Christopher Trusky and Kelly Lee Trusky v. Ariadne Holoway

Affirmed as Modified and Memorandum Opinion filed May 17, 2005 Affirmed as Modified and Memorandum Opinion filed May 17, 2005. In The Fourteenth Court of Appeals ____________ NO. 14-04-00196-CV ____________ CHRISTOPHER TRUSKY AND KELLY LEE TRUSKY, Appellants V. ARIADNE HOLOWAY, Appellee On Appeal from the 133rd District Court Harris County, Texas Trial Court Cause No. 02-51016 M E M O R A N D U M   O P I N I O N Christopher and Kelly Lee Trusky appeal from a judgment favoring Ariadne Holoway on her negligence and Deceptive Trade Practices Act causes of action. After a jury trial, the court awarded Holoway $4,749.50 in actual damages, plus pre- and postjudgment interest and attorney’s fees. In six issues, the Truskys contend that (1) there was no evidence that they made any negligent misrepresentations, (2) Holoway failed to present any expert testimony regarding the standard of care for negligence; (3) there was no evidence of a failure to disclose under the DTPA; (4) professional negligence is not actionable under the DTPA; (5) the court erred in awarding $1,000 in mental anguish damages because there was no evidence that the Truskys acted knowingly; and (6) the trial court erred in awarding attorney’s fees when the Truskys were not liable to Holoway under the DTPA. We modify the judgment to remove the award of mental anguish damages and affirm as modified. Background Holloway hired Christopher Trusky to survey property that she intended to purchase in Pearland, Texas, and on which she desired to build a home.[1] Trusky reported to Holoway, among other things, that the property was located in the 100-year flood plain; however, Trusky failed to inform Holoway that the property was also in the floodway, which severely restricted the type and manner of construction pursuant to Pearland city ordinance.[2] Holoway sued the Truskys, alleging, among other things, negligence and deceptive trade practices. The jury found that (1) Christopher Trusky’s negligence proximately caused damages to Holoway; (2) Trusky did not commit gross negligence; (3) Trusky engaged in false, misleading, or deceptive acts or practices that caused damages to Holoway, either by failing to disclose information or by breaching the warranty of good and workmanlike performance; and (4) Trusky did not engage in any unconscionable action. In response to a single, unified question on damages, the jury found that Holoway suffered $3,749.50 in consequential damages and $1,000 in mental anguish damages. The trial court entered judgment in accordance with the jury’s findings and did not specify whether the damages were awarded pursuant to the negligence or DTPA findings. DTPA Claims[3] The court’s charge authorized the jury to find that Trusky engaged in false, misleading, or deceptive acts or practices because either (1) he failed to disclose information about goods or services that was known at the time of the transaction with the intention to induce Holoway into a transaction, or (2) he breached the implied warranty of good and workmanlike performance. See Tex. Bus. & Com. Code Ann. § 17.46(b)(24), 17.50(a)(1)(A), (2) (Vernon 2002 & Supp. 2004).[4] In their original brief, the Truskys did not specifically mention the breach of warranty ground; in their reply brief, they argue that the breach of warranty finding cannot support the judgment because it was never pled. However, the Truskys do not cite any place in the record where they preserved this argument in the trial court, by special exception, objection to evidence, or objection to the charge. See Tex. R. Civ. P. 67 (providing that “[w]hen issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings”), 90 (providing that “[e]very defect, omission, or fault in a pleading . . . which is not specifically pointed out . . . before the instruction or charge to the jury . . . shall be deemed to have been waived by the party seeking reversal on such account”), 274 (providing that “[a] party objecting to a charge must point out distinctly the grounds of the objection” and “[a]ny complaint as to a question, definition, or instruction, on account of any defect, omission, or fault in pleading, is waived unless specifically included in the objections”); Tex. R. App. P. 33.1(a) (providing that to preserve a complaint for appellate review the complaining party must have made a timely and sufficiently specific request, objection, or motion in the trial court); Murray v. O & A Exp., Inc., 630 S.W.2d 633, 637 (Tex. 1982) (holding party waived argument that pleadings did not support charge submission by failing to make a timely objection to the charge on that ground); 2 Roy W. McDonald & Elaine A. Grafton Carlson, Texas Civil Practice § 732 (2d ed. 2003) (discussing waiver of pleading omissions). During the charge submission conference, the Truskys’ counsel objected that four paragraphs in the DTPA liability question were not supported by the pleadings. The court and both counsel then discussed each paragraph, and the court struck three of the four paragraphs in their entireties. Regarding the fourth objected-to paragraph, concerning breach of warranty, the Truskys’ counsel argued that “[f]irst of all, there was never any pleading regarding knowingly. It was no direct question [sic] asking if the Defendant did anything knowingly. And as such, it’s just not appropriate in this matter.”[5] The trial court agreed and struck the language regarding “knowingly” from the paragraph. The Truskys’ counsel then asked, “Did we get rid of knowingly?” Holoway’s counsel responded, “He did.” And the Truskys’ counsel said, “Okay. Then I will put this back.” Counsel and the court then briefly discussed the damages submission, and the court asked if anything else needed to be discussed on the record. The Truskys’ counsel indicated that he did not need to make any additional arguments or objections. In summary, the trial court granted the Trusky’s counsel all of the relief he requested in regard to the DTPA submission. The only objection he made to the breach of warranty paragraph was to the inclusion of the term “knowingly”; the court sustained the objection, and counsel had no further objection to the warranty submission. Accordingly, the Truskys did not preserve the argument that the DTPA warranty submission was not supported by the pleadings. See Tex. R. App. P. 33.1(a). Professional Services Exemption In their fourth issue, the Truskys contend that Holoway’s DTPA claims cannot stand because they pertain to the rendering of professional services, which are exempt from application of the DTPA. See Tex. Bus. & Com. Code Ann. § 17.49(c) (“Nothing in this subchapter shall apply to a claim for damages based on the rendering of a professional service, the essence of which is the providing of advice, judgment, opinion, or similar professional skill.”). There is little case law interpreting the professional services exemption, and no Texas court has determined whether it applies to surveyors. The legislative history of the exemption is not determinative of the issue either. While doctors, lawyers, and certified public accountants were specifically mentioned as professionals in the debate, surveyors were not specifically included or excluded as professionals. E.g., Debate on Tex. H.B. 668 on the Floor of the House, 74th Leg., R.S. (May 3, 1995) (comments by Chairman Seidlits and Rep. Danburg mentioning lawyers; comments by Reps. Junell and Danburg mentioning doctors; comments by Chairman Seidlits mentioning accountants).[6] At least one commentator has suggested that surveyors fall within a category of careers that did not obviously qualify for the exemption but could be shown to qualify. David Skeels, The DTPA Professional Services Exemption: Let ‘em be Doctors and Lawyers and Such, 55 Baylor L. Rev. 783, 807 & n.115 (2003). Even if surveyors as a group are considered eligible professionals, the case law and commentators interpreting the exemption have come to the logical conclusion that not every task performed by a professional qualifies as a professional service. See Nast v. State Farm Fire and Cas. Co., 82 S.W.3d 114, 122 (Tex. App.—San Antonio 2002, no pet.); Richard M. Alderman, The Lawyer’s Guide to the Texas Deceptive Trade Practices Act § 3.051 (2d ed. Dec. 2001); David F. Bragg & Michael Curry, DTPA Forms & Practice Guide § 2.02.01 (2001); Skeels, The DTPA Professional Services Exemption, 55 Baylor L. Rev. at 801; Teel Bivens et al., The 1995 Revisions to the DTPA: Altering the Landscape, 27 Tex. Tech L. Rev. 1441, 1451-52 (1996). However, no definitive test has emerged for determining what constitutes a professional service under the exemption. See Nast, 82 S.W.3d at 122 (adopting definition of “professional services” used in interpreting insurance policy exclusion in Atlantic Lloyd’s Ins. Co. of Tex. v. Susman Godfrey, L.L.P., 982 S.W.2d 472, 476 (Tex. App.—Dallas 1998, pet. denied)); Skeels, The DTPA Professional Services Exemption, 55 Baylor L. Rev. at 818-21 (proposing a three-pronged test, including (1) whether the service provider is a professional, (2) whether the essence of the service provided required advice, judgment, opinion, or similar professional skill, and (3) whether any of the exceptions apply). Here, we need neither to determine definitively whether surveyors are professionals contemplated by the exemption, nor to formulate an exact test for determining what constitutes a professional service under the exemption. We find that the Truskys have failed to sufficiently present the issue in the trial court or on appeal. In the trial court, the Truskys argued the professional services exemption in their “Motion to Withdraw Case from Jury and to Render Judgment,” which was essentially a motion for directed verdict, and in a “Motion to Disregard the Jury Verdict.”[7] In order to prevail on either motion, the Truskys had to establish that they were entitled to judgment as a matter of law. See Wilson & Wilson Tax Servs., Inc. v. Mohammed, 131 S.W.3d 231, 241 (Tex. App.—Houston [14th Dist.] 2004, no pet.). When reviewing these motions, we consider all the evidence in the light most favorable to the nonmovant, giving the nonmovant the benefit of all inferences arising from the evidence. Id. In their motions, as proof that Trusky was performing a professional service covered by the exemption, the Truskys referred only to Holoway’s testimony regarding what she expected from Trusky in performing the survey.[8] Holoway testified somewhat inconsistently on this issue. She stated that she expected Trusky to tell her about the floodway because of “professional reasons” and that she was “disappointed that a professional . . . missed giving me information,” but she also said, “It’s not professional opinion. It’s his job.” But, more importantly, there is no evidence in the record that Holoway had any particular knowledge about the work of surveyors, about how Trusky performed this particular survey, or about the DTPA professional services exemption that would have made her opinion on the issue relevant. In their reply brief on appeal, the Truskys additionally argue that the “Manual of Practice” for Texas surveyors, an excerpt of which was produced at trial, establishes that Trusky was performing a professional service. Texas Society of Professional Surveyors, Manual of Practice: for Land Surveying in the State of Texas (9th ed. 1999). Specifically, the Truskys point to a portion of the manual that states that a surveyor should consider and evaluate information regarding flood plains and floodways. See id., Category 1B, § 5.10. The Truskys interpret this language as proof that the service provided required advice, judgment, opinion, or similar skill such as would qualify it under the professional services exemption. However, we find this statement in the manual insufficient to demonstrate the applicability of the exemption to these circumstances. The question here is not simply whether the service provided by Trusky required some degree of advice, judgment, opinion, or similar skill, as most services do; the question is whether the essence of the service was the provision of advice, judgment, opinion, or similar skill. See Tex. Bus. & Com. Code Ann. § 17.49(c); see also Alderman, supra, § 3.051.[9] The manual mentions evaluation and consideration but also provides considerable detail regarding the mechanical procedures to be followed by a surveyor; thus, the manual by itself does not affirmatively answer the essence question.[10] Certainly, the performance and reporting of a survey requires skill, but we cannot tell from this record whether the skill required is of such a nature and degree as to fit under the DTPA’s professional services exemption. Accordingly, we find that the Truskys have failed to demonstrate as a matter of law that the exemption applies so as to defeat Holoway’s DTPA claims. See Wilson & Wilson Tax Servs., 131 S.W.3d at 241. Their fourth issue is overruled. The Truskys do not make any other arguments regarding the breach of warranty finding. Because this finding supports the damages awarded in the judgment, except as discussed below regarding mental anguish damages, we need not address the Truskys’ first and second issues attacking the negligence finding. Accordingly, these issues are overruled as moot. Mental Anguish In their fifth issue, the Truskys contend that the trial court erred in awarding judgment for $1,000 in mental anguish damages because there was no finding that they acted knowingly, or alternatively, there is no evidence to support a finding that they acted knowingly. Under the DTPA, mental anguish damages may be awarded only upon a finding of a knowing violation. Tex. Bus. & Com. Code Ann. § 17.50(b)(1).[11] The Truskys’ first contention, that there was no finding of knowing conduct, is incorrect. Question no. 3 asked the jury whether Trusky engaged in any false, misleading, or deceptive act or practice. It defined such acts or practices as either a breach of warranty or “[f]ailing to disclose information about goods or services that was known at the time of the transaction with the intention to induce another into a transaction.” While the breach of warranty submission did not require a knowing violation, the failure to disclose submission did.[12] Specifically, the latter submission required that Trusky have known the information that he was failing to disclose and that he intentionally failed to disclose the information to induce Holoway into a transaction. A person cannot intentionally fail to disclose information without doing so knowingly. Cf. Prudential Ins. Co. of Am. v. Jefferson Assocs., 896 S.W.2d 156, 162-63 (Tex. 1995) (stating that a seller cannot be liable under the DTPA for failing to disclose information that it did not actually know); Lone Star Ford, Inc. v. Hill, 879 S.W.2d 116, 119-20 (Tex. App.—Houston [14th Dist.] 1994, no writ) (holding that same evidence demonstrating intentional failure to disclose under DTPA also demonstrated knowing violation); Wyatt v. Petrila, 752 S.W.2d 683, 687 (Tex. App.—Corpus Christi 1988, writ denied) (stating that knowledge is an essential element of a failure to disclose violation under the DTPA).[13] Thus, there was an affirmative finding of knowing conduct. Alternatively under this issue, the Trusky’s argue that there is no evidence that Christopher acted knowingly in failing to disclose information. Additionally, in their third issue they generally attack the sufficiency of the evidence to support the failure to disclose finding. We agree that there is no evidence to support the finding of a knowing failure to disclose. To find a failure to disclose, the jury had to find, among other things, that Trusky knew that the property was in the floodway at the time he failed to disclose that information to Holoway. Trusky testified that he did not know the property was in the floodway until after Holoway filed her lawsuit. He said that he called the Pearland city engineer’s office and was told that the property was in the flood plain but did not ask and was not told that the property was in the floodway. Holoway did not remember to whom he spoke at the city engineer’s office. Andrew Gallagher, an assistant city engineer for Pearland, testified that as part of his job he takes telephone calls from surveyors and others and gives them information regarding the flood plain and floodway. He stated that he keeps a log of all the telephone responses that he provides and that his log showed that he told each person who called about the particular property that the property was in the floodway. However, he also stated that he has no record of any telephone call from Trusky. It is unclear from Gallagher’s testimony whether he is the only person with the city engineer’s office who responds to such phone calls.[14] That leaves two possibilities: (1) Trusky talked to someone else at the city engineer’s office, or (2) Trusky did not talk to anyone at the city engineer’s office. If Trusky talked to someone other than Gallagher, there is no evidence of the substance of that conversation other than Trusky’s testimony that he was not told that the property was in the floodway. If Trusky did not talk to anyone at the city engineer’s office, it might mean that he did not testify truthfully on the issue, but it does not mean that he knew the property was in the floodway.[15] Accordingly, we find that there is no evidence to support the finding of a knowing failure to disclose. See Sergeant Oil & Gas Co. v. Nat’l Maint. & Repair, Inc., 861 F.Supp. 1351, 1362 (S.D. Tex. 1994) (affirming summary judgment against DTPA failure to disclose claim where defendant’s principal testified that he had no knowledge of the undisclosed information and no evidence established that he had such knowledge); Pfeiffer v. Ebby Halliday Real Estate, Inc., 747 S.W.2d 887, 889-91 (Tex. App.—Dallas 1988, no writ) (affirming judgment notwithstanding the verdict on DTPA failure to disclose claim where there was no evidence that listing agent had actual knowledge of foundation problems, despite evidence of prior foundation repairs and common knowledge among other agents regarding the foundation problems). We sustain the Truskys’ third and fifth issues. Therefore, the trial court’s judgment must be modified by deleting the $1,000 awarded as mental anguish damages. Attorney’s Fees In their sixth issue, the Truskys contend that the trial court erred in granting attorney’s fees to Holoway because they were not liable under the DTPA. Because, as discussed above, we affirm the finding of DTPA liability, we overrule the Truskys’ sixth issue. We modify the trial court’s judgment by removing the $1,000 awarded as mental anguish damages. The judgment is affirmed as modified. /s/ Adele Hedges Chief Justice Judgment rendered and Memorandum Opinion filed May 17, 2005. Panel consists of Chief Justice Hedges and Justices Fowler and Seymore. [1] Although the jury charge does not mention Kelly Trusky, the court awarded judgment against her as well as her husband, Christopher Trusky. The parties make no arguments regarding the judgment against Kelly apart from those also made regarding the judgment against Christopher; accordingly, we do not address her liability separately from that of Christopher. In this opinion, we use the plural term “Truskys” when referring to both Kelly and Christopher, and we use the singular term “Trusky” when referring only to Christopher. [2] Andrew Gallagher, an assistant city engineer for Pearland, testified that no new structures could be built in the floodway unless an engineering study proved that there would be no adverse effect to other properties. He estimated the cost of such a study at $6,000 to $7,000. He further stated that although a house might be built on the property on stilts or pilings, it would be very unlikely that a house could be built on a traditional slab foundation. He testified that the city had granted only one permit to build in the floodway in the past six years. [3] Because we hold that the judgment is, for the most part, sustainable on a DTPA ground of recovery, we need not address the Truskys’ issues concerning the negligence ground of recovery. [4] DTPA section 17.50(a)(2) provides a cause of action for when a breach of an express or implied warranty is a producing cause of damages. Tex. Bus. & Com. Code Ann. § 17.50(a)(2) (Vernon 2002); Cont’l Dredging, Inc. v. De-Kaizered, Inc., 120 S.W.3d 380, 390-91 (Tex. App.—Texarkana 2003, pet. denied). [5] The Truskys’ counsel acknowledged that there was some evidence in the record relating to breach of warranty. [6] A representative of the Texas Society of Professional Surveyors did testify in favor of the legislative tort reform package, which included the professional services exemption. An Act Relating to Civil Remedies for Deceptive Trade Practices and Certain Related Consumer Claims: Hearing on Tex. H.B. 668 Before the House Comm. on State Affairs, 74th Leg., R.S. (Mar. 6, 1995). [7] It is difficult to tell from the record whether these two motions were indeed separate motions. The Motion to Withdraw was filed during jury deliberations but was apparently never argued on the record. No Motion to Disregard appears in the clerk’s record, but the reporter’s record contains discussion relating to the motion. Notwithstanding the confusing state of the record, the standards and our considerations remain the same. See Wilson & Wilson Tax Servs., Inc. v. Mohammed, 131 S.W.3d 231, 241 (Tex. App.—Houston [14th Dist.] 2004, no pet.). [8] In the Motion to Withdraw, the Truskys acknowledged that the exemption was an affirmative defense, quoted the exemption, and then stated: “Plaintiffs own testimony confirmed that she brought this action based upon her alleged desire to obtain an opinion or advice regarding the flood possibilities of her property when she employed the professional service rendered to her by Defendant in the production of her survey.” In argument on the Motion to Disregard, the Truskys’ counsel stated flatly that Holoway was “looking for . . . advice.” The Truskys made no further arguments and cited no additional evidence. [9] Alderman compared a mechanic repairing an automobile to a lawyer preparing a will. Alderman, supra, § 3.051. He suggests that while the mechanic certainly uses advice, judgment, and opinion in diagnosing the problem, the essence of repairing the vehicle is mechanical. Id. Conversely, the essence of preparing a will involves advice, judgment, and opinion, although there is some mechanical activity in producing the document. Id. It is impossible to tell on the present record where the preparation of a land survey falls in Alderman’s dichotomy. [10] It should be noted as well that the particular part of the service on which Holoway claims Trusky performed badly was obtaining and communicating the floodway information. Gallagher, an assistant city engineer, testified that he often receives telephone calls from surveyors and others asking for information on properties from the city’s maps, and he routinely provides floodway information to them over the telephone. He also suggested that anyone who came into the office and could read a simple map scale (i.e., converting feet to inches) could examine the city’s map and determine whether a property was in the floodway. Clearly, making a telephone call does not require the skill of a professional, nor does reading a simple map scale. However, it would be problematic to focus on this particular part of the service to the exclusion of the land survey service as a whole. Cf. Duncanville Diagnostic Ctr., Inc. v. Atlantic Lloyd’s Ins. Co. of Tex., 875 S.W.2d 788, 791 (Tex. App.—Eastland 1994, writ denied) (holding that acts causing death of patient were professional medical services covered by an insurance policy exclusion, stating that even though the particular acts did not require the exercise of professional medical judgment, they were an integral part of the professional medical services provided to the patient). [11] Mental anguish damages cannot be awarded in negligence cases involving property unless the negligence was gross in nature and involved some ill-will, animus, or intention to harm the plaintiff personally. City of Tyler v. Likes, 962 S.W.2d 489, 496 (Tex. 1997); Petco Animal Supplies, Inc. v. Schuster, 144 S.W.3d 554, 561-62 (Tex. App.—Austin 2004, no pet.); Seminole Pipeline Co. v. Broad Leaf Partners, Inc., 979 S.W.2d 730, 753‑57 (Tex. App.—Houston [14th Dist.] 1998, no pet.). Here, the jury found that Trusky did not commit gross negligence, and there was no allegation or evidence of ill-will, animus, or desire to harm. Thus, the negligence finding could not have supported the award of mental anguish damages. [12] As discussed above, during the charge conference, Trusky specifically objected to the inclusion of the term “knowingly” in the warranty submission, and the court removed the term from that portion of Question No. 3. [13] Furthermore, even if the jury was not effectively charged on knowingly, it would appear to have been a deemed element since the damages submission included—and the court awarded—mental anguish damages, which could only be awarded on a finding of knowing conduct. See Tex. Bus. & Com. Code Ann. § 17.50(b)(1); Tex. R. Civ. P. 279. The Truskys did not object to the inclusion of mental anguish damages in the damages submission. [14] When asked on two occasions whether his office responded to requests regarding flood plains and floodways, he replied “I do” and “Yes. I respond to phone calls.” [15] Arguably, there is a third option: that despite his testimony Gallagher failed to log the call from Trusky. However, even if this were so, there would still be no evidence of the substance of that conversation other than Trusky’s testimony. Gallagher testified specifically about each phone call he received regarding the property; he did not testify globally that he told everyone who called about the floodway.