Ojeda De Toca v. Wise
31 Tex. Sup. Ct. J. 348, 748 S.W.2d 449, 1988 Tex. LEXIS 37 (1988)
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Rule of Law:
A seller's liability under the Deceptive Trade Practices Act (DTPA) for intentionally failing to disclose a known material fact is not negated by the buyer's constructive notice of that fact from public property records.
Facts:
- The City of Houston issued an order to demolish a specific house.
- The city's demolition order was officially filed and recorded in the Harris County real property deed records.
- Wise Developments, Inc., and its owner William J. Wise, knew the property they owned was subject to this demolition order.
- Wise Developments, Inc. sold the house to Rocío Ojeda de Toca.
- During the transaction, Wise Developments, Inc. intentionally did not disclose the existence of the demolition order to Mrs. Toca to induce her to purchase the property.
- After Mrs. Toca completed the purchase, the City of Houston demolished the house pursuant to the previously filed order.
Procedural Posture:
- Rocío Ojeda de Toca sued Wise Developments, Inc. and William J. Wise in a Texas trial court for violations of the Deceptive Trade Practices Act (DTPA) and fraud.
- A jury found in favor of Mrs. Toca, and the trial court entered a judgment awarding her damages.
- Wise Developments, Inc. and William J. Wise (as appellants) appealed to the Texas Court of Appeals.
- The Court of Appeals reversed the trial court's judgment, holding that the recorded demolition order provided constructive notice, which served as a complete defense to Mrs. Toca's claims.
- Mrs. Toca (as petitioner) successfully petitioned the Supreme Court of Texas for a writ of error to review the appellate court's decision.
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Issue:
Does a buyer's constructive notice of a fact, derived from its recordation in the public property records, operate as a defense for a seller against a claim under the Deceptive Trade Practices Act (DTPA) for intentionally failing to disclose that same fact?
Opinions:
Majority - Kilgarlin, Justice
No. Constructive notice under the real property recording statutes does not operate as a defense to a buyer’s action for damages under the Deceptive Trade Practices Act (DTPA). The purpose of recording statutes is to protect innocent purchasers from secret liens and adverse claims to title, not to shield perpetrators of fraud or deceptive acts. The DTPA makes it a violation for a seller to fail to disclose known information with the intent to induce a consumer into a transaction. The legislature did not intend for the legal fiction of constructive notice to bar a consumer's statutory right to sue for damages caused by a seller's intentional deception.
Analysis:
This decision significantly strengthens the Texas Deceptive Trade Practices Act (DTPA) by clarifying that its consumer protection remedies are distinct from traditional common law property principles. It establishes that a seller's duty to disclose known material defects is an active responsibility that cannot be evaded by relying on the buyer's theoretical ability to discover the information in public records. This precedent prevents sellers from using the legal fiction of constructive notice as a shield for their own intentional, deceptive conduct, thereby reinforcing the DTPA's focus on the seller's knowledge and intent rather than the buyer's diligence.
