Ppg Industries, Inc. v. jmb/houston Centers Partners Limited Partnership

IN THE SUPREME COURT OF TEXAS

IN THE SUPREME COURT OF TEXAS

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No. 01-0346

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PPG Industries, Inc.,

Petitioner

v.

JMB/Houston Centers Partners

Limited Partnership, Respondent

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On Petition for Review from the

Court of Appeals for the Fourteenth District

of Texas

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Argued

on November 20, 2002

Justice O = Neill , joined by Justice Schneider and Justice Smith , concurring in part and dissenting in part.

S, a car dealer, turns the odometer back on a

vehicle that it sells to B, clearly a false and deceptive trade practice that

the DTPA was designed to remedy. Unaware

that the odometer has been tampered with, B sells the car to C a week later and

assigns all warranties associated with it.

The car immediately breaks down, and C discovers that the vehicle has

100,000 more miles on it than the odometer represents. After today, C has no remedy against S for

deceptive trade practices because the Court indiscriminately outlaws the

assignment of all DTPA claims, even those that do not raise the policy concerns

the Court fears.

I agree with the Court that DTPA assignments have

the potential to raise public policy concerns, and when they do we should

address them. But before proceeding to

abolish, wholesale, the assignment of all DTPA claims B

even those that would further the DTPA = s

purposes B I would

first decide whether HCC had a DTPA claim to assign. The Court skips over this threshold legal

question to make a broader policy choice.

Addressing the first question, I conclude that HCC was not a consumer

under the DTPA and was therefore not entitled to invoke its protections. Having no DTPA claim itself, HCC certainly

could not assign one. For this reason, I

would reverse and render judgment against JMB on its DTPA claim without

reaching the broader assignability question. But if I did reach that question, I would

uphold the assignment in this case; it is consistent with the DTPA = s purpose and does not violate public

policy. The Court = s

decision today is inconsistent with our own jurisprudence and the legislative

intent underlying the DTPA. Accordingly,

I concur in the Court = s

judgment insofar as it relates to JMB = s

right to recover under the DTPA, although for different reasons. Further, I agree with the Court that

limitations does not bar JMB = s

claim regarding breach of the twenty-year seal warranty, but I disagree that

the trial court erred in finding that the warranty applied as a matter of

law. For reasons that the court of

appeals expressed, 41 S.W.3d 270, 284 , I would render judgment in JMB = s favor on the breach-of-warranty claim

and respectfully dissent from the Court = s

judgment remanding that claim for a new trial.

I. Deceptive Trade Practices Act

A.

Consumer Status

In 1976, PPG contracted with HCC to provide glass

and glazing for One Houston Center. As a

buyer of PPG = s goods

and services, HCC qualified as a consumer under the DTPA in effect at the time. In 1983, the Legislature excluded from the

DTPA = s

consumer protections entities like HCC whose assets exceeded $25 million. In 1989, JMB, whose assets also exceeded $25

million, purchased the building and was assigned all warranties and claims

associated with it. In 1994, after many

windows had fogged or discolored, JMB sued PPG for breach of warranty and DTPA

violations.

Assuming that PPG committed deceptive acts or

practices in connection with selling and servicing its windows, as the jury

found, only a A consumer @ has standing to seek recovery against

it under the DTPA. See Knight v. Int = l

Harvester Credit Corp ., 627 S.W.2d 382, 388 (Tex. 1982). The 1973 version of the Act that applied when

HCC purchased the windows defined A consumer @ broadly to include a A corporation who seeks or acquires by

purchase or lease, any goods or services. @ Act of Apr. 10, 1975, 64th Leg., R.S., ch . 62, '

1, 1975 Tex. Gen. Laws 149 , 149 (amended 1983) (current version at Tex. Bus. & Com. Code ' 17.45(4)) . HCC clearly qualified as a A consumer @

under this definition. HCC still owned

the building in 1983 when the Legislature amended the statutory definition to

exclude business consumers with assets exceeding $25 million. Act of Aug. 29, 1983, 68th Leg., R.S., ch . 883, '

2, 1983 Tex. Gen. Laws 4943 , 4943-44 (current version at Tex. Bus. & Com. Code ' 17.45(4)). HCC did not qualify as a consumer under the

amended definition. For reasons that

follow, I believe that the amended definition became effective immediately and

operated to extinguish any DTPA claims that HCC might have had.

The DTPA is a statutory cause of action that the

Legislature created to protect consumers damaged by deceptive trade

practices. Having created the cause of

action, the Legislature is free to repeal or amend it at any time. See Knight , 627 S.W.2d at 384 . When a party = s

right or remedy is dependent upon a statute, the repeal of that statute without

a savings clause limiting the repeal = s

effect operates to immediately deprive the party of all rights that have not

become vested or been reduced to final judgment. Quick v. City of Austin , 7 S.W.3d 109,

128 (Tex. 1999); see also Knight , 627 S.W.2d at 384 ; Nat = l Carloading

Corp. v. Phoenix-El Paso Express, Inc. , 176 S.W.2d 564, 568 (Tex. 1943); Dickson

v. Navarro County Levee Improvement Dist. No. 3 , 139 S.W.2d 257, 259 (Tex.

1940). Thus, A suits

filed in reliance on the statute must cease when the repeal becomes effective;

if final relief has not been granted before the repeal goes into effect, final

relief cannot be granted thereafter, even if the cause is pending on appeal. @

Quick , 7 S.W.3d at 128 ; see Knight , 627 S.W.2d at

384 (citing Dickson , 139 S.W.2d at 259 ).

A savings clause may modify this general rule of

abatement. Quick , 7 S.W.3d at

128-29 . Texas = s

general savings clause is found in section 311.031 of the Government Code,

which provides that the repeal or amendment of a statute does not affect the

statute = s prior

operation or any rights previously acquired under it. Tex.

Gov = t Code '

311.031(a). In this case, the court of

appeals applied the general savings clause and held that the 1983 amendments

did not immediately apply to alter the consumer status of corporations whose

assets exceed the $25 million cap. 41

S.W.3d at 278-79 . In doing so, though,

the court ignored the 1983 Act = s

more specific amendatory language. While

it may be true that a specific savings clause does not necessarily negate

section 311.031 = s general

application, that does not mean the more specific language may be

disregarded. If contrary legislative

intent can be found in the amendatory language, the general savings clause does

not apply. Quick , 7 S.W.3d at

130 . Accordingly, I begin by analyzing

the 1983 Act = s

amendatory terms.

The 1983 amendments to the DTPA effected three

separate changes. First, as already

said, the amendments excluded from the Act = s

consumer protections businesses with assets exceeding $25 million. Second, the legislation allowed smaller

businesses with assets of $5 million or more to waive the Act = s protections by written contract. Finally, the Act added a definition of A business consumer. @

Act of Aug. 29, 1983, 68th Leg., R.S., ch .

883, ' '

1, 2, 1983 Tex. Gen. Laws 4943 , 4943-44 (current version at Tex. Bus. & Com. Code ' ' 17.42, 17.45(4)). Section 4 then contains the following

provision:

This

Act applies only to a contract executed on or after the effective date

of this Act. A contract executed before

the effective date of this Act is governed by the law in effect when the

contract was executed.

Act of Aug. 29, 1983, 68th Leg., R.S., ch .

883, ' 4, 1983

Tex. Gen. Laws 4943 , 4944 (emphasis added).

The question, then, is whether this savings provision applies only to

the portion of the amending act governing contractual waivers, or if it also

preserves the consumer status of corporations with assets exceeding $25 million

as to transactions occurring before the amendment = s

effective date. I conclude that the

specific amendatory language indicates the Legislature did not intend to leave

the consumer status of corporations exceeding the asset cap intact as to

pre-amendment transactions.

Section 4 of the 1983 Act specifically provides

that the Act applies only to A contract[s]

executed @ on or

after the amendments =

effective date, indicating that it must have intended to preserve from the

amendments =

immediate effects contracts that were executed before. Id .

The DTPA = s

protections, though, extend beyond transactions based upon written

contracts. From its inception, the DTPA

has defined a A consumer @ as anyone A who

seeks or acquires @ goods or

services. Act of May 21, 1973, 63rd Leg.,

R.S., ch . 143, '

1, 1973 Tex. Gen. Laws 322 , 323 (current version at Tex. Bus. & Com. Code '

17.45(4)). Thus, A consumers @ do not need a written contract; the

Act encompasses those with oral contracts or no contract at all ( i.e. ,

mere shoppers). If the Legislature truly

meant the asset cap to apply only to A contracts

executed @ after

1989, then it has never become operative for oral contracts or shoppers. Such a reading would contravene the

Legislature = s

directive that, in construing statutes, we should presume that A the entire statute is intended to be

effective. @ Tex.

Gov = t Code '

311.021(2).

Moreover, the Legislature knows how to more

broadly preserve claims if that is its intent.

The Legislature clearly expressed its intent to A save @ all claims arising in whole or in part

before its 1979 and 1981 DTPA amendments became effective. As to the 1979 amendments, the Legislature

stated that A [t]his

Act shall be applied prospectively only.

Nothing in this Act affects either procedurally or substantively a cause

of action that arose either in whole or in part prior to the effective date of

this Act. @ Act of Apr. 10, 1979, 66th Leg., R.S., ch . 603, '

9, 1979 Tex. Gen. Laws 1327 , 1332. The

1981 amendatory language is similarly broad:

A Nothing

in this Act shall affect procedurally or substantively a cause of action

arising in whole or in part prior to the effective date of this Act. @

Act of March 30, 1981, 67th Leg., R.S., ch .

307, ' 2, 1981

Tex. Gen. Laws 863 , 864. By contrast,

the Legislature = s 1983 effective-date

provision is carefully limited to executed contracts, which can only refer to

the contractual waiver provision. As

some commentators have noted:

There

is no savings clause in the 1983 amendments to the DTPA which would save a

business consumer = s pending

cause of action. The savings clause of

the 1983 amendments is applicable only to contracts executed before the

effective date of the amendment (i.e., waivers of DTPA claims in contracts

executed before effective date are not valid.)

The Texas legislature clearly distinguishes its

express intent regarding the immediate application of the 1979 and 1981

amendments to a pending cause of action from the 1983 amendments. In 1983, the legislature expressly chose to A save @

only existing contracts (i.e., no valid disclaimer of DTPA rights in contracts

executed before effective date) from immediate or retroactive application, and

did not intend to A save @ the cause of action of a business

consumer (with more than $25 million in assets) arising in whole or in part

prior to the effective date of such amendment.

Andy A. Tschoepe II, et al., Aspects

of Defending a Texas Deceptive Trade Practices B

Consumer Protection Act Claim , 20

St. Mary = s L.J. 527, 555-56 (1989) .

Because the specific 1983 amendatory language

indicates the Legislature did not intend to preserve a business consumer = s claim that arose before the effective

date, the general savings clause found in section 311.031(a) has no

application. Thus, the 1983 amendment

establishing the $25 million asset cap became effective immediately and

extinguished HCC = s

consumer status. As a nonconsumer , then, HCC had no cause of action under the DTPA

when it sold the building to JMB in 1989; the only claims JMB acquired in that

purchase were potential breach-of-warranty claims. For this reason, I agree that JMB may not

recover under the DTPA. But if HCC did

qualify as a consumer, I would uphold the assignment of its DTPA claim to JMB

when it sold the building.

B. Assignability

The Court concludes that DTPA assignments in

general, and the one in this case particularly, violate public policy and

thwart the Legislature = s

purpose. While this may be true in some

other case, I fail to see it here. JMB

owns the defective and allegedly misrepresented A Twindows @

and has suffered real economic harm. JMB = s DTPA breach-of-warranty claim is, in

essence, a property-damage claim, and such claims have long been freely

assignable. See, e.g., G.H. &

S.A.R.R. v. Freeman, 57 Tex. 156, 157 (Tex. 1882); Allstate Ins. Co. v.

Kelly , 680 S.W.2d 595, 610 (Tex. App. B Tyler

1984, writ ref = d n.r.e .); Rosell v.

Farmers Tex. County Mut . Ins. Co. , 642

S.W.2d 278, 279 (Tex. App. B Texarkana 1982, no writ); see also Thomes v. Porter , 761 S.W.2d 592, 594 (Tex. App. B Fort Worth 1988, no writ) (holding DTPA

claim survived owner = s

death and could be pursued by estate).

Moreover, common-law principles support the assignment in this

case. See Thomes ,

761 S.W.2d at 594 (applying common-law rules because the DTPA does not

expressly provide for survival of a cause of action).

In State Farm Fire & Casualty Co. v. Gandy ,

we examined the history of assignments and the policy considerations underlying

them. 925 S.W.2d 696, 705-11 (Tex.

1996). At early common law, a chose in

action generally could not be assigned. Id.

at 705 . This aversion to assignments was

based in part upon courts =

reluctance to increase or distort litigation.

See id. at 706 .

Assignments were also disfavored because, under the common law, a chose

in action presupposed a personal relationship between the parties which could

not be transferred. See id .;

see also James B. Ames , The

Inalienability of Choses in Action , in Lectures in Legal History 210, 211-212

(1913).

Over time, the demands of commerce eroded the

disfavored status of assignments, although certain uniquely personal tort

actions which affected their owner = s

person, personal feelings, or character B

such as slander, libel, battery, and false imprisonment B

remained unassignable under the common law. See Gandy, 925 S.W.2d at 706-07 ;

Walter W. Cook, The Alienability of Choses in

Action , 29 Harv. L. Rev . 816,

826-29 (1916). The continued nonassignability of such claims was justified by the

concern that the factors determining liability and damages were so closely

associated with the particular actors involved in the alleged wrongdoing that

they could not be fairly assessed when one of the actors was replaced. See Gandy , 925 S.W.2d at 706-07 ; Freeman ,

57 Tex. at 157 ; see also Mallios v. Baker , 11

S.W.3d 157, 169 (Tex. 2000) ( Hecht, J. ,

concurring). But A when

the injury affect[ed] the estate rather than the person . . . the right of

action could be bought and sold. @ Freeman , 57 Tex. at 157 . Thus, assignability

of property-damage claims long ago became the general rule. See, e.g. , Graham v. Franco ,

288 S.W.2d 390, 393 (Tex. 1972); Stewart v. H. & T.C. R = y Co. , 62 Tex. 246, 247 (1884); Wolff

v. Commercial Standard Ins. Co. , 345 S.W.2d 565, 568 (Tex. Civ . App. B Houston

1961, writ ref = d n.r.e .); Wichita City Lines, Inc. v. Pucket ,

288 S.W.2d 122, 124 (Tex. Civ . App. B Fort Worth 1956), aff = d , 295 S.W.2d 894 (1956); see

also Johnson v. Rolls , 79 S.W. 513, 514 (Tex. 1904) (noting that at A common law all causes of action for

damages die with the person of the party injured, or the person inflicting the

injury, except such damages as grow out of acts affecting the property rights

of the injured party @ ).

Gradually, assignability

of choses in action expanded beyond contract and

property-damage claims to include torts and other wrongful acts. See Gandy , 925 S.W.2d at 707 . On the premise that assignability

depended on survivability, the passage of the Texas Survivor Statute meant that

personal injury claims became assignable.

See Act of May 4, 1895, 24th Leg., R.S., ch . 89, '

1, 1895 Tex. Gen. Laws 143 (amended 1985) (current version at Tex. Civ. Prac. & Rem. Code ' 71.021); Gandy , 925 S.W.2d at

707 ( A On the

theory that assignability of a chose in action

depended on whether it survived the owner = s

death, personal injury claims thus became assignable in Texas. @ ); Beech Aircraft Corp. v. Jinkins III , 739 S.W.2d 19, 22 (Tex. 1987) ( A We are mindful of the general rule that

a cause of action for damages for personal injuries may be sold or assigned. @ ) (citations omitted). Thus, while some of the common law = s reservations still remain, choses in action are now generally considered freely

alienable. See Gandy , 925 S.W.2d

at 707 ; Doty v. Caldwell , 38 S.W. 1025 (Tex. App. 1897, no writ); see

also Int = l

Proteins Corp. v. Ralston-Purina Co. , 744 S.W.2d 932, 934 (Tex. 1988) ( A As a general rule a cause of action may

be assigned . . . . @ ).

In Gandy , which involved an attempted

assignment of an insured = s

DTPA and other claims against his insurer, we decided the claims = assignability

based on considerations of equity and public policy. 925 S.W.2d at 696 ; see also Int'l

Proteins, 744 S.W.2d at 934 (invalidating assignment of plaintiff's

products liability and negligence claims to joint tortfeasor

as contrary to public policy). The facts

presented in Gandy are instructive.

There, the plaintiff sued her stepfather, Pearce, for sexual abuse. Gandy , 925 S.W.2d at 698 . State Farm, which insured the Pearce home,

agreed to pay for Pearce = s

defense and reserved its right to contest coverage. Id . at 699-700. Pearce and Gandy settled the case, and, as

part of the settlement, Pearce assigned any claims against State Farm to

Gandy. Id . at 700. Although Pearce had originally denied ever

abusing Gandy, after the settlement was negotiated he agreed to a $6 million

adverse judgment reciting that he had abused her on 325 occasions. Id . at 712. And contrary to the position that Gandy took

in her suit against Pearce, she argued in her suit against State Farm as Pearce = s assignee that Pearce would not have

been liable had State Farm properly handled his defense, while Pearce returned

to his original contention that he had never abused Gandy and would have proved

his innocence had State Farm provided him with competent counsel. Id .

In holding that the assignment in Gandy was

invalid, our concerns were twofold.

First, rather than resolving the suit, the assignment prolonged the

litigation. Even after the district

court held as a matter of law that Gandy = s

claims were not covered and that State Farm had no duty to defend Pearce, the

settlement practically guaranteed that litigation would continue because, A as Gandy = s

counsel freely testified, the entire purpose of the arrangement was to find a

way to recover against State Farm. @ Id .

Second, and more importantly, the assignment distorted the litigation,

causing the parties to take A positions

that appeared contrary to their natural interests for no other reason than to

obtain a judgment against State Farm. @ Id .

Thus, we held the claims nonassignable based

on public policy concerns. Id. at

713 .

We have also held that Mary Carter agreements,

which assign a plaintiff = s

claims against a nonsettling defendant to a settling

defendant, are void as against public policy.

Elbaor v. Smith , 845 S.W.2d 240

(Tex. 1992). These arrangements A nearly always ensure a trial against

the non-settling defendant @

and A grant the

settling defendant veto power over any proposed settlement between the

plaintiff and any remaining defendant. @ Id . at 248. They also confuse the jury by presenting A a sham of adversity @ between the plaintiff and settling

defendant. Id . at 249. We concluded that public policy did not

support arrangements A that

skew the trial process, mislead the jury, promote unethical collusion among

nominal adversaries, and create the likelihood that a less culpable defendant

will be hit with the full judgment. @ Id . at 250. Similar concerns that arise when parties

purport to assign legal malpractice actions.

See Zuniga, Jr. v. Groce , Locke & Hebdon , 878 S.W.2d 313, 318 (Tex. App. B San Antonio 1994, writ ref = d) (noting that such assignments would

cause A a

demeaning reversal of roles @

and a A shameless

shift of positions @ ).

The assignment of HCC = s

warranty-based DTPA claims to JMB when it purchased the building does not

present the same concerns. The

assignment did not spawn litigation that would not likely have occurred

otherwise. Instead, the DTPA claims are

in the hands of the defective windows =

owner, who seeks the same remedy the assignor could have pursued had it not

sold the building. Furthermore, the

assignment does not require the assignor and assignee to assume positions

contrary to their natural interests, nor is the assignment likely to cause jury

confusion. Consequently, the distortion

of the litigation process that we deplored in Gandy and Elbaor is simply nonexistent.

The Court additionally premises its holding on the

notion that, because the DTPA permits the recovery of enhanced damages, DTPA

claims are punitive in nature and thus should not be assignable. Without question enhanced damages, by

definition, produce an award that exceeds the amount of underlying damage and

therefore have a punitive effect. But

the DTPA = s

enhanced-damages provision also has a remedial purpose that the Court entirely

ignores. The remedial aspect is

expressed in the statutory language, which states that the Act = s underlying purpose is A 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. @ Act of May 21, 1973, 63rd Leg., R.S., ch . 143, '

1, 1973 Tex. Gen. Laws 322 , 322-23 (amended 1995) (current version at Tex. Bus. & Comm. Code ' 17.44(a)); see generally John L. Hill, Introduction to

Consumer Law Symposium , 8 St.

Mary = s L. J. 609, 609-12 (1977) (discussing

the lack of consumer protections and the inadequacy of remedies for consumer

complaints prior to the DTPA). The

Legislature has expressed its intent that the DTPA be A liberally

construed and applied to promote its underlying purposes . . . . @

Act of May 21, 1973, 63rd Leg., R.S., ch . 143,

' 1, 1973 Tex. Gen. Laws 322 (amended

1995) (current version at Tex. Bus.

& Comm. Code '

17.44(a)). We have observed that A one

purpose of the DTPA = s treble

damages provision is to encourage privately initiated consumer litigation,

reducing the need for public enforcement. @ Pennington v. Singleton, III , 606

S.W.2d 682, 690 (Tex. 1980). The DTPA = s enhanced-damages provision also acts

as a deterrent in discouraging violations by others. That the damages in this case were mandatorily trebled indicates an intent that they be

proportional to the magnitude of the harm caused and not dependent on the

degree of the defendant's culpability, making them less personal than ordinary

punitive damages and underscoring the trebling provision's remedial

purpose. See Act of May 21, 1973,

63rd Leg., R.S., ch . 143, '

1, 1973 Tex. Gen. Laws 322 , 327; Woods v. Littleton , 554 S.W.2d 662, 671

(Tex. 1977); Pennington , 606 S.W.2d at 691 (noting that culpability is

an important consideration of section 17.50 as amended in 1979). Our decision in Pace v. State, 650

S.W.2d 64 (Tex. 1983), does not negate the DTPA = s

remedial effect. There, plaintiffs

sought to recover from the Real Estate Recovery Fund, a public fund the

Legislature created to reimburse those who suffered monetary loss caused by

unscrupulous real estate agents. Id. at

65 . Relying on the statutory

mandate that the fund be used A for

reimbursing aggrieved persons who suffer monetary damages , @ we noted that treble damages are

punitive rather than restitutionary and A [t] herefore

the Legislature could not have intended that treble damages be paid from the

fund. @ Id . at 65 (emphasis in original). Designed to remedy a public harm with limited

funds, the Real Estate Recovery Fund specifically provided a limited

remedy. That does not mean, however,

that mandatory DTPA trebling is devoid of remedial purpose. The punitive aspect that the Court emphasizes

is only one of several purposes that the DTPA serves. [1]

The closely analogous Sherman Anti-Trust Act

provides a useful comparison. Similar to

the version of the DTPA in question here, a violation of the antitrust act

gives rise to a claim for mandatory treble damages. 15 U.S.C. '

15(a). As under the DTPA, these damages

have a punitive effect, but they were also A designed

to deter future antitrust violations @

and were A created

primarily as a remedy. @ Am. Soc = y

of Mech. Eng = rs , Inc. v. Hydrolevel Corp .,

456 U.S. 556, 575 (1982); see, e.g. , Brunswick Corp. v. Pueblo

Bowl-O-Mat, Inc ., 429 U.S. 477, 485 (1977) (noting treble damages function

to penalize and deter wrongdoers). And

federal law is uniform in holding that an action to recover treble damages

under the Sherman Anti-Trust Act A is

not an action to recover a penalty @

and is assignable. See Hicks v. Bekins Moving & Storage Co. , 87 F.2d 583, 585 (9th

Cir. 1937) (citing Chattanooga Foundry & Pipe Works v. Atlanta , 203

U.S. 390, 397 (1906)); see also, e.g., Sampliner

v. Motion Picture Patents Co. , 254 U.S. 233, 234 (1920); Gulfstream III Assocs., Inc. v. Gulfstream Aerospace Corp. , 995 F.2d 425 , 431 (3rd Cir.

1993); Chiropractic Coop. Ass = n

of Mich. v. Am. Med. Ass = n ,

867 F.2d 270, 272 (6th Cir. 1989); Health Care Equalization Comm. of the

Iowa Chiropractic Soc = y

v. Iowa Med. Soc = y ,

851 F.2d 1020 , 1022 (8th Cir. 1988); Klamath-Lake Pharm .

Ass = n v.

Klamath Med. Servs . Bureau , 701 F.2d 1276, 1283

(9th Cir. 1983); Fazakerly v. E. Kahn = s Sons Co. , 75 F.2d 110, 114 (5th

Cir 1935). That anti-trust violations

result in injury to the property or business, not the person, of the

individuals bringing claims further operates in favor of assignability . See Moore v. Backus , 78 F.2d

571, 576 (7th Cir. 1935); United Copper Sec. Co. v. Amalgamated Copper Co. ,

232 F. 574, 577-78 (2d Cir. 1916). [2]

Finally, the Court vastly overstates our holding

in Amstadt v. United States Brass Corp. ,

919 S.W.2d 644, 647 (Tex. 1996). There,

we addressed A whether

the Legislature intended that upstream suppliers of raw materials and component

parts be liable under the DTPA when none of their misrepresentations reached

the consumers . @ Id . at 652 (emphasis added). Our concern was that the deceptive act or

practice touch the consumer transaction: A [the

defendants = ] actions

were not connected with the plaintiffs =

transactions, that is, the sale of the homes , in a way that justifies

liability under the DTPA. @ Id . (emphasis added). There is nothing in our Amstadt

opinion to suggest that, had the defendants =

misrepresentations been directly connected with the homes = sale, subsequent buyers of the homes

could not assert DTPA claims by assignment.

This is entirely consistent with our decision in Gupta v. Ritter

Homes, Inc ., 646 S.W.2d 168, 169 (Tex. 1983), which involved a homeowner = s warranty-based DTPA claim against the

builder, where we said:

As

between the builder and owner, it matters not whether there has been an

intervening owner. The effect of the

latent defect on the subsequent owner is just as great as on the original buyer

and the builder is no more able to justify his improper work as to a subsequent

owner than to the original buyer.

Id . Amstadt simply did not concern warranty-based DTPA

claims against a product supplier whose representations were made directly to

the consumer B in this

case HCC.

In sum, none of the theories that have been

applied to determine a claim = s

assignability supports striking down the assignment

in this case. Liability is predicated

upon a breach-of-warranty property-damage claim, which has long been held

assignable at common law. Recognizing the

validity of such an assignment is consistent with the DTPA = s underlying purposes and does not give

rise to the policy concerns that led us to invalidate the assignment in Gandy . Just as C should be able to assert a DTPA

claim against S for turning back his vehicle = s

odometer before sale, JMB should be able to step into HCC = s shoes and, were HCC a consumer,

assert a DTPA claim against PPG.

II.

Breach of Warranty

JMB additionally asserts claims based upon PPG = s alleged breach of five- and

twenty-year warranties. I agree with the

Court that limitations does not bar JMB = s

claims that are based on the twenty-year seal warranty. PPG contends, though, that JMB cannot recover

under that warranty because it failed to obtain jury findings that the warranty

formed the A basis of

the bargain @ and that

JMB notified PPG of the defect within a reasonable time. See Tex.

Bus. & Com. Code ' '

2.313(a)(1), 2.607(c)(1). The Court

agrees, holding that the trial court erred in finding these elements as a

matter of law rather than submitting them to the jury. I disagree.

An issue that is conclusively established as a

matter of law should not be submitted to the jury. See T.O. Stanley Boot Co., Inc. v. Bank of

El Paso , 847 S.W.2d 218, 222-23 (Tex. 1992); Tex. R. Civ. P . 278 (requiring the court to submit to the

jury only those questions raised by the pleadings and the evidence). Thus, if the trial court correctly found that

these elements were conclusively established, it did not err in failing to

submit them. See Green Int = l,

Inc. v. Solis , 951 S.W.2d 384, 391-92 (Tex. 1997) (holding that trial court

properly refused to submit a question unsupported by evidence to jury).

To be actionable, a representation relating to an

express warranty must form a A basis

of the bargain. @ See Tex.

Bus. & Com. Code '

2.313 cmt . 3; Sweco ,

Inc. v. Cont = l Sulfur

& Chem ., 808 S.W.2d 112, 115 (Tex. App. B El

Paso 1991, writ denied). PPG argues that

the warranty could not have formed a basis of the bargain because there was no

evidence PPG relied on it. JMB, on the

other hand, relying on a comment to section 2.313, claims no particular

reliance need be shown for a representation to become an actionable part of the

agreement. Whether or not reliance is an

essential element of a breach-of-warranty claim is a question we recently noted

in Compaq v. Lapray is undecided in

Texas. ____ S.W.3d ____, ___ (Tex. 2004). But we do not need to answer that question

here because, whether or not specific reliance is a necessary element, it was

shown here. It is undisputed that PPG published the twenty-year warranty in

Sweet = s Architectural

Guide before HCC accepted its bid for the A Twindows @

in order to induce customers to purchase its product. Jim Gatton , HCC = s lead architect, testified that he

depended upon the information that PPG provided in Sweet = s

Guide:

It

was very important to us. It presented

the Pittsburgh Plate Glass [PPG], as well as other glass products within the Sweet = s Architectural file. We read it very closely. We were dependent upon the information that

was printed about the glass in the Sweet = s

index.

Gatton specifically testified that he

relied on the warranty, along with the product specifications provided in Sweet = s, in selecting the A Twindows @ for One Houston Center. The only evidence that PPG offered to

controvert HCC = s

contention that it selected the A Twindows @

based on the twenty-year warranty was Gatton = s testimony that the warranty was not

the only reason A Twindows @

were chosen. But it is not necessary to

a breach of warranty action to prove that the warranty was the only basis upon

which a particular product was chosen.

To become a A basis of

the bargain, @ it need

only be shown that the affirmation of fact or promise made to the buyer was part

of the basis of the bargain, not the sole basis . See Tex.

Bus. & Com. Code '

2.313(a)(1).

The Court concludes that the trial court erred in

determining as a matter of law that the twenty-year warranty was a basis of the

bargain, in part, because Gatton A did not explain why he omitted it when

he drew up the bid specification that included numerous other shorter

warranties. @ ___

S.W.3d at ___. But Gatton

testified repeatedly that the warranty was considered the equivalent of other

specifications of the A Twindows , @

such as U-value and shading coefficient, that also were not expressly stated in

the contract. He explained that the

twenty-year warranty was A part

of the statement by PPG that they would provide along with the glass, along

with the shading coefficient, stated with the U-value with everything else they

said about the glass. @ Gatton had

previously testified that HCC chose A Twindows @

based upon their shading coefficient, their U-value, and the warranty because

these specifications best fit the building = s

needs.

PPG also argues that it had revised the warranty

to a ten-year limited warranty before it signed the contract to supply HCC

windows, and offered in support a July 1, 1976, a letter from PPG = s senior vice president informing the

trade that PPG was offering a ten-year warranty, effective September 1,

1976. But PPG presented no evidence that

this letter was ever disseminated or published.

Moreover, HCC accepted PPG = s

bid on May 27, 1976, over three months before the purported revised warranty = s effective date. The testimony of PPG = s

lay witnesses that the ten-year warranty was the operative one are conclusory legal opinions not binding on the court. See Anderson v. Snider , 808 S.W.2d 54,

55 (Tex. 1991). PPG presented no

evidence of rescission or modification of the twenty-year warranty. Thus, the trial court did not err in failing

to submit the A basis of

the bargain @ issue to

the jury.

PPG also contends that the trial court erred in

failing to submit the issue of reasonable notice of breach of warranty to the

jury. Again, I disagree. The question of reasonable notice may be

decided as a matter of law. See O = Ferral v.

Coolidge , 228 S.W.2d 146, 148 (Tex. 1950).

Here, the uncontroverted evidence shows that

HCC first notified PPG of a A halo

effect @ in some

units in 1982. PPG inspected the units

and saw the problems first-hand. See

Carroll Instrument Co. v. B.W.B. Controls, Inc. , 677 S.W.2d 654, 657-58

(Tex. App. B Houston

[1st Dist.] 1984, no writ) (buyer gave adequate notice by showing defective

part to seller). PPG received

notification of problems with additional units in July 1989. PPG = s

notice to JMB in October 1989 that it would no longer replace failed units also

suggests that it had notice of the continuing problems.

In sum, the trial court did not abuse its

discretion in refusing to submit the A basis

of the bargain @ or

reasonable notice issues to the jury.

Because legally sufficient evidence supports the jury = s finding that JMB neither discovered

nor should have discovered PPG = s

breach of the twenty-year warranty, I would affirm the court of appeals

judgment in JMB = s favor

on this claim.

As to the five-year warranty, PPG contends that

JMB = s claims are barred by

limitations. But JMB alleged the same

injuries under the twenty-year warranty, and the jury awarded the same amount

of damages for each breach that it found.

Because the judgment can be sustained on the jury = s

findings regarding JMB = s

twenty-year warranty claim, I would not reach PPG = s

arguments challenging recovery under the five-year warranty.

III. Conclusion

I would hold that JMB may not invoke the DTPA = s consumer protections, and therefore

concur in the Court = s

judgment to the extent it renders judgment against JMB on that claim. I also agree with the Court that limitations

does not bar JMB = s claims

based on breach of the twenty-year seal warranty. I disagree, though, with the Court = s sweeping conclusion that no DTPA

claims are assignable and its conclusion that the trial court abused its

discretion in the manner in which it submitted the breach-of-warranty claim to

the jury. I would affirm the court of

appeals = judgment

on the breach-of-warranty claim. Because

the Court remands that claim for a new trial, I respectfully dissent.

__________________________________________

Harriet O = Neill

Justice

OPINION

DELIVERED: July 9, 2004

[1] Many other courts, in assessing the assignability of enhanced damages under state law, have

abandoned the remedial/punitive distinction, focusing instead on the underlying

claim = s assignability . See, e.g. , Cuson

v. Md. Cas . Co., 735 F. Supp. 966, 971 (D. Haw.

1990) (applying Hawaii law and holding that A punitive

damages claims which have their genesis in [assignable claims] are assignable

as well @ ); Fed. Deposit Ins. Corp. v. W.R. Grace & Co. ,

691 F. Supp. 87, 92 (N.D. Ill. 1988) (applying Illinois law and holding that

punitive damages are assignable if the underlying claim is assignable because A punitive damages are a type of relief which is part

and parcel of the underlying cause of action @ ), rev = d in part on other grounds , 877 F.2d 614 (7th Cir. 1989); First Fed. Sav . & Loan Assoc. of Pittsburgh v. Oppenheim ,

Appel , Dixon & Co. , 629 F. Supp. 427, 446-47

(S.D.N.Y. 1986) (applying federal and state law and concluding that A once a cause of action is determined to be assignable,

a punitive damage claim based upon the cause of action may also be brought by

the assignee @ ); Oppel v. Empire

Mut . Ins . Co., 517 F. Supp. 1305, 1307 (S.D.N.Y.

1981) (concluding that because A New York courts permit punitive damages in a bad faith

case . . . there is no reason why this cause of action also cannot be assigned @ ); Kleinwort Benson N. Am., Inc. v. Quantum Fin. Servs ., Inc ., 692 N.E.2d 269, 273-75 (Ill. 1998)

(holding that punitive damages are a component of relief and are therefore A deemed a part of the underlying action, @ and assignability favors

the public policy goal of deterrence); Clearwater v. State Farm Mut . Auto. Ins. , 780 P.2d 423, 427 (Ariz. Ct. App.

1989), vacated in part on other grounds , 792 P.2d 719 (Ariz. 1990)

(holding that under Arizona law a claim for bad faith was not a personal tort

and neither law nor public policy prevented the punitive damages aspect of the

claim from being assigned); see also INS Investigations Bureau, Inc. v. Lee,

709 N.E.2d 736, 742 (Ind. Ct. App. 1999) (applying Indiana law); Allstate

Ins. Co. v. Axsom , 696 N.E.2d 482, 285-86 (Ind.

Ct. App. 1998) (applying Indiana law and holding bad faith insurance claims

assignable); Kaplan v. Harco , Nat. Ins. Co., 716

So. 2d 673, 680 (applying Mississippi law and concluding that public policy

goal of deterrence is fostered by allowing assignment of punitive

damages). Under this line of authority,

the assignability of DTPA treble damages would depend

upon the assignability of JMB's

underlying warranty claim, which has long been recognized as assignable. This result is consistent with our opinion in

Hofer v. Lavendar , 679 S.W.2d 470, 472-75 (Tex.

1984), in which we held that punitive damages survive along with an underlying

claim for personal injury.

[2] Enhanced-damage awards under other federal statutory

schemes have similarly been held to be nonpenal in

nature and therefore assignable. These

claims include treble-damage patent actions, see, e.g ., Cheramie v. Orgeron ,

434 F.2d 721, 723 (5th Cir. 1970); Pierce v. Allen B. Du

Mont Labs., Inc ., 297 F.2d 323, 324-25 (3rd Cir. 1961); Armstrong v.

Emerson Radio & Phonograph Corp ., 132 F. Supp. 176, 179 (S.D. N.Y.

1955); Activated Sludge, Inc. v. Sanitary Dist. of Chicago , 64 F. Supp.

25, 35-36 (N.D. Ill. 1946), fifty-percent penalties for civil tax fraud, see,

e.g ., Reimer = s Estate v. Comm = r of Internal Revenue , 180 F.2d 159, 160 (6th Cir. 1950); Kahr v. Comm = r of Internal Revenue , 414 F.2d 621 , 626 (2d Cir. 1969); Rau = s Estate v. Comm = r of Internal Revenue , 301 F.2d 51, 55-56 (9th Cir. 1962); Kirk v. Comm = r of Internal Revenue , 179 F.2d 619, 621-22 (1st Cir. 1950), and

treble-damage Truth-in-Lending Act claims, see e.g ., Porter v.

Household Fin. Corp ., 385 F. Supp. 336, 342 (S.D. Ohio 1974); Murphy v.

Household Fin. Corp ., 560 F.2d 206, 211 (6th Cir. 1977); but see Johnson

v. Household Fin. Corp ., 453 F. Supp. 1327, 1331 (S.D. Ill. 1978) (holding

that because A actual damages are not a necessary allegation @ of a complaint under the Truth-in-Lending Act, the

statutory award is a civil penalty and does not survive). See also W. Auto Supply Co. v.

Gamble- Skogmo , Inc ., 348 F.2d 736, 740-41 (8th

Cir. 1965), Derdiarian v. Futterman Corp ., 223 F. Supp. 265, 270-71 (S.D.N.Y.

1963); Int = l

Ladies = Garment Workers =

Union v. Shields & Co. , 209 F.

Supp. 145, 149-50 (S.D.N.Y. 1962); Mills v. Sarjem

Corp ., 133 F. Supp. 753, 761-62 (D. N.J. 1955) (all holding that securities

fraud claims, which limit recovery to actual damages, are assignable since they

are neither penal nor personal).