Opinion
01-20-00408-CV
06-30-2022
BUDGET RENT A CAR SYSTEM, LLC, Appellant v. CHIKE OZUMBA A/K/A EBENEZER OZUMBA, Appellee
On Appeal from County Civil Court at Law No. 2 Harris County, Texas Trial Court Case No. 1132011
Panel consists of Justices Landau, Hightower, and Rivas-Molloy.
MEMORANDUM OPINION
Rivas-Molloy, Justice
Appellant Budget Rent a Car System, LLC ("Budget") appeals the trial court's take nothing judgment rendered on a jury verdict on its breach of contract case against Appellee Chike Ozumba a/k/a Ebenezer Ozumba ("Ozumba") arising from Ozumba's refusal to pay Budget certain costs for repairing a rental car he rented from Budget. Budget raises three related issues on appeal. In its first two issues, Budget argues there is legally and factually insufficient evidence to support the jury's finding that (1) the car rental agreement between Budget and Ozumba was unconscionable, and (2) "Budget failed to comply with a material obligation of the rental agreement." In its third issue, Budget argues the trial court abused its discretion by instructing the jury in Jury Question 3 that if Ozumba failed to comply with the car rental agreement, the jury could find the failure was excused if either (1) Budget previously failed to comply with a material obligation of the rental agreement, or (2) the rental agreement was unconscionable. Budget argues (i) neither defense is supported by sufficient evidence, (ii) unconscionability is a question of law for the court, not the jury, and (iii) the unconscionability instruction failed to state the law accurately.
In a single cross-point, Ozumba argues we must affirm the take nothing judgment against Budget because the trial court erred in failing to grant his motion for directed verdict on his unconscionability defense.
We reverse the trial court's judgment and remand for a new trial.
Background
Ozumba rented a black 2015 Toyota Camry from Budget ("Camry") during a trip to California. At the time of rental, Ozumba declined to purchase "Loss Damage Waiver" coverage for the Camry. Two days later, as Ozumba was leaving a flower shop and making a right turn with the Camry, the car's right front wheel dislodged. Ozumba alerted Budget. That same day, Budget towed the Camry back to its facility and provided Ozumba with a substitute rental car. Budget later demanded that Ozumba pay for the costs of repairing the Camry. Ozumba refused and Budget filed suit.
Budget sued Ozumba for breach of the car rental agreement ("Rental Agreement") seeking to recover damages, plus court costs, attorney's fees, and prejudgment and post-judgment interest. Ozumba filed an answer in which he asserted a general denial and several affirmative defenses. The answer states in pertinent part:
Pleading further, Defendant is not liable to Plaintiff because prior to Defendant's alleged breach, Plaintiff materially breached the contract in question by failing to provide Defendant with a safe, working, and reliable vehicle.
Pleading further, Defendant is not liable to Plaintiff because Plaintiff, a merchant of rental cars, breached their implied warranty of merchantability prior to Defendant's alleged breach. Plaintiff failed to provide Defendant with a vehicle fit for the ordinary purposes of a rental car. Specifically, the vehicle's wheel was not properly installed.
Pleading further, Defendant is not liable to Plaintiff because Plaintiff, a merchant of rental cars, breached their implied warranty of fitness for a particular purpose prior to Defendant's alleged breach. Specifically, Plaintiff failed to provide Defendant with a vehicle fit to be driven for the duration of the lease.
Pleading further, Defendant is not liable to Plaintiff because Plaintiff did not substantially perform a material obligation required under the
contract. Specifically, Plaintiff did not provide Defendant with a substantially safe, reliable, working vehicle.
Ozumba also asserted he was not liable to Budget because the provision in the Rental Agreement providing that a renter who declines "Loss Damage Waiver" coverage is responsible for all loss or damage to the rental car no matter who or what caused the loss or damage, even if the cause is unknown, "is void as a matter of public policy" and "unconscionable."
A. Trial Testimony
Ozumba and Budget employee Kimberly Green ("Green") testified during the one-day jury trial. Ozumba, a network engineer, testified that he and his girlfriend flew to Los Angeles, California on April 23, 2015, because his girlfriend was competing in a fitness competition that weekend. He rented the Camry from Budget using an online application and he picked up the car from the airport's Budget office around midnight on April 23, 2015. The couple then drove to their hotel located 15 to 20 miles away from the airport.
Ozumba drove the Camry car the next day, on April 24, 2015, without incident. The next morning, on April 25, 2015, Ozumba drove his girlfriend to the fitness competition about 15 miles from their hotel and then drove to a nearby floral shop to buy her flowers. As Ozumba was making a right turn out of the floral shop's parking lot, Ozumba heard a cracking or crackling noise right before the Camry's right front wheel dislodged mid-turn. When Ozumba exited the car to inspect the damage, he noticed the right front wheel of the car was in an awkward position and appeared to be leaning on the axle. The Camry was undrivable.
Ozumba called Budget to report the problem. Budget had the Camry towed back to its facility and provided Ozumba with a replacement rental car which Ozumba returned to Budget on April 26, 2015. Although Ozumba doubted he had driven the Camry that much, Budget's records reflect that, based on the odometer, Ozumba had driven the Camry 100 miles before the wheel became dislodged. The odometer for the replacement rental car indicated Ozumba drove the replacement car 195 miles before he returned it to Budget the next day.
Ozumba testified he did not hit or run over anything while driving the Camry. He denied driving over any speed bumps or potholes or doing anything to cause the wheel on the Camry to dislodge. He also denied that the Camry was damaged in an "accident," and stated, "It was just literally I got a car that was possibly defective and it happened."
Ozumba, a member of Budget's "Fastbreak" car rental program, testified he had been to the Los Angeles airport several times and was familiar with the process of going to the airport's car rental location and picking up a rental car. When asked if there was anything unusual about his rental of the Camry on April 23, 2015, Ozumba answered, "Not to my knowledge." He testified that he did not choose his rental car, no one offered him an opportunity to inspect the mechanics of the rental car or show him anything under the car's hood, and even if they had, it was too dark for him to get a good look at the car. Ozumba also testified he expected the car to be in good working order at the time of rental and to remain functional for the three days he planned to drive it.
Budget's counsel questioned Ozumba about his understanding of the Rental Agreement's terms, which Ozumba acknowledged applied to him. Under the Rental Agreement, Ozumba agreed to return the Camry to Budget in the same condition he received it and to pay for any damage sustained to the car regardless of cause. Ozumba confirmed he declined to purchase coverage for the car known as "Loss Damages Waiver."
Paragraph 11 of the Rental Agreement, entitled "Loss Damage Waiver" ("LDW"), provides:
You understand that you may choose to accept or decline the LDW option by so indicating on your Enrollment Profile. You understand that LDW is not insurance and is not mandatory. You agree that your choice will apply to each rental you make using Fastbreak Service, unless and until you change your choice for all future rentals by sending us a new Enrollment Profile indicating the changed choice in writing. On any rental for which you have chosen to accept LDW, you'll pay the LDW fee in effect at the time of rental for each full or partial day that the car is rented to you. In that case if the car is used and operated in accordance with this agreement, we assume responsibility for the loss of or damage to the car except, if permitted by law, for lost, damaged or stolen keys or remote entry devices and except for your amount of "responsibility", if any specified on the rental document at the time of rental. You understand that we have the right to change the LDW fee from time to time and that you can be informed of the LDW fee that will apply at the time of your rental by requesting this information from
the reservation agent, or checking the Budget Web site at the time you reserve.
Notices About Loss Damage Waiver (LDW)
The following section meets certain state requirements for disclosure . . . .
California and Nevada: You are responsible for loss or damage to the rented vehicle even if someone else caused it or the cause is unknown. You are responsible for the cost of repair up to the value of the vehicle, loss of use where allowed by law, and towing, storage and impound fees. Your own insurance may cover all or part of your financial responsibility for the rented vehicle. Check with your insurance company to find out about your coverage. Budget will not hold you responsible if you buy LDW, but LDW will not protect you for loss or damage under certain prohibited events. Read the list of prohibited events in paragraph 9 of these Terms and Conditions, including exclusions from LDW. The daily cost of optional LDW in California is either $9 or $15 or a fair market rate based expressly upon the MSRP of the vehicle as set forth by California law and $15 in Nevada, per day. In California and Nevada, the purchase of LDW is not mandatory.(Emphasis added). Paragraph 12 of the Rental Agreement, entitled "Damage to/Loss of the Car," further provides:
If you do not accept LDW, or if the car is lost or damaged as a direct or indirect result of a violation of paragraph 9, you are responsible and will pay us for all loss of or damage to the car regardless of cause, or
who, or what caused it. If the car is damaged, you will pay our estimated repair cost . . . .(Emphasis added).
Paragraph 9, not applicable here, is entitled "Repossessing the Car" and identifies the circumstances under which Budget may repossess a rental car.
Paragraph 12 also sets forth the customer's obligations in the event Budget decides to sell the damaged car. In this case, Budget opted to repair and retain the car.
When asked about the LDW, Ozumba testified that a renter who opts to purchase LDW is not responsible for any damage to a rental car. Ozumba acknowledged he declined LDW coverage for the Camry. He also confirmed he understood, before renting the Camry, that he would be responsible for any damage to the car, even if someone else caused the damage or the cause of the damage was unknown, unless he purchased LDW from Budget for an extra charge. Ozumba testified, however, that he believed he would be responsible only for damage to the Camry resulting from a collision and he did not understand he would be liable for any pre-existing damage to the car. Although Ozumba acknowledged that the Rental Agreement's terms were available online, he testified he did not read the Rental Agreement before signing it. He also testified that no one went through the contract with him "verbatim" or told him that under the contract, he would be liable for damage to the car even if he did not cause the damage.
The Rental Agreement states the "daily cost of optional LDW in California is either $9 or $15 of a fair market rate based expressly upon the MSRP of the vehicle as set forth by California law. . . ."
Kimberly Green ("Green"), Budget's representative and a maintenance and damage manager, testified the Camry was brand new. She testified the car had only two miles on it when Budget took possession of the car on February 11, 2015, a little over two months before Ozumba rented the car. Budget inspected the Camry on February 11, 2015, and immediately placed it into service.
Ozumba rented the Camry on April 23, 2015. Green testified that according to Budget's maintenance records, the Camry had been towed to Budget's maintenance facility on April 5, 2015 for inspection of the car's undercarriage and to check and adjust the tire pressure. Budget placed the Camry back into service on April 22, 2015. Green testified that Budget does not put a car back into service unless it is functioning properly following inspection.
Green clarified that the notation on Budget's records stating, "Towed in. Technician noted exhaust hangs low," indicated that before renting the Camry to Ozumba, a prior renter had the Camry towed in on April 5, 2015. Green explained that the Camry's exhaust is located at the rear of the car and that the exhaust system is not "connected" to the wheel that dislodged when Ozumba drove the car. She testified that a "low hanging exhaust" is not a "mechanical" issue. Green also testified that something happened to the Camry when it was rented out to the previous renter requiring it to be towed in for inspection, but she did not know what that was or the extent of repairs to the car, if any. The records do not include this information.
On cross-examination, Green testified that a "customer has the right to walk around the car and inspect it" before taking possession. She also agreed with Budget's counsel that customers have this right of inspection because Budget "wouldn't hold someone responsible-a new customer responsible for damage that's already there." Green also testified that while customers may not put the car on a lift, they are still able to inspect the undercarriage because they could "get on the ground and look at it." Green acknowledged that "Budget was responsible for maintaining the vehicle when it's not actively being rented out."
Ozumba's counsel was able to ask Green limited questions about the terms of the Rental Agreement. Green testified that that Rental Agreement defines "car" as "the vehicle rented to you or its replacement and includes tires, tools, equipment, accessories, plates and car documents." She testified it was fair to assume that the term "tires" means the car would have "four working wheels." Green testified that Budget had no evidence Ozumba had done anything to cause the wheel to dislodge from the Camry. When asked, "[I]s it fair to say, at least to your knowledge, you didn't rent the car with known damage to it," Green answered, "Correct."
B. Motion for Directed Verdict and Jury Charge
At the close of the evidence, Ozumba moved for a directed verdict arguing that the "loss damage waiver and/or the damage provisions" in the Rental Agreement were unconscionable as applied. He argued:
We would ask for a judicial finding that the terms of the contract as applied to this case are legally unconscionable as to the application of this loss damage waiver and/or the damage provisions in the contract in this case due to the situation that the evidence shows Mr. Ozumba did nothing to cause, contribute, or in any way make this incident occur.
The trial court responded, "The Court declines to take that action at this time." The trial court then held the charge conference.
The proposed jury charge asked the jury to determine whether (1) Ozumba "enter[ed] into an agreement with Budget Rent A Car System, LLC in which he agreed to pay for vehicle damage upon demand" (Jury Question 1), (2) Ozumba "fail[ed] to comply with the agreement" (Jury Question 2), (3) "Ozumba's failure to comply [was] excused" (Jury Question 3), and (4) Budget "breach[ed] an implied warranty of fitness for a particular purpose, and, if so, [whether] such breach [was] a proximate cause of the occurrence in question" (Jury Question 4). As to damages, the jury charge asked the jury to determine "[w]hat sum of money, if paid now in cash, would fairly and reasonably compensate Budget Rent A Car, LLC for the property damages resulting from the occurrence in question" (Jury Question 5).
As concerns the present appeal, Jury Question 3 states in its entirety:
Was Chike Ozumba a/k/a Ebenezer Ozumba's failure to comply [with the Rental Agreement] excused?
Failure to comply by Chike Ozumba a/k/a Ebenezer Ozumba is excused if Budget Rent A Car System, LLC previously failed to comply with a material obligation of the same agreement.
Failure to comply by Chike Ozumba a/k/a Ebenezer Ozumba is excused if the terms of the agreement are unconscionable. An unconscionable action or course of action is an act or practice that, to a consumer's detriment, takes advantage of the lack of knowledge, ability, experience, or capacity of the consumer to a grossly unfair degree.
During the charge conference, Budget's counsel objected to the submission of Jury Question 3 arguing (1) there was no evidence Budget failed to comply with a material obligation of the Rental Agreement, (2) the question of whether the terms of the Rental Agreement are unconscionable is a question of law for the court, not the jury, and (3) the question impermissibly combined the question of Budget's breach with the question of unconscionability. Budget's counsel argued:
If you're going to-if you're going to ask if [Ozumba's failure to comply with the Rental Agreement is] excused, it can be excused from one or the other. I think we will get a muddled jury verdict. If they say yes, we won't know if they're saying yes to a material obligation breach, or yes to unconscionability.
The trial court ruled, "I'm not going to rule on the issue of whether or not I think the contract is unconscionable and against public policy at this time, but I'm going to deny the objections." When Ozumba's counsel asked the trial court to clarify its ruling, the trial court stated:
It means that I'm not finding-right now, I'm not saying that the contract is unconscionable as a matter of law and against public policy. I'm saying that decision may come later, but as of right now, I have not made that decision. Instead, I'm going to submit it to the jury and we'll see what the jury says. But then at the end, once we get the jury verdict, then we do have an entry docket where we enter a final judgment. And so I'm just saying, at that time it may be different. And I will probably ask you both to brief that issue at that time. But for right now, I'm going to overrule the objection and let it go to a jury. And I'm going to hold my reservation on the ruling on whether or not I find it unconscionable as a matter of law and against public policy.
The unmodified jury charge was submitted to the jury. The jury found Ozumba entered into the Rental Agreement with Budget (Jury Question 1), Ozumba failed to comply with the Rental Agreement (Jury Question 2), and Ozumba's failure to comply was excused (Jury Question 3). The trial court entered judgment in accordance with the jury's verdict. Budget moved for a new trial, which the trial court denied. This appeal followed.
Because the jury found that Ozumba's breach was excused in response to Jury Question 3, it did not reach Jury Questions 4 and 5.
There is no indication in the record that the trial court requested further briefing on Ozumba's unconscionability defense or entered any other findings regarding the defense after the jury returned its verdict.
Sufficiency of the Evidence and Charge Error
In three related issues, Budget argues the trial court abused its discretion by instructing the jury in Jury Question 3 that Ozumba's failure to comply with the Rental Agreement was excused if either (1) Budget previously failed to comply with a material obligation of the Rental Agreement, or (2) the Rental Agreement was unconscionable. Budget argues (i) neither defense is supported by legally or factually sufficient evidence, (ii) unconscionability is a question of law for the court, not the jury, and (iii) the unconscionability instruction failed to state the law accurately.
A. Sufficiency of the Evidence
In a legal sufficiency, or no-evidence review, we determine whether the evidence would enable reasonable and fair-minded people to reach the verdict under review. See City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). In conducting this review, we credit favorable evidence if a reasonable factfinder could, and we disregard contrary evidence unless a reasonable factfinder could not. Id. We consider the evidence in the light most favorable to the finding and indulge every reasonable inference that would support it. Id. at 822. "If there is any evidence of probative force to support the finding, i.e., more than a mere scintilla, we will overrule the issue." City of Hous. v. Hildebrandt, 265 S.W.3d 22, 27 (Tex. App.- Houston [1st Dist.] 2008, pet. denied) (citing Haggar Clothing Co. v. Hernandez, 164 S.W.3d 386, 388 (Tex. 2005)). When a party attacks the legal sufficiency of an adverse finding on which it did not have the burden of proof, it must demonstrate that there is no evidence to support the adverse finding. Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex. 1983). The jury, as the fact finder, is the sole judge of the witnesses' credibility and the weight to give their testimony. Gunn v. McCoy, 554 S.W.3d 645, 665 (Tex. 2018) (citing City of Keller, 168 S.W.3d at 819). "It is the province of the jury to resolve conflicts in the evidence, and when reasonable jurors could resolve conflicting evidence either way, we presume they did so in accordance with the verdict." Gunn, 554 S.W.3d at 665 (citing City of Keller, 168 S.W.3d at 820).
B. Charge Error
A trial court must give "such instructions and definitions as shall be proper to enable the jury to render a verdict." Columbia Rio Grande Healthcare, L.P. v. Hawley, 284 S.W.3d 851, 855 (Tex. 2009) (quoting Tex.R.Civ.P. 277). An instruction is proper if it (1) assists the jury, (2) accurately states the law, and (3) finds support in the pleadings and evidence. Id. A trial court has the discretion to determine necessary and proper jury instructions, and we review such instructions for abuse of discretion. Id. at 856. A trial court abuses its discretion by failing to follow guiding rules and principles. Id.
An appellate court may reverse a trial court's judgment based on charge error only if the error probably caused the rendition of an improper verdict or probably prevented the appellant from properly presenting the case to the court of appeals. Thota v. Young, 366 S.W.3d 678, 687 (Tex. 2012); see Tex. R. App. P. 44.1(a) (stating "[n]o judgment may be reversed on appeal on the ground that the trial court made an error of law unless the court of appeals concludes that the error complained of: (1) probably caused the rendition of an improper judgment; or (2) probably prevented the appellant from properly presenting the case to the court of appeals"). Charge error is generally considered harmful if it relates to a contested, critical issue. Hawley, 284 S.W.3d at 856.
C. Jury Question 3: Prior Material Breach
The interrogatory portion of Jury Question 3 asked the jury to determine whether Ozumba's failure to comply with the Rental Agreement was excused. The jury was instructed that it could find excuse based either on Budget's prior failure "to comply with a material obligation" of the Rental Agreement or "if the terms of the [Rental A]greement [were] unconscionable."
Budget argues there is legally insufficient evidence to support the instruction on Budget's alleged prior failure to "comply with a material obligation of the Rental Agreement" because (1) Ozumba presented no evidence the Camry was defective or damaged before the rental, and (2) "Ozumba did not point to any specific provision of the rental agreement that Budget allegedly breached in either his pleadings or at trial." Budget further contends that expert testimony was necessary to prove the Camry was defective and Ozumba provided "nothing aside from his own non-expert testimony to support his allegation that the rental vehicle was defective." Finally, Budget argues the trial court abused its discretion by submitting the material obligation instruction under Jury Question 3 because the defense is not supported by the pleadings or evidence.
Budget waived its factual sufficiency challenge because it did not raise it in its motion for new trial. See Tex. R. Civ. P. 324(b)(2) ("A point in a motion for new trial is a prerequisite to. . . [a] complaint of factual insufficiency of the evidence to support a jury finding."); Control Works, Inc. v. Seeman, No. 01-17-00212-CV, 2018 WL 3150339, at *2 (Tex. App.-Houston [1st Dist.] June 28, 2018, no pet.) (mem. op.).
1. Budget's Obligations under the Rental Agreement
"It is a fundamental principle of contract law that when one party to a contract commits a material breach of that contract, the other party is discharged or excused from further performance." Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 196 (Tex. 2004). Ozumba argues Budget failed to comply with its obligation to provide Ozumba with "a roadworthy rental car with four working wheels," thus excusing Ozumba's subsequent breach of the Rental Agreement.
In construing a written contract, our primary concern is to ascertain the true intention of the parties as expressed in the contract. Plains Exploration & Prod. Co. v. Torch Energy Advisors Inc., 473 S.W.3d 296, 305 (Tex. 2015); see also Universal Health Servs., Inc. v. Renaissance Women's Group, P.A., 121 S.W.3d 742, 747 (Tex. 2003) ("Generally, a court looks only to the written agreement to determine the obligations of contracting parties."). "We construe contracts from a utilitarian standpoint bearing in mind the particular business activity sought to be served, and we avoid unreasonable, inequitable, and oppressive constructions when possible and proper." Plains Exploration & Prod. Co., 473 S.W.3d at 305 (internal citations omitted); Frost Nat'l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 312 (Tex. 2005). To imply a term into an agreement, it must appear that doing so is necessary to carry out the purposes of the contract as a whole as gathered from the written instrument. See Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 850- 51 (Tex. 2009); Shawn Ibrahim, Inc. v. Houston-Galveston Area Local Dev. Corp., 582 S.W.3d 753, 771 (Tex. App.-Houston [1st Dist.] 2019, no pet.). "[I]mplied covenants are not favored by law and will not be read into contracts except as legally necessary to effectuate the plain, clear, unmistakable intent of the parties." In re Bass, 113 S.W.3d 735, 743 (Tex. 2003) (orig. proceeding); see also Shawn Ibrahim, Inc., 582 S.W.3d at 771.
Ozumba argues Budget breached its obligation under the Rental Agreement to provide him with a car, because the agreement defines "car" as "the vehicle rented to [the customer] or its replacement," including "tires, tools, equipment, accessories, plates and car documents." He argues the definition of "car" implies that the Camry's wheels or tires would be in good working condition at the time of rental.
Under the express terms of the Rental Agreement, Budget agreed to rent Ozumba a "car" for a fee with the understanding Ozumba would be driving the car ("you . . . may drive the car") for the duration of the rental period. The commercial activity served by the Rental Agreement was thus the rental of a car to a driver for a fee. It would be unreasonable to interpret the Rental Agreement as not requiring Budget to, at a minimum, provide its customers, including Ozumba, with a safe, working, and reliable rental car for the entire rental period. See Plains Exploration & Prod. Co., 473 S.W.3d at 305 (stating courts construe contracts from utilitarian standpoint bearing in mind "particular business activity sought to be served" and "avoiding unreasonable, inequitable, and oppressive constructions when possible and proper"). Thus, although the Rental Agreement does not expressly require Budget to provide a safe, working, and reliable rental car, such a promise is necessarily implied. See In re Bass, 113 S.W.3d at 743 (stating implied covenant will not be read into contract "except as legally necessary to effectuate the plain, clear, unmistakable intent of the parties").
The remaining question is whether there is legally sufficient evidence to support the jury's finding that Budget failed to comply with the Rental Agreement because the Camry was not a safe, working, and reliable car at the time of rental. As we discuss below, we find the evidence legally sufficient to support the jury's finding.
2. Sufficiency of the Evidence on Breach
Budget argues there is legally insufficient evidence to support the jury's finding that Budget failed to comply with a material obligation of the Rental Agreement because Ozumba did not (1) present any evidence the Camry was defective or damaged prior to rental, (2) "specify what about the vehicle was allegedly defective," (3) or "explain why the car was functional for the first day and a half it was in his possession but then suddenly became inoperable as the result of a defect or some alleged fault of Budget."
The record reflects Budget bought the Camry a little over two months before Ozumba rented the car on April 23, 2015. On April 5, 2021, the Camry, which was then being rented by another customer, was towed into Budget's maintenance facility for inspection of the car's undercarriage and to check and adjust the tire pressure. Budget's records do not indicate why the Camry had to be towed in for inspection on April 5, 2015. While the extent of any repairs to the car is also unknown, the record reflects that Budget did not place the Camry back into service until April 22, 2015-about two and a half weeks after it was towed in and one day before Ozumba rented the car.
Ozumba testified he heard a cracking or crackling noise right before the Camry's right front wheel dislodged as he was driving out of a floral shop's parking lot, rendering the car inoperable. He testified he did not hit or run over anything while driving the Camry and he specifically denied driving over any speed bumps or potholes or doing anything to cause the wheel to dislodge. Green, Budget's representative, also acknowledged Budget had no evidence that Ozumba had done anything to cause the car's wheel to dislodge. There is thus more than a scintilla of circumstantial evidence from which the jury could have reasonably inferred that the Camry was not a safe, working, and reliable car when Budget rented it to Ozumba on April 23, 2015. See City of Hous., 265 S.W.3d at 27 (stating scintilla of evidence "is any evidence of probative force to support the finding").
Relying on Driskill v. Ford Motor Company, 269 S.W.3d 199 (Tex. App.- Texarkana 2008, no pet.) and Ford Motor Company v. Ledesma, 242 S.W.3d 32 (Tex. 2007), Budget argues the evidence is legally insufficient to support the jury's finding of a prior material breach because expert testimony was necessary to prove the Camry was "defective" and Ozumba provided "nothing aside from his own non-expert testimony to support his allegation that the rental vehicle was defective." Budget's reliance on Driskill and Ledesma is misplaced. The opinions address the requirements for expert testimony in a products liability case. See Ledesma, 242 S.W.3d at 42-43; Driskill, 269 S.W.3d at 204-05. Moreover, neither opinion holds expert testimony is always required to prove the existence of a defect, as Budget suggests. See Ledesma, 242 S.W.3d at 42 (stating expert testimony "is generally encouraged if not required to establish a products liability claim"); Driskill, 269 S.W.3d at 204 (stating "expert testimony may not be required" in all products liability cases); see also generally Emerson Elec. Co. v. Johnson, 627 S.W.3d 197, 207 (Tex. 2021) (holding expert testimony was not required to prove alleged design defect caused injury under specific facts of case); Walker v. Thomasson Lumber Co., 203 S.W.3d 470, 474 (Tex. App.-Houston [14th Dist.] 2006, no pet.) (stating neither expert testimony nor direct evidence is required to establish existence of manufacturing defect); Goodyear Tire & Rubber Co. v. Rios, 143 S.W.3d 107, 111 (Tex. App.-San Antonio 2004, pet. denied) (same).
A "[p]roducts liability action" is defined as "any action against a manufacturer or seller for recovery of damages arising out of personal injury, death, or property damage allegedly caused by a defective product whether the action is based in strict tort liability, strict products liability, negligence, misrepresentation, breach of express or implied warranty, or any other theory or combination of theories." Tex. Civ. Prac. & Rem. Code § 82.001(2).
Expert testimony is required only when the issue before the factfinder involves matters beyond "the general experience and common understanding of laypersons." Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 583 (Tex. 2006); see also Gharda USA, Inc. v. Control Sols., Inc., 464 S.W.3d 338, 348 (Tex. 2015) (stating expert testimony was required in manufacturing defect case because plaintiff's complex causation theory "'involves matters beyond jurors' common understanding'") (quoting Mack Trucks, Inc., 206 S.W.3d at 583). Whether a particular issue requires the presentation of expert testimony is a question of law. Mack Trucks, Inc., 206 S.W.3d at 583. Thus, the question before us is whether Ozumba's defense based on Budget's alleged prior material breach involves issues beyond the general experience and common understanding of laypersons.
Ozumba's theory is that Budget breached the Rental Agreement because when he rented the Camry, the car was not "a substantially safe, reliable, working vehicle" as evidenced by the Camry's maintenance history and the fact the Camry's wheel dislodged one day later under regular driving conditions. Notably, the jury was not asked to find whether the Camry was "defective." Rather, the issue presented to the jury was characterized as whether the Camry was "working" properly. Budget's counsel argued in closing that "the car was in good working condition when he got it." "We gave him a car that was working." "Whether or not something happened to that car, what happened to it, we don't know. But it was working when he took it, it was working when we inspected it and put it back into the fleet." Similarly, Ozumba's counsel argued in closing that Budget violated the Rental Agreement because it did not provide him with a car with "four working wheels." "But the point is, they didn't provide him with-with a working car. That's a material breach."
The term defective is a term of art with different, specialized meanings depending on the cause of action asserted. For example, a product is defective for purposes of establishing a manufacturing defect when the "'product deviates, in its construction or quality, from the specifications or planned output in a manner that renders it unreasonably dangerous." Cooper Tire & Rubber Co. v. Mendez, 204 S.W.3d 797, 800 (Tex. 2006) (quoting Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004)). For breach of implied warranty of merchantability, a product is considered defective if it is "unfit for the ordinary purposes for which [it is] used because of a lack of something necessary for adequacy." Hyundai Motor Co. v. Rodriguez ex rel. Rodriguez, 995 S.W.2d 661, 665 (Tex. 1999) (quoting Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 444 (Tex. 1989)). Jury Question 4 asked the jury to determine whether Budget "breach[ed] and implied warranty of fitness for a particular purpose, and, if so, [whether] such a breach [was] a proximate cause of the occurrence in question." The jury never reached Jury Question 4, however, because they answered Jury Question 3 in the affirmative.
The only suggestion that the Camry was "defective" is when Ozumba testified that the Camry "was possibly defective."
There is nothing particularly complicated about Ozumba's theory that the Camry was not "working" properly when Budget rented the car to him because the wheel dislodged one day later, nor does the theory involve the type of highly technical and specialized areas of inquiry that often require expert testimony. See generally Gharda USA, Inc., 464 S.W.3d at 348 (requiring expert testimony to prove plaintiffs' "complex" causation theory that defendants "manufactured and sold drums of chlorpyrifos that were contaminated with EDC, EDC contamination caused an exothermic reaction that released flammable gases into the hot box, spontaneous combustion or static electricity ignited the vapors and caused an explosion, and the ensuing fire spread throughout the warehouse"). Whether the Camry was "working" properly when the wheel dislodged from the car is a simple concept well within "the general experience and common understanding of laypersons." Mack Trucks, Inc., 206 S.W.3d at 583. Thus, under the facts of this case, Ozumba was not required to present expert testimony to establish Budget breached the Rental Agreement by failing to provide Ozumba with a "safe, working, and reliable" rental car.
Contrary to Budget's assertion, Ozumba's failure to "specify what about the vehicle was allegedly defective" does not necessarily render the evidence legally insufficient. Cf. Walker, 203 S.W.3d at 474 ("If a plaintiff has no evidence of a specific defect in the manufacture of a product, he may offer evidence of its malfunction as circumstantial proof of the product's defect."). Nor does Ozumba's alleged failure to "explain why the car was functional for the first day and a half it was in his possession but then suddenly became inoperable as the result of a defect or some alleged fault of Budget," render the evidence supporting the finding of material breach legally insufficient. The jury could reasonably have concluded that the wheel was not working properly when Ozumba took possession of the Camry, but the wheel's condition was not so severe as to immediately render the car inoperable. See City of Keller, 168 S.W.3d at 822 (stating courts consider evidence in light most favorable to finding and indulge every reasonable inference that would support it). Similarly, although the Camry was inspected by a Budget mechanic and placed into service a day before Ozumba rented the car, and Budget's representative testified that Budget would not put a car back into service if it were not functioning properly following inspection, such evidence does not dictate a different result. As the factfinder, it was within the province of the jury to weigh the evidence, judge the credibility of the witnesses' testimony, and resolve any conflicts in the evidence. See id. at 819 (stating jury is sole judge of witnesses' credibility and weight to give their testimony).
Considering the evidence in the light most favorable to the finding, and indulging every reasonable inference supporting the jury's finding, we conclude there is legally sufficient evidence supporting a finding that Budget breached a material obligation of the Rental Agreement by failing to provide Ozumba with a safe, working, and reliable rental car. See id. at 822; Croucher, 660 S.W.2d at 58; see also Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 444-45 (Tex. 1989) ("Evidence of proper use of the goods together with a malfunction may be sufficient evidence of a defect.").
3. Supported by the Pleadings and Evidence
Budget argues the trial court abused its discretion by submitting a prior material breach instruction to the jury because the instruction is not supported by the pleadings or evidence. This argument is unavailing.
As noted, there is legally sufficient evidence supporting a finding of Budget's prior material breach. As for Budget's argument regarding Ozumba's pleadings, Ozumba asserted in his answer that Budget breached certain obligations and implied warranties under the Rental Agreement and thus his subsequent breach of the Rental Agreement was excused. Among other things, Ozumba asserted that Budget failed to provide him with "a safe, working, and reliable vehicle," "a vehicle fit for the ordinary purposes of a rental car," and "a substantially safe, reliable, working vehicle." Thus, the prior material breach instruction in Jury Question 3 is supported by the pleadings. Because the prior material breach instruction is supported by both the pleadings and the evidence, the trial court did not abuse its discretion by submitting the instruction to the jury. See Hawley, 284 S.W.3d at 855.
Budget does not argue that the prior material breach instruction is improper because it does not assist the jury or inaccurately states the law. See Columbia Rio Grande Healthcare, L.P. v. Hawley, 284 S.W.3d 851, 855 (Tex. 2009) (stating proper jury instruction (1) assists jury, (2) accurately states law, and (3) finds support in pleadings and evidence).
We overrule Budget's challenge to the submission of the prior material breach instruction under Jury Question 3.
D. Jury Question 3: Unconscionability
Budget argues there is legally insufficient evidence to support a finding that the Rental Agreement was unconscionable. Budget also argues the trial court erred by submitting an instruction on unconscionability under Jury Question 3, because (1) there is legally insufficient evidence to support a finding of unconscionability, (2) unconscionability is a question of law for the court, not the jury, and (3) the instruction did not accurately state the law.
Budget waived its factual sufficiency challenge because it did not raise it in its motion for new trial. See Tex. R. Civ. P. 324 (b)(2) ("A point in a motion for new trial is a prerequisite to. . . [a] complaint of factual insufficiency of the evidence to support a jury finding."); Control Works, Inc. v. Seeman, No. 01-17-00212-CV, 2018 WL 3150339, at *2 (Tex. App.-Houston [1st Dist.] June 28, 2018, no pet.) (mem. op.).
Unconscionable contracts are not enforceable under Texas law. In re Poly-Am., L.P., 262 S.W.3d 337, 348 (Tex. 2008). The bar for establishing unconscionability is very high because the defense allows an otherwise valid contract to be invalidated. Ridge Natural Res., LLC v. Double Eagle Royalty, LP, 564 S.W.3d 105, 131 (Tex. App.-El Paso 2018, no pet.); see also Venture Cotton Co-op. v. Freeman, 435 S.W.3d 222, 228 (Tex. 2014) ("Unconscionable bargains are therefore an exception to the freedom that generally pervades contract law."); Churchill Forge, Inc. v. Brown, 61 S.W.3d 368, 371 (Tex. 2001) (noting Texas has "strong commitment to the principle of contractual freedom").
The Rental Agreement includes a choice of law provision that states that the terms of the agreement are governed by the law of the State of New Jersey. The parties did not raise that issue and they briefed Ozumba's unconscionability defense under Texas law. We thus address the parties' arguments on unconscionability under Texas law.
"Unconscionability is to be determined in light of a variety of factors, which aim to prevent oppression and unfair surprise; in general, a contract will be found unconscionable if it is grossly one-sided." In re Poly-Am., L.P., 262 S.W.3d at 348. For contracts governed by the UCC, such as the Rental Agreement, "an unconscionability defense is a question of law that involves a highly fact-specific inquiry into the circumstances of the bargain, such as the commercial atmosphere in which the agreement was made, the alternatives available to the parties at the time and their ability to bargain, any illegality or public-policy concerns, and the agreement's oppressive or shocking nature." Venture Cotton Co-op., 435 S.W.3d at 228; see generally Selectouch Corp. v. Perfect Starch, Inc., 111 S.W.3d 830, 834 (Tex. App.-Dallas 2003, no pet.) (holding that despite parties' treatment of case as "a common law breach of contract and breach of warranty case," contract at issue was for sale of goods and therefore governed by UCC). The party asserting unconscionability has the burden of proving unconscionability. Ski River Dev., Inc. v. McCalla, 167 S.W.3d 121, 136 (Tex. App.-Waco 2005, pet. denied).
Texas recognizes both procedural and substantive unconscionability as a defense against contract enforcement. Delfingen US-Tex., L.P. v. Valenzuela, 407 S.W.3d 791, 797 (Tex. App.-El Paso 2013, no pet.). Procedural unconscionability deals with the circumstances surrounding a contract's adoption while substantive unconscionability refers to the inherent unfairness of a particular contract or provision. Id. When evaluating the fairness of a contract's substantive terms, courts must also consider whether there were "procedural abuses," such as an unfair bargaining position between the parties at the time the agreement was made. See Ski River Dev., Inc., 167 S.W.3d at 136 (citing Tri-Cont'l Leasing Corp. v. Law Office of Richard W. Burns, 710 S.W.2d 604, 609 (Tex. App.-Houston [1st Dist.] 1985, writ ref'd n.r.e.)). The grounds for substantive unconscionability must be "sufficiently shocking or gross to compel the court to intercede, . . . and the same is true for procedural abuse-the circumstances surrounding the negotiations must be shocking." Ski River Dev., Inc., 167 S.W.3d at 136; see also LeBlanc v. Lange, 365 S.W.3d 70, 88 (Tex. App.-Houston [1st Dist.] 2011, no pet.) (quoting Ski River Dev., Inc., 167 S.W.3d at 136).
We begin by addressing Budget's argument that the trial court erred by submitting the unconscionability instruction to the jury because whether a contract is unconscionable is a question of law. Whether a contract is unconscionable at the time it is formed is a question of law which is reviewed de novo. Hoover Slovacek LLP v. Walton, 206 S.W.3d 557, 562 (Tex. 2006); Ski River Dev., Inc., 167 S.W.3d at 136. The determination of the facts relevant to the question of unconscionability, however, presents a question of fact for the factfinder. See Delfingen US-Tex., L.P., 407 S.W.3d at 798; Besteman v. Pitcock, 272 S.W.3d 777, 788 (Tex. App.- Texarkana 2008, no pet.).
Ozumba argues the trial court did not abuse its discretion by including an instruction on unconscionability in Jury Question 3 because his defense of excuse turned on the determination of facts, specifically, "whether Budget provided a rental car with pre-existing damages or defects, and whether under such circumstances existing at the time of rental, the Rental Agreement took advantage of Ozumba's lack of knowledge to a grossly unfair degree." Jury Question 3 states in its entirety:
Was Chike Ozumba a/k/a Ebenezer Ozumba's failure to comply [with the Rental Agreement] excused?
Failure to comply by Chike Ozumba a/k/a Ebenezer Ozumba is excused if Budget Rent A Car System, LLC previously failed to comply with a material obligation of the same agreement.
Failure to comply by Chike Ozumba a/k/a Ebenezer Ozumba is excused if the terms of the agreement are unconscionable. An unconscionable action or course of action is an act or practice that, to a consumer's detriment, takes advantage of the lack of knowledge, ability, experience, or capacity of the consumer to a grossly unfair degree.
The jury answered, "Yes." The jury, however, was not asked to make a finding about any facts that would support a finding of unconscionability. Rather, the jury was asked whether Ozumba's failure to comply with the Rental Agreement was excused, and they were instructed they could find excuse if they found the "terms of the [Rental Agreement were] unconscionable." While the facts underlying the defense of unconscionability may present a question of fact for the jury, the ultimate issue presented to the jury-whether the agreement is unconscionable-is a question of law the court should have decided. Hoover Slovacek LLP, 206 S.W.3d at 562; Ski River Dev., Inc., 167 S.W.3d at 136. The trial court thus abused its discretion by submitting an unconscionability instruction to the jury that required the jury to determine a question of law. See Knutson v. Ripson, 163 Tex. 312, 314, 354 S.W.2d 575, 576 (1962) (stating trial court errs if it submits question of law to jury); Indian Beach Prop. Owners' Ass'n v. Linden, 222 S.W.3d 682, 704 (Tex. App.-Houston [1st Dist.] 2007, no pet.) (same). Consequently, whether or not there was legally sufficient evidence to support the instruction, or the instruction accurately stated the law on unconscionability, it was error for the court to submit the unconscionability instruction to the jury.
During the charge conference, Budget did not object to the submission of the unconscionability instruction on the basis that it included a definition that did not accurately state the law.
Budget argues that, assuming the prior material breach instruction was not error, the erroneous submission of the unconscionability instruction was harmful pursuant to Crown Life Insurance Company v. Casteel, 22 S.W.3d 378 (Tex. 2000), because Jury Question 3 incorporated a valid defensive theory (prior material breach) and an invalid defensive theory (unconscionability). In Casteel, the trial court submitted a single broad-form question on the issue of liability that included thirteen independent grounds for liability, five of which were found to be invalid. Casteel, 22 S.W.3d at 389. The Texas Supreme Court held that "when a trial court submits a single broad-form liability question incorporating multiple theories of liability, the error is harmful and a new trial is required when the appellate court cannot determine whether the jury based its verdict on an improperly submitted invalid theory." Id. at 388.
Ozumba argues that even if submission of the unconscionability instruction was improper, the error was harmless. He argues that presumed harm is not applicable under Casteel because the trial court "submitted only one affirmative defense: excuse," and the "instructions merely set forth two examples of excuses." As such, Ozumba argues, we must apply the harmless error analysis under Rule 44.1(a)(1). See Tex. R. App. P. 44.1(a)(1) (stating reversible error is one that probably caused rendition of improper judgment). Ozumba further contends that "the unconscionability instruction did not cause the rendition of an improper judgment" because the "prior breach instruction was legally proper, supported by the evidence, and alone justifies the jury's defense verdict." Finally, Ozumba argues the jury could not have found the Rental Agreement unconscionable unless it also found Budget breached the Rental Agreement by providing Ozumba with a damaged or defective car. According to Ozumba, "[t]he two instructions go hand in hand because they are necessarily based on the same underlying factual determination: that Budget was not entitled to recover its repair costs from Ozumba because they arose from the rental car's pre-existing defects or damages."
The trial court submitted a question on one theory of liability, breach of contract (Jury Question 2), and a separate question on the affirmative defense of excuse (Jury Question 3). Jury Question 3 asked the jury to determine whether Ozumba's failure to comply with the Rental Agreement was excused and instructed the jury they could find excuse based on two independent defenses: (1) if Budget previously failed to comply with a material provision in the Rental Agreement, or (2) the terms of the Rental Agreement were unconscionable. The jury answered, "Yes." Because the jury was not asked to make separate findings with respect to Budget's prior material breach or the unconscionability of the Rental Agreement, we cannot determine the jury's reason for finding Ozumba's failure to comply was excused under Jury Question 3.
Ozumba's argument that the jury could not have found the Rental Agreement unconscionable unless it also found Budget breached the Rental Agreement by providing Ozumba with a damaged or defective car is not persuasive. When addressing Jury Question 3 during closing arguments, Ozumba's counsel argued that Ozumba's failure to comply with the Rental Agreement was excused if either (1) Budget failed to comply with one of the agreement's material obligations or (2) the terms of the agreement were unconscionable. Ozumba argued Budget materially breached the Rental Agreement by failing to provide him with a safe, working, and reliable rental car. Ozumba did not, as he now argues, limit his unconscionability defense to the same "underlying factual determination." Rather, with respect to unconscionability, Ozumba advanced both procedural and substantive unconscionability arguments based on a number of facts.
In advancing his unconscionability defense, Ozumba focused on the alleged inequities with respect to the bargaining process at the time of contracting, such as Ozumba's alleged inability to negotiate the terms of the Rental Agreement or his inability to inspect the Camry before taking possession of the car. Specifically, Ozumba argued that the Rental Agreement was unconscionable because "he didn't have the opportunity to negotiate" the agreement, and it was "something [Budget] just handed him and he was relying on them." In his brief, Ozumba also asserts the Rental Agreement was unconscionable for a multitude of reasons, including that (1) "Budget's 37 page-long Rental Agreement for was one-sided," (2) he "had no legal training," (3) "he was not provided with any explanation of the Rental Agreement's applicable terms," (4) "he had no opportunity to negotiate or bargain the terms," and (5) "he did not understand that he could be liable in a situation like this where the repairs were necessitated by some pre-existing defect or damage." He also asserts that the Rental Agreement was unconscionable because the parties had disparate knowledge concerning the Camry's history, he was not allowed to choose his rental car, and he had "no time or ability to inspect it for mechanical or latent defects or ask questions about its history." At trial and on appeal, Ozumba also argued that applying the Rental Agreement to him was grossly unfair based on his inability to negotiate the agreement or inspect the Camry. Ozumba did not argue nor was the jury told, as Ozumba now claims on appeal, that the Rental Agreement's unconscionability related to or depended solely upon whether Budget failed to provide Ozumba with a safe, working, and reliable car.
Based on the record, including the way the issues were presented to the jury during closing arguments, the jury could have found that although Budget did not breach the Rental Agreement because the Camry was working properly when Ozumba took possession of the car, Ozumba's failure to comply with the Rental Agreement was nonetheless excused because the terms of the Rental Agreement were procedurally or substantively unconscionable. Or vice versa. There is simply no way for the parties or this Court to know the basis for the finding of excuse under Jury Question 3. Thus, whether or not Casteel applies to the type of charge error presented here, the erroneous submission of the unconscionability instruction was harmful under Rule 44.1(a)(2) because we cannot discern whether the jury found that Ozumba's failure to comply with the Rental Agreement was excused based on the improper unconscionability instruction or the proper prior material breach instruction. See Hawley, 284 S.W.3d at 865 (holding Rule 61.1(b)'s harm analysis applied to non-Casteel charge error because "the jury could have found Columbia liable based on Dr. Valencia's acts or omissions under the charge as given [which could not support the finding], and there is no way for Columbia or an appellate court to tell if it did so"); Tex.R.App.P. 61.1(b) (stating reversible error is one that "probably prevented the petitioner from properly presenting the case to the appellate courts"); see also Tex. R. App. P. 44.1(a)(2) (stating error is reversible in civil case if it "probably prevented the appellant from properly presenting the case to the court of appeals").
The Texas Supreme Court's harmless error standard is set forth in Texas Rule of Appellate Procedure 61.1 and the lower appellate courts' harmless error standard is set forth in Rule 44.1.
We sustain Budget's third issue.
Ozumba's Cross Point
In a single cross-point, Ozumba argues in the alternative that we must affirm the take nothing judgment against Budget because the trial erred in denying his motion for directed verdict on his unconscionability defense. Ozumba argues on appeal that "Budget is using the Rental Agreement's liability transfer clause to hold Ozumba liable for its own negligence" and the "Rental Agreement fails the express negligence doctrine and is accordingly unconscionable and unenforceable as a matter of law, based on the facts."
"A directed verdict is warranted when the evidence is such that no other verdict can be rendered and the moving party is entitled, as a matter of law, to judgment." Izen v. Laine, 614 S.W.3d 775, 784 (Tex. App.-Houston [14th Dist.] 2020, no pet.). When a party challenges the denial of a motion for directed verdict on a defense for which he bears the burden of proof, he must demonstrate that the evidence conclusively established all vital facts to support his defense. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001) (citing Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989)); Prudential Ins. Co. of Am. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000) (stating directed verdict in favor of defendant is proper if evidence conclusively establishes defense to plaintiff's cause of action). "A matter is conclusively proved if reasonable people could not differ as to the conclusion to be drawn from the evidence." Mason v. AMed-Health, Inc., 582 S.W.3d 773, 780 (Tex. App.-Houston [1st Dist.] 2019, pet. denied) (citing City of Keller v, 168 S.W.3d at 816). Our review of a trial court's denial of a motion for directed verdict is limited to the specific grounds stated in the motion. Cleveland Reg'l Med. Ctr., L.P. v. Celtic Properties, L.C., 323 S.W.3d 322, 346 (Tex. App.- Beaumont 2010, pet. denied).
During the pre-trial hearing, the trial court asked Budget's counsel to "explain your objection to the jury charge question 3 as it pertains to [un]conscionability." During that discussion, Ozumba's counsel argued the Rental Agreement was unconscionable in part because it failed the express negligence test by allowing Budget to hold Ozumba responsible for Budget's own negligence without expressly stating as such in the Rental Agreement. After hearing the parties' arguments, the trial court stated, "So here's what I'm going to do. We're going to proceed. We are just going to proceed and I'll decide in the jury charge conference what's going to be in there. I'm going to do some research on my own while I go look at this."
At the close of evidence, Ozumba moved for a directed verdict on his affirmative defense of unconscionability stating:
We would ask for a judicial finding that the terms of the contract as applied to this case are legally unconscionable as to the application of this loss damage waiver and/or the damage provisions in the contract in this case due to the situation that the evidence shows Mr. Ozumba did nothing to cause, contribute, or in any way make this incident occur.
Ozumba made no further arguments in support of his motion for directed verdict. Thus, while the record reflects Ozumba raised the express negligence doctrine during the pre-trial conference, he did not raise the issue in his motion for directed verdict.
Although Ozumba conflates these issues on appeal, the express negligence doctrine and the defense of unconscionability are two independent legal concepts affecting the enforceability of contract provisions. Under the express negligence doctrine, a contract clause that shifts the risk of one party's future negligence to another party is unenforceable unless the intent to do so is set forth in specific terms within the four corners of the contract. See Fisk Elec. Co. v. Constructors & Assocs., Inc., 888 S.W.2d 813, 814 (Tex. 1994); see also Storage & Processors, Inc. v. Reyes, 134 S.W.3d 190, 192 (Tex. 2004). Separately, a party may also assert a contract is unenforceable because it is unconscionable. In re Poly-Am., L.P., 262 S.W.3d at 348. Thus, a contract clause may be unenforceable because it violates the express negligence doctrine, but such a violation does not necessarily render the clause unconscionable.
In his motion for directed verdict, Ozumba argued the "loss damage waiver and/or the damage provisions" are unconscionable because he "did nothing to cause, contribute, or in any way make this incident occur." This is a substantive unconscionability argument. Delfingen US-Tex., L.P., 407 S.W.3d at 797 (explaining substantive unconscionability refers to inherent unfairness of contract or specific contractual provision). Because Ozumba did not raise the express negligence doctrine in his motion for directed verdict, we analyze only whether the trial court erred by denying Ozumba's motion for directed verdict based on the only ground asserted-substantive unconscionability. See Cleveland Reg'l Med. Ctr., L.P., 323 S.W.3d at 346 (stating courts are limited to specific grounds stated in motion for directed verdict when reviewing trial court's denial of motion).
Unconscionability may be either procedural or substantive. Its application is "determined in light of a variety of factors, which aim to prevent oppression and unfair surprise; in general, a contract will be found unconscionable if it is grossly one-sided." In re Poly-Am., L.P., 262 S.W.3d at 348. "Generally, a contract is unconscionable if, 'given the parties' general commercial background and the commercial needs of the particular case, the clause involved is so one-sided that it is unconscionable under the circumstances existing when the parties made the contract.'" In re Olshan Found. Repair Co, LLC, 328 S.W.3d 883, 892 (Tex. 2010) (quoting In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753 (Tex. 2001)). "The principle is one of the prevention of oppression and unfair surprise and not of disturbance of allocation on risks because of superior bargaining power." In re Olshan Found. Repair Co, LLC, 328 S.W.3d at 892 (citation omitted). "The fact that a party entered into a contract that was 'lawful but improvident' or that an opposing party drove a hard bargain during negotiations does not justify a finding of unconscionability." Ridge Natural Res., L.L.C., 564 S.W.3d at 131. Instead, the grounds for substantive abuse "must be sufficiently shocking or gross to compel the court to intercede . . . ." Id. (quoting Delfingen US-Tex., L.P., 407 S.W.3d at 798).
Because Ozumba is challenging the denial of a motion for directed verdict based on his affirmative defense of unconscionability, Ozumba must establish that the evidence conclusively established all vital facts to support his unconscionability defense. Dow Chem. Co., 46 S.W.3d at 241 (citing Sterner, 767 S.W.2d at 690 (Tex. 1989)); Prudential Ins. Co. of Am., 29 S.W.3d at 77. In the section of his brief addressing his cross point, Ozumba argues the Rental Agreement is unconscionable because it does not satisfy the express negligence test and he generally asserts, without further elaboration, that the Rental Agreement is "otherwise unconscionable and unenforceable as a matter of law." Ozumba does not, as he is required, point to any specific evidence conclusively establishing unconscionability.
The record reflects that Ozumba was familiar with the rental car process and had rented cars many times. He testified there was nothing unusual about his rental of the Camry. Ozumba also testified that the terms of the Rental Agreement were available to him online and that he was familiar with the LDW provision. He testified he knew he had the option either to accept the LDW coverage for a fee or, as he did in this case, to decline the coverage thus accepting an allocation of risk for damage to the car. Based on this evidence, we cannot conclude that the evidence conclusively established "oppression or unfair surprise." In re Olshan Found. Repair Co, LLC, 328 S.W.3d at 892; see generally Ski River Dev., Inc., 167 S.W.3d at 136 (stating courts consider "procedural abuses" when evaluating fairness of contractual provisions).
While Ozumba also testified that he did not read the terms of the Rental Agreement, a party is charged with having read and understood the terms of an agreement he executes. Ridge Natural Res., LLC v. Double Eagle Royalty, LP, 564 S.W.3d 105, 133 (Tex. App.-El Paso 2018, no pet.). Failure to read or understand a signed agreement does not render a contract unconscionable. Id. (holding that absent proof of mental incapacity or "trick or artifice" a person "who signs a contract is presumed to have read and understood the contract" and further rejecting unconscionability defense based on argument the challenging party failed to read or understand the terms of the agreement).
To the extent Ozumba argues the Rental Agreement is unconscionable because the Camry was not in proper working condition when he entered into the Rental Agreement, there was more than a scintilla of circumstantial evidence from which the jury could have reasonably inferred the Camry was not a safe, working, and reliable car when Budget rented it to Ozumba. More than a scintilla of evidence, however, is not the same as conclusive evidence. Compare City of Hous., 265 S.W.3d at 27 (stating scintilla of evidence "is any evidence of probative force to support the finding") and Lee Lewis Const., Inc. v. Harrison, 70 S.W.3d 778, 782- 83 (Tex. 2001) (stating more than scintilla of evidence exists if evidence furnishes reasonable basis for differing conclusions by reasonable minds about vital fact's existence) with City of Keller, 168 S.W.3d at 816 (stating matter is conclusively proved if reasonable people could not differ as to conclusion to be drawn from evidence).
In addition to the evidence that would support a finding that the Camry was not a safe, working, and reliable car when Budget rented it to Ozumba, there is also evidence to the contrary. Specifically, the record reflects the Camry was inspected by a Budget mechanic and placed into service a day before Ozumba rented the car and Green, Budget's representative and a maintenance and damage manager, testified that Budget would not put a vehicle back into service if it were not functioning properly following inspection. There is also evidence Ozumba drove the car for 100 miles over a day and a half before the wheel dislodged. In light of this evidence regarding the Camry's condition, we cannot say Ozumba conclusively established all vital facts to support his defense of unconscionability. Dow Chem. Co., 46 S.W.3d at 241; Prudential Ins. Co. of Am., 29 S.W.3d at 77.
We overrule Ozumba's cross-point.
Conclusion
We reverse the trial court's judgment and remand for a new trial.