By Sibley, et al. S.B. No. 25
74R3372 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 compensatory damages for
1-20 pecuniary loss. The term does not include exemplary damages or
1-21 damages for physical pain and suffering, mental anguish and
1-22 suffering, loss of consortium, and disfigurement.
1-23 (4) "Exemplary damages" means any damages awarded as
1-24 <an example to others, as> a penalty<,> or by way of punishment.
2-1 "Exemplary damages" includes punitive damages.
2-2 (5) <(4)> "Fraud" means fraud other than constructive
2-3 fraud.
2-4 <(5) "Gross negligence" means more than momentary
2-5 thoughtlessness, inadvertence, or error of judgment. It means such
2-6 an entire want of care as to establish that the act or omission was
2-7 the result of actual conscious indifference to the rights, safety,
2-8 or welfare of the person affected.>
2-9 (6) "Malice" means:
2-10 (A) a specific intent <conduct that is
2-11 specifically intended> by the defendant to cause substantial injury
2-12 to the claimant; or
2-13 (B) <an act that is carried out by the defendant
2-14 with a> flagrant disregard by the defendant for the rights of
2-15 others and <with> actual awareness on the part of the defendant
2-16 that the act or omission will, in reasonable probability, result in
2-17 human death, great bodily injury <harm>, or property damage.
2-18 Sec. 41.002. APPLICABILITY. (a) This chapter applies to
2-19 any <an> action in which a claimant seeks exemplary damages
2-20 relating to a cause of action <as defined by Section 33.001>.
2-21 (b) This chapter establishes the maximum exemplary damages
2-22 that may be awarded in an action subject to this chapter, including
2-23 an action for which exemplary damages are awarded under another law
2-24 of this state. This chapter does not apply to the extent another
2-25 law establishes a lower maximum amount of exemplary damages for a
2-26 particular claim<:>
2-27 <(1) an action brought under the Deceptive Trade
3-1 Practices-Consumer Protection Act (Subchapter E, Chapter 17,
3-2 Business & Commerce Code) except as specifically provided in
3-3 Section 17.50 of that Act;>
3-4 <(2) an action brought under Chapter 21, Insurance
3-5 Code;>
3-6 <(3) an action brought under the workers' compensation
3-7 laws of this state (Article 8306 et seq., Revised Statutes);>
3-8 <(4) an action to recover exemplary damages against an
3-9 employer by the employee's beneficiaries in a death action arising
3-10 out of the course and scope of employment where the employer is a
3-11 subscriber under the workers' compensation laws of this state
3-12 (Article 8306 et seq., Revised Statutes);>
3-13 <(5) an action brought under Chapter 246, Acts of the
3-14 63rd Legislature, Regular Session, 1973, Home Solicitation
3-15 Transactions (Article 5069-13.01 et seq., Vernon's Texas Civil
3-16 Statutes);>
3-17 <(6) an action brought under Chapter 547, Acts of the
3-18 63rd Legislature, Regular Session, 1973, Debt Collection Practices
3-19 (Article 5069-11.01 et seq., Vernon's Texas Civil Statutes);>
3-20 <(7) an action brought under Chapter 54, 91, or 92,
3-21 Property Code;>
3-22 <(8) an action brought under the Texas Manufactured
3-23 Housing Standards Act (Article 5221f, Vernon's Texas Civil
3-24 Statutes);>
3-25 <(9) an action brought under the Texas Motor Vehicle
3-26 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes);>
3-27 <(10) an action brought under the Texas Proprietary
4-1 School Act, Chapter 32, Education Code;>
4-2 <(11) an action brought under Section 9.507 or Section
4-3 2.01, Business & Commerce Code;>
4-4 <(12) an action brought under Chapter 36, Family Code;>
4-5 <(13) an action brought under the Health Spa Act
4-6 (Article 5221l, Vernon's Texas Civil Statutes);>
4-7 <(14) an action brought under the Business Opportunity
4-8 Act (Article 5069-16.01 et seq., Vernon's Texas Civil Statutes); or>
4-9 <(15) an action brought under the Texas Timeshare Act
4-10 (Article 6573c, Vernon's Texas Civil Statutes)>.
4-11 (c) Except as provided by Subsection (b), in <In> an action
4-12 to which this chapter applies, the provisions of this chapter
4-13 prevail over all other law to the extent of any conflict.
4-14 Sec. 41.003. STANDARDS FOR RECOVERY OF EXEMPLARY DAMAGES.
4-15 (a) Except as provided by Subsection (c), exemplary <Exemplary>
4-16 damages may be awarded only if the claimant proves that the
4-17 <personal injury, property damage, death, or other> harm with
4-18 respect to which the claimant seeks recovery of exemplary damages
4-19 results from:
4-20 (1) fraud; or
4-21 (2) malice<; or>
4-22 <(3) gross negligence>.
4-23 (b) The claimant must prove the elements of exemplary
4-24 damages as provided by this section <Subsection (a)(1), (a)(2), or
4-25 (a)(3)>. This burden of proof may not be shifted to the defendant
4-26 or satisfied by evidence of ordinary negligence, bad faith, or a
4-27 deceptive trade practice.
5-1 (c) If the claimant relies on a statute establishing a cause
5-2 of action and authorizing exemplary damages in specified
5-3 circumstances or in conjunction with a specified culpable mental
5-4 state, exemplary damages may be awarded only if the claimant proves
5-5 that the damages result from the specified circumstances or
5-6 culpable mental state.
5-7 Sec. 41.004. FACTORS PRECLUDING RECOVERY. (a) Except as
5-8 provided by Subsection (b), exemplary <Exemplary> damages may be
5-9 awarded only if damages other than nominal damages are awarded.
5-10 (b) A claimant may recover exemplary damages, even if only
5-11 nominal damages are awarded, if the claimant establishes, beyond a
5-12 reasonable doubt, that the harm with respect to which the claimant
5-13 seeks recovery of exemplary damages results from malice.
5-14 <Exemplary damages may not be awarded to a claimant who elects to
5-15 have his recovery multiplied under another statute.>
5-16 Sec. 41.005. MULTIPLE AWARDS AGAINST DEFENDANT. (a) Except
5-17 as provided by Subsection (d), a court may not award exemplary
5-18 damages to a claimant if:
5-19 (1) exemplary damages have been previously awarded
5-20 against the defendant by a court; and
5-21 (2) the harm with respect to which the claimant seeks
5-22 recovery of exemplary damages resulted from the same act or course
5-23 of conduct that formed the basis of the previous exemplary damage
5-24 award.
5-25 (b) On request of a defendant, the court shall conduct a
5-26 pretrial hearing at which the defendant may present evidence that
5-27 exemplary damages have been previously awarded against the
6-1 defendant for the same act or course of conduct that formed the
6-2 basis of the action.
6-3 (c) Except as provided by Subsection (d), if the defendant
6-4 at the pretrial hearing presents prima facie evidence of a previous
6-5 award of exemplary damages as described by Subsection (a), the
6-6 claimant may not present a claim for exemplary damages during the
6-7 trial of the action.
6-8 (d) Subsections (a) and (c) do not apply if the claimant
6-9 establishes at the pretrial hearing that:
6-10 (1) substantial evidence of malice, fraud, or other
6-11 circumstances or culpable mental state described by Section
6-12 41.003(c) relating to the act or course of conduct exists; and
6-13 (2) that evidence was not available at the time the
6-14 previous exemplary damage award was entered.
6-15 (e) If the claimant makes the showing required by Subsection
6-16 (d), the court shall reduce the amount of exemplary damages awarded
6-17 to the claimant, if any, by the amount of all previous exemplary
6-18 damage awards against the defendant based on the same act or course
6-19 of conduct.
6-20 (f) For purposes of this section, the manufacture of
6-21 multiple identical individual units of a product line is a single
6-22 act or course of conduct.
6-23 Sec. 41.006. HARM RESULTING FROM REGULATED ACTIVITY. (a)
6-24 Except as provided by Subsections (b) and (c), a court may not
6-25 award a claimant exemplary damages if the harm with respect to
6-26 which the claimant seeks recovery of exemplary damages results
6-27 from:
7-1 (1) conduct or a product that is subject to regulation
7-2 by an agency of this state or the United States; or
7-3 (2) a product whose design, formulation, testing,
7-4 packaging, labeling, or warning was approved or certified before
7-5 sale by an agency of this state or the United States.
7-6 (b) A court may award a claimant exemplary damages in the
7-7 circumstances described by Subsection (a)(1) if the claimant proves
7-8 that the defendant did not comply with applicable regulations
7-9 promulgated by the regulating agency.
7-10 (c) Subsection (a) does not apply if the claimant proves
7-11 that the defendant:
7-12 (1) knowingly and in violation of law withheld or
7-13 misrepresented material information required to be submitted to the
7-14 regulating agency; or
7-15 (2) made an illegal payment to an official of the
7-16 regulating agency to secure approval of the conduct or product in
7-17 question.
7-18 Sec. 41.007. HARM RESULTING FROM CRIMINAL ACT. In an action
7-19 arising from harm resulting from an assault, theft, or another
7-20 criminal act, a court may not award exemplary damages against an
7-21 owner or occupier of real property for failing to prevent another
7-22 person from committing the criminal act.
7-23 Sec. 41.008. AWARD SPECIFIC TO DEFENDANT. In any action in
7-24 which there are two or more defendants, an award of exemplary
7-25 damages must be specific as to a defendant, and each defendant is
7-26 liable only for the amount of the award made against that
7-27 defendant.
8-1 Sec. 41.009 <Sec. 41.006>. PREJUDGMENT INTEREST.
8-2 Prejudgment interest may not be assessed or recovered on an award
8-3 of exemplary damages.
8-4 Sec. 41.010 <Sec. 41.007>. LIMITATION ON AMOUNT OF RECOVERY.
8-5 (a) In an action in which a claimant seeks recovery of exemplary
8-6 damages, the trier of fact shall determine the amount of economic
8-7 damages separately from the amount of other compensatory damages.
8-8 (b) Except as provided by Subsection (c) <Section 41.008>,
8-9 exemplary damages awarded against a defendant may not exceed two
8-10 <four> times the amount of actual damages or $200,000, whichever is
8-11 greater.
8-12 (c) In an action in which the trier of fact finds that the
8-13 harm with respect to which the claimant seeks exemplary damages
8-14 results from malice, exemplary damages awarded against a defendant
8-15 may not exceed four times the amount of actual damages or $200,000,
8-16 whichever is greater.
8-17 (d) The provisions of Subsections (b) and (c) may not be
8-18 made known to a jury by any means, including voir dire,
8-19 introduction into evidence, argument, or instruction.
8-20 Sec. 41.011. BIFURCATED TRIAL. (a) On motion by a party,
8-21 the court shall provide for a bifurcated trial under this section.
8-22 (b) In the first phase of a bifurcated trial, the trier of
8-23 fact shall determine:
8-24 (1) liability for compensatory and exemplary damages;
8-25 and
8-26 (2) the amount of compensatory damages.
8-27 (c) If liability for exemplary damages is established during
9-1 the first phase of a bifurcated trial, the trier of fact shall, in
9-2 the second phase of the trial, determine the amount of exemplary
9-3 damages to be awarded, if any.
9-4 (d) Evidence that is relevant only to the amount of
9-5 exemplary damages that may be awarded is not admissible during the
9-6 first phase of a bifurcated trial.
9-7 Sec. 41.012. UNANIMOUS JURY. In a trial to a jury,
9-8 exemplary damages may not be awarded unless the jury unanimously
9-9 finds that the defendant is liable for exemplary damages in
9-10 accordance with Section 41.003.
9-11 Sec. 41.013. CONSIDERATIONS IN MAKING AWARD. (a) Before
9-12 making an award of exemplary damages, the trier of fact shall
9-13 consider the definition and purposes of exemplary damages as
9-14 provided by Section 41.001.
9-15 (b) The determination of whether to award exemplary damages
9-16 and the amount of exemplary damages to be awarded is within the
9-17 discretion of the trier of fact.
9-18 Sec. 41.014. EVIDENCE RELATING TO AMOUNT OF EXEMPLARY
9-19 DAMAGES. (a) In determining the amount of exemplary damages, the
9-20 trier of fact may only consider evidence relating to:
9-21 (1) the reprehensibility of the defendant's motives;
9-22 (2) the likelihood, at the time of the conduct, of
9-23 serious harm;
9-24 (3) the defendant's awareness of the likelihood of
9-25 serious harm;
9-26 (4) the duration of the conduct; and
9-27 (5) the harm suffered by the claimant.
10-1 (b) In determining the amount of exemplary damages, the
10-2 trier of fact may not consider evidence relating to the defendant's
10-3 wealth or ability to pay, including the defendant's net worth and
10-4 gross or net revenues.
10-5 Sec. 41.015. JURY INSTRUCTIONS. In a trial to a jury, the
10-6 court shall instruct the jury with regard to Sections 41.013 and
10-7 41.014(a).
10-8 Sec. 41.016. JUDICIAL REVIEW OF AWARD. An appellate court
10-9 that reviews the evidence with respect to a finding by a trier of
10-10 fact concerning liability for exemplary damages or with respect to
10-11 the amount of exemplary damages awarded shall state, in a written
10-12 opinion, the court's reasons for upholding or disturbing the
10-13 finding or award. The written opinion must address the evidence or
10-14 lack of evidence with specificity, as it relates to the liability
10-15 for or amount of exemplary damages, in light of the requirements of
10-16 this chapter.
10-17 <Sec. 41.008. EXCEPTION. Section 41.007 does not apply to
10-18 exemplary damages resulting from malice as defined by Section
10-19 41.001(6)(A) or to an intentional tort>.
10-20 <Sec. 41.009. PROVISIONS NOT TO BE MADE KNOWN TO JURY. The
10-21 provisions of Section 41.007 may not be made known to the jury
10-22 through any means, including voir dire, introduction into evidence,
10-23 or instruction.>
10-24 SECTION 2. This Act takes effect September 1, 1995, and
10-25 applies only to a cause of action that commences on or after that
10-26 date. An action that commenced before the effective date of this
10-27 Act is governed by the law applicable to the action as it existed
11-1 immediately before the effective date of this Act, and that law is
11-2 continued in effect for that purpose.
11-3 SECTION 3. The importance of this legislation and the
11-4 crowded condition of the calendars in both houses create an
11-5 emergency and an imperative public necessity that the
11-6 constitutional rule requiring bills to be read on three several
11-7 days in each house be suspended, and this rule is hereby suspended.