Court of Appeals of Texas, Fifth District, Dallas
Appeal from the 193rd Judicial District Court Dallas County,
Texas Trial Court Cause No. DC-17-10734
Justices Whitehill, Partida-Kipness, and Pedersen, III.
PEDERSEN, III JUSTICE.
an appeal from a trial court's order denying
appellants' recovery from the Real Estate Recovery Trust
Account maintained by the Texas Real Estate Commission. We
Philips Jacob Vallakalil and Reeja Susan Philips, owned a
plot of land on which they wanted to build a house. In early
2016, appellants met Jeremy Eric Larsen (Larsen). According
to appellants, Larsen introduced himself as a real estate
agent with experience in planning, designing, estimating,
bidding, financing, and constructing homes. In April 2016,
appellants entered into a contract with Jeremy Larsen Homes,
L.L.C. (LLC) for the construction of a new house on their
property. The contract is titled New Home Construction
Contract, Fixed Price. The contract names Larsen as the
contractor's representative; Larsen signed the contract
as Managing Member of LLC.
construction project experienced numerous problems and
delays. Finally, on August 27, 2017, appellants filed suit
against LLC for breach of contract, breach of the duty of
good faith and fair dealing, negligence, and violations of
the Deceptive Trade Practices Act (DTPA). Two days later, LLC
filed its petition for Chapter 7 bankruptcy protection. In
November 2017, appellants amended their petition to add
Larsen individually as a defendant, alleging that Larsen was
personally liable for the conduct of LLC that caused
appellants' damages. They asserted additional claims,
including claims for fraudulent inducement/statutory fraud,
civil conspiracy, and unjust enrichment. They also filed a
partial nonsuit, dismissing their claims against LLC only.
When Larsen failed to file an answer to appellants'
amended petition, they filed a motion for default judgment
against Larsen only. On December 28, 2017, the trial court
signed a final default judgment against Larsen, awarding
appellants $603, 453.00 in actual damages, $7, 500.00 in
attorneys' fees, costs and expenses of $2, 726.00, and
post-judgment interest. On January 12, 2018, Larsen filed his
petition for Chapter 7 bankruptcy protection.
filed a proof of claim in Larsen's bankruptcy
proceedings. Unable to collect on their judgment, they filed
an application for an order directing payment from the Real
Estate Recovery Trust Account (RTA). The Texas Real Estate
Commission (Commission) opposed appellants' request for
relief on the basis that Larsen was not acting in his
capacity as a real estate licensee when he committed the acts
made the basis of appellants' claims. Following a hearing
of appellants' application, the trial court found in
favor of the Commission and denied appellants'
application. Appellants now appeal the trial court's
raise two issues on appeal, arguing that the trial court
erred by (1) denying their application for payment from the
RTA, and (2) refusing to find that appellants were entitled
to the statutory maximum of $100, 000 from the RTA.
Commission is charged with administration and enforcement of
the Real Estate License Act. Tex. Occ. Code Ann. §
1101.151(a)(1). Subchapter M of the act directs the
Commission to establish a fund, the RTA, to reimburse
aggrieved persons who suffer actual damages caused by an act
described in § 1101.652(a-1)(1) or (b), committed by a
real estate license holder. See Tex. Occ. Code Ann.
§§ 1101.601(a)(1), 1101.652(a-1), (b); see also
Tex. Real Estate Comm'n v. Nagle, 767 S.W.2d 691,
693 (Tex. 1989). Section 1101.652 contains a long list of
actions for which real estate licensees may be disciplined or
have their license suspended or revoked. The RTA compensates
persons who are unable to collect from a real estate licensee
for judgment awards based on these specified types of
wrongdoing. Tex. Occ. Code Ann. § 1101.606(a); see
also Nagle, 767 S.W.2d at 693 ("A person who has a
judgment against a real estate broker which is uncollectable
may file a verified claim in the court in which the judgment
was rendered and, upon notice to the commission and the
judgment debtor, apply for an order directing payment out of
the fund."). Generally, the claimant's damages must
relate to the licensee's dishonest conduct.
Nagle, 767 S.W.2d at 693.
Commission does not agree that a claimant's application
meets these statutory requirements, a hearing may be
scheduled. Tex. Occ. Code Ann. § 1101.608. The
Commission may appear to protect the RTA from spurious or
unjust claims or to ensure compliance with statutory
requirements for recovery. Id. § 1101.608(b).
At the hearing, the claimant must show, among other things,
that its prior judgment is against a licensed real estate
broker who caused claimant's damages while acting as a
broker. Id. §§ 1101.601(a), 1101.607(1).
Here, the parties agree that Larsen maintained a real estate
license during the relevant time period. They do not agree
that Larsen's individual actions caused appellants to
suffer damages or that Larsen was acting in the capacity of a
real estate broker when he committed the complained-of acts.
presents a question of statutory construction, which we
review de novo. Tex. Health Presbyterian Hosp. of Denton
v. D.A., 569 S.W.3d 126, 131 (Tex. 2018); see Wilson
v. Bloys, 169 S.W.3d 364, 368 (Tex. App.-Austin 2005,
pet. denied). When interpreting a statute, our primary task
is to ascertain and effectuate the intent of the legislature.
Tex. Gov't Code Ann. § 312.005; Youngkin v.
Hines, 546 S.W.3d 675, 680 (Tex. 2018). When a statute
is clear and unambiguous, we are to enforce the plain meaning
of the statute. Wilson, 169 S.W.3d at 368. Further,
we read every word, phrase, and expression in a statute as if
it were deliberately chosen and presume the words excluded
from the statute are done so purposefully. Tex. Real
Estate Comm'n v. Bucurenciu, 352 S.W.3d 828, 831
(Tex. App.-San Antonio 2011, no pet.).
mere fact that Larsen had a real estate license does not
entitle appellants to reimbursement from the RTA. Appellants
were required to show that Larsen caused their damages
while acting as a real estate broker. See
Bucurenciu, 352 S.W.3d at 831-32 (real estate licensee
engaged in financing or mortgage brokering was not engaged in
real estate brokerage services so aggrieved client could not
recover from RTA). In their first amended application for
reimbursement, appellants asserted that their judgment
against Larsen was based on facts showing that he engaged in
fraud or misrepresentation in violation of Sections
1101.652(a-1)(1) or 1101.652(b) of the Texas Occupations
Code. During the hearing, appellants argued that Larsen
engaged in this fraud and misrepresentation in his capacity
as a real estate broker and not as a contractor, stating
"in addition to being a constructor or constructing the
home itself, he did planning, designing, estimating, bidding,
financing, and constructing the home." The court
questioned this assertion, noting that appellants'
pleadings alleged improper construction, not wrongful
activities as a broker. Indeed, appellants' motion for
default judgment alleged that "[p]er the terms of the
contract, Larsen was obligated to reimburse Plaintiff these
costs as a consequence of Larsen's construction mistakes,