Texas HB No. 274 Omnibus Tort Reform Bill Passes

Lawsuits are expensive, too expensive for many people.  Even when you know you are right, most average people and small businesses cannot afford to pursue their rights under contracts or seek remedies for other legal wrongs.  When the legal costs and attorneys’ fees surpass the potential recovery, the average person makes the decision to take their losses and move on.

Under new legislation passed by the Texas legislature, the Texas Supreme Court has been directed to adopt new rules to address the high costs and long time periods affecting lawsuits involving damages of $100,000.00 or less.  The new law appears to create a new class of law suits under the title of “Expedited Civil Actions.”

The law requires the Supreme Court to adopt rules: (1) to lower discovery costs and (2) to expedite procedures in these cases involving smaller monetary damages. 

In adopting new rules, the Supreme Court cannot adopt rules that conflict with existing provisions of the Texas family code, property code, tax code or chapter 74 of the Civil Practice and Remedies Code.

Until the Supreme Court adopts the new rules, many questions remain unanswered.  However, the Court may provide some relief to small business people and individuals who suffer damages under $100,000.00.

Another aspect of HB 274 concerns the payment of litigation costs when a settlement offer is made.  Under the new law, litigation costs may be awarded when a qualifying settlement offer is rejected.

In order to qualify for the award of litigation costs, the defendant must make a qualifying settlement offer.  The law provides that the settlement offer must: (1) be in writing; (2) indentify that the offer is being made under chapter 42.003 of the Civil Practice and Remedies Code; (3) state the terms of the settlement; (4) contain a deadline for acceptance; and (5) be served on all parties to whom the settlement offer is made.

If the plaintiff rejects a qualifying settlement offer, litigation costs may be awarded under the current 80/20 statutory framework.  Litigation costs are defined to include court costs, reasonable depositions costs, reasonable fees for not more than two testifying experts and reasonable attorney’s fees.
HB 274 is effective September 1, 2011


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Attorney Mark A. Nacol is board certified in Civil Trial Law by the Texas Board of Legal Specialization

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