Mirta Zorrilla v. Aypco Construction II, LLC and Jose Luis Munoz
469 S.W.3d 143 (2015)
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Rule of Law:
The statutory cap on exemplary damages under Texas Civil Practice and Remedies Code § 41.008 is not an affirmative defense or an avoidance under Texas Rule of Civil Procedure 94. Because the cap applies automatically when invoked and does not require a defendant to prove additional facts, it is not waived if it is not affirmatively pleaded in a responsive pleading and may be raised for the first time in a post-verdict motion.
Facts:
- Mirta Zorrilla hired Jose Luis Munoz and his company, Aypco Construction II, L.L.C., to perform construction work on a residence.
- The initial project scope expanded significantly to include a guest house, a game room, a lake, and other substantial additions not in the original estimate.
- Zorrilla also requested and authorized Aypco to perform repair work at a second residential property she owned on Plazas del Lago Drive.
- Zorrilla paid Aypco's invoices for all work performed through the end of April 2007, amounting to nearly $367,000.
- Aypco continued to perform work in May 2007 and submitted five weekly invoices for that month's labor and materials.
- Zorrilla refused to pay any of the May 2007 invoices, asserting that the work was unauthorized, had been previously billed, or was not actually performed.
Procedural Posture:
- Aypco Construction II, L.L.C. and its owner sued Mirta Zorrilla in a Texas trial court for breach of contract and fraud.
- A jury found that Zorrilla committed fraud and awarded Aypco $56,654.15 in economic damages and $250,000 in exemplary damages.
- The trial court entered judgment on the jury's verdict.
- In a motion for new trial, Zorrilla argued for the first time that the exemplary damages award exceeded the statutory cap under Texas Civil Practice and Remedies Code § 41.008. The motion was overruled.
- Zorrilla, as appellant, appealed to the Texas Court of Appeals, which affirmed the exemplary damages award, holding that the statutory cap was an affirmative defense that Zorrilla had waived by failing to plead it.
- The Supreme Court of Texas granted Zorrilla's petition for review to resolve a conflict among the courts of appeals on this issue.
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Issue:
Does the statutory cap on exemplary damages under Texas Civil Practice and Remedies Code § 41.008 constitute an affirmative defense or matter of avoidance that is waived if not affirmatively pleaded in a defendant's responsive pleadings?
Opinions:
Majority - Justice Guzman
No, the statutory cap on exemplary damages is not an affirmative defense or an avoidance that must be affirmatively pleaded. The court reasoned that the hallmark of an affirmative defense or avoidance under Rule 94 is that the defendant bears the burden of presenting evidence to establish the defense. The exemplary damages cap, however, does not require proof of any additional facts to establish its applicability; it applies automatically to all cases not expressly excluded by the statute. Because the cap does not require additional factual proof and its existence in the statute provides sufficient notice to all parties, it does not function like a traditional affirmative defense, which introduces new facts to defeat liability. Therefore, a party can timely invoke the cap post-verdict, such as in a motion for new trial, without having pleaded it in their initial answer.
Analysis:
This decision resolves a significant split among Texas intermediate appellate courts, establishing a uniform rule that statutory damage caps are not affirmative defenses subject to waiver by failure to plead. The holding clarifies that such caps function as self-executing limitations on remedies, distinct from defenses against liability that introduce new factual issues. This ruling simplifies litigation by removing a potential pleading trap for defendants and ensures that legislatively mandated limitations on damages are consistently applied as long as they are timely raised before the judgment becomes final.
