By Clark H.B. No. 1524 Line and page numbers may not match official copy. Bill not drafted by TLC or Senate E&E. A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the awarding of litigation costs in certain civil 1-3 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. LITIGATION COSTS FOLLOWING AN 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 to recover monetary damages 1-11 or for other relief, including a counterclaim, cross-claim, or 1-12 third-party claim. The term does not include a claim for 1-13 injunctive relief or for litigation costs. 1-14 (2) "Claimant" means a person making a claim. 1-15 (3) "Defendant" means a person from whom a claimant 1-16 seeks recovery of damages on a claim, including a counterdefendant, 1-17 cross-defendant, or third-party defendant. 1-18 (4) "Litigation costs" means costs actually incurred 1-19 that are directly related to preparing an action for trial and 1-20 actual trial expenses, including: 1-21 (A) attorney's fees; 2-1 (B) costs of court; 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 or 2-6 compromise a claim made in compliance with Section 42.021. 2-7 Sec. 42.002. APPLICABILITY AND EFFECT. (a) This chapter 2-8 does not apply to: 2-9 (1) a class action; 2-10 (2) a shareholder's derivative action; 2-11 (3) an action brought under the Deceptive Trade 2-12 Practices-Consumer Protection Act (Sections 17.41 et seq., Business 2-13 & Commerce Code); 2-14 (4) an action brought under the Family Code; 2-15 (5) an action to collect workers' compensation 2-16 benefits under Subtitle A, Title 5, Labor Code; or 2-17 (6) an action for which another statute specifically 2-18 authorizes recovery of attorney's fees or litigation costs by the 2-19 prevailing party. 2-20 (b) This chapter does not limit or affect the ability of any 2-21 person to make an offer to settle or compromise a claim that does 2-22 not comply with this chapter. A party's offer to settle or 2-23 compromise that does not comply with Section 42.021 does not 2-24 entitle the party to recover litigation costs under this section. 2-25 Sec. 42.003. ELECTION BY GOVERNMENTAL UNITS; WAIVER. 3-1 (a) This chapter does not apply to an action by or against the 3-2 state, any unit of state government, or any political subdivision 3-3 of the state unless the governmental unit expressly elects both to 3-4 seek recovery of litigation costs under this chapter and to waive 3-5 immunity from liability for litigation costs awarded under this 3-6 chapter. 3-7 (b) To be effective as an election and waiver, the 3-8 governmental unit must make the election and waiver specifically 3-9 and affirmatively by a writing filed with the court within 45 days 3-10 of the filing of the governmental unit's original petition or 3-11 original answer. 3-12 (c) An election and waiver is effective only in the action 3-13 in which it is filed, even if the action is subsequently joined or 3-14 consolidated with another action. 3-15 Sec. 42.004. MODIFICATION OF TIME LIMITS. A court may 3-16 modify the time limits specified in this chapter in an order issued 3-17 following a pretrial conference directed pursuant to Rule 166, 3-18 Texas Rules of Civil Procedure. 3-19 Sec. 42.005. SERVICE. When this chapter requires a writing 3-20 to be served on another party, service is adequate if it is 3-21 performed in a manner described in Rule 21a, Texas Rules of Civil 3-22 Procedure. 3-23 (Sections 42.006 to 42.020 reserved for expansion 4-1 SUBCHAPTER B. OFFER TO SETTLE; 4-2 AWARDING LITIGATION COSTS 4-3 Sec. 42.021. OFFER TO SETTLE. (a) A party may serve on an 4-4 opposing party an offer to settle all the claims in the action 4-5 between that party and the opposing party. 4-6 (b) The offer to settle: 4-7 (1) must be in writing; 4-8 (2) must state that it is an offer to settle under 4-9 this section; 4-10 (3) must specify the terms by which the claims may be 4-11 settled; 4-12 (4) must specify a deadline by which the offer must be 4-13 accepted; 4-14 (5) may not include a demand for litigation costs 4-15 except for costs of court; 4-16 (6) must offer to allow a judgment to be entered 4-17 consistent with the terms of the offer; and 4-18 (7) must be served on the party to whom the offer is 4-19 made. 4-20 (c) A party may not make an offer to settle a claim under 4-21 this section until the 45th day after the date the defendant filed 4-22 the first responsive pleading to the claim. 4-23 (d) A party may not make an offer to settle under this 4-24 section after the 10th day before the date set for trial, except 4-25 that a party may make an offer to settle that is a counteroffer on 5-1 or before the seventh day before the date set for trial. 5-2 (e) The parties are not required to file with the court an 5-3 offer to settle. 5-4 Sec. 42.022. ACCEPTANCE OF OFFER. (a) A party may accept 5-5 an offer to settle on or before 5:00 p.m. on the 14th day after the 5-6 date the party received the offer to settle or before the deadline 5-7 specified in the offer, whichever is later. 5-8 (b) Acceptance of an offer must be: 5-9 (1) in writing; and 5-10 (2) served on the party who made the offer. 5-11 Sec. 42.023. WITHDRAWING AN OFFER. (a) A party may 5-12 withdraw an offer to settle by a writing served on the party to 5-13 whom the offer was made before the party accepts the offer. A 5-14 party may not accept an offer to settle after it is withdrawn. A 5-15 party may not withdraw an offer to settle after it has been 5-16 accepted. 5-17 (b) If a party withdraws an offer to settle, that offer does 5-18 not entitle the party to recover litigation costs. 5-19 Sec. 42.024. REJECTION OF OFFER. For purposes of this 5-20 chapter, an offer to settle a claim is rejected if: 5-21 (1) the party to whom the offer was made rejects the 5-22 offer by a writing served on the party making the offer; or 5-23 (2) the offer is not withdrawn and is not accepted 5-24 before the deadline for accepting the offer. 5-25 Sec. 42.025. AWARD OF LITIGATION COSTS. (a) A party who 6-1 made an offer to settle the claims between that party and the party 6-2 to whom the offer was made may recover litigation costs provided: 6-3 (1) the offer to settle was rejected; 6-4 (2) the claims were tried, proceeded to a verdict, and 6-5 the court entered a judgment on the claims; 6-6 (3) if a party sought monetary damages: 6-7 (A) the amount of monetary damages awarded on 6-8 the claims in the judgment is more favorable to the party who made 6-9 the offer than the offer to settle the claims, and 6-10 (B) the difference between the amount of 6-11 monetary damages awarded on the claims in the judgment and the 6-12 amount of the offer to settle the claims is equal to or greater 6-13 than 10 percent of the amount of the offer to settle the claims; 6-14 and 6-15 (4) if a party sought nonmonetary relief, the judgment 6-16 is as favorable or more favorable to the party who made the offer 6-17 to settle the claims. 6-18 (b) Litigation costs awarded to a party under this section 6-19 shall include only those costs incurred by the party who made the 6-20 offer to settle after the rejection of the earliest offer to settle 6-21 which, if it had been accepted, would have been more favorable to 6-22 the person who rejected the offer than the judgment. 6-23 (c) Each element of litigation costs awarded under this 6-24 chapter must be both reasonable and necessary to the prosecution or 6-25 defense of the action. 7-1 (d) The court may review and reduce an award of litigation 7-2 costs as justice requires. 7-3 Sec. 42.026. AMOUNT OF ATTORNEY'S FEES. (a) A party may 7-4 not recover attorney's fees as litigation costs under this chapter 7-5 unless the party was represented by an attorney. 7-6 (b) The court shall limit the amount of attorney's fees 7-7 included in litigation costs awarded to a claimant against a 7-8 defendant under this chapter to one-third of the amount of damages 7-9 recovered by the claimant from the defendant on the claims that 7-10 were the subject of the offer to settle. 7-11 (c) The courts shall limit the amount of attorney's fees 7-12 included in litigation costs awarded to a defendant against a 7-13 claimant under this chapter to one-third of the amount of damages 7-14 sought by the claimant against the defendant at the time the 7-15 claimant rejected the offer to settle. 7-16 Sec. 42.027. LIMITATION ON LITIGATION COSTS. The amount of 7-17 litigation costs awarded against the claimant in an action for 7-18 personal injury or death may not exceed the amount of the damages 7-19 recovered by the claimant in the action. 7-20 Sec. 42.028. EVIDENCE NOT ADMISSIBLE. (a) Evidence 7-21 relating to offers to settle is not admissible except in an action 7-22 to enforce the settlement or in a proceeding to obtain litigation 7-23 costs under this chapter. 7-24 (b) Except in an action or proceeding described in 7-25 Subsection (a), the provisions of this chapter may not be made 8-1 known to the jury through any means, including voir dire, 8-2 introduction into evidence, instruction, or argument. 8-3 SECTION 2. This Act takes effect September 1, 1999, and 8-4 applies only to a civil action described by Chapter 42, Civil 8-5 Practice and Remedies Code, as added by this Act, commenced on or 8-6 after the effective date of this Act. An action that commenced 8-7 before the effective date of this Act is governed by the law in 8-8 effect immediately before that date, and that law is continued in 8-9 effect for that purpose. 8-10 SECTION 3. The importance of this legislation and the 8-11 crowded condition of the calendars in both houses create an 8-12 emergency and an imperative public necessity that the 8-13 constitutional rule requiring bills to be read on three several 8-14 days in each house be suspended, and this rule is hereby suspended.