Ppg Industries v. Jmb/Houston Centers

• Decision Date: 09 July 2004
• Docket Number: No. 01-0346.,01-0346.
• Citation: 146 S.W.3d 79
• Parties: PPG INDUSTRIES, INC., Petitioner, v. JMB/HOUSTON CENTERS PARTNERS LIMITED PARTNERSHIP, Respondent.
• Court: Texas Supreme Court

146 S.W.3d 79

PPG INDUSTRIES, INC., Petitioner, v. JMB/HOUSTON CENTERS PARTNERS LIMITED PARTNERSHIP, Respondent.

No. 01-0346.

Supreme Court of Texas.

Argued November 20, 2002.

Decided July 9, 2004.

Rehearing Denied November 5, 2004.

Appeal from the 127th District Court, Harris County.

Charles R. Dunn, W. Frances Moore, Dunn Kacal Adams, Helen A. Cassidy, Storey Moore & McCally, P.C., David M. Gunn, Beck, Redden & Secrest, L.L.P., David W. Holman, Holman Keeling & York, P.C., Houston, for Petitioner.

Richard M. Alderman, David Crump, Alene Ross Levy, Lynne Liberato, Haynes & Boone, H. Bruce Golden, Golden & Owens, L.L.P., Houston, for Respondent.

Justice BRISTER delivered the opinion of the Court, in which Chief Justice PHILLIPS, Justice HECHT, Justice OWEN and Justice WAINWRIGHT joined.

JMB/Houston Centers Partners obtained a judgment of more than $17 million for deceptive acts and warranty breaches that a jury found had been committed by PPG Industries, Inc. But as the two corporations had no direct business dealings, none of the claims stemmed from transactions between them. Instead, JMB's suit relied on warranty and DTPA claims received by assignment from its predecessor in interest.

The court of appeals affirmed the judgment, joining several other courts that have held or assumed DTPA claims are assignable;¹ a few other opinions suggest they are not.² We granted the petition in this case to decide the matter.

We hold that assigning DTPA claims would defeat the primary purpose of the statute—to encourage individual consumers to bring such claims themselves. Additionally, we find the personal and punitive aspects of DTPA claims cannot be squared with a rule allowing them to be assigned as if they were mere property.

We also conclude the trial court erred in holding that JMB's five-year-warranty claim was not barred by limitations, and that its twenty-year-warranty claim was a basis of the parties' bargain as a matter of law. Accordingly, we reverse the judgment, and remand for a new trial of the latter claim alone.

I. Background

One Houston Center, a forty-six-story skyscraper in downtown Houston, was completed in April 1978 and originally owned by Houston Center Corporation (HCC). The exterior included more than 12,000 Twindows, a dual-pane glass window unit manufactured and installed by PPG. Twindows were chosen for their insulating ability and color, which blended with other buildings in the Houston Center complex.

By July of 1982, a large number of the Twindows showed fogging and discoloration. At HCC's request, PPG manufactured and installed replacements for one-fourth of the building's windows pursuant to a contractual warranty. The replacement project took more than two years.

Several years later, HCC entered negotiations to sell One Houston Center to JMB. During its due diligence, JMB learned of the earlier window problems, and that to a limited extent they continued. When JMB inquired whether any warranties still applied, PPG replied that all had expired.

JMB bought the building "as is" in December 1989 as part of a $375 million purchase. HCC assigned to JMB all warranties relating to the building, and JMB waived all DTPA claims against HCC.

When extensive Twindows problems appeared in 1991, JMB sued PPG for violating the DTPA and breaching warranties issued to HCC. A jury found for JMB on all claims, assessing the cost to replace every Twindow in the building with comparable but nondefective window units at $4,745,037. The trial court trebled the award under the mandatory provisions of the 1973 DTPA,³ and after a bench trial awarded another $1,716,181 in attorney fees.

II. Assignment of DTPA Claims

A

PPG first attacks the DTPA award, asserting that DTPA claims cannot be assigned. To determine whether DTPA claims are assignable, we look first to the words of the statute.

The sale of Twindows was a sale of goods, and thus subject to the warranty provisions of Chapter 2 of the Texas Business and Commerce Code (the UCC).⁴ Chapter 17 of the same Code (the DTPA) allows consumers to bring breach of warranty claims under that chapter as well.⁵ Thus, a consumer may choose to bring warranty claims under either chapter, or both as JMB did here.

The purposes and provisions of the UCC and the DTPA are, of course, not the same; otherwise, there would have been no need for both. The primary difference relevant here is that the UCC expressly provides that warranty claims are assignable,⁶ while the DTPA says nothing about assignment.

A statute's silence can be significant.⁷ When the Legislature includes a right or remedy in one part of a code but omits it in another, that may be precisely what the Legislature intended.⁸ If so, we must honor that difference.⁹

Of course, legislatures do not always mean to say something by silence. Legislative silence may be due to mistake, oversight, lack of consensus, implied delegation to courts or agencies, or an intent to avoid unnecessary repetition. But we must at least begin our analysis by noting that the Legislature clearly knew how to indicate that warranty claims were assignable, but did not do so in the DTPA.

B

In some cases of statutory silence, we have looked to the statute's purpose for guidance.¹⁰ Accordingly, we next look to the purposes of the DTPA to determine whether assignment of claims is consistent with its goals.

The DTPA's primary goal was to protect consumers by encouraging them to bring consumer complaints:

This subchapter shall be liberally construed and applied 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.¹¹

While the DTPA allows the attorney general to bring consumer protection actions,¹² one of the statute's primary purposes is to encourage consumers themselves to file their own complaints:

[The Legislature] provided for the recovery of attorney's fees under the Deceptive Trade Practices Act, as encouragement to those abused by certain proscribed conduct to avail themselves of the remedies of the Act.¹³

* * *

[O]ne purpose of the DTPA's treble damages provisions is to encourage privately initiated consumer litigation, reducing the need for public enforcement.¹⁴

* * *

[T]he legislative intent [was] to encourage aggrieved consumers to seek redress and to deter unscrupulous sellers who engage in deceptive trade practices.¹⁵

Making DTPA claims assignable would have just the opposite effect: instead of swindled consumers bringing their own DTPA claims, they will be brought by someone else.

The Legislature did not intend the DTPA for everybody. It limited DTPA complaints to "consumers,"¹⁶ and excluded a number of parties and transactions from the DTPA, including claims by businesses with more than $25 million in assets,¹⁷ and certain claims in which consumers were represented by legal counsel.¹⁸ If DTPA claims can be assigned, a party excluded by the statute (such as JMB here) could nevertheless assert DTPA claims by stepping into the shoes of a qualifying assignor. This would frustrate the clear intent of the Legislature.

The court of appeals reasoned that assignment would accord with one of the DTPA's other purposes — discouraging consumer fraud.¹⁹ But this proves too much; commercial trading in almost any kind of claim would likely encourage its proliferation, but raises a host of other concerns.²⁰

First, the DTPA's treble-damage provisions were intended to motivate affected consumers;²¹ they may provide a different motivation for those who might traffic in such claims. It is one thing to place the power of treble damages in the hands of aggrieved parties or the attorney general; it is quite another to place it in the hands of those considering litigation for commercial profit.

Second, appraising the value of a chose in action is never easy, due to the absence of objective measures or markets.²² Consumers are likely to be at a severe negotiating disadvantage with the kinds of entrepreneurs willing to buy DTPA claims cheap and settle them dear. The result of making DTPA claims assignable is likely to be that some consumers will be deceived twice.

Third, in many cases consumers may not even know they have DTPA claims when they sign a general assignment included in contractual boilerplate.²³ If such assignments are valid, the claims meant to protect consumers will quite literally be gone before they know it. In this case for example, both JMB and HCC were wealthy and sophisticated corporations, yet both denied any knowledge of a potential DTPA claim against PPG at the time of the 1989 building sale.²⁴ There was no assignment of claims generally, and no mention specifically of DTPA claims against PPG; instead, JMB relies solely on a general assignment of the building's warranties.²⁵ If this is enough, then HCC assigned away its DTPA rights against PPG without knowing it and without receiving anything for it; the $10 million in incentive damages left over after every Twindow is replaced will serve as a pure windfall for JMB. Every conceivable purpose of the statute is defeated if consumers may lose their claims by accident.

JMB makes no attempt to defend commercial marketing of DTPA claims, arguing only for assignment in cases like this — in which it bought the underlying building and will bear the costs of repairing it. But allowing DTPA claims by those who purchase defective goods from a consumer shifts the focus of the DTPA from deceptive practices to defective products.²⁶ If DTPA claims may be assigned to subsequent buyers like JMB, treble damages will often go to wealthy entrepreneurs rather than the consumers who were actually defrauded.

Moreover, JMB's only claim here is based on the written assignment. JMB acquired no DTPA claims merely by becoming a subsequent owner of One Houston Center,²⁷ and asserts none...