San Antonio Real Estate Lawyer                         
                    

Real Estate Brokers/Agents Exemptions from DTPA Claims Not Absolute

ABOUT THE DTPA

The Texas Deceptive Trade Practices Act (“DTPA”) is a very powerful statute. The DTPA provides protections for consumers from deceptive trade practices in the purchase and lease of goods and services. See TEX. BUS. & COM. CODE ANN. §§ 17.46, 17.50; Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 649 (Tex. 1996); Smith v. Baldwin, 611 S.W.2d 611, 616 (Tex. 1980). “Services” means “work, labor, or service purchased or leased for use, including services furnished in connection with the sale or repair of goods.” TEX. BUS. & COM. CODE ANN. § 17.45(2); Smith, 611 S.W.2d at 615-16.

ELEMENTS OF A DTPA CLAIM

The elements of a cause of action for violation of the DTPA are that (1) the plaintiff is a consumer, (2) the defendant can be sued under the DTPA, (3) the defendant committed a wrongful act under the statute, and (4) the defendant’s actions were the producing cause of the plaintiff’s damages. See TEX. BUS. & COM. CODE ANN. §§ 17.45, 17.46; Amstadt, 919 S.W.2d at 649.

REAL ESTATE AGENTS AND BROKERS GENERALLY EXEPMT FROM THE DTPA

A licensed real estate broker or salesperson is exempted from the DTPA for “an act or omission by the persons while acting as a broker or salesperson.” TEX. BUS. & COM. CODE ANN. § 17.49(i); see Retherford v. Castro, 378 S.W.3d 29, 35 (Tex. App.-Waco 2012, pet. denied); see also TEX. OCC. CODE ANN. ch. 1101 (titled “Real Estate Brokers and Sales Agents”).

EXEMPTIONS ARE NOT ABSOLUTE. THESE CAVEATS APPLY

The real estate professionals’  exemption does not apply to:

(1) an express misrepresentation of a material fact that cannot be characterized as advice, judgment, or opinion;

(2) a failure to disclose information in violation of § 17.46(b)(24); or

(3) an unconscionable action or course of action that cannot be characterized as advice, judgment, or opinion.

TEX. BUS. & COM. CODE ANN. § 17.49(i)(1)-(3); see also id. § 17.49(b)(24) (providing that “false, misleading, or deceptive acts or practices” includes failing to disclose information about the goods or services that was known at the time of the transaction with the intent to induce the consumer to enter into the transaction); In re Rhee, 481 B.R. 880, 892-93 (Bankr. S.D. Tex. 2012).

ANALYZING THE CAVEATS

  • MISREPRESENTATION

An actionable misrepresentation may be oral or written. Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 502 (Tex. 2011); Barnett v. Coppell N. Tex. Court, Ltd.,123 S.W.3d 804, 822 (Tex. App.-Dallas 2003, pet. denied); Wayne Duddlesten, Inc. v. Highland Ins., 110 S.W.3d 85, 91 (Tex. App.-Houston [1st Dist.] 2003, pet. denied). A plaintiff need not prove the other party’s intent to make a misrepresentation under § 17.46(b)(2), (5), (12), or (14); rather, the act of making the false representation is itself actionable. See TEX. BUS. & COM. CODE ANN. §§ 17.46(b)(2), (5), (12), (14), 17.49(i)(1); Miller v. Keyser, 90 S.W.3d 712, 716 (Tex. 2002); Helena Chem. Co., 47 S.W.3d at 502; Smith, 611 S.W.2d at 616-17.

Misrepresentations of fact made outside of a contract during the performance of services are also actionable under the DTPA. See Best v. Ryan Auto Grp., Inc.,786 S.W.2d 670, 671 (Tex. 1990) (per curiam) (holding that evidence of representations outside the contract was legally sufficient evidence to support a claim under § 17.46(b)(12)); Cont’l Dredging, Inc. v. De-Kaizered, Inc., 120 S.W.3d 380, 389-90 (Tex. App.-Texarkana 2003, pet. denied) (noting that misrepresentations outside of a contract between the parties may be a violation of the DTPA despite only economic loss); Apple Imports, 945 S.W.2d at 898-99; see also Bossier Chrysler-Dodge II, Inc. v. Riley, 221 S.W.3d 749, 756 (Tex. App.-Waco 2007, pet. denied); Valley Nissan, Inc. v. Davila, 133 S.W.3d 702, 710 (Tex. App.-Corpus Christi-Edinburg 2003, no pet.).

  • FAILURE TO DISCLOSE WITH INTENT TO INDUCE THE CONSUMER INTO A TRANSACTION

The second caveat to the DTPA exemption for real estate brokers and sellers provides that the DTPA applies to a broker when the broker fails “to disclose information concerning goods and services which was known at the time of the transaction if such failure to disclose such information was intended to induce the consumer into a transaction into which the consumer would not have entered had the information been disclosed[.]” See TEX. BUS. & COM. CODE ANN. §§ 17.46(b)(24), 17.49(i)(2); Patterson v. McMickle, 191 S.W.3d 819, 827 (Tex. App.-Fort Worth 2006, no pet.)(“The plaintiff must also show that the information was withheld with the intent of inducing the consumer to engage in a transaction.” (citing Willowbrook Foods, Inc. v. Grinnell Corp., 147 S.W.3d 492, 507 (Tex. App.-San Antonio 2004, pet. denied))); Head,159 S.W.3d at 744.  The term “transaction” contemplates an act or acts whereby an alteration of legal rights occur. Head, 159 S.W.3d at 744-45 (citing Doe v. Boys Clubs of Greater Dall., Inc., 868 S.W.2d 942, 954 (Tex. App.-Amarillo 1994), aff’d, 907 S.W.2d 472 (Tex. 1995)); see also Red Roof Inns, Inc v. Jolly, No. 14-10-00344-CV, 2011 WL 6288147, at *7 (Tex. App.-Houston [14th Dist.] Dec. 15, 2011, no pet.).

  • UNCONSCIONABLE ACTION

“Unconscionable action or course of action” is defined as “an act or practice which, to a consumer’s detriment, takes advantage of the lack of knowledge, ability, experience, or capacity of the consumer to a grossly unfair degree.” Id. § 17.45(5); see Ins. Co. of N. Am. v. Morris, 981 S.W.2d 667, 677 (Tex. 1998); Latham v. Castillo, 972 S.W.2d 66, 68 (Tex. 1998). “Grossly” means the resulting unfairness must be “glaringly noticeable, flagrant, complete and unmitigated.” Strobach v. WesTex Cmty. Credit Union, No. 08-17-00182-CV, 2019 WL 3812366, at *16, ___ S.W.3d ___, ___ (Tex. App.-El Paso Aug. 14, 2019, no pet.); Yates Bros. Motor Co. v. Watson, 548 S.W.3d 662, 671 (Tex. App.-Texarkana 2018, no pet.); Bennett v. Bank United, 114 S.W.3d 75, 82 (Tex. App.-Austin 2003, no pet.) (citing Riverside Nat’l Bank v. Lewis, 603 S.W.2d 169, 175 (Tex. 1980)). Unconscionability under the DTPA is an objective standard for which scienter is irrelevant. Bradford, 48 S.W.3d at 760; Yates Bros. Motor Co. v. Watson, 548 S.W.3d 662, 671 (Tex. App.-Texarkana 2018, no pet.).

Further, the unconscionable act or practice does not have to occur simultaneously with the purchase or lease of goods or services by the consumer. Flenniken v. Longview Bank & Tr. Co, 661 S.W.2d 705, 707 (Tex. 1983); Teague v. Bandy, 793 S.W.2d 50, 54 (Tex. App.-Austin 1990, writ denied). However, the unconscionable act or practice must occur within the context of the purchase or lease of goods or services. Flenniken, 661 S.W.2d at 707; see Hines v. Evergreen Cemetery Ass’n,865 S.W.2d 266, 269 (Tex. App.-Texarkana 1993, no writ).