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79R1183 AJA-F
By: Van de Putte, Fraser S.B. No. 236
A BILL TO BE ENTITLED
AN ACT
relating to liability for certain unfair methods of competition or
deceptive acts or practices in the business of insurance.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 541.002, Insurance Code, as effective
April 1, 2005, is amended to read as follows:
Sec. 541.002. DEFINITIONS. In this chapter:
(1) "Economic damages" means compensatory damages for
pecuniary loss, including costs of repair and replacement. The
term does not include exemplary damages or damages for physical
pain and mental anguish, loss of consortium, disfigurement,
physical impairment, or loss of companionship and society.
(2) "Intentionally" means actual awareness of the
falsity, unfairness, or deceptiveness of the act or practice on
which a claim for damages under Subchapter D is based, coupled with
the specific intent that the consumer act in detrimental reliance
on the falsity or deception or in detrimental ignorance of the
unfairness. Intention may be inferred from objective
manifestations that indicate that the person acted intentionally or
from facts showing that a defendant acted with flagrant disregard
of prudent and fair business practices to the extent that the
defendant should be treated as having acted intentionally.
(3) "Knowingly" means actual awareness of the falsity,
unfairness, or deceptiveness of the act or practice on which a claim
for damages under Subchapter D is based. Actual awareness may be
inferred if objective manifestations indicate that a person acted
with actual awareness.
(4) [(2)] "Person" means an individual, corporation,
association, partnership, reciprocal or interinsurance exchange,
Lloyd's plan, fraternal benefit society, or other legal entity
engaged in the business of insurance, including an agent, broker,
adjuster, or life and health insurance counselor.
(5) "Residence" means a building:
(A) that is a single-family house, duplex,
triplex, or quadruplex, or a unit in a multiunit residential
structure in which title to the individual units is transferred to
the owners under a condominium or cooperative system; and
(B) that is occupied or to be occupied as the
person's residence.
(6) "Unconscionable action or course of action" means
an act or practice which, to a person's detriment, takes advantage
of the lack of knowledge, ability, experience, or capacity of the
person to a grossly unfair degree.
SECTION 2. Section 541.151, Insurance Code, as effective
April 1, 2005, is amended to read as follows:
Sec. 541.151. PRIVATE ACTION FOR DAMAGES AUTHORIZED. (a)
Except as provided by Subsections (b) and (c), a [A] person who
sustains actual damages may bring an action against another person
for those damages caused by the other person engaging in an act or
practice:
(1) defined by Subchapter B to be an unfair method of
competition or an unfair or deceptive act or practice in the
business of insurance; or
(2) specifically enumerated in Section 17.46(b),
Business and Commerce Code, as an unlawful deceptive trade practice
if the person bringing the action shows that the person relied on
the act or practice to the person's detriment.
(b) A person may not bring an action under this section
against another person, or an entity that could be vicariously
liable for the other person's conduct, for damages caused by the
other person's provision of a professional service, the essence of
which is the provision of advice, judgment, opinion, or a similar
professional skill. This subsection does not apply to a claim for
damages caused by:
(1) an express misrepresentation of a material fact
that cannot be characterized as advice, judgment, or opinion;
(2) a failure to disclose a matter in violation of
Section 541.061(5);
(3) an unconscionable action or course of action that
cannot be characterized as advice, judgment, or opinion;
(4) breach of an express warranty that cannot be
characterized as advice, judgment, or opinion; or
(5) a violation of Section 17.46(b)(26), Business &
Commerce Code.
(c) A person may not bring an action under this section
against another person for a claim arising out of:
(1) an insurance policy or other written contract if:
(A) the contract relates to a transaction, a
project, or a set of transactions related to a single project,
involving total consideration by the person of more than $100,000;
(B) in negotiating the contract the person is
represented by legal counsel who is not directly or indirectly
identified, suggested, or selected by the defendant or an agent of
the defendant; and
(C) the contract does not involve the person's
residence; or
(2) a transaction, project, or set of transactions
relating to the same project, involving total consideration by the
person of more than $500,000, other than a cause of action involving
a person's residence.
SECTION 3. Section 541.152, Insurance Code, as effective
April 1, 2005, is amended to read as follows:
Sec. 541.152. DAMAGES, ATTORNEY'S FEES, AND OTHER RELIEF.
(a) A plaintiff who prevails in an action under this subchapter may
obtain:
(1) the amount of economic damages determined by the
trier of fact [actual damages,] plus court costs and reasonable and
necessary attorney's fees;
(2) an order enjoining the act or failure to act
complained of; and [or]
(3) any other relief the court determines is proper.
(b) If [On a finding by] the trier of fact determines that
the defendant's [defendant] conduct was committed knowingly
[committed the act complained of], the trier of fact may award:
(1) the amount of damages for mental anguish
determined by the trier of fact; and
(2) an amount that does not [to] exceed three times the
amount of economic [actual] damages determined by the trier of
fact.
(c) If the trier of fact determines that the defendant's
conduct was committed intentionally, the trier of fact may award:
(1) the amount of damages for mental anguish
determined by the trier of fact; and
(2) an amount that does not exceed three times the
amount of economic damages and damages for mental anguish
determined by the trier of fact.
SECTION 4. Section 33.002(a), Civil Practice and Remedies
Code, is amended to read as follows:
(a) This chapter applies to:
(1) any cause of action based on tort in which a
defendant, settling person, or responsible third party is found
responsible for a percentage of the harm for which relief is sought;
[or]
(2) any action brought under the Deceptive Trade
Practices-Consumer Protection Act (Subchapter E, Chapter 17,
Business & Commerce Code) in which a defendant, settling person, or
responsible third party is found responsible for a percentage of
the harm for which relief is sought; or
(3) any action brought under Subchapter D, Chapter
541, Insurance Code, in which a defendant, settling person, or
responsible third party is found responsible for a percentage of
the harm for which the relief is sought.
SECTION 5. The changes in law made by this Act apply only to
a cause of action that accrues on or after the effective date of
this Act. A cause of action that accrues before the effective date
of this Act is governed by the law in effect immediately before that
date, and that law is continued in effect for that purpose.
SECTION 6. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect September 1, 2005.