By: Ratliff S.B. No. 532
99S0360/1
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the awarding of litigation costs in certain civil
1-2 actions.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subtitle C, Title 2, Civil Practice and Remedies
1-5 Code, is amended by adding Chapter 42 to read as follows:
1-6 CHAPTER 42. LITIGATION COSTS FOLLOWING AN OFFER TO SETTLE
1-7 SUBCHAPTER A. GENERAL PROVISIONS
1-8 Sec. 42.001. DEFINITIONS. In this chapter:
1-9 (1) "Claim" means a claim to recover monetary damages
1-10 or for other relief, including a counterclaim, cross-claim, or
1-11 third-party claim. The term does not include a claim for
1-12 injunctive relief or for litigation costs.
1-13 (2) "Claimant" means a person making a claim.
1-14 (3) "Defendant" means a person from whom a claimant
1-15 seeks recovery of damages on a claim, including a counterdefendant,
1-16 cross-defendant, or third-party defendant.
1-17 (4) "Litigation costs" means costs actually incurred
1-18 that are directly related to preparing an action for trial and
1-19 actual trial expenses, including:
1-20 (A) attorney's fees;
1-21 (B) costs of court;
1-22 (C) reasonable deposition costs; and
1-23 (D) reasonable fees for not more than two expert
1-24 witnesses.
2-1 (6) "Offer to settle" means an offer to settle or
2-2 compromise a claim made in compliance with Section 42.021.
2-3 Sec. 42.002. APPLICABILITY AND EFFECT. (a) This chapter
2-4 does not apply to:
2-5 (1) a class action;
2-6 (2) a shareholder's derivative action;
2-7 (3) an action brought under the Deceptive Trade
2-8 Practices-Consumer Protection Act (Sections 17.41 et seq., Business
2-9 & Commerce Code);
2-10 (4) an action brought under the Family Code;
2-11 (5) an action to collect workers' compensation
2-12 benefits under Subtitle A, Title 5, Labor Code; or
2-13 (6) an action for which another statute specifically
2-14 authorizes recovery of attorney's fees or litigation costs by the
2-15 prevailing party.
2-16 (b) This chapter does not limit or affect the ability of any
2-17 person to make an offer to settle or compromise a claim that does
2-18 not comply with this chapter. A party's offer to settle or
2-19 compromise that does not comply with Section 42.021 does not
2-20 entitle the party to recover litigation costs under this section.
2-21 Sec. 42.003. ELECTION BY GOVERNMENTAL UNITS; WAIVER.
2-22 (a) This chapter does not apply to an action by or against the
2-23 state, any unit of state government, or any political subdivision
2-24 of the state unless the governmental unit expressly elects both to
2-25 seek recovery of litigation costs under this chapter and to waive
2-26 immunity from liability for litigation costs awarded under this
3-1 chapter.
3-2 (b) To be effective as an election and waiver, the
3-3 governmental unit must make the election and waiver specifically
3-4 and affirmatively by a writing filed with the court within 45 days
3-5 of the filing of the governmental unit's original petition or
3-6 original answer.
3-7 (c) An election and waiver is effective only in the action
3-8 in which it is filed, even if the action is subsequently joined or
3-9 consolidated with another action.
3-10 Sec. 42.004. MODIFICATION OF TIME LIMITS. A court may
3-11 modify the time limits specified in this chapter in an order issued
3-12 following a pretrial conference directed pursuant to Rule 166,
3-13 Texas Rules of Civil Procedure.
3-14 Sec. 42.005. SERVICE. When this chapter requires a writing
3-15 to be served on another party, service is adequate if it is
3-16 performed in a manner described in Rule 21a, Texas Rules of Civil
3-17 Procedure.
3-18 (Sections 42.006 to 42.020 reserved for expansion
3-19 SUBCHAPTER B. OFFER TO SETTLE; AWARDING LITIGATION COSTS
3-20 Sec. 42.021. OFFER TO SETTLE. (a) A party may serve on an
3-21 opposing party an offer to settle all the claims in the action
3-22 between that party and the opposing party.
3-23 (b) The offer to settle:
3-24 (1) must be in writing;
3-25 (2) must state that it is an offer to settle under
3-26 this section;
4-1 (3) must specify the terms by which the claims may be
4-2 settled;
4-3 (4) must specify a deadline by which the offer must be
4-4 accepted;
4-5 (5) may not include a demand for litigation costs
4-6 except for costs of court;
4-7 (6) must offer to allow a judgment to be entered
4-8 consistent with the terms of the offer; and
4-9 (7) must be served on the party to whom the offer is
4-10 made.
4-11 (c) A party may not make an offer to settle a claim under
4-12 this section until the 45th day after the date the defendant filed
4-13 the first responsive pleading to the claim.
4-14 (d) A party may not make an offer to settle under this
4-15 section after the 10th day before the date set for trial, except
4-16 that a party may make an offer to settle that is a counteroffer on
4-17 or before the seventh day before the date set for trial.
4-18 (e) The parties are not required to file with the court an
4-19 offer to settle.
4-20 Sec. 42.022. ACCEPTANCE OF OFFER. (a) A party may accept
4-21 an offer to settle on or before 5:00 p.m. on the 14th day after the
4-22 date the party received the offer to settle or before the deadline
4-23 specified in the offer, whichever is later.
4-24 (b) Acceptance of an offer must be:
4-25 (1) in writing; and
4-26 (2) served on the party who made the offer.
5-1 Sec. 42.023. WITHDRAWING AN OFFER. (a) A party may
5-2 withdraw an offer to settle by a writing served on the party to
5-3 whom the offer was made before the party accepts the offer. A
5-4 party may not accept an offer to settle after it is withdrawn. A
5-5 party may not withdraw an offer to settle after it has been
5-6 accepted.
5-7 (b) If a party withdraws an offer to settle, that offer does
5-8 not entitle the party to recover litigation costs.
5-9 Sec. 42.024. REJECTION OF OFFER. For purposes of this
5-10 chapter, an offer to settle a claim is rejected if:
5-11 (1) the party to whom the offer was made rejects the
5-12 offer by a writing served on the party making the offer; or
5-13 (2) the offer is not withdrawn and is not accepted
5-14 before the deadline for accepting the offer.
5-15 Sec. 42.025. AWARD OF LITIGATION COSTS. (a) A party who
5-16 made an offer to settle the claims between that party and the party
5-17 to whom the offer was made may recover litigation costs provided:
5-18 (1) the offer to settle was rejected;
5-19 (2) the claims were tried, proceeded to a verdict, and
5-20 the court entered a judgment on the claims;
5-21 (3) if a party sought monetary damages:
5-22 (A) the amount of monetary damages awarded on
5-23 the claims in the judgment is more favorable to the party who made
5-24 the offer than the offer to settle the claims, and
5-25 (B) the difference between the amount of
5-26 monetary damages awarded on the claims in the judgment and the
6-1 amount of the offer to settle the claims is equal to or greater
6-2 than 10 percent of the amount of the offer to settle the claims;
6-3 and
6-4 (4) if a party sought nonmonetary relief, the judgment
6-5 is as favorable or more favorable to the party who made the offer
6-6 to settle the claims.
6-7 (b) Litigation costs awarded to a party under this section
6-8 shall include only those costs incurred by the party who made the
6-9 offer to settle after the rejection of the earliest offer to settle
6-10 which, if it had been accepted, would have been more favorable to
6-11 the person who rejected the offer than the judgment.
6-12 (c) Each element of litigation costs awarded under this
6-13 chapter must be both reasonable and necessary to the prosecution or
6-14 defense of the action.
6-15 (d) The court may review and reduce an award of litigation
6-16 costs as justice requires.
6-17 Sec. 42.026. AMOUNT OF ATTORNEY'S FEES. (a) A party may
6-18 not recover attorney's fees as litigation costs under this chapter
6-19 unless the party was represented by an attorney.
6-20 (b) The court shall limit the amount of attorney's fees
6-21 included in litigation costs awarded to a claimant against a
6-22 defendant under this chapter to one-third of the amount of damages
6-23 recovered by the claimant from the defendant on the claims that
6-24 were the subject of the offer to settle.
6-25 (c) The courts shall limit the amount of attorney's fees
6-26 included in litigation costs awarded to a defendant against a
7-1 claimant under this chapter to one-third of the amount of damages
7-2 sought by the claimant against the defendant at the time the
7-3 claimant rejected the offer to settle.
7-4 Sec. 42.027. LIMITATION ON LITIGATION COSTS. The amount of
7-5 litigation costs awarded against the claimant in an action for
7-6 personal injury or death may not exceed the amount of the damages
7-7 recovered by the claimant in the action.
7-8 Sec. 42.028. EVIDENCE NOT ADMISSIBLE. (a) Evidence
7-9 relating to offers to settle is not admissible except in an action
7-10 to enforce the settlement or in a proceeding to obtain litigation
7-11 costs under this chapter.
7-12 (b) Except in an action or proceeding described in
7-13 Subsection (a), the provisions of this chapter may not be made
7-14 known to the jury through any means, including voir dire,
7-15 introduction into evidence, instruction, or argument.
7-16 SECTION 2. This Act takes effect September 1, 1999, and
7-17 applies only to a civil action described by Chapter 42, Civil
7-18 Practice and Remedies Code, as added by this Act, commenced on or
7-19 after the effective date of this Act. An action that commenced
7-20 before the effective date of this Act is governed by the law in
7-21 effect immediately before that date, and that law is continued in
7-22 effect for that purpose.
7-23 SECTION 3. The importance of this legislation and the
7-24 crowded condition of the calendars in both houses create an
7-25 emergency and an imperative public necessity that the
7-26 constitutional rule requiring bills to be read on three several
8-1 days in each house be suspended, and this rule is hereby suspended.