Archives for posts with tag: texas business and commerce code

Unfortunately, many homeowners have experienced the effects of hailstorms on the roof of their homes. For many an unsuspecting owner, a nice man will show up at their door touting his company’s ability to quickly repair the roof for the insurance proceeds and promising to cover the owner’s deductible. Such an arrangement clearly is beneficial to the owner, in particular where the owner’s insurance carries a high deductible. The roofer is more than happy to procure the work by increasing the price of the work in excess of the normal charges to cover the deductible. By entering into and performing such agreement, the owner and roofer may very well be committing a crime under Texas Law.

Under Section 27.02 of the Texas Business and Commerce Code, the roofer claims an offense where (1) it sells goods or services and advertises or promises to provide the good or service by paying all or part of any applicable insurance deductible or gives the other party a rebate of the applicable insurance deductible; (2) the good or service is paid for by the owner from proceeds of an insurance policy; and (3) the roofer knowingly charges in excess of the usual and customary charges by an amount equal to or greater than all or part of the deductible or relates the deductible to the owner. Such conduct is a Class A Misdemeanor in Texas punishable by a fine up to $4,000.00 and/or a jail term of up to one year.

The owner commits a Class A misdemeanor by simply submitting a claim under an insurance policy where the roofer is in violation of Section 27.02 or knowingly allows such a claim to be submitted, unless the owner promptly notifies the insurer of the excessive charges.

Such an arrangement can also support a felony under Texas law. Pursuant to Section 35.02 of the Texas Penal Code, the roofer or the owner commits an offense where either of them prepares and presents, or causes such to be presented, to the insurer a statement to support an insurance claim that the person knows to contain false or materially misleading information with the intent to defraud the insurer. Additionally, Section 35.02 of the Penal Code provides that the roofer or the owner commits an offense where either of them solicited, offers, pays or receives a benefit associated with the furnishing of goods or services where an insurance claim has been made with the intent to fraud the insurer.

The range of punishment under Section 35.02 is dependent on the value of the claim submitted. The following chart sets out the respective punishment classes:

Value of Claim Punishment Class

Less than $50.00 Class C misdemeanor

$50.00 < $500.00 Class B misdemeanor

$500.00 < $1,500.00 Class A misdemeanor

$1,500.00 < $20,000.00 State Jail Felony

$20,000.00 < $100,000.00 Third Degree Felony

$100,000.00 < $200,000.00 Second Degree Felony

more than $200,000.00 First Degree Felony

The value of the claim may be calculated by subtracting the amount of the valid portion of the claim from the total claim made. A rebuttable presumption exists that the owner or roofer caused the fraudulent claim to be prepared or submitted by simply submitting a fraudulent bill for payment of goods or services to the insurance carrier.

Class C misdemeanors carry the punishment of a fine not to exceed $500.00. Class B misdemeanors carry the punishments of a fine not to exceed $2,000.00, or a jail term of up to 180 days, or both. Class A misdemeanor punishments are discussed above.

A state jail felony carries the punishment of confinement in a state jail for a minimum term of 180 days up to 2 years. A third degree felony provides for confinement with the Texas Department of Criminal Justice (TDC) for a term from 2 to 10 years. A second degree felony imposes imprisonment with the TDC for a term from 2 to 20 years. A first degree felony provides for a maximum confinement term of 5 to 99 years. Each of those felonies may also carry fines of up to $10,000.00 assessed in addition to imprisonment.

When confronted with a “too good to be true” situation, care should be taken not to turn an unfortunate casualty event into conduct that may cost additional money or personal loss of freedom.

I would like to thank my law partner Brian T. Cartwright for his significant contributions to this Article

R. Scott Alagood is board certified in Commercial and Residential Real Estate Law by the Texas Board of Specialization and can be reached at alagood@dentonlaw.com or http://www.dentonlaw.com.

ContractsOne of the most frequent questions asked of attorneys goes something like this.

Q:  X and I verbally entered into an agreement concerning [insert subject matter here}.  X didn’t perform his part of the agreement.  Can I sue him over that agreement?

Verbal agreements may be enforceable where they contain all of the legal elements necessary to form a contract.  That is, there is an offer made by one party, an acceptable of the offer by another party, consideration exists, and the agreement is not otherwise illegal or against public policy.  Consideration may be in the form of goods or money, or may be nothing more than mutual promises of each party to perform in accordance with the agreement.  Certain contracts which have been held to be illegal or against public policy in Texas are gambling debts, Mary Carter Agreements, and unreasonable non-compete agreements.

In situations where it appears that an otherwise enforceable contract exists, the law will not enforce a verbal contract or promise unless it is in writing and signed by the person sought to be charged (or his or her authorized agent).  This legal rule is called the Statute of Frauds and is codified in Section 26.01 of the Texas Business & Commerce Code.

The Statute of Frauds applies to the following types of promises and agreements:

–promises from an executor or administrator to pay the debts or damages of the decedent;

–guaranty agreements;

–an agreement made in consideration of marriage or non marital conjugal cohabitation;

–a contract for the sale of real estate;

–a lease of real estate for a term longer than one year;

–an agreement that is not to be performed within one year;

–an agreement to pay a commission on the sale or purchase of an oil or gas lease, royalty, or mineral interest; and

–an agreement, promise, or warranty of cure relating to medical care or results by a physician or health care provider (excluding pharmacists).

There are other types of agreements which must be in writing and signed by the party to be bound, such as:

–loans from certain financial institutions (Tex. Bus. & Com. Code Section 26.02);

–contracts for the sale of goods for a price of $500.00 or more (Tex. Bus. & Com. Code Section 2.201(a);

–agreements between parties or attorneys touching a lawsuit (Texas Rule of Civil Procedure 11); and

–agreements seeking commissions from the sale or purchase of real estate (Texas Occupations Code Section 1101.806(c)).

Where a contract appears to meet the terms of the Statute of Frauds, the writing must contain within itself or by express reference to another writing all of the essential or material terms of the parties’ agreement.  The contract terms must be ascertained from the writing without resort to outside verbal testimony or writings not referenced in the contract.  Certain terms of a contract may be implied by a court if not specifically addressed, such as the time for performance, time and place of payment, and in certain situations, price.

In a contract involving the sale or lease of real estate which is subject to the statute of frauds, the writing must contain itself, or by reference to another existing writing, sufficient data or other means by w which the land may be identified with reasonable certainty.  Failure of the contract to contain a proper legal description in these situations will render the contract unenforceable under the Statute of Frauds.

Of course, there are always exceptions.  Where on of the parties to an agreement partially performs the agreement, a court will not apply the Statute of Frauds.  “Partial performance” occurs when one party to the agreement performs his part of the agreement and in reliance suffers a substantial detriment for which there is no legal remedy, while the other party would reap an unearned benefit.  For example, Seller agrees to sell his house to Buyer for a specified price, but the agreement is never reduced to writing and no deed to the property is ever delivered to the Buyer.  In reliance of such verbal agreement, the Buyer takes possession of the house, pays the agreed price, maintains and improves the residence, pays the property taxes, insures the dwelling, and otherwise does all the things that an owner would do.  If the Seller than refuses to deed the property to the Buyer following the Buyer’s performance, the law will not render the verbal agreement unenforceable under the Statute of Frauds.

Scott Alagood is Board Certified in Commercial and Residential Real Estate Law by the Texas Board of Legal Specialization and can be reached at alagood@dentonlaw.com or www.dentonlaw.com.  

 

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