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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

No. 99-40100

JOE R. STRINGER; DESIREE H. STRINGER,
Plaintiffs-Appellants,
versus
CENDANT MORTGAGE CORPORATION,
doing business as PHH
Mortgage Services Corporation,
Defendant-Appellee.

Appeal from the United States District Court
For the Eastern District of Texas

December 22, 1999
Before HIGGINBOTHAM and SMITH, Circuit Judges, and DUPLANTIER*,
District Judge.
PER CURIAM:
This case requires the construction of section 51 of the Texas
Constitution: whether a home equity lender may require the
borrower to pay off other third-party debt not secured by the
homestead with the loan proceeds. Because this case involves a
determinative question of state law which the Texas courts have not
definitively decided, we are persuaded that we should certify the
question to the Supreme Court of Texas.
CERTIFICATE FROM THE UNITED STATES COURT OF APPEALS
*District Judge of the Eastern District of Louisiana, sitting by designation.

FOR THE FIFTH CIRCUIT
TO THE SUPREME COURT OF TEXAS, PURSUANT TO THE TEXAS
CONSTITUTION, ART. 5, § 3-C AND TEX. R. APP. P. 114
TO THE SUPREME COURT OF TEXAS AND THE HONORABLE JUSTICES THEREOF:
I. STYLE OF THE CASE
The style of the case in which this certificate is made is
Joe R. Stringer; Desiree H. Stringer, Plaintiffs--Appellants,
versus Cendant Mortgage Corporation, doing business as PHH
Mortgage Services Corporation, Defendant--Appellee, Case No. 99-
40100, in the United States Court of Appeals for the Fifth
Circuit, on appeal from the United States District Court for the
Eastern District of Texas.
II. STATEMENT OF THE CASE
Joe and Desiree Stringer appeal a judgment holding that
their home equity lender may condition its loan upon payment of
third-party creditors from their loan proceeds. The Stringers
applied for a loan of $227,150 from Cendant secured by equity in
their home. Cendant gave them the required statutory notice,
which read:
(Q) loans described by section 50(a)(6), Article xvi,
of the Texas Constitution must:
(1) not require you to apply the proceeds to another
debt that is not secured by your home or to another
debt to the same lender. . . .
At closing, Cendant insisted that as a condition of closing,
$106,174.92 of the loan proceeds be used to pay off designated
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third-party creditors. Those debts had not been secured by
equity in the Stringers' home. The Stringers filed suit in Texas
state court, contending that the Texas Constitution prohibited
that act. Cendant removed the case on diversity grounds and
filed a motion to dismiss, which the district court granted.
Texas amended its Constitution in 1997 to allow home equity
loans. See TEX. CONST. ART. XVI § 50 (1999). The provision allows
for home equity loans but includes many protections for the
borrower. The first requirement relevant here is
§ 50(a)(6)(Q)(I), which limits the lender's ability to apply the
loan proceeds against other debts:
[an extension of credit that is made on the condition
that:] the owner of the homestead is not required to
apply the proceeds of the extension of credit to repay
another debt except debt secured by the homestead or
debt to another lender. . . .
TEX. CONST. ART. XVI § 50(a)(6)(Q)(I) (1999). The second provision
requires that the lender provide written notice regarding what
debts the lender may require to be paid. That provision advises
the debtor:
(Q) LOANS DESCRIBED BY SECTION 50(a)(6), ARTICLE XVI,
OF THE TEXAS CONSTITUTION MUST:
(1) NOT REQUIRE YOU TO APPLY THE PROCEEDS TO ANOTHER
DEBT THAT IS NOT SECURED BY YOUR HOME OR TO ANOTHER
DEBT TO THE SAME LENDER. . . .
§ 50(g)(Q)(1) (1999).
The language of these two provisions arguably cannot be
reconciled: the positively-framed § 50(g)(a)(6) reads that the
lender may force the payment of third-party debts unsecured by
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the home, while the prohibitively-framed § 50(g)(Q) reads that
the lender may not.
The parties urge different methods of statutory construction
to resolve the dilemma. Cendant proposes that we focus on
§ 50(a), which it describes as the "substantive" provision, and
dismiss the inconsistency in the notice provision as poor
drafting. The Stringers argue that the legislative history and
the presumed narrowness of exception language requires that the
prohibitive language of the notice provision be given effect.
The choice between these methods would require us to make an
important decision that ought to be made by the State of Texas.
This we are reluctant to do, particularly given the unique
position the homestead has historically held under Texas law.
III. QUESTION CERTIFIED
Under the Texas Constitution, may a home equity lender
require the borrower to pay off third-party debt that is not
secured by the homestead with the proceeds of the loan?
IV. CONCLUSION
We disclaim any intention or suggestion that the Supreme
Court of Texas confine its reply to the precise form or scope of
the question certified. We look for guidance from our state
court colleagues. The answer they provide will be dispositive of
the principal issue on appeal in this case. The record in this
action, together with the copies of the parties' briefs, is
transmitted herewith.
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This panel retains cognizance of the appeal in this case
pending response from the Supreme Court of Texas. We hereby
CERTIFY the question stated above to the Supreme Court of Texas.
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