1-1 By: Duncan (Senate Sponsor - Montford) H.B. No. 1395
1-2 (In the Senate - Received from the House May 5, 1993;
1-3 May 6, 1993, read first time and referred to Committee on Economic
1-4 Development; May 14, 1993, reported adversely, with favorable
1-5 Committee Substitute by the following vote: Yeas 9, Nays 0;
1-6 May 14, 1993, sent to printer.)
1-7 COMMITTEE VOTE
1-8 Yea Nay PNV Absent
1-9 Parker x
1-10 Lucio x
1-11 Ellis x
1-12 Haley x
1-13 Harris of Dallas x
1-14 Harris of Tarrant x
1-15 Leedom x
1-16 Madla x
1-17 Rosson x
1-18 Shapiro x
1-19 Wentworth x
1-20 COMMITTEE SUBSTITUTE FOR H.B. No. 1395 By: Harris of Tarrant
1-21 A BILL TO BE ENTITLED
1-22 AN ACT
1-23 relating to residential construction liability.
1-24 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-25 SECTION 1. Sections 27.001(2) and (3), Property Code, are
1-26 amended to read as follows:
1-27 (2) "Construction defect" means a matter concerning
1-28 the design, construction, or repair of a new residence, of an
1-29 alteration of or addition to an existing residence, or of an
1-30 appurtenance to a residence, on which a person has a complaint
1-31 against a contractor. The term "construction defect" may include
1-32 any physical damage to the residence, <or> any appurtenance, or the
1-33 real property on which the residence and appurtenance are affixed
1-34 proximately caused by a construction defect.
1-35 (3) "Contractor" means a person contracting with an
1-36 owner for the construction or sale of a new residence constructed
1-37 by that person or of an alteration of or addition to an existing
1-38 residence, repair of a new or existing residence, or construction,
1-39 sale, alteration, addition, or repair of an appurtenance to a new
1-40 or existing residence. The term "contractor" also includes a risk
1-41 retention group registered under Article 21.54, Insurance Code,
1-42 that insures all or any part of a contractor's liability for the
1-43 cost to repair a residential construction defect.
1-44 SECTION 2. Section 27.001, Property Code, is amended by
1-45 adding Subdivision (5) to read as follows:
1-46 (5) "Structural failure" means actual physical damage
1-47 to the load-bearing portion of a residence caused by a failure of
1-48 the load-bearing portion.
1-49 SECTION 3. Section 27.002, Property Code, is amended to read
1-50 as follows:
1-51 Sec. 27.002. Application of Chapter. (a) This chapter
1-52 applies to any action to recover damages resulting from a
1-53 construction defect, except a claim <an action> for personal
1-54 injury, survival, or wrongful death or for damage to goods. To the
1-55 extent of conflict between this chapter and any other law,
1-56 including the Deceptive Trade Practices-Consumer Protection Act
1-57 (Subchapter E, Chapter 17, Business & Commerce Code), this chapter
1-58 prevails.
1-59 (b) In this section:
1-60 (1) "Goods" does not include a residence.
1-61 (2) "Personal injury" does not include mental anguish.
1-62 SECTION 4. Section 27.003, Property Code, is amended to read
1-63 as follows:
1-64 Sec. 27.003. Liability. (a) In an action to recover
1-65 damages resulting from a construction defect, a contractor is not
1-66 liable for <damages, or> any percentage of damages<,> caused by:
1-67 (1) negligence of a person other than the contractor
1-68 or an agent, employee, or subcontractor of the contractor;
2-1 (2) failure of a person other than the contractor or
2-2 an agent, employee, or subcontractor of the contractor to:
2-3 (A) take reasonable action to mitigate the
2-4 damages; or
2-5 (B) take reasonable action to maintain the
2-6 residence;
2-7 (3) normal wear, tear, or deterioration; <or>
2-8 (4) normal shrinkage due to drying or settlement of
2-9 construction components within the tolerance of building standards;
2-10 or
2-11 (5) the contractor's reliance on written information
2-12 relating to the residence, appurtenance, or real property on which
2-13 the residence and appurtenance are affixed that was obtained from
2-14 official government records, if the written information was false
2-15 or inaccurate and the contractor did not know and could not
2-16 reasonably have known of the falsity or inaccuracy of the
2-17 information.
2-18 (b) Except as provided herein, this chapter does not limit
2-19 or bar any other defense or defensive matter or other defensive
2-20 cause of action applicable to an action to recover damages
2-21 resulting from a construction defect.
2-22 SECTION 5. Section 27.004, Property Code, is amended to read
2-23 as follows:
2-24 Sec. 27.004. NOTICE AND OFFER OF SETTLEMENT. (a) Before
2-25 the 60th day preceding the date a claimant seeking from a
2-26 contractor damages arising from a construction defect files suit,
2-27 the claimant shall give written notice by certified mail, return
2-28 receipt requested, to the contractor, at the contractor's last
2-29 known address, specifying in reasonable detail the construction
2-30 defects that are the subject of the complaint. During the 35-day
2-31 <21-day> period after the date the contractor receives the notice,
2-32 and on the contractor's written request, the contractor shall be
2-33 given a reasonable opportunity to inspect and have inspected the
2-34 property that is the subject of the complaint to determine the
2-35 nature and cause of the defect and the nature and extent of repairs
2-36 necessary to remedy the defect. The contractor may take reasonable
2-37 steps to document the defect.
2-38 (b) Within the 45-day <31-day> period after the date the
2-39 contractor receives the notice, the contractor may make a written
2-40 offer of settlement to the claimant. The offer may include either
2-41 an agreement by the contractor to repair or to have repaired by an
2-42 independent contractor at the contractor's expense any construction
2-43 defect described in the notice and shall describe in reasonable
2-44 detail the kind of repairs which will be made. The repairs shall
2-45 be made within the 45-day period after the date the contractor
2-46 receives written notice of acceptance of the settlement offer,
2-47 unless completion is delayed by the claimant or by other events
2-48 beyond the control of the contractor. For the purposes of this
2-49 section, "independent contractor" means a person who is independent
2-50 of the contractor and did not perform any of the work complained of
2-51 in the claimant's notice. The claimant and the contractor may
2-52 agree in writing to extend the periods described by this
2-53 subsection.
2-54 (c) If the giving of the notice under Subsections (a) and
2-55 (b) within the period prescribed by those subsections is
2-56 impracticable because of the necessity of filing suit at an earlier
2-57 date to prevent expiration of the statute of limitations or if the
2-58 complaint is asserted as a counterclaim, that notice is not
2-59 required. However, the suit or counterclaim shall specify in
2-60 reasonable detail each construction defect that is the subject of
2-61 the complaint, and the inspection provided for by Subsection (a)
2-62 may be made during the 60-day <21-day> period following the date of
2-63 service of the suit or counterclaim on the contractor, and the
2-64 offer provided for by Subsection (b) may be made within the 60-day
2-65 <31-day> period following the date of service. If, while a suit
2-66 subject to this chapter is pending, the statute of limitations for
2-67 the cause of action would have expired and it is determined that
2-68 the provisions of Subsection (a) were not properly followed, the
2-69 suit shall be abated for up to 75 days in order to allow compliance
2-70 with Subsections (a) and<,> (b)<, and (f)>.
3-1 (d) If a claimant unreasonably rejects an offer made as
3-2 provided by this section or does not permit the contractor or
3-3 independent contractor a reasonable opportunity to repair the
3-4 defect pursuant to an accepted offer of settlement, the claimant
3-5 may not recover an amount in excess of the reasonable cost of the
3-6 repairs which are necessary to cure the construction defect and
3-7 which are the responsibility of the contractor and may recover only
3-8 the amount of reasonable and necessary attorney's fees and costs
3-9 incurred before the offer was rejected or considered rejected.
3-10 (e) If <a claimant reasonably rejects an offer,> a
3-11 contractor fails to make a reasonable <an> offer under this
3-12 section, or <a contractor> fails to make a reasonable attempt to
3-13 complete the repairs specified in an accepted offer made under this
3-14 section, or fails to complete, <repair the defects within the time
3-15 allowed by this section> in a good and workmanlike manner, the
3-16 repairs specified in an accepted offer made under this section, the
3-17 limitations on damages and defenses to liability provided for in
3-18 this section shall not apply.
3-19 (f) Except as provided by Subsection (d), in a suit subject
3-20 to this chapter the claimant may recover only the following damages
3-21 proximately caused by a construction defect:
3-22 (1) the reasonable cost of repairs necessary to cure
3-23 any construction defect that the contractor failed to cure;
3-24 (2) the reasonable expenses of temporary housing
3-25 reasonably necessary during the repair period;
3-26 (3) the reduction in market value, if any, to the
3-27 extent the reduction is due to structural failure; and
3-28 (4) reasonable and necessary attorney's fees. <If
3-29 suit is filed after a contractor makes repairs as provided by this
3-30 section, the claimant may not be awarded damages arising from the
3-31 construction defect, attorney's fees, or costs unless the trier of
3-32 fact finds that the attempt to repair was not made in good faith
3-33 and did not cure the construction defect described in the notice.>
3-34 (g) The total damages awarded in a suit subject to this
3-35 chapter may not exceed the claimant's purchase price for the
3-36 residence.
3-37 (h) <(g)> An offer of settlement made under this section
3-38 that is not accepted before the 25th day after the date the offer
3-39 is received by the claimant is considered rejected.
3-40 (i) <(h)> An affidavit certifying rejection of a settlement
3-41 offer under this section may be filed with the court. The trier of
3-42 fact shall determine the reasonableness of a rejection of an offer
3-43 of settlement made under this section <The affidavit may not be
3-44 offered into evidence or referred to by a party in the presence of
3-45 the jury on trial of the case>.
3-46 (j) <(i)> A contractor who makes or provides for repairs
3-47 under this section is entitled to take reasonable steps to document
3-48 the repair and to have it inspected.
3-49 (k) <(j)> Notwithstanding Subsections (a), (b), and (c), a
3-50 contractor who receives written notice of a construction defect
3-51 resulting from work performed by the contractor or an agent,
3-52 employee, or subcontractor of the contractor and creating an
3-53 imminent threat to the health or safety of the inhabitants of the
3-54 residence shall take reasonable steps to cure the defect as soon as
3-55 practicable. If the contractor fails to cure the defect in a
3-56 reasonable time, the owner of the residence may have the defect
3-57 cured and may recover from the contractor the reasonable cost of
3-58 the repairs plus attorney's fees and costs in addition to any other
3-59 damages recoverable under any law not inconsistent with the
3-60 provisions of this chapter.
3-61 (l) <(k)> This section does not preclude a contractor from
3-62 making a monetary settlement offer.
3-63 (m) <(l)> The inspection and repair provisions of this
3-64 chapter are in addition to any rights of inspection and settlement
3-65 provided by common law or by another statute, including Section
3-66 17.505, Business & Commerce Code.
3-67 SECTION 6. Chapter 27, Property Code, is amended by adding
3-68 Section 27.006 to read as follows:
3-69 Sec. 27.006. CAUSATION. In an action to recover damages
3-70 resulting from a construction defect, the claimant must prove that
4-1 the damages were proximately caused by the construction defect.
4-2 SECTION 7. The change in law made by this Act applies to an
4-3 action for residential construction liability filed on or after the
4-4 effective date of this Act. An action filed before the effective
4-5 date of this Act is governed by the law in effect at the time of
4-6 filing, and the prior law is continued in effect for that purpose.
4-7 SECTION 8. The importance of this legislation and the
4-8 crowded condition of the calendars in both houses create an
4-9 emergency and an imperative public necessity that the
4-10 constitutional rule requiring bills to be read on three several
4-11 days in each house be suspended, and this rule is hereby suspended,
4-12 and that this Act take effect and be in force from and after its
4-13 passage, and it is so enacted.
4-14 * * * * *
4-15 Austin,
4-16 Texas
4-17 May 14, 1993
4-18 Hon. Bob Bullock
4-19 President of the Senate
4-20 Sir:
4-21 We, your Committee on Economic Development to which was referred
4-22 H.B. No. 1395, have had the same under consideration, and I am
4-23 instructed to report it back to the Senate with the recommendation
4-24 that it do not pass, but that the Committee Substitute adopted in
4-25 lieu thereof do pass and be printed.
4-26 Parker,
4-27 Chairman
4-28 * * * * *
4-29 WITNESSES
4-30 FOR AGAINST ON
4-31 ___________________________________________________________________
4-32 Name: William T. Little x
4-33 Representing: TX Assn of Builders
4-34 City: Houston
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