1-1 By: Lucio, et al. S.B. No. 31
1-2 (In the Senate - Filed January 11, 1995; January 16, 1995,
1-3 read first time and referred to Committee on Economic Development;
1-4 January 31, 1995, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 11, Nays 0;
1-6 January 31, 1995, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 31 By: Lucio
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the assessment of attorney's fees, costs, and damages
1-11 for certain frivolous lawsuits and defenses.
1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-13 SECTION 1. Subtitle A, Title 2, Civil Practice and Remedies
1-14 Code, is amended by adding Chapter 10 to read as follows:
1-15 CHAPTER 10. CERTAIN FRIVOLOUS LAWSUITS AND DEFENSES
1-16 Sec. 10.001. DEFINITION. In this chapter, "litigant" means:
1-17 (1) a party that brings or defends an action or part
1-18 of an action; or
1-19 (2) an attorney representing that party.
1-20 Sec. 10.002. APPLICABILITY. This chapter applies to any
1-21 civil action unless other applicable law provides for an assessment
1-22 of attorney's fees, costs, or damages in an amount greater than
1-23 that which would be assessed pursuant to the provisions of this
1-24 chapter.
1-25 Sec. 10.003. ASSESSMENT OF ATTORNEY'S FEES, COSTS, AND
1-26 DAMAGES FOR FRIVOLOUS SUIT OR DEFENSE. (a) Except as provided by
1-27 Section 10.008, on the motion of any party or its own motion, a
1-28 court shall assess reasonable attorney's fees and costs against a
1-29 litigant who brings or defends an action or a part of an action in
1-30 a manner that the court finds:
1-31 (1) is frivolous, groundless in fact or in law, or
1-32 vexatious;
1-33 (2) is for delay or harassment; or
1-34 (3) unnecessarily expands the action because of
1-35 improper conduct by the litigant, including abuse of discovery
1-36 procedures.
1-37 (b) If the court makes the finding required by Subsection
1-38 (a), the court may also award additional damages for inconvenience,
1-39 harassment, and any out-of-pocket expense incurred.
1-40 (c) A party may make a motion under this section at any time
1-41 while proceedings are pending before the trial court.
1-42 (d) Attorney's fees, costs, or damages under this chapter
1-43 may not be awarded for the filing of a general denial under Rule
1-44 92, Texas Rules of Civil Procedure.
1-45 (e) Attorney's fees, costs, or damages under this chapter
1-46 may not be awarded if the court determines that a litigant has
1-47 asserted a claim or defense in good faith to establish a new theory
1-48 of law.
1-49 Sec. 10.004. FACTORS IN ASSESSING ATTORNEY'S FEES, COSTS,
1-50 AND DAMAGES. In determining whether to assess attorney's fees,
1-51 costs, or damages under Section 10.003 against a litigant who
1-52 brings or defends an action and the amount to be assessed, the
1-53 court shall consider:
1-54 (1) any effort by the litigant to determine the
1-55 validity of the action before bringing it;
1-56 (2) any effort by the litigant after the commencement
1-57 of the action to reduce the number of claims or defenses asserted
1-58 or to dismiss claims or defenses found invalid;
1-59 (3) the availability to the litigant of facts to
1-60 determine the validity of the action or defense;
1-61 (4) whether the litigant brought or defended the
1-62 action in bad faith;
1-63 (5) whether facts relating to the validity of the
1-64 action or defense were reasonably in conflict;
1-65 (6) the extent to which the litigant prevailed
1-66 compared with the number of claims in controversy and the amount of
1-67 the judgment;
1-68 (7) whether the litigant asserted a claim or defense
2-1 in a good faith attempt to establish a new theory of law;
2-2 (8) the amount or conditions of any offer of judgment
2-3 or settlement compared to the amount or conditions of any judgment;
2-4 (9) whether the litigant made a reasonable effort to
2-5 determine whether a party sued or joined to the action owed the
2-6 litigant a legally defined duty; and
2-7 (10) any effort by the litigant to reduce the number
2-8 of parties in the action.
2-9 Sec. 10.005. NOTICE AND HEARING REQUIREMENTS. (a) A court
2-10 may not assess attorney's fees, costs, or damages unless the court
2-11 gives the litigant against whom the award of attorney's fees,
2-12 costs, or damages would be made:
2-13 (1) notice;
2-14 (2) a reasonable opportunity to respond; and
2-15 (3) a hearing.
2-16 (b) Notice under this chapter must be given in accordance
2-17 with the Texas Rules of Civil Procedure.
2-18 Sec. 10.006. STATEMENT OF REASONS FOR AWARD. A court that
2-19 assesses attorney's fees, costs, or damages under this chapter
2-20 shall state the reasons for the assessment in writing.
2-21 Sec. 10.007. METHOD OF ASSESSMENT. (a) Attorney's fees,
2-22 costs, or damages assessed under this chapter are in addition to
2-23 any other fees, costs, or damages assessed by the court.
2-24 (b) A court may assess attorney's fees, costs, or damages
2-25 under this chapter directly against a litigant or the court may
2-26 include the fees, costs, or damages as a part of its judgment.
2-27 (c) A court may allocate attorney's fees, costs, or damages
2-28 assessed under this chapter among more than one litigant.
2-29 Sec. 10.008. EXCEPTION FOR PARTY APPEARING WITHOUT ATTORNEY.
2-30 (a) A court may not assess attorney's fees, costs, or damages
2-31 under this chapter against a party who is not represented by an
2-32 attorney unless the court finds that the party clearly knew or
2-33 reasonably should have known that action or part of an action
2-34 brought or defended by the party was frivolous, groundless in fact
2-35 or in law, or vexatious.
2-36 (b) This section does not apply to a party who is an
2-37 attorney.
2-38 Sec. 10.009. APPROVAL OF CERTAIN STIPULATIONS. (a) A court
2-39 may approve a written stipulation filed with the court or an oral
2-40 stipulation in open court agreeing to:
2-41 (1) no award of attorney's fees, costs, or damages as
2-42 provided by this chapter; or
2-43 (2) an award of attorney's fees, costs, or damages in
2-44 a manner different from that provided by this chapter.
2-45 (b) Once filed, the stipulation may not be withdrawn and
2-46 remains effective throughout the pendency of the litigation, unless
2-47 the court determines that the stipulation:
2-48 (1) was obtained by fraud; or
2-49 (2) is void on another ground that would void a
2-50 contract, other than the requirement for consideration necessary
2-51 for the formation of a contract.
2-52 Sec. 10.010. MANDATORY APPELLATE REVIEW. On timely filing
2-53 of an appeal or other submission to a court with appellate
2-54 jurisdiction, including a court of appeals or the supreme court, as
2-55 appropriate, the court with appellate jurisdiction shall review:
2-56 (1) the determination of a court to award or deny
2-57 attorney's fees, costs, or damages under this chapter; or
2-58 (2) the determination of an appellate court to uphold
2-59 or reverse an award or denial of attorney's fees, costs, or damages
2-60 under this chapter.
2-61 SECTION 2. This Act takes effect September 1, 1995, and
2-62 applies only to an action commenced on or after that date. An
2-63 action commenced before the effective date of this Act is governed
2-64 by the law in effect at the time the action was commenced, and that
2-65 law is continued in effect for that purpose.
2-66 SECTION 3. The importance of this legislation and the
2-67 crowded condition of the calendars in both houses create an
2-68 emergency and an imperative public necessity that the
2-69 constitutional rule requiring bills to be read on three several
2-70 days in each house be suspended, and this rule is hereby suspended.
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