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3/8/2019 11:51 AM

Velva L. Price
District Clerk
Travis County
19-001244
No. D-1-GN-__________________ D-1-GN-19-001244
Victoria Benavides

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98th
TRAVIS COUNTY, TEXAS, § _____ JUDICIAL DISTRICT COURT

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Plaintiff §

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DGC PHASE 1, LLC, URIEL CASTRO, §

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A.J. SHIELD, eXp REALTY, LLC, and §

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MATTHEW EVAN TEIFKE, §

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Defendants § TRAVIS COUNTY, TEXAS

PLAINTIFF’S ORIGINAL PETITION AND

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APPLICATION FOR TEMPORARY AND PERMANENT INJUNCTIONS

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TO THE HONORABLE COURT:

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DGC Phase 1, LLC, acting through its managing members, Uriel Castro and A. J.
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Shield, has illegally subdivided property located on Dee Gabriel Collins Road in Travis
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County, Texas. DGC Phase 1, LLC, compounded this illegal conduct by selling and
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attempting to sell the illegally subdivided property through acts of deception and fraud
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committed by Uriel Castro, a real estate sales agent, whose sponsoring brokers were
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eXp Realty, LLC and Matthew Evan Teifke.


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Travis County, Texas, Plaintiff, through its County Attorney and at the request of

the Travis County Commissioners Court, asks the Court to punish the Defendants for
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their fraudulent activities by awarding civil penalties, rescinding the illegal sales,
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awarding damages to the victims, and enjoining the Defendants from additional illegal
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sales.
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1. DISCOVERY CONTROL PLAN


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1.1 Discovery in this case should be conducted under level 2 pursuant to Rule

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190.3 of the Texas Rules of Civil Procedure.

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2. PARTIES

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2.1 Plaintiff is Travis County, Texas, acting by and through its County Attorney,

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David Escamilla, under the enforcement authority granted to it by Section 232.005 of the

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Texas Local Government Code, and Section 27.015 of the Texas Business and Commerce

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Code. This suit is brought pursuant to the request of the Travis County Commissioners

Court, as authorized by Subchapter A of Chapter 232 of the Texas Local Government

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Code, dealing with the regulation of subdivisions, and pursuant to Section 27.015 of the

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Texas Business and Commerce Code, dealing with fraud in real estate transactions.

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Defendant DGC Phase 1, LLC, is a domestic limited liability company that may
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be served through its registered agent, A.J. Shield, at 2206 Tower Drive, Austin, TX
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78703, or wherever he may be found.


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2.3 Defendant Uriel Castro, a Texas real estate agent, may be served at 4803 Misty
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Slope, Austin, Texas 78744, or wherever he may be found.


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2.4 Defendant A.J. Shield, also known as Alan Shield and Alan Shield, Jr., is an
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individual that may be served with process at 1604 Cinnamon Path, Austin, Texas
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78704, 2206 Tower Drive, Austin, Texas 78703, or wherever he may be found.
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2.5 Defendant eXp Realty, LLC, is a foreign limited liability company that may be
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served through its registered agent, Corporation Service Co. dba CSC-Lawyers
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Incorporating Service Co., 211 E. 7th St., Suite 620, Austin, TX 78701.
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2.6 Defendant Matthew Evan Teifke, a Texas real estate broker, may be served at
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8210 Bent Tree Road, Austin, Texas 78759, or wherever he may be found.

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3. JURISDICTION AND VENUE

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3.1 This Court has jurisdiction over this matter pursuant to section 232.005 of the

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Texas Local Government Code and sections 27.015 and 17.47(b) of the Texas Business

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and Commerce Code.

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3.2 Travis County seeks a monetary award within the jurisdictional limits of the

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court and non-monetary relief.

3.3 Venue is proper in Travis County as it is the county in which all or a substantial

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part of the events or omissions giving rise to Plaintiff’s claim occurred (Tex. Civ. Prac. &

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Rem. Code § 15.002(a)(1)).

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4. APPLICABLE LAW
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4.1 The Defendants’ misconduct spans two broad categories of substantive law. The
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first category contains the requirements for creating and selling a legal subdivision of
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land, whether as a typical subdivision or as a condominium. The second is the law of


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fraud and deceptive trade practices.


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A. Subdivision Laws
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4.2 A subdivision of real property occurs when an owner divides the property into
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two or more parts to lay out lots or streets. 1


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4.3 An owner that divides a tract of land located in unincorporated Travis County
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must have a plat prepared. 2


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4.4 The plat must be filed and recorded with the Travis County Clerk.3
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1 Tex. Local Gov’t Code § 232.001(a).


2 Tex. Local Gov’t Code § 232.001(a).
3 Tex. Local Gov’t Code § 232.001(d).

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4.5 A plat cannot be filed or recorded unless it is approved by the Travis County

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Commissioners Court. 4

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4.6 The Travis County Commissioners Court is authorized to establish requirements

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for subdivisions. 5

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4.7 Travis County’s subdivision regulations can be found in County Code Chapter

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482.

4.8 The County Attorney may file suit seeking injunctive relief to enjoin violations or

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threatened violations of the subdivision requirements. 6

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B. Condominiums

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Condominiums are a form of real property with portions designated for separate
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ownership or occupancy, and the remainder designated for common ownership or


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occupancy solely by the owners of those portions. 7


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4.10 The Texas Uniform Condominium Act, found in Chapter 82 of the Property
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Code, regulates the creation and transfer of condominiums.


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4.11 A condominium is created “only by recording a declaration executed in the same


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manner as a deed by all persons who have an interest in the real property that will be
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conveyed to unit owners....” 8


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4.12 Condominiums are subject to Travis County’s subdivision requirements. 9


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4 Tex. Prop. Code § 12.002(b).


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5 Tex. Loc. Gov’t Code § 232.003.


6 Tex. Loc. Gov’t Code § 232.005(a)(1).
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7 Tex. Prop. Code § 82.003(a)(8).


8 Tex. Prop. Code § 82.051(a).
9 Tex. Prop. Code § 82.006.

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4.13 The Travis County Code defines subdivisions to include “condominium

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regimes.” 10

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C. Sales of Subdivided Property

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4.14 The relevant requirements for selling subdivided property generally – as well as

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condominium units specifically – are discussed below.

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1). Unapproved plats cannot be used to sell property.

4.15 A subdivider cannot use the subdivision’s description in a deed of conveyance, a

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contract for a deed, or a contract of sale or other executory contract to convey that is

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delivered to a purchaser unless the plat is approved and filed with the Travis County

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4.16 If a subdivider uses an unapproved subdivision description as part of a sale,


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such an act is prima facie evidence of an attempt to defraud. 12


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2). Condominium sales requirements.


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4.17 Before offering any condominium unit for sale, the declarant “shall prepare a
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condominium information statement.” 13


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4.18 The condominium information statement must contain, among other things,
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“any conditions relating to or limitations upon the exercise of development rights.” 14


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4.19 The declarant “shall promptly amend the condominium information statement
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to reflect a material and substantial change in its contents. If the change may adversely
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10 Travis County Code 464.031(86).


Tex. Prop. Code §12.002(c).
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12 Tex. Prop. Code § 12.002(f).
13 Tex. Prop. Code § 82.152(a).
14 Tex. Prop. Code § 82.153(a)(4).

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affect a prospective purchaser who has received a condominium information statement,

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the declarant shall furnish a copy of the amendment to the prospective purchaser before

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closing.” 15

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4.20 The person preparing the condominium information statement is liable for any

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false or misleading statements therein. 16

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3). Notice Requirements

4.21 At the time of a real estate sales agent’s first substantive communication with a

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person relating to a proposed transaction regarding specific real property, the sales

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agent must provide to that person a written notice that:

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(a) describes the ways in which a broker can represent a party to a real estate
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transaction, including as an intermediary;
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(b) describes the basic duties and obligations a broker has to a party to a real
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estate transaction that the broker represents; and


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(c) provides the name, license number, and contact information for the license
holder and the license holder's supervisor and broker, if applicable. 17
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4.22 A real estate sales agent is also required to post at his or her business and on his
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or her website, including his or her Facebook page, the Consumer Protection Notice
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form published by the Texas Real Estate Commission. 18


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D. Fraud and Deceptive Trade Practices


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4.23 Fraud in a real estate transaction is a false representation of a material fact that is
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(1) made to a person for the purpose of inducing that person to enter into a contract;
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Tex. Prop. Code § 82.153(c).


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16 Tex. Prop. Code § 82.152(d).
17 Tex. Occ. Code §11.01.558 (b-1).
18 22 Tex. Admin. Code §531.18

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and (2) relied on by that person in entering into that contract.19

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4.24 Such fraud is a deceptive trade practice that can be prosecuted by the county

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attorney. 20

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4.25 The county attorney may seek (1) injunctive relief; (2) civil penalties of up to

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$20,000 per violation; and (3) a judgment to compensate buyers for actual damages or to

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restore money or property which may have been acquired by means of any unlawful

act or practice.21

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5. FACTUAL BACKGROUND

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A. DGC Phase 1, LLC, is formed and acquires real property

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DGC Phase 1, LLC, was formed on March 16, 2017. The managers – and their
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interest in the company – are as follows: A.J. Shield (50%) and Uriel Castro (50%). Since
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its formation, DGC Phase 1, LLC, its members, and its associates have illegally
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subdivided and sold and attempted to sell property to unsuspecting consumers.


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5.2 On March 24, 2017, DGC Phase 1, LLC, purchased Lot 4 of the C.I. Collins
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Heights subdivision in Travis County, also known as 7709 Dee Gabriel Collins Road.
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5.3 On May 10, 2017, at the request of DGC Phase 1, LLC, XDS Land Surveying, LLC
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performed a survey of this property and prepared a condominium plat that subdivided
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this property into four lots, each of which was just over an acre in size. This plat has
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never been approved by the Travis County Commissioners Court.


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19 Tex. Bus. & Comm. Code § 27.01.


20 Tex. Bus. & Comm. Code § 27.015.
21 Tex. Bus. & Comm. Code § 17.47.

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5.4 On May 4, 2017, Uriel Castro, on behalf of DGC Phase 1, LLC, applied with

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Travis County for a driveway approach permit for this property; a permit Travis

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County has never issued.

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B. DGC Phase 1, LLC, begins selling property

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5.5 On May 16, 2017, by a General Warranty Deed signed by Uriel Castro, DGC

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Phase 1, LLC conveyed Lot 4, in its entirety, to Roger Hernandez and Zulma Jeanette

Soto Hernandez. However, a Correction Warranty Deed was filed on September 8, 2017,

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clarifying that Roger and Zulma Hernandez purchased only one of the four one-acre

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lots illegally created by DGC Phase 1, LLC.

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C. DGC Phase 1, LLC, attempts to form a condominium
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5.6 On June 13, 2017, DGC Phase 1, LLC filed with the Travis County Clerk a
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Condominium Declaration. This Declaration, signed by Uriel Castro and Alan Shield,
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states that “Declarant is the owner of all the real property, including the land…located
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at 7709 Dee Gabriel Collins Road….” This is a false statement because Lot 4 had been
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sold to the Roger and Zulma Hernandez. The filing of the Correction Warranty Deed
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did not make this statement any less false, because DGC Phase 1, LLC still did not own
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all of 7709 Dee Gabriel Collins Road.


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5.7 The law is clear, a condominium is created “only by recording a declaration


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executed in the same manner as a deed by all persons who have an interest in the real
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property that will be conveyed to unit owners....” 22 Because Roger and Zulma
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22 Tex. Prop. Code § 82.051(a)(emphasis added).

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Hernandez did not execute the Declaration, it is insufficient as a matter of law and no

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condominium was created.

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D. DGC Phase 1, LLC, acquires more real property

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5.8 On July 7, 2017, DGC Phase 1, LLC purchased Lot 1 of the C.I. Collins Heights

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subdivision in Travis County, also known as 7635 Dee Gabriel Collins Road. This lot is

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about four acres in size.

5.9 On July 25, 2017, Uriel Castro, on behalf of DGC Phase 1, LLC, applied with

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Travis County for a driveway approach permit for this property; a permit Travis

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County has never issued.

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E. DGC Phase 1, LLC is repeatedly informed of its illegal activity
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5.10 On August 14, 2017, Travis County informed DGC Phase 1, LLC, that 7709 Dee
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Gabriel Collins Road had been illegally subdivided since a portion of that property had
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been sold. Castro was also informed that a division of land requires the filing of a
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subdivision plat and that each lot must have frontage to a street rather than an
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easement.
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5.11 On August 29, 2017, Travis County informed DGC Phase 1, LLC, through Uriel
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Castro and A.J. Shield, that selling portions of 7709 Dee Gabriel Collins Road, which
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they had already done, constituted an illegal subdivision of land.


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5.12 On October 12, 2017, Travis County informed DGC Phase 1, LLC, through Uriel
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Castro, that the County requires a site plan for multiple units on a tract of land. Castro
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was also told that he would have to submit a site plan even if he were proposing a
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condominium regime, as that too, is a subdivision of land.

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5.13 On November 17, 2017, Roger Hernandez applied with Travis County for a

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permit to place two residences at 7709 Dee Gabriel Collins Road, Unit 2. Travis County

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did not issue such a permit because DGC Phase 1, LLC, illegally subdivided 7709 Dee

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Gabriel Collins Road.

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5.14 On February 1, 2018, Travis County informed Uriel Castro that the permit

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requested for 7709 Dee Gabriel Collins Road would not be approved because the

property had been illegally subdivided because a portion of it had been sold before the

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Travis County Commissioners Court had approved the subdivision.

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F. DGC Phase 1, LLC continues to market and sell illegally subdivided
property
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5.15 On November 8, 2011, Uriel Castro obtained his real estate sales agent license
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from the Texas Real Estate Commission. As a real estate sales agent, Uriel Castro cannot
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engage in or provide real estate brokerage services unless he is sponsored by a licensed


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broker and is acting for that broker. On August 22, 2017, eXp Realty, LLC, became Uriel
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Castro’s sponsoring broker. That relationship ended on February 19, 2019. Matthew
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Evan Teifke became Uriel Castro’s sponsoring broker on February 23, 2019.
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5.16 Even after DGC Phase 1, LLC, and Uriel Castro had been repeatedly informed by
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Travis County that selling portions of the property on Dee Gabriel Collins Road before
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a subdivision plat was approved by the County constituted an illegal subdivision of


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property, Uriel Castro continued to market and attempt to sell portions of this property.
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Uriel Castro advertised the sale of one acre lots on Facebook, showed the property to
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prospective buyers, presented to prospective buyers the XDS plat as a means of

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identifying the one acre lots for sale, and prepared and submitted to prospective buyers

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contracts for sale. As a result, DGC Phase 1, LLC, sold another acre out of Lot 4.

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5.17 Most of these real estate brokerage services were done when eXp Realty, LLC

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was Uriel Castro’s sponsoring broker. However, some occurred when Uriel Castro’s

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real estate sales agent license was inactive because he had no sponsoring broker.

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5.18 Uriel Castro, while providing these real estate brokerage services did not provide

any prospective buyers information about brokerage services or a Consumer Protection

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Notice.

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6. FIRST CLAIM – FRAUD IN A REAL ESTATE TRANSACTION

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Fraud in a real estate transaction is a false representation of a material fact that is
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(1) made to a person for the purpose of inducing that person to enter into a contract;
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and (2) relied on by that person in entering into that contract.23


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6.2 As set forth above, numerous false representations of material fact were used to
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induce consumers into buying Units of the purported 7709 Dee Gabriel Collins
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Condominiums.
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A. The Defendants falsely represented that a condominium had been created.


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6.3 The false representations of DGC Phase 1, LLC and Uriel Castro begin at the
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most basic level – they offered something for sale that does not exist. To date, a
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condominium has not been created at 7709 Dee Gabriel Collins Road.
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23 Tex. Bus. & Comm. Code §27.01.

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6.4 DGC Phase 1, LLC attempted to create a condominium, but that attempt is

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legally insufficient. DGC Phase 1, LLC, did not file a condominium declaration when it

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owned all of the property.

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6.5 At the time the condominium declaration was filed, DGC Phase 1, LLC and Uriel

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Castro knew that the first recital in that document – “Declarant is the owner of all the

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real property, including the land…located at 7709 Dee Gabriel Collins Road” – was

false, as all four acres had been conveyed to Roger and Zulma Hernandez. It wasn’t

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until about three months later that a Correction Warranty Deed was recorded, revealing

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that only one of the four acres had been conveyed to Roger and Zulma Hernandez.

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DGC Phase 1, LLC and Uriel Castro continued making this misrepresentation
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every time Uriel Castro provided the Declaration to a potential purchaser. In addition,
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any reference to the Property being a condominium was a misrepresentation.


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B. DGC Phase 1, LLC and Uriel Castro used unapproved plats and plat
descriptions to sell the units.
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6.7 The property description attached to the Hernandez Correction Warranty Deed
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refers to a particular unit of the 7709 Dee Gabriel Collins Condominiums.


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6.8 This description conforms with the unapproved plat attached as Exhibit B-2 to
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the Declaration.
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6.9 On information and belief, Exhibit B-2 was used by DGC Phase 1, LLC and Uriel
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Castro to market and sell the property located at 7709 Dee Gabriel Collins Road.
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C. Travis County is entitled to civil penalties, injunctive relief, and recovery of
damages to the consumers.

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6.10 The false statements DGC Phase 1, LLC and Uriel Castro of are violations of the

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Business and Commerce Code. As the sponsoring broker of Uriel Castro, eXp Realty,

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LLC, is liable for the actions of Uriel Castro. These violations are also deceptive trade

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practices. Travis County has a cause of action to prosecute these deceptive trade

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practices. 24

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6.11 For these violations, Travis County asks the Court to award (1) injunctive relief;

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(2) civil penalties of $20,000 per violation per Defendant; and (3) compensation for

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actual damages to the buyers and restoration of any money or property which was
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acquired by means of an unlawful act. 25
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7. SECOND CLAIM – INJUNCTIVE RELIEF


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7.1 Travis County requests that, pursuant to section 232.005 of the Local
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Government Code, the Court, after notice and hearing, issue Temporary and Permanent
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Injunctions, enjoining DGC Phase 1, LLC, Uriel Castro, and Alan Shield from
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subdividing Lots 1 and 4 of the C. I. Collins Heights subdivision (7635 and 7709 Dee
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Gabriel Collins Road) into smaller lots and marketing, selling, or otherwise conveying
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those lots until such time as the Travis County Commissioners Court has approved the
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re-platting and subdivision of the Property.


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7.2 Travis County also asks the Court to issue Temporary and Permanent
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Injunctions enjoining Matthew Evan Teifke from permitting or authorizing Uriel Castro
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24 Tex. Bus. & Comm. Code § 27.015.


25 Tex. Bus & Comm. Code § 17.47.

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to provide real estate brokerage services in connection with the marketing and/or sale

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of portions of Lots 1 and 4 of the C. I. Collins Heights subdivision (7635 and 7709 Dee

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Gabriel Collins Road) until such time as the Travis County Commissioners Court has

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approved the re-platting and subdivision of the Property

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7.3 Travis County is exempt from filing a bond for a temporary restraining order or

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temporary injunction. 26

8. EXHIBITS

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8.1 The following exhibit is attached hereto in support of this application:

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Exhibit A, the affidavit of Sue Welch, a Planner II with the Travis County

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Transportation and Natural Resources Department
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REQUEST FOR DISCLOSURE
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Travis County requests that DGC Phase 1, LLC; Alan Shield; Uriel Castro; eXp
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Realty, LLC, and Matthew Evan Teifke each disclose, within 50 days, the information
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and materials described by Texas Rule of Civil Procedure 194.2.


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PRAYER
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Travis County requests:


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1. the Court grant judgment for appropriate civil penalties against the
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Defendants including post-judgment interest;


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2. the Court issue temporary and permanent injunctions against the


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Defendants for the injunctive relief described above;


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26 Tex. Civ. Prac. & Rem. Code § 6.001.

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3. the Court order the Defendants to restore all money or property acquired

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by means of unlawful acts or, alternatively, to compensate identifiable

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victims for actual damages;

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4. the Court rescind all agreements entered into by and between the

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Defendants and the consumers; and

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5. for such other and further relief, at law and in equity, to which the County

may show itself justly entitled.

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Respectfully submitted,

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DAVID ESCAMILLA

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TRAVIS COUNTY ATTORNEY
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By: /s/ Tim Labadie
Tim Labadie
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Assistant Travis County Attorney


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State Bar No. 11784853


tim.labadie@traviscountytx.gov
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Ryan Fite
Assistant Travis County Attorney
State Bar No. 24045873
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ryan.fite@traviscountytx.gov
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P.O. Box 1748


Austin, Texas 78767
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(512) 854-9415
(512) 854-9316 (fax)
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ATTORNEYS FOR PLAINTIFF


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EXHIBIT A

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