Third Party Petition

DEFENDANT FI RST CHOI CE CONSTRUCTI ONS ORI GI NAL PETI TI ON AGAI NST
THIRD-PARTY DEFENDANT Page 1

CAUSE NO. 429-04043-2013
PRIMELENDING, IN THE DISTRICT COURT OF
A PLAINSCAPITAL COMPANY,
Plaintiff
V.
FIRST CHOICE
CONSTRUCTION, LLC AND
SHELBY BROOKS COLLIN COUNTY, TEXAS
d/b/a THE 203K CONSULTING
GROUP, INC. f/k/a THE 203K
CONSULTING GROUP, LLC,
Defendants
V.
DEBRA WHITE
3
rd
Party Defendant 429
TH
JUDICIAL DISTRICT
DEFENDANT FIRST CHOICE CONSTRUCTION, LLCS ORIGINAL
PETITION AGAINST THIRD-PARTY DEFENDANT
TO THE HONORABLE JUDGE OF SAID COURT:
NOW COMES, FIRST CHOICE CONSTRUCTION, LLC (Choice)
Defendant and Counter-Plaintiff, who files its ORIGINAL PETITION AGAINST
THIRD-PARTY DEFENDANT complaining of PRIMELENDING, a PlainsCapital
Company (Prime), Plaintiff and Counter-Defendant, and DEBRA WHITE
(White), an individual, and for cause of action show:
I. Jurisdiction, Venue and Discovery Control Plan
The damages sought are within the jurisdictional limits of the Court. The
venue is proper in Collin County, Texas because the property and lien that are the
subject of this action are in Collin County. By agreement of the parties, discovery
is being conducted under Level 3 of Texas Rule of Civil Procedure 190.4.
II. Rule 47 Damages Declaration
Further, pursuant to Rule 47, Choice only seeks monetary relief over
$200,000.00 but not more than $1,000,000.00. Plaintiff reserves the right to amend
these amounts if a jury awards an amount in excess of $1,000,000.00.
III. Parties and Service
Plaintiff PRIMELENDING, a PlainsCapital Company, is a Texas
corporation whose principal office is located in Dallas, County.
Defendant and Counter-Plaintiff FIRST CHOICE CONSTRUCTION, LLC,
is a Texas limited liability company and has already been served and is before this
Court.
Defendant SHELBY BROOKS d/b/a THE 203K CONSULTING GROUP,
INC. f/k/a THE 203K CONSULTING GROUP, LLC, is an individual and has
already been served; however, Plaintiff dismissed all claims against this
Defendant.
Third-Party Defendant DEBRA WHITE is an individual and service of
citation may be had on her at 1108 W. Leland, McKinney, Texas 75069, or her
place of business at 500 N. Central Expressway, Plano, Texas 75074, or wherever
she may be found.
IV. Facts
On or about January 14, 2013, Choice and White executed a
Homeowner/Contractor Agreement (Agreement) for the rehabilitation of the
property (Project) owned by White and located at 1108 W. Leland, McKinney,
Texas 75069 (Property) under Section 203(k) of the National Housing Act
(Program). White also entered into a Homeowner/Contractor Agreement with
Geo-Pro Foundation Repairs (Geo-Pro). Prime is the FHA approved lender.
Defendant Shelby Brooks (Brooks) is the HUD consultant for the Project. The
original renovation construction cost estimates amounted to $128,087.60.
Prior to the Agreement, Choice advised White, Brooks, and Geo-Pro that
the house on the Property really should be a tear-down due to its condition and a
rebuild would cost a lot less than a renovation; however, Choice was advised that
White wanted to renovate the existing home on the Property.
Because Whites renovations included altering the interior walls of the
home, Choice instructed White and Geo-Pro to hold-off on starting the foundation
repairs until White and Choice confirm the interior floor plan. However, White
blatantly ignored Choices instruction and contacted Geo-Pro the day after the
execution of the Agreement and demanded that Geo-Pro start the following day.
Choice was not consulted regarding the start of the foundation repairs. Choice
commenced work on the Property in March of 2013 after Geo-Pro completed the
foundation repairs and the repairs were passed by the City of McKinneys (City)
inspector and engineer.
White then could not make a decision regarding the final layout of the
interior floor plan. Choice spent close to two weeks working with White to
finalize the interior floor plan. White demanded that Choice bring his framer out
and pop lines in the home on at least three different occasions and refused to incur
the expense. This is just one example of Whites interferences with Choices
ability to renovate the property in timely fashion.
Additionally, White requested to perform some of the renovation work
herself, mainly painting. White painted the interior and exterior of the home.
Choice was not contracted to provide any painting in the renovation work. White
even requested paint-grade cabinets be installed in her kitchen, as she informed
Choice that she would be painting the cabinets as well.
During the construction, White displayed erratic behaviors that were
observed by Choice, Prime, Brooks, Geo-Pro, and Choices subcontractors. White
would often walk around the Property, in military garb, giving incoherent orders to
Choices subcontractors, and quite frequently, she would alter the job
specifications with the subcontractors without giving notice to or consulting with
Choice basically increasing her scheduled budget of the Project at Choices time
and expense. White often dictated the schedule of Choices subcontractors
again, without any notice to or consulting with Choice. This conduct by White
also caused delays in the renovation schedule.
White also would demand the selection of certain fixtures or demand
renovations in a certain manner, then deny that she made such demands requiring
Choice and Choices subcontractors to continually re-do the fixtures or
renovations, which also increased Whites renovations expenses. White refused
to pay for her constant interference or demands that resulted in a more costly
renovation and let Choice to carry this burden.
Due to Whites difficult and irrational personality and Whites conduct that
increased the costs of renovation, Choice tried to terminate the contractual
relationship. Brooks and Prime convinced Choice to remain on-site and finish the
Project as Brooks and Prime were afraid that it would be impossible to find
another contractor to work with White and finish the Project on schedule.
Then, without warning to Choice, White fired Choice on Sunday, June 30,
2013; however, Prime had discussed Choices termination with White prior to that
Sunday but did not communicate such with Choice. Prior to termination, White
did not raise any issues relating to the termination or Choices workmanship with
Choice. In fact, in the Projects draw requests, White herself and Primes
consultant, Brooks, certified in writing that all of Choices work had been done in
a workmanlike manner. Moreover, under the terms of the U.S. Department of
Housing and Urban Developments 203(k) Borrowers Acknowledgment contract
signed by White, once White signs a draw request, she accepts the liability that the
work is acceptable and payment is justified.
As of June 30, 2013, all of the City required inspections had been conducted
and passed, without any deficiency or workmanship problems noted. The Property
was approximately two weeks from final walk-through and inspection. Choice
completed, with Whites approval, the following work:
A. Framing. The interior of the home was reframed Choice and Choices
framer had to pop lines for interior walls repeatedly due to Whites
inability to make a decision regarding final framing of home. Framing
was inspected and passed on March 4, 2013. All framing was completed
as of June 30, 2013;
B. Electrical. Replaced all wiring and electrical breaker box (relocated
breaker box). Installed all new plugs. Installed upgrades. Rough passed
on April 22, 2013. As of June 30, 2013, ready for meter and final
inspections.
C. Plumbing. Full replacement of plumbing in the home. Install upgrades.
Rough and top out passed on April 24, 2013. As of June 30, 2013, trim,
which was already purchased, needed to be installed and then plumbing
would be ready for final inspection.
D. Mechanical. Full install of HVAC and duct work, as home did not have
HVAC before renovation. Blow insulation in walls and under house.
Mechanical rough passed on April 30, 2013. The initial insulation
inspection also passed. As of June 30, 2013, needed to set exterior
condenser and start-up, blow insulation in attic,
1
and then final
mechanical inspection and insulation inspection.
E. Exterior. Installed 100% new siding and new roof. Completed as of
June 30, 2013.
F. Interior. Installed sheetrock, drywall, trim, cabinets, doors, tile, and
wood floors. Delayed by White on wood floors and cabinet due to her
painting schedule and lack of knowledge on the construction process.
Needed to complete bull-nose tile, scrape and stain wood floors (after the
HVAC start-up).
G. Fence. Started setting post for new fence, and White demanded Choice
to stop installation of fence. Wanted the Propertys yard scraped before
fence post were set. This was not in Choices scope of work. Choice
rented a bobcat for her on Saturday, June 29, 2013, and White had an
individual scrape the yard. Choice was fired on Sunday, June 30, 2013.
No further fence work was completed.
2
Prior to the termination, White failed to provide Choice with ten days
written notice of any deficiencies she perceived as required under the contract.
Precipitated by Primes advice and consent, White instead chose to fraudulently
induce Choice into investing an additional $12,500.00 in materials and labor
knowing she intended to fire Choice and not pay them for the work they
performed. When Choice asked why she would have Choice go out and purchase
more materials and rent additional equipment if she was going to fire Choice the
next day, White told Choice that Prime instructed her to get all that she could out
of Choice before she fired Choice. White acted on such advice.
1
It is standard construction practice that the attic is not insulated until after the electrical final.
On July 3, 2013, Choice requested a final walk-through of the Property to
discuss any alleged deficiencies in Choices work, determine the renovations
current state of completion and determine what items were complete and what
items were needing to be completed to release the amount held by Prime as
retainage. White refused to allow a final walk-through stating that Prime has
called for an independent inspector for videos and collect evidence.
3
Choice
contacted Prime to help resolve the issues relating to Choices termination and the
walk-through; however, Prime told Choice that it was not going to get involved -
despite its role and duties under the Program. Since Choice has handled over a
hundred projects under the Program with Prime without incident, Choice was
completely surprised by Primes refusal to assist. Choice did not receive any
report of alleged findings from the independent inspector; however, Choice did
receive a formal notice of termination from White dated July 17, 2013. There was
no mention of Whites reasoning behind the firing or any of the independent
inspectors findings.
Due to Whites and Primes collusive actions, Choice was deprived of any
2
White has constructed a fence since Choice was terminated. This was done without a permit.
3
In Whites text response to Choices request for a final walk-through, White also stated that she had contacted the
McKinney Police Department regarding Choices threat to kill her. Choice made no threat to kill her but this is
another example of the erratic and odd behavior of White that Choice and Choices subcontractors were subjected to
on a daily basis while working on the Project.
ability to conduct a final inspection relating to the Property and the Program,
verify the current state of the property and/or remedy any alleged deficiencies.
Unbeknownst to Choice, for weeks prior to and after its termination, White and
Prime actively engaged in the defamation and disparagement of Choice. With zero
evidence, other than Whites word, both White and Prime made unfounded
accusations that Choice was engaged in criminal behavior, including terroristic
threats and attempting to defraud Prime and White out of draw money. Prime, in
response to Whites outrageous allegations and without conducting an
investigation, removed Choice from its approved 203k contractors list. As a
result, Choice has lost significant amounts of work from other vendors and must
try and rebuild what was a good name within the industry.
Choice sent White and Prime a demand for final payment, which included
the ten-percent retainage. Neither White nor Prime made any demand on Choice,
nor were any deficiencies or issues with the Project communicated by White or
Prime. Choice did not receive any communications from White or Prime relating
to the Project after the termination letter was sent to Choice by White on July 17,
2013.
On August 30, 2013, Choice sent a formal demand for payment of the
remaining $24,731.00 to White and Prime, to which Choice has received no
response. Prime did request additional time to investigate the matter but there was
no mention in these requests of the alleged shoddy workmanship, conspiracies
to hoodwink, or under the table deals. In Whites letter, White makes
generalized allegations about Primes work and ethical practices but does not
provide a copy of the report from the independent inspector. Neither make any
demand for Choice to repay the amounts paid to Choice under the Agreement. As
a courtesy, Choice honored their requests for additional time to respond.
While Choice pursued payment under the contract, White and Prime were
settling Whites baseless claims. White also accused Prime of being liable for
Choices torts and breach of contracts. Prime, instead of investigating, played
along with White, took her at her word, and gave her roughly $55,000.00 to settle
all of her claims. Settlement was made between Prime and White on September
30, 2013.
On October 2, 2013, more than a month after the formal demand, Choice
requested an update from Prime. Prime responded that the file was larger than it
anticipated but that much of Choices work was failed by the City inspector.
Choice responded immediately to such accusations and provided the Citys
inspection history report, negating Primes false statements. Despite the fact that
Prime knew that this statement was false and, by its own testimony, that they had
not reviewed the entire file, Prime filed suit against Choice and Brooks with
unfounded, but very serious allegations.
V. Causes of Action
A. Breach of Fiduciary Duty
Under the Program, Prime has the following duties: (1) sole responsibility
to select the 203(k) consultant; (2) exercise control over the consultants services;
(3) full accountability for the loan proceeds; (4) evaluate and document the
performance of the consultant; (5) full responsibility for authorizing draw
inspections, managing the rehabilitation escrow account, and approving the
associated draws from the account; (6) responsibility of assuring that the
inspections are completed in a quality manner; (7) responsible for resolving
disagreements between borrowers, contractors, and consultants; and (8)
documenting and reporting fraud and malfeasance to HUD.
4
These duties were created by the Program, and Prime was under a duty to
act on these duties for the benefit of the Parties of the Program. Prime failed to
perform these duties under the Program, specifically failing to resolve
disagreements between borrowers, contractors, and consultants. Prime refused to
assist in the dispute between the Parties and allowed the contractor and consultant
to be fired without any intervention; denied Choice the ability to make a final
inspection or conduct a final inspection with a third-party service; allowed the
Property to sit without any protection during the hottest months of the year; and
now, despite its own breach of duties under the Program, Prime has allegedly
stepped into Whites shoes as an owner of the Property to fight some imaginary
wrong-doing by Choice and Brooks. Regardless, Prime had a duty to Choice that
Prime breached and that breach has resulted in an injury to Choice. Choice seeks
economic damages and exemplary damages along with Court costs and interest for
Primes breach of fiduciary duties.
B. Business Disparagement
White made and published false statements about Choice and its owner
Jason Morris. Prime republished, repeated and relied on Whites false statements,
without questioning or investigating the truth or falsity of such statements. By
their actions, Prime has adopted the defamatory statements of White as their own.
As such, the republishing of such comments subjects Prime to liability as if they
had made the original false statements.
White stated and referenced numerous times, verbally and in print, that
Choices owner was involved in criminal behavior, including, among other things,
4
United States Department of Housing and Urban Development, Mortgagee Letter 00-25.
criminal conspiracy to defraud and making terroristic threats. In a July 1, 2013,
email to Mr. Kale Salmans, a vice president at Prime, White falsely stated that Mr.
Morris said to her, If [White] say[s] anything bad about him (which [White]
interpreted to mean slander) that he would f****** kill [White]. Mr. Salmans
responded a mere three hours later and less than 24 hours after Choice was
terminated by phone, We have removed Jason and his company from our
approved list as well as the HUD consultant. Both will be reported to HUD and
other authorities. As indicated Mr. Salmans email, Prime accepted, reacted and
republished Whites comments without even the most rudimentary of
investigations into such a wild, yet serious criminal accusation.
Prime then published statements about Choices workmanship and services
that was disparaging and false. Prime was acting with malice when it made the
statement that much of Choices work was failed by the Citys building inspector.
Prime, at the minimum, had reckless disregard for whether the statement is true
and intended on interfering with Choices economic interest.
These disparaging words by White and Prime have caused special damages.
Choice was an approved contractor under the Program. Choice contracted to
perform approximately $400,000.00 worth of work under the Program with Prime
and its borrowers yearly. These disparaging words have completely destroyed this
business. Choice seeks damages for economic injury and exemplary damages
along with Court costs and interest for Primes disparaging words.
C. Defamation Per Se
White and Prime defamed Choice by maliciously publishing false
statements of a disparaging and derogatory nature, regarding Choice and its
owner. Especially despicable is the fact that they did it with the intention of
profiting from hurting Choice financially. White and Prime attempted to use these
false allegations and statements to pressure Choice into paying money and/or
fictitious damages he did not owe. The collusive nature of White and Prime being
represented in a July 25, 2013 letter from White to Prime stating,
It is my belief that Jason Morris wants to remain in good standing
as a business owner in the community and has the financial means to
make amends. In this specific situation, Prime Lending has the
resources to facilitate/negotiate the recovery of funds which is in the
best interest of all concerned
This comment is likely part of the genesis of Whites and Primes
conspiracy to defame, defraud and persecute Choice. Prime believed they could
avoid their own tortious conduct White was alleging and pressure Choice into
paying. In short, completely agree with Whites position and follow through with
her suggestion in the letter. Shortly after this letter was received, Prime took
assignment of Whites alleged claims and filed suit and repeated the same
ridiculous facts, notions and frivolous accusations in their Petition. On their face,
the false and defamatory comments were unambiguously and maliciously intended
to injure Choices business reputation. Not only did Defendants actions in fact
cause Choice injury, both White and Prime intended to benefit from Choices
injury.
D. Money Had and Received
Prime holds money that belongs to Choice in equity and good conscience.
Choice was hired to perform under the Agreement with White, Primes borrower.
Choice performed its duties under the Agreement when Prime instructed White to
get all that she can out of Choice before she terminates the Agreement. Choice
performed its duties under the Agreement, under which Prime was responsible for
oversight and distribution of funds. Choice presented invoices to Prime for
payment; however, Prime refused to conduct a final walk-through and inspection
of the Property and refused to distribute the funds owed to Choice.
Despite the requests, Prime continues to hold Choices funds hostage, now
concocting fables about shoddy workmanship, conspiracies to hoodwink, and
under the table deals in order to cause further injury to Choice. At Choices
termination, all necessary inspections had been passed and performance was
substantially complete. White has had over two months to destroy Choices work,
and Choice has no doubt that she has falsified the damage that Prime is claiming,
if any real damage exists. Prime has no evidence to support its allegations and
only filed suit to intimidate Choice into walking away from money that belongs to
Choice in equity and good conscience. Choice seeks actual damages and
exemplary damages along with Court costs and interest for Primes malicious and
fraudulent withholding of Choices money.
D. Tortious Interference with Existing Contract
Choice and White had a valid contract. Prime willfully and intentionally
interfered with the contract by instructing White to take Choice for all she could
before she terminated Choice from the Project. White took Primes advice and
had Choice make an additional expenditure of $12,500.00 in materials and labor
before firing Choice. Prime intentionally induced White to breach her contract
with Choice. Choice was injured due to Primes conduct. Choice seeks damages
for economic injury, damages for lost benefits of contract, and exemplary damages
along with Court costs and interest for Primes tortious interference.
E. Tortious Interference with a Prospective Business Relationship
Choice and Prime had a valid and profitable existing business relationship.
Choice and Prime had worked together on over a hundred 203(k) loans and would
have continued to work on 203(k) loans, but for Whites actions. White willfully
and intentionally interfered with Choice and Primes business relationship through
false and defamatory statements regarding Choice and its work. Whites tortious
conduct and actions proximately caused Choice injury. Choice seeks actual
damages, economic injury, lost benefit of the relationship, personal injury, mental
anguish, injury to reputation, and exemplary damages along with Court costs and
interest.
F. Negligence
Prime had a legal duty under either contract or a special relationship to
Choice. Prime breached its duty to Choice when it neglected to follow the
procedures under the Program. Primes breach of duty proximately caused the
injury to Choice. Choice seeks damages for economic injury and exemplary
damages along with Court costs and interest for Primes negligence.
G. Breach of Contract
Choice and White have a valid, enforceable contract, and Plaintiffs have
tendered performance under the Contract. White breached the Contract by
neglecting to perform under the Contract, by failing to give proper notice prior to
termination, by failing to tender payment as required, by making Choices
performance impossible, and by repudiating performance of Whites contractual
obligations. Whites breach has caused Choices injury.
H. Fraudulent Inducement
Prime and White conspired to defraud Choice. Both Prime and White made
representations to Choice regarding the renovation work. Such a representations
were false and material. When the representations were made, they either knew the
representation was false or made the representations recklessly, as a positive
assertion, and without knowledge of its truth or falsity. Prime and White made the
representations with the intent that Choice rely on such representations. Choice
did rely on the representations, which caused Choice injury.
VI. Joint and Several Liability
Conspirators are jointly and severally liable for all acts done by any of them
in furtherance of the unlawful combination. Tort liability is extended beyond the
active wrongdoer to those who may have merely planned, assisted, or encouraged
the wrongdoers acts. To establish joint and several liability, Choice does not need
to prove that every act of a conspirator was in concert with the other conspirator or
that all the conspirators met before each act. Prime and White can be liable for any
act committed by a conspirator, even if they were not part of the conspiracy at the
time of the act.
White and Prime actively planned, assisted and encouraged one another to
defraud and defame Choice. By agreement, White and Prime pursued Choice for
an unlawful purpose and/or used unlawful means to pursue Choice for a
questionable purpose. Either or both White and Prime committed an unlawful,
overt act in their pursuit of Choice. Choice suffered injury as a result of such
wrongful actions.
VII. Exemplary Damages
Choice would further show that the acts and omissions of White and Prime,
and the fraudulent acts, complained of herein, were committed knowingly,
willfully, intentionally, with actual awareness, and with the specific and
predetermined intention of injuring Choice and of enriching themselves.
Moreover, with regard to Whites and Primes defamatory and/or disparaging
remarks, Plaintiff will show that such remarks were made with the knowledge of
their falsity or with reckless disregard of the truth. In order to punish said
Defendants for such unconscionable acts and omissions and to deter such actions
and/or omissions in the future, Choice also seeks recovery from Defendants for
exemplary damages as provided by Section 41.003 (1) of the Texas Civil Practice
and Remedies Code.
VIII. Attorneys Fees
As a direct result of Whites breach of contract, Choice found it necessary to
employ the undersigned attorney to enforce its rights under the contract with
White. Reasonable attorneys fees are recoverable pursuant to the Texas Civil
Practices and Remedies Code Section 38.001 and Texas Business and Commerce
Code Section 24.013. Therefore, Plaintiff is entitled to reasonable attorneys fees.
Reasonable and necessary attorneys fees are recoverable pursuant to the
Texas Business and Commerce Code 38.001. Choice made a demand on Prime.
Therefore, Choice is entitled to reasonable attorneys fees and request that the Court
award Choice reasonable and necessary attorneys fees.
IX. Conditions Precedent
All conditions precedent have been performed or have occurred.
X. Prayer
WHEREFORE, as Choice and Prime are already before this Court, Choice
requests that White be cited to appear and answer, and that on final hearing, Prime
and White have nothing, and that Choice have:
1. Actual Damages;
2. Exemplary Damages;
3. Prejudgment and Postjudgment Interest;
4. Court Costs;
5. Attorneys Fees;
6. Joint and Several Liability between White and Prime; and
7. Such other and further relief to which Choice may be justly entitled.
Respectfully submitted,
BROTHERTON LAW FIRM
By:______________________________
William J. Brotherton
State Bar No. 00789989
william@brothertonlaw.com
Heidi S. Whitaker
heidi@brothertonlaw.com
Shawn M. Brotherton
shawn@brothertonlaw.com
Steven J. Manderfeld
steve@brothertonlaw.com
2340 FM 407, Suite 200
Highland Village, TX 75077
972-317-8700; Fax 972-317-0189
ATTORNEYS FOR DEFENDANT
AND COUNTER-PLAINTIFF FIRST
CHOICE CONSTRUCTION, LLC
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing ORIGINAL
PETITION AGAINST THIRD-PARTY DEFENDANT has this day been sent
pursuant to the Texas Rules of Civil Procedure to has this day been sent pursuant
to the Texas Rules of Civil Procedure to Wesley G. Johnson, Cooper & Scully,
900 Jackson Street, Suite 100, Dallas, Texas 75202, and to Tom Carse, Carse Law
Firm, 6220 Campbell Road, Suite 401, Dallas, Texas 75248, Attorneys for
Plaintiff, on the 15th day of August, 2014.
_________________________________
William J. Brotherton

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DEFENDANT FI RST CHOI CE CONSTRUCTI ONS ORI GI NAL PETI TI ON AGAI NST

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