Kinney v. Palmer, 2008

1. Kinney v. Palmer, 2008 Christian Hulme, Joe Nicoll, Dallin Olaveson

2. Procedural Posture • Kinney v. Palmer is a case in which the homebuyers (Gregory and Marsha Kinney) attempted to pursue legal action against Palmer, the previous owner and builder of their new home. This case is a challenge to a decision made in the 224th Judicial District Court, in Bexar County Texas, which granted partial and final summary judgments in favor of Floyd Ross Palmer, a seller and his company. The previous allegations against the seller included negligence, violations of the Texas Deceptive Trade Practices Act (DTPA), breach of implied warranties, misrepresentation, failure to disclose, and unconscionability.

3. Facts • In approximately 1995, Ross Palmer (the seller) began constructing a house for his family by subcontracting all stages of the construction. At the time, Palmer was not constructing houses for sale to the general public. Upon completion, in 1996, Palmer and his family moved in and resided there for over four years. During this period, Palmer learned of and repaired several water leaks in the house. In 2000, Palmer sold the house to the Prestons, providing them with a Seller's Disclosure of Property Condition Notice that disclosed the prior leaks. The Prestons remained in the house for two years and then sold it to the Kinneys. Some time after the Kinneys moved into the house, during particularly heavy rain falls, they discovered that the house leaked. The Kinneys did not sue the Prestons, who sold the house to them, but rather, Palmer, who, in approximately 1998, had begun constructing residential homes for sale to the general public. • The Kinneys challenged a decision which granted partial and final summary judgments in favor of Palmer in an action alleging negligence, violations of the Texas Deceptive Trade Practices Act (DTPA), breach of implied warranties, misrepresentation, failure to disclose, and unconscionability. • The Kinneys went through four amended petitions, changing the wording of the allegations against Palmer each time, before reaching this appellate court.

4. Issues • The Kinneys raised the following issues on appeal: 1) the trial court erred in granting the partial summary judgment to the breach of implied warranties and DTPA; and 2) the trial court erred in granting the final summary judgment to negligence. • The Kinneys further argue that the "trial court compound[ed] its error by depending upon its erroneous Partial Summary Judgment to support its Final Summary Judgment.“ • A third issue is the effect of the Kinneys' Fourth Amended Original Petition on their claims and this appeal. Can the Kinneys appeal the trial court's order granting Partial Summary Judgment to their claims for Breach of Implied Warranties and DTPA when these claims were not alleged in the Kinneys' Fourth Amended Original Petition?

5. Rules • Tex. R. Civ. P. 62: An amended petition adds to or withdraws from that which was previously pleaded to correct or to plead new matter, and completely replaces and supersedes the previous pleading. • Tex. R. Civ. P. 65: Once a pleading is amended and filed, all prior petitions are superseded and the previous pleading "shall no longer be regarded as a part of the pleading in the record of the cause." • Tex. R. Civ. P. 166a(c): To obtain a traditional summary judgment, a party moving for summary judgment must show that no genuine issue of material fact exists and that the party is entitled to judgment as a matter of law. In reviewing the grant of a summary judgment, an appellate court must assume all evidence favorable to the respondent is true. A defendant is entitled to summary judgment if the evidence disproves at least one element of the plaintiff's cause of action. Once the movant has established a right to summary judgment, the burden shifts to the respondent to present evidence that would raise a genuine issue of material fact. • Tex. Prop. Code Ann. § 27.002(a) (Supp. 2007). The Texas Residential Construction Liability Act applies to "(1) any action to recover damages or other relief arising from a construction defect, except a claim for personal injury, survival, or wrongful death or for damage to goods; and (2) any subsequent purchaser of a residence who files a claim against a contractor."

6. Rules (cont.) • Tex. Prop. Code Ann. § 401.003(a): Further defines a "builder" as the following: any person who, for a fixed price, commission, fee, wage, or other compensation, sells, constructs, or supervises or manages the construction of, or contracts for the construction of or the supervision or management of the construction of: (1) a new home; (2) a material improvement to a home, other than an improvement solely to replace or repair a roof of an existing home; or (3) an improvement to the interior of an existing home when the cost of the work exceeds $ 10,000. • To prevail on their negligence claim, the Kinneys were required to show that (1) Palmer owed them a duty, (2) Palmer breached his duty, (3) Palmer's breach proximately caused their injuries, and (4) damages resulted from this breach.

7. Premises Can the Kinneys appeal the trial court's order to their claims for Breach of Implied Warranties and DTPA even though these claims were not alleged in the Kinneys' Fourth Amended Original Petition? • An amended petition which omits causes of action previously alleged serves to dismiss these claims from the amended pleading. An exception to this rule provides that "some error of the court in deciding upon the necessity of the amendment, or otherwise in superseding it, be complained of, and exception be taken to the action of the court.” However, neither party contends that such an exception applies here. • By amending their pleading after partial summary judgment was granted and eliminating the DTPA, negligent misrepresentation, and fraud references, the buyers abandoned those claims and waived any error concerning the trial court's action in granting partial summary judgment to those claims.

8. Premises (cont.) • Although Palmer "built" the house in question, he does not fall within the statutory definition of "contractor" because he did not contract with either the Prestons or the Kinneys for the "construction or repair of a new residence…” and he did not contract with the Prestons or the Kinneys "for the sale of a new residence constructed by or on behalf of that person.“ • The Texas Residential Construction Liability Act (RCLA) does not create a cause of action, but only preempts a cause of action if a conflict arises between the RCLA and any other law, including the Texas Deceptive Trade Practices Act or a common law cause of action. The RCLA is the exclusive remedy for the recovery of damages arising from residential construction defects and Palmer was not a "contractor" under the Act. • No Texas case has held that a person, not in the business of constructing homes for sale to the general public, who builds a home for himself, owes a duty to subsequent purchasers of the house. A homebuilder contemplates sales of the home beyond the initial purchaser and owes a duty to exercise ordinary care in the construction of the home.

9. Answers/Conslusions • Accordingly, the Kinneys' first issue was denied as well as their later argument on the trial court’s use of the partial summary judgment. The trial court did not abuse its discretion in granting Palmer summary judgment to the Kinneys' claim for negligence. • In the end, the RCLA did not apply to this case because, although the seller had built the house in question, he did not fall within either statutory definition of a contractor because he did not contract with the Prestons or the Kinneys for the construction of the home, or for the construction and sale of the home. Or, in other words, the seller was not considered to be a contractor at the time of the sale of his house. • In this case, Palmer built the house for himself and his family. No evidence was presented that prior to or during the construction of the house Palmer was engaged in the business of building houses for sale to the general public or that he contemplated anything other than building a house for himself. We fail to see, under these specific facts, how Palmer would owe a duty to subsequent purchasers to have exercised ordinary care in the construction of a house he built for himself.

10. In the case Kinney (appellants) v. Palmer (appellee), the appellant buyers challenged a decision from the 224th Judicial District Court, Bexar County, Texas, which granted partial and final summary judgments in favor of appellees, a seller and his company, in an action alleging negligence, violations of the Texas Deceptive Trade Practices Act (DTPA), breach of implied warranties, misrepresentations, failure to disclose, and unconscionability. The seller built the home for his family before he was in the construction business. The house was ultimately purchased by the buyers. After learning of leaks in the house, they filed an action against the seller and his business. Summary judgment was granted against the buyers, and this appeal followed. In affirming, the appellate court determined that, by amending their pleading under Tex. R. Civ. P. 65 after partial summary judgment was granted and eliminating the DTPA, negligent misrepresentation, and fraud references, the buyers abandoned those claims and waived any error concerning the trial court’s action in granting partial summary judgment. Next, the Texas Residential Construction Liability Act did not apply to this case because, although the seller had built the house in question, he did not fall within the statutory definition of a contractor under Tex. Prop. Code Ann §27.001 (5) (A)-(B) (Supp. 2007). As to the negligence claim, the seller owed no duty to the buyers to exercise ordinary care in the construction of this home.

11. Facts • The seller built the home for his family before he was in the construction business. The house was ultimately purchased by the buyers. • In approximately 1995, Ross Palmer (“Palmer”) began constructing a house for his family by subcontracting all stages of the construction. At this time, Palmer was not in the business of constructing houses for sale to the general public. Following completion of the house in 1996, Palmer and his family moved in and resided there for over four years. During this period, Palmer learned of and repaired several water leaks in the house. In 2000, Palmer sold the house to the Prestons, providing them with a Seller’s disclosure of Property Condition Notice that disclosed the prior leaks. The Prestons remained in the house for two years and then sold it to the Kinneys. Some time after the moved into the house, during particularly heavy rain falls, they discovered that the house leaked, The Kinneys did not sue the Prestons, who sold the house to them, but rather, Palmer, who, in approximately 1998, had begun constructing residential homes for sale to the general public.

12. Amended Petitions • July 23, 2003 The Kinneys file their First Amended Original Petition, alleging violations f the DTPA, including breach of implied warranties, misrepresentation, failure to disclose, unconscionability, any violation of one of the “tie-in” consumer statutes. • July 14, 2005 The Kinneys file their Second Amended Original Petition, adding claims for negligent misrepresentation and fraud. • October 31, 2005 The Kinneys file their Third Amended Original Petition, alleging solely negligence, and omitting any mention of both the DTPA claims disposed of by the partial summary judgment and their previous clams for negligent misrepresentation and fraud.

13. After learning the facts, the judgment was made that the court’s holding that the Kinneys waived any error regarding the partial summary judgment granted in the DTPA and breach of warranty claims by deleting these claims in their amended pleading is supported by ample authority. There was tension that exists between the court’s interpretation of Rule 65 and Rule 278 of the Texas Rules of Civil Procedure. TEX. R. CIV. P. 65, 278. • These two rules, 65 and 278, are as follows. Rule 65 would require the Kinneys to retain their dismissed claims in their amended pleading to avoid the abandonment of those claims. Yet, the retention of dismissed claims in a pleading appears inconsistent with Rule 278 of the Texas Rules of Civil Procedure. Rule 278 requires trial courts to submit requested questions to the jury if the pleadings and any evidence support team. A trial court must submit in its charge to the jury all questions, instructions, and definitions raised by the pleadings and the evidence. For the plaintiff, failure to adduce evidence on claims contained in the live pleadings at trial results in a waiver of those claims. • The case could have had a different outcome if the Kinneys wouldn’t have submitted four Amended Petitions to the courts. These Amended Petitions caused the courts to rule in favor of the Palmers due to Tex. R. Civ. P. 65.

14. Maxims of Law • Mistakes should be fixed, not taken advantage of. • Liability follows responsibility • For every wrong there is a remedy. No one should suffer by the act of another.

15. Mistakes should be fixed,not taken advantage of. • Though this maxim wouldn’t be applied in the typical way of a contractor taking advantage of an architect/owner who made a mistake on the drawings or in the design, it could be applied. The Kinneys seem to be doing all they can to take advantage of the fact that Palmer made a mistake in constructing his home. If in fact the Kinneys had been under contract with Palmer while he was a contractor, he could be at fault for breach of contract. However, at the time the home was built, Palmer was not a contractor and was building a home for his family. Therefore, the Kinneys do not necessarily have a case against Palmer because of that fact, and should not be trying to take advantage of a mistake made by a personal home builder.

16. For every wrong there is a remedy.No one should suffer by the act of another. • This maxim of law helps the argument of the Kinneys, who argue that they are suffering as a result of Palmer’s incorrect building practices. The remedy in the case in terms of this maxim would be that whoever has caused the wrong should correct it and not allow the other party to suffer because of their wrongdoing. Though this maxim is important, it seems that it would only be applicable in the construction industry in an “ideal world” where people are honest and perform based on the fact that they said they would. However, our industry is based on contracts that define scope, price, duration, etc. that bind people to what they have said they would perform.

17. Liability follows responsibility • The fact that liability falls upon the responsible party could apply for both groups in this particular case, which seems to be the basis of the case. On one hand, the Kinneys could argue that in building the home, Palmer was responsible in seeing that it was built correctly. On the other hand, Palmer could argue a couple different ideas. First, at the time he built the home, he was not a contractor and therefore, had no contract to uphold with another party. Second, when he built the home, he was building for himself and had intentions on staying there. For that reason, he only had responsibility to his family, and not to future buyers of the home, especially not a buyer who was the third or fourth to purchase the home. That itself seems to bring up an issue of its own. Between each sale of the home, the home owner could make modifications to the home, the home may not be maintained correctly, or materials may fail after surpassing their useful life. These issues should not be covered or warranted by the original home builder.

18. Rules of Life and Legal System • The differences in the Rules of the Legal System and the Rules of Life help us to see why courts make rulings that they do, although sometimes contrary to our beliefs and values. Though a few of the Rules of the Legal System and the Rules of Life are the same, the majority of the rules are different. In this case, Rule 113 plays a big role in determining who is responsible for what. Rule of Life 113 says, “Assumptions can be used to support opinions or decisions.” According to the Rules of Life, we can assume that because Palmer built the home, he is responsible for any mistakes in the construction. Rule of the Legal System 113 says, “Only evidence can be used to support an opinion or decision. If no evidence of a certain fact exists, that fact does not exist and cannot be used in a court to support a legal conclusion.” • Because of this rule, the courts must search for facts that exist that show that Palmer is indeed responsible to make repairs and fix any other damages that resulted from the water leaks. Because no contract existed between Palmer and the Kinneys, there was no evidence that the fact existed and could not be used in the courts to support the legal conclusion. Therefore, nothing could prove that Palmer was responsible to the Kinneys and liable to fix the water leaks.

19. Rules of Life and Legal System • Another one of the Rules of Life and Legal System that significantly applies to this case is Rule 116. Rule of Life 116 says, “Winning is better than losing, but it is not everything.” That means that although it is better so win, sometimes we have to cut our losses and deal with losing. Rules of the Legal System 113 says, “Winning is just about everything, plus it pays more bills.” In this case, the Kinneys were arguing just for that reason: to pay the bills. It was very costly for them to repair the damages caused by the water leaks, and they were doing everything they could to win the case. They were not willing to give in and pay for the damages. They argued from every angle and aspect they could to avoid paying the bills.