Why the Texas Deceptive Trade Practices Act Usually Doesn't Apply to Claims Against Brokers

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

One of the favored and most-powerful weapons in the arsenal of Plaintiff's lawyers is the Texas Deceptive Trade Practices Act ("DTPA"). This statute is modeled on similar ones adopted by other states, and provides valuable protections to consumers against all manner of false, misleading and/or deceptive practices and acts.

In addition to serving as an independent cause of action, the DTPA also implicates categories of damages that can result in significant damages awards against defendants who are found to have acted "knowingly" or "intentionally." Specifically, Section 17.50(b) of the DTPA provides:

(b) In a suit filed under this section, each consumer who prevails may obtain:

(1) the amount of economic damages found by the trier of fact. If the trier of fact finds that the conduct of the defendant was committed knowingly, the consumer may also 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 economic damages; or if the trier of fact finds the conduct 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;

Obviously, given the types of damages provided in Section 17.50(b), plenty of demand letters and Petitions contain allegations that the DTPA has been violated. In fact, it seems like many lawyers use the same "boilerplate" language to implicate the statute's Draconian damages provisions or otherwise make a standard tort or contract case "fit" within the scope of the DTPA.

In our San Antonio real estate law practice, we frequently defend and prosecute real estate professionals who have allegedly violated ethical or legal standards. In those instances where our client is a real estate broker or salesperson in a suit or claim advanced against them, we limit the scope of a Plaintiff's claim by forcing that Plaintiff to demonstrate that he or she is entitled (based on the law and/or facts) to pursue each of the causes of action brought against our client. Where the DTPA is concerned, a Plaintiff is usually limited by Section 17.49(i), of the DTPA, which provides:

(i) Nothing in this subchapter shall apply to a claim against a person licensed as a broker or salesperson under Chapter 1101, Occupations Code, arising from an act or omission by the person while acting as a broker or salesperson. This 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 Section 17.46(b)(24); or

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

This section serves to exempt from the DTPA virtually all activities of a real estate professional who renders advice, exercises judgment, or offers and opinion the course and scope of his or her activities as a broker or salesperson. Notably, this exemption does not apply where the real estate professional engages in intentional or other unconscionable behaviors or actual fraud. Likewise, a real estate professional who acts as a principal may not be exempted.