Farrell v. Hunt

• Decision Date: 18 June 1986
• Docket Number: No. C-4736,C-4736
• Parties: Joe C. FARRELL, Petitioner, v. Cliff G. HUNT, et ux., Respondents.
• Court: Texas Supreme Court

Page 298

714 S.W.2d 298

Joe C. FARRELL, Petitioner, v. Cliff G. HUNT, et ux., Respondents.

No. C-4736.

Supreme Court of Texas.

June 18, 1986.

Rehearing Denied Sept. 10, 1986.

Mark Cohen, Henry Novak, Austin, for petitioner.

Benjamin Shefman, New Braunfels, E.S. Prashner, Ertel and Prashner, San Antonio, for respondents.

WALLACE, Justice.

Joe C. Farrell sued Cliff and Roberta Hunt, for a wrongful foreclosure under a deed of trust and under Art. 17.50(b)(1) of the TEX. BUS. & COMM. CODE. The trial court rendered judgment for Hunt and the court of appeals affirmed. We affirm the judgment of the court of appeals.

In June of 1974, Farrell purchased 15 acres of land in Blanco County from Hunt. The sale was made through Ja Wahrmund, a real estate agent with whom Hunt had listed the property. The sale price was $12,048.00; $1,248.00 down, the assumption of a note to a previous owner, Kolodzie, in the amount of $8,200.00; and a note to Hunt in the amount of $3,405.58. The sum of the monthly installments was $136.82. Rather than send the monthly payment by separate checks to Kolodzie and Hunt, as required by the notes, Farrell sent one note for $136.82 to Wahrmund. Wahrmund then sent his check to each note holder.

The jury found: (1) Farrell was not in default on the note as of the date of foreclosure; (2) Hunt's conduct was "an unconsionable act or course of action to Joe Farrell's detriment"; (3) the unconscionable act was a producing cause of damage to Joe Farrell; (4) the conduct was committed knowingly; and (5) the market value of the property on July 1, 1980 was $23,665.00.

We first must determine if Farrell proved damages for wrongful foreclosure. In a wrongful foreclosure suit the measure of damages is the difference between the value of the property in question at the date of foreclosure and the remaining balance due on the indebtedness. League City State Bank v. Mares, 427 S.W.2d 336, 340 (Tex.Civ.App.--Houston [14th Dist.] 1968, writ ref'd n.r.e.); Black v. Burd, 255 S.W.2d 553, 556 (Tex.Civ.App.--Fort Worth 1953, writ ref'd n.r.e.).

In Paragraph Nine of his amended petition, Farrell pleaded for "the difference between the market value of the Blanco County property on July 1, 1980, and the amount the plaintiff owed on both the Kolodzie and Hunt notes on that date." Paragraph Ten of the petition stated:

The combined conduct of the aforesaid defendants constitutes an unconscionable course of action committed knowingly by defendants and a producing cause of plaintiff's actual damages as aforesaid and plaintiff is entitled to recover from said defendants the statutory measure of damages as provided for in Art. 17.50(b)(1) of the TEX. BUS. & COMM. CODE. (Emphasis added).

In his opening statement to the jury, Farrell's attorney stated:

... and what we're going to ask you to do is award Mr. Farrell the difference between the price that Mr. Hunt sold that property for after he took it away from Mr. Farrell and the outstanding balance that was due on the property. Money that Mr. Farrell still owed. To award us the difference between those two figures.

The jury was not asked to determine the indebtedness due on the property at the time of foreclosure. No objection was made by either party to the omission of such issue. The amount due on the Hunt note at the time of foreclosure was proven. The market value as found by the jury as of the date of foreclosure is not questioned; however, no mention was ever made of the amount due on the Kolodzie note.

In the trial court, Hunt moved for judgment on the ground that Farrell had not proven damages. The trial court granted that motion. The court of appeals affirmed the trial court judgment on those grounds.

Farrell contends that he proved the amount of indebtedness due on the property as a matter of law. However, there is no evidence of the amount due on the Kolodzie note. He thus failed to prove his common law damages for wrongful foreclosure.

Farrell further urges the court to hold that he is entitled to $23,665.00, trebled, which the jury found to be the market value of the property at the date of foreclosure. He contends that by submitting that issue, he established his damages and it was Hunt's burden to prove the indebtedness. This contention is made on the basis that "the DTPA should be construed to permit the plaintiff to use the easiest measure of damages available at common law designed to arrive at a total loss." Even if we were to use such a test, Farrell still did not prove any damages at common law.

The Deceptive Trade Practices Act is intended to permit the adversely affected plaintiff to recover the greatest amount of "actual damages" alleged and established as caused by the defendant. Woo v. Great Southwestern Acceptance Corp., 565 S.W.2d 290, 298 (Tex.Civ.App.--Waco 1978, writ ref'd n.r.e.). Actual damages means those recoverable at common law. Brown v. American Transfer & Storage Co., 601 S.W.2d 931, 939 (Tex.1980).

Farrell did not prove actual damages according to any theory under common law. Therefore, the court of appeals correctly rendered judgment for Hunt and we affirm that judgment.

KILGARLIN, J., dissents in an opinion in which McGEE and SPEARS, JJ., join.

KILGARLIN, Justice, dissenting.

I respectfully dissent. The Hunts wrongfully foreclosed on a person not in default. Not only do they get to keep all of the payments made to them by Farrell, they get the property, resell it and keep an additional $11,000 in profit from the resale. This is not justice; it is highway robbery. However, it is not simply because the court's opinion flies in the face of equity that I dissent; the opinion does not correctly state the law.

The court is correct when it states that a plaintiff who prevails in a wrongful foreclosure suit is entitled to recover the difference between the value of the property in question at the date of foreclosure and the remaining balance due on the indebtedness. League City State Bank v. Mares, 427 S.W.2d 336, 340 (Tex.Civ.App.--Houston [14th Dist.] 1968, writ ref'd n.r.e.). However, the court is incorrect when it concludes that Farrell had to prove the amount due on the Kolodzie note.

On August 31, 1974 (not June, 1974) Joe Farrell signed an earnest money agreement to purchase the Blanco County property from Cliff and Roberta Hunt. The agreement provided for a total sales price of $12,048, less a cash down payment of $1,248. On December 1, 1974, Farrell signed a real estate lien note payable to the Hunts for $3,405.58 (Hunt note). This note was secured by a separate deed of trust also signed by Farrell (Hunt deed of trust).

The Hunts' right to foreclose on the Blanco County property arose exclusively from the deed of trust executed by Farrell. The Hunt deed of trust provided:

That in the event of default in the payment of any installment, principal or interest of the note hereby secured ... Beneficiary may elect ... to declare the entire principal indebtedness hereby...