Paul Kramer builds houses in Tarrant County. Expensive
houses. He built a $2 million house for Melissa and Scot Hollmann.
As
construction progressed, the house developed a moisture leak. Kramer sent an
email to the Hollmanns telling them not to worry because it had been fixed.
After
the Hollmanns moved into the house, it developed additional moisture problems
involving the windows, HVAC and roof. The Hollmanns continued to receive
assurances from Kramer, but when mold moved in the Hollmanns moved out.
And then
in 2010 the lawsuits started.
Hollmanns
asserted claims against the architect and several subcontractors, and then
added Kramer for violations of the Texas Deceptive Trade Practices Act, breach
of contract, breach of warranty and negligence. Most of the parties settled
before trial, but not Paul Kramer.
The jury
awarded approximately $1 million in damages to the Hollmanns after finding that
Kramer engaged in false, misleading or deceptive acts. The trial court rendered
judgment for the plaintiffs. Paul Kramer appealed.
Kramer’s
appeal was primarily based on the theory of “puffery.” That is, that the statements he made and emails he sent
contained merely his own opinions, not factual representations.
The
trial court found that Kramer told the Hollmanns that the house would be a “magnificent home with a quality level rarely
seen in Tarrant County,” that it would be a “kick butt house,” that “this
is going to be a really great house,” that it would be “one of the finest homes in the city” and
that the Hollmanns would be “pleased as
punch.”
The
Court of Appeals, perhaps after checking with Urban Dictionary or their 13-year
old children, decided quickly that the term “kick butt house” and “pleased
as punch” are slang terms comprising opinions, not statements of fact or
factual representations.
The
Court further advised that Kramer’s claim that the house will be “really great” is too indefinite to
constitute an actionable misrepresentation.
Then the
Court took a hard look at the other two statements made by Kramer: “magnificent home with a quality level rarely
seen in Tarrant County,” and “one of
the finest homes in the city.”
Careful
evaluation and consideration of previous Texas appellate decisions led the
Court of Appeals to decide that these statements were also subjective
impressions and did not contain specific representations. Consequently and
according to Texas law, all five statements were mere puffery and expressions
of opinion – not representations of fact.
But wait
there’s more. Kramer made other statements such as “Please don’t worry about the leak that was recently fixed,” and “We feel very strongly we have now identified
the problem. Moisture in the walls by the leak will be handled immediately and
will not pose a future problem . . . [T]he sills are the culprit” and “You can be sure that any nonsense associated
with the resolution of all open issues will cease as of this moment.”
I think
it was Kramer’s claim that “there is
nothing inherently wrong with the house” that likely put the Hollmanns over
the edge, after the house had been infested with mold. The Hollmanns vacated
one month later.
The jury
found that the latter statements were actionable under the DTPA. The trial
court agreed, as did the Court of Appeals.
Hollmanns
win. Kramer loses.
See Kramer v. Hollmann; 02-22-00136-CV;
Texas Court of Appeals 2nd District, Fort Worth; November 21, 2012.
Lessons learned:
1. There
is a thin line between statements of opinion and statements of fact or
representations.
2. Although
not part of this case, TREC agents and brokers can be held liable and
accountable for their statements of fact and misrepresentations, as can Texas
property owners, builders, developers, contractors, sellers and landlords.
3. Paul
Kramer filed for bankruptcy protection on December 31, 2012, in Case Number
12-46996-DML-11, US Bankruptcy Court Northern District of Texas, Fort Worth
Division. So, sometimes even when you are sure you have won . . . you haven’t
really.
Reprinted with the permission of North Texas Commercial Association of REALTORS®, Inc.
