Allen v. American General Finance, Inc.Read Time: 1 min
In Allen v. American General Finance, Inc., 2007 WL 4180145 (Tex. App.–San Antonio 2007, no writ), the San Antonio Court of Appeals has added to the case law addressing the circumstance under which a lender will face a Texas Deceptive Trade Practices claim. In 1980 the Texas Supreme Court took the position that money is not a good or service under the DTPA and that, if the sole objective of the borrower is to obtain a loan, then the borrower is not a “consumer” under the DTPA. Subsequently, many lower courts in Texas allowed DTPA cases against lenders to proceed if the consumer could show that some service accompanied the loan.
The most frequently used example is that circumstance in which financial institution assists with the supervision of the construction of the customer’s home for which the loan was based. In the Allen case, the debtor was faced with a tax sale and went to American General for the purpose of obtaining a home equity loan to pay the tax liability. There was testimony by the American General representative that AGF orally agreed “to pay the taxes and handle the [tax] suit.” AGF underpaid the taxes, a default judgment was entered and the property sold at a foreclosure sale. AGF obtained a partial summary judgment dismissing Allen’s DTPA cause of action prior to trial.
In granting the borrower’s point of error on this point, the Court of Appeals held there was sufficient evidence that the borrower’s objective was to obtain services with regard to the tax suit and remanded the case for further proceedings.