McGhee v. Novoterra Chase, LLC

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KIRT MCGHEE, Appellant v. NOVOTERRA CHASE, LLC AND GONET USA, LLC, Appellees

No. 09-22-00167-CV

Court of Appeals of Texas, Ninth District, Beaumont

May 30, 2024

Submitted on September 8, 2023

On Appeal from the 284th District Court Montgomery County, Texas Trial Cause No. 20-10-12063-CV

Before Golemon, C.J., Horton and Johnson, JJ.

MEMORANDUM OPINION

W SCOTT GOLEMON Chief Justice

After the residential lease Kirt McGhee ("McGhee") signed for a home expired, he sued his former landlord, Novoterra Chase LLC ("Novoterra") and GoNet USA, LLC ("GoNet"), under a joint enterprise theory alleging that they had acted in bad faith in withholding his security deposit and by failing to make timely rep airs to the Property when he was living in there during the term of the seventeen-month lease. A jury returned a verdict for McGhee and assessed damages, but the trial court rendered judgment solely on the p art of the award for McGhee's security dep o sit and disregarded the p art o f the jury's award that allowed McGhee to recover half his rent.

In four issues, McGhee complains that the trial court: (1) improperly granted a directed verdict on his causes of action under Property Code sections 92.052 (repair and remedy) and 92.331 (retaliation); (2) erred by granting a directed verdict on attorney's fees; (3) erred in excluding his attorney's testimony on attorney's fees; and (4) denied his Motion to Compel Interrogatory Responses. In one cross-point, Novoterra argues the trial court properly disregarded the jury's answer awarding McGhee damages that amount to half his rent. For the reasons discussed below, we affirm the trial court's judgment awarding McGhee $11,050 for Novoterra wrongfully retaining McGhee's security deposit, court costs, and post-judgment interest. Otherwise, we reverse the trial court's judgment and remand the case to the trial court for further proceedings consistent with this opinion so that a factfinder may consider awarding McGhee reasonable attorney's fees tied to his suit to recover his deposit.

I. Background A. Lease Agreement

McGhee and his wife rented a home in Montgomery County from Novoterra from November 2018 through April 2020. The parties entered a standard Texas Association of Realtors Residential Lease ("the Lease"). Alejandro de la Maza ("De La Maza") signed the Lease on behalf of Novoterra and helped manage the property for his friend Mario Sandoval ("Sandoval"), who owned Novoterra. Section 18 of the Lease provides that Subchapter B, Chapter 92 of the Texas Property Code governs the landlord's repair obligations under the lease. The parties agreed that written notice to Novoterra for repairs would be provided to De la Maza's email address.

Section 10 of the Lease addressed the payment of a security deposit and return of the deposit at the end of the Lease. The Lease required McGhee to give Novoterra at least thirty days' written notice of surrender before Novoterra was "obligated to account for or refund the security deposit. "More specifically, the Lease provides as follows:

Notices about Security Deposits

(1) §92.108, Property Code provides that a tenant may not withhold payment of any portion of the last month's rent on grounds that the security deposit is security for unpaid rent.

(2) Bad faith violations of §92.108 may subject a tenant to liability up to 3 times the rent wrongfully withheld and the landlord's reasonable attorney's fees.

(3) The Property Code does not obligate a landlord to return or account for the security deposit until the tenant surrenders the Property and gives the landlord a written statement of the tenant's forwarding address, after which the landlord has 30 days in which to account.

(Emphasis original.) The Lease then specified the items that the landlord could deduct from McGhee's security deposit.

B. Claims

McGhee sued Novoterra and later added GoNet under a joint enterprise theory. The trial court granted a directed verdict as to the claims against GoNet, citing a lack of evidence that it helped manage the property. McGhee did not assign error to GoNet's dismissal on appeal.

Relevant to this appeal, when McGhee was in the trial court he asserted causes of action for breach of contract, repair and remedy, failure to return the security deposit or to provide itemized list of deductions, and landlord retaliation. McGhee also sought attorney's fees per the Lease and under the applicable sections of the Texas Property Code.

C. McGhee's Testimony

McGhee testified he paid a $3,650 security deposit, and the monthly rent was $3,650. He explained that he and his wife visited the property once before they signed the Lease for about thirty minutes to an hour, but according to McGhee, they were not given an inspection sheet to fill out.

McGhee testified that while they lived in the home, they leased from Novoterra and they had multiple problems with the property, which began the first day when the landlord failed to leave the garage door openers for the home. They also experienced problems with the electrical system, lights in the backyard and pool, HVAC, stove, icemaker, dishwasher, entry doors, landscaping, and rodents, among others. McGhee testified that some electrical issues were never fully addressed, and the landlord's "fix" was cutting and capping wires, which prevented them from using one side of the house. This was in a location where McGhee testified he observed "a very intense heat by an electrical outlet[. ]" McGhee testified the whole family had allergy issues, but his kids were most affected since they were upstairs more, where the AC did not flow properly, and they took the children to doctors twice about their allergies.

Under the terms of the lease, requests for repairs that affected matters of health or safety were required to be submitted to the landlord in writing. McGhee testified he submitted multiple such requests by email. McGhee testified, "I personally witnessed arc faults and light bulbs blowing up. I personally witnessed lights that did not work, loose, frayed wires on the ground. I personally witnessed and put my hand on the wall, feeling heat coming off next to an electrical outlet."He said they never resolved the electrical issue, which concerned him, because it was a fire hazard.

McGhee also testified that his children did not want to sleep in their rooms because there were rodents in the home, which left waste behind. According to McGhee, he sent written repair requests about this problem to De la Maza by email, but it was months before this problem was resolved. He also sent written requests about the backyard and the HVAC by email. McGhee testified that the HVAC issue was never addressed, and the issues with the yard were addressed about four months after he notified De la Maza of his complaints. McGhee testified that he possibly paid an AC company to do some work and possibly requested an offset in rent for that amount, but he insisted that he always paid the rent.

McGhee explained that the issue with the garage door openers was the only issue the landlord addressed quickly; everything else took over thirty days if the issue was ever addressed. He insisted they paid rent every month and never missed a payment. McGhee testified that in his opinion, he complied with the Lease, but he did not think that the home was in good condition given the amount of rent he paid. McGhee hired an attorney, who sent a demand letter that included his forwarding address. He also testified that despite timely providing a forwarding address, Novoterra failed to return his security deposit. McGhee testified that he incurred about $30,000 in attorney's fees during the litigation.

D. Karrie McGhee's Testimony

McGhee's wife, Karrie, also testified. According to Karrie, she observed problems with the electrical, pool, garage doors, pool lights, outdoor lighting, landscaping, dishwasher, HVAC, and rodents. She testified that half the electrical outlets upstairs did not work, and that her children could not sleep because the house had rodents in the attic. Karrie said the defendants did minor repairs but never did any major repairs, which she described as repairs to the outdoor lighting, water issues, and to the electrical system of the house. Karrie testified they paid $3,650 per month in rent, which totaled almost $70,000 duringtheir lease. Karrie testified that in her opinion, they did not get their money's worth for their rent. To Karrie's knowledge, they always paid their rent on time.

Karrie said the landlord removed the rodents and fixed the door but simply capped off the electrical. She testified they could have "burnt down." She believed that the landlord sent two electricians who reported "this is not good."

Karrie testified that per the Lease, the landlord maintained the pool and landscaping. They used the pool often during the day but not at night, because they could not see. She also testified they were constantly "coughing and sneezing." Karrie said that when the lease ended and they left, the house was in better shape than when they moved in, and she described the issues that existed when they moved into the home.

E. Alejandro de la Maza's Testimony

De la Maza signed the lease as Novoterra's representative. He testified he helped his friend, Mario Sandoval, manage the property. De la Maza testified that he made decisions about the property, although he sometimes contacted Sandoval in Mexico. De la Maza explained that he did IT work for a living, and this property was the only experience he had in managing residential property. He said GoNet employee Aurora Taylor help ed him communicate with the McGhees regarding the property.

De la Maza understood he was responsible for rep airing things that...