By: Ratliff S.B. No. 1290
73R7142 DLF-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to award of damages and litigation costs in certain civil
1-3 actions.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subtitle C, Title 2, Civil Practice and Remedies
1-6 Code, is amended by adding Chapter 42 to read as follows:
1-7 CHAPTER 42. JUDGMENT FOLLOWING OFFER OF SETTLEMENT
1-8 SUBCHAPTER A. GENERAL PROVISIONS
1-9 Sec. 42.001. DEFINITIONS. In this chapter:
1-10 (1) "Claim" means a claim seeking recovery of money,
1-11 property, or other relief, including a counterclaim, cross-claim,
1-12 or third-party claim.
1-13 (2) "Claimant" means a party making a claim.
1-14 (3) "Defendant" means a party, including a
1-15 counterdefendant, cross-defendant, or third-party defendant, from
1-16 whom a claimant seeks damages or other relief.
1-17 (4) "Litigation costs" means costs that are directly
1-18 related to preparing a case for trial and actual trial expenses,
1-19 including:
1-20 (A) attorney's fees under Section 42.007;
1-21 (B) costs;
1-22 (C) reasonable deposition costs; and
1-23 (D) reasonable fees for not more than two expert
1-24 witnesses.
2-1 (5) "Offer to settle" means an offer to settle made
2-2 under Section 42.004.
2-3 Sec. 42.002. APPLICABILITY. (a) This chapter does not
2-4 apply to a class action or shareholder's derivative action.
2-5 (b) This chapter does not apply to an action brought under
2-6 the Family Code, except that this chapter does apply to an action
2-7 brought under Chapter 33, Family Code. An action in which a
2-8 husband and wife are joined as parties under Section 4.04, Family
2-9 Code, and an action that is an asset or liability of a party to a
2-10 divorce are not considered to be brought under the Family Code for
2-11 purposes of this section.
2-12 Sec. 42.003. EFFECT OF OFFER TO SETTLE. A party to a civil
2-13 action in a court of this state who makes an offer to settle in
2-14 compliance with Section 42.004 is entitled to litigation costs
2-15 under the conditions specified by Section 42.006.
2-16 Sec. 42.004. OFFER TO SETTLE. (a) A party to an action may
2-17 serve on another party an offer to settle under this section.
2-18 (b) The offer to settle must:
2-19 (1) be in writing;
2-20 (2) state that it is an offer to settle under this
2-21 section;
2-22 (3) offer to settle a claim as specified in the offer;
2-23 and
2-24 (4) offer to allow judgment to be entered in
2-25 accordance with the terms of the offer.
2-26 (c) An offer to settle may not be made after the 30th day
2-27 before the date set for trial, except that an offer to settle that
3-1 is a counteroffer may not be made after the 20th day before the
3-2 date set for trial. The time limits of this subsection may be
3-3 modified by the court under Rule 166, Texas Rules of Civil
3-4 Procedure.
3-5 (d) An offer to settle need not be filed with the court.
3-6 Sec. 42.005. ACCEPTANCE OR REJECTION OF OFFER. (a) A party
3-7 may accept an offer to settle not later than 5 p.m. on the 30th day
3-8 after:
3-9 (1) the date on which the offer to settle was
3-10 deposited in the United States mail; or
3-11 (2) if the offer was not mailed, the date on which the
3-12 offer to settle was delivered.
3-13 (b) An acceptance of an offer must be made in writing and
3-14 served on the party making the offer.
3-15 (c) An offer may be withdrawn by a writing served on the
3-16 party to whom the offer was made before the party accepts the
3-17 offer. An offer may not be accepted after it is withdrawn.
3-18 (d) For purposes of this chapter, an offer is considered
3-19 rejected if:
3-20 (1) a written rejection of the offer is served on the
3-21 party making the offer;
3-22 (2) the offer has not been accepted or withdrawn on or
3-23 before 5 p.m. on the last date the offer may be accepted under
3-24 Subsection (a); or
3-25 (3) acceptance of the offer is later withdrawn.
3-26 (e) To determine the time of day for purposes of Subsection
3-27 (a) or (d), the local time of the recipient of the acceptance or
4-1 the withdrawal controls.
4-2 Sec. 42.006. LITIGATION COSTS. (a) The court shall award
4-3 litigation costs to a party who made an offer to settle if that
4-4 party's last offer is rejected and the judgment finally awarded is
4-5 not more favorable to the person to whom the offer to settle was
4-6 made than the offer.
4-7 (b) Litigation costs awarded to a party under this section
4-8 may include only those costs incurred after the date the last offer
4-9 to settle was made by that party.
4-10 (c) This section does not require an award of litigation
4-11 costs in a judgment arising from an offer to settle made under this
4-12 chapter.
4-13 Sec. 42.007. AMOUNT OF ATTORNEY'S FEES. (a) In determining
4-14 the amount of attorney's fees to be included in litigation costs
4-15 awarded under this chapter, the court shall consider:
4-16 (1) the time and labor required;
4-17 (2) the novelty and difficulty of the questions;
4-18 (3) the skill requisite to perform the legal service
4-19 properly;
4-20 (4) the preclusion of other employment by the attorney
4-21 due to acceptance of the case;
4-22 (5) the customary fee;
4-23 (6) whether the fee is fixed or contingent;
4-24 (7) time limitations imposed by the client or the
4-25 circumstances;
4-26 (8) the amount involved and the results obtained;
4-27 (9) the experience, reputation, and ability of the
5-1 attorney;
5-2 (10) the undesirability of the case;
5-3 (11) the nature and length of the professional
5-4 relationship with the client; and
5-5 (12) awards in similar cases.
5-6 (b) If the claim is for monetary relief only, the court
5-7 shall limit the amount of attorney's fees included in litigation
5-8 costs awarded to a claimant under this chapter to one-third of the
5-9 damages recovered by the claimant and shall limit the amount of
5-10 attorney's fees included in litigation costs awarded to a defendant
5-11 under this chapter to one-third of the damages pled by the
5-12 claimant.
5-13 Sec. 42.008. MUST BE REPRESENTED BY ATTORNEY. To recover
5-14 attorney's fees under this chapter a party must be represented by
5-15 an attorney.
5-16 Sec. 42.009. EVIDENCE OF OFFER NOT ADMISSIBLE. (a)
5-17 Evidence of an offer to settle is not admissible except in:
5-18 (1) an action to enforce the settlement; or
5-19 (2) a proceeding to obtain litigation costs under
5-20 Section 42.006.
5-21 (b) Admission of evidence of an offer to settle in violation
5-22 of this section is presumed to be harmful error for purposes of an
5-23 appeal of the action in which the evidence is admitted.
5-24 Sec. 42.010. LIBERAL CONSTRUCTION. This chapter shall be
5-25 liberally construed to achieve its purposes.
5-26 Sec. 42.011. PROVISIONS NOT TO BE MADE KNOWN TO JURY. The
5-27 provisions of this chapter may not be made known to the jury
6-1 through any means, including voir dire, introduction into evidence,
6-2 or instruction.
6-3 (Sections 42.012-42.020 reserved for expansion
6-4 SUBCHAPTER B. DECLARATION OF INABILITY TO PAY LITIGATION COSTS
6-5 Sec. 42.021. DEFINITION. In this subchapter, "declaration"
6-6 means a declaration of inability to pay litigation costs made under
6-7 this subchapter.
6-8 Sec. 42.022. CLAIMANT'S DECLARATION OF INABILITY TO PAY
6-9 LITIGATION COSTS. (a) A claimant in an action in which litigation
6-10 costs may be awarded under Subchapter A may file a declaration of
6-11 inability to pay all or part of the defendant's litigation costs.
6-12 The declaration must be served on all parties.
6-13 (b) The declaration must be filed at the time the claim is
6-14 served.
6-15 (c) A claimant who does not file a declaration at the time
6-16 specified by Subsection (b) may later file a declaration if,
6-17 because of changed circumstances, the claimant cannot pay all or
6-18 part of the defendant's litigation costs. A declaration under this
6-19 subsection must be filed not later than the 15th day after the date
6-20 on which the claimant knew or should have known that the changed
6-21 circumstances would make the claimant unable to pay the costs.
6-22 Sec. 42.023. REBUTTAL OF DECLARATION. A defendant may, at
6-23 any time before a hearing is held under Section 42.024, file a
6-24 rebuttal to the declaration offering proof that the claimant is
6-25 able to pay litigation costs.
6-26 Sec. 42.024. COURT ORDER. (a) After a hearing, the court
6-27 shall enter an order stating the maximum amount of the defendant's
7-1 litigation costs a claimant who filed a declaration would be
7-2 required to pay in the action. The order may require the claimant
7-3 to pay all of the litigation costs awarded to the defendant under
7-4 Subchapter A.
7-5 (b) In determining the maximum amount under Subsection (a),
7-6 the court shall consider:
7-7 (1) the maximum amount the claimant can pay without
7-8 falling below the federal poverty level based on the federal Office
7-9 of Management and Budget poverty index; and
7-10 (2) whether, at any time after the limitations period
7-11 for the claim began, the claimant made a transfer that is
7-12 fraudulent as to present or future creditors under Chapter 24,
7-13 Business & Commerce Code.
7-14 (c) The court may not order payment of an amount that would
7-15 require liquidation of assets of the claimant that are exempt from
7-16 a creditor's claims under Chapter 41 or 42, Property Code.
7-17 Sec. 42.025. AWARD FROM LITIGATION COSTS FUND. (a) The
7-18 court shall order the comptroller to pay all or a portion of an
7-19 award of litigation costs from the litigation costs fund
7-20 established under Subchapter C to the extent the amount of
7-21 litigation costs awarded against a claimant exceeds both:
7-22 (1) the maximum that the claimant is required to pay
7-23 under an order entered under Section 42.024; and
7-24 (2) the amount of any monetary damages recovered by
7-25 the claimant.
7-26 (b) The comptroller shall pay the remaining portion of the
7-27 award in accordance with the order as money in the litigation costs
8-1 fund becomes available.
8-2 (c) The state may recoup any amount paid from the litigation
8-3 costs fund under Subsection (a) from the claimant.
8-4 Sec. 42.026. PAYMENT OUT OF JUDGMENT. Notwithstanding any
8-5 order issued under Section 42.024, a claimant shall pay litigation
8-6 costs awarded to the defendant to the extent of any monetary
8-7 recovery made by the claimant in the action.
8-8 (Sections 42.027-42.030 reserved for expansion
8-9 SUBCHAPTER C. LITIGATION COSTS FUND
8-10 Sec. 42.031. DEFINITIONS. In this subchapter:
8-11 (1) "Exemplary damages" has the meaning assigned by
8-12 Section 41.001.
8-13 (2) "Fund" means the litigation costs fund established
8-14 by this subchapter.
8-15 Sec. 42.032. LITIGATION COSTS FUND. (a) The litigation
8-16 costs fund is a fund in the state treasury.
8-17 (b) A court that orders an award of exemplary damages in an
8-18 action subject to this chapter shall order the payment of a
8-19 percentage of those damages, as determined under Subsection (d), to
8-20 the comptroller for credit to the fund.
8-21 (c) In any action subject to this chapter in which a
8-22 settlement is reached after a jury has rendered a verdict awarding
8-23 exemplary damages, the court shall order the payment of a
8-24 percentage of those damages, as determined under Subsection (d), to
8-25 the comptroller for credit to the fund.
8-26 (d) The comptroller annually shall compute the percentage of
8-27 each award of exemplary damages to be paid into the fund in a
9-1 calendar year by dividing the total amount of awards made against
9-2 the fund in the 12-month period ending the August 31st preceding
9-3 the calendar year by the total amount of exemplary damages awarded
9-4 in actions subject to this chapter in that 12-month period. If the
9-5 computed percentage exceeds 100 percent, the percentage is 100
9-6 percent.
9-7 (e) Not later than December 31 of each year, the comptroller
9-8 shall publish in the Texas Register the percentage of an award of
9-9 exemplary damages to be paid into the fund in the following
9-10 calendar year.
9-11 SECTION 2. Sections 17.505(c), (d), and (e), Business &
9-12 Commerce Code, are amended to read as follows:
9-13 (c) An action subject to this section is also subject to
9-14 Chapter 42, Civil Practice and Remedies Code. <Any person who
9-15 receives the written notice provided by Subsection (a) of this
9-16 section may, within 60 days after the receipt of the notice, tender
9-17 to the consumer a written offer of settlement, including an
9-18 agreement to reimburse the consumer for the attorneys' fees, if
9-19 any, reasonably incurred by the consumer in asserting his claim up
9-20 to the date of the written notice. A person who does not receive
9-21 such a written notice due to the consumer's suit or counterclaim
9-22 being filed as provided for by Subsection (b) of this section may,
9-23 within 60 days after the filing of such suit or counterclaim,
9-24 tender to the consumer a written offer of settlement, including an
9-25 agreement to reimburse the consumer for the attorneys' fees, if
9-26 any, reasonably incurred by the consumer in asserting his claim up
9-27 to the date the suit or counterclaim was filed. Any offer of
10-1 settlement not accepted within 30 days of receipt by the consumer
10-2 shall be deemed to have been rejected by the consumer.>
10-3 (d) <A settlement offer made in compliance with Subsection
10-4 (c) of this section, if rejected by the consumer, may be filed with
10-5 the court together with an affidavit certifying its rejection. If
10-6 the amount tendered in the settlement offer is the same as or more
10-7 than, or if the court finds that amount to be substantially the
10-8 same as, the actual damages found by the trier of fact, the
10-9 consumer may not recover an amount in excess of the amount tendered
10-10 in the settlement offer or the amount of actual damages found by
10-11 the trier of fact, whichever is less. Such settlement offer shall
10-12 not be admissible as evidence before a jury.>
10-13 <(e)> The tender of an offer of settlement is not an
10-14 admission of engaging in an unlawful act or practice or of
10-15 liability under this Act. <Evidence of a settlement offer may be
10-16 introduced only to determine the reasonableness of the settlement
10-17 offer as provided for by Subsection (d) of this section.>
10-18 SECTION 3. Sections 16(g), (h), and (i), Article 21.21,
10-19 Insurance Code, are amended to read as follows:
10-20 (g) An action under this section is also subject to Chapter
10-21 42, Civil Practice and Remedies Code. <A person who receives the
10-22 written notice provided by Subsection (e) of this section may
10-23 tender, not later than the 30th day after the date of receipt of
10-24 the notice, to the person seeking damages, a written offer of
10-25 settlement, including an agreement to reimburse the person for any
10-26 attorneys' fees reasonably incurred in asserting the claim to the
10-27 date of the written notice. A person who does not receive a
11-1 written notice because the suit or counterclaim is filed as
11-2 provided for by Subsection (f) of this section may tender, not
11-3 later than the 30th day after the date of filing of the suit or
11-4 counterclaim, a written offer of settlement, including an agreement
11-5 to reimburse the person for any attorneys' fees reasonably incurred
11-6 in asserting the claim to the date the suit or counterclaim was
11-7 filed. An offer of settlement is rejected if it is not accepted on
11-8 or before the 30th day after the date of receipt by the person
11-9 seeking damages.>
11-10 (h) <A rejected settlement offer made in compliance with
11-11 Subsection (g) of this section may be filed with the court with an
11-12 affidavit certifying its rejection. If the court finds that the
11-13 amount tendered in the settlement offer is the same or
11-14 substantially the same as the actual damages found by the trier of
11-15 fact, the plaintiff may not recover an amount that exceeds the
11-16 lesser of:>
11-17 <(1) the amount tendered in the settlement offer; or>
11-18 <(2) the amount of actual damages found by the trier
11-19 of fact.>
11-20 <(i)> The tender of an offer of settlement is not an
11-21 admission of engaging in an unlawful act or practice or of
11-22 liability under this Article. <Evidence of a settlement offer may
11-23 be introduced only to determine the reasonableness of the
11-24 settlement offer as provided for by Subsection (h) of this
11-25 section.>
11-26 SECTION 4. Chapter 105, Civil Practice and Remedies Code, is
11-27 amended to read as follows:
12-1 CHAPTER 105. AWARD OF LITIGATION COSTS AGAINST
12-2 <FRIVOLOUS CLAIM BY> STATE AGENCY
12-3 Sec. 105.001. Definitions. In this chapter:
12-4 (1) <"Fees and other expenses" means:>
12-5 <(A) the reasonable expenses of witnesses
12-6 incurred in preparing to testify or in attending or testifying;>
12-7 <(B) a reasonable fee for the professional
12-8 services of an expert witness; and>
12-9 <(C) the reasonable costs of a study, analysis,
12-10 engineering report, test, or other project the court finds to be
12-11 necessary for the preparation of the party's case.>
12-12 <(2)> "Party" means an individual, partnership,
12-13 corporation, association, or public or private organization other
12-14 than a state agency.
12-15 (2) <(3)> "State agency" means a board, commission,
12-16 department, office, or other agency that:
12-17 (A) is in the executive branch of state
12-18 government;
12-19 (B) was created by the constitution or a statute
12-20 of this state; and
12-21 (C) has statewide jurisdiction.
12-22 Sec. 105.002. Recovery of Litigation Costs <Fees, Expenses,
12-23 and Attorney's Fees>. (a) This chapter applies <A party> to a
12-24 civil suit in a court of this state brought by or against a state
12-25 agency in which the agency asserts a cause of action against a
12-26 <the> party, either originally or as a counterclaim or cross
12-27 claim<, is entitled to recover, in addition to all other costs
13-1 allowed by law or rule, fees, expenses, and reasonable attorney's
13-2 fees incurred by the party in defending the agency's action if:>
13-3 <(1) the court finds that the action is frivolous,
13-4 unreasonable, or without foundation; and>
13-5 <(2) the action is dismissed or judgment is awarded to
13-6 the party>.
13-7 (b) In a suit subject to this chapter litigation costs are
13-8 recoverable by or against the state agency in the manner provided
13-9 by Chapter 42.
13-10 Sec. 105.003. <Motion of Frivolous Claim><. (a) To recover
13-11 under this chapter, the party must file a written motion alleging
13-12 that the agency's claim is frivolous, unreasonable, or without
13-13 foundation. The motion may be filed at any time after the filing
13-14 of the pleadings in which the agency's cause of action is alleged.>
13-15 <(b) The motion must set forth the facts that justify the
13-16 party's claim.>
13-17 <(c) The motion must state that if the action is dismissed
13-18 or judgment is awarded to the party, the party intends to submit a
13-19 motion to the court to recover fees, expenses, and reasonable
13-20 attorney's fees.>
13-21 <Sec. 105.004.> Payment of Litigation Costs. The state
13-22 agency shall pay the litigation costs <fees and expenses> from
13-23 funds appropriated for operation of the agency, funds appropriated
13-24 for the payment of costs <fees and expenses> under this chapter, or
13-25 other funds available for that purpose.
13-26 SECTION 5. This Act takes effect September 1, 1993, and
13-27 applies to all actions:
14-1 (1) commenced on or after the effective date of this
14-2 Act; or
14-3 (2) pending on that effective date.
14-4 SECTION 6. (a) The comptroller shall determine the
14-5 percentage of an award of exemplary damages to be paid into the
14-6 litigation costs fund in 1994, as required by Section 42.032, Civil
14-7 Practice and Remedies Code, as added by this Act, on the basis of
14-8 the comptroller's estimate of:
14-9 (1) the amount needed by the fund in 1994 to pay
14-10 awards of litigation costs under Section 42.025, Civil Practice and
14-11 Remedies Code, as added by this Act; and
14-12 (2) the amount of exemplary damages that will be
14-13 awarded in 1994 in actions subject to Chapter 42, Civil Practice
14-14 and Remedies Code, as added by this Act.
14-15 (b) Not later than December 31, 1993, the comptroller shall
14-16 publish in the Texas Register the percentage of an award of
14-17 exemplary damages to be paid into the litigation costs fund in
14-18 1994.
14-19 SECTION 7. The importance of this legislation and the
14-20 crowded condition of the calendars in both houses create an
14-21 emergency and an imperative public necessity that the
14-22 constitutional rule requiring bills to be read on three several
14-23 days in each house be suspended, and this rule is hereby suspended.