BILL ANALYSIS
C.S.H.B. 668
By: Junell
May 1, 1995
Committee Report (Substituted)
BACKGROUND
The Deceptive Trade Practice and Consumer Protection Act (DTPA) was
adopted to dissuade big businesses from taking advantage of
consumers by offering the consumer triple-damages. Some say, the
DTPA has become an avenue for numerous lawsuits, making application
of the DTPA inconsistent with the original intent.
PURPOSE
As proposed, CSHB 668 reforms the procedure and conditions for
awarding damages for deceptive trade practices.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency or institution.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Sections 17.42, 17.43, 17.44, Business and
Commerce Code, as follows:
Sec. 17.42. WAIVERS; PUBLIC POLICY. (a) Provides that a
waiver by a consumer of the provision of this subchapter is
only enforceable if a defendant pleads
and proves that the waiver is in
writing;the consumer is not in a
significantly disparate bargaining
position; and the consumer is represented
by legal counsel. Deletes parts of
existing Subdivision (2) and all of
existing Subdivision (3).
(b) Provides that a waiver is not effective if the consumer's
legal counsel was directly or indirectly identified, suggested
or selected by a defendant or an agent of the defendant.
Deletes existing text.
(c) Sets for the format and language of the waiver.
(d) Authorizes the waiver to be modified to waive only
specific rights under this subchapter.
* (e) The fact that a consumer has signed a waiver under this
section is not a defense to an action brought by the attorney
general under Section 17.47.
Sec. 17.43. CUMULATIVE REMEDIES. Deletes the provision that
no recovery shall be permitted under this subchapter and
another law of actual damages for the same act or practice.
Sec 17.44. CONSTRUCTION AND APPLICATION. Adds section (b)
which states that Chapter 27, Property Code, prevails over
this subchapter.
SECTION 2. Amends Section 17.45, Business and Commerce Code, by
amend Subdivision (9) to add to the definition of "knowingly" and
by adding Subdivisions (11) and (12), to define "economic damages"
and "waiver."
SECTION 3. Amends Section 17.49, Business and Commerce Code, by
adding Subsections (c)-(e), as follows:
(c) This subchapter does not apply to a claim for damages
based on the rending of a professional service, the essence of
which is providing advice, judgement or opinion. This
exemption does not apply to: a misrepresentation of a material
fact that is not advice, judgement or opinion; a failure to
disclose information in violation of Section 17.46(b)(23); an
unconscionable action or course of action that is not advice
judgement or opinion; or breach of an express warranty that is
not advice, judgement or opinion.
(d) This subchapter does not apply to a claim arising out of
a written contract if: the consideration paid exceeds
$200,000; in seeking or acquiring the goods or services the
consumer is represented by legal counsel who is not
identified, suggested, or selected by the defendant or the
defendant's agent; the contract was negotiated at arms length
and the consumer was not in a significantly disparate
bargaining position; and the contract is not related to work
done on the consumer's residence.
(e) This subchapter does not apply to a cause of action
arising from a transaction or project involving total
consideration by the consumer
of more than $1,000,000.
SECTION 4. Amends Sections 17.50(a),(b) and (c) and adds (e) and
(f) Business and Commerce Code, as follows:
(a) Replaces actual damages with economic damages.
(b) Authorizes a consumer who prevails to obtain certain facts
in a suit filed under this section. Replaces actual damages
with economic damages and allows for exemplary damages in an
amount equal to two times that portion of the economic damages
that does not exceed $1000. If the trier of fact finds the
conduct was committed intentionally or knowingly in the case
of a breach of an express or implied warranty, exemplary
damages may also be awarded in an amount equal to no more than
three times economic damages in excess of $1000 subject to
Section 17.501. Deletes existing Subdivisions (A) and (B).
(c) Changes the finding by the court that the action was
groundless in fact and law or brought in bad faith, or brought
for harassment purposes, the court shall award the defendant
attorney's fees and court costs.
(e) Chapter 41, Civil Practice and Remedies Code, does not
apply to a cause of action under this subchapter.
(f) Exceptions to recovery of damages provisions. Applies to
Article 21.21, Insurance Code.
SECTION 5. Amends Chapter 17E, Business and Commerce Code, by
adding Section 17.501, as follows:
Sec. 17.501. JOINT AND SEVERAL LIABILITY. Joint and Several
Liability in an action under this subchapter is governed by
Chapter 33, Civil Practice and Remedies Code.
SECTION 6. Section 17.505, Business & Commerce Code, is amended as
follows:
Sec. 17.505. NOTICE, INSPECTION. (a) If the consumer refuses
to permit the inspection by the person or the person's designated
representative, the court shall not award the
economic damages as provided in Subsection(b) of
Section 17.50.
(b) Changes the date of tender provided for may be made within
60 days after service, rather than filing, of the suit or
counterclaim. Makes a conforming change.
(c) A person against whom a suit is pending who does not
receive written notice, may file a plea in abatement within 30
days. Does not apply if (b) applies.
(d) The court shall abate the suit if the court finds that the
person is entitled to an abatement because notice was not
provided. A suit is automatically abated beginning on the
11th day after the date a plea in abatement is filed under (c)
if the plea is verified and alleges that the person did not
receive the notice and is not controverted by an affidavit
filed by the consumer before the 11th day after the date on
which the plea in abatement is filed.
(e) An abatement under (d) continues until the 60th day after
the date that written notice is served in compliance with (a).
SECTION 7. Subchapter E, Chapter 17, Business & Commerce Code, is
amended by adding Sections 17.5051 and 17.5052 to read as follows:
Sec. 17.5051. MEDIATION. Sets out time schedules and rules
for mediation proceedings under this act.
Sec. 17.5052. OFFERS OF SETTLEMENT, Sets out procedures for
Offers of Settlement.
SECTION 8. Amends Section 17.56, Business and Commerce Code, is
amended to read as follows:
Sec. 17.56 VENUE. Venue for an action brought under this
subchapter is governed by Chapter 15, Civil Practice and
Remedies Code. Deletes existing
text.
SECTION 9. Section 27.004, Property Code, is amended by adding new
Subsections (d) and (e) and relettering existing Subsections:
(d) The court shall abate a suit governed under this section
if Subsection (c) does not apply and the court finds that the
contractor is entitled to an abatement because notice was not
provided as required by Subsection (a). A suit is
automatically abated without the order of the court after 10
days from the date a plea in abatement is filed if the plea in
abatement is verified and alleges that the person against whom
the suit is pending did not receive the notice and is not
controverted by an affidavit filed by the claimant by 10 days
after the plea in abatement is filed.
(e) An abatement under (d) continues until the 60th day after
the date that written notice is served.
SECTION 10. Section 4, Article 21.21, Insurance Code is amended by
adding (10) and (11) which defines "unfair settlement practices"
and "other misrepresentations."
SECTION 11. Amends Article 21.21, Insurance Code, by adding
Section 11A:
Sec. 11A. DOUBLE RECOVERY PROHIBITED. A person may not
recover damages and penalties for the same act or practice
under both this Article and under another law.
SECTION 12. Amends Section 16, Article 21.21, Insurance Code as
follows:
Sec. 16. RELIEF AVAILABLE TO INJURED PARTIES. (a) Any person
who has sustained actual damages as a result of another's
engaging either in a act or practice declared in Section 4 of
this Article to be unfair competition or unfair or deceptive
acts or practices in the business of insurance or any practice
specifically enumerated in a subdivision of Section 17.46(b)
Business & Commerce Code, as an unlawful deceptive trade
practice may maintain an action against the person or persons
engaging in such practices.
(b) Any plaintiff who prevails in a suit under this section
may obtain actual damages plus court costs and reasonable
attorney's fees, in addition, the court shall award two times
of the portion of economic damages that does not exceed $1000.
If it is found that the defendant knowingly committed the acts
complained of, the trier of fact may award not more than three
times the actual damages in excess of $1000 or an order
enjoining such acts or failure to act, or any other relief
which the court deems proper.
(c) No changes to existing language.
(d) No changes to existing language.
(e) changes from 30 to 60 days the time that written notice
shall be given to the other person before filing suit.
(f) Changes notice from 30 to 60 days. Deletes existing
subsection language.
(g) Makes a codifying change. Deletes existing text.
(h) Makes a codifying change.
(i) An abatement under Subsection (h) continues until the 60th
day after the date that written notice is served in compliance
with Subsection (e).
SECTION 13. Amends Article 21.21, Insurance Code, by adding
Sections 16A and 16B to read as follows:
Sec. 16A. OFFERS OF SETTLEMENT. Sets procedures for Offers
of Settlement.
Sec. 16B. MEDIATION. Sets rules and procedures for mediation
proceedings.
SECTION 14. Amends Section 17(a), Article 21.21, Insurance Code to
read as follows:
(a) If a member of the insurance buying public has been
damaged by an unlawful method, act, or practice defined in
Section 4 of this Article or by any practice defined by
Section 17.46(b), Business & Commerce, as an unlawful
deceptive trade practice, the Board may request the Attorney
General to bring a class action or the individual damaged may
bring an action on behalf of himself and others similarly
situated, to recover damages and relief as provided in this
section.
SECTION 15. Subsection (b)(1), Section 33.002, Civil Practice and
Remedies Code, is amended
to read as follows:
(b) This chapter does not apply to an action to collect
workers compensation benefits under the workers' compensation
laws of this state, Subtitle A, Title 15, Labor Code, or
actions against an employer for exemplary damages arising out
of the death of an employee.
SECTION 16. Effective date: September 1, 1995. Makes application
of this act prospective.
SECTION 17. Emergency clause.
COMPARISON OF ORIGINAL TO SUBSTITUTE
The original bill does not address Insurance whereas the substitute
addresses Insurance in Sections 10, 11, 12, 13, and 14.
The original bill changes law allowing a waiver by a consumer who
is in a "significantly disparate position" whereas the substitute
keeps this provision. The substitute also says that the fact that
a consumer has signed a waiver under this section is not a defense
to an action brought by the attorney general under Section 17.47.
The original bill changes language t provide special remedies to
consumers in transactions not larger than $500,000 and adds that
the statute shall not be construed to derogate a reasonable
business practice nor to penalize a person who substantially
complies with the requirements of this subchapter.
In Section 2. the original bill defines "intentionally" and
"professional service", and "economic damages" whereas the
substitute defines "waiver" and "economic damages". The original
defines economic damages as damages for pecuniary loss resulting
from loss of or damage to tangible property, including costs of
repair and replacement; whereas the substitute defines "economic
damages" as compensatory damages or pecuniary loss, including costs
of repair and replacement. The term does not included exemplary
damages or damages for physical pain and mental anguish, loss of
consortium, disfigurement, physical impairment, or loss of
companionship and society.
The substitute deletes SECTION 3 of the original.
The original exempts professional services as defined in the bill;
imposes a transaction cap of $500,000; only includes individual
consumers; and does not apply to bodily injury, death, or any cause
of action in tort for damages other than damage to tangible
property. The substitute replaces actual damages with economic
damages; authorizes a consumer who prevails to obtain certain facts
in a suit filed under this section; and allows for exemplary
damages in an amount equal to two times that portion of the
economic damages that does not exceed $1000. If the trier of fact
finds the conduct was committed intentionally or knowingly in the
case of a breach of an express or implied warranty, exemplary
damages may also be awarded in an amount equal to no more than
three times economic damages in excess of $1000 subject to Section
17.501. Deletes existing Subdivisions (A) and (B). The
substitute also changes the finding by the court that the action
was groundless in fact and law or brought in bad faith, or brought
for harassment purposes, the court shall award the defendant
attorney's fees and court costs. Chapter 41, Civil Practice and
Remedies Code, does not apply to a cause of action under this
subchapter in the substitute.
The original does not change current law relating to Mediation and
Offer of Settlement, whereas the substitute sets provisions for
Mediation and Offer of Settlement. The original changes actual to
economic damages under Section 17.505, Business & Commerce Code,
whereas the substitute retains actual damages and sets out detailed
procedures for inspection.
The original adopts detailed standards for comparative and Joint
and Several liability in lieu of Chapter 33.
The original does not require "knowing" misconduct as threshold for
recovering economic damages. Also preserves existing law relating
to venue, excepts deletes venue where defendant has a fixed place
of business. The substitute addresses Venue in SECTION 8.
In SECTION 9. The substitute amends Section 27.004 of the Property
Code, which is not in the original.
SUMMARY OF COMMITTEE ACTION
Pursuant to notice posted on February 27, 1995, the House Committee
on State Affairs convened in a public hearing on March 6, 1995 and
was called to order by the Chairman, Rep. Seidlits. The Chair laid
out HB 668 and recognized Rep. Junell to explain the bill. Rep.
Seidlits laid out a complete committee substitute. The following
persons testified for the bill: Richard Josephson representing
Texans for Lawsuit Reform; L. Minton Rosenhouse representing the
Texas Society of Certified Public Accountants; Wade Spilman
representing the Texas Association of Insurance Agents; Randall P.
Birdwell representing the Texas Association of Builders; James R.
Royer representing the Consulting Engineers Council and the Greater
Houston Partnership; Mike Brodie representing the Texas Association
of Realtors; and Bob Pierry representing the National Federation of
Independant Business. The following persons testified against the
bill: Jo Longley representing Texas Trial Lawyers Association;
David Bragg representing himself; Mark Allen Owings representing
the handicapped Community; Philip Maxwell representing the Texas
Trial Lawyers Association; and Earle Rawlings III representing
himself. The committee substitute for HB 668 was withdrawn. The
Chair left HB 668 pending. In the same public hearing on March 6,
1995, the Chair laid out HB 668. The Chair laid out a complete
committee substitute. The following people testified for the bill:
Richard W. Weekley representing Texans for Lawsuit Reform; George
J. Carson representing himself; Michael Evans representing the
Texas Society of Professional Surveyors. The following persons
testified against the bill: Mark S. McQuality representing himself.
The complete committee substitute was withdrawn. The Chair left HB
668 pending. In the same public hearing on March 6, 1995, the
chair laid out HB 668. The Chair laid out a complete committee
substitute. The following people testified against the bill: Mark
N. Sefein representing himself; Nigel Austin Weeks representing
himself; Thomas C. Terrell representing himself; Beverly Kennedy
representing United We Stand America-Texas, Inc.; Jackson Walls
representing himself; Reggie James representing Consumers Union;
Susan Pitman representing The Chemical Connection; and Tim Curtis
representing Texas Citizen Action. The complete committe
substitute was withdrawn. The Chair referred HB 668 to a
subcommittee to be named later by the chair. In a public hearing
on April 19, 1995, the Chair recalled HB 668 directly from
subcommittee. The Chair laid out HB 668. The chair laid out a
complete committee substitute which was adopted without objection.
The bill was reported favorably as substituted with the
recommendation that it do pass and be printed which prevailed by a
record vote of 15 ayes, 0 nay, 0 pnv, and 0 absent.