As a real estate lawyer in San Antonio, TX, I have always perceived the Texas Deceptive Trade Practices Act ("DTPA") to be a mixed bag -- one of those statutes with equal parts good and bad implications. My belief has been developed over the past decade based upon what I characterize as a "strict liability" interpretation of the DTPA adopted by the Texas Supreme Court and its subordinate Texas state courts.
One would be hard-pressed to argue legitimately against the DTPA's policy purpose: to protect consumers against false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty. However, the DTPA's application in real estate fraud cases has oft' reminded me of the old maxim: "the road to hell paved is with good intentions."
For better or worse, since at least 2002, Texas courts have rejected the
argument that an individual cannot be held liable under the DTPA when he does
not know the falsity of his representations. Stated differently, the law in Texas provides for strict liability for misrepresentations, as follows:
“[A] DTPA claim does not require that
the consumer prove the [defendant] acted knowingly or intentionally. The DTPA
requires that the consumer show that the misrepresentation was false and that
the false misrepresentation was the producing cause of the consumer's damages.
A consumer is not required to prove intent to make a misrepresentation to
recover under the DTPA."
In the context of a typical real estate dispute, DTPA claims are frequently asserted in connection with misrepresentation or failure to disclose (concealment) allegations. These allegations are usually made by a Buyer against the former Seller and/or that Seller's broker-agent. Often the DTPA is thrown-in as a "catch-all" allegation, when the real crux of the Plaintiff's claims sound in fraud or breach of contract.
I have seen DTPA causes of action filed in cases relating to a given property's: a) suitability for a certain purpose; b) zoning classification; c) propensity to flood; d) right of access to a water well; e) existence or non-existence of a foundation warranty; and f) access to a public roadway. The underlying representations were made innocently -- without knowledge of their falsehood, and in all of these instances, the Seller-Defendant (or that defendant's broker) asserted some variant of the defensive argument that they did not know that their representations were false at the time that they were made. Because this defensive theory goes to intent, which is not a necessary element of proof for recovery under the DTPA (or any strict liability claim), it is usually unsuccessful.
Thus, where real estate representations (or misrepresentations) are concerned, a DTPA violation is usually much easier to prove than a fraud claim. This is so because, in order to prevail on a fraud claim, the Plaintiff must prove that the Defendant knew (or should have known) of the falsehood of their representation at the time that such representation was made. Proving 'intent to defraud' can be difficult because it requires some evidence of the state of mind or knowledge of the actor. By contrast, simple falsehood (however innocent) is the only showing required by the DTPA, and can usually be proven by circumstantial evidence without inquiry into an actor's knowledge or intent.
DTPA claims are nebulous; and, thus, tough to defend. For the Plaintiff they can be tough to prosecute because of various procedural requirements. This is definitely one area in which having a knowledgeable lawyer can make a huge difference.
(1) an express misrepresentation of a material fact that cannot be characterized as advice, judgment, or opinion;
(3) an unconscionable action or course of action that cannot be characterized as advice, judgment, or opinion.
Trey Wilson San Antonio Texas Real Estate Attorney, Trey Wilson Real Estate Lawyer in San Antonio wrote:
