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Ebby Halliday Real Estate, Inc. v. Dugas

Court of Appeals of Texas, Fifth District, Dallas

April 9, 2019


          On Appeal from the County Court at Law No. 3 Dallas County, Texas Trial Court Cause No. CC-15-04871-C

          Before Justices Brown, Schenck, and Pedersen, III



         This appeal arises from the sale of a condominium unit. The buyer, Kevin Dugas, claims the seller's agent, Ebby Halliday Real Estate, Inc. (Ebby), misrepresented the property's square footage. Ebby appeals a jury verdict awarding Dugas damages. Among other issues, Ebby challenges the legal sufficiency of the evidence to support the jury's finding that Ebby made a false representation. We conclude the evidence is legally insufficient to support the jury's finding. We therefore reverse and render.


         The seller, Elizabeth McLarry, retained Ebby to put her condominium unit on the market. Karen Estes, a salesperson employed by Ebby, listed the property on the Multiple Listing Service (MLS).[1] The MLS database contains a drop-down menu from which the listing agent can select "appraisal," "builder," "tax," or "other" as the source of the subject home's square-footage information. Estes selected "tax" for the unit in question, as do most agents when listing properties. Based on this selection, the MLS database accessed the unit's square footage from Dallas Central Appraisal District (DCAD) records and uploaded this information into the MLS listing. The listing noted the property's square footage as "1, 178 / Tax." The listing also contained a narrative field prepared by Estes in which she described the property as a "[d]arling 1, 178 sq. ft." unit. The foregoing descriptions were consistent with DCAD's records, which list both the "[l]iving [a]rea" and the "[t]otal [a]rea" of the unit as 1, 178 square feet. However, this is not the unit's "livable" square footage. This number includes the balcony and garage.

         Dugas's agent, Lisa DeWaal, gave him a copy of the MLS listing. Dugas was a first time home buyer, and he relied on the listing's description of the property's square footage in deciding to make an offer to purchase the property. Dugas purchased the condominium in March 2015 for $130, 000. Although a buyer's lender typically requires an appraisal of the property, in this case Dugas borrowed the purchase money from his father. Thus, no appraisal was performed. After the transaction closed, Dugas measured the unit and discovered that its "livable" square footage-i.e., the interior climate-controlled space excluding the balcony and garage-was only 885 square feet. In other words, the unit was approximately twenty-five percent smaller than Dugas had understood it to be.

         Dugas sued Ebby and Estes and asserted claims for (i) violations of the Deceptive Trade Practices Act (DTPA), see Tex. Bus. & Com. Code Ann. §§ 17.41-.63, (ii) statutory fraud, see id. § 27.01, and (iii) negligent misrepresentation. Dugas also asserted a claim against Ebby for its negligent supervision and training of Estes. The defendants generally denied Dugas's claims, and they also pleaded section 17.506 of the Business Commerce Code. Id. § 17.506(a)(1)-(2). This section provides an affirmative defense to a DTPA claim if the defendant gave reasonably and timely written notice to the plaintiff of the defendant's reliance on written information from official government records or other sources that, if false, the defendant did not know and could not reasonably have known of such falsity. Id.

         Dugas's DTPA and statutory fraud claims against Ebby were tried before a jury in April 2017.[2] At the conclusion of the trial, the jury found that Ebby engaged in false, misleading, or deceptive trade practices and committed statutory fraud. The jury awarded Dugas $32, 335.48, which is the amount that he claims he overpaid for the subject unit, plus additional sums for attorney's fees. However, in response to Question 2 of the charge, the jury found for Ebby regarding its DTPA affirmative defense.

         Following the jury's verdict, Dugas filed a motion for entry of judgment and to disregard certain answers in the verdict. Ebby countered by filing a motion for judgment notwithstanding the verdict. On June 26, 2017, the court held a hearing on both motions. A little over a month later, on July 31, the court rendered judgment awarding Dugas $32, 335.48, plus additional sums for attorney's fees. The judgment also awarded Dugas pre- and post-judgment interest and costs. Moreover, the judgment stated the court had disregarded the jury's answer to Question 2 because no evidence supported this answer. Ebby then filed this appeal.


         I. Statutory Fraud

         Ebby raises eight issues, two of which relate to Dugas's DTPA claim, four of which relate to his statutory fraud claim, and two of which relate to other topics. It appears that the court's judgment awarded damages to Dugas based on his statutory fraud claim.[3] Therefore, we will begin by considering Ebby's issues related to Dugas's fraud claim. Question 5 of the court's charge asked whether Ebby "committed statutory fraud" against Dugas. According to the charge, statutory fraud occurs when, among other elements, "there is a false representation of a past or existing material fact." See Tex. Bus. & Com. Code Ann. § 27.01(a)(1) (providing statutory basis for the foregoing definition). The jury answered "yes" to Question 5. It also found, in response to Question 6, that Ebby was not actually aware that the subject representation was false. See id. § 27.01(c) (providing for exemplary damages if a defendant makes a false representation with actual awareness of such falsity). Ebby's third issue challenges the legal sufficiency of the evidence to support the jury's finding that Ebby misrepresented the size of the condominium unit.

         To prevail on this issue, Ebby must demonstrate that no evidence supports the jury's finding. Graham Central Station, Inc. v. Pena, 442 S.W.3d 261, 263 (Tex. 2014) (per curiam). "We will sustain a legal sufficiency challenge if the evidence offered to prove a vital fact is no more than a scintilla." Id. (citation and internal quotation marks omitted). In conducting this analysis, "we credit evidence that supports the verdict if reasonable jurors could have done so and disregard contrary evidence unless reasonable jurors could not have done so." Id. (citation and internal quotation marks omitted). We must determine "'whether the evidence at trial would enable reasonable and fair-minded people to reach the verdict under review.'" Id. (quoting City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005)).

         As discussed previously, the MLS listing prepared by Estes referred to the subject unit as "1, 178 / Tax." Ebby contends this notation meant 1, 178 square feet according to DCAD. It argues the MLS listing accurately reported the DCAD records' description of the property's size.[4] Dugas responds that a reasonable juror could have found that the term "/ Tax" either had no meaning or meant the amount of square footage on which the unit would be taxed-in other words, the unit's "livable" square footage. In Dugas's view, Ebby's statement was false because in reality the unit had only 885 "livable" square feet. As support, he points to Estes's testimony that the reference to 1, 178 square feet in Ebby's listing (i) was intended to convey "livable" square feet and (ii) was false if the actual square footage was less.

         A statutory fraud clam requires proof of a misrepresentation, not an omission. Tex. Bus. & Com. Code Ann. § 27.01(a); cf. Bradford v. Vento, 48 S.W.3d 749, 755 (Tex. 2001) (noting, as a general rule, that "[s]ilence may be equivalent to a false representation only when the particular circumstances impose a duty on the party to speak and he deliberately remains silent."). We must focus on the actual language of the purported misrepresentation, i.e., "1, 178 / Tax," as opposed to what Ebby subjectively intended it to say. Cf. Great Am. Ins. Co. v. Primo, 512 S.W.3d 890, 893 (Tex. 2017) ("A contract's plain language controls, not what one side or the other alleges they intended to say but did not." (citation and internal quotation marks omitted)). In interpreting the term "/ Tax," we may consider its commonly accepted meaning within the real estate industry. Cf. RSUI Indem. Co. v. The Lynd Co., 466 S.W.3d 113, 121 n.1 (Tex. 2015) (stating same in context of construing undefined contract terms). However, the commonly accepted meaning "may not apply when the language and its context demonstrate that the parties intended a different meaning." Id.

         A. What Was the Representation?

         The evidence established that MLS listings can be accessed only by licensed real estate agents who are members of the MetroTex Association of Realtors, though a prospective homebuyer may obtain an individual listing from his or her agent or in an "open house." Terri Cox, a retained expert for Ebby, testified that the term "/ Tax" is understood within the real estate industry to mean the source of the square footage information, which in this case was DCAD. Likewise, both Estes and DeWaal understood "/ Tax" in the subject listing to mean that tax records were the source of the listing's description of the unit's size. In addition, both Estes and Cox testified that a home's square footage is understood in the industry to mean its "livable" square feet. Based on this evidence, we interpret "1, 178 / Tax" as a representation by Ebby that DCAD had reported the subject unit as 1, 178 "livable" square feet.

         B. Was There a ...

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