Premium Assets, Inc. v. Lydia A. Garcia D/B/A Joe Lynn Dazzles and More and Lydia Ann Garcia ( 2015 )

ACCEPTED
13-13-00549-CV
THIRTEENTH COURT OF APPEALS
CORPUS CHRISTI, TEXAS
1/6/2015 11:12:49 AM
DORIAN RAMIREZ
CLERK
CAUSE NO. 13-13-00549-CV
IN THE COURT OF APPEALS
FOR THE THIRTEENTH JUDICIAL DISTRICT FILED
AT CORPUS CHRISTI-EDINBURG, TEXAS IN THE 13TH COURT OF APPEALS
CORPUS CHRISTI
__________________________________________________________________
1/6/15
PREMIUM ASSETS, INC.
Appellant
v. CLERK
LYDIA A. GARCIA D/B/A JOE LYNN DAZZLES AND
MORE and LYDIA A. GARCIA
Appellees
_________________________________________________________________
Appeal from the 214th Judicial District Court
Of Nueces County, Texas
CAUSE NO. 2012DCV-2610-F
The Honorable Jose Longoria
_________________________________________________________________
APPELLEES’ REPLY BRIEF TO AMENDED BRIEF OF APPELLANT
_________________________________________________________________
Jeffrey Lehrman
State Bar No. 24075490
Robert Anderson
State Bar No. 01220800
Douglas D. McLallen
State Bar No. 00788025
Anderson, Lehrman, Barre, & Maraist LLP
Gaslight Square
1001 Third St, Suite 1
Corpus Christi, TX 78404
Telephone: 361-884-4981
Facsimile: 361-884-2822
jlehrman@albmlaw.com
randerson@albmlaw.com
dmclallen@albmlaw.com
ATTORNEYS FOR APPELLEE
IDENTITY OF PARTIES AND COUNSEL
Appellate Counsel for Appellant Premium Assets, Inc.
Roy K. Ewart
State Bar No. 06752705
Law Offices of Mae Nacol & Associates, P.C.
8303 Southwest Freeway, Suite 945
Houston, Texas 77074
Telephone: 713-655-7055
Facsimile: 713-655-7702
wmnacol@sbcglobal.net
Trial Counsel for Appellant Premium Assets, Inc.
William Maxwell
State Bar No. 24028775
William Maxwell, PLLC
15821 FM 529, Box 298
Houston, Texas 77095
Telephone: 713-739-0663
Facsimile: 713-621-1449
attorneywtm@hotmail.com
Appellate and Trial Counsel for Appellee Lydia A. Garcia d/b/a
Joe Lynn Dazzles and More and Lydia A. Garcia
Jeffrey J. Lehrman
State Bar No. 24074590
Robert Anderson
State Bar No. 01220800
Douglas D. McLallen
State Bar No. 00788025
Anderson, Lehrman, Barre, and Maraist LLC
Gaslight Square
1001 Third St, Suite 1
Corpus Christi, TX 78404
Telephone: 361-884-4981
Facsimile: 361-884-2822
jlehrman@albmlaw.com
randerson@albmlaw.com
dmclallen@albmlaw.com
i
TABLE OF CONTENTS
IDENTITY OF THE PARTIES AND COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . i
TABLE OF CONTENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
TABLE OF AUTHORITIES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
STATEMENT OF THE CASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
STATE REGARDING ORAL ARGUMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
STATEMENT OF THE FACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SUMMARY OF THE ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARGUMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Standard of Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Issues Presented: The Trial Court did not err in rendering final
judgment in favor of Appellees. . . . . . . . . . . . . . . . . . . 14
Sub-Issues: I. The Lease Agreement between the landlord and the
Appellee does not prevent the affirmation of the Trial
Court’s Final Judgment on the Appellee’s claims for
damages against the Appellant under the Texas Deceptive
Trade Practices Act and promissory estoppel causes of
action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
II. Any contractual relationship between the Appellee and the
landlord does not prevent the affirmation of the Trial
Court’s Final Judgment on the Appellee’s claims for
damages against the Appellant under the Texas Deceptive
Trade Practices Act and promissory estoppel causes of
action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ii
III. The Statute of Frauds nor the Statute of Conveyances
prevent the affirmation of the Trial Court’s Final Judgment
on the Appellee’s claims for damages under the Texas
Deceptive Trade Practices Act and promissory estoppel
causes of action.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
PRAYER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
CERTIFICATE OF COMPLIANCE.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
CERTIFICATE OF SERVICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
APPENDIX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
iii
TABLE OF AUTHORITIES
Cases
2616 S. Loop L.L.C. v. Health Source Home Care, Inc., 201 S.W.3d 349, 355
(Tex.App.-Houston [14th Dist.] 2006, no pet.).. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Adams v. Can-Dee Oil Corp., 357 S.W.2d 808 (Tex.Civ.App. Waco 1962 writ
ref'd n.r.e.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Ahmed v. Ahmed, 261 S.W.3d 190, 194 (Tex.App.-Houston [14th Dist.] 2007, no
pet.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Alexander v. Turtur & Associates, 146 S.W.3d 113, 117 (Tex.2004). . . . . . . . . . 38
Bowe v. GMC/Pontiac Div., 830 S.W.2d 775 (Tex.App.—Houston [1st Dist.]
1992, writ denied) .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Broaddus v. Grout, 152 Tex. 398, 258 S.W.2d 308, 309 (1953). . . . . . . . . . . . . . 41
Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986). . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Cessna Aircraft Co. v. Aircraft Network, LLC, 213 S.W.3d 455 (Tex.App.-Dallas
2006, pet. denied). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Chilton Ins. Co. v. Pate & Pate Enters., Inc., 930 S.W.2d 877 (Tex.App.—San
Antonio 1996, writ denied). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.2005). . . . . . . . . . . . . . . . . . 12
Cohn v. Comm'n for Lawyer Discipline, 979 S.W.2d 694, 696-97
(Tex.App.-Houston [14th Dist.] 1998, no pet.).. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Collins v. Walker, 341 S.W.3d 570, 573-74 (Tex.App. - Houston [14th Dist.] 2011,
no pet.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36, 40
DeLaney v. Assured Self Storage, 272 S.W.3d 837, 839 (Tex.App.-Dallas 2008, no
iv
pet.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
El Paso Natural Gas Co. v. Minco Oil & Gas Co., 964 S.W.2d 54 (Tex.
App.—Amarillo 1997, pet. granted). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
English v. Fischer, 660 S.W.2d 521, 524 (Tex.1983). . . . . . . . . . . . . 18, 19, 33, 34
FDIC v. F & A Equip. Leasing, 854 S.W.2d 681, 684 (Tex.App.-Dallas 1993, no
writ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Ford v. City State Bank, 44 S.W.3d 121, 139 (Tex.App. - Corpus Christi 2001, no
pet.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Fretz Construction Co. v. Southern Nat’l Bank, 626 S.W.2d 478, 483-84
(Tex.1981). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18, 33
Gevinson v. Manhattan Constr. Co., 449 S.W.2d 458 (Tex.1969). . . . . . . . . . . . 23
Henderson v. Texas Commerce Bank-Midland, N.A., 837 S.W.2d 778, 781-82
(Tex. Ct.App.-El Paso 1992, writ denied).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Herrin v. Medical Protective Co., 89 S.W.3d 301, 310 (Tex. App. – Texarkana
2002, pet denied). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24, 38
Hoye v. Like, 958 S.W.2d 234 (Tex.App.-Amarillo 1997, no pet.). . . . . . . . . . . . 28
Ikon Office Solutions Inc. v. Elfert, 125 S.W.3d 113, 125 n.6 (Tex. App. - Houston
[14th Dist.] 2003, pet. denied).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Italian Cowboy Partners Ltd., v. Prudential Insurance Co. of America, 341
S.W.3d 323, at 333 (Tex. 2011). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16, 17
J & J Sys., Inc. v. Towers of Texas, Inc., 833 S.W.2d 532 (Tex. App.—Eastland
1991). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41, 42
J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex.2003). . . . . . . . . . . . 15
v
Kennedy v. Sale 689 S.W.2d 890 (Tex.1985). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Lawson v. Commercial Credit Business Loans, Inc., 690 S.W.2d 679 (Tex.App. –
Eastland, 1985, writ ref’d n.r.e).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29, 30
McClure v. Duggan, 674 F. Supp. 211 (N.D.Tex.1987). . . . . . . . . . . . . . . . . . . . . 30
McDonald v. Roemer, 505 S.W.2d 698, 699 (Tex.Civ.App.-San Antonio 1974, no
writ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39, 40
McGalliard v. Kuhlmann, 722 S.W.2d 694, 696 (Tex.1986). . . . . . . . . . . . . . . . . 13
Mart. v. Lou Poliquin Enterprises, Inc., 696 S.W.2d 180 (Tex. App. – Houston
[14th Dist.] 1985, writ ref’d n.r.e.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25, 30
“Moore” Burger, Inc. v. Phillips Petroleum Co.,
492 S.W.2d 934 (Tex.1972). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 33, 40
Nagle v. Nagle, 633 S.W.2d 796 (Tex.1982). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Nordstrom v. Nordstom, 965 S.W.2d 575 (Tex.App.-Houston [1st Dist.] 1997, pet.
denied). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Plas–Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442 (Tex.1989). . . . . . . . . . . . . . 21
Pony Express Courier Corp. v. Morris, 921 S.W.2d 817, 820 (Tex. App.--San
Antonio 1996, no writ). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Regency Advantage Ltd. Partnership v. Bingo Idea–Watauga, Inc., 936 S.W.2d
275, 278 (Tex.1996). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Remington Arms Co. v. Luna, 966 S.W.2d 641 (Tex. App.--San Antonio 1998, pet.
denied). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Richter v. Wagner Oil Co., 90 S.W.3d 890, 899 (Tex.App.-San Antonio 2002, no
pet.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
vi
Roberts v. Burkett, 802 S.W.2d 42 (Tex. App. Corpus Christi 1990, no writ). . . 31
Schlumberger Technology Corp. v. Swanson, 959 S.W.2d 171(Tex.1997).. . . . . 15
Sears, Roebuck and Co. v. Wilson, 963 S.W.2d 166 (Tex. App. – Fort Worth
1998, no pet.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Shaheen v. Motion Indus., 880 S.W.2d 88, 91 (Tex.App. - Corpus Christi 1994,
writ denied). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32, 40
Solar Applications Engineering, Inc. v. T.A. Operating Corp., 327 S.W.3d 104,
108 (Tex.2010). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Southmark Corp. v. Life Investors, Inc., 851 F.2d 763 (5th Cir. 1988). . . . . . 19, 35
Stable Energy, L.P. v. Kachina Oil & Gas, Inc., 52 S.W.3d 327, 336
(Tex.App.-Austin 2001, no pet.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Stanley v. CitiFinancial Mortg. Co., 121 S.W.3d 811 (Tex.App. - Beaumont 2003,
pet denied). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
State v. $281,420.00 in United States Currency, 312 S.W.3d 547 (Tex.2010). . . 28
Texas Taco Cabana, L.P. v. Taco Cabana of N.M., 304 F. Supp. 2d 903 (W.D.Tex.
2003). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Vickery v. Comm'n for Lawyer Discipline, 5 S.W.3d 241, 252 (Tex.App.-Houston
[14th Dist.] 1999, pet. denied).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Walker v. Tafralian, 107 S.W.3d 665 (Tex.App.- Fort Worth 2003, pet. denied). 32
Weitzel v. Barnes, 691 S.W.2d 598, 600 (Tex.1985). . . . . . . . . . . . . . . . . . . . . . . 29
West Beach Marina, Ltd. v. Erdeljac, 94 S.W.3d 248 (Tex.App.—Austin 2002, no
pet.). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Wheeler v. White, 398 S.W.2d 93 (Tex.1965). . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
vii
Statutes
TEX. BUS. & COM. CODE §17.45. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
TEX. BUS. & COM. CODE ANN. § 17.505.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
TEX. BUS. & COM. CODE ANN. § 26.01.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24, 31
TEX. PROP. CODE §5.021. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 37, 40
TEX. R. CIV. P. 299. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Article
Richard M. Alderman, The Texas Deceptive Trade Practices Act In Context: Not
All That Bad; Presented by: The Center for Consumer Law, Houston, Texas,
October 23, 2009, Page 23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
viii
I. STATEMENT OF THE CASE
On June 7, 2012, Appellee, Lydia A. Garcia d/b/a Joe Lynn Dazzles and More
and Lydia A. Garcia brought suit against Appellant, Premium Assets, Inc., under the
Texas Deceptive Trade Practices Act, promissory estoppel, and various breach of
contract theories for the Appellant’s deceptive conduct and acts that were the
producing cause of damages incurred by the Appellee. (CR 3-11). Appellant
subsequently filed its First Amended Answer, Special Exceptions and Counterclaim
on September 27, 2012. (CR 32-35). The Appellee filed it’s Original Answer to
Appellant’s Counterclaim on December 21, 2012. (CR 113-118).
Appellee filed its First Amended Original Petition on February 21, 2013 (CR
229-236). On April 23, 2014, the case proceed to a trial to the bench without
objection from either party. On August 6, 2013, the trial court issued a Final
Judgment against the Appellant. (CR 733-734). The Appellant subsequently
requested Findings of Fact and Conclusions of Law from the Court which were
entered on August 30, 2014. (CR 752-760). Thereafter, the Appellant filed its Notice
of Appeal and posted a supersedes bond with the District Clerk’s office. (CR 761-
762, 839-844).
II. STATEMENT REGARDING ORAL ARGUMENT
Appellee believes that oral argument is necessary because the Court would
Page 1 of 45
benefit from oral argument regarding the issues raised in the Appellant’s Amended
Brief as well as the arguments raised in Appellee’s Reply Brief to Appellant’s
Amended Brief.
III. STATEMENT OF THE FACTS
Appellee Lydia A. Garcia d/b/a Joe Lynn Dazzles and More and Lydia A.
Garcia (hereinafter referred to as “Appellee”), originally brought this cause of action
against Appellant, Premium Assets, Inc. (hereinafter referred to as “Appellant”) on
June 7, 2012. (CR 3-11). On or about the first week in January, 2012, the Appellee
contacted Jason Alaniz (hereinafter referred to as “Alaniz"), a real estate brokerage
agent employed by Joe Adame and Associates and the listing agent for the Appellant,
to inquire about obtaining a commercial lease for a business venture. (PX 15; R.R.
Vol. 5; p. 16, lines 15-21 and p. 34, lines 22-25 through p. 36, line 16).
At the directive of Alaniz, Appellant’s agent, with the authority to represent
and negotiate commercial lease agreements on behalf of the Appellant, the Appellee
was referred to a commercial lot located at 711. N. Carancahua, Corpus Christi,
Texas. (PX 15; R.R. Vol. 5; p. 16, lines 15-25; p. 35 lines 5-10; p. 38, lines 5-25; p.
39, lines 1-15; p. 40, lines 2-6; p. 178, lines 20-23; p. 194 lines 24-25; p. 195, lines
1-25, p. 196 lines 2-4).
The specific commercial lot was located in Suite 115-A of a commercial office
Page 2 of 45
building known as American Bank Plaza in Corpus Christi, Texas. ( PX 3; R.R. Vol.
5; p. 16, lines 15-25). The property was managed by the Appellant with Alaniz being
the leasing agent for the Appellant. ( PX 15; R.R. Vol. 5; p. 16, lines 15-25).
After inspecting the commercial lot, the Appellee instantly realized that it
would be perfect for her intended business endeavor. (R.R. Vol. 5; p. 17, lines 10-20,
p. 82, lines 11-17). Specifically, the Appellee’s store, which was to be called Joe
Lynn Dazzles & More, was intended to sell clothing and accessory items to
downtown, professional women. (R.R. Vol. 5; p. 17, lines 21-23). Upon inspection
of the property, the Appellee was informed that it would be available to lease at a cost
of $275.00 per month under the conditions of a 12 month lease. (PX 3). There was
also a required security deposit in the amount of one month's rent ($275.00) to be paid
at the time of move in. (PX 3).
On or about January 13, 2012, the Appellee obtained a new Tax ID # in
preparation for the opening of her new business. (R.R. Vol. 5; p. 16, lines 15-21; p.
20, lines 24-25, p. 21, lines 1-8). That same week the Appellee was informed by
Alaniz that the Appellant had agreed to accept her as a tenant beginning in February,
2012, and that a formal Lease Agreement would be ready for execution within the
next week. (R.R. Vol. 5; p. 19, lines 8-13; p. 20, lines 16-19 and lines 21-23; p. 53,
lines 3-5; p. 113, lines 2-5 and 15-17, p. 126, lines 18-22).
Page 3 of 45
On or about January 26, 2012, the Appellee, in reliance on the representations
of Alaniz, arrived at the offices of Joe Adame & Associates to formally execute the
Lease Agreement for the commercial lot. (R.R. Vol. 5; p. 49, lines 20-25). After
reviewing the Lease Agreement, the Appellee formally executed it and gave it back
to Alaniz who forwarded it to Appellant. (R.R. Vol. 5; p. 49, lines 20-25, p. 82 lines
23-25, p. 83 lines 1-4). Additionally, the Appellee also tendered Alaniz a check for
February's rent and security deposit in the amount of one month's rent pursuant to the
terms of the Lease Agreement (PX-3). The payments were accepted by Alaniz as
agent for the Appellant and timely delivered to the Appellant. (R.R. Vol. 5; p. 66,
lines 4-25; p. 67, lines 1-2; p. 152, lines 16-25).
In reliance upon the executed Lease Agreement and representations of Alaniz,
the Appellee began to take the necessary actions for her expected February 2012
grand opening. (R.R. Vol. 5; p. 20, lines 24-25; p. 21, lines 1-8; p. 112, lines 23-25;
p. 113, lines 1-5). Some of the actions taken by the Appellee in reliance on the
representations of Alaniz included the following:
1. Obtained Commercial Policy #605072070 through Farmers Insurance
Group (PX 7; R.R. Vol. 5; p. 99, lines 8-25; p. 100, lines 1-2);
2. Purchased $2,843.48 worth of supplies, materials and merchandise to be
used in her new place of business. (PX 1, 2, 4, 5, 6, 8,9,10; R.R. Vol. 5; p. 18, lines
Page 4 of 45
12-14 and lines 17-18, p. 97, lines 1-9, 17-24; p. 98, lines 5-20, p. 100, lines 8-22,
p. 101, lines 24-25, p. 102, lines 1-25, p. 104, lines 23-25, p. 105, lines 1-25, p. 106,
lines 6-25, p. 107, lines 1-25, p. 117, lines 12-25, p. 153, lines 16-25; p. 156 lines 21-
24);
3. Purchased checks for her new business account. (PX 4; R.R. Vol. 5; p.
96, lines 19-25; p. 97, lines 1-9);
4. Opened up new business checking account with Bank of America. (R.R.
Vol. 5; p. 17, lines 21-23); and
5. Quit her job as Office Manager with Sealevel Management. (R.R. Vol.
5; p. 113, lines 15-17; p. 114, lines 3-6; page 115, lines 25; p. 116, lines 1-3, and,
lines 7-18).
The next afternoon, January 27, 2012, the Appellee visited the property where
she dropped off a copy of her newly obtained commercial liability policy with
employees of Appellant. While there, she picked up an entry card key and unit key
to Suite 115A from Noel Harris, Appellant’s property manager, and took full
possession of the unit. (R.R. Vol. 5; p. 92 lines 19-21; p. 118, lines 19-25, p. 119,
lines 1-23; p. 146, lines 18-21). The access keys were given to Appellee without any
limitation or restriction in use or time by Appellant. (R.R. Vol. 5; p. 86, lines 6-10
and lines 17-19). The Appellee was also able to arrange, with Appellant’s express
Page 5 of 45
consent, to have several fixtures delivered to her suite around 7:00 p.m. that same
day. (R.R. Vol. 5; p. 83, lines 14-24).
All of said actions taken by the Appellant ratified the prior representations
made by Alaniz regarding the acceptance of the Appellee as a tenant by the
Appellant, which was reasonably relied upon by Appellee. Appellee subsequently
began to move into the commercial suit in anticipation of her grand opening.
On or about February 1, 2012, the Appellee arrived at the property early in the
morning to continue to set up her store. (R.R. Vol. 5; p. 123, lines 5-25, p. 124 lines
1-11). Around noon, the Appellee left to get more supplies and merchandise at a
nearby retail location. (R.R. Vol. 5; p. 123, lines 5-25, p. 124 lines 1-11). Upon
arriving back at the property, the Appellee discovered that, while she was gone, the
locks to the door to her suite had been changed by the Appellant thus preventing her
from accessing her leased property. (R.R. Vol. 5; p. 53, lines 6-9, p. 86 lines 20-24;
p. 123, lines 5-11).
The Appellant had given no prior notice to the Appellee that it was locking her
out of her unit. (R.R. Vol. 5; p. 57, lines 23-25; p. 58, line 1 and lines 16-23).
Moreover, testimony at trial revealed that at the time the Appellee was locked out of
her commercial space by the Appellant, the Appellee was not in violation of any
provision in her lease agreement. (R.R. Vol. 5; p. 84, line 25; p. 85, lines 1-5).
Page 6 of 45
Furthermore, at the time the Appellant locked the Appellee out of her
commercial suite, the Appellant had personal knowledge that the Appellee had
personal property in the unit and had already moved into the unit. (R.R. Vol. 5; p. 53,
line 25; p. 54, lines 1-10; p. 85, lines 22-24; p. 86 line 25; p. 87 lines 1-3).Testimony
at trial further established that the Appellant expressly refused to provide the
Appellee with any prior notice of the lockout despite actual knowledge that she had
moved into the unit and had personal property inside of the unit. (R.R. Vol. 5; p. 87,
lines 11-24).
Completely shocked that the Appellant had now decided to breach their
agreement and had made the rash decision to change the locks while she had briefly
stepped out, the Appellee began to ask around the building for an explanation. It was
at this point that the Appellee became aware that another tenant in the building had
expressed concern to the Appellant that because her business sold similar
merchandise to Appellee’s, she would be commercially disadvantaged by the
Appellee’s continued occupancy. (R.R. Vol. 5; p. 48, lines 10-25, p. 49, lines 1-15;
p. 113, lines 15-17,).
Subsequently, the Appellee received correspondence from the Appellant which
alleged that the Appellee’s lease had been rejected due to a failed credit check.(D.X.2,
D.X. 3). However, after executing the Lease Agreement, the Appellee was expressly
Page 7 of 45
told by Alaniz that there would be no need for a credit check to be run on the
Appellee as that was only the policy of the Appellant when they were renting out
"large commercial spaces". (R.R. Vol. 5; p. 112, lines 14-18 and lines 19-22; p. 126,
lines 23-25, p. 127, lines 1-4; p. 188, line 25; p. 189 lines 1-3).
Additionally, there was no language in the Lease Agreement which required
a tenant to complete a credit check or be approved by way of credit check prior to
becoming a tenant or the Lease Agreement becoming binding. (PX-3) (R.R. Vol. 5;
p. 50, lines 24-25, p. 51, lines 1-6; p. 88, lines 4-9 ). This fact was corroborated at
trial with testimony from Noel Harris who testified there was never any credit report
run on several of the existing and prior tenants at the Subject Property. (R.R. Vol. 5;
p. 88, lines 4-9; p. 89, lines 5-15). Additionally, at the time Appellee was locked out
by Appellant a credit check had not been performed nor had her Lease Agreement
been denied. (R.R. Vol. 5; p. 51, lines 1-6; p. 60, lines 7-13,).
The credit report the Appellant allegedly relied upon was for a different “Lydia
Garcia” and thus contained wholly inaccurate and unreliable reporting data. (DX 2;
R.R. Vol. 5; p. 109, lines 11-16). Indeed, when questioned about the validity of the
credit report upon which it was relying upon, the Appellant refused to provide the
Appellee with a copy of said credit report. (R.R. Vol. 5; p. 109, lines 1-10).
In truth, and by the Appellant’s own admission at trial, Appellee was in
Page 8 of 45
compliance with all of the terms and conditions of the Lease Agreement during the
incident in question. (R.R. Vol. 5; p. 53, lines 3-5). As a result, Appellee objected to
the Appellant’s attempts to circumvent the terms of their own lease agreement by
misrepresenting the real reason they were breaching her lease agreement. Indeed,
when faced with the prospect of her lease being denied due to a credit check the
Appellee issued a good faith offer to pay the full amount of the lease ($3,300.00) up
front. (R.R. Vol. 5; p. 111, lines 21-25, p. 112, lines 1-13). Appellant, without reason
or justification, unilaterally rejected Appellee’s good faith offer. (R.R. Vol. 5; p. 112,
lines 1-13).
Additionally, Appellant refused to provide Appellee with a date and time to
pick up her personal property which was still locked away in the commercial suite
through trial. (R.R. Vol. 5; p. 55, lines 2-7 and lines 24-25, p. 56, lines 1-2; p. 94 lines
22-25; p. 95 lines 1-10).
On or about April 5, 2012, Appellee made a formal demand to Appellant for
damages incurred, in part, as a result of Appellant’s deceptive trade practices. (PX
16). The correspondence constituted Appellee’s notice of claims to Appellant and was
sent pursuant to TEX. BUS. & COM. CODE ANN. § 17.505, more commonly referred to
as the Texas Deceptive Trade Practices-Consumer Protection Act ("DTPA"). (PX 16).
As of June 5, 2012 (60 days), Appellee had yet to receive any formal correspondence
Page 9 of 45
or formal offer of settlement from Appellant, therefore suit was filed on June 7, 2012.
(CR 3-11).
Appellee’s suit against Appellant alleging violations of the Texas Deceptive
Trade Practices Act, promissory estoppel, and various breach of contract theories for
damages incurred as a proximate result of Appellant’s conduct. (CR 3-11). Appellant
filed its First Amended Answer, Special Exceptions and Counterclaim on September
27, 2012. (CR 32-35). On December 21, 2012, Appellee filed its Original Answer to
Appellant’s Counterclaim. (CR 113-118).
Appellee filed its First Amended Original Petition on February 21, 2013 (CR
229-236). On April 23, 2014 the case proceed to a bench trial without objection from
either party. On August 6, 2013, the Trial Court issued a Final Judgment against
Appellant. (CR 733-734). Appellant subsequently requested a Findings of Fact and
Conclusions of Law from the Court which was entered on August 30, 2014. (CR
752-760). Appellant filed its Notice of Appeal and posted a supersedes bond with the
Nueces County District Clerk’s office. (CR 761-762, 839-844). This appeal ensued.
IV. SUMMARY OF THE ARGUMENT
Under both the Texas Deceptive Trade Practices Act (DTPA) and the common
law theory of promissory estoppel, there is no requirement that a party have an
enforceable contract under Section 26.01 of the Texas Business and Commerce Code
Page 10 of 45
as an element necessary to sustain recovery. The lease agreement at issue was not
within the Statute of Frauds. Additionally, promissory estoppel is an exception to the
Statute of Frauds.
Under both the DTPA and the common law theory of promissory estoppel,
there is no requirement that a party have an enforceable contract under Section 5.021
of the Texas Property Code as an element necessary to sustain recovery. The lease
agreement at issue was for less than one year precluding application of the Statute of
Conveyances; and an exception an exception to the Statute of Conveyances applies.
There is also nothing contained within the Lease Agreement that would
preclude a finding of reliance under either the DTPA or the common law theory of
promissory estoppel.
VI. ARGUMENT
A. Standard of Review
When the trial court's findings involve questions of law and fact, the appellate
court reviews the trial court's decision for an abuse of discretion. El Paso Natural Gas
Co. v. Minco Oil & Gas Co., 964 S.W.2d 54 (Tex. App.—Amarillo 1997, pet.
granted), rev'd sub nom. El Paso Natural Gas Co. v. Minco Oil & Gas, Inc., 8 S.W.3d
309 (Tex. 1999) (applying abuse of discretion standard to a finding of
unconscionability); Pony Express Courier Corp. v. Morris, 921 S.W.2d 817, 820
Page 11 of 45
(Tex. App.--San Antonio 1996, no writ) (applying abuse of discretion standard to a
finding of unconscionability); see also Remington Arms Co. v. Luna, 966 S.W.2d 641,
643 (Tex. App.--San Antonio 1998, pet. denied) (applying abuse of discretion
standard to class certification findings).
In a legal sufficiency review, the reviewing court determines whether the
evidence would enable reasonable and fair-minded people to reach the finding under
review. See City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.2005).
In conducting this review, the court credits favorable evidence if reasonable
fact finders could and disregard contrary evidence unless reasonable fact finders
could not. See id.; see also Ahmed v. Ahmed, 261 S.W.3d 190, 194
(Tex.App.-Houston [14th Dist.] 2007, no pet.). A legal sufficiency, or no evidence,
challenge may only be sustained when either the record reveals a complete absence
of evidence of a vital fact, the court is barred by rules of law or of evidence from
giving weight to the only evidence offered to prove a vital fact, the evidence offered
to prove a vital fact is no more than a mere scintilla, or the evidence establishes
conclusively the opposite of the vital fact. Id.
Moreover, Appellate Courts do not substitute their judgment for that of the fact
finder, even if the reviewing court would have reached a different conclusion when
reviewing the evidence. See FDIC v. F & A Equip. Leasing, 854 S.W.2d 681, 684
Page 12 of 45
(Tex.App.-Dallas 1993, no writ).
Instead, the Appellate Court considers the evidence in the light most favorable
to the finding under review and indulge every reasonable inference in support of the
judgment. City of Keller, 168 S.W.3d at 822; Vickery v. Comm'n for Lawyer
Discipline, 5 S.W.3d 241, 252 (Tex.App.-Houston [14th Dist.] 1999, pet. denied).
Unchallenged findings of fact are binding on an Appellate Court unless the contrary
is established as a matter of law. McGalliard v. Kuhlmann, 722 S.W.2d 694, 696
(Tex.1986). Where the trial court makes findings of fact but inadvertently omits an
essential element of a ground of recovery or defense, the court will imply findings in
support of the judgment. See TEX. R. CIV. P. 299; Vickery, 5 S.W.3d at 252.
Additionally, the Appellate Court will uphold conclusions of law on appeal if
the judgment can be sustained on any legal theory the evidence supports. See 2616
S. Loop L.L.C. v. Health Source Home Care, Inc., 201 S.W.3d 349, 355
(Tex.App.-Houston [14th Dist.] 2006, no pet.). Incorrect conclusions of law do not
require reversal if the controlling findings of fact support the judgment under a
correct legal theory. Id.
Finally, in a bench trial, the trial court is the sole determiner of the credibility
of the witnesses and the weight to be given their testimony. See Cohn v. Comm'n for
Lawyer Discipline, 979 S.W.2d 694, 696-97 (Tex.App.-Houston [14th Dist.] 1998,
Page 13 of 45
no pet.); Nordstrom v. Nordstom, 965 S.W.2d 575, 580-81 (Tex.App.-Houston [1st
Dist.] 1997, pet. denied). The trial court, as the finder of fact, may consider all of the
evidence and circumstances and can reject or accept all or part of a witness's
testimony. Nordstrom, 965 S.W.2d at 580-81.
V. ISSUES PRESENTED
1. The Lease Agreement between the landlord and the Appellee does not
prevent the affirmation of the Trial Court’s Final Judgment on the
Appellee’s claims for damages against the Appellant under the Texas
Deceptive Trade Practices Act and promissory estoppel causes of action.
2. Any contractual relationship between the Appellee and the landlord does
not prevent the affirmation of the Trial Court’s Final Judgment on the
Appellee’s claims for damages against the Appellant under the Texas
Deceptive Trade Practices Act and promissory estoppel causes of action.
3. The Statute of Frauds nor the Statute of Conveyances prevent the
affirmation of the Trial Court’s Final Judgment on the Appellee’s claims
for damages under the Texas Deceptive Trade Practices Act and
promissory estoppel causes of action.
A. Issues
1. The Lease Agreement between the landlord and the Appellee does not
prevent the affirmation of the Trial Court’s Final Judgment on the
Appellee’s claims for damages against the Appellant under the Texas
Deceptive Trade Practices Act and promissory estoppel causes of action.
A. The Lease Agreement does not preclude a finding of detrimental
reliance by the Trial Court on the Appellee’s claims for damages against
the Appellant under the Texas Deceptive Trade Practices Act
The question of whether an adequate disclaimer of reliance exists is a matter
Page 14 of 45
of law. See Schlumberger Technology Corp. v. Swanson, 959 S.W.2d 171, at 181
(Tex.1997). In construing a contract, a court must ascertain the true intentions of the
parties as expressed in the writing itself. See J.M. Davidson, Inc. v. Webster, 128
S.W.3d 223, 229 (Tex.2003). In identifying such intent, courts must “must examine
and consider the entire writing in an effort to harmonize and give effect to all the
provisions of the contract so that none will be rendered meaningless.” Id.
After a careful review of the Lease Agreement sections cited by the Appellant
in its Amended Brief, it is clear that the Lease Agreement does not contain a
disclaimer of any extra contractual representations or reliance. (PX 3).
First, Section 17.15 is a condition precedent clause contained within the Lease
Agreement. (PX 3, page 10). A condition precedent to a contract is an act or event
that must occur before the defendant is required to perform its own obligations. See
Solar Applications Engineering, Inc. v. T.A. Operating Corp., 327 S.W.3d 104, 108
(Tex.2010). Accordingly, Section 17.15 of the Lease Agreement is incorrectly cited
by the Appellant as evidence of a disclaimer of any and all extra-contractual
representations, when in fact it is only a condition precedent clause and thus cannot
be relied upon as proof of any disclaimer of detrimental reliance on the part of the
Appellee.
Next, Section 17.17 of the Lease Agreement is representative of a classic
Page 15 of 45
merger clause. (PX 3, page 10). A typical merger clause states that the written terms
of a contract may not be varied by prior agreements, because all such agreements
have been merged into the written document. See Ikon Office Solutions Inc. v. Elfert,
125 S.W.3d 113, 125 n.6 (Tex. App. - Houston [14th Dist.] 2003, pet. denied).
However, there is an important legal distinction between a merger clause and
disclaimer of reliance clause. See Italian Cowboy Partners Ltd., v. Prudential
Insurance Co. of America, 341 S.W.3d 323, at 333 (Tex. 2011).
In Italian Cowboy Partners Ltd., the Texas Supreme Court held that pure
merger clauses, without an expressed clear and unequivocal intent to disclaim
reliance or waive claims for fraudulent inducement, will not have the effect of
precluding claims based on detrimental reliance. See Italian Cowboy Partners
Ltd.,341 S.W.3d at 334; see also Texas Taco Cabana, L.P. v. Taco Cabana of N.M.,
304 F. Supp. 2d 903 (W.D.Tex.2003)1
A plain reading of the clause contained within Section 17.17 of this Lease
Agreement clearly shows that it is not reflective of the type of “express, clear and
1
In Texas Taco Cabana, the Court held that: “Acknowledgment clauses may bar only representations
expressly excluded by the written disclaimer. Here the acknowledgment of non-reliance quoted by
Counter–Defendants refers only to financial projections. It does not bar the Franchisee from producing evidence of
reliance on the Franchisor's subsequent representations related to matters outside the scope of the disclaimers. Since
the Franchisee's DTPA claims do not involve the subject matter of the disclaimers, the Court finds that there has
been no waiver of reliance on the part of the Franchisee. Because the claims are based on alleged deceptive acts of
Franchisor beyond a disagreement of interpretation and reliance has not been waived, it is proper to deny the motion
to dismiss the claims of Violation of the Texas Deceptive Trade Practices Act.” Id, at 911.
Page 16 of 45
unequivocal” language required to contractually disclaim reliance under Texas law.
(PX 3, page 10). Indeed, Section 17.17 does not disclaim any form of reliance but
instead represents a boilerplate merger clause which does not suffice to disclaim
reliance under the strict language requirement promulgated by the Texas Supreme
Court in the Italian Cowboy Partners Ltd., holding.
Additionally, the application and effect of the merger clause contained within
Section 17.17 of the Lease Agreement would only be relevant in the review of claims
brought against the landlord, as the party to the Lease Agreement, and not against
claims brought against a third party like the Appellant.
In the instant matter, all of the Appellee’s causes of action arise directly from
the misrepresentations of the Appellant who was not a party to the Lease Agreement
and thus cannot avail itself of the protections of any contractual safeguards contained
within the Lease Agreement designed to shield the landlord from liability. See Bowe
v. GMC/Pontiac Div., 830 S.W.2d 775 (Tex.App.—Houston [1st Dist.] 1992, writ
denied) (disclaimer of warranties was automobile dealer’s alone and did not apply to
manufacturer; disclaimer applied to the sale of goods and not the sale of repair
services).
Accordingly, Section 17.17 of the Lease Agreement does not preclude the
finding of detrimental reliance by the Trial Court in its Final Judgment.
Page 17 of 45
Finally, Section 17.18 of the Lease Agreement represents a classic “no-oral
modification” clause. Under Texas law, written clauses contained within a contract
not to modify a contract except in writing are unenforceable as a matter of law. See
Adams v. Can-Dee Oil Corp., 357 S.W.2d 808 (Tex.Civ.App. Waco 1962 writ ref'd
n.r.e.) (“A written agreement not to modify a contract except in writing does not
preclude an oral modification”)
Consequently, in addition to its lack of relevance to any disclaimer of reliance
analysis, Section 17.18 is unenforceable as a matter of law and thus does not act to
prevent the affirmation of the Trial Court’s Final Judgment on the Appellee’s claims
under the Texas Deceptive Trade Practices Act (DTPA).
B. The Lease Agreement does not preclude a finding of detrimental
reliance by the Trial Court on the Appellee’s claims for damages against
the Appellant under promissory estoppel causes of action
Promissory estoppel is available to a promisee who has acted to his detriment
in reasonable reliance on an otherwise unenforceable promise. See Henderson v.
Texas Commerce Bank-Midland, N.A., 837 S.W.2d 778, 781-82 (Tex. Ct.App.-El
Paso 1992, writ denied). To prove an action for promissory estoppel, the plaintiff
must establish the defendant made a promise to the plaintiff. See English v. Fischer,
660 S.W.2d 521, 524 (Tex.1983). A promise may be made orally or in writing or may
be inferred from conduct. See Fretz Construction Co. v. Southern Nat’l Bank, 626
Page 18 of 45
S.W.2d 478, 483-84 (Tex.1981).
Furthermore, the plaintiff must also establish it reasonably and substantially
relied upon the Defendants promise to its detriment. See English, 660 S.W.2d at 524.
As part of the reliance requirement, it must be shown that said reliance caused injury
to the plaintiff. See Southmark Corp. v. Life Investors, Inc., 851 F.2d 763, 770 (5th
Cir. 1988).
Moreover, contrary to the position of the Appellant in its Amended Brief,
privity of contract is not required to support a claim for damages under promissory
estoppel. See “Moore” Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934, 936
(Tex.1972); see also Wheeler v. White, 398 S.W.2d 93, 96 (Tex.1965). In the
Wheeler opinion, the Texas Supreme Court addressed this issue as follows:
'This (promissory estoppel) does not create a contract where none
existed before, but only prevents a party from insisting upon his strict
legal rights when it would be unjust to allow him to enforce them. . . .
The function of the doctrine of promissory estoppel is, under our view,
defensive in that it estops a promisor from denying the enforceability of
the promise.”
Wheeler, 398 S.W.2d at 96.
In fact, privity of contract is an affirmative defense to the enforcement of a
claim based on promise estoppel. See Stable Energy, L.P. v. Kachina Oil & Gas, Inc.,
52 S.W.3d 327, 336 (Tex.App.-Austin 2001, no pet.); see also Richter v. Wagner Oil
Page 19 of 45
Co., 90 S.W.3d 890, 899 (Tex.App.-San Antonio 2002, no pet.) (Promissory estoppel
is not applicable to a promise covered by a valid contract between the parties).
Accordingly, had the Appellee sough enforcement of the Lease Agreement her claims
would have lied exclusively under a breach of contract theory against the landlord,
thus precluding her ability to recover under a theory of promissory estoppel against
the Appellant. However, as this Court is aware, the Appellee’s claims, found to be
supported by a preponderance of the evidence by the Trial Court, were based under
theories of promissory estoppel and DTPA against the Appellant.
Indeed, the Appellee’s claims based on promissory estoppel are rooted
exclusively on the actions taken by the Appellant separate and apart from the
contractual agreements contained within the Lease Agreement between the Appellee
and the landlord. Ironically, the undisputed evidence presented at trial in this case
established that the Appellant, through its employees, agents, and/or representatives,
repeatedly made representations and/or promises to the Appellee, that the Appellee
and landlord were parties to an enforceable lease agreement, which Appellee
detrimentally relied upon resulting in substantial injuries. (CR 752-760). Accordingly,
the very promise of the existence of an enforceable lease agreement made to the
Appellee (promisee) by the Appellant (promisor) was the catalyst for the Appellee’s
damages.
Page 20 of 45
As a result, the existence of privity of contract between the Appellant and
Appellee is not required to affirm the Trial Court’s Final Judgment on the Appellee’s
claims for damages under promissory estoppel.
C. Appellee’s claims for detrimental reliance are not limited to the actions
and/or representations of Alaniz
In reviewing a factual sufficiency challenge, courts consider and weigh all the
evidence supporting and contradicting the challenged finding and set aside the
finding only if it is so contrary to the overwhelming weight of the evidence as to be
clearly wrong and unjust. See Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986); see
Plas–Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex.1989).
In its Amended Brief, the Appellant argues that “basic logic” somehow
prevents this Court from affirming the Trial Court’s Final Judgment on the issue of
detrimental reliance. The Appellant focuses its argument exclusively on the conduct
of Alaniz, the real estate broker who brokered the Lease Agreement. However, the
Appellant fails to cite any of the evidence presented to the Trial Court on the
Appellee’s reliance on the representation and actions taken by Noel Harris and
Patricia Lowery, employees and undisputed agents of the Appellant.
Said actions included the following:
1. Providing the Appellee with a key to her unit; (R.R. Vol. 5; p. 92
lines 19-21; p. 118, lines 19-25, p. 119, lines 1-23; p. 146, lines
Page 21 of 45
18-21);
2. Providing the Appellee with a gate code to her unit; (R.R. Vol. 5;
p. 92 lines 19-21; p. 118, lines 19-25, p. 119, lines 1-23; p. 146,
lines 18-21)
3. Allowing the Appellee to move into her unit without objection for
a period of five days; (R.R. Vol. 5; p. 123, lines 5-25, p. 124 lines
1-11);
4. Locking the Appellee out of her unit without prior notice and
with actual knowledge of her property being within the suit; (R.R.
Vol. 5; p. 57, lines 23-25; p. 58, line 1 and lines 16-23);
5. Locking the Appellee out of her unit before a credit check was
performed; (R.R. Vol. 5; p. 51, lines 1-6; p. 60, lines 7-13);
6. Locking the Appellee out of her unit despite her compliance with
all of the terms of the Lease Agreement; (R.R. Vol. 5; p. 84, line
25; p. 85, lines 1-5);
7. Refusing to provide the Appellee with a copy of her credit report
to verify the information; (R.R. Vol. 5; p. 109, lines 1-10); and
8. Refusing to allow the Appellee to pick up her belongings from
late January 2012 through trial and this appeal; (R.R. Vol. 5; p.
55, lines 2-7 and lines 24-25, p. 56, lines 1-2; p. 94 lines 22-25;
p. 95 lines 1-10).
Consequently, assuming arguendo that the Appellee’s reliance on the actions
of Alaniz were somehow misguided or defied “basic logic” (which is not the standard
of review), this Court should still affirm the damages awarded to the Appellee for the
independent violations of the DTPA and promissory estoppel committed by Harris
Page 22 of 45
and Lowery.
D. There was no judicial admission by the Appellee that would prevent her
recovery under the DTPA or promissory estoppel.
A judicial admission must be a clear, deliberate, and unequivocal statement,
and “occurs when an assertion of fact is conclusively established in live pleadings,
making the introduction of other pleadings or evidence unnecessary.” See Regency
Advantage Ltd. Partnership v. Bingo Idea–Watauga, Inc., 936 S.W.2d 275, 278
(Tex.1996); See also Chilton Ins. Co. v. Pate & Pate Enters., Inc., 930 S.W.2d 877,
884 (Tex.App.—San Antonio 1996, writ denied). A judicial admission “ ‘not only
relieves [an] adversary from making proof of the fact admitted but also bars the party
himself from disputing it.’ ” See Id. (quoting Gevinson v. Manhattan Constr. Co., 449
S.W.2d 458, 466 (Tex.1969)). Once a fact is conclusively established by judicial
admission, jury questions concerning the fact need not be submitted. See Id. at 886.
In its Amended Brief, the Appellant argues that the Appellee’s pleadings
represented a judicial admission on the issue of the Appellee’s detrimental reliance
on the representations of the Appellant. However, the fact that the Appellee knew
during the week of January 13, 2012 that the Lease Agreement would not be executed
until the following week does not represent a judicial admission that the Appellee
somehow deduced that she was not ultimately going to be approved as a tenant, thus
Page 23 of 45
precluding reliance.
In fact, the Appellee’s understanding was later validated when Alaniz
subsequently presented the Appellee with a fully prepared Lease Agreement
approximately a week later. (R.R. Vol. 5; p. 49, lines 20-25, p. 82 lines 23-25, p. 83
lines 1-4). This important act by Alaniz not only substantiated the reasonableness of
the Appellee’s reliance on the earlier representations of Alaniz, but it also confirms
that the Appellee knew she was to be bound by the terms of the Lease Agreement.
(PX 3, page 11).
Nonetheless, this admission is irrelevant to the claims successfully prosecuted
by the Appellee at trial involving the misrepresentations, DTPA laundry list
violations and promises made by the Appellant about the Appellee’s acceptance as
a tenant with the landlord.
2. Any contractual relationship between the Appellee and the landlord does
not prevent the affirmation of the Trial Court’s Final Judgment on the
Appellee’s claims for damages against the Appellant under the Texas
Deceptive Trade Practices Act and promissory estoppel causes of action.
A. The Trial Court’s Final Judgment is not conditioned upon the
enforcement of the Lease Agreement
There is no requirement that a consumer have an enforceable contract under
Section 26.01 of the Texas Business and Commerce Code as an element necessary to
sustain recovery. Additionally, under the DTPA a consumer is not required to make
Page 24 of 45
an actual purchase. See Herrin v. Medical Protective Co., 89 S.W.3d 301, 310 (Tex.
App. – Texarkana 2002, pet denied). Rather a person who merely seeks or acquires
goods or services is a consumer within the protection of the DTPA. Id.
Furthermore, merely seeking, but not actually acquiring, services is enough to
satisfy the “consumer” requirement under DTPA. See Sears, Roebuck and Co. v.
Wilson, 963 S.W.2d 166, 170 (Tex. App. – Fort Worth 1998, no pet.). Although a
prospective buyer must approach prospective seller with a subjective, good faith
objective of purchasing services, no money need change hands to establish consumer
status. Id.
In Kennedy v. Sale, the Texas Supreme Court held that the DTPA does not
require the consumer to be an actual purchaser or lessor of the goods or services, as
long as the consumer is the beneficiary of those goods or services. See Kennedy v.
Sale 689 S.W.2d 890 (Tex.1985). Instead, Texas law has only required a DTPA
consumer to be one who in good faith initiates the purchasing process. See Martin v.
Lou Poliquin Enterprises, Inc., 696 S.W.2d 180, 184 (Tex. App. – Houston [14th
Dist.] 1985, writ ref’d n.r.e.). An individual initiates the purchasing process when he
(1) presents himself to the seller as a willing buyer with the subjective intent or
specific “objective” of purchasing, and (2) possesses at least some credible indicia of
the capacity to consummate the transaction. Id. at 184–85.
Page 25 of 45
It is important to point out that the Appellee’s DTPA complaints are not that
the landlord somehow failed to comply with the terms of the Lease Agreement.
Rather, the Appellee’s complaints are that the Appellant and its agents engaged in
conduct during the negotiation and execution of the Lease Agreement, which were
found to be false, misleading, deceptive acts or practices that are specifically
enumerated in TEX. BUS. & COM. CODE §17.45(4), and which were relied upon by the
Appellee to her detriment. Additionally, Appellee’s complaints are also based on the
Appellant’s acts and conduct which amounted to an enforceable promise under
promissory estoppel.
In its Amended Brief, the Appellant also argues that Section 15.06 of the Lease
Agreement somehow places the Appellee on notice that a financial statement is a
condition precedent to occupancy of her commercial space. First, a plain reading of
Section 15.06 would dispel any notion that it is intended to mean that a financial
statement will be required prior to the execution of the Lease Agreement or the
Appellee’s occupancy of the subject property. (PX-3) Instead, Section 15.06 clearly
stands for the proposition that if/when the tenant submits financial information to the
landlord, said tenant warrants that the submitted information shall be true and correct.
(PX-3).
Second, it is undisputed that the Appellee submitted her financial information
Page 26 of 45
to the Appellant and that said information was true and correct 2. Accordingly, even
if Section 15.06 were relevant to this Court’s inquiry, it is undisputed that the
Appellee complied with said terms. Finally, it should be noted that there is not a
single section or addendum to the Lease Agreement that requires a tenant to complete
a credit check or be approved by way of credit check prior to becoming a tenant or
the Lease Agreement becoming binding. (PX-3) (R.R. Vol. 5; p. 50, lines 24-25, p.
51, lines 1-6; p. 88, lines 4-9 ).
This fact was corroborated at trial with testimony from Noel Harris who
testified there was never any credit report run on several of the existing and prior
tenants at the Subject Property. (R.R. Vol. 5; p. 88, lines 4-9; p. 89, lines 5-15).
Consequently, the Appellant’s attempts at justifying the Appellant’s actions in
locking the Appellee out of her commercial space based on Section 15.06 of the
Lease Agreement is misplaced.
B. The Appellant is not entitled to damages for bailment
To create a bailment, there must be (1) delivery of personal property from one
person, the bailor, to another, the bailee, for a specific purpose; (2) acceptance of
delivery by the bailee; (3) an express or implied contract between the parties that the
2
Although the Appellee submitted the correct personal identification information requested by
the Appellant for use on a credit report, the Appellant’s credit report contained financial and personal
information on individuals who were not the Appellant and was thus unreliable. (D.X.2, D.X. 3).
Page 27 of 45
specific purpose will be realized; and (4) an agreement between the parties that the
property will be either returned to the bailor or dealt with according to the bailor's
direction. See State v. $281,420.00 in United States Currency, 312 S.W.3d 547, 551
(Tex.2010); See also Cessna Aircraft Co. v. Aircraft Network, LLC, 213 S.W.3d 455,
462–63 (Tex.App.-Dallas 2006, pet. denied).
To establish a bailment relationship, the evidence must demonstrate that the
entity sought to be charged as bailee knew that it was assuming such relationship and
responsibilities before it will be charged with the duties of bailee. See DeLaney v.
Assured Self Storage, 272 S.W.3d 837, 839 (Tex.App.-Dallas 2008, no pet.); See also
Hoye v. Like, 958 S.W.2d 234, 237 (Tex.App.-Amarillo 1997, no pet.).
In the instant matter, the Appellant was not the landlord or owner of the subject
property, but was instead the agent of the landlord/owner and thus would not be owed
any recovery under a theory of bailment since there could be no damages sustained
by a party who is not the bailee. Next, there was no express or implied contract
between the Appellant and Appellee and thus the Appellant has failed to meet its
burden of proof on this important element.
Finally, and of paramount importance to this appellate issue, the Appellant
failed to present, develop, or submit any evidence to support its counterclaim for
damages under bailment during trial thus waiving said claim. Indeed, the only trial
Page 28 of 45
reference cited by the Appellant in its Amended Brief is found during the closing
argument stage of trial in which the time to offer and submit evidence had effectively
closed. As a result, said counterclaims were effectively waived by Appellant’s trial
counsel.
3. The Statute of Frauds nor the Statute of Conveyances prevent the
affirmation of the Trial Court’s Final Judgment on the Appellee’s claims
for damages under the Texas Deceptive Trade Practices Act and
promissory estoppel causes of action.
A. Enforcement of the Texas Deceptive Trade Practices Act does not
require the elements of the Texas Statute of Frauds to be satisfied.
A review of Texas law reveals that Texas Courts have consistently held that the
statue of frauds is not a bar to recovery under the DTPA. The relationship between
the statute of frauds and the DTPA was originally examined by the Texas Supreme
Court in the Weitzel opinion. In Weitzel, the Texas Supreme Court held that oral
representations outside of a contract are not only admissible but can serve as the basis
of a DTPA action. See Weitzel v. Barnes, 691 S.W.2d 598, 600 (Tex.1985). The
Texas Supreme Court went on to state that:
“The oral misrepresentations, witch were made both before and after the
execution of the agreement, constitute the basis of this cause of action,
so traditional contractual notions do not apply.”
Weitzel, 691 S.W.2d at 600.
This very issue was also addressed by the 11th Court of Appeals in the Lawson
Page 29 of 45
decision. In Lawson, the court held that the Defendant was precluded from summary
judgment on the issue of whether or not the statute of frauds prevented recovery
under the DTPA3 . See Lawson v. Commercial Credit Business Loans, Inc., 690
S.W.2d 679 (Tex.App. – Eastland, 1985, writ ref’d n.r.e). The Court opined as
follows:
“ Further, we hold that the Statute of Frauds, supra note 3, does not
insulate Commercial Credit from liability under the Deceptive Trade
Practices Act, supra note 2, for the false and misleading statements
which its employees made to Lawson when they found a bidder who
would pay more money for the jewelry.”
Lawson, 690 S.W.2d at 681.
The Lawson holding was extended by the United States District Court -
Northern District of Texas in the McClure opinion. See McClure v. Duggan, 674
F. Supp. 211, 221-22 (N.D.Tex.1987). The Court in McClure found the following:
“In the instant case, McClure has alleged that Duggan made a factual
misrepresentation independent of the alleged unenforceable agreement
to sell Foscarini. The alleged misrepresentation is that the horse would
not “vet.” This alleged false oral statement is disconnected from the
underlying contract and creates a genuine issue of fact material as to
Duggan's DTPA claims. Since the facts of the instant case are on point
with those of Lawson, the statute of frauds will not, as a matter of law,
insulate Duggan from liability for his alleged fraudulent
misrepresentations under the DTPA. As the court in Lawson stated, the
question of whether Duggan did more than merely fail to perform under
3
Of relevance to the facts of the instant matter, the Lawson Court also held that the fact that a would be
buyer's check was not cashed does not prevent the establishment of “consumer” status under the DTPA. Lawson, 690
S.W.2d at 681
Page 30 of 45
the agreement is a fact question for the jury. Id,. at 681. Thus, McClure's
DTPA claim for misrepresentation is not barred by the statute of frauds.”
Texas courts have also consistently held that the transfer of valuable
consideration as an element for a breach of contract cause of action is not a
prerequisite to consumer status under the DTPA. See Roberts v. Burkett, 802 S.W.2d
42, 47 (Tex. App. Corpus Christi 1990, no writ); see also Lou Poliquin Enterprises,
Inc., 696 S.W.2d 180 at 184.
Accordingly, assuming arguendo that Appellee did not have an enforceable
contract for the leasing of the real property at question under the statute of frauds, this
argument has no bearing on the Appellee’s ability to recover damages under the
DTPA against the Appellant for independent deceptive trade practices.
Since its inception, the DTPA has been a remedy for consumer claims that are
not contingent upon proof of a valid and enforceable contract or satisfaction of the
statute of frauds. Indeed, the DTPA was designed exclusively to remedy deceptive
trade practices committed by a defendant on a consumer who was only seeking or
acquiring goods or services including a lease agreement. See TEX. BUS. & COM.
CODE § 17.41-17.63. As a result, the applicability of the statute of frauds or the
requirement of an enforceable contract to support the Trial Court’s findings of fact
and conclusions of law would be contrary to well established Texas legal precedent
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and statutory authority.
B. The Lease Agreement at issue was for less than one year thus
precluding application of the Statute of Frauds.
To prove the defense of the statute of frauds, the defendant must first establish
the contract is subject to the statute of frauds. See Walker v. Tafralian, 107 S.W.3d
665, 668 (Tex.App.- Fort Worth 2003, pet. denied.) It is undisputed that a contract
for one year or less from the date of its making is not subject to the Statute of Frauds.
See TEX. BUS. & COM. CODE ANN. § 26.01 (Vernon 1987); see also Shaheen v.
Motion Indus., 880 S.W.2d 88, 91 (Tex.App. - Corpus Christi 1994, writ denied). In
the instant matter, the Lease Agreement at issue was for the leasing of the subject
commercial space for 12 months commencing on February 1, 2012. (PX 3) (R.R. Vol.
5; p. 67, lines 15-21).
Although Appellant argues that the Lease Agreement began on January 27,
2012 and was set to end on January 31, 2013, that argument is contrary to the
evidence the Trial Court examined in this case, including testimony from the
Defendant’s corporate representative and former property manager as well as the
Lease Agreement itself which clearly states that the Lease Agreement is for 12
months and commences on February 1, 2012. (PX-3) (R.R. Vol. 5; p. 67, lines 15-21;
p. 85, lines 14-21).
Page 32 of 45
Furthermore, the Trial Court found in its findings of fact that the Appellee
“executed” a Lease Agreement with the owner on January 26, 2012 but did not issue
a finding of fact as to when the Lease Agreement was to begin. (CR 752-760) Said
evidence is contained within the Lease Agreement itself which unequivocally states
that the Lease Agreement would begin on February 1, 2012. (PX-3).
As a result, and contrary to the representations made by Appellant in its
Amended Brief, the Lease Agreement at issue was for a period of time that fell
outside of the purview of the Statute of Frauds thus precluding the need for the
Statute of Frauds to be satisfied for enforcement of Appellee’s Final Judgment.
C. Promissory Estoppel is a well established exception to the Statute of
Frauds
It is well settled law that promissory estoppel applies to bar the application of
the statute of frauds and allow the enforcement of an otherwise unenforceable oral
agreement when (1) the promisor makes a promise that he should have expected
would lead the promisee to some definite and substantial injury; (2) such an injury
occurred; and (3) the court must enforce the promise to avoid the injury. See Nagle
v. Nagle, 633 S.W.2d 796, 800 (Tex.1982); see also “Moore” Burger, 492 S.W.2d
at 936.
To prove an action for promissory estoppel, the plaintiff must establish the
Page 33 of 45
defendant made a promise to the plaintiff. See English, 660 S.W.2d at 524. A promise
may be made orally or in writing or may be inferred from conduct. See Fretz , 626
S.W.2d at 483-84. The undisputed evidence presented at trial in this case established
that Appellant, through its officers, agents, and/or representatives, repeatedly made
representations and/or promises to Appellee that the landlord and Appellee were
parties to an enforceable Lease Agreement, which Appellee detrimentally relied upon
resulting in substantial injuries. (CR 752-760).
Appellant’s numerous promises regarding the existence of an enforceable lease
agreement, for which it should have expected would lead to injury, were as follows:
1. Appellant’s disclosure to Appellee that her Lease Agreement had
been accepted by the landlord and that she was approved to move
into her commercial unit in February, 2012 (R.R. Vol. 5; p. 19,
lines 8-13; p. 20, lines 16-19; p. 20, lines 21-23; p. 53, lines 3-5;
p. 113, lines 2-5 and 15-17, p. 126, lines 18-22);
2. Appellant’s acceptance of Appellee’s payment for the security deposit
and first month's rental amount per the terms of the Lease Agreement
(R.R. Vol. 5; p. 66, lines 4-25; p. 67, lines 1-2; p. 152, lines 16-25);
3. Appellee executed the Lease Agreement in the office of the agent
of Appellant on January 26, 2013 without any objection or
qualification (R.R. Vol. 5; p. 49, lines 20-25, p. 82 lines 23-25, p.
83 lines 1-4);
4. Appellant prepared a Lease Agreement tailored to Appellee, including
placing her name, correct suite number and lease term in the Lease
Agreement which was ultimately executed by Appellee (PX-3);
Page 34 of 45
5. Appellant provided Appellee with a key to her unit (R.R. Vol. 5;p. 92
lines 19-21; p. 118, lines 19-25, p. 119, lines 1-23; p. 146, lines 18-21);
6. Appellant provided the Appellee with a gate code to her unit (R.R. Vol.
5; p. 92 lines 19-21; p. 118, lines 19-25, p. 119, lines 1-23; p. 146, lines
18-21); and
7. Appellant allowed the Appellee to move personal property and
merchandise into the commercial unit without objection for five days
(R.R. Vol. 5; p. 123, lines 5-25, p. 124 lines 1-11);
Furthermore, to prove an action for promissory estoppel, the plaintiff must
establish it reasonably and substantially relied upon the Defendants promise to its
detriment. See English, 660 S.W.2d at 524. As part of the reliance requirement, it
must be shown that said reliance caused injury to the Plaintiff. See Southmark Corp.
v. Life Investors, Inc., 851 F.2d at 770. In reliance upon the promises made by
Appellant, evidence at trial showed Appellee took the following actions which caused
Appellee substantial injury:
1. Obtained Commercial Policy #605072070 through Farmers Insurance
Group (PX 7; R.R. Vol. 5; p. 99, lines 8-25; p. 100, lines 1-2);
2. Purchased $2,843.48 worth of supplies, materials and
merchandise to be used in her new place of business. (PX 1, 2, 4,
5, 6, 8,9,10; R.R. Vol. 5; p. 18, lines 12-14 and lines 17-18, p. 97,
lines 1-9, 17-24; p. 98, lines 5-20, p. 100, lines 8-22, p. 101, lines
24-25, p. 102, lines 1-25, p. 104, lines 23-25, p. 105, lines 1-25,
p. 106, lines 6-25, p. 107, lines 1-25, p. 117, lines 12-25, p. 153,
lines 16-25; p. 156 lines 21-24);
3. Purchased checks for her new business account. (PX 4; R.R. Vol. 5; p.
Page 35 of 45
96, lines 19-25; p. 97, lines 1-9);
4. Opened up new business checking account with Bank of America. (R.R.
Vol. 5; p. 17, lines 21-23); and
5. Quit her job as Office Manager with Sealevel Management. (R.R. Vol.
5; p. 113, lines 15-17, page 114, lines 3-6, page 115, lines 25, page 116,
lines 1-3, page 116, lines 7-18).
Additionally, to prove an action for promissory estoppel, it must be established
that plaintiff’s reliance on the defendant’s promise was foreseeable. See Ford v. City
State Bank, 44 S.W.3d 121, 139 (Tex.App. - Corpus Christi 2001, no pet.). As
previously argued above, it was entirely foreseeable that a party who signs a lease
agreement, is told that she has been accepted as a tenant, pays rent and a security
deposit, is given unfettered access to the unit with a key and gate card, and is allowed
to move her items into the unit without objection for five days would reasonably
believe that she has been accepted as a tenant by the landlord.
As shown at trial, and found to be sufficient evidence by the Trial Court, all of
the actions cited herein taken by Appellee proved that she foreseeably relied upon the
acts and conduct of Appellant to her detriment. (CR 52-60). Consequently, there is
no question as to the proof being met for the forseeability element of promissory
estoppel.
Finally, to prove an action for promissory estoppel, the plaintiff must establish
Page 36 of 45
that injustice can be avoided only by enforcing the promise. See Collins v. Walker,
341 S.W.3d 570, 573-74 (Tex.App. - Houston [14th Dist.] 2011, no pet.). After a
thorough review of the relevant Texas case law on promissory estoppel counsel for
the Appellee has yet to locate a case that sets out a bright line test for establishing that
injustice can be avoided only by enforcing a promise under promissory estoppel.
However, clearly the Trial Court found that the only way to avoid the injustice
committed upon the Appellee was to enforce the promises made to her by Appellant.
(CR 752-260). This was a decision made by the trial court after hearing all of the
evidence including the testimony of Appellee, and thus should be affirmed by this
Court.
D. Enforcement of the Texas Deceptive Trade Practices Act does not
require the elements of the Texas Statute of Conveyances to be satisfied.
Under Texas Property Code Section 5.021, “A conveyance of an estate of
inheritance, a freehold, or an estate for more than one year, in land and tenements,
must be in writing and must be subscribed and delivered by the conveyor or by the
conveyor's agent authorized in writing.” See TEX. PROP. CODE § 5.021. Because the
test for sufficiency of writing is essentially same in both Statute of Frauds and Statute
of Conveyances, this section of Appellee’s Reply Brief will frequently incorporate
by reference the same or similar arguments raised previously in response to Appellate
Page 37 of 45
point #2. See West Beach Marina, Ltd. v. Erdeljac, 94 S.W.3d 248
(Tex.App.—Austin 2002, no pet.).
Again, and as stated previously herein, there is no requirement under the DTPA
that a consumer have an agreement in writing and signed and delivered by the
defendant or by the defendant’s agent authorized in writing, in order to bring a cause
of action under the Act. See TEX. BUS. & COM. CODE ANN. § 17.41-17.63. This
statutory exception to Texas common law defenses was best articulated by Professor
Richard Aldeman in his legal article discussing the DTPA:
“ It also is significant to note that common law defenses, applicable to
a breach of contract or tort claim, essentially are inapplicable to a claim
under the DTPA. The DTPA does not represent a codification of the
common law and, therefore, common law defenses do not apply. For
example, the doctrine of “substantial performance” has been held not to
apply to the DTPA,107 as has the “parol evidence rule.”108 Waiver and
estoppel are also inapplicable to a claim under the Act.109.”
See Richard M. Alderman, The Texas Deceptive Trade Practices Act In Context: Not
All That Bad; Presented by: The Center for Consumer Law, Houston, Texas, October
23, 2009, Page 23.
Nonetheless, Appellant continuously argues that both the statute of frauds and
the statute of conveyances bar Appellee’s causes of action. However, Appellee’s
evidence of the Lease Agreement was only used to show how the Appellee
detrimentally relied upon the misrepresentations and empty promises of Appellant
Page 38 of 45
during the time in question resulting in her damages. It is axiomatic that the Appellee
does not need to enforce the Lease Agreement in question to sustain the Trial Court’s
findings of fact and conclusions of law since all of said findings are not based in
contract.
Indeed, all the Appellee must show under the DTPA is that the conduct of
Appellant was the “producing cause” of Appellee’s damages. See Alexander v. Turtur
& Associates, 146 S.W.3d 113, 117 (Tex.2004). An actual purchase or “conveyance”
need not occur for a person to be a consumer under the DTPA. See Herrin, at 89
S.W.3d 310.
Similarly, under her theory of promissory estoppel the Appellee is also only
required to show that an injury occurred as a result of the promisee’s detrimental
reliance on the promise of the promisor. See Stanley v. CitiFinancial Mortg. Co., 121
S.W.3d 811, 820 (Tex.App. - Beaumont 2003, pet denied). Accordingly, the statute
of frauds and statute of conveyances are not applicable to this Court’s inquiry and are
irrelevant to any appellate review of the finding of fact and conclusion of law found
by the Trial Court.
E. The Lease Agreement at issue was for less than one year thus
precluding application of the Statute of Conveyances
A contract for one year or less from the date of its making is not subject to the
Page 39 of 45
Statute of Frauds or Statute of Conveyances. See TEX. PROP. CODE § 5.021; see also
Shaheen., 880 S.W.2d at 91. Once again, it is undisputed that the Lease Agreement
at issue was for the leasing of the subject commercial space for 12 months
commencing on February 1, 2012. (PX 3) (R.R. Vol. 5; p. 67, lines 15-21; p. 85, lines
14-21).
A similar fact pattern to the case at hand was examined by the 4th Court of
Appeals in the McDonald opinion in which the court held that a lease agreement that
was for one year did not have meet the statute of conveyances or the statute of frauds.
See McDonald v. Roemer, 505 S.W.2d 698, 699 (Tex.Civ.App.-San Antonio 1974,
no writ).
As a result, and contrary to the representations made by Appellant in it’s
Amended Brief, the Lease Agreement at issue was for a period of time that fell
outside of the purview of the statute of conveyances thus precluding the need for the
statute of conveyances to be satisfied for affirmation of Appellee’s Final Judgment.
F. Enforcement of the Appellee’s Promissory Estoppel claims does not
require the elements of the Texas Statute of Conveyances to be satisfied.
Appellee’s right to recover under the theory of promissory estoppel is not
conditioned upon the Lease Agreement satisfying the statute of conveyances. As
previously argued herein, there is no requirement under promissory estoppel law
requiring a plaintiff to prove the existence of an enforceable contract for the
Page 40 of 45
conveyance of real property in order for a party to recover for their detrimental
reliance on the promises of a defendant. See Collins, 341 S.W.3d at 573-74; see also
“Moore” Burger, 492 S.W.2d at 936.
The elements of an action for promissory estoppel are the following:1. The
defendant made a promise to the plaintiff 2. The plaintiff reasonably and
substantially relied on the promise to its detriment. 3. The plaintiff’s reliance was
foreseeable by the defendant. 4. Injustice can be avoided only by the enforcement of
the promise. See Citi Financial Mortg. Co., 121 S.W.3d at 820. Accordingly, Texas
has no requirement that the parties have in place an enforceable contract for the
conveyance of real property in order to proceed under a theory of promissory estoppel
at trial.
Furthermore, while it is well settled law that promissory estoppel applies to bar
the application of the statute of frauds and allow the enforcement of an otherwise
unenforceable oral agreement, it would also be analogous to argue that promissory
estoppel provides a similar bar to the application of statute of conveyances since the
test for sufficiency of a writing is essentially the same in both the Statute of Frauds
and the Statute of Conveyances. See, e.g., Broaddus v. Grout, 152 Tex. 398, 258
S.W.2d 308, 309 (1953).
Consequently, under either theory of recovery pled for and awarded by the
Trial Court, satisfaction of the statute of conveyances is not required and thus this
Page 41 of 45
appellate point should be overruled.
G. Exception to the Statute of Conveyances Applies
As previously argued herein, the statute of conveyances does not apply to the
case at hand. But to the extent this Court considers its applicability to the facts of this
case, there is a well established exception to the Statue which is applicable to the
instant matter.
An exception to the applicability of the statute of frauds/conveyances can exist
if each of the following elements are met: (1) payment of consideration; (2)
possession of the leased premises by lessee; and (3) the lessee makes valuable
improvements. See J & J Sys., Inc. v. Towers of Texas, Inc., 833 S.W.2d 532, 534
(Tex. App.—Eastland 1991) rev'd, 834 S.W.2d 1 (Tex. 1992).
In the instant matter Appellee made payment to Appellant in the form of a
deposit and issuance of the first month’s rent. (R.R. Vol. 5; p. 152, lines 16-25).
Appellee was also granted access to, and possession of the leased premises. (R.R.
Vol. 5; p. 123, lines 5-25, p. 124 lines 1-11). Appellee also made valuable
improvements to the leased space by purchasing and placing display cases,
merchandise and fixtures in the leased space which remained in the commercial space
through time of trial and this appeal. (R.R. Vol. 5; p. 90, lines 12-24; p. 124 line 25;
p. 125 lines 1-14; p. 126 lines 1-6).
As a result, the statute of conveyances is also barred as a defense to the
Page 42 of 45
Appellee’s claims under the well established exception to the statute of conveyances
articulated by the J & J Sys., Inc., holding
VII PRAYER
WHEREFORE, PREMISES CONSIDERED, the Appellee prays that this Court
affirm the trial court’s judgment in all respects, and further deny the Appellant’s
request for relief including its request for attorney’s fees and costs.
Respectfully submitted,
ANDERSON, LEHRMAN, BARRE &
MARAIST, L.L.P.
Gaslight Square
1001 Third Street, Suite 1
Corpus Christi, Texas 78404
Telephone: (361) 884-4981
Telecopier: (361) 883-4079
randerson@albmlaw.com
jlehrman@albmlaw.com
dmclallen@albmlaw.com
By: /s/ Jeffrey Lehrman
Jeffrey Lehrman
State Bar No. 24074590
Robert Anderson
State Bar No. 01220800
Douglas D. McLallen
State Bar No. 00788025
Attorneys for Appellees
Page 43 of 45
CERTIFICATE OF COMPLIANCE
I hereby certify that the word count of Appellee’s Brief is 9492 words as
counted by the word processing software used by Appellee.
/s/ Jeffrey Lehrman
Jeffrey Lehrman
CERTIFICATE OF SERVICE
I certify that on January 5, 2015 a true and correct copy of foregoing was
served on counsel of record as indicated below.
Roy K. Ewart Via E-Mail: wmnacol@sbcglobal.net
Law Offices of Mae Nacol
& Associates, P.C.
8303 Southwest Freeway, Suite 945
Houston, Texas 77074
/s/ Jeffrey Lehrman
Jeffrey Lehrman
Page 44 of 45
APPENDIX
Page 45 of 45
8121/2014 BUSINESS AND COMMERCE CODE CHAPTER 17. DECEPTIVE TRADE PRACTICES
Sec. 17.41. SHORT TITLE. This subchapter may be cited as the
Deceptive Trade Practices-Consumer Protection Act.
Added by Acts 1973, 63rd Leg., p. 322, ch. 143, Sec. 1, eff. May
21, 1973.
http://www.statutes .leg is .state.tx.us/Docs/BC/htm!BC. 17.htm#17.41 1/1
812112014 BUSINESS AND COMMERCE CODE CHAPTER 17. DECEPTIVE TRADE PRACTICES
Sec. 17.43. CUMULATIVE REMEDIES. The provisions of this
subchapter are not exclusive. The remedies provided in this
subchapter are in addition to any other procedures or remedies
provided for in any other law; provided, however, that no recovery
shall be permitted under both this subchapter and another law of
both damages and penalties for the same act or practice. A
violation of a provision of law other than this subchapter is not
in and of itself a violation of this subchapter. An act or
practice that is a violation of a provision of law other than this
subchapter may be made the basis of an action under this subchapter
if the act or practice is proscribed by a provision of this
subchapter or is declared by such other law to be actionable under
this subchapter. The provisions of this subchapter do not in any
way preclude other political subdivisions of this state from
dealing with deceptive trade practices.
Added by Acts 1973, 63rd Leg., p. 322, ch. 143, Sec. 1, eff. May
21, 1973. Amended by Acts 1979, 66th Leg., p. 1327, ch. 603, Sec.
1, eff. Aug. 27, 1979; Acts 1995, 74th Leg., ch. 414, Sec. 1, eff.
Sept. 1
.L '
1995.
http://www.statutes. Ieg is.state. tx.us/O ocs/BC/htm/BC .17.htm#17A1 111
8121/2014 BUSINESS AND COMMERCE CODE CHAPTER 17. DECEPTIVE TRADE PRACTICES
Sec. 17.44. CONSTRUCTION AND APPLICATION. (a) This
subchapter shall be liberally construed and applied to promote its
underlying purposes, which are to protect consumers against false,
misleading, and deceptive business practices, unconscionable
actions, and breaches of warranty and to provide efficient and
economical procedures to secure such protection.
(b) Chapter 27, Property Code, prevails over this subchapter
to the extent of any conflict.
Added by Acts 1973, 63rd Leg., p. 322, ch. 143, Sec. 1, eff. May
21, 1973. Amended by Acts 1995, 74th Leg., ch. 414, Sec. 1, eff.
Sept. 1, 1995.
http://www.statutes .I eg is.state.tx.us/D ocs/BC/htm/BC .17. htm#17.41 1/1
8121/2014 BUSINESS AND COMMERCE CODE CHAPTER 17. DECEPTIVE TRADE PRACTICES
Sec. 17.45. DEFINITIONS. As used in this subchapter:
(1) "Goods" means tangible chattels or real property
purchased or leased for use.
(2) "Services'' means work, labor, or service purchased or
leased for use, including services furnished in connection with the
sale or repair of goods.
(3) ''Person'' means an individual, partnership,
corporation, association, or other group, however organized.
(4) "Consumer" means an individual, partnership,
corporation, this state, er 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.
http://www.statutesJ eg is.state. tx.us/Docs/BC/htm/BC .17 .htm#i 7.41 1/1
8/21/2014 BUSINESS AND COMMERCE CODE CHAPTER 17. DECEPTIVE TRADE PRACTICES
Sec. 17.45. DEFINITIONS. As used in this subchapter:
(1) "Goods" means tangible chattels or real property
purchased or leased for use.
(2) "Services" means work, labor, or service purchased or
leased for use, including services furnished in connection with the
sale or repair of goods.
(3) "Person" means an individual, partnership,
corporation, association, or other group, however organized.
(4) "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.
(5) "Unconscionable action or course of action" means an
act or practice which, to a consumer's detriment, takes advantage
of the lack of knowledge, ability, experience, or capacity of the
consumer to a grossly unfair degree.
(6) "Trade" and "commerce" mean the advertising, offering
for sale, sale, lease, or distribution of any good or service, of
any property, tangible or intangible, real, personal, or mixed, and
any other article, commodity, or thing of value, wherever situated,
and shall include any trade or commerce directly or indirectly
affecting the people of this state.
(7) ''Documentary material'' includes the original or a
copy of any book, record, report, memorandum, paper, communication,
tabulation, map, chart, photograph, mechanical transcription, or
other tangible document or recording, wherever situated.
(8) "Consumer protection division'' means the consumer
protection division of the attorney general's office.
(9) "Knowingly" means actual awareness, at the time of
the act or practice complained of, of the falsity, deception, or
unfairness of the act or practice giving rise to the consumer's
claim or, in an action brought under Subdivision (2) of Subsection
(a) of Section 17.50, actual awareness of the act, practice,
condition, defect, or failure constituting the breach of warranty,
but actual awareness may be inferred where objective manifestations
http://www.statutes.!egis.state.tx.us/Docs/BC/htm/BC .17.htm#17.41 1/2
8/21/2014 BUSINESS AND COMMERCE CODE CHAPTER 17. DECEPTIVE TRADE PRACTICES
indicate that a person acted with actual awareness.
(10) "Business consumer'' means an individual,
partnership, or corporation who seeks or acquires by purchase or
lease, any goods or services for commercial or business use. The
term does not include this state or a subdivision or agency of this
state.
(11) "Economic damages" means compensatory damages for
pecuniary loss, including costs of repair and replacement. The
term does not include exemplary damages or damages for physical
pain and mental anguish, loss of consortium, disfigurement,
physical impairment, or loss of companionship and society.
http://www.statutes. Ieg Is .state. tx.us/D ocs/BC/htm'BC .17.htm#17.41 212
8121/2014 BUSINESS AND COMMERCE CODE CHAPTER 17. DECEPTIVE TRADE PRACTICES
Sec. 17.50. RELIEF FOR CONSUMERS. (a) A consumer may
maintain an action where any of the following constitute a
producing cause of economic damages or damages for mental anguish:
(1) the use or employment by any person of a false,
misleading, or deceptive act or practice that is:
(A) specifically enumerated in a subdivision of
Subsection (b) of Section 17. 4 6 of this subchapter; and
(B) relied on by a consumer to the consumer's
detriment;
(2) breach of an express or implied warranty;
(3) any unconscionable action or course of action by any
person; or
(4) the use or employment by any person of an act or
practice in violation of Chapter 541, Insurance Code.
(b) In a suit filed under this section, each consumer who
prevails may obtain:
(1) the amount of economic damages found by the trier of
fact. If the trier of fact finds that the conduct of the defendant
was committed knowingly, the consumer may also recover damages for
mental anguish, as found by the trier of fact, and the trier of
fact may award not more than three times the amount of economic
damages; or if the trier of fact finds the conduct was committed
intentionally, the consumer may recover damages for mental anguish,
as found by the trier of fact, and the trier of fact may award not
more than three times the amount of damages for mental anguish and
economic damages;
(2) an order enjoining such acts or failure to act;
(3) orders necessary to restore to any party to the suit
any money or property, real or personal, which may have been
acquired in violation of this subchapter; and
(4) any other relief which the court deems proper,
including the appointment of a receiver or the revocation of a
license or certificate authorizing a person to engage in business
in this state if the judgment has not been satisfied within three
months of the date of the final judgment. The court may not revoke
or suspend a license to do business in this state or appoint a
receiver to take over the affairs of a person who has failed to
http://www.statutes. leg is .state. tx. us/D ocs/BC/htm/BC .17.htm#17.41 1/3
812112014 BUSINESS AND COMMERCE CODE CHAPTER 17. DECEPTIVE TRADE PRACTICES
satisfy a judgment if the person is a licensee of or regulated by a
state agency which has statutory authority to revoke or suspend a
license or to appoint a receiver or trustee. Costs and fees of
such receivership or other relief shall be assessed against the
defendant.
(c) On a finding by the court that an action under this
section was groundless in fact or law or brought in bad faith, or
brought for the purpose of harassment, the court shall award to the
defendant reasonable and necessary attorneys' fees and court costs.
(d) Each consumer who prevails shall be awarded court costs
and reasonable and necessary attorneys' fees.
(e) In computing additional damages under Subsection (b),
attorneys' fees, costs, and prejudgment interest may not be
considered.
(f) A court may not award prejudgment interest applicable to:
( 1) damages for future loss under this subchapter; or
(2) additional damages under Subsection (b).
(g) Chapter 41, Civil Practice and Remedies Code, does not
apply to a cause of action brought under this subchapter.
(h) Notwithstanding any other provision of this subchapter,
if a claimant is granted the right to bring a cause of action under
this subchapter by another law, the claimant is not limited to
recovery of economic damages only, but may recover any actual
damages incurred by the claimant, without regard to whether the
conduct of the defendant was committed intentionally. For the
purpose of the recovery of damages for a cause of action described
by this subsection only, a reference in this subchapter to economic
damages means actual damages. In applying Subsection (b) ( 1) to an
award of damages under this subsection, the trier of fact is
authorized to award a total of not more than three times actual
damages, in accordance with that subsection.
Added by Acts 1973, 63rd Leg., p. 322, ch. 143, Sec. 1, eff. May
21, 1973. Amended by Acts 1977, 65th Leg., p. 603, ch. 216, Sec.
5, eff. May 23, 1977; Acts 1979, 66th Leg., p. 1329, ch. 603, Sec.
4, eff. Aug. 27, 1979; Acts 1989, 71st Leg., ch. 380, Sec. 2, eff.
Sept. 1, 1989; Acts 1995, 74th Leg., ch. 414, Sec. 5, eff. Sept.
1, 1995.
http://www.statutes .! eg is.state. tx us/D ocs/BC/htm/BC .17. htm#17. 41 213
8/21/2014 BUSINESS AND COMMERCE CODE CHAPTER 17. DECEPTIVE TRADE PRACTICES
Amended by:
Acts 2005, 79th Leg., Ch. 728 (H.B. 2018), Sec. 11.102, eff.
September 1, 2005.
http://www.statutes. Ieg is.state. tx. us/Docs/BC/htm/BC .17. htm#i 7. 41 3/3
8121/2014 PROPERTY CODE CHAPTER 5. CONVEYANCES
ec. 5.021. INSTRUMENT OF CONVEYANCE. A conveyance of an
estate of inheritance, a freehold, or an estate for more than one
year, in land and tenements, must be in writing and must be
subscribed and delivered by the conveyor or by the conveyor's agent
authorized in writing.
Acts 1983, 68th Leg., p. 3481, ch. 5 7 6, Sec. 1, eff. Jan. _L , 1984.
http://www.statutes.!egis.state.tx.us/Docs/PR/htm/PR.5.htrn#5.021 1/1
TEXAS RULES OF APPELLATE PROCEDURE Page 37
(2) the date of filing of any contest; (1) whether a reporter's record has been or \Vil! be
requested, and whether the trial was electronically
(3) the date of any order on the contest; and recorded;
(4) whether the contest was sustained or overruled; (m) the name of the court reporter;
(I) whether the appellant has filed or will file a (n) (1) the dates of filing of any motion and affidavit
supersedeas bond; and of indigence;
(rn) any other information the appellate court requires. (2) the date of any hearing;
32.2. Criminal Cases (3) the date of any order; and
lJpon perfecting the appeal in a criminal case, the (4) \Vhetherthe motion was granted or denied; and
appellant inust file in the appellate court a docketing state1nent
that includes the fOllo\ving information: (o) any other infOrmation the appellate court requires.
(a) (1) if the appellant has counsel, the name of the 32,3, Supplemental Statements
appellant and the nan1e, address, telephone
nu1nber, fax nu1nbcr, if any, and State l3ar of Any party may file a statement supplementing or
Texas identification number of the appellant's correcting the docketing staten1ent.
counsel, and whether the counsel is appointed
or retained; or 32.4. Purpose of Statement
(2) if the appellant is not represented by an 'fhe docketing statement is l'or ad1ninistrative purposes and
attorney, that party's name, address, telephone does not affect the appellate court's jurisdiction.
nun1ber, and fax number, if any;
Notes and Comments
(b) the date the notice of appeal was fJled in the trial
court and, if rflailed to the triai court clerk, the date Con1mcni to 1997 change: The rule is new,
of mailing;
(c) the trial court's name and county, and the name of Rule 33. Preservation of Appellate
the judge who tried the case; Complaints
(d) the date the trial court imposed or suspended 33.1. Preservation; llow Shown
sentence in open court, or the date the judg1ncnt or
order appealed from was signed; (a) In General. As a prerequisite to presenting a
complaint for appellate review, the record must sho\v
(c) the date of filing any motion for nc\v trial, 1notion in that:
a1Test ofjudgment, or any other filing that affects the
time for perfecting the appeal; ( 1) the co1np!aint was made to the trial cou1t by a
ti1nely request, objection, or motion that:
(f) the offense charged and the date of the offense;
(A) stated the grounds for the ruling that the
(g) the defendant's plea; co1nplaining party sought from the trial
court \Vith sufficient specificity to 1nake
(h) whether the trial was jury or nonjury; the trial court aware of the complaint,
unless the specific grounds were apparent
(i) the punishment assessed; ffo1n the context; and
(j) whether the appeal is from a pretrial order; (B) co1nplicd with the requirements of the
Texas Rules of Civil or Criminal
(k) whether the appeal involves the validity of a statute, Evidence or the Texas Rules of Civil or
ordinance, or rule; Appellate Procedure; and
(2) the trial court:
37
parties in accordance with Rule 21 aa "Notice of Past Due Findings of Fact and Conclusions ofLaw"
which shall be immediately called to the attention of the court by the clerk. Such notice shall state
the date the original request was filed and the date the findings and conclusions were due. Upon
filing this notice, the time for the court to tile findings of fact and conclusions oflaw is extended to
forty days from the date the original request was filed.
RULE 298. ADDITIONAL OR AMENDED FINDINGS OF FACT AND
CONCLUSIONS OF LAW
After the court files original findings of fact and conclusions of law, any party may file with the
clerk of the court a request for specified additional or amended findings or conclusions. The request
for these findings shall be made within ten days after the filing of the original findings and
conclusions by the court. Each request made pursuant to this rule shall be served on each party to
the suit in accordance with Rule 21 a.
The court shall file any additional or amended findings and conclusions that are appropriate within
ten days after such request is filed, and cause a copy to be mailed to each party to the suit. No
findings or conclusions shall be deemed or presumed by any failure of the court to make any
additional findings or conclusions.
RULE 299. OMITTED FINDINGS
When findings of fact are filed by the trial court they shall fom1 the basis of the judgrnent upon all
grounds of recovery and of defense embraced therein. The judgment may not be supported upon
appeal by a presumed finding upon any ground ofrecovery or defense, no element of which has been
included in the findings of fact; but when one or more elements thereof have been found by the trial
court, omitted unrequested elements, when supported by evidence, will be supplied by presumption
in support of the judgment. Refusal of the court to make a finding requested shall be reviewable on
appeal.
RULE 299a. FINDINGS OF FACT TO BE SEPARATELY FILED
AND NOT RECITED IN A JUDGMENT
Findings of fact shall not be recited in a judgment. If there is a conflict between findings of fact
recited in a judgment in violation of this rule and findings of fact made pursuant to Rules 297 and
298, the latter findings will control for appellate purposes. Findings of fact shall be filed with the
clerk of the court as a document or documents separate and apart from the judgment.
SECTION 11. TRIAL OF CAUSES
H. Judgments
RULE 300. COURT TO RENDER JUDGMENT
Where a special verdict is rendered, or the conclusions of fact found by the judge are separately
Texas Rules of Evidence (Eff. 01/01107) Page 1of1
RULE 103. RULINGS ON EVIDENCE
(a) Effect of Erroneous Ruling. Error may not be predicated upon a ruling which admits or
excludes evidence unless a substantial right of the party is affected, and
(1) Objection. In case the ruling is one admitting evidence, a timely objection or
motion to strike appears of record, stating the specific ground of objection, if the
specific ground was not apparent from the context. When the court hears
objections to offered evidence out of the presence of the jury and rules that such
evidence be admitted, such objections shall be deemed to apply to such evidence
when it is admitted before the jury without the necessity of repeating those
objections.
http://www.courts.state.tx.us/rules/tre/tre-all-010107 .htm 8/21/2014
THE TEXAS DECEPTIVE TRADE
PRACTICES ACT IN CONTEXT:
NOT ALL THAT BAD
CONSUMER LAW BASICS - KNOW THE LAW!
PRESENTED BY: THE CENTER FOR CONSUMER LAW
HOUSTON, TEXAS
FRIDAY, OCTOBER 23, 2009
© Richard M. Alderman
Associate Dean for Academic Affairs
Director, Center for Consumer Law
University of Houston Law Center
713-743-2165
BIOGRAPHICAL INFORMATION
RICHARD M. ALDERMAN
ASSOCIATE DEAN
DWIGHT OLDS CHAIR IN LAW
DIRECTOR, CENTER FOR CONSUMER LAW
UNIVERSITY OF HOUSTON LAW CENTER
(713) 743-2165
Alderman@uh.edu
Richard M. Alderman grew up in upstate New York. He attended Tulane University and in 1968
was awarded a B.A. in psychology. Following graduation, he attended Syracuse University Law School
where he was graduated first in his class and was awarded a Juris Doctorate degree, After a year practicing
poverty law, he attended the University of Virginia Law School and was awarded a Masters of Law degree.
Dean Alderman has been a Professor at the University of Houston Law Center since 1973. During
that time he has taught courses in Contracts, Commercial Law, Consumer Law, Deceptive Trade Practices
Act and Sports Law. He also serves as the Director of the Center for Consumer Law, a community
outreach arn1 of the Law Center. Professor Alderman is the author of more than twenty books and
numerous articles. His most recent publications include ''Consumer Credit and the Law," and
''Consumer Protection and the La\\'," published by Thomson/West, "The Lawyers Guide to the Texas
Deceptive Trade Practices Act, 11 published by Lexis Law Pubiishing and "Texas Consumer Law: Cases
and Materials,,, published by Imprimatur Press. He also authored 11 Know Your Rights, 11 7th edition, and
"Your Texas Business," 2nd edition, for the layperson, published by Rowman and Littlefield Publishing.
Professor A ldenna11 serves as the Editor-in-Chief of "The Journal of Consumer and Commercial Lav;, u the
official publication of the Consumer and Commercial Law Section of the State Bar of Texas.
In addition to his duties at the Law Center, Dean Aldennan appears regularly as the "People 1s
Lawyer" on radio and television. He currently appears on KTRK-TV, Channel 13. From 1990 until 2006,
he worked with the Texas Young Lawyers' Association on a program entitled "It's the La\V 11 which \Vas
syndicated to 1'V stations in fourteen Texas cities. Dean Alderman has a weekly newspaper column in the
Houston Chronicle that also runs in numerous other newspapers in the state of Texas. His work in
educating the public has been recognized by the State Bar of Texas and the American Bar Association,
which have twice awarded hiin their highest honors. He is often quoted in national publications, and has
appeared on nun1erous television shows, including the "Oprah" show. A highlight of his career came in
April 2000 when the Houston City Council and Mayor named April 15 "Richard M. Alderman Day" in
honor of his work educating the public about their legal rights.
Dean Alderman's wife Janie runs her own graphic design business. They have one son, r1Willie,"
born in 1991.
2
THE TEXAS DECEPTIVE TRADE PRACTICES ACT IN CONTEXT: NOT
THAT BAD
©Richard M. Alderman*
I. INTRODUCTION
Prior to 1973, Texas consumer law could be summed up in two words, caveat
emptor. 1 In 1973, however, the Texas Legislature enacted the Texas Deceptive Trade
Practices--Consumer Protection Law.2 The DTPA, as it soon became known, was
quickly recognized as one of the foremost consumer protection statutes in the country. Its
broad applicability, no-fault liability, and attractive remedial provisions, encourage
attorneys to represent consumers. Courts at all levels followed the mandate of section
l 7.44 to liberally interpret the DTPA consistent with its stated purpose, which was to
"protect consumers against false, misleading, and deceptive business practices,
unconscionable actions, and breaches of warranty and to provide efficient and
economical procedures to secure such protection." 3 This mandate, coupled with the
language of section 17.43 making it clear that the remedies provided by the DTPA are
cumulative to any other procedures or remedies provided for in any other law, 4 resulted
in an extremely favorable climate for plaintiffs and plaintiffs' attorneys.
But sometimes, too much of a good thing can turn bad. By the early 1990s, the
DTPA had become a powerful tool, utilized successfully by consumer attorneys to
combat nearly all forms of misrepresentation, deceit, and fraud in the marketplace. The
DTPA was also successfully employed, however, in nearly all forms of civil litigation.
Our state's "consumer protection statute" was the preferred basis for litigation involving
*Associate Dean, Dwight Olds Chair in Law and Director of the Center for Consu1ner Law, University of
Houston Law Center, Al!i!'.t:!llil!l@Jctlh<;i!!!
1
See generally, John Hill, Introduction- Consumer Protection Symposium, 8 St. Mary's L.J. 609 (1977).
2
TEX. Bus. & COM. CODE §§17.41--63. Note that the Act has been amended nearly every legislative
session since its enactment. For a comprehensive discussion of the DTPA, and all of the language of the
a1nendments, see Richard M. Aldennan, The Lawyer's Guide to the Texas Deceptive Trade Practices Act
(2d ed. 2003).
3
TEX. Bus. & COM. CODE §17.44. It is important to note that the mandate of section 17.44 was left
unchanged by the 1995 amendments.
4
Section 17.43 states:
The provisions of this subchapter are not exclusive. The remedies provided in this subchapter are in
addition to any other procedures or remedies provided for in any other law; provided, however, that
no recovery shall be pern1itted under both this subchapter and another law of both damages and
penalties for the same act or practice. A violation of a provision of law other than this subchapter is
not in and of itself a violation of this subchapter. An act or practice that is a violation of a provision
of Jaw other than this subchapter may be made the basis of an action under this subchapter if the act
or practice is proscribed by a provision of this subchapter or is declared by such other law to be
actionable under this subchapter. The provisions of this subchapter do not in any way preclude
other political subdivisions of this state from dealing with deceptive trade practices.
TEX. Bus. & COM. CODE§ 17.43.
3
multi-million dollar commercial transactions, 5 personal injury arising out of an assault in
an apartment complex, 6 professional malpractice,7 and even the traditional slip and fall
liability suit. 8 Actual damages often reached seven figures, additional damages were
common, and attorneys' fees were mandatory. 9
At the same time attorneys and courts were embracing the liberal provisions of
the DTP A, the political climate in Texas was becoming much more conservative.
Gradually, "tort reform" became the phrase of the day. The "tort reform" movement
began in earnest in Texas in the mid-1980s. 10 By the end of the 1980s, Texas had enacted
substantial changes in the law, and had even attempted to reduce the damages recoverable
under the DTPA in non-traditional consumer cases. 11 But the real "reform" would come
in 1995, when the Republican controlled legislature enacted a broad reform agenda that
included wholesale amendments to the DTPA. 12 With the stated goal of"leveling the
playing field," the legislature substantially amended the Act in an attempt to limit the
amount of damages, preclude application of the DTPA to traditional tort suits, exempt
certain large transactions, and make it easier for defendants to force a settlement and
recover attorneys' fees for frivolous claims. The 1995 amendments clearly limited the
scope of the DTP A and the amount of damages that may be recovered, and gave
defendants additional opportunities to settle and a greater likelihood of recovering their
attorneys' fees for defending a DTPA claim. The 2003 session of the legislature saw a
second major round of"tort reform" legislation that, although not directly dealing with
the DTPA, placed limits on recovery against certain defendants, particularly those in the
residential construction business. 13
5
For example, in Prudentiai Ins. Co. of Ainerica v. Jefferson Associates, Ltd., 896 S.VJ.2d 156 (Tex.
1995) a sophisticated purchaser of commercial real estate sued the seller for damages in excess of $25
million.
6
See. e.g., Beny Property management, Inc. v. Bliskey, 850 S.W.2d 644 (Tex. App.--Corpus Christi
1993) (suit by tenant who was sexually assaulted in apartment).
7
See. e.g., Latham v. Castillo, 972 S.W.2d 66 (Tex. 1998) (suit against attorney based on unconscionable
conduct).
8
Most of these suits were found to be unsustainable under the DTPA. See, e.g., Rojas v. Wal-Mart Stores,
Inc., 857 F. Supp. 533 (N.D. Tex. 1994).
9
Section 17.SO(d) of the Act mandates the award to attorneys' fees to a prevailing consumer.
to See generally Joseph Sanders and Craig Joyce, "Off to the Races: The 1980s Tm1 Crisis and the Law
Reform Process. 27 HOUSTON L. REV. 207 (1990).
11
In 1987, TEX. Bus. & COM. CODE § 17.50 was amended in an attempt to bring the DTPA in line with
traditional torts claims. The result was a provision that actually increased damages under the DTPA by
1naking certain DTPA suits subject to Chapter 41 of the Civil Practice and Re1nedies Code.
12
The 1995 amendments to the DTPA may be found at Tex. H.B. 668, 74th Leg., R.S. (1995).
13
See, Texas Residential Construction Commission Act, Ch. 401 TEX. PROP. CODE; and Residential
Contractors' Liability Act, Ch. 27 TEX PROP. CODE. The Texas Residential Construction Commission Act,
Title 16 of the Texas Property Code, was enacted in 2003. The TRCCA dealt with warranty law and the
DTPA, and substantially impacted any claim involving a "builder." Section 401.006 of the Act, however,
provided:
The Texas Residential Construction Commission is subject to Chapter 325, Government Code (Texas
Sunset Act). Unless continued in existence as provided by that chapter, the comn1ission is abolished and
this title expires September I, 2009.
In 2009, the Texas Legislature failed to continue the Commission in existence, and therefore, all provisions
included in Title 16 have now expired. Any suit filed after September 1. 2009, is no longer subject to this
Act.
4
The goal oftbe reformers was to limit the applicability and effectiveness of the
DTPA. No one can argue that they did not succeed. The extent oftbeir success, however,
is subject to debate. It is clear that the DTPA has been weakened. In absolute terms, the
Act does not provide anywhere near the benefits it did for consumers. But an analysis in
absolute terms is misleading. To truly evaluate the effectiveness of the DTPA as a tool
for consumer attorneys, it must be measured in relative terms.
While the DTPA was being amended and its application limited by the courts and
legislature, other available causes of action were being similarly reviewed, and reduced.
Tort claims have been subject to even greater "reform" than the DTPA. Available
defendants in tort and contract suits are reduced, damages are limited, comparative
responsibility is strengthened, and punitive damages are sharply limited in both
availability and amount. In contrast to claims based in tort or contract, the DTPA still
provides a no-fault standard of recovery, the lowest causation standard, the most liberal
standard for the award of exemplary damages, and mandatory attorneys' fees. In other
words, relative to other available causes of action, the DTPA is still alive and well.
II. APPLICABILITY: PROPER PARTY PLAINTIFF--CONSUMER
Perhaps the most significant event in the past decade of DTPA reform is a change
that was not made. The definition of "consumer" has not been changed since the 1983
amendment, 14 which added the business consumer exception. Under section 17.45(4) a
consumer is:
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 tenn does not include a business consumer that bas assets of $25
million or more, or that is owned or controlled by a corporation or entity with
assets of$25 million ormore. 15
In other words, the DTPA still applies to a broad range of individuals and businesses. It
includes any individual purchasing any thing, as well as the vast majority of businesses
buying for a business purpose. More significantly, because the definition has remained
the same for 21 years, there is a large body of case law interpreting it and upon which
attorneys can rely. To be a consumer, an entity must simply "seek or acquire, by purchase
.
or 1ease, any goo ds or services. " 16
1. Requirements
Basically, to be a consumer, a qualified "entity" 17 must seek or acquire, by
purchase or lease, goods or services. Note that there are three requirements that may be
satisfied with alternatives in each category. For example, a consumer may seek by
purchase goods; or, acquire by purchase services; or, acquire by purchase goods.
Because of the significance of this definition (if you are not a consumer you may not use
14
Tex. H.B. 883, 68'" t.eg., R.S. ( 1983).
15 TEX. Bus. & COM. CODE§ 17.45( 4)
16
For a more comprehensive discussion of the tenn "consumer," see RICHARD M. ALDERMAN, TI-IE
LAWYER'S GUIDE TO THE TEXAS DECEP!TVE TRADE PRACTICES ACT, 2d ed., at Chapter 2.
17
A qualified entity is an individual, pa1tnership, corporation, this state, or a subdivision or agency of this
state
5
the Act), it has been one of the most litigated sections of the Act. The focus of the
litigation has been the meaning of the terms "seek or acquire," "purchase or lease," and
"'goods or services."
a, Seek or Acquire
Assuming that the party asserting a claim under the Act is an entity within the
scope of the definition of consumer, the next question is did that entity "seek or acquire"?
Note that it is only necessary that the entity claiming consumer status prove that it either
sought or acquired. In most cases, it is simple to determine whether an entity has sought
or acquired something. For example, if someone buys something he or she has acquired
it. If someone is in the process of buying something, he or she is seeking it. There is no
requirement, however, that there be contractual relationship, a contract, or payment. For
example, in Martin v. Lou Poliquin Enterprises, Inc., 18 Martin contacted a company to
place an advertisement in the local yellow pages. The company failed to properly place
the ad and violated the DTPA. The company defended by asserting that because Martin
did not pay for its services, there was no consideration and, therefore, Martin was not a
consumer. The court held that the DTPA does not require the transfer of consideration.
An entity is a consumer if it seeks to purchase goods. The court found the test to be
whether the consumer had a good faith intention to purchase, as well as the ability to
purchase. 19
As noted above, in most cases it is simple to determine if someone has acquired
something. For example, anyone who buys something and takes possession of it has
clearly "acquired" it. The courts, however, have held that a good may be "acquired" by
someone who actually is not the owner of the good or has taken possession of it. The test
is whether the objective of the transaction was to benefit the individual claiming
consumer status. In Wellborn v. Sears. Roebuck & Co., 20 a mother brought a DTPA claim
on behalf of her deceased son. The claim was based on a defective garage-door opener,
bought by the mother for her home. The court held that although there was no contractual
relationship between the son and the seller, the son acquired the garage door opener and
the benefits it provided. The son acquired the garage door opener when it was purchased
for his benefit. 21
To show that goods or services were purchased for someone else's benefit, and
confer upon that person consumer status, it is necessary to show more than mere use of,
or benefit from, the goods. The person claiming consumer status must be an "intended"
18
696 S.W.2d 180 (Tex. App.-Houston [14th Dist.] 1985).
19
"A DTPA consu1ner is one who in good faith initiates the purchasing process. An individual initiates the
purchasing process when he (1) presents himself to the seller as a willing buyer with the subjective intent
or specific "objective" of purchasing, and (2) possesses at least some credible indicia of the capacity to
consu1nrnate the transaction." Id at 184-5.
20
970 F.2d 1420 (5'h Cir. 1992).
21
"Although Bobby did not enter into a contractual relationship with the defendants, he acquired the
garage door opener and the benefits it provided. Wellbon1 did not purchase the garage door opener
specifically for Bobby's benefit; nevertheless, Bobby lived with Wellborn and regularly used the garage
door opener until the ti1ne of his death. Wellborn testified that one of the reasons that she bought the
garage door opener was to provide additional security for Bobby on the nights that Bobby was ho1ne by
himself. Indeed, Wellborn had instructed Bobby to lock the house up at night. Because Bobby acquired
the garage door opener when it was purchased for his benefit, installed in his home, and used by him, we
hold that, under the facts of this case, Bobby is a consumer." Id. at 1426-27.
6
rather than an "incidental" beneficiary. For example, a tenant may be a consumer with
respect to services purchased by a landlord; an employee may be a consumer with respect
to goods purchased by an employer; and a purchaser of property may be a consumer with
respect to an inspection paid for by the seller. On the other hand, courts have found that a
passenger riding in a car is not a consumer with respect to the car; a friend who bmTows
goods is not a consumer with respect to the goods; an employee who occasionally uses
goods is not a consumer with respect to the goods; and a fiance of a consumer is not a
consumer with respect to goods purchased by the consumer.
b. Purchase or Lease
To be a consumer under the DTPA, an entity must do more than merely seek or
acquire goods or services. The goods or services must be sought or acquired by "purchase
or lease." An individual who receives services gratuitously is not a consumer for
purposes of the Act. In Exxon v. Dunn. 22 the court held that the plaintiff was not a
consumer with respect to services performed on his car because he was not charged for
the services, and, therefore, they were not acquired by purchase. Other cases have held
that free games of chance, promotional contests, and free legal services are not
"purchased" for purposes of the DTPA.
Goods received as a "gift" or that are paid for by another may still, however, be
acquired by purchase. This conclusion is based on the Texas Supreme Court holding in
Kennedy v. Sale. 23 In Kennedy, an employee who acquired insurance paid for by the
employer was held to be a "consumer" for purposes of the DTPA. The court made it clear
that although a consumer must acquire goods or services by purchase, one other than the
consumer may make the purchase. Thus courts have held that:
i) a tenant is a consumer as to services purchased by the landlord; 24
ii) a child is a consumer with respect to services paid for by the parent; 25
iii) a person who receives legal services paid for by another is a consumer
with respect to those services; 26
iv) a wife is a consumer with respect to services purchased by the husband; 27
and
v) a purchaser is a consumer with respect to accounting services paid for by
the seller. 28
22
581S.W.2d500 (Tex. Civ. App.-Dallas 1979, no writ)
23
689 S.W.2d 890 (Tex. 1985).
24
Kennedy v. Sale, 689 S.W.2d 890 (Tex. 1985). See also HOW Ins. Co. v. Patriot Fin. Serv., 786 S.W.2d
533 (Tex. App.---Austin 1990, writ denied) (condominium owner is consumer as to warrantor even
though policy was purchased by builder); See also DIFW Commercial Roofing v. Mehra, 854 S.W.2d
182 (Tex. App.-Dallas 1993, no writ) (lessee who acquired roof paid for by lessor is consumer).
25
Birchfield v. Texarkana Memorial Hosp., 747 S.W.2d 361 (Tex. 1987) (child is consumer with respect to
medical services purchased by parents).
26
Perez v. Kirk & Carrigan, 822 S.W.2d 261 (Tex. App-Corpus Christi 1991, writ denied) (person who
acquires legal services paid for by another is a consumer).
27
Parker v. Carnahan, 772 S.W.2d 151 (Tex. App.-Texarkana 1989, writ denied) (wife is consumer with
respect to attorney's service purchased by husband).
28
Arthur Anderson v. Perry Equip. Corp., 898 S.W.2d 914 (Tex. App.-Houston [!"Dist.] 1995), rev'd on
other grounds, 945 S.W.2d 812 (Tex. 1997) (company that acquires accounting services paid for by
another is a consu1ner).
7
Under the same analysis, a person who receives a gift is a consumer provided the gift
giver purchases the gift. 29 In DTPA parlance, the person who received the gift has
"acquired by purchase goods." The question to ask is: has the entity asserting consumer
status either sought to purchase goods or services; or, has it acquired goods or services by
a purchase? 30
c. Goods or Services
The final element in consumer status under the DTPA is that the purchase or lease be
of"goods or services." Note that both of these terms are defined by the Act. "Goods" is
defined to mean "tangible chattels or real property purchased or leased for use." 31 It is
important to note that the definition of goods includes real estate. "Services" is defined
to mean "work, labor, or service purchased or leased for use, including services furnished
in connection with the sale or repair of goods." 32
In most cases it is not difficult to detennine if something is a good. The term goods
include every tangible thing, including real estate and living creatures. Perhaps the best
way to discuss this term is to explain what is held to be excluded from the definitions.
The term "goods" has been held to include everything except "intangibles." 33 Thus, the
Act has been held not to apply to money, accounts receivable, stock, options contracts,
ce1iificates of deposit, the proceeds of an insurance policy, trademarks, a limited
partnership interest, and a lottery ticket. 34
Consistent with the mandate of section 17.44, the definition of the term services has
been liberaliy interpreted by the courts to include repair or construction contracts,
29
Precision Sheet ivietal 1v1fg. Co., Inc. v. Yates, 794 S.VV .2d 545 (Tex. A~µp~-Dallas 1990, writ denied)
(plaintiff need not be the one who pays).
3° Can a seller ever be a consu1ner? Although the answer appears to be "no," the facts of each case must be
carefully evaluated to detennine the ttue nature of the relationship. For example, in White v. Pilgritn's Pride
Corp., 2008 U.S. Dist. LEXIS 74793 (E.D. Tex. 2008), chicken farmers sued the chicken processor and
dealer under the DTPA. As the court noted, ''The plaintiffs and PPC operate within a contractual
relationship whereby PPC provides the plaintiffs with the chicks, feed, and supplies required to raise
chickens In exchange, the plaintiffs care for the chickens until they reach maturity and are returned to
PPC." Although the plaintiff's appear to be "selling" the service of raising the chickens to PPC, the court
noted the contractual method payment and the true nature of the relationship. The court looked at the
method used by PPC to calculate payments to the plaintiffs. The plaintiffs pointed out, "[t]he method used
by PPC to calculate feed conversion payments to the plaintiffs at the time of the nsettlement" to show that
PPC deduct its costs from the value of the mature birds. Plaintiffs argue that in each transaction, PPC
specifically identifies individual costs of feed, chicks and medication that the plaintiff has utilized in
growing the broilers, in essence making the transaction a sale." Based on this relationship, the court
concluded that the plaintiffs were in fact DTPA "consumers
31
TEX. Bus. & COM. CODE §17.45(1)
32
Id. at §17.45(2)
33
United Postage Corp. v. Kammeyer. 581S.W.2d716, 721 (Tex. Civ. App.-Dallas 1979, no writ). See
also Parr v, Tagco Indus., 620 S.W.2d 200. 206 (Tex. Civ. App.-Amarillo 1981, no writ) ("goods"
includes "every species of property which is not real estate or a freehold").
34
See. e.g., Riverside Nat'! Bank v. Lewis, 603 S.W.2d 169, 174 (Tex. 1980); Snyders Smart Shop Inc. v.
Santi, Inc., 590 S.W.2d 167, 170 (Tex. Civ. App.-Corpus Christi 1979, no writ); In re Sterling Foster &
Co. (Price v. Sterling Foster & Co.), 222 F. Supp. 2d 289 (E.D.N.Y. 2002; Swenson v. Englestad, 626
F.2d 421, 428 (5"' Cir. 1980); Hand v. Dean Witter Reynolds Inc., 889 S.W.2d 483 (Tex. App.-Houston
[14"' Dist.] 1994, writ denied); English v. Fisher, 660 S.W.2d 521. 524 (Tex. 1983); Meineke Discount
Muffler v. Jaynes, 999 F.2d 120 (5'h Cir. 1993); Marshall v. Quinn-L Equities, Inc., 704 F. Supp. 1384,
1393 (N.D. Tex. 1988).
8
insurance contracts, and professional services, such as medical, legal, accounting,
investment and architectural. The Texas Supreme Court, however, has held that money is
not a good, and a person seeking to borrow money is not seeking a service. 35 Therefore, a
person seeking to borrow, or merely borrowing money, is not a consumer under the Act.
The purchaser of other banking services, however, may be a consumer. Banking services
such as checking and savings accounts, 36 preparation of documents, 37 advice regarding
certificates of deposit, 38 processing of title documents, 39 loan brokering,40 and the sale of
travelers' checks,41 have all been held to give rise to consumer status.
When evaluating a transaction to determine whether it is subject to the DTPA, it must
be evaluated from the consumer's perspective. For example, in Flenniken v. Longview
Bank & Trust Co., 42 the purchaser of a home sued the bank that provided financing for
the builder. The bank, Longview, asserted that Flenniken was not a consumer because all
that Longview did was loan money. The court held that from Flenniken's perspective
there was only one transaction, the purchase of a house. The bank's financing of the
transaction was merely Easterwood's means of making the sale. Flenniken was a
consumer as to anyone who sought to enjoy the benefits of that transaction.4 3 In other
words, a loan transaction is subject to the DTPA if, viewed from the consumer's
perspective; it is part of a transaction in goods or services.
Finally, note that goods or services must be purchased or leased "for use." Purchasing
or leasingfor any purpose including resale, satisfies this requirement. In Big H Auto
Auctions v. Saenz Motors, 44 the court held that the ordinary meaning of"use" should be
applied to the DTPA. Therefore, purchasing for any purpose is purchasing "for use."
35
Riverside National Bank v. Lewis, 603 S.W.2d 169 (Tex. 1980).
36
See. e.g., Bank One, Texas v. Taylor, 970 F.2d 16 (5ili Cir. 1992); Cushman v. Resolution Trust Co., 954
P.2d 317 (5'h Cir. 1992); La Sara Grain Co. v. First Nat'! Bank of Mercedes, 673 S.W.2d 558, 564, 38
U.C.C. Rep. Serv. (West) 963 (Tex. 1984); Farmers & Merchants State Bank of Krum v. Ferguson, 617 S.W.2d
918, 920 (Tex. 1981). See also Security Bank v. Dalton, 803 S.W.2d 443 (Tex. App. Fort Worth 1991,
writ denied) ("appellees are consuiners, both in connection with the various checking accounts and in
connection with the extensions of credit"); Plaza Nat'! Bank v. Walker, 767 S.W.2d 276 (Tex. App.
Beaumont 1989, writ denied) (savings account customer is consumer).
37
See, e.g., First Tex. Savs. Ass'n v. Stiff Properties, 685 S.W.2d 703, 705 (Tex. App. Corpus Christi 1984,
no writ).
38
See, e.g., First Fed. Savs. & Loam Ass'n v. Ritenour, 704 S.W.2d 895, 900 (Tex. App.-Corpus Christi
1986, writ refd n.r.e.). See also McDade v. Texas Commerce Bank, 822 S.W.2d 713 (Tex. App.-
Houston [I st Dist.] l 991, writ denied) (customer seeking to purchase bank's services as IRA trustee is
consumer).
39
See. e.g., Juarez v. Bank of Austin, 659 S.W.2d 139, 142 (Tex. App.-Austin 1983, writ refd n.r.e.);
McNiell v. McDavid fns. Agency, 594 S.W.2d 198, 202 (Tex Civ. App.-Fort Worth 1980, no writ).
40
See. e.g., Portner v. Fannin Bank in Windom, 634 S.W .2d 74, 76 (Tex. App.-Austin 1982, no writ).
41
See, e.g., Mercantile Mortgage Co. v. University Homes, Inc., 663 S.W.2d 45, 47 (Tex. App.-Houston
[14ili Dist.] 1983, no writ); Lubbock Mortgage & Inv. Co., Inc. v. Thomas, 626 S.W.2d 611, 613 (Tex
App.-El Paso 1981, no writ).
42
661 S.W.2d 705 (Tex. 1983).
43
"Privity between the plaintiff and defendant is not a consideration in deciding the plaintiff's status as a
consumer under the DTPA .... A plaintiff establishes his standing as a consumer in tenns of his
relationship to a transaction, not by a contractual relationship with the defendant. The only requirement is
that the goods or services sought or acquired by the consuiner fonn the basis of his complaint." Id. at
707.
44
665 S.W.2d 756 (Tex. !984).
9
d. Business Consumer
Once an entity is a "consumer," it is within the scope of the Act. The DTPA,
however, excludes certain business consumers from the definition. A "business
consumer" with assets of $25 million or more, or one that is owned or controlled by a
corporation or entity with assets of $25 million or more, is not a consumer for purposes
of the DTPA. Business consumer is defined by section 17.45(10) to mean "an individual,
partnership, or corporation who seeks or acquires by purchase or lease, any goods or
services for commercial or business use. The term does not include this state or a
subdivision or agency of this state. It is important to note that not all business consumers
are excluded from the Act's definition, only those business consumers with the required
assets. For example,
X Corp. has assets of $5 million. It recently purchased a widget from Y Corp. In
the course of the transaction, Y violated the DTPA. X Corp is a consumer.
under the Act.
Assume, however, that X Corp is a wholly owned subsidiary of Z Corp. Z Corp
has assets in excess of $50 million. X Corp is not a consumer under the DTPA.
Note that an individual who seeks or acquires goods for personal use is a
consumer regardless of the assets of the individual. For example, if Bill Gates buys an
automobile for his family he is a consumer under the DTPA. Finally, it is important to
note that the defendant has the burden to prove the business consumer exception as an
45
affirmative defense.
2. Statutory Exemptions
Perhaps the most publicized provisions in the 1995 amendments to the DTP A
were those amending section 17.49, exempting certain transaction from the scope of the
Act. After passage of the amendments, there was a widely held belief that the DTPA no
longer applied to claims against professionals, claims rising out of a personal injury, and
most large transactions. As you will see, the scope of the new exemptions to the Act were
misunderstood, and widely exaggerated.
Prior to 1995, the exemption provisions of the DTPA were oflittle consequence.
The Act did not apply to newspapers that published advertisements without knowledge of
the false, misleading or deceptive nature of the publication; and, nothing in the Act
applied to an act or £ractice authorized by specific rules or regulations of the Federal
Trade Commission. 6 Many believed these exemptions sounded a death knell for the
DTPA. In fact, they simply make clear that the DTPA does not apply to a transaction
unless its provisions have been violated.
a. Professional Services
Section l 7.49(c) provides that nothing in the DTPA shall apply to "a claim for
damages based on the rendering of a professional service, the essence of which is the
45
Eckman v. Centennial Savings Bank, 784 S.W.2d 672 (Tex. 1990).
46
See TEX. Bus. & COM. CODE §17.49(a)(b).
IO
providing of advice, judgment, opinion, or similar professional skill."47 Note that this
section does not exempt all "professional services," rather it exempts only a service "the
essence of which" is advice, judgment, opinion, or other professional skill. Thus, some
professional services will be subject to the provisions of the Act, while others will not. 48
Additionally, because the focus of the exemption is the rendering ofa service, not the
occupation of the provider, a professional may render some services subject to the Act,
while other services would be exempt. Two examples demonstrate this:
Stuart is a real estate broker. Casey hires Stuart to obtain a property evaluation
and sales recommendation regarding some property he intends to sell. Stuart
prepares a report indicating the potential value of the property
based on several different growth scenarios. The services provided
by Stuart involved advice, judgment, and opinion.
Stuart is also contacted by Carey. Carey hires Stuart to list his house with the
listing service, to place advertisements for the sale and to show the home to
potential purchasers. The essence of the service provided by Stuart is not advice,
judgment or professional opinion.
Although most transactions will have to be individually evaluated to determined if their
"essence" is advice, judgment or opinion, it is expected that most services provided by
attorneys, physicians, and architects will be classified as "professional" within the scope
of this exemption.
a) Exceptions to the Exemption
Section 17.49(c) of the DTPA exempts certain professional services. The
significance of this exemption is substantially reduced, however, by virtue of subsections
17.49(c) (1)-(4) which provide that "This exemption does not apply to:
1. an express misrepresentation of a material fact that cannot be characterized as
advice, judgment, or opinion;
2. a failure to disclose information in violation of Section 17.46(b)(23);
3. an unconscionable action or course of action that cannot be characterized as
advice, judgment, or opinion; or
4. breach of an express warranty that cannot be characterized as advice, judgment,
. • 49
or opm1on.
These "exceptions" to the exemption of section 17.49(c) substantially reduce the
significance of the exemption. For example, an attorney who acts in an unconscionable
manner is still subject to the DTPA. 50 Similarly, a physician who makes a
misrepresentation of fact is not exempt from the Act. 51 Additionally, any claim based on
47
TEX. Bus. & COM. CODE§ 17.49(c).
48
One way to view this exemption is that it is service specific, not profession specific. In other words, it is
the nature of the service performed~ not the person who perfonns it, that matters.
49
TEX. Bus. & COM. CODE§ 17.49(c)(l )-( 4). See. e.g.. Head v. U.S. Inspect DFW, lnc., 159 S.W.3d 731
(Tex. App.-Fort Worth 2005).
50
See. e.g., Latham v. Castillo, 972 S.W.2d 66 (Tex. 1998) (Pre-1995 version of Act).
51
See Sorokolit v. Rhodes, 889 S.W.2d 239 (Tex. 1994) (Pre-1995 version of Act). Note also that claims
against health care providers are subject to the Medicial Liability and Insurance Improvement Act, which
prohibits DTPA claims based on negligence. The applicability of the Medical Liability Improvement and
11
the failure to disclose is still a viable claim under the DTPA, even if the defendant is a
professional. 52
The DTPA professional services exemption is, in reality, very narrow, and does
not constitute a significant change in the law. 5 A general malpractice claim, based
entirely on a professional's failure to follow a reasonable standard of performance, is
exempt from the scope of the DTPA. Claims based on a misrepresentation of fact,
unconscionability, or failure to disclose, however, are still subject to the DTP A regardless
of whether the actor is a professional.
b. Personal Injury Claims.
DTPA § l 7.49(e) states:
Except as specifically provided by Subsections (b) and (h), Section 17.50, nothing
in this subchapter shall apply to a cause of action for bodily injury or death or the
infliction of mental anguish.
Although some have suggested that this provision exempts all claims involving personal
injury from the DTPA, this clearly is not tbe case. A plain reading of this provision
makes it clear that a claim for personal injury is within the scope of the DTPA, as long as
it is within the provisions of section 17 .50(b) or (h). In other words, only those claims
that are outside of section 17 .50(b) and (h) are exempt from the Act. Jn light of the fact
Insurance Act is frequently litigated in the context of a DTPA claiin. In Scientific linage Center
Management, Inc. v. Brewer, 282 S.W.3d 233 (Tex. App. Dallas 2009, pet. filed), the court noted that the
l'vf"LllA applies to "health-care" claims, that is a claim based on treatrnent, lack oftreat1nent, or other
departure fonn accepted standards of medical care. The court noted:
The Texas Supreme Court repeatedly has held that plaintiffs cannot, through artful pleading, avoid
the strictures now codified in chapter 74 by recasting health care liability claims as other causes of
action. See Diversicare Gen. Partner, Inc. v. Rubio, 185 S.W.3d 842, 845 (Tex. 2005) (patient's
clai1n for sexual assault by another patient caused by nursing home's negligence in failing to
provide adequate supervision and nursing services was health care liability claim); Murphy v.
Russell, 167 S.W.3d 835, 839 (Tex. 2005) (claims doctor sedated patient after expressly
representing and warranting he would not, could not be recast as DTPA action); Garland
Community Hosp. v. Rose, 156 S.W.3d 541, 546 (Tex. 2004) (negligent credentialing claims
centered on the quality of doctor's treat1nent were inextricably intertwined with the patient's
medical treatment); Earle v. Ratliff, 998 S.W.2d 882 (Tex. 1999) (alleged representations
concerning back surgeries related to treatment and surgeries performed and were not DTPA
claims); Walden v. Jeffe1y, 907 S.W.2d 446, 447-48 (Tex. 1995) (dentist's failure to provide
dentures that fit was a negligence claim, not DTPA claim); MacGregor Med. Ass'n v. Campbell,
985 S.W.2d 38, 40-41 (Tex. 1995) (clinic's statements in literature that it provided qualified
personnel and resources, the best services possible, and emergency service twenty-four hours a
day were not actionable under the DTPA when the complaint was negligent treatment); Gormley
v. Stover, 907 S.W.2d 448, 449-50 (Tex. 1995) (per curiam) (dentist's statements he could perform
surgery with no problems, that skin graft would work as well as bone graft, that after surgery
patient could wear dentures with no problen1s, and that patient's pain and numbness would subside
following surgery, could not be recast as DTPA action). But see Sorokolit v. Rhodes, 889 S.W.2d
239, 242-43 (Tex. 1994) (a physician's promise that his patient's appearance following cosmetic
surgery would be identical to a specific photograph was actionable under the DTPA).
52
See generally, TEX. BUS. & COM. CODE§ l 7.46(b)(24).
53
Even before the 1995 a1nendments, courts recognized that a negligence claim could not be turned into a
DTPA claim simply by re-classifying it.
12
that sections 17.50(b) and (h) are the only remedial provisions in the DTPA, it is difficult
to see what this exemption really applies to. In fact, the exemption serves just one
important purpose. The exemption makes it clear that recoverable damages arising out of
a personal injury claim are limited to those specifically authorized by the language of the
Act.
Subsection l 7.50(b), discussed below, is the general damage provision of the Act.
Subsection 17 .50(h), discussed below, is the damage provision for "tie-in statutes."
Together, these provisions allow for the recovery of most damages arising from a
personal injury. For example:
Jane brought her car into Bob's repair shop to have the breaks repaired.
Bob improperly repaired the brakes, violating the DTPA. As a result, the
car crashed, destroying the car and injuring Jane. Jane brought a claim
under the DTPA seeking damages for the value of the car, reimbursement
of medical bills, pain and suffering, mental anguish and loss of
consortium. Under section 17.SO(b) she may recover her "economic loss,"
including the value of the car and her medical expenses, excluding pain
and suffering and loss of consortium. She also may recover mental
anguish damages if she establishes that Bob's acted "knowingly."
Pat went to a health club. The health club, in violation of the Health Spa
Act, misrepresented the services it would provide and the nature of its
program. As a resuit, Pat was injured using the equipment. He filed suit
under the DTPA for violation of the Health Spa Act, a "tie-in" statute.
He sought damages for medical expenses, pain and suffering, mental
anguish, and loss of consortium. He is entitled to recover his "actual
damages" including all elements of damages alleged.
c. Large Transactions
The DTPA also exempts ce1tain large transactions from the scope of the Act.
Section 17.49 provides two "large transaction" exemptions; one for transactions over
$100,000 and another for those in excess of $500,000.
Under section I 7.49(f), certain transactions in excess of $100,000 are not subject
to the Act. The DTPA does not apply to a claim arising out of a written contract if the
contract relates to a "transaction, project, or set of transactions related to the same
project" involving consideration by the consumer of more than $100,000. 54 This
54
TEX. Bus. & COM. CODE§ 17.49(1)(1). See, e.g. Citizens Nat'! Bank v. Allen Rae Invs., Inc.,
142 S.W.3d 459 (Tex. App. Fort Wo1th 2004, no pet. h.) Although both subsections (g) and (f) require the
court to determine the "amount" of consideration, there is no requiretnent that the arriount be determined
from the face of the contract. For example, in Jn re Frazin, 2009 Bankr. LEXIS 2373 (Bankr. N.D. 2009),
the defendant argued that its contingency fee contract with the consun1er was in an amount over $100,000.
The consumer, on the other hand, argued that the contract on its face did not indicate an amount in excess
of the statutory floor. The court concluded that:
Frazin 1s argument takes the statute beyond its logical conclusion. The fact that a contract for legal
services n1ay not quantify the value of those services in the contract itself does not mean that they
should be quantified for DTPA purposes at less than$ 100,000 (such that the Section 17.49(1)
13
exemption for claims arising out of a written contract requires that the consideration must
be more than $100,000. Note, however, that it does not require one transaction. The
exemption applies to a transaction, project, or set of transactions, as well. For example,
the purchase of property for $50,000 and improvements for $75,000 would be sufficient
to invoke this exemption. Note, however, that this exception applies only ifthe consumer
is represented by an attorney and if the attorney who represents the consumer is not
directly or indirectly identified, suggested, or selected by the defendant or an agent of the
defendant. 55
Significantly, the exemption of section I 7.49(t) does not apply to a transaction
involving the consumer's residence. 56 Residence is defined by section 17.45(12) to mean
a building
(A) that is a single-family house, duplex, triplex, or quadruplex or
a unit in a multiunit residential structure in which title to the
individual units is transfen-cd to the owners under a condominium or
cooperative system; and
(B) that is occupied or to be occupied as the consumer's residence.
Section l 7.49(g) provides a second exemption for large transactions. The DTPA
does not apply to a cause of action arising out of a transaction, a project, or a set of
transactions relating to the same project, involving a total consideration by the consumer
of more than $500,000. 57 Note that although the total consideration paid by the consumer
must be in excess of $500,000, there is no requirement there be just a single transaction.
For purposes of determining the total consideration it is necessary to look at "a
transaction, project, or set of transactions." For example, if a developer purchases
property with intent to develop it for $300,000, and then spends $300,000 improving it,
all claims arising out of the project would be exempt. 58 As with the $I 00,000 exemption,
this exception does not apply to a transaction involving the consumer's residence. 59
III. PROPER PARTY DEFENDANT: WHO MAY BE SUED
In addition to qualifying as a consumer, the courts have recognized that to
maintain a claim under the Act the "goods or services" purchased must "form the basis of
the consumer's complaint."60 There is, however, no requirement ofprivity under the Act.
exemption won't apply) instead of being quantified at more that $100,000 (such that the Section
l 7.49(1) exemption will apply) -- it simply means that quantification for DTPA purposes must be
done by looking at something other than the monetary value as stated in the parties' contract.
55
Id. at§ l 7.49(1)(2).
56
Id. at§ 17.49(1)(3).
57
Id. at§ l 7.49(g).
58
It may be possible to avoid the application of this exemption through the use of separate business entities,
each being a separate consumer. For exa1nple, if one entity purchased the land, and another developed the
property, there would be two separate consumers and the total consideration paid for by "the" consumer
would not include funds expanded by the other entity.
59
TEX. Bus. & COM. CODE §l 7.49(g).
60
"We have also recognized at least two requirements that must be established for a person to qualify as a
consumer under the DTPA. One requirement is that the person must have sought or acquired goods or
14
In Cameron v. Terrell & Garrett, Inc., 61 the court held that there is nothing in the Act that
limits its application only to deceptive trade practices committed by persons who furnish
goods or services on which the complaint is based. The court stated:
Consumer is defined in section 17.45(4) only in terms of a person's relationship to
a transaction in goods or services. It does not purport to define a consumer in
terms of a person's relationship to the party he is suing. Section 17.45(4) does
nothing more than describe the class of persons who can bring a suit for treble
damages under section 17.50. It does not say who a consumer can sue under
section 17.50 for a deceptive trade practice violation. With respect to whom a
consumer can sue, section I 7.50(a)(l), the subsection under which this suit was
tried, expressly states that a consumer can bring a suit ifhe has been adversely
affected by "the use or employment by any person of an act or practice declared to
be unlawful in section 17.46." Terrell & Garrett is a person under the Act. We,
therefore, hold that a person need not seek or acquire goods or services furnished
by the defendant to be a consumer as defined in the DTPA. 62
In other words, under the language of the DTP A, once an entity is a consumer, a claim
may be brought against any person, regardless of that person's relationship with the
transaction, and notwithstanding the lack ofprivity. 63 This rule of broad applicability was
substantially modified, however, by the court's decision in Amstadt v. US. Brass. 64
As discussed above, under Cameron, once consumer status is established, all the
consumer must do to maintain a cause of action against a particular defendant is show
that the goods or services form the basis of his complaint and that the defendant violated
the Act. In Amstadt, however, the court noted that although the defendant does not have
to be in privity with the consumer, the defendant's wrongful conduct must be committed
"in connection with" the consumer's transaction.
Although the DTPA was designed to supplement common-law causes of action,
we are not persuaded that the Legislature intended the DTPA to reach upstream
manufacturers and suppliers when their misrepresentations are not communicated
services by purchase or lease. Another requirement recognized by this Court is that the goods or services
purchased or leased must fonn the basis of the co1nplaint. If either requirement is lacking, the person
aggrieved by a deceptive act or practice must look to the comn1on law or some other statutory provision for
redress."
Cameron v. Terrell & Garrett, lnc., 618 S.W.2d 535, 539 (1981).
61
618 S.W.2d 535 (Tex. 1981).
62
Id at 541.
We find no indication in the definition of consumer in section 17 .45(4 ), or any other provision of
the Act, that the legislature intended to restrict its application only to deceptive trade practices
committed by persons who furnish the goods or services on which the complaint is based. Nor do
we find any indication that the legislature intended to restrict its application by any other similar
privity requirement. In contrast, privity requirements have been dispensed with altogether in
negligence suits, in implied warranty suits for economic loss, and, for the most part, privity
requirements have also been abolished in strict liability suits. The Act is designed to protect
consumers fron1 any deceptive trade practice made in connection with the purchase or lease of any
goods or services. To this end, we must give the Act, under the rule of liberal construction, its
most comprehensive application possible without doing any violence to its terms.
Id. at 540-41.
64
919 S.W.2d 644 (Tex. 1996).
15
to the consumer. Despite its broad, overlapping prohibitions, we must keep in
mind why the Legislature created this simple, non-technical cause of action: to
protect consumers in consumer transactions. Consistent with that intent, we hold
that the defendant's deceptive conduct must occur in connection with a consumer
. as we exp ]am
transaction, ' below. 65
The "in connection with" language of Amstadt has not been discussed nor applied
much since the decision, and the decision itself does not provide a great deal of insight
into exactly what it means. 66 It is clear, however, that DTP A suits against a party with
whom the consumer did not directly deal, such as a remote manufacturer, will be subject
to an additional test. Did the defendant's conduct occur "in connection with" the
consumer's transaction? 67 For example, in a misrepresentation claim under the DTPA,
the misrepresentation probably must reach the consumer for a DTPA claim to lie.
A consumer may sue anyone who violates the Act, regardless of whether there is
any privity between the consumer and the defendant. A consumer, however, may not
maintain a DTPA action against an individual that does not have a direct involvement in
the transaction that forms the basis of the consumer's complaint, unless the consumer
shows that the act or practice complained of occurred "in connections with" the
consumer's transaction.
IV. CLAIMS UNDER THE ACT
Section 17.50(a) of the DTPA provides that a consumer may maintain an action
where any of the following constitute a producing cause of economic damages or
damages for mental anguish:
(I) The use or employment by any person of a false, misleading, or deceptive act
or practice that is:
(A) specifically enumerated in a subdivision of Subsection 17.46 of this
subchapter; and
(B) relied on by a consumer to the consumer's detriment;
65
Id at 649.
66 In its opinion, the court states what is not "in connection with," rather than what is. For exan1ple, as to
one of the parties the court noted:
Although the conduct of U.S. Brass comes closer to being in connection with the plaintiffs'
purchase of their homes than the conduct of Shell or Celanese, it also falls short of meeting the
nexus required for DTPA liability. U.S. Brass exercised significant control over the design and
installation of the plumbing syste1ns, but as with Shell and Celanese, U.S. Brass had no role in the
sale of the homes to the plaintiffs. As with Shell, U.S. Brass' marketing efforts were not intended
to, nor were they, incorporated into the marketing of the homes to the plaintiffs. Finally, U.S.
Brass' products were subject to independent evaluation by building code officials, homebuilders,
and the plumbing contractors who installed the materials. Viewed in this context, we conclude that
U.S. Brass' actions were not connected with the plaintiffs 1 transactions, that is, the sale of the
homes, in a way that justifies liability under the DTPA. Id. at 652.
67
See, e.g., Norwest Mortgage. Inc. v. Salinas, 999 S.W.2d 846 (Tex. App. Corpus Christi 1999, no pet.)
wherein the coutt finds the Amstadt test to be satisfied; and, Marshall v. Husch, 84 S.W.3d 781 (Tex.
App. Dallas 2002, no pet. h.), wherein the court notes that Amstadt requires that the representation reach
the consutner, or that there be a benefit from the consun1er's transaction to the party 1naking the
misrepresentation. Richard M. Alderman, THE LAWYER'S GUIDE TO THE TEXAS DECEPTIVE TRADE
PRACTICES Act§ 3.022 at note 32 (2d ed. 2003).
16
(2) breach of an express or implied warranty;
(3) any unconscionable action or course of action by any person; or
(4) the use or employment by any person of an act or practice in violation of
Chapter 541, Insurance Code.
It is important to note that there are four separate, yet cumulative, claims under section
17.SO(a). Conduct may violate one or all of the four provisions. For example, a party may
act in a manner that gives rise to a misrepresentation, a breach of warranty and be
unconscionable. Consider the following example:
Carey brought her car into Bob's for repairs. Carey knew nothing about
automobile engines and relied entirely on Bob's expertise. Bob, knowing that he
had a "sucker" told Carey that she needed a complete engine overhaul, a
statement that was untrue. He then performed a minor engine repair. The repair,
however, was done improperly. Based on this conduct, Carey could establish a
laundry list violation, a breach of the warranty of good and workmanlike
performance, and unconscionability.
1. The Laundry List
Section l 7.46(b) includes a list of twenty-seven acts or practices that are deemed
to be false, deceptive, or misleading under the Act. 68 This list is generally referred to as
"the laundry list." Each of these acts or practices is actionable under the DTPA. Note that
the Act requires that in addition to establishing the act or practice, the consumer must
show that the act was "relied on by a consumer to the consumer's detriment." 69 Jn most
cases reliance will be by the consumer who is maintaining the action. For example,
relying on a seller's misrepresentation, the consumer purchased the goods that form the
basis of the complaint. It is not necessary, however, that the reliance always be by the
consumer who filed the suit. In many cases, a purchase is made by someone other than
the ultimate consumer. For example, a husband, in reliance on a salesperson's
misrepresentation, may purchase a gift for his wife, or a father may rely on the
manufacturer's advertisement when purchasing a product for his son. In such cases, there
are two consumers: the purchaser as well as the party who receives the goods through the
purchase. By using the words "a" consumer and "the" consumer, section 17.SO(a) reaches
the logical conclusion that reliance by "a" consumer is sufficient ton give consumer
standing to "the" consumer who is ultimately injury or stuck with the defective product.
For example, in the above hypothetical, the husband's reliance would be sufficient to
enable wife to maintain a claim under the DTPA, as would father's reliance for the son. 70
Most of the laundry list provisions are self-explanatory. If any of the above
provisions has been found to happen, it is by law an unlawful event actionable under the
DTPA. Violations of the laundry list are actionable without regard to privily and may
occur prior to, simultaneously with, or after a contract has been fonned. lt is also
significant to note that knowledge or intent is not an element of a laundry list violation,
68
TExBus.&COM.CODE § l7.46(b).
69
This require1nent was added by the 1995 amendments. A similar requirement of reliance had been
imposed by the supreme court in Prudential lns. Co. of America v. Jefferson Assocs. Ltd., 896 S.W.2d
156 (Tex. 1995). An interesting issue is the continued validity ofrrudential in light of these changes.
70
Requiring actual reliance by the consu1ner maintaining the claim would often result in the inequitable
situation of allowing a merchant to misrepresent goods or services with no liability based simply on the
fact that the goods were purchased for another.
17
unless required by the particular subdivision. 71 This is a substantial change from common
law fraud. For example, in Pennington v. Singleton, 72 Singleton sold his boat to
Pennington. Singleton had never sold a boat before and was not in the business of selling
boats. Singleton made oral statements to Pennington that the boat and motor had just had
$500 worth of work and was in "excellent condition," "perfect condition," and ''.just like
new." These statements were made as statements of fact. The statements were false
because the mechanic had not adequately repaired the motor. Singleton did not know the
statements were false, did not intend to mislead Pennington, and acted in good faith. The
court found that Singleton violated subsection l 7.46(b)(5) and (7). These subsections do
not require proof of knowledge or intent. 73
a. General Misrepresentations
Although the laundry list consists of twenty-five provisions, most reported
decisions are based on just four, subsection (5), (7), (12), and (23). This is because these
are the most general provisions, and the easiest to establish. Basically, subsections (5)
and (7) apply to any misrepresentation regarding goods or services, subsection (12)
applies to any misrepresentation regarding agreements or legal rights and remedies, and
subsection (23) applies to the failure to disclose. Note that subsection (23) is one of the
provisions of the laundry list that require proof of intent.
To constitute a violation of subsection (5) or (7), it is only necessary that the actor
make a representation of fact regarding goods or services that is inaccurate or false.
Statements may be oral or written. Note, however, that it must be a statement of fact and
not merely opinion. Statements that constitute mere olinion, puffing, or vague
generalizations, are not actionable under the DTPA. 7 Misrepresentations are actionable
under the DTP A regardless of the intent of the party making the representation or his or
her knowledge of the falsity. 75 Here are some examples of conduct that has been found to
violate subsection (5) or (7):
1. Misrepresentation regarding coverage of title insurance policy. 76
2. Misrepresentation that property "properly drained." 77
3. Implied misrepresentation that services had been performed. 78
4. Oral misrepresentation that house complied with housing code. 79
5. Doctor's misrepresentation regarding benefits of drug. 80
6. Builder's misrepresentation regarding quality ofhouse. 81
7. Car dealer's misrepresentation regarding rebate. 82
As noted above, oral representations may form the basis of a DTP A claim under
the laundry list. The parol evidence rule and the statute of frauds, prohibiting the
71 TEX Bus. & COM. CODE§§ l 7.54(b )(10), (13), (23).
72
606 S.W.2d 682 (Tex. 1980).
73
Id. at 687.
74 Id.
75
See. e.g., Pennington v. Singleton, 606 S.W.2d 682 (Tex. 1980).
76
See, e.g., First Title Co. of Waco v. Garrett, 860 S.W.2d 74 (Tex 1993).
77
See, e.g.. Kessler v. Fanning, 953 S.W.2d 515 (Tex. App.-Fort Worth 1997).
78
See, e.g., Orkin v. LeSassier, 688 S.W.2d 651 (Tex. App. -Beaumont 1995).
79
See, e.g., Weitzel v. Barnes, 691 S.W.2d 598 (Tex. J 985).
80
See, e.g., State v. Bachynsky, 770 S.W.2d 563 (Tex. 1989).
81
See, e.g., Smith v. Baldwin, 611S.W.2d61J(Tex.1980).
82
See, e.g., Gunn Buick v. Rosano, 907 S.W.2d 628 (Tex. App.·-San Antonio 1995).
18
introduction of oral statements when a written agreement exists, do not apply to DTPA
misrepresentations, even if the subject matter is land. 83
b. Misrepresentations Regarding Legal Rights
There is a violation of the laundry list whenever a seller of goods or services
misrepresents the nature of the agreement or the rights and remedies available under an
agreement. 84 This provision, however, does not tum all breach of contract actions into
DTPA claims. A statement that is merely an interpretation of a contract that subsequently
proves to be incorrect is not a violation of this subsection. 85 Here are some examples of
conduct that has been found to violate subsection (b )(12):
(i) Misrepresentation that layaway agreement gave seller the right to retain all
86
monies deposited by buyer.
(ii) Landlord's misrepresentation of right to enter and take equipment. 87
88
(iii) Misrepresentation regarding right to repossess.
(ivJ Implicit misrepresentation regarding legal right to tow car from condominium
complex. 8
c. Failure to Disclose
In addition to imposing liability based on affirmative misrepresentations, the
DTPA recognizes that silence may also be false, deceptive or misleading. 90 Subsection
83
See, e.g., Weitzel v. Barnes, 691 S. W .2d 598 (Tex. 1985)
84
TEX BUS. & COM. CODE §17.46(b)(l2).
ss Id.
86
See, e.g., Leal v. Furniture Barn, 571 S.W.2d 864 (Tex. 1978).
87
See, e.g., Myers v. Ginsberg, 735 S.W.2d 600 (Tex. App. - Dallas 1987).
88
See, e.g., Villarreal v. Elizondo, 831 S.W.2d 474 (Tex. App. -Corpus Christi 1992).
89
See, e.g., River Oaks Townhomes Owner's Association v. Bunt, 712 S.W.2d 529 (Tex. App.-Houston
[14'" Dist.] 1986).
90
In addition to the DTPA disclosure requirement, a seller of residential real estate is also required to
disclose, in writing, certain facts about his or her knowledge of the condition of the property. Section
5.008(b) of the Property Code establishes minimum disclosures that must be made, and requires that the
disclosures be made in a fotm "substantially similar" to the statutory model.
The remedy for a violation of the disclosure requirement, however, is somewhat limited. Section
5.008(1) provides:
The notice shall be delivered by the seller to the purchaser on or before the effective date of an
executory contract binding the purchaser to purchase the property. If a contract is entered without
the seller providing the notice required by this section, the purchaser may tenninate the contract
for any reason within seven days after receiving the notice.
In other words, the buyer's sole re1nedy is to tenninate the contract. No provision is made for the consun1er
to retain the property and recover damages. For this reason, Section 5 .008 should always be considered in
conjunction with the DTPA. The failure to disclose under 5.008, or, an inaccurate disclosure, will often be
actionable under the laundry list provisions of the DTPA. Par example, in Robertson v. Odom, 2009 Tex.
App. LEXIS 5960 (Tex. App. Houston [14th Dist.] 2009, no pet. h.) the court considered whether
representing that there were no "structural repairs" violated the DTPA, when in fact a substantial amount of
work had been done on the property and a large amount of sheet rock had been replaced. To detennine the
meaning of"'structural repairs," the court looked to section 5.008, which requires that aJI structural repairs
be disclosed. Reviewing analogous case law, the court found that "structural" means referring to "the load-
bearing portion of a residence." Although this decision may correct in the context of the Property Code, it
may not be the correct approach for a DTPA misrepresentation. For purposes of the DTPA, the court
should have looked at how the reasonable consumer \Vould have understood the phrase.
19
(24) makes the failure to disclose actionable under the Act, however, it adds a
requirement that the defendant intend that his or her silence induce the consumer into the
transaction.
To establish a claim under section l 7.46(b)(23) the consumer must establish four
elements:
(i) the defendant knew information regarding the goods or services;
(ii) the information was not disclosed;
(iii) there was an intent to induce the consumer to enter into the transaction; and
(iv) the consumer would not have entered into the transaction on the same te1ms had the
information been disclosed.
The first element should be an obvious requirement. A party cannot be held
responsible for failing to disclose that which he or she does not know. 91 The second and
third requirements should be considered together. There must be a failure to disclose and
it must be with the intent to induce the consumer into the transaction. A presumption of
intent should arise whenever it is shown that the information was material. At that point
the burden should shift to the defendant to establish why the information was not
disclosed.
Finally, the consumer must establish that he or she would not have entered into the
transaction, or would not have entered into it on the same terms had the information been
disclosed. Note that a seller has no obligation to disclose what the consumer already
knows. For example, if the consumer knows that a foundation is defective, there can be
no liability upon the seller for failing to disclose this fact. Notice, however, must be
actual notice. Constructive notice, for example that provided by filing statutes, is not
sufficient to relieve a defendant of its obligation to disclose. 92
2. Unconscionability
Under section l 7.50(a), a consumer may maintain a claim for any unconscionable
act or practice. For purposes of the DTPA, unconscionability is defined as "an act or
practice, which to a consumer's detriment, takes advantage of the lack of knowledge,
ability, experience, or capacity of the consumer to a grossly unfair degree." 93 Although
the 1995 amendments substantially limited the definition of unconscionability by deleting
subsection (B), permitting pure "price unconscionability," this provision still provides
relief for those situations where a consumer of limited education, sophistication,
experience, or ability, is taken advantage of.
Whether an act or practice is unconscionable is determined at the time of the sale
or contract. 94 The process of establishing unconscionability involves reviewing the facts
The Texas Real Estate Co111mission has promulgated forms that comply with section 5.008, which
are used in most Texas real estate transactions. The TREC Standard Fonns n1ay be purchased from the
Commission or may be printed fron1 the TREC website on the Internet at l\'\\J:I.tr0c.state.t\.u~. The
Commission may be contacted by mail at P.O. Box 12188, Austin, Texas, 78711-2188 or by telephone at
(800) 250-8732.
91
See, e.g., Chandler v. Gene Messer Ford, Inc., 81 S.W.3d 493 (Tex. App. Eastland 2002, no pet)
92
See, e.g.. Ojeda de Toca v. Wise, 748 S.W.2d 449 (Tex. 1988).
93
TEX Bus. & COM. CODE § 17.45(5). Note that until 1995 the definition of unconscionability included a
subsection (B), defining unconscionability to mean charging a price grossly in excess of value received.
When reading unconscionability cases be sure to detennine which definition the court is e1nploying.
94
See, e.g., Parkway Corporation v. Woodruff; 901 S.W.2d 434 (Tex. 1995).
20
of the case, in light of the education, experience and ability of the consumer. Whether an
act or practice takes advantage to a grossly unfair degree is based on an objective review
of the facts. The consumer is not required to show that the defendant acted with any form
of culpable mental state, such as acting intentionally, knowingly, or with conscious
indifference. 95 To be unconscionable an act or practice simply must take advantage of the
consumer's lack of knowledge, ability, experience, or capacity to a "grossly" unfair
degree. The supreme court has defined "grossly" to mean "glaringly noticeable, flagrant,
..
comp 1ete, an d ummt1gate d96
.
Unconscionability under the DTPA requires that the consumer establish two
elements. First, there must be a showing of a Jack of knowledge, ability, experience, or
capacity on the part of the consumer. Second, the consumer must establish that the
defendant took advantage of this lack to a grossly unfair degree. As noted above, there is
no need to show any knowledge, intent, or ill motive on the part of the defendant. In other
words, whether the defendant acted intentionally or innocently is of no relevance with
respect to a determination ofunconscionability.
3. Breach of Warranty
The DTPA is both an independent basis for a cause of action and a vehicle
through which to bring an otherwise existing claim. Subsection l 7.50(a)(2) makes this
clear by providing that a consumer may maintain an action under the DTPA for any
breach of warranty. 97 Thus, warranty law in Texas takes on an added dimension - the
enhanced damages provided by the DTPA. 98
Section l 7.50(a)(2) provides that a consumer may maintain an action under the
Act for breach of an express or implied warranty. Unlike the laundry list and
unconscionability, however, the DTPA does not define or establish any warranties. All it
does is provide a vehicle through which a breach of warranty claim may be brought. To
establish the warranty, law outside of the DTPA must be consulted. 99
Warranties may be express or implied, and may arise by statute or common law.
For example, the Texas Business and Commerce Code creates express and implied
warranties in the sale of goods, 100 and the Texas Supreme Court has created an implied
95
See, e.g., Chastain v. Koonce, 700 S.W.2d 579 (Tex. 1985).
96
Id. at 583.
97
For a co1nplete discussion of Texas warranty la\\ see RICHARD M. ALDERMAN, THE LAWYER'S GUIDE
1
j
TO THE TEXAS DECEPITVE TRADE PRACTICES Acr, 2"' ed. at Chapter 5.
98
Under the DTPA, damages may be enhanced and additional, or punitive, da1nages may be recovered in
situations where they would not otherwise be authorized. For example, under C.hapter 2 of the Texas
Business and Commerce Code, damages for mental anguish and punitive dan1ages may not be
recovered. If the claiin is pied through the DTPA, however, these damages may be recovered if the
defendant acted "knowingly." See TEX Bus & COM CODE §17.50(b).
99
See La Sara Grain Company v. First National Bank of Mercedes, 673 S.W.2d 558 (Tex. 1984). The
importance of the rule that the DTPA does not establish any warranties was clearly demonstrated in
Pavelka v. Foxworth-Galbraith Lumber Co., 2008 Tex. App. LEXIS 6008 (Tex. App. Waco 2008, pet.
denied), where in the court reversed and rein anded a decision based on inconsistent jury answers to
questions about warranty and DTPA warranty. See also Para-Chem Southern, Jnc. v. Sandstone Products,
Inc., 2009 Tex. App. LEXIS 801 (Tex. App. Houston [!st Dist.] 2009, pet. denied) (successful challenge to
warranty claims also defeats DTPA claims based on breach of warranty).
00
' See TEX. Bus. & COM. CODE §§2.312-314.
21
warranty of good and workmanlike performance in service contracts, 101 suitability in
commercial leases, 102 and good and workmanlike performance and habitability in the sale
of a new home. 103 Regardless of how the warranty is created, however, a breach of that
warranty is actionable through the DTP A. 104
Because the DTP A does not create any warranties, they must be established
independent of the Act. This means that all questions regarding the existence of a
warranty, including whether a warranty has been disclaimed or limited, are a matter of
non-DTPA law. Disclaimers, modifications or limitations of warranties are all valid and
enforceable in a claim under the DTPA, if they are valid and enforceable outside of the
Act.1os
To bring a breach of warranty claim through the DTP A the consumer must prove
that a warranty exists, that the warranty applies to the consumer, and that the warranty
has been breached. The DTP A incorporates all existing warranty law and makes a breach
of warranty actionable through the Act. This does not change whether a warranty exists,
the scope of the warranty, or whether the warranty has been disclaimed or modified. All
of these questions are answered by general principles of law outside of the DTPA. Once a
breach is established, a consumer may maintain an action under the Act and recover
enhanced remedies under the DTPA.
4. Chapter 541
The fourth claim that may be brought under the DTPA is the use or employment
of an act or practice in violation of Chapter of the Texas Insurance Code. A discussion of
Chapter 541 is beyond the scope of this paper, however, suffice it to say that any
violation of Chapter 541 is actionable through the DTPA by a consumer.
V.DEFENSES
One of the greatest benefits of the DTP A has always been the limited defenses
available to defendants. That continues to be the case, even after the recent amendments.
The DTPA provides little in the way of statutory defenses, and those that do exist are
very limited. For example, one of the few statutory defenses is reliance on written
101
Melody Home Manufacturing Co. v. Barnes, 741 S.W.2d 349 (Tex. 1987). Note that there is no implied
warranty of good and workmanlike perfonnance in professional services. Murphy v. Campbell, 964
S.W.2d 265 (Tex. 1998); Dennis v. Allison, 698 S.W.2d 94 (Tex. 1985).
102
Davidow v. Inwood North Professional Group. 747 S.W.2d 373 (Tex. 1988).
103
See Humber v. Morton, 426 S.W.2d 554 (Tex. 1968).
104
But see the recent Texas Supre1ne Court decision in PPG Industries, Inc. v. JMB/Houston Centers
Limited Partnership. 146 S.W.3d 79, at 89 (Tex. 2004) wherein the court held that a breach of implied
warranty clahn may not be brought under the DTPA against a "remote'' seller, such as a 1nanufacturer. 'fhe
court stated, "Thus, we have established a clear distinction between DTPA and warranty claiins: A
downstream buyer can sue a remote seller for breach of an implied warranty, but cannot sue under the
DTPA."(emphasis in original)
105
See Southwestern Bell Telephone Company v. FDP Corp., 811 S.W.2d 572 (Tex. 1991). It must be
emphasized that the validity of a warranty disclaimer or limitation is determined exclusively from "non-
DTPA" law. In other words, only a warranty that exists and has not been disclaimed may give rise to a
claim under section l 7.50(a)(2) of the Act.See, e.g., Lindsey v. Lone Star R.V. Sales, 2009 U.S. Dist.
LEXIS 38616 (S.D. Tex. 2009) (no action may be brought under DTPA when contract disclaims all
warranties).
22
information provided to the defendant by another. To use this defense the defendant must
also show he gave the consumer reasonable and timely written notice of the defendant's
reliance. 106
It also is significant to note that common law defenses, applicable to a breach of
contract or tort claim, essentially are inapplicable to a claim under the DTPA. The DTPA
does not represent a codification of the common law and, therefore, common law
defenses do not apply. For example, the doctrine of"substantial performance" has been
held not to apply to the DTPA, 107 as has the "parol evidence rule." 108 Waiver and
estoppel are also inapplicable to a claim under the Act. 109 Recent decisions, however,
have provided for defenses based on contract language negating causation.
As discussed below, a consumer must prove that the wrongful act of the defendant
was a producing cause of the consumer's damages. It is a defense to damages under the
DTPA to show that the act or practice was not a producing cause of the consumer's
damages. For example, it is not unusual for a consumer to purchase goods or services "as
is," with a contract stating he or she is not relying on any representation of the seller. If a
consumer knowingly and voluntarily signs a contract containing such provisions, the
consumer has negated "producing cause" and is not entitled to any damaf\es. 110 In
Prudential Insurance Company ofAmerica v. J~fferson Associates, Ltd., 11 Goldman, a
sophisticated businessperson, agreed to purchase property from Prudential Insurance.
Goldman signed a contract that stated the purchase was as is, "with any and all latent and
patent defects." 112 Goldman also stated that he was not relying upon any representation of
the seller. Goldman sued the seller under the DTPA after discovering that the seller
misrepresented the condition of the building. The court held that the agreement signed by
Goldman negated any producing cause and precluded any recovery under the DTPA. 113
The court in Prudential, however, made it clear that its holding did not apply to
all such contractual provisions. Producing cause will be negated only when the agreement
is bargained for at arms length and freely, knowingly, and intelligently negotiated. 114 For
'°" TEXB\JS&CoMCODE §17.506.
107
Smith v. Baldwin, 611S.W.2d611(Tex.1980).
108
Weitzel v. Barnes, 691 S.W.2d 598 (Tex. 1985).
109
Kennemore v. Bennett, 755 S.W.2d 89 (Tex. 1988).
0
" Note that such a contract will also negate reliance required by TEX. Bus. & COM. CODE§ l 7.50(a) for a
laundry list clain1.
"' 896 S.W.2d 156 (Tex. 1995).
112
It is important to emphasize that although the court referred to the clause in Prudential as an "as is\'
clause, it is actually much more. A silnple "as is" clause merely negates warranties. The clause is
Prudential also contained language negating reliance on "any representation." This distinction is important\
and has often been over looked by the courts. For exa1nple, in Them1acor Process, L.P. v. BASF Corp., 567
F.3d 736 (5th Cir. 2009), the court cited Prudential for the proposition that a "disclaimer of warranty can
bar ... fraud and DTPA claims." In fact, that is not the holding of Prudential and the warranty disclaimer in
Thern1acor, while effective to disclaim warranties should not have been sufficient to disclaim DTPA
misrepresentation claims. See also Oliver v. Ortiz, 2008 Tex. App. LEXIS 6033 (Tex. App. Austin Aug. 5,
2008, no pet. h.) (language of as is "clause did not cover representations upon which DTPA claiin was
based); Kupchynsky v. Nardiello, 230 S.W.3d 685 (Tex. App. Dallas 2007, pet. denied) ("as is" clause not
discussed nor negotiated not effective to disclaim DTPA).
3
" /d.atl6l
4
" Id. at 162
23
example, in a one-sided transaction, between an unsophisticated consumer and a
knowledgeable businessperson, such a clause may not have the same effect. 11"'
1. Mediation
Although it is not a "defense," either party to a DTPA case has the right to
attempt to settle the matter by compelling mediation. Under the 1995 amendments to the
DTPA, either side may file a motion to compel mediation. 116 The motion must be filed
within 90 days after service of a pleading seeking relief under the Act. Both sides must
share the costs of the mediation, unless the amount of economic damages sought is less
than $15,000. In that case, the party requesting mediation must pay the costs. Mediation
generally must be held within 30 days of the request. 117
2. Arbitration
Contract provisions requiring arbitration of DTPA claims are enforceable in the
same manner as with respect to any other claim and do not constitute a waiver of the
Act.11s
3. Pre-Suit Notice
Perhaps the most misunderstood, and least used of the DTPA provisions are its
notice and settlement provisions. When properly used, these provisions encourage
reasonable settlement and preclude frivolous litigation. The 1995 amendments to the
DTPA strengthen these provisions providing even greater incentives for both sides to
carefully consider the contents of their notice and settlement letters.
Section 17.505(a) provides that as a prerequisite to filing suit, a consumer must
give the defendant written notice at least 60 days before filing the suit. 1' 9 The notice must
advise the person in reasonable detail of the consumer's specific complaint and the
amount of economic damages, damages for mental anguish, and expenses including
attorneys' fees, if any, reasonably incurred by the consumer in asserting the claim. 120
If the consumer fails to give notice as required, the defendant may file a plea in
abatement not later than the 301h day after the date the person files an original answer.
The suit will then be abated to permit the consumer to give proper notice. 121
4. Settlement
Once a plaintiff has given proper notice, the defendant has four options. 122 First,
the defendant may pay the amount requested and settle the matter. 123 Second, he may
115
116
TEX. Bus. & COM. CODE§ I 7.5051.
n1 Id.
8
" See, e.g., Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266 (Tex. 1992). For a general discussion of
arbitration in the consumer context, see Richard M. Alderman, Pre-Dispute Mandatory Arbitration in
Consumer Contracts: A Call for Refonn, 38 Hous. L. Rev. 1237 (2001).
119
If the giving of 60 days written notice is i1npracticable by reason of the necessity of filing suit in order to
prevent the expiration of the statute of limitations or if the consu1ner's clai1n is asserted by way of
counterclaim, notice is not required. DTPA §17.505(b).
120 Id.
121
TEX. Bus & COM. CODE § I 7 .505( c ).
122
Note that the fourth option was not available before the 1995 amendments.
24
ignore the notice and do nothing. Third, he may propose a settlement 124 and forward it to
the plaintiff within 60 days after receipt of the notice. 125 And, finally, he may wait until
suit is filed and then file a settlement proposal during the period beginning on the date an
original answer is filed and ending on the 901h day after that date. If mediation is held, a
person may tender settlement during the period beginning on the date that the mediation
ends and ending on the 20tl' day after that date. 126
Under section 17 .5052(d), a settlement offer must include an offer to pay the
following amounts of money, separately stated:
(i) an amount of money or other consideration reduced to its cash value
(settlement in kind), as settlement of the consumer's damages; and
(ii) an amount of money to compensate the consumer for the consumer's
reasonable attorneys' fees incun-ed as of the date of the offer.
An example best demonstrates how the notice and settlement provisions of the
DTPAwork.
Assume consumer sends written notice to defendant advising him of a claim
under the DTPA. Consumer states that defendant misled him with respect to the
extent of repairs necessary to repair his car. Consumer requests $2,000 for
overcharges, and $1,300 to restore the car to its original condition. He also
demands $300 for a rental car. Finally, consumer requests $500 for attorneys'
fees. Defendant tenders a settlement offer including $1,000 for overcharges, a
promise to restore the car to its original condition, valued at $1,000, and the use of
a loaner car, valued at $300. He also offers to pay $500 for attorneys' fees.
lf the consumer rejects the defendant's tender of settlement, it may be filed with
the court together with an affidavit certifying its rejection. 127 Rejection of a reasonable
settlement offer limits a consumer's recovery of damages. If the comi finds that the
Defendant's settlement offer is the same, substantially the same as, or more than, the
damages found by the trier of fact, the consumer may not recover as damages an amount
in excess of the lesser of:
(i) the amount of damages tendered in the settlement offer; or
(ii) the amount of damages found by the trier of fact. 128
Assume in the above example that the consumer rejects the defendant's offer and
the matter proceeds to trial. The jury awards the consumer damages in the amount of
$1,100 for overcharges, $900 to restore the car, $300 for a rental car and $15,000 for
attorneys' fees. Because the Defendant's settlement offer was "substantially the same" as
the amount of damages the consumer would be limited to $1,000 for overcharges (the
lesser amount), $900 to restore the car (the lesser amount) and $300 for a loaner car. In
123
Note that even if the plaintiff refuses an offer of settlen1ent in full, the tender itself will constitute a
defense if the plaintiff pursues the matter.
124
A settletnent offer is not an admission of engaging in an unlawful act or practice or liability under the
Act. It may not be offered as evidence except in connection with the limitation of damages or attorneys'
fees. TEX. Bus. & COM. CODE§ l 7.5052(k).
5
" Id. at§ 17.5052 (a).
126
Id. at§ 17.5052 (c).
127
Id. at§ l 7.5052(f).
128
Jd.at§17.5052(g).
25
other words, the defendant's reasonable offer has the potential to substantially limit
damages, and preclude additional damages.
5. Attorneys' Fees
Perhaps even more significantly than limiting damages, the rejection of a
reasonable settlement offer substantially limits the recovery of the consumer's attorney's
fees. In many DTPA cases, a substantial part of the plaintiffs recovery consists of the
consumer's attorneys' fees. Section 17.5052 as amended in 1995 provides an opportunity
for the defendant to limit its exposure through a reasonable offer of attorneys fees, at the
129
time the offer was made. If the court finds that the defendant's tender of settlement was
the same, substantially the same, or greater than the damages found by the trier of fact,
the court then determines the attorneys' fees necessary to compensate the consumer for
attorneys' fees incurred before the date and time of rejection of the offer. 130 If the court
finds that the offer of attorneys' fees in the defendant's offer was the same, substantially
the same, or more, than the amount of reasonable attorneys' fees, the consumer may not
recover fees greater than the amount of fees tendered in the settlement offer. 131
Referring again to the above hypothetical, assume that the court detennines that
the amount of reasonable attorney's fees at the time the settlement was rejected was
$500.
The consumer will be limited to the recovery of $500, the amount offered in the
settlement offer, notwithstanding the fact that the jury awarded fees in the amount of
$15,000.
The DTPA is designed to provide a liability scheme that can be understood by the
parties, and notice and settlement practices that encourage settlement rather than
litigation. Plaintiffs' attorneys must be careful to send reasonable notice letters designed
to encourage settlement in full and prompt resolution, while defendants' attorney should
always offer some amount in settlement to be able to take advantage of the DTPA penalty
provisions in the event a reasonable settlement offer is rejected.
6. Limitations
An action under the DTPA must be commenced within two years after the date on
which the false, misleading, or deceptive act or practice occurred or within two years
after the consumer discovered or in the exercise ofreasonable diligence should have
discovered the occurrence of the false, misleading, or deceptive act or practice. 132
Section 17 .565 provides what is generally referred to as a "discovery rule" of
limitations. It provides an objective and a subjective test for determining when limitations
begin to run. Limitations run two years from either:
(i) The date of the act or practice;
(ii) The date the consumer discovered the act or practice; or
(iii) The date the consumer in the exercise of reasonable diligence should
have discovered the act or practice.
129
ld. at§ 17.5052 (d)(2).
130
Jd. at § 17 .5052(h).
n1 Id.
132
TEX. Bus. & COM. CODE § 17.565. The limitation period may be extended 180 days if the consumer
proves that failure to timely file was due to the defendant's knowingly engaging in conduct solely
calculated to induce the plaintiff to refrain from or postpone the comn1encement of the action.
26
Note that the third alternative applies a reasonable person test to the consumer's
discovery. Actual discovery is not required if"in the exercise of reasonable diligence" the
act or practice should have been discovered. In most cases, the courts have held that a
consumer "should have" discovered the act or practice, no later than the date the injury
occurs. 133
7. Preemption
In some cases the provisions of the DTPA may be preempted by other state law
provisions. For example, state law specifically exempts certain acts of health care
providers, 134 and veterinarians 135 from the provisions of the DTPA. The Texas Supreme
Comt has also held that the DTPA is indirectly pre-empted by the provisions of the Texas
Antitrust Act. 136 It is important that attorneys for both parties carefully review Texas law
outside of the DTPA to see ifthe provisions of the DTPA have been preempted.
The courts have also found that various federal laws preempt the DTPA when
their provisions conflict. For example, it has been held that the DTPA may be Jlreempted
by ERISA, 137 the Airline Deregulation Act, 138 and the Carmack Amendment. 1 9 In many
other cases, however, preemption claims have been unsuccessful. The issue depends upon
whether the statute in question expressly provides for preemption or whether it is implied
by the regulation itself and whether that preemption is applicable to the facts of the
particular case. Again, it is essential that the attorney in a DTPA case be familiar with
relevant federal law and understand its possible preemptive effect.
VI. REMEDIES
The DTPA has always provided for liberal damages to an aggrieved consumer.
This was done to insure that consumers were fully compensated, provide an incentive for
attorneys to handle such cases, and provide a deterrent to wrongful conduct. As originally
enacted, the DTPA provided for mandatory trebling of all actual damages, as well as
attorneys' fees to a prevailing consumer. In 1979, the legislature recognized the potential
for over-compensation from a mandatory trebling provision and amended section 17 .50
to require trebling of only the first $1,000 of damages. Damages in excess of $1,000 were
subject to trebling at the discretion of the jury, if the defendant was found to have enacted
"knowingly."
Today, section 17.50 still provides significant relief for consumers who prevail
under the Act. The 1995 amendments, however, have substantially reduced potential
damages. The amendments, however, did not change the mandatory award of attorneys'
fees to a prevailing plaintiff, nor did they eliminate the potential for additional damages
133
See. e.g.,KPMG Peat Marwick v. Harrison Co. Hous. Fin. Corp., 988 S.W.2d 746 (Tex. 1999).
134
TEX. CIV. PRAC. & REM. CODE §74.004.
135
TEX Occ. CODE § 801.507, Nonapplicability of Deceptive Trade Practices-Consumer Protection Act,
provides, "Subchapter E, Chapter 17, Business & Commerce Code, does not apply to a claim against a
veterinarian for damages alleged to have resulted from veterinary in al practice or negligence."
136
Segura v. Abbott Laboratories, Inc., 907 S.W.2d 503 (Tex. 1995).
137
See, e.g., Cathey v. Metropolitan Life Ins. Co., 805 S.W.2d 387 (Tex. 1991).
138
See, e.g., Trans World Airlines, Inc. v. Mattox, 897 F.2d 773 (5'h Cir. 1990) affd, 498 U.S. 926 (1992).
139
See, e.g., Moffitt v. Bekins Moving & Storage, 818 F. Supp. 178 (N.D. Tex. 1993).
27
based on "knowing" conduct by a defendant. 140 It is fair to say that although DTPA
damages have been reduced, they still provide a generous potential for recovery when
compared to alternative causes of action. The Act also permits the award of attorneys'
fees to defendants in cases where a consumer files a frivolous claim.
1. Causation
One of the most significant elements of recovery under the DTP A is the lower
causation under section l 7.50(a). To recover damages a DTPA consumer must show that
the defendant's conduct was "a producing cause of economic damages or damages for
mental anguish." Thus, the causation standard for recovery of damages under the Act is
"producing cause." This is the lowest causation standard employed by the courts and has
been defined to mean: "an efficient, exciting, or contributing cause, which in a natural
sequence, produced injuries or damages complained of." 141 "A producing cause is a
substantial factor which brings about the injury and without which the injury would not
have occurred." 142 Note that this is a lower standard than "proximate cause," which
incorporates an element of forseeability and that there may be more than one producing
143
cause.
2. Damages in General
The current language of the DTPA provides that each consumer who prevails may
obtain economic damages and, in an appropriate case, damages for mental anguish and
144
additional damages of not more than three times the damages awarded. Each consumer
who prevails under the Act is entitled to recover "economic damages." This is a new tenn
that was added to the DTPA in 1995 to replace the former damage standard of "actual
damages." Economic damages is defined to mean
compensatory damages for pecuniary loss, including costs of repair and
replacement. The term does not include exemplary damages or damages for
physical pain and mental anguish, loss of consortium, disfigurement, physical
impairment, or loss of companionship and society. 145
Economic damages may be computed by any appropriate formula including the benefit of
the bargain rule, 146 the out-of-pocket rule, or the cost of repairs. Consequential damages
are also recoverable whenever appropriate under general principles of contract law.
140
Note that this is a substantially lower standard than that required in a tort case. See generally, Chapter41
of the Texas Civil Practice and Remedies Code, which requires a finding of fraud, malice or gross
negligence to support an award of exe1nplary damages.
141
See Rourke v. Garza, 530 S.W.2d 794, 801 (Tex. 1975). See generally Page Keeton, Causation, 28 S.
TEX. L. REV. 231 (l 986).
142
Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472, 481 (Tex. 1995).
143
For example, in Archibald v. Act III Arabians, 755 S. W .2d 84 (Tex. 1988), the jury found conduct
sufficient to satisfy the producing cause standard but not proximate cause.
144
TEX. Bus. & COM. CODE § l 7.50(b )( 1). Note that the general damage standard was changed in 1995
from "actual damages," to "economic damages." Actual damages, however, remains the damage
standard under section 17.SO(h) for violation of"tie-in" statutes.
145
id. at§ 17.45(11 ).
146
ln Perez v. Luu, 244 S.W.3d 444 (Tex. App. Eastland 2007, no pet.h.), the court apparently did not
understand the purpose of the benefit of the bargain rule, and its objectives. As noted in the text, the
28
Although there have been few cases discussing the term economic damages, it
should be interpreted to include all compensatory damages and exclude all "soft "
damages. For example,
Consumer purchased a toaster from seller. The toaster had a warranty defect. As a
result it caught on fire. Consumer was burned, the toaster was destroyed and the
kitchen was damaged. Consumer sued for breach of warranty under the DTPA
and negligence. She sought damages for her medical expenses, the cost of the
toaster, the cost to repair the kitchen, pain and suffering, and disfigurement.
Under the DTPA, she may recover only "economic damages," including her
medical expenses, the cost of the toaster and the cost to repair the kitchen.
Note that the term "economic damages" expressly excludes recovery for mental anguish.
Damages for mental anguish, however, are expressly authorized by section l 7.50(b)(l),
upon a finding that the defendant acted "knowingly.
Prior to 1995, damages for mental anguish were recoverable as part of "actual
damages." 147 ln 1995, the legislature replaced the term actual damages with the term
"economic damages." As noted above, the term "economic damages" expressly excludes
recovery for mental anguish. The DTP A states, however, that: "If the trier of fact finds
that the conduct of the defendant was committed knowingly, the consumer may also
recover damages for mental anguish." 148
"Knowingly" is defined by the Act to mean:
actual awareness, at the time of the act or practice complained of, of the falsity,
deception, or unfairness of the act or practices giving rise to the consumer's
claim, or, in an action brought under Subdivision (2) of Subsection (a) of Section
17.50, actual awareness of the act, practice, condition, defect, or failure
constituting the breach of warranty, but actual awareness may be inferred where
objective manifestations indicate that a person acted with actual awareness. 149
Under this definition, actual awareness does not mean merely that the person knew what
he or she was doing. It means that the person knows that what he or she is doing is false,
deceptive, misleading, unfair, or a breach of warranty. For purposes of determining
whether a person acted knowingly, knowledge or industry standards may be imputed to
one who is in an industry. Note that "knowingly" is a question of fact to be detennined by
the trier of fact, and may be inferred from objective manifestations. Once it is determined
that the defendant has acted "knowingly" the jury is pennitted to consider an award of
damages for mental anguish.
The award of damages for mental anguish damages must be made based on the
same standard that would be required to award such damages in any other cause of
action. There is no requirement that the consumer be awarded economic damages or that
there be an accompanying physical injury. 150 The consumer must, however, show a
purpose of this rule is to reward the consumer for a "good bargain." In Perez, the consumer attempted to
purchase I 00 hard drives, worth $1, 195 each, for $1, the price the seller mistakenly advertised them for.
The court noted, "even if Perez were otherwise cotTect [regarding liability] his 1naximu1n damages under
this theory [benefit of the bargain] would be only $100." The court was correct in finding no liability under
the DTPA; however, its damage calculation is in error.
147
Note this is still the applicable standard for a tie-in statute. See TEX. Bus. COM. CODE l 7.50(h).
148
TEX. Bus. & COM. CODE§ 17.50(b)(1 ).
149
Id at§ I 7.45(9).
150
See. e.g., Latham v. Castillo, 972 S.W.2d 66 (Tex. 1998) (Pre-1995 version of Act).
29
relatively high degree of mental pain and distress, more than mere disappointment, anger,
resentment, or embarrassment. Compensation can only be for mental anguish that causes
a "substantial disruption in ... daily routine" or "a high degree of mental pain and
distress" that is "more than mere worry, anxiety, vexation, embarrassment or anger." 151
For example, recovery may be based upon mental sensation of pain resulting from such
painful emotions as grief, severe disappointment, indignation, wounded pride, shame,
despair and/or public humiliation.
A DTPA consumer who prevails may recover all of the consumer's pecuniary loss
as "economic damages." This includes any economic damages arising out of an incident
involving a personal injury, such as hospital bills or lost income, and includes direct and
consequential damages. If the defendant acted "knowingly," the consumer may also
recover damages for "mental anguish." Economic damages, however, do not include
traditional "soft" tort damages such as pain and suffering, loss of consortium, or
disfigurement.
3, Additional Damages
To achieve its objectives of deterring wrongful conduct, protecting consumers and
providing an incentive for attorneys to bring a lawsuit, the DTPA pennits the recover of
damages in addition to actual losses. As originally enacted, the DTPA automatically
trebled all damages recovered by the consumer. Today, additional damages, up to a total
of three times the amount awarded by the jury, may be awarded
The DTPA authorizes the award of additional, or punitive damages, whenever the
defendant has acted "knowingly," or "intentionally." Section 17.50(b) states in relevant
pmt:
if the trier of fact finds that the conduct of the defendant was committed
knowingly, ... the trier of fact may award not more than three times the amount of
economic damages; or ifthe trier of fact finds that the conduct was committed
intentionally, ... the trier of fact may award not more than three times the amount
of damages for mental anguish and economic damages. 152
In other words, whenever the fact finder finds the defendant acted knowingly, it may
award a total of up to three times the consumer economic damages. A finding of
intentional conduct entitles the consumer to a total of up to three times economic
damages and damages for mental anguish.
It is important to note that this section authorizes the trier of fact to award a total of not
more than three times economic damages, or, a total of three times economic damages
and damages for mental anguish. This means that the maximum recovery is three times
economic damages, or economic damages and damages for mental anguish. For example,
assume that the fact finder awards $5,000 in economic damages. If it then finds the
conduct was committed knowingly, it may award a total recovery between $5,000 and
$15,000. This section does not authorize the recovery of economic damages plus three
times economic damages. 153 To fully understand the DTPA additional dmnages it is best
to view it as authorizing the award of damages, plus up to an additional two-times
151
See, e.g., Parkway Co. v. Woodmff, 901S.W.2d434 (Tex. 1995).
152
TEX. Bus. & COM. CODE§ l7.50(b)(l).
153
See. e.g., Jim Walter Homes, Inc. v. Valencia, 690 S.W.2d 239 (Tex 1985) (decided under pre-1995
DTPA).
30
damages, for a total of not more than three times damages. [Note that in Tony Gullo
Motors v. Chapa, 212 S.W.3d 299 (Tex. 2006) the supreme court seems to state that
additional damages my be three times economic damages for a total recovery of four
times economic damages. To date, no other court has followed this interpretation.]
4. Attorneys' Fees
In order to fully compensate the consumer, as well as encourage attorneys to
represent consumers, the DTPA mandates the award of attorneys' fees to a prevailing
consumer. Additionally, to deter frivolous lawsuits, the Act mandates the award of
attorneys' fee to a defendant when the suit was "groundless and brought in bad faith, or
brought for the purpose of harassment."
a. Consnmers' Attorneys' Fees
"Each consumer who prevails shall be awarded court costs and reasonable and
necessary attorneys' fees." 154 By using the word shall this section make it clear that the
award of attorney fees to a prevailing plaintiff is not optional. Attorneys' fees must be
awarded to a successful consumer. Attorneys' fees are awarded even if the consumer's
entire recovery of damages is offset by a claim of the defendant. 155
A consumer is entitled to recover attorneys' fees in an amount that is "reasonable
and necessary." Although many attorneys will have a percentage contingency fee
arrangement with his or her attorney, the Texas Supreme Court has held that although
such an agreement is valid between the parties, the amount of the fees awarded by the
fact finder must be determined in a dollar amount not as a percentage of the recovery. 156
b. Defendants' Attorneys' Fees
Section I 7.50(c) provides that "on a finding by the co mt that an action under this
section was groundless in law or in fact or brought in bad faith, or brought for purpose of
harassment, the court shall award to the defendant reasonable and necessary attorneys'
fees and court costs." 157 Note that similar to the award of consumers' attorneys' fees, the
award of defendants' attorneys' fees is mandatory once a court makes the requisite
factual findings.
The determination of whether adequate facts exist to justify the award of
defendants'' attorneys' fees is a question of law for the court, not the fact finder. 158 If the
court finds the consumer's claim was groundless or brought in bad faith it shall award
attorneys' fees to the defendant. 159 Groundless should be defined as having "no basis in
law or fact and not warranted by good faith argument for the extension, modification, or
reversal of existing law.'' 160 Although the courts have not yet defined "bad faith" in the
context of DTPA attorneys' fees, however, a finding of malice, ill will, spite, or reckless
disregard should be sufficient. Note that the court must find the action to have been either
brought in bad faith or groundless to justify the award of attorneys' fees.
154
TEX. Bus. &COM. CODE§ I 7.50(d).
155
See McKinley v. Drozd, 685 S.W.2d 7 (Tex. 1985).
156
See Arthur Andersen & Co. v. Perry Equipment Corp., 945 S.W.2d 812 (Tex. 1997).
157
TEX. Bus. & COM. CODE § 17 .50( c ).
158
Donwei1h v. Preston ll Chrysler-Dodge, Inc., 775 S.W.2d 634 (Tex. 1989).
159
Note that the term "or" v. as added in 1995 replacing the term "and." This would appear to create a lower
1
standard for the award of defendants' attorneys' fees.
160
See Donwerth v. Preston ll Chrysler-Dodge, Inc., 775 S.W.2d 634 (Tex. 1989).
31
Under the present version of the DTPA, harassment alone is also sufficient to
support the award of defendants' attorneys' fees. The suit, however, must be brought for
the sole purpose of harassment. 161 Essentially, to establish harassment it is necessary to
show the consumer would not be better off after the suit than he or she was before the
suit.
A defendant is entitled to recover attorneys' fees in an amount that is "reasonable
and necessary." The Texas Supreme Court has held that in the context of a consumer's
attorneys' fees this requires that the amount of the fees be determined in a dollar amount
not as a percentage of the recovery. 162 A similar standard should be applied with respect
to defendants' attorneys' fees.
6. Tie-in Statutes: Actual damages
Prior to 1995, the DTP A permitted a consumer who prevailed to recover all
"actual damages." Actual damages is generally defined to include all damages
recoverable at common law, and includes damages for mental anguish, and the so-called
"soft damages," such as pain and suffering and loss of consortium. As discussed above,
this term has been replaced as the DTPA's general damage standard with the less
inclusive te1m "economic damages." Actual damages, however, may still be recovered in
cases brought through the so-called "tie-in statutes."
Since the enactment of the DTPA, the legislature has chosen to incorporate its
provisions into many other statutes dealing with consumer-related issues. This is
accomplished by making a violation of those statutes a violation of the DTPA, actionable
under the provisions of the DTP A. Because these statutes tie them to the DTPA, they are
generally referred to as "tie-in statutes."
Section 17.50(h) of the DTPA provides that if the consumer brings a claim
through another law, i.e. a tie-in statute, the consumer may recover any "actual damages"
incurred. For purposes of DTP A "additional damages" in an action brought through a tie-
in statute, the term "economic damages" is replaced with the term actual damages. A
brief example demonstrates the significance of this provision.
Consumer went to a health club to discuss a possible membership. The
salesperson misrepresented the qua! ification of the instructors and the te1ms of the
membership agreement. As a result, Consumer was injured. If consumer files a
complaint under the laundry list she will recover economic damages. To recover
mental anguish damages she must show the defendant acted knowingly. To
recover treble economic damages she must show the defendant acted knowingly.
To recover treble mental anguish damages she must show defendant acted
intentionally.
If, however, Consumer filed her DTPA claim through the Health Spa Act, a tie-in
statute, she would be authorized to recover all actual damages. (Which includes mental
anguish as well as pain and suffering.) To recover treble all actual damages, including
mental anguish damages, she must show the defendant acted knowingly.
The term actual damages has been defined to include any damages recoverable at
common law. The amount of damages recoverable is determined by the total loss of the
161 Id.
162
See Arthur Andersen & Co. v. Perry Equipment Corp., 945 S.W.2d 812 (Tex. 1997).
32
consumer. 163 The term includes all compensatory damages, as well as damages for mental
anguish and pain and suffering.
Perhaps the most significant change made by the 1995 amendments was the
replacement of the term "actual damages, "with "economic damages." Section 17.SO(h),
however, reinstates the former "actual damages" standard in any case brought through a
tie-in statute. A consumer who brings a claim through a tie-in statute is entitled to recover
damages under the more generous damage standard of "actual damages," and treble that
amount upon a showing that the defendant acted "knowingly." It is in the interest of all
consumer attorneys to carefully review the more than thirty tie-in statutes to see if a
possible claim may be brought, in addition to the more standard laundry list,
unconscionability and warranty claims.
Tie-in Statute ~
Business Opportunity Act Tex. Bus. & Com. Code§ 41.302
Certain Sales Of Homestead Tex. Prop. Code§ 41.006(b)
Coastal Public Lands Management Act of 1973 Tex. Nat. Res. Code§ 33.135(d)
Contest and Gift Tex. Giveaway Act Tex. Bus. & Comm. Code §621.252
Debt Collecf1on Act Tex. Fin. Code § 392.404(a)
Disclosure by Financial Institution that Deposits are Not Insured Tex. Ins. Code§ 556.052
Disclosure to Purchaser of Property Tex. Nat. Res. Code§ 61.025(d)
Health Spa Act Tex. Occ. Code§ 702.403
Home Solicitation Sales Tex. Bus. & Comm. Code§ 601.204
Licensing and Regulation of Speech-Language Pathologists and Audiologist Tex. Occ. Code § 401.501
Personal Employment Services Tex. Occ. Code§ 2501.204
Credit Service Organizations Tex. Fin. Code § 393.504
Regu!aHon of Invention Deve!opment Services Act Tex. Bus. & Comm. Code§ 52.153
Removal of Unauthorized Vehicles from Parking Facffity or Public Roadway Tex Occupations Code§ 2308.406
Rental-Purchase Agreements Tex. Bus. & Com. Code§ 92.202
Representation as Attorney Tex. Gov. Code §406.017(D
Residential Service Company Act Tex. Occ. Code§ 1303.405
Sales of Certain Fuef Tex. Agriculture Code§ 17.152
Self-Service Storage Facility Liens Tex. Prop. Code§ 59.005
Talent Agency Registration Act Tex. Occ. Code§ 2105.251
Telphone Solicitation Tex. Bus. & Comm. Code§ 302.303
Texas Manufactured Housing Standards Act Tex. Occ. Code§ 1201.603
Texas Membership Camping Resort Act Tex. Prop. Code§ 222.011(a)
Texas Motor Vehicle Commission Code Tex. Occ. Code§§ 2303.054, 2302.053
Tex as Optometry Act Tex. Occ. Code§ 351.604
Texas Timeshare Act Tex. Prop. Code§ 221.071 (a)
Treatment Facilities Marketing Practices Act Tex. Health & Safety Code§ 164.013
Unfair Claim Settlement Practices Act Tex. Ins. Code§ 542.004
Private Child Support Enforcement Agencies Tex. Finance Code§ 396.353(a)
Private Action for Damages Authorized Tex. Ins. Code§ 541.151
Cigarette Tax, Enforcement of Tax Tex. Tax Code§ 154.4095
Tex. Bus. & Comm. Code§ 52.153
Occupational and Business Regulation, Miscellaneous
Medical Liability, Arbitration Agreements Tex. Civ. Prac. & Rem. Code§ 74.451 (c)
Currency Exchange, Transportation, and Transmission Tex. Finance Code§ 153.404
Home Improvement Contract Tex. Prop. Code§ 41.007(b)
Seller's Disclosure of Tax Payments and Insurance Coverage Tex. Prop. Code§ 5.070(b)(1)
Disposition of Insurance Proceeds Tex. Prop. Code§ 5.078(d). (e)
163
See, e.g., Kish v. Van Note, 692 S.W.2d 463 (Tex. 1985).
33
Interest in Land, Disclaimer and Disclosure Required Tex. Prop. Code§ 41.0051(c)
Executory Contract for Conveyance, Oral Agreements Prohibited Tex. Prop. Code§ 5.072(e)(1), (0
Seller's Disclosure of Property Condition Tex. Prop. Code§ 5.069(d)(a), (e)
34