Date: 01-25-2017

Case Style: Rafael Montez Da Oca v. Eduardo Gutierrez

Case Number: 03-14-00668

Judge: David Puryear

Court: Texas Court of Appeals, Third District on appeal from the County Court at Law. No. 2, Travis County

Plaintiff's Attorney: Ray Bass and Rafael Montez Da Oca

Defendant's Attorney: Aftan Cavanaugh, Paul T. Morin and Eduardo Gutierrez

Description: Rafael Montez Da Oca appeals the trial court’s final judgment against him for damages
resulting from his alleged wrongful conduct as the landlord under a commercial-lease agreement
with appellee Eduardo Gutierrez. Da Oca challenges the sufficiency of the evidence supporting
various jury findings. For the following reasons, we will affirm the trial court’s final judgment.
BACKGROUND
The parties’ legal dispute originated in the form of a forcible-detainer action filed in
the justice court by Da Oca against Gutierrez after Da Oca locked Gutierrez out of the leased
premises where Gutierrez was operating a restaurant. Da Oca’s sworn petition filed in the forcibledetainer
action alleged that Gutierrez was delinquent in paying the monthly rent of $4,200 and had
a history of late payments and that Gutierrez owed rent in the total amount of $4,410 (one month’s
rent plus late fees). The justice court’s judgment is not in the appellate record, but the parties’
briefing and other documents in the record indicate that the justice court entered a judgment granting
possession of the property to Da Oca and terminating the lease.
After the conclusion of the forcible-detainer proceeding, Da Oca’s attorney sent
Gutierrez a letter stating that Gutierrez’s security deposit would “be reduced by the deductions for
damages, charges for which you are legally liable under the unexpired terms of the lease (utilities
and sales taxes), and damages and charges that resulted from a breach of the lease.” The letter also
asserted that, pursuant to section 93.006 of the Property Code, Gutierrez was “not entitled to a
description and itemized list of deductions since rent was owed when [Da Oca] recovered the
property vis a vis [the justice court’s judgment]” and that “prior to the rendition of [the justice
court’s] judgment rents were in arrearage since March, 2011.”
Gutierrez then sent a response letter to Da Oca’s attorney seeking the return of his
$21,000 security deposit and admittance into the leased premises to retrieve his personal property
left behind as a result of the lockout. His letter quoted the justice court’s judgment accordingly: “IT
IS ORDERED, ADJUDGED AND DECREED . . . [that] the Tenant is entitled to recover a month’s
rent less the cost of delinquent rents. Since a month’s rent was delinquent, then tenant would not
receive these damages.” About a year and a half later, Gutierrez’s newly appointed attorney sent a
letter to Da Oca’s attorney, again requesting the return of Gutierrez’s security deposit. When Da Oca
failed to return the deposit or provide an itemized list of deductions, Gutierrez filed the present
lawsuit now on appeal.
In this lawsuit, Gutierrez alleged that he and Da Oca entered into a five-year
commercial lease of premises owned by Da Oca; that he paid Da Oca a security deposit of $21,000;
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and that Da Oca locked him out of the leased premises without any notice when he fell behind
on his rent. He made claims for damages from Da Oca’s alleged wrongful lockout and unlawful
retention of his security deposit. The trial court rendered a default judgment in favor of Gutierrez
upon Da Oca’s failure to appear for trial, heard and admitted Gutierrez’s evidence, and awarded him
total damages in the amount of $104,001.11, including amounts for attorney’s fees and damages for
Da Oca’s bad-faith retention of the security deposit. Da Oca filed a motion for new trial supported
by the affidavit of his attorney, in which he asserted that he failed to appear for the trial because he
had not been notified of the trial setting. The trial court granted Da Oca’s motion for new trial, and
the cause was then tried to a jury.
The jury found that Da Oca: (1) wrongfully failed to refund $19,570.65 of a $21,000
security deposit; (2) retained the security deposit in bad faith; (3) constructively evicted Gutierrez,
thereby causing damages to him in the amount of $18,424.30; (4) caused $8,000 in damages to
Gutierrez by locking him out of the leased premises; and (5) should pay $50,000 in attorney’s fees,
plus additional specified amounts in the event of an unsuccessful appeal. The trial court rendered
judgment for Gutierrez in accordance with these jury findings. In this appeal, Da Oca complains
of several of the findings.
DISCUSSION
In his first issue, Da Oca contends that the evidence is factually insufficient to support
the jury’s finding that he wrongfully failed to refund a portion of Gutierrez’s security deposit. See
Tex. Prop. Code § 93.005(a) (“The landlord shall refund the security deposit to the tenant not later
than the 60th day after the date the tenant surrenders the premises and provides notice to the landlord
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or the landlord’s agent of the tenant’s forwarding address under Section 93.009.”); Ortiz v. Jones,
917 S.W.2d 770, 772 (Tex. 1996) (outlining factual-sufficiency standard of review). Specifically,
Da Oca contends that the $21,000 that Gutierrez paid him did not constitute a security deposit and,
therefore, Da Oca did not violate the Property Code and Gutierrez is not entitled to a refund of that
money. See id. § 93.004 (“A security deposit is 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 commercial rental property.”).
The lease between the parties, which was admitted into evidence, indicated that
Gutierrez paid Da Oca a $21,000 security deposit. The evidence showed that the lease was prepared
by Da Oca or his agent. Gutierrez testified that he paid Da Oca $16,000 by check (a copy of the
check was admitted as an exhibit)1 as part of the total security deposit and that the remainder of the
$21,000 deposit was provided to Da Oca in the form an agreement whereby either Gutierrez assumed
the remaining debt owed on a promissory note to an associate of Gutierrez or the debt was entirely
forgiven.2 Gutierrez’s associate, Arlene Martinez, similarly testified that Da Oca was given $16,000
1 Gutierrez testified that he had obtained the $16,000 through a loan from his sister to help
him operate a restaurant in the leased premises. Da Oca himself had been operating a restaurant in
the premises but was seeking to sell the business because his finances had become tight. Gutierrez
attempted to help broker a sale but, after no success in finding a buyer, Gutierrez agreed to take over
the operation of the restaurant, changing the cuisine and the restaurant’s name.
2 The testimony is not entirely clear whether Gutierrez’s associate, Arlene Martinez, actually
forgave the remaining $9,200 owed on the debt or whether Gutierrez assumed the obligation. In any
case, Gutierrez’s testimony indicates that Da Oca was no longer obligated on the debt; that Da Oca’s
automobile titles, which had been securing the loan, were returned to him; and that Da Oca,
Martinez, and Gutierrez considered the $9,200 for which Da Oca was no longer indebted as part of
the security deposit on the leased premises. Martinez testified that Da Oca was having trouble
repaying the loan about the same time that Gutierrez was preparing to open his restaurant in the
leased premises, and the parties negotiated that the remaining $9,200 that Da Oca owed on the debt
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by Gutierrez, and that the three parties agreed that the total of Gutierrez’s check plus debt
forgiveness ($16,000 plus $9,200) would be applied thus: $21,000 as a security deposit and $4,200
towards the first month’s rent when the restaurant started operating.
While other evidence at trial was inconsistent with the finding that the parties
intended to use the $21,000 as a security deposit, we cannot say that the jury’s verdict in favor of
Gutierrez on this issue 3 was so contrary to the overwhelming weight of the evidence that it is
clearly wrong and unjust. See Ortiz, 917 S.W.2d at 772; see also Maritime Overseas Corp. v. Ellis,
971 S.W.2d 402, 406 (Tex. 1998) (noting that in factual-sufficiency review, appellate court is not
required to detail all evidence supporting judgment when affirming trial court’s damages). The
evidence was factually sufficient to support the jury’s implied finding that the $21,000 did, indeed,
constitute a security deposit. Accordingly, we overrule Da Oca’s first issue.
In his second issue, Da Oca contends that the evidence is factually insufficient to
support the jury’s finding that he withheld the security deposit in bad faith. A landlord who fails to
return a security deposit or to provide a written description and itemized list of deductions on or
before the 60th day after the date the tenant surrenders possession is presumed to have acted in bad
faith. See Tex. Prop. Code § 92.109(d). Once the presumption of bad faith arises, the burden shifts
to the landlord to rebut the presumption and prove that his retention of the security deposit was
reasonable. See id. § 92.109(c); Johnson v. Waters at Elm Creek, L.L.C., 416 S.W.3d 42, 47 (Tex.
would be transferred over as a security deposit on the leased premises on Gutierrez’s behalf and that
Martinez thereby “invested” in the restaurant and obtained an ownership interest in it.
3 The jury answered “yes” to a question asking whether Da Oca wrongfully failed to refund
any portion of Gutierrez’s security deposit and found the amount unreturned was $19,570.65.
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App.—San Antonio 2013, pet. denied). Da Oca concedes that the presumption applied to him but
argues that the evidence of his good faith and reasonableness in retaining the deposit was sufficient
to rebut the presumption. See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001) (noting
that when reviewing factual-sufficiency challenge to jury finding on issue on which appellant had
burden of proof, appellate court will determine whether adverse finding is “against the great weight
and preponderance of the evidence.”).
The jury heard Da Oca’s testimony explaining why he did not timely provide an
itemized list to Gutierrez or return the security deposit (stating that he believed that Gutierrez owed
unpaid amounts for utilities, sales taxes, and delinquent rent and that he feared Martinez would later
sue him for the forgiven debt). The documentary evidence that Da Oca attempted to offer to support
his testimony about unpaid utility amounts was not admitted into evidence. The jury also heard
Gutierrez’s conflicting testimony (including his averment that he made all of the contested utility,
tax, and rent payments)4 and the testimony of other witnesses on the same issues. The jury viewed
various exhibits, including records from the State Comptroller showing sales-tax returns and
accompanying checks indicating payment thereof by Gutierrez. The Comptroller’s records did not
support Da Oca’s testimony that he had paid over $3,500 in unpaid sales taxes for the restaurant.
4 For instance, Gutierrez testified that the utility services were not separately metered to the
leased premises (other commercial enterprises occupied different areas of the common building in
which the restaurant was located) and that each month Da Oca would inform Gutierrez of his portion
of the utility bill. Gutierrez testified that he “wholeheartedly trust[ed]” Da Oca about the amounts
due, paid them each month in cash or by check, and that he could not access his records to prove that
he had paid them because his records were still in the restaurant and inaccessible since the sudden
lockout. Gutierrez also testified that he and Da Oca had orally agreed to a rent reduction for several
of the initial months of the lease because the restaurant would take some time to generate cash flow.
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The evidence also showed that (1) Da Oca eventually provided an itemized list of the
deductions for which he claimed that Gutierrez was liable, but not until his deposition over a year
and a half after the lockout, and (2) over the three years until trial he had not refunded Gutierrez any
amount of the security deposit, despite his sworn statement when filing his eviction action in the
justice court that Gutierrez owed overdue rent and late fees in the amount of only $4,410. After
hearing all of the evidence, the jury made specific findings that Gutierrez paid all utilities, rent, and
taxes required of him under the lease and was free to weigh or disregard Da Oca’s testimony in
making its determination of whether, under the circumstances, his retention of the deposit and
failure to timely provide an itemized list of deductions were reasonable, and we cannot say that its
bad-faith finding was against the great weight and preponderance of the evidence. See Dow Chem.
Co., 46 S.W.3d at 242. We overrule Da Oca’s second issue.
In his third and fourth issues, Da Oca contends that the evidence is legally and
factually insufficient to support the jury’s finding that he constructively evicted Gutierrez.
Specifically, he posits that a lockout authorized by the Property Code does not constitute constructive
eviction, and that his lockout of Gutierrez was authorized by Gutierrez’s failure to pay August rent.
See Tex. Prop. Code § 93.002(c)(3), (f) (providing procedures by which landlord is permitted to
lockout tenant who is delinquent in rent); Ashford.Com, Inc. v. Crescent Real Estate Funding III,
L.P., No. 14-04-00605-CV, 2005 WL 2787014, at *7 (Tex. App.—Houston [14th Dist.] Oct. 27, 2005,
no pet.) (mem. op.) (holding that where lockout was lawful, tenant’s claim for violation of covenant
of quiet enjoyment failed). However, the jury found both that Da Oca’s lockout of Gutierrez was
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in violation of the Property Code and that Gutierrez paid all rent required by the parties’ agreement,5
and Da Oca does not challenge those findings. Additionally, our review of the evidence leads us to
conclude that it is legally and factually sufficient to support each of the elements of the jury’s
constructive-eviction finding.6 See Lazell v. Stone, 123 S.W.3d 6, 11–12 (Tex. App.—Houston
[1st Dist.] 2003, pet. denied) (listing elements of constructive eviction); see also City of Keller
v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005) (noting legal-sufficiency standard of review); Ortiz,
917 S.W.2d at 772 (noting factual-sufficiency standard of review). Da Oca’s intention that Gutierrez
no longer enjoy the premises can be inferred from the combination of his changing the locks, failure
to post the required notice about how Gutierrez could regain entry, and sending an eviction notice
five days after the lockout. These acts also constitute a material act by Da Oca substantially and
permanently interfering with and depriving Gutierrez of his intended use and enjoyment of the
premises. Gutierrez testified that, after sending a letter to Da Oca seeking resolution of the issue
5 While Gutierrez admitted that he was late on his August rental payment and had not paid
it as of the lockout date, he explained that he and Da Oca had reached an agreement whereby Da Oca
would simply deduct the August rent from the $7,500 refund of a liquor-license deposit that Da Oca
would soon be receiving from the Texas Alcoholic Beverage Commission (TABC). Although the
TABC deposit would be refunded directly to Da Oca (who had operated his own restaurant in the
leased premises before leasing them to Gutierrez), Gutierrez testified that at the beginning of the
lease period, he had paid Da Oca $7,500 for the liquor license because Da Oca needed the cash and
Gutierrez needed the liquor license. The parties agreed that Gutierrez would file the appropriate
documents with the Secretary of State to register the restaurant corporation in his name, but because
he never did so, the TABC deposit remained in Da Oca’s name even though, according to Gutierrez,
the $7,500 rightfully belonged to him.
6 The elements of constructive eviction are: (1) an intention on the part of the landlord that
the tenant shall no longer enjoy the premises, (2) a material act by the landlord that substantially
interferes with the tenant’s intended use and enjoyment of the premises, (3) an act that permanently
deprives the tenant of the use and enjoyment of the premises, and (4) abandonment of the premises
by the tenant within a reasonable time after the commission of the act. Lazell v. Stone, 123 S.W.3d
6, 11–12 (Tex. App.—Houston [1st Dist.] 2003, pet. denied).
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and receiving no response, Gutierrez effectively abandoned the premises and communicated to
Da Oca his option to terminate the lease. We overrule Da Oca’s third and fourth issues.
In his fifth issue, Da Oca contends that the jury’s award of $8,000 in damages to
Gutierrez proximately caused by Da Oca’s lockout of Gutierrez is excessive. See Maritime Overseas
Corp., 971 S.W.2d at 406 (“The standard of review for an excessive damages complaint is factual
sufficiency of the evidence.”); see also Tex. Prop. Code § 93.002(c), (f), (g) (providing for recovery
by tenant of actual damages, attorney’s fees, and court costs for landlord’s violation of section, which
prohibits lockout of tenant except for non-payment of rent, among other non-applicable reasons, and
requires specific posting on tenant’s door upon lockout). The jury found both that Gutierrez paid
any rent due to Da Oca under the lease and that Da Oca failed to provide the statutory written notice
upon locking out Gutierrez. Gutierrez testified that several items of his personal property remained
in the leased premises, such as various commercial kitchen appliances and restaurant furniture and
equipment, and that he had not been provided an opportunity to retrieve them as of the trial date.
He testified that the value of the unreturned property was between $6,000 and 8,000. A list of the
specific items that Gutierrez had been unable to retrieve from the leased premises and remained
in Da Oca’s possession was admitted as an exhibit. We conclude that the evidence was factually
sufficient to support the damage award, see Maritime Overseas Corp., 971 S.W.2d at 407, and we
overrule Da Oca’s fifth issue.
In his sixth issue, Da Oca contends that the trial court erred by failing to instruct the
jury on the factors that may be considered in assessing attorney’s fees. See Arthur Andersen & Co.
v. Perry Equipment Corp., 945 S.W.2d 812, 818 (Tex. 1997). However, Da Oca did not preserve
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this error because he did not make a timely objection in the trial court. See Faust v. BNSF Ry. Co.,
337 S.W.3d 325, 331 (Tex. App.—Fort Worth 2011, pet. denied) (“An objection to a jury instruction
must timely and plainly make the trial court aware of the complaint, and the complaining party must
obtain a ruling in order to preserve the error regarding the instruction for appeal.”) (citing Ford
Motor Co. v. Ledesma, 242 S.W.3d 32, 43–44 (Tex. 2007)); Academy Corp. v. Interior Buildout &
Turnkey Constr., Inc., 21 S.W.3d 732, 742–43 (Tex. App.—Houston [14th Dist.] 2000, no pet.)
(holding that not objecting to jury charge before it was read to jury for charge’s failure to instruct
jury on Andersen factors waived error with regard to that complaint). Accordingly, we overrule Da
Oca’s sixth issue.

Outcome: Having overruled all of Da Oca’s issues, we affirm the trial court’s final judgment.

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