Filed: Aug. 23, 2012
Latest Update: Feb. 12, 2020
Summary: Case: 11-40602 Document: 00511967039 Page: 1 Date Filed: 08/23/2012 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit FILED August 23, 2012 No. 11-40602 Lyle W. Cayce Clerk VANDERBILT MORTGAGE AND FINANCE, INCORPORATED, Plaintiff-Intervenor Defendant-Appellant, versus CESAR FLORES; ALVIN E. KING, Defendants-Appellees, ARTURO TREVINO; MARIA M. TREVINO Intervenor Plaintiffs-Appellees, versus CLAYTON HOMES, INCORPORATED; CMH HOMES, INCORPORATED
Summary: Case: 11-40602 Document: 00511967039 Page: 1 Date Filed: 08/23/2012 IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT United States Court of Appeals Fifth Circuit FILED August 23, 2012 No. 11-40602 Lyle W. Cayce Clerk VANDERBILT MORTGAGE AND FINANCE, INCORPORATED, Plaintiff-Intervenor Defendant-Appellant, versus CESAR FLORES; ALVIN E. KING, Defendants-Appellees, ARTURO TREVINO; MARIA M. TREVINO Intervenor Plaintiffs-Appellees, versus CLAYTON HOMES, INCORPORATED; CMH HOMES, INCORPORATED,..
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Case: 11-40602 Document: 00511967039 Page: 1 Date Filed: 08/23/2012
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
August 23, 2012
No. 11-40602
Lyle W. Cayce
Clerk
VANDERBILT MORTGAGE AND FINANCE, INCORPORATED,
Plaintiff-Intervenor
Defendant-Appellant,
versus
CESAR FLORES; ALVIN E. KING,
Defendants-Appellees,
ARTURO TREVINO; MARIA M. TREVINO
Intervenor
Plaintiffs-Appellees,
versus
CLAYTON HOMES, INCORPORATED; CMH HOMES, INCORPORATED,
Intervenor
Defendants-Appellants.
Appeals from the United States District Court
for the Southern District of Texas
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No. 11-40602
Before DAVIS, SMITH, and DENNIS, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Vanderbilt Mortgage and Finance, Incorporated (“Vanderbilt”), sued to
foreclose against appellees Cesar Flores and Alvin King for defaulting on their
installment payments on a mobile home. Flores and King responded by claiming
they had been released from any underlying debt on the retail installment con-
tract; they counterclaimed that Vanderbilt had unlawfully continued to collect
payments on the released debt. Arturo and Maria Trevino intervened with
claims against Vanderbilt and CMH Homes, Incorporated (“CMH”), and their
parent company, Clayton Homes, Incorporated (“CHI”), asserting, inter alia that
those three companies had filed false liens on their land as collateral for Flores
and King’s retail installment contract. A jury found against defendants on all
claims, and Vanderbilt, CMH, and CHI appeal.
I.
Flores and King entered into a Retail Installment Contract with CMH for
the purchase of a mobile home in 2002; Vanderbilt provided the financing. When
they signed the contract at CMH’s Corpus Christi, Texas, store, Flores and King
opted to finance the entire $40,815.19 purchase price, obligating themselves to
pay a total of $73,641.60. The debt was secured by two vacant lots in Jim Wells
County, Texas, owned by the Trevinos, the sister and brother-in-law of Flores,
through CMH’s “land-in-lieu” program, which permitted purchasers to avoid
making a down payment if a friend or family member offered land as collateral
for the financing. A Deed of Trust (“DOT”) and a Builder’s and Mechanic’s Lien
(“BML”) were filed in the county records on the Trevinos’ property.1
1
Specifically, the DOT created a security interest in favor of Vanderbilt, and the BML
created a security interest in favor of CMH. CMH then assigned the retail installment con-
(continued...)
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No. 11-40602
II.
In 2004, various lawsuits were filed alleging that many of the property
owners whose property secured debts incurred under the land-in-lieu program
had not voluntarily pledged their property to secure the purchases of manufac-
tured homes. Rather, employees at CMH’s Corpus Christi store allegedly forged
and then falsely notarized the signatures of property owners to create liens on
their property without ensuring they had the owners’ permission to create the
liens. In 2005, CMH and Vanderbilt attempted to rectify the situation by unilat-
erally releasing the liens created by BMLs and DOTs for nearly 400 parcels of
land, including the Trevinos’ property.
Flores and King, meanwhile, continued to live in their mobile home and
made eighty-four payments on the Retail Installment Contract until they
defaulted; they paid $25,000 after the BML and DOT releases had been filed. In
August 2009, Vanderbilt sued to foreclose on Flores and King’s home. Flores and
King counterclaimed, asserting that the BML and DOT releases operated to
release not only the liens on the Trevinos’ land but also the debt owed by Flores
and King, which was secured by those liens. Accordingly, Flores and King
alleged common-law unfair debt collection, violations of the Texas and Federal
Debt Collection Practices Acts, fraud, and claims under the Racketeer Influenced
and Corrupt Organizations Act (“RICO”). The Trevinos intervened, claiming
violations of Chapter 12 of the Texas Civil Practice & Remedies Code (“Chap-
ter 12”), which prohibits the filing of false liens,2 and joining current appellants
1
(...continued)
tract to Vanderbilt.
2
Chapter 12 provides civil liability for persons who “make, present, or use a document
. . . with: (1) knowledge that the document . . . is a . . . fraudulent lien or claim against real or
personal property . . . ; (2) intent that the document . . . be given the same legal effect as a . . .
document . . . evidencing a valid lien or claim . . . ; and (3) intent to cause another person to
suffer[] . . . financial injury.” TEX. CIV. PRAC. & REM. CODE § 12.002(a).
3
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CMH and CHI, a holding company that is the parent company of CMH and Van-
derbilt. CMH removed the action to federal court based on federal-question jur-
isdiction under RICO and 28 U.S.C. § 1331.
The jury found against Vanderbilt, CHI, and CMH on all claims and coun-
terclaims. As to Flores and King’s claims, the jury apportioned causation 80%
to Vanderbilt and 20% to Flores and King, awarding actual damages of $15,000
to each of Flores and King and $300,000 in exemplary damages to each. The
jury found that the Trevinos had suffered no actual damages, but it awarded
$10,000 in statutory damages per violation per defendant, for a total of $120,000.
The district court denied various post-verdict renewed motions for judgment as
a matter of law (“JMOL”) and motions for a new trial but reduced the award of
exemplary damages to Flores and King to $200,000 pursuant to the Texas
exemplary-damages-cap statute. See TEX. CIV. PRAC. & REM. CODE § 41.008. In
a separate order, the court awarded attorneys’ fees of about $88,000 to the Tre-
vinos and a contingent award of fees of about $81,000 to Flores and King should
they prevail on appeal.
III.
Vanderbilt, CMH, and CHI (the “companies”) ask us to review the district
court’s ruling on renewed motions for JMOL, motions for a new trial, and
motions for remittitur of damages. “We review the district court’s denial of a
renewed JMOL motion de novo.” Black v. Pan Am. Labs., LLC, 646 F.3d 254,
258 (5th Cir. 2011) (citation omitted). “The decision to grant or deny a motion
for new trial or remittitur rests in the sound discretion of the trial judge; that
exercise of discretion can be set aside only upon a clear showing of abuse.” Con-
sol. Cos. v. Lexington Ins. Co.,
616 F.3d 422, 435 (5th Cir. 2010) (citation omit-
ted). “A trial court abuses its discretion when it bases its decision on an errone-
ous view of the law or a clearly erroneous assessment of the evidence.” Black,
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646 F.3d at 258-59 (quoting United States v. Caldwell,
586 F.3d 338, 341 (5th
Cir. 2009)). Texas substantive law controls the state-law claims, and, in apply-
ing Texas law, “we must do that which we think the Texas Supreme Court would
deem best.” Calbillo v. Cavendar Oldsmobile, Inc.,
288 F.3d 721, 729 (5th Cir.
2002) (brackets, citation, and internal quotation mark omitted).
IV.
The district court sustained the jury’s rejection of Vanderbilt’s claim
against Flores and King for the unpaid debt on the mobile home under the Retail
Installment Contract and also sustained the verdicts against Vanderbilt on
Flores and King’s counterclaims. Vanderbilt’s arguments as to why it should
have been granted JMOL on its affirmative claim and on each set of counter-
claims against it center on the decisive question whether the DOT and BML
releases released Flores and King’s underlying debt on the mobile home.
The jury found that “Vanderbilt released the debt owed by Cesar Flores
and Alvin King under the Retail Installment Contract as of October 14, 2005,
when it filed the Deed of Trust Release.” Vanderbilt filed a renewed JMOL chal-
lenging that finding, which the district court denied; the court reasoned that the
language of the DOT release, read in light of the BML release, was ambiguous
with respect to intent to release the underlying debt, creating a fact issue for the
jury. Under Texas law, “[a] release is a contract subject to the rules of contract
construction. Accordingly, in order to establish the affirmative defense of
release, the party asserting the defense of release is required to prove the ele-
ments of a contract.” In re J.P., 296 S.W.3d 830, 835 (Tex. App.SSFort Worth
2009, no pet.) (citations omitted).
We do not agree that the DOT release, even if read in conjunction with the
BML release, is ambiguous with respect to an intent to release Flores and King
from the underlying debt on the mobile home. The release provides in substan-
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tive part:
DEED OF TRUST RELEASE
VANDERBILT MORTGAGE AND FINANCE, INC. . . . declares
that it is the true and lawful owner and holder of that certain note
and indebtedness secured by a deed of trust and/or mortgage exe-
cuted by MARIA M. TREVINO & AUTURO [sic] TREVINO to
KEVIN T. CLAYTON, trustee, and dated January 7, 2002, filed for
record in the office of the Register of Deeds for JIM WELLS County,
TEXAS . . . to which deed of trust and/or mortgage or specific ref-
erence is hereby made; and for a valuable consideration in hand
paid, the said VANDERBILT MORTGAGE & FINANCE, INC., does
hereby RELEASE the lien of said deed of trust and/or mortgage.
The DOT release is dated October 8, 2005, and signed by “David R. Jordan,”
“Asst. Secretary,” on behalf of Vanderbilt. It indicates that it was prepared by
Kimberly Blackwell of “CMH HOMES INC.”
The BML release provides in substantive part:
MECHANICS LIEN RELEASE
CMH HOMES, INC., . . . declares that it is the true and lawful
owner of that certain note and indebtedness secured by a MECHAN-
ICS LIEN CONTRACT executed by MARIA M TREVINO &
ARTURO TREVINO, dated JANUARY 5, 2002, and recorded in
OFFICIAL PUBLIC RECORDS in Volume 774 Page 629, in the
office of the COUNTY CLERK for JIM WELLS COUNTY, Texas to
which THE MECHANIC LIEN CONTRACT or specific reference is
hereby made; and for a valuable consideration in hand paid, the said
CMH HOMES, INC. does hereby release the lien of said MECHAN-
ICS LIEN CONTRACT and has been paid in full.
Like the DOT release, the BML release is dated October 8, 2005, indicates it was
prepared by Kimberly Blackwell of CMH, and is signed by Jordan as “Asst. Sec-
retary,” though Jordan’s signature is on behalf of CMH rather than Vanderbilt.
Vanderbilt argues that the BML release is invalid and therefore cannot be
considered in determining whether the DOT release is facially ambiguous,
because the BML release was purportedly issued by CMH, even though the lien
it purports to release had already been assigned from CMH to Vanderbilt. Even
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assuming that the language of the BML release can be considered in construing
the DOT release, the releases cannot reasonably be read to release Flores and
King’s underlying debt on the mobile home under the Retail Installment Con-
tract and the security interest in the mobile home secured thereby.
Both releases unambiguously state that they are releasing the Trevinos
from their obligations under the DOT and BML liens. Those liens, in turn, refer
to the Retail Installment Contract, but only insofar as they indicate that the Tre-
vinos’ obligations under the liens would be triggered should the terms of the con-
tract be violated. That is, the liens provided that the Trevinos’ land would be on
the line as collateral “in the event of default in the performance of any obligation
under the Retail Installment Contract hereby secured.”
The district court determined that the DOT release was ambiguous as to
whether it released Flores and King’s underlying debt, in part because of its use
of the word “mortgage”: The release states that Vanderbilt “is the true and law-
ful owner and holder of that certain note and indebtedness secured by a deed of
trust and/or mortgage executed by” the Trevinos and that Vanderbilt “does
hereby RELEASE the lien of said deed of trust and/or mortgage.” The court
noted that Black’s Law Dictionary defines “mortgage” not only as “[a] lien
against property that is granted to secure an obligation (such as a debt) and that
is extinguished upon payment or performance according to stipulated terms” and
“[a]n instrument (such as a deed or contract) specifying the terms of such a
transaction” but also as, “[l]oosely, the loan on which such a transaction is
based.” BLACK’S LAW DICTIONARY 1101-02 (9th ed. 2009). The court also pointed
to the statement in the BML release that CMH “does hereby release the lien of
said MECHANICS LIEN CONTRACT and has been paid in full” as creating
ambiguity as to whether that release was intended to mean that Flores and
King’s underlying debt had been paid in full, releasing the lien.
But that reading needlessly injects ambiguity into the plain terms of the
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releases. Neither release purports to release the Retail Installment Contract,
and neither purports to release any person other than the Trevinos from any
obligation. Nor should a court interpret a legal term, such as “mortgage,” found
in a legal document, in its “loose” or colloquial fashion. The DOT release does
refer to the “certain note and indebtedness” but specifically says that the indebt-
edness is “secured by a deed of trust and/or mortgage,” and it is the “deed of trust
and/or mortgage” that is being released. It is incorrect to interpret “mortgage”
as the debt itself, because a debt cannot be secured by itself.
A fair reading of the documents as a whole makes plain that they pur-
ported to release only the Trevinos from any obligation under the liens. The dis-
trict court erred in holding the releases ambiguous; instead, it should have held,
as a matter of law, that the releases did not release Flores and King from their
debt obligations. That erroneous legal determination not only permitted the jury
to release Flores and King from their obligations under the Retail Installment
Contract and prevent foreclosure, but also permitted their counterclaims to
proceedSSall premised on the erroneous notion that Vanderbilt had unlawfully
continued to demand payment and collect on an already-released debt.
Therefore, Flores and King’s counterclaims fail as a matter of law, so we need
not reach Vanderbilt’s appeal of the denial of the motions for new trial and
remittitur.
V.
The companies challenge the judgment on the Trevinos’ Chapter 12 claims;
the companies request judgment in their favor, a new trial, or remittitur. They
advance their arguments on several grounds.
A.
The companies argue that the district court improperly applied Texas’s
8
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“discovery rule” for claim accrual in concluding that the Trevinos’ claims were
not time-barred. The companies maintain that the Trevinos’ claims are barred
by the applicable four-year statute of limitations, because the allegedly fraudu-
lent liens were filed in 2002, and the Trevinos did not intervene with their Chap-
ter 12 claims until 2009 and 2010.
Generally, when a cause of action accrues is a question of law. As
a general rule, a cause of action accrues and the statute of limita-
tions begins to run when facts come into existence that authorize a
party to seek a judicial remedy. In most cases, a cause of action
accrues when a wrongful act causes a legal injury, regardless of
when the plaintiff learns of that injury or if all resulting damages
have yet to occur.”
Provident Life & Acc. Ins. Co. v. Knott, 128 S.W.3d 211, 221 (Tex. 2003) (citations
omitted). But the Texas Supreme Court also applies a “discovery rule,” under
which
the cause of action does not accrue until the injury could reasonably
have been discovered. The discovery rule is applied categorically to
instances in which the nature of the injury incurred is inherently
undiscoverable and the evidence of injury is objectively verifiable.
An injury is not inherently undiscoverable when it is the type of
injury that could be discovered through the exercise of reasonable
diligence. Recognizing the social benefit in granting repose after a
reasonable time, [the court] ha[s] described the rule as a very lim-
ited exception to statutes of limitations.
BP Am. Prod. Co. v. Marshall, 342 S.W.3d 59, 65-66 (Tex. 2011) (citations and
internal quotation marks omitted). The Trevinos concede that their claims
would be time-barred under the generally applicable “legal injury” rule for claim
accrual, but they urge that the district court correctly applied the discovery rule.
We applied the Texas discovery rule of claim accrual in an analogous con-
text in Kansa Reinsurance Co. v. Congressional Mortg. Corp. of Tex., 20 F.3d
1362 (5th Cir. 1994): Under Texas law, “the recording of a document in public
records serves as constructive notice for limitations purposes only for those per-
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sons who are under an obligation to search the records.”3 The court applied
Texas caselaw to conclude that “[o]nce [the plaintiff] acquired its interest as
assignee of [the property from the defendant], it was not required to make
continuous searches of the real property records for interests subsequently
secured.”4
The district court relied on Kansa in concluding that the Trevinos’ Chap-
ter 12 claims were inherently undiscoverable because the Trevinos, as land own-
ers, had no duty, nor could be reasonably expected, constantly to review the
county property records just in case some entity had filed a fraudulent lien. The
companies rely principally on three post-Kansa Texas Supreme Court decisions,
arguing that, because real property records, such as the allegedly fraudulent
liens, are publicly available, the Chapter 12 violations that gave rise to the Tre-
vinos’ claims were not inherently undiscoverable.5 Those decisions, however, are
in harmony with Kansa.
In the most recent of them, Marshall, the plaintiffs complained of the
defendant “lessee’s failure to continue good faith efforts to develop an oil and gas
lease.” Marshall, 342 S.W.3d at 66. The court held that “[b]ecause the [plain-
tiffs] had a duty to exercise reasonable diligence in protecting their mineral
interests, and since the low probability of success of [the defendant]’s continued
operations could have been discovered with the exercise of reasonable diligence,
the injury was not inherently undiscoverable.”
Id. at 67. The companies argue
3
Kansa, 20 F.3d at 1370 (citing Lightfoot v. Weissgarber,
763 S.W.2d 624, 627 (Tex. Civ.
App.SSSan Antonio 1989, writ denied); Cox v. Clay,
237 S.W.2d 798, 804 (Tex. Civ. App.SS
Amarillo 1950, writ ref’d n.r.e.)).
4
Id. (citing several Texas opinions indicating, inter alia, that “the ‘purpose of [the
Texas] recording laws is to notify subsequent purchasers . . . and not to give protection to the
alleged perpetrators of fraud’” (alterations in original)).
5
See BP Am. Prod. Co. v. Marshall, 342 S.W.3d 59 (Tex. 2011); Wagner & Brown, Ltd.
v. Horwood,
58 S.W.3d 732 (Tex. 2001); HECI Exploration Co. v. Neel,
982 S.W.2d 881 (Tex.
1998).
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that Marshall suggests that the discovery rule does not apply where “informa-
tion disclosing” the facts relevant to a claim “is available from . . . public rec-
ords,” even where the “public documents” in question are “technical” in nature.
Id. at 66. Thus, by extension, the discovery rule does not apply in the instant
case, because the liens were publicly available.
Marshall’s holding, however, was explicitly premised on its statement that
the plaintiff oilfield lessors “had a duty to exercise reasonable diligence in pro-
tecting their mineral interests.” Id. at 67. No similar duty exists here. The Tre-
vinos correctly draw a distinction between the situation in Marshall, which
involved an existing, known relationship between the parties, and the instant
case, in which there is no relationship between the parties, no reason for the
landowner to believe that any adverse claim has been made on his property, and
no reason to be checking regularly to see whether such a filing has been made.
The companies counter with Sherman v. Sipper, 152 S.W.2d 319 (Tex.
1941), which held a fraud claim time-barred where a cloud on the title of the
plaintiff’s property would have been apparent from a review of the public land
records:
[W]here a person has a right in property, and he claims fraudulent
statements were made concerning the title to such property, when
the records relating to such title are open to him he must exercise
reasonable diligence to discover such defect; and if by the exercise
of such diligence he could have discovered such defect and would
have known of his right, he is held to have known it, and limitation
[sic] will run against his claim from the time he could have made
such discovery by the exercise of ordinary diligence.
Id. at 321. But Sherman is also distinguishable insofar as it involved a pur-
chaser of land rather than a current owner or seller. Indeed, in HECI the court
specifically described Sherman as “holding in a fraud case that purchasers had
constructive notice of matters reflected in real property records and that limita-
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tions barred the claim.”6
Certainly, HECI indicates that real property title records can constitute
constructive notice to certain parties:
The need for stability and certainty regarding titles to real property
has led courts to hold that real property records can constitute con-
structive notice. For the same reasons, courts have imposed con-
structive notice in connection with in rem proceedings because such
proceedings are intended to bind all persons. . . . Thus, we held in
Mooney [v. Hardin, 622 S.W.2d 83 (Tex. 1981),] that a person inter-
ested in an estate admitted to probate is charged with notice of what
the will provides and that a claim for fraud based on exclusion from
a will must be brought within the applicable limitations period.
HECI, 982 S.W.2d at 887 (citing
Mooney, 622 S.W.2d at 85). The court
explained, however, that “when the rationale for imposing constructive notice is
lacking, public records have not been held to create an irrebuttable presumption
of notice.”
Id. (citations omitted). In making that statement, the court specifi-
cally cited precedent “holding that [an] amendment to [an] oil and gas lease exe-
cuted and recorded after [the] royalty owner acquired his interest was not con-
structive notice.”
Id. (emphasis added) (citing Andretta v. West,
415 S.W.2d 638,
642 (Tex. 1967)). By analogy, a lien filed and recorded on a property owner’s
property “after the owner acquired his interest” does not give that ownerSSas
distinguished from a prospective purchaser or a subsequent granteeSSconstruc-
tive notice of the lien. This precise distinction from Mooney was drawn in
6
HECI, 982 S.W.2d at 886-87 (emphasis added) (citing
Sherman, 152 S.W.2d at 321);
see also
id. at 886 (“We do not suggest . . . that all records maintained by the Railroad Com-
mission constitute constructive notice to royalty owners of their content, as is the case with
recorded instruments in a grantee’s chain of title.” (emphasis added)). The companies cite Poag
v. Flories,
317 S.W.3d 820 (Tex. App.SSFort Worth 2010, pet. denied), as an example of a case
in which a Texas court has “applied the legal injury rule to a closely analogous slander of title
claim, noting that public land records put claimants on constructive notice of title impair-
ments.” Like Sherman, however, Poag involved a claim by a purchaser who failed to inspect
property records for defects in title, rather than a current owner or seller of a property inter-
est. See
Poag, 317 S.W.3d at 826-27.
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Kansa, 20 F.3d at 1369.
Moreover, the HECI court made clear that the question whether a public
record provides constructive notice is not the same as the question whether a
claim premised on such a record is inherently undiscoverable. See HECI, 982
S.W.2d at 887. The determinative factor in HECI was the duty of mineral roy-
alty owners to exercise due diligence in seeking out the relevant information,
such as the existence of other operators, the existence of a common reservoir, or
whether adjoining operators have inflicted damage or drainage. See
id. at 886.
The same concern with whether plaintiffs “have ‘some obligation to exercise rea-
sonable diligence in protecting their interests’” was central to the decision in
Wagner & Brown, in which the court reasoned that, “[j]ust as a royalty owner
should determine whether operations in a common reservoir are harming its
interests, a royalty owner should exercise due diligence to determine whether
charges made against royalty payments are proper and reasonable.” Wagner &
Brown, 58 S.W.3d at 736 (quoting and citing
HECI, 982 S.W.2d at 886).
The companies claim that Trevinos had an obligation to examine the land
records, because they conveyed the lots at issue in 2003 and 2005, after the DOT
had been filed.7 But the companies cite no Texas statute or case indicating that
owners or sellers of general real propertySSas distinguished from holders of min-
eral royalty interests or property purchasersSSare obligated to check county land
records routinely. The situation before us is analogous to that in Kelley v. Rin-
kle, 532 S.W.2d 947, 949 (Tex. 1976), in which the court applied the discovery
rule to a false-credit-report claim because “[a] person will not ordinarily have
7
Cf. Trousdale v. Henry, 261 S.W.3d 221, 235-37 (Tex. App.SSHouston [14th Dist.]
2008, pet. denied). Unlike the Trevinos, the plaintiff in Trousdale “should have been suspici-
ous enough to inquire about the” facts giving rise to her legal malpractice claim based on
“information [she] knew that should have caused her to investigate more” and that “would
have prompted a reasonable person to investigate further and, ultimately, to discover that her
actions were dismissed and that she should consider filing a malpractice action.”
Id. at
236 & n.6.
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any reason to suspect that he has been defamed by the publication of a false
credit report to a credit agency until he makes application for credit to a concern
which avails itself of the information furnished by the credit agency.”
In sum, the district court correctly concluded that the filing of a fraudulent
lien against a property interest is inherently undiscoverable with respect to the
owner of the property interest under Texas law. Additionally, the Trevinos’
claims are “objectively verifiable” so as to meet the second requirement for appli-
cation of the discovery rule. See S.V. v. R.V., 933 S.W.2d 1, 6 (Tex. 1996). The
companies argue that the Trevinos “failed to meet their burden of proving that
they suffered an objectively verifiable injury” because they did not “present any
direct, physical evidence of actual harm or damage” resulting from the filing of
the liens on their property. But, as explained below, the Trevinos are entitled
to pursue a Chapter 12 claim absent any allegation of actual damages resulting
from the filing of the fraudulent liens.
More importantly, the claims center on the terms of extant physical docu-
ments (the BML and the DOT), and the Trevinos’ allegations of forgery relied on
testimony from the Trevinos and the authorized notary as to whether the Tre-
vinos had ever signed those documents; such evidence “provide[s] sufficient
objective verification of [wrongful conduct], even if it occurred years before suit
was brought, to warrant application of the discovery rule.” Id. at 15. Thus, the
district court correctly applied the discovery rule to toll the statute of limitations
on the Trevinos’ Chapter 12 claims.
B.
The companies contend that the Trevinos lack statutory standing to main-
tain a cause of action under Chapter 12. Section 12.003(a)(8) of the Texas Civil
Practice & Remedies Code gives standing to, “in the case of a fraudulent lien or
claim against real or personal property or an interest in real or personal prop-
14
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No. 11-40602
erty, the obligor or debtor, or a person who owns an interest in the real or per-
sonal property.”
The companies reason that the Trevinos do not qualify, because (1) the
fraudulent lien against them was released before they intervened, such that they
were no longer “obligor[s] or debtor[s]” under the fraudulent lien, and (2) they
had already conveyed their interests in the property before they intervened, such
that they were no longer “person[s] who own[] an interest in the real . . . prop-
erty.” TEX. CIV. PRAC. & REM. CODE § 12.003(a)(8). Put another way, the com-
panies urge that the Trevinos must prove that they met the requirements of
Section 12.003(a)(8) as of the time they intervened.
Texas courts have rejected the argument that a Chapter 12 damages claim
is mooted when a defendant unilaterally releases an allegedly fraudulent lien
after the claim was filed but before trial or final judgment.8 AlthoughSSunlike
in the instant caseSSthe lien at issue in Esau was still in existence at the time
of filing, extending Esau’s reasoning to the present situation is warranted.
Generally, there is standing once a plaintiff has suffered a legally cogniza-
ble injury or wrong for which the law provides a cause of action to seek redress.9
Though Texas courts hold that “standing is [generally] determined at the time
a suit is filed,” Bowers v. Matula, 943 S.W.2d 536, 539 (Tex. App.SSHouston [1st
Dist.] 1997), and as a result plaintiffs may lose standing if they seek to enjoin
ongoing or future harms, standing for a party complaining of a concrete past vio-
lation of a statutory right does not evaporate merely because the defendant has
since ceased to violate that right.
8
Esau v. Robinson, 2008 WL 2375861, at *1-2 (Tex. App.SSCorpus Christi June 12,
2008, no pet.) (“We refuse to hold that appellant's release of lien effectively precluded the
court’s ability to hear Robinson’s claim for damages.”).
9
See Meza v. Livingston, 607 F.3d 392, 399-400 (5th Cir. 2010) (stating that “a defen-
dant’s voluntary cessation of a challenged practice does not deprive a federal court of its power
to determine the legality of the practice”).
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Ultimately, the companies’ “statutory standing” argument is somewhat of
a mongrelSSan amalgam between the two pure-bred arguments of (1) mootness10
and (2) lack of injury.11 The case is not moot, because a live controversy contin-
ues as to whether the defendants’ actions constituted a violation of Chapter 12,
entitling the Trevinos to recover statutory damages. See, e.g., K.P. v. LeBlanc,
627 F.3d 115, 120 (5th Cir. 2010).
C.
Regarding whether a plaintiff is required to show injury to prevail on a
Chapter 12 claim, the “Liability” section of Chapter 12 provides:
(a) A person may not make, present, or use a document . . . with:
(1) knowledge that the document . . . is a . . . fraudulent lien
or claim against real or personal property or an interest in
real or personal property;
(2) intent that the document or other record be given the same
legal effect as a . . . document . . . evidencing a valid lien or
claim against real or personal property or an interest in real
or personal property; and
(3) intent to cause another person to suffer[] . . . financial
injury[] . . . .
(b) A person who violates Subsection (a) . . . is liable to each injured
person for:
(1) the greater of:
(A) $10,000; or
10
The argument for mootness would rely on the contention that the Trevinos’ interest
in their Chapter 12 claims were extinguished by their sale of the property or the filing of the
release on the DOT.
11
The argument for lack of injury would rely on the claim that the Trevinos are not
entitled to any recovery under Chapter 12 because they suffered no actual damages and thus
are not “injured person[s]” entitled to recovery within the meaning of section 12.003(a)(8).
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No. 11-40602
(B) the actual damages caused by the violation;
(2) court costs;
(3) reasonable attorney’s fees; and
(4) exemplary damages in an amount determined by the court.
TEX. CIV. PRAC. & REM. CODE § 12.002. The companies assert that they cannot
be “liable to” the Trevinos under § 12.002(b), because the Trevinos are not
“injured person[s]” under that section, given that the Trevinos did not sustain
any actual damages from the filing of the fraudulent lien. The district court
rejected that argument on the ground that “the language of Section 12.002(b)
indicates that statutory damages are an alternative to actual damages.” We
agree.
The companies can point to little textual or caselaw support for their argu-
ment that the Legislature’s use of the term “injured person” requires a plaintiff
to show actual damages to recover statutory damages under section 12.002-
(b)(1)(A). Instead, the plain reading of the statuteSSthat, as the district court
held, an award of $10,000 in statutory damages under subsection (b)(1)(A) is an
alternative to the award of actual damages under subsection (b)(1)(B)SSeviscer-
ates any argument that actual damages are necessary to recover under the
statute. The companies, by arguing that this reading renders the word “injured”
in the phrase “injured person” surplusage, fail to consider that the Legislature
merely meant that the person against whom a fraudulent lien is filed is “injured”
thereby because his statutorily protected rights have been invaded.
The district court’s interpretation is also supported by the structure of
Chapter 12. First, the elements of the claim do not require proof that the filing
of the fraudulent lien actually caused financial or other injury, but only that the
defendant “inten[ded] to cause” such injury. TEX. CIV. PRAC. & REM. CODE
§ 12.002(a)(3). Second, because Chapter 12 permits numerous public officials to
sue to recover damages for the filing of a fraudulent lien, id. § 12.003(a)(1)-(6),
17
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No. 11-40602
in addition to “the obligor or debtor” or property owner, id. § 12.003(8), it is sen-
sible that Section 12.002(b) clarifies that “[a] person who violates” Chapter 12
“is liable to each injured person” as opposed to those other “persons” permitted
to bring the action.
Neither does any of the caselaw cited by the companies support their con-
tention that, for a plaintiff to recover, Texas courts interpret the phrase “injured
person” to require actual damages. Indeed, some of the cases the companies cite
demonstrate that statutory damages without any evidence of actual injury is
found in other provisions of Texas law.12 The district court did not err in holding
that plaintiffs need not show actual damages to recover under Chapter 12.
D.
The companies argue that Chapter 41 of the Texas Civil Practice and Rem-
edies Code bars a court from awarding statutory damages under Chapter 12
absent a showing of actual damages because such damages would constitute
“exemplary damages” which “may be awarded only if damages other than
nominal damages are awarded.”13 The question whether Chapter 41 prohibits
awarding Chapter 12 “statutory damages” absent a showing of actual damages
12
See Marauder Corp. v. Beall, 301 S.W.3d 817, 822 (Tex. App.SSDallas 2009, no pet.)
(“A statutory minimum recovery does not require proof of actual damages. . . . [N]othing in
section 392.403 requires a person to prove actual harm or injury to recover the statutory dam-
ages. Thus, there is no relation between the statutory damages and the injury.”); Nguyen v.
Yovan,
317 S.W.3d 261, 271 (Tex. App.SSHouston [1st Dist.] 2009, pet. denied) (“[S]ection
[5.077] of the Property Code does not require a purchaser to prove actual harm or injury to
recover statutory damages.”); see also Flores v. Millennium Interests, Ltd.,
185 S.W.3d 427, 434
(Tex. 2005) (“The Fifth Circuit . . . asks whether a purchaser must prove actual harm or injury
to recover statutory damages for an incomplete annual [accounting] statement [required to be
provided by a property seller to a purchaser under an executory contract]. We find nothing
in the statute to suggest such a requirement.”).
13
See TEX. CIV. PRAC. & REM. CODE § 41.004(a); id. § 41.001(5) (defining “exemplary
damages” as “any damages awarded as a penalty or by way of punishment but not for compen-
satory purposes”).
18
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No. 11-40602
hinges on whether the $10,000 minimum damages provision in Section 12.002-
(b)(1)(A) should be considered “exemplary damages” for purposes of Chapter 41.
Although at first blush it may seem that Section 12.002(b)(1)(A) qualifies
as “exemplary damages” under Chapter 41, such a conclusion is undermined by
Section 12.002(b)(4), which separately permits “exemplary damages in an
amount determined by the court,” evincing the Legislature’s intent that the
$10,000 minimum-damages provision in Section 12.002(b)(1)(A) not be consid-
ered “exemplary damages.” We agree with the Trevinos that the best reading
of the damages permitted under Section 12.002(b)(1)(A) is that they are not
exemplary damages but rather “statutory damages” of a generally compensatory
nature even if not designed to compensate for any particular, actual harm suf-
fered by the individual named in a fraudulent lien.
In this respect, Chapter 12 is strikingly similar to Chapter 123 of the
Texas Civil Practice and Remedies Code, which prohibits the interception of
communications without consent and provides “statutory damages” of up to
$10,000 for each intercepted communication in addition to actual damages in
excess of $10,000, punitive damages, attorneys’ fees, and costs. TEX. CIV. PRAC.
& REM. CODE § 123.004. In rejecting a defendant’s argument that the “statutory
damages” provision of Chapter 123 amounted to punitive damages, one federal
court noted that the purpose of statutory damages was “deterring the public
harm associated with the activity proscribed, rather than seeking to compensate
each private injury caused by a violation. When designed to address ‘public
wrongs,’ statutory damages need not be limited to actual loss or damages felt by
a private party.” DirecTV, Inc. v. Cantu, 2004 WL 2623932, at *4 (W.D. Tex.
Sept. 29, 2004) (citation omitted).
The public harms compensated by statutory damages are especially easy
to see in the context of Chapter 12. The filing of fraudulent liens undermines
the reliability of the public records system on which so many rely, including land
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No. 11-40602
owners, purchasers, local governments, title companies, insurers, and realtors.
Fraudulent liens increase transaction costs for all market participants, even if
harm to particular individuals is not readily discernable. As the Legislature has
found, fraudulent liens have “clogged the channels of commerce.” House Com-
mittee, Bill Analysis, HB1185, 75th Leg. (Tex. 1997). Accordingly, damages
under Section 12.002(b)(1)(A) are not “exemplary damages” and thus are not
subject to the limitations of Chapter 41.
Nor is Section 12.002(b)(1)(A) unconstitutional under the Texas or United
States Constitution, as the companies claim. Under the Texas Constitution,
a fine becomes constitutionally excessive only in an extraordinary
case in which the fine becomes so manifestly violative of the consti-
tutional inhibition as to shock the sense of mankind. The wide lati-
tude the state has in imposing fines is exceeded and denies due pro-
cess only where the penalty prescribed is so severe and oppressive
as to be wholly disproportioned to the offense and obviously
unreasonable.
Henderson v. Love, 181 S.W.3d 810, 816 (Tex. App.SSTexarkana 2005, no pet.)
(citing Pennington v. Singleton,
606 S.W.2d 682, 690 (Tex. 1980)) (internal quo-
tation marks omitted). “A primary consideration in determining whether a fine
is excessive is whether it is fixed with reference to the object it is to accomplish.”
Pennington, 606 S.W.2d at 690. Given these standards, Texas’s choice to award
at least $10,000 for imposing fraudulent liens on another’s propertySSwhich can
cause much disruption in real-property commerce and impugns the validity of
public recordsSSis not so shocking and unreasonable as to violate the state con-
stitution. Moreover, because the companies make no argument in support of
their contentions that this award is unconstitutional, the issue is waived.
Neither does Chapter 12 violate the Excessive Fines Clause or Due Process
Clause of the United States Constitution. In support of their due process argu-
ment, the companies cite State Farm Mutual Automobile Insurance Co. v. Camp-
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No. 11-40602
bell, 538 U.S. 408 (2003), in which the Court invalidated a punitive-damages
jury award of $145 million where the compensatory damage was only $1 million,
and BMW of North America, Inc. v. Gore,
517 U.S. 559 (1996), in which the Court
invalidated a similar award of $2 million in punitive damages where compensa-
tory damages were only $4000. The companies note that the ratio between puni-
tive and compensatory damages led to the invalidation in those cases; in the
instant case, the ratio between the award ($120,000) and the actual damages
($0) is infinitely higher.
The cited cases are inapplicable, because they concern discretionary jury
awards of punitive damages rather than a fixed statutory-damage provision.
This discretion, the arbitrariness that might accompany it, and principles of fair
notice are what led the Court to invalidate the award under the Due Process
Clause. See Campbell, 538 U.S. at 416-17. No such discretion or problem with
notice is applicable here, because the $120,000 award was mandated by statute
as a minimum penalty.
Moreover, the “ratio test” pressed by the companies is only one factor in
the Court’s three-factor test: “(1) the degree of reprehensibility of the defendant’s
misconduct; (2) the disparity between the actual or potential harm suffered by
the plaintiff and the punitive damages award; and (3) the difference between the
punitive damages awarded by the jury and the civil penalties authorized or
imposed in comparable cases.” Id. at 418. The third factor, which evaluates the
difference between a jury award and analogous civil penalties, reinforces the
conclusion that decisions such as Campbell and Gore are inapplicable to a case
involving the civil penalties themselves.
Nor is the Excessive Fines Clause a bar to recovery. Even assuming that
the Clause has been incorporated against the states,14 the fine in questionSS
14
See McDonald v. City of Chi., 130 S. Ct. 3020, 3035 n.13 (2010) (“[T]he only rights not
(continued...)
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$10,000 for filing a fraudulent lienSSis not “grossly disproportional to the gravity
of a defendant’s offense.” United States v. Bajakajian, 524 U.S. 321, 334 (1998).
E.
The companies mount one final challenge to the jury award, maintaining
that the district court erred in interpreting Chapter 12 to permit a $10,000 stat-
utory-damages award for the filing of each lien against each of the three defen-
dants, and in favor of each of the plaintiffs, for a total of $120,000 in statutory
damages. That argument, however, lacks support in both caselaw and the text
of the statute. The text supports the district court’s ruling that (1) the compan-
ies are liable for $10,000 to each plaintiff and (2) each of the companies is sepa-
rately liable for $10,000 per lien per plaintiff.
The statute provides that “[a] person who violates Subsection (a)” by pre-
senting a fraudulent lien “is liable to each injured person[]” for damages. TEX.
CIV. PRAC. & REM. CODE § 12.002(a)-(b). That plain languageSS“is liable to each
injured person”SSis directly contrary to the companies’ assertion that damages
may be awarded only for each piece of property subjected to a fraudulent lien
rather than to each claimant. Both Maria and Arturo Trevino were named on
the allegedly fraudulent liens. None of the cases cited by defendants in support
of their interpretation of the statute is relevant to this issue.
The companies’ policy arguments also lack merit. They urge that if a part-
nership with one hundred partners owned a piece of property, under the district
court’s interpretation a person filing a fraudulent lien would be liable for $1 mil-
14
(...continued)
fully incorporated [to the states] are (1) the Third Amendment’s protection against quartering
of soldiers; (2) the Fifth Amendment’s grand jury indictment requirement; (3) the Seventh
Amendment right to a jury trial in civil cases; and (4) the Eighth Amendment’s prohibition on
excessive fines. We never have decided whether . . . the Eighth Amendment’s prohibition of
excessive fines applies to the States through the Due Process Clause.”) (citing Browning-Ferris
Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 276, n.22 (1989))..
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lion in damages. But Texas law defines “person” to include a partnership, so the
defendant’s hypothetical would see the partnership receiving only $10,000. See
TEX. GOV’T CODE § 311.005(2).
Additionally, neither the text of the statute nor any caselaw supports the
companies’ position that all persons who filed a single lien against a piece of
property would be liable jointly for one $10,000 Chapter 12 award. Again, the
statute provides that “[a] person” who violates the statute is liable under its
damages provisions; there is no reference to joint liability. If there were suffi-
cient evidence that each of the defendants violated the elements of Chapter 12
by making, presenting, or using each fraudulent lien, no part of the statute pro-
hibits holding each liable.
VI.
CHI appeals the district court’s ruling that it had personal jurisdiction
over CHI. The court denied CHI’s Federal Rule of Civil Procedure 60(b)(4) post-
judgment motion to vacate the judgment on this basis, concluding that there was
specific personal jurisdiction over CHI because CHI marketed mobile homes and
the land-in-lieu financing to Texas consumers, the Trevinos’ claims arose out of
those contacts, and the exercise of personal jurisdiction would not offend notions
of fair play and substantial justice.15
“In general, whether in personam jurisdiction can be exercised over a
defendant is a question of law and subject to de novo review by this court. This
de novo standard, we have held, applies to personal-jurisdiction challenges under
Rule 60(b)(4), just as it does in other contexts.” Jackson v. FIE Corp., 302 F.3d
15
“Because Texas’s long-arm statute reaches to the constitutional limits, the question
[the panel] must resolve is whether exercising personal jurisdiction over the defendant offends
due process.” Clemens v. McNamee,
615 F.3d 374, 378 (5th Cir. 2010), cert. denied,
131 S. Ct.
3091 (2011).
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515, 521 (5th Cir. 2002) (citations and internal quotation marks omitted). “[This
court] review[s] the district court’s findings of fact underlying its disposition of
a rule 60(b)(4) motion for clear error.” Goetz v. Synthesys Techs., Inc., 415 F.3d
481, 483 (5th Cir. 2005). Our test for specific personal jurisdiction considers
(1) whether the defendant has minimum contacts with the forum
state, i.e., whether it purposely directed its activities toward the
forum state or purposefully availed itself of the privileges of con-
ducting activities there; (2) whether the plaintiff’s cause of action
arises out of or results from the defendant’s forum-related contacts;
and (3) whether the exercise of personal jurisdiction is fair and rea-
sonable. The minimum contacts inquiry is fact intensive and no one
element is decisive; rather the touchstone is whether the defen-
dant’s conduct shows that it reasonably anticipates being haled into
court. The defendant must not be haled into a jurisdiction solely as
a result of random, fortuitous, or attenuated contacts, or of the uni-
lateral activity of another party or third person.
McFadin v. Gerber, 587 F.3d 753, 759 (5th Cir. 2009).
The denial of the Rule 60(b)(4) motion was based on three factual findings
as to CHI’s Texas contacts: (1) that CHI owned the mobile home sold to Flores
and King; (2) that the Retail Installment Contract effecting the sale of the home
was executed in Texas; and (3) that CHI marketed the land-in-lieu program to
residents of Texas by a January 7, 2002, “prospect letter” and a similar letter to
“Future Home Buyer,” both of which bore “Clayton Homes, Inc.” letterhead and
a Corpus Christi, Texas, address below the “Clayton Homes, Inc.” name.
The Trevinos also point to several documents, each titled an “Assumed
Name Certificate,” filed in 1997 with the Texas Secretary of State, by “James J.
Clayton” on behalf of “Clayton Homes, Inc.,” indicating that “Clayton Homes,
Inc.” would be conducting business in “all” Texas counties. The Trevinos contend
that those documents mean that “CHI did business in Texas as ‘CMH Homes,
Inc.’”
CHI contends that those contacts were actually maintained by CMH and
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No. 11-40602
that the district court’s attribution of these activities to CHI ignored the defen-
dants’ distinct corporate identities. Undoubtedly, the minimum-contacts analy-
sis is complicated by the convoluted overlapping of corporate identifiers, identi-
ties, and officers between CHI and CMH. That recurring confusion is evident in
the assumed-name certificates and is particularly pronounced in CHI’s 2002
Securities and Exchange Commission Form 10-K annual report, which repeat-
edly refers to numerous “Clayton” mobile home entitiesSSincluding CHI, CMH,
and VanderbiltSSas one “company.”
After examining all the record evidence, we conclude that CHI has failed
to demonstrate that the factual findings as to CHI’s Texas contacts, on which the
district court based its conclusion that CHI is subject to specific personal juris-
diction, were clearly erroneous because of the conflicting documentary evidence
SSand particularly in light of the fact that the confusion stems from CMH’s and
CHI’s arguably misleading paperwork.16 The district court did not err in exercis-
ing personal jurisdiction over CHI.
VII.
The companies challenge various evidentiary rulings and the sufficiency
of the evidence used to justify the verdict. The companies argue that a new trial
was warranted because of the (1) exclusion of Arturo Trevino’s fifteen-year-old
drug conviction; (b) exclusion of expert testimony; (c) exclusion of Flores’s failure
to file income tax returns; and (d) exclusion of notes from certain telephone con-
versations. The defendants have failed to brief several of these arguments
16
See ICEE Distributors, Inc. v. J&J Snack Foods Corp., 325 F.3d 586, 591 (5th Cir.
2003) (“Because [the plaintiff] prevailed in the district court, we must review the complaint
and any factual disputes in favor of the exercise of personal jurisdiction, and all reasonable
inferences from the facts thus established are drawn in favor of the prevailing plaintiff.” (cita-
tions and internal quotation marks omitted)).
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adequately and have therefore abandoned them.17 In any event, the arguments
lack merit.
Vanderbilt and CHI also aver that the district court erred in denying their
renewed motions for JMOL, on the ground that the jury was not presented with
sufficient evidence to sustain the findings of liability on the Chapter 12 claims.
Again, establishing a violation of Chapter 12 required proof that the defendant
“ma[d]e, present[ed], or use[d] a document . . . with: (1) knowledge that the docu-
ment . . . [was] a fraudulent lien . . . ; (2) intent that the document . . . be given
the same legal effect as a court record . . . evidencing a valid lien . . . ; and
(3) intent to cause another person to suffer[] . . . financial injury.” We
review the district court’s denial of a renewed JMOL motion de
novo. This court must review the entire record, drawing all reasona-
ble inferences in favor of the nonmoving party, but making no credi-
bility determinations or weighing any evidence. Thus, although [the
court] must review the record as a whole, it must disregard all evi-
dence favorable to the moving party that the jury is not required to
believe. Reviewing the record in this light, [the denial of JMOL
should be reversed] if the facts and inferences point so strongly in
favor of [the defendant] that a rational jury could not arrive at a
contrary verdict.
Perez v. Tex. Dep’t of Crim. Justice, 395 F.3d 206, 215 (5th Cir. 2004) (citations
and internal quotation marks omitted).
The district court rejected Vanderbilt’s sufficiency argument on the basis
that the Trevinos “adduced plentiful evidence to support that CMH Homes
employees acted with actual or apparent authority of all three of the Clayton
entities, including Vanderbilt, when they prepared and filed the fraudulent docu-
ments.” The court cited testimony of Lance Kimball, one of the CMH employees
who regularly closed land-in-lieu transactions and the employee responsible for
17
See Procter & Gamble Co. v. Amway Corp., 376 F.3d 496, 499 n. 1 (5th Cir. 2004);
FED. R. APP. P. 28(a)(9)(A).
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the sale of the mobile home to Flores and King, as “reveal[ing] that Vanderbilt
would communicate with the sales associates responsible for each transaction,
and either approve the documentation or indicate that more information or fur-
ther verification was required.” Specifically, Kimball testified that he “would
communicate directly with Vanderbilt” through the approval process during a
transaction such as the land-in-lieu and that he “would provide [Vanderbilt] with
the customer’s information, and they would send stuff back, like, ‘we need this’
or ‘we need appraisal,’ or something like that.”
Additionally, Paul Nichols, the president of Vanderbilt, testified that “the
notary practices in Store 214 w[ere] deplorable,” in that “[e]vidently they were
passing the notary stamp around and other people were using it and signing the
notary’s name.” He stated that “one of the jobs of Vanderbilt is to review the
credit application, review the documents that make up the credit application
which would be the various documents signed by the customer and notarized,”
and also to review the “deed of trust, mechanic’s lien, those types of documents.”
The jury reasonably could have inferred that Vanderbilt personnelSSwho were
directly involved in arranging the land-in-lieu financing packagesSSwere com-
plicit in the fraudulent notarizing practices at the Corpus Christi store and were
involved in preparing the fraudulent liens filed against the Trevinos with the
intent that they would be given legal effect and would cause the Trevinos to
incur financial injury.
CHI argues that the Trevinos failed to submit any evidence that CHI was
involved in the filing of the BML or DOT liens, did so with the intent to cause
the Trevinos to suffer injury, or was aware of, approved, or authorized any
notary fraud. But as with Vanderbilt, a review of the record amply supports the
conclusion that CMH employees filed the liens knowing that they had been
fraudulently notarized and with the intent that they would be given the legal
effect of obligating the Trevinos under the land-in-lieu program, thereby making
27
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out the elements of a Chapter 12 violation. More importantly, there was suffi-
cient evidence from which the jury could conclude that CMH employees acted
under the apparent authority of CHI in carrying out these actions.
Although most of the evidence shows it was CMH employees who were
most directly involved in the forging of the notary signatures, the jury was free
to disregard or discredit evidence and various witnesses’ testimony attempting
to explain the corporate structuring arrangements and supposed misfilings and
misunderstandings that led to CHI’s name being used in association with CMH’s
dealings. Given the conflicting evidence regarding whether relevant actors were
employed by or acting on behalf of CMH or CHI when conducting the activities
that led to the filing of the fraudulent liens, and drawing all reasonable infer-
ences in favor of the verdict, there was sufficient evidence to support the jury’s
finding that CHI was liable for violating Chapter 12.
VIII.
For the reasons given, the judgment and award of damages with respect
to the Trevinos’ claims is AFFIRMED. The judgment as to Vanderbilt’s claims
against Flores and King, as well as Flores and King’s counterclaims, is
REVERSED and REMANDED for further proceedings as needed.
28
