Zheng v. Vacation Network, Inc.

• Decision Date: 28 May 2015
• Docket Number: NO. 14–13–01136–CV,14–13–01136–CV
• Citation: 468 S.W.3d 180
• Parties: Weizhong Zheng, Appellant v. Vacation Network, Inc. and Linh C. Dinh, Appellees
• Court: Texas Court of Appeals

468 S.W.3d 180

Weizhong Zheng, Appellant

v.Vacation Network, Inc. and Linh C. Dinh, Appellees

NO. 14–13–01136–CV

Court of Appeals of Texas, Houston (14th Dist.).

Opinion filed May 28, 2015

On Appeal from the 165th District Court, Harris County, Texas, Trial Court Cause No.2013–33555.

Elizabeth Ray, Judge.

Craig Welscher, Houston, TX, Weizhong Zheng, Austin, TX, for Appellant.

Joe T. Sanders II, Austin, TX, Anthony Arguijo, Houston, TX, for Appellees.

Panel consists of Justices Christopher, Donovan, and Wise.

OPINION

John Donovan, Justice

Appellant, Weizhong Zheng, appeals the trial court's judgment, dismissing, under Texas Rule of Civil Procedure 91a, Zheng's claims against appellees, Vacation Network, Inc. and Linh C. Dinh, and awarding attorney's fees to appellees. We reverse the portion of the judgment dismissing Zheng's claim under the Texas Timeshare Act against Vacation Network. We affirm the portion of the judgment dismissing Zheng's fraud claim against Vacation Network and all of Zheng's claims against Dinh. We remand for further proceedings, including a determination of the appropriate awards of attorney's fees.

I. Background

Zheng alleges the following facts in his petition: On June 6, 2009, in response to solicitations from Vacation Network and after attending a presentation, Zheng entered into a timeshare contract with Vacation Network. Dinh is the president of Vacation Network. Zheng paid the full contractual price of $7,299. Appellees failed to provide the services they verbally promised and made materially false representations or concealed or failed to disclose material facts to secure Zheng's endorsement of the contract. Three days after execution, Zheng requested cancellation and a full refund. He has not used any contractual benefits. Appellees offered a modification, which Zheng declined. Appellees refused to honor Zheng's request for cancellation and retained his payment. The contract contained a waiver-of-rescission clause in violation of the Texas Timeshare Act, and appellees were not licensed to promote timeshares.

Zheng asserts two causes of action: (1) violations of the Timeshare Act; and (2) common law fraud. As we construe the petition, he seeks damages equal to the contractual price or rescission of the contract and a refund of the price.

Appellees filed a motion to dismiss each claim pursuant to Texas Rule of Civil Procedure 91a, to which Zheng responded. The trial court conducted a hearing on the motion. On September 23, 2013, the trial court signed an order granting the motion, dismissing all of Zheng's claims with prejudice, and ordering that appellees are entitled to recover their costs and attorney's fees associated with the motion. Appellees then filed a motion for award of their attorney's fees and entry of final judgment, with evidence attached to prove the amount of attorney's fees. On February 3, 2014, the trial court signed a final judgment, dismissing Zheng's claims with prejudice and awarding appellees $9,806.81 in attorney's fees. After the trial court signed the dismissal order but before it signed the final judgment, Zheng filed a motion for new trial, which was overruled.

II. Dismissal of Zheng's Claims

Rule 91a, entitled “Dismissal of Baseless Causes of Action,” provides in pertinent part:

91a.1 Motion and Grounds. Except in a case brought under the Family Code or a case governed by Chapter 14 of the Texas Civil Practice and Remedies Code, a party may move to dismiss a cause of action on the grounds that it has no basis in law or fact. A cause of action has no basis in law if the allegations, taken as true, together with inferences reasonably drawn from them, do not entitle the claimant to the relief sought. A cause of action has no basis in fact if no reasonable person could believe the facts pleaded.

91a.2 Contents of Motion. A motion to dismiss must state that it is made pursuant to this rule, must identify each cause of action to which it is addressed, and must state specifically the reasons the cause of action has no basis in law, no basis in fact, or both.

...

91a.5 Effect of Nonsuit or Amendment; Withdrawal of Motion.

(a) The court may not rule on a motion to dismiss if, at least 3 days before the date of the hearing, the respondent files a nonsuit of the challenged cause of action, or the movant files a withdrawal of the motion.

(b) If the respondent amends the challenged cause of action at least 3 days before the date of the hearing, the movant may, before the date of the hearing, file a withdrawal of the motion or an amended motion directed to the amended cause of action.

(c) Except by agreement of the parties, the court must rule on a motion unless it has been withdrawn or the cause of action has been nonsuited in accordance with (a) or (b). In ruling on the motion, the court must not consider a nonsuit or amendment not filed as permitted by paragraphs (a) or (b).

...

91a.6 Hearing; No Evidence Considered. Each party is entitled to at least 14 days' notice of the hearing on the motion to dismiss. The court may, but is not required to, conduct an oral hearing on the motion. Except as required by 91a.7, the court may not consider evidence in ruling on the motion and must decide the motion based solely on the pleading of the cause of action, together with any pleading exhibits permitted by Rule 59.

Tex.R. Civ. App. 91a.1, .2, .5(a)–(c), .6.

Determinations of whether a cause of action has any basis in law and in fact are both legal questions which we review de novo, based on the allegations of the live petition and any attachments thereto. Wooley v. Schaffer, 447 S.W.3d 71, 76 (Tex.App.–Houston [14th Dist.] 2014, pet. filed). ¹ In conducting our review, we must construe the pleadings liberally in favor of the plaintiff, look to the pleader's intent, and accept as true the factual allegations in the pleadings to determine if the cause of action has a basis in law or fact. Id. We apply the fair-notice pleading standard to determine whether the allegations of the petition are sufficient to allege a cause of action. Id.; seeRoark v. Allen, 633 S.W.2d 804, 810 (Tex.1982) (“A petition is sufficient if it gives fair and adequate notice of the facts upon which the pleader bases his claim.”).²

Zheng's second and third issues are interrelated and challenge the merits of the dismissal. Zheng argues the trial court improperly considered evidence outside of the pleadings and erred by dismissing both claims. We will address separately the claims against each defendant because our analysis differs somewhat for each defendant.

A. Claims against Vacation Network1. Violations of Timeshare Act

Zheng characterizes his first claim as based on violations of the Texas Timeshare Act (“the Act”). See generallyTex. Prop.Code Ann. §§ 221.001–.090 (West, Westlaw through 2013 3d C.S.) (“the Texas Timeshare Act”). Liberally construing the petition, we glean that Zheng seeks recovery of his purchase price as actual damages or rescission of the contract and refund of the purchase price for two separate reasons: (1) appellees were not licensed by the Texas Real Estate Commission to promote timeshares; see id. § 221.021 (generally requiring that timeshare plan be registered with the commission); and (2) the contract contained a rescission-waiver clause which is invalid under the Act, and Vacation Network refused Zheng's timely request for cancellation. See id. § 221.041 (providing purchaser may cancel timeshare contract within certain timeframes, purchaser may not waive right of cancellation, and contract containing a waiver is voidable by purchaser).

In the motion to dismiss, Vacation Network asserted Zheng's claim has no basis in law or fact because the contract is not a timeshare agreement. In support, Vacation Network cited various portions of the Act and attached the contract, which was not an exhibit to Zheng's petition. Vacation Network stated the contract demonstrates Zheng purchased a right to buy, at a later time, accommodations at a discounted price and did not purchase an ownership right in property or right to use accommodations. According to Vacation Network, this distinction means the contract is not a timeshare agreement. Vacation Network also relied on Zheng's answers to a questionnaire, made a part of the contract, in which he acknowledged the contract did not convey “any interest in ... vacation timeshareing.”

The parties dispute whether the trial court was permitted to consider the contract. Zheng maintains the trial court could not because the contract was not attached as an exhibit to the petition or filed and referred to therein. See Tex.R. Civ. P. 91a.6 (providing that, except as to attorney's fees, court may not consider evidence in ruling on the motion to dismiss and must decide the motion based solely on the pleading, “together with any pleading exhibits permitted by Rule 59”); id. 59 (providing, inter alia, that written instruments, constituting “the claim sued on” may be made a part of the pleading by originals or copies being attached, filed and referred to, or copied in the body).

In contrast, Vacation Network argues (1) Zheng waived his contention that the trial court could not consider the contract by failing to object and by presenting his own evidence in response to the motion to dismiss, and (2) the trial court was permitted to consider the contract pursuant to Rule 91a.6 because it constitutes “the claim sued on” under Rule 59, albeit attached to the motion to dismiss rather than the petition. See id.

We need not decide whether the trial court was permitted to consider the contract because even if it was permitted, the trial court erred by dismissing the claim based on violations of the Act. Whether the contract is a timeshare agreement involves comparison of the contractual terms and the nature of the interest purchased by Zheng against the statute, including its definitions relative to what constitutes a timeshare interest. The...