Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D. Colo.: Claims of more than $500,000 exempt from Texas law, (Feb 10, 2015)

By Dan Selcke, J.D.

The federal district court in Denver dismissed a claim brought under the Texas Deceptive Trade Practices-Consumer Protection Act (TDTPPA) because it involved a series of transactions totaling over $500,000, putting it outside the reach of the statute. In addition to the TDTPPA claim, the plaintiff also brought claims for breach of contract, promissory estoppel, money had and received, and unjust enrichment (Obermeyer Hydro Accessories, Inc. v. CSI Calendering, Inc., February 5, 2015, Moore, R).

Price dispute. Obermeyer Hydro Accessories, Inc. provided hydropower and water-control equipment. To perform its manufacturing work, it used polyester fabric treated by a process called calendering. Over a period of several months, Obermeyer contracted with CSI Calendering, Inc. to provide it with these goods and services, but eventually accused CSI of overcharging it hundreds of thousands of dollars “for the purchase of certain fabric and the treatment of that fabric in a process known as Calendering.” Obermeyer sued under the TDTPPA, and CSI filed a motion to dismiss.

Exemption This case involved whether Obermeyer’s TDTPPA claim was exempt under the statute. According to Tex. Bus. & Com. Code Ann. Section 17.49(g), the TDTPPA did not apply to “a cause of action arising from…a set of transactions relating to the same project, involving total consideration by the consumer of more than $500,000, other than a cause of action involving a consumer’s residence.” CSI argued that Obermeyer paid over $500,000 in a set of transactions all relating to the same project. Obermeyer replied, pointing out that it had placed several different purchase orders for fabric and calendering at different times and that none of these individual orders were for more than $500,000. It argued that each purchase order garnered it material and services that it used to complete a series of separate projects.

“Project.” The TDTPPA did not define the terms “project” or “transaction,” so the court analyzed the language using general contract principles. According to the Oxford American Dictionary, a “project” was “an individual or collaborative enterprise that is carefully planned and designed to achieve a particular plan.” Under that definition, the many transactions between Obermeyer and CSI, which were undertaken in the context of an ongoing relationship based around buying and selling exactly these goods and services, were indeed related to one project. The two companies entered into a “collaborative enterprise” to provide Obermeyer with fabric and calendering services, and this “particular plan” was carried out by Obermeyer submitting and CSI agreeing to sell or calendar orders of fabric.

Statutory intent. Obermeyer’s argument that that it would use the fabric and calendering treatments it obtained with each purchase order to complete a series of separate projects was out on synch with the purpose of the TDTPPA, which was to protect the consumer vis-à-vis the seller of goods or services. Keeping that purpose in mind, it made little sense to define “project” as the undertaking proposed solely by the consumer. The focus of the TDTPPA was on the relationship between the consumer and the seller, so “project” must be defined in relation to both parties.

Conclusion. While none of the individual purchase orders exceeded $500,000, the total of all the purchase orders did. This meant that the TDTPPA did not apply to Obermeyer’s claim. The court granted CSI’s motion to dismiss Obermeyer’s TDTPPA claim, although its other claims survived.

The case number is: 14-cv-00184

Attorneys: Richard F. Greenleaf (Berg Hill Greenleaf & Ruscitti, LLP) for Obermeyer Hydro Accessories, Inc. Joy Christine Syrcle (Stinson Leonard Street LLP) for CSI Calendering, Inc.

Companies: Obermeyer Hydro Accessories, Inc.; CSI Calendering, Inc.

Cases: StateUnfairTradePractices ColoradoNews