Kerrville HRH, Inc. v. City of Kerrville, No. 04-89-00220-CV

CourtCourt of Appeals of Texas
Writing for the CourtREEVES
Citation803 S.W.2d 377
Docket NumberNo. 04-89-00220-CV
Decision Date19 December 1990
PartiesKERRVILLE HRH, INC., Appellant, v. CITY OF KERRVILLE, Appellee.

Page 377

803 S.W.2d 377
KERRVILLE HRH, INC., Appellant,
v.
CITY OF KERRVILLE, Appellee.
No. 04-89-00220-CV.
Court of Appeals of Texas,
San Antonio.
Dec. 19, 1990.
Rehearing Denied Feb. 6, 1991.

Page 380

Mike Willatt, Austin, for appellant.

Alan Dale Hickes, Plunkett, Gibson & Allen, Melvin A. Krenek, Melvin A. Krenek & Assoc., San Antonio, Thomas S. Terrell, Kerrville, for appellee.

Before REEVES, BIERY and CARR, JJ.

OPINION

REEVES, Justice.

Appellant, Kerrville HRH, Inc., sued the City of Kerrville for damages arising out of a leasehold agreement between the parties. HRH sued for violations of the Deceptive Trade Practices Act (DTPA), breach of express and implied warranties, and for fraud in a real estate transaction. A jury answered most questions in HRH's favor, but the trial court awarded HRH only 51 percent of the damages found by the jury based on a finding that HRH could have avoided 49 percent of its damages but for its negligence.

In its first six points of error HRH claims that the court erred in reducing the jury award by 49 percent. In its seventh and eighth points it argues that the court erred in failing to award it an amount representing interest paid on money borrowed to operate its business on the leasehold, plus 40 percent of that amount as

Page 381

attorneys fees. The City brings nine cross points.

The City owns a 200 acre piece of land known as the City Farm. At the time of the lease in question, it used the farm to dispose of the effluent from its sewage treatment plant by way of an irrigation system installed for that purpose. HRH leased the farm to grow wholesale nursery products including St. Augustine grass, shrubs and trees. The lease commenced on January 1, 1985 with a termination date of December 31, 1996.

HRH encountered numerous problems with the irrigation system during the course of the lease. HRH was able to repair and rehabilitate the system in a 7-acre tract known as the tree farm where 13,000 oak and crepe myrtle trees were planted. HRH also began rehabilitation work in a 20-acre field in which it planted St. Augustine grass. However, after the grass had been planted, new problems with the system arose which eventually resulted in ruination of the field. While the work on the St. Augustine field continued, work was begun on two other sections of the farm. These sections were also found to be in need of extensive repair. It was at this point that HRH decided that it could not continue to make the repairs. The parties continued to negotiate for a time but were unable to reach a satisfactory resolution. Eventually the City decided to build a new treatment plant and to discontinue irrigation of the farm.

The jury concluded that HRH was due $246,167.53 in out-of-pocket expenses and $25,000.00 in lost profits plus 40 percent of those amounts as attorneys fees. The trial court awarded HRH $193,613.63, representing these damages plus attorneys fees, reduced by 49 percent.

TORT CLAIMS ACT

Several of the City's cross points will defeat HRH's recovery, therefore we will discuss them first. The City asserts in its second cross point that the Texas Tort Claims Act shields it from liability in this suit. The Tort Claims Act waives a governmental unit's immunity from tort suits in certain specified instances. TEX.CIV.PRAC. & REM.CODE ANN. §§ 101.021, 101.025 (Vernon 1986). Because this suit does not involve a tort claim, the Act is inapplicable and the cross point is overruled.

DTPA JURISDICTION

In its fourth cross point the City argues that a city cannot be a defendant in a DTPA action.

A "consumer" may maintain a DTPA suit when specified actions of a "person" constitute the producing cause of actual damages. DTPA § 17.50(a). 1 "Person" is defined as "an individual, partnership, corporation, association, or other group, however organized." DTPA § 17.45(3). HRH argues that the term, "other group," includes cities. It offers little authority to support this conclusion other than the argument that if the legislature had meant to exclude cities, it could easily and specifically have done so. HRH cites as an example the definition of "business consumer" which specifically excludes "this state or a subdivision or agency of this state." DTPA § 17.45(10).

Our goal in interpreting the DTPA is to ascertain the legislature's intent, and to do so we examine the entire Act rather than isolated portions. Woods v. Littleton, 554 S.W.2d 662, 665 (Tex.1977). Legislative intent rather than the strict letter of the Act, will control. Pennington v. Singleton, 606 S.W.2d 682, 686 (Tex.1980). The legislature has determined that the DTPA is to be:

liberally construed and applied to promote its underlying purposes, which are to protect consumers against false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty and to provide efficient and

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economical procedures to secure such protection.

DTPA § 17.44. The supreme court has said that the range of possible defendants under the Act is limited only by the exemptions provided in DTPA § 17.49 (which do not include cities). Flenniken v. Longview Bank and Trust Co., 661 S.W.2d 705, 706 (Tex.1983). But we also note that for the legislature to waive the sovereign immunity of a governmental unit, it must do so by clear and unambiguous language. Duhart v. State, 610 S.W.2d 740, 742 (Tex.1980); City of Corpus Christi v. Acme Mechanical Contractors, Inc., 736 S.W.2d 894, 906 (Tex.App.--Corpus Christi 1987, writ denied).

The phrase "this state, or a subdivision 2 or agency of this state," is included in the definition of consumer, DTPA § 17.45(4), but does not appear in the definition of person. While every word of a statute must be presumed to have been used for a purpose, it is also the case that every word excluded from a statute must be presumed to have been excluded for a purpose. Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 540 (Tex.1981). Only when it is necessary to give effect to the clear legislative intent can we insert additional words or requirements into a statutory provision. Id. The use of the phrase "other group" does not evidence a clear and unambiguous legislative intent to include cities within the range of possible DTPA defendants, especially given their plain inclusion within the definition of consumer. Our opinion is that the legislature intended to include cities within the range of possible plaintiffs under the Act, but to exclude them as defendants. The exclusion of the state, its subdivisions and agencies from the definition of "business consumer" indicates only that these governmental bodies were to be treated as consumers but not as business consumers.

One final matter needs to be addressed. The cause of action for breach of an express or implied warranty is not limited to "persons." DTPA § 17.50(a)(2). While this might permit the argument that these actions may be brought against cities, we do not view this as a clear and unambiguous waiver of governmental immunity. It would be incongruous for the legislature to retain immunity for three of the DTPA's causes of action and waive it for the fourth in such an equivocal manner.

The cross point is sustained.

REAL ESTATE FRAUD

HRH sought relief under TEX.BUS. & COM.CODE ANN. § 27.01 (Vernon 1987) which provides damages for persons injured as the result of fraud in real estate transactions. Fraud in a real estate transaction consists of a:

(1) false representation of a past or existing material fact, when the false representation is

(A) made to a person for the purpose of inducing that person to enter into a contract; and

(B) relied on by that person in entering into that contract; or

(2) false promise to do an act, when the false promise is

(A) material;

(B) made with the intention of not fulfilling it;

(C) made to a person for the purpose of inducing that person to enter into a contract; and

(D) relied on by that person in entering into that contract.

Section 27.01(a). A person who makes a false representation or false promise commits the fraud described in subsection (a) and is liable to the person defrauded for actual damages. Section 27.01(b). Thus, under the act, "persons" are both the defrauders and the defrauded.

The City argues in its third cross point that section 27.01 does not apply to municipalities because sovereign immunity to such suits has not been waived. Section 27.01 does not define "person." For that

Page 383

definition we turn to the Code Construction Act. This Act applies to codes enacted, amended or revised by the 60th or a subsequent legislature as part of the state's statutory revision program. TEX.GOV'T CODE ANN. § 311.002 (Vernon 1988). Section 27.01 was enacted by the 60th Legislature as part of its codification of the Business and Commerce Code. Business and Commerce Code, ch. 785, § 1, 1967 Tex.Gen.Laws 2343, 2603. The Code Construction Act contains a list of definitions which applies "unless the statute or context in which the word or phrase is used requires a different definition." TEX.GOV'T CODE ANN. § 311.005 (Vernon 1988). "Person" is defined to include "government or governmental subdivision or agency...." TEX.GOV'T CODE ANN. § 311.005(2) (Vernon 1988). The legislature is presumed to have used the term, "person" in section 27.01 with the knowledge that that term was defined in the Code Construction Act to include governments. Allen Sales and Servicenter, Inc. v. Ryan, 525 S.W.2d 863, 866 (Tex.1975). If the legislature did not intend to include governments within the act, it may exclud them by definition. We hold that municipalities are subject to liability under section 27.01.

The jury found that the City made false representations of past and existing material facts to induce HRH to enter the lease; that HRH relied on these false representations; that they were made with actual awareness of their falsity; and that they were the proximate cause of HRH's damages....

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38 practice notes
  • Elbaor v. Smith, No. D-1163
    • United States
    • Supreme Court of Texas
    • December 2, 1992
    ...appellate court "consider[ed] evidence most favorably in behalf of the complaining party"); Kerrville HRH, Inc. v. City of Kerrville, 803 S.W.2d 377, 383 (Tex.App.--San Antonio 1990, writ denied) (trial court "may refuse to submit a question only if no evidence exists to warrant its submiss......
  • In re Enron Corporation Securities, Derivative, No. MDL-1446.
    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
    • August 24, 2007
    ...intent can be inferred from the absence or presence of a particular provision in a statute"); Kerrville HRH, Inc. v. City of Kerrville, 803 S.W.2d 377, 382 (Tex.App.-San Antonio 1990, writ denied) ("While every word in the statute must be presumed to be used for a purpose, it is also the ca......
  • Richard Barton Enterprises, Inc. v. Tsern, Nos. 940295
    • United States
    • Utah Supreme Court
    • August 6, 1996
    ...property principles should apply. See also Gober v. Wright, 838 S.W.2d 794 (Tex.Ct.App.1992); Kerrville HRH, Inc. v. City of Kerrville, 803 S.W.2d 377 (Tex.Ct.App.1990); Henry S. Miller Mgmt. Corp. v. Houston State Assocs., 792 S.W.2d 128 (Tex.Ct.App.1990); Coleman v. Rotana, Inc., 778 S.W.......
  • Swanson v. Schlumberger Technology Corp., No. 06-93-00084-CV
    • United States
    • Court of Appeals of Texas
    • November 30, 1994
    ...that it is proper to award statutory attorney's fees as a percentage of total recovery. See Kerrville HRH, Inc. v. City of Kerrville, 803 S.W.2d 377, 387 (Tex.App.-San Antonio 1990, writ denied); March v. Thiery, 729 S.W.2d 889, 897 (Tex.App.-Corpus Christi 1987, no Schlumberger also conten......
  • Request a trial to view additional results
38 cases
  • Elbaor v. Smith, No. D-1163
    • United States
    • Supreme Court of Texas
    • December 2, 1992
    ...appellate court "consider[ed] evidence most favorably in behalf of the complaining party"); Kerrville HRH, Inc. v. City of Kerrville, 803 S.W.2d 377, 383 (Tex.App.--San Antonio 1990, writ denied) (trial court "may refuse to submit a question only if no evidence exists to warrant its submiss......
  • In re Enron Corporation Securities, Derivative, No. MDL-1446.
    • United States
    • United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
    • August 24, 2007
    ...intent can be inferred from the absence or presence of a particular provision in a statute"); Kerrville HRH, Inc. v. City of Kerrville, 803 S.W.2d 377, 382 (Tex.App.-San Antonio 1990, writ denied) ("While every word in the statute must be presumed to be used for a purpose, it is also the ca......
  • Richard Barton Enterprises, Inc. v. Tsern, Nos. 940295
    • United States
    • Utah Supreme Court
    • August 6, 1996
    ...property principles should apply. See also Gober v. Wright, 838 S.W.2d 794 (Tex.Ct.App.1992); Kerrville HRH, Inc. v. City of Kerrville, 803 S.W.2d 377 (Tex.Ct.App.1990); Henry S. Miller Mgmt. Corp. v. Houston State Assocs., 792 S.W.2d 128 (Tex.Ct.App.1990); Coleman v. Rotana, Inc., 778 S.W.......
  • Swanson v. Schlumberger Technology Corp., No. 06-93-00084-CV
    • United States
    • Court of Appeals of Texas
    • November 30, 1994
    ...that it is proper to award statutory attorney's fees as a percentage of total recovery. See Kerrville HRH, Inc. v. City of Kerrville, 803 S.W.2d 377, 387 (Tex.App.-San Antonio 1990, writ denied); March v. Thiery, 729 S.W.2d 889, 897 (Tex.App.-Corpus Christi 1987, no Schlumberger also conten......
  • Request a trial to view additional results

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