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Colton MacPherson v. Leila Shahin Aglony
Citation: Not availableDocket: 09-21-00004-CV
Court: Court of Appeals of Texas; September 22, 2022; Texas; State Appellate Court
Original Court Document: View Document
Colton MacPherson purchased a home from Leila Shahin Aglony for $140,000, utilizing a purchase agreement featuring an "As Is" clause. After moving in, MacPherson discovered defects he claimed were undisclosed by Aglony, leading him to file a lawsuit in November 2019. His claims included violations of the Texas Deceptive Trade Practices Act (DTPA), fraud, and breach of contract, alleging that Aglony conspired to hide the home's true condition through cosmetic upgrades and misrepresentation in the Seller’s Disclosure. MacPherson sought damages for extensive repairs needed on the property, as well as for mental anguish and attorney’s fees. At trial, the court ruled in favor of Aglony, leading to a take-nothing judgment against MacPherson. Additionally, prior to the trial, the court granted a summary judgment in favor of Aglony's real estate agent, Caroline Pena, and her affiliated real estate company, severing their case from MacPherson's appeal. MacPherson appealed the trial court’s decision, challenging the evidence supporting the judgment. The appellate court affirmed the trial court's ruling, confirming that MacPherson had not succeeded in proving his claims against Aglony. Evidence presented included MacPherson's testimony about the home's listing, which described various renovations that he later claimed were misleading. MacPherson believed the repairs made by the seller, Aglony, to the Property were limited and testified he had no reason to think otherwise. He inspected the Property from the outside and through windows before hiring a realtor to make a $140,000 offer, which was accepted, leading to a signed contract on July 4, 2017, and a closing on August 3, 2017. He never communicated with Aglony and was unaware the Property was a foreclosure; had he known, he stated he would not have purchased it due to negative perceptions of foreclosures. During his inspection, he noted only minor touch-ups and found no significant defects, as corroborated by an inspection report from Ray Basinger, which was also admitted into evidence. MacPherson acknowledged receiving the Seller’s Disclosure Notice during the contract period, which indicated Aglony was an investor who had never occupied the Property and claimed no knowledge of major defects, except for acknowledged issues with the driveway. He trusted Aglony’s representations and did not believe she had made any structural repairs or modifications. However, shortly after moving in, he and his father discovered a hairline crack in a wall, and MacPherson later found that doors had been replaced or improperly installed, leaving gaps and causing some to fall off hinges. He also observed patchwork repairs to the ceiling, suggesting previous issues that were not disclosed. Photographs of the Property before Aglony's remodeling were submitted into evidence. MacPherson provided testimony regarding significant structural changes made to a property prior to his purchase, noting alterations such as modifications to the exterior wall, the addition of a new window, and the removal of two interior walls. He highlighted that the ceiling was deteriorating where an interior wall had been removed. MacPherson was unaware of existing cracks in the concrete and fireplace prior to his purchase, as they were concealed beneath installed carpet. After purchasing the property, he observed that hairline cracks had worsened over time. He also discovered additional cracks in the master bedroom floor and was not informed about any repairs made by the seller, which would have influenced his decision to buy the property. He did not seek a foundation expert due to a lack of knowledge about the need for one. Shortly after his purchase, Hurricane Harvey occurred, but no damage was found by his insurance company, which did identify a preexisting foundation issue that was unrelated to the hurricane. MacPherson attempted to repair the property, including removing a moldy wall and addressing plumbing issues. He encountered problems with the plumbing system shortly after moving in, including a clogged main line and malfunctioning fixtures, which he had to repair himself. Photographs from June 2018 evidenced ongoing issues, such as a widening crack in a wall and deteriorating conditions in the master bathroom, including a falling shelf and crumbling shower corners. MacPherson noted that he was unable to safely use the fireplace due to cracks. MacPherson provided detailed testimony regarding various structural issues in a property he purchased from Aglony. He noted that Aglony had placed tape over a large hole in the ceiling, and observed a misalignment in the sheetrock and a significant lean in the room. MacPherson was unable to enter that room during his inspection due to it being filled with equipment. He criticized the quality of brickwork repairs, reported separation in the front door frame, and identified cracks in the walls and siding that had been painted over to conceal issues. He mentioned cracks around a window and discrepancies in mortar coloring in photographs, indicating previous caulking attempts. MacPherson highlighted the need to replace a plexiglass window in the middle bedroom and noted additional cracks in the hallway door frames and the master bedroom. He described sagging ceilings in several rooms and cracks in the garage sheetrock. Upon pulling back the living room carpet, he discovered that the floor had been leveled with mortar during Aglony’s renovations, and similar findings were noted in the third bedroom. He stated he would not have bought the house had he known about the cracked floors and prior repairs. MacPherson accused Aglony of being dishonest in her Seller’s Disclosure, asserting she was aware of past structural and foundation repairs. He acknowledged Aglony's admissions in her responses to Requests for Admission, which confirmed repairs made in 2017, including floor and interior wall repairs and window replacements. Aglony claimed that the repairs were cosmetic and visible, which MacPherson disputed. He admitted to signing a purchase contract indicating he was buying the property "As Is," but claimed he did not understand the implications of this clause and relied solely on the Seller’s Disclosure. During cross-examination, he recognized that the contract defined "As Is" to encompass all defects and confirmed he had the opportunity to inspect and negotiate repairs prior to purchase. MacPherson also indicated he sent a notice to Aglony under the DTPA regarding her failure to disclose known defects in various aspects of the property. A demand letter was introduced as evidence, requesting approximately $60,000 for various repairs, including $11,000 for the foundation, $15,000 for exterior brick walls, and $8,200 for the roof. The purchase contract for the Property from Aglony to MacPherson was also admitted into evidence, labeled as “One to Four Family Residential Contract (Resale)” and compliant with TREC standards. Under Paragraph 7B, an “X” indicated that the Buyer had not received the Seller’s Disclosure Notice, which required the Seller to provide it within 10 days of the contract's effective date. Failure to provide this notice allowed the Buyer to terminate the contract anytime before closing, with a refund of the earnest money. If the notice was delivered, the Buyer could terminate the contract within 7 days of receipt or prior to closing. The contract included a provision under Paragraph 7D(1) where MacPherson accepted the Property “As Is,” meaning in its current condition, with all defects, except for title warranties. This acceptance did not prevent MacPherson from inspecting the Property, negotiating repairs, or terminating the contract during any designated Option Period. The Seller’s Disclosure, a form from the Texas Association of Realtors, was also admitted, stating it reflects the Seller’s knowledge of the Property's condition as of the signing date and is not a warranty. Aglony indicated she had never occupied the Property and, as an investor, claimed no knowledge of its conditions. She marked "no" for all listed defects except for driveways, where she marked "yes." She also stated she was unaware of any prior conditions related to structural issues. Aglony signed to confirm the accuracy of her statements, while MacPherson acknowledged receipt of the Seller’s Disclosure on July 14, 2017. Marcie McClimans, MacPherson’s real estate agent, testified that he purchased the property for $140,000 and had no knowledge of any repairs beyond those listed in the Seller’s Disclosure. She emphasized that sellers are obligated to disclose known repairs, and in Texas, buyers typically rely on the Seller’s Disclosure and inspection reports without conducting their own investigations. McClimans noted that the Seller’s Disclosure included a statement indicating the seller was an investor unaware of prior conditions, leading her to believe no structural repairs had been made. Upon reviewing comparison photographs, she observed that Aglony, the seller, had renovated windows before the sale. McClimans had only encountered one other instance in her five years as a realtor where a seller failed to disclose repairs. She discussed the inspection report with MacPherson, finding no indications that repairs had been undisclosed or that he should avoid purchasing the property. She conducted two walkthroughs with MacPherson and did not identify any issues. Had she known about concrete cracks, she would have recommended further inspections. McClimans reiterated that the purchase was "As Is," relying on disclosures until inspections could be performed, and acknowledged that inspections do not always reveal all repairs. She concluded that Aglony likely failed to disclose some repairs based on trial evidence. Leila Aglony testified that she remodels homes through her own company, hiring unlicensed contract workers whom she compensates mostly in cash. She directs the contractors on specifics such as paint color and flooring type, receiving cost estimates for the repairs. At the time of trial, Aglony had purchased approximately ten properties through foreclosure sales. Aglony testified that upon purchasing the Property at foreclosure, it required significant repairs, but she received no information from the seller regarding its condition and relied on her realtor for guidance. She hired a contractor from Home Depot, recommended by a previous worker, to perform aesthetic changes, including painting, installing carpet, tile flooring in the bathroom, granite in the kitchen, yard work, and fence repairs. She did not recall hiring them for door or window changes; however, she later agreed that a new window installation must have been with her approval. During her deposition, Aglony could not remember why she initially stated that the doors had been changed, as subsequent reviews of photos indicated they had not. She noted that there were cracks in the concrete floor but believed they were not problematic and stated that the realtor and HAR.com confirmed no flooding or foundation issues existed. Aglony denied knowledge of any leveling work done by the contractors and maintained that her instructions were limited to painting and aesthetic improvements. She was not present during the remodel, did not direct any structural repairs, and purchased materials solely for decoration, without evidence of reimbursement for repair materials. The contractors took about three months to complete the work, and Aglony only visited the Property once towards the end. She acknowledged that in past home sales, she did not disclose repairs made, attributing this oversight to guidance from her agent. Aglony provided testimony regarding the Seller’s Disclosure statement for the Property, indicating she personally handwrote the disclosures, which her realtor later typed. She asserted that when she stated she was unaware of any previous conditions, it meant she was not aware of the items listed. Aglony noted that the buyer's realtor did not request a complete disclosure. She used the same realtor for both the purchase and sale of the Property, which she bought for approximately $86,000 and intended to sell for around $140,000, reflecting the average prices of similar homes in the area. Her realtor advised her on repairs that could enhance the property’s value, which she believed justified the price increase. Aglony claimed that her team completed the repairs, making the Property livable at the time of sale, and stated she never misrepresented her status as an investor nor claimed to have lived in the house. She emphasized that her intention was to improve the home without hiding defects or committing fraud, and she maintained that she did not lie on the disclosure statement. Ray Basinger, a home inspector with about ten years of experience, testified he inspected the Property at the request of MacPherson, finding no undisclosed issues. His report specified that only visible and accessible components were inspected. Basinger affirmed that Aglony's repairs matched her disclosures and that he observed no signs of inadequate or hidden repairs. During his inspection, he checked various structural aspects and found the quality of the drywall and paint to be very good. He indicated that if unlicensed contractors had been used for repairs, further evaluation would be necessary. When presented with photographs showing pre-remodel cracks in the concrete, he stated he would have recommended a structural evaluation had he known those conditions existed at the time of MacPherson's purchase. Basinger testified that neither he nor a prospective buyer could identify foundation cracks under the carpet during an inspection, as they could not lift the carpet. He observed some exterior brick patching, common in older Texas homes, but could not determine the timing of the repairs. He indicated that if recent patching cracked soon after the buyer moved in, it would suggest ongoing movement in the property. After reviewing photographs of a significant foundation crack, he stated he would have recommended a foundation assessment and structural engineering evaluation had he seen them earlier. Basinger noted that if he had seen the crack repaired, he would advise the buyer to obtain repair documentation and warranties. On cross-examination, he acknowledged that he did not identify any foundation defects during his inspection and that issues with the roof would have been noted in his report. His report mentioned that the exterior brick veneer had cosmetic repairs that should be monitored for any separation. He highlighted poor gaps around doors and windows, repairs made to the roof structure, and settling in the exterior and interior walls. Basinger clarified that his recommendation to monitor for cracks indicated no cracks were present at the time of inspection, but that their appearance would imply poor repairs or structural movement. He also noted irregular door gaps that could result from settling but did not necessarily indicate structural issues, stating that a skilled contractor could install doors correctly. Basinger indicated that a cracked driveway should not be interpreted as a foundation problem, as it was a separate pour. Ultimately, he concluded that the foundation appeared to support the structure as intended, as required by TREC for licensed inspectors. He did not observe drywall cracks or excessive leveling of the floor. The trial court found that Colton Macpherson purchased the Property from Leila Shahin Aglony for $140,000 and subsequently sued, claiming problems with the Property that he alleges were misrepresented or concealed by the seller in the Seller’s Disclosure. Colton Macpherson's lawsuit is based on his reliance on the Seller’s Disclosure when purchasing a property. However, the earnest money contract indicates he had not received the Seller’s Disclosure at the time of signing, meaning he made his offer without that information. The disclosure was received ten days after the contract execution. The contract specified that the property was sold "As Is," a term Macpherson did not understand, but which is defined in the contract to mean the property’s current condition, with all defects and limited warranties. After signing, Macpherson hired an inspector who found no major defects but noted possible signs of foundation movement, which he opined were not problematic. The parties negotiated some repairs prior to closing, which Macpherson completed. Macpherson could have declined to close the sale after receiving the Seller’s Disclosure or due to its incompleteness but ultimately closed the sale. After closing, he discovered issues such as patched ceiling and wall repairs and a foundation crack, which he claims would have affected his decision to purchase. His complaints focus on the Seller’s Disclosure regarding defects and malfunctions, despite not having received it when he made his offer. The inspector determined the foundation was adequately supporting the structure, and no structural engineer provided testimony regarding the foundation’s integrity during the trial. Speculation existed regarding the foundation's condition, but no expert testimony indicated it was defective or failing. Leila Shahin Aglony, an investor who had never lived on the property, purchased it for remodeling and resale. She relied on her realtor's assurance that there were no foundation issues and did not instruct contractors to address the foundation, only requesting carpet installation. Legal conclusions indicate a lack of sufficient evidence to establish liability against the defendant. The plaintiff's claim of reliance on the Seller's Disclosure is undermined by the timeline: the disclosure was not seen by the plaintiff until ten days after the earnest money contract was executed, contradicting his assertion of reliance. Additionally, there was insufficient evidence to substantiate claims for damages related to repair costs, as there was no demonstration of the nature, reasonableness, or necessity of the proposed repairs, nor any clear pricing evidence. In a bench trial, the trial court serves as the sole factfinder, determining witness credibility and the weight of evidence. Findings of fact from the trial court hold the same significance as a jury's verdict and are upheld if supported by evidence. Legal conclusions are reviewed de novo, with the appellate court sustaining them if any legal theory backed by evidence supports the judgment. A legal sufficiency challenge must demonstrate that all essential facts are established as a matter of law, while a factual sufficiency review examines all evidence to ascertain if the judgment is unjust. MacPherson appeals the trial court's judgment on four issues, focusing on the sufficiency of evidence regarding liability against Aglony. In his second issue, he contends that the trial court wrongly determined there was insufficient evidence of liability based on a lack of reliance. His fourth issue claims that he presented uncontroverted evidence supporting his claims for violations under the Deceptive Trade Practices Act (DTPA), statutory fraud, fraud by nondisclosure, breach of contract, and negligence. Both issues challenge Conclusion of Law #3, which found insufficient evidence for liability against Aglony. The court reviews Conclusion of Law #3 de novo and will affirm it if the judgment is sustainable on any legal theory backed by the evidence. The trial court's Finding of Fact #3 states that the property sale contract was “As Is,” with “As Is” defined as the current condition of the property with all defects and limited warranties. MacPherson does not contest this finding. Under Texas law, a seller must disclose material facts not discoverable through reasonable diligence by the buyer. However, sellers are not liable for failing to disclose unknown facts or past conditions not known at the time of the Seller’s Disclosure Notice. A seller is not required to disclose repaired conditions or defects. Texas Property Code Section 5.008 mandates that sellers provide a written notice detailing property conditions, emphasizing that this disclosure is based on the seller's knowledge at the time of signing and does not replace the need for buyer inspections. If a seller fails to provide this notice, the buyer may terminate the contract within seven days after receiving it. The law does not impose liability on sellers for not exceeding the disclosure requirements set forth in Section 5.008. Buyers purchasing “As Is” properties assume responsibility for assessing the property's condition and value independently. The buyer assumes responsibility for evaluating the purchase and accepts the risk of potential misjudgment. The seller does not provide any guarantees regarding the value or condition of the item sold, thus the buyer must rely solely on their own assessment, eliminating the potential for damages caused by the seller's actions. The enforceability of an "As Is" clause is determined as a legal question, with such clauses generally upheld if they are significant to the contract and agreed upon by parties of relatively equal bargaining power. However, these clauses are not valid if they stem from fraudulent actions by the seller or if the seller impedes the buyer’s inspection of the property. To establish fraudulent representation, the buyer must demonstrate a material misrepresentation by the seller, knowledge of its falsity or ignorance of the truth by the seller, an intent for the buyer to rely on the misrepresentation, actual reliance by the buyer, and resultant injury. An enforceable "As Is" clause negates causation legally. In this case, the buyer did not contest the significance of the "As Is" clause or claim unequal bargaining power. The trial court evaluated the evidence, including witness testimonies and disclosures, concluding that the seller was unaware of any defects apart from those disclosed. The buyer also received the Seller’s Disclosure in a timely manner and opted not to cancel the contract after his inspection, indicating informed consent to proceed with the purchase. The trial court determined that Aglony did not engage in fraudulent representation or concealment that would have led MacPherson to enter the contract. Consequently, MacPherson failed to prove that the "As Is" clause was unenforceable due to fraud or that Aglony obstructed his ability to inspect the property. By agreeing to purchase the home "As Is," MacPherson accepted the responsibility to appraise the property's value and assume the risk regarding its quality and any potential losses. The court found that the "As Is" clause negated causation for MacPherson’s claims under the Deceptive Trade Practices Act (DTPA), negligence, breach of contract, and fraud. It concluded that there was legally sufficient evidence supporting its finding of no liability against Aglony on these claims. The excerpt outlines the necessary elements for each of the claims, emphasizing that causation is crucial for the DTPA claim, and details the requirements for negligence, breach of contract, and fraud by nondisclosure. The court ultimately overruled issues two and four raised in the case. MacPherson contends that the trial court erred by only considering a limited scope of his claims and evidence, specifically challenging Findings of Fact #1, #2, and #12. He argues that these findings wrongly restricted his claims to reliance on the Seller’s Disclosure and events prior to the purchase contract's signing. Additionally, MacPherson claims the court failed to accept Aglony’s prior judicial admission regarding floor repairs and her trial admissions about repairs that should have been disclosed. The trial court, as the factfinder, holds the authority to assess witness credibility and assign weight to evidence, a role that appellate courts cannot override. MacPherson's first issue is addressed in conjunction with issues two and four, which uphold the trial court's judgment, rendering further examination unnecessary. In his third issue, he challenges the evidence supporting the court's finding of no damages. However, since the liability issues were resolved against him, this challenge is also moot. The trial court's judgment is affirmed.