Court Opinion

ID: 9681025
Source: CourtListenerOpinion
Date Created: 2023-08-24 07:42:44.389928+00
Date Added: 2024-06-11T18:17:31.894810
License: Public Domain

CADENA, Chief Justice,
dissenting.
The conclusion that Guerra is not entitled to treble damages in this case because Brumlow recovered more under his counterclaim than did Guerra under his Deceptive Trade Practices Act claim can be justified only by ignoring the considerations which led to the enactment of the Deceptive Trade Practices Act in 1973 and, at the very least, by doing violence to the treble damage provision, § 17.50(b)(1), as it existed prior to the 1979 amendments. 1973 Tex. Gen.Laws, ch. 143 § 17.50(b)(1) at 327.
The intent of the legislature in enacting the Deceptive Trade Practices Act was manifestly to deter persons from engaging in the conduct denounced by the statute, to make consumer litigation feasible and to provide an incentive for consumers to initiate litigation to recover damages suffered because of deceptive trade practices. See Woods v. Littleton, 554 S.W.2d 662, 669-71 (Tex.1977). We may assume that the mere fact that a statute declares that certain conduct by an actor will result in his liability for damages will have some deterrent effect. Apparently being convinced in 1973 that consumer litigation was not generally feasible because of the small amounts involved in many cases, the legislature chose to encourage consumer litigation by awarding the consumer who successfully established a cause of action not only his actual damages but, in addition, enhanced damages and attorney’s fees. Such provisions not only encouraged the injured consumer to file suit, they also operated as a deterrent. Violations were to be deterred by the increase in the amount recoverable by the consumer and by the prospect that suits for deceptive practices would be filed more frequently. Thus, the treble damage provision had a dual deterrent effect.
In construing the enhanced damages provisions, we should not lose sight of the fact that the legislature has expressly command*432ed the courts to construe and apply the statute liberally “to promote its underlying purposes, which are to protect consumers against false, misleading, and deceptive business practices, unconscionable actions and breaches of warranty and to provide efficient and economical procedures to secure such protection.” Tex.Bus. & Com. Code Ann. § 17.44 (Vernon Supp.1982).
Section 17.50(a)(1) gives a cause of action to a consumer where a false, misleading or deceptive act or practice has been a producing cause of actual damages. Tex.Bus. & Com.Code Ann. § 17.50(a)(1) (Vernon Supp. 1982). Prior to the 1979 amendment, § 17.50(b)(1) allowed each consumer who. prevailed in a suit filed under § 17.50 to recover “three times the actual damages plus court costs and attorney’s fees in reasonable relation to the amount of work expended.” 1973 Tex.Gen.Laws, ch. 143 § 17.50(b)(1) at 327. The language was simple and clear. A consumer who prevailed in a deceptive trade practice suit was entitled to an award of enhanced damages, attorney’s fees, and costs. A consumer prevails in a § 17.50 suit if he establishes that the defendant’s false, misleading or deceptive conduct constituted a producing cause of actual damages to the consumer. The statute contained no language which even suggested that a consumer who established that he suffered actual, damages as a result of the defendant’s deceptive conduct could not be a prevailing party unless the amount of his actual damages exceeded the amount recovered by defendant under a counterclaim.
Smith v. Baldwin, 611 S.W.2d 611 (Tex.1980), does not support the conclusion that Guerra is not entitled to treble damages. In Smith, Baldwin agreed to build a house for Smith for $31,300.00. The jury found that the house was defectively constructed and that Baldwin was guilty of deceptive trade practices which caused Smith actual damages of $4,400.00. The actual damages consisted of $2,900.00 representing interim interest that Smith was forced to pay and $1,500.00 representing the cost of repairing the defects. Smith, however, occupied the house for a period of 10 months without making payments to Baldwin on the note he had signed. The reasonable rental value of the house for such ten-month period was found to be $3,500.00. Smith contended that his actual damages should be trebled before deducting the $3,500.00 that Baldwin was entitled to as a result of Smith’s occupancy. Under Smith’s theory, Smith would have realized a net recovery of $9,700.00 [ (3 X $4,400.00) — $3,500.00]. The contention was rejected; Justice Steakley, speaking for a majority of the Texas Supreme Court, said:
The actual damages suffered under 17.-50(b)(1) are determined by the total loss sustained by the plaintiff as a result of the deceptive trade practices. Allowable set offs will necessarily reduce the actual damages and hence the sum subject to trebling. The net damages suffered by [plaintiff] that is required to be trebled is the sum of $900, i.e., a total of $2,700. The sum of $900 results from adding the sums of $2,900 interim interest and $1,500 representing the cost of remedying the defects in the house, less the reasonable rental value [of the house which plaintiff had occupied for 10 months] of $3,500. [Emphasis added.]
611 S.W.2d at 617.
Smith v. Baldwin, supra, has not escaped criticism.1
*433Even if we unquestioningly accept Smith, it does not support the position taken by the majority in this case. Smith does not stand for the proposition that a plaintiff is entitled to enhanced damages only when he realizes a net recovery as a result of the litigation. In Smith, the amount deducted from the consumer’s damages represented the value of benefits that he received from his free occupancy of the house. The occupancy was a result of the transaction in which misrepresentation concerning the house were made. The record in the case before us contains no suggestion that Guerra realized any benefit as a result of his possession of the bull whose fitness for breeding purposes had been misrepresented by Brumlow. What Brumlow is entitled to recover on his counterclaim is the unpaid portion of the price of the other cattle purchased from Brumlow by Guerra and not the value of benefits received by Guerra because of his possession of the bull which exhibited a total lack of concern for the needs of Guerra’s cows. It must be noted that the animals in question were not purchased in bulk by Guerra at the auction. He submitted a separate bid for the bull and became entitled to the animal when no higher bid was made. Guerra’s net loss from the transaction which was tainted by the deceptive trade practice was $1,850.00. Even under Smith, Brumlow had no valid counterclaim connected with the sale and purchase of the reluctant bull.
Neither Beeman v. Worrell, 612 S.W.2d 953 (Tex.Civ.App.—Dallas 1981, no writ), nor Woo v. Great Southwestern Acceptance Corporation, 565 S.W.2d 290 (Tex.Civ.App.—Waco 1978, writ ref’d n. r. e.), support the holding of the majority in this case. In both Beeman and Woo, as in Smith, plaintiff realized a financial benefit from the very transaction tainted by the seller’s deception.
Atlas Amalgamated, Inc. v. Castillo, 601 S.W.2d 728 (Tex.Civ.App.—Waco 1980, writ ref’d n. r. e.), appears to be the only case in which a counterclaim arising from a separate transaction was required to be deducted from the consumer’s damages before such damages were trebled. The only authority cited in support of such holding is Woo, which, as already noted, involved a set off arising from the very transaction that gave rise to the consumer’s Deceptive Trade Practices Act claim.
In Atlas Amalgamated, Inc. v. Castillo, supra, plaintiff was involved in a collision and his vehicle was taken to Atlas to be repaired in October 1977. At that time, all parties understood that the cost of repairs would be paid by Castillo’s insurer. After subtracting the “deductible” of $250.00 which Castillo paid to Atlas, the insurance company was to pay Atlas the balance of the costs of repairs, $1,633.97. Atlas made no effort to collect the balance from Castillo; instead, it insisted that the insurance company pay the balance. Unaware that his insurer had not paid Atlas the balance due for the October 1977 work, Castillo took his automobile to Atlas for work on the air conditioner hose in March 1978. The defect in the air conditioner hose was unrelated to the damage resulting from the October 1977 collision. Atlas later refused to return the vehicle to Castillo, telling him that it had a right to retain possession of the vehicle until Castillo paid the sum of $1,696.29, which amount included the $1,633.97 still owing for the work done by Atlas in October 1977. In fact, Atlas had no right to retain possession until the balance due for the October 1977 work was paid. The jury found that Atlas had converted Castillo’s automobile on March 24, 1978, the date it represented to Castillo that it had rights to the vehicle which it did not have, and that the market value of the automobile on that date was $4,200.00. Additionally, the jury *434found that the value of the use of the automobile was $3,000.00. The trial court rendered judgment in favor of Castillo for $21,903.71. The judgment was computed as follows: [3 X ($4,200.00 (value of car) + $3,000.00 (value of use))] + $2,000.00 (stipulated attorney’s fees) - $1,696.29 [$1,633.97 (cost of the October 1977 repairs) + $63.32 (cost of the March 1978 repairs)]. The Waco Court held that the trial court should have deducted the $1,633.97 due for the October 1977 repairs before trebling the damages suffered by Castillo as a result of the March 1978 conversion, “thus trebling only the net damages suffered by plaintiff.” 601 S.W.2d at 730.2
Despite Atlas Amalgamated, Inc. v. Castillo, supra, I would limit the Smith v. Baldwin, supra, holding to a situation where plaintiff’s Deceptive Trade Practices Act claim and the defendant’s counterclaim arise from the same transaction and plaintiff’s counterclaim is based on benefits received by the consumer because of such transaction. While it can, perhaps, be reasonably argued that a determination of plaintiff’s “actual damages” requires a consideration of the benefits received by plaintiff as a result of the transaction tainted by the deception, a rule allowing defendant to offset any other claims he may have against plaintiff would do indefensible violence to the statutory language.
If the majority conclusion is correct, there is no basis for allowing an award of attorney’s fees to Guerra, as the majority opinion does.

. “This decision effectively defines ‘actual damages’ as the net loss plaintiff suffers ... [T]his definition undermines the dual purposes of the Act. The ... treble damages provision was designed ... to deter deceptive practices and promote private suits to ensure compliance with its provisions [Woods v. Littleton, 554 S.W.2d 662, 670 (Tex.1977)]. The Legislature has commanded that the Act be liberally construed to enforce these underlying purposes [Sec. 17.44], By deducting an ordinary counterclaim before trebling damages ..., the punitive aspect of the Act, and hence its deterrent effect, is eliminated.
“.. . On the other hand, trebling the actual damages perfectly discharges the Act’s function .... Not only does the ... narrow formulation of ‘actual damages’ directly undermine the Act’s deterrent purpose in private enforcement actions, but it also negates the incentive to bring private actions by barring attorney’s fees in these suits. A consumer may *433recover attorneys’ fees only if he has sustained ‘actual damages.’ [This] possibility of the counterclaim which would exceed the plaintiffs damages will substantially discourage private enforcement actions .... “... [Baldwin] ... makes [the] error of artificially trebling the defendant’s counterclaim, and thereby emasculates both the deterrent effect and private enforcement incentives under the Act.” D. Bragg, P. Maxwell & J. Longley, Texas Consumer Litigation 73-4 (Supp.1981).

. The failure of the court to give Atlas credit for the cost of the March 1978 repairs ($63.32) is not explained in the opinion, although that portion of the counterclaim is closely connected to the transaction involving the deceptive trade practice.