DTPA – “Knowing” Conduct

Texas insurance lawyers need to be know how to use the Texas Deceptive Trade Practices Act (DTPA) to help their clients.
Part of using the DTPA properly is to know when conduct by a company arises to the DTPA legal definition of “knowing.” Here is why. The Texas Business & Commerce Code, Section 17.50(b), tells us that mental anguish damages can be recovered under the DTPA when a “knowing” violation is shown. This is affirmed in Texas case law by the Texas Supreme Court in a 1993 case, and again in a 1995 case.
Section 17.45(9) tells us that “knowingly” means actual awareness, at the time of the act or practice complained of, of the falsity, deception, or unfairness of the act or practice giving rise to the consumer’s claim or, in an action brought under subdivision (2) of subsection (a) of Section 17.50, actual awareness of the act, practice, condition, defect, or failure constituting the breach of warranty, but actual awareness may be inferred where objective manifestations indicate that a person acted with actual awareness.
The preceding definition has been expanded by the Texas Supreme Court to say:
“Actual awareness” does not mean merely that a person knows what he is doing; rather, it means that a person knows that what he is doing is false, deceptive, or unfair. In other words, a person must think to himself at some point, “Yes, I know this is false, deceptive, or unfair to him, but I’m going to do it anyway.
This was said in the 1998, case, St. Paul Surplus Lines Insurance Company v. Dal-Worth Tank Co.
Furthermore, even once this threshold for mental anguish damages is met, the plaintiff must show “a high degree of mental pain and distress” that is “more than mere worry, anxiety, vexation, embarrassment, or anger.” These are the words used by the Supreme Court in Parkway Co. v. Woodruff, in 1995. An award of mental anguish damages will be upheld “when the plaintiffs have introduced direct evidence of the nature, duration, and severity of their mental anguish, thus establishing a substantial disruption in the plaintiffs’ daily routine. This evidence may come from the claimants’ own testimony, testimony of third parties, or testimony of experts, and is more likely to provide the fact finder with adequate details to assess mental anguish claims. When this standard is applied to insurance cases is set out in the 1996, Texas Supreme Court case, Saenz v. Fidelity & Guarantee Insurance Underwriters.
It is important to know when a fact finder finds that the defendant acted “knowingly” the jury is allowed to award up to three times the amount of economic damages. These additional damages are discretionary with the fact finder. Mental anguish damages are not included in the amount that may be trebled.
Something to keep in mind is that the easiest way to submit additional damages to the jury is simply to ask the jury to award an additional amount. After the verdict, the trial court can then compare the award of additional damages to the award of economic damages and reduce any amount that exceeds the statutory cap.
An example of this is found in a 1991 case from the Austin Court of Appeals. There, the jury found an agent misrepresented coverage. The jury therefore could infer that the agent knew her later denials were false. This knowledge would be attributable to the insurance company. This evidence, along with evidence that the insurance company attempted to “cover up” the misrepresentation, supported the jury finding that the insurance company acted knowingly.

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