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119 Cards in this Set

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What damages are recoverable under the DTPA's private cause of action?
1) economic damages caused by actionable conduct
2) treble damages (3 times economic damages for knowing conduct)
3) Attorney's fees (mandatory)
When are treble damages awarded in a DTPA private cause of action?
If the private act was committed knowingly or intentionally.
When are attorneys fees recoverable in a DTPA private cause of action?
always. mandatory recovery of attorney's fes under the DTPA.
What are the elements of a private cause of action under the DTPA?
1) plaintiff must be a consumer
2) defendant must be connected to the consumer transation
3) defendant must commit actionable conduct
a. laundry list violation
b. insurance code Chapter 541 violation
c. breach of warranty
d. unconscionable conduct
e. violation of tie in statute
4. defendant's violation must be producing cause of
5. damages to the plaintiff.
What are the 5 basic categories of actionable conduct under the DTPA?
1) DTPA laundry list violatoin
2) violation of insurance code 541
3) breach of warranty
4) unconscionable conduct
5) violation of tie in statute
What are the standing requirements under the DTPA?
Plaintiff must be a consumer.
Who is a consumer under the DTPA?
someone who seeks or acquires by purchase or lease goods or services for use.

Not limited to natural persons.
Not necessary to be the individual who actually purchases the good or service if they are the intended beneficiary.

Payment of consideration not required in order to "seek" goods or services. Intent and ability to purchase satisfy definition.
Can an individual who does not actually purchase goods or services for money still qualify as a consumer under the DTPA?
Yes- if they are the intended beneficiary of the transaction.
Who is not a consumer under the DTPA?
"business consumers" with assets exceeding $25,000,000 are not consumers under the DTPA.
Must a consumer actually pay money in order to qualify as a consumer under the DTPA?
No- seeking goods or services is sufficient. seeking requires
1) intent and
2) ability to purchase.
What types of property are considered "goods" under the DTPA?
tangible and real property.
What types of property are not considered goods under the DTPA?
intangible property, such as stocks, CDs or pure loan transactions.
What services are included under the DTPA?
all kinds of labor and a variety of services, including insurance policies and financial/banking services
What services are not included under the DTPA?
the act of solely lending money.
BUT, a lender who commits a DTPA violation in connection with a loan when the consumer's objective is to purchase a tangible good=actionable service.
What defendants are exempt from the DTPA?
1) Professionals when the essence of their activity is the exercise of professional judgment or advice.EXCEPT:
a. unconscionable conduct
b. express misrepresentations of fact
c. breaches of express warranties
d. failure to disclose information

2) Real Estate Brokers/salesmen acting as a real estate broker or salesman

3) Publishers/media unless they have actual knowledge of falsity of their act or practice.
What transactions are exempt from the DTPA?
1) Transactions over $500,000 (excluding the consumer's residence)

2) transactions over $100,000 if
a. written contract
b. consumer represented by attorney UNLESS consumer's residence involved.
Are personal injury claims included under the DTPA, and, if so, when?
Generally, PI claims are exempt from the DTPA EXCEPT

1) recovery of economic damages like medical expenses, lost earnings, and mental anguish in the event of knowing and intentional conduct.

2) Violation of a tie in statute (Chapter 541) allows recovery of all damages, not just economic damages, including personal injury damages.
What is the DTPA laundry list?
A list of practices considerd false, misleading, or deceptive under the DTPA and the commission of which imputes liability on the defendant.
What are the 4 most common DTPA laundry list violations?
1) subsection 5- misrepresentation of characteristics
2) subsection 7- misrepresentation of quality
3) misrepresentation of contractual rights
4)subsection 24 Misrepresentation by omission
What are the three other common DTPA laundry list violations?
1) misrepresentation of repairs
2) misrepresentation of warranty
3) misrepresentation of work performed
What is necessary to demonstrate a subsection 5 DTPA laundry list violation?
representation that goods or services have sponsorship, approval, CHARACTERISTICS, ingredients, USES, BENEFITS, or QUALITIES that they do not have.
What is necessary to demonstrate a subsection 7 DTPA laundry list violation?
representation that goods or services are of a particular STANDARD, QUALITY, or grade or that goods are of a particular style or model if they are of another.
What is necessary to demonstrate a misrepresentation of contract or agreement DTPA laundry list violation?
representation that an agreement confers or involves rights, remedies, or obligations which it does not have or which are prohibited.
What is necessary to demonstrate a subsection 24 DTPA laundry list violation?
failing to disclose information concerning goods or services which was KNOWN at the time of the transaction if such failure to disclose was intended to induce the consumer into a transaction they would not have entered had the information been disclosed.

* Requires knowledge
What is necessary to demonstrate a misrepresentation of repairs DTPA violation?
KNOWINGLY making false or misleading statements of fact concerning the need for parts, replacement, or repair service.

**requires knowledge
What is necessary to demonstrate warranty fraud under the DTPA laundry list?
representing that a guarantee or warranty confers or involves rights or remedies which it does not involve.
What is necessary to demonstrate a misrepresentation of work performed DTPA laundry list violation?
representing that work or services have been performed on, or parts replaced in, goods when the work or services were not performed or the parts were not replaced.
What is mere puffery and is it sufficient to constitute an actionable representation?
Descriptions like "perfect condition", "top quality" etc. may be actionable because the DTPA is construed liberally.
In addition to a laundry list violation, what else must be shown in order to demonstrate a DTPA violation?
RELIANCE- a consumer must rely on a laundry list provision to their detriment.
What is necessary to demonstrate unconscionable conduct under the DTPA?
Taking advantage of a consumer's lack of knowledge, ability, experience, or capacity to a grossly unfair degree.

A grossly unfair degree is one that is glaring, noticeable, flagrant, complete, unmitigated.

** separate from the laundry list- often also present.
What is a tie-in statute and why is its incorporation under the DTPA beneficial for a plaintiff?
Tie in statutes cross reference the DTPA and, when violated, impart remedies on the consumer that the DTPA does not.

Violation of a tie in statute is considered a violation of the DTPA.
What are the most common tie-in statutes under the DTPA?
1) Federal Debt Collection Act
2) Business Opportunity Act
3) Health Spa Act
4) Manufactured Housing Standards Act
5) Home Solicitation Act
6) Insurance Code 541
What remedy as a tie in statute does the Federal Debt Collection Act provide under the DTPA?
actual damages
How does the Texas Business Opportunity Act work as a tie in statute to the DTPA?
Purpose: protect against false, misleading, deceptive practices in advertising, offering for sale or lease, and sale or lease of business opportunities.

Requirements:
1) buyer purchases or leases $500 or more of products or services
2) seller promises a profit more than initial payment
3) seller promises to provide assistance in operation of hte business, provide sales, production or marketing plans, or promises to buy back finished products.

*"franchises" under Federal law are exempt.
How does the Health Spa Act work as a tie in statute to the DTPA?
purpose: protect individuals who buy memberships at health clubs or health spas, not private clubs run by members.

clubs must be truthful in their conduct to prospective clients.
How does the Manufactured Housing Standards Act work as a tie in statute to the DTPA?
subjects manufacturers to written warranty of habitability
How does the Home Solicitation Act work as a tie in statute to the DTPA?
Entitles consumers solicited for sales of goods or services at their home to a written contract and specific disclosure of information.
Does the DTPA create warranties?
No. It serves as a vehicle for enforcing warranties created by other areas of law, such as the UCC.

Defenses or conditions inherent to the enforced warranty applies.
The breach of which types of warranties may be enforced under the DTPA?
1. UCC Article 2 Express and implied warranties

2. Common law implied warranties
What is required for the creation of an express warranty under Article 2 of the UCC, enforceable under the DTPA?
1. An affirmation of fact or promise
2. A description of the goods, or
3. a model or sample.

The warranty must be the BASIS OF THE BARGAIN

the words "warranty" or guarantee need not be included

The warranty need not be in writing- an oral statement can create a warranty

express warranties can be disclaimed or modified IF disclaimer does not directly contradict the terms of the warranty. (warrant 4 wheel drive, disclaim 4 wheel drive capability)
What types of UCC Article 2 implied warranties may be enforced under the DTPA?
1. Implied warranty of merchantability
2. implied warranty of fitness for a particular purpose
3. implied warranty of title
What is required to create a UCC Article 2 implied warranty of merchantability enforceable under the DTPA?
Sale of
1. NEW goods only (does not apply to used goods)
2. by a MERCHANT
must be
FIT FOR THE ORDINARY PURPOSE FOR WHICH THE GOODS ARE USED.
Can the UCC Article 2 implied warranty of merchantability be disclaimed or modified?
Yes, but the disclaimer must be
1. in writing
2. must be conspicuous (identified to consumer before purchase)
3. directly mention the implied warranty of merchantability or use words such as "as is" or "with all faults" or "disclaimer of all warranties"

valid disclaimers and modifications must be respected by DTPA claimants
What is required to create a UCC Article 2 implied warranty of fitness for a particular purpose under the DTPA?
1. the seller has knowledge of the buyer's particular purpose for the goods and that the buyer is relying on the seller's judgment, and
2. the buyer in fact relies on the seller's skill or judgment to select suitable goods

Does not require new goods or a merchant. BROAD
Can the UCC Article 2 implied warranty of fitness for a particular purpose be disclaimed or modified?
Yes, but the disclaimer must be
1. in writing
2. must be conspicuous (identified to consumer before purchase)
3. directly mention the implied warranty of merchantability or use words such as "as is" or "with all faults" or "disclaimer of all warranties"

valid disclaimers and modifications must be respected by DTPA claimants
Is privity required to enforce UCC implied warranties under the DTPA?
No, but the proper defendant must still be connected tot he transaction (i.e. no upstream manufacturers or sellers)
What is the source of implied warranties regarding goods in relation to the DTPA?
UCC Article 2.
What is the source of express or implied warranties regarding services in relation to the DTPA?
Common law
What implied warranties may be created for services in relation to the DTPA?
1. Implied warranty that services be performed in a good and workmanlike manner
2. Implied warranty of suitability (commercial leaseholds)
3. implied warranty of good and workmanlike construction and habitability (new home)
What is required to create an implied warranty that services be performed in a good and workmanlike manner in relation to the DTPA?
Repair or modification of an existing tangible good.
(ex. car repair, plumbing)

Does not apply to professional services.

workmanlike manner?=negligence standard of care in the industry
Can the implied warranty that services be performed in a good and workmanlike manner be disclaimed or modified?
No.
What is required to create an implied warranty of good and workmanlike construction and habitability in relation to the DTPA?
New homes must be suitably constructed and appropriate for routine occupancy.
Can the implied warranty of good and workmanlike construction and habitability be modified or disclaimed?
Yes, but only in very limited circumstances.
What are the 4 ost common measures of economic damages under the DTPA?
1. Benefit of the bargain damages
2. Out of pocket damages
3. Cost of repair damages
4. Loss of use damages
How are benefit of the bargain damages measured under the DTPA?
The difference between the value as represented and the value as delivered.

(ex. hurry and buy this home for $150k because it's worth it. when it wasn't a very good deal)
How are out of pocket damages measured under the DTPA?
The difference in value between the price paid and the value as delivered.
How are cost of repair damages measured under the DTPA?
Cost of making the goods or services as warranted or represented
How are loss of use damages measured under the DTPA?
Cost to rent replacement goods while the purchased goods are unavailable.
Are lost profits recoverable as damages under the DTPA?
Yes, but only if shown with REASONABLE CERTAINTY.
In what circumstances are personal injury damages recoverable under the DTPA?
1. tie in statute=actual damages
2. medical expenses or lost wages (economic damages)
3. mental anguish may be recovered if the DTPA violation was committed KNOWINGLY or INTENTIONALLY.
In the event a DTPA violation was committed knowingly or intentionally, what damages are available?
1. Mental anguish damages
2. Discretionary additional damages (treble damages)
What is required under the DTPA in order to justify the award of mental anguish damages?
1. predicate finding of knowing and intentional DTPA violation
2. DIRECT EVIDENCE showing the NATURE, DEGREE, and SEVERITY of the consumer's mental anguish
3. demonstration that the anguish caused a SUBSTANTIAL DISRUPTION in the consumer's DAILY ROUTINE.
What is required under the DTPA in order to justify the award of discretionary additional damages (treble damages)?
1. Predicate finding of knowing or intentional DTPA violation
2. Determination of amount
What are the limitations on discretionary additional damages (treble damages) under the DTPA?
1. Knowing conduct= 3 times the amount of economic damages
2. Intentional conduct= (more egregious) 3 times the total of economic damages + mental anguish damages
What is the limitations for attorney's fees under the DTPA?
if a consumer prevails, they are mandatorily entitled to reasonable and necessary attorney's fees.
Is a net recovery necessary for a consumer to prevail and recover attorney's fees under the DTPA?
NO. plaintiff prevails if they win a judgment in their favor, regardless of success of counterclaims etc.
What other remedies in addition to economic and discretionary damages are available for a claimant under the DTPA?
1. injunctions
2. declaratory relief
3. rescision of a contract or agreement
Can a consumer waive their rights and remedies under the DTPA?
Technically yes, but practically almost impossible. Waivers are usually ineffective because they don't conform to the strict standards.
What is required to waive the provisions of the DTPA?
1. in writing
2. 10 point font or larger
3. specific sentence "I waive my rights under the DTPA..."
4. signed by consumer
5. consumer and defendant in similar bargaining position
6. consumer represented by attorney
What are the common law defenses to a DTPA violation?
No common law defenses to a DTPA case. (parol evidence rule, doctrine of merger, substantial performance rule do not apply.)
What are the complete statutory defenses to a DTPA violation?
1. Written notice of outside source
2. rejection of full payment settlement offer
What other defenses besides statutory and common law defenses can be used in a DTPA case?
1. "mere breach of contract" defense
2. "as-is" provision in contract
What is required for the statutory complete defense of written notice of outside source under the DTPA?
If
1. at the time of the transaction
2. the defendant states in writing that
3. he is relying on a third party or outside source
4. that is unknowingly false or inaccurate

he will not be held liable if the information is incorrect.

Rare.
What is required for the statutory complete defense of rejection of full payment settlement offer under the DTPA?
If the defendant:
1. tenders the full amount of damages claimed + the amount of attorney's fees reasonably incurred
2. Within 30 days of receiving the DTPA notice and
3. the consumer rejects that offer

The defendant is not liable.
What is required for the "mere breach of contract" defense in a DTPA action?
The mere breach of a contract or promise to perform is not a DTPA violation UNLESS the defendant NEVER INTENDED TO PERFORM.

rationale- not a misrepresentation
What is required for the "as-is" contractual language defense under the DTPA?
"as-is" clauses in a contract are sufficient to bar a DTPA claim if
1) freely negotiated
2) similarly sophisticated
3) part of the basis of the bargain, and
4) product of an arm's length transaction

UNLESS
1) procured by fraud
2) seller impaired the consumer's ability to inspect the goods
3) the clause is boiler plate language in a contract of adhesion
What limitations are placed on consumers seeking to bring a DTPA claim?
2 years statute of limitations.

Begins to run from the date when the DTPA violation occurred OR
from the date when the consumer discovered or reasonably should have discovered the wrongfully caused injury.

May be extended 180 days if the defendant knowingly caused delay in filing suit.
What is the pre-suit notice requirement under the DTPA?
60 days prior to filing suit, a consumer must provide written notice to a defendant containing
1) a description of the consumer's specific complaint about the transaction in reasonable detail
2) a dollar amount of damages sought
3) a dollar amount of attorney's fees incurred
What are the exceptions to the pre-suit notice requirement under the DTPA?
1) statute of limitations is about to expire
2) if the DTPA claim is being asserted as a counterclaim
What is required for a valid settlement offer under the DTPA?
1) within 60 days after receiving notice
2) in writing
3) offers an amount for damages
4) offers and amount for attorney's fees
What happens when a plaintiff rejects the defendant's valid settlement offer under the DTPA?
1) damages
if the defendant offers to pay an amount which is the same as or less than the amount awarded by the trier of fact, the consumer's damages will be limited to the lesser of the two.

2) Attorney's fees
if amount offered by defendant is roughly the same as the amount incurred prior to rejection, plaintiff limited to lesser of two.
When is a DTPA claim barred aside from exemptions and statute of limitations?
FRIVOLOUS.
If the court determines that the lawsuit is
1) groundless in law or fact
2) brought in bad faith
3) for purposes of harassment
defendant awarded reasonable attorney's fees and costs.
What are an insurance company's common law duties?
1. Duty of good faith and fair dealing
2. Stowers Doctrine
What is the insurer's duty of good faith and fair dealing?
insurer owe policyholders (not third party claimants) a duty to settle a claim when liability is reasonably clear.
What is the Stower's doctrine?
provides an insured with a cause of action for negligence against an insurer who unreasonably refuses to accept a settlement offer within policy limits.

if insured is hit with judgment in excess of policy limits, they may recover the difference.
How does Chapter 541 of the Insurance Code relate to the DTPA?
it is a tie in statute that is closely related to the DTPA and adopting most of the same requirements as the DTPA.

Applies to INSURANCE
What are the standing requirements of a claimant under Chapter 541 of the Insurance Code?
The private cause of action is available only to a "person"

person is defined very broadly to include corporations, insurance companies, and any other person engaged in the business of insurance.

DOES NOT INCLUDE THIRD PARTY CLAIMANTS
What are the elements of a private cause of action under Chapter 541 of the Insurance Code?
1. plaintiff must be a "person"
2. defendant must be a "person"
3. the defendant must commit actionable conduct; either
a. violation of DTPA laundry list
b. violation of subchapter B
4. defendant's conduct is a producing cause of
5. actual damages to plaintiff.
What are the most common prohibited practices under Subchapter B of the Chapter 541 of the Insurance Code?
1. misrepresentation of an insurance policy
2. false advertising regarding teh business of insruance
3. misrepresenting to a claimant a material fact or policy consideration
4. failing to attempt a prompt, fair, and equitable settlement once liability is reasonably clear
5. failure to pay a claim without conducting a reasonable investigation
What remedies are available under Chapter 541 of the Insurance Code?
1. Actual damages, including mental anguish (broader than economic damages available under DTPA)
2. Discretionary Additional damages (3x actual damages)
3. Mandatory Attorney's fees
how do the provisions regarding notice, settlement, statute of limitations, and counterclaims under Chapter 541 differ from the DTPA?
They don't. They are exactly the same.
What are the deadlines placed on an insurer under Chapter 542 of the Insurance Code ?
I. after receipt of a claim, insurer has 15 days to
1. acknowledge receipt of claim
2. begin investigation of claim
3. request all information needed for decision
II. once required informaiton received, insurer has 15 days to accept or reject
III. Payment must be made within 5 business days of acceptance of the claim.
What happens if an insurer fails to comply with Chapter 542 of the Insurance Code?
1. Interest of 18% per year added to claim amount.
2. attorney's fees
What statutes govern debt collection practices?
1. Federal Fair Debt Collection Practices Act
2. Texas Debt Collection Act
What are the preemption rules regarding the Federal Fair Debt Collection Practices Act?
the FFDCPA does not preempt state law except when there is DIRECT CONFLICT, and then only to the extent of that conflict.

A state law providing greater protection is not inconsistent.
What damages are recoverable under the FFDCPA?
1. actual damages (broader than economic damages)
2. civil penalty of up to $1,000 per case
3. Attorney's fees (reasonable and necessary)
When does the FFDCPA apply?
FFDCPA provides redress to a person against any debt collector who violates the FFDCPA's standards of conduct for debt collection activities related to a "debt".
Who is a "consumer" under the FFDCPA?
any "natural" person obligated to pay a debt. in communication context, person includes spouse.
What is a "debt under the FFDCPA?
any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the subject of the transaction is primarily for personal, family, or household purposes.

business expenses are not "debts"
Who is a "debt collector" under the FFDCPA?
any person who uses any instrument of interstate commerce or the mail:
1. in any business whose principal purpose is DEBT COLLECTION, or
2. who REGULARLY attempts to collect, directly or indirectly, debts owed to ANOTHER
Are attorneys "debt collectors" under the FFDCPA?
They can be if they regularly attempt to collect debts on behalf of another.
Who is not a "debt collector" under the FFDCPA
1. creditors or employees of creditors
2. a legal process server
3. a nonprofit debt counseling service
4. a bona fide fiduciary
5. a government official acting in government capacity.
What are the categories of actionable conduct under the FFDCPA?
1. Third Party Communications
2. Mandatory Disclosures
3. Prohibited Acts
4. Prohibited false or misleading communications
What rules govern third party communication under the FFDCPA?
Generally: a debt collector cannot contact a third party for the purpose of collection without the debtor's consent.
BUT
Debt collectors can obtain location information IF
1. they properly identify themselves
2. they do not state a debt is owed
3. they do not indicate they are a debt collector of that the communication relates to a debt collection
4. they do not use post cards
5. they do not publish the debt to the public
What mandatory disclosures are required from debt collectors under the FFDCPA?
1. Validation Notice
2. Mini-Miranda Warning
What are the rules governing a validation notice under the FFDCPA?
within 5 business days of initial contact with a consumer, the debt collector must provide in writing
1) the amount owed
2) the name of the creditor
3) notice that
i) unless the consumer disputes the validity of the debt within 30 days, the debt i s presumed valid, and
ii) on written notice of dispute, the debt collector stops debt collection efforts and provides verification of debt
What is require in a mini-miranda warning under the FFDCPA?
When communicating with the consumer, the debt collector must inform the consumer:
1) that he is making efforts to collect a debt
2) that information obtained will be used for that purpose
3) must remind the consumer of these parameters in subsequent communications
What acts are prohibited under the FFDCPA?
1. inconvenient communication (before 8am or after 9pm) absent consent
2. communication with individual represented by an attorney absent consent
3. calls to consumers place of employment if the collector knows the employer objects
4. harassment or abuse (profanity, violence, publication, abuse of telephone)
What types of communication are prohibited under the FFDCPA?
1) false representation of government intervention
2) misinformation regarding amount, character, or nature of debt
3) falsely implying debt collector is an attorney when they are not
4) implication that failure to pay is a crime punishable by jail when it is not
What defenses can a debt collector assert under the FFDCPA?
Bona Fide Error Defense:
affirmative defense
1) if FFDCPA violation was not intentional and
2) reasonable procedures were adopted but not followed in this instance, no violation.
Are debt collectors in violation of the FFDCPA criminally liable?
No.
What limitations are placed on a FFDCPA violation?
one year statute of limitations
Is a private citizen the only one capable of enforcing the FFDCPA?
No. FTC (public right of action) can investigate and enforce the act.
Who is a debt collector under the Texas Debt Collection Act?
includes creditors collecting their own debts, unlike FFDCPA
Who is a third party debt collector under the TDCA?
the same meaning as a debt collector under the FFDCPA (one who regularly attempts to collect debts) BUT does not include attorneys!
What type of debt collector conduct are prohibited under the TDCA?
1. threats or coercion
2. harassment or abuse
3. unfair or unconscionable means (charging interest or fees not authorized by debt)
4. fraudulent, deceptive, or misleading representations
Is the list of prohibited conduct provided in the TDCA exclusive?
Yes. FFDCPA prohibited conduct is NOT exclusive.
What must third party debt collectors and credit bureaus do before doing business in Texas?
File a $10,000 surety bond. failure to do so=TDCA violation
Is a debt collector criminally liable for violation of the TDCA?
Yes. FFDCPA does not have criminal penalties.