Motion for Judgment Notwithstanding the Verdict in Gary Gates, Et Al vs. K. Hovnanian Developments of Texas, Inc.| Trellis.Law

On March 01, 2019 a Motion-Secondary was filed involving a dispute between Gates, Gary, Gates, Susan, K. Hovnanian Developments Of Texas, Inc., and Chas Roberts Of Texas, Llc, D&D Mechanical And Refrigeration, Inc., Nava Construction, Inc., K. Hovnanian Developments Of Texas, Inc., for Contract - Other in the District Court of Galveston County.

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Filed: 7/5/2022 1:07 PM
JOHN D. KINARD - District Clerk
Galveston County, Texas
Envelope No. 66017300
By: Rolande Kain
7/5/2022 1:16 PM

CAUSE NO. 19-CV-0341

GARY GATES AND SUSAN GATES, § IN THE DISTRICT COURT OF
§
Plaintiffs, §
§
v. § GALVESTON COUNTY, TEXAS
§
K. HOVNANIAN DEVELOPMENTS §
OF TEXAS, INC. §
§
Defendant. § 122ND JUDICIAL DISTRICT
DEFENDANT K. HOVNANIAN DEVELOPMENTS OF TEXAS, INC.’S
RESPONSE TO PLAINTIFFS’ MOTION FOR ENTRY OF JUDGMENT
AND
DEFENDANT’S MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT

Defendant, K. HOVNANIAN DEVELOPMENTS OF TEXAS, INC. (“K. Hovnanian” or

“Defendant”), files this Response to Plaintiffs GARY GATES AND SUSAN GATES’ Motion for Entry

of Judgment and this Motion for Judgment Notwithstanding the Verdict, without waiving its rights

to appeal any or all of the findings made by the jury.

SUMMARY OF MOTION

1. Despite the jury’s verdict, the law and the lack of sufficient evidence introduced at

trial calls for the Court to enter a judgment notwithstanding the verdict and that Plaintiffs take

nothing from K. Hovnanian. There is no evidence to establish a construction defect proximately

caused Plaintiffs’ alleged damages. The jury’s verdict to Question No. 2 regarding good

workmanship and habitability must be disregarded because (1) the Express Warranty superseded

any implied warranty of good workmanship and (2) Plaintiffs provided insufficient evidence to

support a breach of the implied warranty of habitability. The jury’s verdict to Question No. 1

regarding breach of contract must be disregarded because there was no evidence that K. Hovnanian

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 1 OF 20
breached the Earnest Money Contract. The jury’s verdict to Question No. 3 regarding negligence

must be disregarded because it is barred by the economic loss rule.

2. In the alternative, if this Court were to award monetary damages to Plaintiffs, then

the damages must be reduced. In response to Question No. 4, the jury determined Plaintiffs were

25% contributorily negligent for their damages. Under the Residential Construction Liability Act

(“RCLA”), Section 27.003(a)(1)(A), Defendant is not liable for any percentage of damages caused

by the negligence of a person other than the contractor or its agent, employee or subcontractor—

thus, Defendant is not liable for damages caused by Plaintiffs under any theory of recover Plaintiffs

may elect. The Express Warranty also prohibits Plaintiffs’ recovery of damages Plaintiffs caused

or contributed to. The RCLA further reduces Plaintiffs’ recovery because Plaintiffs’ underlying

causes of action do not authorize the recovery of either attorney or expert fees. Therefore,

Plaintiffs’ monetary award is limited to $199,818.00.

3. In the alternative, the Court must enter a judgment notwithstanding the verdict

and/or a verdict that provides for K. Hovnanian’s right under the Conditional Sale to Builder

provision in the RCLA. Under the RCLA and the parties’ contract, K. Hovnanian has the option

to elect to repurchase the Property. Following the jury’s verdict of liability and damages against

K. Hovnanian in excess of 30% of the value of the Property, K. Hovnanian timely notified

Plaintiffs of its election to repurchase the Property. K. Hovnanian is entitled to repurchase the

Property and make payments specified in TEX. PROP. CODE 27.0042 as an alternative to the

damages specified in the jury’s verdict.

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 2 OF 20
FACTUAL SUMMARY

4. On March 1, 2019, Plaintiffs, Gary Gates and Susan Gates, filed this lawsuit

alleging construction defects in their house located at 1508 Permesso Lane, League City, Texas

77573 (the “Property”). Plaintiffs asserted breach of contract, breach of implied warranties of

habitability and good workmanship, and negligent construction against K. Hovnanian. K.

Hovnanian filed its Answer and third-party petitions against Nava Construction, Inc. and Chas

Roberts of Texas, LLC.

5. Prior to the commencement of trial, claims against Chas Roberts of Texas, LLC

and Nava Construction, Inc. were resolved. Plaintiffs and K. Hovnanian commenced jury trial

before this Court. On May 3, 2022, the jury returned their verdict in favor of Plaintiffs. See Ex. 1.

6. On May 17, 2022, K. Hovnanian notified Plaintiffs of its election to repurchase the

Property. See Ex. 2. To date, Plaintiffs have refused to cooperate with K. Hovnanian’s repurchase

election.

7. On May 24, 2022, Plaintiffs filed their Motion for Entry of Judgment. Plaintiffs’

Motion is currently set for hearing on July 7, 2022. K. Hovnanian requests this Court deny

Plaintiffs’ Motion and enter a Judgment Notwithstanding the Verdict, or alternatively, a judgment

that includes K. Hovnanian’s repurchase right.

ARGUMENT AND AUTHORITIES

8. A trial court should render a judgment notwithstanding the verdict (“JNOV”) if a

directed verdict would have been proper and should disregard any jury findings on a question that

has no support in the evidence. TEX. R. CIV. P. 301; Volkswagen of Am., Inc. v. Ramirez, 159

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 3 OF 20
S.W.3d 897, 903 (Tex. 2004). A JNOV is also appropriate when the evidence supporting a jury’s

verdict is shown to be legally insufficient: (1) there is a complete lack of evidence of a vital fact;

(2) the court is barred by rules of law or evidence from giving weight to the only evidence offered

to prove a vital fact; (3) there is no more than a mere scintilla of evidence to prove a vital fact; or

(4) the evidence conclusively established the opposite of a vital fact. See Litigation & Records

Services, LLC v. QTAT BPO Solutions, Inc., 2022 WL 1260193, at *3 (Tex. App.—Houston [14th

Dist.] April 28, 2022, no pet. hist.).

9. The jury’s findings to Question No. 1, 2, and 3 on liability must be disregarded. As

discussed below, neither the law nor facts support the jury’s verdict. In the alternative, the jury’s

finding in response to Question No. 4 that Plaintiffs were 25% contributory negligent must be

applied to reduce any monetary damages. Further, a JNOV must be entered, or alternatively the

repurchase option must be included in any money judgment entered, because K. Hovnanian has

elected its statutory and contractual remedy to purchase the Property.

I. A take-nothing judgment must be entered because Plaintiffs presented legally
insufficient evidence to support the jury’s findings.

A. Plaintiffs present legally insufficient evidence to support a finding that a
construction defect existed that proximately caused Plaintiffs’ alleged injuries.

10. To prevail on any claim governed by RCLA, Plaintiffs must prove that a

construction defect existed and the construction defect was the proximate cause of their damages.

TEX. PROP. CODE §27.006. There is no evidence to support the jury’s finding because Plaintiffs

presented insufficient evidence to establish that a construction defect existed or the alleged defects

were the proximate cause of Plaintiffs’ injuries.

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 4 OF 20
11. Plaintiffs’ expert, Reid Middlebrooks, failed to provide legally sufficient evidence

to establish a construction defect. Mr. Middlebrooks testified that he relied solely on infrared

thermography in forming his opinions of air leakage defects. Mr. Middlebrooks’ reliance on

infrared thermography alone is insufficient to establish the existence of a construction defect at the

Property.

12. Plaintiffs’ expert, Linda Lauver, failed to provide legally sufficient evidence to

establish the presence of hidden mold at the Property. Ms. Lauver testified that she utilized a

modified, self-created version of wall cavity air sampling to determine the presence of hidden

mold. Ms. Lauver’s reliance on modified wall cavity air samples alone is insufficient to establish

the presence of hidden mold in the wall cavities at the Property.

13. Plaintiffs failed to provide sufficient evidence to establish that the alleged defects

proximately caused their injuries. There was no evidence, or no more than a scintilla of evidence,

or no competent evidence, that K. Hovnanian failed to use an applicable standard of care, that the

failure caused any damages, or the alleged damages were foreseeable. Accordingly, a take nothing

judgment must be entered because Plaintiffs presented legally insufficient evidence to establish a

construction defect existed and the construction defect proximately caused their damages.

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 5 OF 20
B. The jury’s verdict to Question No. 2 must be disregarded because neither the
law nor evidence supports a breach of implied warranty finding.

14. The jury’s answer to Question No. 2 must be disregarded because (1) Plaintiffs’

breach of implied warranty of good workmanship claim is superseded by the Express Warranty as

a matter of law and (2) Plaintiffs presented no legally sufficient evidence to support the jury’s

finding of a breach of implied warranty of habitability.

A. Plaintiffs’ breach of implied warranty of good workmanship claim was
superseded by the Express Warranty.

15. Question No. 2’s breach of good workmanship claim should not have been

submitted. The Earnest Money Contract contained an Express Warranty that superseded the

implied warranty of good workmanship as a matter of law. At trial, K. Hovnanian moved to enter

the Home Builder’s Limited Warranty into evidence as Defendant’s Exhibit 38. See Ex. 3.

Plaintiffs objected on the basis of relevance. The objection was improperly sustained and Exhibit

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 6 OF 20
38 was entered as a Court Exhibit only. The Express Warranty should have been entered into

evidence because it is incorporated into the Earnest Money Contract. Paragraph 15 of the Earnest

Money Contract states:

16. The Express Warranty detailed K. Hovnanian’s obligations and Plaintiffs’

remedies. The Express Warranty specifies the manner, performance, and quality of the Property:

17. The Earnest Money Contract and Express Warranty make it clear that the Express

Warranty’s provisions supersede the implied warranty of good workmanship. The Texas Supreme

Court has held that an express warranty may supersede the implied warranty of good workmanship.

Gonzales v. Southwest Olshan Foundation Repair Co., LLC, 400 S.W.3d 52, 56 (Tex. 2013).

Courts recognize that the implied warranty of good workmanship is a “gap-filler” or “default

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 7 OF 20
warranty,” that applies unless and until the parties express a contrary intention. Centex Homes

v. Bucher, 95 S.W.3d 266, 273-74 (Tex. 2002) (emphasis added).

18. The implied warranty of good workmanship “may not be disclaimed but may be

superseded if the parties’ agreement sufficiently describes the manner, performance or quality of

the services.” Melody Homes Mftr. Co. v. Barnes, 741 S.W.2d 349, 354 (Tex. 1987). Courts are

clear that the implied warranty of good workmanship only “attaches to a contract if the parties’

agreement does not provide for the quality of the services to be rendered.” Olshan, 400

S.W.3d at 56 (emphasis added).

19. To determine if an express warranty supersedes the implied warranty of good

workmanship, courts examine the agreement and whether it “provides for the manner, performance

or quality of the desired construction.” Id. In Olshan, the Texas Supreme Court held that Olshan’s

express warranty superseded the implied warranty because it warranty language (i) specified the

work Olshan was to provide (foundation repair), the manner in which it was to provide it (a good

and workmanlike manner), and how the service would be performed (no adjustments needed, or,

if it did Olshan would adjust without cost to the owner). Id. Based on the language in Olshan’s

express warranty, the court held that the implied warranty of good workmanship was superseded

and the jury’s finding on the implied warranty claim could not serve as a basis for judgment. Id.

20. Similarly, in Richardson v. Duperier, the Houston Court of Appeals held that a

builder’s express warranty effectively superseded any implied warranty of good workmanship.

Richardson v. Duperier, 14-04-00388-CV, 2005 WL 831745, at *3 (Tex. App.—Houston [14th

Dist.] Apr. 12, 2005, no pet.) (mem. op.). The builder’s warranty stated:

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 8 OF 20
[Builder] warrants its products against failure due to defective
workmanship or materials for a period of one year from completion
date. [Builder] does not warrant products which are not
manufactured by [Builder] except to the extent of the warranty
[Builder] may actually receive from the manufacturer. [Builder’s]
liability shall be limited to the written warranties specified herein.

21. The court found this express warranty specific enough to supersede any implied

warranty of good workmanship. Id. It reasoned that the warranty guaranteed the home against

“failure due to defective workmanship,” providing an objective standard by which the builder’s

workmanship could be measured. Id. The court rejected the homeowner’s argument that the

warranty was simply boilerplate language. Id. at *4. Here, the Express Warranty contains specific

standards for K. Hovnanian and the Property. Plaintiffs’ implied warranty of good workmanship

is superseded by the Express Warranty.

22. In Thoede v. Wortham, the court held that an estimate and invoice stating that the

“service provider fully warrants workmanship and materials on all jobs for seven days after service

performed,” sufficiently described the quality of performance, and effectively superseded any

implied warranty. 2018 WL 3342692, at *7 (Tex. App.—Dallas July 9, 2018, no pet.). Here, since,

among other things, the Express Warranty specified the performance standards for the Property, it

sufficiently superseded the implied warranty of good workmanship. Accordingly, Question No.

2’s inclusion of a “breach of implied warranty of good workmanship” claim was improper. The

jury’s findings must be disregarded.

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 9 OF 20
B. Plaintiffs presented no legally sufficient evidence to support jury’s finding that K.
Hovnanian breached the warranty of habitability.

23. The implied warranty of habitability is limited in scope and “protect[s] the

purchaser only from those defects that undermine the very basis of the bargain. It requires the

builder to provide a house that is safe, sanitary, and otherwise fit for human habitation. In other

words, this implied warranty only protects new home buyers from conditions that are so defective

that the property is unsuitable for its intended use as a home.” Centex Homes v. Buecher, 95 S.W.3d

266, 273 (Tex. 2002) (internal citations omitted). For example, a home built on a toxic waste site.

Id. at 273-274.

24. Implied warranties concern the condition of the home on the date of sale and not

its future performance. Safeway v. Certainteed, 710 S.W.2d 544, 546-548. Implied warranties

relate to the condition of the sold goods at the time of sale, and only express warranties may

explicitly extend to future performance. “The words ‘explicit’ and ‘implied’ are contradictory”

and “by its very nature, [an implied warranty] cannot explicitly extend to future performance.” Id.

at 546-547. (The Texas Supreme Court has held that UCC warranty cases are instructive in service-

transaction cases. S.W. Bell Tel. Co. v. FDP Corp., 811 S.W.2d 572, 575 (Tex. 1991)). If the

alleged defects merely created a risk of future problems, there is no breach of the warranty of

habitability. Todd v. Perry Homes, 156 S.W.3d 919, 921 (Tex. 2005) (holding that homeowners

did not raise genuine issue of material fact as to habitability where they presented evidence that

the drainage only created a risk of mold, rot, or termites in the house).

25. Plaintiffs presented no evidence that the Property was unhabitable. Plaintiffs were

required to provide competent testimony from a qualified expert. Flores v. Allstate Texas Lloyd's

Co., 229 F.Supp.2d 697, 699 (S.D. Tex. 2002) (holding an untenantable home is one that cannot

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 10 OF 20
be restored using ordinary repairs). Courts have held that the “subjective belief of the occupants

that their home is not up to their ‘standard of living’ is not competent evidence of untenantability.”

Id. Plaintiffs’ subjective belief that the Property was uninhabitable is not legally sufficient

evidence. Further, Plaintiffs’ own testimony established that they continued to reside at the

Property at all relevant times, thus directly refuting the contention that the Property was not

habitable.

26. To establish the Property was uninhabitable, Plaintiffs were required to provide

evidence from a competent and qualified expert. Plaintiffs provided no evidence from a competent

qualified expert that the Property was uninhabitable. Plaintiffs’ expert, Linda Lauver, is not

qualified to provide opinions on habitability because she is neither qualified by education, training,

or experience, nor are her methods reliable. Plunkett v. Connecticut General Life Ins. Co., 285

S.W.3d 106, 118 (Tex. App.—Dallas 2009, no pet); see also See Starr v. A.J. Struss & Company,

2015 WL 4139028, at *7 (Tex. App.—Houston [1st Dist.] 2015, no pet.) (holding a medical expert

must personally examine a plaintiff to determine with a reasonable degree of medical probability

that mold exposure caused a plaintiff’s health complaint). Without evidence from a qualified and

competent expert, Plaintiffs failed to meet their burden to establish a breach of the implied

warranty of habitability. Accordingly, the jury’s verdict to Question No. 2 must be disregarded.

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 11 OF 20
C. The jury’s finding to Question No. 1 must be disregarded because there is no
evidence that K. Hovnanian failed to comply with the Earnest Money Contract.

27. There is no evidence to support the jury’s finding that K. Hovnanian breached the

Earnest Money Contract. The Plaintiffs presented no evidence that K. Hovnanian breached the

Purchase Agreement. Plaintiffs’ only complaint is the alleged construction defects (of which there

was insufficient evidence, as discussed above). Courts have held that when a party’s claim is based

on receipt of defective goods, the party has a breach of warranty claim, not a breach of

contract claim. Ellis v. Precision Engine Rebuilders, Inc., 68 S.W.3d 894, 897 (Tex. App.—

Houston [1st Dist.] 2002, no writ hist.) (emphasis added). The First Court of Appeals held that

when a claim is due to failure to conform” it is a breach of warranty; whereas “failure to deliver is

a breach of contract.” Id.

28. Plaintiffs presented no evidence (and asserted no claim) that K. Hovnanian

breached the Express Warranty, which superseded the implied warranty of good workmanship. As

discussed, Plaintiffs provided no legally sufficient evidence that K. Hovnanian breached the

implied warranty of habitability. Thus, the jury’s verdict to Question No. 1 must be disregarded.

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 12 OF 20
D. The jury’s verdict to Question No. 3 must be disregarded because a negligence
claim is barred by the economic loss rule as a matter of law.

29. The jury’s verdict to Question No. 3 regarding negligence must be disregarded

because as a matter of law, Plaintiffs’ negligence claim is barred by the economic loss rule. The

economic loss rule “forecloses a negligence claim predicated on a duty created under a contract to

which the plaintiff is a party when tort damages are sought for an injury consisting only of economic

loss to the subject of the contract.” Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407,

418-18 (Tex. 2011). Texas courts have held that “[c]onstruction projects operate by agreements

among the participants” and that it is “beyond argument that one participant on a construction

project cannot recover from another … for economic loss caused by negligence.” LAN/STV v.

Martin K. Eby Const. Co., Inc., 435 S.W.3d 234, 246 (Tex. 2014).

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 13 OF 20
30. A plaintiff may have a viable tort claim when “the duty allegedly breached is

independent of the contractual undertaking and the harm suffered is not merely the economic loss

of a contractual benefit.” Id. at 242. Courts examine whether “the loss is to the subject of the

contract.” Rosetta Resources Operating, LP v. Martin, 2022 WL 1434662, at *11 (Tex., 2022)

31. Plaintiffs’ alleged damages are subject to the Earnest Money Contract and thus,

barred by the economic loss rule. Further, Plaintiffs provided no evidence that their alleged damages

exceed economic losses of a contractual benefit. See Rohrs v. Hartz, 2021 WL 2677422, at *12

(Tex. App.—Beaumont, 2021, no pet.) (holding trial court did not abuse its discretion by failing

to submit a negligence question to the jury because negligence claim was barred by economic loss

rule). As such, the jury’s answer to Question No. 3 must be disregarded and this Court should enter

a judgement notwithstanding the verdict. (Note, however, that Question No. 4, the percentage of

negligence question, was required to be submitted whether or not the predicate negligence question

was submitted, because Defendant is entitled to a reduction of damages for any cause of action as

a result of Plaintiffs’ negligence in accordance with TEX. PROP. CODE § 27.003(a)(1)(A).)

II. In the alternative, Plaintiffs’ recovery is limited to $199,818.00.
A. The jury’s finding of Plaintiffs’ 25% contributory negligence must be applied
to all damages.

32. Under the RCLA, a builder is not liable for any percentage of damages caused by

the negligence of another person. TEX. PROP. CODE § 27.003(a)(1)(A). The Express Warranty also

excludes damages caused by the acts or negligence of the homeowner. See Ex. 3, Section

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 14 OF 20
VI(A)(1)(b). K. Hovnanian asked for an instruction in the various liability and damage questions

that the jury should not include any amounts caused by the negligence of another person. The

Court improperly refused the inclusion of this language and instead only submitted Plaintiffs’

negligence as a contributory negligence question. In response to Question No. 4, the jury

determined that Plaintiffs caused or contributed to their alleged damages by 25%.

B. Plaintiffs are not entitled to recover attorneys’ and expert fees.

33. The RCLA “does not permit a plaintiff to recover attorney or expert fees in the

absence of an underlying cause of action providing recovery of such fees.” Mitchell v. D.R.

Horton, 579 S.W.3d 135,140 (Tex. App.—Houston [1st Dist.] 2019, no pet.) (emphasis added).

See also Vision 20/20 Ltd. v. Cameron Builders, Inc. 525 S.W.3d 854, 856 (Tex. App.—Houston

[14th Dist.] 2017, no pet.) (“The RCLA does not create a cause of action but provides defenses

and limitations on damages.”).

34. Plaintiffs are not entitled to recover attorneys’ fees because they failed to prove a

breach of the Earnest Money Contract. Alternatively, if any attorneys’ fees are awarded, they must

be reduced by 25%, as discussed below.

35. Plaintiffs are not entitled to recover expert fees because there is no contract

provision, cause of action, or statute that provides for recovery of expert fees. Further, expert fees

are not recoverable as court costs. May v. Ticor Title Ins., 422 S.W.3d 93, 106 (Tex. App.—

Houston [14th Dist.] 2014, no pet.); Bundren v. Holly Oaks Townhomes Ass’n, Inc., 347 S.W.3d

412, 440 (Tex. App.—Dallas 2011, no pet.). Without an underlying cause of action, statute, or

contract authorizing recovery of expert fees, Plaintiffs cannot recover their expert costs.

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 15 OF 20
C. If a judgment is entered, it should be limited to $199,818.00.

36. As shown below, Plaintiffs’ compensatory damages must be reduced by 25%.

Further, Plaintiffs are not entitled to recover their attorneys’ or expert fees. As such, Plaintiffs’

monetary damages must be reduced as follows:

Jury Award Alternative Award

Mold Remediation $ 76,300.00 $ 57,225.00
Build Back of Structure $ 68,274.00 $ 51,205.50
Remedial Repairs $ 113,450.00 $ 85,087.50
Content $ - $ -
Alt. Living Expenses $ 8,400.00 $ 6,300.00
Expert Fees $ 41,441.29 $ -
Attorneys' Fees $ 184,496.25 $ -

Total: $ 199,818.00

37. If attorneys’ fees are included in the judgment, then the attorneys’ fee amount

should be reduced by $46,124.06, for a total attorneys’ fee amount of $138,372.19.

III. In the alternative, the Court must enter a judgment notwithstanding the verdict
because K. Hovnanian elected its Conditional Sale to Builder remedy.

38. A judgment notwithstanding the verdict must be entered because (without waiving

any arguments for appeal) K. Hovnanian elected its right to repurchase the Property in lieu of

paying the damages specified in the jury’s verdict. The RCLA exclusively governs all claims made

in this case and all damages awarded. TEX. PROP. CODE §27.001, et. seq. The RCLA governs what

Plaintiffs may recover for a construction defect case. The RCLA permits a builder to elect to

repurchase a property in lieu of monetary damages. A builder’s election to repurchase is triggered

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 16 OF 20
if the cost of repairs exceeds an agreed percentage of the current value of the property without

reference to the alleged damages:

Sec. 27.0042. CONDITIONAL SALE TO BUILDER. (a) A written agreement
between a contractor and a homeowner may provide that, except as provided by
Subsection (b), if the reasonable cost of repairs necessary to repair a construction
defect that is the responsibility of the contractor exceeds an agreed percentage of
the current fair market value of the residence, as determined without reference to
the construction defects, then, in an action subject to this chapter, the contractor
may elect as an alternative to the damages specified in Section 27.004(g) that the
contractor who sold the residence to the homeowner purchase it.

39. If the builder elects to purchase the home, Section 27.0042 requires the builder to

pay the original purchase price of the home and closing costs incurred by the homeowner and the

cost of transferring title to the builder. TEX. PROP. CODE § 27.0042(c)(1). Further, the homeowner

may also recover attorney’s fees, expert fees, reimbursement for permanent improvements the

homeowner has made, and moving costs. TEX. PROP. CODE § 27.0042(c)(2).

40. The Earnest Money Contract between the parties, which was the basis of Plaintiffs’

breach of contract claim, contains a provision that complies with TEX. PROP. CODE 27.0042:

41. At the trial on the merits, K. Hovnanian presented its defense denying the amount

of damages and repair costs alleged by Plaintiffs and denying liability for same. The jury returned

a verdict awarding damages to Plaintiffs for repairs in the amount of $258,024.00, and finding K.

Hovnanian 75% liable for such damages. As such, the jury determined that K. Hovnanian is

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 17 OF 20
responsible for costs to repair construction defects in the amount of $193,518.00. The jury’s verdict

exceeds 30% of the purchase price of the Property.

42. While the RCLA does not mandate a timeframe in which a builder may elect to

repurchase, Plaintiffs’ attorney has argued to this Court that a builder’s right to repurchase does

not accrue until a builder’s liability has been established. In Welch v. Greeneco Builders, LLC, a

case pending before this Court (Cause No. 19-CV-0340 in the 122nd Judicial District Court of

Galveston County, Texas), the builder elected to repurchase the property prior to trial. Plaintiffs’

counsel (the same as in this case) argued: “This Court cannot entertain a judgment on the amount

of damages for Plaintiffs’ construction defect claims until and unless Defendant’s liability for that

claim has been established.” Plaintiffs’ counsel argued that Greeneco needed to stipulate to

liability before the repurchase right arose, calling the liability finding a “threshold requirement”

for Defendant to invoke the right to repurchase the home under Section 27.0042 of the Texas

Property Code.1

43. Here, the threshold liability finding was met when the jury found K. Hovnanian

liable. K. Hovnanian always denied (and still denies) that it was legally responsible for Plaintiffs’

alleged damages. Thus, K. Hovnanian’s election to repurchase the Property after the jury’s

findings is permitted by the RCLA.2 On May 17, 2022, K. Hovnanian notified Plaintiffs of its

election to purchase the residence under the RCLA. TEX. PROP. CODE § 27.0042(a). See Ex. 2.

1
Attached as Exhibit 4 is Welch’s summary judgment, Plaintiffs’ counsel’ response, and the court’s order.
2
When the Texas Residential Construction Commission was in place prior to the Commission’s sunset, the contractor’s
deadline to elect to purchase the home ran from the date of “a final, unappealable determination of a dispute under
Subtitle D, Title 16 [the state-sponsored dispute resolution process]” (see Tex. Prop. Code 27.0042(b)(2)). As such,
the legislature contemplated that the repurchase right would be invoked after a liability determination was made.

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 18 OF 20
44. Under the RCLA, K. Hovnanian has the right to elect its repurchase of the Property

in lieu of the jury’s verdict. The Earnest Money Contract and RCLA require K. Hovnanian, in

exercising this election, to pay the original purchase price of the Property, closing costs incurred

by the homeowner, and the cost of transferring title to the contractor. Further, the RCLA provides

that the homeowner may also recover reimbursement for permanent improvements made to the

residence, reasonable and necessary attorney’s fees and expert fees, and reasonable moving costs.

As discussed above, since the jury determined Plaintiffs were 25% responsible for their damages,

Plaintiffs’ recovery of these various costs that “may” be awarded must be reduced by 25%.

Accordingly, K. Hovnanian respectfully requests the Court enter a judgment notwithstanding the

verdict and to allow K. Hovnanian to exercise its right to repurchase.

CONCLUSION

Defendant, K. HOVNANIAN DEVELOPMENTS OF TEXAS, INC., respectfully requests

this Court grant this Motion Notwithstanding the Jury Verdict, and prays for such further relief to

which it may show itself justly entitled.

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 19 OF 20
Respectfully submitted,
PECKAR & ABRAMSON, P.C.

By:
KIM ALTSULER
State Bar No. 00796656
kaltsuler@pecklaw.com
CRYSTAL DANG
State Bar No. 24097566
cdang@pecklaw.com
3050 Post Oak Boulevard, Suite 500
Houston, TX 77056
Telephone: (713) 568-1500
Facsimile: (713) 568-1490

ATTORNEYS FOR DEFENDANT
K. HOVNANIAN DEVELOPMENTS OF
TEXAS, INC.

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing instrument was

forwarded to all counsel of record in accordance with the Texas Rules of Civil Procedure on this

the on this 5th day of July 2022.

Crystal T. Dang

DEFENDANT K. HOVNANIAN’S RESPONSE AND
MOTION FOR JUDGMENT NOTWITHSTANDING THE JURY VERDICT PAGE 20 OF 20
JOHN
CLERK DIS
D.KINARD
FﬂIDCT COURT
@
MAY03202242Hfm/7
CTAUSE NO. 19— C‘V-0341
B&ALVESTON comm, TEXAS
GARY GATES AND SUSAN GATES, § IN THE DISTRICT C OF
§
Plaintiffs, §

§
v. § GALVESTON COUNTY, TEXAS
§
K. IIOVNANIAN DEVELOPMENTS §
OF TEXAS. INC. §

§
Defendants. § 122ND JUDICIAL DISTRICT

CHARGE OF THE COURT
LADIES AND GENTLEMEN OF THE JURY:
After the closing arguments, you will go t0 the jury room t0 decide thc case,
answer the questions that arc attached, and reach a verdict. You may discuss the case
with other jurors only when you are all together in the jury room.

Remember my previous instructions: Do not discuss the case with anyone else,
either in person 0r by any other means. Do not d0 any independent investigation about
the case 0r conduct any research. Do not 100k up any words in dictionaries 0r 0n thc
Internet. D0 not post information about the case 0n the Internet. Do n01 share any special
knowledge 0r experiences with the other jurors. D0 not use your phone 0r any other
electronic device during your deliberations for any reason.

Any notes you have taken arc for your own personal use. You may take your notes
back into the jury room and consult them during deliberations, but d0 not show 0r read
your notes 10 your fellow jurors during your deliberations. Your notes arc not evidence.
Each of you should rely 0n your independent recollection 0f the evidence and not be
inﬂuenced by the fact that anolhcrjuror has 0r has not taken notes.

You must lcavc your notes with lhc bailiff when you are not deliberating. The
bailiff will give your notes t0 mc promptly after collecting them from you. I will make
sure your notes are kept in a safe, secure location and n01 disclosed to anyone. After you
complete your deliberations, Ihc bailiff will collect your notes. When you arc released
from jury duty. Ihc bailiff will promptly destroy your notes so that nobody can read what
you wrote.

19—0“ 43“
ucv
charge 8““
“mm
33:;

‘

iiiﬁﬁiw\\\\\\\\\\\\\\\\\\\\\\\\\\\\

EXHIBIT 1
Herc are the instructions for answering the questions.

1. D0 not let bias, prejudice. 0r sympathy play any part in your decision.

2. Base your answers only 0n the evidence admitted in court and on the law
that is in these instructions and questions. D0 not consider 0r discuss any evidence that
was not admitted in the courtroom.

3. You arc Io make up your own minds about thc facts. You arc the sole
judges 0f the credibility 0f the witnesses and the weight t0 give their testimony. But 0n
matters oflaw, you must follow all 0f m)” instructions.

4. If my instructions use a word in a way that is different from its ordinary
meaning. use the meaning l give you, which will bc a proper legal deﬁnition.

5. All the questions and answers are important. N0 one should say that any
question 0r answer is not important.

6. Answer “yes” 0r “n0" l0 all questions unless you are told Otherwise. A
“yes” answer must bc based 0n a preponderance 0f the evidence. Whenever a question
requires an answer other than “yes” or “n0,” your answer must be based 0n a
preponderance of‘the evidence.

Thc term “preponderance 0f the evidence” means the greater weight 0f credible
evidence presented in this case. If you d0 n01 ﬁnd that a preponderance of the evidence
supports a “yes" answer, then answer “no." A preponderance 0f the evidence is not
measured by the number 0f witnesses 0r by the number 0f documents admitted in
evidence. For a fact t0 bc proved by a preponderance 0f the evidence, you must ﬁnd that
the fact is more likely Iruc than not true.

7. Do n01 decide who you think should win before you answer the questions
and then just answer the questions t0 match your decision. Answer each question
carefully without considering who will win. Do not discuss or consider the effect your
answers will have.

8. D0 n01 answer questions by drawing straws 0r by any method ofchance.

EXHIBIT 1
9. Some questions might ask you for a dollar amount. D0 not agree in advance
t0 decide on a dollar amount by adding up cach juror's amount and then ﬁguring the
average.

10. D0 not trade your answers. For example, d0 n01 say, “I will answer this
question your way ifyou answer another question my way.”

As have said before, ifyou do not follow these instructions, you will be guilty 0f
I

juror misconduct. and l might have t0 order a new trial and start this process over again.
This would waste your time and the parties‘ money: and would require the taxpayers 0f
this county to pay for another trial. If a juror breaks any Ofthesc rules. tell that person t0

stop and report i1 10 me immediately.

EXHIBIT 1
ADDITIONAL INSTRUCTIONS AND DEFINITIONS

1. “Plaintiffs” shall mean Plaintiffs Gary Gates and Susan Gates.

2. “Defendant” shall mean Defendant K. Hovnanian Developments 0f Texas,
Inc.

3. “Earnest Money Contract” shall mean the agreement between Plaintiffs
and K. Hovnanian dated July 1. 2016.

EXHIBIT 1
QUESTION NUMBER l:

Did Defendant fail to comply with the Eamesl Money Contract?

Answer “Yes” 0r “N0.”

Answer: i6 S

EXHIBIT 1
QUESTION NUMBER 2:

Was the failure. if any, 0f Defendant to comply with a warranty a cause 0f
damages to Plaintiffs?

“Failure t0 comply with a warranty" means any Ofthe following:

Failing t0 perform services in a good and workmanlike manner

selling a home that was n01 suitable for human habitation.

A good and workmanlike manner is that quality 0f work performed by one who
has the knowledge, training. 0r experience necessary for thc successful practice ofa trade
0r occupation and performed in a manner generally considered proﬁcient by those
capable ot‘judging such work.

Answer “ch" 0r “N0.”

Answer: kle S

EXHIBIT 1
QUESTION NUMBER 3:

Did thc negligence. if any, 0f those named below proximately cause Ihc damages
in question?

“Negligence" means failure t0 use ordinary care, that is, failing t0 d0 that which a

person ol‘ordinary prudence would have done under the same 0r similar circumstances 0r
doing that which a person 0f ordinary prudence would not havc done under the same 0r
similar circumstances.

“Ordinary Care" means that degree 0f carc that would bc used by a person 0f
ordinary prudence under the same 0r similar circumstances.

“Proximatc cause" means that and continuous sequence,
cause which, in a natural

produces an event, and without which cause such event would n01 have occurred. ln
order 10 be a proximate cause, the act 0r omission complained 0f must be such that a
person using ordinary care would have foreseen that the event, 0r some similar event,
might reasonably result therefrom. Thcrc may be more than one proximate cause 0f an
event.

Answer “ch” or "N0” :

l. Defendant \JEE

2. Plaintiffs V€§

EXHIBIT 1
It‘you answered “Yes” 10 Question 3 for more than one oflhose named below,
then answer the following question. Otherwise, do not answer thc following question.

Assign percentages ofresponsibility only l0 those you found caused 0r contributed
t0 cause the damages. Thc percentages you ﬁnd must total 100 percent. The percentages
must be expressed in whole numbers. The percentage ofrcsponsibility attributable t0 any
one is n01 necessarily measured by the number ofacts 0r omissions found. 'l‘he
percentage attributable to anyone need not be the same percentage attributed t0 that one
in answering another question.

QUESTION NO. 4
For each person you found caused 0r contributed 10 cause the damages, ﬁnd thc
percentage ofresponsibility attributable lo each:

1. Defendant 75‘ %
2. Plaintiffs Q5" %

EXHIBIT 1
Ifyou have answered “ch" t0 any question above, then answer the following
question; otherwise, d0 n01 answer the question below.

QUESTION NUMBER 5:

What sum 0f money, if an); if paid now in cash. would fairly and reasonably
compensate Plaintiffs for economic damages, ifany, proximately caused by Defendant 0r
anyone acting 0n their behalf as found in response t0 the questions above?

“Economic damages” means compensatory damages for pecuniary loss

proximately caused by a construction defect.

“Proximatc cause” means a cause that was a substantial factor in bringing about an
event, and without which cause such cvcm would not have occurred. In order 10 bc a
proximate cause, the act 0r omission complained 0f must bc such that a person using thc
degree of care required 0f him would have foreseen that the event, 0r some similar cvcnt,
might reasonably result therefrom There may be more than one proximate cause 0f an
event.

In answering questions about damagcs‘ answer each question separately. Do not
increase 0r reduce the amount

Case Info

Judge

Jones, Jeth Track Judge’s New Case

Case No.

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Document Filed Date

July 05, 2022

Case Filing Date

March 01, 2019

County

Parties

Chas Roberts of Texas, LLC Third Party Defendant
Dax O. Faubus Attorneys for Plaintiffs
Dax O. Faubus Attorney for the Plaintiff
D&D Mechanical and Refrigeration, Inc. Third Party Defendant
Ennio J. Diaz Attorneys for Defendants
Faubus, Dax O. Attorney for the Plaintiff
Gates, Gary Appellee
Gates, Gary Plaintiff
Gates, Susan Appellee
Gates, Susan Plaintiff
Gosda, Douglas T
Gosda, Douglas T Attorney for the Defendant
K. Hovnanian Developments of Texas, Inc. Appellant
K. Hovnanian Developments of Texas, Inc. Defendant
K. Hovnanian Developments of Texas, Inc. Third Party Plaintiff
Kimberly G Altsuler Attorneys for Defendants
Kimberly G Altsuler Attorney for the Appellant
Kimberly G Altsuler Attorney for the Defendant
Nava Construction, Inc. Third Party Defendant
Senter, Mark S. Attorneys for Defendants
Wales, Teresa Hayashi Attorney
Kellie Ros Attorney
Shari Goggin Attorneys for Defendants
Daniel Hinde Attorney
H. Cohn Attorneys for Defendants
Melinda Riseden Attorneys for Defendants
Debra Bradberry Attorney

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Motion-Secondary: Gary Gates, Et Al vs. K. Hovnanian Developments of Texas, Inc.

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