Mosaic Baybrook One, L.P. v. Simien
| Decision Date | 21 April 2023 |
| Docket Number | 19-0612,21-0159 |
| Parties | Mosaic Baybrook One, L.P., and Mosaic Baybrook Two, L.P., Petitioners, v. Paul Simien, Respondent Mosaic Baybrook One, L.P.; Mosaic Baybrook Two, L.P.; and Mosaic Residential, Inc., Petitioners, v. Paul Simien, Respondent |
| Court | Texas Supreme Court |
Argued September 21, 2022
On Petition for Review from the Court of Appeals for the First District of Texas JUSTICE BUSBY delivered the opinion of the Court, in which Justice Lehrmann, Justice Boyd, Justice Devine, and Justice Young joined.
OPINION
These two interlocutory appeals arise from a single suit by respondent Paul Simien against his landlords, petitioners Mosaic Baybrook One, L.P., Mosaic Baybrook Two, L.P., and Mosaic Residential, Inc. (collectively, "Mosaic").[1] Their dispute concerns a "Water/Sewer Base Fee" that Mosaic billed tenants each month to recover certain amounts it had paid the municipal utility district. This fee included not only (1) each apartment's allocated portion of the utility's customer service charge for water and sewer service, but also (2) an undisclosed amount equivalent to part of the utility's charges for non-water emergency services.
Simien sued Mosaic under the Water Code on behalf of a tenant class, alleging that this practice "violate[d] [administrative rules] regarding submetering of utility service . . . or nonsubmetered master metered utility costs." TEX. WATER CODE § 13.505.[2] Among other things, the rules provide that "[c]harges billed to tenants for submetered or allocated utility service may only include bills for water or wastewater from the retail public utility." 16 TEX. ADMIN. CODE § 24.124(a).[3]
In its first appeal (No. 19-0612) ("Simien 1"), Mosaic challenges the trial court's grant of Simien's motion for partial summary judgment on liability, as well as the court's subject-matter jurisdiction over Simien's requests for particular elements of damages. We conclude the trial court has jurisdiction because at least some damages are available for this statutory claim. And we affirm the partial summary judgment because Simien's lease did not authorize Mosaic to charge him for nonwater emergency services. Mosaic overcharged Simien in violation of the statute and rules by including undisclosed non-water charges Simien did not owe in the base fee it billed him for water and wastewater utility service.
In its second appeal (No. 21-0159) ("Simien 2"), Mosaic challenges Simien's standing and argues that the trial court abused its discretion by certifying a class under Rule 42 of the Texas Rules of Civil Procedure. We hold that Simien has standing because he paid the fee.
As to class certification, Mosaic's primary challenge is that the trial court did not conduct a rigorous analysis and significantly misunderstood the law because Simien's claim fails on the merits. But the merits are relevant only to the extent a rigorous analysis shows that the claim is legally baseless or that the court misunderstood the law in some other manner that affects the requirements for class certification. Here, we have affirmed the partial summary judgment for Simien, and Mosaic has identified no other disputed legal issue regarding its claim that could have a significant effect on any certification requirement.
Mosaic also argues that the trial court's order failed to address its defenses. But the court disposed of all but one defense prior to certification, and it accounted for the remaining defense of limitations in setting the class period. We therefore affirm the certification order.
Mosaic operates as the corporate landlord of various properties including the Baybrook Village apartments, a residential apartment complex near Houston that includes over 700 apartment units. Mosaic has owned and managed Baybrook Village since May 2015.
In July 2015, Mosaic hired RealPage Utility Management ("RealPage")[4] to prepare monthly statements for the tenants of Baybrook Village. As part of that process, Mosaic sent RealPage a sample lease used by prior management. Mosaic carried forward most of the sample lease's terms in the leases it signed with Simien and other tenants. Some of the changes Mosaic made to the sample lease are relevant in evaluating the parties' positions about whether the leases authorize Mosaic to charge Simien for fire, EMS, and law enforcement services. We therefore examine the leases in some detail.
Paragraph seven of the sample lease provided that the landlord would pay for certain items, if checked, and the tenant would "pay for all other utilities and services." The sample lease also included a "LEASE ADDENDUM FOR ALLOCATING SERVICES AND GOVERNMENTAL FEES," which contained the following statement in paragraph two:
Reason for allocation. Apartment owners receive bills for services provided to residents and charges for various governmental fees. These are direct costs that the apartment community incurs. In order to help control the cost of rent, we have chosen to allocate the services and governmental fees indicated below through an allocated bill using a standardized formula to distribute those costs fairly.
Paragraph three of the addendum then provided that the landlord "will allocate the following services and governmental fees," and it printed various types of fees with a box that could be checked by each to indicate if that particular fee would be allocated to tenants. The box for "Emergency services fee" was not checked. Paragraph three also included some blank lines on which other types of fees could be written in and checked. In the sample lease, the following fees were written in and checked: (1) "Pest Control Fees $3.50 mo"; (2) "Law Enforcement Fee. $4.29 mo"; (3) "Water Fire Protection $8.05mo"; and (4) "Ambulance Fee $1.40mo."
In advising RealPage how to set up billing for new tenants and lease renewals, Mosaic sent an e-mail instructing RealPage to "disregard the ambulance, law enforcement, etc., it's all included in the water/sewer." In response, RealPage requested that Mosaic "remove the below from the Government Fees addendum" and indicated that RealPage's billing "[s]etup" for Baybrook Village would include a "Water/Sewer Base Fee" that "will include minimum [water/sewer] charges from [the municipal utility district] plus Law Enforcement, Ambulance, &Fire Protection." Thus, RealPage said it was "going to include all those fees as one charge, within the water and sewer base fees." The e-mail also included a header entitled "Remove:" followed by an image of the four fees that had been written in and checked in the sample lease.
In June 2016, Simien signed a lease with Mosaic for an apartment at Baybrook Village with an initial lease term of July 1, 2016, to July 31, 2017. Like the sample lease, Simien's lease included a "LEASE ADDENDUM FOR ALLOCATING SERVICES AND GOVERNMENT FEES," and the box for allocating an "Emergency services fee" was not checked. Unlike the sample lease, paragraph three of the addendum in Simien's lease includes only three fees that are written in and checked: (1) "Pest Control Fees $3.50 mo"; (2) "Convergent Billing Fee $3.50"; and (3) "valet trash $25.00." Fees for law enforcement, ambulance, and fire service were not written in.
For each month that he lived at Baybrook Village, Simien received a residential account statement from Mosaic, which RealPage generated as follows. As reflected in its rate orders, Harris County Municipal Utility District 55 ("the MUD") imposed various rates and charges for the services it provided customers, including a monthly service charge, a monthly water service rate, a monthly sewer service rate, a monthly fire protection rate, a monthly emergency medical service rate, and a monthly law enforcement service rate. For Baybrook Village, the MUD billed those amounts to Mosaic's accounts[5] and sent separate monthly invoices for the services provided to each building directly to Mosaic. The monthly invoice that Mosaic received from the MUD for each building assessed fees in lump sums on a building-wide basis with itemized subtotals listed for (1) "WATER"; (2) "SEWER"; (3) "LAW ENF FEE"; (4) "SERVICE CHARGE"; (5) "FIRE"; and (6) "EMS FEE." Mosaic then sent those invoices to RealPage to prepare the residential account statements that were sent to each tenant.
RealPage was responsible for calculating each tenant's portion of the line items for "WATER" and "SEWER" listed in the MUD invoices. RealPage combined those two amounts and listed the sum on the tenant's monthly account statement as a single line item for "Water/Sewer."
RealPage was also responsible for calculating each tenant's portion of the line items for "LAW ENF FEE," "SERVICE CHARGE," "FIRE," and "EMS FEE" listed in the MUD invoices, which it did as follows. RealPage divided each of the line items by the number of apartment units in the building. RealPage then combined those four amounts and listed the total on each tenant's monthly account statements as a single line item labeled "Water/Sewer Base Fee"-the item in dispute.
Each month, Simien received a residential account statement that listed total amounts due for "Property Charges" and "Billed Charges." The "Billed Charges" were further broken out into line-item subtotals for (1) "Water/Sewer Base Fee"; (2) "Water/Sewer"; (3) "Pest Control"; and (4) "Trash." Simien regularly paid Mosaic's "Water/Sewer Base Fee" each month until his lease ended in September 2017. Throughout Simien's residence at Baybrook Village, Mosaic and RealPage assessed a...
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