CONSUMER LAW

FALL 2011

Murray v. Grayum, W.L. 2533796; LEXIS 4810 (Tex. App.—Austin 2011) (memo op.)

Presumption That “Usual and Customary” Attorney’s Fees Are Reasonable Not Available Under the DTPA: In a dispute over repairs to a boat motor, the plaintiff, Richard Grayum, prevailed and was awarded economic damages, treble damages and attorney’s fees. Grayum, represented by his attorney wife, presented evidence of $10,400.00 in attorney’s fees accrued through trial but did not offer evidence that such fees were “reasonable and necessary.” The trial judge took judicial notice of the “usual and customary” attorney’s fees, stating as much in its judgment, and awarded $10,400.00 in attorney’s fees to the plaintiff. Held: Reversed and remanded for proper evidence of attorney’s fees. The Court observed that, without evidence that the attorney’s fees requested were reasonable and necessary, the record was insufficient to support an award of attorney’s fees under the DTPA. The plaintiff was not entitled to the presumption under Texas Civil Practice & Remedies Code Chapter 38 that “usual and customary” attorney’s fees are “reasonable” because he sought attorney’s fees under the DTPA and not under Chapter 38. The issue of attorney’s fees was remanded for a new trial on that issue only.

Southwest Olshan Foundation Repair Co., L.L.C. v. Gonzales, W.L. 1647256; LEXIS 321 (Tex. App.—San Antonio 2011) (memo op.)

Melody Home Implied Warranty of Services Subject to Two-Year DTPA Limitations: In Melody Home Manufacturing Co. v. Barnes, 741 S.W.2d 349 (Tex. 1987), the Texas Supreme Court recognized an implied warranty to repair or modify existing tangible goods or property in a good and workmanlike manner on behalf of “consumers suing under the DTPA.” Since then, there has been some question as to whether the implied warranty for services was available outside of the DTPA and whether the DTPA’s two-year (or the UCC’s four-year) statute of limitations applied. Held: The Court of Appeals joined three other Texas Courts of Appeals in applying the DTPA’s two-year statute of limitations based upon the conclusion that the implied warranty was only available under the DTPA.

Williams v. Dardenne, W.L. 1935889; LEXIS 3849 (Tex. App.—Houston [1^st Dist.] 2011)

“As is” Clause in Standard TREC Residential Resale Contract Precludes Fraud and DTPA Claims for Not Disclosing Foundation Engineer’s Report Where Buyers Conducted Independent Investigation: In November 2007, the buyers purchased an existing home from the sellers using a standard TREC residential resale contract which states, “Buyer accepts Property in its present condition . . ..” In the sellers’s disclosure, the sellers disclosed that the “foundation had been repaired prior to our ownership.” The sellers also disclosed two engineering reports, but failed to disclose a 2006 report from Knight Engineering Services in which an engineer opined that significant foundation problems existed. Prior to closing, the buyers had the home inspected by an independent inspector who found that the foundation was performing adequately. The case was tried to a jury which returned a verdict in favor of the buyers under the DTPA, fraud and negligent misrepresentation. The jury specifically found that the buyers were fraudulently induced into the purchase contract. Held: Reversed and rendered. Because the buyers failed to present any evidence that they would have read the Knight Engineering Report and that they would not have entered the contract had they read it, the Court found the evidence insufficient as a matter of law to support the jury’s fraudulent inducement finding. Without a finding of fraudulent inducement, the “as is” clause in the TREC contract was enforceable to preclude the elements of reliance and causation under their fraud, DTPA and negligent misrepresentation claims as a matter of law.

Hornbuckle v. Countrywide Home Loans, Inc., W.L. 1901975; LEXIS 3857 (Tex. App.—Fort Worth 2011) (memo op.)

“Show me the note” Defense to Foreclosure Rejected: “Show me the note” advocates, contending that only the holder of an originally signed note has the lawful power to initiate a non-judicial disclosure, have been mounting this challenge to foreclosure proceedings nationwide since 2009. Here, the note and deed of trust were assigned to Mortgage Electronic Registration Systems, Inc. (“MERS”) in 2004. The assignment through MERS to Countrywide of the deed of trust was not recorded until 2006 just before foreclosure proceedings were initiated. The homeowner appealed the trial court’s summary judgment allowing Countrywide, as the loan servicing agent, to foreclose on her home without showing that Countrywide was the holder of the original note. Held: Affirmed. The Court observed that Texas law did not require the mortgage servicing agent to produce the original promissory note in order to obtain a judicial foreclosure. The MERS book entry system was included within the definition of “Mortgagee” under Texas Property Code § 51.0001(4) (Vernon Supp. 2010). The Court overruled the homeowner’s challenge to the MERS system as being an improper or ineffective way to record an assignment of a note and deed of trust. Note: These “show me the note” challenges to the MERS system have been routinely rejected by both federal and state courts in Texas. See, e.g., Wells v. BAC Home Loans Servicing, L.P., W.L. 2163987; LEXIS 61529 (W.D. Tex. 2011) Broyles v. Chase Home Finance, W.L. 1428904; LEXIS 40536 (N.D. Tex. 2011); and Griffin v. BAC Home Loans Servicing, L.P., W.L. 675285; LEXIS 15297 (S.D. Tex. 2011).