2010 Texas Bar - Consumer Law

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Consumer Law

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Consumer Law

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Can the DTPA be waived?

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Generally no. C must be
- represented by counsel,
- waiver must be written, signed, conspicious
- identified by "Waiver of Consumer Rights" heading

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Remedies cumulative?

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Yes, but no double recovery for single act.

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Consumer:

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Indiv, P, corp, state agency who:
- seeks/acquires (not incidental beneficiary)
- by purchase/lease (gift included if purchased by someone)
- goods or services (not borrowed money)
- excludes biz w/ $25M assets

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Goods:

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- tangible chattels
- real property
- purchased or lease for use

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Services:

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- work, labor or services
- includes services in connection with repair of goods

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Unconcionable:

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takes advantage of C's lack of:
- knowledge
- ability
- experience
to grossly unfair degree

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Knowingly:

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actual awareness of falsity, deception or unfairness of act claimed
- necessary to get mental anguish damages under DTPA
- necessary for punitive damages under tie-in statute

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Intentionally:

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"knowingly" coupled with specific intent that C act in detrimental reliance
- necessary to get punitive damages under DTPA

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Economic damages:

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compensatory damages for pecuniary (economic) loss

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Actual damages:

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all economic loss + pain/suffering, mental anguish, etc.

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Tie-in statute:

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incorporates provisions of the DTPA
- actual damages available only through one of these

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Business consumer:

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- $25M in assets
- or controlled by corp. w/ $25M assets
- personal assets unlimited (Bill Gates is a consumer)

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Newspaper publishing false ads?

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Exempt

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Professional services?

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Exempt
- essence is providing "advice, judgment, opinion" (e.g. lawyer)
Except:
- misrep of mat. fact
- fail to disclose with intent
- unconcionable action
- breach of exp. W

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General malpractice?

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Exempt from DTPA

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TXN involving consideration over $100K based on written K?

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Exempt from DTPA
- Does not apply to TXN involving C's residence

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TXN over $500K?

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Exempt from DTPA
- Does not apply to TXN involving C's residence

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"In connection with"?

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- required of a party to be sued
- all immediate parties are in connection with the TXN
- remote parties only if actions related to TXN

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Four claims under the DTPA?

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- laundry list (only claim requiring proof of reliance by C)
- breach of express or implied warranty
- unconcionable action
- violation of Insurance Code

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Laundry list?

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27 causes of action list in DTPA. 4 most common:
- General Misrep. (sec. 5 or 7)
- Misrep. regarding Legal Rights (12)
- Failure to Disclose (24) (requires 1. knowledge, 2. nondisclosure, 3. intent to induce, 4. causation.

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Types of warranties?

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- implied Ws of title
- merchantability
- fitness
- express warranties (UCC Article 2)

DTPA does not create warranties

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Defenses to DTPA violation?

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- D's reliance on written info provided by 3rd party (must have written notice of reliance to C)
- negate "producing cause" element

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Mediation?

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- motion to compel within 90 days of pleading
- costs shared, unless < $15k in eco D

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Arbitration clause in K?

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Enforceable

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Settlement?

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- Offer within 60 days of notice or 90 days of answer or 20 days after mediation
- If C rejects offer substantially the same as damages, C may only recover lesser of settlement amount and found by trier of fact
- Attorneys fees limited to time of settlement offer
- C HAS DUTY TO ACCEPT REASONABLE SETTLEMENT OFFER

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Statute of Lims for DTPA?

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- 2 years after wrongful act OR
- 2 years of discovery or with reasonable dil. would have
- 180 day extension if D induced P not to file timely

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Producing cause?

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- "substantial factor" test
- less strict than proximate cause
- can be negated by "as is" if negotiated properly

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CTPA damages if no showing of D's state of mind:

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$10K ED:
MAX: $10K

$10K ED, $5K MAD:
MAX: $10K (ED only)

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CTPA damages if D acted knowingly:

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$10K ED:
MAX: $30K (ED x 3)

$10K ED, $5K MAD:
MAX: $35K (ED x 3 + MAD)

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CTPA damages if D acted intentionally:

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$10K ED:
MAX: $30K (ED x 3)

$10K ED, $5K MAD:
MAX: $45K ((ED x 3) + (MAD x 3))

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Types of damages:

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Economic:
- pecuniary loss, available always, punitive when D acts knowingly

Mental Anguish:
- high degree of mental pain, availble when D knowingly, punitive when D acts intentionally

Actual Damages:
- all types of harm, tie-in statute, punitive when D acts knowingly

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FDCPA: Debt collector:

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- Any person in the business of collecting debts OR
- who regularly collects debts for others (e.g. attorney collecting debts on behalf of clients)

- can apply to entity collecting its own debt using different name

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FDCPA: restrictions on communication:

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- proper time & place
- cannot contact if DC knows C is represented by an attorney
- cannot contact at place of employment if known that employer prohibits such comm.

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FDCPA: communication with 3rd parties

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prohibited except:
- to obtain location info
- with prior consent of C
- with express permission of court
- as reasonably necessary to effectuate post J judicial remedy

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FDCPA: validation of debt

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must send consumer notice in writing (large and prominent):
- amount of debt
- name of creditor
- stmt that debt presumed valid if no dispute w/in 30 days
- stmt that DC will validate if timely notice of dispute

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FDCPA: Prohibited conduct:

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Harassment / Abuse
- threats, obscenity, publication, use of telephone to annoy

False or Misleading Reps.
- false credit info, etc

Unfair / Unconc Practice
- trying to collect unauthorized amts, threats of nonJ action against property

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TDCA: limited to 3rd party debt collectors?

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NO

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TDCA: credit bureaus:

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- person has a right to report w/in 45 days
- CB must deny or admit inaccuracies w/in 30 days, or state not enough time to verify
- if not enough time, must treat inaccuracy as admitted until can verify

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TDCA: prohibited conduct

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(Exhaustive list, unlike FDCPA)
- Threats / coercion (OK to threaten arrest if there has been a crime)
- harrassment / abuse
- unfair / unconcionable
- fraud / deceptive / mislead. reps

Creditor not liable for acts of indep. DC w/out actual knowledge

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Tie-in statutes:

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Violation of these is a violation of DTPA
Examples:
- Biz Op. Act, TDCA, Health Spa Act, Coastal Lands Management Act

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Texas Insurance Code 541:

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Prohibits unfair competition and unfair or deceptive acts in insurance
Example violations:
False ads, Defamation of other insurer, Boycott

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541: remedy

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Up to 3x actual damages if committed knowingly

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Stowers doctrine

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- Insurer MUST accept a settlement within policy limits or be liable for additional damages imposed on the insured
- Breach is not a violation of 541

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541: person or consumer?

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- 541 applies to persons, DTPA applies only to consumers
- a person may sue under DTPA for violation of 541, but it is NOT a tie-in statute

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When discussing remedies...

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ALWAYS mention attorneys fees