J. Anthony Referente and Elizabeth A. Referente v. City View Courtyard, L.P. and JAAV Investments, LLC
477 S.W.3d 882
Tex. App.2015Background
- Elizabeth Referente bought a Houston townhome in 2010 under the TREC standard One-to-Four Family Residence Contract (Resale) that included an attorney’s-fees provision and an “accepts the Property in its present condition” (as-is) clause.
- Pre-closing inspection revealed anticipated repairs; parties negotiated a $15,000 price reduction; seller’s disclosure denied knowledge of defects or water penetration.
- In early 2011 the Referentes discovered a kitchen ceiling leak and evidence of a prior repair; in January 2013 they sued the sellers (City View and JAAV) for negligence, breach of warranty, and DTPA violations.
- Defendants filed a traditional and no-evidence summary-judgment motion (including a counterclaim for contractual attorney’s fees) that remained pending for nearly a year and was set for submission May 5, 2014.
- Six days before submission the Referentes nonsuited their claims without stating a reason; trial proceeded solely on whether defendants were prevailing parties entitled to fees under the contract.
- The trial court found the Referentes nonsuited to avoid an unfavorable merits ruling and awarded defendants $9,447 in attorney’s fees; the Referentes appealed alleging insufficient evidence for that finding and arguing the as-is clause was inapplicable due to fraudulent concealment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether evidence legally supports trial court finding that Referentes nonsuited to avoid an unfavorable merits ruling | Referentes: no evidence shows suit was meritless at filing; they nonsuited for financial reasons (couldn't afford litigation costs) | Defendants: timing (nonsuit six days before summary-judgment submission after year-long pendency) and lack of explanatory notice support inference nonsuit was to avoid adverse ruling | Court: affirmed—sufficient evidence supports finding nonsuit to avoid unfavorable ruling (trial court could discredit financial-need testimony) |
| Whether defendants were prevailing parties entitled to contractual attorney’s fees after nonsuit | Referentes: nonsuit mooted claims and defendants are not prevailing parties because suit had arguable merit when filed | Defendants: under Epps, a defendant may prevail if court finds the nonsuit was to avoid an unfavorable ruling; thus fees recoverable | Court: affirmed—because court found nonsuit was to avoid unfavorable ruling, defendants were prevailing parties and entitled to fees |
| Whether the as-is/present-condition contract clause was binding given alleged fraudulent concealment | Referentes: fraudulent concealment of defect renders as-is clause inapplicable | Defendants: as-is clause bars recovery; summary-judgment grounds would have succeeded absent nonsuit | Court: court did not need to reach full merits because Epps does not require the hypothetical merits ruling be correct; alternatively, Referentes failed to oppose no-evidence summary judgment on causation, so they cannot show they would have defeated it |
Key Cases Cited
- Epps v. Fowler, 351 S.W.3d 862 (Tex. 2011) (a defendant may be a prevailing party after a plaintiff nonsuits if court finds nonsuit was to avoid an unfavorable merits ruling; enumerates factors supporting such an inference)
- Travelers Ins. Co. v. Joachim, 315 S.W.3d 860 (Tex. 2010) (a nonsuit terminates the case from the moment filed but does not affect motions for attorney’s fees pending at dismissal)
- HTS Servs., Inc. v. Hallwood Realty Partners, L.P., 190 S.W.3d 108 (Tex. App.—Houston [1st Dist.] 2005, no pet.) (standard for appellate review of trial-court factual findings challenged for sufficiency)
- Moreland v. Johnson, 95 S.W.3d 392 (Tex. App.—Houston [1st Dist.] 2002, no pet.) (appellate de novo review applies to legal questions about whether a suit had an arguable basis in law)
- El Paso Nat. Gas Co. v. Minco Oil & Gas Co., 964 S.W.2d 54 (Tex. App.—Amarillo 1997) (mixed question review: defer to trial court’s factual findings but review legal conclusions de novo)