Flores, et al v. Millennium Interests

United States Court of Appeals
Fifth Circuit
F I L E D
September 8, 2006
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 and WIENER, Circuit Judges.*
PER CURIAM:
The Supreme Court of Texas has answered
our certified questions. See Flores v. Millen-
nium Interests, Ltd., 185 S.W.3d 427 (Tex.
2005). Based on those answers, we affirm the
summary judgment in favor of Millennium In-
terests, Ltd. (“Millennium”).
As explained in our original opinion, Flor-
es v. Millennium Interests, Ltd., 390 F.3d 374
(5th Cir. 2004) (per curiam), plaintiffs pur-
chased houses from Millennium under con-
tracts for deeds. Millennium retained Concord
Servicing Corp. (“Concord”) to perform
accounting and reporting services for the con-
tracts. Concord provided annual statements
for the years 2001 and 2002 to each of Millen-
nium’s customers, including plaintiffs.
In 2001 the Texas Legislature renumbered
and revised TEX. PROP. CODE § 5.077, sub-
section (a) of which requires a seller of a con-
tract for deed to provide annual statements to
its purchaser, and subsection (b) of which lists
seven items that must be included in each such
statement.1 The annual statements provided to
plaintiffs omitted two of the required items: §
5.077(b)(1), the “amount paid under the con-
tract,” and § 5.077(b)(3), “the number of
payments remaining under the contract.”2
Under § 5.077(c), a seller that fails “to comply
with Subsection (a)” becomes liable to the pur-
chaser for “(1) liquidated damages in the
amount of $250 a day for each day after Janu-
ary 31 that the seller fails to provide the pur-
chaser with the statement; and (2) reasonable
attorney’s fees.”3
* Judge Pickering was a member of the panel
but retired from the court after the original opinion
was issued. This appeal accordingly is decided by
a quorum. See 28 U.S.C. § 46(d).
1 Those items are “(1) the amount paid under
the contract; (2) the remaining amount owed under
the contract; (3) the number of payments remaining
under the contract; (4) the amounts paid to taxing
authorities on the purchaser’s behalf if collected by
the seller; (5) the amounts paid to insure the prop-
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-
ing of the proceeds applied to the property; (7) if
the seller has changed insurance coverage, a legible
copy of the current policy, binder, or other evi-
dence that satisfies the requirements of Section
5.070(a)(2).” TEX. PROP. CODE § 5.077(b).
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 Although not applicable to the present case,
effective September 1, 2005, the statute was
amended to limit the damages under this provision,
(continued...)

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Plaintiffs sued, asserting, inter alia, claims
against Millennium under § 5.077 and against
Concord under the Federal Fair Debt Collec-
tion Practices Act. Jurisdiction is based on 28
U.S.C. § 1331. The district court entered
summary judgment for Millennium and Con-
cord on all claims. Plaintiffs appealed only the
adverse ruling on the § 5.077 claims.
Because the case involves determinative but
unanswered questions of Texas law, we
certified three questions to the Texas Supreme
Court:
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 Tex-
as Property Code, specifically in the in-
formation required by § 5.077(b)(1) or (3),
or both, is the seller liable to the purchaser
for $250 per day liquidated damages as set
forth in § 5.077(c)?
2. If a seller under a contract for deed
sends a purchaser a statement that omits in-
formation required by §§ 5.077(b)(1) and
(3), must the purchaser prove actual harm
or injury to recover liquidated damages un-
der 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 “liquidated damages” in § 5.077 of
the Texas Property Code, so that to re-
cover under § 5.077 of the Property Code
a purchaser would have to comply with §
41.003 of the Civil Practice and Remedies
Code?
Flores, 390 F.3d at 376-77. The Supreme
Court of Texas gave negative answers to the
first two questions and concluded that those
two answers made it unnecessary to reach the
third question. See Flores v. Millennium In-
terests, Ltd., 185 S.W.3d 427, 429 (Tex.
2005). In answering the first question, the
court held that “an annual statement under
Section 5.077 that omits some required infor-
mation does not invoke the ‘liquidated dam-
ages’ provision unless the statement is so de-
ficient as to be something other than a good
faith attempt by the seller to inform the pur-
chaser of the current status of their contractual
relationship.” Id. at 433.
The court further held that the annual state-
ments mailed to the plaintiffs in this case were
“timely under § 5.077(a) and that the omission
of some information required by § 5.077(b)
did not render them deficient or otherwise in-
voke the liquidated damages provision of
§ 5.077(c).” Id. at 428-29. We agree.4
The company hired by Millennium to ser-
vice its contracts for deeds provided the same
annual statements it typically sent borrowers
with traditional mortgage loans. Those state-
3(...continued)
for lenders that conduct at least two § 5.077 trans-
actions per year, to the fair market value of the
property and reasonable attorney’s fees. 2005 Tex.
Sess. Law Serv. ch. 978 (H.B. 1823) (West).
4 Because we agree with the conclusion of the
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
these particular facts. See Amberboy v. Societe de
Banque Privee, 831 S.W.2d 793, 798 (Tex. 1992)
(“It would exceed this court’s constitutional and
rule-based authority to apply our answer to the
factual record before the Fifth Circuit.”).

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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.

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