Wednesday, June 22, 2011

DTPA Claim in Texas: What is actionable?

What can bad actors (businesses) be sued for by consumers? 
The DTPA prohibits “[f]alse, misleading, or deceptive acts or practices in the conduct of any trade or commerce.” TEX. BUS. and COMM. CODE ANN. § 17.46(a) (West 2011).
DTPA Violations Laundry list 
Section 17.46(b) contains a laundry list of specifically prohibited acts. Included in that laundry list are (1) “representing that goods or services have characteristics which they do not have,” (2) “representing that goods or services are of a particular . . . quality, . . . if they are of another, ” (3) “representing that an agreement confers or involves rights, remedies, or obligations which it does not have or involve,” (4) “representing that a guarantee or warranty confers or involves rights or remedies which it does not have or involve,” and (5) “failing to disclose information concerning goods or services which was known at the time of the transaction if such failure to disclose such information was intended to induce the consumer into a transaction into which the consumer would not have entered had the information been disclosed.” Id. § 17.46(b)(5), (7), (12), (20) and (24). Actionable representations may be oral or written. Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 502 (Tex. 2001). Intent to make a misrepresentation is not required to recover under section 17.46 (b)(5), (7), and (12). See id.
What damages are available? 
Under section 17.50(a), a DTPA plaintiff may recover “economic damages” for which the defendant’s misconduct was a producing cause. TEX. BUS. and COM. CODE ANN. § 17.50(a) (West 2011). Economic damages include both benefit-of-the-bargain damages similar to those recoverable for breach of contract and out-of-pocket damages. See W.O. Bankston Nissan, Inc. v. Walters, 754 S.W.2d 127, 128 (Tex. 1988) (explaining that out-of-pocket and benefit-of-the-bargain are two measures of damages under the DTPA, and noting that a plaintiff may recover the greater of the two measures). Additionally, “recovery under the DTPA is not exclusively limited to only these two types of damages.” Manon v. Tejas Toyota, Inc., 162 S.W.3d 743, 754 (Tex. App.—Houston [14th Dist.] 2005, no pet.). Rather, the consumer may recover its “total loss sustained . . . as a result of the deceptive trade practice,” including “related and reasonably necessary expenses.” Id.; see D.S.A., Inc. v. Hillsboro Indep. Sch. Dist., 973 S.W.2d at 662, 663–64 (Tex. 1998) (explaining that a plaintiff can recover, in addition to out-of-pocket-expenses, any loss otherwise suffered as a consequence of misrepresentations); Henry S. Miller Co. v. Bynum, 836 S.W.2d 160, 162 (Tex. 1992) (holding that DTPA damages include recovery for “lost capital investment”). In other words, the consumer is “permitted [to recover] other damages to ensure that the plaintiff is made whole.” Bynum, 836 S.W.2d at 162.
Mere Breach of Contract not a DTPA violation 
[W]hen a plaintiff’s claim arises solely from the failure of one of the parties to perform on a contract, a DTPA action is inappropriate. Crawford v. Ace Sign, Inc., 917 S.W.2d 12, 14 (Tex. 1996) (per curiam); see also Wayne Duddlesten, Inc. v. Highland Ins. Co., 110 S.W.3d 85, 92 (Tex. App.—Houston [1st Dist.] 2003, pet. denied) (holding that proof of a failure to comply with contractual promises “cannot be used to support an action under the DTPA”). In Crawford, the plaintiff sought to escape this rule based on the defendant’s misrepresentations that it would perform under the contract. The court held, however, that a misrepresentation that is based on nothing more than a failure to perform a contractual promise cannot be the basis for a DTPA claim; otherwise, every breach of contract claim would be converted into a DTPA claim. Id.
SOURCE: Houston Court of Appeals - 01-10-00017-CV - 6/16/11

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