Briercroft Service Corp. v. De Los Santos

• Decision Date: 31 May 1988
• Docket Number: No. 04-87-00194-CV,04-87-00194-CV
• Citation: 776 S.W.2d 198
• Parties: BRIERCROFT SERVICE CORPORATION, et al., Appellants, v. Rodolfo DE LOS SANTOS, et ux., Appellees.
• Court: Texas Court of Appeals

Page 198

776 S.W.2d 198

BRIERCROFT SERVICE CORPORATION, et al., Appellants, v. Rodolfo DE LOS SANTOS, et ux., Appellees.

No. 04-87-00194-CV.

Court of Appeals of Texas,

San Antonio.

May 31, 1988.

Rehearing Denied Aug. 23, 1989.

Charles B. Frye, Robert W. St. Clair, Curry, Curry & Robinson, Lubbock, for appellants.

Charles Manning, Beeville, for appellees.

Before CANTU, REEVES and BISSETT, ^* JJ.

OPINION ON MOTION FOR REHEARING

BISSETT, Justice (Assigned).

The opinion of this Court in this case, which was delivered and filed on March 23, 1988, is withdrawn and this opinion is substituted therefor. The judgment of this Court, which was also filed on March 23, 1988, is also withdrawn, and a new judgment is substituted therefor.

Both plaintiffs and defendants have filed motions for rehearing. The motion of plaintiffs is denied and the motion for defendants is granted.

Involved in this appeal are alleged violations of the Federal Trade Commission Rule, 16 C.F.R. § 433.2 (1976), TEX.BUS. & COM.CODE ANN. § 17.41, et seq., (Vernon 1987), and TEX.REV.CIV.STAT.ANN. art. 5069-1.01 et seq. (Vernon 1987).

IN GENERAL

Plaintiffs Rodolfo De Los Santos and his wife, Lydia De Los Santos, filed suit on June 5, 1984, against Steve Barrera, d/b/a Alamo Builders and Supply, Briercroft Service Corporation and Briercroft Savings Association to recover damages as a result of an alleged breach of a home solicitation transaction. On appeal, the principal issue is whether the assignees of a home improvement contract can be held jointly and severally liable for the contractors' misconduct in failing to construct the improvements in a good and workmanlike manner. Plaintiffs predicate their right to a recovery of damages against Briercroft Service Corporation and Briercroft Savings Association strictly on the undisputed facts that both were assignees of the home improvement contract and Briercroft Savings Association was the holder of the note executed by plaintiffs in payment for the contracted home improvements.

In late September or early October 1983, an agent of Alamo Builders and Supply, hereafter "Alamo," visited plaintiffs in their home in Kennedy, Texas, and discussed with them the possible construction of home improvements to plaintiffs' residence (their homestead). Plaintiffs' Exhibit 4 purports to be a "Retail Installment Contract," which described the proposed home improvements to be made. It was not signed by Alamo or by plaintiff Rodolfo De Los Santos, although it was signed by plaintiff Lydia De Los Santos. Since it was not signed by all parties, we do not notice it further. Thereafter, a document entitled "Contract for Labor and Materials and Trust Deed," Plaintiffs' Exhibit 2, was entered into by and between plaintiffs and Alamo. It was dated October 3, 1983, and provided for the construction of certain improvements to plaintiffs' home, and was signed by plaintiffs, as "Owners," and by Alamo, as "Contractor." The contract provided that plaintiffs would pay the contractor $13,000.00 for the construction of the improvements, and that the $13,000.00 would be evidenced by a note for said Also, on October 3, 1983, plaintiffs completed and signed a "Credit Application for Property Improvement Loan," Plaintiffs' Exhibit 6, in order to obtain a loan pursuant to Title I of the National Housing Act. It recites that plaintiffs were applying to Briercroft Service Corporation for a loan of $13,000.00, to be repaid in 120 months, and that Briercroft Service Corporation "will provide the funds." The improvements to be made to plaintiffs' home were detailed therein. The application was submitted to an approved lender, Briercroft Service Corporation, a wholly owned subsidiary corporation of Briercroft Savings Association, for a determination of whether it would make the loan. The next day, October 4, 1983, Briercroft Service Corporation issued its "Advance Notice," Defendants' Exhibit B, to plaintiffs indicating it intended to loan plaintiffs $13,000.00, to be repaid in monthly installments of $216.34, with interest thereon at the rate of 15 1/2% per annum. The Notice further stated that Briercroft Service Corporation would disburse the amount of the loan ($13,000.00) to Alamo when a "Completion Certificate" was completed by plaintiffs and received by it "indicating that the work has been satisfactorily completed." In the Notice, plaintiffs were advised that they should not sign the completion certificate until the contract had been fulfilled to their satisfaction. In connection with the aforesaid Application, plaintiffs and Alamo signed "Truth in Lending Disclosures," Plaintiffs' Exhibit 3.

amount, to be executed by plaintiffs upon completion of the improvements, payable to the order of the contractor in 120 equal monthly installments of $216.34, bearing interest at the rate of 15 1/2% per annum.

In the Truth in Lending Disclosures, we note the following statements:

1. Annual Percentage Rate ("the cost of your credit as a yearly rate:)--15 1/2%;

2. Finance Charge ("the dollar amount the credit will cost you")--$12,960.80;

3. Amount Financed ("the amount of credit provided to you or on your behalf")--$13,000.00;

4. Total of Payments ("the amount you will have paid after you have made all payments as scheduled")--$25,960.80; and

5. Total Sales Price "the total cost of your purchase on credit, including your down payment of $-0")--$25,960.80.

The home improvements proceeded, and plaintiffs signed a Completion Certificate on October 31, 1983, Plaintiffs' Exhibit 7, wherein they stated:

I (we) certify that all articles and materials have been furnished and installed and the work satisfactorily completed on premises indicated in my (our) credit application.

Briercroft Service Corporation disbursed the $13,000.00 to Alamo upon receipt of the Completion Certificate, and funded a National Housing Act Loan under Title I.

Plaintiffs then executed a note in the principal sum of $13,000.00, payable to the order of Alamo. Apparently, the note was executed on October 31, 1983, and was endorsed by Alamo to Briercroft Service Corporation and by it to Briercroft Savings Association. The contract was assigned by Alamo to Briercroft Service Corporation on October 3, 1983, and by the latter to Briercroft Savings Association on November 1, 1983. The first installment on the note and loan became due and payable on December 31, 1983. Plaintiffs did not make any payments on the note.

Plaintiffs were not satisfied with the work performed by Alamo, and in late December, 1983, complained to Briercroft Service Corporation about the defective workmanship and the failure of Alamo, after demand made upon it, to remedy and correct the defects and flaws in the work on their home. Briercroft did nothing with respect to the complaint.

Plaintiffs, in their trial petition, alleged that Alamo had misrepresented the terms and effect of the contract, and had breached various warranties relating to the workmanship and materials used in the home improvement work. Briercroft Service Corporation and Briercroft Savings Association were joined as defendants. Plaintiffs alleged that they were entitled to damages Briercroft Service Corporation and Briercroft Savings Association, in addition to their original answer to plaintiffs' petition, also filed a counterclaim against plaintiffs whereby they sought to recover the balance due on the aforesaid note; it was waived at the trial. Alamo did not file an answer and did not appear at the trial.

                against all defendants for violations of the Federal Trade Commission Rule, 16 C.F.R., hereafter the "FTC Rule";  TEX.BUS. & COM.CODE ANN. § 17.41, et seq., the Deceptive Trade Practice Act, hereafter the "DTPA," and TEX.REV.CIV.STAT.ANN. art. 5069-1.01 et seq., hereafter the "Consumer Credit Code."   They also alleged that defendants Briercroft Service Corporation and Briercroft Savings Association were so "inextricably intertwined" with Alamo in the home improvement contract transaction so as to be jointly and severally liable for the actual damages caused by Alamo as a result of the defective work done under the contract
                

Partial summary judgment in favor of plaintiffs against all defendants as signed on November 13, 1986, wherein it was found and decreed:

1. The transaction forming the basis of this suit was a home solicitation transaction on plaintiffs' otherwise unencumbered homestead.

2. The indebtedness evidenced by the Contract for Labor and Materials and Trust Deed was assigned less than five days after execution by plaintiffs to defendant BRIERCROFT SERVICE CORP., and was filed for record in the Kansas County Clerk's office on November 14, 1983.

3. Defendant BRIERCROFT SERVICES CORP. failed to provide notice to plaintiffs of the negotiation or sale of the evidence of indebtedness to defendant BRIERCROFT SAVINGS ASSOCIATION.

4. No notices of negotiation were provided to plaintiffs upon negotiation of the contracts involved in the transaction.

5. Plaintiffs were consumers, seeking goods and services from defendant STEVE C. BARRERA, d/b/a ALAMO BUILDERS & SUPPLY, and said defendant was conducting trade or commerce in his dealings with plaintiffs', as defined by TEX.BUS. & COM.CODE § 17.45, as amended and effective on the pertinent dates herein.

6. Defendant BRIERCROFT SERVICE CORP. is and at all pertinent times herein was a Texas corporation which provided funding to defendant STEVE C. BARRERA, d/b/a ALAMO BUILDERS & SUPPLY for the transaction with plaintiffs.

7. Defendant BRIERCROFT SAVINGS ASSOCIATION is and at all pertinent times herein was a Texas state charged savings and loan association which provided funding to defendant STEVE C. BARRERA, d/b/a ALAMO BUILDERS & SUPPLY for the transaction with plaintiffs.

8. In the transaction in question, plaintiffs were invited by defendant STEVE C. BARRERA, d/b/a ALAMO BUILDERS & SUPPLY or his agents to obligate themselves to pay $12,960.80 in interest or finance...