Bill not drafted by TLC or Senate E&E.
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By Cuellar H.B. No. 2895
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the award of damages and litigation costs in certain
1-3 civil actions.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subtitle C, Title 2, Civil Practice and Remedies
1-6 Code, is amended by adding Chapter 42 to read as follows:
1-7 CHAPTER 42. JUDGMENT FOLLOWING OFFER TO SETTLE
1-8 SUBCHAPTER A. GENERAL PROVISIONS
1-9 Sec. 42.001. DEFINITIONS. In this chapter:
1-10 (1) "Claim" means a claim seeking recovery of monetary
1-11 damages, including a counterclaim, cross-claim, or third-party
1-12 claim, but does not include a claim for equitable relief.
1-13 (2) "Claimant" means a party making a claim.
1-14 (3) "Defendant" means a party, including a
1-15 counterdefendant, cross-defendant, or third-party defendant, from
1-16 whom a claimant seeks damages or other relief.
1-17 (4) "Judgment finally awarded" means the total amount
1-18 of any damages awarded, including actual and punitive damages,
1-19 interest, costs, and all other monetary relief, excluding
1-20 attorney's fees awarded under this chapter.
1-21 (5) "Litigation costs" means costs that are directly
1-22 related to preparing a case for trial and actual trial expenses,
1-23 including:
1-24 (A) attorney's fees under Section 42.007;
2-1 (B) costs;
2-2 (C) reasonable deposition costs; and
2-3 (D) reasonable fees for not more than two expert
2-4 witnesses.
2-5 (6) "Offer to settle" means an offer to settle made
2-6 under Section 42.004.
2-7 Sec. 42.002. APPLICABILITY. This chapter does not apply to:
2-8 (1) a class action;
2-9 (2) a shareholder's derivative action;
2-10 (3) an action brought under the Deceptive Trade
2-11 Practices Act; or
2-12 (4) an action brought under the Family Code.
2-13 Sec. 42.003. EFFECT OF OFFER TO SETTLE. A party to a civil
2-14 action in a court of this state who makes an offer to settle in
2-15 compliance with Section 42.004 is entitled to recover litigation
2-16 costs from the opposing party under the conditions specified by
2-17 Section 42.006.
2-18 Sec. 42.004. OFFER TO SETTLE. (a) A party to an action may
2-19 serve on another party an offer to settle under this section.
2-20 (b) The offer to settle must:
2-21 (1) be in writing;
2-22 (2) state that it is an offer to settle under this
2-23 section;
2-24 (3) offer to settle a claim as specified in the offer;
2-25 and
2-26 (4) offer to allow judgment to be entered in
2-27 accordance with the terms of the offer.
2-28 (c) An offer to settle may not be made after the 10th day
2-29 before the date set for trial, except that an offer to settle that
2-30 is a counteroffer may not be made after the 7th day before the date
3-1 set for trial. The time limits of this subsection may be modified
3-2 by the court under Rule 166, Texas Rules of Civil Procedure.
3-3 (d) An offer to settle need not be filed with the court.
3-4 (e) This subchapter does not limit the ability of any party
3-5 to make a settlement offer that is not in compliance with this
3-6 section. A settlement offer that is not in compliance with this
3-7 section does not entitle the offeror to recover litigation costs
3-8 under Section 42.006.
3-9 Sec. 42.005. ACCEPTANCE OR REJECTION OF OFFER. (a) A party
3-10 may accept an offer to settle not later than 5 p.m. on the 7th day
3-11 after receipt of the offer.
3-12 (b) An acceptance of an offer must be made in writing and
3-13 served on the party making the offer.
3-14 (c) An offer may be withdrawn by a writing served on the
3-15 party to whom the offer was made before the party accepts the
3-16 offer. An offer may not be accepted after it is withdrawn.
3-17 (d) For purposes of this chapter, an offer is considered
3-18 rejected if:
3-19 (1) a written rejection of the offer is served on the
3-20 party making the offer;
3-21 (2) the offer has not been accepted or withdrawn on or
3-22 before 5 p.m. on the last date the offer may be accepted under
3-23 Subsection (a); or
3-24 (3) acceptance of the offer is later withdrawn.
3-25 (e) To determine the time of day for purposes of Subsection
3-26 (a) or (d), the local time of the recipient of the acceptance or
3-27 the withdrawal controls.
3-28 Sec. 42.006. LITIGATION COSTS. (a) The court shall award
3-29 litigation costs to a party who made an offer to settle if that
3-30 party's last offer is rejected and the judgment finally awarded is
4-1 not more favorable to the person to whom the offer to settle was
4-2 made than the offer.
4-3 (b) Litigation costs awarded to a party under this section
4-4 shall include only those costs incurred after the date of the
4-5 earliest offer to settle which, if it had been accepted, would have
4-6 been of more benefit to the offeree than the judgment finally
4-7 awarded.
4-8 (c) The court may review and adjust an award of litigation
4-9 costs as justice requires.
4-10 Sec. 42.007. AMOUNT OF ATTORNEY'S FEES. (a) The amount of
4-11 attorney's fees included as litigation costs under this chapter
4-12 must be both reasonably incurred and necessary to the prosecution
4-13 or defense of the case and based upon actual attorney time spent
4-14 and a reasonably hourly rate. In determining a reasonably hourly
4-15 rate, the court shall consider:
4-16 (1) the time and labor required, the novelty and
4-17 difficulty of the questions involved, and the skill requisite to
4-18 perform the legal service properly;
4-19 (2) the likelihood, if apparent to the client, that
4-20 the acceptance of the particular employment will preclude other
4-21 employment by the lawyer;
4-22 (3) the fee customarily charged in the locality for
4-23 similar legal services;
4-24 (4) the amount involved and the results obtained;
4-25 (5) the time limitations imposed by the client or by
4-26 the circumstances;
4-27 (6) the nature and length of the professional
4-28 relationship with the client;
4-29 (7) the experience, reputation, and ability of the
4-30 lawyer or lawyers performing the services; and
5-1 (8) whether the fee is fixed or contingent on results
5-2 obtained or uncertainty of collection before the legal services
5-3 have been rendered.
5-4 (b) The court shall limit the amount of attorney's fees
5-5 included in litigation costs awarded to a claimant under this
5-6 chapter to one-third of the damages recovered by the claimant and
5-7 shall limit the amount of attorney's fees included in litigation
5-8 costs awarded to a defendant under this chapter to one-third of the
5-9 damages sought in the claimant's last filed petition.
5-10 Sec. 42.008. LIMITATIONS ON AWARDS IN CERTAIN CASES. (a)
5-11 This section applies only to cases involving personal injury,
5-12 property damage, or wrongful death.
5-13 (b) The amount of litigation costs awarded against the
5-14 claimant shall not exceed the amount recovered by the claimant.
5-15 (c) A party who elects to initiate an offer to settle shall
5-16 be required, on demand by the offeree, to give security sufficient
5-17 to support a potential award of litigation costs to the offeree.
5-18 If the party who is required to give security fails to do so, he
5-19 may withdraw his offer without prejudice but shall not recover
5-20 litigation costs under this chapter unless the offeree elects to
5-21 initiate the procedure or makes a counteroffer without demanding
5-22 security.
5-23 (d) Any party who has received an offer to settle shall not
5-24 be required to give security, but shall be entitled to make an
5-25 offer to settle thereafter to the party who has made such initial
5-26 offer to settle.
5-27 Sec. 42.009. MUST BE REPRESENTED BY ATTORNEY. To recover
5-28 attorney's fees under this chapter, a party must be represented by
5-29 an attorney.
5-30 Sec. 42.010. EVIDENCE OF OFFER NOT ADMISSIBLE. (a)
6-1 Evidence of an offer to settle is not admissible except in:
6-2 (1) an action to enforce the settlement; or
6-3 (2) a proceeding to obtain litigation costs under
6-4 Section 42.006.
6-5 (b) Admission of evidence of an offer to settle in violation
6-6 of this section is presumed to be harmful error for purposes of an
6-7 appeal of the action in which the evidence is admitted.
6-8 Sec. 42.011. PROVISIONS NOT TO BE MADE KNOWN TO JURY. The
6-9 provisions of this chapter may not be made known to the jury
6-10 through any means, including voir dire, introduction into evidence,
6-11 or instruction.
6-12 SECTION 2. Section 38.001, Civil Practice and Remedies Code,
6-13 is amended to read as follows:
6-14 Sec. 38.001. RECOVERY OF ATTORNEY'S FEES. (a) A person may
6-15 recover reasonable attorney's fees from an individual or
6-16 corporation in addition to the amount of a valid claim and costs,
6-17 if the claim is for:
6-18 (1) rendered services;
6-19 (2) performed labor;
6-20 (3) furnished material;
6-21 (4) freight or express overcharges;
6-22 (5) lost or damaged freight or express;
6-23 (6) killed or injured stock;
6-24 (7) a sworn account; or
6-25 (8) an oral or written contract.
6-26 (b) If a person who has asserted a claim for attorney's fees
6-27 pursuant to this section does not prevail, the individual or
6-28 corporation against whom the claim was asserted may recover
6-29 reasonable attorney's fees and costs from the person who asserted
6-30 the claim.
7-1 SECTION 3. This Act takes effect September 1, 1997, and
7-2 applies to all actions:
7-3 (1) commenced on or after the effective date of this
7-4 Act; or
7-5 (2) pending on that effective date.
7-6 SECTION 4. The importance of this legislation and the
7-7 crowded condition of the calendars in both houses create an
7-8 emergency and an imperative public necessity that the
7-9 constitutional rule requiring bills to be read on three several
7-10 days in each house be suspended, and this rule is hereby suspended.