Flores v. Millennium Interests, Ltd.

United States Court of Appeals Fifth Circuit F I L E D In the September 8, 2006 United States Court of Appeals Charles R. Fulbruge III for the Fifth Circuit Clerk _______________ m 03-21002 _______________ ARTURO FLORES, Plaintiff-Appellant, VERSUS MILLENNIUM INTERESTS, LTD., ET AL, Defendants, MILLENNIUM INTERESTS, LTD., Defendant-Appellee. *************** PEDRO FLORES AND MARIBEL FLORES, Plaintiffs-Appellants, VERSUS MILLENNIUM INTERESTS, LTD., ET AL., Defendants, MILLENNIUM INTERESTS, LTD., Defendant-Appellee. *************** ALEJANDRO VERGARA AND JOAQUINA VERGARA, Plaintiffs-Appellants, VERSUS MILLENNIUM INTERESTS, LTD., ET AL., Defendants, MILLENNIUM INTERESTS, LTD., Defendant-Appellee. *************** _______________ m 03-21003 _______________ ARTURO FLORES, Plaintiff-Appellant, VERSUS MILLENNIUM INTERESTS, LTD., ET AL, Defendants, MILLENNIUM INTERESTS, LTD., Defendant-Appellee. 2 *************** PEDRO FLORES AND MARIBEL FLORES, Plaintiffs-Appellants, VERSUS MILLENNIUM INTERESTS, LTD., ET AL., Defendants, MILLENNIUM INTERESTS, LTD., Defendant-Appellee. *************** ALEJANDRO VERGARA, ET AL., Plaintiffs, ALEJANDRO VERGARA, Plaintiff-Appellant, VERSUS MILLENNIUM INTERESTS, LTD., ET AL., Defendants, MILLENNIUM INTERESTS, LTD., Defendant-Appellee. 3 _________________________ Appeals from the United States District Court for the Southern District of Texas ______________________________ Before SMITH and WIENER, Circuit Judges.* statement.1 The annual statements provided to plaintiffs omitted two of the required items: § PER CURIAM: 5.077(b)(1), the “amount paid under the con- tract,” and § 5.077(b)(3), “the number of The Supreme Court of Texas has answered payments remaining under the contract.”2 our certified questions. See Flores v. Millen- Under § 5.077(c), a seller that fails “to comply nium Interests, Ltd., 185 S.W.3d 427 (Tex. with Subsection (a)” becomes liable to the pur- 2005). Based on those answers, we affirm the chaser for “(1) liquidated damages in the summary judgment in favor of Millennium In- amount of $250 a day for each day after Janu- terests, Ltd. (“Millennium”). ary 31 that the seller fails to provide the pur- chaser with the statement; and (2) reasonable As explained in our original opinion, Flor- attorney’s fees.”3 es v. Millennium Interests, Ltd., 390 F.3d 374 (5th Cir. 2004) (per curiam), plaintiffs pur- chased houses from Millennium under con- 1 Those items are “(1) the amount paid under tracts for deeds. Millennium retained Concord the contract; (2) the remaining amount owed under Servicing Corp. (“Concord”) to perform the contract; (3) the number of payments remaining accounting and reporting services for the con- under the contract; (4) the amounts paid to taxing tracts. Concord provided annual statements authorities on the purchaser’s behalf if collected by for the years 2001 and 2002 to each of Millen- the seller; (5) the amounts paid to insure the prop- nium’s customers, including plaintiffs. erty on the purchaser’s behalf if collected by the seller; (6) if the property has been damaged and the seller has received insurance proceeds, an account- In 2001 the Texas Legislature renumbered ing of the proceeds applied to the property; (7) if and revised TEX. PROP. CODE § 5.077, sub- the seller has changed insurance coverage, a legible section (a) of which requires a seller of a con- copy of the current policy, binder, or other evi- tract for deed to provide annual statements to dence that satisfies the requirements of Section its purchaser, and subsection (b) of which lists 5.070(a)(2).” TEX. PROP. CODE § 5.077(b). seven items that must be included in each such 2 The annual statements also did not include the final three items listed in § 5.077(b), because Millennium had neither provided, received, nor changed insurance on these properties. * 3 Judge Pickering was a member of the panel Although not applicable to the present case, but retired from the court after the original opinion effective September 1, 2005, the statute was was issued. This appeal accordingly is decided by amended to limit the damages under this provision, a quorum. See 28 U.S.C. § 46(d). (continued...) 4 Plaintiffs sued, asserting, inter alia, claims cover under § 5.077 of the Property Code against Millennium under § 5.077 and against a purchaser would have to comply with § Concord under the Federal Fair Debt Collec- 41.003 of the Civil Practice and Remedies tion Practices Act. Jurisdiction is based on 28 Code? U.S.C. § 1331. The district court entered summary judgment for Millennium and Con- Flores, 390 F.3d at 376-77. The Supreme cord on all claims. Plaintiffs appealed only the Court of Texas gave negative answers to the adverse ruling on the § 5.077 claims. first two questions and concluded that those two answers made it unnecessary to reach the Because the case involves determinative but third question. See Flores v. Millennium In- unanswered questions of Texas law, we terests, Ltd., 185 S.W.3d 427, 429 (Tex. certified three questions to the Texas Supreme 2005). In answering the first question, the Court: court held that “an annual statement under Section 5.077 that omits some required infor- 1. If a seller under a contract for deed mation does not invoke the ‘liquidated dam- sends a purchaser a statement under ages’ provision unless the statement is so de- § 5.077(a) that omits any of the applicable ficient as to be something other than a good information listed in § 5.077(b) of the Tex- faith attempt by the seller to inform the pur- as Property Code, specifically in the in- chaser of the current status of their contractual formation required by § 5.077(b)(1) or (3), relationship.” Id. at 433. or both, is the seller liable to the purchaser for $250 per day liquidated damages as set The court further held that the annual state- forth in § 5.077(c)? ments mailed to the plaintiffs in this case were “timely under § 5.077(a) and that the omission 2. If a seller under a contract for deed of some information required by § 5.077(b) sends a purchaser a statement that omits in- did not render them deficient or otherwise in- formation required by §§ 5.077(b)(1) and voke the liquidated damages provision of (3), must the purchaser prove actual harm § 5.077(c).” Id. at 428-29. We agree.4 or injury to recover liquidated damages un- der the statute? The company hired by Millennium to ser- vice its contracts for deeds provided the same 3. In 2001, 2002, and 2003, did the statu- annual statements it typically sent borrowers torily defined “exemplary damages” in with traditional mortgage loans. Those state- chapter 41 of the Texas Civil Practice and Remedies Code encompass the statutorily 4 defined “liquidated damages” in § 5.077 of Because we agree with the conclusion of the the Texas Property Code, so that to re- Texas Supreme Court on the application of the law it has announced to the facts of this case, we need not, and do not, decide whether this court is bound to follow the application of that court’s response to 3 (...continued) these particular facts. See Amberboy v. Societe de for lenders that conduct at least two § 5.077 trans- Banque Privee, 831 S.W.2d 793, 798 (Tex. 1992) actions per year, to the fair market value of the (“It would exceed this court’s constitutional and property and reasonable attorney’s fees. 2005 Tex. rule-based authority to apply our answer to the Sess. Law Serv. ch. 978 (H.B. 1823) (West). factual record before the Fifth Circuit.”). 5 ments contained two of the four items required by § 5.077(b), the “remaining amount owed on the contract” and the “amounts paid to taxing authorities.” TEX. PROP. CODE § 5.077(b)(2), (4). One of the omitted items, the “total amount paid under the contract,” can be calcu- lated from the contracts themselves.5 The statements also included information not required by statute, such as the interest paid during the preceding year and the calculation of the purchaser’s escrow payments. Although the statements omit two items re- quired by § 5.077(b), they plainly constitute a good-faith effort by Millennium to inform plaintiffs of the current status of their contrac- tual relationship. Thus, according to the test provided by the Texas Supreme Court, under Texas law the annual statements provided to these plaintiffs do not invoke the liquidated damages provision of § 5.077(c). Therefore, it is unnecessary for us to reach the remaining two questions we certified. The summary judgment is AFFIRMED. 5 The “total amount paid under the contract” can be determined by subtracting the account bal- ance, which was included on the annual statements, from the original purchase price. 6