Perry signs 'loser pays' lawsuit reform into law

Texas Gov. Rick Perry signs HB 274 into law on May 30. Perry was joined by the bill's author, Rep. Brandon Creighton, far left, and Senate sponsor Sen. Joan Huffman, far right.

Gov. Rick Perry on Monday signed a bill that will implement a "loser pays" system to stop frivolous lawsuits in Texas.

House Bill 274 enacts several measures that supporters say will streamline and lower the cost of litigation in Texas courts, allowing parties to resolve disputes more quickly, more fairly and less expensively.

"HB 274 provides defendants and judges with a variety of tools that will cut down on frivolous claims in Texas," Gov. Perry said. "This important legislation will help make Texas that much more attractive to employers seeking to expand or relocate from countries all over the world by allowing them to spend less time in court and more time creating jobs."

Under the bill, some civil plaintiffs who sue and lose will be required to pay the court costs and attorney fees of those they are suing. The law creates expedited civil actions for cases less than $100,000 and allows judges to dismiss meritless lawsuits early in the process.

Gov. Perry was joined at the signing ceremony by Rep. Brandon Creighton, R-Conroe, the House author of the bill, and Sen. Joan Huffman, R-Houston, sponsor of the bill for the Senate.

"House Bill 274 signifies a major landmark for tort reform in Texas," Rep. Creighton said. "I am pleased with the outcome and am positive that this bill, now signed into law by Governor Perry, will make litigation in Texas fair, expedient, and affordable - helping to create jobs, make plaintiffs whole and protect defendants from meritless cases."

Several trial lawyer groups and the AFL-CIO opposed the bill, claiming it would give corporations the upper hand in lawsuits and prevent some individuals with legitimate claims from filing suit.

Huffman worked to negotiate a compromise between trial lawyer groups and businesses. The trial lawyers agreed to support the Senate version of the bill after the provision that allows judges to immediately dismiss frivolous lawsuits was added.

"Texas remains a national leader of tort reform with the signing of HB 274. The legislation curtails the frivolous lawsuits that can harm individuals and small businesses and fosters a more efficient and accessible court system for all parties," Sen. Huffman said. "I was pleased to sponsor the bill in the Senate and thank my colleagues for supporting these important improvements to our legal climate."

The law goes into effect Sept. 1.

Highlights of HB 274

  • Allows a trial court to dismiss a frivolous lawsuit immediately if there is no basis in law or fact for the lawsuit; 

  • Allows a trial judge to send a question of law directly to the appellate court without requiring all parties to agree if a ruling by a court of appeals could decide the case; 

  • Allows plaintiffs seeking less than $100,000 to request an expedited civil action; and 

  • Encourages the timely settlement of disputes and helping prevent a party from extending litigation by seeking a "home run" if they have already been offered a fair settlement.

  • More Stories