HBA-TYH H.B. 1524 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 1524 By: Clark Civil Practices 4/26/1999 Introduced BACKGROUND AND PURPOSE Currently, a party is not penalized for threatening expensive litigation in a lawsuit, although an abuse of litigation can be extremely costly to both parties. An innocent civil defendant may be required to pay high litigation expense to fight a claim without merit or may be forced to pay a large settlement to avoid those expenses. At the same time, a civil plaintiff who makes a reasonable settlement offer that is rejected must choose between litigation of a lengthy discovery process and trial against meritless defenses or acceptance of a low settlement to resolve promptly the plaintiff's claims. H.B. 1524 would protect victims of abusive litigation tactics by allowing a party to recover litigation expenses, including reasonable attorney's fees, if a party rejects a fair settlement offer and then wins less, or loses more, at trial. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subtitle C, Title 2, Civil Practice and Remedies Code, by adding Chapter 42, as follows: CHAPTER 42. LITIGATION COSTS FOLLOWING AN OFFER TO SETTLE SUBCHAPTER A. GENERAL PROVISIONS Sec. 42.001. DEFINITIONS. Defines "claim," "claimant," "defendant," "litigation costs," and "offer to settle." Sec. 42.002. APPLICABILITY AND EFFECT. Sets forth the actions to which this chapter does not apply. Provides that this chapter does not limit or affect the ability of any person to make an offer to settle or compromise a claim that does not comply with this chapter. Provides that a party's offer to settle or compromise that does not comply with Section 42.021 does not entitle the party to recover litigation costs under this section. Sec. 42.003. ELECTION BY GOVERNMENTAL UNITS; WAIVER. Provides that this chapter does not apply to actions directly involving any unit of the state government, or any state political subdivision unless the governmental unit expressly elects to both to seek recovery of litigation costs and waive immunity from liability for litigation costs awarded under this chapter. Provides that to be effective as an election and waiver, the governmental unit must make the election and waiver specifically and affirmatively by a writing filed with the court within 45 days of the filing of the governmental unit's original petition or original answer. Provides that an election and waiver is effective only in the action in which it is filed, even if the action is subsequently joined or consolidated with another action. Sec. 42.004. MODIFICATION OF TIME LIMITS. Authorizes a court to modify the time limits specified in this chapter in an order issued following a pretrial conference directed pursuant to Rule 166 (Pretrial Conference), Texas Rules of Civil Procedure. Sec. 42.005. SERVICE. Provides that when a writing is required to be served on another party, service is adequate if service is performed in a manner described in Rule 21a (Methods of Service), Texas Rules of Civil Procedure. SUBCHAPTER B. OFFER TO SETTLE; AWARDING LITIGATION COSTS Sec. 42.021. OFFER TO SETTLE. Authorizes a party to serve on an opposing party an offer to settle all claims in an action between that party and the opposing party. Sets forth criteria for the offer to settle. Prohibits a party from making an offer to settle under this section until the 45th day after the date the defendant filed the first responsive pleading to the claim. Prohibits a party from making an offer to settle after the 10th day before the date set for trial, except that a party may make an offer to settle that is a counteroffer on or before the seventh day before the date set for the trial. Provides that the parties are not required to file an offer to settle. Sec. 42.022. ACCEPTANCE OF OFFER. Authorizes a party to accept an offer to settle on or before 5:00 p.m. on the 14th day after the date the party received the offer to settle or before the deadline specified in the offer, whichever is later. Sets forth criteria for an acceptance of an offer. Sec. 42.023. WITHDRAWING AN OFFER. Authorizes a party to withdraw an offer to settle by a writing served on the party to whom the offer was made before the party accepts the offer. Prohibits a party from accepting an offer to settle after it is withdrawn. Prohibits a party from withdrawing an offer to settle after it has been accepted. Provides that an offer to settle does not entitle a party to recover litigation costs, if the party withdraws the offer. Sec. 42.024. REJECTION OF OFFER. Sets forth conditions under which an offer to settle a claim is rejected. Sec. 42.025. AWARD OF LITIGATION COSTS. Authorizes a party to recover litigation costs in an offer to settle claims between the party and another party under certain conditions. Requires litigation costs awarded under this section to include only those costs incurred by the party who made the offer to settle after the rejection of the earliest offer to settle which, if it had been accepted, would have been more favorable to the person who rejected the offer than the judgment. Requires each element of litigation awarded under this chapter to be both reasonable and necessary to the prosecution or defense of the action. Authorizes the court to review and reduce an award of litigation costs as required. Sec. 42.026. AMOUNT OF ATTORNEY'S FEES. Prohibits a party from recovering attorney's fees as litigation costs under this chapter unless the party was represented by an attorney. Requires the court to limit attorney's fees for a claimant against a defendant to onethird of the amount of damages recovered by the claimant from the defendant on the claims that were the subject of the offer to settle. Requires the court to limit attorney's fees for a defendant against a claimant to one-third the amount of damages sought by the claimant against the defendant at the time the claimant rejected the offer to settle. Sec. 42.027. LIMITATION ON LITIGATION COSTS. Prohibits the amount of litigation costs awarded against the claimant in an action for personal injury or death from exceeding the amount of the damages recovered by the claimant in the action. Sec. 42.028. EVIDENCE NOT ADMISSIBLE. Establishes that evidence relating to an offer to settle is not admissible, except in an action to enforce the settlement or obtain litigation costs. Prohibits the provisions of this chapter from being made known to a jury through any means, including voir dire, introduction into evidence, instruction, or argument, except in an action or proceeding described in this section. SECTION 2.Effective date: September 1, 1999. Makes application of this Act prospective. SECTION 3.Emergency clause.