ZEM C.S.H.B. 1022 75(R)BILL ANALYSIS CIVIL PRACTICES C.S.H.B. 1022 By: Hilbert 5-7-97 Committee Report (Substituted) BACKGROUND It is a general principle of tort law that a successful plaintiff should have one recovery for the harm he or she suffered, but not multiple recoveries. Key features of the law, however, promote multiple recoveries for the same harm. The sliding scale credit for settlements bears no relationship to the harm caused by the settling person or to the amount of the settlement. It usually results in multiple recovery of damages. The prejudgment interest statute promotes multiple recovery by requiring interest awards that over-compensate plaintiffs for the time value of money during the period leading up to a judgment. It sets an artificially high interest rate and awards prejudgment interest on future damages, which are damages the claimant has not yet suffered - and might not ever suffer. PURPOSE The bill advances the one-recovery rule by modifying key civil law rules that promote multiple recovery of damages. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 33.012(b), Civil Practice and Remedies Code, to repeal the sliding scale credit for settlements and substitute the traditional percentage credit, by which a judgment is reduced by the percentage of responsibility the jury attributes to a settling person. SECTION 2. Amends Section 2, Article 1.05, Title 79, Revised Statutes (Article 5069-1.05, Vernon's Texas Civil Statutes) by deleting the prejudgment interest rate floor and ceilings. SECTION 3. Amends Section 6, Article 1.05, Title 79, Revised Statutes (Article 5069-1.05, Vernon's Texas Civil Statutes) by amending Subsections (a) and (d) and adding Subsection (h) and (i) to allow prejudgment interest on past damages in judgments for wrongful death, personal injury, property damages, and harm caused by tortious conduct and for breach of contracts that do not specify an interest rate and to suspend prejudgment interest during periods of delay caused by the plaintiff, but not delays caused by the defendant. Provides that a court may not award prejudgment interest on attorney's fees or future damages and requires the court to instruct the jury that prejudgment interest will be awarded on past damages. SECTION 4. Applies prospectively; savings clause SECTION 5. Emergency clause. Effective date: upon passage. COMPARISON OF ORIGINAL TO SUBSTITUTE The committee substitute makes the following substantive changes: 1. The committee substitute modifies the language concerning percentage credit for settlements to clarify that the percentage is deducted from the amount of damages found by the trier of fact. 2. The committee substitute omits SECTION 2 of the original bill which related to the collateral source rule. 3. The committee substitute allows prejudgment interest to be awarded on amounts of past damages, rather than only on past economic damages. 4. The committee substitute adds a provision in SECTION 3, Article 5069-1.05 (i) directing the court to instruct the jury that prejudgment interest will be awarded on the amounts of past damages awarded by the jury. 5. The committee substitute provides that the act applies prospectively to cases filed on or after the effective date and not to pending cases as was provided in the original bill.