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.