Country Title , L.L.C. v. Morenike Jaiyeoba
01-14-00931-CV
Tex. App.May 7, 2015Background
- Jaiyeoba contracted to buy a Sugar Land house; Country Title acted as escrow/closing agent and agreed to record deeds and wire the payoff to the seller’s lender.
- Country Title’s recording and wire attempts failed; World Savings foreclosed, purchased the property at sale, and evicted tenants; Jaiyeoba lost rental income and later defaulted on mortgage payments to her lender, harming her credit.
- Country Title later attempted to cure by recording deeds and offering to pay the escrowed payoff; negotiations included Country Title’s request for a release and indemnity; settlement talks failed and Jaiyeoba sued for breach of contract, negligence, gross negligence, and breach of fiduciary duty.
- At trial the court directed a verdict on negligence and fiduciary-duty claims initially, but submitted gross negligence and credit-reputation damages to the jury; the jury awarded $30,000 (credit-reputation) and found gross negligence, and a subsequent trial awarded $100,000 exemplary damages; final judgment included those sums plus actual damages and pre-judgment interest.
- On appeal (this brief), Country Title argues the economic-loss rule bars the negligence/gross-negligence claims, that settlement communications were inadmissible under Tex. R. Evid. 408 and prejudicial, and that evidence of credit-reputation damages was legally insufficient.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held (trial-court ruling) |
|---|---|---|---|
| Whether gross-negligence / exemplary damages are recoverable given duties arose from contract | Jaiyeoba contends Country Title’s conduct (failure to record/pay) supports gross negligence and punitive damages | Country Title argues duties were contractual so economic-loss rule bars negligence/gross-negligence; also negligence was waived for failure to request jury charge | Trial court submitted gross negligence and exemplary damages; jury found gross negligence and awarded exemplary damages |
| Admissibility of settlement negotiations (release/indemnity requests) | Jaiyeoba introduced negotiations as evidence of Country Title’s indifference/breach of fiduciary duty | Country Title contends Rule 408 barred use of settlement offers and indemnity/release requests; admission was prejudicial | Trial court admitted letters and testimony about settlement requests; plaintiff emphasized them in closing |
| Sufficiency of credit-reputation damages award ($30,000) | Jaiyeoba points to credit reports, missed payments, and a bank’s refusal of a loan as showing injury to credit reputation and loss | Country Title argues plaintiff produced no proof that declined loan was caused by Title’s conduct or that she suffered quantifiable financial loss from impaired credit | Trial court submitted credit-reputation damages to the jury; jury awarded $30,000 |
| Waiver of ordinary negligence jury submission | Jaiyeoba relied on breach of fiduciary duty and did not request an ordinary-negligence charge | Country Title argues plaintiff waived the negligence submission by failing to request an instruction or directed verdict before the jury retired | Trial court initially left negligence out of the charge, later reopened evidence and treated negligence as established; judgment entered on gross-negligence-based exemplary damages |
Key Cases Cited
- LAN/STV v. Martin K. Eby Const. Co., 435 S.W.3d 234 (Tex. 2014) (economic-loss rule and allocation of economic losses by contract)
- Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407 (Tex. 2011) (economic-loss rule applies where tort duty is not independent of contractual obligations)
- St. Paul Surplus Lines Ins. Co. v. Dal-Worth Tank Co., Inc., 974 S.W.2d 51 (Tex. 1998) (lost-credit damages require proof that inability to obtain credit caused actual injury and proof of amount)
- Provident American Ins. Co. v. Castaneda, 988 S.W.2d 189 (Tex. 1998) (no recovery for loss of credit reputation without proof of injury)
- Chapman Custom Homes, Inc. v. Dallas Plumbing Co., 445 S.W.3d 716 (Tex. 2014) (economic-loss rule precludes tort recovery for purely economic losses stemming from contract breach)
- Nowzaradan v. Ryans, 347 S.W.3d 734 (Tex. App.—Houston [14th Dist.] 2011) (gross negligence requires proof of ordinary negligence)