Negligence Lawsuit Against Team Remanded

Read the full decision: Calhoun v. I-20 Team Real Estate, LLC

Texas appellate court reverses dismissal of lawsuit and sends case back to the trial court that alleged a real estate team was negligent when it failed to advise client that seller had not properly completed the property condition disclosure form.

A couple (“Buyers”) decided to relocate from Oklahoma to Texas, and so they retained a licensee (“Buyer’s Representative”) who worked on a real estate team (“Team”) to help them with their property search. The Buyer’s Representative accompanied the Buyers to visit a property and provided the Buyers with the sellers’ property condition disclosure form (“Disclosure Form”).

The sellers checked “yes” to the question about flooding into structures but failed to provide the required explanation about the flooding. The Buyer’s Representative did not alert the Buyers that they should have received a written explanation, and the Buyers later testified they were unaware of this requirement. Additionally, the sellers’ disclosure form left unchecked the boxes concerning: improper drainage; present flood insurance; located in a hundred-year flood plain; or located in floodway. An inspector discovered water markings in a crawl space but (incorrectly) opined those probably came from a leaking water line.

The Buyers purchased the property. Shortly afterwards, they discovered that the property had improper drainage and learned that the property had experienced flooding for years. After receiving a demand letter related to the improper disclosure of the property’s flooding history, the sellers told the Buyers that they had disclosed the history of flooding to the listing broker and the listing broker had completed the disclosure form that the Buyers had received. The Buyers sued the listing broker for fraud, violations of the state’s deceptive trade practices statute, and negligent misrepresentation. The Buyers also sued the Team for negligently failing to advise them that the disclosure form had not been properly completed. The trial court dismissed the Team from the lawsuit and the Buyers appealed.

The Court of Appeals of Texas, Tyler, reversed the trial court’s ruling in favor of the Team and sent the case back to the lower court for further proceedings. The Buyers claimed that the Team had a legal duty to use diligence and care in representing the Buyers but instead negligently failed to advise the Buyers that they had not received all required information. In order to succeed in a claim of negligence, a party must allege that the other party owed a duty and breached that duty, proximately causing damage.

The court ruled that the Buyers had sufficiently alleged negligence by the Team and so reversed the trial court, returning the case to the lower court for further proceedings. While the Team conceded that it should have alerted the Buyers that they should have received more information from the Sellers, the Team argued that the Buyers had failed to allege that they had proximately caused harm to the Buyers by failing to provide this information since the real damages were caused by the failure to provide the information about the flooding. The court disagreed, finding that the Buyers were first time home buyers and would have no reason to know that the sellers needed to provide additional information beyond simply checking “yes” on the Disclosure Form. Therefore, the court reversed the trial court and returned the case to the lower court for further proceedings.

Calhoun v. I-20 Team Real Estate, LLC, No. 12-18-00224-CV, 2019 WL 456892 (Tex. App. Feb. 6, 2019). [This is a citation to a Westlaw document. Westlaw is a subscription, online legal research service. If an official reporter citation should become available for this case, the citation will be updated to reflect this information.]

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