LIABILITY FOR DECEPTIVE TRADE PRACTICES IN TEXAS

DTPA.jpgThe Texas Deceptive Trade Practices Act (DTPA) is codified in Chapter 17, Subchapter E of the Texas Business and Commerce Code. The purpose of the DTPA is to protect consumers from false, misleading or deceptive business practices, unconscionable actions or breaches of warranty.

To prevail in a claim brought under the Texas Deceptive Trade Practice Act, it must be established that:

1. The plaintiff is a consumer;
2. The defendant can be sued under the Act;
3. The defendant committed one or more of the following acts:

  • A false, misleading or deceptive act or practice listed in section 17.46(b) of the Texas Business and Commerce Code that was relied on by the plaintiff to the plaintiff’s detriment;
  • A breach of express or implied warranty;
  • An unconscionable course of action;
  • An act or practice in violation of Chapter 541 of the Texas Insurance Code; and/or;
  • A violation of one of the “tie-in” consumer statutes, authorized by section 17.50(h) of the Texas Business and Commerce Code, and

4. The defendants’ conduct was a producing cause of the plaintiff’s damages.

Subject to certain exceptions, a “consumer” under the DTPA means any individual, business entity or governmental entity that seeks to acquire goods or services for purchase or lease. The DTPA defines “goods” as tangible chattels or real property purchased or leased for use. “Services” means any work, labor or service, including services furnished in connection with the sale or repair of goods. However, most professional services are not subject to the DTPA.

To be actionable under the DTPA, the defendant’s deceptive acts or practices must be committed in connection with a transaction in which the plaintiff is purchasing or leasing goods or services. The plaintiff must show the transaction was connected with the defendant through a representation made by the defendant that reached the plaintiff or that a benefit from the plaintiff’s transaction reached the defendant.

Section 17.50 of the Texas Business and Commerce Code describes five (5) types of wrongful acts that can provide a basis for a consumer’s suit under the DTPA. These include deceptive acts or practices, breach of warranty, unconscionable course of action, violations of the Texas Insurance Code and violations of tie-in statutes. Section 17.46(b) of the Texas Business and Commerce Code sets forth the specific acts or practices that are considered false, misleading or deceptive. Because the DTPA does not create any warranties, the plaintiff must rely on other statutory provisions such as the Uniform Commercial Code or the common law to establish the warranty. An unconscionable act or practice means any act that, to the consumer’s detriment, takes advantage of the consumer’s lack of knowledge, ability, experience or capacity to a grossly unfair degree.

Section 541.151 of the Texas Insurance Code limits the rights of an insured person to bring claims under the DTPA against an insurance company only for the false, misleading or deceptive acts that are set forth in 17.46(b) of the Texas Business and Commerce Code. Section 17.50(h) of the Texas Business and Commerce Code provides that a plaintiff can maintain a DTPA action for the violation of other consumer protection statutes that are incorporated into the DTPA (tie-in statutes). The advantage of bringing suit under the tie-in statutes is that the plaintiff can recover actual damages for the alleged tie-in violation whereas under the DTPA the consumer is limited to the recovery of “economic” damages. Examples of the tie-in statutes include, but are not limited to: The Texas Lemon Law, The Texas Debt Collection Act, telephone solicitation regulations and laws regulating credit reporting agencies.

In a claim under the DTPA, a plaintiff can recover economic damages, mental anguish damages and attorneys fees. Economic damages are compensation for the pecuniary loss sustained by the plaintiff, but do not include pain and suffering, disfigurement, physical impairment or loss of society and companionship among others. Examples of economic damages include out of pocket losses, loss of benefit of the bargain, lost profits and lost time. Mental anguish damages can only be recovered if the defendant acted knowingly or intentionally. A finding of knowing or intentional conduct will also authorize the jury to award the plaintiff up to three times the amount of economic and mental anguish damages incurred as a result of the defendant’s conduct.

Defenses to DTPA claims include the statute of limitations, contributory negligence and lack of consumer status among others. The statute of limitations for a claim under the DTPA is two (2) years from the date that the violation occurred or two (2) years from the date when the plaintiff discovered or should have discovered of the violation.

At The Law Office of Stephen O’Rear, P.C. we represent people who are victims of false, misleading and deceptive business practices.