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gain from the sale of the Lakeshore property on their 2001
Federal income tax return.
Difficulty arose at the time of closing the sale of the
Lakeshore property in 2001. Petitioners believed that the real
estate agent who had organized the sale had damaged the Lakeshore
property and the contents of the house, consisting of
furnishings, appliances, and other personal property.9
Petitioners therefore refused to pay the realtor’s commission and
instead placed an amount equal to the realtor’s commission in an
escrow account. When negotiation and mediation attempts failed,
the realtor brought suit against petitioners in the District
Court of Llano County, Texas, seeking payment of the commission
as well as recovery of attorney’s fees. Petitioners
counterclaimed, alleging negligence, conversion, breach of
contract, and violation of the Texas Deceptive Trade Practices-
Consumer Protection Act set forth in Tex. Bus. & Com. Code Ann.
secs. 17.41-17.63 (Vernon, 2002). Specifically, petitioners
alleged that they had been deprived of personal property
consisting of household furnishings and appliances that had been
in the Lakeshore property. The realtor prevailed in the district
court proceeding, and the amount of the realtor’s commission was
released from the escrow account. The realtor was also awarded
9At the trial of this case, Mr. Stukes testified that the
personal property was already in the house when petitioners
bought it.
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Last modified: November 10, 2007