5/10/2011 11:27 AM
The House last night passed the governor's omnibus tort reform bill , HB 274 by Rep. Brandon Creighton (R-Conroe). The bill has been nicknamed “loser pays” because one of its provisions would require in certain cases that the loser of the lawsuit pay the victor’s attorney’s fees, though the bill does a lot more than just that provision. Basically, the bill expands and builds upon the concepts first passed into Texas law in 2003 in that year's omnibus tort reform bill, House Bill 4.
“I applaud the House and Rep. Brandon Creighton’s leadership for moving Texas one step closer to implementing a loser pays system that will help expedite legitimate legal claims and crack down on junk lawsuits," said Gov. Rick Perry. "This legislation will also protect Texas jobs and stimulate economic opportunity by relieving Texans and employers of the costs and burdens created by frivolous and drawn-out lawsuits. I encourage the Senate to quickly take action on this important legislation.”
Under the bill, the prevailing party in a breach of contract lawsuit, rather than only the claimant, may recover reasonable attorney's fees from an individual, corporation, or other legal entity if a claim is for breach of an oral or written contract.
The bill also expands the offer of settlement provision from House Bill 4. Opponents, including Rep. Craig Eiland (D-Galveston), noted that that provison of the bill would sometimes require the lawsuit winner to pay attorneys’ fees. Offer of settlement allows the defendant to make a settlement offer and a plaintiff to make a counter-offer. If the jury verdict differs by more than 20 percent from the offer, attorneys fees shift. If a plaintiff rejects a settlement offer and the jury verdict is less than 80 percent of the offer, the plaintiff would pay the defendant's attorney's fees from the time the offer was rejected. Once a defendant invokes the provision, fee-shifting also would apply to a defendant's rejection of a plaintiff counter-offer
In 2003 the tort reform bill established a floor so that the plaintiff would never have to pay out of his pocket somebody else’s attorneys’ fees -- the judgment obtained by the plaintiff would be offset by the shifted attorneys fees. HB 274 would require plaintiffs who rejected a settlement offer and did more than 20 percent worse at trial to pay attorneys fees out of pocket, if those shifted fees exceeded the plaintiff's recovery.
The bill also directs the Supreme Court to make it easier to dismiss lawsuits that do not have merit. It directs the court to create a simplified procedure for claims under $100,000. It allows appeal of certain cases where the law is ambiguous. The bill states that courts may not imply causes of actions from state statues. Any new cause of action must be created directly and explicitly. The bill also prohibits the use of non-US law as controlling precedent in Texas courts.
Rep. Eddie Lucio III (D-Brownsville) brought an amendment to clarify that the bill would not apply to family law, or divorce cases. The amendment aimed to avoid dissuading a concerned parent, whose child is being abused by the other parent’s new spouse, from filing for custody for fear of having to pay attorneys’ fees. “You don’t want to close the door to family matters because it is cost-prohibitive,” Lucio said. Although originally voted down, it was reconsidered and Creighton declared it acceptable. The amendment then passed without objection.
Rep. Roland Gutierrez (D-San Antonio) amended the bill to allow taxpayers to recover attorneys fees when challenging appraisal districts in court over their property values for tax purposes.
The bill passed to engrossment as amended, 96-49. It heads to the Senate now.
Texans for Lawsuit Reform president Richard Trabulsi, Jr. praised the House for passing the bill. "HB 274 will increase the efficiency of our courts by instituting less costly and time consuming court procedures. It also provides incentives for fair and early settlements and imposes risk on those who pursue meritless or abusive lawsuits," he said. TLR has set up a website (www.balancetexascourts.com) to promote the bill.
William Lutz contributed to this blog post