TBE CONSUMER RIGHTS--Quick & Dirty Rules Flashcards
DTPA. Wtf is that?
What are its Remedies?
Deceptive Trade Practices Act
1) General Rules
a) Deceptive Trade Practices Act is liberally construed in
favor of consumers.
b) This act may not be waived unless there is a waiver.
To elaborate, when there is a waiver, as-is disclaims implied warranties, and negating reliance precludes all Deceptive Trade Practices Act claims.
2) Deceptive Trade Practices Act Remedies
Remedies provided by the act are in addition to any other procedures or remedies provided for in any other law, but a plaintiff cannot get a double recovery of damages.
The plaintiff, however, can get more than one recovery if
recoveries are from separate acts or practices.
Whats a consumer?
Who’s not covered?
3) Definitions
a) Consumer is an individual, partnership, corporation, this state, a subdivision of this state, or an agency of this state, who SEEKS OR ACQUIRES by PURCHASE OR LEASE, any GOODS OR SERVICES.
There is an exception for business consumer who has assets of 25 million dollars or more.
Whats a business consumer?
Are business consumers covered?
Who has burden to prove/what kind of defense is it?
b) A business consumer is an individual, partnership, or
corporation who seeks or acquires, by purchase or by lease, any goods or services for commercial or business use.
Lastly, Business Consumers are those buying for business purposes.
Consumer includes business consumers (business consumer are consumers UNLESS assets > $25 million), but it does not include business consumer that has assets of 25 million dollars or more, or that is controlled by an entity with assets of 25 million dollars or more.
A defendant has the burden to prove the affirmative defense that the plaintiff is a business consumer with gross assets of 25 million dollars or more.
Who are/are not the proper plaintiffs for purposes of the DTPA?
What does each part of the definition of consumer mean?
S/A
P/L
G/S
Whats included and not included under these?
Proper Plaintiff
1) Parties Covered by Deceptive Trade Practices Act
Individuals are covered by the Deceptive Trade Practices Act no matter what their financial status is. However, businesses are only covered by the act if assets are less than 25 million dollars.
2) Consumer
Consumer includes an individual or a proper entity who seeks or acquires, by purchase or by lease, any goods or services.
On SEEKING as a consumer, an entity does not need to actually buy the good, but an entity needs to possess subjective good faith intent to purchase the good. Here, no transfer of consideration is required.
And on ACQUIRING, a consumer can acquire the goods from a purchase either because he personally bought the goods or is a THIRD PARTY BENEFICIARY.
To elaborate, the consumer is a THIRD PARTY BENEFICIARY if goods were bought primarily for his benefit.
Moreover, an INCIDENTAL beneficiary, such as a borrower or passenger, is NOT a consumer.
On Exam: Look for words intended or incidental to distinguish between incidental and intended beneficiary.
Again, a consumer can seek or acquire any goods or services.
GOODS include tangible chattels and real property purchased or leased for use, which includes for the purpose of resell.
But GOODS DO NOT INCLUDE money, stock, accounts receivable, CDs, or partnership interests.
On the other hand, SERVICES include work, labor, or service purchased or leased, and services furnished in connection with the sale or repair of goods.
But SERVICES DO NOT INCLUDE activity that is merely lending money.
For Example, if a consumer’s objective is to purchase a tangible good with money borrowed from the bank, then the bank is not subject to the Deceptive Trade Practices Act.
And again, a consumer can seek or acquire any goods or services by purchase or lease.
Here, PURCHASE can mean any consideration.
Truly free goods or services are not covered by the Deceptive Trade Practices Act.
Also, purchase does not have to be money and can be a legal detriment
On the other hand, a LEASE means a transfer of right of
possession for a period of time in exchange for consideration.
Who is Exempted from DTPA?
Four big exemptions and exceptions to those exemptions.
Exemptions from DTPA
1) Media
Deceptive Trade Practices Act does not apply to owners or employees of regularly published newspaper, magazine, telephone directory, broadcast station or billboard.
However, it applies if the owners or employees of media either have knowledge of the false, deceptive or misleading acts or practices or had a direct or substantial financial interest in the unlawfully advertised good or service.
2) Professional Services
Generally, the Deceptive Trade Practices Act does not apply to professional services where the essence is in providing professional advice, judgment, or opinion.
This exemption protects attorney, doctor, architect, and
engineer from their services and is service specific, not
profession specific.
Attorneys, doctors, accountants, architects, and engineers provide professional services are exempt UNLESS there is:
a) An express misrepresentation of material fact that cannot be characterized as advice, judgment or opinion.
b) A failure to disclose information.
c) An unconscionable action or course of action that cannot be characterized as advice, judgment or opinion.
d) Breach of an express warranty that cannot be
characterized as advice, judgment or opinion.
3) Personal Injury Claims
Generally, there is no recovery for a cause of action for bodily injury or death, or the infliction of mental anguish.
However, a plaintiff can get economic damages in connection with bodily injury or death and mental anguish if he can prove knowledge or intent, and a plaintiff can get all damages arising under a tie-in statute, which is to bring a claim based on other statutes through the Deceptive Trade Practices Act.
4) Large Transactions
In written contracts, the Deceptive Trade Practices Act DOES NOT APPLY to a claim arising out of a written contract IF:
a) The contract is for more than 100 thousand dollars
AND the plaintiff is represented by an attorney at the time of the contract. This attorney must not be suggested by the defendant.
–However, the Deceptive Trade Practices Act DOES APPLY if the written contract involves the plaintiff’s residence.
b) Also, the Deceptive Trade Practices Act generally DOES NOT APPLY to a claim arising from a transaction involving total consideration by Plaintiff of over $500,000. It does not have to be a written contract.
–However, same as the written contract, the act DOES APPLY if it involves Plaintiff’s residence.
What makes a proper defendant under the DTPA?
Requirements (4)?
Action contrary to Public Policy? Exceptions?
Proper Defendant
1) Basic Requirements
a) The plaintiff does not have to be in privity with the
defendant.
b) Goods or services sought or acquired must form the basis of the complaint.
c) The defendant has to have some connection with the
transaction, and his deceptive conduct must occur in connection with the transaction.
d) For remote consumers, the Deceptive Trade Practices
Act does not reach upstream manufacturers and suppliers when their misrepresentations are not communicated to the consumer.
In contrast, the act reaches the upstream manufacturers and suppliers if misrepresentation reached the consumer.
In summary, the PLAINTIFF DOES NOT have to be the one who purchases, and the defendant does not have to be the one who furnishes the goods or services.
However, the DEFENDANT MUST have some connection to the transaction.
2) Action Contrary to Public Policy
If the Deceptive Trade Practices Act action is contrary to
public policy, it is unenforceable and VOID UNLESS:
a) It is in writing and signed by the consumer.
b) Consumer is not in a significantly unequal bargaining position.
c) Consumer is represented by an attorney of his own choosing.
d) And the waiver is conspicuous.
What kinds of claims can be brought under the DTPA?
Claims under DTPA
4 Claims Brought under Deceptive Trade Practices Act
1) Laundry List Violations
2) Breach of Implied or Express Warranty
3) Unconscionable Act
4) And Insurance Code Violation (Article 21.21)
What is a laundry list violation?
Three most common prohibited practices?
Laundry List Violations
It is the use or employment by any person of a false,
misleading, or deceptive act or practice that is:
1) Specifically enumerated in the laundry list
2) Relied on by a consumer to the consumer’s detriment.
3) There is a need for reliance by a consumer to the consumer’s detriment.
4) Also, no privity, knowledge or intent is required unless it is specifically enumerated as an element of the violation.
5) And there are three most common prohibited practices of the laundry list violation:
a) The first is general misrepresentation about goods and services.
b) The actor makes a representation of fact regarding goods or services that is inaccurate or false.
c) Failure to disclose
Statements which constitute mere opinion, vague generalization or puffing are not actionable.
Three most common prohibited practices of Laundry list violation?
Last one has 4 elements.
The three most common prohibited practices of the laundry list violation:
a) The first is general misrepresentation about goods and services.
First Example, it could be a car dealer’s misrepresentation
regarding a rebate or a doctor’s misrepresentation regarding benefits of drugs.
b) The actor makes a representation of fact regarding goods or services that is inaccurate or false.
The second most common prohibited practice of the laundry list violation is misrepresentation about legal rights.
Here, assertion of legal rights that do not exist is actionable, but a valid contract interpretation is not.
For Example, it could be a landlord’s misrepresentation of the right to enter and take equipment.
c) Failure to disclose (4 elements)
And the third most common prohibited practice of the laundry list violation is failure to disclose, which has 4 elements:
1) Defendant knew information regarding the goods or services.
2) The information was not disclosed.
3) There was intent to induce the consumer to enter into the transaction.
4) And the consumer would not have entered into the transaction on the same terms had the information been disclosed.
What is a breach of an express or implied warranty?
How to approach on the exam?
Breach of Implied or Express Warranty
The general rules are that:
Any breach of warranty can be brought under the Deceptive Trade Practices Act.
And warranties are created under the UCC and common law.
However, the Deceptive Trade Practices Act does not establish or define any warranties: It is merely a vehicle through which a breach of warranty claim can be brought.
ON THE EXAM, first establish an independent breach of warranty, attach it to the Deceptive Trade Practices Act, and then look to statute and state law to see if the warranty exists and whether it has been disclaimed or limited.
Disclaimers are not affected by the fact that a claim is brought under the act, and a person cannot maintain a claim under the act for breach of implied warranty against a remote manufacturer.
Let’s look at different warranties.
First, an implied warranty of suitability in commercial
leaseholds is where the property is fit for its intended
purposes. This warranty MAY be WAIVED.
Second, an implied warranty of good and workmanlike performance in service contracts is where there is a warranty that the work will be performed as a reasonably competent person would perform it in a contract for repair or modification of tangible chattels. This type of warranty MAY NOT be WAIVED.
Also, there is no implied warranty for professional services.
And third, in an implied warranty of good and workmanlike performance and habitability in the sale of home, habitability MAY NOT be WAIVED, but good and workmanlike performance MAY BE WAIVED.
What is an Unconscionable Act?
4) Unconscionable Act
The third type of claim is any unconscionable action or course of action by any person.
Unconscionable act is an act or practice which, to a consumer’s detriment, takes unfair advantage of the lack of knowledge, ability, experience or capacity of the consumer to a grossly unfair degree.
The objective standard is used for unconscionable act.
On Exam: Review the conduct at the time of the contract and do not consider Defendant’s mental state.
Furthermore, grossly unfair means that unfairness was
noticeable, flagrant, complete and unmitigated.
What is Insurance Code Violation?
Violation of Article 21.21
It is the use or employment by any person of an act or practice in violation of Insurance Code Chapter 541, Article 21.21.
Any violation of Article 21.21 is automatically a violation of
the Deceptive Trade Practices Act.
This is NOT A TIE-IN statute.
The Deceptive Trade Practices Act directly states it is
actionable.
Defenses based on DTPA (5)?
Defenses
There are five Defenses to the cause of actions based on
Deceptive Trade Practices Act:
1) The first defense is absence of reliance. If it is a laundry
list or unconscionable act violation, Defendant can claim that there is no reliance by Plaintiff.
2) The second defense is lack of pre-suit notice.
3) The third defense is mediation and arbitration, where Deceptive Trade Practices Act claims are subject to mandatory mediation or arbitration clauses.
4) The fourth defense is the statute of limitations.
–It is 2 years from the date of Deceptive Trade Practices Act violation or the date the plaintiff discovered or should have discovered the violation.
The statute of limitations begins to run from the time the
plaintiff discovers or should have discovered the injury, not the violation.
5) And the fifth defense is the contractual limitation on damages clause.
–The limitation clause can only be used to limit liability for
breach of warranty, and it cannot be used to limit liability for a laundry list violation or unconscionable act.
What are the Remedies?
How do you qualify for the particular remedies?
Remedies
First, the PRODUCING CAUSE is a substantial factor which brings about the injury and without which the injury would not have occurred.
On Exam: Never mention the proximate cause. The producing cause is a lower standard than the proximate cause.
The producing cause may be negated by stating the sale is “as is”. This is not a waiver, meaning, the plaintiff may still sue, but his cause will be negated.
Second, DAMAGE is a REMEDY.
As the general rule, the consumer may recover ECONOMIC damages under the Deceptive Trade Practices Act.
If the defendant KNOWINGLY committed the act, the consumer can get THREE TIMES the amount of ECONOMIC damages PLUS MENTAL ANGUISH damages.
And if the defendant INTENTIONALLY committed the act, the consumer can get THREE TIMES of BOTH the amount of ECONOMIC and MENTAL ANGUISH damages.
What types of Damages are there under DTPA?
CONFUSING SHIT
Let’s go over the three types of damages: 1) ACTUAL 2) ECONOMIC 3) MENTAL ANGUISH 4) ATTORNEY'S FEES damages.
1) ACTUAL damages are available for actions brought through a tie-in statute. ACTUAL damages INCLUDE ECONOMIC damages, MENTAL ANGUISH and PAIN AND SUFFERING.
THREE times of the ACTUAL damages are available upon a showing of the intent, KNOWINGLY.
2) ECONOMIC damages are compensatory damages for pecuniary loss, including costs of repair and replacement.
It DOES NOT INCLUDE EXEMPLARY damages OR SOFT damages
SOFT damages include physical pain and mental anguish, loss of consortium, disfigurement, physical impairment, and loss of companionship and society.
3) MENTAL ANGUISH damages are available upon a showing of KNOWING conduct.
Here, knowing 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.
Also, the standard for showing of KNOWING conduct is KNEW OR SHOULD HAVE KNOWN.
4) And lastly, the ATTORNEY’S FEES is another Deceptive Trade Practices Act remedy.
The Deceptive Trade Practices Act mandates the award of the attorney’s fees to the prevailing consumers.
The rationale behind awarding the attorney’s fees is to
fully compensate the consumer and encourage attorneys to represent consumers.
To deter frivolous lawsuits, the Deceptive Trade Practices Act mandates attorney’s fees to a defendant when the suit was:
- -Groundless,
- -Brought in bad faith,
- -Or brought for the purpose of harassment, which must be the sole purpose.
Lastly, the award of attorney’s fees is MANDATORY, and the amount is DISCRETIONARY.
An attorney’s percentage contingency fee is valid, but an
attorney’s fee award under the Deceptive Trade Practices Act must be in dollars based on the number of hours worked.
