Opinion
No. 13-05-00453-CV
Opinion delivered and filed August 28, 2007.
On appeal from the County Court at Law No. 3, of Cameron County, Texas.
Before Chief Justice VALDEZ and Justices BENAVIDES and VELA.
Memorandum Opinion by Chief Justice VALDEZ.
MEMORANDUM OPINION
Gabriel Vanounou, individually and as agent of Mega Custom Homes, Inc. (MCH), and MCH, appeal from an adverse judgment in a construction defect suit rendered in favor of Gerardo and Dulce Cantu. In three issues, Vanounou argues that the evidence is legally and factually insufficient to support the jury's findings regarding: (1) damages suffered due to a construction defect, (2) the reasonableness and necessity of repair costs, and (3) the individual responsibility assessed against Vanounou. We affirm.
Appellant's appeal is brought before us by a brief that was filed on May 30, 2006. Tex. R. App. P. 38.7 (providing that a brief may be amended or supplemented whenever justice requires, on whatever reasonable terms the court may prescribe).
I. BACKGROUND
Vanounou is the sole shareholder of MCH, a residential construction company. MCH constructed three townhomes on South Padre Island in 1999. The Cantus purchased one of the newly constructed townhomes from MCH in August 1999 and used the townhome as a second home. In June 2002, the Cantus discovered that water penetration had significantly damaged the framing, ceilings, floors, sub-floors, and walls of much of the home. The Cantus contacted Vanounou in an effort to remedy the situation. After an amicable agreement could not be reached, the Cantus filed suit against Vanounou for, inter alia, negligence, breach of contract, breach of warranty, fraud, and violations of the Residential Construction Liability Act. Vanounou answered with a general denial.
The case was tried to a jury. The Cantus called Hector Resendez to testify regarding the cause of the damage and general construction practices. Resendez is a general contractor, holds an associate degree in building construction technology, and has worked for numerous construction companies. Resendez was contacted by Gerardo Cantu to find the cause of the damage and to perform the remediation work. Resendez testified that the building contained two construction flaws. First, a hose that ran from a water line to the refrigerator in the kitchen had a kink in it. Resendez opined that the kink happened when the cabinets were installed, caused pressure to build, and eventually caused a leak. The second construction flaw, according to Resendez's testimony, is that no flashing was installed in the balcony. Installation of flashing is standard in the construction industry because, without it, water could penetrate inside the house.
Resendez also testified to the extent of the damage and the costs of remediation. He opined that the damage to the Cantus's townhome was extensive. As additional evidence of the damage, the Cantus introduced photos showing mold growing on sheet rock, doors, ceilings, and trusses. All of these photos were admitted into evidence. In repairing the damage, Resendez employed between ten and twelve laborers. These included an electrician, plumber, air conditioning subcontractor, carpet and title professionals, and a painter. The trial court admitted into evidence two estimates from Resendez Construction Services. The first is an estimate for remediation work to the balcony for $17,200.00; the second is for what appears to be the remainder of the townhouse and totals $50,000.00. Each estimate contains a detailed listing of the work to be done.
Vanounou testified at trial regarding MCH's entity status, the quality of the construction, and the cause of the water penetration. Vanounou testified that he owns several clothing stores on South Padre Island, was deeply involved in the construction of some of the commercial properties housing his clothing stores, and created MCH as a construction company. He individually purchased the property on which the Cantus's townhome was constructed and transferred it to MCH. At the time of trial, MCH had no active checking account, no employees, no pending projects, and received its mail at Vanounou's main office. During the construction project, MCH hired Jose Woloski as the general contractor. A construction management agreement executed between Woloski and Vanounou was admitted as an exhibit and states that, "Gabriel Vanounou will supply the specifications, materials and sub-contractors."
Vanounou also testified about the construction of the Cantu's townhome and the cause of the damage. According to Vanounou, he is an experienced developer and hired Woloski to construct the townhome project. Vanounou claims that flashing was installed on the wall where the balcony is located and that the water damage to the townhome came from the leak in the kitchen. He also claimed that the leaky kitchen hose was damaged by the Cantus or was possibly an accident caused by moving the refrigerator.
The jury was charged on three theories of liability: (1) negligence, (2) negligent misrepresentation, and (3) construction defect. If the jury answered yes to either questions one, two, or three, it was asked to assess damages for reasonable and necessary repairs and attorney's fees and to determine whether Vanounou should be individually liable for damages caused by MCH. The jury answered no to the negligent and negligent misrepresentation questions; it answered yes to the construction defect question. The jury also assessed the cost of repairs at $45,000.00 and attorney's fees at $10,000.00. Finally, the jury found that Vanounou should be individually liable for MCH's damages. The trial court entered a judgment in accordance with the jury's verdict. This appeal ensued.
II. DISCUSSION
A. Standards of Review
All three of Vanounou's issues are challenges to the legal and factual sufficiency of the evidence underlying various aspects of the judgment. We will sustain a legal sufficiency or "no-evidence" challenge if the record shows one of the following: (1) a complete absence of evidence of a vital fact, (2) rules of law or evidence bar the court from giving weight to the only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a scintilla, or (4) the evidence establishes conclusively the opposite of the vital fact. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005). In conducting a legal sufficiency review, a court must consider evidence in the light most favorable to the verdict, and indulge every reasonable inference that would support it. Id. at 822. If there is more than a scintilla of evidence to support the challenged finding, we must uphold it. Formosa Plastics Corp. USA v. Presidio Eng'rs Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998).
"When the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence, the evidence is no more than a scintilla and, in legal effect, is no evidence." Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 601 (Tex. 2004) (quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983)). However, if the evidence at trial would enable reasonable and fair-minded people to differ in their conclusions, then jurors must be allowed to do so. City of Keller, 168 S.W.3d at 822; see also King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003). A reviewing court cannot substitute its judgment for that of the trier-of-fact, so long as the evidence falls within this zone of reasonable disagreement. City of Keller, 168 S.W.3d at 822.
In conducting a factual sufficiency review, we must consider, weigh, and examine all of the evidence that supports or contradicts the jury's determination. Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989); London v. London, 192 S.W.3d 6, 14-15 (Tex.App.-Houston [14th Dist.] 2005, pet. denied). We may set aside the verdict only if the evidence that supports the jury's finding is so contrary to the overwhelming weight of the evidence as to be clearly wrong or unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); Steinberg v. Comm'n for Lawyer Discipline, 180 S.W.3d 352, 355 (Tex.App.-Dallas 2005, no pet.); Nip v. Checkpoint Sys., Inc., 154 S.W.3d 767, 769 (Tex.App.-Houston [14th Dist.] 2004, no pet.).
B. Issue 1: Consistency of Jury Answers/Challenge to Causation Evidence
By his first issue, Vanounou argues that the jury answers are inconsistent and that this inconsistency is based on a lack of evidence. Vanounou highlights the fact that the jury did not find him negligent and did not find that he made negligent misrepresentations to the Cantus. According to Vanounou, the jury could not have found that the townhome was defectively constructed because construction defect claims must be premised on some other cause of action-such as negligence or negligent misrepresentation. Vanounou also tangentially argues that the purported inconsistency in the jury's answers is because the evidence is insufficient.
Vanounou advances his first issue without a single citation to statutory or case authority. We hold that this issue is inadequately briefed, and we therefore overrule Vanounou's first issue. See Tex. R. App. P. 38.1(h) (providing that the brief must contain a clear and concise argument for the contentions made, with appropriate citations to authorities and to the record).
C. Issue 2: Challenge to the Sufficiency of the Evidence of Damages
By his second issue, Vanounou argues that the evidence is insufficient to support the award of damages because the Cantus failed to present evidence of the reasonableness of their repairs and their mitigation efforts. He asks us to reverse the judgment as to damages, or in the alternative to modify the judgment to reflect Resendez's estimate for the repair work done to the balcony. Vanounou contends that he made a good faith effort to remedy the Cantus's situation. We disagree with Vanounou's assessment of the evidence.
We note that Vanounou's argument in favor of a modified judgment does not request an application of the limitation's provisions contained in the Residential Construction Liability Act. Tex. Prop. Code Ann. § 27.004(e) (Vernon Supp. 2006). Additionally, the record does not contain a written settlement offer made by Vanounou, which is required by the Act. Id. § 27.004(b).
Resendez testified as to the extent of the damages. Vanounou also testified as to the extent of the damages. According to Vanounou's testimony, eighty percent of the first floor and forty percent of the second floor suffered water damage. Resendez agreed with Vanounou's testimony concerning the degree of water damage throughout the townhome. Two estimates prepared by Resendez were admitted into evidence. They detail the amount of remediation work needed and present a total of $17,000.00 for the balcony and $50,000.00 for what appears to be the remaining portions of the townhome. Both exhibits were admitted without objection. To rebut the amount of damages, Vanounou testified that he knew many subcontractors on South Padre Island and could have found cheaper remediation work.
Vanounou also testified that the Cantus did not hire a housesitter to look after the property in case of water leaks. On appeal, Vanounou now argues that the Cantus failed in their "mitigation" efforts by not discovering the damage sooner. It was undisputed at trial that the Cantus used their townhome as a second home and would spend extended periods of time away from it. Vanounou's "mitigation" argument is really an argument regarding failure to prevent damage. He has presented no authority on such a notion. Tex. R. App. P. 38.1(h). In any event, Gerardo Cantu testified that he contacted Vanounou's office upon discovering moldy conditions in the townhome and hired Resendez to find the problem and fix it.
We conclude that the evidence is both legally and factually sufficient to support the jury's verdict. See Jones v. Am. Economy Ins. Co., 672 S.W.2d 879, 881 (Tex.App.-Dallas 1984, no writ) (providing "itemized statements" from person repairing homeowner's damage supported amount of repairs). Vanounou's second issue is overruled.
D. Issue 3: Piercing the Corporate Veil
In his third and final issue, Vanounou contends that the evidence is legally and factually insufficient to support a finding that Vanounou should be individually responsible for the damages. We find that there was ample evidence to support an alter ego theory.
The alter ego theory of liability applies when there is such unity between the corporation and the individual that the separateness of the corporation has ceased and holding only the corporation liable would be unjust. See Goldstein v. Mortenson, 113 S.W.3d 769, 781 (Tex.App.-Austin 2003, no pet.). Such unity can be shown where an individual owns or controls the corporate entity and operates the company in a manner indistinguishable from his personal affairs and in a manner calculated to mislead those dealing with him to their detriment. See Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 229 (Tex. 1990).
An alter ego relationship may be shown from the total dealings of the corporation and the individual, including evidence of "the degree to which corporate formalities have been followed and corporate and individual property have been kept separately, the amount of financial interest, ownership and control the individual maintains over the corporation, and whether the corporation has been used for personal purposes." See id. at 228.
The record shows that Vanounou owned and controlled MCH and exclusively made all the decisions regarding the development company's "vision." When MCH was formed, Vanounou individually purchased the property where the townhomes were constructed and transferred the property to MCH. At the time of trial, MCH did not have an active checking account, did not employ anyone, had no pending projects, and received its mail at Vanounou's main office. The construction management agreement executed between Woloski and Vanounou states that, "Gabriel Vanounou will supply the specifications, materials and sub-contractors." Moreoever, Vanounou testified that MCH sold the Cantus their townhome for $206,000.00, the other townhome for $195,000.00, and purchased his own for $150,000.00.
The evidence presented at trial supports the jury's finding that there was a unity between MCH and Vanounou such that MCH was no longer a separate entity and holding only the corporation liable would be unjust. Accordingly, we conclude the evidence is both legally and factually sufficient to support the trial court's imposition of liability on Vanounou under an alter ego theory. Vanounou's third issue is overruled.
III. CONCLUSION
The judgment of the trial court is AFFIRMED. Tex. R. App. P. 43.2(a).