Phila. Indem. Ins. Co. v. White

• Decision Date: 18 December 2013
• Docket Number: No. 04–12–00721–CV.,04–12–00721–CV.
• Citation: 421 S.W.3d 252
• Parties: PHILADELPHIA INDEMNITY INSURANCE COMPANY a/s/o Mirsan, L.P., d/b/a Sienna Ridge Apartments, Appellant v. Carmen A. Carmen A. WHITE, Appellee.
• Court: Texas Court of Appeals

421 S.W.3d 252

PHILADELPHIA INDEMNITY INSURANCE COMPANY a/s/o Mirsan, L.P., d/b/a Sienna Ridge Apartments, Appellant

v.Carmen A. Carmen A. WHITE, Appellee.

No. 04–12–00721–CV.

Court of Appeals of Texas, San Antonio.

Dec. 18, 2013.

Paul Vigushin, Law Offices of Paul Vigushin, P.C., Dallas, TX, for Appellant.

Sheryl Gray Rasmus, Rasmus Law Firm, Austin, TX, for Appellee.

Sitting: SANDEE BRYAN MARION, MARIALYN BARNARD, and LUZ ELENA D. CHAPA, Justices.

OPINION

Opinion by: SANDEE BRYAN MARION, Justice.

Appellant Philadelphia Indemnity Insurance Company (“Philadelphia”), as subrogee of Mirsan, L.P. d/b/a Sienna Ridge Apartments, sued appellee Carmen White for damages related to an apartment fire. Philadelphia alleged White caused the damage to her apartment and several adjacent apartments and she was liable for all damages according to a provision in her apartment lease. After a jury found in favor of Philadelphia, White moved for a judgment notwithstanding the verdict (“JNOV”), and the trial court granted the motion. We affirm.

BACKGROUND

After completing graduate school out-of-state, White obtained employment in San Antonio, Texas. Her friend recommended White live in her apartment complex, Sienna Ridge Apartments. White never visited the complex, but handled her rental agreement via telephone and email before moving to San Antonio. Although White did not negotiate the terms of the lease or hire an attorney to review the lease, she ultimately signed documents consisting of a rental application and a standard Texas Apartment Association (“TAA”) lease contract. Once she moved into her apartment, White's parents purchased and gifted her a new washer and dryer. White connected the washer herself, but when she plugged the cord she had purchased for the dryer into the outlet, the outlet sparked. White then asked Sienna Ridge for assistance in connecting the dryer, and, about a week after she moved into the apartment, a Sienna Ridge maintenance man installed the dryer. Several days later, while using the dryer, a fire started inside the dryer. White's entire belongings perished in the fire, and her apartment and several adjacent units were destroyed.

White testified she had used the dryer two or three times prior to the day the fire occurred and experienced no problems. On the day of the fire, White placed several items inside the dryer, including two decorative pillows, sheets, a duvet, a blanket, and a bed pillow. After starting the dryer, she sat down to watch television and immediately began to smell a “burning smell” coming from the laundry area. She opened the dryer's door and saw flames inside the drum. She attempted to extinguish the flames with a fire extinguisher, but was unsuccessful because she was not able to get it to work. She left her apartment to call 911.

Sienna Ridge filed a damage claim with its insurance carrier, Philadelphia, which in turn, adjusted and paid the claim. Philadelphiathen sued White for damages in excess of $83,000, asserting its subrogation rights against her. Philadelphia's initial claims were based on negligence. Philadelphia amended its pleadings to add breach of contract, alleging White violated paragraph 12 of the TAA lease by failing to timely reimburse Sienna Ridge for the damage caused by the fire.

The case was submitted to the jury on both the negligence and breach of contract claims. The jury found White was not negligent, but found she breached the lease contract, and awarded Philadelphia its claimed damages, plus attorney's fees. Thereafter, Philadelphia filed a motion for entry of judgment, and White filed a motion for JNOV. After a hearing on these motions and additional briefing, the trial court granted White's motion for JNOV and denied Philadelphia's motion for entry of judgment. Ultimately, the court signed the final judgment entering a take-nothing judgment in favor of White. Philadelphia then perfected this appeal.

STANDARD OF REVIEW

A trial court may grant a JNOV if a directed verdict would have been proper because a legal principle precludes recovery. Fort Bend Cnty. Drainage Dist. v. Sbrusch, 818 S.W.2d 392, 394 (Tex.1991); AMS Const. Co., Inc. v. K.H.K. Scaffolding Houston, Inc., 357 S.W.3d 30, 40 (Tex.App.-Houston [1st Dist.] 2011, pet. dism'd); Tex.R. Civ. P. 301. In her motion for JNOV and on appeal, White contends paragraph 12 of the TAA lease is unenforceable as a matter of law because it: (1) is ambiguous; (2) lacks consideration; (3) violates the Texas Property Code; (4) is void on public policy grounds; (5) is unconscionable; (6) fails to meet the fair notice requirements of risk-shifting contractual clauses; and (7) improperly creates a new theory of strict liability. Because the trial court did not specify the grounds for granting White's JNOV motion, we must uphold the trial court's ruling if any of the stated grounds in the motion uphold the judgment. Sbrusch, 818 S.W.2d at 394. It is Philadelphia's burden to discredit the grounds White raised in her motion. Id. Because we believe the grounds of ambiguity and void on public policy grounds are dispositive, we address only those two grounds for the trial court's JNOV.

AMBIGUITY

Paragraph 12 of the TAA lease states as follows:

DAMAGES AND REIMBURSEMENT. You must promptly pay or reimburse us for loss, damage, consequential damages, government fines or charges, or cost of repairs or service in the apartment community due to: a violation of the Lease Contract or rules; improper use; negligence; other conduct by you or your invitees, guests or occupants; or any other cause not due to our negligence or fault.....

[Emphasis added.]

White first argues paragraph 12's catch-all provision—“or any other cause not due to our negligence or fault”—is ambiguous. Whether a contract is ambiguous is a question of law for the court. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex.2003). In determining whether the contract is ambiguous, courts look at the contract as a whole, in light of the circumstances present when the parties entered into the contract. Universal Health Servs., Inc. v. Renaissance Women's Group, P.A., 121 S.W.3d 742, 746 (Tex.2003). When a contract is found to be ambiguous, the parties' intent is a determination for the factfinder. Coker v. Coker, 650 S.W.2d 391, 394–95 (Tex.1983); see Lenape Res. Corp. v. Tenn. Gas Pipeline Co., 925 S.W.2d 565, 574 (Tex.1996) (noting if meaning of contract is uncertain, or is reasonably susceptible to more than one interpretation, then it is ambiguous and its meaning must be resolved by finder of fact). When a written contract is so worded that it can be given a certain definite legal meaning or interpretation, it is not ambiguous, and the court construes it as a matter of law. Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex.2003). In construing a contract, we look to ascertain the parties' intent as expressed in the instrument. See Seagull Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342, 345 (Tex.2006).

We conclude the language of paragraph 12 is not ambiguous-“You must promptly pay or reimburse us for loss, damage, consequential damages ... due to ... other conduct by you or your invitees, guests or occupants; or any other cause not due to our negligence or fault.” We hold that under the plain language of the paragraph, only one interpretation can be construed: White is required to pay Sienna Ridge for any damages to the apartment complex as long as the apartment complex was not at fault. Accordingly, the trial court could not have granted White's motion for JNOV based on the ground of ambiguity. Because we conclude the challenged portion of paragraph 12 is not ambiguous, we next consider whether the language violates public policy.

VOID ON PUBLIC POLICY GROUNDS

Philadelphia asserts the trial court erred in granting White's motion for JNOV and overturning the jury's finding that White breached paragraph 12 of her apartment lease. Philadelphia argues paragraph 12's catch-all provision rendered White liable for all the damage caused by the fire that started in her dryer. Philadelphia presented evidence at trial claiming there were only two causes of the fire: White's misuse of the dryer or a dryer defect. Despite the jury finding White was not negligent, Philadelphia argues that because White owned the dryer, she is contractually liable, pursuant to paragraph 12, to pay Sienna Ridge for all damages, including those damages related to areas outside of her apartment and adjacent units. Philadelphia contends her failure to pay Sienna Ridge for the fire damage constituted a breach of the lease contract.

White focuses her public policy argument on the language of paragraph 12 that states a tenant “must promptly pay or reimburse [Sienna Ridge] for loss, damage, consequential damages, government fines or charges, or cost of repairs or service in the apartment community due to ... any ... cause not due to [Sienna Ridge's] negligence or fault.” [Emphasis added.] White argues this language is against public policy because it makes a tenant liable for damage to the entire apartment complex for accidental losses, acts of God, criminal acts of another, or any other act of someone or something unassociated with the tenant or Sienna Ridge. We agree.

We recognize Texas's strong public policy in favor of preserving the freedom of contract. Tex. Const. art. I, § 16 (“No bill of attainder, ex post facto law, retroactive law, or any law impairing the obligation of contracts, shall be made.”); see also Churchill Forge, Inc. v. Brown, 61 S.W.3d 368, 370 (Tex.2001) (observing that competent parties in Texas have the utmost liberty of contracting). “We also recognize the importance of the ‘indispensable partner’ to the freedom of contract: contract enforcement.” Fairfield Ins. Co. v. Stephens Martin Paving, LP, 246 S.W.3d 653, 664 (Tex.2008). However, freedom of contract is not unbounded.Id. “As a rule, parties have the right to contract as t...