Benard John Horak v. Warren Newman and Ruth Newman

Citation: Not availableDocket: 03-05-00170-CV

Court: Court of Appeals of Texas; July 21, 2009; Texas; State Appellate Court

Original Court Document: View Document

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Bernard John Horak, a self-employed home builder, appeals a judgment from the Burnet County District Court favoring appellees Warren and Ruth Newman regarding the construction and repair of their residence, which Horak undertook under a contract in October 1993. The contract stipulated that Horak would construct a 2,800 square foot home for $217,700, guaranteeing materials and labor would meet specifications and be performed in a workmanlike manner. The Newmans moved in before construction was fully completed, experiencing issues such as flooding from an unattached water line on their first night and subsequent water intrusion during rainstorms.

Horak attempted repairs, including fixing flooding damage and replacing roofing panels, but issues persisted. In 1999, HVAC servicing revealed mold in the ducts, prompting additional repairs costing the Newmans $2,765, alongside $5,901.71 for repairs to water damage in the tub room. The Newmans notified Horak of their construction defects through counsel starting in 1999 but could not resolve the dispute, leading them to file a lawsuit in April 2000 for breach of contract, breach of warranty, and violations of the Texas Deceptive Trade Practices-Consumer Protection Act (DTPA) seeking damages, additional statutory damages, and attorney's fees. The trial occurred in March 2003, where Horak raised thirteen points of error, contesting the evidence's sufficiency supporting the Newmans' claims and arguing that the statute of limitations barred their claims, but the court affirmed the trial court's judgment.

The Newmans presented several witnesses, including Mr. and Mrs. Newman, Wayne Roark (owner of Wayne's Air Control), Shawn Solsbery (owner of Classic Constructors), and their attorney. Mrs. Newman detailed their agreement with Horak regarding the construction of their residence, the flooding issues from an unattached water line during their first night, subsequent water intrusion during heavy rain, and later discovery of rotting walls and mold in 1999. Mr. Newman recounted his communications with Horak, specifically Horak's assurances that the repairs made in 1995 resolved the leakage issues. Roark and Solsbery provided testimony on their observations and the repairs they conducted, along with associated costs. The attorney testified about the attorney's fees incurred.

Horak's witnesses included himself and Ken Cleveland, a builder. Horak affirmed the agreement with the Newmans and discussed the repairs he made in 1995, admitting during cross-examination that he did not make a settlement offer in response to the Newmans' demands and confirmed representing to Mr. Newman that the water issues were resolved. Cleveland testified about his observations during the repairs in 1999. No construction expert was designated by either party.

On December 21, 2004, the trial court ruled in favor of the Newmans on claims of breach of contract, breach of warranty, DTPA violations, and awarded damages totaling $8,666.71, along with additional statutory damages of $10,000.00, attorney's fees of $9,250.00, costs, and interest, without providing findings of fact or conclusions of law. Horak appealed, raising thirteen points of error, primarily arguing that the statutes of limitations barred the Newmans' claims and contesting the sufficiency of evidence supporting the judgment and damages awarded. The analysis focused on the implied findings due to the lack of explicit findings by the trial court, applying the appropriate standards for legal and factual sufficiency challenges. Legal sufficiency can be challenged under specific conditions, such as a complete absence of evidence for a vital fact or evidence conclusively establishing the opposite of a vital fact. The reviewing court must view evidence favorably towards the trial court's judgment.

In evaluating a factual sufficiency challenge, a reviewing court assesses all evidence and may only overturn a verdict if it is overwhelmingly against the weight of the evidence. The trial court serves as the sole judge of witness credibility and can accept or reject testimonies. Horak argues that the Newmans' breach of warranty claims under the DTPA are barred by a two-year statute of limitations, asserting the claims stem from events prior to February 1995, with no evidence of water intrusion after that date, and that the Newmans did not file suit until 2000. He contends there was insufficient evidence to demonstrate that the defects were undiscoverable or that the Newmans acted with reasonable diligence in discovering them. The Newmans counter that Horak must establish the timing of the mold and rot to prove the claims are time-barred and invoke the discovery rule, which delays the accrual of a cause of action until a plaintiff is aware, or should be aware, of the facts leading to the claim. Whether a plaintiff knew or should have known about an injury is a factual question. Assuming the Newmans' claims would be barred without the discovery rule, the trial court is implied to have found that the Newmans discovered, or reasonably should have discovered, the facts behind their claims in 1999. Supporting evidence includes testimonies from Mrs. Newman, Roark, and Mr. Newman, indicating that the mold was not detected until 1999 during a maintenance inspection, and that prior to this, the HVAC systems showed no signs of flooding or moisture issues. The testimony of Solsbery highlighted that water damage in the tub room was not visible until the siding was removed in 1999. Mrs. Newman also confirmed that the damage was only apparent after the wall was accessed and that she had no knowledge of further leaks post-repair in 1995. Photographic evidence of the crawl space and ducts prior to flooding was also presented.

Horak argues that the Newmans did not demonstrate reasonable diligence in discovering water damage, citing their failure to inspect their property after 1995 despite evidence of accessibility and visible mold on HVAC systems. He challenges the credibility of witnesses who testified about the damage. However, the trial court has the authority to assess witness credibility, and the evidence supports an implied finding that the Newmans exercised reasonable diligence in discovering the facts related to their breach of warranty claims by 1999. Therefore, their claims filed in 2000 are not barred by limitations, and Horak's related points of error are overruled.

Horak also contests the sufficiency of evidence supporting the Newmans' breach of warranty claims, asserting that these claims fall under the Residential Construction Liability Act (RCLA), which modifies actions for construction defects. The RCLA sets limitations on damages unless the contractor makes a reasonable settlement offer, which Horak failed to do. Consequently, the Newmans' claims are analyzed under common law and the DTPA. Horak acknowledges his warranty for construction quality but argues that the evidence does not show his work was substandard or that there was a direct link between his construction and the subsequent damage. He claims the issues arose from architectural plans rather than defective construction and points to a lack of expert testimony on causation. Despite these challenges, the trial court's implied finding that Horak breached his warranty is upheld, suggesting his actions were a substantial factor in the Newmans' injuries.

Evidence supporting the mold claim includes: (i) an improperly installed water line caused flooding in the residence in October 1994; (ii) repairs made by Horak in 1995 involved removing standing water from the ducts without replacing them; and (iii) no further flooding occurred post-repair, with HVAC systems functioning afterward. Roark, a subcontractor, testified about the 1995 incident, stating he was called by Horak to inspect and drain the ducts, which had significant water accumulation. He noted that while one HVAC system was more affected than others, mold and mildew could result if water was not fully drained. Horak argued against a causal relationship between the 1995 events and subsequent mold findings in 1999, claiming that mold can occur without flooding. However, Roark confirmed he found mildew and some mold in the other systems, attributing the main mold issue to the previously affected system. Mrs. Newman corroborated the flooding event as the only one known to her. The trial court could infer inadequate repair work by Horak contributed to the mold issue, supporting findings of a breach of warranty. Regarding the tub room, Mrs. Newman reported significant water intrusion during heavy rain but no further leaks post-repair. Testimonies and photographs provided evidence of water damage and repair efforts, while Horak maintained compliance with architectural standards and claimed he repaired the tub room at his expense. He disputed the evidence's competence regarding construction standards and the specifics of water penetration.

Evidence suggests the leak likely originated from the Plexiglass ceiling, with no indication that a vapor barrier would have mitigated water intrusion. Testimonies from Solsbery and Cleveland highlight a builder's responsibilities regarding zero overhang designs, emphasizing the importance of addressing moisture exposure to prevent wood rotting. Horak, responsible for the construction, stated that the architect's plans did not specify a flashing detail, leaving it to him to determine the necessary waterproofing measures. Despite recognizing the inherent moisture risks of the zero overhang design, he admitted to not implementing a vapor barrier. Horak recalled that the Plexiglass ceiling moved with heat, necessitating a switch to laminated glass, which resolved the issue. He also acknowledged the need for careful detailing in the absence of overhangs to protect against moisture. Solsbery observed significant rot and water damage in the tub room, attributing it to a lack of protective measures prior to the 1999 repair, during which a vapor barrier was finally installed to address the ongoing moisture problems.

Cleveland provided testimony regarding the Newmans' house during the period when Solsbery was conducting repairs, specifically addressing the cause of water damage in the tub room and preventive measures against water intrusion related to the zero overhang design. He affirmed that a zero overhang can lead to water penetration and that it is common for such designs to experience this issue. He identified the zero overhang as the likely cause of the water damage observed.

During cross-examination, Cleveland outlined specific construction practices that could mitigate water intrusion, emphasizing the importance of using rot-resistant materials instead of wood and the potential effectiveness of properly sealed flashing or vapor barriers. He noted that there were no prohibitions in the plans preventing Mr. Horak from implementing such measures, including installing flashing around windows or applying vapor barriers beneath the exterior wood.

Cleveland acknowledged that builders should be aware of the increased risks of water intrusion with a zero roof line and that they should take extra precautions to prevent water entry, particularly around windows. He indicated that he had no knowledge of any actions taken by Mr. Horak to prevent water intrusion.

The trial court could reasonably conclude that Horak's construction and repair work in the tub room was inadequate, contributing significantly to the water damage. The evidence supported a finding that Horak breached a warranty that was a key factor in causing the damage. The court also noted that while Horak argued the absence of expert testimony undermined the Newmans' case, the necessity of expert testimony is a legal determination. Expert testimony is required for issues beyond common understanding, whereas laypersons can sometimes establish causation based on general experience.

Expert testimony is necessary when issues exceed common juror understanding; however, lay witness testimony can suffice to establish causation if it demonstrates a strong, logical connection between events and conditions. In this case, the Newmans provided testimony from skilled witnesses regarding the causes of their injuries, asserting that inadequate water removal during repairs breached the warranty of good construction, which contributed to mold and water damage—an issue within jurors' understanding. The court found the Newmans' evidence of causation sufficient despite the absence of designated construction experts.

Horak contested the sufficiency of the evidence supporting damages awarded by the trial court, which totaled $8,666.71 for mold and water damage repairs. The amount comprised $2,765.00 for duct repairs and $5,901.71 for tub room repairs. Horak argued that the Newmans failed to demonstrate the reasonableness of these repair costs. The court implied that the trial court found the costs reasonable, supported by testimonies from Roark and Solsbery, who provided detailed accounts of the work performed and associated costs. Roark’s invoice outlined specific tasks and charges, while Solsbery confirmed that only necessary repairs were made to keep costs low. The court reviewed the evidence to affirm the reasonableness of the incurred repair costs.

The estimate for repairs was $6,630.00, while the final invoice totaled $5,901.71, both of which were submitted as evidence. Horak argued that the Newmans only provided evidence of the amounts they paid without demonstrating that these amounts were reasonable, citing a precedent from Perry Homes. However, the current case differs as the repair company owners testified and itemized their charges, providing sufficient evidence to support an implied finding that the Newmans' repair costs were reasonable. 

Regarding statutory additional damages, the trial court awarded $10,000.00, aligning with the statutory limit of three times the awarded damages. Horak contested this, claiming insufficient evidence of "knowingly" under the DTPA. The definition of "knowingly" includes actual awareness of the deceptive act, which can be inferred from objective indications. The court implied that Horak was aware of the issues leading to the breach of warranty. Testimonies revealed that Horak's subcontractor acknowledged the risk of mold from inadequate duct repairs, and a builder confirmed the obvious risk of water intrusion associated with a zero overhang, which Horak had failed to address adequately. Evidence indicated that Horak was aware of moisture problems but did not implement necessary precautions, supporting the trial court's findings regarding his awareness and the justification for the awarded damages.

Mr. Newman testified that Horak claimed to have resolved all issues regarding repairs in the tub room in 1995. Evidence suggests that Horak had actual knowledge of conditions constituting a breach of warranty. The findings support the legal conclusion that Horak acted knowingly, justifying the statutory additional damages awarded. The trial court awarded $9,250 in attorney's fees, which Horak did not contest in amount but argued was erroneous since the Newmans did not succeed in any claims. However, given that the court found sufficient evidence for Horak's violation of the Deceptive Trade Practices Act (DTPA), the award of attorney's fees was upheld. The court affirmed the trial court's judgment, confirming that the Newmans' warranty claims under the DTPA were not subject to limitations and that the evidence supported both the breach of warranty claims and the awarded damages.

Horak Construction assured that all work was completed satisfactorily, specifically regarding the roof and structure to prevent leaks. Mr. Newman confirmed he inspected the ducts after water damage was found and after repairs in 1995, receiving assurances from Horak that duct repairs were complete. Horak sought findings of fact and conclusions of law from the trial court but failed to file a notice regarding the timeliness of these findings, which is pertinent under Texas Rules of Civil Procedure. The court did not address Horak's claims related to the Newmans’ breach of contract and DTPA violations involving "laundry list" items and unconscionability, noting that Horak argued these claims were barred by limitations and the sufficiency of evidence for both breach of contract and DTPA claims. The statute of limitations for DTPA actions is two years from the occurrence or discovery of the deceptive act. Legislative amendments to the Residential Construction Liability Act (RCLA) occurred in 1999, 2003, and 2007, but these do not affect the current case analysis. The contract stipulated that all materials were guaranteed to meet specifications and be performed in a workmanlike manner. Under DTPA, a consumer can pursue action for economic damages resulting from breach of warranty, which must be recognized by common law or statute. Proximate cause requires foreseeability, unlike producing cause. Horak identified a plumbing subcontractor responsible for faulty installation leading to issues, noting water intrusion from leaks in a glass ceiling prior to February 1, 1995.

Solsbery testified that during the repair of a structure, no vapor barrier was observed, which he believed contributed to a moisture issue. According to Texas Rule of Evidence 701, a non-expert witness's opinion must be based on their perception and assist in understanding their testimony or determining relevant facts. The final invoice detailed various repair costs totaling $5,901.71, including charges for tear out, window replacement, and disposal, with a 20% builder's fee. An estimate provided similar categories of work with a total of $6,630. Section 17.50(b)(1) of the Texas Deceptive Trade Practices Act (DTPA) stipulates that a prevailing consumer may recover economic damages, and if the defendant's conduct was knowing or intentional, additional damages for mental anguish and potentially treble damages may be awarded.