In The
Court of Appeals
Fifth District of Texas at Dallas
............................
No. 05-08-00087-CV
............................
RICK SUTTON AND STACY MCCRIMMON, Appellants
V.
EBBY HALLIDAY REAL ESTATE, INC. D/B/A EBBY HALLIDAY REALTORS
AND DIANA MORRIS, INDIVIDUALLY, Appellees
.............................................................
On Appeal from the 86th Judicial District Court
Kaufman County, Texas
Trial Court Cause No. 70049-86
.............................................................
OPINION
Before Justices Morris, Whittington See Footnote 1 , and O'Neill
Opinion By Justice Morris

In this case based on alleged fraud in a real estate
transaction, a jury awarded Rick Sutton and Stacy McCrimmon $94,700 in
compensatory damages, $35,000 in mental anguish damages, and $1 million
in exemplary damages. The trial court signed a judgment awarding Sutton
and McCrimmon compensatory damages but granted a judgment
notwithstanding the verdict as to the mental anguish and exemplary
damages. Sutton and McCrimmon bring this appeal seeking a reversal of
the JNOV. Ebby Halliday Real Estate, Inc. d/b/a Ebby Halliday Realtors
and Diana Morris cross-appeal contending there is legally insufficient
evidence to support the jury's findings of various acts of fraud on the
part of Morris. We conclude the evidence is legally insufficient to
support the jury's verdict in favor of Sutton and McCrimmon.

Accordingly, we reverse the trial court's judgment to the extent it
awards Sutton and McCrimmon actual damages and attorney's fees and
render judgment that Sutton and McCrimmon take nothing by their claims.
I.
In 2003, Robert Owen and his business partner, Joe Neel,
purchased a plot of land in Kaufman County, Texas, for the purpose of
building a house for resale. Diana Morris, an agent with Ebby Halliday
Realtors, represented Owen and Neel in the transaction. The listing
agent for the property was Linda Christenson, who also worked for Ebby
Halliday.
Several properties surrounding the lot purchased by Owen and
Neel had already been developed at the time of the purchase. According
to one of the neighbors, Christenson was told that all of the property
in the area flooded and there was a lawsuit pending about the flooding
issue. The listing for the property stated that “neighbor of this
property has said land is in a flood zone” and “buyer would need to
verify.” The listing also stated there was “no paper work on file to
backup neighbor's statement.” Owen testified that he spoke to one
neighbor who told him there was “water on that lot.” But Owen spoke to
another neighbor who stated that he had lived in the neighborhood for
many years and had never seen the property flood. Neel verified that the
property was not located in a floodplain, and he and Owen went ahead
with the purchase.
During the time that Owen and Neel were building a house on the
property, neither of them lived there. Once the house was completed,

they listed it for sale and, again, used Diana Morris as their agent.
Owen completed a seller's disclosure notice stating he did not know of
either a flooding or drainage problem with the property. A new listing
was published by Ebby Halliday with no mention of the property
potentially being located in a flood zone.
Rick Sutton and his wife, Stacy McCrimmon, became interested in
the property and Morris gave them the seller's disclosure notice. Morris
then showed them the property. Sutton stated that, while touring the
house, he asked Morris if there were any problems with drainage on the
property and Morris replied there were not.
After seeing the house, Sutton and McCrimmon hired Dee Evans,
also with Ebby Halliday, as their agent to represent them in purchasing
the property. As part of the negotiations, Owen agreed to give Sutton
and McCrimmon a $4,500 credit on the purchase price. Owen stated that
the credit was intended to be used toward installing the final grade for
the lot and landscaping the property. Sutton disputed this and stated
the credit was intended to be put toward their closing costs. Sutton
also said he never discussed installing the final grade on the property
with Owen.
Owen had an attorney draft an addendum to be added to the
purchase contract that addressed the grade and landscaping of the lot.
The proposed addendum stated, Purchaser, Rick Sutton,
acknowledges that he is solely responsible, and Seller is divested of
responsibility, for any and all landscaping, final grades and drainage

issues which may arise or be required in connection with the tract of
land the subject of this Contract.
Although Owen gave Morris the addendum to give to Sutton before the
closing and Morris stated that she sent the addendum to Evans, the
addendum was not included among the documents given to Sutton and
McCrimmon either before or at the closing. Morris did not attend the
closing and the addendum was not signed.
When Judy Harris, manager of the Ebby Halliday office at which
Morris and Evans worked, learned that the addendum had not been signed,
she contacted Sutton and sent him a copy of the addendum. According to
Harris, Sutton refused to sign the addendum because he did not
understand the legal terms. After speaking with Owen, Harris drafted a
second addendum in an attempt to make it more understandable. The second
addendum stated,
Purchaser Rick Sutton agrees that he will provide at his
expense grading and landscaping on the above referenced property. Rick
Sutton, Purchaser acknowledges that Robert Owen, Seller will not be
liable for any drainage issues that result from the grading work done by
Purchaser.
Sutton refused to sign this addendum as well.
Shortly after moving into the home, Sutton and McCrimmon noticed
that the property flooded and held water without draining for weeks at a
time after it rained. Sutton dug out the drainage pond in the backyard
and attempted to make it deeper, but he stated that the property
continued to flood. Water never entered the house, but large portions of
the yard would remain under water for long periods of time.

Sutton and McCrimmon filed suit against Ebby Halliday, Morris,
and Harris. The couple sought both actual damages as well as exemplary
damages based on their assertion that the defendants knew the property
flooded and purposefully concealed this information from them. After
hearing the evidence, the jury awarded Sutton and McCrimmon $94,700 in
compensatory damages, $35,000 in mental anguish damages, and $1 million
in exemplary damages. The trial court signed a judgment awarding Sutton
and McCrimmon compensatory damages and attorney's fees but granted a
judgment notwithstanding the verdict as to the mental anguish and
exemplary damages. The trial court further ruled that Sutton and
McCrimmon take nothing from Harris. Sutton and McCrimmon bring this
appeal challenging the trial court's decision to grant a judgment
notwithstanding the verdict on the mental anguish and exemplary damages.
Ebby Halliday and Morris bring a cross-appeal contending the evidence is
legally insufficient to support the judgment against them for fraud. The
jury's findings that Morris, in her capacity as an agent of Ebby
Halliday, committed acts of fraud necessarily form the basis for any
potential award of mental anguish and exemplary damages. Accordingly, we
first address the cross-points of error brought by Ebby Halliday and
Morris challenging the jury's findings.

II.

In their fourth, fifth, and sixth cross-points of error as well
as their third reply point, Ebby Halliday and Morris challenge the legal
sufficiency of the evidence to support the jury's findings that Diana

Morris (1) engaged in a false, misleading, or deceptive act or practice,
(2) committed fraud, (3) made a negligent representation, (4) committed
statutory fraud, and (5) secured the execution of a document by
deception. When parties attack the legal sufficiency of the evidence
supporting an adverse finding on an issue on which they did not have the
burden of proof, they must show there is no evidence to support the
adverse finding. See Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex.1983).
In evaluating the legal sufficiency of the evidence to support a
finding, we must determine whether the evidence, as a whole, would
enable reasonable and fair-minded people to differ in their conclusions.
See OAIC Commercial Assets, L.L.C. v. Stonegate Village, L.P., 234
S.W.3d 726, 736 (Tex. App.-Dallas 2007, pet. denied). We view the
evidence in the light most favorable to the finding, crediting favorable
evidence if a reasonable fact-finder could and disregarding contrary
evidence unless a reasonable fact-finder could not. City of Keller v.
Wilson, 168 S.W.3d 802, 827 (Tex.2005). Anything more than a scintilla
of evidence is legally sufficient to support a challenged finding. See
OAIC, 234 S.W.3d at 736.
The court's charge on all five claims against Morris required a
finding that Morris had actual knowledge of the defective condition of
the property. See Footnote 2 In effect, Sutton and McCrimmon were
required to prove that Morris knew the property flooded and either
misrepresented the condition of the property or failed to disclose this

information. Morris and Ebby Halliday contend the evidence presented at
trial is legally insufficient to support a finding that Morris had
knowledge of the condition of the property at the time it was purchased
by Sutton and McCrimmon. After reviewing the entirety of the evidence,
we agree.
The following are the facts that Sutton and McCrimmon contend
support the jury's finding of knowledge: Morris was the real estate
agent representing Owen and Neel both in their purchase of the property
in 2003 and their later sale of the property to Sutton and McCrimmon;
before Owen and Neel purchased the property, the listing stated that a
“neighbor of this property has said land is in a flood zone” and “buyer
would need to verify;” the agent who spoke to the neighbor about the
flooding issue worked in the same office as Morris; the contract Morris
drafted for Owen's purchase of the property provided that the “buyer is
responsible to verify flood plain;” and, when Sutton and McCrimmon later
saw the property, the listing no longer included any information about
its possible location in a flood plain.
Before closing, Owen provided Morris with an addendum drafted by
his lawyer stating that Owen would be “divested of responsibility, for
any and all landscaping, final grades and drainage issues which may
arise or be required” in connection with the property. Morris assured
Owen that the addendum would be signed by Sutton and McCrimmon. Evans,
the agent representing Sutton and McCrimmon, testified that, although
she worked in the same office as Morris, she never received the

addendum. It is undisputed that Sutton and McCrimmon did not see the
addendum until after they closed on their purchase of the house and they
would not have purchased the house if they had seen the addendum first.
Sutton and McCrimmon contend that both the earlier MLS listing
and the addendum show that Morris had knowledge of the flooding issues
associated with the property before they purchased the house from her
client. But, even reading the evidence in the light most favorable to
the jury's verdict, as we are compelled to do, we conclude this evidence
amounts to no more than a scintilla to show that Morris had prior
knowledge of flooding problems.
The listing upon which Sutton and McCrimmon rely stated that a
neighbor indicated the land was in a flood zone and the buyer would need
to verify this. The listing also stated, however, that there was “no
paper work on file to backup neighbor's statement.” The evidence shows
that Morris did as the listing recommended and was told by Neel, as
buyer, that the property was not located in a floodplain.
Sutton and McCrimmon point to the testimony of their expert
witness in which he stated that, in his opinion, the property was
located in a floodplain. His testimony shows, however, that his opinion
was based solely on the fact that the property floods and not on any
official records or public documents. Indeed, other evidence admitted at
trial shows that the property was not located in any recorded
floodplain. Nor was it located in a Federal Emergency Management Agency

flood hazard area. Even if the property had been located in a recorded
floodplain, Morris was told by her client that it was not. Because the
listing indicated only that the buyer would need to verify whether the
property was in a floodplain, and the buyer in this case stated the
property was not, the listing itself provides no evidence to support a
finding that Morris was aware of a flooding problem.
Sutton and McCrimmon also presented evidence that the neighbor
referenced in the listing told Ebby Halliday that the property
“flooded,” not that it was in a flood zone. But this statement was made
to Ebby Halliday agent Linda Christenson, not to Morris. There is no
evidence that Christenson ever told Morris that the property flooded.
Furthermore, Sutton and McCrimmon provide no authority to impute
Christenson's knowledge to Morris, and we decline to do so. Cf. Pfeiffer
v. Ebby Halliday Real Estate, Inc., 747 S.W.2d 887, 890 (Tex.
App.-Dallas 1988, no writ) (real estate agent will not be charged with
“common knowledge” of other agents).
As for the addendum, this document was drafted by Owen and his
attorney. There is no evidence that Morris was involved in its creation.
She was merely given the addendum to present to Sutton and McCrimmon as
part of the purchase contract. Nothing in the addendum itself indicates
that there was a pre-existing flooding problem with the property. The
addendum, therefore, provides no evidence that Morris had any knowledge
the property had flooding issues at the time it was purchased by Sutton
and McCrimmon.

Based on the foregoing, we conclude there is no evidence of
probative force to show that Morris had any knowledge of flooding issues
with the property at the time it was purchased by Sutton and McCrimmon.
Accordingly, there is no evidence to support the jury's affirmative
findings in response to questions Nos. 1, 2, 3, 4, and 13 of the court's
charge. We sustain Ebby Halliday and Morris's fourth, fifth, and sixth
cross-points of error as well as their third reply point. It is
unnecessary for us to address the remaining points of error and
cross-points of error brought by the parties.
We reverse the trial court's judgment to the extent it awards
Sutton and McCrimmon actual damages and attorney's fees. We affirm the
trial court's judgment in all other respects.

JOSEPH B. MORRIS
JUSTICE
080087F.P05
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Footnote 1
The Honorable Mark Whittington, Justice, Court of Appeals, Fifth
District of Texas at Dallas, Retired, sitting by assignment.
-------------------
Footnote 2
The pertinent portions of the jury instructions are as follows:
Under Question No. 1 pertaining to the claim for false,
misleading, or deceptive act or practice, the jury was instructed that
the term false, misleading, or deceptive act or practice means “failing
to disclose information about the property that was known at the time of
the transaction . . . .”
Under Question No. 2 pertaining to fraud, the jury was
instructed that fraud occurs “when a party fails to disclose a material
fact within the knowledge of that party . . . .”

Under Question No. 3 pertaining to negligent misrepresentation,
the jury was instructed that “real estate agents are not required to
inspect property prior to sale to discover its condition.” The jury was
further instructed that “real estate agents and brokers are not liable
for a misrepresentation or a concealment of a material fact made by a
seller in a real estate transaction unless the agent or broker (1) knew
of the falsity of the misrepresentation or concealment; and (2) failed
to disclose their knowledge of the falsity of the misrepresentation or
concealment.”
Under Question No. 4 pertaining to statutory fraud, the jury was
instructed that fraud occurs when “a person has actual awareness of the
falsity of a representation or promise made by another person . . . .”
Under Question No. 13 pertaining to securing the execution of a
document by deception, the jury was instructed that “deception” means
“creating or confirming by words or conduct a false impression of law or
fact that is likely to affect another in the transaction, and that the
actor does not believe to be true.”