CAUSE NO. 97-08-14714-CV
GLORIA NAVARRO n/k/a § IN THE DISTRICT COURT
MARIA GLORIA DEL RIO; §
LEONEL and MARTHA GARZA; §
JOSE M. and PETRONILA MUNOZ; §
REYES and ALMA HERNANDEZ; §
VICTOR and ROSARIO HERNANDEZ; §
LUIS and JUANITA GARCIA; §
RICARDO and LUZ ESQUIVEL; §
MARIO CRUZ; JUAN P., GABRIELA, §
HOMERO and MARIA BARRIOS; §
LAURO and BEATRIZ GUTIERREZ; §
JAIME and EDNA VARGAS; §
RODOLFO and GABRIELA GOMEZ; §
GUILLERMO and LIDIA M. ROJAS; §
ALEJANDRO GUARDIOLA; §
SANTOS and SAN JUANITA §
GUARDIOLA; JORGE DAVID and §
MARTHA ESCARENO; EDUARDO § 293RD JUDICIAL DISTRICT
RAMIREZ; MARIO and ROSALINDA §
MEDRANO; MARIA CONCEPCION §
NOLAZCO and son JOSE PRUDENCIO §
NOLAZCO; JUAN G. and SYLVIA §
P. SIFUENTES; MANUEL and SONIA §
URTEAGA; and NANCY CHAVEZ, §
PLAINTIFFS §
Vs. §
§
JACK K. DUNCAN d/b/a §
CHULA VISTA SUBDIVISION; §
JACKIE DUNCAN; J.D.'s §
DRAGON, INC. a/k/a J.D.'s §
DRAGGON, INC., and DARRELL §
E. LEE d/b/a CHULA VISTA §
SUBDIVISION, CHULA VISTA §
HEIGHTS, and LA CENTER §
LAND, INC., §
DEFENDANTS. § MAVERICK COUNTY, TEXAS
PLAINTIFFS' SECOND AMENDED ORIGINAL PETITION
NOW COME GLORIA NAVARRO n/k/a MARIA GLORIA DEL RIO; LEONEL and MARTHA
GARZA; JOSE M. and PETRONILA MUNOZ; REYES and ALMA HERNANDEZ; VICTOR and
ROSARIO HERNANDEZ; LUIS and JUANITA GARCIA; RICARDO and LUZ ESQUIVEL;
MARIO CRUZ; JUAN P., GABRIELA, HOMERO and MARIA BARRIOS; LAURO and
BEATRIZ GUTIERREZ; JAIME and EDNA VARGAS; RODOLFO and GABRIELA GOMEZ;
GUILLERMO and LIDIA M. ROJAS; ALEJANDRO GUARDIOLA; SANTOS and SAN
JUANITA GUARDIOLA; JORGE DAVID and MARTHA ESCARENO; EDUARDO RAMIREZ;
MARIO and ROSALINDA MEDRANO; MARIA CONCEPCION NOLAZCO and son JOSE
PRUDENCIO NOLAZCO; JUAN G. and SILVIA P. SIFUENTES; MANUEL and SONIA
URTEAGA; and NANCY CHAVEZ; hereinafter Plaintiffs, and complain of JACK K. DUNCAN
d/b/a CHULA VISTA SUBDIVISION; JACKIE DUNCAN; J.D.'s DRAGON, INC., a/k/a J.D.'s
DRAGGON, INC., and DARRELL E. LEE d/b/a CHULA VISTA SUBDIVISION, CHULA
VISTA HEIGHTS, and LA CENTER LAND, INC., hereinafter Defendants, and for cause of action
show:
I.
DISCOVERY
1.1 Plaintiffs intend to conduct discovery pursuant to Level Two of Rule 190 of the
Texas Rules of Civil Procedure.
II
PRELIMINARY STATEMENT
2.1 This is a civil action for damages and injunctive relief brought by Plaintiff
consumers who purchased single family lots and/or dwellings for their personal, family, and
household purposes from subdivider and general contractor, JACK K. DUNCAN, d/b/a/ as
CHULA VISTA SUBDIVISION. Plaintiff consumers subsequently discovered that the homes and
septic systems they purchased from Defendant JACK K. DUNCAN had material defects due to
DUNCAN's systematic pattern of deficient construction, brought about by cost cutting measures
designed to maximize his profits to the detriment of unaware buyers.
2.2 Thereafter Defendant JACK K. DUNCAN and his alter ego, J.D.'s DRAGON, INC.,
in concert with Defendant JACKIE DUNCAN engaged in an unlawful and systematic collection
scheme designed to wrongfully foreclose on the properties of Plaintiffs.
2.3 Plaintiffs also seek to cancel or offset the amount due on the notes currently held by
Defendant DARRELL E. LEE as he failed to give notice of negotiation to Plaintiffs.
Consequently, the notes are subject to the claims and defenses Plaintiffs have against Defendant
JACK K. DUNCAN.
III
PARTIES
3.1 Plaintiffs GLORIA NAVARRO n/k/a MARIA GLORIA DEL RIO; LEONEL and
MARTHA GARZA; JOSE M. and PETRONILA MUNOZ; REYES and ALMA HERNANDEZ;
VICTOR and ROSARIO HERNANDEZ; LUIS and JUANITA GARCIA; RICARDO and LUZ
ESQUIVEL; MARIO CRUZ; JUAN P., GABRIELA, HOMERO and MARIA BARRIOS;
LAURO and BEATRIZ GUTIERREZ; JAIME and EDNA VARGAS; RODOLFO and
GABRIELA GOMEZ; GUILLERMO and LIDIA M. ROJAS; ALEJANDRO GUARDIOLA;
SANTOS and SAN JUANITA GUARDIOLA; JORGE DAVID and MARTHA ESCARENO;
EDUARDO RAMIREZ; MARIO and ROSALINDA MEDRANO; MARIA CONCEPCION
NOLAZCO and son JOSE PRUDENCIO NOLAZCO; JUAN G. and SILVIA P. SIFUENTES;
MANUEL and SONIA URTEAGA; and NANCY CHAVEZ; hereinafter Plaintiffs, are individuals
who reside in Eagle Pass, Maverick County, Texas.
3.2 Defendant JACK K. DUNCAN is an individual who now resides at 5585 North Cambell
Road, Las Vegas, Nevada 89129. At times pertinent to this action he was the owner, subdivider,
and developer of real property situated in Maverick County, Texas, that is known as Chula Vista
Subdivision and general contractor for the single family dwellings at issue in this action. This
Second Amended Petition may be served upon Defendant JACK K. DUNCAN by serving Paul J.
Tarski, Attorney of Record for Defendant.
3.3 Defendant JACKIE DUNCAN is an individual who resides in Crystal City, Zavala
County, Texas. This Second Amended Petition may be served upon Defendant JACKIE
DUNCAN by serving Paul J. Tarski, Attorney of Record for Defendant.
3.4 Defendant J.D.'s DRAGON, INC., a/k/a J.D.'s DRAGGON, INC., is a corporation
organized and existing by virtue of the laws of the State of Washington. J.D.'s DRAGON, INC., is
jointly and severally liable for the wrongful conduct of Defendant JACK K. DUNCAN in that (a)
Defendant JACK K. DUNCAN is its sole shareholder and chief executive officer, (b) Defendant
JACK K. DUNCAN and J.D.'s DRAGON, INC., do not maintain separate offices, but rather J.D.'s
DRAGON, INC.'s business address is actually the location of Defendant JACK K. DUNCAN's
personal residence, (c) Defendant JACK K. DUNCAN has represented to Plaintiffs that he and
J.D.'s DRAGON, INC., are one and the same, (d) Defendant J.D.'s DRAGON, INC., has no
independent telephone number, but rather uses Defendant JACK K. DUNCAN's telephone line, (e)
all assets of J.D.'s DRAGON , INC., are actually owned by Defendant JACK K. DUNCAN and/or
have been assigned to J.D.'s DRAGON, INC., by Defendant JACK K. DUNCAN, and (f)
Defendant JACK K. DUNCAN formed J.D.'s DRAGON, INC., solely for his personal benefit, to
defraud Plaintiffs, and to avoid personal liability for misconduct committed while doing business
individually and as CHULA VISTA SUBDIVISION. Thus, JACK K. DUNCAN and J.D.'s
DRAGON, INC., are alter egos of each other. Defendant J.D.'s DRAGON, INC., may be served
the Second Amended Petition by serving its Attorney of Record, Paul J. Tarski.
3.5 Defendant DARRELL E. LEE is an individual with a residence in both Eagle Pass,
Maverick County, Texas and Vancouver, Clark County, Washington. He is doing business in
Maverick County, Texas, as Chula Vista Subdivision, Chula Vista Heights, and La Center Land,
Inc. The Second Amended Petition may be served on this Defendant at 12010 Salmon Creek
Avenue, Vancouver, Washington 98686.
IV
VENUE
4.1 Venue is proper in Maverick County, Texas, because all or a substantial part of the
events or omissions giving rise to Plaintiffs' claims occurred in said county. Further, this suit
involves real property situated in Maverick County, Texas.
V.
STATEMENT OF FACTS
5.1 At times pertinent to this action Defendant JACK K. DUNCAN was the owner,
developer, and subdivider of real property situated in Maverick, Dimmitt, and Zavala Counties.
The property in Maverick County is known as Chula Vista Subdivision.
5.2 Between 1993 and 1997, Plaintiffs separately entered into agreements for the sale
and purchase of residential lots sold by Defendant JACK K. DUNCAN d/b/a CHULA VISTA
SUBDIVISION. All the agreements with the exception of those entered into by Plaintiffs MARIA
CONCEPCION NOLAZCO and son JOSE PRUDENCIO NOLAZCO, JUAN G. and SILVIA P.
SIFUENTES, and NANCY CHAVEZ included the purchase of a residence and septic system to be
built by Defendant JACK K. DUNCAN. The Agreements of the NOLAZCO, SIFUENTES, and
CHAVEZ Plaintiffs included the construction of a septic system.
5.3 Defendant JACK K. DUNCAN at all times pertinent to this action acted as general
contractor, and was to build the residences and septic systems in a good and workmanlike manner.
5.4 Defendant JACK K. DUNCAN when building the residences sold at CHULA VISTA
SUBDIVISION, including the homes sold to Plaintiffs, engaged in a systematic pattern of deficient
construction, brought about by cost cutting measures, designed to maximize his profits to the
detriment of unaware buyers.
5.5 After moving into their new homes all house buyer Plaintiffs, with the exception of
MANUEL and SONIA URTEAGA, discovered a number of material defects due to Defendant
JACK K. DUNCAN's negligent, defective, and deficient construction of Plaintiffs' homes. These
include, but are not limited to;
The defective construction of the foundations has proximately caused the foundations and floors of
the residences to crack and to shift such that portions of the floors rise while other portions sink;
The defective construction of the foundations and/or interior walls has proximately caused the
interior walls to rise upward and separate from the floors;
The defective construction of the foundations and/or interior walls has proximately caused the
interior walls to form large cracks which are increasing in size;
As a proximate cause of the defective construction of the foundations, and/or interior walls and
doors, some doors and windows will not close properly and/or become stuck when closed;
As a proximate cause of the defective construction of the foundation the bricks enclosing the
houses are cracking and/or coming loose;
The defective construction of the foundations and/or interior walls has proximately caused the
interior walls to shift and lean;
As a proximate cause of the defective construction of the foundations and/or interior walls the
ceilings are cracking;
As a proximate cause of the defective construction of the foundations and/or exterior walls and/or
windows the exterior walls are leaning creating undue pressure that is creating large gaps between
the windows and exterior walls;
As a proximate cause of the defective construction of the foundations and/or walls and the exterior
doors, many large gaps have been created letting hot and cold air enter the residences; and allowing
access to rodents, small bugs, and flies; and when it rains water enters the residences;
As a proximate cause of the defective construction of the foundations, the plumbing of the homes is
being crushed, such that that water lines taking water into the houses have to be replaced, and such
that the sinks, lavatories, and tubs of the houses frequently clog up.
As a proximate cause of the defective construction of the septic systems, sewage backs up into
Plaintiffs' homes making the systems and homes unsanitary, a health hazard, and the sewage back
up causes foul odors to permeate Plaintiffs' homes. Further, the septic systems need to be emptied
more frequently than is normal.
5.6 Defendant JACK K. DUNCAN's construction of the septic systems was negligent,
deficient, and defective in that the drainfields were improperly graded; and/or incompatible
connectors were used at the joints; and because the drainfields were refilled with the clay soil that
was dug up rather than the class two sandy soils required by State mandated standards. Clay is
considered unsuitable for drainfields because its pore and particle size are so small that the soil
cannot transport water quickly. Further, clay becomes sticky and plastic when wet. As a
consequence the evaporation rate is inadequate causing sewage to back up into Plaintiffs' homes.
5.7 Defendant JACK K. DUNCAN was fully aware of the deficiencies and defects in
the construction of Plaintiffs' residences and septic systems, and other houses and septic systems
built by Defendant JACK K. DUNCAN in CHULA VISTA SUBDIVISON. As a licensed septic
system installer he knowingly deviated from State mandated standards. Furthermore, he
knowingly deviated from CHULA VISTA SUBDIVISION's uniform construction standards and its
architectural drawing when building the houses sold to Plaintiffs.
5.8 Whenever in this Petition it is alleged that Defendant JACK K. DUNCAN, did
anything it is meant that Defendant JACK K. DUNCAN, his agents, employees, servants,
representative, or subcontractors did such things or acts and that at the time such acts were done,
they were done with the full authorization or ratification of Defendant JACK K. DUNCAN or were
done in the normal and ordinary course and scope of employment of Defendant JACK K.
DUNCAN's agents, employees, servants, representative, or subcontractors.
5.9 The shifting and cracking of the foundations of Plaintiffs' homes, and the above
foundation problems, are due in substantial part to:
(a) Defendant JACK K. DUNCAN's failure to conduct geotechnical and structural design studies to
determine foundation design parameters for the types of soil found at CHULA VISTA
SUBDIVISION;
(b) Failure to properly prepare the sites before pouring the foundations;
(c) Use of 2,500 PSI concrete rather than the 3,000 PSI concrete required by CHULA VISTA
SUBDIVISION's uniform construction standards;
(d) Inadequate thickness of the concrete slabs which deviates from CHULA VISTA
SUBDIVISION's uniform construction standards and its architectural drawing;
(e) Inadequate grade-beam thickness and width which deviates from CHULA VISTA
SUBDIVISION's uniform construction standards and its architectural drawing;
(f) Failure to reinforce the concrete slabs with steel rebar which is the customary practice in
Maverick County, which includes the area of CHULA VISTA SUBDIVISION; and
(g) Placement of welded wire fabrics at the bottom of the concrete slabs rather than the upper 1/3 of
slab floor thickness.
5.10 Plaintiffs informed Defendant JACK K. DUNCAN of the problems with their homes on
numerous occasions but he refused to repair, and continues to refuse to repair the construction
problems, as this would entail repairing all the homes he built at CHULA VISTA SUBDIVISION.
5.11 Plaintiffs provided Defendant JACK K. DUNCAN notice of all defects and an offer of
settlement pursuant to § 27.004 of the Texas Property Code. Defendant JACK K. DUNCAN did
not respond to Plaintiffs' notices and offers of settlement as provided in §27.004 of the Texas
Property Code. The construction defects in the homes purchased by Plaintiffs are progressively
getting worse and Defendant JACK K. DUNCAN has done nothing to remedy the situation.
5.12 Plaintiffs after purchasing their homes, learned that Defendant JACK K. DUNCAN
engaged in the pattern and practice of selling as new, homes which he repossessed and touched up
to make presentable, while concealing construction defects from unaware buyers. Plaintiffs
GLORIA NAVARRO n/k/a MARIA GLORIA DEL RIO, and LEONEL and MARTHA GARZA
were victims of this fraudulent scheme.
5.13 The cosmetic repairs to above foundation problems, done by Defendant JACK K.
DUNCAN to hide material defects in the construction of Plaintiffs' home, did not cure the
construction defects. As the problems above the foundation are due to the defective foundation,
the problems hidden by the superficial repairs, remanifest themselves as the unstable foundation
continues to move. Any meaningful repairs to above-foundation problems must be done after the
foundation problems are corrected.
5.14 In selling homes to Plaintiffs' Defendant JACK K. DUNCAN made other material
misrepresentations. These include, but are not limited to the following:
(a) In addition to the home and septic system, Defendant JACK K. DUNCAN agreed to build a car
port for Plaintiffs JAIME and EDNA VARGAS. The car port was never built by Defendant JACK
K. DUNCAN.
(b) Defendant JACK K. DUNCAN agreed to convey to Plaintiff ALEJANDRO GUARDIOLA a
residential lot that was 440 feet in length. Defendant JACK K. DUNCAN actually transferred to
Plaintiff ALEJANDRO GUARDIOLA a residential lot that is only 325 feet in length.
(c) Defendant JACK K. DUNCAN represented that the homes were new, yet the NAVARRO,
GARZA, and GUARDIOLA Plaintiffs have since learned that the homes were used and/or that
portions of the homes were built using old lumber.
(d) Plaintiffs GUILLERMO and LIDIA M. ROJAS agreed to pay Defendant $45,000.00 for the lot,
and single family home Defendant JACK K. DUNCAN agreed to build thereon. Defendant,
however, seeks $49,500.00 from the ROJAS as he filed a note for the full $45,000.00 that does not
credit the $4000.00 down payment made by the ROJAS Plaintiffs on their purchase.
(e) Defendant JACK K. DUNCAN also agreed to finish the construction to the ceiling of the air
conditioning closet in the house sold to the ROJAS Plaintiffs, through this gaping hole in the
ceiling, the outside of the ROJAS home can be seen. Defendant JACK K. DUNCAN never
remedied this problem as agreed.
(f) Defendant JACK K. DUNCAN relocated Plaintiffs LAURO and BEATRIZ GUTIERREZ to a
house adjacent to the ones purchased by Plaintiffs, while he did repairs to the septic system as
sewage was backing into the home purchased by the GUTIERREZ Plaintiffs, after completing the
repairs Defendant sold the GUTIERREZ house to other buyers. Defendant JACK K. DUNCAN
continued to accept the payments made by the GUTIERREZ while living in the house to which
they were relocated. By his conduct Defendant reformed the CHULA VISTA SUBDIVISION
PURCHASE AGREEMENT with respect to the location of the house on the now adjacent lot.
Defendant, JACK K. DUNCAN, however never reduced this modification to writing. Defendant
LEE wrongfully evicted and interfered with the PURCHASE AGREEMENT the GUTIERREZ
Plaintiffs entered into with Defendant JACK K. DUNCAN
5.15 In building the homes sold to Plaintiffs, Defendant impliedly warranted that the residences
were built in a good and workmanlike manner and that they were habitable as constructed.
Defendant JACK K. DUNCAN also made express warranties to Plaintiffs. In constructing the
homes sold to Plaintiffs, Defendant breached these implied and expressed warranties, and Plaintiffs
who relied upon these warranties have suffered injury.
5.16 Defendant JACK K. DUNCAN when selling the residential lots and houses to homebuyer
Plaintiffs documented the sale and purchase using uniform CHULA VISTA SUBDIVISION
PURCHASE AGREEMENTS. Under the Agreements Plaintiff homebuyers agreed to purchase
prices ranging from $42,000.00 to $70,000.00; initial down payments ranging from $2,000.00 to
$6,000.00; with the balance to be paid in 360 installments at an interest rate of 10 per cent per
annum. At the time of the transactions Defendant JACK K. DUNCAN failed to provide the
disclosures of property conditions required by Texas Property Code Sections 5.008 or 5.069.
5.17 The CHULA VISTA SUBDIVISION PURCHASE AGREEMENTS required Defendant
JACK K. DUNCAN to provide homebuyer Plaintiffs and file for record a lien note, warranty deed
with vendor's lien, and a deed of trust. These legal documents were not provided to homebuyer
Plaintiffs at the time of the initial transactions, but rather at a later date.
5.18 Defendant JACK K. DUNCAN failed to provide to Plaintiffs the written disclosures as
required by the federal Truth in Lending Act, 15 U.S.C. §1601, et seq., hereafter "TILA", in a
format substantially similar to that required by Federal Reserve Board Regulation Z, 12 C.F.R.
§226, including but not limited to the: (1) Annual Percentage Rate; (2) Finance Charge; (3) Amount
Financed; (4) Total of Payments; and (5) Total Sales Price.
PLAINTIFFS MARIA CONCEPCION NOLAZCO AND SON
JOSE PRUDENCIO NOLAZCO
5.19 Plaintiffs MARIA CONCEPCION NOLAZCO and her then minor son JOSE
PRUDENCIO NOLAZCO, on August 5, 1996 entered into an agreement to purchase a lot from
Defendant JACK K. DUNCAN for their personal, family, and household purposes. The
NOLAZCO Plaintiffs agreed to pay $14,800.00, in 180 monthly installments of $159.05 beginning
on September 5, 1996, at the rate of 10 percent per year for Lot 48, Unit 5, School Block, Chula
Vista Subdivision, Maverick County, Texas. Defendant JACK K. DUNCAN agreed to sell said
lot for said purposes under said terms.
5.20 Plaintiff MARIA CONCEPCION NOLAZCO urgently needed a place where she
and her three young children could live. Defendant JACK K. DUNCAN, aware of the urgent
situation in the purchase agreement disclosed that the septic system would be installed by no later
than September 1, 1996, and that water was available at the lot. Within a week of the purchase
date the NOLAZCO Plaintiffs had their mobile home moved to their new lot.
5.21 The NOLAZCO Plaintiffs were not able to establish their residence on their new lot
as quickly as anticipated because the lot was fenced and Defendant JACK K. DUNCAN unlawfully
withheld the keys to the gates even after the NOLAZCO's purchase. Further, the septic system
was not completed until September 26, 1996, that same day the NOLAZCO Plaintiffs obtained the
County Inspector's approval to connect the water utility service to their home. The water,
however, could not be connected as the utility provider's water line was not set up to service the lot
purchased by the NOLAZCO Plaintiffs. The water utility company would charge $3,500 to run
the water line across FM 2030 to the NOLAZCO Plaintiffs' lot. Defendant JACK K. DUNCAN
refused and continues to refuse to cover the costs. Defendant LEE has also refused to connect the
NOLAZCO lot to the water lines of the utility. By their refusal, Defendants have knowingly
violated applicable terms of a settlement agreement reached with the State of Texas.
5.22 The NOLAZCO Plaintiffs, being persons of limited means, had no choice but to live
on the property without water. They were forced to haul water from their neighbor's in buckets for
their household purposes. This situation is not conducive to a humane or sanitary environment.
5.23 Plaintiff MARIA CONCEPCION NOLAZCO has since learned that the residential
lot she purchased from Defendant JACK K. DUNCAN had already been sold to third person, who
has now conveyed it by warranty deed to a fourth another person. Thus, the NOLAZCO Plaintiffs
have been making payments and paying taxes on a lot Defendant JACK K. DUNCAN was not
authorized to sell. Neither Defendant JACK K. DUNCAN nor Defendant LEE can provide the
clear title required by the Purchase Agreement.
5.24 On December 2, 1997, Defendant DARRELL E. LEE, hereafter, LEE, purchased
accounts receivable and real property from Defendant JACK K. DUNCAN. The receivables
represent debts then owed by more than 300 individuals, including Plaintiffs, who purchased
houses and/or lots intended for residential purposes from Defendant Jack Duncan. The foregoing
transaction is evidenced by an Agreement, Warranty Deed With Vendor's Lien, Real Estate Lien
Note, Deed of Trust, Agreement for Partial Release of Liens, and a Transfer of Liens all of even
date. The relevant Deed of Trust is filed with the Clerk of Maverick County at Volume 479 page
259 of the Deed of Trust Records.
5.25 Pursuant to the Agreement entered into by Defendants, Defendant JACK K.
DUNCAN would remain responsible for the shoddy construction, although Defendant LEE agreed
to give his best efforts to placate complainers by doing minor repairs and not insisting that missed
payments be made up all at once. The debts were transferred to LEE at 80% of their value in order
for Defendant LEE to undertake the hassle of collecting.
5.26 Pursuant to the Agreements of December 2, 1997, Defendant LEE assumed
responsibility of assuring that all lots in Unit 5 of CHULA VISTA SUBDIVISION sold by
Defendant JACK K. DUNCAN had a connection to the water supply from El Indio Water Supply
Corporation the water utility that services the area.
5.27 Pursuant to the Transfer of Liens dated December 2, 1997, Defendant JACK K.
DUNCAN expressly "waive[d] and release[d] any and all present and future rights to establish or
enforce the liens" that were the subject of the transfer. See, attached Plaintiff Exhibit 1.
5.28 The Agreement, Warranty Deed With Vendor's Lien, and Deed of Trust all
recognize that Defendant LEE accepted the deed with full knowledge that the conveyance was
subject to numerous outstanding deeds and contracts of sale executed by Defendant JACK K.
DUNCAN, and Defendant LEE assumed all of the obligations of Defendant DUNCAN with
respect to title as to these transactions. The documents further evidence that Defendant LEE
would continue in the business of selling residential lots. To facilitate this operation, Defendant
DUNCAN agreed to sign release of liens once the debt on each individual property was paid in full,
so that clear title could be given to purchasers. This obligation is made manifest by the Agreement
for Partial Release of Liens which in pertinent part, provides that "[DUNCAN] conveyed a
substantial amount of property to [LEE]...evidenced by an 'Agreement' between the parties and
warranty deed...[I]n these documents...DUNCAN agreed to execute partial releases of the liens...to
enable [LEE] to sell the property in parcels." See, attached Plaintiffs' Exhibit 2.
5.29 In accordance with the above described transaction between Defendant JACK K. DUNCAN
and Defendant LEE, DUNCAN on December 3, 1997, signed and sent Plaintiffs a letter which
stated it was being sent to all 300 debtors and advising them that he had sold their debt to
Defendant LEE and advising them to make all future payments to LEE. See, attached Plaintiffs'
Exhibit 3. The Plaintiffs, acting in reliance on this notification started sending their payments to
Defendant LEE, and have been doing so for the last 4 years. The letter did not comply with the
requirements that the Texas Finance Code, Section 345.304, sets forth for notice of negotiation,
transfer or assignment of consumer debt in Texas.
5.30 For over 31/2 years Defendant JACK K. DUNCAN did nothing that would lead
Plaintiffs to believe they should send their payments to him rather than Defendant LEE. However
on April 17, 2001, Defendants JACK K. DUNCAN and J.D.'s DRAGON, INC., who was assigned
the former's remaining interest in the debts, without ever providing Plaintiffs notice of negotiation,
and without ever foreclosing on Defendent LEE, sent all purchasers of residential lots at Chula
Vista Subdivision, whose notes had been transferred to Defendant LEE, letters demanding that they
stop sending their note payments to Defendant LEE, and start paying Defendant J.D.'s DRAGON,
INC. See, Letter addressed to Plaintiff JUAN SIFUENTES attached hereto as Plaintiffs' Exhibit 4.
Defendants JACK K. DUNCAN and J.D.'s DRAGON, INC., on May 18, 2001, sent Chula Vista
Subdivision note payers an open letter telling them that any further payments to Defendant LEE
were "like a free gift to Mr. Lee." See, attached Plaintiffs' Exhibit 5. This collection activity
undertaken by Defendants JACK K. DUNCAN and J.D.'s DRAGON, INC., was undertaken
without legal authority, in contravention of the real estate transaction entered into with Defendant
LEE on December 2, 1997 and contradicted the December 3, 1997 letter.
5.31 The foregoing letters created confusion among the purchasers of residential lots,
including Plaintiffs, whose notes were assigned to Defendant LEE by Defendant JACK K.
DUNCAN. To get out of the web of confusion, created by the above described letters, Plaintiffs
JORGE and MARTHA ESCARENO made arrangements to pay off their note to Defendant LEE.
Defendant JACK K. DUNCAN after the ESCARENO home was paid off refused to sign the
release of lien required by the Agreement for Partial Release of Liens entered into with Defendant
LEE on December 2, 1997. Instead Defendants JACK K. DUNCAN and J.D.'s DRAGON, INC.,
by letter dated June 14, 2001, notified Plaintiff JORGE ESCARENO that they had a lien on his
home for $27,778.07. See, attached Exhibit 6.
5.32 Plaintiffs MANUEL and SONIA URTEAGA refinanced their home with Conseco
Finance Servicing Corp. to get out of the foregoing predicament. Defendant LEE told the
URTEAGAS that the pay off amount good through October 5, 2001, was $55,914.71. See,
attached Plaintiffs' Exhibit 7. Defendant JACK K. DUNCAN, however, refused to sign the release
of lien until he was paid an additional $2,895.56. See, attached Plaintiffs' Exhibit 8. In order to
pay the additional sum wrongfully exacted by Defendants JACK K. DUNCAN and J.D.'s
DRAGON, INC., the URTEAGA Plaintiffs had to extend the note with Conseco Finance Servicing
Corporation from 20 to 25 years. This extended the $620.00 monthly payments for another 5
years, which total an additional $37,200.00 in payments.
5.33 Defendant JACK K. DUNCAN and Defendant LEE have an ongoing dispute
regarding monies due pursuant to the terms of the real estate transaction of December 2, 1997.
Defendant JACK K. DUNCAN claims that Defendant LEE is in default. Defendant LEE claims
he is not in default. Due to this disagreement Defendants JACK K. DUNCAN and JACKIE
DUNCAN instituted non-judicial foreclosure proceedings against Defendant LEE. On May 24,
2001, the Judge of the 365th Judicial District Court entered a temporary restraining order
(hereinafter "TRO") in the case styled Lee v. Duncan and number 01-05-17,353 on the docket of
said court. The TRO enjoined Trustee's Sales scheduled for June 5, 2001, and further enjoined
Defendant DUNCAN "from communicating with and encouraging others to send payments to him
instead of Defendant[LEE]." See, Certified copy of TRO attached hereto as Plaintiffs' Exhibit 9.
A temporary injunction has also been issued enjoining Defendants JACK K. DUNCAN and
JACKIE DUNCAN from holding a Trustee's Sale on the 300 debts Defendant LEE purchased from
Defendant JACK K. DUNCAN. See, Declaration of Darrell E. Lee dated November 27, 2001,
attached as Plaintiffs' Exhibit 10; and Temporary Injunction attached as Plaintiffs' Exhibit 11. A
hearing on the merits was scheduled for February, 2002. Id. See, Lee Declaration at ¶ 6. The
Hearing date has since than been extended.
5.34 Defendant LEE has not returned to Defendant JACK K. DUNCAN any right to
enforce payment or foreclose on any piece of property encompassed by the real estate transaction
of December 2, 1997, and has not declared the ESQUIVEL, ESCARENO, MEDRANO, and
CHAVEZ Plaintiffs in default on their payments. Id., at ¶ 4.
5.35 Despite the orders and admonition of the 365th District Court in the above described
proceedings Defendants JACKIE DUNCAN, JACK K. DUNCAN, and J.D.'s DRAGON, INC.,
have proceeded with their unlawful debt collection scheme in an unabated fashion.
5.36 Defendants JACK K. DUNCAN and J.D.'s DRAGON, INC., followed up their April
and March letters with letters dated August 5 and/or 7, 2001. These letters notified plaintiffs and
other purchasers of residential lots at Chula Vista Subdivision that their accounts would not be
credited with payments made to Defendant LEE after April 2001, that they were opening an office
at Espantosa Subdivision in Crystal City, Texas, on August 9, 2001, and eventually at Chula Vista.
See, Plaintiff's Exhibits 12 and 13 which are attached hereto.
5.37 On August 26, 2001, Defendant JACK K. DUNCAN wrote to Plaintiffs and other
purchasers of residential lots at Chula Vista Subdivision threatening foreclosure if they did not send
him the April, May, June, July, and August payments. To give his unlawful collection scheme a
semblance of legality Defendant JACK K. DUNCAN stated that Plaintiffs should consult with
Texas Attorney General, Don Gutierrez, at (512) 475-4445 regarding their responsibility under
their notes. See, attached Plaintiffs' Exhibit 14. The Office of the Texas Attorney General has
written to Defendant JACK K. DUNCAN requesting that he notify all persons who received his
letter of August 26, 2001, that the Office of the Texas Attorney General has taken no position in his
dispute with Defendant LEE. See, attached Plaintiffs' Exhibit 15. To date, Defendant JACK K.
DUNCAN has not complied with this request.
5.38 By correspondence dated October 13, 2001, Defendant JACK K. DUNCAN acting
in concert with Defendant JACKIE DUNCAN wrote to Plaintiffs LUZ and RICARDO
ESQUIVEL; JORGE and MARTHA ESCARENO; MARIO and ROSALINDA MEDRANO; and
to JOSE and LETICIA CHAVEZ, parents of Plaintiff NANCY CHAVEZ. In said correspondence
Defendant JACK K. DUNCAN contends Plaintiffs are in default because their (1) notes are seven
months delinquent, (2) failure to maintain insurance on the property, and (3) failure to provide the
note holder with proof of payment of ad valorem taxes. Defendant JACK K. DUNCAN also
advised Plaintiffs he would accelerate the indebtedness unless they cured the defaults "by payment
of all sums due and owing to JACK K. DUNCAN and the appropriate entities, and attorneys fees
and expenses." The correspondence however does not specify the amount that must be paid to
Defendant JACK K. DUNCAN to cure the default, or the time within which the default must be
cured. See, attached Plaintiffs' Exhibits 16.
5.39 Defendant JACK K. DUNCAN never accelerated the indebtedness as required by
the Deeds of Trust granted by Plaintiffs. Instead Defendant JACKIE DUNCAN by
correspondence dated November 13, 2001, notified Plaintiffs ESQUIVEL (Chula Vista Unit 5,
Block 2, Lot 130); ESCARENO (Chula Vista Unit 5, Block 2, Lot 118); MEDRANO (Chula Vista
Unit 5, Block 2, Lot 64); and CHAVEZ (Chula Vista Unit 7, Block 2, Lot 345) that their property
was set for foreclosure sale on Tuesday, December 4, 2001, at 10:00 o'clock a.m. See, attached
Plaintiffs' Exhibit 17. All of the aforementioned Plaintiffs live on the property that was posted for
Trustee's Sale.
5.40 The foreclosure sales did not transpire as scheduled as this Court granted a
Temporary Restraining Order and an Agreed Temporary Injunction Order on November 30, 2001,
and December 16, 2001, respectively, in former Cause Number 01-11-17, 728-MCV styled Luz
and Ricardo Esquivel, et al., v. Jackie Duncan, et al.
VI.
IRREPARABLE INJURY
6.1 To permit the Trustee's Sale under the foregoing circumstances as to the
ESQUIVEL, ESCARENO, MEDRANO, and CHAVEZ Plaintiffs would have condoned the use of
collection practices violative of the Texas Deceptive Trade Practices Act and the Texas Debt
Collection Practices Act, by JACK K. DUNCAN, JACKIE DUNCAN, and J.D.'s DRAGON, INC.
Since the conduct of Defendants violates the foregoing remedial statutes, irreparable injury is
presumed, and injunctive relief is authorized.
6.2 Further the unlawful collection activity has placed Plaintiffs and about 300 other
individuals who purchased residential lots from Defendant JACK K. DUNCAN in a precarious
predicament, as confusion reigns regarding who to pay, Defendants JACK K. DUNCAN, JACKIE
DUNCAN, and J.D.'s DRAGON INC., will continue to prey upon confused consumers unless
permanently enjoined by this Court.
6.3 Further due to the unlawful collection activity of the DUNCAN Defendants,
Plaintiffs who are not in default on their notes are on the verge of losing their homes to foreclosure.
Since the DUNCAN Defendants collection activity has proceeded in an unabated fashion, other
innocent consumers will be subjected to this unlawful conduct, unless said conduct is enjoined by
the Court so as to preserve the status quo.
6.4 Plaintiffs would further show that real estate is a unique and valuable property right,
that permitting the foreclosure sales under the above described circumstances will result in the loss
of valuable homestead rights through no fault of Plaintiffs.
6.5 Plaintiffs would further show that the DUNCAN Defendants ongoing self-help
collection scheme evidences disrespect for legal processes, and other appropriate authorities, and
this affords trial courts an adequate basis for issuing injunctive relief. See, Houck v. Froger Co.,
555 S.W. 2d 803 (Tex. Civ. App. - Houston [14th Dist.] 1977, writ ref'd n.r.e.).
6.6 In sum, Plaintiffs will suffer irreparable harm and damage for which they have no
adequate remedy at law. On the other hand Defendants will suffer no harm if restrained, as they
will merely be enjoined from engaging in conduct prohibited by law, and foreclosed by Defendant
JACK K. DUNCAN's transfer and assignment of liens to Defendant LEE. Finally, Defendant
JACK K. DUNCAN is not without a remedy. He can prosecute claims already pending against
Defendant LEE in the 365th Judicial District Court in Cause Number 01-05-17, 353-CV.
VII.
CAUSES OF ACTION
A. First Cause of Action - Negligent, Defective and/or Deficient Construction
7.1 Plaintiffs GLORIA NAVARRO n/k/a MARIA GLORIA DEL RIO; LEONEL and
MARTHA GARZA; JOSE M. and PETRONILA MUNOZ; REYES and ALMA HERNANDEZ;
VICTOR and ROSARIO HERNANDEZ; LUIS and JUANITA GARCIA; RICARDO and LUZ
ESQUIVEL; MARIO CRUZ; JUAN P., GABRIELA, HOMERO and MARIA BARRIOS;
LAURO and BEATRIZ GUTIERREZ; JAIME and EDNA VARGAS; RODOLFO and
GABRIELA GOMEZ; GUILLERMO and LIDIA M. ROJAS; ALEJDRANO GUARDIOLA;
SANTOS and SAN JUANITA GUARDIOLA; JORGE DAVID and MARTHA ESCARENO;
EDUARDO RAMIREZ, and MARIO and ROSALINDA MEDRANO reallege and incorporate by
reference paragraphs 1.1. to 6.6 of this Petition.
7.2 Plaintiffs further allege that they have suffered economic and other injuries as a
proximate cause of the negligent, deficient, and defective construction of their homes by Defendant
JACK K. DUNCAN acting by himself and through his agents, employees, servants, representatives
and/or subcontractors in the following respects:
a. In negligently, defectively and/or deficiently constructing the subject residences and their septic
systems; and
b. In failing to properly supervise the construction of the septic systems and the residences,
including the foundations, which resulted in structural failure.
7.3 Plaintiffs further allege that Defendant JACK K. DUNCAN is a "Contractor," the subject
properties are "Residences" and the construction defects set forth above are "Construction defects"
as defined by the Texas Property Code, Sections 27.001(3), 27.001(4) and 27.001(2), respectively.
7.4 Plaintiffs have provided Defendant JACK K. DUNCAN written notice of the claims made
herein.
B. Second Cause of Action - Truth In Lending Act Violation
7.5 Plaintiffs reallege and incorporate by reference paragraphs 1.1 to 6.6 of this Petition.
7.6 For a second and additional cause of action against Defendant JACK K. DUNCAN,
Plaintiffs further allege the following:
7.7 At all times relevant to this action, Plaintiffs were "consumers" as defined by the
TILA, Section 1602(h).
7.8 At all times relevant to this action, Defendant JACK K. DUNCAN was a "creditor"
as defined by the TILA, Section 1602(f).
7.9 Each Plaintiff's agreement is, inter alia, a consumer credit transaction subject to the
TILA Section 1601, et. seq.
7.10 Each consumer credit transaction violates the requirements of the Truth in Lending
Act and Regulation Z, 12 C.F.R. Chapter 226, in the following and other respects:
1. By failing to provide the required disclosures prior to consummation of the transaction in
violation of 15 U.S.C. Section 1638(b) and Regulation Z, 12 C.F.R. Section 226.17(b);
2. By failing to make required disclosures clearly and conspicuously in writing in violation of 15
U.S.C. Section 1632(b) and Regulation Z Section 226.17(a); and
3. By failing to properly identify property subject to a security interest in violation of 15 U.S.C.
Section 1638(a) (9) and Regulation Z Section 226.18(m).
7.11 By reason of the aforesaid violations of the TILA and Regulation Z, Defendant JACK K.
DUNCAN is liable to each Plaintiff in the amount of twice the finance charge, actual damages to be
established at trial, and costs in accordance with 15 U.S.C. Section 1640.
C. Third Cause of Action - Breach of Contract
7.12 Plaintiffs reallege and incorporate by reference paragraphs 1.1 to 6.6 of this Petition.
7.13 For a third and additional cause of action against Defendant JACK K. DUNCAN, Plaintiffs
further allege the following:
7.14 Defendant JACK K. DUNCAN entered into contracts with Plaintiffs by which Defendant
JACK K. DUNCAN agreed to sell each homebuyer Plaintiff certain real property with a new home
on it, and, for valuable consideration, each of the homebuyer Plaintiffs agreed to buy certain real
property and the new home thereon.
7.15 Defendant JACK K. DUNCAN breached the contracts entered with Plaintiffs by:
(a) failing to construct the houses and septic systems purchased by homebuyer Plaintiffs in a good
and workmanlike manner;
(b) failing to construct the car port for the VARGAS Plaintiffs as agreed;
(c) conveying to Plaintiff ALEJANDRO GUARDIOLA a lot that was 325 feet in length rather than
the 440 feet agreed to;
(d) charging the ROJAS Plaintiffs $49,500.00 for the house and lot rather than the $45,000.00
agreed to; and
(e) not releasing the liens of the ESCARENO and URTEAGA Plaintiffs as required upon payment
of the notes.
7.16 As a direct consequence of Defendant JACK K. DUNCAN's breach, Plaintiffs suffered
substantial injury.
7.17 Defendant JACK K. DUNCAN is therefore liable to Plaintiffs for actual, incidental,
consequential damages and for costs under Tex. Civ. Prac. And Rem. Code Section 38.001.
D. Fourth Cause of Action - Specific Performance
7.18 Plaintiffs JORGE DAVID and MARTHA ESCARENO, and MANUEL and SONIA
URTEAGA reassert and incorporate by reference paragraphs 1.1 to 6.6 of this Petition.
7.19 The ESCARENO and URTEAGA Plaintiffs are intended third-party beneficiaries of the
real estate transaction entered into between Defendants, JACK K. DUNCAN and DARRELL E.
LEE, on December 2, 1997. The ESCARENO and URTEAGA Plaintiffs acted in reasonable
reliance on the various documents which evidence these Defendants' real estate transaction of
December 2, 1997, including the Transfer of Liens and Agreement for Partial Release of Liens and
have suffered, and continue to suffer, irreparable harm and damages as a direct, proximate, and
foreseeable result of Defendant JACK K. DUNCAN's refusal to honor his obligations under the
aforementioned documents. The ESCARENO and URTEAGA Plaintiffs seek specific
performance of Defendant JACK K. DUNCAN's obligation to release the lien on the property of
Plaintiffs ESCARENO and URTEAGA as their notes have already been paid off, the ESCARENO
and URTEAGA Plaintiffs also seek all damages caused by Defendant JACK K. DUNCAN's failure
to honor the terms of the Transfer of Liens and the Agreement for Partial Release of Liens
including but not limited to any excess payments that have been paid on their notes.
E. Fifth Cause of Action - Fraud
7.20 Plaintiffs reallege and incorporate by reference paragraphs 1.1 to 6.6 of this Petition.
7.21 For a fifth and additional cause of action against Defendant JACK K. DUNCAN, Plaintiffs
further allege the following:
7.22 Defendant JACK K. DUNCAN intentionally and falsely represented material facts to
Plaintiffs by:
(a) representing that the houses and septic systems constructed for Plaintiffs were built in a good
and workmanlike manner when he knew they were not;
(b) failing to disclose the material defects in the homes and septic systems sold to Plaintiffs;
(c) representing that the cracking and shifting of the foundations, walls and ceilings was normal
when it was not;
(d) representing that the homes sold to the NAVARRO and GARZA Plaintiffs were new and had
never been previously occupied when it was not so;
(e) representing to the GOMEZ Plaintiffs that the foundations do not need to be reinforced with
steel rebar, that welded wire mesh is enough, when that is not so;
(f) representing to the NOLAZCO Plaintiffs that he had the authority to sell the lot purchased by
the NOLAZCO's , that the septic system would be installed by September 1, 1996, and that water
utility service was available at the lot when it was not; and
(g) representing to the VARGAS Plaintiffs that he would build a carport for them when he had no
such intention.
7.23 Defendant JACK K. DUNCAN made these false representations with the intent of inducing
Plaintiffs to purchase residential lots and/or residences he had built or agreed to build at CHULA
VISTA SUBDIVISION, Maverick County, Texas.
7.24 Plaintiffs relied on these false misrepresentations of material facts and acted in
accordance with them, suffering actual and consequential damages as a proximate cause.
7.25 Plaintiffs further allege that by reason of the fact that Defendant JACK K.
DUNCAN knew that the representations described above were false at the time they were made,
the representations were willful and malicious and constitute conduct for which the law allows the
imposition of exemplary damages. Accordingly, Plaintiffs request that exemplary damages be
awarded against Defendant JACK K. DUNCAN.
F. Sixth Cause of Action - Unlawful Foreclosure
7.26 Plaintiffs reassert and incorporate by reference paragraphs 1.1 to 6.6 of this Petition.
7.27 Defendants JACK K. DUNCAN, J.D.'s DRAGON, INC., and JACKIE DUNCAN
unlawfully moved to sell the homes of the ESQUIVEL, ESCARENO, MEDRANO, and CHAVEZ
Plaintiffs, at a public non-judicial foreclosure sale scheduled for Tuesday, December 4, 2002, at 10
o'clock a.m. The foreclosure sales were temporarily enjoined by the Court.
7.28 The foreclosure sale is unlawful and should be permanently enjoined in that:
(a) Defendant JACK K. DUNCAN transferred and assigned to Defendant LEE the liens in
question and expressly waived and released any present and future rights to establish or enforce the
liens; thus, Defendant JACK K. DUNCAN, J.D.'s DRAGON, INC., and JACKIE DUNCAN are
fraudulently representing they have the authority to foreclose;
(b) The DUNCAN Defendants failed to properly specify the amount in default, and the time within
which to cure as required by the Deeds of Trust; and
(c) The DUNCAN Defendants failed to accelerate the indebtedness as required by the Deed of
Trust prior to giving notice of foreclosure sale as required by the Deed of Trust.
G. Seventh Cause of Action - Violation of Disclosure Provisions of Texas Property Code
7.29 Plaintiffs reallege and incorporate by reference paragraphs 1.1 to 6.6 of this Petition.
7.30 At the time Plaintiffs entered into contracts to purchase from Defendant single family
dwelling units, which had previously been occupied for residential purposes ("the Contract").
7.31 Defendant did not provide Plaintiffs with a "Seller's Disclosure of Property Condition" on
or before the effective date of the Contract, as required by the Texas Property Code, §5.008(a), and
in fact, has never provided it.
7.32 The Texas Property Code, §5.008(f) provides in part that "[I]f a contract is entered without
the seller providing the notice required by this section [that is, Section 5.008, Tex. Prop. Code] the
purchaser may terminate the contract for any reason within seven days after receiving the notice."
H. Eighth Cause of Action - Deceptive Trade Practices
7.33 Plaintiffs reallege and incorporate by reference paragraphs 1.1 to 6.6 of this Petition.
7.34 For an eighth and additional cause of action against Defendant JACK K. DUNCAN,
Plaintiffs allege that the acts and omissions stated above are false, misleading, or deceptive acts or
practices prohibited by the Texas Business and Commerce Code, Section 17.41 through 17.63,
known as the Texas Deceptive Trade Practices-Consumer Protection Act (hereinafter referred to as
the DTPA).
7.35 Plaintiffs are consumers as defined by the DTPA section 17.41(4).
7.36 Plaintiffs further allege and affirm that the Defendant JACK K. DUNCAN violated the
provisions of the DTPA in numerous particulars including the following violations of Sections
17.50(a) of said DTPA as follows:
(a) In breaching an implied or expressed warranty that the residences were constructed in a skillful
and workmanlike manner when they were not, in violation of the DTPA Section 17.50(a)(2);
(b) In breaching an implied or expressed warranty that the residences were habitable as constructed
when they were not, in violation of DTPA Section 17.50(a)(2);
(c) In breaching an implied or expressed warranty that the residences were built in accordance with
accepted building standards when there were not, in violation of the DTPA Section 17.50(a)(2):
(d) Plaintiffs further allege that Defendant JACK K. DUNCAN is guilty of unconscionable courses
of action in taking advantage of the lack of knowledge, ability, experience or capacity of Plaintiffs
to a grossly unfair degree, in violation of the DTPA Sections 17.50(a)(3) and 17.45(5);
(e) In representing that goods or services have sponsorships, approval, characteristics, ingredients,
uses, benefits, or quantities which they do not have or that a person has a sponsorship, approval,
status, affiliation, or connection which he does not, in violation of the DTPA Sections 17.50(a)(1)
and 17.46(b)(5);
(f) In representing that goods or services are of a particular standard, quality, or grade, or that goods
are of a particular style or model, if they are of another in violation of the DTPA Sections
17.50(a)(1) and 17.46(b)(7);
(g) In representing that an agreement confers or involves rights, remedies, or obligations which it
does not have or involve, or which are prohibited by law, in violation of the DTPA Sections
17.50(a)(1) and 17.45(b)(12); and
(h) In failing to disclose information concerning goods or services which was known at the time of
the transaction if such failure to disclose such information was intended to induce the consumer
into a transaction into which the consumer would not have entered had the information been
disclosed in violation of the DTPA Sections 17.50(a)(1) and 17.46(b)(23).
(i) In failing to provide the seller's disclosure of property condition required by Texas Property
Code §5.069, which is actionable under the DTPA.
7.37 Plaintiffs further allege that they relied to their detriment on the deceptive acts and practices
enumerated in paragraph 7.36 above.
7.38 Plaintiffs further allege that the violations of law enumerated in paragraph 7.36 constituted a
producing cause of economic damages and/or damages for mental anguish.
7.39 Plaintiffs LUZ and RICARDO ESQUIVEL, JORGE DAVID and MARTHA ESCARENO,
MARIO and ROSALINDA MEDRANO, JUAN G. and SILVIA P. SIFUENTES, MANUEL and
SONIA URTEAGA, and NANCY CHAVEZ further allege that Defendants JACK K. DUNCAN,
J.D.'s DRAGON, INC., and JACKIE DUNCAN engaged in the following conduct violative of the
DTPA:
(a) Using a written communication that created a false impression that Defendants' collection
activity had the approval of the Office of the Texas Attorney General in violation of the Texas Debt
Collection Practices Act, Texas Finance Code §392.304(a)(10); and made actionable under the
DTPA. Id., §392.404(a).
(b) Threatening that non-payment of a consumer debt will result in the sale of Plaintiffs' property
without proper court proceedings as the DUNCAN Defendants seek to sell on Plaintiffs' property at
a foreclosure sales without first foreclosing pursuant to the terms of the real estate transaction of
December 2, 1997, with Defendant LEE in violation of the Texas Finance Code §392.301(a)(8),
and made actionable under the DTPA. Id., §392.404(a).
(c) Collecting or attempting to collect attorneys' fees as these are not legally chargeable to Plaintiffs
as the DUNCAN Defendants are not attorneys, in violation of the Texas Debt Collection Practices
Act, Texas Finance Code §392.303(a)(2); and made actionable under the DTPA. Id., §392.404(a).
(d) Representing that the agreements entered with Defendant LEE on December 2, 1997,
authorized the DUNCAN Defendants to enforce Plaintiffs' notes when the right or remedy was
assigned to Defendant LEE and expressly waived by Defendant JACK K. DUNCAN in violation of
DTPA §17.46(b)(12).
(e) That the DUNCAN Defendants persist on a scheme to enforce said notes vis-à-vis Plaintiffs
while knowing the right to enforce said notes has been expressly waived constitutes an
"unconscionable action or course of action" as defined by the DTPA, §17.45(5), and made
actionable by §17.50(a)(3) of the Act.
7.40 Plaintiffs further allege that the violations of law enumerated in paragraph 7.38 were
committed knowingly and/or intentionally and constitute a producing cause of economic damages
and mental anguish.
7.41 The DTPA [§17.50(b)(3)] and the Texas Debt Collection Practices Act [Finance Code
§392.403(a)(1)] both authorize injunctive relief to restrain violation of the respective Acts.
I. Ninth Cause of Action - Retail Installment Sales Act
7.42 Plaintiffs reallege and incorporate by reference paragraphs 1.1 to 6.6 of this Petition.
7.43 At all times relevant to this action, Defendant JACK K. DUNCAN is a "retail seller" as
defined at V.T.C.A., Finance Code §345.001(8).
7.44 At all times relevant to this action, Plaintiffs are "retail buyers" as defined at id.,
§345.001(3), who purchased "goods" and "services" as defined at id., §345.002(a)(a) and (b)(2), by
means of "retail installment contracts" as defined at id., §345.001(6), and by entering into "retail
installment transactions" as defined at id., §345.001(7).
7.45 Defendant DARRELL E. LEE is a "holder" of the retail installment contracts defined at id.,
§345.001(2)(A)(ii), by virtue of having purchased the contracts and notes from Defendant JACK K.
DUNCAN.
7.46 Defendant J.D.'s DRAGON, INC., is a "holder" as defined at id., §345.001(2)(A)(ii)
by virtue of Defendant JACK K. DUNCAN having allegedly transferred to it any remaining
interest he had in the outstanding balance due on the notes or contracts.
7.47 Defendant JACK K. DUNCAN violated the Act in the following manner and other
respects:
(a) By failing to comply with the general requirements of a Retail Installment Contract, in violation
of §345.051;
(b) By failing to include terms, a Retail Installment Contract must contain, in violation of §345.052;
(c) By not complying with proper charges for default in payment of installments, in violation of
§345.060;
(d) By not complying with any and all completion of contract requirements, in violation of
§345.064;
(e) By not properly notifying Plaintiffs as retail buyers of their right to rescind the contract, in
violation of §345.066;
(f) By failing to comply with requirements regarding buyer's acknowledgment of delivery of
contract copy, in violation of §345.067;
(g) By failing to provide Plaintiffs with a certificate of completion or satisfaction of contract, in
violation of §345.081; and
(h) By making excessive charges contrary to §349.001.
7.48 Defendant JACK K. DUNCAN thus is liable for any and all damages resulting from the
above enumerated violations, twice the amount of interest, default charges contracted for, and costs
of court.
7.49 Defendants DARREL E. LEE and J.D.'s DRAGON, INC., violated the Act by not giving
the notice of negotiation to buyers required by id., §345.304, upon transfer of an interest in the
notes by the original seller. Consequently, as holders who failed to provide notice of negotiation
they are subject to all rights of action and defenses Plaintiffs have against the original seller, that is,
Defendant JACK K. DUNCAN.
J. Tenth Cause of Action - Breach of Contract by Defendant LEE
7.50 Plaintiffs LAURO and BEATRIZ GUTIERREZ; and MARIA CONCEPCION NOLAZCO
and son JOSE PRUDENCIO NOLAZCO reallage and incorporate by reference paragraphs 1.1 to
6.6 of this Petition.
7.51 The GUTIERREZ and NOLAZCO Plaintiffs for an additional cause of action against
Defendant LEE allege that pursuant to their CHULA VISTA SUBDIVISION PURCHASE
AGREEMENT and as intended third party beneficiaries of the real estate transaction entered into
between Defendants JACK K. DUNCAN and DARRELL E. LEE, Defendant LEE became
contractually bound to:
(a) honor the CHULA VISTA SUBDIVISION PURCHASE AGREEMENT of Plaintiffs LAURO
and BEATRIZ GUTIERREZ as modified by Defendant JACK K. DUNCAN;
(b) to connect the lot purchased by the NOLAZCO Plaintiffs to the water lines of the El Indio
Water Supply Company, and to guarantee the title to the lot purchased by the NOLAZCO
Plaintiffs.
7.52 Defendant LEE breached his obligations by wrongfully evicting the GUTIERREZ Plaintiffs
from their home, and by not connecting the NOLAZCO's residential lot to the water lines of El
Indio Water Supply Corporation. Further, LEE cannot provide clear title to the NOLAZCO
Plaintiffs as superior legal title was already vested in a third person who purchased the property
prior to the NOLAZCO Plaintiffs.
7.53 The GUTIERREZ and NOLAZCO Plaintiffs due to the above described material breaches
and defect in title hereby request the cancellation of the purchase agreements and the return of all
payments made under the agreement.
VIII.
PRAYER FOR RELIEF
8.1 WHEREFORE, PREMISES CONSIDERED, Plaintiffs pray that on final trial of this
cause they be awarded:
(a) their actual, incidental, and consequential damages resulting from Defendant
JACK K. DUNCAN's deficient, defective and/or negligent construction of the residences and septic
systems, and his failure to properly supervise the construction of the residences. Damages include
but are not limited to the reasonable costs of repairs necessary to cure the construction defects, any
reasonable and necessary engineering or consulting fees required to evaluate and cure the
construction defects; the reasonable expenses of temporary housing reasonably necessary during
the repair period; and any reduction in market value of Plaintiffs' homes due to the structural
failure. Defendants JACK K. DUNCAN and J.D.'s DRAGON, INC., should be held accountable
for these damages.
(b) Actual damages to be proved at trial, and statutory damages of twice the finance
charge not to exceed $2000 per Plaintiff for violations of the TILA as authorized by 15 U.S.C.
§1640(a)(2). Defendants JACK K. DUNCAN and J.D.'s DRAGON, INC., should be held
accountable for these damages.
(c) Actual, incidental, and consequential damages for Defendant JACK K. DUNCAN's
breach of contract as set forth in paragraph 7.15 of this Petition. Defendant JACK K. DUNCAN
and J.D.'s DRAGON, INC. should be held accountable for these damages.
(d) Order that Defendant JACK K. DUNCAN specifically perform as required by the
Agreement for Partial Release of Liens as to the ESCARENO and URTEAGA Plaintiffs and award
any damages caused by Defendant JACK K. DUNCAN's failure to timely perform including any
excess obligations incurred by the ESCARENO or URTEAGA Plaintiffs. Defendants JACK K.
DUNCAN and J.D.'s DRAGON, INC. should be held accountable for these damages.
(e) Award Plaintiffs their actual, incidental, consequential, and exemplary damages
within the jurisdictional limits of this Court resulting from Defendant JACK K. DUNCAN's
fraudulent conduct. Defendants JACK K. DUNCAN and J.D.'s DRAGON, INC., should be held
accountable for these damages.
(f) Permanently enjoin Defendants JACK K. DUNCAN, J.D.'s DRAGON, INC., and
JACKIE DUNCAN from proceeding with public non-judicial foreclosure sales of the homes of the
ESQUIVEL, ESCARENO, MEDRANO, and CHAVEZ Plaintiffs.
(g) Terminate the contracts of the NAVARRO, GARZA and other Plaintiffs who
choose to terminate their contracts because they were not provided the notice of property conditions
required by Texas Property Code §5.008.
(h) Award Plaintiffs the damages caused by the violations of the DTPA by Defendants JACK
K. DUNCAN, J.D.'s DRAGON, INC., and JACKIE DUNCAN, and cancel or rescind the contracts
of all Plaintiffs who choose to exercise the right to cancel because they were not provided the
property condition disclosure required by Texas Property Code §5.069.
(i) Award Plaintiffs actual, incidental, and consequential damages, and all other damages,
twice the amount of interest, and default charges contracted for due to Defendant JACK K.
DUNCAN's violation the Retail Installment Sales Act. Defendants JACK K. DUNCAN and J.D.'s
DRAGON, INC. should be held accountable for these damages.
(j) Order the cancellation of the purchase agreements of the NOLAZCO and GUTIERREZ
Plaintiffs and the return of all payments made under the purchase agreements with Defendants
JACK K. DUNCAN. Defendants JACK K. DUNCAN, J.D.'s DRAGON, INC. and DARRELL E.
LEE being held accountable for the sums each received under the purchase agreements.
(k) As Defendants DARRELL E. LEE and J.D.'s DRAGON, INC., were transferred an interest
in the notes and contracts of Plaintiffs by Defendant JACK K. DUNCAN and neither provided
Plaintiffs notice of negotiation as set forth in paragraphs 7.49 of this Petition, the notes remain
subject to claims and defenses Plaintiffs have against JACK K. DUNCAN. Plaintiffs, therefore,
request that the amounts due on the notes of all Plaintiffs who choose not to cancel their contracts,
be offset up to the amount due on each note, by the damages awarded against JACK K. DUNCAN,
and with Defendants JACK K. DUNCAN and J.D.'s DRAGON, INC., remaining liable for any sum
of damages awarded in excess of the amounts due on the notes.
(l) Declaration that Defendants JACK K. DUNCAN and J.D.'s DRAGON, INC., are
alter egos of each other and therefore jointly and severally liable for any damages awarded against
Defendant JACK K. DUNCAN and J.D.'s DRAGON, INC.
(m) Award Plaintiffs their cost of Court, pre and post judgment interest as provided by
law, and such other further relief to which Plaintiffs may be entitled at law or in equity.
Respectfully submitted,
TEXAS RURAL LEGAL AID, INC. LAW OFFICE OF R.W. RODRIGUEZ
P.O. Box 2001
542 E. Main Street
Eagle Pass, Texas 78852 R.W. Rodriguez, J.D.
Tel. (830) 773-6151 Attorney At Law
Fax. (830) 773-5806 Bar No. 17148300
2505A El Indio Hwy. Suite 1
Eagle Pass, Texas 78852
Javier Riojas Tel. (830) 773-3006
Bar No.: 16935830 Fax. (830) 773-5222
Michael E. Urena
Bar No.: 00789689
Gloria E. Hernandez
Attorney At Law
545 Quarry Street
Eagle Pass, Texas 78852
Tel. (830) 757-4300
Fax. (830) 757-1781
NOW COME Plaintiffs and demand a jury on the issues on this case and respectfully
request that this cause be placed upon the jury docket.
CERTIFICATE OF SERVICE
I, Javier Riojas, hereby certify that a true and correct copy of the foregoing amended
Petition has this 11th day of September 2002, been sent by first class mail, postage paid, to:
Paul J. Tarski
Attorney At Law
221 North Getty Street
Uvalde, Texas 78801
Darrell E. Lee, Pro Se
12010 Salmon Creek Ave.
Vancouver, Washington 98686
Javier Riojas
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