Opinion
No. 4-04-00644-CV
Delivered and Filed: November 9, 2005.
Appeal from the County Court at Law No. 2, Webb County, Texas, Trial Court No. 2003-Cvd-00014-L2, Honorable Jesus Garza, Judge Presiding.
Affirmed in Part, Reversed and Remanded in Part.
Sitting: Alma L. LÓPEZ, Chief Justice, Sarah B. DUNCAN, Justice, Rebecca SIMMONS, Justice.
MEMORANDUM OPINION
Quoc Trinh appeals a judgment notwithstanding the verdict (JNOV) entered in favor of Dan A. Richter as Trustee for the Carlos August Richter Trust ("Richter") that assesses damages at $25,500.00. On appeal, Trinh argues Richter failed to conclusively establish his entitlement to damages. We affirm the trial court's judgment regarding possession and reverse the trial court's judgment with respect to damages and remand the cause to the trial court for further proceedings.
Factual and Procedural Background
Richter leased property in Laredo, Texas to Smart Toys d/b/a Quoc Trinh in May 1997. Paragraph 7 of the lease required Trinh to obtain insurance of $1,000,000 covering both landlord and tenant and provide yearly certificates evidencing the coverage. Paragraph 12 of the lease prohibited Trinh from assigning or subletting the premises without Richter's consent. A subsequent lease modification allowed Trinh to sublet the premises to his sister, Phong Trinh.
In a letter dated January 29, 2003, Richter informed Trinh that the lease was terminated for violations of paragraphs 7 and 12 because Trinh did not provide the landlord timely copies of the liability insurance certificate for the property and Trinh was subletting the premises without permission. Trinh explained to Richter, in a letter dated February 5, 2003, that the premises were not sublet because he was part owner of Family Shoes, the entity operating from the building's first floor. Trinh also provided a copy of a liability insurance certificate showing that the premises were insured and naming Smart Toys, Inc. as the insured. In a letter dated March 27, 2003, Richter informed Trinh that he considered the lease terminated pursuant to his prior letter, reiterating the reason for termination as violation of paragraphs 7 and 12 of the lease.
Richter brought an action for forcible entry and detainer against Trinh in the justice court to determine whether Richter or Trinh was entitled to possession of the property. The justice court entered a judgment in Richter's favor, and Trinh appealed to the county court at law. Trial began on October 27, 2003, and the jury in the county court at law found that Richter was not entitled to possession. Since the jury found in favor of Trinh on possession, it did not answer questions regarding any holdover period by Trinh. The issue of calculating any damages was left to the trial court and therefore not submitted to the jury. The parties agreed to submit attorney's fees to the court via affidavit.
During the charge conference, it was agreed that the court would calculate the amount of holdover damages based on the holdover period determined by the jury.
Richter moved for JNOV on the ground that his entitlement to possession had been established as a matter of law. In his motion, Richter requested an award of holdover rent and other damages. The trial court granted Richter's motion and entered judgment on June 16, 2004, which gave Richter possession of the premises and awarded him $25,500.00 in damages and $43,829.00 in attorney's fees. The damages appear to be based solely on seventeen months of holdover rent.
Trinh paid $6000.00 in rent. The lease assessed holdover rent at $7500.00. The difference between the two is $1500.00. The damages awarded by the trial court are $25,500.00, which equates to $1500.00 multiplied by seventeen, which correlates to the time period of February 1, 2003 through June 16, 2004, the date judgment was entered.
On appeal, Trinh argues that Richter failed to conclusively establish the duration of the holdover period and the amount of the holdover rent due but not paid, and requests that the claim for holdover rent be remanded to the trial court for a new trial. Richter counters that Trinh did not properly preserve error in the court below nor disprove Richter was entitled to the damages awarded.
While Texas Property Code Section 24.007 prevents us from reviewing the issue of possession in this case, we have jurisdiction to consider the sufficiency of the evidence supporting the damage award because that issue is not based on the merits of possession. See, e.g., A.V.A. Servs., Inc. v. Parts Indus. Corp., 949 S.W.2d 852, 853 (Tex.App.-Beaumont 1997, no writ) (deciding the merit of points which did not involve possession); Academy Corp. v. Sunwest N.O.P., Inc., 853 S.W.2d 833, 834 (Tex.App.-Houston [14th Dist.] 1993, writ denied) (indicating that the factual sufficiency of an attorneys' fee award could have been appealed, if the argument had not been presented as reliant on the award of possession).
Standard of Review
Texas Rule of Civil Procedure 301 provides that a court may render a judgment notwithstanding the verdict if a direct verdict would have been proper. "Therefore, a JNOV should be entered if the evidence is conclusive and one party is entitled to judgment as a matter of law." Quaker Petroleum Chems. Co. v. Waldrop, 75 S.W.3d 549, 555 (Tex.App.-San Antonio 2002, no pet.). Here, the trial court not only granted a JNOV as to possession, but also in effect granted a directed verdict as to the term of the holdover period. Consequently, in order to be entitled to holdover damages, Richter had to conclusively establish the period in which Trinh wrongfully possessed the premises at issue.
Holdover Period
In order to recover holdover damages, Richter needed to conclusively prove the duration of the holdover period. Thus, the date the lease expired or terminated and the date the holdover period ended are necessary to calculate damages. The judgment includes holdover rent for seventeen months, which equates to the time period of February 1, 2003 through the date judgment was entered, some seven months after trial.
The trial court found in its final judgment that damages should accrue from February 5, 2003. Richter argues that the lease terminated February 1st when he sent Trinh a letter asserting two grounds for termination: failure to provide the landlord with liability insurance certificates and subleasing the property without proper permission. Trinh disputes February 1, 2003 as the date of termination since he did not receive the notice of default until February 3 or 4, and the lease provided a 10 day cure period following notice of default to the tenant. The record shows that Trinh provided the landlord with a copy of a liability insurance certificate and a copy of a partnership agreement with an explanation that he was part owner of the entity operating out of the property within the cure period. Trinh argues that this cured the default within the ten-day period allowed in the lease.
On March 27, 2003, Richter sent Trinh a second letter, indicating that Richter did not consider the default cured because the liability insurance certificate provided by Trinh did not cover "all [of Trinh's] business operations" and the sublease was without the consent of the landlord. Trinh contends the March 27th letter serves as the notice of Richter's intent to terminate the lease, and consequently, the earliest date of termination would be April 6th.
The insurance certificate provided by Trinh within the February 5th letter failed to comply with the lease requirements. It did not show public liability and property insurance for its business operations on the leased premises covering the Landlord as well as the Tenant. Nowhere is Richter listed as an insured. At trial, it was uncontested that Richter was never named an insured under any insurance offered by Trinh. Trinh's new business operating on the first floor, Family General Shoe, Inc., also is not named as an insured. Only Smart Toys, Inc. is listed as the insured. The certificate provided by Trinh was legally insufficient to cure the default. Because we hold the lease terminated by the failure to provide the appropriate insurance certificate we need not reach the issue of the subleasing by Trinh.
The lease terminated in February 2003 as a matter of law when Trinh received notice of termination. Richter concedes the date that is conclusive as to when Trinh received notice of the termination is February 5th, when Trinh responded to Richter's initial letter. We now examine the calculation of damages by the trial court. The trial court's judgment is based on a calculation of holdover rent for seventeen months. The computation of holdover rent due requires that the end of the holdover period be conclusively established. Evidence presented at trial conclusively established that Trinh occupied the premises and paid the base rent through trial. However, the record is devoid of any evidence showing that Trinh continued to occupy the premises after the October 2003 trial or the amount of rent paid, if any, between trial and judgment in June 2004. The evidence is insufficient to establish the termination date of the holdover period, precluding proper computation of the holdover damages.
When liability is contested in the trial court, whether or not an additional discreet challenge to liability is raised on appeal, Texas Rule of Appellate Procedure 44.1(b) requires that both the liability and damage issues be remanded to the trial court. See Tex.R.App.P. 44.1(b). Thus, it would seem that we should remand the entire cause to the trial court. However, Texas Property Code Section 24.007 dictates that final judgments of county courts in suits such as this may not be appealed on the issue of possession unless the premises are used for residential purposes only. Tex. Prop. Code Ann. § 24.007 (Vernon 2000). When a rule of procedure conflicts with a statute, the statute prevails. See Tex. Gov't Code Ann. § 22.004 (Vernon 1988). Because the Property Code and the Rules of Appellate Procedure conflict in this instance, the Property Code prevails. Therefore, the issue of possession cannot be remanded to the trial court. However, we note that the Property Code does allow the issue of the sufficiency of evidence supporting the holdover damage award to be remanded to the trial court.
The only issue before the trial court on remand is the calculation of damages.
Preservation Of Error
Richter complains that Trinh did not properly preserve error because Trinh's motion for new trial did not state a complaint with sufficient specificity. However, Trinh was not required to file a motion for new trial since the court's JNOV was in the nature of a directed verdict on the holdover period. Tex. R. Civ. P. 324; Tex.R.App.P. 33.1(d).
Conclusion
We affirm the portion of the trial court's judgment relating to possession and reverse the portion of the trial court's judgment relating to the calculation of holdover damages and attorney's fees. The cause is remanded to the trial court for further proceedings consistent with this opinion.