First Financial Development Corp. v. Hughston

• Decision Date: 06 September 1990
• Docket Number: No. 13-89-350-CV,13-89-350-CV
• Citation: 797 S.W.2d 286
• Parties: FIRST FINANCIAL DEVELOPMENT CORPORATION, et al., Appellants, v. Janie HUGHSTON, Appellee.
• Court: Texas Court of Appeals

Page 286

797 S.W.2d 286

FIRST FINANCIAL DEVELOPMENT CORPORATION, et al., Appellants, v. Janie HUGHSTON, Appellee.

No. 13-89-350-CV.

Court of Appeals of Texas,

Corpus Christi.

Sept. 6, 1990.

Rehearing Overruled Oct. 11, 1990.

Don E. Williams, Royal H. Brin, Jr. and James K. Peden, III, Dallas, for appellants.

Ed Stapleton, John Haywood and Dana Allison Lester, Brownsville, for appellee.

Before NYE, C.J., and KEYS and SEERDEN, JJ.

OPINION

KEYS, Justice.

Janie Hughston, appellee, sued First Financial Development Corporation, Williams Construction Corporation, and the Sun Tide III Home Owners Association for damages caused by the negligent construction and maintenance of an outside stairway in Sun Tide III condominiums. By twelve points of error, First Financial and Williams Construction complain of a judgment in Hughston's favor in the sum of $987,396.90. We reverse and render the judgment in favor of First Financial and affirm the judgment against Williams Construction.

Sun Tide III is one of many condominium projects located on South Padre Island. First Financial was the developer for the Sun Tide complex, and as such, it hired Williams Construction Corporation to build Sun Tide III, the third unit in the complex. Sun Tide III was opened in June, 1982.

The Condominium Declaration required First Financial to turn over possession and control of Sun Tide III to the Home Owners Association upon sale of 80% of the units. This occurred in August 1983. After that date, the Home Owners Association operated and maintained Sun Tide III.

Many persons fell while going up and down a stairway in the south west corner of Sun Tide III. One witness testified that persons visiting the complex were falling on the stairs daily, particularly children. Although the Owners Association was aware of the dangerous condition of the stairway, it took no remedial action. The stairway was poorly lit, open to the elements, covered with a slick carpet, and poorly maintained. In addition, the hand rail violated the housing codes in two respects: it was built too high and at an improper angle. On November 22, 1986, Janie Hughston fell down these stairs and received serious injuries.

In her original petition, the plaintiff filed suit against Sun Tide Condominiums III, a corporation, alleging use of a dangerous floor covering and improper maintenance. In her first amended original petition, she added other defendants, including, Sun Tide III Condominium Association, Sun Tide III Owners Association, Inc. ¹ as well as appellants herein, alleging various acts of negligence connected with the design, construction and maintenance of the stairway. In her third amended petition, she alleged that eleven specific acts of negligence were the cause of the injury and that the defendants were liable under a per se negligence theory.

The Home Owners Association and appellants answered with a general denial on December 5, 1988. On December 15, 1989, the Home Owners Association filed a separate general denial. On April 21, 1989, they filed an answer setting forth various defenses, and a cross action against appellants. Trial was set for May 8, 1989.

During the pretrial proceedings, the Home Owners Association assumed the burden of going forward with the defense of the suit, and appellants did very little to contribute. Some time between April 21, 1989, and May 1, 1989, the Home Owners Association settled; however, they were not dismissed and remained party defendants. On May 1, 1990, exactly seven days before trial, appellants filed a cross action against the Home Owners Association and an amended answer which raised limitations as a new affirmative defense. The trial court granted a motion to strike the amended answer and cross action.

Trial was to the court. Final Judgment was rendered soley against First Financial Development Corporation and Williams Construction Company for $987,396.90. The court filed findings of fact and conclusions of law.

By its first and second points of error, appellant First Financial complains that the judgment against it should be reversed because a transferor of real property is not liable for injuries suffered by third parties after transfer of possession to the transferee. In support, First Financial cites the Restatement (Second) of Torts §§ 351, 352, and 353 as well as Beall v. Lo-Vaca Gathering Company, 532 S.W.2d 362 (Tex.Civ.App.--Corpus Christi 1975, writ ref'd n.r.e.). We sustain this point of error.

The Restatement provides:

§ 351 A vendor of land is not subject to liability for physical harm caused to his vendee or others while upon the land by any dangerous condition, whether natural or artificial, which comes into existence after the vendee has taken possession.

§ 352 Except as stated in § 353, a vendor of land is not subject to liability for physical harm caused to his vendee or others while upon the land after the vendee has taken possession by any dangerous condition, whether natural or artificial, which existed at the time that the vendee took possession.

§ 353 (1) A vendor of land who conceals or fails to disclose to his vendee any condition, whether natural or artificial, which involves unreasonable risk to persons on the land, is subject to liability to the vendee and others upon the land with the consent of the vendee or his subvendee for physical harm caused by the condition after the vendee has taken possession, if

(a) the vendee does not know or have reason to know of the condition of the risk involved, and

(b) the vendor knows or has reason to know of the condition, and realizes or should realize the risk involved, and has reason to believe that the vendee will not discover the condition or realize the risk.

(2) If the vendor actively conceals the condition, the liability stated in Subsection (1) continues until the vendee discovers it and has reasonable opportunity to take effective precautions against it. Otherwise the liability continues only until the vendee has had reasonable opportunity to discover the condition and to take such precautions.

In Lo-Vaca, this court, in affirming a summary judgment, held that the Restatement (Second) of Torts, § 352, 353 barred recovery by a third party against a transferor for injuries caused by a dangerous condition on the land of which the transferee is aware. We find Lo-Vaca factually similar to this case because there the transferor constructed the dangerous condition on the property prior to the conveyance, the transferee was put on notice of the dangerous condition, and a third party was injured by the condition after the conveyance. Under these facts, the court held that the third party was barred from suing the transferor as a matter of law for injuries caused by dangerous conditions.

The first issue under these points is whether First Financial is a transferor (vendor under restatement terminology). Appellee argues that First Financial is not a prior transferor because of continuing involvement with the property.

The trial court's findings of fact and conclusions of law indicate that First Financial was "the previous owner and occupier" of Sun Tide III and its "vendor". The condominium by-laws indicate that upon conveyance of 80% of the condominiums by the developer the Board of Directors of Sun Tide III Home Owners Association would be appointed. From the time of the first meeting, the Association would be responsible for "management, maintenance operation and administration of the ... Common Elements." Stairways are included in the definition of Common Elements. The uncontroverted evidence indicated that 80% of the condominiums were conveyed by August, 1983. Thus, at that time First Financial became a transferor.

Under the Restatement view, and this court's holding in Lo-Vaca, a transferor of real property is generally not liable for injuries caused on real property after the conveyance. See Davis v. Esperado Mining Co., 750 S.W.2d 887 (Tex.App.--Houston [14th Dist.] 1988); Moeller v. Fort Worth Capital Corp., 610 S.W.2d 857 (Tex.Civ.App.--Fort Worth 1980, writ ref'd n.r.e.); Neuhaus v. Daniels, 430 S.W.2d 906 (Tex.Civ.App.--Amarillo 1968, writ dism'd w.o.j.). In factually similar cases this is the rule in other jurisdictions. Bailey for Bailey v. Gammell, 34 Wash.App. 417, 661 P.2d 612 (1983); Wilson v. Thermal Energy, Inc., 21 Wash.App. 153, 583 P.2d 679 (1978); Chapman v. Lily Cache Builders, Inc., 48 Ill.App.3d 919, 6 Ill.Dec. 176, 362 N.E.2d 811 (1977). This rule bars liability for all dangerous conditions. Adroit phrasing of the pleadings to encompass design defects, per se negligence, or any other theory of negligence will not avoid the obvious justice of this rule. The exception to the rule exists where the transferor fails to disclose or actively conceals the dangerous condition that causes the injury. This exception, however, does not come into play where the transferee discovers or should have discovered the dangerous condition and has a reasonable opportunity to take precautions. § 353(2).

Without citing any authority, appellee argues that Lo-Vaca is distinguishable because of First Financial's continuing involvement with the property. We find no merit in this argument. First Financial's continuing involvement allegedly consisted of ownership of a number (less than 20%, the exact number is not indicated in the record) of condominium units. No findings suggested that First Financial continued to own any interest in the condominium. In fact, the findings speak of First Financial's ownership interest in the past tense. Thus, no findings were made to support appellee's assertion that Lo-Vaca is distinguishable on this basis, and we find this distinction, if it exists, unpersuasive. Even if such findings were made, appellee fails to direct this court's attention to unfavorable controlling precedent. Dutcher v. Owens, 647 S.W.2d 948, 951 (Tex.1983), limits liability of a condominium owner to the pro rata share of...