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IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TEXAS

SAN ANTONIO DIVISION

RICARDO LOPEZ, BARBARA JEAN 

SAENZ, BARBARA SAENZ; AND 

JEANNETTE DIANA GODDARD, 

JEANNETTE GODDARD;

 Plaintiffs,

vs.

AQUA FINANCE, CONNEXUS CREDIT 

UNION, ENERFUZE LLC,

 Defendants.

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5-20-CV-00218-DAE

REPORT AND RECOMMENDATION

OF UNITED STATES MAGISTRATE JUDGE

To the Honorable Senior United States District Judge David A. Ezra:

This Report and Recommendation concerns the Second Amended Motion for Default 

Judgment filed by Plaintiffs Ricardo Lopez, Barbara Saenz, and Jeanette Goddard. See Dkt. No. 

32. The motion was referred for resolution pursuant to Rules CV-72 and 1 of Appendix C to the 

Local Rules for the United States District Court for the Western District of Texas. Plaintiffs 

premise federal jurisdiction on claims invoking the Truth in Lending Act (“TILA”), 18 U.S.C 

§ 1640, and the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962(c), 

and urge that supplemental jurisdiction exists with respect to their state law claims. See 28 U.S.C. 

§§ 1331, 1367. Authority to enter this recommendation stems from 28 U.S.C. § 636(b)(1)(B). 

For the reasons set forth below, the Motion, Dkt. No. 32, should be GRANTED IN PART

as to liability, as discussed further herein. Plaintiffs, however, must more fully brief the legal and 

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factual bases for their damages request. The damages issue will be set for a hearing by separate 

order.

Factual and Procedural Background

Plaintiffs Lopez, Saenz, and Goddard are three individual San Antonio homeowners who 

contend they were tricked by a door-to-door salesperson employed by Defendant Enerfuze LLC 

d/b/a Enerfuze Water Technologies. The result of this trickery, Plaintiffs contend, is that they 

purchased water-treatment systems at their homes at an inflated price. According to their Amended 

Complaint, the Enerfuze salesperson performed misleading tests that showed sediment in 

Plaintiffs’ tap water. The salesperson then promised to install, at no out-of-pocket cost to Plaintiffs, 

water-treatment systems that would oxygenate the water, making it healthier to consume. See

Amend. Compl. at 1 & ¶¶ 22, 26-27, 42-43, 48-49. Although the systems themselves cost $10,400

each,1 Enerfuze represented that it would pay Plaintiffs annually to cover the cost, provided they 

put up signs advertising Enerfuze in their front yards. See id. ¶¶ 27, 42-43, 49. Plaintiffs each 

agreed to “purchase” Enerfuze’s water system. See id. ¶¶ 25, 43, 50. But the Enerfuze salesperson 

in each case didn’t inform Plaintiffs that the “purchase” involved a loan financed by Defendants 

Aqua Finance, Inc. and Connexus Credit Union. See id. at 1; ¶ 31. 

In connection with this transaction, Plaintiffs executed one or more of the following

documents: (1) a Purchase & Installation Agreement in which Enerfuze agreed to install the watertreatment system and, in exchange, Plaintiffs agreed to pay Enerfuze $10,400 for “the Total 

Contract Price for [the] system”; (2) a “Model Home Advocate Program Disclosure” which 

1 There appears to be a slight discrepancy regarding the purchase price of the water-treatment

system. According to Plaintiffs’ live Complaint, Enerfuze charged $10,500 for the system. Later 

documents submitted by Plaintiffs, however, reveal that Enerfuze charged $10,400. This minor 

discrepancy, however, isn’t material to the merits of Plaintiffs’ motion. 

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provided that Enerfuze will directly2pay Plaintiffs $1,500 annually to use Plaintiffs’ property as 

advertising for up to 60 months until the loan is paid in full; (3) a Credit Application that authorized 

Enerfuze to “apply for credit with third party financial companies to finance the purchase of 

[Enerfuze’s] products and services”; and (4) a Retail Installation Credit Agreement wherein 

Plaintiffs agreed to finance the water system at a reduced interest rate of 9.9% with a “minimum 

monthly payment factor reduced to 1.2%,” via a revolving line of credit with Enerfuze, which in 

turn assigned the debt to Aqua Finance. See id. ¶¶ 32, 43, 51; see also Dkt. Nos. 27-30.

3

As promised, shortly after the installation, Enerfuze delivered a check to each of the 

Plaintiffs who in turn used the funds to pay Aqua Finance for the loan. See Amend. Compl. ¶ 28, 

34-37, 53.4 But Enerfuze didn’t make any payments after the first check; nor did it respond to 

Plaintiffs’ inquiries. See id. ¶¶ 38, 45, 53-54. Accordingly, Plaintiffs contend that they currently 

owe thousands of dollars on loans Defendants scammed them into purchasing. See id. ¶¶ 57-58. 

On February 24, 2020, Plaintiffs sued Defendants Enerfuze, Aqua Finance, and Connexus 

Credit Union—the alleged current owner of the loans. See Dkt. No. 1. Plaintiffs’ live Complaint 

raises the following claims against all three Defendants: (1) violation of the TILA, 15 U.S.C.

§§ 1637-38 and its implementing regulation, the so-called “Regulation Z,” 12 C.F.R. § 226 et al., 

2 The Disclosure advised Plaintiffs that Enerfuze would not be making their monthly bank 

payments. Instead, Plaintiffs could “choose” how to spend the funds. 

3 Although Plaintiffs’ Amended Complaint is a bit unclear regarding the exact “paperwork” they 

signed with Enerfuze, they later filed affidavits attaching the contracts at issue. Accordingly, the 

Court will exercise its discretion and consider these contracts, as well as the information in 

Plaintiffs’ Declarations to the extent it clarifies Plaintiffs’ well-pleaded allegations. See, e.g.,

Wooten v. McDonald Transit Assocs., Inc., 788 F.3d 490, 499-500 (5th Cir. 2015) (permitting the 

use of evidentiary hearings to “prove-up” or “flesh out” the truth of plaintiff’s well-pleaded claims) 

(citing Fed. R. Civ. P. 55(b)(2)). The Court, however, will not consider any allegations in 

Plaintiffs’ Declarations that are absent from their live Complaint. 

4

See also Dkt. No. 28 ¶¶ 16-17 (clarifying that these allegations apply to all Plaintiffs and not just 

Lopez and Goddard).

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for failure to provide numerous material disclosures for accounts other than open-ended credit 

plans or, alternatively, disclosures required for open-credit plans; (2) RICO violations, see 19 

U.S.C. § 1962(c); (3) violation of the Texas Deceptive Trade Practices Act (“DTPA”), by violating 

the following laundry-list provisions, Tex. Bus. & Comm. Code § 17.46(b)(2), (4) (5), (7), (13), 

& (24), as well as the Home Solicitations Act, Tex. Bus. & Comm. Code § 601.204, a “tie-in” to 

the DTPA; (4) fraud; and (5) negligent misrepresentation. 

As a remedy, Plaintiffs seek (1) actual damages; (2) statutory damages for violation of the 

TILA; (3) treble damages under the DTPA; (4) cancellation of the loan contracts; (5) attorney fees 

and costs; (6) exemplary damages “where applicable”; and (7) pre-judgment and post-judgment 

interest “as allowed by law.” 

Defendants haven’t answered or otherwise responded to Plaintiffs’ Amended Complaint as 

of the date of this Order. See Fed. R. Civ. P. 12(a)(1)(A). Accordingly, with some prompting by 

the District Court, see Dkt. No. 13 & 21, Plaintiffs sought and obtained entry of default against 

Defendants, and Plaintiffs thereafter moved for default judgment. See Dkt. Nos. 17-20, 23-24. 

After evaluating Plaintiffs’ motion for default judgment, the Court determined that some 

clarification and additional briefing was required. See Dkt. No. 25. Accordingly, the Court ordered 

Plaintiffs to file an amended motion that adequately briefed the factual and legal bases entitling 

them to the relief sought. See id. Plaintiffs thereafter filed an amended motion, but it still didn’t 

address all the Court’s concerns. See Dkt. No. 23. Specifically, Plaintiffs failed to explain how the 

Assistant Vice President of Aqua Finance was authorized to accept service on behalf of Connexus. 

See Dkt. No. 31. Plaintiffs also didn’t explain how the allegations in their live Complaint provided 

a sufficient basis to enter judgment in their favor, and they appeared to lump all three Defendants 

together for misconduct without sufficiently explaining how the Defendants are related and why—

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with citations to relevant authority—each defendant is liable for each claim for which Plaintiffs 

seek a default judgment. See id. Finally, Plaintiffs didn’t adequately brief the legal basis for their 

damages request against each Defendant and identify the amount requested. Accordingly, the 

Court ordered Plaintiffs to file an amended motion for default judgment to address these concerns. 

See id.

Plaintiffs now—via their Second Amended Motion for Default Judgment—move for 

default judgment against Defendants Enerfuze and Aqua Finance. See Dkt. No. 32. They no longer 

seek default judgment against Connexus. See id. n. 1. 

Analysis

A. Enerfuze and Aqua Finance Defaulted. 

The record reflects Plaintiffs served a copy of the Summons and Amended Complaint on 

Aqua Finance’s Assistant Vice President Kathryn Klosinski on May 28, 2020, and on Enerfuze’s 

Chief Executive Officer Paul Chancey on October 5, 2020. See Dkt. Nos. 17 & 22. As officers of 

Aqua Finance and Enerfuze, Klosinski and Chancey were authorized to accept service on each

respective company’s behalf. See Fed. R. Civ. P. 4(h)(1)(B). Defendants have failed to answer or 

otherwise defend against Plaintiffs’ claims, as demonstrated by Plaintiffs’ motions for entry of 

default. See Dkt. No. 17& 22. The rules provide that “[w]hen a party against whom a judgment for 

affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by 

affidavit or otherwise, the clerk must enter the party’s default.” Fed. R. Civ. P. 55(a). Accordingly, 

the Clerk properly entered default against Enerfuze and Aqua Finance. 

B. Default Judgment Should be Granted in Part as to Liability, But More 

Briefing Is Needed on Damages.

Once a default has been entered, and upon a party’s motion, a court may enter a default 

judgment. Fed. R. Civ. P. 55(b); N.Y. Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996). 

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“[A] party,” however, “is not entitled to a default judgment as a matter of right, even where the 

defendant is technically in default.” Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001) (quotation 

marks omitted). Rather, “[t]here must be a sufficient basis in the pleadings for the judgment 

entered.” Nishimatsu Constr. Co., Ltd. v. Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975).

When considering whether such a basis is presented, a court accepts as true the complaint’s wellpleaded factual allegations—except regarding damages—and must determine whether those 

pleaded facts state a claim upon which relief may be granted. See id.; see also United States ex rel. 

M-Co. Constr., Inc. v. Shipco Gen., Inc., 814 F.2d 1011, 1014 (5th Cir. 1987).

As discussed further below, Plaintiffs have stated claims against Defendants Enerfuze and 

Aqua Finance for violation of the TILA, and Plaintiffs have also stated viable DTPA claims against 

Enerfuze. But Plaintiffs haven’t stated a viable DTPA claim against Aqua Finance. Plaintiffs also 

forfeited default judgment on their claims for fraud, RICO, and negligent misrepresentation

Although judgement in favor of Plaintiffs is warranted, under Texas’s “one satisfaction 

rule” “[t]here can be but one recovery for one injury, and the fact that there may be more than one 

theory of liability does not modify this rule.” Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 

299, 303 (Tex. 2006) (quotation, and ellipses omitted). As the prevailing party, Plaintiffs are

entitled to judgment under the most favorable theory of recovery. Moreover, further briefing is 

needed regarding damages before the Court sets this matter for a hearing.

1. Plaintiffs have each stated a viable claim against Enerfuze and Aqua 

Finance for violation of the TILA. The TILA and Regulation Z impose a variety of disclosure 

requirements on creditors, both to protect consumers from inaccurate and unfair credit practices 

and “‘to assure a meaningful disclosure of credit terms so that the consumer will be able to compare 

more readily the various credit terms available to him and avoid the uninformed use of credit.’” 

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James v. City Home Serv., Inc., 712 F.2d 193, 194 (5th Cir. 1983) (quoting 15 U.S.C. § 1601(a)); 

see also Fairley v. Turan–Foley Imports, Inc., 65 F.3d 475, 479 (5th Cir.1995). The Act provides 

a private cause of action to any individual consumer against any creditor who fails to disclose 

certain material terms associated with the extension of credit. See 15 U.S.C.A. § 1640(a); Lacy v. 

Gen. Fin. Corp., 651 F.2d 1026, 1029 (5th Cir. 1981). 

Here, Plaintiffs are consumers for purposes of the Act5and allege that Enerfuze is a 

“creditor”6that provided a closed-end credit loan7and, in the course of doing so, failed to provide 

a number of required disclosures, such as those respecting the “finance charge,” the “sum of the 

amount financed,” the penalties for late payments, the number of payments and payment schedule, 

and other material terms.

8

See Amend. Compl.¶¶ 62a-j (citing 15 U.S.C. §§ 1638(a)(3)-(8), (10), 

(12) & 12 C.F.R. §§ 226.18(b), (d), 226.4. A review of the documents Enerfuze allegedly provided 

5 A person is a “consumer” under the TILA if the “party to whom credit is offered or extended is 

a natural person, and the money, property, or services which are the subject of the transaction are 

primarily for personal, family, or household purposes.” 15 U.S.C. § 1602(h).

6 The TILA defines a creditor as a “person who both (1) regularly extends, whether in connection 

with loans, sales of property or services, or otherwise, consumer credit which is payable by 

agreement in more than four installments or for which the payment of a finance charge is or may 

be required, and (2) is the person to whom the debt arising from the consumer credit transaction is 

initially payable on the face of the evidence of indebtedness or, if there is no such evidence of 

indebtedness, by agreement.” 15 U.S.C. § 1602(g). 

7

“A ‘closed-end credit’ transaction is one where the finance charge is divided into the term of the 

loan and incorporated into time payments.” B McAnaney v. Astoria Fin. Corp., No. 04-CV1101JFBWDW, 2008 WL 222524, at *4 (E.D.N.Y. Jan. 25, 2008) (quotations omitted). “By 

contrast, an ‘open-end’ credit transaction is one in which the creditor reasonably contemplates 

repeated transactions, and provides for a finance charge which may be computed from time to time 

on the outstanding unpaid balance.” Id. (quotations and ellipsis omitted). Accordingly, Plaintiffs’ 

one-time purchase of a water-filtration system is a closed-end loan, and the mandatory disclosures 

set forth in § 1638 of the TILA apply here. 

8 Because Plaintiffs are only entitled to a single recovery for Defendants’ multiple TILA violations,

it isn’t necessary to consider whether there is a sufficient basis in the pleadings for each claimed 

non-disclosure. See Turner v. Firestone Tire & Rubber Co., 537 F.2d 1296, 1298 (5th Cir. 1976) 

(citing 15 U.S.C. § 1640(g)). 

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Plaintiffs supports this contention. See 15 U.S.C. § 1632(a) (“Information required by this 

subchapter shall be disclosed clearly and conspicuously, in accordance with regulations of the 

Bureau”); 12 C.F.R. § 226.17(a)(2), (7), (b) (requiring such disclosures to be “conspicuously 

segregated from all other terms, data or information provided in connection with a transaction”). 

Accepting Plaintiffs’ well-pleaded allegations as true—as clarified by their affidavits and the 

documents attached thereto—Plaintiffs have each stated a viable claim for violation of the TILA

against Enerfuze. See McGowan v. King, Inc., 569 F.2d 845, 849 (5th Cir. 1978) (“The basis of 

[Section] 1640(a) liability is the failure to disclose information required to be disclosed; there is 

no requirement that the plaintiff himself be deceived in order to sue [under the Act].”). 

Because these violations would’ve been apparent from the face of the disclosure statements 

themselves, Aqua Finance, as the assignee of the debt, is similarly liable. See 15 U.S.C. § 1641(a);

McLean v. Big Dog Grp., LLC, No. CV 15-40-JWD-EWD, 2016 WL 3211514, at *8 (M.D. La. 

Mar. 11, 2016). And, although Plaintiff Lopez concedes that he later received a billing statement 

with some of the necessary disclosures, see Amend. Compl. ¶ 37; Dkt. No. 30, this late disclosure 

wasn’t made at the time Lopez consummated the transaction, still didn’t disclose all the 

information required by the TILA, and wouldn’t have constituted a proper “correction of error” so 

as to absolve Aqua Finance of liability. See Moor v. Travelers Ins. Co., 784 F.2d 632, 633 (5th 

Cir. 1986) (“Concluding a credit transaction without making the required disclosures constitutes a 

TILA nondisclosure violation.”); 15 U.S.C. § 1640(b) (discussing how a creditor or assignee may 

correct a disclosure violation).

2. Plaintiffs pleaded viable DTPA claims for laundry-list violations against 

Enerfuze, but not against Aqua Finance. As pertinent here, the DTPA permits consumers to 

recover for “[f]alse, misleading, or deceptive acts or practices in the conduct of any trade or 

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commerce.” Tex. Bus. & Com. Code § 17.46(a). To plead a claim for a DTPA violation of the type 

alleged here, Plaintiffs must allege that (1) they are consumers; (2) Defendants engaged in a false, 

misleading, or deceptive act or practice that is either specifically enumerated in § 17.46(b) (the socalled “laundry list”) or Defendants violated another DTPA tie-in provision; (3) they relied on the 

false, misleading, or deceptive act or practice to their detriment; and (4) the act or practice was a 

producing cause of their injuries. See Tex. Bus. & Com. Code § 17.50(a), (h); Amstadt v. U.S. 

Brass Corp., 919 S.W.2d 644, 649 (Tex. 1996).

Here, Plaintiffs are each consumers for purposes of the DTPA9that claim Enerfuze 

performed misleading water-treatment tests and falsely promised Plaintiffs greater safety and 

better taste if Plaintiffs “purchased” a water-treatment system at no added cost to them. See

Amend. Compl. at 1. Specifically, Plaintiffs allege Enerfuze falsely promised to cover the cost of 

the systems so long as Plaintiffs permitted Enerfuze to use their yards for advertising. See id. ¶¶ 

26-31, 40, 43, 48-49, 53, 57, 81. But Enerfuze, according to Plaintiffs, only intended to cover one 

such payment and further failed to disclose that the water-treatment system would be financed 

through a loan with Aqua Finance taken out in Plaintiffs’ names. See id. Plaintiffs contend they 

relied on these misrepresentations to their detriment and that the misrepresentations were the 

producing cause of their damages. Accordingly, Plaintiffs each pleaded a viable claim against 

Enerfuze for violation of the DTPA via one or more of its laundry list provisions. See Tex. Bus. & 

Comm. Code §§17.46(b)(7), (24).

10

9 A consumer, for purposes of the DTPA, is “an individual who seeks or acquires by purchase or 

lease any goods or services.” Tex. Bus. & Comm. Code § 17.45(4). 

10 Plaintiffs allege that aforementioned acts constitute numerous other violations of the DTPA’s 

laundry list provisions See Amend. Compl. ¶¶ 81a-f; 91a-d. Because these allegedly false, 

misleading, or deceptive acts or practices led to only a single injury, the Court need only determine 

whether Plaintiffs have pled at least one viable violation of the DTPA’s laundry list. See 27 Tex. 

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Plaintiffs, however, have failed to adequately plead that Aqua Finance is derivatively liable 

for Enerfuze’s laundry list violations. Plaintiffs’ live Complaint alleges that “[t]he Lender 

Defendants are liable for the actions of Enerfuze LLC as they are the holder in due course of the 

loan contracts.” Amend. Compl. ¶ 85. But Plaintiffs have failed to explain how a holder of a note 

can be derivatively liable under the DTPA for an assignor’s independent misrepresentations. In

Home Savings Association v. Guerra, 733 S.W.2d 134, 136 (Tex. 1987), the Texas Supreme Court 

explained that “[t]he DTPA does not attach derivative liability to a defendant based on an innocent 

involvement in a business transaction.” Rather, “[a]lthough a consumer suing under the DTPA 

need not establish contractual privity with the defendant, he must show that the defendant has 

committed a deceptive act which is the producing cause of the consumer’s damages.” Id. In short, 

“[t]o hold a creditor liable [under the DTPA] in a consumer credit transaction, the creditor must 

be shown to have some connection either with the actual sales transaction or with a deceptive act 

related to financing the transaction.” Id. Here, however, Aqua Finance is not alleged to have had 

a sufficient connection to the sales transaction or to any deceptive act related to the transaction to 

support DTPA liability against it.

In attempting to address the Court’s concerns over this issue, Plaintiffs argue for the first 

time in their amended motion that Enerfuze was acting as Aqua Finance’s agent, and further that 

Aqua Finance ratified Enerfuze’s misrepresentations when Aqua Finance informed Plaintiffs they 

would still be liable for the loan, notwithstanding Enerfuze’s misconduct. See Dkt. No. 32 ¶¶ 13-

19; 79. Such agency-principal allegations are absent from Plaintiffs’ live Complaint.

11 And any 

Prac., Consumer Rights And Remedies § 1.19 (3d ed. 2000) (discussing the “one satisfaction rule” 

in the context of DTPA claims). 

11 Plaintiffs only allege that Connexus entered into a principal-agent relationship with Aqua 

Finance. See Amend. Compl. ¶ 35.

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allegations in Plaintiffs’ Declarations that they now contend allegedly support this new theory of 

liability can’t be considered in this posture. See Nishimatsu Constr. Co., Ltd. v. Houston Nat’l 

Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) (to grant default judgment, “[t]here must be a sufficient 

basis in the pleadings for the judgment entered.”). At most, Plaintiffs pleaded that Aqua Finance 

failed to exercise due diligence before engaging in business with Enerfuze and, further, sought to 

bind Plaintiffs to contracts Enerfuze assigned to Aqua Finance. See Amend. Compl. ¶¶ 14-15, 45, 

57-58. A mere business relationship with Enerfuze is insufficient to subject Aqua Finance to 

liability under the DTPA. See, e.g., Qantel Bus. Sys., Inc. v. Custom Controls Co., 761 S.W.2d 

302, 305 (Tex. 1988) (“The DTPA does not recognize or envision the expansion of common law 

theories of vicarious liability to include ‘inextricably intertwined,’ or the mere existence of a 

‘relationship’ between parties.”). The fact that Aqua Finance later billed Plaintiffs pursuant to a 

financing agreement Enerfuze assigned to it isn’t indicative of an agency relationship. 

Accordingly, as pleaded—and based on Plaintiffs’ present briefing— Plaintiffs have failed to plead

a viable DTPA claim against Aqua Finance by virtue of Enerfuze’s violation of the DTPA’s 

laundry list violations.

3. Plaintiff Goddard has pleaded a DTPA violation by virtue of Enerfuze’s 

Home Solicitation Act Violation. The Texas Home Solicitations Act12 provides that a “merchant,”

defined as “a party to a consumer transaction other than a consumer,”

13must provide a “consumer”

with a “complete receipt or copy of the contract pertaining to the consumer transaction at the time 

of its execution.” Tex. Bus. & Comm. Code § 601.052. A “consumer” is defined as, “an individual 

12 The Texas Home Solicitations Act applies to the acts at issue here because the personal 

solicitation occurred at Plaintiffs’ homes and concerned a “merchant” or its agent’s offer to 

purchase goods or services exceeding $25. See Tex. Bus. & Comm. § 601.002(a) (discussing the 

applicability of the Act).

13 See Tex. Bus. & Comm. Code § 601.001(3). 

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who seeks or acquires real property, money or other personal property, services, or credit for 

personal, family, or household purposes.”

14 The contract must contain a statement in bold typeface 

notifying a consumer of the right to cancel the transaction at any time prior to midnight of the third 

business day after the transaction. This statement must be in a substantially similar form as the one 

set forth in § 601.052(b), and it must further attach a “completed notice of cancellation form in 

duplicate” in bold typeface with the language set forth in § 601.053(a)(3). Further, the Act 

prohibits a “merchant” from (1) “fail[ing] to inform the consumer orally of the right to cancel the 

transaction” at the time the consumer signs the contract; or (2) “misrepresent[ing] in any manner 

the consumer’s right to cancel.” Id. § 601.152. A violation of the Home Solicitation Act is 

considered a “false, misleading, or deceptive act or practice” under the DTPA. Tex. Bus. Comm. 

Code § 601.204.15

Here, Plaintiffs are consumers and Enerfuze is a merchant, as those terms are defined by 

the Home Solicitation Act. Plaintiffs contend Enerfuze violated the Act by failing to provide Lopez 

the three-day cancellation notice and duplicate attachment, see Amend. Compl. ¶ 33, and also by 

misrepresenting Goddard’s cancellation rights, see id. ¶ 52. Although Plaintiffs now contend that 

Enerfuze also violated the Act by failing to verbally inform Saenz of her right to cancel, see Dkt. 

No. 32 ¶ 62, such allegations are absent from the live Complaint.16 Accordingly, Saenz has failed 

to plead a viable DTPA tie-in claim. Lopez’s tie-in claim similarly fails for failure to plead 

detrimental reliance, which is an essential element of a DTPA claim. See Cruz v. Andrews 

14 See id.(1). 

15 Plaintiffs have not pleaded that Defendants violated the Home Solicitations Act independent of 

their DTPA claims. Cf. Tex. Bus. & Comm. Code § 601.202 (discussing a merchant’s liability for 

violating the Home Solicitations Act).

16 It is also absent from Saenz’s Declaration, contrary to Plaintiffs’ contentions. See Dkt. No. 28. 

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Restoration, Inc., 364 S.W.3d 817, 823 (Tex. 2012). In other words, Lopez doesn’t claim that he 

would’ve cancelled the transaction had Enerfuze informed him of his rights. 

Plaintiff Goddard, however, has plausibly pleaded a DTPA tie-in claim against Enerfuze. 

Goddard pleads that after agreeing to the installation of the water filter, she began to have concerns 

because she “had been scammed in the past and after rebuilding her credit, she did not want to get 

caught up in something that would hurt her financially.” Amend. Compl. ¶ 52. Accordingly, 

Goddard contends that she asked Enerfuze whether she could cancel the transaction. See id. In 

response, Enerfuze misrepresented that Goddard “had no right to cancel by then and needed to just 

sign.” Id. Although Goddard doesn’t explicitly plead that she relied on this misrepresentation to 

her detriment, it is implicit in her allegations. Moreover, in her Declaration, Goddard clarifies that

she “didn’t try to cancel because [she] had been told that it was not allowed.” Dkt. No. 27 ¶ 9. 

Plaintiffs, however, again fail to explain how Aqua Finance could be liable for Enerfuze’s 

actions in consummating the transaction. Accordingly, on this briefing, Goddard isn’t entitled to 

default judgment against Aqua Finance for her Home Solicitation Act violation.

17

4. Plaintiffs forfeited their RICO, fraud, and negligent misrepresentation

claims. Plaintiffs’ Second Amended Motion for Default Judgment doesn’t brief—let alone 

mention—RICO or fraud. And, although Plaintiffs discuss Enerfuze’s various misrepresentations, 

they appear to do so in the context of briefing their DTPA claims; not claims for fraud or negligent 

17 Nevertheless, because a violation of the Home Solicitations Act renders a contract void and 

unenforceable, see Tex. Bus. & Comm. Code § 601.201, it appears that Aqua Finance can’t enforce 

its contract at least against Goddard. Goddard may also be entitled to recover the funds she paid 

Aqua Finance under a theory of unjust enrichment, although Plaintiffs haven’t pled a claim for 

unjust enrichment or briefed the issue. See In re Okedokun, 593 B.R. 469, 578 (Bankr. S.D. Tex. 

2018), subsequently aff’d and remanded sub nom. 968 F.3d 378 (5th Cir. 2020) (discussing the 

split in Texas courts regarding whether unjust enrichment is an independent cause of action or 

instead, a theory of recovery). 

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misrepresentation. Accordingly, to the extent Plaintiffs seek default judgment on their claims for 

RICO, fraud, and negligent misrepresentation, the request should be denied as inadequately 

briefed; those claims are forfeited. See United States v. Maes, 961 F.3d 366, 377 (5th Cir. 2020), 

as revised (Jun. 2, 2020) (failure to adequately brief an argument renders it forfeited). 

5. Further briefing is needed regarding Plaintiffs’ damages. Having found 

that default judgment in part on liability is appropriate, the Court next considers damages. “As a 

general proposition, in the context of a default judgment, unliquidated damages normally are not 

awarded without an evidentiary hearing.” James v. Frame, 6 F.3d 307, 310 (5th Cir. 1993). But 

the fact that Plaintiffs are seeking unliquidated damages here and have requested a hearing to 

present evidence on the matter doesn’t excuse them from fully briefing the issue of damages. 

As the Court previously explained in its February 10, 2021 and March 31, 2021 Orders, 

Dkt. Nos. 26 & 31, Plaintiffs should adequately brief the legal basis for their damages request 

against each Defendant and identify the amount requested. This brief should clearly identify: 

(1) the theory of recovery for which each Plaintiff seek damages against each Defendant, keeping 

in mind Texas’s one-satisfaction rule; (2) the category of damages each Plaintiff requests against 

each Defendant along with a citation to the relevant legal authority that permits such a recovery

and a brief explanation where necessary18; (3) with respect to each category of damages, the 

amount requested against each Defendant; and (4) at minimum, the evidence Plaintiffs will be 

presenting to support each category of requested damages broken down by category of damages 

where possible. 

18 For example, if certain proof is required to recover the type of damages sought Plaintiffs should 

so specify. See, e.g., O’Connor’s Texas Causes of Action Ch. 41-F § 5 (2021) (discussing how a 

plaintiff can prove loss of credit).

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Plaintiffs’ amended motion fails to adequately address these deficiencies. For example, 

Plaintiffs again fail to provide the amount sought in damages. They also fail to clearly identify 

each category of damages requested against each Defendant along with the relevant legal authority 

that permits them to recover it. Instead, Plaintiffs begin their brief by broadly claiming “statutory, 

economic, and unliquidated damages” and then at other points in their brief claim to seek “actual 

damages” in the form of stress and mental anguish (at least for some Plaintiffs), damage to their 

credit, a cloud on the title to their home, and attorneys’ fees. Dkt. No. 32 ¶¶ 11, 31, 70-72. But 

whether Plaintiffs are entitled to recover economic damages or the more generous actual damages, 

depends on whether or not Plaintiffs seek damages for violation of the DTPA’s laundry list or

instead the Home Solicitations Act tie-in provision. Compare Tex. Bus. & Comm. Code § 17.50(a) 

with § 17.50(h); see also Richard M. Alderman, Texas Deceptive Trade Practices Act Remedies, 

15 J. Consumer & Com. L. 2, 5 (2011) (distinguishing between the damages awarded on such 

claims). Moreover, to recover treble damages, Plaintiffs must show that Defendants acted either 

knowingly or intentionally, depending on which claim Plaintiffs seek recovery. Compare Tex. 

Bus. & Comm. Code § 17.50(a) with § 17.50(h); see also 15 J. Consumer & Com. L. at 5. Finally, 

some of the types of damages sought here—such as damages to Plaintiffs’ credit report and cloud 

on title—appear to be special damages that must be specifically pleaded under Texas law. See Boat 

Superstore, Inc. v. Haner, 877 S.W.2d 376, 379 (Tex. App.—Houston [1st Dist.] 1994, no writ). 

Yet Plaintiffs’ live Complaint and motion are silent on this matter. 

In sum, more work is needed here. As the parties seeking relief, Plaintiffs bear the burden 

to fully brief the precise relief requested and the legal and factual bases for it. An evidentiary 

hearing will not be held unless and until the matter is appropriately briefed, and the failure to fully 

brief this matter can result in significant consequences for Plaintiffs and their claims.

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Conclusion and Recommendation

For the reasons discussed above, it is recommended that Plaintiffs’ Second Amended 

Motion for Default Judgment, Dkt. No. 32, should be GRANTED IN PART as to liability, as

discussed herein. Specifically, Plaintiffs should be awarded default judgment against Defendant 

Enerfuze on their claims for violation of the TILA and the DTPA’s laundry list. Plaintiff Goddard 

should be also awarded default judgment on her claim that Enerfuze violated the DTPA by virtue 

of the Home Solicitations Act. Plaintiffs should also be awarded default judgment against 

Defendant Aqua Finance on claims for violation of the TILA. Default judgment with respect to 

Plaintiffs’ DTPA claims against Aqua Finance, however, should be denied. Similarly, default 

judgment with respect to Plaintiffs’ claims against Defendants Enerfuze and Aqua Finance for 

fraud, negligent misrepresentation, and RICO should be denied. 

IT IS ORDERED THAT within thirty (30) days from the date of this Order, Plaintiffs

shall file a brief that fully addresses its damages request as discussed more fully herein.

Instructions for Service and Notice of Right to Object/Appeal

The United States District Clerk shall serve a copy of this report and recommendation on 

all parties by either (1) electronic transmittal to all parties represented by attorneys registered as a 

“filing user” with the clerk of court, or (2) by mailing a copy by certified mail, return receipt 

requested, to those not registered. Written objections to this report and recommendation must be 

filed within fourteen (14) days after being served with a copy of same, unless this time period is 

modified by the district court. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b). The objecting party 

shall file the objections with the clerk of the court, and serve the objections on all other parties. A 

party filing objections must specifically identify those findings, conclusions, or recommendations 

to which objections are being made and the basis for such objections; the district court need not 

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consider frivolous, conclusory, or general objections. A party’s failure to file written objections to 

the proposed findings, conclusions, and recommendations contained in this report shall bar the 

party from a de novo determination by the district court. Thomas v. Arn, 474 U.S. 140, 149-52 

(1985); Acuña v. Brown & Root, Inc., 200 F.3d 335, 340 (5th Cir. 2000). Additionally, failure to 

timely file written objections to the proposed findings, conclusions, and recommendations 

contained in this report and recommendation shall bar the aggrieved party, except upon grounds 

of plain error, from attacking on appeal the unobjected-to proposed factual findings and legal 

conclusions accepted by the district court. Douglass v. United Servs. Auto. Ass’n, 79 F.3d 1415, 

1428-29 (5th Cir. 1996) (en banc).

IT IS SO ORDERED. 

SIGNED this 25th day of January, 2022.

RICHARD B. FARRER

UNITED STATES MAGISTRATE JUDGE

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