By Brimer H.B. No. 465
74R2195 DLF-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to payment of costs of defense following settlement of
1-3 cause of action.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Title 7, Civil Practice and Remedies Code, is
1-6 amended by adding Chapter 156 to read as follows:
1-7 CHAPTER 156. PAYMENT OF DEFENSE COSTS FOLLOWING SETTLEMENT
1-8 Sec. 156.001. DEFINITIONS. In this section:
1-9 (1) "Claim" means any claim brought in court to
1-10 recover damages. The term includes a counterclaim, cross-claim, or
1-11 third-party claim.
1-12 (2) "Claimant" means the party bringing a claim.
1-13 (3) "Defendant" means a party, including a
1-14 counterdefendant, cross-defendant, or third-party defendant, from
1-15 whom a claimant seeks damages.
1-16 (4) "Defense costs" means the costs reasonably
1-17 incurred by a defendant to defend against a claim before the claim
1-18 is settled, including:
1-19 (A) the cost of investigation of the claim;
1-20 (B) attorney's fees; and
1-21 (C) court costs.
1-22 Sec. 156.002. DEFENSE COSTS AFTER SETTLEMENT. (a) A
1-23 claimant who settles a claim is liable to the defendant for the
1-24 percentage of the defense costs equal to the percentage obtained by
2-1 dividing the amount of the alleged damages, less any amount
2-2 received under the settlement, by the amount of the alleged
2-3 damages.
2-4 (b) If the claimant receives at least the amount of the
2-5 alleged damages under the settlement, the claimant is not liable to
2-6 the defendant under this section.
2-7 (c) For purposes of this section, the amount of the alleged
2-8 damages is the highest amount of damages claimed by the claimant in
2-9 a pleading filed with the court. If the claimant did not allege a
2-10 specific amount of damages, the amount of the alleged damages is:
2-11 (1) if the court is subject to a jurisdictional limit
2-12 on the maximum amount in controversy applicable to a matter before
2-13 the court, that maximum amount; or
2-14 (2) if the court is not subject to a jurisdictional
2-15 limit on the maximum amount in controversy applicable to a matter
2-16 before the court, the minimum amount in controversy applicable to a
2-17 matter before the court.
2-18 Sec. 156.003. MULTIPLE CLAIMANTS. (a) If there is more
2-19 than one claimant asserting a claim against the defendant, and the
2-20 claimants settle their claims at the same time, each claimant is
2-21 jointly and severally liable for the defense costs awarded under
2-22 Section 156.002.
2-23 (b) If there is more than one claimant asserting a claim
2-24 against the defendant, and the claimants settle their claims at
2-25 different times, the earlier settling claimant is liable only for
2-26 defense costs incurred before that claimant settled. The later
2-27 settling claimant is liable for the defense costs incurred:
3-1 (1) before the earlier settling claimant settled; and
3-2 (2) after the earlier settling client settled but
3-3 before the later settling claimant settled.
3-4 (c) A defendant may not receive multiple recoveries for the
3-5 same defense costs.
3-6 Sec. 156.004. AWARD OF DEFENSE COSTS. On motion of a
3-7 defendant, the court in which the claim is pending shall award
3-8 defense costs under this chapter. The award must be made before
3-9 the claim is dismissed or otherwise terminated in conjunction with
3-10 the settlement.
3-11 Sec. 156.005. WAIVER PROHIBITED. A waiver of a defendant's
3-12 right to recover defense costs under this chapter is void.
3-13 SECTION 2. This Act takes effect September 1, 1995, and
3-14 applies only to a claim filed on or after that date. A claim that
3-15 was filed before the effective date of this Act is governed by the
3-16 law applicable to the action as it existed immediately before the
3-17 effective date of this Act, and that law is continued in effect for
3-18 that purpose.
3-19 SECTION 3. The importance of this legislation and the
3-20 crowded condition of the calendars in both houses create an
3-21 emergency and an imperative public necessity that the
3-22 constitutional rule requiring bills to be read on three several
3-23 days in each house be suspended, and this rule is hereby suspended.