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.).  

Who may bring legal malpractice claim?

ATTORNEY-CLIENT RELATIONSHIP REQUIRED TO SUE FOR LEGAL MALPRACTICE

A legal malpractice claim is dependent on the existence of an attorney-client relationship. Barcelo v. Elliott, 923 S.W.2d 575, 577 (Tex. 1996) (attorney owes a duty of care only to his client, and privity rule requires this relationship as a predicate for legal malpractice claim); Gamboa v. Shaw, 959 S.W.2d 662, 664-65 (Tex. App.-San Antonio 1997, no pet.); see Swank v. Cunningham, 258 S.W.3d 647, 666 (Tex. App.-Eastland 2008, pet. denied) (applying privity rule).

Therefore, we must first determine whether an attorney-client relationship existed between Sloan and Gonzalez/the Law Office.

SOURCE: SAN ANTONIO COURT OF APPEALS - 04-13-00239-CV - 8/29/2014

The existence of an attorney-client relationship gives rise to a duty on the attorney's part to act with ordinary care, in other words, in a manner consistent with the standard of care expected to be exercised by a reasonably prudent attorney. Cosgrove, 774 S.W.2d at 664. An attorney must use "the utmost good faith in dealings with the client" and "reasonable care in rendering professional services to the client." Byrd, 891 S.W.2d at 700; see also Meyer v. Cathey, 167 S.W.3d 327, 330-31 (Tex. 2005) (per curiam) (in a formal relationship such as an attorney-client relationship a fiduciary duty arises as a matter of law). See TEX. DISCIPLINARY R. PROF'L CONDUCT §§ 1.01-8.05, reprinted in TEX. GOV'T CODE ANN., tit. 2, subtit. G, App. A, art. X (West 2013 & Supp. 2014) (rules defining attorney's responsibilities within an attorney-client relationship). An attorney's failure to exercise "that degree of care, skill, and diligence that a lawyer of ordinary skill and knowledge commonly possesses and exercises" gives rise to a legal malpractice or professional negligence claim.[6] Cosgrove, 774 S.W.2d at 664-65 (complaints about an attorney's care, skill, or diligence in representing a client implicate this duty of ordinary care and sound in negligence).

SOURCE: SAN ANTONIO COURT OF APPEALS - 04-13-00239-CV - 8/29/2014

The Texas rule against fracturing a negligence claim prevents legal malpractice plaintiffs from dividing a claim that sounds only in negligence into other claims in order to benefit from a longer limitations period, the availability of treble damages, or "other tactical advantages." Riverwalk, 391 S.W.3d at 236; Beck, 284 S.W.3d at 427; see Deutsch v. Hoover, Bax & Slovacek, 97 S.W.3d 179, 189 (Tex. App.-Houston [14th Dist.] 2002, no pet.). When the real issue is whether the professional exercised that degree of care, skill and diligence that professionals of ordinary skill and knowledge commonly possess and exercise, then the complaint may not be "fractured" into separate claims for negligence, breach of fiduciary duty, fraud, breach of contract, or DTPA. Beck, 284 S.W.3d at 426-27; Kimleco Petroleum, Inc. v. Morrison & Shelton, 91 S.W.3d 921, 924 (Tex. App.-Fort Worth 2002, pet. denied).

The rule against fracturing does not, however, preclude a client from asserting causes of action other than negligence against an attorney if those other claims are supported by the facts. Riverwalk, 391 S.W.3d at 236; Murphy, 241 S.W.3d at 695; Deutsch, 97 S.W.3d at 189; see also Beck, 284 S.W.3d at 427-28 (noting the fracturing rule does not necessarily bar the simultaneous assertion of negligence and non-negligence claims that are predicated on some "common or overlapping facts"); Deutsch, 97 S.W.3d at 190. However, the client must do more than "merely reassert the same claim for legal malpractice under an alternative label." Beck, 284 S.W.3d at 427 (quoting Duerr v. Brown, 262 S.W.3d 63, 70 (Tex. App.-Houston [14th Dist.] 2008, no pet.)). If the "gist" of the complaint is that the attorney did not exercise the degree of care, skill, or diligence that attorneys of ordinary skill and knowledge commonly possess and exercise, then the complaint should be pursued as a negligence claim rather than as some other claim. Riverwalk, 391 S.W.3d at 236; Beck, 284 S.W.3d at 427-28; Deutsch, 97 S.W.3d at 189-90. Claims regarding the quality of the lawyer's representation of the client are professional negligence claims. Murphy, 241 S.W.3d at 696-97; Ersek v. Davis & Davis, P.C., 69 S.W.3d 268, 274-75 (Tex. App.-Austin 2002, pet. denied) (if the ultimate issue is whether there has been a breach of duty leading to damages, then the claim constitutes a negligence claim).

SOURCE: SAN ANTONIO COURT OF APPEALS - 04-13-00239-CV - 8/29/2014

[No] Legal standing to complain: Texas Supreme Court nixes citizen's suit to challenge balloting process that favors political parties as unconstitutional

 
SUPREMES SAY WOULD-BE ELECTION-SYSTEM REFORMER WHO TOOK A STAND AGAINST PARTISAN BALLOTING DID NOT HAVE STANDING
    
Honorable Hope Andrade v. [Average Joe tax-paying Citizen] Don Veneable (Tex. May 18, 2012)
  

In an anonymous per curiam opinion, the Texas Supreme Court this morning disposed of a Dallas resident's constitutional challenge to partisan identification of candidates and straight-ticket voting option on the general election ballot on standing grounds. The challenged feature of the general election ballot process allows voters to vote for all candidates of the same political party simultaneously rather than making a choice between competing candidates in each race. The straight-ticket option, no doubt, strengthens the parties. [Texas uses nonpartisan ballots in some local elections].   

NO SPECIAL INTEREST

The Supremes, who are among those elected on partisan ballots in Texas, collectively conclude that the election system critic who brought the underlying suit in Dallas County was no different from any other Mr. Joe Public, and that he did not satisfy the requirements for tax-payer standing under existing precedent either. Holding that the citizen had no special interest, the justices render judgment for the election official who defended the status quo.  

  

OPINION EXCERPT

  
Don Venable seeks to enjoin Dallas County from identifying candidates’ political party affiliations and providing a “straight-party” option on general election ballots. We must decide whether Venable has standing to pursue these claims. Because Venable has no interest distinct from that of the general public and has not established taxpayer standing under Williams v. Lara, 52 S.W.3d 171, 179 (Tex. 2001), we reverse in part the court of appeals’ judgment and render judgment dismissing Venable’s claims against Secretary of State Hope Andrade.
  

Venable has not pleaded facts showing that measurable and significant public funds were being spent on the activity he challenges, and thus, has failed to affirmatively demonstrate taxpayer standing. Because Venable has no interest distinct from that of the public generally, and his claims fall outside the narrow taxpayer exception to the bar against generalized grievances, he lacks the requisite and particularized stake to warrant standing. Accordingly, we grant the petition for review, and without hearing oral argument, we reverse in part the court of appeals’ judgment and render judgment dismissing Venable’s claims against Andrade. TEX. R. APP. P. 59.1, 60.2(c).

SOURCE: TEXAS SUPREME COURT - Honorable Hope Andrade v. Don Veneable, No. 11-0008  (Tex. May 18, 2012) Petition for Review from Dallas County; 5th district (05‑10‑00303‑CV, ___ SW3d ___, 11‑15‑10)
 

PER CURIAM OPINION

Capacity to sue and standing are distinct, and also have different procedural implications

 

CORPORATIONS’ CAPACITY TO SUE VS. STANDING

   

A corporation's authority to bring a lawsuit on a claim is an issue of capacity, not standing to sue. See El T. Mexican Rests., Inc. v. Bacon, 921 S.W.2d 247, 249 (Tex. App.-Houston [1st Dist.] 1995, writ denied) (capacity is a party's legal authority to go into court to prosecute or defend a suit). A party must challenge a corporation's capacity to file suit by a verified denial under rule 93. See id.; see also Sixth RMA Partners v. Sibley, 111 S.W.3d 46, 56 (Tex. 2003) (“When capacity is contested, Rule 93 requires that a verified plea be filed unless the truth of the matter appears of record.”).

  

SOURCE:  DALLAS COURT OF APPEALS - 05-10-00725-CV – 4/27/12

  

Gutierrez's first three issues claim TWLF could not recover on the contract because its corporate privileges were forfeited by the secretary of state in 2004 for non-payment of franchise taxes. Gutierrez did not raise these arguments in a verified denial under rule 93; instead he raised them for the first time in a supplemental motion for new trial filed more than thirty days after the judgment was signed. Thus, the issues were not timely raised in the trial court and are not preserved for appeal. See Tex. R. Civ. P. 93(1), (2), (6), 329b(b); Tex. R. App. P. 33.1(a).

   

Gutierrez argues this is an issue of standing to sue and can be raised at any time. We disagree.

Gutierrez v. Wright Lawfirm, PLLC, No. 05-10-00725-CV, 2012 WL 1898950 (Tex. App.-Dallas Apr. 27, 2012, no pet.) (mem. op.)