Brown v. De La Cruz

• Citation: 156 S.W.3d 560
• Decision Date: 03 December 2004
• Docket Number: No. 03-0703.,03-0703.
• Parties: Columbus P. BROWN, a/k/a C.P. Brown, Petitioner, v. Arturo DE LA CRUZ, Respondent.
• Court: Texas Supreme Court

156 S.W.3d 560

Columbus P. BROWN, a/k/a C.P. Brown, Petitioner, v. Arturo DE LA CRUZ, Respondent.

No. 03-0703.

Supreme Court of Texas.

Argued April 14, 2004.

Decided December 3, 2004.

Bryan H. Hall, Richard & Hall, P.C., El Paso, Jeffery B. Thompson, Alto, NM, for petitioner.

Anthony C. Aguilar, Law Office of Tony Aguilar, El Paso, for respondent.

Deborah G. Hankinson, Rick Thompson, Law Office of Deborah Hankinson, PC, Dallas, for amicus curiae Texas Financial Services Association.

Greg Abbott, Atty. Gen., Danica Lynn Milios, Barry Ross McBee, Edward D. Burbach, Rafael Edward Cruz, Office of Atty. Gen., Austin, for amicus curiae State of Texas.

Michael S. Lee, The Lee Firm, Corpus Christi, for amicus curiae Jose Torres.

Justice BRISTER delivered the opinion of the Court, in which Chief Justice JEFFERSON, Justice HECHT, Justice OWEN, Justice O'NEILL, Justice WAINWRIGHT, and Justice MEDINA joined.

Since 1995, the Texas Property Code has required that sellers by executory contract (or "contract for deed") of certain residential property in Texas must record and transfer a deed within thirty days of final payment.¹ In this case, a seller subject to the statute delivered title almost four years too late.

From 1995 to 2001, the Property Code provided that failure to comply was "subject to a penalty" of up to $500 a day.² By amendment in 2001, the Code now provides that such a seller is "liable to the purchaser for ... liquidated damages" in the same amount.³ The 2001 amendment clearly provides a private cause of action for purchasers; the question presented is whether the original statute (which alone governs this case) did as well.

The trial court held it did not, and granted a take-nothing summary judgment. The court of appeals reversed.⁴ For the reasons stated below, we agree with the trial court that a private cause of action was not created until 2001, and accordingly reverse the court of appeals' judgment.

I

On December 3, 1984, Columbus P. Brown agreed to sell unimproved real property described as Lot 3, Block 5, Roseville Subdivision, El Paso County, Texas to Arturo De La Cruz for $13,500. The executory contract provided for immediate possession by De La Cruz, but Brown was to retain title until De La Cruz paid the purchase price plus 12% interest (totaling $26,063.83). De La Cruz's wife (whom he had remarried during the contract period) personally made the final payment on June 9, 1997, and requested that her name be added to the deed. Because De La Cruz was not present and only he was listed as buyer on the contract for deed, Brown's employees directed her to an attorney to accomplish her request. De La Cruz did not hire an attorney due to the expense, and Brown did not deliver a warranty deed within thirty days, as required both by the parties' contract and the enactment of Texas Property Code section 5.102 in 1995.⁵

Almost four years later, still having received no deed, De La Cruz filed the present lawsuit against Brown on January 26, 2001. He alleged no lost sales or other actual damages of any kind; instead, he sought $664,500 in section 5.102 statutory penalties — almost fifty times the original sales price. On March 30, 2001, Brown recorded what he denominated a "replacement warranty deed" delivering title to De La Cruz.

The parties filed cross-motions for summary judgment, De La Cruz contending he was entitled to the statutory penalties, and Brown contending section 5.102 did not grant De La Cruz a private cause of action, and alternatively that recovery was barred by laches and the constitutional limit on excessive fines.⁶ The trial court granted Brown's motion for summary judgment without specifying reasons.

The court of appeals reversed, finding nothing in section 5.102 authorizing the Attorney General to collect the statutory penalty, and no one else to enforce the statute if De La Cruz could not.⁷ The court remanded for consideration of Brown's other defenses.⁸ We granted Brown's petition to review this issue of statutory construction.⁹

II

When a private cause of action is alleged to derive from a constitutional or statutory provision, our duty is to ascertain the drafters' intent.¹⁰ For example, in City of Beaumont v. Bouillion, we held that the Texas Constitution created a private action for damages only if the language of the specific provisions involved clearly implied one.¹¹ Thus, we noted that the takings section implied a private action for damages by prohibiting takings "without adequate compensation,"¹² while the free speech and assembly sections implied only a private equitable action (not damages) by declaring that violations "shall be void."¹³ Federal law is to the same effect.¹⁴

Accordingly, the answer in this case must be found in the language of section 5.102. When enacted in 1995, that section provided in pertinent part:

(a) The seller shall transfer recorded, legal title of the property covered by the executory contract to the purchaser not later than the 30th day after the date the seller receives the purchaser's final payment due under the contract.

(b) A seller who violates Subsection (a) is subject to a penalty of:

(1) $250 a day for each day the seller fails to transfer the title to the purchaser during the period that begins the 31st day and ends the 90th day after the date the seller receives the purchaser's final payment due under the contract; and

(2) $500 a day for each day the seller fails to transfer title to the purchaser after the 90th day after the date the seller receives the purchaser's final payment due under the contract.¹⁵

The statute expressly provides for a penalty, but is silent about who may collect it.

Sixty years ago, we construed a statute containing precisely the same language to exclude a private action for damages. In Agey v. American Liberty Pipe Line Co., an oil producer brought suit under a statute providing that violations of certain rules governing pipelines "shall be subject to a penalty" of up to $1000 per day.¹⁶ The statute in that case gave more direction than section 5.102, in that it directed half of the penalty was "recoverable in the name of the State" and the other half "in the name of and for the use of the party or parties aggrieved."¹⁷ Nevertheless, we concluded "that a statute which imposes a penalty must be strictly construed, and that a person who seeks to recover a penalty thereunder must bring himself clearly within the terms of the statute."¹⁸ Because the individual in that suit had not joined the attorney general and nothing in the statute authorized him to bring suit on the State's behalf, we held the statute did not authorize him to bring the action on his own.¹⁹

We believe this is still the correct interpretation. Generally, a statutory penalty or fine is not payable to a private litigant.²⁰ For example, the Texas Whistleblower Act authorizes a private action for "damages" to private litigants,²¹ but a "civil penalty" of up to $15,000 collectible only by public prosecutors.²² Virtually all other statutes that imposed a daily penalty in 1995 when section 5.102 was enacted authorized collection only by the Attorney General or some other governmental entity or representative.²³ Without some indication in section 5.102 that this penalty belongs to De La Cruz, we do not believe he has brought himself so clearly within the statute's terms as to justify implying a private cause of action.

This construction of section 5.102 is supported by the subsequent amendments to it.²⁴ When the section was amended and renumbered as Property Code section 5.079 in 2001, paragraph (a) was left intact, but paragraph (b) was amended to read:

(b) A seller who violates Subsection (a) is liable to the purchaser for:

(1) liquidated damages in the amount of:

(A) $250 a day for each day the seller fails to transfer the title to the purchaser during the period that begins the 31st day and ends the 90th day after the date the seller receives the purchaser's final payment due under the contract; and (B) $500 a day for each day the seller fails to transfer title to the purchaser after the 90th day after the date the seller receives the purchaser's final payment due under the contract; and

(2) reasonable attorney's fees.²⁵

De La Cruz asserts this amendment made explicit what the Legislature had intended in 1995. For three reasons, we disagree.

First, if the Legislature intended merely to clarify who could recover the penalty, the substitution of "liable to the purchaser" would have been sufficient. Instead, by changing "penalty" to "liquidated damages" and adding a provision for attorney's fees, the Legislature changed not just the recipient but the nature of the amounts assessed.

Second, the Legislature made its amendment of paragraph (b) applicable only to violations occurring after September 1, 2001; "[a] violation that occurs before September 1, 2001, is covered by the law in effect when the violation occurred, and the former law is continued in effect for that purpose."²⁶ By contrast, paragraph (a), which was left intact, was made applicable to all contracts for deed, whether signed before or after the amendment's effective date. If the Legislature intended neither to be a substantive change, it is hard to see why one was made prospective only.

Third, the Bill Analysis to the 2001 amendment indicates the amendment was a change rather than a clarification:

Redesignates existing Section 5.102 as Section 5.079. TITLE TRANSFER. Provides that a seller who violates Subsection (a) is liable to the purchaser for, rather than subject to a penalty of, liquidated damages in certain amounts, and reasonable attorney's fees.²⁷

In Subaru of America, Inc. v. David McDavid Nissan, Inc., we reviewed similar language in a bill analysis, and concluded that by describing the amendment as making the Motor Vehicle Board's jurisdiction "exclusive, rather than general" as to some "rather than all aspects" of marketing, the...