Kish v. Van Note

• Decision Date: 19 June 1985
• Docket Number: No. C-2860,C-2860
• Citation: 692 S.W.2d 463
• Parties: Joseph J. KISH and Donna M. Kish, Petitioners, v. Todd VAN NOTE d/b/a Cowboy Pools, Bank of Dallas, and American Centennial Insurance Company, Respondents.
• Court: Texas Supreme Court

Page 463

692 S.W.2d 463

Joseph J. KISH and Donna M. Kish, Petitioners, v. Todd VAN NOTE d/b/a Cowboy Pools, Bank of Dallas, and American Centennial Insurance Company, Respondents.

No. C-2860.

Supreme Court of Texas.

June 19, 1985.

Rehearing Denied July 17, 1985.

Diamond J. Pantaze, Dallas, for petitioners.

Calhoun, Spillman & Stacy, Roy L. Stacy, Dallas, J. Harris Morgan and Richard A. Bosworth, Greenville, for respondents.

ON MOTION FOR REHEARING

GONZALEZ, Justice.

Our opinion and judgment of February 27, 1985 are withdrawn and the following is substituted. The motion for rehearing is granted.

This is an appeal in a suit for damages for violations of the Texas Consumer Credit Code and for treble damages under the Deceptive Trade Practices Act. After a jury trial, the trial court denied recovery under the Consumer Credit Code, allowed a partial recovery under the DTPA, and allowed foreclosure of a lien on the property. In an unpublished opinion, the court of appeals affirmed. We reverse in part the judgments of the courts below and render judgment for petitioners, the Kishes.

Joseph and Donna Kish contracted to have a swimming pool built in their back yard by Todd Van Note d/b/a Cowboy Pools. The price was $5,500 to be paid in full upon completion of the pool. Cowboy Pools had an arrangement with CES Financial to obtain financing for its customers. Before construction began, CES obtained financing for the Kishes through the Bank of Dallas. CES supplied the "Home Improvement Retail Installment Contract and Promissory Note" and the "Mechanics and Materialman's Lien Contract" which were signed by the Kishes and Cowboy Pools. The contract and lien were later assigned to the Bank of Dallas.

The Kishes elected credit life insurance on the note and the premium was added to the amount financed. The bank obtained an insurance policy covering the eight-year term of the installment contract but did not deliver a copy of this policy to the Kishes. The contract failed to disclose that the premium for the credit life insurance was not at a rate fixed or approved by the State Board of Insurance. The following statement was included in boldfaced capital letters at the bottom of the installment contract:

NOTICE--ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED PURSUANT HERETO OR WITH THE PROCEEDS HEREOF, RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER.

Cowboy Pools began installing a different pool from the one it had contracted to install. Because of poor excavation work, the fiberglass pool cracked during the early stages of construction. Rather than replace the pool, Cowboy Pools attempted several unsuccessful patch jobs. The filter and the other systems were not supplied and the pool was never functional.

The bank paid Cowboy Pools the entire contract price before construction was begun. The Kishes complained repeatedly to Cowboy Pools, CES and the bank. The Kishes made five payments on the contract and refused to pay any more. CES made four payments on the note while it attempted to get Cowboy Pools to correct the problem.

The bank submitted a claim for the default to its insurer, American Centennial Insurance Company. This claim was settled and the installment contract and mechanic's lien were assigned to American.

The Kishes sued Cowboy Pools, the bank and American for alleged violations of TEX.BUS. & COM.CODE ANN. § 17.41 et seq. (the Texas Deceptive Trade Practices Act) and TEX.REV.CIV.STAT. Ann. art. 5069 (the Texas Consumer Credit Code). Cowboy Pools did not file an answer. Both the bank and American denied liability. American also counterclaimed against the Kishes for amounts allegedly due under the installment contract and for foreclosure of the mechanic's lien.

The jury found every submitted issue in favor of the Kishes. Among other things the jury found that Cowboy Pools failed to perform the work in a good and workmanlike manner and failed to fulfill its one-year guarantee against defects. The jury also found that the pool was not merchantable and that the sale of the pool constituted an unconscionable action. As to damages, the jury found in special issue No. 10 that:

(A) The difference between the value received and the price paid for the swimming pool was $1500.

(B) The cost of removing the pool and restoring the Kishes' back yard to its original condition would be $4000.

(C) The cost of removing the mechanic's lien from the real property owned by the Kishes would be $8,000.

In addition, the jury found that Cowboy Pools had failed to complete the swimming pool in accordance with the contract; that Cowboy Pools and the bank failed to obtain a certificate of completion; that Cowboy Pools failed to disclose to the Kishes that the credit life insurance premium was at a rate not fixed or approved by the State Board of Insurance; and that neither Cowboy Pools nor the bank delivered the credit life insurance policy to the Kishes within 45 days after it was issued.

After disregarding parts (B) and (C) of issue No. 10, the trial court offset the Kishes' recovery against American's recovery, rendered judgment for the Kishes against Cowboy Pools for $3,000, rendered judgment for American on its counterclaim against the Kishes for $4,332.77, awarded the Kishes $1,600 "net" attorney's fees against Cowboy Pools and American, and directed that the $1,600 be credited and offset against the $4,332.77 awarded American. The court also granted American foreclosure of its mechanic's lien on the Kishes' homestead to the extent of its net judgment against the Kishes. Finally, the court denied all other relief and taxed costs "against the party incurring same." The court of appeals affirmed this judgment. On appeal, the Kishes contend that the trial court judgment was inadequate.

DAMAGES RECOVERABLE UNDER THE DTPA

The Kishes maintain that they are entitled to recover the following elements of damages for DTPA violations:

(A) treble their actual damages of payments on the contract;

(B) consequential damages for removing the worthless pool;

(C) cancellation of the lien and indebtedness; and

(D) reasonable attorney's fees.

The object of awarding a plaintiff recovery is to compensate for the actual loss sustained as a result of the defendant's conduct. The DTPA embraces this concept by permitting the injured consumer to recover the greatest amount of actual damages alleged and factually established to have been caused by the deceptive practice, including related and reasonably necessary expenses. Building Concepts, Inc. v. Duncan, 667 S.W.2d 897, 901 (Tex.Civ.App.-Houston [14th Dist.] 1984, writ ref'd n.r.e.); Woo v. Great Southwestern Acceptance Corp., 565 S.W.2d 290, 298 (Tex.Civ.App.--Waco 1978, writ ref'd n.r.e.). The Act itself states in section 17.43 that the remedies provided therein "are in addition to any other procedures or remedies provided for in any other law." Section 17.44 provides that the Act shall be "liberally construed and applied to promote its underlying purposes," which are to protect consumers from the false, misleading, and deceptive business practices it condemns. The amount of actual damages recoverable under the DTPA is determined by the total loss sustained as a result of the deceptive trade practice. Smith v. Baldwin, 611 S.W.2d 611, 617 (Tex.1980). While the Act does not define "actual damages," the term has been construed to mean common law damages. Brown v. American Transfer and Storage Company, 601 S.W.2d 931, 939 (Tex.1980).

If the jury verdict contains more than one acceptable measure of damages, a plaintiff may be forced to elect prior to judgment the recovery he wants by waiving the surplus findings with respect to the damages. TEX.R.CIV.P. 440; Butler v. Joseph's Wine Shop, Inc., 633 S.W.2d 926, 933 (Tex.Civ.App.--Houston [14th Dist.] 1982, writ ref'd n.r.e.). The Kishes attempted to make such an election when they filed their Motions to Disregard Jury Finding and Motions for Judgment. The trial court erred in denying these motions.

CONSUMER CREDIT CODE VIOLATIONS

The Kishes maintain that the trial court judgment was inadequate in that it denied them relief pursuant to the Consumer Credit Code for statutory penalties and attorney's fees. They contend that liability arose as a result of Cowboy Pools' failure to obtain a certificate of completion, failure to disclose that the credit life insurance was procured at a premium or rate not fixed or approved by the State Board of Insurance, and...