Donwerth v. Preston II Chrysler-Dodge, Inc.
32 Tex. Sup. Ct. J. 517, 1989 Tex. LEXIS 77, 775 S.W.2d 634 (1989)
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Rule of Law:
Under the Texas Deceptive Trade Practices—Consumer Protection Act (DTPA), the determination of whether a consumer's lawsuit is groundless and brought in bad faith, for the purpose of awarding attorney's fees to the defendant, is a question of law exclusively for the court to decide. Additionally, an appellee can seek affirmative relief through cross-points without filing a separate appeal, unless the appellant strictly limits the appeal's scope.
Facts:
- In March 1983, Harvey and Dorothy Donwerth purchased a used 1981 Chrysler from Preston II Chrysler Dodge, Inc.
- Before the sale, a Preston II salesman, Bob White, represented that the car was in good condition and that there was nothing wrong with the brakes, despite Mr. Donwerth noting the brake pedal felt 'spongy.'
- Preston II provided the Donwerths with a written odometer statement indicating the mileage was approximately 37,000 miles and correct to the best of its knowledge.
- Months after the purchase, the Donwerths experienced serious problems with the car, especially the brakes, which were found to be dangerously worn.
- A title history check revealed that a prior owner's records showed the car with over 57,000 miles, indicating the odometer had been rolled back by approximately 20,000 miles.
- When confronted, White produced an odometer certificate from the wholesale dealer who sold the car to Preston II.
- After unsuccessful settlement negotiations, the Donwerths picketed the Preston II dealership for three consecutive Saturdays with signs on their car stating, 'BOUGHT THIS CAR FROM PRESTON II. THE MILES WERE ROLLED BACK.'
Procedural Posture:
- Preston II Chrysler Dodge, Inc. sued Harvey and Dorothy Donwerth for defamation in a Texas trial court.
- The Donwerths filed a counterclaim against Preston II, alleging violations of the Deceptive Trade Practices—Consumer Protection Act (DTPA).
- A jury found that Preston II had violated the DTPA but also found that the Donwerths' DTPA claim was groundless and brought in bad faith, awarding Preston II $7,000 in attorney's fees.
- The trial court judge disregarded the jury's findings on groundlessness and bad faith and entered a judgment on the verdict for the Donwerths in the amount of $15,300.
- Preston II, as appellant, appealed to the Texas Court of Appeals, and the Donwerths, as appellees, asserted cross-points.
- The Court of Appeals reversed the trial court, rendered a take-nothing judgment against the Donwerths, reinstated the jury's finding of bad faith, and awarded Preston II its attorney's fees.
- The Donwerths then brought the case to the Supreme Court of Texas for review.
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Issue:
Under the Texas Deceptive Trade Practices—Consumer Protection Act (DTPA), is the determination of whether a consumer's action is 'groundless and brought in bad faith' a question of fact for the jury or a question of law for the court?
Opinions:
Majority - Justice Spears
No. The determination of whether a consumer's action is groundless and brought in bad faith under the DTPA is a question of law for the court, not a question of fact for the jury. The plain language of the statute, section 17.50(c), states, 'On a finding by the court...' which assigns this determination exclusively to the trial judge. The court defines 'groundless' not as a complete lack of evidence, but as having 'no basis in law or fact and not warranted by good faith argument for the extension, modification, or reversal of existing law,' mirroring Texas Rule of Civil Procedure 13. To equate 'groundless' with 'no evidence' would improperly discourage legitimately wronged consumers from pursuing their rights under the Act. In this case, there was some evidence of misrepresentation regarding the brakes and odometer, so the Donwerths' claim was not groundless as a matter of law. The court also held that an appellee may seek affirmative relief through cross-points without perfecting a separate appeal, unless the appellant properly limits the appeal under Texas Rule of Appellate Procedure 40(a)(4).
Concurring - Chief Justice Phillips
This opinion concurs in the judgment but disagrees with the majority's dicta regarding the 'purpose of harassment' prong of the DTPA's attorney's fee provision. The plain language and legislative history of the 1979 amendment to section 17.50(c) show that 'groundless and brought in bad faith' and 'brought for the purpose of harassment' are two distinct, independent grounds for awarding a defendant attorney's fees. A finding of harassment alone should be sufficient to award fees, even without a corresponding finding that the suit was also groundless. The majority's suggestion that a non-groundless case could rarely, if ever, be brought for the sole purpose of harassment is an unnecessary and incorrect incursion into a legislative policy decision.
Concurring - Justice Ray
This opinion concurs in the judgment and writes to further explain the procedural rules governing cross-points in Texas appellate courts. The opinion reaffirms that Texas Rule of Appellate Procedure 40(a)(4) provides the sole method for an appellant to limit the scope of their appeal and thereby prevent an appellee from seeking affirmative relief via cross-points. It clarifies that confusing phrases from prior case law, such as requiring cross-points to 'affect the interest of the appellant,' simply mean the issues must have been in controversy between those specific parties at trial. The opinion contrasts the more liberal rule for cross-points in the intermediate courts of appeals with the stricter rule in the Texas Supreme Court, where a separate application for writ of error is required to seek more favorable relief, and calls for a more unified and simplified appellate procedure.
Analysis:
This decision significantly clarifies Texas procedural and consumer protection law by resolving a split among the courts of appeals. By holding that the determination of 'groundless and bad faith' is a question of law for the judge, the Supreme Court of Texas centralizes power away from the jury, aiming for more consistent application of the DTPA's fee-shifting provision and protecting consumers from potentially punitive jury findings. The court's definitive ruling on cross-points simplifies appellate practice, placing a clear burden on appellants to formally limit an appeal's scope if they wish to prevent appellees from raising their own issues. This impacts litigation strategy, as DTPA defendants now know their claims for attorney's fees will be decided by a judge applying a legal standard, and appellate parties understand the default scope of an appeal is the entire controversy between them.
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