By Clark H.B. No. 61 77R1456 DAK-F A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to the settlement of certain civil 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. OFFER OF SETTLEMENT 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 (5) "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 2-27 chapter. 3-1 (b) To be effective as an election and waiver, the 3-2 governmental unit must make the election and waiver specifically 3-3 and affirmatively by a writing filed with the court on or before 3-4 the 45th day after the date the governmental unit files its 3-5 original petition or original answer. 3-6 (c) An election and waiver is effective only in the action 3-7 in which it is filed without regard to whether the action is 3-8 subsequently joined or consolidated with another action. 3-9 Sec. 42.004. MODIFICATION OF TIME LIMITS. A court may 3-10 modify the time limits specified in this chapter in an order issued 3-11 following a pretrial conference directed pursuant to Rule 166, 3-12 Texas Rules of Civil Procedure. 3-13 Sec. 42.005. SERVICE. When this chapter requires a writing 3-14 to be served on another party, service is adequate if it is 3-15 performed in a manner described in Rule 21a, Texas Rules of Civil 3-16 Procedure. 3-17 (Sections 42.006-42.020 reserved for expansion 3-18 SUBCHAPTER B. OFFER TO SETTLE; 3-19 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; 3-27 (3) must specify the terms by which the claims may be 4-1 settled; 4-2 (4) must specify a deadline by which the offer must be 4-3 accepted; 4-4 (5) may not include a demand for litigation costs 4-5 except for costs of court; 4-6 (6) must offer to allow a judgment to be entered 4-7 consistent with the terms of the offer; and 4-8 (7) must be served on the party to whom the offer is 4-9 made. 4-10 (c) A party may not make an offer to settle a claim under 4-11 this section before the 45th day after the date the defendant filed 4-12 the first responsive pleading to the claim. 4-13 (d) A party may not make an offer to settle under this 4-14 section after the 10th day before the date set for trial, except 4-15 that a party may make an offer to settle that is a counteroffer on 4-16 or before the seventh day before the date set for trial. 4-17 (e) The parties are not required to file with the court an 4-18 offer to settle. 4-19 Sec. 42.022. ACCEPTANCE OF OFFER. (a) A party may accept 4-20 an offer to settle on or before 5:00 p.m. on the 14th day after the 4-21 date the party received the offer to settle or before the deadline 4-22 specified in the offer, whichever is later. 4-23 (b) Acceptance of an offer must be: 4-24 (1) in writing; and 4-25 (2) served on the party who made the offer. 4-26 Sec. 42.023. WITHDRAWING AN OFFER. (a) A party may 4-27 withdraw an offer to settle by a writing served on the party to 5-1 whom the offer was made before the party accepts the offer. A 5-2 party may not accept an offer to settle after it is withdrawn. A 5-3 party may not withdraw an offer to settle after it has been 5-4 accepted. 5-5 (b) If a party withdraws an offer to settle, that offer does 5-6 not entitle the party to recover litigation costs. 5-7 Sec. 42.024. REJECTION OF OFFER. For purposes of this 5-8 chapter, an offer to settle a claim is rejected if: 5-9 (1) the party to whom the offer was made rejects the 5-10 offer by a writing served on the party making the offer; or 5-11 (2) the offer is not withdrawn and is not accepted 5-12 before the deadline for accepting the offer. 5-13 Sec. 42.025. AWARD OF LITIGATION COSTS. (a) A party who 5-14 made an offer to settle the claims between that party and the party 5-15 to whom the offer was made may recover litigation costs provided: 5-16 (1) the offer to settle was rejected; 5-17 (2) the claims were tried, proceeded to a verdict, and 5-18 the court entered a judgment on the claims; 5-19 (3) if a party sought monetary damages: 5-20 (A) the amount of monetary damages awarded on 5-21 the claims in the judgment is more favorable to the party who made 5-22 the offer than the offer to settle the claims; and 5-23 (B) the difference between the amount of 5-24 monetary damages awarded on the claims in the judgment and the 5-25 amount of the offer to settle the claims is equal to or greater 5-26 than 10 percent of the amount of the offer to settle the claims; 5-27 and 6-1 (4) if a party sought nonmonetary relief, the judgment 6-2 is as favorable or more favorable to the party who made the offer 6-3 to settle the claims. 6-4 (b) Litigation costs awarded to a party under this section 6-5 include only those costs incurred by the party who made the offer 6-6 to settle after the rejection of the earliest offer to settle 6-7 which, if it had been accepted, would have been more favorable to 6-8 the person who rejected the offer than the judgment. 6-9 Sec. 42.026. AMOUNT OF ATTORNEY'S FEES. (a) A party may 6-10 not recover attorney's fees as litigation costs under this chapter 6-11 unless the party was represented by an attorney. 6-12 (b) The court shall limit the amount of attorney's fees 6-13 included in litigation costs awarded to a claimant against a 6-14 defendant under this chapter to one-third of the amount of damages 6-15 recovered by the claimant from the defendant on the claims that 6-16 were the subject of the offer to settle. 6-17 (c) The court shall limit the amount of attorney's fees 6-18 included in litigation costs awarded to a defendant against a 6-19 claimant under this chapter to one-third of the amount of damages 6-20 sought by the claimant against the defendant at the time the 6-21 claimant rejected the offer to settle. 6-22 Sec. 42.027. LIMITATION ON LITIGATION COSTS. (a) The 6-23 amount of litigation costs awarded against the claimant in an 6-24 action for personal injury or death may not exceed the amount of 6-25 the damages recovered by the claimant in the action. 6-26 (b) Each element of litigation costs awarded under this 6-27 chapter must be both reasonable and necessary to the prosecution or 7-1 defense of the action. 7-2 (c) The court may review and reduce an award of litigation 7-3 costs as justice requires. 7-4 Sec. 42.028. EVIDENCE NOT ADMISSIBLE. (a) Evidence 7-5 relating to offers to settle is not admissible except in an action 7-6 to enforce the settlement or in a proceeding to obtain litigation 7-7 costs under this chapter. 7-8 (b) Except in an action or proceeding described in 7-9 Subsection (a), the provisions of this chapter may not be made 7-10 known to the jury through any means, including voir dire, 7-11 introduction into evidence, instruction, or argument. 7-12 SECTION 2. This Act takes effect September 1, 2001, and 7-13 applies only to a civil action described by Chapter 42, Civil 7-14 Practice and Remedies Code, as added by this Act, commenced on or 7-15 after the effective date of this Act. An action that commenced 7-16 before the effective date of this Act is governed by the law in 7-17 effect immediately before that date, and that law is continued in 7-18 effect for that purpose.