Amstadt v. United States Brass Corp.
1996 WL 99879, 919 S.W.2d 644 (1996)
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Rule of Law:
For an upstream manufacturer or supplier to be liable under the Texas Deceptive Trade Practices-Consumer Protection Act (DTPA), their deceptive act or practice must occur in connection with the consumer's specific transaction and cannot be based solely on misrepresentations made to other entities in the chain of distribution.
Facts:
- Hoechst Celanese Corporation ('Celanese') manufactured a plastic compound called Celcon and sold it to U.S. Brass.
- Shell Oil Company ('Shell') produced polybutylene resin and sold it to U.S. Brass.
- U.S. Brass Corporation ('U.S. Brass') used the Celcon and resin to design and manufacture a polybutylene plumbing system.
- U.S. Brass and Shell marketed this plumbing system to homebuilders, including General Homes Corporation, and to municipal officials to gain building code approval.
- These marketing efforts included representations that the plumbing system was durable, reliable, and superior to other materials.
- General Homes installed the U.S. Brass plumbing systems into new homes it built and sold to consumers.
- Numerous homeowners, including the Andraus, Knowlton, and Barrett plaintiffs, purchased these homes from General Homes.
- After several years, the Celcon fittings in the plumbing systems began to develop cracks, leading to leaks and significant property damage in the homes.
Procedural Posture:
- Homeowners in three separate actions sued U.S. Brass, Shell, and Celanese in Texas trial courts, alleging negligence and violations of the DTPA.
- In the Andraus case, a jury found the defendants liable under both negligence and DTPA theories, and the trial court entered judgment for the homeowners primarily on the DTPA claims.
- The defendants in Andraus appealed to the court of appeals, which affirmed the DTPA liability.
- In the Knowlton/Kochie case, the trial court granted summary judgment against the Knowlton plaintiffs on res judicata grounds. The Kochie plaintiffs proceeded to trial, and a jury found U.S. Brass liable under the DTPA.
- On appeal, the court of appeals reversed the summary judgment against the Knowlton plaintiffs and affirmed the judgment against U.S. Brass for the Kochie plaintiffs.
- In the Barrett case, a jury found U.S. Brass liable for negligence and DTPA violations, but the trial court disregarded the DTPA findings and entered judgment only on negligence.
- On appeal, the court of appeals reinstated DTPA liability for some Barrett plaintiffs.
- The manufacturers appealed the adverse rulings from the courts of appeals to the Supreme Court of Texas.
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Issue:
Does an upstream manufacturer's deceptive act or misrepresentation create liability under the Texas Deceptive Trade Practices-Consumer Protection Act (DTPA) if the act or misrepresentation was not made in connection with the consumer's purchase transaction?
Opinions:
Majority - Justice Cornyn
No. A defendant's deceptive conduct is not actionable under the DTPA unless it was committed in connection with the plaintiff's consumer transaction. While privity of contract is not required, liability does not extend to upstream manufacturers whose alleged misrepresentations were never communicated to the consumer. The DTPA's purpose is to protect consumers in their transactions, and the required nexus is absent when misrepresentations are made only to intermediaries like homebuilders and building code officials who can independently evaluate the product. The homeowners' DTPA remedy is against the seller of the homes, General Homes, who may then seek contribution or indemnity from the upstream manufacturers. The homeowners can, however, maintain direct negligence claims against the upstream manufacturers for foreseeable injuries.
Concurring in part and dissenting in part - Justice Gonzalez
No, as to the misrepresentation claims, but Yes, as to U.S. Brass's unconscionable conduct. The majority is correct that the misrepresentation claims fail the 'in connection with' requirement. However, the evidence supports a jury finding that U.S. Brass engaged in an unconscionable course of action under a separate provision of the DTPA. U.S. Brass's extensive control over the system's design, its aggressive marketing, and its suppression of negative reports show it took advantage of the homeowners' lack of knowledge to a grossly unfair degree. This conduct was a 'substantial factor' and thus a legal cause of the new homeowners' injuries, creating a sufficient connection for DTPA liability based on unconscionability, distinguishing U.S. Brass from the mere component suppliers, Shell and Celanese.
Analysis:
This decision significantly narrows the scope of the Texas DTPA by establishing the 'in connection with' requirement as a critical limitation on liability for upstream manufacturers. It prevents the DTPA from becoming a pure products liability statute, shifting the focus from whether a product caused an injury to whether the defendant's deceptive act was tied to the consumer's actual purchase. This holding protects manufacturers from DTPA claims by remote consumers when misrepresentations are only made business-to-business. It effectively channels consumer DTPA claims to the direct seller, who in turn can use contribution or indemnity actions against responsible upstream parties.
