Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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Thursday, May 24, 2012

Statute of Frauds as to real estate transactions: What kind of description of the property is sufficient?

The statute of frauds does not require that a complete description of the land to be conveyed appear in a single document. See Padilla v. LaFrance, 907 S.W.2d 454, 460 (Tex. 1995)) (holding that series of letters between parties satisfied statute of frauds). A property description is sufficient if the writing furnishes within itself, or by reference to some other existing writing, the means or data by which the particular land to be conveyed may be identified with reasonable certainty. See AIC Mgmt. v. Crews, 246 S.W.3d 640, 645 (Tex. 2008). The description of the land may be obtained from documents that are prepared in the course of the transaction, even if those documents are prepared after the parties’ contract for sale. See Porter v. Reaves, 728 S.W.2d 948, 949 (Tex. App.—Fort Worth 1987, no writ) (description of land as “1/2 of 20-acre tract” satisfied statute of frauds because location of tract was not disputed, the parties referenced a drawing of the tract in their contract, and seller was required to furnish “current survey” of land after contract was executed); see also Adams v. Abbott, 254 S.W.2d 78, 80 (Tex. 1952) (description furnished by exchange of correspondence between the parties)
SOURCE: HOUSTON COURT OF APPEALS - 01-11-00460-CV – 5/25/12 
General Metal Fabricating Corporation v Stergiou (Tex.App.- Houston [1st Dist.] May 24, 2012)

Wednesday, May 23, 2012

One bite only: Res judicata doctrine stops second bite at the proverbial apple

The one-bite rule – as applicable to courthouse apple chumping rather than your neighbor’s dog
Res judicata bars assertion of a claim in a subsequent case when (1) there is a prior final determination on the merits by a court of competent jurisdiction; (2) the parties in the second action are the same or in privity with those in the first action; and (3) the second action is based on the same claims as were raised or could have been raised in the first action. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010). Res judicata precludes the relitigation of claims that were finally adjudicated “as well as related matters that, with the use of diligence, should have been litigated in the prior suit.” Barr v. Resolution Trust Corp., 837 S.W.2d 627, 628 (Tex. 1991). Texas follows the transactional approach to res judicata barring claims arising out of the transaction or occurrence that is the subject matter of the first suit. State & Cnty. Mut. Fire Ins. Co. v. Miller, 52 S.W.3d 693, 696 (Tex. 2001).

As the Texas Supreme Court has explained, “[m]odern rules of procedure obviate the need to give parties two bites at the apple … to ensure that a claim receives full adjudication.” Barr, 837 S.W.2d at 631.
[T]he court’s order was a public record which was on file for four years and which Nancy could have discovered with the use of diligence. See Barr, 837 S.W.2d at 628 (stating res judicata bars related matters that, with the use of diligence, should have been litigated in prior suit).

PS: If you came to this page through a search enging, but were looking for the other one-bite rule, here is a link: http://www.johnneeselaw.com/news/texas-dog-laws-understanding-the-one-bite-rule 

When is guaranty agreement [not] enforceable?

“A guaranty creates a secondary obligation whereby the guarantor promises to answer for the debt of another and may be called upon to perform once the primary obligor has failed to perform.” Anderton v. Cawley, No. 05-10-00693-CV, 2012 WL 1606665, at *5 (Tex. App.-Dallas May 8, 2012, no pet. h.) (quoting Dann v. Team Bank, 788 S.W.2d 182, 183 (Tex. App.-Dallas 1990, no writ)). To recover under a guaranty, a claimant must prove (1) the existence and ownership of the guaranty contract, (2) the terms of the underlying contract, (3) the occurrence of the conditions upon which liability is based, and (4) the guarantor's failure or refusal to perform the promise. Id.; Marshall v. Ford Motor Co., 878 S.W.2d 629, 631 (Tex. App.-Dallas 1994, no writ). 

A guarantor may require that the terms of his guaranty be strictly followed, and the guaranty may not be extended by construction or implication beyond the precise terms of the contract. Reece v. First State Bank of Denton, 566 S.W.2d 296, 297 (Tex. 1978); Marshall, 878 S.W.2d at 631; Beal Bank, SSB v. Biggers, 227 S.W.3d 187, 192 (Tex. App.-Houston [1st Dist.] 2007, no pet.). A guarantor is discharged by a material alteration of the underlying contract that lacks the consent of the guarantor and harms the guarantor. Beal Bank, SSB, 227 S.W.3d at 192; Austin Hardwoods Inc. v. Vanden Berghe, 917 S.W.2d 320, 325 (Tex. App.-El Paso 1995, writ denied); see also McKnight v. Va. Mirror Co., 463 S.W.2d 428, 430 (Tex. 1971).

A material alteration is an alteration of the underlying contract between a creditor and principal debtor that either injures or enhances the risk of injury to the guarantor. United Concrete Pipe Corp. v. Spin-Line Co., 430 S.W.2d 360, 365-66 (Tex. 1968); Fed. Deposit Ins. Corp. v. Attayi, 745 S.W.2d 939, 944 (Tex. App.-Houston [1st Dist.] 1988, no writ).

To be entitled to discharge from liability on the guaranty, the guarantor must prove (1) a material alteration of the underlying contract; (2) made without the guarantor's consent; (3) which is to the guarantor's detriment. Vastine v. Bank of Dallas, 808 S.W.2d 463, 464-65 (Tex. 1991) (per curiam); Byboth v. Wood Ltd. P'ship, No. 05-08-00915-CV, 2009 WL 1416768, at *2 (Tex. App.-Dallas May 21, 2009, pet. denied) (mem. op.).

SOURCE: DALLAS COURT OF APPEALS - 05-11-00211-CV – 5/22/12

Tuesday, May 22, 2012

Limitations on Cancellation and Rescission

A. Limitations on Cancellation and Rescission
"In equity, rescission allows for the forced termination of an agreement and the restoration of benefits or consideration previously transferred." See Carrow v. Bayliner Marine Corp., 781 S.W.2d 691, 696 (Tex. App.-Austin 1989, no writ). At common law, a party seeking the equitable remedy of rescission must first satisfy several requirements, which include (1) giving timely notice to the seller that the contract is being rescinded; and (2) tendering or offering to tender the property received and the value of any benefit derived from its possession back to the seller. Id. (citing David McDavid Pontiac, Inc. v. Nix, 681 S.W.2d 831, 836 (Tex. App.-Dallas 1984, writ ref'd n.r.e.)). The party seeking equitable rescission bears the burden of proof on the issues of notice and tender. Id. (citing Nix, 681 S.W.2d at 836).
Morton argues in Issue 4 that these common-law limitations implicitly are incorporated into the express statutory remedy of cancellation and rescission authorized under the Texas Property Code, and that the Nguyens are not entitled to cancellation and rescission because they failed to tender or offer to tender the value of their almost three-year possession of the property back to Morton.[8]
In support of this argument, Morton cites to a line of cases from the Fifth Court of Appeals analyzing the similar statutory remedy of "restoration of consideration" under the DTPA. These cases hold that the DTPA remedy of "restoration of consideration" is "a statutory recognition" of the equitable remedy of rescission and restitution, as well as the common-law limitation that the complaining party "surrender any benefits received" before electing to avoid the contract and "recover that [which] he parted with." Smith v. Kinslow, 598 S.W.2d 910, 915 (Tex. App.-Dallas 1980, no writ); see also TEX. BUS. & COM. CODE ANN. § 17.50(b)(3) ("In a suit filed under this section, each consumer who prevails may obtain . . . orders necessary to restore to any party to the suit any money or property, real or personal, which may have been acquired in violation of this subchapter."). In other words, the Fifth Court of Appeals has held that the statutory remedy of "restoration of consideration" under the DTPA incorporates the common-law notice and tender requirements applicable to the equitable remedy of rescission and restitution. See, e.g., Nix, 681 S.W.2d at 835-36 (purchaser was not entitled to "restoration of consideration" under DTPA because limitation on remedy of rescission requires and record contained no evidence of "tender, or offer of tender" of value of benefits received from using the product approximately one month); see also Chubb Lloyds Ins. Co. of Tex. v. Andrew's Restoration, Inc., 323 S.W.3d 564, 580-81 (Tex. App.-Dallas 2010, pet. granted) (consumer was not entitled to "restoration of consideration" under DTPA because consumer failed to show that he complied with prerequisite of surrendering benefits received from other parties), aff'd in part, rev'd in part, —S.W.3d—, No. 10-0995, 2012 WL 1370851 (Tex. Apr. 20, 2012). Cf. Schenck v. Ebby Halliday Real Estate, Inc., 803 S.W.2d 361, 366-67 (Tex. App.-Tyler 1990, no writ) (jury's finding that consumer acted negligently or wrongfully constituted equitable bar to "restoration of consideration" under DTPA under equitable doctrine requiring claimant seeking equitable relief to have "unclean hands"). Morton argues that these cases from the Fifth Court of Appeals should guide our analysis of the similar statutory remedy of "cancellation and rescission" under subchapter D of chapter 5 of the Texas Property Code.
The Texas Supreme Court recently considered the position taken by the Fifth Court of Appeals and rejected it in Cruz v. Andrews Restoration, Inc., —S.W.3d—, No. 10-0995, 2012 WL 1370851, at *7-8 (Tex. Apr. 20, 2012). Reiterating its prior holding from Smith v. Baldwin, 611 S.W.2d 611, 616-17 (Tex. 1980), in which the court stated that "[t]he DTPA does not represent a codification of the common law" and was intended "to provide consumers a cause of action for deceptive trade practices without the burden of proof and numerous defenses encountered in a common law fraud or breach of warranty suit," the court held in Cruz: "[C]ompliance with [the] requirements [of notice and tender] is unnecessary under the DTPA. Instead, we adopt the Restatement approach and conclude that notice and restitution or a tender of restitution are not prerequisites to a remedy under [the DTPA] . . . ." Cruz, 2012 WL 1370851, at *8. This holding weighs against a conclusion that the statutory remedy of cancellation and rescission under the Texas Property Code incorporates the same common-law limitations.
With respect to the history and purpose of subchapter D of chapter 5, the following explanation illuminates our discussion:
In 1995, the Legislature amended chapter 5 of the Texas Property Code to address serious abuses in the acquisition of homes in the colonias. The colonias are substandard, generally impoverished, rural subdivisions that typically lack basic utilities and other infrastructure. Concentrated along the Texas border with Mexico, colonia residents almost always acquire residential lots through executory contracts called "contracts for deed" or "contracts for sale" . . . .
The Legislature found that purchasers had little legal protection under the contract-for-deed financing arrangement and no statutory right to critical information about the colonia property being purchased. Sellers have sold individual lots to two or more purchasers, sold lots without written contracts, and placed liens on lots subsequent to the sale without informing the purchasers and colonia residents. Colonia residents also complain that sellers frequently misrepresent the availability of water, sewer service, and other utilities, and that the residents are often not informed when property being sold lies in a flood plain or is otherwise unsuitable for habitation.
Although the Legislature considered a prohibition of contract-for-deed conveyances to end these abuses, it determined that many residents building homes in these areas need this method of financing because they do not have access to traditional mortgage financing. The contract-for-deed arrangement, however, allows low-income persons to purchase property and build homes on the property.
To address the fraudulent and abusive conduct, the Legislature amended the statute in 2001, substantially increasing the monetary penalties and applying the protections statewide.
Flores, 185 S.W.3d at 434-35 (Wainwright, J., concurring) (emphasis added, citations omitted). Subchapter D, therefore, provided new grounds to rescind a contract for deed that previously had been unavailable to purchasers at risk of being misled by incomplete disclosures regarding the nature of the purchased property. Accordingly, no common-law remedies were codified by the Legislature's enactment of subchapter D. In fact, to read the statute as incorporating common-law limitations into the statutory remedy would frustrate the very purpose of these sections, which were designed to "address the fraudulent and abusive conduct" of sellers. See id. at 435 (Wainwright, J. concurring). The Legislature could have included express limitations on the remedy of cancellation and rescission for these new grounds, but did not do so. We overrule Morton's Issue 4.[9]
B. Equitable Defenses of Quasi-Estoppel and Laches 
Morton argues in Issues 5-8 that the equitable defenses of quasi-estoppel and laches apply to the statutory remedy of cancellation and rescission, and that he established such defenses.
Common-law defenses may not be used to defeat claims brought under a statute that was not designed to be a codification of the common law.

SOURCE: FOURTEENTH COURT OF APPEALS - No. 14-11-00126-CV - 5/17/12 (substituted opinion)

Statutory causes of actions and common-law defenses

Common-law defenses may not be used to defeat claims brought under a statute that was not designed to be a codification of the common law. See, e.g., Smith, 611 S.W.2d at 616 (DTPA not designed to be a codification of common law; DTPA was designed to "provide consumers a cause of action for deceptive practices without the burden of proof and numerous defenses encountered in a common law fraud or breach of warranty suit"); Diversified, Inc. v. Gibraltar Sav. Ass'n, 762 S.W.2d 620, 623 (Tex. App.-Houston [14th Dist.] 1988, writ denied) ("[I]t is well established that the DTPA was not designed to be a codification of the common law and any common law defenses may not be used to defeat a claim under it." (emphasis in original)); Joseph v. PPG Indus., Inc., 674 S.W.2d 862, 865 (Tex. App.-Austin 1984, writ ref'd n.r.e.) (common-law defenses "cannot be used to defeat claims under the DTPA" because DTPA was not designed to codify common law); see also Frank B. Hall & Co v. Beach, Inc., 733 S.W.2d 251, 264 (Tex. App.-Corpus Christi 1987, writ ref'd n.r.e.) (applying rule from Smith and Joseph to preclude common-law defenses to claims brought under Texas Insurance Code). We already have determined that the sections of the Texas Property Code at issue in this case do not constitute a codification of the common law.[10] Therefore, we conclude that these common-law defenses are not available to defeat claims under the statute, and we overrule [Appellant's] Issues 4-8.[11

SOURCE: FOURTEENTH COURT OF APPEALS - HOUSTON - No. 14-11-00126-CV - 5/17/12 (substituted opinion)

Attorney fee segregation requirement not necessarily enforced by the court

Opposing party may waive complaint about failure to segregate recoverable from unrecoverable fees by failing to object in a timely fashion

Because an award of attorney's fees must be authorized by statute or contract, a party presenting more than one claim in a single cause must segregate attorney's fees between claims for which attorney's fees are or are not recoverable. See Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310-11 (Tex. 2006).
However, if no one objects to the fact that the attorney's fees are not segregated as to specific claims, the objection is waived. Green Int'l, Inc. v. Solis, 951 S.W.2d 384, 389 (Tex. 1997) (citing Hruska v. First State Bank of Deanville, 747 S.W.2d 783, 785 (Tex. 1988)); Pitts & Collard, L.L.P. v. Schechter, —S.W.3d—, No. 01-08-00969-CV, 2011 WL 6938515, at *14 (Tex. App.-Houston [1st Dist.] Dec. 29, 2011, no pet. h.) (objection to request for attorney's fees "must be made before the trial court renders judgment"). Morton failed to object at the trial court that the Nguyens should be required to segregate their request for attorney's fees, and such failure waived this issue for appellate review. See Red Rock Props. 2005, Ltd. v. Chase Home Fin., L.L.C., No. 14-08-00352-CV, 2009 WL 1795037, at *6-7 (Tex. App.-Houston [14th Dist.] June 25, 2009, no pet.) (mem. op.) (objection that attorney's fees were not segregated was not preserved in trial court); Fortenberry v. Cavanaugh, No. 03-07-00310-CV, 2008 WL 4997568, at *11-12 (Tex. App.-Austin Nov. 26, 2008, pet. denied) (mem. op.) (same); see also TEX. R. APP. P. 33.1(a)(1). We overrule Morton's Issue 16.

SOURCE: FOURTEENTH COURT OF APPEALS - HOUSTON - No. 14-11-00126-CV - 5/17/12 (substituted opinion)


"When a lawsuit involves multiple claims or parties, the proponent of attorney's fees must segregate recoverable fees from those incurred by parties or on claims for which fees are not recoverable." Clearview Props., L.P. v. Prop. Tex. SC One Corp., 287 S.W.3d 132, 143 (Tex. App.-Houston [14th Dist.] 2009, pet. denied) (citing Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 313 (Tex. 2006)). Attorney's fees that relate solely to a claim for which fees are unrecoverable must be segregated. Chapa, 212 S.W.3d at 313. The Supreme Court of Texas has held that attorney's fees are recoverable only as provided by contract or statute, and it "eliminated the exception for fees incurred solely on separate but arguably intertwined claims." Varner v. Cardenas, 218 S.W.3d 68, 69 (Tex. 2007) (citing Chapa, 212 S.W.3d at 313). But the Supreme Court did not require that all fees be segregated even when incurred by co-defendants jointly represented by the same counsel and when such fees are incurred as a result of the same discrete tasks and work.

SOURCE: HOUSTON COURT OF APPEALS - 01-13-00855-CV – 12/30/2014