Lorrie Frazin v. Marc Sauty and Benedicte Sauty ( 2016 )

AFFIRM in Part, REVERSE in Part, and RENDER; Opinion Filed November 7, 2016.
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-15-00879-CV
LORRIE FRAZIN, Appellant
V.
MARC SAUTY AND BENEDICTE SAUTY, Appellees
On Appeal from the County Court at Law No. 3
Dallas County, Texas
Trial Court Cause No. CC-11-00258-C
MEMORANDUM OPINION
Before Chief Justice Wright, Justice Fillmore, and Justice Brown
Opinion by Justice Fillmore
Lorrie Frazin appeals the final judgment in favor of Marc Sauty and Benedicte Sauty (the
Sautys), awarding them damages for the failure of Frazin to return a residential lease security
deposit. In two issues, Frazin asserts the jury verdict does not support a judgment in favor of the
Sautys because an essential element of their claim for statutory damages was not included in the
jury charge, and the trial court erred in awarding prejudgment interest on exemplary and
statutory damages. We reverse the trial court’s judgment awarding prejudgment interest and
render judgment deleting the award of prejudgment interest. We affirm the trial court’s
judgment in all other respects.
Factual Background
The Sautys entered into an agreement with Frazin for the lease of residential property in
Dallas, Texas (the Lease Agreement). The term of the Lease Agreement commenced on July 1,
2008 and ended on June 30, 2009. 1 In conjunction with the Lease Agreement, the Sautys
provided a security deposit in the amount of $2,195.00. A few months after commencement of
the lease term, Marc Sauty’s employer notified him that he was being transferred to France, and
the Sautys provided written notice to Frazin that they would be leaving the leased residence at
the end of November 2008. On December 24, 2008, the Sautys provided Frazin with their
forwarding address and phone numbers in France.
The Sautys continued to make monthly lease payments, as well as payments for lawn and
pool maintenance and utilities, for the duration of the Lease Agreement. The Lease Agreement
expired by its own terms at the end of June 2009. On August 18, 2009, Marc Sauty emailed
Frazin stating, “I believe it will be time now for us to get the Deposit back from [sic], as rental
has officially stopped on June 30th. Can you send me the check back by mail to my new address
[included] below?” On August 28, 2009, Frazin provided the Sautys with notice of intent not to
return any of the security deposit:
I am very sure that your termination of electric service on the morning of
June 31st [sic] was an oversight on your part. You were, of course, responsible
for the utilities through the end of your lease term, including the 31st [sic].
Regrettably, we had a painter making the property ready for the new
tenants on the 31st [sic], and they were prevented from finishing their job because
the electricity was cut off.
More regrettably, the delay that was caused in restoring service that was
cut off (as opposed to just changing the name of the account) even though we paid
approximately $90.00 for an emergency turn on, lasted 3 days. By the time the
electricity was back on for the work to be finished, we had lost the new tenant.
As the unfortunate result of having the electricity turned off before your
lease term was over, in addition to the lost rent in July, because of the way the
rental market works, we have not yet found a tenant for August or September.
1
The parties acknowledge the Lease Agreement incorrectly provides the end of the lease term was June 31, 2009; there are only thirty days
in the month of June and the parties have operated pursuant to a tacit understanding that the Lease Agreement’s term ended on June 30, 2009.
–2–
I fully understand you surly [sic] did not intend to breach your lease
commitment in turning off electric service early, and likely you had not thought
about the possibility that repairs needed to be made for a new tenant.
With regret, because of the losses caused by your failure to fulfill your
lease obligation, the security deposit has been applied, and not refunded to you.
Additionally, there was a very small drip in the utility room.
Unfortunately, it was small enough not to be readily noticed, but large enough to
dampen the inner wall. The drip caused rot and black mold inside the wall, and
the wall need [sic] to be repaired. The cost of that repair was $735.00 including
parts and labor.
The movers apparently knocked holes in the wall in the foyer and hall, the
cost of those repairs was $98.00. A door was also severely dented, but has yet
been repaired.
Technically, I am obligated to request that you reimburse those expenses.
In light of our long and personal history, the request for that reimbursement is
only technical.
No portion of the security deposit was refunded to the Sautys.
Procedural Background
This cause originated as a small-claims-court lawsuit brought by the Sautys against
Frazin for “failure to return deposit.” The Sautys prevailed in that forum, and Frazin pursued an
appeal de novo to the county court at law. See TEX. CIV. PRAC. & REM. CODE ANN. § 51.001
(West 2015); TEX. R. CIV. P. 506.1.
The Sautys filed a motion for summary judgment in the county court, asserting they were
entitled to judgment as a matter of law because there were no genuine issues of material fact
relating to their claim that Frazin failed to return their security deposit in bad faith. Frazin
responded to the motion for summary judgment arguing she had raised genuine issues of material
fact regarding the Sautys’ claim. The county court granted the Sautys’ motion for summary
judgment and awarded them $5,685 in damages, but denied their request for attorney’s fees
because they failed to include a request for attorney’s fees in their petition filed in the justice of
the peace court.
–3–
Frazin appealed the county court’s judgment in favor of the Sautys. We concluded
Frazin had raised a genuine issue of material fact regarding whether she retained the security
deposit in violation of chapter 92, subchapter C of the property code, precluding traditional
summary judgment on the Sautys’ claim for failure to return the security deposit. Frazin v.
Sauty, No. 05-12-00137-CV, 2014 WL 3828210, at *7 (Tex. App.—Dallas Aug. 5, 2014, no
pet.) (mem. op.).
Following remand of the case to county court, the Sautys’ claim for damages resulting
from Frazin’s failure to return the security deposit was tried before a jury. Frazin requested that
the following question be included in the jury charge:
Question: Did Defendant Lorrie Frazin fail to provide a written description and
itemization of deductions to the Plaintiffs Marc Sauty and Benedicte Sauty on or
before the 30th day after the date the tenants surrendered possession, if such
written description and itemization was required?
The jury charge included the question of whether Frazin provided a written description and
itemized list of damages and charges to the Sautys within thirty days of the end of the lease term
and receipt of a written statement of the Sautys’ forwarding address. 2 Frazin requested a jury
question, conditioned upon an affirmative finding that she failed to provide a written description
and itemization of deductions from the security deposit, inquiring whether she had acted in bad
2
Frazin requested an instruction that the landlord is not required to give the tenant a description and itemized list of deductions if the tenant
owes rent when he surrenders possession of the premises and there is no controversy concerning the amount of rent owed. The trial court denied
Frazin’s request for that instruction. Frazin requested an instruction that the landlord is not obligated to provide the tenant a written description of
damages and charges until the tenant gives the landlord a written statement of the tenant’s forwarding address for the purpose of refunding the
security deposit. The trial court granted Frazin’s request for this instruction and included that instruction in the jury charge.
The jury charge as submitted to the jury included the following instructions:
a) before returning a security deposit, the landlord may deduct from the deposit damages and charges for which the tenant
is legally liable under the lease or as a result of breaching the lease; b) the landlord may not retain any portion of a security
deposit to cover normal wear and tear; and c) if the landlord retains all or part of a security deposit under this section, the
landlord shall give to the tenant the balance of the security deposit, if any, together with a written description and itemized
list of all deductions. The landlord is not obligated to give the tenant a written description of damages and charges until the
tenant give [sic] the landlord a written statement of the tenant’s forwarding address for the purpose of refunding the
security deposit.
–4–
faith. 3 The trial court denied Frazin’s request for the jury question as to whether she had acted in
bad faith by failing to provide to the Sautys a written description and itemization of deductions
from the security deposit.
In response to jury questions, the jury found that Frazin failed to return the security
deposit to the Sautys, and the Sautys were entitled to a refund from Frazin of $2,195.00, the full
amount of the security deposit. The jury also answered that Frazin did not provide a written
description and itemized list of damages and charges to the Sautys within thirty days from the
end of the lease term and receipt of a written statement of the Sautys’ forwarding address.
The trial court signed a final judgment setting out the jury’s findings. Based on the jury’s
findings that the Sautys were entitled to a full refund of the security deposit and Frazin “[failed
to provide] a written description and itemized list of damages and charges” to the Sautys within
thirty days from the end of the lease term, the trial court found as a matter of law that Frazin
acted “in bad faith.” Accordingly, the final judgment awards the Sautys statutory damages of
$100.00, and three times their actual damages of $2,195.00, for a total of $6,685.00. See TEX.
PROP. CODE ANN. § 92.109(a) (West 2014). The final judgment also awards the Sautys costs in
the amount of $865.68, statutory prejudgment interest from June 30, 2009 to the date of
judgment, and statutory post-judgment interest.
Jury Charge Error
In her first issue, Frazin asserts the jury verdict does not support a judgment in the
Sautys’ favor because an essential element of the Sautys’ claim for statutory damages under the
property code, that Frazin acted in bad faith, was omitted from the jury charge, despite her
objection to the trial court’s failure to include in the charge her requested jury question on
3
The trial court denied Frazin’s request for inclusion of the following instructions in the jury charge: “‘Bad Faith’ is an intention to deprive
the tenant of a refund lawfully due. If a landlord did not know that she was not entitled to retain the deposit to recover for damages, then the
landlord did not act in bad faith.”
–5–
whether she acted in bad faith by failing to provide a written description and itemized list of
damages and charges to the Sautys. Frazin argues a finding of bad faith is essential to the
Sautys’ claim for statutory damages.
Standard of Review
To determine whether an alleged error in the jury charge is reversible, we must consider
the pleadings of the parties, the evidence presented at trial, and the charge in its entirety. Island
Recreational Dev. Corp. v. Republic of Tex. Savs. Ass’n, 710 S.W.2d 551, 555 (Tex. 1986).
Alleged error will be deemed reversible only if, when viewed in the light of the totality of the
circumstances, it “amounted to such a denial of the rights of the complaining party as was
reasonably calculated and probably did cause the rendition of an improper judgment.” Id. at 555;
see also TEX. R. APP. P. 44.1(a)(1)(a). A trial court must submit the questions to the jury which
are raised by the pleadings and the evidence. See TEX. R. CIV. P. 278 (court shall submit the
questions, instructions and definitions which are raised by written pleadings and evidence). Each
element of a cause of action is “essential and material to the cause of action, and therefore is an
ultimate issue.” Daves v. Comm’n for Lawyer Discipline, 952 S.W.2d 573, 578 (Tex. App.—
Amarillo 1997, writ denied).
Applicable Law
Chapter 92, subchapter C, of the property code governs a security deposit associated with
a residential lease. TEX. PROP. CODE ANN. §§ 92.101–92.110 (West 2014 & Supp. 2015); Pulley
v. Milberger, 198 S.W.3d 418, 427 (Tex. App.—Dallas 2006, pet. denied). 4 Except as provided
4
A security deposit is defined as “any advance of money, other than a rental application deposit or an advance payment of rent, that is
intended primarily to secure performance under a lease of a dwelling that has been entered into by a landlord and a tenant.” TEX. PROP. CODE
ANN. § 92.102 (West 2014); Pulley, 198 S.W.3d at 427.
–6–
by section 92.107 of the property code, 5 a landlord “shall refund a security deposit to the tenant
on or before the 30th day after the date the tenant surrenders the premises.” TEX. PROP. CODE
ANN. § 92.103(a) (West. 2014). “Before returning a security deposit, the landlord may deduct
from the deposit damages and charges for which the tenant is legally liable under the lease or as
a result of breaching the lease.” Id. § 92.104(a) (West 2014). However, if the landlord retains
all or part of the security deposit under section 92.104, the landlord shall give the tenant the
balance of the security deposit, if any, together with a written description and itemized list of all
deductions. Id. § 92.104(c). 6 Further, the landlord is not required to provide the tenant a written
description and itemized list of deductions from the security deposit if the tenant owes rent when
he surrenders possession of the premises and there is no controversy concerning the amount of
rent owed. Id.
Subchapter C of chapter 92 establishes two causes of action that permit a tenant to seek
recovery of his security deposit from his landlord. See TEX. PROP. CODE ANN. § 92.109(a), (b);
Pulley, 198 S.W.3d at 427. Each of these causes of action provides the tenant with a different
remedy. See TEX. PROP. CODE ANN. § 92.109(a), (b); Pulley, 198 S.W.3d at 427.
The first cause of action involves a landlord’s bad faith retention of the security deposit
and is established in section 92.109(a). See TEX. PROP. CODE ANN. § 92.109(a); Pulley, 198
S.W.3d at 428. When a landlord is found liable under section 92.109(a), the tenant may recover
from the landlord: (1) an amount equal to the sum of $100; (2) three times the portion of the
security deposit wrongfully withheld; and (3) the tenant’s reasonable attorney’s fees in a suit to
5
Under section 92.107(a), the landlord “is not obligated to return a tenant’s security deposit or give the tenant a written description of
damages and charges until the tenant gives the landlord a written statement of the tenant’s forwarding address for the purpose of refunding the
security deposit.” TEX. PROP. CODE ANN. § 92.107(a) (West 2014); see also Pulley, 198 S.W.3d at 427.
6
We note that subchapter C employs various terms that appear to be synonymous to describe the obligation of a landlord to notify the
tenant of reasons for security deposit retention: “accounting” and “written description and itemized list of all deductions,” see TEX. PROP. CODE
ANN. § 92.104; “accounting of security deposit deductions,” id. § 92.1041 (West 2014); “description of damages and charges” and “written
description of damages and charges,” id. § 92.107(a); and, “written description and itemized list of damages and charges” and “written
description and itemization of deductions,” id.§ 92.109(b), (d). See also Sauty, 2014 WL 3828210, at *6 n.3.
–7–
recover the security deposit. TEX. PROP. CODE ANN. § 92.109(a); Pulley, 198 S.W.3d at 428. To
prevail under this cause of action, the tenant must prove the landlord: (1) acted in bad faith; and
(2) retained the security deposit in violation of chapter 92, subchapter C of the property code.
Pulley, 198 S.W.3d at 428; Sauty, 2014 WL 3828210, at *5.
The premise of the second cause of action is the landlord’s bad faith failure to account for
the security deposit. See TEX. PROP. CODE ANN. § 92.109(b); Pulley, 198 S.W.3d at 428. A
landlord who in bad faith does not provide the tenant with a written description and itemized list
of damages and charges in violation of chapter 92, subchapter C of the property code “forfeits
the right to withhold any portion of the security deposit or to bring suit against the tenant for
damages to the premises” and is liable for the tenant’s reasonable attorney’s fees in a suit to
recover the security deposit. TEX. PROP. CODE ANN. § 92.109(b); Pulley, 198 S.W.3d at 428;
Ackerman v. Little, 679 S.W.2d 70, 73 (Tex. App.—Dallas 1984, no writ); see also Lost Creek
Ventures, LLC v. Pilgrim, No. 01-15-00375-CV, 2016 WL 3569756, at *4 (Tex. App.—Houston
[1st Dist.] June 30, 2016, no pet.) (mem. op.) (if landlord in bad faith does not provide written
description and itemized list of damages and deductions withheld from tenant’s security deposit,
it forfeits right to withhold any portion of deposit or to bring suit against tenant for damages to
premises). To prevail under this cause of action, the tenant must prove the landlord: (1) acted in
bad faith; and (2) failed to provide the tenant with: (a) “a written description of the damages in
violation of chapter 92, subchapter C” of the property code; and (b) an “itemized list of the
deductions in violation of chapter 92, subchapter C” of the property code. Pulley, 198 S.W.3d at
428.
“Bad faith is presumed when a landlord fails to: (1) return the security deposit; or (2)
provide a written description of the damages and an itemized list of all deductions within thirty
days after the tenant surrenders the premises.” Id.; see TEX. PROP. CODE ANN. § 92.109(d); see
–8–
also Pilgrim, 2016 WL 3569756, at *4 (bad faith presumed if landlord fails either to return
security deposit or provide written description and itemization of deductions on or before
thirtieth day after tenant surrenders possession of premises). 7 To defeat the presumption of bad
faith, the “landlord must prove his good faith, i.e., honesty in fact in the conduct or transaction
concerned.” Pulley, 198 S.W.3d at 428. “In an action brought by a tenant under this subchapter,
the landlord has the burden of proving that the retention of any portion of the security deposit
was reasonable.” TEX. PROP. CODE ANN. § 92.109(c); see also Pulley, 198 S.W.3d at 429 (“Even
when a landlord defeats the presumption of bad faith in an action under section 92.109(a) as to
the failure to return security deposits, the landlord has another hurdle. He must prove the
retention of any portion of the security deposit was reasonable.”).
Pleadings of the Parties
In their pleading, the Sautys’ sued Frazin for “failure to return deposit.” Frazin generally
denied the Sautys’ allegation. “A landlord’s rebuttal of the statutory presumption of bad faith
and proof of the reasonableness of his retention of the security deposit is asserted by his denial of
the tenant’s claims of bad faith retention of the security deposit.” Pulley, 198 S.W.3d at 425.
Accordingly, a landlord is “not required to plead as affirmative defenses the absence of bad faith,
that the charges offset against the security deposit were reasonable, or that he had a reasonable
excuse for failing to refund the security deposit or give the [tenants] an itemized list of the
deductions.” Id. Frazin’s general denial effectively asserted both her denial of a claim of bad
faith retention of the security deposit and her contention that the retention of the security deposit
was reasonable, and that she had a reasonable excuse for failing to refund the security deposit
and for failing to give the Sautys an itemized list of “damages and charges.”
7
A landlord acts in bad faith when he retains the security deposit in dishonest disregard of the tenant’s rights. Pulley, 198 S.W.3d at 428;
see Reed v. Ford, 760 S.W.2d 26, 30 (Tex. App.—Dallas 1988, no writ); Alltex Constr., Inc. v. Alareksoussi, 685 S.W.2d 93, 94 (Tex. App.—
Dallas 1984, writ ref’d n.r.e.). Bad faith implies an intention to deprive the tenant of a lawfully due refund. Pulley, 198 S.W.3d at 428; see Reed,
760 S.W.2d at 30; Alltex Constr., 685 S.W.2d at 94; Wilson v. O’Connor, 555 S.W.2d 776, 780 (Tex. Civ. App.—Dallas 1977, writ dism’d).
–9–
Jury Charge
The evidence established Frazin failed to return the security deposit to the Sautys. See
TEX. PROP. CODE ANN. § 92.109(a). 8 Therefore, under section 92.109(d), Frazin was presumed
to have acted in bad faith in failing to return the security deposit. See TEX. PROP. CODE ANN.
§ 92.109(d); Pulley, 198 S.W.3d at 428; Pilgrim, 2016 WL 3569756, at *4.
Frazin bore the burden of proving the retention of the security deposit was reasonable,
see TEX. PROP. CODE ANN. § 92.109(c), and Frazin did not request a jury question as to whether
her retention of the security deposit was reasonable. Further, Frazin did not request a jury
question as to whether her retention of the security deposit was in bad faith. Contrary to Frazin’s
assertion in her appellate brief that she proposed a jury question “as to whether she acted in bad
faith with respect to refund of the security deposit,” Frazin only requested a jury question as to
whether she acted in bad faith in “fail[ing] to provide a written description and itemization of
deductions” from the security deposit. Having failed to request a jury question on an issue on
which she had the burden of proof, we conclude Frazin has failed to preserve this alleged error in
the jury charge. See TEX. R. CIV. P. 278; see also Mazon Assocs., Inc. v. Heritage Wholesale
Nursery, Inc., No. 05-09-01218-CV, 2011 WL 1107219, at *6 (Tex. App.—Dallas Mar. 28,
2011, no pet.) (mem. op.) (when trial court omits a jury question, party who relies on that
question must tender that question in writing in substantially correct form and obtain a ruling in
order to preserve error requiring reversal).
Further, we are unpersuaded by Frazin’s complaint that the jury verdict does not support
a judgment in the Sautys’ favor because the essential element of bad faith in the Sautys’ claim
for statutory damages under the property code was omitted from the jury charge. The jury found
8
On appeal, Frazin has not challenged the jury’s findings that she failed to return the security deposit and that the Sautys were entitled to a
refund of the entire amount of the security deposit. See TEX. PROP. CODE ANN. § 92.109(a).
–10–
Frazin failed to return the Sautys’ security deposit. A bad faith failure to return the security
deposit was presumed. See TEX. PROP. CODE ANN. § 92.109(d); Pulley, 198 S.W.3d at 428;
Pilgrim, 2016 WL 3569756, at *4. Under section 92.109(a), a landlord who in bad faith retains a
security deposit in violation of chapter 92, subchapter C, is liable for statutory damages of $100
and three times the portion of the security deposit wrongfully withheld. TEX. PROP. CODE ANN.
§ 92.109(a). In the final judgment, the trial court found that, in addition to failing to provide a
written description and itemized list of damages and charges within thirty days from the end of
the lease, Frazin’s failure to return the full amount of the security deposit to the Sautys was in
bad faith as a matter of law. The jury’s verdict, thus, supports the final judgment’s inclusion of
statutory damages as allowed by section 92.109(a) (landlord who in bad faith retains security
deposit in violation of this subchapter is liable for amount equal to sum of $100 and three times
the portion of security deposit wrongfully withheld).
We resolve Frazin’s first issue against her.
Prejudgment Interest
In her second issue, Frazin contends the trial court erred in awarding prejudgment interest
on exemplary damages and statutory damages that were not associated with claims for personal
injury or property damage. See TEX. FIN. CODE ANN. § 304.102 (West 2006) (judgment in
wrongful death, personal injury, or property damage case earns prejudgment interest); see also
Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 530 (Tex. 1998)
(predecessor statute to section 304.102 applies only to wrongful death, personal injury, and
property damage cases). The Sautys respond that the Lease Agreement specifically provides for
recovery of prejudgment interest by the prevailing party in any legal proceeding brought under
the lease.
–11–
We review a trial court’s award of prejudgment interest under an abuse of discretion
standard. Bufkin v. Bufkin, 259 S.W.3d 343, 356 (Tex. App.—Dallas 2008, pets. denied); J.C.
Penney Life Ins. Co. v. Heinrich, 32 S.W.3d 280, 289 (Tex. App.—San Antonio 2000, pet.
denied). Under this standard, we will not disturb a trial court’s findings on factual issues unless
the court reasonably could have reached only one decision and failed to do so. Heinrich, 32
S.W.3d at 289 (citing Walker v. Packer, 827 S.W.2d 833, 839–40 (Tex. 1992)); see also Jelinek
v. Casas, 328 S.W.3d 526, 539 (Tex. 2010) (trial court abuses its discretion if it acts in an
arbitrary or unreasonable manner without reference to guiding rules or principles). A trial court
has no discretion in determining what the law is or applying the law to the facts.” Sanchez v.
Martin, 378 S.W.3d 581, 587 (Tex. App.—Dallas 2012, no pet.).
The Lease Agreement provides that “[a]ny person who is a prevailing party in any legal
proceeding brought under or related to the transaction described in this lease is entitled to
recover prejudgment interest . . . .” However, the Sautys did not assert a claim for breach of
contract. 9 The Sautys’ damage claim is based on the provision of section 92.109(a) of the
property code authorizing recovery of statutory penalties in the event of a landlord’s bad faith
retention of the security deposit. The trial court awarded the Sautys “statutory prejudgment
interest” from the end of the lease, June 30, 2009, to the date of judgment on the amounts
awarded them for Frazin’s violation of section 92.109(a): statutory damages of $100.00 and the
sum of $6,685.00, representing three times the amount of the $2,195.00 security deposit the jury
found the Sautys were entitled to have refunded. See TEX. PROP. CODE ANN. § 92.109(a).
9
The Sautys’ Original Petition claimed “failure to return deposit.” The Sautys sought recovery against Frazin under section 92.109 of the
property code as evidenced by their Supplemental Petition filed in the county court claiming reasonable attorney’s fees pursuant to section
92.109(b)(2) of the property code. See TEX. PROP. CODE ANN. § 92.109(b)(2) (landlord who in bad faith does not provide written description and
itemized list of damages and charges in violation of this subchapter is liable for tenant’s reasonable attorney’s fees in a suit to recover the
deposit); Hanks v. Lake Towne Apartments, 812 S.W.2d 625, 627 n.1 (Tex. App.—Dallas 1991, writ denied) (tenant’s “only claim for attorney
fees was based on the statutory provision authorizing recovery of such fees (in addition to statutory penalties) because of bad faith retention of a
security deposit” (citing section 92.109(a) of the property code)). Frazin moved to strike the Sautys’ supplemental petition because they had not
pleaded for attorney’s fees in the Justice Court. The January 26, 2015 order of the county court provides the parties stipulated to the granting of
Frazin’s motion to strike the Sautys’ claim for attorney’s fees and ordered the Supplemental Petition stricken.
–12–
“There are two legal sources for an award of prejudgment interest: (1) general principles
of equity and (2) an enabling statute.” Johnson & Higgins of Tex., Inc., 962 S.W.2d at 528. 10
The final judgment specifically provides that the prejudgment interest awarded constituted
statutory prejudgment interest. 11 Although section 92.109(a) of the property code provides for
recovery of certain penalties (the sum of $100, three times the portion of the security deposit
wrongfully withheld, and the tenant’s reasonable attorney’s fees in a suit to recover the deposit),
there is no provision for recovery of prejudgment interest. See Finlay v. Blanton, No. 01-14-
00764-CV, 2015 WL 9311451, at *2 (Tex. App.—Houston [1st Dist.] Dec. 22, 2015, no pet.)
(mem. op.) (property code provides statutorily prescribed penalties for landlord’s failure to
refund tenant’s security deposit). Prejudgment interest does not apply to statutory penalties
imposed for wrongdoing. See Meridien Hotels, Inc. v. LHO Fin. P’ship I, L.P., 255 S.W.3d 807,
823 (Tex. App.—Dallas 2008, no pet.) (op. on reh’g) (discussing cases holding that prejudgment
interest does not apply to statutory penalties imposed for wrongdoing); see, Ellis Cty. State Bank
v. Keever, 888 S.W.2d 790, 798 (Tex. 1994) (“Punitive damages, being inherently penal in
character, should not be enlarged by the imposition of prejudgment interest in the absence of an
express legislative intent to do so.”); Vail v. Tex. Farm Bureau Mut. Ins. Co., 754 S.W.2d 129,
137 (Tex. 1988) (trial court improperly awarded prejudgment interest on trebled damages under
the Deceptive Trade Practices Act for insurance code violation); Steves Sash & Door Co. v. Ceco
Corp., 751 S.W.2d 473, 476–77 (Tex. 1988) (prejudgment interest not recoverable on usury
penalty damages). 12
10
See, e.g., TEX. FIN. CODE ANN. § 304.102 (judgment in wrongful death, personal injury, or property damage case earns prejudgment
interest).
11
Moreover, as a general rule, a plaintiff is required to plead for prejudgment interest sought in equity as an element of damages. DeGroot
v. DeGroot, 369 S.W.3d 918, 926 (Tex. App.—Dallas 2012, no pet.). In their Original Petition filed in Justice Court, the Sautys did not include a
request for prejudgment interest. See id.
12
See also Dunn v. S. Farm Bureau Cas. Ins. Co., 991 S.W.2d 467, 479 (Tex. App.—Tyler 1999, pet. denied) (prejudgment interest not
recoverable on penalty awarded as damages for insurer’s violation of statutory requirement for prompt payment of insurance claim); Alaniz v.
–13–
The damages awarded by the trial court under section 92.109(a) were based on statutorily
prescribed penalties for Frazin’s failure to refund the Sautys’ security deposit. See Blanton, 2015
WL 9311451, at *2. Subchapter C of the property code has no statutory provision entitling the
Sautys, as prevailing parties under section 92.109(a), to recover prejudgment interest. Absent
such a provision, “statutory prejudgment interest” was not recoverable on the statutory penalties
of $100.00 and $6,685.00 (representing three times the amount of the $2,195.00 security deposit
the jury found the Sautys were entitled to have refunded) imposed against the Sautys.
We conclude the trial court abused its discretion by awarding “statutory prejudgment
interest.” We resolve Frazin’s second issue in her favor.
Conclusion
We reverse the trial court’s judgment awarding the Sautys prejudgment interest, and
render judgment deleting the award of prejudgment interest from the judgment. We affirm the
trial court’s judgment in all other respects.
/Robert M. Fillmore/
ROBERT M. FILLMORE
JUSTICE
150879F.P05
Yates Ford, Inc., 790 S.W.2d 38, 39 (Tex. App.—San Antonio 1990, no writ) (penalties recovered under the consumer credit code were penal in
nature and not actual damages on which prejudgment interest may be awarded).
–14–
S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
LORRIE FRAZIN, Appellant On Appeal from the County Court at Law
No. 3, Dallas County, Texas,
No. 05-15-00879-CV V. Trial Court Cause No. CC-11-00258-C.
Opinion delivered by Justice Fillmore, Chief
MARC SAUTY AND BENEDICTE Justice Wright and Justice Brown
SAUTY, Appellees participating.
In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED in part and REVERSED in part. We REVERSE that portion of the trial court's
judgment awarding prejudgment interest and RENDER judgment deleting the award of
prejudgment interest in the trial court’s judgment. In all other respects, the trial court's judgment
is AFFIRMED.
It is ORDERED that each party bear its own costs of this appeal.
Judgment entered this 7th day of November, 2016.
–15–