Opinion
A-99-CA-784 AA.
April 5, 2001.
ORDER
Before the Court is Defendant, World Christian Church's Motion for Summary Judgment (Clerk's Doc. No. 30); Plaintiff's Response to World Christian Church's Motion for Summary Judgment (Clerk's Doc. No. 33); and World Christian Church's Reply Brief in Support of its Motion for Summary Judgment (Clerk's Doc. No. 34). The District Court referred the case to the undersigned Magistrate Judge pursuant to the parties' consent under 28 U.S.C. § 636(c).
I. FACTUAL BACKGROUND
Plaintiff, Donna Browne, alleges Defendant World Christian Church d/b/a La Salle University violated the Texas Deceptive Trade Practices Act ("DTPA") by "engaging in false, misleading and/or deceptive acts or practices upon which Browne relied to her detriment." Plaintiff's First Amended Petition, pg. 4. (Clerk's Doc. 9). Specifically, Browne alleges that she completed a correspondence Ph.D. program through LaSalle University based upon its representations that it was an accredited University. Browne alleges she wanted to become a licensed psychologist and she chose LaSalle University because it offered a doctorate degree through correspondence courses. LaSalle proclaimed to be accredited by the Council on Post-Secondary Education, an entity formed and run by the President of LaSalle University, Thomas Kirk. Approximately one year after receiving her Doctorate in Theocentric Psychology from LaSalle University, she received a letter from the United States Attorney's Office informing her that Kirk pled guilty to a charge of conspiracy to commit fraud involving false representations regarding their accreditation by a fictitious organization. See Plaintiff's Response to Defendant's Motion for Summary Judgment, Ex. A. World Christian Church entered a civil settlement agreement with the Government wherein they agreed to change their accreditation publicity and set aside funds to pay victims' claims. Plaintiff's Response to Defendant's Motion for Summary Judgment, Ex. B-3. Browne alleges her advanced degree does not qualify her to become a licensed psychologist because LaSalle is not a "regionally accredited educational institution." Browne alleges that as a result, she lost her position as a "qualified mental retardation professional and behavioral specialist" and had to take a lower paying position.
In order to qualify as a licensed psychologist, the State of Texas requires a candidate to have a degree from an institution accredited by the Southern Association of Colleges and Schools. TEX. OCC. CODE § 501.255; TEX. EDU. CODE § 61.003.
World Christian Church first contends that because the parties' relationship is centered in Louisiana that Texas law does not apply to this case. Therefore, because the only claim against it is under the Texas DTPA, World Christian Church is entitled to summary judgment as a matter of law. Secondly, World Christian Church asserts that Browne cannot demonstrate that she relied on World Christian Church's representation because the burden was on Browne to investigate whether the University's accreditation would qualify her to apply for a psychologist license under the laws of the State of Texas. Regardless, World Christian Church argues, there is no summary judgment evidence that had she been qualified she would have passed such examination and actually become a licensed psychologist. Therefore, there is not evidence that their misrepresentation was the producing cause of her injuries.
II. ANALYSIS
A. Choice of Law
It is axiomatic that in diversity cases, a federal court must follow the choice of law rules of the state in which it sits. Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496 (1941). Texas courts use the ALI Restatement's "most significant relationship test" for all choice of law cases except those contract cases in which the parties have agreed to a valid choice of law clause. See Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 421 (Tex. 1984).
Although the Texas DTPA does not state that it is intended to apply to out of state facts affecting Texas consumers, it should be applied liberally to protect those citizens from false, misleading, and unconscionable acts, and it does not provide that its application will be limited to acts or practices occurring in Texas. Busse v. Pacific Cattle Feeding Fund, 896 S.W.2d 807, 814 (Tex.App.-Texarkana, 1995, writ denied). Moreover, the DTPA's definition of "trade" and "commerce" includes the sale of any good or service "wherever situated" if the trade or commerce directly or indirectly affects the people of Texas. TEX.BUS. COM. CODE ANN. § 17.45(6); Reed v. Israel Nat'l Oil Co., 681 S.W.2d 228 (Tex.App.-Houston [1st Dist.] 1984, no writ). If construction of the Texas statute justifies the application of Texas rather than Louisiana law, and that does not offend the constitution, it is not necessary to engage in the choice of law analysis based on the significant relationships set out in Restatement (Second) of Conflict of Laws § 6(2) (1971). Busse, 896 S.W.2d at 814.
In this case, World Christian Church solicited Browne, a Texas resident, in Texas, she completed the application process in Texas, and completed all of her course work in Texas. It would not be unreasonable to apply Texas law to protect a Texas consumer when the Louisiana company made such an effort to conduct business in Texas. See Siskind v. Villa Foundation for Educ., Inc., 642 S.W.2d 434 (Tex. 1982). Although Siskind was deciding the issue of personal jurisdiction, the two issues, while not dispositive of each other, are often closely related and to a substantial degree depend upon similar considerations. Shaffer v. Heitner, 433 U.S. 186, 224-225 (1977). Furthermore, there is no element of unfair surprise or frustration of legitimate expectations as a result of applying Texas law. Because World Christian Church was doing business in Texas and was undoubtedly aware that Browne was a Texas resident, it had to have anticipated that Texas law might apply to any dispute arising out of their relationship. Allstate Insurance Co. v. Hague, 449 U.S. 302, 317-318 (1981).
Even if the most significant relationship test were called for here, the record reveals a sufficient significant relationship to justify the application of Texas law to the controversy here. The factors to be considered in determining which state has the most significant relationship are: The place where the injury occurred; the place where the conduct causing the injury occurred; the domicile, residence, nationality, place of incorporation and place of business of the parties; and the place where the relationship, if any, between the parties is centered. Spence v. Glock, 227 F.3d 308, 312 (5th Cir. 2000); Restatement (Second) of Conflict of Laws § 145.
Although World Christian Church is a Louisiana corporation and its principal place of business is in Louisiana, Browne resides in Texas, and the injury occurred in Texas. In addition, Texas has an overwhelming interest in protecting its citizens. Siskind, 642 S.W.2d at 437. The Court accordingly finds that, on balance, the factors weigh in favor of the application of Texas law. See McClure v. Duggan, 674 F. Supp. 211 (N.D.Tex. 1987) (applying Texas consumer protection law noting that it made little practical difference as both states had enacted consumer protection laws. )
Louisiana has similarly enacted a consumer protection law. La.R.S. 51:1401 et seq.
B. DTPA claims
World Christian Church next contends that Browne had the duty to investigate the University's accreditation status on her own; thus, Browne cannot establish she relied upon false representations to her detriment as the DTPA requires. TEX. BUS. COM. CODE ANN. § 17.50(a)(1)(B). World Christian Church cites Ambrose v. New England Assoc. of Schs. and Coll., 2000 WL 1195363 (D.Me. Aug. 7, 2000) for the proposition that a plaintiff cannot maintain a cause of action based upon a school's statement of accreditation without investigating whether the organization accrediting the school was sufficient for their specific needs. However, the Ambrose Court held that the plaintiffs did not show sufficient evidence of reliance because they testified they had no special knowledge of the accreditation process; and therefore could not have based their decision on whether to attend the school on its accreditation status. Ambrose, 2000 WL 1195363 *5.
The statute, as amended in 1995, clearly requires detrimental reliance as an element of a Plaintiff's claim. Browne's argument that reliance is not required for claims of unconscionable acts under § 17.50(a)(3) is correct but, as World Christian Church correctly points out, irrelevant. Browne's First Amended Petition clearly states her cause of action is brought under § 17.50(a)(1). See Plaintiff's First Amended Petition, pg. 4 section V.
Here, although Browne testified that she was also unclear about the accreditation process, she did testify that she in fact relied on their representation that it was an accredited school in making her decision to enroll there. Plaintiff's Response to World Christian Church's Motion for Summary Judgment, Ex. C. Furthermore, the glaring difference in this case is, the United States Government has determined World Christian Church violated the law in representing its accreditation and filed criminal charges to which the CEO pled guilty. As a result, Browne alleges she sustained lost income and earning capacity in addition to tuition costs and mental anguish. Therefore, the Court finds that Ambrose is not directly on point. The Court cannot say, as a matter of law, that World
Christian Church's misrepresentation was not the producing cause of Browne's injuries. For all of these reasons, the Court finds that there is a genuine issue of material fact regarding whether Browne relied on World Christian Church's false representation of its accreditation to her detriment which representation was the producing cause of Browne's injuries.
Accordingly, for all of these reasons, Defendant World Church's motion for summary judgment is hereby DENIED.