Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS: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. 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. By amendment in 2001, the code now provides that such a seller is “liable to the purchaser for . . . liquidated damages” in the same amount. 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. HOLDING:Reversed and rendered. Generally, a statutory penalty or fine is not payable to a private litigant. For example, the Texas Whistleblower Act authorizes a private action for “damages” to private litigants, but a “civil penalty” of up to $15,000 collectible only by public prosecutors. Virtually all other statutes that imposed a daily penalty in 1995 when Texas Property Code 5.102 was enacted authorized collection only by the attorney general or some other governmental entity or representative. Without some indication in 5.102 that this penalty belongs to De La Cruz, the court does not believe he has brought himself so clearly within the statute’s terms as to justify implying a private cause of action. The court finds that nothing in 5.102 as originally enacted suggests that a private cause of action was intended. By long-standing precedent, a statute providing for a daily penalty unrelated to actual losses must be strictly construed and may be asserted in a private cause of action only if the statute clearly so provides. As the Legislature did not do so here until 2001, it did not authorize De La Cruz to bring this action on his own. The court notes that several courts of appeals have cited a rule of “necessary implication” � that when a legislative enforcement scheme fails to adequately protect intended beneficiaries, the courts must imply a private cause of action to effectuate the statutory purposes. Some cite at the same time a contradictory rule of strict construction � that causes of action may be implied only when a legislative intent to do so appears in the statute as written. The basis for the former rule appears to be federal cases that have now been abandoned in favor of the latter rule. “To the extent there has been confusion about the Texas rule, we too disapprove of the former in favor of the latter.” OPINION:Brister, J., delivered the opinion of the court, in which Jefferson, C.J., Hecht, Owen, O’Neill, Wainwright and Medina, JJ., join. Smith, J., concurs in the judgment only.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.