Commercial Transactions Outline

Consumer Transactions

Bauman

Spring 2014

DTPA Basics

· Introduction to DTPA

· Pre DTPA: Fraud Claims

o Intent requirement

o Puffing defense

o Waiver by Contract

· DTPA

o No intent element- only ∆ made misrepresentation

o DAS: Treble

· Original: the first 1K and all if state of mind

o Attorney fees

· Purpose:

o Make it easier and more cost effective and encourage consumers to seek private resolutions for their grievances

o Π will actually make demand

o ∆ know he is on the line for DAS and the more he delays the higher the attorney fee award, this is and encouragement to ∆ to resolve these cases early.

· Legislative Intent

o Act shall be liberally construed to promote its underlying purpose which are to protect consumer against false, misleading, and deceptive acts or practices, unconscionable actions and breaches of warrant and to provide efficient and economical procedures to secure such protection.

· Personal Nature of DTPA Claim

o Do not survive death of π

o Non assignable

o PPG v JMB Houston Centers: π purchased office building from original purchase that had a DTPA claim against the ∆. Purchase does not acquire the claim as an assignor.

· Treble DAS are intended to motivate the injured, not those who purchase the claim they are the ones that have money.

· Assessing value of a claim is hard and entrepreneurs will purchase them on the cheap.

· Consumers may not even know that they have a claim.

· Basics of § 17.45 Cause of Action

· Elements of DTPA Claim

Π is a Consumer as defined by the statute

∆ committed one of the 4 defined violations

The violation was the producing cause of economic or mental anguish DAS

· 4 Types of Consumer Actions/Violations

False & misleading or deceptive act or practices that is

· Specifically enumerated in the statute (laundry list)

· Relied on by the consumer to the consumer’s detriment

o Breach of an express or implied warranty

o Any unconscionable action or course of action by any person

o Violation of Ch. 541 Insurance Code.

· Remedies

o Economic Loss

o Mental Anguish

o Attorney Fees

o Additional DAS with appropriate finding of knowing conduct.

· Violations of DTPA § 17.46

· “Unlawful Acts”: False, misleading or deceptive acts or practices in the conduct of any trade or conduct

· Rights to Enforce:

o AG: Consumer Protection Division – All violations

o Consumers: Laundry List violations only

So: Consumers must be able to point to violation on the laundry list to bring a suit for violation of DTPA

· How Limited:

o Term “false, misleading, or deceptive act or practice” is limited to laundry list in Consumer π cases

· Producing Cause

· Rule: The Misrepresentation or act must be the producing cause of the economic DAS or DAS for mental anguish

o Lower than proximate cause

o There may be more than 1

o Cause in fact+ substantial factor in causing the injuries.

· Higher than But For because it can be too speculative

o Failure to fix a flat tire properly that results in blow out and causes and accident and then π is late for job interview.

· It must have been possible in the first place

o Dr. Nick Riviera has expanded his medical practice by adding a very high-risk procedure. He talks to Bob DeBroker and Bob assures him that such a procedure could be added to his current policy with a rider and an additional steep premium. Bob gets a check from Dr. Nick, which he later cashes, but he fails to procure the rider. When Dr. Nick is later sued for malpractice, he discovers Bob’s error and sues Bob under the DTPA for his misrepresentations. Bob is able to show that no insurance company would have insured the procedure because it was so high-risk.

· Non Insurable + Reliance on Statement = Producing Cause

o Dr. Nick Riviera wants to expand his practice by adding a very high-risk procedure. He talks to Bob his insurance broker and tells him that the procedures are so high-risk that there is absolutely no way he will do them without insurance coverage. Bob assures him that such a procedure could be added to his current policy with a rider and an additional steep premium. Bob gets a check from Dr. Nick, which he later cashes, but he fails to procure the rider. When Dr. Nick is later sued for malpractice, he discovers Bob’s error and sues Bob under the DTPA for his misrepresentations. Bob is able to show that no insurance company would have insured the procedure.

· Venue § 17.56

· Options

o All or a substantial part of events or omissions

o ∆ residence at the time of accrual if ∆ is natural person

o ∆ PPB if not a natural person

o ∆ or an authorized agent of ∆ solicited the transaction made subject of the act