RITCHEY v. PINNELL, 06-10-00010-CV.

• Decision Date: 21 September 2010
• Docket Number: No. 06-10-00010-CV.,06-10-00010-CV.
• Parties: Brenda RITCHEY, Appellant, v. Steve PINNELL and Amy Pinnell, Appellees.
• Court: Texas Court of Appeals

324 S.W.3d 815

Brenda RITCHEY, Appellant,

v.Steve PINNELL and Amy Pinnell, Appellees.

No. 06-10-00010-CV.

Court of Appeals of Texas,Texarkana.

Submitted Aug. 20, 2010.

Decided Sept. 21, 2010.

William R. Power, Law Office of William R. Power, Mineola, for appellant.

G. Blake Thompson, J. Mark Mann, Stacie H. Tandy, The Mann Firm, Henderson, for appellee.

Before MORRISS, C.J., CARTER and MOSELEY, JJ.

OPINION

Opinion by Justice CARTER.

Brenda Ritchey appeals the trial court's order granting Steve and Amy Pinnell's motion for summary judgment. Ritchey purchased a home from the Pinnells which Steve had remodeled prior to the purchase. Steve had purchased the home as an investment ¹ intending to remodel the home and resell it. The remodeling included extensive plumbing and electrical work. Although Steve hired a licensed electrician to “move the ... service line from the front of the house to the-to the side of the house,” Steve did the majority of the electrical work and all of the plumbing himself without a license, without obtaining permits, and without inspections. Ritchey filed suit against the Pinnells for statutory real estate fraud ² and breach of contract. After discovery, the Pinnells filed a combination traditional and no-evidence motion for summary judgment. After a hearing, ³ the trial court granted the Pinnells' motion for summary judgment. On appeal, Ritchey argues the trial court erred in granting the motion for summary judgment because the independent investigation for Ritchey did not preclude recovery, the Pinnells made material misrepresentations, the “as is” clause does not prevent recovery for statutory fraud, and there is some evidence the Pinnells breached the contract. We reverse the trial court's order granting the Pinnells' motion for summary judgment as to the statutory fraud claim because there are genuine issues of material fact and affirm the summary judgment regarding the breach of contract claim.

I. Factual Summary

Steve testified that he is not a licensed electrician and that he learned how to do electrical work by reading “how-to guides” and “look[ing] at things that were done in my house already.” In the seller's disclosure, ⁴ the Pinnells represented that there were no “alterations or repairs made without necessary permits or not in compliance with building codes in effect at the time.” Steve testified in his deposition that he thought he “was doing it properly and that I was doing everything the right way.” Steve asserted, “I thought if I owned the home, I could work on anything on my side of the City's box.”

The parties signed a standard preprinted form real estate contract. This contract contained a clause that the buyer “accepts the Property in its present condition.” After the purchase, Ritchey alleges that she discovered much of the electrical work did not meet code requirements and was performed without the necessary permits. ⁵ Ritchey also alleges the water heater is located in the wrong location. ⁶ Ritchey was refused an application for a certificate of occupancy. ⁷ Eventually, Steve was fined by the Texas Department of Licensing and Regulation for performing electrical repairs without a license.

II. Standard of Review

In reviewing an order granting summary judgment, we are restricted to the arguments expressly presented to the trial court in the written motion for summary judgment and the response. Tex.R.App. P. 33.1; Tex.R. Civ. P. 166a(c); see Clear Creek Basin Auth., 589 S.W.2d at 677; Driskill v. Ford Motor Co., 269 S.W.3d 199, 206 (Tex.App.-Texarkana 2008, no pet.). In determining whether grounds are expressly presented to the trial court, appellate courts “may not rely on briefs or summary judgment evidence.” Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 912 (Tex.1997). In our review, we “must review all of the summary judgment grounds on which the trial court actually ruled, whether granted or denied, and which are dispositive of the appeal, and may consider any grounds on which the trial court did not rule.” Baker Hughes, Inc. v. Keco R. & D., Inc., 12 S.W.3d 1, 5 (Tex.1999) (citations omitted).

The Pinnells filed a combination traditional and no-evidence motion for summary judgment. A combination motion is permissible under the Texas Rules of Civil Procedure. Binur v. Jacobo, 135 S.W.3d 646, 650 (Tex.2004); see Tex.R. Civ. P. 166a. In their written motion for summary judgment, the Pinnells argued there was no evidence of statutory real estate fraud because there was no evidence of a false representation and no evidence Ritchey relied upon a false representation. The Pinnells also argued Ritchey's reliance was negated as a matter of law because she hired an inspector. Last, the Pinnells argued summary judgment should be granted on the breach of contract claim because there was no evidence the Pinnells breached the contract. Although the Pinnells argue on appeal that the “as is” clause of the contract should prohibit recovery for statutory real estate fraud, this argument was not raised in the Pinnells' motion for summary judgment.

To prevail on a traditional motion for summary judgment, a movant must establish that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. Tex.R. Civ. P. 166a(c); Clear Creek Basin Auth., 589 S.W.2d 671; Baubles & Beads v. Louis Vuitton, S.A., 766 S.W.2d 377 (Tex.App.-Texarkana 1989, no writ). The defendant must conclusively negate at least one element of each of the plaintiff's theories of recovery or plead and conclusively establish each element of an affirmative defense. Martinez, 941 S.W.2d at 911. Because the movant bears the burden of proof, all conflicts in the evidence are disregarded, evidence favorable to the nonmovant is taken as true, and all doubts as to the genuine issues of material fact are resolved in favor of the nonmovant. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546 (Tex.1985); see Limestone Prods. Distrib., Inc. v. McNamara, 71 S.W.3d 308, 311 (Tex.2002); Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex.1999). A motion for summary judgment must stand on its own merits, and the nonmovant may argue on appeal that the movant's summary judgment proof is insufficient as a matter of law, even if the nonmovant filed no response to the motion. See M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex.2000).

To prevail on a no-evidence motion for summary judgment, the movant must first allege there is no evidence of one or more specified elements of a claim or defense on which the nonmovant would have the burden of proof at trial. Sudan v. Sudan, 199 S.W.3d 291, 292 (Tex.2006); see Tex.R. Civ. P. 166a(i). If the nonmovant produces less than a scintilla of probative evidence on the specified element, the motion must be granted. Id. “Less than a scintilla of evidence exists when the evidence is ‘so weak as to do no more than create a mere surmise or suspicion’ of a fact.” King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex.2003) (quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex.1983)).

III. Statutory Fraud Claim A. Independent Inspection

[1] The Pinnells argue Ritchey's claims were negated as a matter of law because Ritchey hired an inspector who inspected the premises prior to closing. In her summary judgment affidavit, Ritchey stated that she relied upon the sellers' disclosure in deciding to purchase the house. The Pinnells, though, claim the fact that Ritchey hired an inspector establishes Ritchey did not rely on the disclosure as a matter of law.

The Pinnells rely on M.L. Mayfield Petroleum Corp. v. Kelly, which held the reliance element of fraud is negated by evidence that a purchaser relied upon his own investigation. 450 S.W.2d 104 (Tex.Civ.App.-Tyler 1970, writ ref'd n.r.e.). The court held:

[N]o purchaser who relies on his own investigation may successfully assert that he relied upon representations made to him by his vendor. If a purchaser makes a personal investigation which is free and unhampered and the conditions are such that he must obtain the information he desires, he is presumed to rely upon his own investigation rather than on representations made to him by his vendor.

Id. at 110.

In considering the same issue, the Dallas Court of Appeals has taken a different approach. That court has held that an independent inspection negates causation and reliance as a matter of law when the buyer relied solely on the pre-purchase inspection, which revealed the defect complained of, and there is a renegotiation of the sales contract establishing that the existence of the defect was part of the parties' bargain. See Bernstein v. Thomas, 298 S.W.3d 817, 822-23 (Tex.App.-Dallas 2009, no pet.); Kupchynsky v. Nardiello, 230 S.W.3d 685, 688-89 (Tex.App.-Dallas 2007, pet. denied); Fernandez v. Schultz, 15 S.W.3d 648, 652 (Tex.App.-Dallas 2000, no pet.); Dubow v. Dragon, 746 S.W.2d 857, 860 (Tex.App.-Dallas 1988, no writ). But see Lesieur v. Fryar, 325 S.W.3d 242 (Tex.App.-San Antonio 2010, no pet. h.) (rejecting the test announced in Dubow and its progeny). We agree with the reasoning of the Dallas court on this issue.

In this case, there is no evidence that Ritchey's inspection revealed the defect complained of. While an independent inspection may discover repairs which do not meet code requirements, we note most physical home inspections are unlikely to discover whether the proper permits were obtained. Further, the evidence establishes there was no renegotiation of the contract based on the results of the inspection. Therefore, the fact that Ritchey hired an inspector does not negate reliance and causation as a matter of law. The fact that Ritchey hired an inspector merely creates a fact issue concerning whether Ritchey relied upon the misstatement that no work was conducted without the necessary permits. Genuine issues of material fact exist concerning whether the fact that Ritchey hired an...