By:  Lucio, et al.                                      S.B. No. 31
                                 A BILL TO BE ENTITLED
                                        AN ACT
    1-1  relating to the assessment of attorney's fees, costs, and damages
    1-2  for certain frivolous lawsuits and defenses.
    1-3        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-4        SECTION 1.  Subtitle A, Title 2, Civil Practice and Remedies
    1-5  Code, is amended by adding Chapter 10 to read as follows:
    1-6         CHAPTER 10.  CERTAIN FRIVOLOUS LAWSUITS AND DEFENSES
    1-7        Sec. 10.001.  DEFINITION.  In this chapter, "litigant" means:
    1-8              (1)  a party that brings or defends an action or part
    1-9  of an action; or
   1-10              (2)  an attorney representing that party.
   1-11        Sec. 10.002.  APPLICABILITY.  This chapter applies to any
   1-12  civil action unless other applicable law provides for an assessment
   1-13  of attorney's fees, costs, or damages in an amount greater than
   1-14  that which would be assessed pursuant to the provisions of this
   1-15  chapter.
   1-16        Sec. 10.003.  ASSESSMENT OF ATTORNEY'S FEES, COSTS, AND
   1-17  DAMAGES FOR FRIVOLOUS SUIT OR DEFENSE.  (a)  Except as provided by
   1-18  Section 10.008, on the motion of any party or its own motion, a
   1-19  court shall assess reasonable attorney's fees and costs against a
   1-20  litigant who brings or defends an action or a part of an action in
   1-21  a manner that the court finds:
   1-22              (1)  is frivolous, groundless in fact or in law, or
   1-23  vexatious;
   1-24              (2)  is for delay or harassment; or
    2-1              (3)  unnecessarily expands the action because of
    2-2  improper conduct by the litigant, including abuse of discovery
    2-3  procedures.
    2-4        (b)  If the court makes the finding required by Subsection
    2-5  (a), the court may also award additional damages for inconvenience,
    2-6  harassment, and any out-of-pocket expense incurred.
    2-7        (c)  A party may make a motion under this section at any time
    2-8  while proceedings are pending before the trial court.
    2-9        (d)  Attorney's fees, costs, or damages under this chapter
   2-10  may not be awarded for the filing of a general denial under Rule
   2-11  92, Texas Rules of Civil Procedure.
   2-12        (e)  Attorney's fees, costs, or damages under this chapter
   2-13  may not be awarded if the court determines that a litigant has
   2-14  asserted a claim or defense in good faith to establish a new theory
   2-15  of law.
   2-16        Sec. 10.004.  FACTORS IN ASSESSING ATTORNEY'S FEES, COSTS,
   2-17  AND DAMAGES.  In determining whether to assess attorney's fees,
   2-18  costs, or damages under Section 10.003 against a litigant who
   2-19  brings or defends an action and the amount to be assessed, the
   2-20  court shall consider:
   2-21              (1)  any effort by the litigant to determine the
   2-22  validity of the action before bringing it;
   2-23              (2)  any effort by the litigant after the commencement
   2-24  of the action to reduce the number of claims or defenses asserted
   2-25  or to dismiss claims or defenses found invalid;
   2-26              (3)  the availability to the litigant of facts to
   2-27  determine the validity of the action or defense;
    3-1              (4)  whether the litigant brought or defended the
    3-2  action in bad faith;
    3-3              (5)  whether facts relating to the validity of the
    3-4  action or defense were reasonably in conflict;
    3-5              (6)  the extent to which the litigant prevailed
    3-6  compared with the number of claims in controversy and the amount of
    3-7  the judgment;
    3-8              (7)  whether the litigant asserted a claim or defense
    3-9  in a good faith attempt to establish a new theory of law;
   3-10              (8)  the amount or conditions of any offer of judgment
   3-11  or settlement compared to the amount or conditions of any judgment;
   3-12              (9)  whether the litigant made a reasonable effort to
   3-13  determine whether a party sued or joined to the action owed the
   3-14  litigant a legally defined duty; and
   3-15              (10)  any effort by the litigant to reduce the number
   3-16  of parties in the action.
   3-17        Sec. 10.005.  NOTICE AND HEARING REQUIREMENTS.  (a)  A court
   3-18  may not assess attorney's fees, costs, or damages unless the court
   3-19  gives the litigant against whom the award of attorney's fees,
   3-20  costs, or damages would be made:
   3-21              (1)  notice;
   3-22              (2)  a reasonable opportunity to respond; and
   3-23              (3)  a hearing.
   3-24        (b)  Notice under this chapter must be given in accordance
   3-25  with the Texas Rules of Civil Procedure.
   3-26        Sec. 10.006.  STATEMENT OF REASONS FOR AWARD.  A court that
   3-27  assesses attorney's fees, costs, or damages under this chapter
    4-1  shall state the reasons for the assessment in writing.
    4-2        Sec. 10.007.  METHOD OF ASSESSMENT.  (a)  Attorney's fees,
    4-3  costs, or damages assessed under this chapter are in addition to
    4-4  any other fees, costs, or damages assessed by the court.
    4-5        (b)  A court may assess attorney's fees, costs, or damages
    4-6  under this chapter directly against a litigant or the court may
    4-7  include the fees, costs, or damages as a part of its judgment.
    4-8        (c)  A court may allocate attorney's fees, costs, or damages
    4-9  assessed under this chapter among more than one litigant.
   4-10        Sec. 10.008.  EXCEPTION FOR PARTY APPEARING WITHOUT ATTORNEY.
   4-11  (a)  A court may not assess attorney's fees, costs, or damages
   4-12  under this chapter against a party who is not represented by an
   4-13  attorney unless the court finds that the party clearly knew or
   4-14  reasonably should have known that action or part of an action
   4-15  brought or defended by the party was frivolous, groundless in fact
   4-16  or in law, or vexatious.
   4-17        (b)  This section does not apply to a party who is an
   4-18  attorney.
   4-19        Sec. 10.009.  APPROVAL OF CERTAIN STIPULATIONS.  (a)  A court
   4-20  may approve a written stipulation filed with the court or an oral
   4-21  stipulation in open court agreeing to:
   4-22              (1)  no award of attorney's fees, costs, or damages as
   4-23  provided by this chapter; or
   4-24              (2)  an award of attorney's fees, costs, or damages in
   4-25  a manner different from that provided by this chapter.
   4-26        (b)  Once filed, the stipulation may not be withdrawn and
   4-27  remains effective throughout the pendency of the litigation, unless
    5-1  the court determines that the stipulation:
    5-2              (1)  was obtained by fraud; or
    5-3              (2)  is void on another ground that would void a
    5-4  contract, other than the requirement for consideration necessary
    5-5  for the formation of a contract.
    5-6        Sec. 10.010.  MANDATORY APPELLATE REVIEW.  On timely filing
    5-7  of an appeal or other submission to a court with appellate
    5-8  jurisdiction, including a court of appeals or the supreme court, as
    5-9  appropriate, the court with appellate jurisdiction shall review:
   5-10              (1)  the determination of a court to award or deny
   5-11  attorney's fees, costs, or damages under this chapter; or
   5-12              (2)  the determination of an appellate court to uphold
   5-13  or reverse an award or denial of attorney's fees, costs, or damages
   5-14  under this chapter.
   5-15        SECTION 2.  This Act takes effect September 1, 1995, and
   5-16  applies only to an action commenced on or after that date.  An
   5-17  action commenced before the effective date of this Act is governed
   5-18  by the law in effect at the time the action was commenced, and that
   5-19  law is continued in effect for that purpose.
   5-20        SECTION 3.  The importance of this legislation and the
   5-21  crowded condition of the calendars in both houses create an
   5-22  emergency and an imperative public necessity that the
   5-23  constitutional rule requiring bills to be read on three several
   5-24  days in each house be suspended, and this rule is hereby suspended.