SCI Texas Funeral Services Inc. v. Hijar

Restitution is not an available remedy for SCI Texas Funeral Services' alleged breach of contract; thus, in the absence of a cognizable damage theory, the plaintiffs lack standing to maintain their breach of contract suit.

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Click here for the full text of this decision FACTS:On Sept. 24, 1982, the Federal Trade Commission (FTC) promulgated 16 C.F.R. �453 (1982), the so-called “funeral rule,” which prohibited certain unfair and deceptive practices in the funeral service industry. The funeral rule requires that a funeral home provide consumers with a general price list of the funeral goods or services regularly offered by the funeral provider. Customers who contract for funeral goods and services must be given a separate purchase agreement that lists retail prices for all goods and services selected, lists the actual or estimated prices for cash-advance items and lists a total cost. Under the regulation, a cash-advance item includes any item obtained from a third party and paid for by the funeral provider on the purchaser’s behalf. Similarly, the Texas Occupations Code �651.405 and the Texas Administrative Code require that a funeral establishment provide a retail price list of items or services provided by the establishment. David Hijar, Lupe Wiebel and Patricia Villegas each purchased funeral goods and services from funeral homes affiliated with SCI Texas Funeral Services, Inc. and related companies (SCI) in El Paso. Hijar filed suit alleging state law claims on behalf of himself and a class for fraud, negligent misrepresentation, deceptive trade practices and civil conspiracy. The allegations were based on SCI’s violation of the state and federal Funeral Rule. Wiebel and Villegas later joined the suit and the plaintiffs added a cause of action based upon violations of the Texas Occupations Code. SCI sought summary judgment contending that the funeral rule only applies to cash-advance items. In his fifth amended petition, Hijar abandoned the fraud, negligent misrepresentation and deceptive trade causes of action. He added a cause of action for breach of contract arising from SCI’s violation of the Funeral Rule. In that petition, he sought injunctive relief and damages. Hijar also filed a motion for summary judgment. The trial court denied SCI’s motion and granted partial summary judgment in favor of Hijar. The court held as a matter of law that several types of goods and services are cash-advance items under 16 C.F.R. �453.3(1)(b) and 22 Texas Administrative Code �203.1(3) when purchased from a third-party and resold to persons arranging funerals, including: “direct cremation; immediate burial; forwarding remains; receiving remains; embalming; refrigeration; other preparation; transportation; casket/cremation casket; alternative container; outside enclosure; clothing/shroud; memorial booklet; service folders/prayer cards; acknowledgment cards; flowers; shipping container; crematory services; crucifix; escorts; certified copies; public transportation; outside funeral director’s expense; vault installation; clergy/religious facility; musicians or singers; hairdressing; and permits.” Finding that SCI’s statutory violations rendered the agreement illegal and unenforceable to the extent the listed prices exceeded the amount paid to third parties, the court ruled that Hijar could recover the difference as restitution. Following the entry of the partial summary judgment, Hijar filed a sixth amended petition which added a cause of action for restitution based on an illegal contract. Wiebel and Villegas were subsequently added as plaintiffs in a seventh amended petition, but the causes of action remained the same as in the sixth amended petition. Following a hearing, the trial court entered an order certifying the class. SCI raised several challenges to the certification order in an interlocutory appeal. HOLDING:Reversed and rendered. At issue, the court stated, is whether David Hijar, Lupe Wiebel and Patricia Villegas have standing to pursue individual and class claims against SCI based upon purported violations of the federal and state funeral rules. The court first held that there is no private cause of action for violation of the federal or state funeral rules. Hilharm, Wiebel and Villegas, the court also held, lack standing to maintain their illegal contract and civil conspiracy causes of action insofar as those claims were based on a claimed violation of the state funeral rule. But the court concluded that Hilharm, Wiebel and Villegas had standing to assert a breach of contract claim insofar as it is based on SCI’s alleged breach of the specific written provisions of their contracts. Hilharm, Wiebel and Villegas did not win on that point, however, because SCI argued that the equitable remedy of restitution was not a proper remedy under the legal theories and facts pled. The court agreed. In the absence of a cognizable damage theory, Hilharm, Wiebel and Villegas lacked standing to maintain their cause of action for breach of contract. The court reversed the certification order and rendered judgment dismissing the breach of contract, illegal contract and civil conspiracy claims. The only remaining cause of action left for the trial court to resolve was Hilharm, Wiebel and Villegas’ petition for injunctive relief. OPINION:McClure, J.; Chew, C.J., and McClure, J. Barajas, C.J. (retired), did not participate in the decision.

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