Schenck v. Ebby Halliday Real Estate, Inc.

• Citation: 803 S.W.2d 361
• Decision Date: 12 December 1990
• Docket Number: No. 2-89-170-CV,2-89-170-CV
• Parties: David and Denise SCHENCK, Ebby Halliday Real Estate, Inc., and Mary Taylor, Appellants, v. EBBY HALLIDAY REAL ESTATE, INC., Mary Taylor, David and Denise Schenck, and B.E. and Neita Horton, Appellees.
• Court: Texas Court of Appeals

Page 361

803 S.W.2d 361

David and Denise SCHENCK, Ebby Halliday Real Estate, Inc., and Mary Taylor, Appellants, v. EBBY HALLIDAY REAL ESTATE, INC., Mary Taylor, David and Denise Schenck, and B.E. and Neita Horton, Appellees.

No. 2-89-170-CV.

Court of Appeals of Texas,

Fort Worth.

Dec. 12, 1990.

Rehearing overruled Feb. 12, 1991.

Richard C. Guinan, Jr. and Mark Frels, Denton & Guinan, Dallas, for appellants David and Denise Schenck.

J. Kent Newsom, Newsom, Terry & Newsom, Dallas, for appellants Ebby Halliday and Mary Taylor.

L. Kent Clay and Jonathan T. Suder, Kelly, Hart & Hallman, Fort Worth, for appellees.

Before WEAVER, C.J., and HILL and MEYERS, JJ.

OPINION

MEYERS, Justice.

This is an appeal from a judgment rendered against the buyers, sellers, and brokers in a lawsuit which arose out of a sale of real property. Appellants David and Denise Schenck ("Schencks") are appealing the $45,305 in damages which was awarded to them and for which appellees B.E. and Neita Horton ("Hortons"), Mary Taylor and Ebby Halliday Real Estate ("Brokers"), were held jointly and severally liable. The first four points of error argue that, based upon the jury's findings, they should have been awarded rescission as they requested. Alternatively, in their fifth point of error, appellants, the Schencks, claim that there was no evidence or insufficient evidence to support an award of $45,305 when the only evidence submitted conclusively established their damages as being $125,000. Finally, the Schencks argue that the trial court erred when it refused to offset the $122,917.20 judgment awarded to the Hortons by the $45,305 judgment awarded to the Schencks for the purposes of calculating the pre- and post-judgment interest awarded to the Hortons on their judgment.

The Hortons cross-appealed, raising five cross-points of error. The Hortons argue in their first cross-point of error that the trial court erred in awarding them only $10,000 in attorneys' fees based upon the jury's answer to Special Question No. 18 because this finding was against the great weight and preponderance of the evidence. Secondly, the Hortons complain that the trial court erred in sustaining the Schencks' objection to the admission into evidence of the Horton's exhibits numbers 24, 25, and 26, because these exhibits were relevant, admissible, and established as a matter of law the amount of attorney's fees the Hortons are entitled to recover. The trial court's denial of the Hortons' motion for a judgment notwithstanding the verdict as to Special Questions Nos. 3 and 7 is complained of by the Hortons in their third and fourth cross-points of error. In their fifth cross-point of error, the Hortons state that the trial court erred in not submitting, in the jury charge, the Hortons' special questions regarding the Schencks' liability for damages under § 17.555 of the Deceptive Trade Practices Act ("D.T.P.A.") which allows for contribution and indemnity between liable parties.

The Brokers are appealing from the $45,305 judgment in favor of the Schencks for which they were held jointly and severally liable. They raise the following three points of error: (1) the trial court erred in excluding the testimony of expert witness Don Hall regarding the diminished value of the property due to the existence of the flood plain; (2) the trial court erred in awarding the Schencks relief under the D.T.P.A. because the Schencks failed to prove they had given the Brokers notice of their claim prior to filing suit as required by Article 17.505 of the Texas Business and Commerce Code; and (3) the trial court erred in refusing to submit, in the jury's charge, the Brokers' requested special jury question regarding the Schencks' liability for damages under Article 17.555 of the Texas Business and Commerce Code which permits contribution and indemnity between liable parties. In response to the appeal brought by the Schencks, the Brokers counter that the trial court did not err in denying the Schencks' request to disregard the jury's finding in relation to Special Question No. 11 because there is sufficient evidence in the record to support the jury's response to this question.

We affirm.

In August of 1985, the Schencks entered a contract with the Hortons to purchase a tract of real property located in Arlington, Tarrant County, Texas, for $195,000. Pursuant to this contract, on August 29, 1985, the Schencks paid the Hortons $50,000 in cash and executed a real estate lien note in the amount of $145,000. In return for this, the Hortons conveyed the property to the Schencks by warranty deed. The Schencks also executed a deed of trust granting the Hortons a purchase money lien against the property.

At trial, the jury found that the property was located within the boundaries of a 100-year flood plain and was subject to significant flooding. Halliday and Taylor co-brokered the sale of the property with Anne Hurley, an employee of Coldwell Banker. Under the terms of the contract Taylor, together with Halliday, was to receive a commission of 3% of the sale price and as was Hurley together with Coldwell Banker.

David Schenck and B.E. Horton had a conversation while standing on the property during which Schenck asked Horton if he had ever had any problems with flooding. Horton replied that he had never seen it flood. Schenck is uncertain if this conversation occurred before or after he signed the contract to purchase the property.

At trial, the Schencks presented the expert testimony of David C. Hughes, Jr., a certified engineer. Hughes testified that from the data he was provided, he determined that a 200-foot portion of the property purchased by the Schencks was located within the 100-year floodplain and floodway. Rene J. Olivier, a real estate appraiser, testified that the presence of the floodway on the property depreciated the value of the property to $70,000.

Paragraph 19 of the contract, which the Schencks signed when they agreed to purchase the land, provided that if the Schencks were to ascertain that the property is located within a 100-year floodplain and notify the Hortons within 15 days of the date of the contract, the Schencks could terminate the contract. However, it was not until after the Schencks decided to sell this property in June 1986 that they examined the property and discovered the property's location within the floodplain.

On December 31, 1986, the Schencks filed suit against the Hortons, Ann Hurley, Mary Taylor, Dunaway Associates/Surveying, Ebby Halliday Real Estate, Inc., and Coldwell Banker Residential Real Estate. The causes of action alleged included negligence, breach of contract, common-law fraud, fraud in the sale of real estate under § 27.01, TEX.BUS. & COM.CODE ANN. (Vernon 1987) and deceptive trade practices under TEX.BUS. & COM.CODE ANN. § 17.45 (Vernon 1987). The Schencks contend that the Hortons refused the offer to reconvey the property to them prior to filing suit. The Hortons claim that prior to the filing of the Schencks' third amended original petition, the Schencks did not request rescission. The first mention of rescission in the transcript of this case is in the Schencks' third amended original petition.

In response to the lawsuit, the Hortons brought a counterclaim for payment under the note the Schencks signed in partial payment to the Hortons for the property. Prior to trial, Coldwell Banker, Coldwell Banker Brokerage, Hurley, Dunaway, and Ticor were non-suited based on the Schencks' motion to non-suit these parties.

After the close of evidence at the trial of this case, the jury returned a verdict assessing liability against all the parties. Based on the verdict, the Schencks attempted to elect as a remedy the rescission of their contract to purchase the property and the return of the consideration they paid. The Hortons objected to this election and urged the trial court under several bases that the Schencks were not entitled to rescission. After several hearings, the trial court denied the Schencks' request for rescission and entered a judgment based on the jury verdict. The Hortons were to recover from the Schencks $122,917.20 in payment of the note along with prejudgment interest in the amount of $5,789.58 and continuing thereafter at the rate of $63.47 per day until the date of judgment. The Schencks were also to pay the Hortons $10,000 in attorneys' fees. The sum of $45,305 was awarded to the Schencks. The Hortons, Mary Taylor, and Ebby Halliday were held jointly and severally liable for this amount together with prejudgment interest in the amount of $8,266.65 and continuing thereafter at the rate of $7.45 per day until the date of judgment. The Schencks were also awarded $36,400 in attorneys' fees and $4,000 in expenses under § 27.01 of the TEX.BUS. & COM.CODE, to be paid by the Hortons. Ebby Halliday and Mary Taylor were ordered to pay $18,200 in attorneys' fees to the Schencks.

We shall address jointly the Schencks' first four points of error which state that the trial court erred in refusing to enter judgment granting the Schencks the relief of rescission for the four following reasons: (1) the court was obligated to enter a judgment in favor of the Schencks for the greatest relief which could be afforded to them; (2) the Schencks are entitled to elect to receive such relief based upon the affirmative finding of fraud by the jury; (3) the Schencks are entitled to elect to receive such relief based upon the affirmative finding by the jury of violations of the Texas Deceptive Trade Practices Act; and (4) the Schencks are entitled to elect to receive such relief based upon the affirmative finding by the jury of a breach of the express warranty that the property was suitable for construction of the Schencks' residence.

The decision whether to grant rescission lies within the sound discretion of the trial court. Ebberts v. Carpenter Prod. Co., 256 S.W.2d 601, 627 (Tex.Civ.App.--Beaumont 1953, writ ref'd n.r.e.)....