Dickinson State Bank v. Ogden

• Court: Texas Civil Court of Appeals
• Writing for the Court: Before COLEMAN; COLEMAN
• Citation: Dickinson State Bank v. Ogden, 624 S.W.2d 214 (Tex. Ct. App. 1981)
• Decision Date: 02 July 1981
• Docket Number: No. 17775,17775
• Parties: DICKINSON STATE BANK, Appellant, v. John Wallace OGDEN et ux., Appellees. (1st Dist.)

Page 214

624 S.W.2d 214

DICKINSON STATE BANK, Appellant, v. John Wallace OGDEN et ux., Appellees.

No. 17775.

Court of Civil Appeals of Texas, Houston (1st Dist.).

July 2, 1981.

Rehearing Denied Sept. 17, 1981.

Krist, Gunn, Weller & Neumann, William G. Neumann, Jr., Houston, for appellant.

McConnico, Gregg & Jones, Dalton L. Jones, Dick H. Gregg, Houston, for appellees.

Before COLEMAN, C. J., and PEDEN and DOYLE, JJ.

On Motion for Re-hearing

COLEMAN, Chief Justice.

This suit arises from the breach of a construction contract wherein Alan Thayer, doing business as John Thayer Construction Company, Inc., (Thayer) agreed to build a home for John and Carol Ogden (Ogdens) on property they owned for an ultimate price of $89,380. To finance the construction of the home, Thayer received an interim loan of $66,000 from appellant, Dickinson State Bank (Bank), giving his note therefor. As security for his loan, Thayer pledged a mechanic's lien contract with power of sale and the $66,000 note.

Thayer abandoned the job before completion and the bank posted the property for sale under its mechanic's and materialman's lien. The Ogdens filed suit seeking to enjoin the sale and secured a temporary injunction. In its answer to this suit the bank sued for recovery on its note and the foreclosure of its lien. The Ogdens then amended their pleadings to include a cause of action for recovery under the Deceptive Trade Practices Act, Tex.Bus. & Com.Code Ann. § 17.41 et seq. (Vernon Supp. 1980-81). ¹

After a jury trial the court rendered judgment for the Ogdens for treble the amount of damages found by the jury reduced by the difference between the amount of the note ($66,000) and the cost to complete the contract as found by the jury. The trial court also awarded attorney's fees to the Ogdens and cancelled the lien on the Ogden property.

By its first point of error the Bank asserts that the trial court erred in overruling its motion for instructed verdict because appellees were not "consumers" as defined in the DTPA. In § 17.45(4) a consumer is defined as "an individual-who seeks or acquires by purchase or lease any goods or services." This definition was considered by the Supreme Court of Texas in Cameron et ux. v. Terrell and Garrett, Inc., 618 S.W.2d 535 (1981), where the court said:

We find no indication in the definition of consumer in section 17.45(4), or any other provision of the act, that the legislature intended to restrict its application only to deceptive trade practices committed by persons who furnish the goods or services on which the complaint is based. Nor do we find any indication that the legislature intended to restrict its application by any other similar privity requirements. In contrast, privity requirements have been dispensed with altogether in negligence suits, and, for the most part, privity requirements have also been abolished in strict liability suits. ... The Act is designed to protect consumers from any deceptive trade practice made in connection with the purchase or lease of any goods or services... To this end, we must give the Act, under the rule of liberal construction, its most comprehensive application possible without doing any violence to its terms.

Consumer is defined in section 17.45(4) only in terms of a person's relationship to a transaction in goods or services. It does not purport to define a consumer in terms of a person's relationship to the party he is suing. Section 17.45(4) does nothing more than describe the class of persons who can bring suit for treble damages under section 17.50... It does not say who a consumer can sue, section 17.50(a)(1), the subsection under which this suit was tried, expressly stated that a consumer can bring a suit if he has been adversely affected by "the use or employment by any person of an act or practice declared to be unlawful in section 17.46."

Terrell & Garrett is a person under the Act. We, therefore, hold that a person need not seek or acquire goods or services furnished by the defendant to be a consumer as defined in the DTPA... Whether the Act should be so restricted is a matter for the legislature and not this Court. Accordingly, we hold the Camerons are consumers because they purchased the goods on which their complaint is based. (citations omitted)

The Ogdens purchased goods and services from Thayer. There is evidence that they were adversely affected by "the use or employment" by the Bank "of an act or practice declared to be unlawful in § 17.46." Under the holding of the Supreme Court in Cameron the Ogdens are consumers as that word is defined in the DTPA.

The unlawful deceptive trade practices complained of by the Ogdens and alleged to be the producing cause of their damage are:

1. Representing that an agreement confers or involves the rights, remedies or obligations which it does not have or involve, or which are prohibited by law.

2. Breach of an express or implied warranty.

3. Committing an unconscionable action or course of action.

In answers to the special issues submitted the jury found (1) that the defendant Bank represented to the Ogdens that it would protect the interim construction funds through periodic inspections and the withholding of loan funds until percentages of the completion of the house were finished; (2) that the Bank paid out the construction monies to the Alan Thayer Construction Company, Inc., without using ordinary care in making said payments; (3) that the Bank's failure to use ordinary care in making payments to the construction company was a producing cause of damages to the Ogdens; (4) that the Bank failed to use ordinary care in inspecting the work in progress on the Ogdens' house; (4a) that the Bank's failure to use ordinary care in inspecting the work in progress was a producing cause of damages to the Ogdens; (5) that on April 9, 1979, the Bank through its agent, servant and employee or attorney began foreclosure proceedings on the builder's and mechanic's lien on the Ogdens' property at a time it did not have a right to do so; (5a) that the Bank's attempt to foreclose was a producing cause of damages to the Ogdens; (6) that the Dickinson State Bank attempted to collect the sum of $66,000 plus interest and attorney's fees under the note and contract executed by the Ogdens on August 3, 1978, at a time when it was not due; (7) that the attempt by the Bank to collect $66,000 plus interest and attorney's fees was a producing cause of damages to the Ogdens; (8) that the reasonable cost of completing the Ogden residence in a good and workman-like manner according to the plans and specifications on or about 20 November 1978 was $38,000; (9) that the reasonable cost of completing the Ogden residence in a good and workman-like manner according to the plans and specifications on 1 May 1980 was $45,600; (10) that the Dickinson State Bank had no written notice of the Ogdens' complaint about the Bank's manner of disbursement of the interim construction funds, or the bank's manner of inspection of the Ogdens' house, before 3 April 1980.

A general damage issue was submitted by special issue number eleven reading:

What sum of money, if any, do you find from a preponderance of the evidence will compensate John and Carol Ogden for their damages, if any, as a result of the acts of the Dickinson State Bank?

You are instructed you may consider the following in connection with your answer to this issue:

(a) Increases in interest costs from January 1, 1979 to date.

Answer: Zero

(b) Loss of fees paid to Guaranty Federal Savings and Loan Association.

Answer: Zero

(c) Cost to complete improvements in a good and workman-like manner according to the plans and specifications on 1 May 1980.

Answer: $45,600.

The Ogdens rely on these findings to sustain their cause of action under the Deceptive Trade Practices Act. In appellees' original brief they expressly waived recovery under a tort or negligence theory. The Bank's points of error twenty-seven through forty-two complain of the trial court's errors in submitting special issues 1 through 4a for the reason that there were no pleadings or evidence to support the submissions.

Mr. Ogden testified on direct examination that there was a discussion concerning draws at a meeting attended by Mr. Fitzpatrick and Mr. Austin of the Bank and Mr. Thayer and the Ogdens. There was also a discussion of a special account for the Alan Thayer Construction Company, Inc., for the construction of the house. Mr. Ogden gathered from the discussions that draws would be made from the proceeds of the $66,000 note and that inspections would be made.

On cross-examination Mr. Ogden testified that he made no special request of the bank in connection with the interim construction loan and that he did not inquire about the Bank procedure in such matters. He did not ask the Bank to handle the disbursement of the funds in any particular matter or to give him an accounting of the money disbursed. He recognized at that time that the relationship between the Bank and Mr. Thayer was none of his business "other than the common goal." While there is testimony that a discussion of draws and inspections was had at this meeting, there is no testimony as to the content of any agreements or representations made at that time. There is evidence of the Bank's customary practices, but there is no evidence that the Bank expressly represented that these customary practices would be followed. There is no evidence that the Ogdens knew the Bank's practices with regard to disbursements and inspections. In the absence of testimony establishing the specific representations made to the Ogdens by the Bank, there is no evidence of warranties express or implied. There is no evidence to support the jury's answer to special issue number one.

There is no evidence that the Bank breached a duty owed to the Ogdens arising from contract or from the common law arising out of their inspections of the work in progress or from the...