Opinion
No. 14-10-00065-CV
Opinion filed August 23, 2011.
On Appeal from the County Civil Court at Law No. 4, Harris County, Texas, Trial Court Cause No. 940,473.
Panel consists of Justices ANDERSON, SEYMORE, and McCALLY.
MEMORANDUM OPINION
Appellant Dorothy Baber sued appellees, James Pigg, individually, and A-1 Vacuum Center, Inc. for violations of the Texas Deceptive Trade Practices Act ("DTPA"). In 19 issues, Baber claims the trial court erred in finding that (1) appellees did not breach an implied warranty of merchantability, (2) she failed to mitigate damages under the DTPA, and (3) Baber's suit was groundless. Finding the trial court erred in determining Baber's suit was groundless, we modify the trial court's judgment to delete the finding of groundlessness and the assessment of attorney's fees based on that finding. We affirm the remainder of the judgment.
I. Factual and Procedural Background
A. Undisputed Facts
Baber took an old vacuum cleaner into A-1 Vacuum Center for maintenance. James Pigg, an employee of A-1, suggested she purchase a new Riccar model 1500S. On November 9, 2007, Baber purchased a new Riccar model 1500S vacuum cleaner. She paid $564.99 for the vacuum, $14.99 for bags, and sales tax for a total of $611.61. Baber signed the sales receipt under a statement that she "Received Merchandise in Good Order." Immediately below Baber's signature are the words, "All Sales Final." Over one month later, on December 12, 2007, Baber returned the vacuum to A-1 and reported that the motor emitted a burning smell. Between November 9, 2007 and December 12, 2007, the vacuum was used only once because Baber's housekeeper was out of town. Baber did not use the vacuum cleaner, but was in the house when it was being used and noticed the burning smell. On December 15, 2007, A-1 installed a new motor in the vacuum and returned it to Baber. On December 29, 2007, after the vacuum had been used once more, Baber returned the vacuum to the store again because it was continuing to emit a burning smell. When the vacuum was plugged in at A-1 it did not work at all. At that time, A-1 offered Baber a new vacuum cleaner, but Baber refused A-1's offer and requested a refund.
On February 19, 2008, Baber's attorney sent a "D.T.P.A. Notice Letter" to A-1 and Riccar America Inc., a.k.a. Tacony Corporation, the manufacturer of the vacuum, offering to settle the dispute for $611.61 plus attorney's fees of $1,500.00. On March 13, 2008, general counsel for Tacony responded to the demand letter and offered to provide a new Riccar 1500S model to Baber at no cost to her. On March 21, 2008, Baber's attorney sent a letter to Tacony rejecting its offer of a replacement vacuum.
B. Justice Court
On October 27, 2008, Baber filed suit in the Justice Court in Harris County alleging that A-1 and its employee, James Pigg, violated the DTPA by (1) engaging in false, misleading, or deceptive acts, (2) representing that goods or services have sponsorship, approval, status, characteristics, ingredients, uses or benefits they do not have, (3) representing that goods or services are of a particular standard, quality, or grade, (4) representing that an agreement confers or involves rights, remedies, or obligations it does not have, (5) representing that a warranty confers rights or remedies it does not have, and (6) failure to disclose information about goods or services with intent to induce the consumer into a transaction she would not have entered had the information been disclosed. Baber also alleged that appellees breached an implied warranty of merchantability and implied warranty of fitness for a particular purpose.
On December 22, 2008, A-1 and Pigg filed an amended answer and counterclaim in which they alleged the affirmative defenses of (1) failure to mitigate damages, (2) exhibition of a product does not constitute a warranty, (3) no reasonable opportunity to cure defect, (4) any representations were mere puffing or opinion, (5) cause of action is not actionable under the DTPA, and (6) the implied warranty of fitness for a particular purpose does not apply. Appellees asserted a counterclaim in which they alleged that Baber's suit was groundless in fact or law, brought in bad faith, or brought for the purpose of harassment.
The Justice Court found in Baber's favor and determined that she should recover actual damages of $611.61 plus $4,000.00 in attorney's fees. The court further found that appellees take nothing on their counterclaim. Appellees appealed to the County Civil Court at Law for a trial de novo.
C. County Court
The County Court held a trial de novo at which Ralph and James Pigg and Baber testified. Each of the parties' attorneys testified as to their fees. The Piggs testified that they sold the vacuum cleaner to Baber and that she signed a sales receipt stating that all sales were final. James Pigg testified that he explained to Baber that she could not return the vacuum for a refund. He further explained the manufacturer's warranty and that A-1 would honor the warranty if the vacuum did not work properly. Baber testified that she purchased the vacuum because James Pigg told her it was an "excellent, top quality" vacuum. She signed the sales receipt, which stated that she received the goods in working order and that all sales were final. She testified that she did not receive any information about the manufacturer's warranty. Baber's attorney explained to the court that Baber brought strictly a DTPA action, and that was the only basis under which she sought recovery. Baber's attorney explained, "Warranty is two of our three DTPA theories."
The trial court entered judgment that Baber take nothing on her claims. The court further found that appellees proved their entitlement to recovery on their counterclaim, and that appellees recover $10,000.00 from Baber for attorney's fees incurred in defending a groundless suit. The trial court made extensive findings of fact and conclusions of law. The court found that Baber purchased the vacuum for $661.61, that James Pigg represented the vacuum was "top quality," that Baber was provided with warranty information at the time of the sale, and that the "All Sales Final" policy was explained to her that she could not receive a refund for the vacuum. When Baber returned the vacuum the second time she was offered repair or replacement of the vacuum, but refused and demanded a refund. The court further found that Baber refused offers of A-1 and the Tacony Corporation to replace the vacuum at no cost to her. In its conclusions of law, the court determined that Baber failed to give appellees reasonable notice to cure the defect, Baber was not entitled to a refund or her purchase price, any and all warranties regarding the vacuum were made by the manufacturer, not appellees, Baber failed to mitigate her damages, the representation that the vacuum was of "top quality" was opinion or puffing, and appellees were entitled to recover their attorney's fees for defense of a groundless lawsuit.
II. Discussion
Baber brings 19 issues challenging the trial courts findings of fact and conclusions of law. In each of her issues, she argues the trial court misapplied the law, or the evidence is legally and factually insufficient to support the findings or conclusions.
A. Standards of Review
1. Conclusions of Law
Appellate courts must review a trial court's conclusions of law as a legal question. BMC Software Belgium, N.V. v. Marchland, 83 S.W.3d 789, 794 (Tex. 2002). We review conclusions of law de novo, without deference to the trial court's judgment. State v. Heal, 917 S.W.2d 6, 9 (Tex. 1996). If the appellate court concludes that the trial court erred in its conclusions of law, "but the trial court rendered the proper judgment, the erroneous conclusion of law does not require reversal." BMC Software, 83 S.W.3d at 794 (Tex. 2002).
2. Legal Sufficiency
When reviewing a no evidence or legal sufficiency challenge, we review the evidence in the light most favorable to the challenged finding and indulge every reasonable inference that would support it. City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005). We credit favorable evidence if a reasonable fact finder could and disregard contrary evidence unless a reasonable fact finder could not. Id. The evidence is legally sufficient if it would enable fair minded people to reach the same verdict under review. Id. at 827. The trier of fact is the sole judge of the witnesses' credibility and the weight to be given to their testimony. Id. at 819.
3. Factual Sufficiency
We apply the same standard of review to a trial court's fact findings as we do to a jury's findings. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996). In reviewing the factual sufficiency of the evidence, we must examine the entire record, considering both the evidence in favor of, and contrary to, the challenged findings. See Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 406-07 (Tex. 1998). We set aside the trial court's findings of fact only if there is no probative evidence to support the finding. Santa Fe Petroleum, LLC v. Star Canyon Corp, 156 S.W.3d 630, 637 (Tex. App.-Tyler 2004, no pet.).
B. Breach of the Implied Warranty of Merchantability
In her first six issues, Baber contends the trial court misapplied the law, or, the evidence was legally and factually insufficient to support the trial court's findings that appellees did not breach the implied warranty of merchantability.
An implied warranty of merchantability applies in every contract for goods unless specifically bargained out of the agreement. Elliott v. Kraft Foods North America, Inc., 118 S.W.3d 50, 56 (Tex. App.-Houston [14th Dist.] 2003, no pet.). An implied warranty of merchantability requires the goods to be "fit for the ordinary purposes for which such goods are used." Tex. Bus. Com. Code Ann. § 2.314(b)(3). To recover under the DTPA on a breach of warranty, a plaintiff must show (1) consumer status, (2) existence of the warranty, (3) breach of the warranty, and (4) the breach was a producing cause of damages. Elliott, 118 S.W.3d at 56.
To show a breach of an implied warranty of merchantability, Baber must show the goods were defective at the time they left A-1's possession. See Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 444 (Tex. 1989). In the context of an implied warranty of merchantability, the word "defect" means a condition of the goods that renders them unfit for the ordinary purposes for which they are used because of a lack of something necessary for adequacy. Id.
The facts are undisputed that Baber purchased the vacuum on November 9, 2007, that the vacuum was used once by Baber's housekeeper, and that when it was used it emitted a burning smell. Baber did not use the vacuum, and there is no evidence as to whether it was properly used. Baber argues the vacuum was clearly defective because "it was used once to clean her house, and it emitted a burning smell." Baber did not testify to the manner in which the housekeeper used the vacuum, nor did the housekeeper testify.
Because Baber did not present evidence that the vacuum was properly used, she did not meet her burden to prove that appellees breached the implied warranty of merchantability. Baber's first six issues are overruled.
In its conclusions of law, the trial court found that Baber's claim for breach of the implied warranty of fitness for a particular purpose does not apply because the vacuum was purchased to clean a residence, one of its ordinary functions. On appeal, Baber does not complain of this finding.
C. DTPA Violations
In issues seven through fourteen, eighteen and nineteen, Baber argues that appellees violated the DTPA by making actionable misrepresentations, and the evidence is legally and factually insufficient to support the trial court's findings to the contrary. Specifically, she argues that the evidence showed appellees violated section 17.46 of the Texas Business and Commerce Code. Tex. Bus. Com. Code § 17.46(b). Baber further argues that the evidence is legally and factually insufficient to prove appellees' affirmative defense of failure to mitigate damages.
In a DTPA suit, the prevailing plaintiff is entitled to "actual damages." Tex. Bus. and Com. Code § 17.50(b)(1). "Actual damages" are defined as those damages recoverable at common law. W.O. Bankston Nissan v. Walters, 754 S.W.2d 127, 128 (Tex. 1988). Under mitigation principles, the long-standing law of this state requires a claimant to mitigate damages if it can do so with "trifling expense or with reasonable exertions." Great Am. Ins. Co. v. North Austin Mun. Util. Dist. No. 1, 908 S.W.2d 415, 426 (Tex. 1995). The duty to mitigate often is not dependent on an offer from the wrongdoer. A consumer may have the opportunity to mitigate her damages immediately after the deceptive act or practice occurred, well before any DTPA notice letter is sent or suit is filed. Gunn Infiniti, Inc. v. O'Byrne, 996 S.W.2d 854, 857 (Tex. 1999). A defendant may see the error of its ways promptly after the deceptive or unconscionable act occurred and seek to forestall all or at least some of the damages suffered by a consumer. Id.
When an injured party fails to comply with the duty to mitigate damages, recovery is not permitted as to that part of damages that could have been avoided or was incurred as a result of the failure to mitigate. Pinson v. Red Arrow Freight Lines, Inc., 801 S.W.2d 14, 15 (Tex. App.-Austin 1990, no writ). Under the doctrine of avoidable consequences, an injured party with an otherwise valid cause of action who fails to mitigate his damages may not recover those damages shown to have resulted from her failure to use reasonable efforts to avoid or prevent the loss. Id. at 15; Alexander Alexander of Texas, Inc. v. Bacchus Indus., Inc., 754 S.W.2d 252, 253 (Tex. App.-El Paso 1988, writ denied); see also Bank One, Texas, N. A. v. Taylor, 970 F.2d 16, 29 (5th Cir. 1992). One who claims a failure to mitigate damages has the burden to prove not only lack of diligence on the part of the injured party, but also the amount by which damages were increased by such failure to mitigate. Geotech Energy Corp. v. Gulf States Telecommunications Info. Sys., Inc., 788 S.W.2d 386, 390 (Tex. App.-Houston [14th Dist.] 1990, no writ).
The trial court found that Baber received an offer to mitigate damages by repairing or replacing the vacuum at no cost to her, but failed to mitigate her damages. Appellees presented evidence that both A-1 and the vacuum cleaner manufacturer offered to replace the vacuum with a new vacuum at no cost to Baber. Baber argues that the trial court mischaracterized Baber's decision not to settle the dispute as a failure to mitigate damages. To the contrary, the offers of a new vacuum were made prior to the notice letter being sent, and prior to suit being filed. A-1 and the manufacturer made the offers at the time Baber raised the issue of the vacuum not working properly. Both offers were made unconditionally, and neither party requested that Baber release any claims in exchange for acceptance of the new vacuum. Had Baber accepted the offer of a new vacuum at the time it was made, she would not have needed to hire an attorney or incur attorney's fees. The evidence supports the trial court's finding that Baber failed to mitigate her damages. As such, she is not entitled to recover under her DTPA cause of action. See Pinson, 801 S.W.2d at 15. Issues seven through fourteen, eighteen and nineteen are overruled.
C. Finding of Groundless Lawsuit.
In issues fifteen through seventeen, Baber contends her suit was not groundless, nor brought in bad faith or for harassment. Appellees filed a counterclaim for recovery of attorney's fees and costs for defense of Baber's allegedly groundless suit as provided by section 17.50(c) of the Texas Business and Commerce Code. Groundlessness is defined as "no basis in law or fact and not warranted by good faith argument for the extension, modification, or reversal of existing law." Donwerth v. Preston II Chrysler-Dodge, Inc., 775 S.W.2d 634, 637 (Tex. 1989). Whether a suit is groundless or brought in bad faith is a question of law for the trial court. Donwerth, 775 S.W.2d at 637. Our review of the trial court's determinations under Section 17.50(c) is a question of law under an abuse of discretion standard. Riddick v. Quail Harbor Condominium Ass'n, Inc., 7 S.W.3d 663, 677-78 (Tex. App.-Houston [14th Dist.] 1999, no pet.). The standard for determining whether a suit is groundless is "whether the totality of the tendered evidence demonstrates an arguable basis in law or fact for the consumer's claim." Splettstosser v. Myer, 779 S.W.2d 806, 808 (Tex. 1989).
The trial court found, "[t]here was no basis in law or in fact for the claims asserted by Plaintiff Dorothy Baber against Defendants James Pigg and A-1 Vacuum Center, Inc." In its conclusions of law, the trial court determined:
Plaintiff Dorothy Baber's suit is groundless in fact or law, or brought in bad faith, or brought for the purpose of harassment, in that Plaintiff is attempting to prosecute her claims to recover for losses that Plaintiff, as a result of her own failure to allow reasonable repairs and/or a new replacement vacuum cleaner to be provided to her pursuant to multiple offers by A-1 Vacuum Center, Inc. and the manufacturer's Limited Warranty, is entirely responsible. Tex. Bus. Com. Code Ann. § 17.50(c).
Viewing the totality of the tendered evidence, we conclude the trial court abused its discretion in finding Baber's suit was groundless. Ralph Pigg testified that Baber's suit was frivolous because Baber knew when she purchased the vacuum that "everything was above board and everything." Baber, however, believed that a colorable claim existed. Although she failed to prove the vacuum was defective at the time it left the store, she reasonably could have believed that it was and that A-1 misrepresented the vacuum to her. Stated differently, the trial court, as fact finder, was free to disbelieve Baber's testimony for purpose of the merits of the suit. However, such credibility call when viewed in context of all other evidence, including evidence that Baber was the prevailing party in Justice Court, does not support a finding that Baber's suit was groundless. Baber's fifteenth through seventeenth issues are sustained.
III. Conclusion
We conclude Baber's claims are not groundless, and modify the judgment to delete the award of attorney's fees to appellees. The remainder of the trial court's judgment is affirmed as modified.