                                                       United States Court of Appeals
                                                                Fifth Circuit
                                                             F I L E D
               IN THE UNITED STATES COURT OF APPEALS         February 9, 2004
                       FOR THE FIFTH CIRCUIT
                                                          Charles R. Fulbruge III
                                                                  Clerk

                           No. 03-10206


     JOHN HENRY PELT; JANICE PELT

                Plaintiffs - Counter Defendants - Appellants

          v.

     US BANK TRUST NATIONAL ASSOCIATION, formerly known as First
     Trust Bank National Association, as Trustee under the
     Pooling and Service Agreement, New Century Home Equity Loan
     Trust, Series 1998-NC7;

                Defendant - Counter Claimant - Appellee

     NEW CENTURY MORTGAGE CORPORATION

                Defendant - Appellee


          Appeal from the United States District Court
               for the Northern District of Texas


Before KING, Chief Judge, and JONES and SMITH, Circuit Judges.

KING, Chief Judge:

     Plaintiffs-Appellants John Pelt and Janice Pelt filed suit

against Defendants-Appellees U.S. Bank Trust National Association

(“U.S. Bank Trust”) and New Century Mortgage Corporation (“New

Century”) seeking, inter alia, a declaration that Defendants had

violated various provisions of the Texas Constitution in

connection with the origination of Plaintiffs’ home equity loan.

U.S. Bank Trust filed a counterclaim, seeking an order both

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upholding the validity of the loan and authorizing a foreclosure

of the property securing the loan.      After a jury trial, the

district court entered judgment in favor of Defendants.

Plaintiffs appeal, contending that the district court improperly

instructed the jury on a controlling issue of Texas

constitutional law.    For the following reasons, we AFFIRM.

                             I. BACKGROUND

     In September 1998, Plaintiffs obtained a $240,000 home

equity loan from New Century, secured by Plaintiffs’ homestead

located in Duncanville, Texas.      Plaintiffs ceased making payments

on the loan in August 1999.     Subsequently, in February 2000, New

Century filed an application in Texas state court for an order

authorizing an expedited foreclosure of the lien securing the

loan.    See TEX. R. CIV. P. 736.   In May 2003, Plaintiffs filed

this diversity suit in federal district court, naming as

Defendants both New Century and the current holder of the home

equity loan, U.S. Bank Trust.1

     In their complaint, Plaintiffs alleged that the home equity

loan documents failed to comply with several of the requirements

set forth in Article XVI, § 50(a)(6) of the Texas Constitution

including, inter alia, § 50(a)(6)(Q)(v), which requires that the

lender provide the borrower copies of all documents signed at the

closing.    Thus, they sought both a declaratory judgment that the

     1
           This suit abated the state foreclosure action.      See
TEX. R. CIV. P. 736(10).

                                    2
loan was invalid and a judgment ordering Defendants to forfeit

all principal and interest under the loan.   See TEX. CONST. art.

XVI, § 50(a)(6)(Q)(x) (“[T]he lender or any holder of the

note . . . shall forfeit all principal and interest of the

extension of credit if the lender or holder fails to comply with

the lender’s or holder’s obligations under the extension of

credit. . . .”).2   In response, U.S. Bank Trust filed a

counterclaim seeking an order authorizing foreclosure of the

property securing the loan.

     Defendants also filed a motion for summary judgment on

Plaintiffs’ claims arising under the Texas Constitution and on

U.S. Bank Trust’s counterclaim.   In September 2002, the district

court granted the motion in part and denied it in part, leaving

for trial: (1) Plaintiffs’ forfeiture claim under

§ 50(a)(6)(Q)(v) and § 50(a)(6)(Q)(x) and (2) the counterclaim

for an order of foreclosure.   At trial, Plaintiffs presented

evidence that, prior to the lawsuit, they did not receive copies

of eight of the documents that they had signed in connection with

the loan; however, Defendants’ evidence suggested that unsigned

copies of all loan documents were provided to Plaintiffs on the

day of the closing and that copies of the signed documents were


     2
          Plaintiffs also alleged that New Century violated the
Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq.
(2000), and that both Defendants violated the Texas Debt
Collection Act, TEX. FIN. CODE ANN. § 392 et seq. (Vernon 1998).
But Plaintiffs withdrew both of these claims just before trial.

                                  3
made available to Plaintiffs shortly thereafter.   After weighing

the evidence, the jury returned a verdict against Plaintiffs.

The district court then entered a judgment decreeing that the

loan was valid and authorizing U.S. Bank Trust to foreclose on

the property.   Plaintiffs then filed a motion for a new

trial––claiming that the verdict was against the weight of the

evidence, and that the court had erroneously charged the

jury––which the district court denied in January 2002.     On

appeal, Plaintiffs maintain that the district court erroneously

instructed the jury regarding the meaning of the language in

Article XVI, § 50(a)(6)(Q)(v) of the Texas Constitution.

                          II. DISCUSSION

     We review the district court’s instructions to the jury

under a two-prong standard of review:

     First, the challenger must demonstrate that the charge as
     a whole creates substantial and ineradicable doubt
     whether the jury has been properly guided in its
     deliberations.   Second, even if the jury instructions
     were erroneous, we will not reverse if we determine,
     based upon the entire record, that the challenged
     instruction could not have affected the outcome of the
     case.

Johnson v. Sawyer, 120 F.3d 1307, 1315 (5th Cir. 1997) (citation

and internal quotation marks omitted).

     Plaintiffs contend that the district court’s supplemental

instruction to the jury regarding Question No. 1 of the jury

charge was erroneous.   Question No. 1 essentially asked the jury

to decide whether Plaintiffs had proven that Defendants violated


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Article XVI, § 50(a)(6)(Q)(v) of the Texas Constitution, which

requires that “the lender, at the time the extension of credit is

made, provide the owner of the homestead a copy of all documents

signed by the owner related to the extension of credit” (emphasis

added).   Specifically, Question No. 1 inquired whether Plaintiffs

had “prove[n] by a preponderance of the evidence that New

Century, or someone on its behalf, failed to provide them a copy

of all documents they signed related to the home equity loan at

the time it was made[.]”   On appeal, neither party argues that

the wording of this question was either misleading or erroneous.

     In the course of its deliberations, however, the jury

expressed its confusion over the meaning of Question No. 1 by

sending a handwritten note to the district court, which stated:

     Consider the following statement: “failed to provide them
     a copy of all documents they signed related to the home
     equity loan . . .”
          Does this statement in Question 1 require the lender
     to provide a “signed” copy of the documents? If unsigned
     documents were provided, would that meet the requirement
     of the Texas Constitution?

(ellipsis in original).    Plaintiffs asked the court to respond to

this query by informing the jury that “signed copies” of the

documents were required by the Texas Constitution.   Defendants

disagreed and argued that if the lender had provided the

homeowner with unsigned copies of the documents it had fulfilled

its obligations under § 50(a)(6)(Q)(v).   After considering these

arguments, the district court delivered the following

supplemental instruction to the jury over Plaintiffs’ objection:

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       The Texas Constitution requires that “a copy of all
       documents signed by the owner” be provided. It does not
       state that the owner be provided “a signed copy.” It
       does require the owner to be provided with a copy of any
       document that he or she signed at the time the home
       equity loan was made. You are further instructed to use
       your good judgment and common sense in deciding this
       question.

The jury subsequently found that Plaintiffs had not sustained

their burden of proof on this claim.

       On appeal, Plaintiffs contend that the district court

erroneously instructed the jury that a lender may satisfy

§ 50(a)(6)(Q)(v) by providing unsigned copies of the home equity

loan documents to the borrower.    Although no case from either the

Texas Supreme Court or any other Texas state court has

interpreted § 50(a)(6)(Q)(v), we do not believe that the district

court’s supplemental instruction was an improper statement of the

law.    The Texas Supreme Court has repeatedly instructed that, in

interpreting the Texas Constitution, courts must “rely heavily on

its literal text and must give effect to its plain language” to

assure that constitutional provisions are given “the effect their

makers and adopters intended.”    Doody v. Ameriquest Mortgage Co.,

49 S.W.3d 342, 344 (Tex. 2001); accord Stringer v. Cendant

Mortgage Corp., 23 S.W.3d 353, 355 (Tex. 2000).    Here,

§ 50(a)(6)(Q)(v) states that a lender must provide to the

borrower a “copy of all documents signed by the owner”–-it does

not require, as the district court aptly pointed out in its

supplemental instruction, that the owner be provided “a signed


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copy” of each of these documents.    Instead, the phrase “signed by

the owner” simply identifies which--of the numerous documents

presented at the closing of the home equity loan--must be copied

and given to the borrower: only those that the borrower actually

signs in connection with the loan.   In other words, the provision

does not further require that the documents be photocopied only

after they are signed.

     Nonetheless, Plaintiffs assert that the Texas courts’ policy

of construing statutes and constitutional provisions liberally in

favor of homestead owners should influence our interpretation of

§ 50(a)(6)(Q)(v)’s language.   See, e.g., Andrews v. Sec. Nat’l

Bank of Wichita Falls, 50 S.W.2d 253, 256 (Tex. 1932) (“The

universal rule of construction is that homestead provisions of

the organic law and statutes are to be liberally construed, for

the purpose of effectuating the wise and salutary provisions

thereof.”); see also Rooms With a View, Inc. v. Private Nat’l

Mortgage Ass’n, Inc., 7 S.W.3d 840, 847 (Tex. App.-Austin 1999,

pet. denied) (“Homestead rights are intended to protect Texas

families from destitution and homelessness and encourage feelings

of independence . . . .   Courts should liberally construe

homestead provisions in a manner that promotes that intended

purpose.” (citations and internal quotation marks omitted)).

While we agree that Texas law aims to protect the rights and




                                 7
interests of homeowners,3 we also note that the Texas Supreme

Court nevertheless has applied its general rules of

constitutional construction––including a heavy reliance on the

plain language of a provision––to other subsections of

§ 50(a)(6).   See, e.g., Doody, 49 S.W.3d at 346-47 (holding that

§ 50(a)(6)(Q)(x) provides lenders with the opportunity to cure

defects in all of the lender’s obligations under the extension of

credit, even though the borrower had argued that this result

might provide an incentive for lenders to violate many of the

requirements initially); Stringer, 23 S.W.3d at 357 (reconciling

a conflict between the language of § 50(a)(6)(Q)(i) and

§ 50(g)(Q)(1) in a manner more favorable to lenders than to

borrowers, based on the plain meaning of these sections).

Moreover, we do not believe that interpreting § 50(a)(6)(Q)(v) to

allow a lender to copy the unsigned documents harms the borrower

in any way, since this provision still requires that the copies

given be accurate facsimiles of the loan documents.   That is, if

a document is altered before the borrower executes it at the

closing, then the lender does not comply with the Texas

Constitution unless it ensures that the borrower receives a copy

of the document that includes the alterations.   Therefore, we

     3
          For example, the provision in question is one of a
lengthy list of requirements and obligations that lenders must
fulfill to ensure that a home equity loan will not later be
subject to forfeiture. See Stringer, 23 S.W.3d at 356-57
(discussing the requirements set forth in TEX. CONST. art. XVI,
§ 50(a)(6)).

                                 8
conclude that the district court did not err when it instructed

the jury that § 50(a)(6)(Q)(v) does not require lenders to

provide the borrower with “a signed copy” of each document that

the borrower signed at the closing.4

     Finally, Plaintiffs argue, in the alternative, that we

should reverse and remand for a new trial because the district

court improperly allowed the jury to resolve a question of law.

See Green Tree Acceptance, Inc. v. Wheeler, 832 F.2d 116, 118

(8th Cir. 1987) (“When a ground for the verdict should have been

decided as a matter of law, reversal and a new trial are

     4
            Plaintiffs also rely on the Regulatory Commentary on
Equity Lending Procedures, an interpretive document drafted by
several Texas agencies, to buttress their assertion that
§ 50(a)(6)(Q)(v) requires lenders to provide homeowners with
copies of all “signed documents” related to the extension of
credit. We recognize the persuasive value of this document, see
Stringer, 23 S.W.3d at 357, but we do not believe that it
supports Plaintiffs’ position in this case. In the section
interpreting § 50(a)(6)(Q)(v), the Regulatory Commentary
paraphrases the constitutional language and suggests that, in the
event that a document cannot be signed at closing, “the lender
must provide the owner copies of these documents within a
reasonable time after execution.” OFFICE OF CONSUMER CREDIT COMM’R ET
AL., REGULATORY COMMENTARY ON EQUITY LENDING PROCEDURES 10 (1998). This
statement does not implicitly assume, as Plaintiffs contend, that
the copies given to the borrower must bear the borrower’s
signature. Instead, the Regulatory Commentary simply recognizes
that a lender might not be able, during the closing, to identify
and provide copies of documents that the borrower might later
sign in relation to the closing. Because § 50(a)(6)(Q)(v) only
requires the borrower to provide copies of documents that are
actually “signed by the owner related to the extension of
credit,” the borrower must be given time to provide copies of
these extra documents after it becomes apparent that these
documents fit this criterion. For the same reasons, Plaintiffs’
reliance on the recent regulations adopted by the Texas Finance
Commission is also unavailing. See 29 Tex. Reg. 96 (2004) (to be
codified at 7 TEX. ADMIN. CODE § 153.22).

                                  9
required . . . .”).    Plaintiffs point to the final sentence of

the supplemental instruction, in which the district court stated:

“You are further instructed to use your good judgment and common

sense in deciding this question.”      Because the jury had inquired

about the meaning of § 50(a)(6)(Q)(v)’s language in its query to

the court, Plaintiffs suggest that, by inviting the jury to use

its own “judgment” in deciding this question, the district court

allowed the jury to settle on its own interpretation of the

constitutional provision.

     We disagree.    Viewed as a whole, the district court’s

supplemental instruction resolved the issue of constitutional

interpretation.     In response to the jury’s inquiry--whether the

Texas Constitution required the lender to provide “signed copies”

of the loan documents, as opposed to unsigned copies--the

district court clearly stated: “It does not state that the owner

be provided ‘a signed copy.’”    This instruction, phrased in a

manner that directly responds to the jury’s query, demonstrates

that the district court believed that providing copies of the

unsigned documents satisfied the terms of § 50(a)(6)(Q)(v).

Thus, the district court did not ask the jury to decide a

question of law; rather, the jury was faced with the task of

sifting through the conflicting testimony presented by the

parties in this case and deciding whether, in fact, New Century

met this constitutional requirement by providing Plaintiffs with

a full set of the home equity loan documents in a timely fashion.

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                    III. CONCLUSION

Accordingly, we AFFIRM the judgment of the district court.




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