon’s opinion was that the Plaintiffs’ attorney’s fees are not the usual,
reasonable, and customary fees that would be charged in a like or similar case. In
Gordon’s opinion, Plaintiffs’ counsel’s billings were more than three times the
amount of damages. He also testified that he had not seen any segregation of
attorney’s fees by cause of action in this case.
After the close of the Defendants’ case, the Defendants again moved for a
directed verdict, which the court denied.
Analysis
Appraisal Testimony and
Sufficiency of the Evidence on Damages
In their first issue, Appellants challenge the reliability of Appellees’ expert’s
opinion testimony and argue that Todd Rotholz’s “appraisal impairment testimony”
is unreliable under Robinson. See generally E.I. du Pont de Nemours and Co., Inc.
v. Robinson, 923 S.W.2d 549 (Tex. 1995) (setting forth “non-exclusive factors” for
courts to use to determine whether scientific evidence is relevant and reliable and
may be admitted under Rule of Evidence 702). According to Appellants, Rotholz
offered his opinion that there is a thirty percent diminution in value for the Brewers’
29
home “[w]ithout explaining any basis whatsoever[.]” Appellants argue that Rotholz
failed to apply the Uniform Standards of Professional Appraisal Practice (“USPAP”)
analysis of risk, use, cost, and comparably impaired properties to render his opinion
on the thirty percent impairment in the townhome’s market value. Appellants assert
that Rotholz’s opinion was pulled “out of the air” and is unreliable under Robinson.
According to Appellants, because Rotholz’s opinion testimony about the reduction
in current market value was the sole measure of actual damages that the jury
considered, the evidence is not legally sufficient to support the jury’s damages
award.
When, as here, a party attacks the legal sufficiency of the evidence to support
an adverse finding on an issue for which it did not have the burden of proof, the party
must show on appeal that no evidence supports the adverse finding. See Croucher v.
Croucher, 660 S.W.2d 55, 58 (Tex. 1983); Royce Homes, L.P. v. Humphrey, 244
S.W.3d 570, 574 (Tex. App.—Beaumont 2008, pet. denied). Evidence is legally
sufficient if it “would enable reasonable and fair-minded people to reach the verdict
under review.” City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). In
evaluating whether the evidence is legally sufficient, “we credit evidence that
supports the verdict if reasonable jurors could, and disregard contrary evidence
unless reasonable jurors could not.” Kroger Tex. Ltd. P’ship v. Suberu, 216 S.W.3d
788, 793 (Tex. 2006); Humphrey, 244 S.W.3d at 574-75. We sustain legal
30
sufficiency challenges when there is no more than a scintilla of evidence on the issue.
See Suberu, 216 S.W.3d at 793. “When the evidence offered to prove a vital fact is
so weak as to do no more than create a mere surmise or suspicion of its existence,
the evidence is no more than a scintilla and, in legal effect, is no evidence.” Kindred
v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983); see also Ford Motor Co. v.
Ridgway, 135 S.W.3d 598, 601 (Tex. 2004). The jurors are the sole judges of the
credibility and weight of the witnesses’ testimony, and on review, we do not
substitute our own opinion for the jury’s verdict. City of Keller, 168 S.W.3d at 819.
Rather, we assume the jurors made credibility determinations in favor of the verdict
if reasonable persons could do so. Id.
In Robinson, the Texas Supreme Court set forth six non-exclusive factors for
courts to consider when determining whether an expert’s scientific opinions are
reliable and admissible.5 See 923 S.W.2d at 557. However, the Texas Supreme Court
5
In Robinson, the court stated,
There are many factors that a trial court may consider in making the
threshold determination of admissibility under Rule 702. These factors
include, but are not limited to:
(1) the extent to which the theory has been or can be tested;
(2) the extent to which the technique relies upon the subjective
interpretation of the expert [];
(3) whether the theory has been subjected to peer review and/or
publication;
(4) the technique’s potential rate of error;
(5) whether the underlying theory or technique has been generally
accepted as valid by the relevant scientific community; and
31
later noted that these factors “cannot always be used with other kinds of expert
testimony.” See Gammill v. Jack Williams Chevrolet, Inc., 972 S.W.2d 713, 726
(Tex. 1998). In Gammill, the Court stated that “the criteria for assessing relevance
and reliability must vary, depending on the nature of the evidence[,]” and
“[e]xperience alone may provide a sufficient basis for an expert’s testimony in some
cases[.]” Id. at 726, 727. An expert’s mere ipse dixit will not suffice, and the expert
must show how his observations support his conclusions, else the opinion is not
reliable due to “‘too great an analytical gap between the data and the opinion
proffered.’” Id. at 727 (quoting Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146 (1997)).
To be admitted into evidence, a real estate appraiser’s expert opinion must be
relevant and reliable. Humphrey, 244 S.W.3d at 579 (citing Guadalupe-Blanco River
Auth. v. Kraft, 77 S.W.3d 805, 807 (Tex. 2002); see also Tex. R. Evid. 702. As a
general rule the proper measure of damages in cases involving injury to real property
is “the cost to restore or replace, plus loss of use for temporary injury, and loss in
fair market value for permanent injury.” Gilbert Wheeler, Inc. v. Enbridge Pipelines
(E. Tex.), L.P., 449 S.W.3d 474, 481 (Tex. 2014). The Texas Supreme Court has
(6) the non-judicial uses which have been made of the theory or
technique.
We emphasize that the factors mentioned above are non-exclusive.
See E.I. du Pont de Nemours and Co., Inc. v. Robinson, 923 S.W.2d 549, 557 (Tex.
1995). Here, the Defendants did not make a challenge to the admissibility of
Rotholz’s testimony.
32
cautioned that this rule should be applied with flexibility and with consideration of
the facts and circumstances of the case. See id. When valuing real property, the
comparable sales method of determining the market value of real property is a
traditional method—and the preferred method—of determining the market value of
real property. See City of Harlingen v. Estate of Sharboneau, 48 S.W.3d 177, 182
(Tex. 2001). “Under a comparable sales analysis, the appraiser finds data for sales
of similar property, then makes upward or downward adjustments to these sales
prices based on differences in the subject property.” Id.; see also Humphrey, 244
S.W.3d at 579 (citing Kraft, 77 S.W.3d at 808). Making adjustments is particularly
appropriate for real estate experts to support their appraisal opinions with their
experience. See Williams v. State, 406 S.W.3d 273, 291 (Tex. App.—San Antonio
2013, pet. denied) (analyzing expert market value opinions in a condemnation
proceeding). We have previously recognized that downward adjustments for
“stigma” have been allowed in real estate cases. See Humphrey, 244 S.W.3d at 576.6
The Texas Supreme Court has explained, “‘[s]tigma damages’ essentially constitute
‘damage to the reputation of the realty.’ They ‘represent[] the market’s perception
6
Citing Country Village Homes, Inc. v. Patterson, 236 S.W.3d 413, 443-44
(Tex. App.—Houston [1st Dist.] 2007, pet. granted, judgm’t vacated w.r.m.)
(construction defects); Perry Homes v. Alwattari, 33 S.W.3d 376, 385-86 (Tex.
App.—Fort Worth 2000, pet. denied) (defective foundation); Smith v. Levine, 911
S.W.2d 427, 434 (Tex. App.—San Antonio 1995, writ denied) (defective
foundation); Terminix Int’l, Inc. v. Lucci, 670 S.W.2d 657, 663-64 (Tex. App.—San
Antonio 1984, writ ref’d n.r.e.) (termite damage).
33
of the decrease in property value caused by the injury to the property.’” Houston
Unlimited, Inc. v. Mel Acres Ranch, 443 S.W.3d 820, 824 (Tex. 2014) (citations
omitted).
To be sure, damages may not be based on speculative or conjectural evidence.
See Humphrey, 244 S.W.3d at 580. That said, “[t]he proper way of attacking shaky
but admissible evidence is through cross examination.” Williams, 406 S.W.3d at 291
(citing Gammill, 972 S.W.2d at 728).
Todd Rotholz testified that he used the sales comparison approach to develop
his opinion, which he explained is based on comparable sales and then the sales are
adjusted in comparison with the specific characteristics of the subject property.
Rotholz also testified that he looked at market data available from MLS and he
reviewed the values applied by the Montgomery County Appraisal District. When
developing his appraisal opinion for 2020, he reviewed sales of three townhomes in
the Bellago community and determined that the “unencumbered market value” of
unit 55 was $225,000. Rotholz testified that he also used the Drebelbis report to
arrive at an “encumbered” value for the property, considering the steep incline at the
edge of the rear of the property and the engineer’s opinion that a retaining wall was
necessary to stop soil movement. Rotholz further explained that his adjustment of a
30% reduction in value was based on Rotholz’s more-than-twenty years of
experience as a real estate appraiser and dealing with buyers and sellers, he
34
. . . evaluated [] the exposure or fear factor that a buyer would be faced
with, to determine at what point would a buyer be willing to accept this
risk, at what price point would he be able to accept this risk and still
move forward with the purchase, knowing the issue at hand.
According to the testimony at trial, Rotholz reached an opinion that a thirty percent
discount would be enough of a discount to entice someone to risk purchasing the
unit, and during cross-examination, he referred to this discount as “stigma.” On
cross-examination, he testified that he had considered risk, usability, and cost of
repairs in arriving at his opinion. Although Appellants allege that Rotholz “admitted
he merely rendered an opinion out of the air,” the record reflects that Rotholz
testified as follows:
[M]y opinion is not pulled out of thin air. My opinion is based on
thousands and thousands of hours and thousands of appraisals and work
experience of just evaluating properties, how they interact in the
marketplace, and most importantly, how buyers and sellers in the
marketplace interact to problems that they incur or see during the
process.
The record does not reflect that the defense objected in the trial that Rotholz’s
testimony was not admissible under Rule 702, and we find no pretrial challenges
were made to the admissibility of Rotholz’s opinions. Defense counsel cross-
examined Rotholz, and Rotholz did agree that “there’s nothing that gives you a
quantifiable [discount of] 30 percent.” The defense offered no witnesses to testify
about a comparable sales value nor about damages. On appeal, Appellants concede
that “Rotholz arguably did a proper comparable value study of the unimpaired
35
Townhome[.]” Appellants’ sole complaint on appeal pertains to the 30% reduction
in value due to the problems identified at trial.
It was the jurors’ responsibility to determine the weight and credibility of
Rotholz’s testimony. See City of Keller, 168 S.W.3d at 819. The record reflects that
Rotholz used comparable properties—other townhomes in the Bellago
community—to derive a comparable sales approach of an unencumbered value for
the home and that his reduction of 30% was explained by him as being based on
more than “two decades” of his professional experience as a real estate appraiser and
his knowledge of what it would take to entice a willing buyer to purchase the
townhome with the existing problems. The defense had an opportunity to cross-
examine Rotholz, and the defense offered no competing testimony on the home’s
value or impaired value.
“The line determining whether an expert opinion is conclusory is difficult to
draw, and close calls must go to the trial court.” Windrum v. Kareh, 581 S.W.3d 761,
770 (Tex. 2019) (internal quotation omitted) (a medical malpractice case). “[W]hen
the evidence falls within the zone of reasonable disagreement, the court may not
substitute its judgment for that of the fact finder.” Id.Based on this record, we cannot agree with Appellants that Rotholz’s
testimony was unreliable or plucked out of thin air. We conclude there is more than
a scintilla of evidence to support the damages, and we overrule Appellants’ first
36
issue. See Perry Homes v. Alwattari, 33 S.W.3d 376, 385 (Tex. App.—Fort Worth
2000, pet. denied) (concluding that a realtor’s opinion of the “stigma” of a defective
foundation was legally sufficient evidence to support a damages award for
diminution in value).
Submission of Question 13
Appellants’ second issue argues that the trial court erred in submitting
Question 13 to the jury because it was not the proper measure of damages. According
to Appellants, the proper measure of damages is “the difference in value, when
Appellees purchased the Townhome between the property as represented, and the
actual market value of the Townhome at that time.” Appellants argue that because
the instruction on damages was incorrect, the trial court further erred in entering
judgment based on an incorrect measure of damages.
We review an allegation of jury charge error under an abuse of discretion
standard. See Shupe v. Lingafelter, 192 S.W.3d 577, 579 (Tex. 2006) The omission
of an instruction is reversible error only if the error probably resulted in the rendition
of an improper judgment. See Tex. R. App. P. 44.1(a)(1); Union Pac. R.R. Co. v.
Williams, 85 S.W.3d 162, 166 (Tex. 2002).
Appellants argue that the proper measure of damages for a claim under the
DTPA for misrepresentation is either (1) out-of-pocket damages reflecting the
difference between the value the buyer paid and the value received or (2) benefit-of-
37
the-bargain damages reflecting the difference between the value as represented and
the value received. 7 In this case, however, the jury found the Defendants liable for
engaging in a false, misleading, or deceptive act or practice (Jury Question 1);
engaging in an unconscionable action or course of action (Jury Question 2); failure
to comply with a warranty (Jury Question 3); negligence (Jury Question 6); negligent
misrepresentation (Jury Question 7); and fraud (Jury Question 9). Question 13
instructed the jury on damages as to the above-listed claims of liability as follows:
What sum of money, if any, if paid now in case, would fairly and
reasonably compensate Wayne and Melinda Brewer for their damages,
if any, that resulted from such conduct?
Consider the following element of damages, if any, and none other.
1. the reduction in current market value of the Property.
“Market value” means the amount that would be paid in cash by a
willing buyer who desires to buy, but is not required to buy, to a willing
seller who desires to sell, but is under no necessity of selling.
The Final Judgment states that “[t]he jury unanimously answered ‘$67,500.00’ in
answer to Question 13 concerning damages for all liability theories (DTPA,
negligence, negligent misrepresentation, and fraud).”
When defense counsel argued his motion for directed verdict, he stated that
the date of damage should be the date of the misrepresentation. The trial court
responded that the testimony on damages “went by the date that the problem
manifested itself.” Plaintiffs’ counsel argued that when the representations were
7
Citing Leyendecker & Assocs., Inc. v. Wechter, 683 S.W.2d 369, 373 (Tex.
1984).
38
made, the Brewers had not even bought the unit. The trial court stated that damages
should be determined by “diminution of value because it’s less than the cost to
repair[.] . . . Any current damage must be loss of value.”
The Brewers testified that the problems to the foundation, soil, and drainage
were not apparent when they purchased the home. Under Texas law, “a recovery of
damages for a permanent injury to real property is generally limited to the difference
in value before and after the injury.” ExxonMobil Corp. v. Lazy R Ranch, LP, 511
S.W.3d 538, 540 (Tex. 2017). The Texas Supreme Court has explained that “[a]s a
general rule, when an injury to real property is temporary, the owner is entitled to
damages commensurate with the cost of restoring his property, but when an injury
to the same property is permanent, the owner is entitled to damages commensurate
with the loss in the fair market value to the property as a whole.” Gilbert Wheeler,
Inc., 449 S.W.3d at 476; see also Houston Unlimited, Inc., 443 S.W.3d at 825
(“Generally, we have permitted landowners to recover either the lost value of their
land if the injury to the land is permanent or the cost to repair or remediate the land
if the injury is temporary.”). In this case, the Defendants do not contend, and the
Brewers do not allege, the injury to their property is temporary.
Melinda Brewer testified that their buyer’s inspection did not show an issue
associated with the structure or the foundation, but that after they moved in, she
noticed erosion behind the house and the land “pulling away from the foundation.”
39
According to Melinda, even after gutters and an underground drainage system were
installed, the erosion and gaps between the foundation and soil did not stop. Melinda
testified that, over time, they noticed damage to the inside and outside of the house,
including cracks in the wall and ceiling, cracks around the garage, and cracks in the
foundation, and cabinets and the fireplace separating from the wall. Wayne Brewer
testified that their backyard had lost one-to-two feet since they bought the unit.
Appellants complain that the trial court used the wrong measure of damages because
it should have instructed the jury to measure the difference between the value
Appellees paid and the value they received, as of the date when they purchased the
Townhome. In their brief they cite to Arthur Andersen & Co. v. Perry Equip. Co.,
945 S.W.2d 812, 815 (Tex. 1997) and Mid-State Homes, Inc. v. Ricks, No. 09-97-
362-CV, 1999 Tex. App. LEXIS 7705, at **2-3 (Tex. App.—Beaumont Oct. 14,
1999, no pet.).
In Arthur Andersen, Perry Equipment Corporation (PECO) sued the
accounting firm of Arthur Andersen for a faulty audit of Maloney Pipeline Systems,
a company that PECO sought to purchase and did purchase. 945 S.W.2d at 814. At
trial, PECO presented uncontradicted evidence that the purchase price it paid for
Maloney “was a total loss from which PECO realized no return” and evidence that
Arthur Andersen’s pre-purchase audit of Maloney contained serious errors. Id. The
40
trial court rendered judgment for PECO, and on appeal, one of the issues was the
measure of damages. Id.
Arthur Andersen as appellant complained that the jury charge allowed the jury
to award PECO the entire purchase price of Maloney without instructing the jury to
subtract the value of Maloney stock at the time of the sale. Id. at 815. As appellee,
PECO argued that it was entitled to direct damages and also the purchase price it
paid for Maloney as consequential damages. Id. at 816. According to Arthur
Andersen, PECO had not introduced any evidence showing that the Maloney stock
was valueless at the time of purchase, so that PECO failed to establish that it was
entitled to the entire purchase price under either benefit-of-the-bargain or out-of-
pocket damages. Id. In discussing damages, the Texas Supreme Court explained that
both out-of-pocket and benefit-of-the-bargain damages are recoverable under the
DTPA, and each is determined at the time of sale. Id. at 817. However, the Court
remanded the case for a new trial not only because the charge failed to instruct the
jury on the proper measure of direct damages but also because there was some
evidence that Arthur Andersen’s misrepresentation was a producing cause of
PECO’s loss. Id.
We conclude that Arthur Andersen is not relevant to the appeal currently
before us. The final judgment in this case did not include a damages award under the
DTPA, and the challenges on appeal only concern the proper measure of damages
41
for real property—which the Texas Supreme Court addressed in Gilbert Wheeler
and Houston Unlimited, as we previously discussed. See 449 S.W.3d at 476; 443
S.W.3d at 825. Likewise, the judgment in the Mid-State Homes was based on DTPA
claims and the judgment in this appeal is based on claims arising from fraud;
therefore, Mid-State Homes is also not relevant here. See 1999 Tex. App. LEXIS
7705, at **2-3.
To be fair, we agree the Appellees submitted a DTPA claim to the jury, and
the jury awarded them damages on that claim. But since the Appellees also prevailed
on their claims of negligence, negligent misrepresentation, fraud, and gross
negligence, they moved for judgment on those claims, not on their claim under the
DTPA.
The evidence at trial reflects the condition of the home deteriorated and
increased in severity over time, and the evidence supports the Brewers’ allegations
that their damages were permanent, not temporary. Therefore, based on the evidence
the trial court did not err in allowing them to recover for the diminished fair market
value of their property. See Gilbert Wheeler, Inc., 449 S.W.3d at 476 (“[W]hen an
injury to the same property is permanent, the owner is entitled to damages
commensurate with the loss in the fair market value to the property as a whole.”).
“[T]he trier of fact is afforded considerable discretion in evaluating opinion
testimony on the issue of damages.” See McGalliard v. Kuhlmann, 722 S.W.2d 694,
42
697 (Tex. 1986). We conclude the trial court did not abuse its discretion by allowing
the jury to consider awarding damages according to Question 13 on a record where
some evidence was admitted that would allow a reasonable factfinder to conclude
the home suffered a reduction in market value after it was purchased as a result of
the defendants’ conduct. See id.; see also Houston Unlimited, Inc., 443 S.W.3d at
825. Additionally, the Appellants have not shown that the trial court’s submission
of Question 13 probably resulted in an improper judgment. See Tex. R. App. P.
44.1(a)(1); Williams, 85 S.W.3d at 166. We overrule Appellants’ second and third
issues.
Plaintiffs’ Fourth Amended Petition
In issue four, Appellants argue that the trial court erred in permitting
Appellees to amend their pleadings after trial and after entry of the Final Judgment
because the amendment “operated as a surprise which was severely prejudicial” to
the Defendants. According to Appellants, filing the Fourth Amended Petition was
prejudicial on its face because Appellants “never had a need to designate a rebuttal
expert on appraisals as Appellees’ designated expert had never rendered an opinion
germane to Appellees’ pleadings[]” or “to present rebuttal evidence to Rotholz’s
opinions.”
We generally review a trial court’s decision to allow or deny a trial
amendment before the judgment is signed under an abuse of discretion standard. See
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Greenhalgh v. Serv. Lloyds Ins. Co., 787 S.W.2d 938, 939 (Tex. 1990); Candelier v.
Ringstaff, 786 S.W.2d 41, 43 (Tex. App.—Beaumont 1990, writ denied). However,
after judgment is rendered, it is generally too late to amend a pleading. See Banker
v. Banker, 517 S.W.3d 863, 881-82 (Tex. App.—Corpus Christi–Edinburg 2017,
pet. denied). But we will not reverse a judgment on appeal unless the Appellant
demonstrates that the trial court erred and that the error probably caused the rendition
of an improper judgment. See Tex. R. App. P. 44.1(a)(1).
“An issue is tried by consent when a party introduces evidence to support an
issue that is not included in the written pleadings and no objection is made to the
lack of pleadings.” See Mid-State Homes, Inc., 1999 Tex. App. LEXIS 7705, at *5
(citing Duncan Land & Exploration, Inc. v. Littlepage, 984 S.W.2d 318, 327-28
(Tex. App.—Fort Worth 1998, pet. denied)). Texas Rule of Civil Procedure 67
provides,
When issues not raised by the pleadings are tried by express or implied
consent of the parties, they shall be treated in all respects as if they had
been raised in the pleadings. In such case such amendment of the
pleadings as may be necessary to cause them to conform to the evidence
and to raise these issues may be made by leave of court upon motion of
any party at any time up to the submission of the case to the Court or
jury, but failure so to amend shall not affect the result of the trial of
these issues; provided that written pleadings, before the time of
submission, shall be necessary to the submission of questions, as is
provided in Rules 277 and 279.
Tex. R. Civ. P. 67 (emphasis added). The party opposing the amendment bears the
burden to show that it was prejudiced—that the amendment asserts a new cause of
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action or defense or caused “surprise.” State Bar of Tex. v. Kilpatrick, 874 S.W.2d
656, 658 (Tex. 1994); Greenhalgh, 787 S.W.2d at 939. An amended pleading that
changes only the amount of damages sought does not necessarily operate as a
surprise. See Greenhalgh, 787 S.W.2d at 940.
“A petition is sufficient if it gives fair and adequate notice of the facts upon
which the pleader bases his claim[,]” and “[w]hen there are no special exceptions, a
petition will be construed liberally in favor of the pleader.” Roark v. Allen, 633
S.W.2d 804, 809-10 (Tex. 1982). Where the facts are set up in the pleadings, and the
cause of action as alleged is supported by the evidence, the measure of damages is a
question of law for the court to determine. See McDaniel Bros. v. Wilson, 70 S.W.2d
618, 622 (Tex. App.—Beaumont 1934, writ ref’d); see also Boswell v. Farm &
Home Sav. Ass’n, 894 S.W.2d 761, 771 (Tex. App.—Fort Worth 1994, writ denied);
Hedley Feedlot, Inc. v. Weatherly Trust, 855 S.W.2d 826, 834-35 (Tex. App.—
Amarillo 1993, writ denied). “It is not necessary for a complainant to allege the
measure of damages in order to recover damages.” Hedley Feedlot, Inc., 855 S.W.2d
at 834; see also Bowen v. Robinson, 227 S.W.3d 86, 94 (Tex. App.—Houston [1st
Dist.] 2006, pet. denied) (“Under Texas law, a party is not required to plead his
measure of damages.”). “When a party erroneously alleges the measure of his
damages, and the competent testimony reveals the proper measure, the court may
charge the jury on the proper measure.” Bowen, 227 S.W.3d at 95.
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In their Third Amended Petition, the live petition when the trial began, the
Brewers prayed for damages as follows:
Pursuant to the Texas Civil Practice and Remedies Code and common
law, the Brewers are entitled to recover actual damages; economic
damages; consequential damages; compensatory damages; reasonable
cost of repairs necessary to cure any construction defect; reasonable and
necessary cost for the replacement of any damaged goods in the
residence; reasonable and necessary engineering and consulting fees;
reasonable expenses of temporary housing reasonably necessary during
the repair period; reduction in current market value, if any, after the
construction defect is repaired if the construction defect is a structural
failure; mental anguish damages; reasonable and necessary attorneys’
fees; court costs; exemplary damages; treble damages; pre-judgment
interest; post-judgment interest; and all other relief to which the
Brewers may be entitled.
In Plaintiffs’ Fourth Amended Petition, the Brewers included the following prayer
for relief (we have italicized that portion containing a change from the Third
Amended Petition):
Pursuant to the Texas Civil Practice and Remedies Code and common
law, the Brewers are entitled to recover actual damages; economic
damages; consequential damages; compensatory damages; reasonable
costs of repairs necessary to cure any construction defect; reasonable
and necessary cost for the replacement of any damaged goods in the
residence; reasonable and necessary engineering and consulting fees;
reasonable expenses of temporary housing reasonably necessary during
the repair period; diminution of value of their property and/or a
reduction in the current market value of Unit 55, whether assessed at
the time of the purchase of Unit 55 by the Brewers or at any time
subsequent thereto; mental anguish damages; reasonable and necessary
attorneys’ fees; court costs; exemplary damages; treble damages; pre-
judgment interest; post-judgment interest; and all other relief to which
the Brewers may be entitled.
46
Appellants do not claim that the Brewers asserted a new cause of action in
their Fourth Amended Petition, but only that the Brewers pleaded a diminution in
value of the property for the first time in this amended pleading. The Brewers’ Third
Amended Pleading requested damages for “reduction in current market value,” with
the qualifying clause, “if any, after the construction defect is repaired if the
construction defect is a structural failure[.]”
As we have explained, a party need not plead a measure of damages provided
its petition pleads sufficient facts from which the court may determine the proper
measure of damages as a matter of law. See McDaniel Bros., 70 S.W.2d at 622. The
reworded measure of damages in the Fourth Amended Petition was raised by Todd
Rotholz’s testimony and report. See id. Defense counsel cross-examined Rotholz at
trial, and nothing in the record show the defense was not prepared for his testimony
or that the defense had not received Rotholz’s report during discovery.8 As far back
as their Original Petition, which they filed in October 2017, the Brewers had prayed
for damages that included but were not limited to the “[r]eduction in current market
value” of their townhome after “the construction defect [in it had been] repaired if
the construction defect [was due to] a structural failure[.]” Nothing in the record
shows the Defendants filed special exceptions to the damages allegation in the
Brewers’ Third Amended Petition, so any defects as to damages in the allegations
8
Rotholz’s report is in the record and contains a bates-stamp.
47
are deemed to have been waived. See Tex. R. Civ. P. 90 (any defect in pleading that
is not identified in a written special exception is deemed waived).
The record reflects that the trial court granted the Brewers leave to file their
Fourth Amended Petition on July 16, 2021, at 3:43:50 p.m. The court signed the
Final Judgment on July 16, 2021, at 3:46:30 p.m. Based on the record before use,
we conclude that the trial court did not abuse its discretion in granting the Brewers
leave to file the petition. See Candelier, 786 S.W.2d at 43. Additionally, Appellants
have not met their burden to show surprise or prejudice, and they have not shown
that the filing of the Fourth Amended Petition probably caused the rendition of an
improper judgment. See Tex. R. App. P. 44.1(a)(1); Greenhalgh, 787 S.W.2d at 940.
We overrule Appellants’ fourth issue.
Exemplary Damages and Prejudgment Interest
Appellants’ fifth issue argues that the trial court erred in submitting questions
on exemplary damages to the jury and rendering a Final Judgment that awards
exemplary damages because “there can be no exemplary damages [] if there are no
actual damages.” 9 Because we overruled Appellants’ second and third issues on
9
In their Statement Regarding Oral Argument, Appellants state that their fifth
issue relates to “improper and incorrect instruction on corporate veil piercing[.]” To
the extent Appellants intended to raise an issue related to corporate veil piercing,
they have waived the issue for failure to brief it. See Tex. R. App. P. 38.1(i);
Fredonia State Bank v. Gen. Am. Life Ins. Co., 881 S.W.2d 279, 284-85 (Tex. 1994)
(“error may be waived by inadequate briefing[]”); Atkins-January v. State Office of
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actual damages, we also overrule the fifth issue. Appellants’ sixth issue argues that
the trial court erred in awarding prejudgment interest in the Final Judgment because
the Brewers did not plead their claim for damages until after the trial court rendered
its Final Judgment. We have already determined that the jury’s responses to
Question 13 and the Final Judgment awarding $67,500 damages based on the
damages awarded by the jury were supported by sufficient pleadings and evidence.
Therefore, we also overrule Appellants’ sixth issue. See Tex. R. App. P. 47.1.
Having overruled all Appellants’ issues, we affirm the trial court’s Final
Judgment.
AFFIRMED.
_________________________
LEANNE JOHNSON
Justice
Submitted on January 25, 2023
Opinion Delivered July 27, 2023
Before Golemon, C.J., Horton and Johnson, JJ.
Risk Mgmt., No. 09-16-00439-CV, 2017 Tex. App. LEXIS 7330, at **3-5 (Tex.
App.—Beaumont Aug. 3, 2017, no pet.) (mem. op.).
49