Investors, Inc. v. Hadley

• Decision Date: 23 September 1987
• Docket Number: No. 3-86-021-CV,3-86-021-CV
• Citation: 738 S.W.2d 737
• Parties: INVESTORS, INC., Appellant, v. Charles HADLEY and Gayle Hadley, Appellees.
• Court: Texas Court of Appeals

Page 737

738 S.W.2d 737

INVESTORS, INC., Appellant, v. Charles HADLEY and Gayle Hadley, Appellees.

No. 3-86-021-CV.

Court of Appeals of Texas Austin.

Sept. 23, 1987.

Rehearing Denied Nov. 4, 1987.

David G. Slater, Austin, for appellant.

Bruce E. Anderson, Austin, for appellees.

Before SHANNON, C.J., and BRADY and ABOUSSIE, JJ.

SHANNON, Chief Justice.

Appellees Charles Hadley and Gayle Hadley sued Investors, Inc. in the district court of Williamson County claiming Investors violated the Deceptive Trade Practices Act, Tex.Bus. & Comm.Code Ann. § 17.46(b) (Supp.1987). Upon trial to a jury, the district court rendered judgment for the Hadleys. This Court will reverse the judgment in part and affirm the judgment in part.

The Hadleys pleaded that Investors made certain misrepresentations to them in the process of providing a loan commitment. Pursuant to the claimed misrepresentations, the Hadleys believed that Investors would provide permanent financing for the purchase of their house even though the house was not completely constructed. Investors, however, refused to provide permanent financing for the partially completed house. The Hadleys asserted that, as a result, they were forced to draw upon their cash reserves and to obtain permanent financing on less favorable terms than those supposedly offered by Investors.

The jury answered that in connection with the loan transaction Investors had committed several acts in violation of the Deceptive Trade Practices Act, that such acts were producing causes of actual damage to the Hadleys, and that such acts were committed knowingly. Based upon the answers of the jury, the district court rendered judgment awarding the Hadleys $42,000 in actual and "additional" damages and $29,922.81 in attorney's fees.

By point of error one, Investors claims that the district court erred in submitting special issue ten "without an instruction regarding the proper measure of damages." In response, the Hadleys suggest that Investors failed to preserve the claimed error for review by tendering a substantially correct instruction.

Special issue ten reads:

What sum of money, if any, if paid now in cash, do you find would fairly and reasonably compensate the Plaintiffs for the actual damages they have incurred?

In answering this issue, you are instructed not to consider damages, if any, for mental anguish, if any.

Investors does not complain that the accompanying instruction was erroneous but complains instead that the district court failed to submit its tendered additional explanatory instruction giving the measure of damages.

Texas R.Civ.P. 279 Ann. provides in this connection:

Failure to submit a definition or explanatory instruction shall not be deemed a ground for reversal of the judgment unless a substantially correct definition or explanatory instruction has been requested in writing and tendered by the party complaining of the judgment. (Emphasis supplied).

Investors' tendered instruction provided "Actual damages" constitutes the difference between the contractual rate of interest and the rate of interest the Plaintiffs were required to pay to obtain money from another source, and may also include other special damages, reasonably within the contemplation of the parties.

In a deceptive trade practices cause of action, the prevailing plaintiff is entitled to recover, inter alia, "the amount of actual damages found by the trier of fact." Tex.Bus. & Com.Code Ann. § 17.50(b)(1) (Supp.1987). Actual damages are "those recoverable at common law." Brown v. American Transfer & Storage Co., 601 S.W.2d 931 (Tex.1980). The Deceptive Trade Practices Act "does not extend the scope of actual damages beyond these common law rules." Building Concepts, Inc. v. Duncan, 667 S.W.2d 897 (Tex.App.1984, writ ref'd n.r.e.); Great State Petroleum v. Arrow Rig Service, 706 S.W.2d 803 (Tex.App.1986, no writ). Accordingly, although the defendant's acts may literally be a "producing cause" of damage to the plaintiff, the plaintiff may only be compensated for what he shows to be "actual damages "--damages recoverable at common law. See § 17.50(a).

As reflected in Investors' requested instruction, at common law, the basic measure of damages for breach of an agreement to lend is the difference between the contractual rate of interest and the rate of interest appellant obtained from another loan source. Davis v. Small Business Investment Co., 535 S.W.2d 740 (Tex.Civ.App.1976, writ ref'd n.r.e.); Collin County Savings & Loan v. Miller Lumber Co., 653 S.W.2d 114 (Tex.App.1983, no writ). Both parties, however, agree that the Hadleys suffered no damage in this respect since the subsequent loan acquired by them carried a lower interest rate. Instead, the Hadleys sought only consequential damages --additional expenses and costs incurred by them as a result of Investors' failure to provide the loan. Accordingly, it is that part of Investors' requested instruction, directed to special damages, which must be examined.

In a breach of loan agreement case, consequential damages are recoverable when "reasonably within the contemplation of the parties at the time the agreement was made." Davis, supra (Emphasis supplied); see Mead v. The Johnson Group, Inc., 615 S.W.2d 685 (Tex.1981) (stating this as general rule for recovery of consequential damages). The critical "time frame" element of consequential damages was omitted from Investors' proposed instruction. As Investors' instruction would allow the jury to consider occurrences subsequent to the agreement to provide the loan in determining whether the Hadleys' damages were foreseeable to Investors, the tendered instruction was not substantially correct. The point of error is overruled.

By points of error seven through nine, Investors attacks, by "no evidence" and "insufficient evidence" points, the district court's submission of special issues one, four, and seven. Each of these issues related to whether Investors had committed a deceptive trade practice. Special issue one inquired whether Investors "caused confusion or misunderstanding as to the source and/or approval of the loan." Special issue four inquired whether Investors "represented that the loan had approval, benefits, or quantities which it did not have." Special issue seven asked whether Investors had engaged in "any unconscionable action or course of action...." Because the jury's answer to special issue four is supported by sufficient evidence, we need not address points seven and nine.

In considering a "no evidence" point, the reviewing court must reject all evidence contrary to the jury's findings and consider only the facts and circumstances which tend to support those findings. Renfro Drug Co. v. Lewis, 149 Tex. 507, 235 S.W.2d 609 (1950). In reviewing factual sufficiency points of error, the reviewing court considers all of the evidence to determine whether the findings are so against the great weight and preponderance of the evidence as to be manifestly unjust. In re King's Estate, 150 Tex. 662, 244 S.W.2d 660 (1951).

By its affirmative answer to special issue four the jury concluded, inter alia, that "Defendant represented that the loan had ... benefits" which it did not have. In support of the jury's answer, the Hadleys' evidence tended to show that Investors' representative, Doug Freer, had falsely represented that Investors would provide a loan before the house was completely finished.

Gayle Hadley testified that Freer had said "we could close [the loan] at the rough-in stage" and that "he would give us a mortgage to the rough-in stage." Gayle Hadley further testified that Freer's representation came in response to the Hadleys' submission of a loan application accompanied by documents showing the house completed to a "rough-in" stage.

Q: And he told you in some words that you could get a mortgage on what you were doing?

A: He said he would give us a mortgage on what we were doing, yes.

Charles Hadley also testified that they had submitted "a package" to Freer representing an unfinished house and that Freer had said that Investors would provide a mortgage on that basis. Hadley further explained that Freer "knew exactly what stage we were going to," and that he had told Freer that the Hadleys would "close the house and then complete it." This proof constitutes some evidence that Freer represented that the loan had a benefit it did not have.

In its sufficiency of the evidence challenge, Investors relies principally on the fact that among the documents in the "package" submitted to Investors was a "Cost Breakdown" reflecting costs necessary to transform the home from its rough-in stage to a complete and finished house. Based on this document, Investors insists that the package submitted to Freer, "taken as a whole, detailed a finished house," and in approving the Hadley project for a loan, Freer was approving a loan for a completed house. Charles Hadley, however, testified that he did not, and could not have, prepared the cost estimates shown in the "cost breakdown," although he stated the figures were in his hand. Hadley further testified that the "Cost Breakdown" did not form the basis for any part of the loan transaction. From this evidence, the jury could have concluded that the "package" submitted, for which Freer approved a loan, was for an unfinished house. The sufficiency of the evidence point is overruled.

Under point of error ten, Investors complains that there was no evidence, or alternatively, that there was insufficient evidence, in support of the jury's answer that the Hadleys had suffered $20,000 in actual damages. Investors first attacks the Hadleys' proof concerning the additional costs in principal and interest incurred by the Hadleys when they ultimately obtained a new loan for a greater sum of money than they had sought from Investors. Charles Hadley testified that the difference in monthly payments between the abortive loan and the one ultimately obtained...