Preview
Filed November 21, 2016
Lois Rogers, District Clerk
7th District Court
CAUSE NO. 15-0678-A Cockrum, Terry
KAY S. BRACKEN, K.S. BRACKEN § IN THE 7™4 JUDICIAL
FAMILY LIMITED PARTNERSHIP, §
AND PEROT MINERALS, LTD.,
PLAINTIFFS,
Vv.
LARRY S. LOTT D/B/A LARRY LOTT DISTRICT COURT OF
INTERIORS, CHALEY MCCAIN,
WOLDERT-MCCAIN REALTORS, LLC
D/B/A RE/MAX TYLER PREVIOUSLY
IDENTIFIED AS “THE MCCAIN TEAM-
RE/MAX TYLER,” AND MCCAIN
REALTY, LLC D/B/A MCCAIN
REALTY,
SMITH COUNTY, TEXAS
DEFENDANTS.
JOINT PRE-TRIAL ORDER
APPEARANCE OF COUNSEL
Plaintiffs: Kay S. Bracken, K.S. Bracken Family Limited Partnership, and Perot
Minerals, Ltd.
Represented by: Gregory S. Porter
SBN: 24002785
PORTER LAW FIRM, P.C.
3311 Woods Blvd.
Tyler, Texas 75707
(903) 561-5144
(903) 705-6253 Fax
greg@gregporterlaw.com
Defendant: Larry S. Lott d/b/a Larry Lott Interiors
Represented by: Amy D. Long
SBN: 24036984
ATTORNEY AT LAW
100 East Ferguson, Suite 610
Tyler, Texas 75702
(903) 592-1641 office
(903) 592-8043 fax
amy@amydlong.com
Nicholas L. Everett
SBN: 24087005
ATTORNEY AT LAW
514 Hampton Hill
Tyler, TX 75703
(903) 530-1115 office
ick.everett83@gmail.com
Defendants: Chaley McCain, Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler
previously identified as “The McCain Team-Re/Max Tyler,” and McCain
Realty, LLC d/b/a McCain Realty.
Represented by: Robert S. Davis
SBN: 05544200
Lee I. Correa
SBN: 24072049
FLOWERS DAVIS, P.L.L.C.
1021 ESE Loop 323, Suite 200
Tyler, Texas 75701
(903) 534-8063 office
(903) 534-1650 Fax
rsd@flowersdavis.com
STATEMENT OF THE CASE
Plaintiffs seek economic damages, treble damages, exemplary or punitive damages,
attorney’s fees, interests and costs of Court against Defendants for violations of the D.T.P.A.;
common-law fraud; breach of fiduciary duty, conversion; negligence and gross negligence; and
conspiracy relating to a real estate transaction and referral fee agreement entered into by
Defendants without Plaintiffs’ knowledge or consent.
Defendant Lott has filed a Cross-Claim against Defendants Chaley McCain, Woldert-
McCain Realty, LLC, and McCain Realty LLC in which he seeks damages for extortion. Lott has
also named James McCain, Jr. as a responsible third party.
Defendants Chaley McCain, Woldert McCain Realtors, LLC d/b/a Re/Max Tyler deny the
allegations made by Plaintiffs and asset that they did not commit any of the acts alleged.
MOTIONS Resolved by Rule 11 or Court Order
Plaintiffs Motion in Limine;
Defendants Chaley McCain, Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler’s
Challenge/Motion to Exclude/Strike Plaintiffs’ Expert Charles Ray Porter, Jr.;
Defendants Chaley McCain, Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler’s Motion
in Limine; and
Defendants Chaley McCain, Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler, and
McCain Realty, LLC d/b/a McCain Realty’s Motion to Compel.
Defendant, Larry Lott d/b/a/ Larry Lott Interiors, has asserted that Plaintiffs are not
“consumers” within the meaning of the statute. Plaintiffs have asserted objections to
producing the documents requested. Defendant, Larry Lott, joins in the motion to compel
filed herein by the McCain Defendants.
Defendant, Larry Lott d/b/a Motion in Limine.
CONTENTIONS OF THE PARTIES
A Plaintiff's Contentions
Kay Bracken hired Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler (“Re/Max”) and/or
McCain Realty, LLC d/b/a McCain Realty (“McCain Realty”) to serve as her buying agent in
connection with the sale of residential property in Smith County, Texas. The property is located at
7129 Turnberry Circle, Tyler, Texas. Kay Bracken already had an ongoing business relationship
with Re/Max and McCain Realty because these real estate companies previously listed, sold, or
were currently listing other properties owned by Kay Bracken. With regard to the Turnberry home,
Chaley McCain showed Ms. Bracken the home. Chaley McCain was acting within the course and
scope of her employment and as the agent for Re/Max and/or McCain Realty. As a result of that
showing, Ms. Bracken made an offer on the home and purchased it. The sale of the house closed
in 2013. Re/Max and the McCains received a commission on the sale of the home.
Chaley McCain introduced Ms. Bracken to Larry Lott who does business in Tyler as Larry
Lott Interiors. This introduction took place prior to the closing date for the sale of the home. Ms.
McCain recommended that Ms. Bracken use Larry Lott Interiors. Based on Ms. McCain’s
recommendation and referral, Ms. Bracken retained Larry Lott to not only serve as the interior
designer, but also as the general contractor for the remodeling of her home. Upon information and
belief, Ms. McCain breached her duty to keep confidential information confidential by disclosing
to Lott Ms. Bracken’s financial condition.
Unknown to Ms, Bracken, Chaley McCain also entered into a secret side agreement with
Larry Lott and Larry Lott Interiors whereby Mr. Lott agreed to pay Ms. McCain 10% of the total
amount Mr. Lott billed for the furnishing and remodeling Ms. Bracken’s home. This fact became
knowledge only after Chaley McCain sued Larry Lott and Larry Lott Interiors on or about January
8, 2015, in the case styled Chaley McCain v. Larry S. Lott d/b/a Larry Lott Interiors; Cause No.
15-0053-C; in the 241% District Court of Smith County, Texas. Ms. McCain seeks $620,000.00 as
a referral fee. Ms. McCain claims that Mr. Lott billed Ms. Bracken a total of $6,200,000.00;
therefore, Mr. Lott supposedly owes Ms. McCain $620,000.00 as a referral fee. The lawsuit states
that Ms. McCain has “only been paid $325,251.05 of the $620,000.00 owed to her” and seeks the
balance of $294,748.95. Such a referral fee agreement is unconscionable since Chaley McCain
performed no work or service that would justify such an outlandish fee.
At no time did any of the Defendants named in this case ever disclose to Ms. Bracken that
there was a kick-back scheme to reward Ms. McCain, Re/Max, and /or McCain Realty for sending
her to Larry Lott. Ms. McCain, Re/Max, and /or McCain Realty owed Ms. Bracken a fiduciary
duty. Pursuant to this duty and the ethical obligations owed by realtors in Texas, these Defendants
had an obligation to fully disclose the relationship and referral fee arrangement in writing, and
then obtain Ms. Bracken’s consent. They breached this ethical obligation. There was no prior
written disclosure. But for the filing of the lawsuit by Ms. McCain against Lott, Ms. Bracken would
not have learned about the true nature of the unethical referral agreement. Chaley McCain did
nothing to justify a fee of over $353,000.00, much less a fee of $620,000.00. Again, the referral
fee agreement is unconscionable given the complete lack of services performed.
In addition, Larry Lott and Larry Lott Interiors fraudulently billed Ms. Bracken hundreds
of thousands of dollars. He never disclosed to Ms. Bracken that any of the money he collected was
flowing to Ms. McCain and the businesses owned by her husband James R. McCain, Jr. It has only
recently been discovered that Larry Lott and Larry Lott Interiors took unfair advantage of Ms.
Bracken and engaged in dishonest billing practices. He grossly overcharged Ms. Bracken by
marking up bills from subcontractors and putting those charges on Larry Lott Interior invoices.
This overbilling was done, at least in part, to cover the 10% he promised to Chaley McCain. The
invoices were paid by Ms. Bracken and her companies K.S. Bracken Family Limited Partnership
and Perot Minerals, Ltd. Larry Lott deceptively increased the cost of products and labor to an
unreasonable degree and did not disclose the mark-ups to Ms. Bracken. He attempted to hide the
true cost of the products and labor by demanding that his employees and subcontractors not
communicate directly with Ms. Bracken about pricing. Ms. Bracken was left to believe, based
upon the representations of Larry Lott that he was only marking up the invoices by 5%.
Larry Lott and Larry Lott Interiors are incompetent as general contractors. By way of
example, Lott hired unlicensed subcontractors, such as electricians and plumbers, to perform work
on Ms. Bracken’s home. He failed to ask for permits from the City of Tyler to complete the
remodeling project even though such permits are required by law. Ms. Bracken was forced retain
others to inspect Mr. Lott’s work to obtain the City of Tyler’s approval of the remodeling
performed under the direction and control of Mr. Lott. All of this has caused Ms. Bracken a
considerable amount of expense and left her to guess if the remodeling completed by Mr. Lott was
done safely such that she can live in the home.
Plaintiffs seek economic damages, treble damages, exemplary or punitive damages,
attorney’s fees, interests and costs of Court against Defendants for violations of the D.T.P.A.;
common-law fraud; breach of fiduciary duty; conversion; negligence and gross negligence; and
conspiracy. Plaintiffs also invoke the discovery rule and the doctrine of fraudulent concealment.
B Defendants’ Contentions
Larry S. Lott d/b/ Larry Lott Interiors:
Larry Lott is an individual whom was doing business as an interior decorator under the
name “Larry Lott Interiors” at all times during the renovation of Kay Bracken’s home at 7129
Turnberry Circle, Tyler, Texas. Larry Lott met Kay Bracken through Chaley McCain in January
2013. Although Bracken and Lott never entered into a written design services agreement, Kay
Bracken hired Larry Lott to decorate Bracken’s new Turnberry residence.
The Turnberry project began when Bracken purchased an antique bed over the telephone
with Lott while Lott was at the Dallas Market Center. At some point during the redecorating and
renovating project, Kay Bracken went to an inpatient drug-treatment facility and Larry Lott
supervised completion of the work at the residence. Lott denies he acted as the general contractor
for the project; instead, Lott asserts that Plaintiff was billed on one single invoice for Plaintiff's
convenience. Plaintiff admitted to this fact during her deposition.
Kay Bracken admits the work performed by Larry Lott and his workers was of good quality
and was “beautiful” and contained many specialty and antique and/or one of a kind items sourced
by Lott. Kay Bracken admits she was not forced into buying anything for the home, pre-approved
every purchase, and believes the home is decorated beautifully with quality materials and finishes.
Larry Lott contends neither Kay S. Bracken, K. S. Bracken Family Limited Partnership,
and/or Perot Minerals, Ltd. were “consumers” as contemplated by the Texas Deceptive Trade
Practices Act. Larry Lott contends the residence was never intended as a private residence, but
was rather, a business asset.
Larry Lott contends he does not owe a duty to Kay S. Bracken -- much less a fiduciary duty
-- that the fees Lott set for each item were approved in advance by Kay S. Bracken and
subsequently paid by a Plaintiff.
Chaley McCain, while acting as a real estate agent for Kay Bracken, was employed by
Woldert-McCain Realtors, LLC, and/or Mccain Realty, LLC, and/or James McCain, Jr. Chaley
introduced Larry Lott to Kay Bracken and recommended Kay Bracken use Larry Lott to redecorate
the Turnberry home McCain sold to Bracken. McCain used threats, intimidation and coercion to
extort Larry Lott to pay McCain 10% of what Bracken paid to Lott. There was no written
agreement between McCain and Lott. Lott made some payments to McCain and ceased payments.
McCain sued Lott. The breach of contract suit against Lott was voluntarily dismissed by McCain
after a default judgment was overturned on appeal. During the relvant times, Chaley McCain was
acting within the course and scope of her employment by Woldert-McCain Realtors LLC and/or
McCain Realty, LLC and James Me Cain, Jr. was Chaley McCain’s supervising broker.
Chaley McCain’s actions were tantamount to a civil conspiracy by Chaley McCain and Jim
McCain against Larry Lott. Such actions by the McCains were committed intentionally,
knowingly and with intent to defraud Larry Lott and exercise dominion and control over Lott’s
personal property. The McCain’s actions were unlawful and violated Section 1101.652 of the
Texas Occupations Code and the McCains did engage in conduct that is dishonest or in bad faith
and that demonstrates untrustworthiness.
The McCain defendants, individually and by and through respondeat superior are guilty
of material and false representations made to Defendant, Lott. The McCains knew the
representations were false or with reckless disregard for their truth and committed fraud by non-
disclosure against Larry Lott.
Lott contends the McCain Defendants converted Lott’s personal property funds using
deception, acts constituting extortion, or in the alternative duress, and unethical practices to
wrongfully exercise dominion over Lott’s property, namely cash.
Lott suffered damages as a direct and proximate result of the McCain Defendants’ actions.
Lott seeks disgorgement of all funds wrongfully obtained by the McCain Defendants.
McCain Defendants:
Chaley McCain, Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler and McCain Realty,
LLC d/b/a McCain Realty generally deny all the allegations made in Plaintiffs’ Fourth Amended
Petition and any amendments thereto and demand strict proof thereof. Additionally these
Defendants assert the following affirmative defenses: lack of standing to assert claims, lack of
standing as a consumer under the DTPA, DTPA exemption found in section 17.49(c), waiver
and/or estoppel, ratification, statute of limitations, laches, contributory negligence and failure to
mitigate.
Chaley McCain, Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler and McCain Realty,
LLC d/b/a McCain Realty generally deny all the allegations made in Larry Lott d/b/a Larry Lott
Interiors’ Cross Claim and any amendments thereto and demand strict proof thereof. Additionally,
these Defendants assert the following affirmative defenses: lack of standing to assert claims,
waiver and/or estoppel, ratification, statute of limitations, laches, fraud, res judicata and estoppel,
unclean hands, contributory negligence and legal justification.
ADMISSIONS OF FACT
The following fact are hereby stipulated and admitted:
1 The property is located at 7129 Turnberry Circle, Tyler, Texas.
Ms. Bracken made an offer on the home and purchased it for $674,000.00.
CONTESTED ISSUES OF FACT
Did any of the Defendants disclose to Plaintiffs the existence of the referral fee agreement?
If so, when and how was it disclosed?
Did Larry Lott fraudulently bill Plaintiffs in order to cover the 10% referral fee to Ms.
McCain?
Was Ms. McCain acting in the course and scope of her employment with Woldert-McCain
Realtors, LLC d/b/a Re/Max Tyler when she entered into the referral fee agreement with
Lott, or was she acting separate and apart from being a real estate agent?
Was the alleged wrongful conduct of Defendants a proximate or producing cause of the
actual damages sustained by Plaintiffs?
What damages, if any, were proximately caused by the conduct of Defendants?
Kay Bracken hired Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler (“Re/Max”) to
serve as her buying agent in connection with the sale of residential property in Smith
County, Texas.
The sale of the house closed on January 16, 2013.
Re/Max received a 3% commission on the sale of the home.
10. Ms. McCain received $13,000, or approximately 65% of what was paid to Re/Max.
11 Chaley McCain also entered into an agreement with Larry Lott and Larry Lott Interiors
whereby Mr. Lott agreed to pay Ms. McCain 10% of the total amount Mr. Lott billed for
interior decorator services. Lott denies this fact, and asserts that any monies paid to Chaley
McCain was made under duress due to threats by Chaley McCain to interfere with Lott’s
prospective and later ongoing business relations with Plaintiff.
12. This referral fee agreement was not in writing and not disclosed in writing to Kay Bracken.
13. Chaley McCain sued Larry Lott and Larry Lott Interiors on or about January 8, 2015, in
the case styled Chaley McCain v, Larry S. Lott d/b/a Larry Lott Interiors; Cause No. 15-
0053-C; in the 241 District Court of Smith County, Texas.
14, In that lawsuit, Ms. McCain sought $620,000.00 as a referral fee from Larry Lott, claiming
she was paid $353,000.00 of the $620,000.00 claimed owed.
15 The McCain v. Lott lawsuit was dismissed after a successful appeal of the erroneous grant
of a default judgment on the basis of discovery sanctions.
16. Larry Lott owed no fiduciary duty to Kay S. Bracken.
17 Kay S. Bracken and Larry Lott d/b/a Larry Lott Interiors did not have a written agreement
between them setting out the material terms of the redecorating/renovation project.
18 Kay S. Bracken believes the redecorating work Larry Lott aid for her was high quality and
beautiful.
19. Do K.S. Bracken Family Limited Partnership and/or Perot Minerals, LTD. have standing
to assert any claim against any Defendants?
20. Did K.S. Bracken Family Limited Partnership and/or Perot Minerals, LTD. Enter into any
agreements with any Defendants.
21 Did Kay Bracken have authorization to write checks from K.S. Bracken Family Limited
Partnership?
22 Did any Defendant owe any duty to K.S. Bracken Family Limited Partnership?
23 Are the Plaintiffs “consumers” under the Texas Deceptive Trade Practices Act?
24. Are all or some of Plaintiff's claims barred by the doctrines of waiver and estoppel?
25 Are some or all of Plaintiff's claims barred by the doctrine of ratification?
26 Was the Plaintiff negligent and are some or all of the Plaintiffs claims barred by Texas
Civil Practicve and Remedies Code Section 33.001 because Plaintiff's responsibility for
the alleged damages, if any, is greater than 50%.
27. Are some or all of Plaintiffs’ claims barred by the statute of limitations and/or Laches?
28. Did the Plaintiffs fail to mitigate their damages, if any?
29, Was Larry Lott negligent, and what was the percentage of his negligence, if any?
AGREED APPLICABLE PROPOSITIONS OF LAW
None.
CONTESTED ISSUES OF LAW
Did Larry Lott commit common-law fraud and/or fraud by non-disclosure?
Did Defendants breach a fiduciary duty owed to Plaintiffs? If so, which Defendant, if any?
Were Chaley McCain and Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler negligent
in acting as a real estate agent or broker?
Are any Defendants liable under the D.T.P.A.?
Did any Defendants engage in a civil conspiracy?
As a direct and proximate result of the occurrences made the basis of this lawsuit, did
Plaintiffs suffer economic injuries and damages?
Was Defendants’ alleged wrongful conduct a producing cause of Plaintiffs’ alleged injuries
and damages?
Are Plaintiffs entitled to treble damages under Texas Business & Commerce Code section
17.50(b)(1)?
9 Are Plaintiffs entitled to exemplary or punitive damages?
10. Are Plaintiffs are entitled to recover reasonable and necessary attorney’s fees for
prosecuting this suit under Texas Business & Commerce Code section 17.50(d)?
11. Is any Plaintiff a “consumer” as contemplated by the Texas Deceptive Trade Practices
Act?
12. “Negligence,” when used with respect to the conduct of Chaley McCain, means failure to
use ordinary care, that is, failing to do that which a real estate agent of ordinary prudence
would have done under the same or similar circumstances or doing that which a real estate
agent of ordinary prudence would not have done under the same or similar circumstances.
13 To be part of a conspiracy, Chaley McCain and another person or persons must have had
knowledge of, agreed to, and intended a common objective or course of action that resulted
in the damages to Kay Bracken. One or more persons involved in the conspiracy must have
performed some act or acts to further the conspiracy.
14. Was Kay Bracken a “consumer” under the Texas Deceptive Trade Practices Act?
15 Is Chaley McCain entitled to the exemption found in section 17.49(c) of the Texas
Deceptive Trade Practices Act?
16. Does Kay Bracken have standing to assert a claim involving the agreement between Chaley
McCain and Larry Lott?
17 Did Kay Bracken waive any claim against Chaley McCain by her knowledge and consent
of the arrangement between Chaley McCain and Larry Lott?
18. Is Kay Bracken estopped from making any claim against Chaley McCain due to her
knowledge and consent of the arrangement between Chaley McCain and Larry Lott?
19. Did Kay Bracken ratify the agreement between Chaley McCain and Larry Lott?
20. Are Kay Bracken’s claims against the McCain Defendants barred by the statute of
limitations?
21. Did Kay Bracken fail to mitigate her damages?
22. Is Kay Bracken contributorily negligent?
23. Does Larry Lott have standing to assert a cross-claim against the McCain Defendants?
24, Fraud occurs when—{a) a party fails to disclose a material fact within the knowledge of
that party, and (b) the party knows that the other party is ignorant of the fact and does not
have an equal opportunity to discover the truth, and (c) the party intends to induce the other
party to take some action by failing to disclose the fact, and (d) the other party suffers
injury as a result of acting without knowledge of the undisclosed fact.
25. “Ordinary care,” when used with respect to the conduct of Chaley McCain, means that
degree of care that a real estate agent would use under the same or similar circumstances.
26. “Proximate cause,” when used with respect to the conduct of Chaley McCain, means a
cause that was a substantial factor in bringing about an occurrence or injury, and without
which cause such occurrence or injury would not have occurred. In order to be a proximate
cause, the act or omission complained of must be such that a real estate agent using
ordinary care would have foreseen that the occurrence or injury, or some similar occurrence
or injury, might reasonably result therefrom. There may be more than one proximate cause
of an occurrence or injury.
27 “False, misleading, or deceptive act or practice” means any of the following: Representing
that goods or services had or would have characteristics that did not have, or representing
that goods or services are or will be of a particular quality if they were of another, or failing
to disclose information about goods or services that was known at the time of the
transaction with the intention to induce Kay Bracken into a transaction she otherwise
would not have entered into if the information had been disclosed.
28 An unconscionable action or course of action is an act or practice that, to a consumer’s
detriment, takes advantage of the lack of knowledge, ability, experience, or capacity of the
consumer to a grossly unfair degree.
EXHIBITS
Plaintiffs’ Exhibit List is being filed separately in conjunction with this Order.
Defendant Lott’s Exhibit List is being filed separately in conjunction with this Order.
Defendant Chaley McCain, Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler, and
McCain Realty, LLC d/b/a McCain Realty’s Exhibit List is being filed separately in
conjunction with this Order.
WITNESSES
Plaintiffs’ Witness List is being filed separately in conjunction with this Order.
Defendant Lott’s Witness List being filed separately in conjunction with this Order.
Defendant Lott will call the parties, Graham Northcutt, Amy Baxter, Stephanie Thompson,
Cheri Rome, Mitchell Zaggat, Bobby Brown, Lisa Victoria, and reserves the right to cross-
examine any other witnesses.
Defendant Chaley McCain, Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler, and
McCain Realty, LLC d/b/a McCain Realty’s Witness List being filed separately in
conjunction with this Order
SETTLEMENT
This case was mediated on October 12, 2016. The parties are continuing to negotiate, but
no settlement has been reached.
TRIAL
A Probable Length of trial: The parties believe that this case can be tried in 5 days,
inclusive of jury selection.
B Availability of witnesses, including out-of-state witnesses: To the best of the
parties’ knowledge, the witnesses listed in the parties’ attached respective witness lists will be
available for trial or via deposition.
21st November
SIGNED this the day of , 2016.
KeayHONORABLE KERRY L. RUSSELL
Presiding Judge
7 Judicial District Court
AGREE) AND APPROVED BY:
‘egory, Pérter
Coun: for Plaintiffs Kay S. Bracken,
KS. racken Family Limited Partnership,
and Perot Minerals, Ltd.
thle fa
Amy D. Long
Nicholas L. Everett
Counsel for Defendant Larry S. Lott
d/b/a Larry Lott Interiors
Robert S. Davis
Lee I. Correa
Counsel for Defendants Chaley McCain,
Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler,
and McCain Realty, LLC d/b/a McCain Realty
Preview
Filed November 21, 2016 Lois Rogers, District Clerk 7th District Court CAUSE NO. 15-0678-A Cockrum, Terry KAY S. BRACKEN, K.S. BRACKEN § IN THE 7™4 JUDICIAL FAMILY LIMITED PARTNERSHIP, § AND PEROT MINERALS, LTD., PLAINTIFFS, Vv. LARRY S. LOTT D/B/A LARRY LOTT DISTRICT COURT OF INTERIORS, CHALEY MCCAIN, WOLDERT-MCCAIN REALTORS, LLC D/B/A RE/MAX TYLER PREVIOUSLY IDENTIFIED AS “THE MCCAIN TEAM- RE/MAX TYLER,” AND MCCAIN REALTY, LLC D/B/A MCCAIN REALTY, SMITH COUNTY, TEXAS DEFENDANTS. JOINT PRE-TRIAL ORDER APPEARANCE OF COUNSEL Plaintiffs: Kay S. Bracken, K.S. Bracken Family Limited Partnership, and Perot Minerals, Ltd. Represented by: Gregory S. Porter SBN: 24002785 PORTER LAW FIRM, P.C. 3311 Woods Blvd. Tyler, Texas 75707 (903) 561-5144 (903) 705-6253 Fax greg@gregporterlaw.com Defendant: Larry S. Lott d/b/a Larry Lott Interiors Represented by: Amy D. Long SBN: 24036984 ATTORNEY AT LAW 100 East Ferguson, Suite 610 Tyler, Texas 75702 (903) 592-1641 office (903) 592-8043 fax amy@amydlong.com Nicholas L. Everett SBN: 24087005 ATTORNEY AT LAW 514 Hampton Hill Tyler, TX 75703 (903) 530-1115 office ick.everett83@gmail.com Defendants: Chaley McCain, Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler previously identified as “The McCain Team-Re/Max Tyler,” and McCain Realty, LLC d/b/a McCain Realty. Represented by: Robert S. Davis SBN: 05544200 Lee I. Correa SBN: 24072049 FLOWERS DAVIS, P.L.L.C. 1021 ESE Loop 323, Suite 200 Tyler, Texas 75701 (903) 534-8063 office (903) 534-1650 Fax rsd@flowersdavis.com STATEMENT OF THE CASE Plaintiffs seek economic damages, treble damages, exemplary or punitive damages, attorney’s fees, interests and costs of Court against Defendants for violations of the D.T.P.A.; common-law fraud; breach of fiduciary duty, conversion; negligence and gross negligence; and conspiracy relating to a real estate transaction and referral fee agreement entered into by Defendants without Plaintiffs’ knowledge or consent. Defendant Lott has filed a Cross-Claim against Defendants Chaley McCain, Woldert- McCain Realty, LLC, and McCain Realty LLC in which he seeks damages for extortion. Lott has also named James McCain, Jr. as a responsible third party. Defendants Chaley McCain, Woldert McCain Realtors, LLC d/b/a Re/Max Tyler deny the allegations made by Plaintiffs and asset that they did not commit any of the acts alleged. MOTIONS Resolved by Rule 11 or Court Order Plaintiffs Motion in Limine; Defendants Chaley McCain, Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler’s Challenge/Motion to Exclude/Strike Plaintiffs’ Expert Charles Ray Porter, Jr.; Defendants Chaley McCain, Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler’s Motion in Limine; and Defendants Chaley McCain, Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler, and McCain Realty, LLC d/b/a McCain Realty’s Motion to Compel. Defendant, Larry Lott d/b/a/ Larry Lott Interiors, has asserted that Plaintiffs are not “consumers” within the meaning of the statute. Plaintiffs have asserted objections to producing the documents requested. Defendant, Larry Lott, joins in the motion to compel filed herein by the McCain Defendants. Defendant, Larry Lott d/b/a Motion in Limine. CONTENTIONS OF THE PARTIES A Plaintiff's Contentions Kay Bracken hired Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler (“Re/Max”) and/or McCain Realty, LLC d/b/a McCain Realty (“McCain Realty”) to serve as her buying agent in connection with the sale of residential property in Smith County, Texas. The property is located at 7129 Turnberry Circle, Tyler, Texas. Kay Bracken already had an ongoing business relationship with Re/Max and McCain Realty because these real estate companies previously listed, sold, or were currently listing other properties owned by Kay Bracken. With regard to the Turnberry home, Chaley McCain showed Ms. Bracken the home. Chaley McCain was acting within the course and scope of her employment and as the agent for Re/Max and/or McCain Realty. As a result of that showing, Ms. Bracken made an offer on the home and purchased it. The sale of the house closed in 2013. Re/Max and the McCains received a commission on the sale of the home. Chaley McCain introduced Ms. Bracken to Larry Lott who does business in Tyler as Larry Lott Interiors. This introduction took place prior to the closing date for the sale of the home. Ms. McCain recommended that Ms. Bracken use Larry Lott Interiors. Based on Ms. McCain’s recommendation and referral, Ms. Bracken retained Larry Lott to not only serve as the interior designer, but also as the general contractor for the remodeling of her home. Upon information and belief, Ms. McCain breached her duty to keep confidential information confidential by disclosing to Lott Ms. Bracken’s financial condition. Unknown to Ms, Bracken, Chaley McCain also entered into a secret side agreement with Larry Lott and Larry Lott Interiors whereby Mr. Lott agreed to pay Ms. McCain 10% of the total amount Mr. Lott billed for the furnishing and remodeling Ms. Bracken’s home. This fact became knowledge only after Chaley McCain sued Larry Lott and Larry Lott Interiors on or about January 8, 2015, in the case styled Chaley McCain v. Larry S. Lott d/b/a Larry Lott Interiors; Cause No. 15-0053-C; in the 241% District Court of Smith County, Texas. Ms. McCain seeks $620,000.00 as a referral fee. Ms. McCain claims that Mr. Lott billed Ms. Bracken a total of $6,200,000.00; therefore, Mr. Lott supposedly owes Ms. McCain $620,000.00 as a referral fee. The lawsuit states that Ms. McCain has “only been paid $325,251.05 of the $620,000.00 owed to her” and seeks the balance of $294,748.95. Such a referral fee agreement is unconscionable since Chaley McCain performed no work or service that would justify such an outlandish fee. At no time did any of the Defendants named in this case ever disclose to Ms. Bracken that there was a kick-back scheme to reward Ms. McCain, Re/Max, and /or McCain Realty for sending her to Larry Lott. Ms. McCain, Re/Max, and /or McCain Realty owed Ms. Bracken a fiduciary duty. Pursuant to this duty and the ethical obligations owed by realtors in Texas, these Defendants had an obligation to fully disclose the relationship and referral fee arrangement in writing, and then obtain Ms. Bracken’s consent. They breached this ethical obligation. There was no prior written disclosure. But for the filing of the lawsuit by Ms. McCain against Lott, Ms. Bracken would not have learned about the true nature of the unethical referral agreement. Chaley McCain did nothing to justify a fee of over $353,000.00, much less a fee of $620,000.00. Again, the referral fee agreement is unconscionable given the complete lack of services performed. In addition, Larry Lott and Larry Lott Interiors fraudulently billed Ms. Bracken hundreds of thousands of dollars. He never disclosed to Ms. Bracken that any of the money he collected was flowing to Ms. McCain and the businesses owned by her husband James R. McCain, Jr. It has only recently been discovered that Larry Lott and Larry Lott Interiors took unfair advantage of Ms. Bracken and engaged in dishonest billing practices. He grossly overcharged Ms. Bracken by marking up bills from subcontractors and putting those charges on Larry Lott Interior invoices. This overbilling was done, at least in part, to cover the 10% he promised to Chaley McCain. The invoices were paid by Ms. Bracken and her companies K.S. Bracken Family Limited Partnership and Perot Minerals, Ltd. Larry Lott deceptively increased the cost of products and labor to an unreasonable degree and did not disclose the mark-ups to Ms. Bracken. He attempted to hide the true cost of the products and labor by demanding that his employees and subcontractors not communicate directly with Ms. Bracken about pricing. Ms. Bracken was left to believe, based upon the representations of Larry Lott that he was only marking up the invoices by 5%. Larry Lott and Larry Lott Interiors are incompetent as general contractors. By way of example, Lott hired unlicensed subcontractors, such as electricians and plumbers, to perform work on Ms. Bracken’s home. He failed to ask for permits from the City of Tyler to complete the remodeling project even though such permits are required by law. Ms. Bracken was forced retain others to inspect Mr. Lott’s work to obtain the City of Tyler’s approval of the remodeling performed under the direction and control of Mr. Lott. All of this has caused Ms. Bracken a considerable amount of expense and left her to guess if the remodeling completed by Mr. Lott was done safely such that she can live in the home. Plaintiffs seek economic damages, treble damages, exemplary or punitive damages, attorney’s fees, interests and costs of Court against Defendants for violations of the D.T.P.A.; common-law fraud; breach of fiduciary duty; conversion; negligence and gross negligence; and conspiracy. Plaintiffs also invoke the discovery rule and the doctrine of fraudulent concealment. B Defendants’ Contentions Larry S. Lott d/b/ Larry Lott Interiors: Larry Lott is an individual whom was doing business as an interior decorator under the name “Larry Lott Interiors” at all times during the renovation of Kay Bracken’s home at 7129 Turnberry Circle, Tyler, Texas. Larry Lott met Kay Bracken through Chaley McCain in January 2013. Although Bracken and Lott never entered into a written design services agreement, Kay Bracken hired Larry Lott to decorate Bracken’s new Turnberry residence. The Turnberry project began when Bracken purchased an antique bed over the telephone with Lott while Lott was at the Dallas Market Center. At some point during the redecorating and renovating project, Kay Bracken went to an inpatient drug-treatment facility and Larry Lott supervised completion of the work at the residence. Lott denies he acted as the general contractor for the project; instead, Lott asserts that Plaintiff was billed on one single invoice for Plaintiff's convenience. Plaintiff admitted to this fact during her deposition. Kay Bracken admits the work performed by Larry Lott and his workers was of good quality and was “beautiful” and contained many specialty and antique and/or one of a kind items sourced by Lott. Kay Bracken admits she was not forced into buying anything for the home, pre-approved every purchase, and believes the home is decorated beautifully with quality materials and finishes. Larry Lott contends neither Kay S. Bracken, K. S. Bracken Family Limited Partnership, and/or Perot Minerals, Ltd. were “consumers” as contemplated by the Texas Deceptive Trade Practices Act. Larry Lott contends the residence was never intended as a private residence, but was rather, a business asset. Larry Lott contends he does not owe a duty to Kay S. Bracken -- much less a fiduciary duty -- that the fees Lott set for each item were approved in advance by Kay S. Bracken and subsequently paid by a Plaintiff. Chaley McCain, while acting as a real estate agent for Kay Bracken, was employed by Woldert-McCain Realtors, LLC, and/or Mccain Realty, LLC, and/or James McCain, Jr. Chaley introduced Larry Lott to Kay Bracken and recommended Kay Bracken use Larry Lott to redecorate the Turnberry home McCain sold to Bracken. McCain used threats, intimidation and coercion to extort Larry Lott to pay McCain 10% of what Bracken paid to Lott. There was no written agreement between McCain and Lott. Lott made some payments to McCain and ceased payments. McCain sued Lott. The breach of contract suit against Lott was voluntarily dismissed by McCain after a default judgment was overturned on appeal. During the relvant times, Chaley McCain was acting within the course and scope of her employment by Woldert-McCain Realtors LLC and/or McCain Realty, LLC and James Me Cain, Jr. was Chaley McCain’s supervising broker. Chaley McCain’s actions were tantamount to a civil conspiracy by Chaley McCain and Jim McCain against Larry Lott. Such actions by the McCains were committed intentionally, knowingly and with intent to defraud Larry Lott and exercise dominion and control over Lott’s personal property. The McCain’s actions were unlawful and violated Section 1101.652 of the Texas Occupations Code and the McCains did engage in conduct that is dishonest or in bad faith and that demonstrates untrustworthiness. The McCain defendants, individually and by and through respondeat superior are guilty of material and false representations made to Defendant, Lott. The McCains knew the representations were false or with reckless disregard for their truth and committed fraud by non- disclosure against Larry Lott. Lott contends the McCain Defendants converted Lott’s personal property funds using deception, acts constituting extortion, or in the alternative duress, and unethical practices to wrongfully exercise dominion over Lott’s property, namely cash. Lott suffered damages as a direct and proximate result of the McCain Defendants’ actions. Lott seeks disgorgement of all funds wrongfully obtained by the McCain Defendants. McCain Defendants: Chaley McCain, Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler and McCain Realty, LLC d/b/a McCain Realty generally deny all the allegations made in Plaintiffs’ Fourth Amended Petition and any amendments thereto and demand strict proof thereof. Additionally these Defendants assert the following affirmative defenses: lack of standing to assert claims, lack of standing as a consumer under the DTPA, DTPA exemption found in section 17.49(c), waiver and/or estoppel, ratification, statute of limitations, laches, contributory negligence and failure to mitigate. Chaley McCain, Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler and McCain Realty, LLC d/b/a McCain Realty generally deny all the allegations made in Larry Lott d/b/a Larry Lott Interiors’ Cross Claim and any amendments thereto and demand strict proof thereof. Additionally, these Defendants assert the following affirmative defenses: lack of standing to assert claims, waiver and/or estoppel, ratification, statute of limitations, laches, fraud, res judicata and estoppel, unclean hands, contributory negligence and legal justification. ADMISSIONS OF FACT The following fact are hereby stipulated and admitted: 1 The property is located at 7129 Turnberry Circle, Tyler, Texas. Ms. Bracken made an offer on the home and purchased it for $674,000.00. CONTESTED ISSUES OF FACT Did any of the Defendants disclose to Plaintiffs the existence of the referral fee agreement? If so, when and how was it disclosed? Did Larry Lott fraudulently bill Plaintiffs in order to cover the 10% referral fee to Ms. McCain? Was Ms. McCain acting in the course and scope of her employment with Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler when she entered into the referral fee agreement with Lott, or was she acting separate and apart from being a real estate agent? Was the alleged wrongful conduct of Defendants a proximate or producing cause of the actual damages sustained by Plaintiffs? What damages, if any, were proximately caused by the conduct of Defendants? Kay Bracken hired Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler (“Re/Max”) to serve as her buying agent in connection with the sale of residential property in Smith County, Texas. The sale of the house closed on January 16, 2013. Re/Max received a 3% commission on the sale of the home. 10. Ms. McCain received $13,000, or approximately 65% of what was paid to Re/Max. 11 Chaley McCain also entered into an agreement with Larry Lott and Larry Lott Interiors whereby Mr. Lott agreed to pay Ms. McCain 10% of the total amount Mr. Lott billed for interior decorator services. Lott denies this fact, and asserts that any monies paid to Chaley McCain was made under duress due to threats by Chaley McCain to interfere with Lott’s prospective and later ongoing business relations with Plaintiff. 12. This referral fee agreement was not in writing and not disclosed in writing to Kay Bracken. 13. Chaley McCain sued Larry Lott and Larry Lott Interiors on or about January 8, 2015, in the case styled Chaley McCain v, Larry S. Lott d/b/a Larry Lott Interiors; Cause No. 15- 0053-C; in the 241 District Court of Smith County, Texas. 14, In that lawsuit, Ms. McCain sought $620,000.00 as a referral fee from Larry Lott, claiming she was paid $353,000.00 of the $620,000.00 claimed owed. 15 The McCain v. Lott lawsuit was dismissed after a successful appeal of the erroneous grant of a default judgment on the basis of discovery sanctions. 16. Larry Lott owed no fiduciary duty to Kay S. Bracken. 17 Kay S. Bracken and Larry Lott d/b/a Larry Lott Interiors did not have a written agreement between them setting out the material terms of the redecorating/renovation project. 18 Kay S. Bracken believes the redecorating work Larry Lott aid for her was high quality and beautiful. 19. Do K.S. Bracken Family Limited Partnership and/or Perot Minerals, LTD. have standing to assert any claim against any Defendants? 20. Did K.S. Bracken Family Limited Partnership and/or Perot Minerals, LTD. Enter into any agreements with any Defendants. 21 Did Kay Bracken have authorization to write checks from K.S. Bracken Family Limited Partnership? 22 Did any Defendant owe any duty to K.S. Bracken Family Limited Partnership? 23 Are the Plaintiffs “consumers” under the Texas Deceptive Trade Practices Act? 24. Are all or some of Plaintiff's claims barred by the doctrines of waiver and estoppel? 25 Are some or all of Plaintiff's claims barred by the doctrine of ratification? 26 Was the Plaintiff negligent and are some or all of the Plaintiffs claims barred by Texas Civil Practicve and Remedies Code Section 33.001 because Plaintiff's responsibility for the alleged damages, if any, is greater than 50%. 27. Are some or all of Plaintiffs’ claims barred by the statute of limitations and/or Laches? 28. Did the Plaintiffs fail to mitigate their damages, if any? 29, Was Larry Lott negligent, and what was the percentage of his negligence, if any? AGREED APPLICABLE PROPOSITIONS OF LAW None. CONTESTED ISSUES OF LAW Did Larry Lott commit common-law fraud and/or fraud by non-disclosure? Did Defendants breach a fiduciary duty owed to Plaintiffs? If so, which Defendant, if any? Were Chaley McCain and Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler negligent in acting as a real estate agent or broker? Are any Defendants liable under the D.T.P.A.? Did any Defendants engage in a civil conspiracy? As a direct and proximate result of the occurrences made the basis of this lawsuit, did Plaintiffs suffer economic injuries and damages? Was Defendants’ alleged wrongful conduct a producing cause of Plaintiffs’ alleged injuries and damages? Are Plaintiffs entitled to treble damages under Texas Business & Commerce Code section 17.50(b)(1)? 9 Are Plaintiffs entitled to exemplary or punitive damages? 10. Are Plaintiffs are entitled to recover reasonable and necessary attorney’s fees for prosecuting this suit under Texas Business & Commerce Code section 17.50(d)? 11. Is any Plaintiff a “consumer” as contemplated by the Texas Deceptive Trade Practices Act? 12. “Negligence,” when used with respect to the conduct of Chaley McCain, means failure to use ordinary care, that is, failing to do that which a real estate agent of ordinary prudence would have done under the same or similar circumstances or doing that which a real estate agent of ordinary prudence would not have done under the same or similar circumstances. 13 To be part of a conspiracy, Chaley McCain and another person or persons must have had knowledge of, agreed to, and intended a common objective or course of action that resulted in the damages to Kay Bracken. One or more persons involved in the conspiracy must have performed some act or acts to further the conspiracy. 14. Was Kay Bracken a “consumer” under the Texas Deceptive Trade Practices Act? 15 Is Chaley McCain entitled to the exemption found in section 17.49(c) of the Texas Deceptive Trade Practices Act? 16. Does Kay Bracken have standing to assert a claim involving the agreement between Chaley McCain and Larry Lott? 17 Did Kay Bracken waive any claim against Chaley McCain by her knowledge and consent of the arrangement between Chaley McCain and Larry Lott? 18. Is Kay Bracken estopped from making any claim against Chaley McCain due to her knowledge and consent of the arrangement between Chaley McCain and Larry Lott? 19. Did Kay Bracken ratify the agreement between Chaley McCain and Larry Lott? 20. Are Kay Bracken’s claims against the McCain Defendants barred by the statute of limitations? 21. Did Kay Bracken fail to mitigate her damages? 22. Is Kay Bracken contributorily negligent? 23. Does Larry Lott have standing to assert a cross-claim against the McCain Defendants? 24, Fraud occurs when—{a) a party fails to disclose a material fact within the knowledge of that party, and (b) the party knows that the other party is ignorant of the fact and does not have an equal opportunity to discover the truth, and (c) the party intends to induce the other party to take some action by failing to disclose the fact, and (d) the other party suffers injury as a result of acting without knowledge of the undisclosed fact. 25. “Ordinary care,” when used with respect to the conduct of Chaley McCain, means that degree of care that a real estate agent would use under the same or similar circumstances. 26. “Proximate cause,” when used with respect to the conduct of Chaley McCain, means a cause that was a substantial factor in bringing about an occurrence or injury, and without which cause such occurrence or injury would not have occurred. In order to be a proximate cause, the act or omission complained of must be such that a real estate agent using ordinary care would have foreseen that the occurrence or injury, or some similar occurrence or injury, might reasonably result therefrom. There may be more than one proximate cause of an occurrence or injury. 27 “False, misleading, or deceptive act or practice” means any of the following: Representing that goods or services had or would have characteristics that did not have, or representing that goods or services are or will be of a particular quality if they were of another, or failing to disclose information about goods or services that was known at the time of the transaction with the intention to induce Kay Bracken into a transaction she otherwise would not have entered into if the information had been disclosed. 28 An unconscionable action or course of action is an act or practice that, to a consumer’s detriment, takes advantage of the lack of knowledge, ability, experience, or capacity of the consumer to a grossly unfair degree. EXHIBITS Plaintiffs’ Exhibit List is being filed separately in conjunction with this Order. Defendant Lott’s Exhibit List is being filed separately in conjunction with this Order. Defendant Chaley McCain, Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler, and McCain Realty, LLC d/b/a McCain Realty’s Exhibit List is being filed separately in conjunction with this Order. WITNESSES Plaintiffs’ Witness List is being filed separately in conjunction with this Order. Defendant Lott’s Witness List being filed separately in conjunction with this Order. Defendant Lott will call the parties, Graham Northcutt, Amy Baxter, Stephanie Thompson, Cheri Rome, Mitchell Zaggat, Bobby Brown, Lisa Victoria, and reserves the right to cross- examine any other witnesses. Defendant Chaley McCain, Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler, and McCain Realty, LLC d/b/a McCain Realty’s Witness List being filed separately in conjunction with this Order SETTLEMENT This case was mediated on October 12, 2016. The parties are continuing to negotiate, but no settlement has been reached. TRIAL A Probable Length of trial: The parties believe that this case can be tried in 5 days, inclusive of jury selection. B Availability of witnesses, including out-of-state witnesses: To the best of the parties’ knowledge, the witnesses listed in the parties’ attached respective witness lists will be available for trial or via deposition. 21st November SIGNED this the day of , 2016. KeayHONORABLE KERRY L. RUSSELL Presiding Judge 7 Judicial District Court AGREE) AND APPROVED BY: ‘egory, Pérter Coun: for Plaintiffs Kay S. Bracken, KS. racken Family Limited Partnership, and Perot Minerals, Ltd. thle fa Amy D. Long Nicholas L. Everett Counsel for Defendant Larry S. Lott d/b/a Larry Lott Interiors Robert S. Davis Lee I. Correa Counsel for Defendants Chaley McCain, Woldert-McCain Realtors, LLC d/b/a Re/Max Tyler, and McCain Realty, LLC d/b/a McCain Realty