Following the lead of Texas Gov. Rick Perry in support of a loser pays tort reform initiative, two Texas legislators have filed bills that could make the reforms a reality.
Under a loser pays system, a losing plaintiff would be required to pay the court costs of the defendants when a court determines that a lawsuit is groundless or a jury determines a suit is frivolous.
State Sen. Joan Huffman, R-Southside Place, and State Rep. Brandon Creighton, R-Conroe, submitted their bill proposals on March 11.
"The lawsuit reforms we won in 2003 played a major role in the strength of our economy, and it is time for the next phase of reform, which is a 'loser pays' system that provides added protections for innocent people fraudulently targeted by frivolous suits," Rep. Creighton said to Texas Insider about a week before filing HB 274. "A 'loser pays' reform is necessary to ensure the integrity of our civil justice system so that innocent parties on both sides are protected."
Texans for Lawsuit Reform applauded the governor's "tort reform package."
"Gov. Perry is the most committed and effective pro-lawsuit reform governor in America," said Richard Weekley, chairman and CEO of Texans for Lawsuit Reform. "On his watch, Texas has enacted tort reforms that have resulted in restored respect for the law, record job growth, and much improved access to doctors and health care, including a mass influx of physicians to our state."
"The goal of the Governor's tort reform legislation – HB 274 and SB 13—is to bring more efficiency to litigation so that it is less time-consuming and costly to the parties and to impose risk on persons who try to pursue abusive litigation. These are also TLR's goals," Weekley said.
Huffman's SB 13 states that litigation costs can be recovered by the prevailing party in civil suits for services, labor and materials; lost or damaged freight; killed or injured stock; contracts or defamation.
The bill states a defendant who makes a settlement offer to a claimant seeking monetary relief shall recover litigation costs from the claimant if the settlement offer is rejected, the court signs judgment on the claim, the amount of monetary relief to the claimant in the judgment is more favorable to the defendant who made the settlement offer than the settlement offer.
Huffman's proposed bill would also order the Texas Supreme Court to conduct a study to determine the most effective method to implement a system in which the prevailing party in a civil action may recover its attorney's fees, court costs and other litigation costs from adverse parties. The supreme court would report the findings of the study to the legislature by December 2012.
"The system should allow a defendant to determine if the fee-shifting system would apply to a lawsuit and should discourage the filing of frivolous lawsuits," Huffman wrote.
Creighton's House bill, HB 274, contains similar language, and defines "litigation costs."
"Litigation costs include reasonable and necessary attorney's fees, reasonable and necessary travel expenses, reasonable fees for not more than two testifying expert witnesses and court costs," Creighton wrote.
Attorney liability is also addressed in HB 274.
"If the trier of fact determines that a civil action is an abusive civil action, an attorney of record for the party against whom litigation costs are recoverable is liable to the prevailing party, jointly and severally, for the amount of the litigation costs awarded."
In a case in which the determination of whether a civil action is an abusive civil action
is submitted to a jury, the charge to the jury must ask whether the civil action prosecuted by the claimant was an abusive civil action.
"The following instruction must be included in the charge: 'You are instructed that an abusive civil action is a civil action that a reasonable person would conclude is an abuse of the civil justice process,'" the bill states.
Weekley said TLR will work with the governor, Sen. Huffman and Rep. Creighton as the bills make their way through the legislative process.