By Junell, et al. H.B. No. 5
74R3974 DLF-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to exemplary damages in civil suits.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Chapter 41, Civil Practice and Remedies Code, is
1-5 amended to read as follows:
1-6 CHAPTER 41. EXEMPLARY DAMAGES
1-7 Sec. 41.001. DEFINITIONS. In this chapter:
1-8 (1) "Claimant" means a party, including a plaintiff,
1-9 counterclaimant, cross-claimant, or third-party plaintiff, seeking
1-10 recovery of exemplary damages. In a cause of action in which a
1-11 party seeks recovery of exemplary damages related to injury to
1-12 another person, damage to the property of another person, death of
1-13 another person, or other harm to another person, "claimant"
1-14 includes both that other person and the party seeking recovery of
1-15 exemplary damages.
1-16 (2) "Defendant" means a party, including a
1-17 counterdefendant, cross-defendant, or third-party defendant, from
1-18 whom a claimant seeks relief with respect to exemplary damages.
1-19 (3) "Economic damages" means damages for pecuniary
1-20 loss, including damages for loss of or damage to property and
1-21 damages for lost wages, loss of earning capacity, expenses for
1-22 medical care, and burial expenses. The term does not include
1-23 damages for pain and suffering, mental anguish, loss associated
1-24 with disfigurement, or loss of companionship or consortium.
2-1 (4) "Exemplary damages" means any damages awarded as
2-2 <an example to others, as> a penalty<,> or by way of punishment.
2-3 "Exemplary damages" includes punitive damages.
2-4 (5) <(4)> "Fraud" means fraud other than constructive
2-5 fraud.
2-6 <(5) "Gross negligence" means more than momentary
2-7 thoughtlessness, inadvertence, or error of judgment. It means such
2-8 an entire want of care as to establish that the act or omission was
2-9 the result of actual conscious indifference to the rights, safety,
2-10 or welfare of the person affected.>
2-11 (6) "Malice" means:
2-12 (A) a specific intent <conduct that is
2-13 specifically intended> by the defendant to cause substantial injury
2-14 to the claimant; or
2-15 (B) <an act that is carried out by the defendant
2-16 with a> flagrant disregard by the defendant for the rights of
2-17 others and <with> actual awareness on the part of the defendant
2-18 that the act or omission will, in reasonable probability, result in
2-19 human death, great bodily injury <harm>, or property damage.
2-20 (7) "Owner" means a person who, in whole or in part,
2-21 owns, operates, manages, leases, subleases, controls, assumes
2-22 control of, or derives a benefit from any real property. The term
2-23 includes an employee or agent of an owner.
2-24 Sec. 41.002. APPLICABILITY. (a) This chapter applies to
2-25 any <an> action in which a claimant seeks exemplary damages
2-26 relating to a cause of action <as defined by Section 33.001>.
2-27 (b) This chapter establishes the maximum exemplary damages
3-1 that may be awarded in an action subject to this chapter, including
3-2 an action for which exemplary damages are awarded under another law
3-3 of this state. This chapter does not apply to the extent another
3-4 law establishes a lower maximum amount of exemplary damages for a
3-5 particular claim<:>
3-6 <(1) an action brought under the Deceptive Trade
3-7 Practices-Consumer Protection Act (Subchapter E, Chapter 17,
3-8 Business & Commerce Code) except as specifically provided in
3-9 Section 17.50 of that Act;>
3-10 <(2) an action brought under Chapter 21, Insurance
3-11 Code;>
3-12 <(3) an action brought under the workers' compensation
3-13 laws of this state (Article 8306 et seq., Revised Statutes);>
3-14 <(4) an action to recover exemplary damages against an
3-15 employer by the employee's beneficiaries in a death action arising
3-16 out of the course and scope of employment where the employer is a
3-17 subscriber under the workers' compensation laws of this state
3-18 (Article 8306 et seq., Revised Statutes);>
3-19 <(5) an action brought under Chapter 246, Acts of the
3-20 63rd Legislature, Regular Session, 1973, Home Solicitation
3-21 Transactions (Article 5069-13.01 et seq., Vernon's Texas Civil
3-22 Statutes);>
3-23 <(6) an action brought under Chapter 547, Acts of the
3-24 63rd Legislature, Regular Session, 1973, Debt Collection Practices
3-25 (Article 5069-11.01 et seq., Vernon's Texas Civil Statutes);>
3-26 <(7) an action brought under Chapter 54, 91, or 92,
3-27 Property Code;>
4-1 <(8) an action brought under the Texas Manufactured
4-2 Housing Standards Act (Article 5221f, Vernon's Texas Civil
4-3 Statutes);>
4-4 <(9) an action brought under the Texas Motor Vehicle
4-5 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes);>
4-6 <(10) an action brought under the Texas Proprietary
4-7 School Act, Chapter 32, Education Code;>
4-8 <(11) an action brought under Section 9.507 or Section
4-9 27.01, Business & Commerce Code;>
4-10 <(12) an action brought under Chapter 36, Family Code;>
4-11 <(13) an action brought under the Health Spa Act
4-12 (Article 5221l, Vernon's Texas Civil Statutes);>
4-13 <(14) an action brought under the Business Opportunity
4-14 Act (Article 5069-16.01 et seq., Vernon's Texas Civil Statutes); or>
4-15 <(15) an action brought under the Texas Timeshare Act
4-16 (Article 6573c, Vernon's Texas Civil Statutes)>.
4-17 (c) Except as provided by Subsection (b), in <In> an action
4-18 to which this chapter applies, the provisions of this chapter
4-19 prevail over all other law to the extent of any conflict.
4-20 Sec. 41.003. STANDARDS FOR RECOVERY OF EXEMPLARY DAMAGES.
4-21 (a) Except as provided by Subsection (c) and Section 41.004,
4-22 exemplary <Exemplary> damages may be awarded only if the claimant
4-23 proves that the <personal injury, property damage, death, or other>
4-24 harm with respect to which the claimant seeks recovery of exemplary
4-25 damages results from:
4-26 (1) fraud; or
4-27 (2) malice<; or>
5-1 <(3) gross negligence>.
5-2 (b) The claimant must prove the elements of exemplary
5-3 damages as provided by this section beyond a reasonable doubt
5-4 <Subsection (a)(1), (a)(2), or (a)(3)>. This burden of proof may
5-5 not be shifted to the defendant or satisfied by evidence of
5-6 ordinary negligence, bad faith, or a deceptive trade practice.
5-7 (c) If the claimant relies on a statute establishing a cause
5-8 of action and authorizing exemplary damages in specified
5-9 circumstances or in conjunction with a specified culpable mental
5-10 state, exemplary damages may be awarded only if the claimant proves
5-11 that the damages result from the specified circumstances or
5-12 culpable mental state.
5-13 Sec. 41.004. STANDARDS FOR RECOVERY OF EXEMPLARY DAMAGES IN
5-14 CERTAIN ACTIONS. (a) In an action governed by Section 26, Article
5-15 XVI, Texas Constitution, exemplary damages may be awarded if the
5-16 claimant proves beyond a reasonable doubt that the death with
5-17 respect to which the claimant seeks recovery of exemplary damages
5-18 results from a wilful act or omission or from gross neglect.
5-19 (b) For purposes of this section, gross neglect means more
5-20 than momentary thoughtlessness, inadvertence, or error of judgment.
5-21 (c) To prove gross neglect, the claimant must establish
5-22 that:
5-23 (1) the defendant's act or omission created an extreme
5-24 risk of serious harm to the person affected by the act or omission;
5-25 and
5-26 (2) at the time of the act or omission, the defendant
5-27 had actual subjective knowledge that the act or omission created an
6-1 extreme risk of serious harm to the person affected by the act or
6-2 omission.
6-3 Sec. 41.005. FACTORS PRECLUDING RECOVERY. (a) Except as
6-4 provided by Subsection (b), exemplary <Exemplary> damages may be
6-5 awarded only if damages other than nominal damages are awarded.
6-6 (b) A claimant may recover exemplary damages, even if only
6-7 nominal damages are awarded, if the claimant establishes, beyond a
6-8 reasonable doubt, that the harm with respect to which the claimant
6-9 seeks recovery of exemplary damages results from malice as
6-10 described by Section 41.001(6)(A). <Exemplary damages may not be
6-11 awarded to a claimant who elects to have his recovery multiplied
6-12 under another statute.>
6-13 Sec. 41.006. MULTIPLE AWARDS AGAINST DEFENDANT. (a) Except
6-14 as provided by Subsection (d), a court may not award exemplary
6-15 damages to a claimant if:
6-16 (1) exemplary damages have been previously awarded
6-17 against the defendant by a court; and
6-18 (2) the harm with respect to which the claimant seeks
6-19 recovery of exemplary damages resulted from the same act or course
6-20 of conduct that formed the basis of the previous exemplary damage
6-21 award.
6-22 (b) On request of a defendant, the court shall conduct a
6-23 pretrial hearing at which the defendant may present evidence that
6-24 exemplary damages have been previously awarded against the
6-25 defendant for the same act or course of conduct that formed the
6-26 basis of the action.
6-27 (c) Except as provided by Subsection (d), if the defendant
7-1 at the pretrial hearing presents prima facie evidence of a previous
7-2 award of exemplary damages as described by Subsection (a), the
7-3 claimant may not present a claim for exemplary damages during the
7-4 trial of the action.
7-5 (d) Subsections (a) and (c) do not apply if the claimant
7-6 establishes at the pretrial hearing that:
7-7 (1) substantial evidence of malice, fraud, or other
7-8 circumstances or culpable mental state described by Section
7-9 41.003(c) relating to the act or course of conduct exists; and
7-10 (2) that evidence was not available at the time the
7-11 previous exemplary damage award was entered.
7-12 (e) If the claimant makes the showing required by Subsection
7-13 (d), the court shall reduce the amount of exemplary damages awarded
7-14 to the claimant, if any, by the amount of all previous exemplary
7-15 damage awards against the defendant based on the same act or course
7-16 of conduct.
7-17 (f) For purposes of this section, the manufacture of
7-18 multiple identical individual units of a product line is a single
7-19 act or course of conduct.
7-20 Sec. 41.007. HARM RESULTING FROM REGULATED ACTIVITY. (a)
7-21 Except as provided by Subsections (b) and (c), a court may not
7-22 award a claimant exemplary damages if the harm with respect to
7-23 which the claimant seeks recovery of exemplary damages results
7-24 from:
7-25 (1) conduct or a product that is subject to regulation
7-26 by an agency of this state or the United States; or
7-27 (2) a product whose design, formulation, testing,
8-1 packaging, labeling, or warning was approved or certified before
8-2 sale by an agency of this state or the United States.
8-3 (b) A court may award a claimant exemplary damages in the
8-4 circumstances described by Subsection (a)(1) if the claimant proves
8-5 that the defendant did not comply with applicable regulations
8-6 promulgated by the regulating agency.
8-7 (c) Subsection (a) does not apply if the claimant proves
8-8 that the defendant:
8-9 (1) knowingly and in violation of law withheld or
8-10 misrepresented material information required to be submitted to the
8-11 regulating agency; or
8-12 (2) made an illegal payment to an official of the
8-13 regulating agency to secure approval of the conduct or product in
8-14 question.
8-15 Sec. 41.008. HARM RESULTING FROM CRIMINAL ACT. In an action
8-16 arising from a loss, injury, or death resulting from an assault,
8-17 theft, or another criminal act, a court may not award exemplary
8-18 damages against an owner of real property on which the criminal act
8-19 occurred, in whole or in part, or on which the resulting harm
8-20 occurred, in whole or in part, unless the owner is an active
8-21 participant, acting with malice, in the criminal act.
8-22 Sec. 41.009 <41.005>. AWARD SPECIFIC TO DEFENDANT. In any
8-23 action in which there are two or more defendants, an award of
8-24 exemplary damages must be specific as to a defendant, and each
8-25 defendant is liable only for the amount of the award made against
8-26 that defendant.
8-27 Sec. 41.010 <41.006>. PREJUDGMENT INTEREST. Prejudgment
9-1 interest may not be assessed or recovered on an award of exemplary
9-2 damages.
9-3 Sec. 41.011 <41.007>. LIMITATION ON AMOUNT OF RECOVERY. (a)
9-4 In an action in which a claimant seeks recovery of exemplary
9-5 damages, the trier of fact shall determine the amount of economic
9-6 damages separately from the amount of other compensatory damages.
9-7 (b) Exemplary <Except as provided by Section 41.008,
9-8 exemplary> damages awarded against a defendant may not exceed two
9-9 <four> times the amount of economic <actual> damages or $200,000,
9-10 whichever is greater.
9-11 (c) The provisions of Subsection (b) may not be made known
9-12 to a jury by any means, including voir dire, introduction into
9-13 evidence, argument, or instruction.
9-14 Sec. 41.012. BIFURCATED TRIAL. (a) On motion by a
9-15 defendant, the court shall provide for a bifurcated trial under
9-16 this section. A motion under this subsection must be made before
9-17 the defendant is asked to announce ready for trial or at a
9-18 different time specified by a pretrial court order issued under
9-19 Rule 166, Texas Rules of Civil Procedure.
9-20 (b) In an action with more than one defendant, the court
9-21 shall provide for a bifurcated trial on motion of any defendant.
9-22 (c) In the first phase of a bifurcated trial, the trier of
9-23 fact shall determine:
9-24 (1) liability for compensatory and exemplary damages;
9-25 and
9-26 (2) the amount of compensatory damages.
9-27 (d) If liability for exemplary damages is established during
10-1 the first phase of a bifurcated trial, the trier of fact shall, in
10-2 the second phase of the trial, determine the amount of exemplary
10-3 damages to be awarded, if any.
10-4 (e) Evidence that is relevant only to the amount of
10-5 exemplary damages that may be awarded is not admissible during the
10-6 first phase of a bifurcated trial.
10-7 Sec. 41.013. UNANIMOUS JURY. In a trial to a jury,
10-8 exemplary damages may not be awarded unless the jury unanimously
10-9 finds that the defendant is liable for exemplary damages in
10-10 accordance with Section 41.003.
10-11 Sec. 41.014. CONSIDERATIONS IN MAKING AWARD. (a) Before
10-12 making an award of exemplary damages, the trier of fact shall
10-13 consider the definition and purposes of exemplary damages as
10-14 provided by Section 41.001.
10-15 (b) The determination of whether to award exemplary damages
10-16 and the amount of exemplary damages to be awarded is within the
10-17 discretion of the trier of fact.
10-18 Sec. 41.015. EVIDENCE RELATING TO AMOUNT OF EXEMPLARY
10-19 DAMAGES. (a) In determining the amount of exemplary damages, the
10-20 trier of fact may only consider evidence relating to:
10-21 (1) the reprehensibility of the defendant's motives;
10-22 (2) the likelihood, at the time of the conduct, of
10-23 serious harm;
10-24 (3) the defendant's awareness of the likelihood of
10-25 serious harm;
10-26 (4) the duration of the conduct; and
10-27 (5) the harm suffered by the claimant.
11-1 (b) In determining the amount of exemplary damages, the
11-2 trier of fact may not consider evidence relating to the defendant's
11-3 wealth or ability to pay, including the defendant's net worth and
11-4 gross or net revenues.
11-5 Sec. 41.016. JURY INSTRUCTIONS. In a trial to a jury, the
11-6 court shall instruct the jury with regard to Sections 41.014 and
11-7 41.015(a).
11-8 Sec. 41.017. JUDICIAL REVIEW OF AWARD. An appellate court
11-9 that reviews the evidence with respect to a finding by a trier of
11-10 fact concerning liability for exemplary damages or with respect to
11-11 the amount of exemplary damages awarded shall state, in a written
11-12 opinion, the court's reasons for upholding or disturbing the
11-13 finding or award. The written opinion must address the evidence or
11-14 lack of evidence with specificity, as it relates to the liability
11-15 for or amount of exemplary damages, in light of the requirements of
11-16 this chapter.
11-17 <Sec. 41.008. EXCEPTION. Section 41.007 does not apply to
11-18 exemplary damages resulting from malice as defined by Section
11-19 41.001(6)(A) or to an intentional tort.>
11-20 <Sec. 41.009. PROVISIONS NOT TO BE MADE KNOWN TO JURY. The
11-21 provisions of Section 41.007 may not be made known to the jury
11-22 through any means, including voir dire, introduction into evidence,
11-23 or instruction.>
11-24 SECTION 2. (a) Section 408.001(b), Labor Code, is amended
11-25 to read as follows:
11-26 (b) This section does not prohibit the recovery of exemplary
11-27 damages by the surviving spouse or heirs of the body of a deceased
12-1 employee whose death was caused by an intentional act or omission
12-2 of the employer or by the employer's gross neglect, subject to
12-3 Chapter 41, Civil Practice and Remedies Code <negligence>.
12-4 (b) Section 408.001(c), Labor Code, is repealed.
12-5 SECTION 3. This Act takes effect September 1, 1995, and
12-6 applies only to a cause of action that commences on or after that
12-7 date. An action that commenced before the effective date of this
12-8 Act is governed by the law applicable to the action as it existed
12-9 immediately before the effective date of this Act, and that law is
12-10 continued in effect for that purpose.
12-11 SECTION 4. The importance of this legislation and the
12-12 crowded condition of the calendars in both houses create an
12-13 emergency and an imperative public necessity that the
12-14 constitutional rule requiring bills to be read on three several
12-15 days in each house be suspended, and this rule is hereby suspended.