Date: 10-12-2017

Case Style:

Case Number: 01-16-00337-CV

Judge: Sherry Radack

Court: Texas Court of Appeals, First District on appeal from the 152nd District Court, Harris County

Plaintiff's Attorney: Marilyn Griffin

Defendant's Attorney: Seth Herschel Kretzer, Claudia Lozano, Sebastian Filgueira and Jay Baksa

Description: Appellant, Jay Baska, challenges the trial court’s judgment in favor of appellee, Rebecca McGuire, in her suit against Baska for breach of contract and fraud. In his first through third issues, Baska contends that the statute of frauds1 bars
1 See TEX. BUS. & COM. CODE ANN. § 26.01 (West 2015).
2
McGuire’s breach-of-contract claim and, if sustained, he is entitled to a remand for
reconsideration of the trial court’s award of exemplary damages and attorney’s fees.
In his fourth issue, Baska challenges the sufficiency of the evidence supporting the
trial court’s award of exemplary damages in favor of McGuire on her fraud claim.
We affirm.
Background
At trial, McGuire testified that, in 2013, she moved to Houston and began
looking in Missouri City, Texas, for a home to purchase. She attended an open house
on Englerock Circle, which was hosted by Baska, a real estate agent with Summit
Realty Group. Baska, who represented the seller and owned an interest in the house,
offered to sell the house to McGuire under a contract for deed.2 McGuire completed
an application for seller financing and paid an application fee. The trial court
admitted into evidence a copy of the receipt for McGuire’s application fee. After
Baska confirmed that McGuire had funds available for a down payment, Baska told
McGuire that he had access to private funding and suggested that she allow him to
find a “better house” for her.
2 A “contract for deed” is an agreement by a seller to deliver a deed to property once
certain conditions have been met. Graves v. Diehl, 958 S.W.2d 468, 470 (Tex.
App.—Houston [14th Dist.] 1997, no pet.). Ordinarily, the buyer is entitled to
immediate possession of the property upon making a down payment; however, title
remains in the seller until the purchase price, which is typically paid in installments
over the course of several years, is paid in full. Id. at 470–71.
3
McGuire testified that, in July 2013, Baska showed her a house for sale at
10430 Deer Branch (the “Deer Branch house”), and she executed a purchase contract
with the seller. After McGuire was unable to secure a mortgage loan, however,
Baska offered to provide her with financing. Baska told McGuire that she would
need to give him $10,000.00 in earnest money.3 McGuire went to Woodforest
National Bank, located at a Walmart store, and arranged to wire $10,000.00 from
her out-of-state bank account into Baska’s Woodforest account. Later, McGuire also
wired $2,500.00 in “additional purchase money” to Baska’s account. Subsequently,
however, the seller of the Deer Branch house repudiated the purchase contract.
Baska then told McGuire to find another house to purchase, and he would apply her
$10,000.00 payment toward the purchase. The trial court admitted into evidence a
copy of the purchase contract between McGuire and the seller and of McGuire’s
wire-transfer receipt for her $2,500 payment to Baska.
In August 2013, McGuire decided to purchase a house for sale at 28
Wellington Court (the “Wellington house”). Baska agreed to purchase the house on
McGuire’s behalf and to provide her with financing. Baska told McGuire that the
purchase required a total down payment in the amount of $30,000.00, and thus, in
3 “Earnest money” is defined as “[a] deposit paid (often in escrow) by a prospective
buyer (esp. of real estate) to show a good-faith intention to complete the transaction,
and [is] ordinarily forfeited if the buyer defaults.” Skinner Custom Homes, Inc. v.
Smith, 397 S.W.3d 841, 846 (Tex. App.—El Paso 2013, pet. denied) (quoting
Earnest Money, BLACK’S LAW DICTIONARY (9th ed. 2009)).
4
addition to her prior $10,000.00 payment for the Deer Branch house, she would need
to give him an additional $20,000.00. McGuire complied, wiring $20,000.00 into
Baska’s bank account at Woodforest. Baska then told McGuire that her purchase
offer had been accepted, that the financing was approved, and that closing was
scheduled for September 20, 2013.
Subsequently, Baska asked McGuire, who has a professional marketing
background, to become a partner in his real estate business. McGuire testified that
Baska claimed that he had money to invest and asked her to find houses for him to
purchase that could be renovated and resold for a profit. Baska promised to split
with McGuire the profits and rents that he earned from the houses that she found.
McGuire accepted his offer and began finding homes. McGuire testified regarding
certain sums that Baska had earned on houses that she had found and that Baska had
never paid her the commissions and rents that he had promised her.
The trial court admitted into evidence a transcript of text messages between
McGuire and Baska, in which McGuire repeatedly asked Baska for a copy of the
Wellington house contract and Baska assured her that he would email a copy to her.
The transcript contains a notation that, on September 14, 2013, McGuire and Baska
met at the Wellington house and signed “paperwork.” Afterwards, Baska told
McGuire that he would make copies and email them to her.
5
McGuire testified that, on September 20, 2013, Baska told her that, with
respect to closing on the Wellington house, the lender had approved the transaction
and was sending over the closing instructions. Baska also sent to McGuire a text
message congratulating her on her new house. Baska and McGuire then went to the
Wellington house, where Baska removed a key from a lock box on the front door,
let McGuire into the house, and told her that he was going to make a copy of the
key. Subsequently, McGuire moved into the Wellington house. She noted that the
interior of the house smelled of smoke, and she had the entire house professionally
cleaned and portions re-painted. McGuire testified that she incurred $2,000.00 in
cleaning and re-painting expenses.
Days after McGuire moved into the Wellington house, however, the seller’s
listing agent came to the house and asked McGuire why she was there. When
McGuire told her that she had purchased the house under a contract for deed with
Baska, the agent told McGuire that Baska had represented to the mortgage company
that the loan was for himself as an owner-occupier, and not as an investor.
Furthermore, the sale had not yet closed. The agent demanded that McGuire
immediately vacate the property. McGuire contacted Baska and expressed concern
that he had involved her in a mortgage-fraud scheme. Baska reassured her that there
was a misunderstanding, but directed McGuire to move out until the sale was closed.
6
McGuire again rented a truck and hired help to move her belongings back out of the
Wellington house.
Days later, Baska again told McGuire that he had closed on the Wellington
house. After McGuire demanded written documentation that the sale had actually
closed, along with the written appraisal and warranty information on the house, for
review by her attorney, Baska responded that he was no longer willing to provide
McGuire with financing and would return her $30,000.00 down payment by “bank
check.” Thereafter, however, Baska never returned McGuire’s money.
McGuire sued Baska for breach of contract and fraud, seeking actual damages,
exemplary damages, and attorney’s fees. McGuire testified that the $30,000.00 sum
that Baska has refused to return represents her, and her husband’s, entire retirement
savings. As a result, she has suffered stress so severe that she has required lung
surgery and has become dependent on a portable oxygen machine. The stress has
also exacerbated her husband’s heart condition, necessitating quadruple bypass
surgery and his placement into a long-term-care facility.
McGuire also testified that immediately after Baska refused to sell the
Wellington house to her, he moved a rental client into the house and began collecting
rent in the amount of $1,200.00 per month. McGuire testified that she is entitled to
one-half of the rents that Baska has earned from November 23, 2013 through trial.
7
McGuire further testified that her research of the real property records at the
Fort Bend County Clerk’s Office revealed that Baska actually purchased the
Wellington house in the name of Rodney Thomas, an individual in New York.
McGuire also discovered that an individual in California had filed a complaint
against Baska, alleging facts similar to those in the instant case.
McGuire’s attorney, Marilyn Griffin, testified regarding the attorney’s fees
McGuire has incurred. The trial court admitted into evidence Griffin’s invoices.
Although Baska answered the suit, generally denying McGuire’s claims and
asserting various affirmative defenses, including that the statute of frauds bars
McGuire’s breach-of-contract claim, Baska did not appear for deposition or at trial,
either in person or through counsel, despite multiple resettings and discussions with
the trial-court coordinator.
After trial, the trial court signed a judgment as follows:
[On January 27, 2016], this case was called to trial and
[McGuire] appeared . . . and announced ready for trial. [Baksa]
although duty cited to appear and given proper notice, failed to appear
for trial. The Court after hearing the evidence makes the following
findings of fact and conclusions of law:
On July 21, 2013, McGuire and Baska entered into a contract
whereby McGuire agreed to pay Baska a refundable $10,000.00 down
payment towards the purchase of a house located at 10430 Deer Branch,
Missouri City, Texas, and Baska agreed to buy the house for McGuire
and sell it to her.
McGuire paid Baska $10,000.00 and performed her obligations
under the contract.
8
Baska, although receiving $10,000.00 from McGuire did not
perform his obligations under the contract other than to tell McGuire to
find another house to buy, but did not return the down payment to
McGuire.
On August 21, 2013, McGuire and Baska entered into another
contract whereby McGuire agreed to pay Baska an additional
refundable $20,000,00 down payment for a total of $30,000.00 towards
the purchase of a house located at 28 Wellington, Missouri City. Texas,
77459 (hereinafter referred to as the “Subject Property”) and Baska
agreed to buy the Subject Property for McGuire and sell it to her.
McGuire paid Baska the additional $20,000.00 and performed
her obligations under the contract.
Baska, although receiving the additional $20,000.00 from
McGuire did not perform his obligations under the contract, did not
purchase the Subject Property for McGuire, and did not return the down
payment to McGuire. Baska’s failure to perform was a breach of the
contract.
The court also finds, by clear and convincing evidence that Baska
never intended to perform under the contract and made
misrepresentations to McGuire with no intent of performing under the
contract and in fact represented to McGuire that he had closed on the
purchase and congratulated McGuire on her new home and even gave
McGuire a key to the Subject Property for her to move into the Subject
Property. McGuire was told she owned the Subject Property and spent
$2,000.00 on repainting and sealing the Subject Property to clean and
remove smoke damage to the interior, Baska did not reimburse
McGuire for the repair to the Subject Property. The court finds Baska
did not sell the Subject Property to McGuire. After McGuire demanded
proof thereof, Baska then refused to deal with McGuire and promised
to return $30,000,00 to McGuire. Baska failed to return the $30,000,00
even after many attempts to collect the money.
The Court further finds that Baska enticed McGuire to trust him
on the contract to purchase the Subject Property and to postpone
returning the down payments to McGuire by offering her a job and
promising he would split all commissions and rents with McGuire for
her services, McGuire did work for Baska and found multiple properties
to invest in and referred Baska clients to sell their homes. Baska
purchased some of the properties and sold a referral home from which
9
he made $8,000.00 in commission and from which he should have paid
McGuire $4,000.00. Baska did not pay McGuire any of the
commissions, Baska also rented the Subject Property and has received
$1,200,00 a month rent since November 2013, half of which he owes
to McGuire under their agreement.
The court finds [that] Baska has defrauded others in similar
situations before and if not punished will continue to defraud more
people in the future. The court finds by clear and convincing evidence
Baska’s conduct was fraud.
The court further finds that the following elements of damages were
proven:
Breach of Contract Damages: $30,000.00
Fraud Damages (proven by clear and convincing evidence):
Commissions owed to McGuire $22,200.00
Attorney Fees: $9,438.64
The Court finds the following damages were proven by clear
convincing evidence: Exemplary Damages: $50,000.00.
Baska, proceeding pro se, filed a motion for new trial, challenging the
sufficiency of the evidence to support the judgment. The trial court denied Baska’s
motion. The trial court granted McGuire’s motion to sever the instant suit from her
suit against Baska’s associates at Summit Realty.
Statute of Frauds
In his first issue, Baska argues that the trial court erred in not concluding that
McGuire’s breach-of-contract claim is barred by the statute of frauds. He asserts
that the “$30,000.00 portion of the judgment fails as a matter of law” because “there
is no written contract or evidence about the written contract . . . to overcome this
affirmative defense.”
10
We first note that the trial court rendered a post-answer default judgment
against Baska. “A post-answer default judgment occurs when a defendant who has
answered fails to appear for trial.” Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d
922, 925 (Tex. 2009). “[A] post-answer default constitutes neither an abandonment
of the defendant’s answer nor an implied confession of any issues thus joined by the
defendant’s answer.” Paradigm Oil, Inc. v. Retamco Operating, Inc., 372 S.W.3d
177, 183 (Tex. 2012) (internal quotations omitted). When a defendant has filed an
answer, as here, the trial court may not render judgment on the pleadings and the
plaintiff is required to offer evidence and prove all aspects of her claim. Dolgencorp
of Tex., Inc., 288 S.W.3d at 930; Sharif v. Par Tech, Inc., 135 S.W.3d 869, 873 (Tex.
App.—Houston [1st Dist.] 2004, no pet.). To be entitled to judgment on her claim
for breach of contract, McGuire was required to produce evidence of the following
essential elements: (1) the existence of a valid contract; (2) performance or tendered
performance by McGuire; (3) breach of the contract by Baska; and (4) damages
sustained as a result of the breach. See B & W Supply, Inc. v. Beckman, 305 S.W.3d
10, 16 (Tex. App.—Houston [1st Dist.] 2009, pet. denied).
McGuire testified at trial, and the parties do not dispute on appeal, that
McGuire and Baska agreed that Baska would provide financing to McGuire for the
purchase of a house. With respect to the Deer Branch house, Baska directed
McGuire to provide him with $10,000.00 in earnest money, and it is undisputed that
11
she wired the money into Baska’s account. McGuire also provided Baska, at his
behest, $2,500 in “additional purchase money.” The wire-transfer receipt reflects
that on July 22, 2013, McGuire wired $2,500.00 to Baska’s bank account for the
purpose of a “Home Purchase.” Although the seller of the Wood Branch house later
repudiated the contract, Baska promised to apply McGuire’s funds to the purchase
of a different house. McGuire chose to buy the “Wellington house,” and Baska
agreed to provide financing. Baska told McGuire that the total down payment for
the Wellington house would be $30,000.00 and, thus, she would need to give him an
additional $20,000.00. It is undisputed that McGuire then wired $20,000.00 into
Baska’s bank account. The record shows that McGuire and Baska met at the
Wellington house and executed an agreement, and Baska promised to give McGuire
a copy.
Thereafter, according to McGuire’s testimony, Baska repeatedly assured her
that the purchase of the Wellington house had closed, that her financing was
“approved,” and that the house belonged to her. Baska also congratulated McGuire
on her new house and gave her a key so that she could move in. McGuire then spent
$2,000.00 to clean and re-paint the house. Days later, however, after McGuire
learned that the sale had, in fact, not closed, Baska told her to move back out. It is
undisputed that Baska, thereafter, promised to return McGuire’s $30,000.00 down
payment, but did not do so.
12
On appeal, Baska does not dispute that he and McGuire had an agreement.
He argues, however, that their agreement involves a transfer of real estate and is
therefore subject to the statute of frauds, which requires that a contract for the sale
of real estate be in writing. See TEX. BUS. & COM. CODE ANN. § 26.01(a), (b)(4)
(West 2015). He asserts that there is no evidence that their agreement was reduced
to writing.
The statute of frauds provides, in pertinent part, as follows:
(a) A promise or agreement described in Subsection (b) of this
section is not enforceable unless the promise or agreement, or a
memorandum of it, is
(1) in writing; and
(2) signed by the person to be charged with the promise or
agreement or by someone lawfully authorized to sign for
him.
(b) Subsection (a) of this section applies to:
. . . .
(4) a contract for the sale of real estate . . . .
TEX. BUS. & COM. CODE ANN. § 26.01(a), (b)(4). The statute requires that, “with
respect to the agreements defined therein, there must be a written memorandum
which is complete within itself in every material detail, and which contains all of the
essential elements of the agreement, so that the contract can be ascertained from the
writings without resorting to oral testimony.” Cohen v. McCutchin, 565 S.W.2d 230,
232–33 (Tex. 1978); see Walker v. Tafralian, 107 S.W.3d 665, 668 (Tex. App.—
Fort Worth 2003, pet. denied).
13
The statute of frauds is an affirmative defense. See TEX. R. CIV. P. 94. A
defendant relying on an affirmative defense must plead, prove, and secure findings
to sustain the defense. See Woods v. William M. Mercer, Inc., 769 S.W.2d 515, 517
(Tex. 1988); see Love v. State Bar of Tex., 982 S.W.2d 939, 943 (Tex. App.—
Houston [1st Dist.] 1998, no pet.). Pleadings, even if verified, are not evidence of
the truth of their allegations. Love, 982 S.W.2d at 943. This Court has held that “a
defendant with an affirmative defense who fails to appear at trial, and offers no
evidence to support that defense, effectively waives that affirmative defense.” Id.;
see also Lentino v. Cullen Ctr. Bank & Tr., No. 14-00-00692-CV, 2002 WL 220421,
at *6 (Tex. App.—Houston [14th Dist.] Feb. 14, 2002, pet. denied).
Here, Baska pled the statute of frauds as an affirmative defense and thus had
the initial burden to establish that his agreement with McGuire fell within the statute
of frauds. See Woods, 769 S.W.2d at 517; Love, 982 S.W.2d at 943; see also TEX.
BUS. & COM. CODE § 26.01(a), (b); TEX. R. CIV. P. 94. By not participating at trial,
however, Baska waived his opportunity to present evidence on his affirmative
defense, unless he met the requirements of Craddock,4 which he did not assert in the
4 Ordinarily, to set aside a post-answer-default judgment and to obtain a new trial at
which he may produce evidence, a defaulting party must (1) establish that his failure
to appear was not intentional or the result of conscious indifference, but was due to
mistake or accident; (2) offer a meritorious defense; and (3) demonstrate that
granting a new trial will not result in delay or prejudice to the plaintiff. Craddock
v. Sunshine Bus Lines, 134 Tex. 388, 392–93, 133 S.W.2d 124, 126 (Tex. 1939);
14
trial court and does not assert on appeal. See Love, 982 S.W.2d at 943; see also
Craddock v. Sunshine Bus Lines, 134 Tex. 388, 392–93, 133 S.W.2d 124, 126 (Tex.
1939); see, e.g., Lentino, 2002 WL 220421, at *7 (declining to consider affirmative
defense, or evidence relating to affirmative defense, when appellants, by not
participating at trial and not meeting Craddock requirements, lost opportunity to
present such evidence).
We hold that Baska has not demonstrated that the trial court erred by not
concluding that the statute of frauds barred McGuire’s breach-of-contract claim.
We overrule Baska’s first issue.
In his second issue, Baska argues that if he prevails on his first issue, the
exemplary damages awarded against him must be reversed and remanded for
reconsideration, “in light of McGuire’s substantially reduced compensable
damages.” We note that the trial court awarded McGuire exemplary damages on her
fraud claim, and not on her breach-of-contract claim. Exemplary damages are not
available for a breach-of-contract claim. See Stewart Title Guar. Co. v. Aiello, 941
S.W.2d 68, 72 (Tex. 1997). Having held that Baska did not prevail on his first issue,
we do not reach his second issue.
see Lentino v. Cullen Ctr. Bank & Tr., No. 14-00-00692-CV, 2002 WL 220421, at
*7 (Tex. App.—Houston [14th Dist.] Feb. 14, 2002, pet. denied).
15
In his third issue, Baska argues that if he prevails on his first issue, the portion
of the attorney’s fees attributable to McGuire’s breach-of-contract claim must be
remanded for reconsideration. Again, having held that Baska did not prevail on his
first issue, we do not reach his third issue.
Exemplary Damages
In his fourth issue, Baska challenges the legal sufficiency of the evidence
supporting the exemplary damages awarded against him on McGuire’s fraud claim.
He asserts that there is “no evidence to support exemplary damages based on a
recidivism finding.”
Specifically, Baska complains about the portion of the trial court’s judgment
emphasized below, but shown in context:
The court also finds, by clear and convincing evidence that Baska
never intended to perform under the contract and made
misrepresentations to McGuire with no intent of performing under the
contract and in fact represented to McGuire that he had closed on the
purchase and congratulated McGuire on her new home and even gave
McGuire a key to the Subject Property for her to move into the Subject
Property. McGuire was told she owned the Subject Property and spent
$2,000.00 on repainting and sealing the Subject Property to clean and
remove smoke damage to the interior, Baska did not reimburse
McGuire for the repair to the Subject Property. . . .
The Court further finds that Baska enticed McGuire to trust him
on the contract to purchase the Subject Property and to postpone
returning the down payments to McGuire by offering her a job and
promising he would split all commissions and rents with McGuire for
her services, McGuire did work for Baska and found multiple properties
to invest in and referred Baska clients to sell their homes. Baska
purchased some of the properties and sold a referral home from which
16
he made $8,000.00 in commission and from which he should have paid
McGuire $4,000.00. Baska did not pay McGuire any of the
commissions, Baska also rented the Subject Property and has received
$1,200,00 a month rent since November 2013, half of which he owes
to McGuire under their agreement.
The court finds [that] Baska has defrauded others in similar
situations before and if not punished will continue to defraud more
people in the future. The court finds by clear and convincing evidence
Baska’s conduct was fraud.
The court further finds that the following elements of damages were
proven:
. . . .
Fraud Damages (proven by clear and convincing evidence):
Commissions owed to McGuire $22,200.00
. . . .
The Court finds the following damages were proven by clear
convincing evidence: Exemplary Damages: $50,000.00.
(Emphasis added.)
Baska further complains about the following testimony by McGuire:
Q. [McGuire], . . . . after all this happened and everything that’s
gone on did you have an opportunity to do some research on
[Baska]?
A. Yes, I did.
Q. And what did you find out?
A. We did a great deal of research. I found out that he had done the
same thing—realtor license [sic] in California when he was still
working for John Manno in Summit Reality. He had a man out
there and it was in the same thing. The man had filed a complaint
against him for doing exactly the same thing: Taking the down
payment and then not giving the house.
17
Baska asserts that McGuire’s vague allegation that he had previously committed a
similar act, i.e., taking down payment money and not delivering a house in California
does not constitute evidence of recidivism. Therefore, there is no evidence
supporting the trial court’s award of exemplary damages.
In reviewing an award for exemplary damages, we conduct a legal sufficiency
review under the “clear and convincing” evidence standard. U-Haul Int’l, Inc. v.
Waldrip, 380 S.W.3d 118, 137 (Tex. 2012); Finley v. P.G., 428 S.W.3d 229, 238
(Tex. App.—Houston [1st Dist.] 2014, no pet.). “‘Clear and convincing’ means the
measure or degree of proof that will produce in the mind of the trier of fact a firm
belief or conviction as to the truth of the allegations sought to be established.” TEX.
CIV. PRAC. & REM. CODE ANN. § 41.001(2) (West Supp. 2015); Waldrip, 380
S.W.3d at 137. Thus, we look at all the evidence in the light most favorable to the
finding to determine whether a reasonable trier of fact could have formed a firm
belief or conviction that its finding was true. Columbia Med. Ctr. of Las Colinas,
Inc. v. Hogue, 271 S.W.3d 238, 248 (Tex. 2008); Soon Phat, L.P. v. Alvarado, 396
S.W.3d 78, 109 (Tex. App.—Houston [14th Dist.] 2013, pet. denied). Generally,
exemplary damages may be awarded if the claimant proves by clear and convincing
evidence that the harm at issue results from (1) fraud; (2) malice; or (3) gross
negligence. TEX. CIV. PRAC. & REM. CODE ANN. § 41.003(a) (West 2015).
18
The elements of fraud are: (1) a material misrepresentation was made; (2) the
representation was false; (3) when the representation was made, the speaker knew it
was false or made the statement recklessly without any knowledge of the truth;
(4) the speaker made the representation with the intent that the other party should
act on it; (5) the party acted in reliance on the representation; and (6) the party
thereby suffered injury. In re FirstMerit Bank, 52 S.W.3d 749, 758 (Tex. 2001);
Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d
41, 47 (Tex. 1998).
Here, McGuire testified that Baska represented that the purchase of the
Wellington house had closed and the house was hers, and he gave her a key so that
she could move in. In reliance, McGuire moved in and spent $2,000.00 on cleaning
and repainting the property. Days later, Baska told her to move out because the
house did not belong to her, and he rented the house to a tenant who paid Baska
$1,200,00 per month in rent. In addition, Baska offered McGuire a job and promised
that he would split the commissions and rents that he earned from the properties
McGuire found for him to sell. Although McGuire found several properties for
Baska, however, he did not pay her any of the commissions he promised her. Among
the properties was one in which Baska earned $8,000.00 and should have paid
McGuire $4,000.00, but did not pay her anything. Baska further did not reimburse
McGuire’s expenses to clean and re-paint the Wellington house or pay her any
19
portion of the rent he earned. See In re FirstMerit Bank, 52 S.W.3d at 758 (elements
of fraud).
Notably, Baska does not challenge the sufficiency of the evidence supporting
the trial court’s finding that he committed fraud against McGuire. See, e.g., Supply
Pro, Inc. v. Ecosorb Int’l, Inc., No. 01-15-00621-CV, 2016 WL 4543136, at *12–13
(Tex. App.—Houston [1st Dist.] Aug. 30, 2016, no pet.) (mem. op.) (considering
legal sufficiency of evidence supporting award of exemplary damages based on
fraud). He argues, rather, that McGuire’s testimony that he previously committed a
similar fraud in California constitutes no evidence to support the trial court’s award
of exemplary damages.
Evidence to support a finding of recidivism is not necessary to support a fraud
claim or a decision to award exemplary damages. See TEX. CIV. PRAC. & REM. CODE
ANN. § 41.003(a) (providing exemplary damages may be awarded if claimant proves
by clear and convincing evidence that harm at issue results from (1) fraud; (2)
malice; or (3) gross negligence); In re FirstMerit Bank, 52 S.W.3d at 758 (elements
of fraud). Rather, trial courts consider recidivism in ensuring that the amount of the
award is not unconstitutionally excessive, or in violation of due process constraints.
See Bennett v. Reynolds, 315 S.W.3d 867, 873 (Tex. 2010); Tony Gullo Motors I,
L.P. v. Chapa, 212 S.W.3d 299, 309 (Tex. 2006). In considering due process, trial
courts consider: (1) the degree of reprehensibility of the defendant’s conduct; (2) the
20
disparity between the actual or potential harm suffered by the plaintiff and the
exemplary damages award; and (3) the difference between the exemplary damages
awarded by the factfinder and the civil penalties authorized or imposed in
comparable cases. Reynolds, 315 S.W.3d at 873; see also Bennett v. Grant, No. 15-
0338, 2017 WL 1553157, at *5 (Tex. Apr. 28, 2017) (considering whether
exemplary-damages awards were excessive and violated due process). The degree
of reprehensibility includes whether the conduct involved repeated actions and not
just an isolated incident. Reynolds, 315 S.W.3d at 874; see also Horizon Health
Corp. v. Acadian Healthcare Co., 520 S.W.3d 848, 875 (Tex. 2017) (noting that
whether conduct involved repeated actions “is about recidivism, not the course of
conduct giving rise to the plaintiff’s ultimate harm”). Here, however, Baska does
not challenge the amount of the award as unconstitutionally excessive or in violation
of due process. See TEX. CIV. PRAC. & REM. CODE ANN. § 41.008(b) (West 2015);
see, e.g., State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 417–18, 123 S.
Ct. 1513, 1520–21 (2003).
We hold that the evidence is legally sufficient to support the trial court’s
finding of fraud and decision to award McGuire exemplary damages against Baska.
We overrule Baska’s fourth issue.

Outcome: We affirm the trial court’s judgment.
Sherry Radack
Chief Justice
Panel consists of Chief Justice Radack and Justices Keyes and Brown.

Plaintiff's Experts:

Defendant's Experts:

Comments: