Day 28: Tort Reform Bill Gives High Court New Powers

Texas Supreme Court justices listen to the State of the Judiciary speech on February 23, 2011.
Texas Supreme Court justices listen to the State of the Judiciary speech on February 23, 2011.

31 Days 31 Ways


Throughout the month of August, The Texas Tribune is featuring 31 ways Texans' lives will change come Sept. 1, the date most bills passed by the Legislature — including the dramatically reduced budget — take effect. Check out our story calendar here

Day 28: Under a new tort reform law, the Texas Supreme Court will make rules to expedite lawsuits with claims under $100,000 and to allow judges to dismiss those without merit early on. And it also will grant legal costs to prevailing parties under certain circumstances.

As the debate over a tort reform bill reached a crescendo on the House floor, state Rep. Craig Eiland, D-Galveston, took to the back microphone to call it "the loser pays and sometimes the winner pays too, bill." 

The version of HB 274 that will take effect on Sept. 1 isn't the one that earned the ire of Eiland and many others in the legal community in May. It enacts much narrower cost-shifting provisions and directs the Texas Supreme Court to make changes that, it appears, appease both the plaintiffs' and the defense bars.

 

“I don't expect it to affect my practice at all,” says Fort Worth plaintiff lawyer Brad Parker, who helped negotiate the bill that became law.

Under the law, the high court will develop rules to move lawsuits with claims under $100,000 through the legal system more quickly and get rid of frivolous suits sooner.

Initially, the bill would have allowed winning parties to collect their litigation costs in any breach-of-contract case. It also contained a provision — the one Eiland was referring to — that would have awarded attorney's fees to defendants even if a jury ruled against them if they had previously made an offer to settle, and the jury's final award to the plaintiff was less than 80 percent of that original offer. 

In the bill that became law that’s capped so that defendants in that scenario can’t recover litigation costs that add up to more than a plaintiff's final award from the jury — and adds a measure that would allow the plaintiff to collect fees, too, if they win a verdict that's more than 120 percent of the settlement offer.

The law also creates new procedural rule for Texas courts. For the first time, there will be a “motion to dismiss” for meritless claims before parties can go through the often expensive and time-consuming discovery process. Such a rule already exists in federal court. If a judge grants that motion to dismiss, the losing party will have to pay the other’s attorney’s fees.

The threat of having to pay legal fees will make it more likely that plaintiffs will withdraw suits they know are meritless, says Chip Babcock, a defense lawyer with offices in Houston and Dallas and who chairs the Supreme Court advisory committee that will develop the rules.

Prior to the law passed this session, he said the only practical way to get a lawsuit thrown out of state court would be to file a motion for summary judgment, which often requires discovery.

“You're faced with a situation where in your view the plaintiff does not have a meritorious claim at all and yet you've got to go through discovery before you can bring that to the court's attention,” Babcock said, “That’s always been frustrating from a defendant’s perspective.”

 

On the other side of the courtroom, Parker said he also welcomed the motion to dismiss and the expedited trials for smaller claims.

“As a plaintiff's lawyer, I don't make money off of frivolous lawsuits,” he said, “It's not going to have any impact on good trial lawyer's practice at all.”

Web resources:

Texas Supreme Court Advisory Committee

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