A.V.I., Inc. v. Heathington

• Decision Date: 28 August 1992
• Docket Number: No. 07-91-0042-CV,07-91-0042-CV
• Citation: 842 S.W.2d 712
• Parties: A.V.I., INC., Appellant, v. Kenneth and Claudia HEATHINGTON, Appellees.
• Court: Texas Court of Appeals

Page 712

842 S.W.2d 712

A.V.I., INC., Appellant, v. Kenneth and Claudia HEATHINGTON, Appellees.

No. 07-91-0042-CV.

Court of Appeals of Texas,

Amarillo.

Aug. 28, 1992.

Rehearing Overruled Oct. 5, 1992.

Carr Fouts Hunt Craig Terrill & Wolfe, Donald M. Hunt, Gary M. Bellair, Lubbock, for appellant.

Daniel L. Adcock, Lamesa, for appellee.

Before REYNOLDS, C.J., and BOYD and POFF, JJ.

POFF, Justice.

Appellant, A.V.I., Inc. (AVI), appeals from a judgment finding it had engaged in deceptive acts or practices in its dealings with appellees, Kenneth and Claudia Heathington (the Heathingtons), and ordering it to pay the Heathingtons $31,470.55 in damages, attorney's fees and prejudgment interest. In four points of error, AVI contends the trial court erred by (1) submitting and rendering judgment upon Question 5b because the question submitted an improper measure of damages; (2) admitting the irrelevant testimony of two witnesses; (3) rendering judgment for the Heathingtons despite their failure to conclusively prove they had given AVI a required demand letter; and (4) awarding prejudgment interest on attorney's fees. In a single cross point of error, the Heathingtons contend the trial court erred in not granting a new trial on the issue of attorney's fees on appeal. We will overrule AVI's four points of error and sustain the Heathingtons' cross point of error.

In 1978, the Heathingtons agreed to lease a water-driven irrigation system from Trans Union Leasing Corporation (Trans Union). However, they did not deal directly with Trans Union. Rather, they dealt with AVI in obtaining the lease. In 1980, the Heathingtons agreed to lease an electric sprinkler irrigation system from Trans Union for a ten-year term. They again dealt directly with AVI. By the terms of the written lease, the Heathingtons had an option at the end of the ten-year term to either purchase the irrigation system for its fair market value or renew the lease for one year at fair rental value. The lease provided that the fair market value of the system would be determined by an independent appraiser approved by both parties.

Subsequently, the Heathingtons became unable to make the required payments on the 1978 lease and Trans Union sued for the back payments. The Heathingtons claim that not until this time did they become aware of their written contractual options regarding retention of the electric irrigation system at the end of the 1980 lease. Up to that point in time, the Heathingtons claim to have relied on the statement of the AVI representative who assisted them in obtaining both leases, Paul Carter, that at the end of the ten-year term the electric irrigation system could be purchased for one dollar. Upon discovering that Carter's alleged representation was false, the Heathingtons, as a third-party plaintiff, sued AVI, as a third-party defendant, asserting violations of the Deceptive Trade Practices-Consumer Protection Act (DTPA). See Tex.Bus. & Com.Code Ann. §§ 17.41-.63 (Vernon 1987 & Vernon Supp.1992). One of the Heathingtons' assertions was that by telling them the irrigation systems could be purchased at the end of the lease term for one dollar, AVI represented that an agreement conferred rights it did not have in violation of Tex.Bus. & Com.Code § 17.46(b)(12) (Vernon 1987). The Heathingtons also asserted that AVI's misrepresentation was intended to induce them into a transaction into which they otherwise would not have entered and therefore constituted a violation of Tex.Bus. & Com.Code § 17.46(b)(23) (Vernon 1987).

While the suit remained pending, Trans Union and the Heathingtons negotiated a settlement agreement which served to resolve the two parties' differences regarding the 1978 lease, as well as the 1980 lease which had not been at issue in the suit. Under the terms of the agreement, the Heathingtons agreed to pay Trans Union a total of $7500--$2500 to settle the 1978 lease and $5000 to settle the 1980 lease. Following this settlement, only the Heathingtons' claims against AVI remained. The Heathingtons then amended their original petition against AVI to assert entitlement to the $7500 paid to settle with Trans Union.

At trial, both Carter and AVI's president denied that any representations had been made concerning purchase of the irrigation systems for one dollar at the end of the lease. The jury, however, found that AVI had violated the DTPA during the course of its dealings with the Heathingtons on both the 1978 lease and the 1980 lease. The jury also found that the statute of limitations defeated the Heathingtons' DTPA claim as to the 1978 lease and the Heathingtons have not appealed from that finding. In regard to AVI's deceptive trade practices in conjunction with the 1980 lease, the jury awarded the Heathingtons $5000 actual damages and $22,979.87 attorney's fees. The trial court then imposed $2000 in statutory damages and $1490.68 for prejudgment interest on actual damages and attorneys fees. It is from this total judgment of $31,470.55 that AVI appeals.

In its first point of error, AVI contends the trial court erred in submitting and rendering judgment upon question 5b because the question submitted an improper measure of damages. The question read as follows Question Number 5:

What sum of money, if any, if paid now in cash, would fairly and reasonably compensate the Heathingtons for their damages, if any, that resulted from such false, misleading, or deceptive acts or practices or unconscionable actions or course of action with respect to the 1978 or 1980 lease?

Consider the following elements of damages, if any, and none other. Consider each element separately. Do not include damages for one element in any other element.

Answer in dollars and cents for damages, if any.

....

b. The amount, if any, the Heathingtons reasonably paid to settle the claims of Trans Union Leasing Corporation on the 1980 lease.

Answer: $5,000.00

AVI objected to the inclusion of Question 5b in the charge on the ground that it submitted an improper measure of damages. Additionally, after the jury had made the $5000 finding, AVI moved that the finding be set aside as immaterial.

The DTPA is intended to provide remedies for persons victimized by false, misleading, or deceptive acts or statements. See Brown v. American Transfer & Storage Co., 601 S.W.2d 931, 938 (Tex.1980). The purpose of the DTPA is to permit the adversely affected party to recover the greatest amount of "actual damages" alleged and established to have been caused by the defendant. Farrell v. Hunt, 714 S.W.2d 298, 300 (Tex.1986). Actual damages are those found in common law. Id. The amount of actual damages that can be recovered under the DTPA is determined by the total loss caused by the deceptive trade practice. Kish v. Van Note, 692 S.W.2d 463, 466 (Tex.1985).

The DTPA allows a plaintiff to recover damages as measured by the "out of pocket" rule or the "benefit of the bargain" rule, whichever gives the consumer the greatest recovery. Leyendecker & Assoc., Inc. v. Wechter, 683 S.W.2d 369, 373 (Tex.1984). The benefit of the bargain rule allows the consumer to recover the difference between the value as represented and the actual value received. Id. Both AVI and the Heathingtons agree that in this case, the benefit of the bargain should be measured by the difference between one dollar--the amount for which the Heathingtons claim AVI represented the electric irrigation system could be purchased at the end of the lease term--and the fair market value of the irrigation system at the end of the lease term. As mentioned, the terms of the lease contract required the Heathingtons to pay the fair market value of the irrigation system in order to obtain it at the end of the lease term.

AVI's basic contention is that the $5000 paid by Heathington to settle the 1980 lease is no evidence of the fair market value of the electric irrigation system at the end of the lease. However, in their written settlement agreement, Trans Union and the Heathingtons agreed that the fair market value of the electric irrigation system was $5000. While the lease states that the fair market value of the system would be determined by an independent appraiser, AVI's Paul Carter testified that appraisers were not commonly used to determine fair market value. Carter stated that "[m]ost people negotiated their deal at the end [of the term] and agreed to pay for it." We find the agreement between Trans Union and the Heathingtons that the fair market value of the irrigation system was $5000 constitutes evidence of the fair market value of the system at the end of the lease term. The trial court did not err in submitting Question 5b. AVI's first point of error is overruled.

In its second point of error, AVI contends that the trial court erred in allowing the testimony of two local farmers, Randy Floyd and Dean Faulkenberry, concerning lease agreements they entered into with Paul Carter of AVI. At trial, Carter declared, "I have never told anyone that they could buy it [irrigation systems] at the end of that lease for a dollar on a Trans Union lease." However, both Floyd and Faulkenberry rebutted Carter's statement by testifying that they had leased irrigation systems from Trans Union through AVI and that, as in the case of the Heathingtons, Carter told them the irrigation system could be purchased at the end of the lease term for one dollar. AVI argues that the testimony of Floyd and Faulkenberry should not have been admitted because it was irrelevant. AVI contends that such testimony would only have been relevant if it established that AVI had a habit of making the one dollar misrepresentation. See Tex.R.Civ.Evid. 406. We disagree.

Relevant evidence is "evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." Tex.R.Civ.Evid. 401. The fact that is of consequence to...