LawFuel.com – In a precedent-setting appellate victory, the Court of Appeals for the First District of Texas affirmed the constitutionality of Texas law governing ownership and transfer of title on manufactured homes. The decision upheld the trial court’s final judgment in favor of Haynes and Boone, LLP clients Robert F. Larson and Trustmark Bank (formerly Republic National Bank.)
The ruling advocates homeowners’ rights to clear title and ensures banks can rely on Texas law, specifically Chapter 1201 of the Texas Occupations Code, to protect their investment when financing the purchase of manufactured homes.
“Ultimately at issue was who maintains the right to title in these transactions,” said Haynes and Boone’s Jeff Nobles, who handled the appeal. “By upholding the constitutionality of the statute, the court is offering consumers and banks a necessary level of protection from the unlawful practices of unscrupulous third-party retailers of these homes.”
The suit, brought by Shipley Brothers, Ltd., a manufactured homes distributor, asserted claims for fraud, conversion, and violations of the Theft Liability Act after a third-party retailer failed to pay Shipley for a home it sold on consignment.
Mr. Larson, an electrical salesman in Houston, purchased the manufactured home with financing from Trustmark Bank. After arranging for warranty-covered repairs with a man claiming to be a representative of the manufacturer, Larson returned to his property to discover his home missing. The representative was actually a Shipley employee. Instead of making the repairs as promised, Shipley Brothers repossessed the home without notifying Larson, the new and rightful owner.
Though Shipley had paid for the manufactured home and retained the manufacturer’s certificate of origin (MCO), the court agreed Shipley knew consumers purchasing homes from third-party retailers would expect to obtain clear title and would have no reason to know of competing claims to the title from Shipley. In effect, the seller must convey clear title to the consumer at the time of the purchase.
Haynes and Boone’s victory also marks another significant step toward legitimizing an industry long in need of reform. Texas Attorney General Greg Abbott conducted a lengthy enforcement action in 2007 against central Texas manufactured home retailers who sold homes without clear titles. His activism helped ensure owners of manufactured homes across central Texas would receive clear titles to homes they purchased in good faith from unlicensed, fraudulent retailers, and led to industry-wide reforms by improving financing procedures for manufactured home purchases.
Haynes and Boone, LLP is an international corporate law firm with offices in Texas, New York, California, Washington, D.C., Mexico City and Moscow, providing a full spectrum of legal services. With almost 550 attorneys, Haynes and Boone is ranked among the largest law firms in the nation by The National Law Journal. The firm has been recognized as one of the “Best Corporate Law Firms in America” (Corporate Board Member Magazine, 2001-2008), as one of “The Best 20 Law Firms to Work For” (Vault.com, 2008), and as a Top 100 law firm for both diversity (MultiCultural Law Magazine, 2009) and women (Women 3.0, 2008).