74(R) HB 668 Senate Committee Report

BILL ANALYSIS

C.S.H.B. 668
By: Junell (Bivins)
Economic Development
05-15-95
Senate 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. Currently, the
DTPA has become an avenue for numerous lawsuits, making the
application of the DTPA inconsistent with the original intent.

PURPOSE

As proposed, C.S.H.B. 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 grant any
additional rulemaking authority to a state officer, institution, or
agency.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Sections 17.42, 17.43, and 17.44, Business &
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 the waiver is in writing, signed by the
consumer, and the consumer is represented by legal counsel.
Deletes existing Subdivisions (1)-(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.

(d) Authorizes the waiver to be modified to waive only
specific rights under this subchapter.

(e) Provides 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.

Sec. 17.43. CUMULATIVE REMEDIES. Provides that no recovery
shall be permitted under both this subchapter and another law
of both damages and penalties for the same act or practice.

Sec. 17.44. CONSTRUCTION AND APPLICATION. (a) Makes no
change.

(b) Provides that Chapter 27, Property Code, prevails over
this subchapter to the extent of any conflict.

SECTION 2. Amends Section 17.45, Business & Commerce Code, by
amending Subdivisions (5) and (9) and by adding Subdivisions (11)-(12), to redefine "unconscionable action or course of action,"
"knowingly," and define "economic damages," "residence," and
"intentionally."

SECTION 3. Amends Section 17.46(b), Business & Commerce Code,
to redefine "false, misleading, or deceptive acts or practices."

SECTION 4. Amends Section 17.49, Business & Commerce Code, by
adding Subsections (c)-(f), and (g) as follows:

(c) Provides that nothing in this chapter applies to 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. Sets forth the
actions to which this exemption does not apply.

(d) Provides that Subsection (c) applies to a cause of action
brought against the individual who performed the professional
service and a cause of action brought against any entity that
could be found to be vicariously liable for the individual's
conduct.

(e) Provides that nothing in this subchapter applies to a
cause of action for bodily injury or death, or for the
infliction of mental anguish.

(f) Provides that nothing in this subchapter applies to a
claim arising out of a written contract if 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; 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 the
contract does not involve a consumer's residence.

(g) Provides that nothing in this subchapter applies to a
cause of action arising out of 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.

SECTION 5. Amends Sections 17.50, Business & Commerce Code, as
follows:

Sec. 17.50. RELIEF FOR CONSUMERS. (a) Authorizes a consumer
to maintain an action in which certain actions constitute a
producing cause of economic damages, rather than actual
damages, or damages for mental anguish.

(b) Provides that a consumer who prevails in a suit filed
under this section may obtain economic damages found by the
trier of fact. Authorizes the consumer to recover damages
for mental anguish, as found by the trier of fact, and the
trier of fact to award not more than three times the amount
of economic damages; or if the trier of fact finds that the
conduct of the defendant was committed intentionally, the
consumer may recover damages for mental anguish, as found by
the trier of fact, and the trier of fact may award not more
than three times the amount of damages for mental anguish
and economic damages. Deletes existing Subdivisions (A) and
(B).

(c) Requires the court to award to the defendant reasonable
and necessary attorneys' fees and court costs if the court
finds that an action under this section was groundless in
fact or in law, or brought in bad faith or for the purpose
of harassment.

(d) Makes no change.

(e) Prohibits attorneys' fees, costs, and prejudgment
interest from being considered, in computing additional
damages under Subsection (b).

(f) Prohibits a court from awarding prejudgment interest
applicable to damages for future loss under this subchapter
or additional damages under Subsection (b).

(g) Provides that Chapter 41, Civil Practice and Remedies
Code, does not apply to a cause of action brought under this
subchapter.

(h) Provides that if a claimant is granted the right to
bring a cause of action under this subchapter by another
law, the claimant is not limited to recovery of economic
damages only, but may recover any actual damages incurred by
the claimant. Makes conforming changes.

SECTION 6. Amends Section 17.505, Business & Commerce Code, as
follows:

Sec. 17.505. New heading: NOTICE; INSPECTION. (a)-(b)
Deletes the provision which prohibits the court from awarding
the two times actual damages not exceeding $1,000, as provided
in Subsection (b) of Section 17.50 of this subchapter, if the
consumer unreasonably refuses to permit the inspection. Makes
conforming and nonsubstantive changes.

(c) Authorizes a person against whom a suit is pending who
does not receive written notice, as required by Subsection
(a), to file plea in abatement not later than the 30th day
after the date the person files an original answer in the
court in which the suit is pending. Provides that this
subsection does not apply if Subsection (b) applies.
Deletes existing Subsection (c).

(d) Requires the court to abate the suit if the court,
after a hearing, finds that the person is entitled to an
abatement because the notice was not provided as required by
this section. Provides that a suit is automatically abated
without the order of the court beginning on the 11th day
after the date the plea in abatement is filed under
Subsection (c) if the plea is verified and is not
controverted within 11 days.

(e) Provides that an abatement under Subsection (d)
continues until the 60th day after the date that written
notice is served in compliance with Subsection (a). Deletes
existing Subsections (d) and (e).

SECTION 7. Amends Chapter 17E, Business & Commerce Code, by adding
Sections 17.5051 and 17.5052, as follows:

Sec. 17.5051. MEDIATION. (a) Authorizes a party to an
action brought under this subchapter, not later than the 90th
day after the date service of citation was made, to compel
mediation of the dispute as provided by this section.

(b) Requires the court to sign an order setting the time
and place of the mediation within 30 days after a motion is
filed.

(d) Requires mediation to be held within 30 days after the
date the order is signed, unless the parties agree otherwise
or the court determines that additional time, not to exceed
an additional 30 days, is warranted.

(e) Requires each party who has appeared to participate in
the mediation and to share the fee, except as provided by
Subsection (f) or as agreed to by all parties.

(f) Prohibits a party from compelling mediation under this
section if the amount of economic damages claimed is less
than $15,000, unless the party seeking to compel mediation
agrees to pay the costs of the mediation.

(g) Provides that Section 154.023 and Chapters 154C and
154D, Civil Practice and Remedies Code, apply to the
appointment of a mediator and to the mediation process
provided by this section.

(h) Provides that this section does not apply to an action
brought by the attorney general under Section 17.47.

Sec. 17.5052. OFFER OF SETTLEMENT. Authorizes a person who
receives notice under Section 17.505 to tender an offer of
settlement at any time during the period beginning on the date
the notice is received and ending on the 60th day after that
date.

(b) Authorizes a person, if a mediation under Section
17.5051 is not conducted, to tender an offer of settlement
at any time during the period beginning on the date an
original answer is filed and ending on the 90th day after
that date.

(c) Authorizes a person against whom a claim under this
subchapter is pending to tender an offer of settlement
during the period beginning on the day after the date that
the day after the date that the mediation ends and ending on
the 20th day after the date.
(d) Requires an offer of settlement tendered by a person
against whom a claim under this subchapter is pending to
include an offer to pay an amount of money or other
consideration reduced to its cash value as a settlement of
the consumer's claim for damages and an amount of money to
compensate the consumer for the consumer's reasonable and
necessary attorneys' fees incurred as of the date of the
offer.

(e) Provides that the offer is rejected unless both parts
of an offer tendered by the defendant are affirmatively
accepted by the consumer within 30 days.

(f) Authorizes an offer tendered by a person against whom
a claim under this subchapter is pending that complies with
this section and that has been rejected by the consumer to
be filed with the court with an affidavit certifying its
rejection.

(g) Prohibits the consumer, if the court finds that the
amount tendered in the settlement offer for damages under
Subsection (d)(1) is the same as or more than the damages
found by the trier of fact, from recovering any amount in
excess of the lesser of the amount of damages tendered in
the settlement offer or the amount of damages found by the
trier of fact.

(h) Prohibits the consumer from recovering an amount
greater than the lesser of the amount tendered in the offer
or the amount of economic damages and attorney's fees found
by the trier of fact if the amount tendered in the offer as
settlement of the consumer's claim for economic damages and
attorneys' fees is the same as or more than, or if the court
finds that amount to be substantially the same as, the
economic damages and attorneys' fees found by the trier of
fact.

(i) Provides that if the court finds that the offering
party could not perform the offer at the time the offer was
made or that the offering party substantially misrepresented
the cash value of the offer, Subsections (g) and (h) do not
apply.

(j) Requires the court to award as economic damages and
damages for mental anguish the amount found by the trier of
fact if Subsection (g) does not apply. Requires the court
to award attorney's fees as provided by Section 17.50(d) if
Subsection (h) does not apply.

(k) Provides that an offer is not an admission of engaging
in an unlawful act or practice or liability under this
subchapter. Prohibits an offer or rejection of an offer
from being offered in evidence at trial for any purpose,
except as otherwise provided by this section.

SECTION 8. Amends Section 17.506(d), Business & Commerce Code,
to make conforming changes.

SECTION 9. Amends Section 17.56, Business & Commerce Code, to
authorize an action brought under this subchapter to be brought in
any county in which venue is proper under Chapter 15, Civil
Practice and Remedies Code. Deletes Subdivision (2).

SECTION 10. Amends Section 27.004, Property Code, by adding new
Subsections (d) and (e) and relettering existing Subsections (d)-(m), as follows:

(d) Requires the court to abate a suit governed by this
section if Subsection (c) does not apply and the court, after
a hearing, finds that the contractor is entitled to an
abatement because notice was not provided as required by
Subsection (a). Provides that a suit is automatically abated
without the order of the court beginning on the 11th day after
the date a plea in abatement is filed if the plea in abatement
is verified and not controverted within 11 days after the plea
in abatement is filed.

(e) Provides that an abatement under Subsection (d) continues
until the 60th day after the date that written notice is
served in compliance with Subsection (a). Makes conforming
changes.
SECTION 11. Amends Section 4, Article 21.21, Insurance Code, to
include as unfair and deceptive acts or practices in the business
of insurance, engaging in certain unfair settlement practices with
respect to a claim by an insured or beneficiary, except that
Paragraph (10)(1) does not provide a cause of action to a third
party asserting one or more claims against an insured covered under
a liability insurance policy, and misrepresenting an insurance
policy by making an untrue statement of material fact; failing to
state a material fact that is necessary to make other statements
made not misleading; making a statement in such a manner as to
mislead a reasonably prudent person to a false conclusion of a
material fact; making a material misstatement of law; or failing to
disclose any matter required by law to be disclosed.

SECTION 12. Amends Article 21.21, Insurance Code, by adding
Section 11A, as follows:

Sec. 11A. DOUBLE RECOVERY PROHIBITED. Prohibits a person from
recovering damages and penalties for the same act or practice
under both this article and under another law.

SECTION 13. Amends Section 16, Article 21.21, Insurance Code, as
follows:

Sec. 16. RELIEF AVAILABLE TO INJURED PARTIES. (a) Requires
a person to show that the person has relied on the act or
practice to the person's detriment to maintain an action for
a deceptive act or practice enumerated in Section 17.46(b),
Business & Commerce Code. Deletes the reference to rules or
regulations adopted by the State Board of Insurance. Makes
conforming and nonsubstantive changes.

(b) Provides that the trier of fact may award not more than
three times the amount of actual damages, rather than the
court awarding, in addition, two times the amount of actual
damages.

(c)-(d) Makes no changes.

(e) Makes a conforming change.

(f) Deletes the provision that a tender of a written offer
of settlement provided for by Subsection (g) of this section
may be made not later than the 30th day after the date of
filing of the suit or counterclaim.

(g) Authorizes a person against whom a suit is pending who
does not receive written notice, as required by Subsection
(e) of this section, to file a plea in abatement not later
than the 30th day after the date the person files an
original answer in the court in which the suit is pending.
Provides that this subsection does not apply if Subsection
(f) applies. Deletes existing Subsection (g).

(h) Requires the court to abate the suit if the court,
after a hearing, finds that the person is entitled to an
abatement because notice was not provided as required by
this section. Provides that a suit is automatically abated
without the order of the court beginning on the 11th day
after the date a plea in abatement is filed under Subsection
(g) if the plea in abatement is verified and not
controverted within 11 days. Deletes existing Subsection
(h).

(i) Provides that an abatement under Subsection (h)
continues until the 60th day after the date that written
notice is served in compliance with Subsection (e). Deletes
existing Subsection (i).

SECTION 14. Amends Article 21.21, Insurance Code, by adding
Sections 16A and 16B, to make conforming changes.

SECTION 15. Amends Section 17(a), Article 21.21, Insurance Code,
to make conforming changes.

SECTION 16. Amends Section 33.002, Civil Practice and Remedies
Code, by amending Subsection (b) and adding Subsection (c), as
follows:

(b) Provides that this chapter does not apply to an action to
collect workers' compensation under Title 5A, Labor Code,
rather than Article 8306 et seq., V.T.C.S.

(c) Provides that this chapter applies to an action brought
under the Chapter 17E, Business & Commerce Code. Deletes
existing Subdivision (3).

SECTION 17. Amends Article 11.05, Article 5069-11.05, V.T.C.S.,
as follows:

Art. 11.05. Prohibits debt collectors from collecting or
attempting to collect debts or obtain information concerning
a consumer by any fraudulent, deceptive, or misleading
representations which employ certain practices including:

(a) if engaged in the collection of credit card debt, using
a name other than the name appearing on the face of the
credit card;

(b) Makes no change.

(d) Makes no change.

(e) using any written communication which fails to clearly
indicate, among other information, a post office box and
telephone number;

(f)-(p) Make no change.

(q) Requires all changes made to this Act by any Act of the
74th Legislature to apply to any civil action pending on or
after the effective date of the enactment of these changes.

SECTION 18. Amends Article 11.10, Title 79, V.T.C.S., by
amending Subsection (c) and adding Subsection (d), as follows:

(c) Requires a person who successfully maintains an action
under this article for violation of Article 11.02(c) or 11.07A
of this Act to be awarded at least $100 for each violation of
this Act.

(d) Requires all changes made to this Act by any act of the
74th Legislature to apply to any civil action pending on or
after the effective date of the enactment of these changes.

SECTION 19. (a) Effective date: September 1, 1995.

(b) Makes application of this Act prospective beginning
September 1, 1996.

(c) Makes application of Section 17.56, Business & Commerce
Code, as amended by this Act, prospective.
SECTION 20. Emergency clause.