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JIK Cayman Bay Exchange LLC v. Medina

Court of Appeals of Texas, Fifth District, Dallas

May 2, 2018

JIK CAYMAN BAY EXCHANGE LLC, JIK ARBORS LLLP, AND JKT EXCHANGE LLC, Appellants
v.
OLIVER MEDINA AND RICHARD SIMPSON, Appellees

          On Appeal from the County Court at Law No. 5 Dallas County, Texas Trial Court Cause No. CC-13-03572-E

          Before Justices Lang-Miers, Myers, and Boatright.

          MEMORANDUM OPINION

          JASON BOATRIGHT JUSTICE.

         A jury found that appellants JIK Cayman Bay Exchange LLC, JIK Arbors LLLP, and JKT Exchange LLC (collectively, JIK) fraudulently induced appellees Oliver Medina and Richard Simpson to enter into residential leases at The Arbors of Las Colinas (the Arbors), and jurors awarded appellees actual and exemplary damages and attorney's fees. JIK challenges the sufficiency of the evidence supporting each element of appellees' fraud claim and the damages awarded them. Alternatively, JIK challenges the provision of the trial court's judgment making JIK's liability for the exemplary damages award joint and several. We conclude the evidence is insufficient to support the fraud verdict, so we reverse the trial court's judgment and render judgment that appellees take nothing.

         Background

         Simpson moved into an apartment at the Arbors in July 2006; Medina moved into his apartment there in September 2011. On December 3, 2012, a fire destroyed their apartment building. The fire started in the apartment of another tenant in the same building, Mohsin Zia. It destroyed all of appellees' personal possessions.

         At the heart of this case is a lease provision requiring all tenants to have a renter's liability insurance policy with limits of at least $100, 000. Appellees allege that unidentified leasing agents working for JIK told them before they moved in that all tenants were required to carry this insurance, that JIK enforced the insurance requirement, and that if a tenant were discovered not to have the required insurance, he would be evicted in three days. The agents assured appellees that the insurance provision allowed the Arbors to attract "a better clientele" and to keep out "riffraff" and "bad people that didn't like to have insurance." Appellees contend that they leased their apartments and renewed those leases in reliance on JIK's representations. After the fire, all parties learned that Zia had allowed his insurance coverage to lapse several months earlier.

         Appellees sued JIK, contending they were fraudulently induced to lease their apartments by misrepresentations and false promises concerning the insurance requirement and how it would be enforced. The jury found in appellees' favor, awarding actual and exemplary damages to both Simpson and Medina. JIK appeals.

         Fraud in the Inducement

         The trial court's charge on appellees' fraud in the inducement claim asked jurors whether JIK committed fraud against appellees and instructed that fraud could take two forms: (1) a false representation of a past or existing material fact, made to a person to induce that person to enter into a contract, and relied upon by that person in entering into that contract; or (2) a false material promise to do an act, made with the intention of not fulfilling it, for the purpose of inducing a person to enter into a contract, and relied upon by that person in entering into that contract. The charge also asked the jury to determine the amount necessary to compensate appellees for their "damages, if any, that were proximately caused by such fraud."

         Misrepresentations or False Promises

         In its first issue, JIK contends that there are seven bases for concluding that no evidence supports the jury's fraud findings.[1] The first of these bases is JIK's contention that no evidence establishes that any representation or promise allegedly made by the leasing agents was false. Appellees' theories of misrepresentation and false promises were based on similar allegations. They contend that representatives of the Arbors told them:

(1) all tenants were required to have $100, 000 in liability insurance;
(2) the Arbors enforced this requirement; and
(3) if the Arbors discovered a tenant was not abiding by the requirement, the tenant would be evicted in three days.

         It was appellees' burden at trial to prove these representations were false. Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001). We do not challenge the credibility of appellees, who testified these representations were made; credibility was an issue for the jury. Golden Eagle Archery v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003). However, we conclude that, assuming JIK made the ...


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