By Junell, et al.                                      H.B. No. 668
       74R906 DLF-F
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to civil remedies for deceptive trade practices.
    1-3        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-4        SECTION 1.  Sections 17.42, 17.43, and 17.44, Business &
    1-5  Commerce Code, are amended to read as follows:
    1-6        Sec. 17.42.  WAIVERS; PUBLIC POLICY.  (a)  Any waiver by a
    1-7  consumer of the provisions of this subchapter is contrary to public
    1-8  policy and is unenforceable and void; provided, however, that a
    1-9  waiver is valid and enforceable if the waiver is in writing and <a
   1-10  defendant in an action or claim under this subchapter pleads and
   1-11  proves:>
   1-12              <(1)  the consumer is not in a significantly disparate
   1-13  bargaining position;>
   1-14              <(2)>  the consumer is represented by legal counsel <in
   1-15  seeking or acquiring goods or services, other than the purchase or
   1-16  lease of a family residence occupied or to be occupied as the
   1-17  consumer's residence, by a purchase or a lease for a consideration
   1-18  paid or to be paid that exceeds $500,000; and>
   1-19              <(3)  the consumer waives all or part of this
   1-20  subchapter, other than Section 17.555, by an express provision in a
   1-21  written contract signed by both the consumer and the consumer's
   1-22  legal counsel; and provided, however, that a business consumer with
   1-23  assets of $5 million or more according to the most recent financial
   1-24  statement of the business consumer prepared in accordance with
    2-1  generally accepted accounting principles that has knowledge and
    2-2  experience in financial and business matters that enable it to
    2-3  evaluate the merits and risks of a transaction and that is not in a
    2-4  significantly disparate bargaining position may by written contract
    2-5  waive the provisions of this subchapter, other than Section
    2-6  17.555>.
    2-7        (b)  A waiver under Subsection (a) is not effective if the
    2-8  consumer's legal counsel was directly or indirectly identified,
    2-9  suggested, or selected by a defendant or an agent of the defendant
   2-10  <The existence or absence of a disparate bargaining position may
   2-11  not be established as a matter of law solely by evidence of the
   2-12  consumer's financial position relative to other parties to the
   2-13  contract or by matters contained in a written contract relating to
   2-14  the relative bargaining position of the parties>.
   2-15        (c)  A waiver under this section must be in bold-face type of
   2-16  at least 10 points in size and must be in substantially the
   2-17  following form:
   2-18        "The undersigned waive their rights under the Deceptive
   2-19        Trade Practices-Consumer Protection Act, Section 17.41,
   2-20        et seq., Business & Commerce Code, a law that confers
   2-21        special rights on consumers.  After consultation with
   2-22        an attorney of their own selection, the undersigned
   2-23        voluntarily consent to this waiver."
   2-24        (d)  The waiver required by Subsection (c) may be modified to
   2-25  waive only specified rights under this subchapter.
   2-26        Sec. 17.43.  CUMULATIVE REMEDIES.  The provisions of this
   2-27  subchapter are not exclusive.  The remedies provided in this
    3-1  subchapter are in addition to any other procedures or remedies
    3-2  provided for in any other law; provided, however, that no recovery
    3-3  shall be permitted under both this subchapter and another law of
    3-4  both <actual> damages and penalties for the same act or practice.
    3-5  A violation of a provision of law other than this subchapter is not
    3-6  in and of itself a violation of this subchapter.  An act or
    3-7  practice that is a violation of a provision of law other than this
    3-8  subchapter may be made the basis of an action under this subchapter
    3-9  if the act or practice is proscribed by a provision of this
   3-10  subchapter or is declared by such other law to be actionable under
   3-11  this subchapter.  The provisions of this subchapter do not in any
   3-12  way preclude other political subdivisions of this state from
   3-13  dealing with deceptive trade practices.
   3-14        Sec. 17.44.  CONSTRUCTION AND APPLICATION.  (a)  This
   3-15  subchapter shall be liberally construed and applied to promote its
   3-16  underlying purposes, which are to provide special remedies to
   3-17  individual and small business <protect> consumers in transactions
   3-18  not larger than $500,000 against false, misleading, and deceptive
   3-19  business practices, unconscionable actions, and breaches of
   3-20  warranty and to provide efficient and economical procedures to
   3-21  secure such protection.
   3-22        (b)  This  section may not be construed to derogate a
   3-23  reasonable business or commercial practice or to penalize a person
   3-24  who substantially complies with the requirements of this
   3-25  subchapter.
   3-26        SECTION 2.  Section 17.45, Business & Commerce Code, is
   3-27  amended by amending Subdivisions (4), (5), (9), and (10) and adding
    4-1  Subdivisions (11), (12), and (13) to read as follows:
    4-2              (4)  "Consumer" means an individual<, partnership,
    4-3  corporation, this state, or a subdivision or agency of this state>
    4-4  who seeks or acquires by purchase or lease, any goods or services,
    4-5  except that the term does not include a business consumer that has
    4-6  assets of $25 million or more<, or that is owned or controlled by a
    4-7  corporation or entity with assets of $25 million or more>.
    4-8              (5)  "Unconscionable action or course of action" means
    4-9  an act or practice which, to a consumer's <person's> detriment,<:>
   4-10                    <(A)>  takes advantage of the lack of knowledge,
   4-11  ability, experience, or capacity of the consumer <a person> to a
   4-12  grossly unfair degree<; or>
   4-13                    <(B)  results in a gross disparity between the
   4-14  value received and consideration paid, in a transaction involving
   4-15  transfer of consideration>.
   4-16              (9)  "Knowingly" means actual awareness of the falsity,
   4-17  deception, or unfairness of the act or practice giving rise to the
   4-18  consumer's claim or, in an action brought under Subdivision (2) of
   4-19  Subsection (a) of Section 17.50, actual awareness of the act, <or>
   4-20  practice, condition, defect, or failure constituting the breach of
   4-21  warranty, but actual awareness may be inferred where objective
   4-22  manifestations indicate that a person acted with actual awareness.
   4-23              (10)  "Business consumer" means an individual<,
   4-24  partnership, or corporation> who seeks or acquires by purchase or
   4-25  lease, any goods or services for commercial or business use.  <The
   4-26  term does not include this state or a subdivision or agency of this
   4-27  state.>
    5-1              (11)  "Intentionally" means actual awareness of the
    5-2  falsity, deception, or unfairness of the act or practice giving
    5-3  rise to the consumer's claim, coupled with the specific intent that
    5-4  the consumer act in detrimental reliance on the falsity or
    5-5  deception or in detrimental ignorance of the unfairness.  Intention
    5-6  may be inferred from objective manifestations that indicate that
    5-7  the person acted intentionally or from facts showing that a
    5-8  defendant acted with flagrant disregard of prudent and fair
    5-9  business practices to the extent that the defendant should be
   5-10  treated as having acted intentionally.
   5-11              (12)  "Professional service" means a service provided
   5-12  by or under the direct supervision of a registered, certified, or
   5-13  licensed person in the scope of the registration, certification, or
   5-14  license as:
   5-15                    (A)  an accountant;
   5-16                    (B)  an architect;
   5-17                    (C)  a lawyer;
   5-18                    (D)  a pharmacist;
   5-19                    (E)  a professional engineer; or
   5-20                    (F)  a real estate broker.
   5-21              (13)  "Economic damages"  means damages for pecuniary
   5-22  loss resulting from loss of or damage to tangible property,
   5-23  including costs of repair and replacement.
   5-24        SECTION 3.  Section 17.46(d), Business & Commerce Code, is
   5-25  amended to read as follows:
   5-26        (d)  For the purposes of the relief authorized in Subdivision
   5-27  (1) of Subsection (a) of Section 17.50 of this subchapter, the term
    6-1  "false, misleading, or deceptive acts or practices" is limited to
    6-2  the acts that are enumerated in specific subdivisions of Subsection
    6-3  (b) of this section and that the trier of fact finds were committed
    6-4  knowingly.  This subsection does not apply to the authority of the
    6-5  consumer protection division or any other person seeking injunctive
    6-6  or other equitable relief.
    6-7        SECTION 4.  Section 17.49, Business & Commerce Code, is
    6-8  amended by adding Subsections (c), (d), and (e) to read as follows:
    6-9        (c)  This subchapter does not apply to a cause of action
   6-10  against an individual arising out of the provision of professional
   6-11  services by the individual.
   6-12        (d)  This subchapter does not apply to a cause of action for
   6-13  bodily injury or death or to any other cause of action in tort for
   6-14  damages other than damage to tangible property.
   6-15        (e)  This subchapter does not apply to a cause of action
   6-16  arising out of a transaction the total dollar value of which
   6-17  exceeds $500,000.
   6-18        SECTION 5.  Sections 17.50(a) and (b), Business & Commerce
   6-19  Code, are amended  to read as follows:
   6-20        (a)  A consumer may maintain an action where any of the
   6-21  following constitute a producing cause of economic <actual>
   6-22  damages:
   6-23              (1)  the use or employment by any person of a false,
   6-24  misleading, or deceptive act or practice that is specifically
   6-25  enumerated in a subdivision of Subsection (b) of Section 17.46 of
   6-26  this subchapter;
   6-27              (2)  breach of an express or implied warranty;
    7-1              (3)  any unconscionable action or course of action by
    7-2  any person; or
    7-3              (4)  the use or employment by any person of an act or
    7-4  practice in violation of Article 21.21, Texas Insurance Code, as
    7-5  amended, or rules or regulations issued by the State Board of
    7-6  Insurance under Article 21.21, Texas Insurance Code, as amended.
    7-7        (b)  In a suit filed under this section, each consumer who
    7-8  prevails may obtain:
    7-9              (1)  the amount of economic <actual> damages found by
   7-10  the trier of fact.  In addition the court shall award exemplary
   7-11  damages in an amount equal to two times that portion of the
   7-12  economic <actual> damages that does not exceed $1,000.  If the
   7-13  trier of fact finds that the conduct of the defendant was committed
   7-14  intentionally or knowingly in the case of a breach of an express or
   7-15  implied warranty, the trier of fact may also award exemplary
   7-16  damages in an amount equal to not more than three times the amount
   7-17  of economic <actual> damages in excess of $1,000, subject to
   7-18  Section 17.501 <provided that:>
   7-19                    <(A)  the provisions of Chapters 33 and 41, Civil
   7-20  Practice and Remedies Code, shall govern the determination of the
   7-21  consumer's right under this subchapter to recover actual and other
   7-22  damages, including exemplary damages, and the amount of those
   7-23  damages that may be recovered by the consumer under this
   7-24  subchapter, in an action seeking damages for (i) death; (ii)
   7-25  personal injury other than mental anguish or distress associated
   7-26  with a violation of this subchapter that does not involve death or
   7-27  bodily injury; or (iii) damage to property other than the goods
    8-1  acquired by the purchase or lease that is involved in the
    8-2  consumer's action or claim if that damage arises out of an
    8-3  occurrence that involves death or bodily injury; and>
    8-4                    <(B)  only in an action under this subchapter
    8-5  that is subject to Paragraph (A) of this subdivision, the
    8-6  consumer's right to recover damages shall be subject to any defense
    8-7  or defensive matter that could be considered by the trier of fact
    8-8  in an action subject to Chapter 33, Civil Practice and Remedies
    8-9  Code, in determining the percentage of responsibility attributable
   8-10  to the consumer claimant under that chapter>;
   8-11              (2)  an order enjoining such acts or failure to act;
   8-12              (3)  orders necessary to restore to any party to the
   8-13  suit any money or property, real or personal, which may have been
   8-14  acquired in violation of this subchapter; and
   8-15              (4)  any other relief which the court deems proper,
   8-16  including the appointment of a receiver or the revocation of a
   8-17  license or certificate authorizing a person to engage in business
   8-18  in this state if the judgment has not been satisfied within three
   8-19  months of the date of the final judgment.  The court may not revoke
   8-20  or suspend a license to do business in this state or appoint a
   8-21  receiver to take over the affairs of a person who has failed to
   8-22  satisfy a judgment if the person is a licensee of or regulated by a
   8-23  state agency which has statutory authority to revoke or suspend a
   8-24  license or to appoint a receiver or trustee.  Costs and fees of
   8-25  such receivership or other relief shall be assessed against the
   8-26  defendant.
   8-27        SECTION 6.  Subchapter E, Chapter 17, Business & Commerce
    9-1  Code, is amended by adding Section 17.501 to read as follows:
    9-2        Sec. 17.501.  COMPARATIVE RESPONSIBILITY IN CERTAIN ACTIONS.
    9-3  (a)  Damages awarded under Section 17.50(b)(1) shall be reduced by
    9-4  the percentage of fault attributed to the consumer.  If the
    9-5  consumer's percentage of fault exceeds 50 percent, the consumer may
    9-6  not recover under Section 17.50(b)(1).
    9-7        (b)  The liability of a defendant is not joint and several,
    9-8  but each defendant is liable only for the percentage of the total
    9-9  economic damages and nondiscretionary exemplary damages, before any
   9-10  reduction under Subsection (a), that is equal to the percentage of
   9-11  responsibility of that defendant.
   9-12        (c)  A defendant is not liable for the percentage of economic
   9-13  damages and nondiscretionary exemplary damages equal to the
   9-14  percentage of responsibility of another defendant who settled with
   9-15  the consumer or of any person not joined in the cause of action.
   9-16        (d)  An award of discretionary exemplary damages under
   9-17  Section 17.50(b)(1) is specific as to each defendant, and only the
   9-18  defendant against whom the award is made is liable for the damages.
   9-19        (e)  In apportioning fault to a consumer under Subsection
   9-20  (a), the trier of fact shall include wrongful or negligent conduct
   9-21  of the consumer, including negligence, misuse, or failure to
   9-22  observe product specifications, warnings, or disclosures, and
   9-23  similar acts.
   9-24        (f)  Notwithstanding Subsection (e), a consumer may rely
   9-25  entirely on a representation of a defendant, and the failure of the
   9-26  consumer to investigate the representation is not evidence of
   9-27  wrongful or negligent conduct in relation to that defendant.
   10-1        (g)  Chapters 33 and 41, Civil Practice and Remedies Code, do
   10-2  not apply to an action under this subchapter.
   10-3        SECTION 7.  Section 17.505, Business & Commerce Code, is
   10-4  amended to read as follows:
   10-5        Sec. 17.505.  NOTICE:  OFFER OF SETTLEMENT.  (a)  As a
   10-6  prerequisite to filing a suit seeking damages under Subdivision (1)
   10-7  of Subsection (b) of Section 17.50 of this subchapter against any
   10-8  person, a consumer shall give written notice to the person at least
   10-9  60 days before filing the suit advising the person in reasonable
  10-10  detail of the consumer's specific complaint and the amount of
  10-11  economic <actual> damages and expenses, including attorneys' fees,
  10-12  if any, reasonably incurred by the consumer in asserting the claim
  10-13  against the defendant.  During the 60-day period a written request
  10-14  to inspect, in a reasonable manner and at a reasonable time and
  10-15  place, the goods that are the subject of the consumer's action or
  10-16  claim may be presented to the consumer.  If the consumer
  10-17  unreasonably refuses to permit the inspection, the court shall not
  10-18  award the two times economic <actual> damages not exceeding $1,000,
  10-19  as provided in Subsection (b) of Section 17.50 of this subchapter.
  10-20        (b)  If the giving of 60 days' written notice is rendered
  10-21  impracticable by reason of the necessity of filing suit in order to
  10-22  prevent the expiration of the statute of limitations or if the
  10-23  consumer's claim is asserted by way of counterclaim, the notice
  10-24  provided for in Subsection (a) of this section is not required, but
  10-25  the tender provided for by Subsection (d) <(c)> of this section and
  10-26  by Subsection (d), Section 17.506 of this subchapter may be made
  10-27  within 60 days after the filing of the suit or counterclaim.
   11-1        (c)  If a consumer does not give the written notice required
   11-2  by Subsection (a) and Subsection (b)  does not apply, the consumer
   11-3  may cure the failure by giving the written notice as required by
   11-4  Subsection (a) to the person against whom the suit is pending.  A
   11-5  person receiving notice under this subsection may abate the suit
   11-6  only if the person files a plea in abatement and an affidavit
   11-7  stating the facts required to be established by this subsection in
   11-8  a court in which the suit is pending.  The plea in abatement and
   11-9  affidavit must be filed not later than the 30th day after the date
  11-10  the person receives the written notice.  If the consumer does not
  11-11  file a controverting affidavit or if, after hearing, the court
  11-12  finds the person is entitled to the abatement, the court shall
  11-13  abate the suit for 60 days.
  11-14        (d)  Any person who receives the written notice provided by
  11-15  Subsection (a) or (c) of this section may, within 60 days after the
  11-16  receipt of the notice, tender to the consumer a written offer of
  11-17  settlement, including an agreement to reimburse the consumer for
  11-18  the attorneys' fees, if any, reasonably incurred by the consumer in
  11-19  asserting his claim up to the date of the written notice.  A person
  11-20  who does not receive such a written notice due to the consumer's
  11-21  suit or counterclaim being filed as provided for by Subsection (b)
  11-22  of this section may, within 60 days after the filing of such suit
  11-23  or counterclaim, tender to the consumer a written offer of
  11-24  settlement, including an agreement to reimburse the consumer for
  11-25  the attorneys' fees, if any, reasonably incurred by the consumer in
  11-26  asserting his claim up to the date the suit or counterclaim was
  11-27  filed.  Any offer of settlement not accepted within 30 days of
   12-1  receipt by the consumer shall be deemed to have been rejected by
   12-2  the consumer.
   12-3        (e) <(d)>  A settlement offer made in compliance with
   12-4  Subsection (d) <(c)> of this section, if rejected by the consumer,
   12-5  may be filed with the court together with an affidavit certifying
   12-6  its rejection.  If the amount tendered in the settlement offer is
   12-7  the same as or more than, or if the court finds that amount to be
   12-8  substantially the same as, the economic <actual> damages found by
   12-9  the trier of fact, the consumer may not recover an amount in excess
  12-10  of the amount tendered in the settlement offer or the amount of
  12-11  economic <actual> damages found by the trier of fact, whichever is
  12-12  less.  Such settlement offer shall not be admissible as evidence
  12-13  before a jury.
  12-14        (f) <(e)>  The tender of an offer of settlement is not an
  12-15  admission of engaging in an unlawful act or practice or of
  12-16  liability under this Act.  Evidence of a settlement offer may be
  12-17  introduced only to determine the reasonableness of the settlement
  12-18  offer as provided for by Subsection (e) <(d)> of this section.
  12-19        SECTION 8.  Section 17.506(d), Business & Commerce Code, is
  12-20  amended to read as follows:
  12-21        (d)  In an action brought under Section 17.50 of this
  12-22  subchapter, it is a defense to a cause of action if the defendant
  12-23  proves that he received notice from the consumer advising the
  12-24  defendant of the nature of the consumer's specific complaint and of
  12-25  the amount of economic <actual> damages and expenses, including
  12-26  attorneys' fees, if any, reasonably incurred by the consumer in
  12-27  asserting the claim against the defendant, and that within 30 days
   13-1  after the day on which the defendant received the notice the
   13-2  defendant tendered to the consumer:
   13-3              (1)  the amount of economic <actual> damages claimed;
   13-4  and
   13-5              (2)  the expenses, including attorneys' fees, if any,
   13-6  reasonably incurred by the consumer in asserting the claim against
   13-7  the defendant.
   13-8        SECTION 9.  Section 17.56, Business & Commerce Code, is
   13-9  amended to read as follows:
  13-10        Sec. 17.56.  VENUE.  An action brought which alleges a claim
  13-11  to relief under Section 17.50 of this subchapter may be commenced
  13-12  in the county in which the person against whom the suit is brought
  13-13  resides or<,> has his principal place of business, <or has a fixed
  13-14  and established place of business at the time the suit is brought>
  13-15  or in the county in which the alleged act or practice occurred or
  13-16  in a county in which the defendant or an authorized agent of the
  13-17  defendant solicited the transaction made the subject of the action
  13-18  at bar.
  13-19        SECTION 10.  Section 33.002(b), Civil Practice and Remedies
  13-20  Code, is amended to read as follows:
  13-21        (b)  This chapter does not apply to:
  13-22              (1)  an action to collect workers' compensation
  13-23  benefits under the workers' compensation laws of this state,
  13-24  Subtitle A, Title 5, Labor Code, <(Article 8306 et seq., Vernon's
  13-25  Texas Civil Statutes)> or actions against an employer for exemplary
  13-26  damages arising out of the death of an employee;
  13-27              (2)  an action brought under the Deceptive Trade
   14-1  Practices-Consumer Protection Act (Subchapter E, Chapter 17,
   14-2  Business & Commerce Code)  <except as specifically provided in
   14-3  Section 17.50 of that Act>; or
   14-4              (3)  an action brought under Chapter 21, Insurance
   14-5  Code.
   14-6        SECTION 11.  This Act takes effect September 1, 1995, and
   14-7  applies only to a cause of action that accrues on or after that
   14-8  date.  An action that accrued before the effective date of this Act
   14-9  is governed by the law applicable to the action immediately before
  14-10  the effective date of this Act, and that law is continued in effect
  14-11  for that purpose.
  14-12        SECTION 12.  The importance of this legislation and the
  14-13  crowded condition of the calendars in both houses create an
  14-14  emergency and an imperative public necessity that the
  14-15  constitutional rule requiring bills to be read on three several
  14-16  days in each house be suspended, and this rule is hereby suspended.