THE DTPA IS ALIVE AND WELL
Walter P. Wolfram
State Bar of Texas
September 12, 2006
THE DTPA IS ALIVE AND WELL
A. Basics of DTPA – A Strategic Scope
This paper is designed as an overview and introduction to the effective use of the Deceptive Trade Practices –Consumer Protection Act of the State of Texas (DTPA) fo the use of attorneys who litigate on behalf of “consumers” in the State of Texas. It is my desire that this paper will instill in you a strategic grasp of the DTPA and permit you to hereafter quickly come to grips with this most interesting statutory scheme. In attempting to present an overview document on the “BASICS OF DTPA,” choices are imposed by the constraints of time, space, energy and resources. Therefore, I have chosen to outline what I have come to believe to be certain strategically important aspects of DTPA litigation that are unique to the act and, in my opinion, are indispensable to an adequate understanding of this field of law. The matters of waiver, limitations, evidence, venue, etc., (albeit important) are tactical only and are left out of this article intentionally. Many of these absent topics are developed in “A Strategic Grasp of the DTPA” 1993, State Bar of Texas PDP a 460 page seminar paper, published by the State Bar of Texas in book form. The matters contained in this overview, in my way of thinking, are of strategic importance and the failure to grasp the significance of any one of them, may result in an improper application of the law. Indexed they are:
A. Basics of DTPA – (A Strategic Scope)
2. Exemptions – Professions, certain large transactions
4. Residence actions remain under DTPA §17.49(g)
1. Knowing violation
2. Injunctive Relief
3. Restoration orders/rescission
4. Receivership to enforce judgment
5. Other relief
D. Causes of Action
1. Laundry List
2. Breach of Warranty
3. Unconscionable Course of Action
4. Chapter 541 — Insurance Code
5. Plug-In Statutes
E. Attorney’s Fees
F. DTPA Demand Letter
G. Parol Evidence Rule
H. Groundless – Counterclaim
I. Property Code – Chapter 27 (RCLA)
J. Oh Fair Reason, Wherefore Art Thou?
Each topic will be treated on an overview basis with citations to specific statute sections and cases supporting the propositions stated. However, the readers should not content themselves with the materials set out herein, and the litigator should prepare and brief adequately to meld his/her presentation of the law and facts to their particular circumstances.
Please keep in mind that allegations brought under the DTPA are TORT cases even though they spring from a contractual/transactional basis.1
CAVEAT– APPLICABILITY OF THE NEGOTIABLE INSTRUMENTS LAW TO THIS PAPER: I have always had an agreement with the State Bar of Texas that my signature on this paper is strictly regulated by the Negotiable Instruments Law of Texas in that I have endorsed this paper without recourse on me.
1. CONSUMER DEFINED
The plain language of § 17.45(4) defines a “consumer” as one “who  seeks or acquires  by purchase or lease,  any goods or services.” Each of the three categories are disjunctive; therefore, a “consumer” may be determined by any series of combinations so long as there exists evidence and facts using all three categories. The buyer/seller relationship or lessor/lessee relationship creates a traditional consumer relationship and presents no novelty to the litigator. However, the bland definition in the statute has given rise to a conceptual struggle between the traditional mercantile community and the emerging consumer consciousness of our state. The strategic importance of understanding the DTPA term “consumer” arises from the fact that standing to sue under the DTPA is predicated on qualifying as a “consumer.” Failure to qualify as a “consumer” will defeat the standing and thereby deny the claim. Riverside Natl. Bank v. Lewis, 603 S.W.2d 169 (Tex. 1980); Flenniken v. Longview Bank & Trust Co., 661 S.W.2d 705 (Tex. 1983); Sherman Simon Enter., Inc. v. Lorac Service Corp., 724 S.W.2d 13 (Tex. 1987); Home Savings Assn. v. Guerra, 733 S.W.2d 135 (Tex. 1987). The DTPA does not define the class of persons who may be subject to liability under the act. So, it is in determining who is a “consumer” within the meaning of the act that one determines who is subject to being sued. Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 541 (Tex. 1981); Flenniken, supra, at 706.
§17.45(4) provides that a “consumer” does not include a “business consumer” with assets in excess of $25,000,000.00 or is owned or controlled by a corporation or entity with those assets. “Business consumer” is defined in terms of business or commercial use. The burden to prove the exemption is on the defendant. Eckman v. Centennial Sav. Bank, 784 S.W.2d 672 (Tex. 1990).
§17.49(c) provides an exemption from application of the DTPA to the rendering of advice, judgment, opinion or similar professional skill. Excluded from the exemption are those actions which constitute an express misrepresentation, a failure to disclose information in violation of §17.49(b)(26), unconscionable conduct and breach of an express warranty. The burden in a summary judgment proceeding is on the professional to plead and prove that the exclusions to the exemption does not apply. Gibson v. Ellis 58 S.W.3d 818, (Tex.App.- Dallas, 2001).
4. ACTIONS INVOLVING CONSUMER’S RESIDENCE EXEMPT FROM EXCLUSIONS
§ 17.49(g) B&CC speaks for itself.
5. CRITICAL DEFINITIONS
a. “Consumer” Defined
§17.45(4): Means an individual, partnership, corporation, this state, or a subdivision or agency of this state who seeks or acquires by purchase of lease any goods or services except that term does not include a business consumer that has assets of $25 million or more, or that is owned or controlled by a corporation or entity with assets of $25 million or more.
b. “Goods” Defined
§17.45(1) of the DTPA: “`Goods’ means tangible chattels or real property purchased or leased for use.”
c. “Services” Defined
§17.45(2) of the DTPA: “`Services’ means work, labor, or service purchased or leased for use, including services furnished in connection with the sale or repair of goods.”
d. “Person” Defined:§17.45(3)
“’Person’ means an individual, partnership, corporation, association or other group however organized.” This sub-section definition does not have any cases stating what constitutes an “other group however organized.” Comment: All consumer litigators find “groups” of people involved in transactions where the claimant is seeking to impose joint and several liability. It occurs to ths writer that the use of this section may well be proper for those circumstances.
6. STANDING: TWO PRONG TEST
Because of the language in §17.50 of the act requiring the transaction to be a producing cause of damages to the consumer, the courts now say that “standing to sue” under the DTPA is a two-prong test: (1) the claimant must qualify as a consumer, and (2) the goods or services purchased or leased must form the basis of the complaint. Woods v. Littleton, 554 S.W.2d 662, 666 (Tex. 1977); Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 538 (Tex. 1981); Sherman Simon Enter., Inc. v. Lorac Services Corp., 724 S.W.2d 13 (Tex. 1987); Melody Home Mfg. Co. v. Barnes, 741 S.W.2d 349 (Tex. 1987).
7. PRIVITY NOT REQUIRED
If a party meets the two-prong test, he does not have to be in privity with the provider, Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 540-41 (Tex. 1981), Qantel Business Systems, Inc. v. Custom Controls Co., 761 S.W.2d 302 (Tex. 1988) and Amstadt v. U.S. Brass Corp., 919 S.W.2d 644 (Tex. 1996).
8. CONSIDERATION NOT REQUIRED
The consumer does not have to part with consideration. Kennedy v. Sale, 689 S.W.2d 890 (Tex. 1985); Birchfield v. Texarkana Memorial Hosp., 747 S.W.2d 361 (Tex. 1987). He may pursue all parties to the transaction giving rise to the claim: those who furnish the money to make the sale or lease, Knight v. IHCC, 627 S.W.2d 382 (Tex. 1982); those who seek to enjoy the benefits of the transaction, Flenniken v. Longview Bank & Trust Co., 661 S.W.2d 705 (Tex. 1983); and “anyone in the transaction who violated the act.” LaSara Grain v. First Natl. Bank of Mercedes, 673 S.W.2d 558, 567 (Tex. 1984).
9. NO DERIVATIVE LIABILITY FOR INNOCENT INVOLVEMENT
The DTPA does not attach derivative liability to a defendant based on an innocent involvement in a business transaction. Home Savings Assn. v. Guerra, 733 S.W.2d 134, 136 (Tex. 1987); Qantel Business Systems, Inc. v. Custom Controls Co., 761 S.W.2d 302 (Tex. 1988).
10. RELATIONSHIP TO TRANSACTION CRITICAL
Although it is one’s relationship to the transaction that establishes the consumer status and the potential for liability, Sherman Simon Enter., Inc., supra, a violation of the DTPA must be alleged and proved. “Although 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.” Qantel Business Systems, Inc., supra; or that the defendant, without privity, has engaged in unconscionable conduct, Flenniken, supra; or that the defendant, without privity, has breached an implied warranty, Nobility Homes of Texas, Inc. v. Shivers, 557 S.W.2d 77 (Tex. 1977). Birchfield v. Texarkana Memorial Hosp., 747 S.W.2d 361, 368 (Tex.1987); Arthur Andersen & Co. v. Perry Equipment Corp., 945 S.W.2d 812, (Tex. 1997), the court held that “The DTPA defines a consumer as one “who seeks or acquires by purchase or lease, any goods or services.” Tex. Bus. & Com.Code § 17.45(4). In determining whether a plaintiff is a consumer, our focus is on the plaintiff’s relationship to the transaction. Amstadt v. United States Brass Corp., 919 S.W.2d 644, 650 (Tex.1996).
C. Remedy Theories: §17.50 of the DTPA
Two New Statutory Torts Created: Let me interrupt a discussion of the remedies with a discussion of the strategically important admonition to the private cause of action litigator to become intimately acquainted with § 17.50 of the DTPA. It is in this section that he/she discovers the “new approach” to consumer litigation. This section sets forth the battle plan, the arsenal and the spoils for the victor. In this section there are set forth 4 distinct legal theories for recovery under the act. In this section two of the four theories are new statutory torts: (1) the “laundry list” and (2) unconscionability. The other two are familiar legal theories:’ breaches of warranty and violations of Chapter 541 of the Insurance Code of Texas. The fifth legal theory relates to the “plug-in” statutes which find their existence outside of §17.50. This latter subject will be discussed in a section of its own.
1. KNOWING VIOLATION–PREDICATE TO MENTAL ANGUISH AND PUNITIVE DAMAGES
§17.50(B)(1) provides that if the trier of fact finds that if the conduct of the defendant was done “knowing the consumer may also recover damages for mental anguish . . . and the trier of fact may also award not more than three times the amount of economic damages” likewise if done “intentionally” the trier of fact may award not more than three times the amount of damages for mental anguish and economic damages. This strange language has been interpreted as being a form of “additional or punitive” damages as defined in the previous versions of the DTPA. Knowingly is defined in the statute at §17.45(9) in terms of actual awareness and may be inferred where “objective manifestations indicate that a person acted with actual awareness. This is the same definition of “actual awareness” found in §27.01(d), B&CC [Fraud in a Transaction Involving Real Estate] which also forms a predicate for “exemplary” damages. “Knowing” conduct will allow mental anguish with punitive damages based on a formula of economic damages alone; “intentional” conduct will allow mental anguish with punitive damages based on both economic and mental anguish damages. St. Paul Surplus Lines Ins. Co., Inc. v. Dal-Worth Tank Co., Inc., 974 S.W.2d 51(Tex.,1998) held:
“Knowingly”, as the district court correctly charged the jury, means actual awareness of the falsity, deception, or unfairness of the conduct in question. “[A]ctual awareness may be inferred where objective manifestations indicate that a person acted with actual awareness.” Tex. Bus. & Com.Code § 17.45(9). “Actual awareness” does not mean merely that a person knows what he is doing; rather, it means that a person knows that what he is doing is false, deceptive, or unfair. In other words, a person must think to himself at some point, “Yes, I know this is false, deceptive, or unfair to him, but I’m going to do it anyway.”
a. Mental Anguish Damages- Two Prong Test
In Saentz v. Fidelity & Guaranty Insurance Company, 925 S.W.2d 607 (Tex. 1996), a non-DTPA case, the Supreme Court stated that “while the impossibility of any exact evaluation of mental anguish requires that juries be given a measure of discretion in finding damages, that discretion is limited . . . Compensation can only be for mental anguish that causes ‘substantial disruption in daily routine’ or ‘a high degree of mental pain and distress.'”The cases seem to require a “gate keeping” function for the trial court to over see that the evidence is sufficient to submit the issue to the jury and not to attempt a definition of mental anguish. There “must be evidence that the amount found is fair and reasonable compensation. . . .” Finally, the court held that “the law requires appellate courts to conduct a meaningful evidentiary review of those determinations.” (p. 614). We now have a two fold standard.
b. Mental Anguish — a Term of Ordinary Significance and Meaning
In Stevens v. National Education Centers, Inc., 990 S.W.2d 374, 379 (Tex. App. -Houston [14th Dist] 1999, no writ yet) the court restated its previous position in Gulf States Utilities Company v. Reed, 659 S.W.2d 849, 854 (Tex. App. – Houston [14th Dist] 1983, n.r.e.) that the term “mental anguish” “is not a legal term, but is of ordinary significance and meaning;” hence, it does not authorize a special definition.
c. Knowingly is not intentionally
The defendant does not need to violate the DTPA intentionally in order to violate it knowingly. Jim Walter Homes, Inc. v. Valencia, 690 S.W.2d 239 (Tex. 1985); Luna v. North Star Dodge Sales, Inc., 667 S.W.2d 115, 118 (Tex. 1984).
2. INJUNCTIVE RELIEF
§ 17.50(b)(2) provides for the prevailing party to obtain “an order enjoining such acts or failure to act.”
3. RESTORATION ORDERS
“Restoration orders” as a portion of § 17.50(b) of the DTPA, seems to include the common law remedy of rescission and restitution, as it relates both to tangible goods and real estate [Lechelet Intl, Inc. v. NOWIK, 787 S.W.2d 101 (Tex. App–Dallas, 1990, no writ), see also the non-DTPA case of Smith v. Natl. Resort Communities, Inc., 585 S.W.2d 655, 660 (Tex. 1979)]; and seems to include the statutory remedy of revocation of acceptance coupled with recovery of consequential damages in transactions involving tangible goods which are regulated by Chapter 2 of B&CC of Texas [Vista Chevrolet, Inc. v. Lewis, 704 S.W.2d 363, 368-9 (Tex. App-Corpus Christi, 1989, rev’d and rendered on other grounds and affirmed on these issues at 709 S.W.2d 176 (Tex. 1980)]; and seems to announce a new remedy free of common law and statutory conditions and defenses [Carrow v. Bayliner Marine Corp., 781 S.W.2d 691, 696 (Tex. App–Austin, 1989, no writ)]. However, in Smith v. Kinslow, 598 S.W.2d 910 (Tex.Civ.App.–Dallas, 1980, no writ) that Court stated that §17.50(b)(3) relating to restoration orders was nothing more than the common law remedy of rescission and held that a consumer under the DTPA could, therefore, not recover both rescission and consequential damages. This case has its progeny which continue this misstatement of the law of denial of damages in cases involving rescission as it existed at the time of the opinion. Nevertheless, the litigator must deal with this line of wrongly decided cases.
4. RECEIVERSHIP AND CERTAIN LICENSE REVOCATIONS
§ 17.50(b)(4). Revocation of state licenses prohibited as a remedy under the DTPA
5. “ANY OTHER RELIEF WHICH THE COURT DEEMS PROPER”
§ 17.50(b)(4). Whirlpool Corp. v. Texical, Inc., 649 S.W.2d 55 (Tex.App. – Corpus Christi 1982, no writ). United Postage Corp. v. Kammeyer, 581 S.W.2d 716, 723 (Tex.Civ.App. – Dallas 1979, no writ). This appears to be a broad grant of equitable discretion in the trial court.
6. ATTORNEY’S FEES AND COURT COSTS
7. PERSONAL INJURY AND DEATH ACTIONS
§17.49 (e) excludes the DTPA from any actions for personal injury or death.
8. REMEDIES CUMULATIVE
The remedies of actual damages, penalty damages, additional damages, injunctive relief, restoration (rescission) and any other relief the court deems proper are conjunctive and cumulative within and among themselves [Sec. 17.50(b)] in addition to being cumulative remedies under Sec. 17.44.
9. WAIVER AND DISCLAIMER OF DTPA REJECTED–CAVEAT FOR EXPRESS WARRANTIES:
Section 17.42, B&CC (DTPA) prohibits a waiver by a consumer of the provisions of the DTPA unless (1) the waiver is sins writing; (2) there is no desperate bargaining position; (3) the consumer is represented by an attorney in seeking or requiring the goods or services; (4) the attorney was not selected or suggested by the defendant or an agent of the defendant; (5) the waiver is conspicuous and in bold-face type of at least 10 points is size; and (6) follows the statutory wording. However, this mandatory language to the contrary notwithstanding, in Prudential Ins. Co. of America v. Jefferson Associates, Ltd., 896 S.W.2d 156 (Tex. 1995) the Texas Supreme Court held that a negotiated “as is” term and condition relating to the property precluded any misrepresentation as a matter of law on the basis that under such circumstances, there could be no “reliance” concerning the condition of the property. This appears to be a “back door” approach to obtain a waiver that is otherwise prohibited. The practitioner that represents sellers of real estate should always consider inserting a term and condition similar to the one in the Prudential case. Recovery of damages for violation of an express warranty is limited to the damages allowed under that express warranty Southwestern Bell Tel. Co. v. FDP, 811 S.W.2d 572 (Tex. 1991). This case is correctly decided and does not arise to te level of a waiver of the DTPA.
D. Causes of Action
Five Separate Categories: It is of strategic importance to private litigators under the DTPA that the private causes of action that may be brought under the DTPA fall solely in five categories. They are:
1. Any “LAUNDRY LIST” violation;
2. Any BREACH OF AN EXPRESS OR IMPLIED WARRANTY;
3. Any UNCONSCION-ABLE ACTION OR COURSE OF ACTION;
4. Any act or practice in VIOLATION OF CHAPTER 541 of the Texas Insurance Code or of the rules and regulations promulgated thereunder; and
5. Any violation of any of the 25 or more specific “PLUG-IN STATUTES” that have expressly classified violations of the provisions of those acts as “false, misleading or deceptive acts or practices” and made subject to the remedies under § 17.50 of the DTPA.
It is likewise of strategic importance for the private litigator to understand that the none of the five categories of causes of action that may be brought under the DTPA are based in negligence, Zimmerman v. First America Title Co., 790 S.W.2d 690, 696 (Tex. App-Tyler, 1990, writ denied); Wilson v. Rice, 807 S.W.2d 836 (Waco 1991, writ den’d); Neither are the DTPA causes of action brought under the “laundry list,” under “unconscionability, ” or violations of Chapter 541 of the Insurance Code subject to the ordinary defenses which are rooted in the common law of tort or contract, Smith v. Baldwin, 611 S.W.2d 611 (Tex. 1980.) “Generally, a DTPA claim is considered separate and distinct from any breach of contract which may have also occurred [arising out of the transaction creating the “consumer status”].” Jack B. Anglin Co. v. Hon. Arthur Tipps, Judge, 842 S.W. 2d 266 (Tex. 1992); Weitzel v. Barnes, 691 S.W.2d 598, 600 (Tex. 1985).
These categories are sufficiently distinct that a waiver or release of one does not waive or release the others. See Mercedes-Benz of North America v. Dickenson, 720 S.W.2d 844, 852 (Tex.App. – Fort Worth 1986, no writ) and Metro Ford Truck Sales, Inc. v. Davis, 709 S.W.2d 785 (Tex.App. – Fort Worth 1986) on rehearing 711 S.W.2d 145 (Tex.App. – Fort Worth 1986, writ den’d n.r.e.).
All DTPA causes of action are statutory torts. Three of the categories of causes of action consist of (1) violations of the laundry list, (2) unconscionability, and (3) violations of the “Plug-In Statutes.” They are creatures of the DTPA or creatures of special regulatory statutes with the remedies of the DTPA being made available to them. The other two categories of causes of action, namely breach of express or implied warranties and violations of Chapter 541 of the Insurance Code, exist independently of the DTPA with DTPA enforcement remedies made available. See LaSara Grain v. First Natl. Bank of Mercedes, 673 S.W.2d 558 (Tex. 1984). A brief synopsis of these five categories of causes of action follow:
CAUSES OF ACTION
1. “THE LAUNDRY LIST”
§ 17.46(b) of the DTPA contains 26 specifically prohibited acts and practices that give rise to per se violations of the act. This portion of the act is affectionately known as the “laundry list.” If any one of those listed acts or practices is found factually to have happened, it is by law an unlawful deceptive trade practice . . . (and) the jury should not be asked if one of the listed acts was in fact deceptive. Spradling v. Williams, 566 S.W.2d 561 (Tex. 1978). The strategic importance of this lies in the fact that once §17.46(b) was adopted in its present form, there no longer exists under the DTPA itself, any other category of “false, misleading or deceptive act” for the private party litigator except as set out in the 25 or more specified categories of the “plug-in” statutes which are specifically designated to be false, misleading or deceptive acts, punishable under the DTPA and certain violations of Chapter 541 of the Insurance Code of Texas as it applies to claims against “persons engaged in the business of insurance.” You look no further in drafting your complaint or lodging your exceptions. Each subdivision of § 17.46(b)–the “laundry list”–is so complete and distinct that each comprises a separate ground of recovery and yet each remains within the “laundry list” category. In Eagle Properties, Ltd. v. Scharbauer, 807 S.W.2d 714 (Tex. 1990) the Texas Supreme Court held, in effect, that each of the “laundry list” violations constituted an independent ground of recovery and was not an evidentiary sub-set of § 17.46(b). The strategic importance of this analysis lies in the fact that jury questions inquiring about whether the Defendant has committed “a false, misleading or deceptive act or practice that is a producing cause of damages to the consumer” may now be required to be separately submitted as to each subdivision of §17.46(b) and this tends to drive us away from the broad form submission which is seemingly being mandated under Rule 277, T.R.C.P. Please note that 19 of the 25 prohibited acts do not include a scienter requirement! Only subsections (9), (10), (13), (17), (22), and (23) incorporate scienter requirements. Chastain v. Koonce, 700 S.W.2d 579 (Tex. 1985). In establishing that a specific prohibited act is a “producing cause” of damages, the plaintiff does not need to show that the damage was foreseeable, Riojas v. Lone Star Gas Co., 637 S.W.2d 956 (Tex.App. – Fort Worth 1982, n.r.e.). Weitzel v. Barnes, 691 S.W.2d 598 (Tex. 1985). However, §17.50(a), B&CC was amended in 1995 and now requires as an element of the cause of action under that category that any false, misleading or deceptive trade must have been relied upon by the consumer to its detriment and was a producing cause of actual damages in order to prevail in a suit. Cause in fact without intent to defraud will sustain a verdict for the consumer upon showing of a specific laundry list violation unless the particular laundry list item requires scienter. This is a very dramatic and strategic change in traditional concepts of the law of deceit! Violations of the “Plug-In Statutes” and violations of Chapter 541 of the Texas Insurance Code and the rules and regulations promulgated thereunder, have all of the aspects of a “laundry list” violation and for our purposes are treated as additions to the “laundry list.”
a. Elements of Laundry List Claim
In Checker Bag Co., a Div. of Checker Food Products Co. v. Washington, 27 S.W.3d 625, (Tex. App.-Waco 2000), the court held that “To succeed in a DTPA laundry-list suit, the plaintiff must show that (1) he is a consumer, (2) the defendant engaged in false, misleading, or deceptive acts, (3) on which the plaintiff relied, and (4) these acts constituted a producing cause of the consumer’s damages. Id.; see Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472, 478 (Tex.1995).”
b. Reliance a Prerequisite
§17.50(a)(B) requires that a claim for false, misleading or deceptive practices [laundry list violations] must be “relied upon by the consumer to the consumer’s detriment.”
2. BREACH OF EXPRESS OR IMPLIED WARRANTIES
§ 17.50 of the Deceptive Trade Practices Act provides that a “consumer may maintain an action where any of the following constitute a producing cause of economic damages or damages for mental anguish : . . . (2) breach of an express or implied warranty.” The primary element of a cause of action for a breach of a warranty is not a creation of the DTPA. The elements of a breach of an express or implied warranty are determined in the law of warranties with an over lay of DTPA remedies such as attorney fees, damages for mental anguish and punitive or additional damages.
a. DTPA Creates No Warranties
“The DTPA does not define the term “warranty.” Furthermore, the act does not create any warranties; therefore any warranty must be established independently of the act . . . . While express warranties are imposed by agreement of the parties to the contract . . . implied warranties are created by operation of law and are grounded more in tort then in contract . . . . Implied warranties are derived primarily from statute, although some have their origin at common law.” LaSara Grain v. First Natl. Bank of Mercedes, 673 S.W.2d 558 (Tex. 1984).
“Unlike a `laundry list’ claim, however, an action for breach of warranty is not a creation of the [DTPA],” and the claims for breach of a warranty, whether express or implied, are burdened with the limitations on those warranties the same as though they were being enforced outside the DTPA.Southwestern Bell Telephone Co. v. FDP Corp, 811 S.W.2d 572 (Tex. 1991).
b. Express Warranties – Basis of the Bargain
Prior to the DTPA, the meaning of the term “warranty” at common law was ambiguous. S. Williston, Treatise on the Law of Contracts, Sec. 673 (3rd Ed. 1961) cited in LaSara Grain v. First Natl. Bank of Mercedes, 673 S.W.2d 558 (Tex. 1984) n. 4. However, with the passage of the DTPA and the virtual explosion of litigation it brought on, the term “express warranties” must now be defined. § 2.313, Bus.&Com.Code. provides a statutory definition of an express warranty that applies to those tangibles goods regulated by Chapter 2 of the Business and Commerce Code, which covers virtually all tangible goods. However, it does not deal with real property or services. Basically, § 2.313 provides that an affirmation or promise, a description of the goods and a sample, any of which “becomes part of the basis of the bargain” creates the warranty. The key is that an express warranty is part of a “bargain.” In Southwestern Bell Tel.Co. v. FDP Corp., 811 S.W.2d 572 (Tex. 1991) that Court held that oral statements made by a seller to induce a sale, constituted an express warranty. That holding was affirmed by the Supreme Court; however, in affirming that portion of the lower Court’s opinion, the Supreme Court went on the adopt the statutory definition of an express warranty set forth in § 2.313, B&C.C. as it applies to both services and real property. The other two categories of warranties are implied or statutory warranties and indeed have fairly clear definitions in their creative force — be it case or statute. For our purposes, we will break down warranties into three categories for treatment: (1) express warranties; (2) statutory implied warranties; and (3) common law implied warranties. Prior to Southwestern Bell Tel.Co. v. FDP Corp, 811 S.W. 2d 572 (Tex. 1991), express warranties were noted more by their attributes than by their definition. By virtue of Southwestern Bell Telephone Co. v. FDP Corp, 811 S.W.2d 572 (Tex. 1991) definition of an express warranty in relation to tangible goods set forth in § 2.313 of the Business and Commerce Code has been extended to services and real property. Basically any affirmation of fact or promise, any description of goods or services, or any sample or model which is made “a part of the basis of the bargain” creates the warranty that the goods or services will conform to the representation. In the FDP Corp. case, the Supreme Court of Texas affirmed the part of the lower Court’s holding that “oral statements made by the seller to induce a sale constituted an express warranty, and that the seller’s failure to perform one of the items in the contract was a breach of that warranty. 749 S.W.2d 569.” In FDP Corp.supra, the Supreme Court went on to say that express warranties are limited by their own terms and the limitations contained in express warranties are enforceable against the consumer in a DTPA case. A “warranty contemplates that a sale has been made and the seller, to induce the sale, undertakes to vouch for the condition, quality, quantity or title of the thing sold.” Church v. Ortho Diagnostic Systems, Inc., 694 S.W.2d 552, 555 (Tex.App. – Corpus Christi 1985, n.r.e.). However, an express warranty will also stem from a lease contract or a combination sale, lease, and installation contract if there is an affirmation of fact or promise in the overall contract. W. R. Weaver Co. v. Burroughs Corp., 580 S.W.2d 76, 81 (Tex.Civ.App. – El Paso 1979, n.r.e.).
c. Implied Warranties – Common Law
Implied warranties in Texas created by the common law are few in number but broad in their application.
(1) RESIDENCE– TRCCA REGULATED
PRE-SEPTEMBER 2003: Prior to the passage of Title 16 of the Property Code (effective September 1, 2003), there were four common law implied warranties relating to the builder/vendor of a residence: (1) that the residence as built is fit for human habitation, Kamarath v. Bennett, 568 S.W.2d 658, 660 (Tex. 1978) and Humber v. Morton, 426 S.W.2d 554 (Tex. 1968); (2) that the residence is constructed in a good and workmanlike manner, Humber, supra (the Humber warranties could be waived. See Centex Homes v. Buecher, 95 S.W.3rd 266 (Tex. 2002)); (3) that if the house is not finished whatever construction has been done, has been done in a good and workmanlike manner, March v. Thiery, 729 S.W.2d 889 (Tex.App. – Corpus Christi 1987, no writ); and (4) that the materials used in the construction are not defective. Moore v. Werner, 418 S.W.2d 918 (Tex.Civ.App. – Houston [14th Dist.] 1967, no writ). The implied warranty as to materials is probably also covered by the statutory implied warranties of Bus.&Comm.Code Chapter 2 which are subject to special waiver provisions and the Bus.&Comm.Code Chapter 2 special statute of limitations, § 2.725. See Safeway Stores, Inc. v. Certainteed Corp., 710 S.W.2d 544 (Tex. 1980). These residential construction warranties were extended to the second home owner. Gupta v. Better Homes, Inc., 646 S.W.2d 169 (Tex. 1983). However, by the passage of TRCCA, there now exist only (1) contracted for express warranties and (2) the statutory warranties set in place by rules and regulations of the TRCCA Commission. The machinations of TRCCA are too complicated for the scope of this article but the litigator mut study it carefully because the statues of limitation are very short – 13 months after move in except for structural defects. Also, RCLA has been strengthened to help the builder at the consumer’s expense. TRCCA provides no enforcement actions after the Commission has determined that a builder has failed to construct in compliance with the TRCCA rules and regulations. Obviously, this State is going through a bleak period for consumer protection.
(2) COMMERCIAL CONSTRUCTION
Commercial construction has an implied warranty that the construction will be done in a good and workmanlike manner. Melody Homes Mfg. Co. v. Barnes, 741 S.W.2d 349 (Tex. 1987). This is derived, not from the facts of the case, but from its description of the warranty: “those who repair or modify existing tangible goods or property [are required] to perform those services in a good and workmanlike manner.” Page 355. See also, Archibald v. Act III Arabians, 755 S.W.2d 84 (Tex. 1988). It may not be waived.
(3) REPAIR OR MODIFICATION
Melody Homes Mfg. Co. v. Barnes, 741 S.W.2d 349 (Tex. 1987) provides a non-waivable implied warranty extended to all personal services contracts that repair or modify existing tangible (personalty) goods or (real) property (except home construction) that the services will be performed in a good and workmanlike manner. “‘Good and workmanlike’ is defined as that quality of work performed by one who has the knowledge, training or experience necessary for the successful practice of a trade or occupation and performed in a manner generally considered proficient by those capable of judging such work.”
(4) LEASES OF REALTY
There are two implied warranties relating to the leasing of real estate: (1) There is an implied warranty that residential rentals are habitable and fit for living, Kamarath v. Bennett, 568 S.W.2d 658, 661 (Tex. 1978); and (2) an implied warranty that commercial rentals are suitable for their intended commercial purposes. Davidow v. Inwood North Professional Group – Phase I, 747 S.W.2d 373 (Tex. 1988). In the commercial rental situation, “the tenant’s obligation to pay rent and the landlord’s implied warranty of suitability are mutually dependent.” That is, a breach of the warranty authorizes an abatement of rent. Davidow, page 377.
(5) PURITY OF FOODSTUFFS
In Jacob E. Decker & Sons, Inc. v. Capps, 164 S.W.2d 828, 829 (Tex. 1942), the Supreme Court acknowledged the implied warranty that foodstuffs must be pure, wholesome and fit for human consumption. There was no privity requirement and no scienter requirement. The passage of the B&CC in 1968 does not seem to have done away with this implied warranty; however, this writer has not seen a case on the subject either at the trial court level or at the appellate level since he handles sons in 1962.
The last Texas common law implied warranty relates to a shipowner’s obligation to furnish a vessel that is seaworthy. Molis v. Ore Navigation Corp., 382 S.W.2d 290, 291 (Tex.Civ.App. – Houston 1964, n.r.e.). This may have been pre-empted by national law.
d. Implied Warranties – Statutory
The most common statutory implied warranties that the private litigator will be dealing with under the DTPA are created in Chapter 2, B&CC, and consist of the implied warranty of merchantability (§2.314,B&CC) and the implied warranty of fitness for a particular purpose. (§2.315,B&CC). One of the most important impacts of these two statutory implied warranties is that the warrantie3s pass through to the remote user. Nobility Homes of Texas v. Shivers, 557 S.W.2d 77 (Tex. 1977).
e. Breach of Contract and Breach of Express Warranty Distinguished
Southwestern Bell Telephone Co. v. FDP Corp, 811 S.W.2d 572 (Tex. 1991) held that a total failure of performance of a contract and its warranties was merely a breach of contract claim and that there must be at least a partial performance for there to be a claim for breach of the contractual warranty contained in the agreement.
f. Express Warranties Compared to Laundry List Item 17.46(7)
It is noteworthy that § 17.46(7) of the DTPA (a laundry list item) smacks of the attributes of an express warranty even though it constitutes a “false, misleading or deceptive” practice: “representing that goods or services are of a particular standard, quality or grade, or that goods are of a particular style or model, if they are of another.” However, an express warranty can be breached without the existence of any representation being false. Superior Trucks, Inc. v. Allen, 664 S.W.2d 136, 143 (Tex.App. – Houston [1st Dist.] 1983, writ ref’d n.r.e.) There is no “reliance” requirement for the existence of or breach of either an exprfess or implied or statutory warranty.
g. Origin Determines Nature of Warranties
The nature of the warranties – express or implied – is determined by their origin, together with their associated warranty limitations, Preston v. Sears Roebuck & Co., 573 S.W.2d 560 (Tex.Civ.App. – Texarkana 1978, n.r.e.). Whether the warranty is breached is likewise determined in context of warranty law and not DTPA law. It is only when the warranty has been determined to exist and has been breached that the remedy provisions of the DTPA are applied. LaSara Grain v. First Natl. Bank of Mercedes, 673 S.W.2d 558 (Tex. 1984.Southwestern Bell Telephone Co. v. FDP Corp., 811 S.W.2d 572 (Tex. 1991).
h. Professionals Services:
The exemptions provided licensed professionals under §17.49, B&CC of the DTPA are enhanced if the professional services are provided by a licensed or professional practitioner by the passage in 2003 of Chapter 150, Civ Prac & Rem Code. For those professionals the claimant must acquire an affidavit by another licensed or registered professional practicing in the same area as the defendant, who sets out in a sworn affidavit the deviation from the industry or professional standard and how that deviation was a proximate cause of the damages being sought. This, however, this is a procedural barrier only, albeit an expensive one, and can be overcome and if the conduct is a violation of an express warranty that cannot be characterized as advice, judgment or opinion then it may be enforced under th DTPA.
i. Does Breach of Implied Warranty Constitute Negligence?
Whether the breach of an implied warranty constitutes an act of negligence is currently in a struggle before the Texas Supreme Court. In Dennis v. Allison, 698 S.W.2d 94 (Tex. 1985), the court distinguished between the nature of an implied warranty relating to the delivery of professional services and the nature of negligence. In the original opinion of Melody Homes Mfg. Co., Dennis v. Allison, supra, was overruled. Later that portion of the opinion was withdrawn and the reservation of decision expressed. Later, in Bennett Coulson & Cae v. Lake L.B.J. Mun. Util. Dist, 734 S.W.2d 649 (Tex. 1987) the Supreme Court, per Justice Wallace, held that there was no difference in allegations of the breach of the implied warranty to perform services in a good and workmanlike manner and allegations of negligence. This seemed to overrule the rationale of Dennis v. Allison, by implication. However, in Archibald v. Act III Arabians, 755 S.W.2d 84 (Tex. 1988), the consumer asserted a claim under negligence and a claim for breach of implied warranty to perform services in a good and workmanlike manner. The services related to the training of a horse by a professional horse trainer. The jury found negligence but no proximate cause. It found a breach of implied warranty that the services would be done in a good and workmanlike manner. The trial court entered a take nothing judgment. If negligence and breach of implied warranty are essentially the same, then there was either a conflict in the jury’s answers or the issue was to be determined against the consumer. If there was an essential difference between allegations of negligence and a breach of implied warranty, then the consumer was to prevail. Here the confrontation was essential to the resolution of the case before the court. The court held that the services related to the repair and modification of existing tangible goods and ducked the issue of applicability of the implied warranty to the rendering of professional services. However, the case did establish an essential difference between allegations of negligence and allegations of a breach of an implied warranty. The significant issue was the court’s retreat from Bennett Coulson & Cae, and the implied return to Dennis v. Allison. This latter portion drew heavy fire from Justice Wallace.
3. “UNCONSCIONABLE COURSE OF ACTION”– DEFINITION
a. Taking Advantage–Need Not Be Intentional
§17.45(5) defines “unconscionable action or course of action” to mean “an act or practice which to a consumer’s detriment takes advantage of the lack of knowledge, ability, experience or capacity of the consumer to a grossly unfair degree.” “Gross” means “glaringly, noticeably flagrant, complete and unmitigated.” Chastain v. Koonce, 700 S.W.2d 579 (Tex. 1985). The “consumer” need only to prove he was taken advantage of to a grossly unfair degree.” This is not an inquiry “whether the defendant intended to take advantage of the consumer or acted with knowledge or conscious indifference.” Chastain (page 582). There is “no requirement that the defendant’s unconscionable act occur simultaneously with the sale . . . .” Flenniken v. Longview Bank & Trust Co., 661 S.W.2d 705 (Tex. 1983). Insurance Co. of North America v. Morris 981 S.W.2d 667 (Tex.,1998) holds that “unconscionability under the DTPA is an objective standard for which scienter is irrelevant.”
4. CHAPTER 541 – INSURANCE CODE
§ 17.50(a)(4) of the DTPA incorporates into itself as an actionable claim the use or employment by any person of any act or practice in violation of Chapter 541 of the Texas Insurance Code The remedies of § 17.50, DTPA, are then available provided the person qualifies as a consumer.
a. DTPA and Chapter 541 – Reciprocity
The result is clear; people (including corporate agents and entities) engaged in the business of insurance who engage in false, misleading or deceptive trade practices are liable to those injured either under the DTPA or under Chapter 541 because each statutory scheme specifically incorporates the basic elements of the other as the foundation for actionable conduct. However, in order for a claimant to take advantage of enforcing Chapter 541 for false, misleading and deceptive practices as defined under the DTPA, they must qualify as a consumer if the sub-section under §17.46(b) requires consumer status even for an action brought under Chapter 541.See Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378 (Tex. 2000).
5. “PLUG-IN STATUTES” – DTPA VIOLATIONS
The qualities of § 17.50 have broad support in our state and have prompted an entire field of
regulatory activities to “plug-in” to it as an aspect of enforcement. The legislature has undertaken the regulation of more than 25 eparate areas of trade, commerce or activity with statutes, each of which “plug-in” to the DTPA, § 17.50. Violations of specific portions of each of these 25 statutes are declared in these statutes to be “false, misleading and deceptive practices” subject to the remedy section of the DTPA. Below is a list of some of the Texas “plug-in” statutes to the DTPA:
|Removal of Unauthorized Parked Vehicles (limited to DTPA injunctions)||6701g-2 Sec. 8||1977|
|Manufactured Housing Standards Act||5221f Sec. 13(e)(4)||1979|
|Motor Vehicle Commission Code||4413(36)Sec. 6.06||1979|
|Business Opportunity Act||5069-16.15||1981|
|Regulation of Invention Services Act||Art. 9020 Sec. 9||1981|
|Residential Service Co. Act (Sec. 16b requires specific reference in contract to DTPA)||B&CC 6573b Sec. 23||1981|
|Self-Storage Facility Liens||59.005||1981|
|Texas Optometry Act||4552-5.09(g), 4552-5.11(f), 4552-5.18(d)||1981|
|Debt Collection Act||5069-11.01-11.11(a)||1983|
|Home Solicitation Act||5069-13.03(e)||1983|
|Regulation of Speech Pathologists and Audiologists||Art. 4512(j)
|Health Spa Act||5221 1 Sec. 21||1985|
|Real Estate License Act (requires specific reference to DTPA)||6573a Sec. 18C(i)(7)||1985|
|Rental-Purchase Agreements||B&CC Sec. 35.71-35.74; Sec. 35.74(c)||1985|
|Texas Timeshare Act||6573c Sec. 11(a)||1985|
|Home Improvement Contracts (Affecting Homestead)||Property Code
|Regulation of Credit Service Organizations||B&CC Chp. 18||1987|
|Regulation of Career Counseling Services||Art. 5221(a)-8 Sec. 10||1987|
|Regulation of Certain Professional Services||Art. 5221a-7||1987|
|Regulating Sham Sales of Property Code Homesteads||Sec. 41.005||1987|
|Disclosure by non-insured Financial Institutions
|Art. 4896-1 Sec. 1 & 2||1987|
|Texas Membership Camping Resort Act||Art. 8880 Sec. 1-16||1987|
|Title Insurance Act Insurance Code (plugs into
Home Solicitations Act which plugs into DTPA)
|Notaries Public||Government Code
|Contest and Gift Giveaway Act||S.B. No. 1695
a. Damages for Violation of Motor Vehicle Commission Code Enforceable under DTPA
In Kawasaki Motors v. Motor Vehicle Commission, 855 S.W.2d 792, 798 (Tex.App.—Amarillo 1993, no writ), the court held that a person who sustains actual damages as a result of a violation of §5.02 of Article 4413(36) may bring an action pursuant to the DTPA in accordance with §606 of the Motor Vehicle Commission Code. The same case held that since the Motor Vehicle Commission did not have the power to make awards of damages it did not have exclusive jurisdiction over this type of claim.
b. “Actual Damages” Available for Plug In Statute Violations (See § 17.50(h))
Actual damages which means damages recoverable at common law, Brown v. American Transfer and Storage Co., 601 S.W.2d 931 (Tex., 1980); and Kish v. Van Note, 692 S.W.2d 463 (Tex. 1985), and consists of the “total loss sustained [by the consumer] as a result of the deceptive trade practice” and there is to be no compartmentalizing of damages that results in the limiting of the consumer’s recovery for his/her damages. Henry S. Miller Company v. Bynum, 836 S.W.2d 160 (Tex. 1992).
6. CAUTION IN DAMAGES SUBMISSION
Care should be exercised in the submission of the DTPA question to the jury on th issues of “knowingly” and “intentionally” and to submit them separately. The Consumer must have an affirmative answer to one of these issues as a predicate to obtaining recovery for either mental anguish damages of punitive damages. That being the case, the consumer should have the court submit the question of mental anguish damages separately. If mental anguish damages are lumped together with all other categories of damages and there is a failure to obtain an affirmative finding on either “knowingly”or “intentionally” the damage issue is flawed and fatal to the entry of a proper judgment for the consumer. Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378 (Tex. 2000).
E. Attorney’s Fees
1. STATUTORY RELIEF
§ 17.50(d) provides:
(d) Each consumer who prevails shall be awarded court costs and reasonable and necessary attorneys’ fees.
2. MANDATORY FOR CONSUMER WHO PREVAILS
The recovery of attorney’s fees for a consumer who prevails in a DTPA claim is mandatory. Doerfler v. Espensen, 659 S.W.2d 929 (Tex.App. – Corpus Christi 1983, no writ); Satellite Earth Stations East v. Davis, 756 S.W.2d 385 (Tex.App. – Eastland 1988, writ den’d). To “prevail” a consumer must obtain some relief as authorized in § 17.50 on a violation of the act, alleged and proved. Easy Living, Inc. v. Cash, 617 S.W.2d 781, 783 (Tex.Civ.App. – Fort Worth 1981, no writ).
a. Absent “Some Relief” Prevailing Is Not Achieved
In Cordery v. Armstrong, 553 S.W.2d 798 (Tex.Civ.App.—Beaumont 1977, no writ), the court held that in order for a consumer to prevail in his suit for purpose of obtaining attorney’s fees and court costs, the consumer must obtain some type of relief. “If plaintiff’s had recovered judgment for actual damages, restoration, or an injunction, then they would have prevailed in the trial court and could have obtained their attorney’s fees and court costs. A plaintiff may not recover only attorney’s fees and court costs.” (Emphasis supplied by the court-page 799).
3. NET RECOVERY NOT ESSENTIAL
A net recovery to the consumer after all offsets are allowed to the defendant is not necessary. McKinley v. Drozd, 685 S.W.2d 7, 9 (Tex. 1985); Matthews v. Candlewood Builders, Inc., 685 S.W.2d 649 (Tex. 1985).
4. APPELLATE ATTORNEYS’ FEES RECOVERABLE
Attorney’s fees for the anticipated appeal are also recoverable at the trial court level upon pleading and proof. Intl Security Life Ins. Co. v. Spray, 468 S.W.2d 347 (Tex. 1971). Boyles v. Kerr, 855 S.W.2d 593, 594 (Tex. 1993).
5. LEGAL ASSISTANT’S CHARGES COLLECTABLE AS ATTORNEY’S FEES
In a non-DTPA case, compensation for a legal assistant’s work may be separately assessed and included in the award of attorney’s fees if a legal assistant performs work that has traditionally been done by an attorney. Gill Savings v. International Supply Co., Inc., 759 S.W.2d 697 (Tex.App.–Dallas, 1988, writ denied); see also Missouri v. Jenkins, 491 U.S.____, 105 L.Ed.2nd 229, 109 S. Ct.____(1989). The evidence must establish:
(1) Legal assistant is qualified;
(2) Work done under direction and supervision of an attorney;
(3) Nature of work done;
(4) Hourly rate; and
(5) Number of hours.
6. SEGREGATION OF FEES NECESSARY IN MULTIPLE CAUSES OF ACTION CASES UNLESS INSEPARABLE
In DTPA cases involving the prosecution or defense of other causes of action in the same law suit, the attorney’s fees related to the DTPA cause of action must be segregated and failure to do so will prevent recovery, Stewart Title Guaranty Company v. W. Dawson Sterling, Trustee, 822 S.W.2d 1, (Tex. 1991) unless “the causes of action involved in the suit are dependent upon the same set of facts or circumstances and thus are `intertwined to the point of being inseparable,’. . . [under which circumstances] . . . the party suing for attorney’s fees may recover the entire amount covering all claims.”
7. ATTORNEYS’ FEES ISSUES MAY BE SEVERED ON APPEAL AND SENT FOR RETRIAL ALONE
If, at the conclusion of the trial, verdict and judgment, the appellate court finds that there has not been a proper segregation of attorney’s fees, and the case is otherwise not to be reversed, the appellate court is to sever the issue of attorney’s fees for a remand with instructions to segregate and resubmit to the trier of fact. Stewart Title Guaranty Company, 822 S.W.2d 1, (Tex. 1991). See however, Otis Elevator Co. v. Bedre, 758 S.W.2d 953 (Tex. 1989), in which the Supreme Court applied Texas Rules of Appellate Procedure, Rule 80(b)(1) rather restrictively on a damage issue that was not attorney’s fees and held that if the underlying liability issues are contested, then the defective damage issue may not be remanded on a stand alone basis and the entire set must be sent back. (Keep in mind that T.R.A.P. Rule 80(b)(1) has its counterpart in Rule 324 T.R.C.P.). However, in light of the Stewart Title Guaranty Company case holding, the Otis case should not restrict the severance principle.
8. AWARD MUST BE IN DOLLARS AND NOT AS A PERCENTAGE OF THE RECOVERY
In Arthur Andersen & Co. v. Perry Equipment Corp., 945 S.W.2d 812 (Tex. 1997) the court held that “we hold that to recover attorney’s fees under the DTPA, the plaintiff must prove that the amount of fees was both reasonably incurred and necessary to the prosecution of the case at bar, and must ask the jury to award the fees in a specific dollar amount, not as a percentage of the judgment.” However, the court upheld the use of percentage or contingent feeds but their existence was simply another matter to be considered. The court raised a rather singular problem with its statement that “Factors that a factfinder should consider when determining the reasonableness of a fee include:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill required to perform the legal service properly;
(2) the likelihood AAA that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
(8) whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered.
The PJC suggests that it is mandatory for the trier of fact to consider all of these factors however, in Checker Bag Co., a Div. of Checker Food Products Co. v. Washington, 27 S.W.3d 625, 640 (Tex.App.-Waco, 2000 (that court held “there is no requirement that all eight of the factors be supported by evidence.”
9. REASONABLENESS NOT PRESUMED
Reasonableness under DTPA is not presumed and must be plead and proved. Smith v. Smith, 757 S.W.2d 422 (Tex.App. – Dallas 1988, writ den’d).
10. DEMAND LETTER A PREREQUISITE FOR ATTORNEYS’ FEES
The prerequisite demand letter of § 17.505 seems to mandate a claim for attorney’s fees in the letter as a foundation for suit to reclaim such fees. However, in Vail v. Farm Bureau Mutual Ins. Co., 754 S.W.2d 129, 137 (Tex. 1988) the Supreme Court upheld an award of attorney’s fees based on a DTPA demand letter that omitted any claim for attorney’s fees. The consumer’s counsel should not take a chance on malpractice and should include a claim for attorney fees n the DTPA demand letter.
11. APPELLANT’S ATTORNEY’S FEES ARE CONDITIONED ON WINNING ON APPEAL:
In Hanes & Boone v. Bowser Bolden, Ltd., 864 S.W.2d 662, 677 (Tex.App.—San Antonio 1993, writ granted) the court of appeals held that although a trial court may award appellate attorney’s fees, it may not penalize a party for taking a successful appeal by charging him with attorney’s fees should he take that action. The trial court must condition an appellant attorney’s fee award upon the appellant’s successful appeal. A trial court may not grant an unconditional award of appellant attorney’s fees. In this case, the trial court awarded unconditional attorney’s fees and the appellate decision was to reverse and render judgment against the successful claimant at the trial court level. The same result was had in Rittgers v. Rittgers, 802 S.W.2d 109, 115 (Tex.App.—Corpus Christi 1990, writ den’d), where the trial court’s awarding of an unconditional appellant’s attorney’s fees was reversed and rendered. However, in Smith v. Smith, 757 S.W.2d 422, 426 (Tex.App.—Dallas 1988, writ den’d), the court had granted an unconditional award for appellant attorney’s fees. The appeals court reversed and remanded that portion of the judgment relating to appellant attorney’s fees for a new trial to determine the amount of reasonable attorney’s fees in light of the opinion. This latter decision is probably preferred over the two that provide for reversing a rendition because in Stewart Title Guaranty Co. v. Sterling, 822 S.W.2d 1, 11 (Tex. 1991), the supreme court held that an award of attorney’s fees erroneously based upon evidence of unsegregated fees requires a remand rather than a rendition. It had the opportunity and did review the contrast between rendering and remanding and chose remanding as the proper remedy. Although not directly in point because it involved attorney’s fees at the trial level, the concept is the same, and the supreme court, will, in all probability, provide for remanding to the trial court rather than rendering a judgment of no attorney’s fees.
F. The DTPA Demand Letter
1. STATUTORY REQUIREMENT
As a prerequisite to filing a DTPA claim on behalf of a consumer, the consumer must issue a written demand to the defendant 60 days prior to suit, setting forth his complaint in reasonable detail and the amount of his actual damages and attorney’s fees. (§17.505, B & C.C.)
2. PREREQUISITE TO FILING SUIT
The strategic importance of the “demand letter” is that its issuance is a prerequisite to filing suit under the DTPA (§ 17.505). Southwestern Bell Tel. Co. v. Delanney, 809 S.W.2d 493 (Tex. 1991); Miller v. Kossey, 802 S.W.2d 873 (Tex.App.—Amarillo 1991, writ den’d). Without the issuance of the “demand letter” (or its excused presence where permitted) the “consumer” may be denied access to the remedies of the DTPA.
Prior to 1989, notice in the DTPA demand letter of a fairly general nature has been accepted. Jim Walter Homes, Inc. v. Valencia, 690 S.W.2d 239 (Tex. 1985). However, after that date, §17.505 states plainly that the demand letter shall be written and in reasonable detail of the specific complaint and the amount of economic damage. Generic damage demands in the DTPA demand letter are no longer allowed.
3. 1989 AMENDMENT REQUIREMENTS CHANGE THINGS SLIGHTLY
Effective September 1, 1989, the consumer’s requisite demand letter was changed to require the following:
a. Reasonable detail and amount of claim
§17.505(a) The demand letter must advise the potential defendant of the consumer’s complaint “in reasonable detail,” together with the amount of his actual damages.
b. 60 Days Notice and Not 30 Days
For the notices mailed after September 1, 1989, the waiting period prior for filing suit is 60 days rather than 30 days.
c. Right of Inspection of Goods: §17.505(a).
4. ABATEMENT AVAILABLE IF NO DTPA DEMAND LETTER
5. WAIVER BY DEFENDANT’S FAILURE TO SEEK ABATEMENT
In Hines v. Hash, 843 S.W.2d 464 (Tex. 1992), the Supreme Court dealt with the nature of the §17.505 (DTPA) demand letter and its statutory and case law history. The result was to dispel any notions that the failure to comply with the requirements of the statute would or should result in a dismissal of the consumer’s complaint. The analysis was clear that the right to a 60 days cooling off period for purposes of negotiation and attempts to settle would be treated as a right conferred upon the defendant and not as a barrier to the plaintiff. The Court held:
We therefore conclude that if a plaintiff files an action for damages under the DTPA without first giving the required notice, and a defendant timely requests an abatement, the trial court must abate the proceedings for 60 days . . . . To be timely, the request for abatement must be made while the purpose of notice–settlement and avoidance of litigation expense–remain viable. Thus, the defendant must request an abatement with the filing of an answer or very soon thereafter. . . A defendant who fails to make a timely request for abatement must be considered to have waived his objection to the lack of notice.
6. NON-COMPLIANCE DURING ABATEMENT REQUIRES DISMISSAL
In Hines v. Hash, 843 S.W.2d 464 (Tex. 1992), the Supreme Court held that it is the burden of the defendant to seek abatement for 60 days in the absence of the plaintiff’s filing of the demand letter required by §17.505 (DTPA) or else waive its requirement. However, if “a plaintiff fails to give notice while the action is abated for that purpose, it should be dismissed.”
7. RULE 54, T.R.C.P. AVERMENTS APPLY TO DTPA
The pleading of compliance with Rule 54, T.R.C.P., and without a specific denial thereof by the defendant, compliance is presumed, and may not be denied and needs no further proof. Investors, Inc. v. Hadley, 738 S.W.2d 737 (Tex.App. – Austin 1987, writ den’d). Plaza Natl. Bank v. Walker, 767 S.W.2d 276, 278 (Tex.App. – Beaumont 1989, writ den’d). See also Carolyn Greathouse, Ind. Extrx v. Charter National Bank-Southwest, 36 S.Ct.J. 1017 (July 1, 1992), a non-DTPA case, for the full impact of a Rule 54 “averment” in any type of case.
8. TRIAL AMENDMENTS ON ISSUE TRIED BY CONSENT DO NOT NEED AMENDED DEMAND LETTER
When the original theory of complaint is a breach of warranty, a trial amendment may be granted to conform the pleadings to issues of liability tried by consent in the absence of the re-issuance of a demand letter urging a different theory of recovery. Bell v. Meeks, 725 S.W.2d 179 (Tex. 1987).
A party may, not later than 90 days after service of original petition, file a motion to compel mediation. The court shall, within 30 days of filing motion for mediation, order mediation to be held within 30 days of date order unless parties agree otherwise. All parties of the lawsuit must appear and participate in mediation. However, if economic damages are less than $15,000, mediation cannot be compelled unless party seeking mediation agrees to pay costs. § 17.5051, Bus. & Comm Code.
10. OFFER OF SETTLEMENT
The 1995 amendments to the DTPA change notice and settlement. Additionally, there are consequences for not accepting a settlement offer. § 17.5052, Bus. & Comm Code.
(1) NOT CONDUCTED
If mediation under § 17.5051 is not conducted, the defendant has 90 days from the date the original answer is filed to make an offer of settlement. § 17.5052(b), Bus. & Comm Code.
If mediation under § 17.5051 is conducted, the defendant has 20 days from date after mediation to make an offer of settlement. § 17.5052(c), Bus. & Comm Code.
b. Components of Offer of Settlement.
An offer of settlement must include an offer to pay the following amounts of money, separately stated:
(1) Amount of money or other consideration, reduced to cash value, as settlement of plaintiff’s claim for damages;
(2) Amount of money for plaintiff’s reasonable and necessary attorneys’ fees as of the date of offer.
§ 17.5052(d), Bus. & Comm Code.
c. Rejection of offer.
Unless both parts of offer of settlement required under § 17.5052(d) are accepted no later than 30 days after offer made, the offer is rejected. § 17.5052(e). After rejection of offer of settlement, the defendant may file with the court an affidavit certifying that the offer complied with the section and the plaintiff rejected the offer. § 17.5052(f), Bus. & Comm Code.
d. Court findings as to Offer of Settlement.
If the court finds that the amount offered in the offer of settlement is the same as, substantially the same or greater than the damages found by the jury, the plaintiff gets the lesser of the amount of the offer or the damages found by the jury and the plaintiff’s attorney’s fees are recoverable only for fees incurred as of the date of the offer. § 17.5052(g)-(h), Bus. & Comm Code. If the court finds that the defendant could not perform the offer at time it was made or that the defendant substantiall misrepresented the cash value of the offer, § 17.5052(g)-(h) do not apply. An offer of settlement is not an admission of engaging in an unlawful act or practice or liability and the offer, or its rejection, may not be offered in evidence at trial for any purpose. § 17.5052(k), Bus. & Comm Code.
G. Parol Evidence Rule
The parol evidence rule is not applicable to a DTPA suit claiming that oral misrepresentations were made to the “consumer.” Weitzel v. Barnes, 691 S.W.2d 598 (Tex. 1985). The courts are not holding this to be an exception to the parol evidence rule. They are simply holding that under the DTPA, “traditional contractual notions do not apply” and “that oral representations are not only admissible but can serve as the basis of a DTPA suit.” The nature of the DTPA statute is to provide a remedy for misrepresentations. The fact that the misrepresentation contradicts a contemporaneous writing to the contrary is simply immaterial to the analysis. It is perhaps noteworthy that the Parol Evidence Rule applies only to actions sounding in contract and DTPA actions are statutory tort claims. In Kennemore v. Bennett, 755 S.W.2d 89, (Tex.,1988) the court opined:
…traditional contractual theories are not controlling in a statutory DTPA action . . . The remedies under the Act are available to any consumer, and they are not waived merely because the consumer accepts the allegedly defective performance. Nothing in the language or policy of the Act requires the consumers to withhold performance themselves in order to allege violations against the other party. Such a policy would discourage the resolution of disputes and the settlement of claims without any corresponding benefits. In the absence of an express settlement or other express waiver, therefore, the Kennemores had every right to proceed with their case. (Page 90)
H. Groundless – Counterclaim
1. BAD FAITH/GROUNDLESS CLAIMS: COUNTERCLAIM
It is in this remedy provided by §17.50(c) of the DTPA that on a finding by the court that ” an action under this section was groundless in fact or law or brought in bad faith, or brought for the purpose of harassment, the court shall award to the defendant reasonable and necessary attorneys’ fees and court costs.” Although the statute has been slightly changed, we find some interpretive help. In the case of Donwerth v. Preston II Chrysler-Dodge, Inc., 775 S.W.2d 634 (Tex. 1989), § 17.50(c) the Supreme Court held whether the plaintiff’s claim violated this section is strictly a matter of law for the trial court. Nevertheless, with the evidentiary standards which the Court established in order to result in a judgment for the defendant, the section is difficult to apply. In Maronge v. Cityfed Mortgage Co., 803 S.W.2d 393 (Tex. App–Houston [14th Dist], 1991, no writ yet) the Court held that the fact that the plaintiff is able to get his/her case submitted to the jury is not the litmus test of whether the claim escapes this section. In Splettstosser v. Myer, 779 S.W.2d 806, 808 (Tex. 1989), the Supreme Court held that the proper test is whether the totality of the evidence both admitted and tendered demonstrates an arguable basis in fact and law for the consumer’s complaint.
2. GROUNDLESS, BAD FAITH AND HARASSMENT: MATTERS FOR THE COURT ONLY
In Donwerth v. Preston II Chrysler-Dodge, Inc., 775 S.W.2d 634 (Tex. 1989) the court cleared the air as to what § 17.50(c) means and held:
1. “Groundless and in bad faith” constitute one standard.
2. “Brought for the purpose of harassment” constitutes another standard.
3. “Groundless” means the same as “groundless” under Rule 13, T.R.C.P.
4. Both standards are questions of law and “the court, not the fact finder, must determine the existence of groundlessness, bad faith and harassment under § 17.50(c).”
5. “Even evidence that is legally inadmissible or subject to other defects may be considered by a court in determining whether an arguable basis existed for the suit, provided there is some good faith basis for belief that the tendered evidence might be admissible or that it could reasonably lead to the discovery of admissible evidence.”
6. “Good faith” is essentially a subjective standard.
7. “The requirement that the suit be brought `for the purposes of harassment’ must mean it was brought for the sole purpose of harassment” and thereby becomes a question of law rather then a question of fact.
8. “It is difficult to conceive of a case which was not groundless but was brought for the purposes of harassment.”
9. Probably the entirety of the matter is subject to a motion in limine because the jury has no place in the decision process on this issue.
In Splettstosser v. Myer, 779 S.W.2d 806 (Tex. 1989) the Supreme Court rejected the test that a DTPA claim surviving a motion for instructed verdict cannot logically be groundless and restated the Donwerth test: “The proper standard . . . is whether the totality of the tendered evidence demonstrates an arguable basis in fact and in law for the consumer’s claim.” See also, Maronge v. Cityfed Mortgage Co., 803 S.W.2d 393 (Tex. App.–Houston [14th Dist] 1991, no writ yet).
All prior court cases under the defensive counterclaim of “groundless,” etc. are now basically meaningless. The Donwerth case has not only gutted § 17.50(c), it has effectively gutted Rule 13 of the Texas Rules of Civil Procedure which provided (until July 5, 1989) sanctions for bringing groundless suits in bad faith.
The only areas left whereby § 17.50(c) would clearly apply would be where the area of the DTPA suit has been preempted by other state laws or by the federal law and after having that matter brought to the claimant’s attention, he persists. Also, if it is demonstrably fixed that the “consumer” has over $25,000,000 in assets and thereby is disqualified to be a consumer, his persistence could readily be classified as a violation of § 17.50(c).
See Transport Indemnity Co. v. Orgain, Bell & Tucker, 846 S.W.2d 878 (Tex.App.—Beaumont 1993, writ den’d with statement that court “neither approves nor disapproves of the court of appeals analysis of the issue of bad faith. . . .”) 36 Tex.S.Ct.J. 1015 (June 16, 1993).
I. Property Code Chapter 27 Residential Construction Liability Act (RCLA)
1. NEW LEGISLATION
The 71st Texas Legislature passed Chapter 27 of the Property Code (RCLA) to provide some relief to home builders and repairmen from the burdens of DTPA. Because of the broad definition of “contractor,” the statute applies to plumbers, electricians, carpenters, masons, roofers and lawn sprinkler system people and any other person involved in the construction or repair of a residence or its out buildings. [§ 27.001(3)].
2. PRIMARILY A RELIEF STATUTE
Being primarily a relief giving statute, the RCLA neither creates nor codifies any cause of action. It does not limit or bar any other defense or defensive matter or other cause of action applicable to any action to recover damages resulting from a construction defect. [§ 27.003(b)] Therefore, the statutory warranties as to tangible goods incorporated into a construction defect survive. The common law implied warranties, if any, relating to residential construction, use and rental also survive.
3. PREEMPTION: RCLA PREFERENCE
The new statute does not preempt the DTPA but in case of a conflict with any provision of the DTPA, this new statute prevails. [§ 27.002].
4. CONTRACTOR FREE OF OTHER’S NEGLIGENCE
The statute expressly exempts a contractor from:
● Negligence other than his own, his own agents or subcontractors (this is probably not new law);
● Damages caused by a claimant’s failure to mitigate his own damages (this is probably not new law);
● Normal wear, tear or deterioration (this is not new law);
● Shrinkage and settlement within normal tolerance levels (this is not new law).
5. RCLA DEMAND LETTER
RCLA has a similar provision to § 17.505 of the DTPA in that it does require a claimant to present a written sixty day notice of claim from the claimant to the contractor with a resultant right to the contractor to inspect and offer to repair or provide for the repairs to a “construction defect.” This written demand is a prerequisite to filing suit. The demand must be in “reasonable detail.”
6. DTPA CAUSATION STANDARD: A NEW PROBLEM
The resulting causation standard to be embodied in the court’s charge to the jury in a construction defect” case initiated after the effective date of this statute is somewhat unclear.
a. DTPA Standard: “Producing Cause”
Under the DTPA, a claim for damages for a “construction defect” would give rise to a causation standard of “producing cause.” [§ 17.50]. The question here is whether there is a conflict between the DTPA and the RCLA on this issue requiring a different causation standard.
b. § 27.001
On definitions provides that “[T]he term `construction defect’ may include any physical damage to the residence or any appurtenance proximately caused by a construction defect.” The term “proximately caused” is not used elsewhere in the RCLA.
c. § 27.002
States “[T]his chapter applies to any action to recover damages resulting from a construction defect. . .”
d. § 27.003(a)
States “[I]n an action to recover damages resulting from a construction defect . . .”
e. § 27.003(b)
States “. . . cause of action applicable to an action to recover damages resulting from a construction defect.”
f. § 27.004(a)
States “. . . a claimant seeking from a contractor damages arising from a construction defect . . .” also it states “. . . to determine the nature and cause of the defect . . . .”
g. § 27.004(f)
States “. . . claimant may not be awarded damages arising from the construction defect . . . .”
h. § 27.004(j)
States “. . . notice of a construction defect resulting from work performed by the contractor . . . .”
i. Standard of Causation Unchanged -Probably!
To hold that the legislature intended to invoke a “proximate cause” standard of causation is tenuous and strained. It would apply only to “physical damage to the residence or appurtenance” and the balance of the damage claims would be under a different causation standard or standards. It seems more probable that there was no intent to alter the causation standard in the primary theory of the suit and that whether the suit is one of negligence, intentional harm, breach of express or implied warranty or DTPA, the standard of causation will be determined without regard to the RCLA.
7. TRCCA AND RCLA IMPACT HOME CONSTRUCTION AND REPAIR CASES
Effective September 1, 2003, Title 16 (Texas Residential Construction Commission Act – TRCCA) of the Property Code was passed along with a strengthening of the Residential Construction Liability Act.” (RCLA) and made their compliance a tandem prerequisite element as a dual predicate for suits against home builders and limited the damages recoverable from a home builder. Since the private home purchase is the single largest investment the bulk of our population ever invest in and is the most important single item of property undergirding our way of life in this company, it makes perfect sense to the legislature to protect the sloppy building practices from an unlicensed occupation from the claims from basically defenseless home owners. The TRCCA and RCLA legislation schemes are designed to thwart and delay the home owner with an expensive and time consuming, mind boggling morass of bureaucratic excess. Its impact on DTPA claims for damages resulting from “construction defects” can be catastrophic and must be followed. TRCCA requires its own demand letter along with the demand letter of the RCLA and DTPA demand letters with rights in the contractor to inspect and offer to remedy. After the TRCCA and RCLA procedures are complete the home owner may then go to court to seek redress. (Why not require formal education and rigorous licensure testing for a person or entity to become a home builder and require that each new home construction project carries a performance bond and payment bond to secure to the home owner the fruits of his/her contract?).
8. RCLA AMENDMENTS OF 2003 (REMEDIAL IN NATURE)
Chapter 27 of the Property Code of Texas is known as the Residential Construction Liability Act (RCLA) has been amended in favor of the contractors. (These amendments are a testimonial of the power of a special interest group that does not like to respond to or pay for their false, misleading, or deceptive acts, breaches of expressed or implied warranties, or unconscionable conduct).
● RCLA does not create a cause of action. It is apparent in reading the RCLA and its amendments of 1993 that the statute does not create a cause of action. It addresses the methodology of handling claims and limiting damages.
● Designed to Effect Remedial Conduct
The essence of the statue is to effect remedial conduct on the part of the contractor and to make the user of the property responsible for his or her own conduct.
● Carrot in front/stick behind
The statue rewards prompt remedial actions by the contractor and punishes the contractor if it does not step forward and remedy the problems. The contractor does not step forward to make a reasonable offer, make a reasonable attempt to make repairs, or complete the repairs in a good and workmanlike manner, the defenses of RCLA do not apply.
● Damages limited for compliance
If the contractor complies with RCLA, then his damages are limited to reasonable costs of repairs, reasonable expenses of necessary temporary housing, reduction in market value due to structural failure, and reasonable and necessary attorneys fees.
● Total damage limitations
Award may not exceed claimant’s purchase price if the contractor complies with RCLA.
● Offer/rejection is Issue for Jury
The trier of fact (jury or judge) determines reasonableness of a settlement offer of rejection.
● Standard of causation change. Now Proximate Cause
A claimant must prove that the damages were proximately caused by the construction of defects. This changes from the DTPA standard of producing cause.
● Increase of Liability Amounts Plus Attorneys Fees is Remedial.
Aetna Insurance Co. v. Richardelle, 528 S.W.2d 280, 284 (Tex.Civ.App.—Corpus Christi 1975, ) held that the increase of liability amounts plus attorneys fees for acts committed prior to alteration of statute are remedial and therefore subject to retroactive application.
COMMENTARY: In light of the foregoing authorities, it seems clear to this writer that the RCLA amendments are “remedial” and will apply to pending and prospective suits, absent a savings clause.
J. Oh Fair Reason, Wherefore Art Thou?!
We pride ourselves as living in a nation of “laws.” This implies that we have established rules of conduct and judgment based on fairness and reason that apply to all persons regardless of their rank in society. In support of that proposition we have adopted into the law, the doctrine of stare decisis The are at least two fundamental presuppositions for the doctrine of stare decisis: (1) that in order for there even to be what we call the law there must be sufficient stability in the rules and regulations of man’s affairs to allow for the society to shape their conduct with regard to them; and (2) there are certain transcendent notions of fairness and decency that apply to all persons similarly situated who are in similar circumstances and without these, law and equity come out of the barrel of a gun and justice is measured by the length of the foot of the king. Of course, the doctrine allows for changes and corrections that are necessary because of error or change of times and circumstances. Under this doctrine, common decency and notions of fair play argue that persons similarly situated and under similar circumstances should be treated the same. This concept is well stated in Chrysler Corp. v. Texas Motor Vehicle Commission, 755 F2d 1192, 1201 (5th Cir. 1985) when it stated:
When legislation classifies, as it almost inevitably does, it must accommodate the egalitarian command that similarly situated persons are similarly treated.
With those thoughts in mind, I have listed in this portion of the article a series of cases to let them comment on themselves in contrast to other cases and statutes as to whether they were fully and properly thought out before a decision was made.
1. MENTAL ANGUISH DAMAGES IN DTPA CASES
In Brown v. American Transfer and Storage Co. 601 S.W.2d 931(Tex. 1980) the Texas Supreme Court held that absence of allegations and proof of economic damages or resulting physical injury precluded an award for mental anguish under the DTPA. In St. Elizabeth Hospital v. Garrard, 730 S.W.2d 649 (Tex. 1987), the Texas Supreme Court abolished the requirement of a physical manifestation to recover mental anguish damages, however, it left intact the necessity of allegations of proof of other DTPA damages . However, without reference to the Brown case or the St. Elizabeth Hospital case in Latham v. Castillo, 972 S.W.2d 66, (Tex. 1998)the Texas Supreme Court held that the consumer does “not have to first prove that they have suffered economic damages in order to recover mental anguish damages.” There is no rationale given and explanation of the apparent overruling of Brown.
2. SURVIVABILITY v. ASSIGNABILITY v. MERE CONTRACT
In Kristin Terk et al v. Oppenheimer, Blend, Harrison & Tate, Inc., 49 S.Ct.J. 598 (May 5, 2006) the Texas Supreme Court held that DTPA cases “alleging pure economic loss survive in favor of a deceased client’s estate, because such claims are necessarily limited to recovery for property.” The opinion of the court prohibits, under old law, the survivability of claims for mental anguish and punitive damages that might have otherwise been sought under the DTPA. No mention is made of the claims for attorney fees under the DTPA surviving–presumably they do.
The court’s analysis is interesting because the general rule is that a cause of action that is not assignable does not survive the death of the claimant. In Harding v. State Nat. Bank of El Paso, 387 S.W.2d 768, (Tex.Civ.App. 1965) the court held that
The test most commonly used to determine survivability is whether or not the cause of action may be assigned . . .In this state it is the rule that if a cause of action is not assignable, it does not survive.
It is middling strange that DTPA claims survive the death of the consumer but may not be assigned.
However, with respect to the loss of assignability, there is another way to “skin the cat.”
§ 12.014 of the Property Code provides as follows:
§ 12.014. TRANSFER OF JUDGMENT OR CAUSE OF ACTION. (a) A . . . or an interest in a cause of action on which suit has been filed may be sold, regardless of whether the judgment or cause of action is assignable in law or equity, if the transfer is in writing.
(b) A transfer under this section may be filed with the papers of the suit if the transfer is acknowledged or sworn to in the form and manner required by law for acknowledgment or swearing of deeds.
For the practitioner, many times we have the sale of a home, business or personal property where there is a DTPA claim owned by the seller that is available but suit has not been filed or suit has actually been filed but in either case the buyer desires to take over the claim. Under the PPG Industries, Inc. v. JMB/Houston Centers Partners Ltd., Partnership, 146 S.W.3d 79 (Tex. 2004), the seller’s consumer claim may not be assigned. However, the practitioner should encourage the parties to have the claim filed in the consumer’s name and then transferred to the buyer under this statue. I see no way for the courts to deny the efficacy of the assignment.
Yet again, with respect to the survivability of DTPA claims in favor of the decedent consumer’s estate we have the requirement that the claim not include claims for mental anguish or punitive damages. This restriction may impact some cases where the only claims are for the benefits of the contract out of which the claims arise. Of course, some DTPA claims for actual damages–damages at common law– exceed the scope of damages stemming merely from a breach of the contract. However, if there are no extra-contractual claims, there is the likelihood that the claims will be merely for benefits of the contract. In that case, we come face to face with Crawford v. Ace Sign, Inc., 917 S.W.2d 12 (Tex. 1996), which holds that
An allegation of a mere breach of contract, without more, does not constitute a ‘false, misleading or deceptive act’ in violation of the DTPA.
If a decedent’s estate limits its survived claims under the DTPA to seeking only the benefits of a breached contract, the claim fails to materialize as a DTPA claim and the issue then is whether the contract claim survives. Neither the PPG case nor the Kristen Terk case refer to the issues involved in the Crawford case. This is not very helpful to the practitioner.
Every remedy that the prevailing private litigating consumer can expect under the DTPA is set forth in §17.50 of the statute and in Chapters 33 and 41 of the Civil Remedies & Practice Code.
3. STANDARD OF CAUSATION FOR DTPA
The Standard of Causation IN A DTPA suit is changed within the statue itself at §17.50 which states that “ . . . a consumer may maintain an action where any of the following constitute a producing cause of economic damages. . . ” The Supreme Court of Texas has fleshed out this term in Rourke v. Garza, 530 S.W.2d 794, 801 (Tex. 1975). However, with the passage of Chapter 33 Civ. Prac & Rem Code in 1987, we may have a mandated change in more than DTPA cases on the issue of causation.
4. §33.002 OF CHAPTER 33, CIV. PRAC & REM CODE
Provides expressly that “This chapter applies to . . . any action brought under the [DTPA] . . . .” §33.003(a) provides that “[t]he trier of fact . . . shall determine the percentage of responsibility . . . with respect to each person’s causing or contributing to cause in any way the harm for which recovery . . . is sought.” With the use of the mandatory term “shall” this appears to be a newly mandated standard of causation and the practitioner should take due note in preparing his/her court’s charge, especially for the defendant. A proposed jury question might be submitted under the DTPA as impacted by §33.003, Civ Prac & Rem Code as follows:
Do you find that Don Davis, the Defendant, caused or contributed to cause in any way the harm for which damages is sought?
This is causation in fact without any limitation of “remoteness” as arguably may apply to “producing cause” but §33.003 gives the question such punch on behalf of the claimant that it is almost a comment on the weight of the evidence. However, the mandate of the statute overcomes any prohibition against comment on the weight of the evidence proscribed in Rule 277, T.R.C.P.
1In Stewart Land Title Guaranty Co. v. W. Dawson Sterling, Trustee, 822 S.W.2d 1, (Tex. 1991), the Supreme Court held that issues of contribution in DTPA claims are governed by Chapter 32 of the Civ. Prac. & Rem. Code of Texas, which in turn states that such chapter applies only to tort cases that are not governed by any other contribution scheme. This leads us to the result that DTPA claims are statutory tort claims.