Flores, et al v. Millennium Interests

United States Court of Appeals
Fifth Circuit
F I L E D
November 5, 2004
Charles R. Fulbruge III
Clerk
In the
United States Court of Appeals
for the Fifth Circuit
_______________
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.
* * * * * * * * * * * * * * *

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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.
* * * * * * * * * * * * * * *

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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.

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_________________________
Appeals from the United States District Court
for the Southern District of Texas
_________________________
Before SMITH, WIENER, and PICKERING,
Circuit Judges.
PER CURIAM:
This case, in which federal jurisdiction is
grounded in diversity of citizenship, raises
important issues of Texas law that the Texas
courts have not resolved. Accordingly, we
certify the unresolved questions to the Su-
preme Court of Texas.
CERTIFICATION FROM THE
UNITED STATES COURT OF AP-
PEALS FOR THE FIFTH CIRCUIT
TO THE SUPREME COURT OF
TEXAS, PURSUANT TO TEXAS
CONSTITUTION ART. 5, § 3-c, AND
RULE 58 OF THE TEXAS RULES OF
APPELLATE PROCEDURE.
TO THE SUPREME COURT OF TEXAS
AND HONORABLE JUSTICES THEREOF:
I. Style of the Case
The style of the case in which certification
is made is Flores v. Millennium Interests, Ltd.,
Case No. 03-21002, in the United States Court
of Appeals for the Fifth Circuit, on appeal
from the United States District Court for the
Southern District of Texas.
II. Statement of the Case
The defendant, Millennium Interests, Ltd.
(“Millennium”), develops residential subdivi-
sions in the Houston area, financing most of its
sales using contracts for deeds. The plaintiffs
are from three families who purchased houses
from Millennium under contracts for deeds.
In July 2000, Millennium retained Concord
Servicing Corp. (“Concord”) to perform ac-
counting and reporting services for the con-
tracts. Concord provided two annual state-
ments to each of Millennium’s customers, an
Annual Interest Statement and an Escrow An-
alysis. In 2002 and 2003, Concord transmitted
to plaintiffs these annual statements for calen-
dar years 2001 and 2002, respectively.
In 2001, the Texas Legislature renumbered
and revised Texas Property Code § 5.077.
Effective September 1, 2001, § 5.077(a) re-
quires a seller of an executory contract to pro-
vide annual statements to its purchaser, and
§ 5.077(b) lists seven items that must be
included in each such statement. Of the seven
items, two were not included in the statements
that Concord issued to plaintiffs: § 5.077-
(b)(1), the “amount paid under the contract,”
and § 5.077(b)(3), the “number of payments
remaining under the contract.”
Subsection (c) of § 5.077 contains a penalty
provision for a seller’s failure “to comply with
Subsection (a).” It makes the seller liable to
the purchaser for “(1) liquidated damages in
the amount of $250 a day for each day after
January 31 that the seller fails to provide the
purchaser with the statement; and (2) reason-

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able attorney’s fees.”
Plaintiffs sued, asserting, inter alia, claims
against Millennium under § 5.077 and against
Concord under the Federal Fair Debt Collec-
tion Practices Act. The district court entered
summary judgment for Millennium on all
claims. Plaintiffs appeal only in regard to the
adverse ruling on § 5.077.
III. Legal Issues
The district court ruled that “[t]o claim
damages for an incomplete statement, the pur-
chaser must show an actual injury resulting
from the omission,” and that “[b]ecause Mil-
lennium’s omission resulted in no actual harm,
it is not liable for damages under the statute.”
The court further reasoned that a violation can
stem only from the failure to send any
statement at all, and the statements in question
“were not so deficient that they constituted no
statements at all.” Resolution of this case
turns on the answers to the following
questions: (1) Does the seller under a
contract for deed violate the statute if the
statement furnished to the purchaser does not
strictly comply with the statute, i.e., omits
information required by the statute, or may the
seller satisfy the statute by substantial compli-
ance, i.e., by furnishing a statement containing
less than all the required contents?; and (2) if
the seller may satisfy the statute by substantial
compliance and does so, must the purchaser
prove “actual harm” to recover statutory
damages from the seller? This case also raises
the question whether, in calendar years 2001
through 2003, “exemplary damages” as de-
fined in Chapter 41 of the Texas Civil Practice
and Remedies Code included “liquidated
damages” as defined in § 5.077 of the Texas
Property Code, making it necessary for a
purchaser under a contract for deed to comply
with § 41.003 of the Civil Practice and Reme-
dies Code to recover “liquidated damages”
under § 5.077 of the Texas Property Code?
IV. Questions Certified
1. If a seller under a contract for deed
sends a purchaser a statement under § 5.077(a)
that omits any of the applicable information
listed in § 5.077(b) of the Texas Property
Code, specifically in the information required
by § 5.077(b)(1) or (3), or both, is the seller
liable to the purchaser for $250 per day liqui-
dated damages as set forth in § 5.077(c)?
2. If a seller under a contract for deed
sends a purchaser a statement that omits
information required by §§ 5.077(b)(1) and
(3), must the purchaser prove actual harm or
injury to recover liquidated damages under the
statute?
3. In 2001, 2002, and 2003, did the statu-
torily defined “exemplary damages” in chapter
41 of the Texas Civil Practice and Remedies
Code encompass the statutorily defined “liqui-
dated damages” in § 5.077 of the Texas Prop-
erty Code, so that to recover under § 5.077 of
the Property Code a purchaser would have to
comply with § 41.003 of the Civil Practice and
Remedies Code?
We disclaim any intention or desire that the
Supreme Court of Texas confine its reply to
the precise form or scope of the questions
certified. The answers provided by the Su-
preme Court of Texas will determine the issues
on appeal in this case. The record and copies
of the briefs are transmitted herewith.
QUESTIONS CERTIFIED.

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