74R9539 E
By Sibley, et al. S.B. No. 25
Substitute the following for S.B. No. 25:
By Black C.S.S.B. No. 25
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) "Clear and convincing" means the measure or degree
1-17 of proof that will produce in the mind of the trier of fact a firm
1-18 belief or conviction as to the truth of the allegations sought to
1-19 be established.
1-20 (3) "Defendant" means a party, including a
1-21 counterdefendant, cross-defendant, or third-party defendant, from
1-22 whom a claimant seeks relief with respect to exemplary damages.
1-23 (4) "Economic damages" means compensatory damages for
1-24 pecuniary loss; the term does not include exemplary damages or
2-1 damages for physical pain and mental anguish, loss of consortium,
2-2 disfigurement, physical impairment, or loss of companionship and
2-3 society.
2-4 (5) <(3)> "Exemplary damages" means any damages
2-5 awarded as <an example to others, as> a penalty<,> or by way of
2-6 punishment. "Exemplary damages" includes punitive damages.
2-7 (6) <(4)> "Fraud" means fraud other than constructive
2-8 fraud.
2-9 (7) <(5) "Gross negligence" means more than momentary
2-10 thoughtlessness, inadvertence, or error of judgment. It means such
2-11 an entire want of care as to establish that the act or omission was
2-12 the result of actual conscious indifference to the rights, safety,
2-13 or welfare of the person affected.>
2-14 <(6)> "Malice" means:
2-15 (A) a specific intent <conduct that is
2-16 specifically intended> by the defendant to cause substantial injury
2-17 to the claimant; or
2-18 (B) an act or omission:
2-19 (i) which when viewed objectively from the
2-20 standpoint of the actor at the time of its occurrence involves an
2-21 extreme degree of risk, considering the probability and magnitude
2-22 of the potential harm to others; and
2-23 (ii) of which the actor has actual,
2-24 subjective awareness of the risk involved, but nevertheless
2-25 proceeds with conscious indifference to the rights, safety, or
2-26 welfare of others <that is carried out by the defendant with a
2-27 flagrant disregard for the rights of others and with actual
3-1 awareness on the part of the defendant that the act will, in
3-2 reasonable probability, result in human death, great bodily harm,
3-3 or property damage>.
3-4 Sec. 41.002. APPLICABILITY. (a) This chapter applies to
3-5 any <an> action in which a claimant seeks exemplary damages
3-6 relating to a cause of action <as defined by Section 33.001>.
3-7 (b) This chapter establishes the maximum exemplary damages
3-8 that may be awarded in an action subject to this chapter, including
3-9 an action for which exemplary damages are awarded under another law
3-10 of this state. This chapter does not apply to the extent another
3-11 law establishes a lower maximum amount of exemplary damages for a
3-12 particular claim<:>
3-13 <(1) an action brought under the Deceptive Trade
3-14 Practices-Consumer Protection Act (Subchapter E, Chapter 17,
3-15 Business & Commerce Code) except as specifically provided in
3-16 Section 17.50 of that Act;>
3-17 <(2) an action brought under Chapter 21, Insurance
3-18 Code;>
3-19 <(3) an action brought under the workers' compensation
3-20 laws of this state (Article 8306 et seq., Revised Statutes);>
3-21 <(4) an action to recover exemplary damages against an
3-22 employer by the employee's beneficiaries in a death action arising
3-23 out of the course and scope of employment where the employer is a
3-24 subscriber under the workers' compensation laws of this state
3-25 (Article 8306 et seq., Revised Statutes);>
3-26 <(5) an action brought under Chapter 246, Acts of the
3-27 63rd Legislature, Regular Session, 1973, Home Solicitation
4-1 Transactions (Article 5069-13.01 et seq., Vernon's Texas Civil
4-2 Statutes);>
4-3 <(6) an action brought under Chapter 547, Acts of the
4-4 63rd Legislature, Regular Session, 1973, Debt Collection Practices
4-5 (Article 5069-11.01 et seq., Vernon's Texas Civil Statutes);>
4-6 <(7) an action brought under Chapter 54, 91, or 92,
4-7 Property Code;>
4-8 <(8) an action brought under the Texas Manufactured
4-9 Housing Standards Act (Article 5221f, Vernon's Texas Civil
4-10 Statutes);>
4-11 <(9) an action brought under the Texas Motor Vehicle
4-12 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes);>
4-13 <(10) an action brought under the Texas Proprietary
4-14 School Act, Chapter 32, Education Code;>
4-15 <(11) an action brought under Section 9.507 or Section
4-16 27.01, Business & Commerce Code;>
4-17 <(12) an action brought under Chapter 36, Family Code;>
4-18 <(13) an action brought under the Health Spa Act
4-19 (Article 5221l, Vernon's Texas Civil Statutes);>
4-20 <(14) an action brought under the Business Opportunity
4-21 Act (Article 5069-16.01 et seq., Vernon's Texas Civil Statutes); or>
4-22 <(15) an action brought under the Texas Timeshare Act
4-23 (Article 6573c, Vernon's Texas Civil Statutes)>.
4-24 (c) Except as provided by Subsections (b) and (d), in <In>
4-25 an action to which this chapter applies, the provisions of this
4-26 chapter prevail over all other law to the extent of any conflict.
4-27 (d) Notwithstanding any provision to the contrary, this
5-1 chapter does not apply to Section 15.21, Business & Commerce Code
5-2 (Texas Free Enterprise and Antitrust Act of 1983), an action
5-3 brought under the Deceptive Trade Practices-Consumer Protection Act
5-4 (Subchapter E, Chapter 17, Business & Commerce Code) except as
5-5 specifically provided in Section 17.50 of that Act, or an action
5-6 brought under Chapter 21, Insurance Code.
5-7 Sec. 41.003. STANDARDS FOR RECOVERY OF EXEMPLARY DAMAGES.
5-8 (a) Except as provided by Subsection (c), exemplary <Exemplary>
5-9 damages may be awarded only if the claimant proves by clear and
5-10 convincing evidence that the <personal injury, property damage,
5-11 death, or other> harm with respect to which the claimant seeks
5-12 recovery of exemplary damages results from:
5-13 (1) fraud;
5-14 (2) malice; or
5-15 (3) wilful act or omission or gross neglect in
5-16 wrongful death actions brought by or on behalf of a surviving
5-17 spouse or heirs of the decedent's body, under a statute enacted
5-18 pursuant to Section 26, Article XVI, Texas Constitution. In such
5-19 cases, the definition of "gross neglect" in the instruction
5-20 submitted to the jury shall be the definition stated in Section
5-21 41.001(7)(B) <gross negligence>.
5-22 (b) The claimant must prove by clear and convincing evidence
5-23 the elements of exemplary damages as provided by this section
5-24 <Subsection (a)(1), (a)(2), or (a)(3)>. This burden of proof may
5-25 not be shifted to the defendant or satisfied by evidence of
5-26 ordinary negligence, bad faith, or a deceptive trade practice.
5-27 (c) If the claimant relies on a statute establishing a cause
6-1 of action and authorizing exemplary damages in specified
6-2 circumstances or in conjunction with a specified culpable mental
6-3 state, exemplary damages may be awarded only if the claimant proves
6-4 by clear and convincing evidence that the damages result from the
6-5 specified circumstances or culpable mental state.
6-6 Sec. 41.004. FACTORS PRECLUDING RECOVERY. (a) Except as
6-7 provided by Subsection (b), exemplary <Exemplary> damages may be
6-8 awarded only if damages other than nominal damages are awarded.
6-9 (b) A claimant may recover exemplary damages, even if only
6-10 nominal damages are awarded, if the claimant establishes by clear
6-11 and convincing evidence that the harm with respect to which the
6-12 claimant seeks recovery of exemplary damages results from malice as
6-13 defined in Section 41.001(7)(A). Exemplary damages may not be
6-14 awarded to a claimant who elects to have his recovery multiplied
6-15 under another statute.
6-16 Sec. 41.005. HARM RESULTING FROM CRIMINAL ACT. (a) In an
6-17 action arising from harm resulting from an assault, theft, or other
6-18 criminal act, a court may not award exemplary damages against a
6-19 defendant because of the criminal act of another.
6-20 (b) The exemption provided by Subsection (a) does not apply
6-21 if:
6-22 (1) the criminal act was committed by an agent or
6-23 employee of the defendant;
6-24 (2) the defendant is criminally responsible as a party
6-25 to the criminal act under the provisions of Chapter 7, Penal Code;
6-26 (3) the criminal act occurred at a location where, at
6-27 the time of the criminal act, the defendant was maintaining a
7-1 common nuisance under the provisions of Chapter 125, Civil Practice
7-2 and Remedies Code, and had not made reasonable attempts to abate
7-3 the nuisance; or
7-4 (4) the criminal act resulted from the defendant's
7-5 intentional or knowing violation of a statutory duty under
7-6 Subchapter D, Chapter 92, Property Code, and the criminal act
7-7 occurred after the statutory deadline for compliance with that
7-8 duty.
7-9 (c) In an action arising out of a criminal act committed by
7-10 an agent or employee, the principal or employer may be liable for
7-11 punitive damages but only if:
7-12 (1) the employer or principal authorized the doing and
7-13 the manner of the act;
7-14 (2) the employee or agent was unfit and the employer
7-15 or principal acted with malice in employing or retaining him;
7-16 (3) the employee or agent was employed in a managerial
7-17 capacity and was acting in the scope of employment; or
7-18 (4) the principal or employer or a manager of the
7-19 principal or employer ratified or approved the act.
7-20 Sec. 41.006. AWARD SPECIFIC TO DEFENDANT. In any action in
7-21 which there are two or more defendants, an award of exemplary
7-22 damages must be specific as to a defendant, and each defendant is
7-23 liable only for the amount of the award made against that
7-24 defendant.
7-25 Sec. 41.007 <41.006>. PREJUDGMENT INTEREST. Prejudgment
7-26 interest may not be assessed or recovered on an award of exemplary
7-27 damages.
8-1 Sec. 41.008 <41.007>. LIMITATION ON AMOUNT OF RECOVERY. (a)
8-2 In an action in which a claimant seeks recovery of exemplary
8-3 damages, the trier of fact shall determine the amount of economic
8-4 damages separately from the amount of other compensatory damages.
8-5 (b) Exemplary <Except as provided by Section 41.008,
8-6 exemplary> damages awarded against a defendant may not exceed an
8-7 amount equal to the greater of:
8-8 (1)(A) two <four> times the amount of economic
8-9 <actual> damages; plus
8-10 (B) an amount equal to any noneconomic damages
8-11 found by the jury, not to exceed $750,000; or
8-12 (2) $200,000<, whichever is greater>.
8-13 (c) Subsection (b) does not apply to a cause of action
8-14 against a defendant from whom a plaintiff seeks recovery of
8-15 exemplary damages based on conduct described as a felony in the
8-16 following sections of the Penal Code if the conduct was committed
8-17 knowingly or intentionally:
8-18 (1) Section 19.02 (murder);
8-19 (2) Section 19.03 (capital murder);
8-20 (3) Section 20.04 (aggravated kidnapping);
8-21 (4) Section 22.02 (aggravated assault);
8-22 (5) Section 22.011 (sexual assault);
8-23 (6) Section 22.021 (aggravated sexual assault);
8-24 (7) Section 22.04 (injury to a child, elderly
8-25 individual, or disabled individual);
8-26 (8) Section 32.21 (forgery);
8-27 (9) Section 32.43 (commercial bribery);
9-1 (10) Section 32.45 (misapplication of fiduciary
9-2 property or property of financial institution);
9-3 (11) Section 32.46 (securing execution of document by
9-4 deception);
9-5 (12) Section 32.47 (fraudulent destruction, removal,
9-6 or concealment of writing); or
9-7 (13) Chapter 31 (theft) the punishment level for which
9-8 is a felony of the third degree or higher.
9-9 (d) In this section, "intentionally" and "knowingly" have
9-10 the same meanings assigned those terms in Sections 6.03(a) and (b),
9-11 Penal Code.
9-12 (e) The provisions of Subsections (a) and (b) may not be
9-13 made known to a jury by any means, including voir dire,
9-14 introduction into evidence, argument, or instruction.
9-15 Sec. 41.009. BIFURCATED TRIAL. (a) On motion by a
9-16 defendant, the court shall provide for a bifurcated trial under
9-17 this section. A motion under this subsection shall be made prior
9-18 to voir dire examination of the jury or at a time specified by a
9-19 pretrial court order issued under Rule 166, Texas Rules of Civil
9-20 Procedure.
9-21 (b) In an action with more than one defendant, the court
9-22 shall provide for a bifurcated trial on motion of any defendant.
9-23 (c) In the first phase of a bifurcated trial, the trier of
9-24 fact shall determine:
9-25 (1) liability for compensatory and exemplary damages;
9-26 and
9-27 (2) the amount of compensatory damages.
10-1 (d) If liability for exemplary damages is established during
10-2 the first phase of a bifurcated trial, the trier of fact shall, in
10-3 the second phase of the trial, determine the amount of exemplary
10-4 damages to be awarded, if any.
10-5 Sec. 41.010. CONSIDERATIONS IN MAKING AWARD. (a) Before
10-6 making an award of exemplary damages, the trier of fact shall
10-7 consider the definition and purposes of exemplary damages as
10-8 provided by Section 41.001.
10-9 (b) The determination of whether to award exemplary damages
10-10 and the amount of exemplary damages to be awarded is within the
10-11 discretion of the trier of fact.
10-12 Sec. 41.011. EVIDENCE RELATING TO AMOUNT OF EXEMPLARY
10-13 DAMAGES. (a) In determining the amount of exemplary damages, the
10-14 trier of fact shall consider evidence, if any, relating to:
10-15 (1) the nature of the wrong;
10-16 (2) the character of the conduct involved;
10-17 (3) the degree of culpability of the wrongdoer;
10-18 (4) the situation and sensibilities of the parties
10-19 concerned;
10-20 (5) the extent to which such conduct offends a public
10-21 sense of justice and propriety; and
10-22 (6) the net worth of the defendant.
10-23 (b) Evidence that is relevant only to the amount of
10-24 exemplary damages that may be awarded is not admissible during the
10-25 first phase of a bifurcated trial.
10-26 Sec. 41.012. JURY INSTRUCTIONS. In a trial to a jury, the
10-27 court shall instruct the jury with regard to Sections 41.001,
11-1 41.003, 41.010, and 41.011.
11-2 Sec. 41.013. JUDICIAL REVIEW OF AWARD. (a) Except as
11-3 provided for in Subsection (b), an appellate court that reviews the
11-4 evidence with respect to a finding by a trier of fact concerning
11-5 liability for exemplary damages or with respect to the amount of
11-6 exemplary damages awarded shall state, in a written opinion, the
11-7 court's reasons for upholding or disturbing the finding or award.
11-8 The written opinion shall address the evidence or lack of evidence
11-9 with specificity, as it relates to the liability for or amount of
11-10 exemplary damages, in light of the requirements of this chapter.
11-11 (b) This section does not apply to the supreme court with
11-12 respect to its consideration of an application for writ of error.
11-13 <Sec. 41.008. EXCEPTION. Section 41.007 does not apply to
11-14 exemplary damages resulting from malice as defined by Section
11-15 41.001(6)(A) or to an intentional tort.>
11-16 <Sec. 41.009. PROVISIONS NOT TO BE MADE KNOWN TO JURY. The
11-17 provisions of Section 41.007 may not be made known to the jury
11-18 through any means, including voir dire, introduction into evidence,
11-19 or instruction.>
11-20 SECTION 2. This Act takes effect September 1, 1995, and
11-21 applies only to a cause of action that accrues on or after that
11-22 date. A suit filed before the effective date of this Act is
11-23 governed by the law applicable to the claim that existed
11-24 immediately before the effective date of this Act, and that law is
11-25 continued in effect for that purpose.
11-26 SECTION 3. The importance of this legislation and the
11-27 crowded condition of the calendars in both houses create an
12-1 emergency and an imperative public necessity that the
12-2 constitutional rule requiring bills to be read on three several
12-3 days in each house be suspended, and this rule is hereby suspended.