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) 

  

 

Standing as consumer under the DTPA

WHO MAY SUE UNDER THE DECEPTIVE TRADE PRACTICES ACT? 

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 - 05-12-01607-CV - 5/5/2014

McLeod does not cite authority for his argument that Gyr cannot establish standing to sue because he received the money he used to acquire McLeod's services from other people and did not personally lose "a dollar." Gyr testified, however, that he acquired McLeod's legal services for the purpose of filing an N-400 application to become a naturalized United States citizen, and his complaint arises from false representations made in connection with the purchase of those services. Regardless of the source of the funds or Gyr's obligation to repay them, Gyr is a consumer under the DTPA and has standing to sue McLeod. See Kennedy, 689 S.W.2d at 892-93; Bus. Staffing, Inc. v. Viesca, 394 S.W.3d 733, 742-43 (Tex. App.-San Antonio 2012, no pet.).  

DTPA Claim: Plaintiff Must Be A Consumer for Texas Deceptive Trade Practices Act to Apply

   
DTPA ELEMENT: Consumer Status of Complainant 
 
Consumer status is an essential element of a DTPA claim. Rivera v. S. Green Ltd. P’ship, 208 S.W.3d 12, 21 (Tex. App.—Houston [14th Dist.] 2006, pet. denied) (citing Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472, 478 (Tex. 1995)).
 
CONSUMER DEFINED FOR PURPOSES OF DTPA CLAIM 
 
A consumer is an individual who seeks or acquires goods or services by purchase or lease. Id.; Tex. Bus. & Com. Code Ann. § 17.45(4) (Vernon Supp. 2009) (“‘Consumer’ means an individual, partnership, corporation, this state, or a subdivision or agency of this state who seeks or acquires by purchase or lease, any goods or services, except that the 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.”).
 
Whether a plaintiff is a consumer under the DTPA is a question of law for the court to decide. Rivera, 208 S.W.3d at 21.
 
SOURCE: Cash Rent-A-Car v. Old American County Mutual Fire Ins. Co. No. 01-09-00021-CV (Tex.App.- Houston [1st Dist.] Jan. 14, 2009)

IS A BORROWER A CONSUMER UNDER THE DTPA DEFINITION? - IT DEPENDS 

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