George Thurman Lauret v. Meritage Homes of Texas, LLC D/B/A Monterey Homes

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

ON REHEARING

NO. 03-13-00082-CV

George Thurman Lauret, Appellant

v.

Meritage Homes of Texas, LLC d/b/a Monterey Homes, Appellee

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT
NO. D-1-GN-09-003096, HONORABLE STEPHEN YELENOSKY, JUDGE PRESIDING

OPINION

We withdraw our opinion and judgment dated October 10, 2014, and substitute the

following in their place. We overrule the appellee’s motion for rehearing.

Appellant George Thurman Lauret sued appellee Meritage Homes of Texas, LLC

for, among other things, violations of the Texas Deceptive Trade Practices Act (the DTPA) in

connection with Meritage Homes’s sale of residential property to Lauret. See Tex. Bus. & Com.

Code § 17.46. The jury found in favor of Lauret, but the trial court entered a take-nothing judgment

in favor of Meritage Homes, concluding that Lauret was not entitled to restoration under the DTPA

because he failed to establish that he had no adequate remedy at law. On appeal, Lauret asserts that

he is not required to prove that he lacked an adequate remedy at law to be entitled to restoration
under the DTPA. We agree and therefore reverse the trial court’s judgment and remand this case

for further proceedings.

BACKGROUND

Lauret contracted to have a new home built in the Rough Hollow development in

Lakeway, Texas. According to Lauret, he negotiated the purchase of this property with Bill Cozart

and Brady Baird, both of whom are employees of Monterey Homes, which is a division of Meritage

Homes. Lauret asserted that from the beginning of these conversations, he made it clear to Cozart

that the “main thing” that he and his future wife wanted was to have a view of Lake Travis. Lauret

explained that Cozart and Baird repeatedly assured him that his property’s view of the lake would

be protected because the adjoining lots had a twenty-five-foot setback from his property line.

Lauret stated that he purchased the property based on these assurances. The total purchase price of

the land and newly constructed home was $951,900.

Before construction began on Lauret’s property, Cozart contacted Lauret to inform

him that one of his neighbors was planning to build a pool and pool house that would partially

obstruct Lauret’s view of the lake. According to Monterey Homes, Lauret’s neighbor deceived the

subdivision’s “Architectural Control Committee” into giving him a variance for the twenty-five-foot

setback, thereby allowing the neighbor to build within five feet of Lauret’s property line. The

Architectural Control Committee subsequently revoked the neighbor’s permit but informed the

neighbor that he could resubmit revised plans that would not obstruct Lauret’s view as much. As

of the time of trial, Lauret’s neighbor had not resubmitted plans for a pool house.

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 Lauret asserted that had he known the twenty-five-foot setback could be waived by

the Architectural Control Committee, he would not have purchased his home. As Lauret explained,

Meritage Homes included the twenty-five-foot setback on its plat that it showed to customers, but

no such setback was memorialized in the subdivision’s plat filed with the City of Lakeway,

established in a zoning ordinance, or “otherwise established by recorded separate instrument.”

Lauret attempted to sell his home, but due to a decline in the local housing market, the home had

depreciated nearly $300,000 in value by that time.

Lauret sued Meritage Homes, asserting that there was a mutual mistake between the

parties as to the terms of the contract; that Meritage Homes had committed statutory fraud under

section 27.01 of the Business and Commerce Code; and that Meritage Homes made false, misleading,

or deceptive statements in violation of the DTPA. See id. § 17.46(b)(12) (“representing that an

agreement confers or involves rights, remedies, or obligations which it does not” is unlawful under

DTPA). The jury found in favor of Lauret on all claims but concluded that he was contributorily

negligent for 49% of his injuries. Lauret elected to “restore” his original purchase price for the

home in exchange for returning the property to Meritage Homes, effectively rescinding the parties’

original contract. See id. § 17.50(b)(3) (allowing prevailing party to obtain “orders necessary to

restore . . . any money or property . . . which may have been acquired in violation” of the DTPA).

However, in its written judgment, the trial court concluded that Lauret had failed to prove that he

lacked an adequate remedy at law, and therefore Lauret was not entitled to restoration of his purchase

price. Accordingly, the trial court rendered a take-nothing judgment and awarded Meritage Homes

applicable court costs. This appeal followed.

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 DISCUSSION

Adequate legal remedy under DTPA

In his sole issue on appeal, Lauret asserts that the trial court erred in denying his

requested remedy of restoring the parties to the position that they would have been in had the

contract not been formed. Specifically, Lauret asserts that although the common law requires proof

that monetary damages are inadequate before a party can be entitled to rescind a contract, there

is no such requirement for restoration under the DTPA. See id. Therefore, according to Lauret, he

was entitled to restoration of his purchase price in exchange for restoring the property to

Meritage Homes.

Whether restoration under the DTPA encompasses the common-law elements of

rescission is an issue of statutory construction and therefore a question of law that we review

de novo. See Cruz v. Andrews Restoration, Inc., 364 S.W.3d 817, 825 (Tex. 2012); First Am. Title Ins.

Co. v. Combs, 258 S.W.3d 627, 631 (Tex. 2008). When construing a statute, our primary objective

is to ascertain and give effect to the legislature’s intent. First Am. Title Ins. Co., 258 S.W.3d

at 631–32. In determining legislative intent, we first consider the plain language of the statute.

General Motors Corp. v. Bray, 243 S.W.3d 678, 685 (Tex. App.—Austin 2007, no pet.). When

statutory text is clear, it is determinative of legislative intent, unless enforcing the plain meaning

of the statute’s words would produce an absurd result. Entergy Gulf States, Inc. v. Summers, 282

S.W.3d 433, 437 (Tex. 2009). We consider the statute as a whole, reading each word in context

rather than in isolation, and unless a different definition is supplied by the legislature, we assume the

words chosen have their plain and ordinary meaning. See City of Rockwell v. Hughes, 246 S.W.3d

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621, 625–26 (Tex. 2008). Only when the statutory text is ambiguous “do we resort to rules of

construction or extrinsic aids.” Shook v. Walden, 304 S.W.3d 910, 917 (Tex. App.—Austin 2010,

no pet.) (internal quotations omitted); see also Combs v. Metropolitan Life Ins. Co., 298 S.W.3d 793,

796–97 (Tex. App.—Austin 2009, pet. denied).

“[T]he DTPA did not codify the common law, and . . . one of its primary purposes

is ‘to provide consumers a cause of action for deceptive trade practices without the burden of proof

and numerous defenses encountered in a common law fraud or breach of warranty suit.’” Cruz,

364 S.W.3d at 825 (quoting Smith v. Baldwin, 611 S.W.2d 611, 616 (Tex. 1980)). Under the DTPA’s

election-of-remedies provision, “each consumer who prevails [in his DTPA claim] may obtain” his

choice of the following remedies:

(1) the amount of economic damages found by the trier of fact . . . ;1

(2) an order enjoining such acts or failure to act;

(3) orders necessary to restore any party to the suit any money or property, real or
personal, which may have been acquired in violation of this subchapter; and

(4) any other relief which the court deems proper . . . .

Tex. Bus. & Com. Code § 17.50(b).

“[I]t cannot be doubted that the Legislature intended ‘may’ [in the election-of-

remedies provision] to indicate that the consumer has several remedies from which to choose and

1
Subsection (b)(1) also provides that if the defendant committed the unlawful conduct
knowingly, the consumer may recover money damages for mental anguish, and if the defendant
committed the unlawful conduct intentionally, the consumer may be entitled to punitive damages.
See Tex. Bus. & Com. Code § 17.50(b)(1).

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that the court is to grant the consumer that relief which the consumer proves a right to receive.”

Woods v. Littleton, 554 S.W.2d 662, 669 (Tex. 1997). Thus, if Lauret established that he was entitled

to restoration of his purchase in exchange for returning his property to Meritage Homes, the trial

court was required to honor his election of that remedy. See id.; see also Cruz, 364 S.W.3d at 825–26

(concluding that restoration under DTPA requires “mutual restoration and accounting”). Restoration

necessarily involves “each party restor[ing] property received from the other” and “is generally

limited to cases in which counter-restitution by the claimant will restore the defendant to the status

quo ante.” Cruz, 364 S.W.3d at 826 (internal citations omitted).

The supreme court recently concluded that restoration under the DTPA “merely

provides a prevailing consumer the option of unwinding the transaction, returning the parties to

the status quo ante.” Id. The court noted that restoration is similar to the common-law remedy of

rescission, and like rescission, restoration is appropriate when mutual restitution can “restor[e] both

parties to their original position.” Id. at 825–26. However, the court was careful to note that the

mere fact that restoration is similar to rescission “does not compel the wholesale adoption of all

of the common law rescission requirements . . . .” Id. As the supreme court explained, “DTPA

restoration is an independent ground of recovery, requiring only that the consumer choose that

remedy subject to the defendant’s right to plead and prove an offset, but not incorporating

common law predicates like notice and tender.” Id. at 826–27 (citing Carrow v. Bayliner Marine

Corp., 781 S.W.2d 691, 695 (Tex. App.—Austin 1989, no writ)).

Similarly in this case, we conclude that requiring a party to prove that he lacks an

adequate remedy at law is inconsistent with DTPA restoration. Under the common law, “rescission

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and specific performance are equitable remedies used as substitutes for monetary damages when

such damages would be inadequate.” Scott v. Sebree, 986 S.W.2d 364, 368 (Tex. App.—Austin

1999, pet. denied). Because equitable remedies are generally disfavored under the common law, a

party seeking rescission is required to prove that legal remedies—i.e., monetary damages—would

not adequately compensate him for his injuries. See Isaacs v. Bishop, 249 S.W.3d 100, 109–10

(Tex. App.—Texarkana 2008, pet. denied) (discussing factors for determining whether party entitled

to rescission); Scott, 986 S.W.2d at 368.

Although DTPA restoration is also an equitable remedy, the DTPA’s election-of-

remedies provision affords a prevailing consumer the right to choose his remedy, and a trial court

must honor a consumer’s choice of restoration if restoration with an appropriate offset can

adequately return the parties to their prior positions. See Cruz, 364 S.W.3d at 826–27; see also

Woods, 554 S.W.2d at 669 (noting that language of DTPA indicates legislature intended consumer

to have right to elect remedies). Thus, unlike common-law rescission, restoration under the DTPA is

not limited to instances when monetary damages would be inadequate. To read such a requirement

into the DTPA would change the language of the election-of-remedies provision to state that a

consumer may choose an injunction or restoration under subsections (b)(2) and (b)(3) only if the

consumer first proves that economic damages under (b)(1) are inadequate. See Tex. Bus. & Com.

Code § 17.50(b)(1)–(3). This additional limitation is not supported by the plain language of the

statute or supreme court precedent interpreting the DTPA. See id.; Cruz, 364 S.W.3d at 826–27

(noting consumer need only choose restoration, subject to defendant’s offset); Woods, 554 S.W.2d

at 669 (concluding legislature intended to afford consumers their choice of remedies under DTPA).

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Therefore, we conclude that a consumer seeking restoration under the DTPA is not required to

prove that he lacks an adequate remedy at law.

Our conclusion is consistent with the Restatement’s approach toward restitution. See

Restatement (Third) of Restitution and Unjust Enrichment § 4 (2011); see also Cruz, 364 S.W.3d

at 827 (adopting Restatement’s disavowment of notice-and-tender rule to DTPA). As the Restatement

explains, “remedies within the law of restitution and unjust enrichment may have originated in law,

in equity, or in a combination of the two,” and therefore “a claimant otherwise entitled to a remedy

for unjust enrichment, including a remedy originating in equity, need not demonstrate the inadequacy

of available remedies at law.” Restatement § 4(1)–(2). As the comments explain, the traditional

requirement that a party prove the inadequacy of legal remedies “is a spurious proposition [that]

rests on an obvious fallacy, and it obscures what courts are actually doing when they invoke it.” See

id. § 4 cmt. e. Thus, although our conclusion that a consumer seeking restoration does not have to

prove that he lacks an adequate remedy at law is based on the plain language of the DTPA itself, our

reading of the DTPA is consistent with the Restatement. See Cruz, 364 S.W.3d at 827.

We conclude that Lauret was not required to prove that he lacked an adequate

remedy at law in order to be entitled to restoration under the DTPA. Because the trial court erred

in concluding otherwise, we sustain Lauret’s sole issue on appeal; reverse the trial court’s take-

nothing judgment in favor of Meritage Homes; and remand this case to the trial court to

(1) determine whether the parties can, with an appropriate offset, be restored to the status quo ante

and (2) if so, restore the parties to their original position, subject to Meritage Homes’s right to plead

and prove an offset. See id. at 826.

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Alternative grounds for affirming take-nothing judgment

In its appellate brief, Meritage Homes asserts that even if Lauret were not required

to prove that he lacked an adequate remedy at law, there are two alternative grounds for affirming

the trial court’s take-nothing judgment. See Tex. R. Civ. P. 324(c) (noting that appellee who obtained

j.n.o.v. on one or more questions “may bring forward by cross-point . . . any ground which would

have vitiated the verdict”). First, Meritage Homes claims that restoration is inappropriate because

the parties cannot be returned to the status quo ante. See Cruz, 364 S.W.3d at 825–26 (noting that

restoration is “limited to cases in which counter-restitution by the claimant will restore the defendant

to the status quo ante”) (internal citations omitted). Specifically, Meritage Homes argues that given

the significant depreciation in the value of the property, Meritage Homes would be unduly prejudiced

if it were required to retake possession of the property.

Whether Meritage Homes, with an appropriate offset, can be adequately restored to

the status quo ante is a question of fact that the trial court did not address. Because the trial court

has not made a factual finding on this issue, it would be inappropriate for this Court to address

Meritage Homes’s argument at this time.2 See Texas Nat’l Bank v. Karnes, 717 S.W.2d 901, 903

(Tex. 1986) (“[A] court of appeals cannot make original findings of fact, it can only ‘unfind’ facts.”)

(internal citations omitted).

Meritage Homes also asserts that because the jury did not make an affirmative

finding that Lauret purchased this property as a residence, the DTPA does not apply to this dispute.

2
For this same reason, we decline to reach Meritage Homes’s other factual argument that
restoration would unfairly prejudice Lauret’s current tenants.

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Under section 17.49(g) of the Business and Commerce Code, “a transaction . . . involving total

consideration by the consumer of more than $500,000, other than a cause of action involving a

consumer’s residence,” is exempted from the protections of the DTPA. See Tex. Bus. & Com. Code

§ 17.49(g). Meritage Homes argues that because it was undisputed that this was a transaction

involving more than $500,000 in consideration, Lauret was required to secure an affirmative jury

finding that this cause of action involved his residence, and Lauret’s failure to do so is an alternative

ground for affirming the trial court’s take-nothing judgment.3 See Clayton W. Williams, Jr., Inc. v.

Olivo, 952 S.W.2d 523, 530 (Tex. 1997) (concluding defendant entitled to take-nothing judgment

where plaintiff failed to secure jury answer on essential element of negligence claim).

At trial, Lauret testified that he and his wife “were buying [this property] as a home

to live in. . . . We intended to live there. Yes, it was going to be our nest egg.” Lauret further

explained that he purchased the property in his own name, rather than in the name of his commercial

trust’s name, and emphasized that he and his wife went to great trouble to decide what upgrades and

changes they wanted to have done during construction—something they would not have done had

they intended to purchase an investment property. Similarly, Cozart testified that Lauret represented

to him that he was buying the property as a residence, and Cozart stated that Meritage Homes had

a policy against selling property to investors because “[t]hat’s bad for the market.” Finally, Cozart

3
Alternatively, Meritage Homes asserts that it requested a jury question about whether
Lauret purchased this home as a residence, and the trial court erred in refusing to submit that
question to the jury. Meritage Homes’s proposed jury question states as follows: “Did Lauret’s claim
relate to a transaction involving total consideration of more than $500,000 for a property that was not
his residence?”

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stated that Meritage Homes had cancelled at least three contracts in the past when it learned that the

purchasers intended to use the property as an investment rather than a residence.

On appeal, Meritage Homes asserts that despite this testimony, there was still a fact

question about whether Lauret purchased the property as his residence. Specifically, Meritage

Homes argues that because Lauret ultimately rented the property to tenants, the jury could have

reasonably believed that he intended it to be investment property. Thus, according to Meritage

Homes, Lauret was required to secure a jury finding as to whether this was a contract for purchase

of Lauret’s residence. We disagree.

As outlined above, both Lauret and Cozart testified that at the time the parties

entered into the contract for purchase of this home, both parties represented and understood

that Lauret was purchasing this home for use as his residence. Meritage Homes did not elicit

any testimony or offer any evidence to contradict Lauret’s and Cozart’s testimony. The evidence

establishes that this was a contract for the purchase of a consumer’s residence as a matter of law

and, therefore, the DTPA applies. See Tex. Bus. & Com. Code § 17.49(g); City of Keller v. Wilson,

168 S.W.3d 802, 820 (Tex. 2005) (“Jurors cannot ignore undisputed testimony that is clear, positive,

direct, otherwise credible, free from contradictions and inconsistences, and could have been readily

controverted.”) (internal citations omitted). Lauret’s failure to secure an affirmative jury finding

to that effect would not support vitiating the jury’s verdict in Lauret’s favor. See City of Keller,

168 S.W.3d at 814–15 (“[U]ncontroverted issues need not be submitted to the jury at all.”) (internal

citations omitted). Thus, Meritage Home’s argument is not a valid alternative ground for affirming

the trial court’s take-nothing judgment.

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 CONCLUSION

We reverse the trial court’s judgment in favor of Meritage Homes and remand the

case to the trial court to restore the parties as contemplated by section 17.50(b)(3) of the Business

and Commerce Code, subject to Meritage Homes’ right to plead and prove an offset.

__________________________________________

Scott K. Field, Justice

Before Chief Justice Jones, Justices Pemberton and Field

Reversed and Remanded on Rehearing

Filed: December 17, 2014

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