TLR STATEMENT ON FINAL PASSAGE OF HB 274
Omnibus Tort Reform Bill Marks the Most Significant Achievement in Lawsuit Reform
Since SB 15 (2005) and HB 4 (2003)

(Austin, TX) HB 274, the 2011 Omnibus Tort Reform Bill, gained final passage on the floor of the Texas House today with a vote of 130 to 13.  The legislation is now headed to Governor Rick Perry for his signature.  TLR President Richard J. Trabulsi Jr., said:

“HB 274 is the most significant legislation impacting the Texas civil justice system since SB 15 in 2005 (asbestos litigation reform) and HB 4 in 2003 (The Omnibus Tort Reform Act).  This bill, which was bitterly opposed by the Texas Trial Lawyers Association until the last minutes of deliberation in the halls of the Senate, has gained final passage through the energetic leadership of Gov. Rick Perry, Lt. Gov. David Dewhurst and Speaker Joe Straus.  HB 274’s sponsors, Rep. Brandon Creighton (R-Conroe)and Sen. Joan Huffman (R-Southside Place), worked tirelessly on the legislation.  Rep. Jim Jackson, (R-Carrollton), Chairman of the House Judiciary and Civil Jurisprudence Committee and Sen. Robert Duncan (R-Lubbock), Chairman of the Senate State Affairs Committee, were instrumental in the development of the bill.  Calendars Chair Todd Hunter, (R-Corpus Christi) also played a crucial role, as he did on tort issues in the 2009 session.”

The major provisions of the Omnibus Tort Bill of 2011 were part of Gov. Perry’s campaign platform last year and he actively advocated for the Bill in the legislative process.  Both Speaker Straus and Lt. Governor Dewhurst provided parliamentary leadership at critical times to assure passage of HB 274.

As with HB 4 in 2003, the Texas House of Representatives took the lead in passing this important omnibus tort bill.  Besides Speaker Straus, Rep. Creighton and Chairman Jackson, several other Members had critical roles in the development and passage of HB 274, including Representatives Tim Kleinschmidt (R-Lexington) and Kenneth Sheets (R-Dallas), who were active in crafting and advocating the offer of settlement provision. Rep. Tryon Lewis (R-Odessa), who served as a state district judge for 21 years, crafted and advocated the responsible third party provision of the bill. Representatives Jerry Madden (R-Richardson), Sarah Davis (R-West University Place),and Lewis served on the Subcommittee handling HB 274.  Committee Members Beverly Woolley (R-Houston),Dwayne Bohac, (R-Houston)and Connie Scott, (R-Corpus Christi),consistently supported the bill.

In the Senate the Lt. Governor and Sen. Huffman worked hard to achieve the necessary votes through negotiations between the stakeholders.  Chairman Duncan was active in the negotiations. While the bill produced by the Senate process was a less pure and sweeping bill than the one passed by the House, the legislation in its final form significantly improves Texas jurisprudence and received all 31 Senators’ votes as well as 130 Members of the House.

HB 274 contains the following civil justice reforms: 

Meritless Lawsuits Can Be Dismissed Early

HB 274 instructs the Texas Supreme Court to write new procedural rules modernizing our legal procedure for evaluating whether lawsuits have any legal basis early in a lawsuit.  Such a procedure is commonly called a “motion to dismiss” procedure.  Federal courts and 42 states utilize such a procedure and have for decades.  It  is well-tested and works well all across the country.  It allows courts to dismiss cases that should not have been filed, and requires courts to assess fees and costs against losing parties. 

Smaller Claims Can Be Litigated More Quickly and Less Expensively

HB 274 also instructs the Texas Supreme Court to write new procedural rules to expedite cases in which the amount in dispute is $100,000 or less.  When you have a relatively small claim, it can sometimes be prohibitively expensive and time consuming to litigate the case through a trial.  HB 274 seeks to establish an efficient process by which smaller claims can be heard in court without the expenditure of so much time and money as to make recovery meaningless.

Controlling Questions of Law Can Be Decided Earlier in a Lawsuit

Texas will now adopt a procedure for getting answers to certain types of difficult legal questions that will determine the outcome in a case without the need for or the expense of a trial.  These types of legal questions are called controlling questions of law.  They do not come up in most cases, but when they do, it can save everyone enormous amounts of time and expense if the appellate courts can resolve the controlling question of law prior to trial.  Both the trial judge and the appellate court judges need to agree that it should be used.  This procedure has been available in federal courts for a long time and it works.

Certain Litigation Costs Can Be Shifted To a Party Rejecting a Settlement Offer

HB 274 also amends our current law on offer of settlement relating to the allocation of litigation costs when a party makes a reasonable settlement offer, but the offer is rejected.  The offer of settlement law is designed to encourage parties in a lawsuit to make reasonable settlement offers earlier in cases rather than later.  Most cases settle, few go all the way to trial.  If we can encourage parties to settle earlier, it will save everyone time and money.  The idea behind the offer of settlement provision is that if you turn down a reasonable offer to settle a lawsuit you might have to pay the other side’s litigation costs because it is your fault that the lawsuit kept going and kept costing time and money.  If a person is unreasonable in keeping a lawsuit going when it should have stopped, that person ought to pay for imposing those costs on the other side.  Our current offer of settlement law does not get used because it does not impose equal financial risk on the parties.  HB 274 corrects this and equalizes the risk of paying litigation costs for both sides.

Statutes of Limitation Defenses Cannot Be Defeated by the Designation of Responsible Third Parties

Our current law relating to the designation and potential joinder of responsible third parties in lawsuits has a flaw that allows parties that are actually in lawsuits to manipulate the system in a way that operates to override statutes of limitation.  The result is that, in certain circumstances, parties could face claims and have to defend themselves in lawsuits when the claims would have otherwise been barred by limitations.  HB 274 corrects this problem and makes clear that statutes of limitation do not get overridden by the law relating to the responsible third party practice.  HB 274 does, however, provide that if the defendant fails to disclose to a plaintiff the existence of a responsible third party in a timely manner and causes a plaintiff to lose the opportunity to join the third party in the lawsuit because limitations has run, the defendant will not get the benefit of designating the third party as a responsible third party.  This places the burdens on the correct parties – those in the lawsuit – and does not force a nonparty to face revived claims that otherwise are barred by limitations.

Texans for Lawsuit Reform, the state’s largest civil justice reform organization, is a bipartisan, volunteer-led coalition with more than 17,000 supporters residing in more than 869 Texas communities and representing 1,253 different businesses, professions and trades. For more information, visit www.tortreform.com.