Xarin Real Estate, Inc. v. Gamboa

• Decision Date: 26 June 1986
• Docket Number: No. 13-85-296-CV,13-85-296-CV
• Citation: 715 S.W.2d 80
• Parties: XARIN REAL ESTATE, INC., et al., Appellants, v. Dr. & Mrs. Jose GAMBOA, et al., Appellees.
• Court: Texas Court of Appeals

Page 80

715 S.W.2d 80

XARIN REAL ESTATE, INC., et al., Appellants, v. Dr. & Mrs. Jose GAMBOA, et al., Appellees.

No. 13-85-296-CV.

Court of Appeals of Texas Corpus Christi.

June 26, 1986.

Rehearing Denied Aug. 29, 1986.

Gary Pinnell, Wayne Scott, James M. Heidelberg, Les Mendelsohn, San Antonio, for appellants.

Emerson Banack, Jr., Michael R. Garatoni, Dale Wilson, Foster, Lewis Law Firm, James M. Pearl, San Antonio, for appellees.

Before NYE, C.J., and DORSEY and BENAVIDES, JJ.

OPINION

DORSEY, Justice.

This appeal involves the construction of the Texas Real Estate License Act ¹. The jury found that plaintiffs Larry Baker and Empire Real Estate, Inc. (hereinafter Baker) and Dr. and Mrs. Jose Gamboa (hereinafter Gamboas) had been damaged by the actions of appellant Xarin Real Estate, Inc. (hereinafter Xarin) in the amount of $232,000.00 and $25,000.00, respectively. In its judgment, the trial court trebled the Gamboas' amount and doubled Baker's under Section 19(b) of the Act. Additionally, the jury found that Baker's action against the Gamboas was brought in bad faith and awarded the Gamboas attorney's fees against Baker for $67,500.00 plus additional attorney's fees in the amount of $25,000.00 for appeal. We reverse and render.

The primary focus of this litigation concerns the Harmony Hills apartment complex located in San Antonio, Texas. In 1978, the owners of the apartment complex, Dr. and Mrs. Gamboa, were contacted by Elaine Watkins, a licensed Texas realtor, concerning the possibility of selling the 87-unit complex. Ms. Watkins subsequently contacted Xarin as a potential purchaser of the property. On February 13, 1979, the Gamboas and Xarin entered into an earnest money contract for the sale/purchase of the apartment complex for $1,400,000.00. The contract stated that the purchaser was to be "Xarin Real Estate, Inc., or nominee." The contract also stated that Xarin was a licensed real estate broker in Texas, which was not true. Prior to the execution of the contract between Xarin and the Gamboas, Xarin's representative in San Antonio, Ray Smith, had been in contact with Roger Thiret. Mr. Thiret was a real estate broker who sought out properties for Larry Baker throughout the country for conversion into condominium units. One of the potential projects discussed by Smith and Thiret was the Harmony Hills project.

On February 15, Baker came to San Antonio and viewed the Harmony Hills Apartments with Smith. Baker decided to purchase them, but Smith informed him that the project was under contract to Xarin but that Xarin would assign to him its rights under the contract for $232,000.00. An agreement was reached between Baker and Xarin, and the earnest money contract between Xarin and the Gamboas was assigned to Baker. Subsequently, the contract with the Gamboas was closed, Baker paid Xarin $232,000.00, and Baker created Empire Real Estate Company and conveyed title to the property to that corporation. Baker was the sole shareholder of Empire Real Estate Company.

A dispute arose concerning the amount of square footage contained in the apartment units, and Baker sued Xarin, the Gamboas, and other parties not here relevant, on theories of fraud, deceptive trade practices, breach of contract, and breach of warranty. Baker also sued Xarin for not being licensed as a real estate broker in Texas. The Gamboas cross-claimed against Xarin, and Xarin counter-claimed against Baker. The jury trial primarily involved the purported misrepresentations of the square footage, but judgment was rendered against Xarin only for its violation of the Real Estate License Act. The judgment also ordered Baker to pay the Gamboas' attorney's fees, pursuant to the jury's finding that Baker's DTPA ² cause of action against them was brought in bad faith or for the purpose of harassment.

While the various parties raise numerous points of error, the initial question which we must resolve concerns construction of the Texas Real Estate License Act. It is appellant Xarin's position that, for a variety of reasons, it was not subject to the provisions of the Act; therefore, the findings by the jury that it had violated the Act were, as a matter of law, incorrect.

The following portions of the Texas Real Estate License Act are relevant:

Section 1. (b) of the Act provides:

It is unlawful for a person to act in the capacity of, engage in the business of, or advertise or hold himself out as engaging in or conducting the business of a real estate broker or a real estate salesman within this state without first obtaining a real estate license from the Texas Real Estate Commission. It is unlawful for a person licensed as a real estate salesman to act or attempt to act as a real estate agent unless he is, at such time, associated with a licensed Texas real estate broker and acting for the licensed real estate broker.

Section 2(2) of the Act provides:

"Real estate broker" means a person who, for another person and for a fee, commission, or other valuable consideration, or with the intention or in the expectation or on the promise of receiving or collecting a fee, commission, or other valuable consideration from another person (emphasis added):

(A) sells, exchanges, purchases, rents, or leases real estate;

(B) offers to sell, exchange, purchase, rent, or lease real estate;

(C) negotiates or attempts to negotiate the listing, sale, exchange, purchase, rental, or leasing of real estate;

(D) lists or offers or attempts or agrees to list real estate for sale, rental, lease, exchange, or trade;

(E) appraises or offers or attempts or agrees to appraise real estate;

(F) auctions, or offers or attempts or agrees to auction, real estate;

(G) buys or sells or offers to buy or sell, or otherwise deals in options on real estate;

(H) aids, attempts, or offers to aid in locating or obtaining for purchase, rent, or lease any real estate;

(I) procures or assists in the procuring of prospects for the purpose of effecting the sale, exchange, lease, or rental of real estate;

(J) procures or assists in the procuring of properties for the purpose of effecting the sale, exchange, lease, or rental of real estate.

Section 2(3) of the Act provides:

"Broker" also includes a person employed by or on behalf of the owner or owners of lots or other parcels of real estate, at a salary, fee, commission, or any other valuable consideration, to sell the real estate or any part thereof, in lots or parcels or other disposition thereof. It also includes a person who engages in the business of charging an advance fee or contracting for collection of a fee in connection with a contract whereby he undertakes primarily to promote the sale of real estate either through its listing in a publication issued primarily for such purpose, or for referral of information concerning the real estate to brokers, or both. (Emphasis added.)

Section 2(5) of the Act defines a "person" as "an individual, a partnership, or a corporation, foreign or domestic."

Section 4 of the Act provides:

A person who, directly or indirectly for another, with the intention or on the promise of receiving any valuable consideration, offers, attempts, or agrees to perform, or performs a single act defined in Subdivisions 2 and 3, Section 2 of this Act, whether as a part of a transaction, or as an entire transaction, is deemed to be acting as a real estate broker or salesman within the meaning of this Act. The commission of a single such act by a person required to be licensed under this Act and not so licensed shall constitute a violation of this Act. (Emphasis added.)

Section 19(a) of the Act provides:

A person acting as a real estate broker or real estate salesman without first obtaining a license is guilty of a misdemeanor and on conviction shall be punishable by a fine of not less than $100 nor more than $500, or by imprisonment in the county jail for a term not to exceed one year, or both; and if a corporation, shall be punishable by a fine of not less than $1,000, nor more than $2,000. A person, on conviction of a second or subsequent offense, shall be punishable by a fine of not less than $500 nor more than $1,000, or by imprisonment for a term not to exceed two years, or both; and if a corporation, shall be punishable by a fine of not less than $2,000 nor more than $5,000.

Section 19(b) provides:

In case a person received money, or the equivalent thereof, as a fee, commission, compensation, or profit by or in consequence of a violation of Subsection (a) of this section, he shall, in addition, be liable to a penalty of not less than the amount of the sum of money so received and not more than three times the sum so received, as may be determined by the court, which penalty may be recovered in a court of competent jurisdiction by an aggrieved person.

The jury found that Xarin acted as a real estate broker in connection with both the Gamboas' sale of the apartment complex and Baker's subsequent purchase of the property. By its fifth through eighth and thirteenth through fifteenth points of error, Xarin challenges the legal and factual sufficiency of the evidence supporting these findings. By its first point of error, Xarin contends it was exempt from the Act solely because it acted as an owner when it sold its interest in the apartments to Baker. Xarin's contention that is the basis of all of these points is that in order for it to be a real estate broker under the Act, and in accord with the jury's finding, it is necessary that Xarin "act for another"; that absent evidence that Xarin "acted for another," it could not be found to have acted as a broker under the Act.

In considering a "no evidence" or "insufficient evidence" point of error, we will follow the well-established test set forth in Dyson v. Olin Corp., 692 S.W.2d 456 (Tex.1985); Glover v. Texas General Indemnity Co., 619 S.W.2d 400 (Tex.1981); Garza v. Alviar, 395 S.W.2d 821 (Tex.1965); Allied Finance Co. v. Garza, 626...