Is a borrower a consumer within the definition of the Texas DTPA?

WHO QUALIFIES AS A CONSUMER UNDER THE TEAS DECEPTIVE TRADE PRACTICES ACT?

- BORROWER NOT NECESSARILY A CONSUMER WITHIN THE MEANING OF CONSUMER UNDER THE DTPA
  
Plaintiffs also allege that JPMC violated the DTPA. The district court dismissed this claim on the basis that Plaintiffs are not "consumers" within the meaning of the Act and thus have no basis for a DTPA claim.

ELEMENTS OF DTPA CLAIM

To succeed on a DTPA claim, Plaintiffs must show: (1) they are consumers who sought or acquired, by purchase or lease, goods or services from JPMC; (2) JPMC can be sued under the DTPA; (3) JPMC committed an act in violation of the DTPA; and (4) JPMC's purported action was a producing cause of Plaintiffs' damages. See Tex. Bus. & Com. Code Ann. §§ 17.41-.63; see also In re Frazin, 732 F.3d 313, 323 (5th Cir. 2013); Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472, 478 (Tex. 1995).

HOW DOES THE DTPA DEFINE A CONSUMER?

The DTPA provides a private cause of action only for "consumers," meaning those who purchase a good or service. See Brittan Commc'ns Int'l Corp. v. Sw. Bell Tel. Co., 313 F.3d 899, 907 (5th Cir. 2002); see also Riverside Nat'l Bank v. Lewis, 603 S.W.2d 169, 173 (Tex. 1980) (citing Tex. Bus. & Com. Code Ann. § 17.45(4)). "Generally, a person cannot qualify as a consumer if the underlying transaction is a pure loan because money is considered neither a good nor a service." Fix v. Flagstar Bank, FSB, 242 S.W.3d 147, 160 (Tex. App.—Fort Worth 2007, pet. denied) (citing Riverside, 603 S.W.2d at 173-74).

We have dismissed DTPA claims based on nearly identical facts. In Miller v. BAC Home Loans Servicing, L.P., the plaintiffs based their claim on their lender's promises and conduct during attempts to modify their original purchase-money mortgage. 726 F.3d 717, 725 (5th Cir. 2013). We held that since the claim rested on promises and conduct related to a loan modification, not the original loan used to purchase the plaintiffs' house, the complaint was based on a "pure loan transaction" and the plaintiffs did not qualify as consumers. Id. (citing Ford, 44 S.W.3d at 133); see also Ayers v. Aurora Loan Servs., LLC, 787 F. Supp. 2d 451, 455 (E.D. Tex. 2011) ("[A] modification of an existing loan . . . is analogous to refinancing services. Refinancing is simply an extension of credit that does not qualify Plaintiff as a consumer."). Miller is directly on point and the district court did not err in dismissing this claim.

SOURCE: FIFTH CIRCUIT: Guajardo v. JP Morgan Chase Bank, NA, Court of Appeals, 5th Circuit Jan 12, 2015


CONSUMER STATUS REQUIRED TO SUE UNDER THE DTPA - A MATTER OF STANDING

To have standing to sue under the DTPA, a party must be a consumer. TEX. BUS. & COM.CODE ANN. § 17.50(a). To be a consumer under the DTPA, a party must show that he sought or acquired goods or services by purchase or lease. Id. § 17.45(4) (defining "consumer"). And he must show that the goods or services purchased or leased form the basis of the complaint. Melody Home Mfg. Co. v. Barnes, 741 S.W.2d 349, 351 (Tex.1987); Kennedy v. Sale, 689 S.W.2d 890, 892 (Tex. 1985).

The purpose of making misrepresentations actionable under the DTPA "is `to ensure that descriptions of goods or services offered for sale are accurate.'" Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472, 480 (Tex.1995) (quoting Pennington v. Singleton, 606 S.W.2d 682, 687 (Tex.1980)).
  
The DTPA does not require the consumer to be the person who actually purchased or leased the services. Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 649 (Tex.1996) ("Privity of contract with a defendant is not required for the plaintiff to be a consumer."); Kennedy, 689 S.W.2d at 892-93 (DTPA's language does not require "that the consumer must himself be the one who purchases or leases" the goods or services).

SOURCE: DALLAS COURT OF APPEALS - No. 05-12-01607-CV439 - S.W.3d 639 (2014) - 8/7/2014 
CITATION: McLeod v. Gyr, 439 S.W.3d 639 (Tex. App.-Dallas 2014, pet. denied)