Kevin T. Morton v. Hung Nguyen and Carol S. Nguyen

Affirmed as Modified in Part; Reversed and Remanded in Part; and Substitute
Opinion filed May 17, 2012.

In The

Fourteenth Court of Appeals

NO. 14-11-00126-CV

KEVIN T. MORTON, Appellant

V.

HUNG NGUYEN AND CAROL S. NGUYEN, Appellees

On Appeal from the 55th District Court
Harris County, Texas
Trial Court Cause No. 2009-74209

SUBSTITUTE OPINION

The opinion of March 22, 2012, is withdrawn and this opinion is substituted in its
place.

Appellant Kevin T. Morton entered into a contract for deed to sell his house to
appellees Hung and Carol S. Nguyen. After the Nguyens rescinded the contract pursuant
to the Texas Property Code, Morton sued the Nguyens for breach of contract. The
Nguyens counterclaimed, seeking (1) a finding that the cancellation and rescission was
proper under the Texas Property Code and a refund of all payments made under the
contract; (2) liquidated damages for alleged violations of the Texas Property Code;
(3) damages ―as the statutory remedy‖ for alleged violations of Texas Finance Code;
(4) mental anguish damages; (5) treble economic damages and mental anguish damages
for alleged knowing and intentional violations of the Texas Deceptive Trade Practices-
Consumer Protection Act (DTPA); (6) attorney‘s fees and costs; and (7) pre- and post-
judgment interest. Following a bench trial, the trial court signed a judgment granting
some but not all relief requested by the Nguyens. All parties appealed.

BACKGROUND

Morton, a senior mortgage loan officer, entered into a contract for deed in January
2007 to sell the Nguyens a house at 8215 Silver Shadows in Spring, Texas.1 Under the
contract, the Nguyens agreed to make monthly payments to Morton in the amount of
$1,533.90 for approximately 35 years before obtaining the deed to the property. Morton
agreed to continue making payments on his existing mortgage on the property, and the
Nguyens agreed to pay for home insurance, taxes, and homeowners‘ association fees.
The Nguyens agreed that their payments to Morton for the first nine years of the contract
term would be interest-only payments. The Nguyens‘ interest rate of 8.875% was
scheduled to increase after the fifth anniversary of the sale by 1% each year until it
reached 12.875%, purportedly to encourage the Nguyens to obtain outside financing and
pay Morton the balance of principal owed on the contract for deed. Carol Nguyen
testified that Morton assured the Nguyens, who were working to improve their credit
following a recent bankruptcy and foreclosure, that they would be able to obtain
financing successfully after two years. Carol testified that she and her husband made
payments to Morton for almost three years until October 2009 when Carol learned that
she and her husband still would not be eligible for outside financing at that time.

1
―A contract for deed, unlike a mortgage, allows the seller to retain title to the property until the
purchaser has paid for the property in full.‖ Flores v. Millenium Interests, Ltd., 185 S.W.3d 427, 429
(Tex. 2005). Such sales are regulated under subchapter D of chapter 5 of the Texas Property Code. Id.;
see TEX. PROP. CODE ANN. §§ 5.061–5.085 (West 2004 & Supp. 2011) (subchapter applicable to
―executory contract[s] for conveyance‖).

2
 The Nguyens informed Morton through their attorney on November 2, 2009, of
their intention to exercise their statutory right under the Texas Property Code to cancel
and rescind the contract for deed on November 30, 2009. The Nguyens thereafter
stopped making payments, and Morton ordered them out of the home. Before the
Nguyens vacated, Carol testified that Morton sent her profane and offensive emails on a
daily basis demanding payment under the contract. She also testified that Morton placed
an unauthorized inquiry on the credit reports belonging to herself and her husband, and
that Morton put notices about the dispute in the mailboxes of the Nguyens‘ neighbors.
She testified that Morton had a key to the house, and his harassing communications made
the Nguyens anxious and afraid to leave their home. The Nguyens moved out of the
home in November 2009.

Morton sued the Nguyens for breach of contract. The Nguyens counterclaimed,
seeking various forms of relief. First, the Nguyens requested a finding that their
cancellation and rescission of the contract for deed was proper based on Morton‘s failure
to comply with numerous Texas Property Code provisions concerning, among other
things: (1) mandatory disclosures about the property; (2) written notice regarding the
Nguyens‘ rights under a contract for deed; and (3) a prohibition against a seller entering
into such contracts with an existing mortgage lien on the property. See TEX. PROP. CODE
ANN. §§ 5.069, 5.070, 5.072, 5.085. A violation of these provisions entitles the purchaser
to ―cancel and rescind‖ the contract and receive a full refund of all payments made to the
seller, including reimbursement for taxes paid and improvements made to the property if
the seller violates the latter restriction. See id. §§ 5.069(d)(2), 5.070(b)(2), 5.072(e)(2),
5.085(c)(2).2

A violation of these Texas Property Code provisions also constitutes a false,
misleading, or deceptive act or practice under the DTPA, for which damages and

2
Alternatively, the Nguyens argued that the contract for deed properly was rescinded because
Morton induced them to enter the contract by committing statutory fraud, and that the Nguyens are
entitled to restitution in the form of a refund of all payments made under the contract for deed. The trial
court found that Morton committed statutory fraud, but awarded no damages based on that finding.

3
attorney‘s fees and costs may be sought. See id. §§ 5.069(d)(1), 5.070(b)(1), 5.072(e)(1),
5.085(c)(1); see also TEX. BUS. & COM. CODE ANN. § 17.50(a), (b), (d) (West 2011).
The Nguyens alleged that Morton‘s violations of the Texas Property Code were knowing
or intentional, and that the Nguyens therefore are entitled to mental anguish damages and
either treble economic damages or treble economic and mental anguish damages under
the DTPA. See TEX. BUS. & COM. CODE ANN. § 17.50(b)(1).

Additionally, the Nguyens sought liquidated damages for Morton‘s failure to
comply with mandatory annual accounting statement requirements under Texas Property
Code section 5.077, which requires the seller to provide an accounting statement with
specific information regarding the current financial status of the parties‘ contractual
relationship not later than January 31 of each year. See TEX. PROP. CODE ANN. § 5.077.
Failure to timely comply entitles the purchaser to ―$250 a day for each day . . . that the
seller fails to provide the purchaser with the statement, but not to exceed the fair market
value of the property,‖ and reasonable attorney‘s fees. See id. § 5.077(d).

The Nguyens also argued that Morton‘s alleged post-rescission conduct violates
the prohibition against the use of threats, coercion, and harassment in debt collection
under Texas Finance Code sections 392.301 and 392.302, and entitles the Nguyens to
damages ―as the statutory remedy.‖ See TEX. FIN. CODE ANN. §§ 392.301–.302,
392.403–404 (West 2006). A violation of these provisions also constitutes a false,
misleading, or deceptive act or practice under the DTPA, for which damages and
attorney‘s fees and costs may be sought. See id.; see also TEX. BUS. & COM. CODE ANN.
§ 17.50(a), (b), (d). The Nguyens alleged that Morton‘s violations of the Texas Finance
Code were knowing or intentional, and that the Nguyens therefore are entitled to mental
anguish damages and either treble economic damages or treble economic and mental
anguish damages under the DTPA. See TEX. BUS. & COM. CODE ANN. § 17.50(b)(1).

After a bench trial, the trial court entered findings of fact and conclusions of law
and signed a final judgment on November 19, 2010, awarding the Nguyens the following
relief:

4
 1. $63,693.47 in actual damages based on the Nguyens‘ proper cancellation
and rescission of the contract for deed under the Texas Property Code. The
trial court‘s findings of fact indicate that this amount represents the sum of
the Nguyens‘ down payment, monthly payments, improvements and
repairs, insurance premiums, and taxes paid, less the amount of unpaid
monthly payments for November and December 2009;

2. $160,000 in liquidated damages for violations of the Texas Property Code
requirement regarding annual accounting statements;

3. $10,000 in mental anguish damages;

4. $300 ―as the statutory remedy‖ for violations of Texas Finance Code
provisions regarding fair debt collection practices;

5. $67,020 in reasonable and necessary attorney‘s fees and $696.74 in costs,
plus additional attorney‘s fees if Morton appeals; and

6. Post-judgment interest accruing at the rate of 5% per annum.

Morton appeals, arguing in eighteen issues that (1) the trial court should have
concluded that Morton complied with the Texas Property Code based on a good-faith
standard; (2) the trial court erred by awarding the Nguyens the equitable relief of
rescission and restitution under the Texas Property Code because they did not return the
value of possession of the property, and because the doctrines of quasi-estoppel and
laches apply to bar such relief; and (3) the trial court erred by awarding damages for
improvements and repairs, damages for violations of Texas Finance Code provisions
regarding fair debt collection practices, damages for mental anguish, and attorney‘s fees.3

The Nguyens raise two issues on cross-appeal, arguing that the trial court abused
its discretion by (1) failing to award pre-judgment interest in the final judgment, despite
its finding that the Nguyens were entitled to such interest; and (2) concluding that certain
3
Morton also argues in Issue 9 that the trial court erred by finding that Morton committed
statutory fraud. Because the trial court failed to award any damages for statutory fraud, and because we
affirm the trial court‘s award of damages based on alternative grounds for cancellation and rescission
under the Texas Property Code, we overrule this issue without further analysis. See supra, note 2, and
infra, Part I.B. Morton argues in Issue 17 that the trial court should have found the Nguyens liable for
breaching the contract for deed. Because we conclude that the trial court properly found that the Nguyens
were entitled to cancel and rescind the contract for deed based on Morton‘s violations of the Texas
Property Code, see infra, Part I.B., we also overrule this issue without further analysis.

5
violations of the Texas Property Code and Texas Finance Code do not also entitle the
Nguyens to relief under the DTPA, and in failing to award any damages under the DTPA
for Morton‘s knowing or intentional violations of these statutes.

MORTON’S ISSUES ON APPEAL

I. Flores and the Good-Faith Standard

Morton argues in Issues 1–3 that the good-faith standard for compliance
articulated in Flores v. Millennium Interests, Ltd., 185 S.W.3d 427 (Tex. 2005), applies
to his alleged violations of the Texas Property Code. Morton urges that because he did
not violate the Texas Property Code under this standard, the Nguyens therefore are not
entitled to (1) recover liquidated damages under section 5.077; or (2) cancel and rescind
the contract for deed and recoup their payments under sections 5.069, 5.070, 5.072, and
5.085.

A. Flores and Section 5.077

Morton argues in Issue 1 that he complied with Texas Property Code section 5.077
according to the Flores good-faith standard, in that he sent the Nguyens an annual
statement before January 31 each year that included some but not all of the information
required by section 5.077.

Section 5.077 states, in relevant part:

(a) The seller shall provide the purchaser with an annual statement in
January of each year for the term of the executory contract. If the seller
mails the statement to the purchaser, the statement must be postmarked not
later than January 31.
(b) The statement must include the following information:
(1) the amount paid under the contract;
(2) the remaining amount owed under the contract;
(3) the number of payments remaining under the contract;
....
(5) the amounts paid to insure the property on the purchaser‘s behalf if
collected by the seller[.]
6
TEX. PROP. CODE ANN. § 5.077.4 A seller who conducts two or more transactions in a
12-month period under this section5 and ―fails to comply with Subsection 5.077(a)‖ is
liable to the purchaser for (1) liquidated damages in the amount of $250 a day for each
day after January 31 that the seller fails to provide the purchaser with the statement, but
not to exceed the fair market value of the property; and (2) reasonable attorney‘s fees. Id.
§ 5.077(d).

The Texas Supreme Court in Flores answered a number of questions regarding
this section, including the question of whether a timely (under section 5.077(a)) but
incomplete (under section 5.077(b)) annual accounting statement triggers the liquidated
damages penalty. See Flores, 185 S.W.3d at 428 (answering certified questions from the
Fifth Circuit). The court first considered whether the statute was compensatory or penal
in nature, noting that the then-current version of section 5.077 could yield liquidated
damages ―in excess of five times the value of the underlying properties,‖ and that such
damages could be awarded even when they bear ―no relation to the harm caused by a late
or incomplete annual statement.‖ Id. at 432–33. Based on these characteristics, the court
concluded that the statute was penal in nature and therefore subject to strict statutory
construction. Id. at 433.

The court strictly construed the statute to conclude that ―[b]y tying the statutory
penalty to timely delivery of the annual statement, but not its contents, the Legislature‘s
apparent purpose was to provide the purchaser with certain annual information about the
parties‘ executory contract and to incite further inquiry if some of that information was
missing or incomplete.‖ Id. The court held that a timely but incomplete statement
therefore ―does not, strictly speaking, trigger an award of ‗liquidated damages‘‖ under the
4
Section 5.077(b) also requires the seller to give the purchaser (1) information regarding the
amounts paid to taxing authorities on the purchaser‘s behalf if collected by the seller; (2) if the property
has been damaged and the seller has received insurance proceeds, an accounting of the proceeds applied
to the property; and (3) if the seller has changed insurance coverage, a legible copy of the current policy,
binder, or other evidence that satisfies the requirements of section 5.070(a)(2). TEX. PROP. CODE ANN.
§§ 5.077(b)(4), (b)(6), (b)(7). The parties do not dispute that these sections are inapplicable to this case.
5
Morton does not dispute that he conducted two or more transactions in a 12-month period under
this section.

7
statute, and that such a statement does not ―fail to comply‖ with section 5.077(a) unless it
is ―so deficient as to be something other than a good faith attempt by the seller to inform
the purchaser of the current status of their contractual relationship.‖ Id.

Although Morton claims that he was ignorant of the Texas Property Code
requirements when he entered into the contract for deed,6 he sent the Nguyens an annual
―Mortgage Interest Statement‖ before January 31 of each year that included the amount
of interest paid on the loan the previous year (which also constitutes the entire amount
paid on the loan the previous year, but not the total amount paid on the contract); and the
principal balance remaining on the loan. Morton concedes that he failed to include a
statement regarding (1) the number of payments remaining under the contract, and (2) the
amounts paid to insure the property on the Nguyens‘ behalf, although he argues that he
nonetheless provided this information throughout the year as the premiums became due
on a quarterly basis.

The trial court (1) found that Morton ―failed to comply‖ with section 5.077;
(2) held the Flores case ―inapplicable‖ as a matter of law; and (3) awarded liquidated
damages in the amount of $160,000. Morton argues that the trial court incorrectly
declined to apply Flores to this case, and that the information contained in Morton‘s
―Mortgage Interest Statements‖ meets the good-faith standard under Flores and precludes
the Nguyens‘ claim for liquidated damages.

In response to Morton‘s argument that the Flores good-faith standard applies, the
Nguyens contend that Morton cannot claim ignorance of the law on one hand, and good-
faith, substantial compliance with the law in the other. However, Flores requires only ―a
good faith attempt by the seller to inform the purchaser of the current status of their
contractual relationship,‖ not a good-faith attempt to comply with the statute.7 Id. The

We note that the trial court found that Morton ―was aware of Chapter 5 of the Texas Property
6

Code and his obligations under the statute.‖
7
In his brief on appeal, Morton incorrectly states that ―substantial compliance in good faith‖ with
the statute—a phrase that does not appear in Flores—is a ―defense‖ to the Nguyens‘ claim for liquidated
damages. However, he also recites the correct Flores good-faith standard and properly argues that he
8
purchasers in Flores received incomplete annual accounting statements because the
company hired by the seller to service the seller‘s financial transactions ―was apparently
unaware‖ of the requirements of section 5.077, and sent the purchasers ―the same
statements it typically used to service traditional mortgages loans.‖ Id. The company‘s
ignorance of the law did not prevent the seller from benefitting from the good-faith
standard, and the court did not address whether the seller itself knew or did not know of
the statutory requirements. We see no reason why Morton‘s asserted ignorance
necessarily precludes the application of the good-faith standard, or why his knowledge of
the statute in this context is relevant to the issue of whether he made a ―good faith attempt
to inform the purchaser of the current status of the contractual relationship.‖

The Nguyens also argue that the Flores good-faith standard (1) no longer is
necessary in light of the fact that the Legislature amended section 5.077 after Flores to
cap the amount of liquidated damages a claimant can seek at the fair-market value of the
property; and (2) should not apply in the event that actual damages are awarded.

As discussed above, the Flores court concluded that section 5.077 must be strictly
construed as a penal statute, in part, because (1) a liquidated damages award under the
then-current statute potentially could exceed the value of the underlying property, and (2)
the statute does not require such damages to bear any relation to (or even be accompanied
by) actual damages or harm. The Nguyens argue that the good-faith standard was
designed to mitigate these ―concerns,‖ and that it does not ―make sense‖ to apply the
good-faith standard to a case in which these ―concerns‖ are not present. The Nguyens‘
arguments fail for two reasons.

First, Flores does not purport to alleviate any ―concerns‖ with respect to the good-
faith standard. The court discusses these punitive characteristics only to determine
whether to strictly construe section 5.077 as a penal statute. Id. Flores in no way
indicates that the good-faith standard may be held inapplicable or unnecessary on a case-

should benefit from that standard for the same reasons stated in Flores.

9
by-case basis, depending on whether a particular liquidated damages award (1) does not
exceed the value of the underlying property, or (2) is accompanied by an award of actual
damages.

Second, with respect to the potential for an unlimited liquidated damages award
under the then-current version of the statute, the Flores court expressly noted that its
determination regarding the punitive nature of section 5.077 did not depend solely upon
this consideration. See id. (―We have found statutory damage schemes far less draconian
than this one to be penal in nature.‖). The cap on liquidated damages awards does not
necessarily render the Flores good-faith standard obsolete. Liquidated damages still may
be awarded in the absence or in excess of actual damages under the statute, an important
consideration supporting a determination that the post-amendment statute remains penal
in nature. See id. (citing Johnson v. Rolls, 79 S.W. 513, 514 (Tex. 1904) (statutory
liquidated damages awarded without reference to any actual loss or injury have ―much
the character of exemplary or punitive damages‖), and Houston & Tex. Cent. Ry. Co. v.
H.W. Harry & Bros., 63 Tex. 256, 260 (1885) (to the extent that an award of statutory
damage exceeds the amount necessary to compensate plaintiff‘s injury, ―the excess is but
exemplary damage‖)). We conclude that the Flores good-faith standard is effective and
applicable to this case, and that the trial court erroneously concluded otherwise.

Because we reverse the trial court‘s legal conclusion that Flores does not apply,
and because the trial court has not had an opportunity to determine whether Morton‘s
statements are ―so deficient as to be something other than a good faith attempt by the
seller to inform the purchaser of the current state of their contractual relationship‖ under
Flores, we must remand this issue to the trial court to consider in the first instance. Cf.
Flores v. Millennium Interests, Ltd., 390 F.3d 374, 376 (5th Cir. 2004) (in certifying
questions to Texas Supreme Court, noting that federal district court had concluded that
statements in question ―were not so deficient that they constituted no statements at all‖),
certified question answered, 185 S.W.3d 427 (Tex. 2005).

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 Accordingly, we sustain Morton‘s Issue 1 and reverse the trial court‘s judgment on
the issue of whether the Nguyens are entitled to $160,000 in liquidated damages for
Morton‘s violations of section 5.077 of the Texas Property Code. We remand that issue
to the trial court for proceedings consistent with this opinion and proceed with our
consideration of the parties‘ remaining issues on appeal.

B. Flores and Sections 5.069, 5.070, 5.072, and 5.085

Morton argues in Issues 2 and 3 that the Flores good-faith standard for compliance
also should apply to the Nguyens‘ grounds for cancellation and rescission under Texas
Property Code sections 5.069, 5.070, 5.072, and 5.085. These sections pertain to, among
other things: (1) mandatory disclosures about the property; (2) written notice regarding
the Nguyens‘ rights under a contract for deed; and (3) a prohibition against a seller
entering into such contracts with an existing mortgage lien on the property. See TEX.
PROP. CODE ANN. §§ 5.069, 5.070, 5.072, 5.085. Morton relies on Nguyen v. Yovan, 317
S.W.3d 261, 273 (Tex. App.—Houston [1st Dist.] 2009, pet. denied), to argue that ―[o]ne
court of appeals has indicated that an attempt to comply in good faith is a defense‖ to a
claim that a seller violated Texas Property Code provisions applicable to contracts for
deed in addition to section 5.077.

In Yovan, the First Court of Appeals held that the trial court erroneously found a
seller ―made a good faith effort to abide by‖ Texas Property Code sections 5.063 and
5.064, which pertain to notices a seller must give in the event of a purchaser‘s default on
a contract for deed. Id. at 272–73. Based on the fact that (1) the record contained no
evidence of any such good faith effort, and (2) the parties did not dispute that the seller
wholly failed to comply with the statute, the First Court of Appeals reversed the portion
of the trial court‘s judgment denying the purchaser relief on that issue, and remanded it
back to the trial court for further proceedings. Id. at 273. However, the court did not
hold—and it was not necessary to its disposition to hold—that such an argument would
be valid, even if it were supported by evidence.

11
 Morton cites to no authority extending the good-faith standard to Texas Property
Code sections other than section 5.077. Morton provides no other arguments for why we
should extend Flores to these sections, which provide a bright-line rule for determining
whether a purchaser is entitled to cancel and rescind a contract for deed. As we explain
in more detail in the context of Morton‘s other issues below, the statutory remedy of
cancellation and rescission is designed to provide special protection to purchasers
entering into such contracts, which are disfavored under Texas law. The accessibility of
the remedy potentially is jeopardized if every purchaser with legitimate grounds for
cancellation and rescission must also expect to litigate the issue of whether the seller
acted in good faith. Because we decline to extend the good-faith standard beyond Texas
Property Code section 5.077, we overrule Morton‘s Issues 2 and 3.

II. Equitable Limitations on and Defenses to Cancellation and Rescission

Morton argues in Issues 4–8 that the trial court erred by finding that the Nguyens
properly cancelled and rescinded the contract for deed because (1) they did not return the
value of possession of the property, which Morton argues is a pre-requisite to seeking
cancellation and rescission under the Texas Property Code, and (2) the doctrines of quasi-
estoppel and laches apply as affirmative defenses to bar such relief.

When construing a statute, we begin with its language. State v. Shumake, 199
S.W.3d 279, 284 (Tex. 2006). Our primary objective is to determine the Legislature‘s
intent which, when possible, we discern from the plain meaning of the words chosen. Id.
(citing City of San Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex. 2003)). If the
statute is clear and unambiguous, we must apply its words according to their common
meaning without resort to rules of construction or extrinsic aids. Id. (citing Fitzgerald v.
Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 865–66 (Tex. 1999)). We may
consider other matters in ascertaining legislative intent, including the objective of the
law, its history, and the consequences of a particular construction. Id. (citing TEX. GOV‘T
CODE ANN. § 311.023(1), (3), (5) (West 2005), and Union Bankers Ins. Co. v. Shelton,
889 S.W.2d 278, 280 (Tex. 1994)). Statutory construction is a question of law, and our

12
review accordingly is de novo. Id. (citing In re Forlenza, 140 S.W.3d 373, 376 (Tex.
2004)). With these standards in mind, we turn to Morton‘s arguments.

A. Limitations on Cancellation and Rescission

―In equity, rescission allows for the forced termination of an agreement and the
restoration of benefits or consideration previously transferred.‖ See Carrow v. Bayliner
Marine Corp., 781 S.W.2d 691, 696 (Tex. App.—Austin 1989, no writ). At common
law, a party seeking the equitable remedy of rescission must first satisfy several
requirements, which include (1) giving timely notice to the seller that the contract is
being rescinded; and (2) tendering or offering to tender the property received and the
value of any benefit derived from its possession back to the seller. Id. (citing David
McDavid Pontiac, Inc. v. Nix, 681 S.W.2d 831, 836 (Tex. App.—Dallas 1984, writ ref‘d
n.r.e.)). The party seeking equitable rescission bears the burden of proof on the issues of
notice and tender. Id. (citing Nix, 681 S.W.2d at 836). Morton argues in Issue 4 that
these common-law limitations implicitly are incorporated into the express statutory
remedy of cancellation and rescission authorized under the Texas Property Code, and that
the Nguyens are not entitled to cancellation and rescission because they failed to tender
or offer to tender the value of their almost three-year possession of the property back to
Morton.8

In support of this argument, Morton cites to a line of cases from the Fifth Court of
Appeals analyzing the similar statutory remedy of ―restoration of consideration‖ under
the DTPA. These cases hold that the DTPA remedy of ―restoration of consideration‖ is
―a statutory recognition‖ of the equitable remedy of rescission and restitution, as well as
the common-law limitation that the complaining party ―surrender any benefits received‖
before electing to avoid the contract and ―recover that [which] he parted with.‖ Smith v.
Kinslow, 598 S.W.2d 910, 915 (Tex. App.—Dallas 1980, no writ); see also TEX. BUS. &

8
Chapter 5 contains no express limitation on a purchaser‘s ability to ―cancel and rescind‖ a
contract for deed and ―receive a full refund of all payments made to the seller,‖ among other things. See
TEX. PROP. CODE ANN. §§ 5.069(d)(2), 5.070(b)(2), 5.072(e)(2), 5.085(c)(2).

13
COM. CODE ANN. § 17.50(b)(3) (―In a suit filed under this section, each consumer who
prevails may obtain . . . orders necessary to restore to any party to the suit any money or
property, real or personal, which may have been acquired in violation of this
subchapter.‖). In other words, the Fifth Court of Appeals has held that the statutory
remedy of ―restoration of consideration‖ under the DTPA incorporates the common-law
notice and tender requirements applicable to the equitable remedy of rescission and
restitution. See, e.g., Nix, 681 S.W.2d at 835–36 (purchaser was not entitled to
―restoration of consideration‖ under DTPA because limitation on remedy of rescission
requires and record contained no evidence of ―tender, or offer of tender‖ of value of
benefits received from using the product approximately one month); see also Chubb
Lloyds Ins. Co. of Tex. v. Andrew’s Restoration, Inc., 323 S.W.3d 564, 580–81 (Tex.
App.—Dallas 2010, pet. granted) (consumer was not entitled to ―restoration of
consideration‖ under DTPA because consumer failed to show that he complied with
prerequisite of surrendering benefits received from other parties), aff’d in part, rev’d in
part, —S.W.3d—, No. 10-0995, 2012 WL 1370851 (Tex. Apr. 20, 2012). Cf. Schenck v.
Ebby Halliday Real Estate, Inc., 803 S.W.2d 361, 366–67 (Tex. App.—Tyler 1990, no
writ) (jury‘s finding that consumer acted negligently or wrongfully constituted equitable
bar to ―restoration of consideration‖ under DTPA under equitable doctrine requiring
claimant seeking equitable relief to have ―unclean hands‖). Morton argues that these
cases from the Fifth Court of Appeals should guide our analysis of the similar statutory
remedy of ―cancellation and rescission‖ under subchapter D of chapter 5 of the Texas
Property Code.

The Texas Supreme Court recently considered the position taken by the Fifth
Court of Appeals and rejected it in Cruz v. Andrews Restoration, Inc., —S.W.3d—, No.
10-0995, 2012 WL 1370851, at *7–8 (Tex. Apr. 20, 2012). Reiterating its prior holding
from Smith v. Baldwin, 611 S.W.2d 611, 616–17 (Tex. 1980), in which the court stated
that ―[t]he DTPA does not represent a codification of the common law‖ and was intended
―to provide consumers a cause of action for deceptive trade practices without the burden

14
of proof and numerous defenses encountered in a common law fraud or breach of
warranty suit,‖ the court held in Cruz: ―[C]ompliance with [the] requirements [of notice
and tender] is unnecessary under the DTPA. Instead, we adopt the Restatement approach
and conclude that notice and restitution or a tender of restitution are not prerequisites to a
remedy under [the DTPA] . . . .‖ Cruz, 2012 WL 1370851, at *8. This holding weighs
against a conclusion that the statutory remedy of cancellation and rescission under the
Texas Property Code incorporates the same common-law limitations.

With respect to the history and purpose of subchapter D of chapter 5, the
following explanation illuminates our discussion:

In 1995, the Legislature amended chapter 5 of the Texas Property
Code to address serious abuses in the acquisition of homes in the colonias.
The colonias are substandard, generally impoverished, rural subdivisions
that typically lack basic utilities and other infrastructure. Concentrated
along the Texas border with Mexico, colonia residents almost always
acquire residential lots through executory contracts called ―contracts for
deed‖ or ―contracts for sale‖ . . . .
The Legislature found that purchasers had little legal protection
under the contract-for-deed financing arrangement and no statutory right to
critical information about the colonia property being purchased. Sellers
have sold individual lots to two or more purchasers, sold lots without
written contracts, and placed liens on lots subsequent to the sale without
informing the purchasers and colonia residents. Colonia residents also
complain that sellers frequently misrepresent the availability of water,
sewer service, and other utilities, and that the residents are often not
informed when property being sold lies in a flood plain or is otherwise
unsuitable for habitation.
Although the Legislature considered a prohibition of contract-for-
deed conveyances to end these abuses, it determined that many residents
building homes in these areas need this method of financing because they
do not have access to traditional mortgage financing. The contract-for-deed
arrangement, however, allows low-income persons to purchase property
and build homes on the property.
To address the fraudulent and abusive conduct, the Legislature
amended the statute in 2001, substantially increasing the monetary penalties
and applying the protections statewide.

Flores, 185 S.W.3d at 434–35 (Wainwright, J., concurring) (emphasis added, citations
15
omitted). Subchapter D, therefore, provided new grounds to rescind a contract for deed
that previously had been unavailable to purchasers at risk of being misled by incomplete
disclosures regarding the nature of the purchased property. Accordingly, no common-
law remedies were codified by the Legislature‘s enactment of subchapter D. In fact, to
read the statute as incorporating common-law limitations into the statutory remedy would
frustrate the very purpose of these sections, which were designed to ―address the
fraudulent and abusive conduct‖ of sellers. See id. at 435 (Wainwright, J., concurring).
The Legislature could have included express limitations on the remedy of cancellation
and rescission for these new grounds, but did not do so. We overrule Morton‘s Issue 4.9

B. Equitable Defenses of Quasi-Estoppel and Laches

Morton argues in Issues 5–8 that the equitable defenses of quasi-estoppel and
laches apply to the statutory remedy of cancellation and rescission, and that he
established such defenses.

Common-law defenses may not be used to defeat claims brought under a statute
that was not designed to be a codification of the common law. See, e.g., Smith, 611
S.W.2d at 616 (DTPA not designed to be a codification of common law; DTPA was
designed to ―provide consumers a cause of action for deceptive practices without the

9
Morton also argues in Issue 10 that the trial court erred by failing to award Morton a ―set-off
against the sums awarded to the Nguyens‖ for ―the value the Nguyens received for their occupancy of the
house for almost three years.‖ In his opening brief on appeal, Morton cites three cases discussing the
common-law, equitable relief of rescission but provides no analysis or argument linking that authority to
the statutory remedy of cancellation and rescission under the Texas Property Code. See Price v.
Kittredge, 361 S.W.2d 721, 723–24 (Tex. Civ. App.—Fort Worth 1962, no writ) (failure to offer or tender
property and reasonable compensation for value received precluded equitable rescission of contract for
deed); Stinson v. Snead, 163 S.W. 989 (Tex. Civ. App.—Amarillo 1914, no writ) (discussing election of
remedies and effect of one party‘s possession of property on other party‘s relief in event of rescinded
contract for deed; fact question remained on issue of rescission and directed verdict was improper);
Burwell v. Sollock, 32 S.W. 844, 846 (Tex. Civ. App. 1895, no writ) (party entitled to value of other
party‘s possession of land subject to annulled contract for deed). And unlike Morton‘s argument in
support of Issue 4—in which he contends that the remedy of rescission and cancellation under the Texas
Property Code must incorporate common-law requirements because the Fifth Court of Appeals has
concluded that such requirements are incorporated into the similar remedy of ―restoration of
consideration‖ under the DTPA—Morton‘s opening brief does not draw a similar analogy in the context
of requesting a ―set-off‖ in Issue 10, and we do not consider the merits of such an argument. We overrule
Morton‘s Issue 10.

16
burden of proof and numerous defenses encountered in a common law fraud or breach of
warranty suit‖); Diversified, Inc. v. Gibraltar Sav. Ass’n, 762 S.W.2d 620, 623 (Tex.
App.—Houston [14th Dist.] 1988, writ denied) (―[I]t is well established that the DTPA
was not designed to be a codification of the common law and any common law defenses
may not be used to defeat a claim under it.‖ (emphasis in original)); Joseph v. PPG
Indus., Inc., 674 S.W.2d 862, 865 (Tex. App.—Austin 1984, writ ref‘d n.r.e.) (common-
law defenses ―cannot be used to defeat claims under the DTPA‖ because DTPA was not
designed to codify common law); see also Frank B. Hall & Co v. Beach, Inc., 733
S.W.2d 251, 264 (Tex. App.—Corpus Christi 1987, writ ref‘d n.r.e.) (applying rule from
Smith and Joseph to preclude common-law defenses to claims brought under Texas
Insurance Code). We already have determined that the sections of the Texas Property
Code at issue in this case do not constitute a codification of the common law. 10
Therefore, we conclude that these common-law defenses are not available to defeat
claims under the statute, and we overrule Morton‘s Issues 4–8.11

III. Other Damages and Attorney’s Fees

Morton argues in Issues 11–16 that the trial court erred by awarding the Nguyens
recovery for (1) improvements and repairs, because there is no evidence to support such a
finding; (2) ―statutory damages‖ for violations of the Texas Finance Code, because there
is no finding of fact regarding such violations and no evidence to support such a finding;
(3) mental anguish damages, because there is no finding of fact regarding mental anguish,
and the Nguyens are not entitled to such damages; and (4) attorney‘s fees, because the
Nguyens failed to segregate between claims for which attorney‘s fees are or are not

10
Morton relies on Schenck, 803 S.W.2d at 366–67, to argue that other courts recognize the
applicability of common-law, equitable defenses to purely statutory claims. However, Schenck expressly
recognized the prohibition of common-law defenses as against DTPA claims and concluded that the
common-law doctrine of ―unclean hands‖ was a permissible factor to consider in whether to afford the
plaintiff her requested remedy. Id. at 367. Schenck does not stand for the proposition that common-law
defenses are effective as against purely statutory claims.
11
Morton argues in Issue 18 that, in the event that we conclude the Nguyens are not entitled to
relief under the Texas Property Code, he is entitled to damages for the value of the Nguyens‘ last month
of possession of the property. Based on our resolution of these issues, we overrule Morton‘s Issue 18.

17
recoverable.

A. Improvements and Repairs

Morton argues in Issue 11 that the Nguyens are not entitled to recovery for
―improvements/repairs‖ made to the property because they failed to offer any proof that
the costs of such improvements were reasonable.

A violation of Texas Property Code section 5.085 entitles the purchaser to cancel
and rescind the contract for deed and receive from the seller, among other things, ―the
value of any improvements made to the property by the purchaser.‖ See TEX. PROP.
CODE ANN. § 5.085(c)(2)(B)(ii). The trial court‘s findings indicate that the Nguyens‘
actual damages award includes an award of $2,648 for ―improvements/repairs.‖

Section 5.085 contains no express requirement that the measure of damages be
based on the reasonable cost of such improvements. Morton cites Allright, Inc. v. Lowe,
500 S.W.2d 190 (Tex. Civ. App.—Houston [14th Dist.] 1973, no writ), in support of his
assertion that section 5.085 imposes a reasonableness requirement onto a purchaser‘s
ability to recover. Allright, Inc. concerns the common-law principle that to establish the
right to recover the cost of repairs made to property wrongfully damaged by another, a
claimant ordinarily must prove that such repairs were necessary and the costs reasonable.
See, e.g., Allright, Inc., 500 S.W.2d at 191–92 (requiring evidence of reasonable cost of
repairs, placement parts, towing, and storage to recover and restore appellee‘s car after it
was stolen from a parking lot found to be negligently operated by appellant and recovered
in a damaged condition); see also Fort Worth Hotel Ltd. P’ship v. Enserch Corp., 977
S.W.2d 746, 762–63 (Tex. App.—Fort Worth 1998, no pet.) (hotel owner failed to
establish right to recover costs of repairs after explosion damaged hotel because hotel
owner did not present sufficient evidence to justify jury‘s finding that costs were
reasonable and repairs necessary). Morton does not explain on appeal why this rule
should be incorporated into section 5.085.

18
 By its plain language, the purchaser‘s right to receive the ―value of improvements‖
under section 5.085 is designed to compensate the purchaser for value that is added by
the purchaser to the property, regardless of the reason, and that is retained by the seller
after the purchaser properly cancels and rescinds the contract for deed. Unlike
circumstances in which a claimant must exercise reasonableness when making necessary
repairs to wrongfully damaged property for which reimbursement will be sought against
another party, the circumstances contemplated by section 5.085 involve a purchaser who
spent his or her own money to improve property the purchaser contracted to own. As the
statute measures the amount of recovery by the ―value‖ rather than the ―cost‖ of such
improvements, we see no reason why the Nguyens should be required to present evidence
of reasonable costs.

We overrule Morton‘s Issue 11.

B. Violations of Texas Finance Code and Mental Anguish Damages

Morton argues in Issues 12 and 13 that the trial court erred by awarding $300 as
―statutory damages‖ for violations of the Texas Finance Code based on Morton‘s alleged
post-rescission conduct because there is no finding of fact regarding such violations and
no evidence to support such a finding. Morton argues in Issues 14 and 15 that the trial
court erred by awarding $10,000 as damages for mental anguish, based on the fact that
there is no finding to support the related award of ―statutory damages‖ under the Texas
Finance Code, and because the Nguyens are not entitled to recovery under any other
cause of action asserted that would support an award of mental anguish damages.

The trial court rejected by striking through the Nguyens‘ proposed finding of fact
28, which states that (1) Morton‘s post-rescission conduct ―violate[s] Sections 392.301,
392.302, and 392.304 of the Texas Finance Code‖; (2) ―[b]ecause this is a tie-in statute
with the [DTPA], [Morton] also violated the DTPA‖; and (3) Morton‘s ―violations
harmed [the Nguyens] and proximately caused them mental anguish.‖ In its conclusions
of law, the trial court also rejected by striking through the Nguyens‘ proposed conclusion
of law 20, which states that the Nguyens ―are entitled to recover liquidated damages of

19
not less than $100‖ for each alleged violation of the Texas Finance Code.12 In other
words, the trial court refused to find that Morton violated the Texas Finance Code or that
such alleged violations caused the Nguyens harm or mental anguish.13

Contrarily, the trial court accepted the Nguyens‘ proposed conclusion of law 18,
which states that the Nguyens ―are entitled to recover their actual damages, mental
anguish, and pre- and post-judgment interest for [Morton‘s] violations of the Texas
Finance Code.‖ The trial court‘s final judgment awards the Nguyens $300 ―as the
statutory remedy for violations of [Chapter] 392 of the Texas Finance Code.‖ Morton
correctly asserts that these conclusions are not supported by findings of fact; in fact, such
conclusions potentially conflict with the trial court‘s rejection of related findings.

We will not set aside a judgment because of conflicting findings of fact, by a judge
or by a jury, if the conflict can be reconciled. Hartford Ins. Co. v. Jiminez, 814 S.W.2d
551, 552 (Tex. App.—Houston [1st Dist.] 1991, no writ). The same rule applies to
conflicts between findings of fact and conclusions of law. Id. When two possible
interpretations exist, the interpretation should be chosen that will harmonize the judgment
with the findings of fact and conclusions of law upon which it is based. Grossnickle v.
Grossnickle, 935 S.W.2d 830, 841 (Tex. App.—Texarkana 1996, writ denied). The
reviewing court must reconcile apparent conflicts if reasonably possible in light of the
pleadings and evidence, the manner of submission, and the other findings considered as a
whole. Anchor, Inc. v. Laguna Enters., Inc., No. 14-00-00283-CV, 2002 WL 287706, at
*4 (Tex. App.—Houston [14th Dist.] Feb. 7, 2002, pet. denied) (not designated for
publication) (citing Bender v. S. Pac. Transp. Co., 600 S.W.2d 257, 260 (Tex.1980)).
We will not determine whether the findings reasonably may be viewed as conflicting; to
12
This proposed conclusion of law did not expressly reference the Texas Finance Code, but it
tracks the language of the statute with respect to certain civil remedies available thereunder and sought by
the Nguyens with respect to Morton‘s post-rescission conduct.
13
If the court omits an element of a ground of recovery that has been ―requested,‖ the court‘s
action may suggest the omission was deliberate, rather than inadvertent. Vickery v. Comm’n for Laywer
Discipline, 5 S.W.3d 241, 253 (Tex. App.—Houston [14th Dist.] 1999, pet. denied). ―In other words,
where the trial court has been specifically requested to make a particular finding in support of its
judgment and fails to do so, the failure is tantamount to a refusal.‖ Id.

20
the contrary, the question is whether there is any reasonable basis upon which the
findings may be reconciled. Bender, 600 S.W.2d at 260.

The Nguyens urge on appeal that it is reasonable to assume that, because the trial
court consistently concluded that none of Morton‘s violations of either the Texas
Property Code or Texas Finance Code also constitute DTPA violations, the trial court
struck proposed finding of fact 28 solely because it included a statement regarding a
related DTPA violation. In other words, they argue that the trial court‘s refusal to accept
the Nguyens‘ proposed finding of fact 28 ―was clearly based upon the manner in which it
was submitted‖—in that it was submitted in conjunction with a statement regarding the
DTPA—―rather than the court‘s determination that the evidence did not support a
finding‖ that Morton violated the Texas Finance Code. However, the trial court
performed numerous other limited strike-outs, eliminating objectionable statements and
accepting others within a single paragraph containing multiple proposed findings. There
is no reasonable explanation for why the trial court would not have done so here.
Additionally, the Nguyens‘ argument is undermined by the fact that the trial court also
struck proposed conclusion of law 20 regarding damages for alleged violations of the
Texas Finance Code, which did not contain any objectionable references to the DTPA.

We conclude that the trial court found that Morton did not violate the Texas
Finance Code, and that finding cannot reasonably be reconciled with the trial court‘s
conclusion that the Nguyens are entitled to damages for Morton‘s alleged violation of the
Texas Finance Code.

Where the trial court‘s findings of fact conflict with its conclusions of law,
findings of facts will be deemed to control. Cnty. of El Paso v. Ortega, 847 S.W.2d 436,
441 (Tex. App.—El Paso 1993, no writ) (citing Gary Safe Co. v. A.C. Andrews Co., Inc.,
568 S.W.2d 166 (Tex. Civ. App.—Dallas 1978, writ ref‘d n.r.e.)). Accordingly, the trial
court‘s factual finding that Morton did not violate the Texas Finance Code controls over
the trial court‘s determination that the Nguyens ―are entitled to recover their actual
damages, mental anguish, and pre- and post-judgment interest for [Morton‘s] violations

21
of the Texas Finance Code.‖ ―Statutory damages‖ and mental anguish damages based on
these alleged violations were awarded in error.14 To that extent, we sustain Morton‘s
Issues 12, 13, and 14.15 Accordingly, we modify the trial court‘s judgment to omit the
paragraph awarding the Nguyens $300 ―as the statutory remedy for violations of
[Chapter] 392 of the Texas Finance Code.‖

Morton argues in Issue 15 that we should reverse the trial court‘s award of
$10,000 in mental anguish damages because the Nguyens are not entitled to recovery
under any other cause of action asserted that would support an award of mental anguish
damages. Morton‘s argument hinges on his assertion that he violated neither the Texas
Finance Code nor the Texas Property Code. Because we uphold the trial court‘s
conclusion that Morton violated certain sections of the Texas Property Code, and because
Morton does not argue that the trial court could not have awarded mental anguish
damages in conjunction with such violations, we do not review whether the trial court
properly could have done so. We overrule Morton‘s Issue 15.

C. Attorney’s Fees

Morton argues in Issue 16 that the trial court erroneously awarded the Nguyens
attorney‘s fees because they ―failed to segregate the fees among the various causes of
action asserted.‖

Because an award of attorney‘s fees must be authorized by statute or contract, a
14
We note that we do not decide whether mental anguish damages would be permitted in
connection with violations of the Texas Finance Code if such an award were supported by related findings
of fact.
15
The Nguyens argue that if the trial court failed to find that Morton‘s post-rescission conduct
constituted a violation of the Texas Finance Code ―section 392,‖ then such failure was against the great
weight and preponderance of evidence. Chapter 392 of the Texas Finance Code, entitled ―Debt
Collection‖ is comprised of fifteen different sections, six of which pertain to prohibited debt collection
methods. See TEX. FIN. CODE ANN. §§ 392.001–.404. The sections pertaining to prohibited debt
collection methods include lists of various specific prohibitions against, among other things (1) threats or
coercion; (2) harassment or abuse; and (3) fraudulent, deceptive, or misleading representations. See id. §§
392.301, 392.302, 39.304. Although the Nguyens summarize the evidence regarding Morton‘s alleged
post-rescission conduct, they fail to tie any of the alleged conduct to specific prohibitions listed in the
statute. Accordingly, we decline to hold that the trial court erred by rejecting the Nguyens‘ proposed
finding of fact regarding alleged violations of the Texas Finance Code.

22
party presenting more than one claim in a single cause must segregate attorney‘s fees
between claims for which attorney‘s fees are or are not recoverable. See Tony Gullo
Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310–11 (Tex. 2006). However, if no one
objects to the fact that the attorney‘s fees are not segregated as to specific claims, the
objection is waived. Green Int’l, Inc. v. Solis, 951 S.W.2d 384, 389 (Tex. 1997) (citing
Hruska v. First State Bank of Deanville, 747 S.W.2d 783, 785 (Tex. 1988)); Pitts &
Collard, L.L.P. v. Schechter, —S.W.3d—, No. 01-08-00969-CV, 2011 WL 6938515, at
*14 (Tex. App.—Houston [1st Dist.] Dec. 29, 2011, no pet. h.) (objection to request for
attorney‘s fees ―must be made before the trial court renders judgment‖). Morton failed to
object at the trial court that the Nguyens should be required to segregate their request for
attorney‘s fees, and such failure waived this issue for appellate review. See Red Rock
Props. 2005, Ltd. v. Chase Home Fin., L.L.C., No. 14-08-00352-CV, 2009 WL 1795037,
at *6–7 (Tex. App.—Houston [14th Dist.] June 25, 2009, no pet.) (mem. op.) (objection
that attorney‘s fees were not segregated was not preserved in trial court); Fortenberry v.
Cavanaugh, No. 03-07-00310-CV, 2008 WL 4997568, at *11–12 (Tex. App.—Austin
Nov. 26, 2008, pet. denied) (mem. op.) (same); see also TEX. R. APP. P. 33.1(a)(1). We
overrule Morton‘s Issue 16.

Having considered all of Morton‘s issues on appeal, we proceed to consider the
Nguyens‘ two issues on cross-appeal.

THE NGUYENS’ ISSUES ON CROSS-APPEAL

The Nguyens argue in two issues on cross-appeal that the trial court abused its
discretion in (1) failing to award pre-judgment interest, despite finding that the Nguyens
are entitled to such interest; and (2) concluding that Morton‘s violations of the Texas
Property Code do not also constitute DTPA violations, and that damages for knowing or
intentional violations additionally should have been awarded under the DTPA.

I. Pre-Judgment Interest

The Nguyens first argue that the trial court abused its discretion in failing to award

23
pre-judgment interest, despite finding that the Nguyens are entitled to such interest.

A complaint regarding the award of pre-judgment interest must be preserved in the
trial court by a motion to amend or correct the judgment or by a motion for new trial. See
Keith v. Keith, 221 S.W.3d 156, 173 (Tex. App.—Houston [1st Dist.] 2006, no pet.); see
also Allright, Inc. v. Pearson, 735 S.W.2d 240, 240 (Tex. 1987) (per curiam) (error
regarding award of pre-judgment interest must be preserved); Miller v. Kendall, 804
S.W.2d 933, 944 (Tex. App.—Houston [1st Dist.] 1990, no writ) (motion to amend or
correct judgment or motion for new trial is proper vehicle for preserving error in
judgment). The Nguyens failed to object to the trial court regarding the award of post-
but not pre-judgment interest, and such failure waived this issue for appellate review. See
Keith, 221 S.W.3d at 173; see also TEX. R. APP. P. 33.1(a)(1). We overrule the Nguyens‘
first issue on cross-appeal.

II. DTPA Tie-Ins

The Nguyens argue in their second issue on cross-appeal that (1) the trial court
erred by concluding that Morton‘s violations of the Texas Property Code do not also
constitute DTPA violations, and (2) the trial court should have awarded damages for
knowing or intentional violations.16

Certain statutes ―tie-in‖ to the DTPA, in that a violation of the ―tie-in‖ statute
constitutes ―a false, misleading, or deceptive act or practice‖ under the DTPA. See, e.g.,
TEX. PROP. CODE ANN. § 5.085(c)(1) (―A violation of this section . . . is a false,
misleading or deceptive act or practice within the meaning of Section 17.46 [of the
DTPA] and is actionable in a public or private suit‖ brought under the DTPA); TEX. BUS.
& COM. CODE ANN. § 17.46 (West 2011) (―laundry list‖ of actionable false, misleading,
or deceptive acts or practices). A consumer may maintain action under the DTPA where,
among other things, the use or employment of a false, misleading, or deceptive act or
16
The Nguyens also argue that the trial court erred by concluding that Morton‘s asserted
violations of the Texas Finance Code do not also constitute DTPA violations. We already have
concluded that the trial court found that Morton did not violate the Texas Finance Code. We therefore
limit our analysis of the Nguyens‘ issue to the relevant Texas Property Code violations.

24
practice is relied upon by a consumer to a consumer‘s detriment and constitutes a
producing cause of economic damages or damages for mental anguish. See TEX. BUS. &
COM. CODE ANN. § 17.50(a). The Nguyens argue that the trial court erroneously rejected
by striking through the Nguyens‘ proposed conclusion of law 16, which states that ―[a]ny
violations of [Texas Property Code] Sections 5.069, 5.070, 5.072, and 5.085 are also
violations of the DTPA.‖

We agree with the Nguyens that certain Texas Property Code violations found by
the trial court constitute ―a false, misleading, or deceptive act or practice‖ within the
context of a DTPA claim. See TEX. PROP. CODE ANN. §§ 5.069, 5.070, 5.072, 5.085
(violation of these sections ―is a false, misleading, or deceptive act or practice‖ within the
context of a DTPA claim). To recover under the DTPA with respect to such acts or
practices, a claimant must establish that: (1) she was a consumer of the defendant‘s goods
or services; (2) the defendant committed false, misleading, or deceptive acts in
connection with the lease or sale of goods or services; and (3) such acts were a producing
cause of actual damages to the consumer. Burroughs v. APS Int’l, Ltd., 93 S.W.3d 155,
163 (Tex. App.—Houston [14th Dist.] 2002, pet. denied) (citing Brown v. Bank of
Galveston, N.A., 963 S.W.2d 511, 513 (Tex.1998)). Although a violation of the relevant
sections of the Texas Property Code at issue in this case also constitutes a ―false,
misleading, or deceptive act or practice,‖ the Nguyens do not address the other elements
of a DTPA claim or cite any authority holding that Morton‘s Texas Property Code
violations automatically entitle the Nguyens to relief under the DTPA. We overrule the
Nguyens‘ second issue on cross-appeal.

CONCLUSION

Having considered all the parties‘ issues on appeal, we (1) reverse the trial court‘s
judgment on the issue of whether the Nguyens are entitled to $160,000 in liquidated
damages for Morton‘s violations of section 5.077 of the Texas Property Code, and
remand that issue to the trial court for proceedings consistent with this opinion; and (2)
modify the trial court‘s judgment by deleting the paragraph awarding the Nguyens $300

25
―as the statutory remedy‖ for Morton‘s violations of the Texas Finance Code. We affirm
the trial court‘s judgment as modified and in all other respects.

/s/ Sharon McCally
Justice

Panel consists of Justices Brown, Boyce, and McCally.

26