Celotex Corp., Inc. v. Gracy Meadow Owners Ass'n, Inc.

• Decision Date: 03 February 1993
• Docket Number: No. 3-90-078-CV,3-90-078-CV
• Citation: 847 S.W.2d 384
• Parties: The CELOTEX CORPORATION, INC. and Nelson Johnson, Appellants, v. GRACY MEADOW OWNERS ASSOCIATION, INC., Appellee.
• Court: Texas Court of Appeals

Page 384

847 S.W.2d 384

The CELOTEX CORPORATION, INC. and Nelson Johnson, Appellants, v. GRACY MEADOW OWNERS ASSOCIATION, INC., Appellee.

No. 3-90-078-CV.

Court of Appeals of Texas,

Austin.

Feb. 3, 1993.

Rehearing Overruled March 10, 1993.

Aaron L. Jackson, Ford & Ferraro, Austin, for appellants.

Mark L. Perlmutter, Perlmutter & Reagan, L.L.P., Austin, for appellee.

Before CARROLL, C.J., and JONES and KIDD, JJ.

JONES, Justice.

Gracy Meadow Owners Association, Inc. ("Gracy Meadow"), appellee, sued the Celotex Corporation, Inc. ("Celotex") and Nelson Johnson, appellants, alleging that Celotex breached express and implied warranties and that both appellants made representations in violation of the Deceptive Trade Practices Act ("DTPA"), Tex.Bus. & Com.Code Ann. § 17.46(b) (West 1987), in connection with roofing shingles manufactured by Celotex. Celotex and Johnson counterclaimed for attorney's fees, asserting that Gracy Meadow's DTPA claims were groundless and brought in bad faith. Following a jury trial, the trial court rendered judgment that Gracy Meadow take nothing from Johnson and that Johnson take nothing from Gracy Meadow. The trial court rendered judgment that Gracy Meadow recover from Celotex $205,713.17 in damages, attorney's fees, and pre-judgment interest.

Celotex perfected an appeal from the trial court's judgment. ¹ On appeal, Celotex complains that (1) the trial court abused its discretion in allowing Gracy Meadow to file a trial amendment alleging pre-installation misrepresentations and in denying Celotex's motion for continuance; (2) the trial court erred in awarding "additional damages" under the DTPA, Tex.Bus. & Com.Code Ann. § 17.50(b) (West Supp.1993); and (3) the trial court erred in denying Celotex's motion for judgment based on an imputed-knowledge theory. We will modify the portion of the judgment awarding Gracy Meadow additional damages and affirm the judgment as modified.

BACKGROUND

Celotex manufactured shingles that were installed on the roof of the Gracy Meadow condominiums in 1980 and 1981. In February 1989 Gracy Meadow, on behalf of the 102 individual condominium owners, filed suit against Celotex and Johnson alleging that the shingles were defective. In its last petition submitted before trial, Gracy Meadow alleged that Celotex had breached express and implied warranties made in connection with the shingles. Further, Gracy Meadow alleged that Johnson, as an employee of Celotex, had made post-installation representations in violation of the DTPA.

During trial, Gracy Meadow submitted four trial amendments to the court, one of which was entitled "DTPA Trial Amendment" The Celotex Corporation warrants Sol-Seal/15 shingles against manufacturing defects for a period of 15 years, provided installation has been made as directed on the shingle wrapper. The monetary liability of Celotex for its portion of the cost of repair or replacement shall be prorated on the basis of the number of unexpired years remaining on the warranty....

                the trial court ultimately granted Gracy Meadow leave to file the amendments.  In the DTPA trial amendment, Gracy Meadow alleged that "Celotex represented in their shingle wrapper and product literature that the type of shingles used on the Gracy Meadow condominiums were fifteen year shingles and had long lasting beauty.  The foregoing misrepresentations are violations of DTPA Sections 17.46(b)(5) or (7)."   At the time this trial amendment was allowed, both the shingle wrapper and the brochure (product literature) had already been submitted into evidence by Celotex.  The shingle wrapper indicated that the shingles were "Sol-Seal/15 Shingles."   The brochure stated that "Celotex Sol-Seal shingles will stay in place and look beautiful for years to come."   In addition, the brochure included the following
                

This product carries a limited warranty (15 years), a copy of which will be provided at the place of purchase or upon written request....

Before submitting its DTPA trial amendment, Gracy Meadow had not made a misrepresentation claim based on pre-installation representations. Celotex objected to this trial amendment. After the trial court granted the trial amendment, Celotex filed a written motion for continuance alleging that it was prejudiced in preparing and maintaining its defense. The trial court overruled Celotex's motion.

The jury returned a verdict in favor of Gracy Meadow. When asked whether Celotex had misrepresented the particular standard, quality, or grade of the shingles or had misrepresented the characteristics, ingredients, uses, or benefits of the shingles, the jury returned an affirmative finding. The jury found actual damages in the amount of $29,240 as a result of the misrepresentations. The jury refused, however, to find that Celotex had committed the misrepresentations knowingly. The jury also found that one of the condominium owners, who had learned of the defect earlier than the others, was barred by the applicable statute of limitations from recovering from Celotex in this lawsuit.

In addition, Gracy Meadow secured a post-verdict finding by the trial court that each owner suffered $286.66 2/3 in damages--the proportionate share of the $29,240 total actual damages found by the jury. The court allowed Gracy Meadow to recover this amount on behalf of each of the 101 recovering owners, resulting in an actual damage award of $28,953.33. The trial court then trebled the share of damages awarded to each owner and rendered judgment that Gracy Meadow recover a total of $86,860 in actual and statutory damages. The court also awarded $115,000 in attorney's fees and $3,853.17 in pre-judgment interest.

TRIAL AMENDMENT/MOTION FOR CONTINUANCE

In its first point of error, Celotex asserts a two-fold complaint. First, Celotex complains that the trial court abused its discretion in granting the DTPA-misrepresentation trial amendment. Second, Celotex complains that, after allowing the amendment, the trial court abused its discretion in denying Celotex's motion for continuance.

Rule 66 of the Texas Rules of Civil Procedure governs the procedure at issue in the present case:

[I]f during the trial any defect, fault or omission in a pleading, either of form or substance, is called to the attention of the court, the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the allowance of such amendment would prejudice him in maintaining his action or defense upon the merits. The court may grant a postponement to Tex.R.Civ.P. 66.

enable the objecting party to meet such evidence.

The standards for reviewing the grant of a trial amendment and denial of a motion for continuance are well established: the decision of the trial court may not be overturned on appeal except on a showing of abuse of discretion. See Missouri-Kansas-Texas R.R. v. Alvarez, 703 S.W.2d 367, 370 (Tex.App.--Austin 1986, writ ref'd n.r.e.) (trial amendment); Acco Int'l Paper Stock Corp. v. Sea-Land Serv., Inc., 615 S.W.2d 855, 857 (Tex.Civ.App.--Houston [1st Dist.] 1981, no writ) (motion for continuance). A court abuses its discretion when it makes a decision without reference to any guiding rules or principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex.1985). In other words, if the trial court's action was arbitrary and unreasonable, such action constitutes an abuse of discretion. However, the mere fact that the trial judge decided the matter differently than an appellate court would have does not demonstrate an abuse of discretion. Id. at 242.

Celotex asserts two bases for concluding that the trial court abused its discretion in the present case. First, Celotex complains that the trial court abused its discretion in granting Gracy Meadow's trial amendment because Gracy Meadow was not diligent in investigating its claim and amending its pleadings before trial. Second, Celotex complains that the trial court abused its discretion by denying Celotex's motion for continuance after it had granted the trial amendment. Celotex claims it was prejudiced in maintaining its defense by this denial because Gracy Meadow's DTPA-misrepresentation claim "reshaped" the cause of action previously asserted in a way that Celotex could not have anticipated.

1. Lack of Diligence

Gracy Meadow does not dispute the fact that a party's diligence, or lack thereof, is a proper matter for the trial court to consider when deciding whether to grant a trial amendment. However, Gracy Meadow contends that this factor is not controlling in the present case. We agree.

Celotex cites several cases for the proposition that a party's lack of diligence is a sufficient basis for the trial court to deny such party's request for leave to file a trial amendment. See, e.g., Robert Nanny Chevrolet Co. v. Evans & Moses, 601 S.W.2d 411, 413 (Tex.Civ.App.--Beaumont 1980, no writ). However, these cases do not support the proposition that a party's lack of diligence, by itself, mandates a denial of the trial amendment. Celotex also cites Merit Drilling Co. v. Honish, 715 S.W.2d 87 (Tex.App.--Corpus Christi 1986, writ ref'd n.r.e.), as an example of a trial court's abuse of discretion in granting a trial amendment when the party requesting such has not been diligent in asserting its claim. However, Merit Drilling is distinguishable in that the appellate court identified "at least four good reasons" why the trial amendment should be denied. Id. at 91. In other words, lack of diligence was not the sole basis for determining that the trial court abused its discretion in granting the trial amendment.

In the instant case, conflicting evidence was presented in the trial court regarding Gracy Meadow's alleged lack of diligence. Celotex contends that Gracy Meadow was not diligent in pursuing its claim because Gracy Meadow knew of the wrapper containing the alleged...