Office of House Bill AnalysisH.B. 1524
By: Clark
Civil Practices


Currently, a party is not penalized for threatening expensive litigation in
a lawsuit, although an abuse of litigation can be extremely costly to both
parties.  An innocent civil defendant may be required to pay high
litigation expense to fight a claim without merit or may be forced to pay a
large settlement to avoid those expenses.  At the same time, a civil
plaintiff who makes a reasonable settlement offer that is rejected must
choose between litigation of a lengthy discovery process and trial against
meritless defenses or acceptance of a low settlement to resolve promptly
the plaintiff's claims.  H.B. 1524 would protect victims of abusive
litigation tactics by allowing a party to recover litigation expenses,
including reasonable attorney's fees, if a party rejects a fair settlement
offer and then wins less, or loses more, at trial. 


It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 


SECTION 1.  Amends Subtitle C, Title 2, Civil Practice and Remedies Code,
by adding Chapter 42, as follows: 



Sec. 42.001.  DEFINITIONS.  Defines "claim," "claimant," "defendant,"
"litigation costs," and "offer to settle." 

Sec. 42.002.  APPLICABILITY AND EFFECT.  Sets forth the actions to which
this chapter does not apply.  Provides that this chapter does not limit or
affect the ability of any person to make an offer to settle or compromise a
claim that does not comply with this chapter. Provides that a party's offer
to settle or compromise that does not comply with Section 42.021 does not
entitle the party to recover litigation costs under this section. 
Sec. 42.003.  ELECTION BY GOVERNMENTAL UNITS; WAIVER. Provides that this
chapter does not apply to actions directly involving any unit of the state
government, or any state political subdivision unless the governmental unit
expressly elects to both to seek recovery of litigation costs and waive
immunity from liability for litigation costs awarded under this chapter.
Provides that to be effective as an election and waiver, the governmental
unit must make the election and waiver specifically and affirmatively by a
writing filed with the court within 45 days of the filing of the
governmental unit's original petition or original answer.  Provides that an
election and waiver is effective only in the action in which it is filed,
even if the action is subsequently joined or consolidated with another

Sec. 42.004.  MODIFICATION OF TIME LIMITS.  Authorizes a court to modify
the time limits specified in this chapter in an order issued following a
pretrial conference directed pursuant to Rule 166 (Pretrial Conference),
Texas Rules of Civil Procedure. 

Sec. 42.005.  SERVICE.  Provides that when a writing is required to be
served on another  party, service is adequate if service is performed in a
manner described in Rule 21a (Methods of Service), Texas Rules of Civil


Sec. 42.021.  OFFER TO SETTLE.  Authorizes a party to serve on an opposing
party an offer to settle all claims in an action between that party and the
opposing party.  Sets forth criteria for the offer to settle.  Prohibits a
party from making an offer to settle under this section until the 45th day
after the date the defendant filed the first responsive pleading to the
claim.  Prohibits a party from making an offer to settle after the 10th day
before the date set for trial, except that a party may make an offer to
settle that is a counteroffer on or before the seventh day before the date
set for the trial.  Provides that the parties are not required to file an
offer to settle. 

Sec. 42.022.  ACCEPTANCE OF OFFER.  Authorizes a party to accept an offer
to settle on or before 5:00 p.m. on the 14th day after the date the party
received the offer to settle or before the deadline specified in the offer,
whichever is later.  Sets forth criteria for an acceptance of an offer. 

Sec. 42.023.  WITHDRAWING AN OFFER.  Authorizes a party to withdraw an
offer to settle by a writing served on the party to whom the offer was made
before the party accepts the offer.  Prohibits a party from accepting an
offer to settle after it is withdrawn.  Prohibits a party from withdrawing
an offer to settle after it has been accepted.  Provides that an offer to
settle does not entitle a party to recover litigation costs, if the party
withdraws the offer. 

Sec. 42.024.  REJECTION OF OFFER.  Sets forth conditions under which an
offer to settle a claim is rejected. 

Sec. 42.025.  AWARD OF LITIGATION COSTS.  Authorizes a party to recover
litigation costs in an offer to settle claims between the party and another
party under certain conditions. Requires litigation costs awarded under
this section to include only those costs incurred by the party who made the
offer to settle after the rejection of the earliest offer to settle which,
if it had been accepted, would have been more favorable to the person who
rejected the offer than the judgment.  Requires each element of litigation
awarded under this chapter to be both reasonable and necessary to the
prosecution or defense of the action.  Authorizes the court to review and
reduce an award of litigation costs as required. 

Sec. 42.026.  AMOUNT OF ATTORNEY'S FEES.  Prohibits a party from recovering
attorney's fees as litigation costs under this chapter unless the party was
represented by an attorney.  Requires the court to limit attorney's fees
for a claimant against a defendant to onethird of the amount of damages
recovered by the claimant from the defendant on the claims that were the
subject of the offer to settle.  Requires the court to limit attorney's
fees for a defendant against a claimant to one-third the amount of damages
sought by the claimant against the defendant at the time the claimant
rejected the offer to settle. 
Sec. 42.027.  LIMITATION ON LITIGATION COSTS.  Prohibits the amount of
litigation costs awarded against the claimant in an action for personal
injury or death from exceeding the amount of the damages recovered by the
claimant in the action. 
Sec. 42.028.  EVIDENCE NOT ADMISSIBLE.  Establishes that evidence relating
to an offer to settle is not admissible, except in an action to enforce the
settlement or obtain litigation costs.  Prohibits the provisions of this
chapter from being made known to a jury through any means, including voir
dire, introduction into evidence, instruction, or argument, except in an
action or proceeding described in this section. 

SECTION 2.Effective date: September 1, 1999.
  Makes application of this Act prospective.

SECTION 3.Emergency clause.