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Introduction

Enactment and Amendments of DTPA

The Texas Deceptive Trade Practices-Consumer Protection Act (DTPA) was originally enacted in 1973, and has been amended many times since then. Except as otherwise indicated in the text, this chapter, together with any cumulative supplement entries for the chapter, reflects the current state of the law. However, a case will generally be governed by the version of the DTPA in effect when the acts giving rise to the cause of action occurred. In addition, some amendments to the DTPA explicitly provide that they apply only prospectively. Therefore, earlier versions of the law may apply to causes of action that arose prior to the effective date of the most recent amendments. Any attorney handling a case that arose prior to the most recent amendments to the DTPA should consult the language of the amendatory act to determine whether the amendments apply to that particular case. If the amendments do not apply, the attorney must consult earlier versions of the Act.

Purposes of DTPA

The DTPA was designed 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 that protection. In order to accomplish these purposes, the DTPA goes beyond common-law remedies. It provides consumers with a cause of action for deceptive trade practices, unencumbered by the burden of proof and many of the defenses encountered in a common-law fraud or breach of warranty suit.

Construction of DTPA

The DTPA should be liberally construed and applied to promote its underlying purposes. In construing the act, the primary emphasis must be on the intention of the legislature, keeping in mind the previous law, the evil the act was designed to prevent, and the remedy provided in the act. The legislative intent, determined from the entire act, should control over the strict letter of the act. In construing the DTPA, courts may consider relevant and pertinent decisions of courts in other jurisdictions.

Traditional contract notions do not necessarily apply in a DTPA case. For example, oral misrepresentations may constitute the basis of a DTPA cause of action, even though a written contract exists. Similarly, precontractual written representations, such as promotional literature, may be introduced to show that the defendant violated the DTPA.

Relationship to Other Laws

The provisions of the DTPA are not exclusive, but are in addition to any other procedures or remedies provided for in any other law, provided that no recovery is to be permitted under both the DTPA and another law for both actual damages and penalties for the same act or practice. A violation of a law other than the DTPA is not in and of itself a violation of the DTPA, but may be made the basis of an action under the DTPA if the act or practice is proscribed by the DTPA or is declared by the other law to be actionable under the DTPA.

IForum selection clauses are valid in Texas. However, a forum selection clause does not apply to an action under the DTPA relating to misrepresentations and fraud in the inducement to sign a contract. Enforcing a valid forum selection clause will not automatically determine the law applicable to the case. If the dispute is raised in another state's court, that court may determine that Texas law, including the DTPA, applies.

Exemptions

Owners and employees of a regularly published newspaper, magazine, or telephone directory or a broadcast station or billboard, in or on which any advertisement in violation of the DTPA is published or disseminated, are exempted from liability under the statute, unless it is established that they had knowledge of the unlawful false, deceptive, or misleading acts or practices, or had a direct or substantial financial interest in the sale or distribution of the unlawfully advertised good or service. As used in the statute, financial interest relates to an expectation that would be the direct result of the advertisement. Knowledge means actual, rather than merely constructive, awareness of the falsity or deception, but actual awareness may be inferred when objective manifestations indicate that a person acted with actual awareness. One writer has noted that direct or substantial financial interest presumably means something more than the compensation received by the medium for carrying the advertisement, and suggests that sharing in the return from the deception, in the manner of a joint venturer or a partner, is probably the sort of limitation the legislature intended to place upon this exemption. This exemption applies only to those disseminating information as members of the media, not to those disseminating information for themselves.

Acts or practices that are authorized under specific rules or regulations promulgated by the Federal Trade Commission under Section 5(a)(1) of the Federal Trade Commission Act are exempt from the DTPA. The DTPA does apply to acts or practices prohibited or not specifically authorized by a rule or regulation of the Federal Trade Commission. For purposes of this rule, an act or practice is not considered specifically authorized if no rule or regulation concerning the act or practice has been issued.

The DTPA contains a limited exemption for professional services. A claim for damages based on the rendering of a professional service, the essence of which is the providing of advice, judgment, opinion, or similar professional skill, may not be brought as a DTPA claim. The exemption applies to either the individual professional who provided the professional service or to any person or entity that could be found to be vicariously liable for that individual's conduct. Nevertheless, this exemption does not apply to a professional who misrepresents a material fact that cannot be characterized as advice, judgment, or opinion, or who fails to disclose information concerning goods or services if this failure to disclose was intended to improperly induce the consumer to enter a transaction. Furthermore, an unconscionable action or course of action, or a breach of an express warranty, that may not be characterized as advice, judgment, or opinion, is actionable under the DTPA.

In practical effect, the DTPA exempts certain transactions involving large sums of money. First, a claim arising out of a written contract is exempted if (1) the contract relates to a transaction, a project, or a set of transactions related to the same project involving total consideration by the consumer of more than $100,000; (2) in negotiating the contract, the consumer is represented by legal counsel who is not directly or indirectly identified, suggested, or selected by the defendant or an agent of the defendant; and (3) the contract does not involve the consumer's residence. Similarly, the DTPA does not apply to a cause of action arising from a transaction, a project, or a set of transactions relating to the same project, involving total consideration by the consumer of more than $500,000, other than a cause of action involving a consumer's residence.

In addition to the exemptions specified in the DTPA itself, some other laws specify that the DTPA does not apply to the subject matter covered by their provisions. For example, the Medical Liability and Insurance Improvement Act provides that the DTPA does not apply to physicians or health care providers as defined in that act, with respect to claims for damages for personal injury or death resulting, or alleged to have resulted, from negligence on the part of any physician or health care provider. However, the Texas Supreme Court has concluded that Section 12.01 precludes only a DTPA suit against a physician for negligence, that is, for a breach of the accepted standard of medical care. While the Court acknowledged that negligence claims may not be recast as DTPA actions to avoid statutory constraints, it held that Section 12.01 does not bar suit under the DTPA for a knowing misrepresentation or breach of an express warranty in cases in which physicians or health care providers warrant a particular result. Similarly, the DTPA does not apply to a veterinarian licensed under the Veterinary Licensing Act with respect to claims for damages for veterinary malpractice or alleged to have resulted from negligence on the part of the veterinarian.

Waiver, General Rule, Public Policy

As a general principle, blanket or wholesale attempts to waive the protections of the DTPA have been invalidated because they are against public policy.

Not all agreements that affect DTPA rights amount to waivers. A forum selection clause that specifies that the parties will litigate in a forum other than that provided by the DTPA venue provisions is not an impermissible waiver of DTPA rights, particularly in the case of a contract between highly sophisticated and knowledgeable parties.

Limited Consumer Waiver

For claims accruing on or after September 1, 1995, and for claims accruing before that date if suit is not brought before September 1, 1996, a waiver is enforceable if all of the following preconditions are met:

1. The waiver must be in writing, and signed by the consumer.

2. The consumer must not be in a significantly disparate bargaining position.

3. The consumer must be represented by legal counsel in seeking or acquiring the goods and services in question. A waiver is not      effective if the legal counsel was directly or indirectly identified, suggested, or selected by a defendant or an agent of the defendant.

In addition, the written waiver must conform to all of the following statutory requirements:

1. The waiver must be conspicuous.

2. The waiver must be in bold-face type of at least 10 points in size.

3. The waiver must be identified by the heading ``Waiver of Consumer Rights,'' or a comparable language.

The text should read substantially as follows:

I waive my rights under the Deceptive Trade Practices-Consumer Protection Act, Section 17.41 et seq., Business & Commerce Code, a law that gives consumers special rights and protections. After consultation with an attorney of my own selection, I voluntarily consent to this waiver.

The text may be modified to waive specified rights only.

Although a consumer may waive his or her rights by complying with the preconditions and procedures outlined above, the rights of the Attorney General are unaffected by a consumer's waiver. The fact that a consumer has signed a waiver does not give a defendant a defense in an action brought by the Attorney General.

"As Is'' Transactions

When goods are sold on an ``as is'' basis, the question of ``waiver'' is irrelevant. In a valid ``as is'' transaction (i.e., when the consumer was not induced to enter the transaction by a fraudulent representation or concealment), there is no basis for the assertion of a DTPA claim and, therefore, nothing to waive.

Not all contracts containing an ``as is'' clause will qualify as valid ``as is'' agreements. The mandate of the Prudential waiver rule is to determine the validity of the ``as is'' agreement in light of the agreement's terms, the sophistication of the parties, and the seller's conduct in misrepresenting or concealing known facts. For instance, one court of appeals concluded that no waiver of DTPA rights occurred, despite the inclusion of an ``as is'' clause in an earnest money contract when the following occurred:

1. The sellers knowingly concealed material information and made affirmative misrepresentations concerning the condition of the      house.

2. The buyers did not expressly and in writing disclaim their reliance on the oral representations.

3. The buyers testified that they in fact relied on the sellers' representations.

Other Effects of Waiver

If, for some reason, a waiver is ineffective with respect to a DTPA claim, the waiver does not become a nullity. A waiver that is ineffective as to DTPA claims might be effective to insulate a defendant from liability on a breach of contract claim.



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