Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—E.D. Tex.: Property title holder is consumer under Texas Deceptive Trade Practices Act, (Jan 25, 2016)

By Greg Hammond, J.D.

A company that held title to certain residential property could be considered a consumer under the Texas Deceptive Trade Practice Act (DTPA), according to a report and recommendation filed in the federal district court in Sherman, Texas. Finding that the plaintiffs therefore sufficiently pleaded facts to establish a DTPA claim, the magistrate judge recommended that the plaintiffs’ motion to remand be granted (Woods v. U.S. Bank, N.A., January 22, 2016, Bush, D.).

An individual and Southern Home Solutions, LLC filed suit against U.S. Bank, N.A., American Home 4 Rent Properties Eight, LLC, and Barrett, Daffin, Frappier, Turner & Engel, LLP, alleging violation of the DTPA, among other claims. The case was removed to the district court and the plaintiffs moved to remand.

U.S. Bank’s notice of removal claimed that although Barrett is believed to be a Texas citizen, it was improperly joined in this action and the plaintiffs failed to assert any viable cause of action against Barrett. Conversely, the plaintiffs claimed that Barrett violated the DTPA by colluding to refuse to provide a payoff amount after accepting a “workout package” and issuing the right to make a prepayment for the sole purpose of precluding Southern from meeting the price by issuing a payoff quote in excess of the previously agreed amount. In addition, the plaintiffs claimed that Barrett wrongfully sold the property to American when it did not have the authority to do so.

U.S. Bank argued that the plaintiffs are not consumers under the DTPA because they did not acquire goods or services from Barrett. The court disagreed, noting that the Supreme Court of Texas has defined “services” as “action or use that furthers some end or purpose: conduct or performance that assists or benefits someone or something: deeds useful or instrumental toward some object.” More simply, according to the court, the term “services” includes “an activity on behalf of one party by another.” Consequently, because Barrett’s conduct—in performing “an activity on behalf of another”—was the basis of the plaintiffs’ complaint, the court was not persuaded that the DTPA claim failed simply because they did not seek or acquire goods or services directly from Barrett. Lastly, because the plaintiffs provided factual statements to support their conclusion that Barrett did not act in good faith and that they qualified as consumers under the DTPA, the court could not conclude that there was no basis for recovery against Barrett under the DTPA. The magistrate judge therefore concluded that the court did not have jurisdiction over the case and recommended that the plaintiffs’ motion to remand be granted.

The case is No. 4:15-cv-00536.

Attorneys: Ugalahi Ugy Agbo Claire Offoboche (U.A.C. Offoboche Law Firm) for Stephanie Woods and Southern Home Solutions, LLC. Jason Levi Sanders (Locke Lord LLP) for U.S. Bank, N.A. Travis Gray (Jack O'Boyle & Associates) for American Home 4 Rent Properties Eight, LLC. Alise Nicole Abel (Maris & Lanier) for Barrett, Daffin, Frappier, Turner & Engel, LLP.

Companies: Southern Home Solutions, LLC; U.S. Bank, N.A.; American Home 4 Rent Properties Eight, LLC; Barrett, Daffin, Frappier, Turner & Engel, LLP

Cases: StateUnfairTradePractices TexasNews