1-1 By: Sibley, et al. S.B. No. 25
1-2 (In the Senate - Filed January 11, 1995; January 11, 1995,
1-3 read first time and referred to Committee on Economic Development;
1-4 February 14, 1995, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 8, Nays 0;
1-6 February 14, 1995, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 25 By: Sibley
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to exemplary damages in civil suits.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Chapter 41, Civil Practice and Remedies Code, is
1-13 amended to read as follows:
1-14 CHAPTER 41. EXEMPLARY DAMAGES
1-15 Sec. 41.001. DEFINITIONS. In this chapter:
1-16 (1) "Claimant" means a party, including a plaintiff,
1-17 counterclaimant, cross-claimant, or third-party plaintiff, seeking
1-18 recovery of exemplary damages. In a cause of action in which a
1-19 party seeks recovery of exemplary damages related to injury to
1-20 another person, damage to the property of another person, death of
1-21 another person, or other harm to another person, "claimant"
1-22 includes both that other person and the party seeking recovery of
1-23 exemplary damages.
1-24 (2) "Clear and convincing" means the measure or degree
1-25 of proof that will produce in the mind of the trier of fact a firm
1-26 belief or conviction as to the truth of the allegations sought to
1-27 be established.
1-28 (3) "Defendant" means a party, including a
1-29 counterdefendant, cross-defendant, or third-party defendant, from
1-30 whom a claimant seeks relief with respect to exemplary damages.
1-31 (4) "Economic damages" means compensatory damages for
1-32 pecuniary loss; the term does not include exemplary damages or
1-33 damages for physical pain and mental anguish, loss of consortium,
1-34 disfigurement, physical impairment, or loss of companionship and
1-35 society.
1-36 (5) <(3)> "Exemplary damages" means any damages
1-37 awarded as <an example to others, as> a penalty<,> or by way of
1-38 punishment. "Exemplary damages" includes punitive damages.
1-39 (6) <(4)> "Fraud" means fraud other than constructive
1-40 fraud.
1-41 (7) <(5) "Gross negligence" means more than momentary
1-42 thoughtlessness, inadvertence, or error of judgment. It means such
1-43 an entire want of care as to establish that the act or omission was
1-44 the result of actual conscious indifference to the rights, safety,
1-45 or welfare of the person affected.>
1-46 <(6)> "Malice" means:
1-47 (A) a specific intent <conduct that is
1-48 specifically intended> by the defendant to cause substantial injury
1-49 to the claimant; or
1-50 (B) an act or omission:
1-51 (i) which when viewed objectively from the
1-52 standpoint of the actor at the time of its occurrence involves an
1-53 extreme degree of risk, considering the probability and magnitude
1-54 of the potential harm to others; and
1-55 (ii) of which the actor has actual,
1-56 subjective awareness of the risk involved, but nevertheless
1-57 proceeds with conscious indifference to the rights, safety, or
1-58 welfare of others <that is carried out by the defendant with a
1-59 flagrant disregard for the rights of others and with actual
1-60 awareness on the part of the defendant that the act will, in
1-61 reasonable probability, result in human death, great bodily harm,
1-62 or property damage>.
1-63 Sec. 41.002. APPLICABILITY. (a) This chapter applies to
1-64 any <an> action in which a claimant seeks exemplary damages
1-65 relating to a cause of action <as defined by Section 33.001>.
1-66 (b) This chapter establishes the maximum exemplary damages
1-67 that may be awarded in an action subject to this chapter, including
1-68 an action for which exemplary damages are awarded under another law
2-1 of this state. This chapter does not apply to the extent another
2-2 law establishes a lower maximum amount of exemplary damages for a
2-3 particular claim<:>
2-4 <(1) an action brought under the Deceptive Trade
2-5 Practices-Consumer Protection Act (Subchapter E, Chapter 17,
2-6 Business & Commerce Code) except as specifically provided in
2-7 Section 17.50 of that Act;>
2-8 <(2) an action brought under Chapter 21, Insurance
2-9 Code;>
2-10 <(3) an action brought under the workers' compensation
2-11 laws of this state (Article 8306 et seq., Revised Statutes);>
2-12 <(4) an action to recover exemplary damages against an
2-13 employer by the employee's beneficiaries in a death action arising
2-14 out of the course and scope of employment where the employer is a
2-15 subscriber under the workers' compensation laws of this state
2-16 (Article 8306 et seq., Revised Statutes);>
2-17 <(5) an action brought under Chapter 246, Acts of the
2-18 63rd Legislature, Regular Session, 1973, Home Solicitation
2-19 Transactions (Article 5069-13.01 et seq., Vernon's Texas Civil
2-20 Statutes);>
2-21 <(6) an action brought under Chapter 547, Acts of the
2-22 63rd Legislature, Regular Session, 1973, Debt Collection Practices
2-23 (Article 5069-11.01 et seq., Vernon's Texas Civil Statutes);>
2-24 <(7) an action brought under Chapter 54, 91, or 92,
2-25 Property Code;>
2-26 <(8) an action brought under the Texas Manufactured
2-27 Housing Standards Act (Article 5221f, Vernon's Texas Civil
2-28 Statutes);>
2-29 <(9) an action brought under the Texas Motor Vehicle
2-30 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes);>
2-31 <(10) an action brought under the Texas Proprietary
2-32 School Act, Chapter 32, Education Code;>
2-33 <(11) an action brought under Section 9.507 or Section
2-34 27.01, Business & Commerce Code;>
2-35 <(12) an action brought under Chapter 36, Family Code;>
2-36 <(13) an action brought under the Health Spa Act
2-37 (Article 5221l, Vernon's Texas Civil Statutes);>
2-38 <(14) an action brought under the Business Opportunity
2-39 Act (Article 5069-16.01 et seq., Vernon's Texas Civil Statutes); or>
2-40 <(15) an action brought under the Texas Timeshare Act
2-41 (Article 6573c, Vernon's Texas Civil Statutes)>.
2-42 (c) Except as provided by Subsection (b) and (d), in <In> an
2-43 action to which this chapter applies, the provisions of this
2-44 chapter prevail over all other law to the extent of any conflict.
2-45 (d) Notwithstanding any provision to the contrary, this
2-46 chapter does not apply to Section 15.21, Business & Commerce Code
2-47 (Texas Free Enterprise and Antitrust Act of 1983).
2-48 Sec. 41.003. STANDARDS FOR RECOVERY OF EXEMPLARY DAMAGES.
2-49 (a) Except as provided by Subsection (c), exemplary <Exemplary>
2-50 damages may be awarded only if the claimant proves by clear and
2-51 convincing evidence that the <personal injury, property damage,
2-52 death, or other> harm with respect to which the claimant seeks
2-53 recovery of exemplary damages results from:
2-54 (1) fraud; or
2-55 (2) malice<; or>
2-56 <(3) gross negligence>.
2-57 (b) The claimant must prove by clear and convincing evidence
2-58 the elements of exemplary damages as provided by this section
2-59 <Subsection (a)(1), (a)(2), or (a)(3)>. This burden of proof may
2-60 not be shifted to the defendant or satisfied by evidence of
2-61 ordinary negligence, bad faith, or a deceptive trade practice.
2-62 (c) If the claimant relies on a statute establishing a cause
2-63 of action and authorizing exemplary damages in specified
2-64 circumstances or in conjunction with a specified culpable mental
2-65 state, exemplary damages may be awarded only if the claimant proves
2-66 by clear and convincing evidence that the damages result from the
2-67 specified circumstances or culpable mental state.
2-68 Sec. 41.004. FACTORS PRECLUDING RECOVERY. (a) Except as
2-69 provided by Subsection (b), exemplary <Exemplary> damages may be
2-70 awarded only if damages other than nominal damages are awarded.
3-1 (b) A claimant may recover exemplary damages, even if only
3-2 nominal damages are awarded, if the claimant establishes by clear
3-3 and convincing evidence that the harm with respect to which the
3-4 claimant seeks recovery of exemplary damages results from malice as
3-5 defined in Section 41.001(7)(A). Exemplary damages may not be
3-6 awarded to a claimant who elects to have his recovery multiplied
3-7 under another statute.
3-8 Sec. 41.005. HARM RESULTING FROM CRIMINAL ACT. (a) In an
3-9 action arising from harm resulting from an assault, theft, or other
3-10 criminal act, a court may not award exemplary damages against a
3-11 defendant because of the criminal act.
3-12 (b) The exemption provided by Subsection (a) does not apply
3-13 if:
3-14 (1) the criminal act was committed by an employee of
3-15 the defendant;
3-16 (2) the defendant is criminally responsible as a party
3-17 to the criminal act under the provisions of Chapter 7, Penal Code;
3-18 (3) the criminal act occurred at a location where, at
3-19 the time of the criminal act, the defendant was maintaining a
3-20 common nuisance under the provisions of Chapter 125, Civil Practice
3-21 and Remedies Code, and had not made reasonable attempts to abate
3-22 the nuisance; or
3-23 (4) the criminal act resulted from the defendant's
3-24 intentional or knowing violation of a statutory duty under
3-25 Subchapter D, Chapter 92, Property Code, and the criminal act
3-26 occurred after the statutory deadline for compliance with that
3-27 duty.
3-28 (c) In an action arising out of a criminal act committed by
3-29 an employee, the employer may be liable for punitive damages but
3-30 only if:
3-31 (1) the principal authorized the doing and the manner
3-32 of the act;
3-33 (2) the agent was unfit and the principal acted with
3-34 malice in employing or retaining him;
3-35 (3) the agent was employed in a managerial capacity
3-36 and was acting in the scope of employment; or
3-37 (4) the employer or a manager of the employer ratified
3-38 or approved the act.
3-39 Sec. 41.006. AWARD SPECIFIC TO DEFENDANT. In any action in
3-40 which there are two or more defendants, an award of exemplary
3-41 damages must be specific as to a defendant, and each defendant is
3-42 liable only for the amount of the award made against that
3-43 defendant.
3-44 Sec. 41.007 <41.006>. PREJUDGMENT INTEREST. Prejudgment
3-45 interest may not be assessed or recovered on an award of exemplary
3-46 damages.
3-47 Sec. 41.008 <41.007>. LIMITATION ON AMOUNT OF RECOVERY.
3-48 (a) In an action in which a claimant seeks recovery of exemplary
3-49 damages, the trier of fact shall determine the amount of economic
3-50 damages separately from the amount of other compensatory damages.
3-51 (b) Exemplary <Except as provided by Section 41.008,
3-52 exemplary> damages awarded against a defendant may not exceed an
3-53 amount equal to the greater of:
3-54 (1)(A) two <four> times the amount of economic
3-55 <actual> damages; plus
3-56 (B) an amount equal to any noneconomic damages
3-57 found by the jury, not to exceed $750,000; or
3-58 (2) $200,000<, whichever is greater>.
3-59 (c) This section does not apply to circumstances in which
3-60 there was an intentional or knowing felony offense as defined in
3-61 the following sections of the Penal Code:
3-62 (1) Section 19.02 (murder);
3-63 (2) Section 19.03 (capital murder);
3-64 (3) Section 20.04 (aggravated kidnapping);
3-65 (4) Section 22.02 (aggravated assault);
3-66 (5) Section 22.011 (sexual assault);
3-67 (6) Section 22.021 (aggravated sexual assault);
3-68 (7) Section 22.04 (injury to a child, elderly
3-69 individual, or disabled individual);
3-70 (8) Section 32.21 (forgery);
4-1 (9) Section 32.43 (commercial bribery);
4-2 (10) Section 32.45 (misapplication of fiduciary
4-3 property or property of financial institution);
4-4 (11) Section 32.46 (securing execution of document by
4-5 deception); or
4-6 (12) Section 32.47 (fraudulent destruction, removal,
4-7 or concealment of writing).
4-8 (d) This section does not apply to circumstances in which
4-9 there was an intentional or knowing third degree felony offense or
4-10 greater as defined in Chapter 31, Penal Code (theft).
4-11 (e) In this section, "intentionally" and "knowingly" have
4-12 the same meanings assigned those terms in Sections 6.03(a) and (b),
4-13 Penal Code.
4-14 (f) The provisions of Subsections (a) and (b) may not be
4-15 made known to a jury by any means, including voir dire,
4-16 introduction into evidence, argument, or instruction.
4-17 Sec. 41.009. BIFURCATED TRIAL. (a) On motion by a
4-18 defendant, the court shall provide for a bifurcated trial under
4-19 this section. A motion under this subsection shall be made prior
4-20 to voir dire examination of the jury or at a time specified by a
4-21 pretrial court order issued under Rule 166, Texas Rules of Civil
4-22 Procedure.
4-23 (b) In an action with more than one defendant, the court
4-24 shall provide for a bifurcated trial on motion of any defendant.
4-25 (c) In the first phase of a bifurcated trial, the trier of
4-26 fact shall determine:
4-27 (1) liability for compensatory and exemplary damages;
4-28 and
4-29 (2) the amount of compensatory damages.
4-30 (d) If liability for exemplary damages is established during
4-31 the first phase of a bifurcated trial, the trier of fact shall, in
4-32 the second phase of the trial, determine the amount of exemplary
4-33 damages to be awarded, if any.
4-34 Sec. 41.010. CONSIDERATIONS IN MAKING AWARD. (a) Before
4-35 making an award of exemplary damages, the trier of fact shall
4-36 consider the definition and purposes of exemplary damages as
4-37 provided by Section 41.001.
4-38 (b) The determination of whether to award exemplary damages
4-39 and the amount of exemplary damages to be awarded is within the
4-40 discretion of the trier of fact.
4-41 Sec. 41.011. EVIDENCE RELATING TO AMOUNT OF EXEMPLARY
4-42 DAMAGES. (a) In determining the amount of exemplary damages, the
4-43 trier of fact shall consider evidence, if any, relating to:
4-44 (1) the nature of the wrong;
4-45 (2) the character of the conduct involved;
4-46 (3) the degree of culpability of the wrongdoer;
4-47 (4) the situation and sensibilities of the parties
4-48 concerned;
4-49 (5) the extent to which such conduct offends a public
4-50 sense of justice and propriety; and
4-51 (6) the net worth of the defendant.
4-52 (b) Evidence that is relevant only to the amount of
4-53 exemplary damages that may be awarded is not admissible during the
4-54 first phase of a bifurcated trial.
4-55 Sec. 41.012. JURY INSTRUCTIONS. In a trial to a jury, the
4-56 court shall instruct the jury with regard to Sections 41.001,
4-57 41.003, 41.010, and 41.011.
4-58 Sec. 41.013. JUDICIAL REVIEW OF AWARD. (a) Except as
4-59 provided for in Subsection (b), an appellate court that reviews the
4-60 evidence with respect to a finding by a trier of fact concerning
4-61 liability for exemplary damages or with respect to the amount of
4-62 exemplary damages awarded shall state, in a written opinion, the
4-63 court's reasons for upholding or disturbing the finding or award.
4-64 The written opinion shall address the evidence or lack of evidence
4-65 with specificity, as it relates to the liability for or amount of
4-66 exemplary damages, in light of the requirements of this chapter.
4-67 (b) This section does not apply to the supreme court with
4-68 respect to its consideration of an application for writ of error.
4-69 <Sec. 41.008. EXCEPTION. Section 41.007 does not apply to
4-70 exemplary damages resulting from malice as defined by Section
5-1 41.001(6)(A) or to an intentional tort.>
5-2 <Sec. 41.009. PROVISIONS NOT TO BE MADE KNOWN TO JURY. The
5-3 provisions of Section 41.007 may not be made known to the jury
5-4 through any means, including voir dire, introduction into evidence,
5-5 or instruction.>
5-6 SECTION 2. This Act takes effect September 1, 1995, and
5-7 applies only to a cause of action that accrues on or after that
5-8 date. An action that accrued before the effective date of this Act
5-9 is governed by the law in effect when the cause of action accrued,
5-10 and that law is continued in effect for that purpose.
5-11 SECTION 3. The importance of this legislation and the
5-12 crowded condition of the calendars in both houses create an
5-13 emergency and an imperative public necessity that the
5-14 constitutional rule requiring bills to be read on three several
5-15 days in each house be suspended, and this rule is hereby suspended.
5-16 * * * * *