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BANKING, CORPORATE AND COMMERCIAL LAW It was success again, which is much better than success at last, for lobbyists for the Texas Business Law Foundation (TBLF). The Texas Legislature, during the 80th session that ended on May 28, approved H.B. 1737. The legislation updates a massive rewrite of the state’s business laws, which the Legislature first approved in 2003. The Business Organizations Code has been the TBLF’s pet issue for years. “We are very happy about that,” says John Kuhl, a lobbyist for the foundation who is a partner in Sanford & Kuhl in Houston. It’s the second session in a row that the Legislature approved a fixer-upper to the Business Organizations Code, which reorganized, simplified and modernized the state’s business laws. The update this session fixed some little glitches and gaps in the bill. It is also aimed at making it easier for business entities that were in existence before Jan 1, 2006, the effective date of the code, to opt in and comply with the law. Businesses in existence before the law went into effect have until 2010 to comply with it. “That is probably going to be the end of the big kind of massive correction package. I suspect from this point forward, we will be doing more single-shot modifications to each of the different types of business organizations laws,” Kuhl says. The TBLF � whose membership includes in-house lawyers and outside counsel � also supported bills that amended Texas Uniform Commercial Code Article 9, which has to do with secured transactions, and Article 3, which addresses negotiable instruments. S.B. 1540 and S.B. 1541 contained the amendments, says Arthur “Val” Perkins, another lobbyist for the TBLF. Both bills passed, he says. Perkins, a director at Coats Rose Yale Ryman & Lee in Houston, says the TBLF was working on a bill to amend Texas UCC Article 2, which has to do with sale agreements, and Article 2A, which relates to leases. But Perkins says there’s still more work to do on a bill, and the TBLF is hopeful the House Business & Industry Committee will tackle it in an interim study. Kuhl and Perkins say the TBLF was in favor of legislation to impose civil penalties against individuals or companies using so-called botnets � which are a collection of “zombie” computers used for unauthorized purposes � to send spam. The Texas Senate passed S.B. 1009, but the bill didn’t make it out of the Texas House during the leadership dispute in the final days of the session, Kuhl says. “Unfortunately, that was a good piece of legislation that got caught up in that [dispute],” Kuhl says. Perkins says the bill, as proposed, would have provided a method for Internet service providers to recover damages from computer hackers in Texas who use botnets. “It’s a way for legitimate businesses to make it worth their while to try to file actions against the folks who do this kind of stuff,” he says. The TBLF, like Texas banking organizations, monitored several bills, which did not pass, that would have imposed fees on money transfers originating in Texas and going outside the country. Those include S.B. 268, introduced by state Sen. Dan Patrick, R-Houston, which earmarked proceeds for border security. Other bills, introduced by state Rep. Leo Berman, R-Tyler, and state Sen. Royce West, D-Dallas and a partner in West & Gooden, would have raised money for indigent health care. The Independent Bankers Association of Texas (IBAT) and the Texas Bankers Association were also watching those bills. “We are pulled in two different directions in that case,” says John Heasley, general counsel of the Texas Bankers Association. He says federal regulators ask banks to meet the needs of low- and moderate income individuals � many of whom send money out of state � while Texas would be penalizing those individuals by establishing the fees. The banking groups are pleased with H.B. 944, which will not allow a state bank to establish or maintain a branch on the premises of property of an affiliate, if the affiliate engages in a commercial activity. That bill effectively prevents the formation of branches in Texas by retail companies with industrial-loan charters. Such industrial-loan charters allow those businesses to operate state banks. The Federal Deposit Insurance Corp. is considering applications from retailers, such as Home Depot, for industrial-loan charters. Wal-Mart had an application on file but withdrew it. Heasley says the bill was vitally important for his group’s members. “That is a big deal for our community bankers, because many have seen how Wal-Mart dominated many retail environments,” he says. Karen Neeley, general counsel of the IBAT and counsel at Cox Smith Matthews in Austin, says her organization also supported H.B. 2219, which requires process servers to deliver court documents to a registered agent of a bank or credit union, if the financial institution has one. “What we wanted to do was make it clear service of process needs to be on the registered agent if the bank or credit union has one, rather than anybody they find in a branch,” Neeley says. Texas voters, meanwhile, will vote on another constitutional amendment related to home-equity lending, which voters originally approved in 2003. H.J.R. 72, which resulted in the constitutional proposition voters will consider in November, would clarify some issues in the wake of Association of Community Organizations for Reform Now, et al. v. Finance Commission of Texas, et al. That suit filed in state court in Travis County in 2004 challenges the finance commission’s authority to interpret Texas’ home-equity lending laws. The commission oversees the banking and financial industries in Texas. Heasley says the constitutional amendment would clear up some technical issues with home-equity loans, such as what constitutes a preprinted check and what documents lenders must provide to consumers who obtain a home-equity loan. “H.J.R. 72 will, we think, clarify some of the points that are a bit murky right now. We worked with consumer advocates,” Neeley says. “We didn’t get everything. They didn’t get everything. Now it’s a matter of going to a vote of the public in November.” � Brenda Sapino Jeffreys COURTS AND THE JUDICIARY Members of the Texas Legislature created a commission that will recommend judges’ salaries. Then lawmakers dug a little deeper into the state’s pockets to fund two computer software programs to aid the state’s judiciary: an appellate court online case management and e-filing system, plus a computerized system for trial judges to learn more about criminal defendants’ backgrounds. Texas Supreme Court Chief Justice Wallace Jefferson had urged state lawmakers in his Feb. 20 state of the judiciary address to adopt a systematic process for reviewing and setting judicial salaries on a regular basis. “I think judicial compensation went kind of haywire for several years,” Jefferson says. In 1999, Texas voters rejected a proposed constitutional amendment that would have set up a judicial compensation commission to review and set salaries for judges. The state’s judges had to wait seven years before the Legislature passed a bill increasing judicial pay during a special session in 2005. H.B. 3199, sponsored by state Rep. Will Hartnett, R-Dallas, adds Chapter 35 to the Texas Government Code to establish a nine-member commission that will recommend what judges should be paid in a report to the Legislature prior to each session. Among other factors, the commission will consider the compensation to judges in other states and on the federal level, lawyers’ earnings in the private sector and the salary level needed to attract the most highly qualified individuals in Texas “from a diversity of life and professional experiences” to serve in the judiciary. “I’m hoping this commission will bring some sanity to this process,” Jefferson says. “It’s a step in the right direction, trying to get some nonpolitical guidance on judicial compensation,” says Hartnett, a partner in the Hartnett Law Firm. “Judges’ pay has been such a politicized issue for so long that perhaps this will help us move away from that.” In the past, state legislators often have been reluctant to approve judicial pay raises, because doing so would boost their retirement benefits. Legislative pensions are tied to the salaries of district judges. Under H.B. 3199, the governor will appoint the commission members whose appointments the Texas Senate must confirm. No more than three members of the commission can be practicing attorneys. Hartnett says the Senate amended the bill to limit the number of lawyers to ensure that the commission is broad based and to prevent conflicts of interest. During the budgeting process, the Legislature approved funding to begin the process of transforming the state’s appellate courts, which currently are awash in paper, into entities that can communicate electronically. The state’s Supreme Court, Court of Criminal Appeals and 14 intermediate appellate courts had requested $3.6 million to convert to the Texas Appeals Management and E-filing System (TAMES), says 14th Court of Appeals Chief Justice Adele Hedges, chairwoman of the state Council of Chief Justices. In H.B. 1, the state’s general appropriations bill, the Legislature appropriated $2.3 million for the project in 2008 and 2009. “We’ve been promised that additional monies will be funded in the 2010-2011 biennium,” Hedges says. Hedges says Houston’s 1st Court of Appeals and 14th Court already have one component of TAMES. Since September 2005, Hedges says, the 1st Court and the 14th Court have used document management software so that each court internally can circulate and edit documents and vote on opinions electronically. The software, which the Houston courts developed in conjunction with Harris County, will serve as the prototype for the systems to be developed for the other appellate courts, she says. According to statistics Hedges provided, the 14th Court improved its case disposition rate with TAMES, disposing of 1,427 cases during the year ending in August 2006, compared to 1,189 cases the previous year. The statistics show that in the 2006 fiscal year, the 14th Court’s average time to rule in cases with per curiam opinions was two days, compared to two weeks during the prior year. Through TAMES, Hedges says, the appellate courts also will move to electronic filing, which many trial courts already offer. Hedges says the appellate courts currently cannot interface with Texas Online, the official portal where lawyers can file documents with the trial courts. While the appellate courts can accept briefs on compact disks, the briefs must be converted to paper documents, she says. Hedges says the conversion to the TAMES program also will enable the appellate courts to update the electronic case management system they’ve used since about 1990. That will improve the courts’ ability to keep track of everything that goes on in a case and monitor the progress on opinions, she says. “Once we complete this project, we will be at the forefront of all state courts,” Hedges says. In a surprise move, the Legislature also approved funding for a computer program designed to give trial judges more information about individuals who appear before them. During the final days of the session, as a House-Senate conference committee worked out differences between the two chambers’ versions of H.B. 1, state Rep. Warren Chisum, R-Pampa, added a rider to the appropriations for the State Office of Court Administration (OCA) to provide $3 million for an Automated Registry System. “Every district court will be able to pull up instant background checks,” says Chisum, chairman of the House Appropriations Committee. Carl Reynolds, the OCA’s administrative director, says the Automated Registry System will allow a judge to cull through various databases, including the Texas Department of Public Safety’s criminal history files and sex offender registrations. “It’s a way to inform judges about whom they are dealing with,” Reynolds says. Judge Wilford Flowers of Austin’s 147th District Court says such a program could be useful to judges when they decide bail for a defendant. A judge needs to know whether an individual has a previous conviction and how long the sentence was for that conviction, says Flowers, whose court is in Travis County’s criminal division. An even greater concern, he says, is if the individual committed an offense in the judge’s county and is out on bond for committing the same offense in another county. Referring to the registry program, Flowers says, “It sounds like it might be a good use of public funds.” Jefferson says the legislative session also brought some disappointments. S.B. 1204, a major court restructuring bill, died on May 21 after state Rep. Senfronia Thompson, D-Houston, raised a point of order against it in the House. A provision in S.B. 1204 would have transferred the responsibility for appointing the nine regional presiding judges from the governor to the state Supreme Court’s chief justice. Jefferson had backed the proposed change in the appointment authority because the Supreme Court oversees the nine judges. Notes Jefferson: “Constitutionally, we have that obligation, but they are hired by the executive.” � Mary Alice Robbins CRIMINAL LAW AND JUVENILE LAW In toughening the penalties for sexually violent offenses against children younger than 14, the Texas Legislature made it possible for prosecutors to seek the death penalty for defendants previously convicted of the same offenses. “This legislation sends a clear message that we will not hesitate to do what it takes to protect our children from the most evil of offenders,” says state Rep. Debbie Riddle, R-Tomball, author of H.B. 8, known as “Jessica’s Law.” Lt. Gov. David Dewhurst, one of the chief proponents of the legislation, says, “Jessica’s Law will protect countless children from harm, but when one of these heinous crimes does occur, this will allow prosecutors to seek severe and appropriate justice.” The law is named for Jessica Lunsford, a 9-year-old Florida girl whom convicted sex offender John Couey kidnapped, raped and murdered in 2005. A Miami jury found Couey guilty of the child’s murder in March and recommended the death penalty. Williamson County District Attorney John Bradley says he does not think most Texas prosecutors will ask juries to consider the death penalty for offenses that don’t result in homicides. “I don’t think anyone who was involved thought it would be used,” Bradley says. “It was a political statement.” Shannon Edmonds, governmental relations director for the Texas District and County Attorneys Association, says prosecutors are pleased with H.B. 8 as it passed because it gives them more flexibility in prosecuting those who commit sexual offenses against children. But Edmonds also says, “I don’t think any of them are that excited by the death penalty aspects of the bill.” Bradley says questions remain as to whether assessing a death sentence for nonhomicide offenses passes muster under the cruel and unusual punishment clause in the Eighth Amendment of the U.S. Constitution. In a 6-1 decision on May 22, the Louisiana Supreme Court affirmed the death sentence assessed Patrick Kennedy for the rape of his 8-year-old stepdaughter, holding in Louisiana v. Kennedy that “the death penalty in this case is not disproportionate under the Eighth Amendment.” Texas prosecutors are likely to wait for the U.S. Supreme Court to speak on the issue before seeking the death penalty for sexual assaults against children, Bradley says. Austin solo Keith Hampton, co-chairman of the Texas Criminal Defense Lawyers Association’s Legislative Committee, says he does not think prosecutors will use the death penalty, because H.B. 8 provides for life without parole for offenders who commit subsequent violent sexual offenses against children. But Hampton says the specter of the death penalty still raises concerns that child molesters who previously would not have killed their victims might be more willing to do so to avoid the possibility of a death sentence. Edmonds says the most important change under H.B. 8 is the creation of a new offense, continuous sexual abuse of a young child, �21.02 of the Texas Penal Code. The punishment is a 25-year minimum sentence for a first conviction, and a second conviction can result in a death sentence or life in prison. Under �21.02, an offense occurs if the defendant commits two or more acts of sexual abuse against one or more victims age 14 or younger over a period in excess of 30 days. Edmonds says the change eliminates, to some extent, the current law’s requirement that the state elect the specific act for which it is prosecuting a defendant under a particular indictment. The continuing course of conduct is the crime, he says. H.B. 8 also amends �22.021 of the Penal Code to increase the minimum prison term for aggravated sexual assault to 25 years if the victim is younger than age 6 at the time of the offense or the victim is younger than age 14 and suffers serious bodily injury in the attack. One of the concerns, Hampton says, is H.B. 8′s elimination of the statute of limitations for certain sexual offenses against children � aggravated sexual assaults, continuous sexual abuse and indecency with a child. Ten years from now, an individual can claim that as a child he or she was the victim of a relative’s continuing course of sexual abuse and seek prosecution, Hampton says. “How do we know it happened?” he asks. The bill also amends the Texas Code of Criminal Procedure, adding Article 2.021 to require the attorney general, if requested by a local prosecutor, to assist in the investigation and prosecution of sexual offenses in which the victims are younger than age 17. “This is the first time a law has given local officials authority to order around the attorney general, who is a statewide elected official,” Edmonds says. In contrast, the Legislature authorized � but did not require � the attorney general to assist local prosecutors in the prosecution of criminal offenses related to the Texas Youth Commission (TYC). The amendment to Texas Government Code �41.102 is part of major legislation dealing with TYC. Deluged with allegations about the sexual abuse of juveniles who were committed to TYC and alleged cover-ups by TYC staff, state lawmakers passed S.B. 103 to overhaul that agency. “We changed the whole culture,” says state Rep. Jerry Madden, R-Richardson, House sponsor of S.B. 103. Madden says the changes provide more transparency with regard to what happens at TYC. But 98th District Judge Jeanne Meurer, chairwoman of the Travis County Juvenile Board, says the bill “has good intentions with some unintended bad consequences” for the young people it’s meant to protect. The bill replaces the voluntary board that previously had oversight for TYC with a commissioner appointed by the governor. The commissioner will head the agency initially, assisted by a nine-member advisory board. But beginning on Sept. 1, 2009, a seven-member board, also made up of gubernatorial appointees, will govern the agency and select an executive director. State Sen. Juan “Chuy” Hinojosa, D-McAllen, author of S.B. 103, says the bill provides for an inspector general, a commissioned peace officer whose office will investigate alleged criminal wrongdoing at TYC facilities. The bill provides for an independent ombudsman, another gubernatorial appointee, to evaluate services to the youth in TYC and investigate their complaints. Hinojosa, a shareholder in Hinojosa & Powell, says the bill also gives advocacy groups greater access to TYC facilities to provide another way to discover problems at the facilities. “If that kind of stuff gets reported, we’ve got a mechanism for at least having those reports processed and looked at and investigated, which was not going on at all with TYC,” Madden says. However, Meurer says S.B. 103 is too restrictive in many ways. The bill amends Texas Family Code ��54.04 and 54.05 to prevent juvenile courts from committing a youth to TYC for a misdemeanor offense or the violation of probation for a misdemeanor. Under S.B. 103, the courts will have to send youthful misdemeanor offenders to community-based programs. When the new law takes effect on Sept. 1, a court can send a youth involved in seven different assaults against fellow students to a local program, but a youth who commits a one-time assault on a teacher, a felony offense, could face time in a TYC facility. Meurer says the bill determines which youth commits the worse crime by the definition of the offense, without considering the whole picture. If the offense is a misdemeanor, the judge cannot take into consideration the dangerousness of the child or that child’s history, she says. “Realistically, you could have a kid commit six or seven assaults at school over a period of five or six years and the kid never has any consequences other than being committed to a county facility,” says Houston solo Brian Fischer, chairman of the State Bar of Texas Juvenile Law Section. Jill Mata, juvenile division chief in the Bexar County District Attorney’s Office, says a court will be unable to send a 16-year-old boy to TYC if he assaults his girlfriend, who is the mother of his two children, because the assault is a misdemeanor. “He can do that 10 times, and he can’t be sent to TYC,” Mata says. But Meurer says a youth caught with one Valium pill at school can go to TYC, because that is a felony. “I don’t think the Legislature took into account the overall system and how it works,” she says. David Gonzalez, a partner in Austin’s Sumpter & Gonzalez, which handles juvenile law cases, says there also is concern that prosecutors will be less inclined to reduce felony charges to misdemeanors because they want courts to be able to commit the youths to TYC. “The concern is that more kids will be stuck with more felonies,” Gonzalez says. Another provision in the bill of concern to defense attorneys amends Chapter 61 of the state’s Human Resources Code to lower the age at which a youth must be released or transferred to the Texas Department of Criminal Justice (TDCJ) from 21 to 19. Fischer, who is board certified in juvenile law by the Texas Board of Legal Specialization, says lowering the age may cause prosecutors to seek certification of youthful offenders as adults as opposed to offering them determinate sentences. Under current law, youths serving determinate sentences must serve at least three years in TYC for a serious offense such as aggravated robbery but can qualify for parole if they successfully complete their TYC programs before turning 21, thereby avoiding having to serve out their sentences in a TDCJ adult prison. The whole premise of determinate sentencing, Fischer says, is to rehabilitate juveniles who commit serious offenses by giving them a certain number of years to serve and to “hang that over their heads” to encourage them to complete their programs. Riley Shaw, assistant district attorney in the Tarrant County District Attorney’s Office juvenile division, says restricting courts from sending youthful misdemeanor offenders to TYC will make communities less safe in the short run. It will take time and money for communities to replace what TYC has been doing, if that ever can be accomplished, he says. “If we can turn a child around and get him back on the right path, that’s what makes our communities safer in the long run,” says Shaw. Because the new law changes the maximum age for a youth to be in TYC, deterrent sentences may not make sense in some circumstances, and prosecutors will seek certification of a juvenile as an adult, adds Shaw, who says he assisted S.B. 103′s House and Senate sponsors as they worked on the bill. Shaw, who also is board certified in juvenile law, says any change in the law affects prosecutors’ charging and plea decisions. S.B. 103 “absolutely” will affect those decisions, he says. “The bill, in effect, dismantles the determinant sentencing statute [Texas Family Code �53.045],” Mata says. Mata says the law sets minimums on the length of stay for a youth with a determinant sentence. Depending on a youth’s conduct, Mata says, a court may or may not transfer him to an adult prison to complete his sentence, which could be up to 40 years. Under S.B. 103, a 16-year-old would be unable to complete the minimum three-year stay at a TYC facility before he ages out and has go to the penitentiary, she says. “Kids that could bargain at one time for determinant sentences will now be looking at certifications as an adult,” Mata says. Defense attorneys fear what that will mean. Notes Fischer: “I think we’ll see a lot more youthful offenders in prison.” � Mary Alice Robbins ENVIRONMENTAL LAW The 80th Legislature approved a sweeping statewide water planning bill and passed several bills addressing pollution, renewable energy and energy efficiency, but it rejected proposals to deny permits for proposed coal plants and chemical plants. The water bill, which awaits Gov. Rick Perry’s signature, takes initial steps in enacting the Texas Water Development Board’s 2007 state water plan. The board, which is tasked with assessing the state’s water needs, estimates that it would cost $30.7 million to design, construct or implement 4,500 water management strategies and projects it says are needed to meet Texas’ future water needs. While not authorizing or appropriating any new funding, S.B. 3 designates 19 potential sites across Texas for new reservoirs and puts regional planning groups in charge of deciding whether to move forward on those reservoirs. Those regional authorities, says state Rep. Robert Puente, D-San Antonio, chairman of the House Natural Resources Committee and a solo practitioner, have a 2015 deadline to start spending funds on potential new reservoirs or risk the loss of the state’s designation of the reservoir site. S.B. 3, Puente says, also protects “environmental flows,” which are the minimum amount of river flow necessary to maintain the health of bays and estuaries that depend on an adequate mix of fresh and salt water. In addition, Puente says, S.B. 3 takes steps to improve water conservation in Texas. The bill mandates that most cities and utilities write water conversation plans addressing drought planning, leak detection and water re-use, then submit their plans to the Texas Water Conservation Board. A good plan qualifies cities and utilities for “more and better funding” for their water needs, Puente says. Lawmakers faced dozens of bills addressing clean air and global warming concerns. The biggest change affecting clean air law during the session, however, occurred outside the Legislature on Feb. 26, when Kohlberg Kravis Robert & Co. and Texas Pacific Group Inc., two private equity firms, announced their agreement to acquire TXU Corp. for $45 million. The firms vowed to build only three new power plants instead of 11 plants earlier proposed by TXU, and they trumpeted endorsements of the deal by environmental activist groups Environmental Defense and the Natural Resources Defense Counsel. Before the session, power providers sought to build 19 new coal-fired plants to meet the state’s growing energy needs, with TXU Corp. seeking to build 11 of the 19 plants. Perry expedited the permitting process for the proposed plants. Fearing significantly dirtier air in Texas, a coalition of Texas mayors, environmentalists and business leaders assembled to demand that state lawmakers issue a moratorium on granting permits for new coal plants or slow the permitting process pending further study of the new plants’ impact on air quality. Following the TXU announcement, some lawmakers pressed ahead with legislation to make the permitting process for new coal plants more stringent by requiring regulators to examine the cumulative impact of new coal plants. The state Senate considered a bill preventing the Texas Commission on Environmental Quality (TCEQ) from permitting new plants that would impact the state’s plan to comply with the federal Clean Air Act or cause regions that meet federal air quality standards to then fall short of those standards because of increased pollution. Ultimately, lawmakers did not beef up the permitting process. H.B. 3732, the final bill on air quality passed by both chambers, contains incentives for coal plants to adopt cleaner technology but did not significantly change the permitting process, because conference committee members stripped those amendments from the bill, according to the Stop the Coal Rush coalition, a group of environmental activist groups that supported the amendments. “There are still coal plants proposed for Texas that threaten our air and health,” says Karen Hadden, executive director of the Austin-based Sustainable Energy and Economic Development coalition. “If permitted, these plants will increase global warming gases and toxic mercury pollution.” Environmentalists also lamented the failure of several bills addressing high levels of toxic air pollution from refineries and chemical plants in the Houston area. The state Senate passed several proposals as amendments to S.B. 12, but the amendments died in conference committee. While most proposals for stricter permitting regulations failed at the Capitol this session, proposals that provided incentives to cut pollution, promote renewable energy and foster conservation were more successful. Averitt successfully pushed for big increases in funding for two programs that reduce nitrogen dioxide emissions by retiring high-polluting cars and commercial equipment. Under S.B. 12, funding for the Texas Emissions Reduction Program, which helps business owners replace old and dirty diesel engines in heavy commercial equipment, over the next two years increased from $257 million in 2005 to at least $338 million, which the state’s environmental groups called a “gigantic” increase. In addition, funding for a program that helps low-income drivers repair or replace cars that fail inspection, increased from $11 million to $100 million, Averitt says. Environmentalists also praised the passage of H.B. 3693, authored by state Rep. Joe Straus, R-San Antonio, which requires that school districts use efficient lighting; state agencies purchase energy-efficient appliances; and state agencies, political subdivisions and school districts examine their energy use and issue plans to reduce it by 30 percent over the next six years. H.B. 3693 also establishes a sales-tax holiday for energy efficient appliances, requires utilities meet 20 percent of the growth in demand for energy through energy efficiency; and establishes “net metering” so consumers who create their own solar and renewable energy can feed it into the power grid and receive an offset on their utility bill. Lawmakers also approved grants to foster biomass energy with the goal of reducing air pollution, diversifying the state’s energy supply and diverting waste from landfills. H.B. 1090, authored by state Rep. David Swinford, R-Dumas, offers price-support incentives to encourage the construction of facilities to generate electric energy with certain types of agricultural residues, forest wood waste, urban wood waste, storm-generated biomass debris and energy-dedicated crops. Legislators added an amendment to H.B. 1090 by state Rep. Mark Strama, D-Austin, which repealed a 2005 law that environmentalists said lowered the minimum amount of energy that Texas power companies must generate from renewable sources. The former Texas Utilities Code �39.904(m), opponents said, defeated the expectation of environmentally conscious consumers that their purchases of renewable energy would put more green power into the Texas power grid. Under the old �39.904(m), consumer purchases of green power merely decreased the obligation of utilities to generate power from renewable sources. � Jonathan Fox FAMILY LAW Jackie Wayne Marr, a partner in Victoria’s Marr Meier & Bradicich, says he believes family law attorneys had an opportunity to review, comment on and contribute to the Legislature’s efforts this past session. “For the first time, a group of family law attorneys read every bill and were prepared to deal with the issues on every bill,” Marr says. Marr chairs the legislative committee of the State Bar of Texas Family Law Section and serves as president of the Family Law Foundation, the section’s nonprofit lobbying arm. Historically, Marr says, family law practitioners have relied upon legislators’ staff members to closely monitor bills related to the family courts. But those staff members, if they are lawyers, Marr says, typically have never practiced family law and need some advice on technical issues. Stewart W. Gagnon, a family lawyer and partner in Houston’s Fulbright & Jaworski, believes that one of the most significant wins Marr and his group accomplished was the passage of H.B. 448 and its companion S.B. 304. The bills raise the cap on the net resources component that judges use in a formula for calculating child support to $7,500 per month from $6,000 per month. Under the current law, child support for one child is 20 percent of available net resources, 25 percent for two children and 30 percent for three children. The new cap, Marr and Gagnon note, will impact higher-income parents. But with that particular legislative initiative, Gagnon notes, legislators didn’t address the needs of lower-income parents. “It’s going to take a very hard effort to make the more difficult adjustments,” Gagnon says. In defense of the Family Law Foundation’s efforts, however, Marr notes that the group did make some headway in helping increase child support payments for children of lower-income earners. In the bills that increased the net resources cap, Marr notes, the language included a section that will flag for family court judges their option to go outside the statutory child support guidelines if litigants such as parents or grandparents prove the children’s needs in court. Marr also points to the influence the Family Law Foundation lawyers had on lawmakers in revising S.B. 671 before its passage. The bill is intended to accelerate the payment of child support upon the death of one of the parties. On the death of a person who owes child support, the bill provides that all the child support will be due at once and provides a mechanism to calculate that lump-sum value. As initially drafted, Gagnon and Marr agree, the bill was wordy, vague and didn’t allow for a discount in the calculation for the present value of the lump-sum payment. Marr says lawyers working with the Family Law Foundation did manage to get that formula correct in the final version of the legislation. But some of the Family Law Foundation’s ambitions, Marr says, were not realized in this session. His group, for instance, did not get the Legislature to address what he sees as an unintended consequence that resulted from well-intended legislation during the 2005 session. Specifically, in 2005, lawmakers passed �3.007 of the Texas Family Code. The statute attempted, Marr says, to create a method to apportion pension benefits and stock options between community and separate property in a divorce. As written, with defective formulas, the statute leaves some of those funds unaccounted for. Marr had hoped with the Family Law Foundation’s vigilance this session to address those defective formulas with H.B. 1646 and S.B. 990 but as the session closed the bill did not get through. “We thought they were going to get done and then at the last minute, they didn’t. But we will be back,” says Marr. � Miriam Rozen IMMIGRATION LAW Lawyers expecting the Texas Legislature to leap into the abyss created by Congress and come up with substantive immigration reform legislation likely are disappointed. Rather than leap, the Legislature dodged and avoided the issue entirely � though it wasn’t for want of bill filing. About 20 filed bills that civil rights groups such as the Mexican American Legal Defense and Educational Fund (MALDEF) viewed as “anti-immigrant rights” didn’t make it in the House State Affairs Committee and never saw the light of the House floor. Among the most controversial of them were the following: H.B. 40, filed by state Rep. Ken Paxton, R-McKinney, would have required proof of citizenship or nationality for individuals to receive basic state medical assistance, but it never made it out of committee. H.B. 104, sponsored by state Rep. Debbie Riddle, R-Tomball, would have required documentation that a person is “lawfully authorized to be in the United States” before he or she could establish in-state residency for higher education purposes. It received a committee hearing but was never brought to a committee vote. H.B. 28, sponsored by state Rep. Leo Berman, R-Tyler, which sought to deny certain “state benefits” such as children’s health insurance, to the American-born children of illegal immigrants and thereby set up a constitutional challenge to automatic birthright citizenship, also died quickly in committee. “These bills were all killed by the committee chairman [state Rep. David A. Swinford, R-Dumas] after he sent them to the [Texas] attorney general to see if they could pass constitutionally,” says Berman, who gave a speech on the House floor condemning this move as an improper delegation of legislative authority to the executive branch. “The attorney general has no jurisdiction over the Legislature over legislation that I file unless it is passed and at that time the attorney general is supposed to defend it.” Swinford says he asked the Texas Office of the Attorney General to look into the immigration bills by posing the question: If the state passed bills dealing with immigration policy, what are the chances the state would win if legal challenges were raised to the laws? The answer Swinford received was that, if the state decided to delve into federal immigration policy, “the chances are 100 percent failure,” he says. “The reality was, if the state of Texas decided to move across the line and into Congress’ territory of immigration law, eventually, [the state laws] would be struck down.” If he didn’t feel constrained to do otherwise, Swinford would likely be one of the members who voted to do something about immigration, “but being the chairman and in charge, I tried not to break the bank by having lawsuits stuck out there we could not win,” he says. “I had to make a difficult decision. We stuck strictly to constitutional law.” The Senate also kept itself out of the immigration debate by not allowing its consideration of H.B. 13, the border security bill, to be used as a vehicle for any anti-immigrant rights legislation, says Luis Figueroa, the legislative staff attorney for MALDEF. “Most lawmakers, especially committee chairs in the House and Senate, realize it is probably unconstitutional to pass immigration laws that state taxpayers don’t want to pay for and that ultimately this issue needs to be solved at the federal level,” state Sen. Eliot Shapleigh, D-El Paso, says. Shapleigh, an El Paso solo, was unsuccessful in passing legislation he sponsored that took a more charitable view toward undocumented immigrants. His S.B. 150, which would have prevented police officers from engaging in racial profiling based on immigration status, and his S.B. 151, which would have prevented emergency room medical providers from inquiring about the immigration status of persons seeking their care, never got out of committee. Whether pro-immigrant rights or not, “there was a general feeling this session that the Texas Legislature did not want to address the immigration issue and that the feds should deal with it,” says Figueroa. � Mark Donald LABOR AND EMPLOYMENT LAW The 80th Legislature resisted making big changes to the state’s body of labor and employment law. Instead, it tinkered with the state’s unemployment insurance and workers’ compensation programs, and it deferred to federal lawmakers on the issue of raising the minimum wage. The state’s labor unions praise lawmakers’ decision to expand slightly eligibility for unemployment insurance coverage and potentially to increase some applicants’ unemployment benefits, by altering the formula by which benefits are calculated. “Working people made some modest gains in this session,” says Ed Sills, a spokesman for the Texas AFL-CIO. “In this field, modest gains are a good result.” Once signed by Gov. Rick Perry, H.B. 550, filed by state Rep. Dawnna Dukes, D-Austin, will expand unemployment insurance coverage to people forced to leave the workplace to protect themselves from domestic abuse or stalking. The bill also expands coverage to include people who leave the workplace to care for a terminally ill spouse, but only if no “reasonable, alternative care” is available. H.B. 2120, filed by state Rep. Joe Deshotel, D-Beaumont, a solo, could increase some applicants’ unemployment benefits by including disputed wages that the Texas Workforce Commission orders an employer to pay in the formula used to the commission to calculate benefits. An organization representing Texas’ small businesses calls H.B. 2120 a “tax increase on Texas business owners” and expresses dismay that the Legislature passed on far-reaching changes to the state’s unemployment insurance program. “Texas legislators deserve an F,” says Will Newton, state director of National Federation of Independent Business (NFIB), which represents Texas’ small businesses. “They failed to bring about needed reforms.” In particular, Newton says lawmakers missed an opportunity to give the Texas Workforce Commission authority to collect overpayments from unemployment insurance claimants, scrutinize more carefully the applications of claimants fired for cause from a previous job, and enact other changes supported by small businesses. While employees fired for cause cannot seek unemployment benefits, Newton says business owners believe that some employees create a new separation from employment by working for a friend and then getting fired or laid off without cause. The result, he says, is a higher-than-necessary unemployment insurance tax paid by employers. But Sills dismisses Newton’s complaints. “Texas is at or near the bottom [among states] in unemployment eligibility,” Sills says. “Employers have a good deal in this state.” After a major overhaul in 2005, lawmakers also fine-tuned the state’s workers’ compensation system during the 2007 session. H.B. 2004, filed by state Rep. Helen Giddings, D-Dallas, requires doctors who review workers’ compensation cases to be certified in a professional specialty appropriate to the care received by the injured employee. In addition, H.B. 724 and H.B. 473, both filed by state Rep. Burt Solomons, R-Carrollton, who is of counsel at Bell, Nunnally & Martin in Dallas, made several technical fixes to the workers’ compensation system, including changes to doctors’ peer review procedures, rules governing third-party administrators of self-insured groups, insurance reimbursement procedures, dispute procedures, procedures for payment of benefits under interlocutory orders, and the award of death benefits and burial benefits. Solomons was the primary author of the 2005 reform. The 80th Legislature began with a handful of bills seeking a raise in the state’s minimum wage, with some proposals seeking to peg minimum wage hikes to inflation or calling for a raise slightly higher than proposals to raise the federal minimum wage. The NFIB and the Texas Association of Business opposed the plans. But “the whole idea fizzled out,” Sills says, because of the likelihood Congress would raise the federal minimum wage. As part of the Iraq War spending bill, Congress on May 24 approved an increase in the federal minimum wage from $5.15 to $7.25 per hour by 2009. With little fanfare, President George W. Bush signed the increase into law on May 25. Because Texas’ minimum wage is pegged to the national minimum wage, it will climb to $5.85 an hour in two months. Then it will rise to $6.55 one year later and to $7.25 in summer 2009. While upbeat that “fair committees” reviewed labor and employment law-related bills this session, Sills expresses disappointment that lawmakers passed on a proposal to require businesses that receive state economic grants to provide health care to employees, as well as a proposal to allow manufacturing workers to receive unemployment when they are furloughed because of parts shortages. � Jonathan Fox REAL ESTATE, PROBATE AND TRUST LAW The 80th Legislature resisted making big changes to Texas law affecting real estate, as lawmakers rejected proposals calling for limits in spending by local governments and property tax growth and declined a proposal mandating sales-price disclosure of commercial properties. But legislators passed bills clarifying the rights of property owners in eminent domain proceedings and giving immunity to county clerks for the release of Social Security numbers in real estate documents. “The 80th Legislature’s effect on real estate is much more nuanced than the last two regular sessions,” says Mark McPherson, a Dallas real estate attorney and chairman of the real estate legislative affairs committee of the State Bar of Texas’ Real Estate, Probate and Trust Law Section. “There are no big, blockbuster bills.” A proposal backed by Gov. Rick Perry sought in part to restrain the growth of local government by limiting growth in revenues collected from property taxes to 5 percent annually before voters could seek an election to roll back the budget hike. The proposal also advanced various measures to lower property taxes, including allowing a taxpayer to pay local property taxes based on a five-year rolling average of his property’s appraised value or to elect to have his property taxes rise no more than 5 percent yearly, a drop from the current 10 percent cap. But all of Perry’s major proposals seeking to rein in property taxes failed. “I’m very disappointed,” says Tom Pauken, a Dallas solo who chaired the Perry-appointed commission that sought limits on taxing and spending by local governments including cities, counties and school districts. The proposals to limit revenue growth, says state Rep. Fred Hill, R-Richardson, would have been onerous to cities, counties and school districts. “In the past year, local governments have faced problems such as hurricanes, tornadoes and fires,” he says. “For the governor or anyone to try to put all of this under one umbrella and say [cities, counties and school districts] can’t grow any faster than 5 percent is very short-sighted.” Appraisal caps “do nothing to reduce property taxes,” Hill says. “The real issue is always the tax rate, and the tax rate is governed by local government,” he says. Hill points out that in the closing days of the Legislature both chambers passed H.B. 2, which Hill says will reduce local school district property taxes by $14.2 billion by increasing state funding for schools. The bill, if signed into law by Perry, will go into effect on Sept. 1. Lawmakers also rejected H.B. 133, a proposal to require sales-price disclosure of commercial properties. Backers of the measure, including the Texas Association of Appraisal Districts (TAAD), argued that disclosure was needed, because big commercial landholders do not pay their fair share of property taxes. A spokesman for TAAD expresses disappointment that H.B. 133 did not pass. “The lack of mandatory sales disclosure, as is common in most other states, creates significant inequities in the Texas property tax system, says Jim Robinson, chief appraiser for the Harris County Appraisal District. But the Texas Association of Realtors lobbied against the bill, arguing that the data would not help appraisers, because the value of commercial properties is tied to revenue coming into the property, which often fluctuates, and other factors such as corporate relocations and new buildings nearby. A TAR spokesman did not return telephone call seeking comment before presstime. Lawmakers also passed H.B. 2061, which gives immunity to county clerks who release real estate documents in the ordinary course of business that contain Social Security numbers. Lawmakers rushed H.B. 2061 to Perry’s desk for his signature after Texas Attorney General Greg Abbott issued Attorney General Opinion GA-0519, which stated that county clerks who made available documents containing Social Security information violated Texas Government Code �552.147, thus subjecting themselves to possible criminal liability. Several clerks’ offices shut down in response to Abbott’s opinion, which held up the closing of real estate transactions, according to a March article in the Houston Chronicle. “This session, [�552.147] came back to bite them, and they did an about face really quickly,” McPherson says. Perry signed H.B. 2061 on March 28. Lawmakers also passed two bills addressing eminent domain that await Perry’s signature. H.B. 1495, filed by state Rep. Bill Callegari, R-Houston, establishes a bill of rights for property owners whose property may be acquired by governmental or private entities through eminent domain that includes rights to notice and due process. Before eminent domain may commence, an entity must provide a copy of the bill of rights to the affected property owner, the bill states. H.B. 2006, filed by state Rep. Beverly Woolley, R-Houston, requires a public vote for eminent domain to proceed and says that entities must make a good-faith effort to acquire properties from their owners voluntarily. The changes to eminent domain law follows more far-reaching changes to the law enacted by the Legislature in 2005, which restricted the use of eminent domain powers for purely economic purposes, such as to benefit a private developer with hopes that the development will improve the local economy, as opposed to obtain land for a road, school or other public improvement. The Legislature also approved several changes to probate, guardianship and trust law that depend on Perry’s signature to become law. H.B. 391, filed by state Rep. Will Hartnett, R-Dallas, a partner in the Hartnett Law Firm, allows a court to declare a marriage void after the death of a decedent based on mental incapacity at the time of the wedding. If a proceeding to declare a marriage void on those grounds is not pending on the day of death, the bill allows an “interested person” to file an application requesting that a court void the marriage on such grounds. H.B. 391 also eliminates oral wills, which are allowed in deathbed circumstances when three witnesses are present. H.B. 593, filed by state Sen. Jeff Wentworth, R-San Antonio, a solo, requires personal representatives of estates to give notice to beneficiaries named in a will no later than 60 days once a will is admitted to probate. The intent of the bill is to make it difficult for executors to steal from or mismanage estates. H.B. 417, also filed by Hartnett, amends Texas guardianship law by allowing a court that receives documentation from an interested person or a physician to investigate and determine whether a person is incapacitated and if guardianship is necessary, then file a guardianship application if appropriate. H.B. 417 also sets forth a procedure for allowing a court to remove a guardian. In the trust law arena, H.B. 567, among its many provisions, protects parties who deal with a trustee in good faith and for fair value from liability from the trustee or beneficiaries if the trustee has exceeded his authority. H.B. 567 also allows administrators of small trusts of $50,000 or less to terminate the trust and distribute the proceeds to beneficiaries upon proper notice if the trustee concludes that the value of the trust property does not justify the continued cost of administering the trust. � Jonathan Fox TORT AND JURY REFORM The groups that generally lobby for and against tort reform � Texans for Lawsuit Reform and the Texas Trial Lawyers Association, respectively � seemed content to just nibble away at the edges of the issue this session and not wage thermonuclear war, like they have in sessions past. The result was that the Legislature did little to change the litigation equation, other than clarify and modify some narrow areas of the law. There was a failed attempt to tweak the $250,000 cap on non-economic damages in health-care liability cases � the bane of every medical-malpractice lawyer’s existence (or at least of those who still practice it). S.B. 1560 would have allowed separate $250,000 caps for each claimant in survival or wrongful death cases involving a health-care liability claim. But it never received a hearing in the Senate State Affairs Committee. S.B. 468 would have returned the “willful” standard of fault that governs malpractice cases arising in emergency room settings to a standard of simple negligence if proven by clear and convincing evidence. But it didn’t fare much better. “Although it passed out of the Senate State Affairs Committee 8-0,” says Jay Harvey, TTLA president and a partner in Austin’s Winckler & Harvey, “the bill was never heard on the Senate floor, and there was virtually no support for it in the House.” Texans for Lawsuit Reform (TLR), which bills itself as the state’s largest civil justice reform organization, directed its attention to other pursuits, such as jury and court reform. However, it was interested in one piece of tort reform legislation. In federal Jones Act cases filed in Texas state courts, TLR sought to eliminate a venue exception that has allowed plaintiffs to file cases in their home counties. According to TLR, because of the exception, the dredging industry has seen a significant increase in the number of Jones Act suits filed in four South Texas counties, where plaintiffs could expect larger damage awards. [See "Tort Reformers Try to Sink Maritime Venue Loophole," Texas Lawyer, March 12, 2007, page 4.] “We felt the whole Texas economy was at risk if the abusive lawsuits had continued,” says Dick Trabulsi, TLR’s president. Trabulsi says large out-of-state dredging companies might pull out of the Texas market, and the smaller Texas companies lack the equipment to do all the dredging necessary to keep open this state’s ports, which are in competition with other ports on the Gulf Coast and in Mexico. But the TTLA felt differently, arguing that maritime injuries that occurred on the high seas were different, because there was no courthouse in which to file them. And the TLR proposal would, for all practical purposes, limit venue to the defendant’s principal place of business. H.B. 1602 struck a compromise on the venue issue, says TTLA’s Harvey. “If the injury occurs shoreward of the navigational line of demarcation, the case [against say, a dredging company operating along the coastline] can now only be brought in the county where the injury occurred or the principal place of the defendant’s business,” says Harvey. “But if the injury occurs seaward of the navigational line [on an off-shore drilling rig], the plaintiff can still bring the case in the county of his residence.” On May 24, Gov. Rick Perry signed H.B.1602 into law. Trabulsi says TLR believes the bill is “an effective cure” to abuse that has occurred because of the venue exception. Perry has been asked by the Texas Association of Business to veto H.B. 3281, which passed the House and Senate over little opposition and benefits personal injury plaintiffs. H.B. 3281 seeks to clarify confusion over the collateral source rule, which was eliminated under the med-mal reforms of H.B. 4 in the 2003 session. H.B. 4 limited recovery of medical or health-care expenses to “the amount paid or incurred by or on behalf of the claimant.” Harvey says H.B. 3281 provides that the limitations within H.B. 4 only apply to health-care liability claims and not to other personal injury suits. So in non-med-mal cases, a plaintiff can recover the full amount of the economic damages he incurs rather than be limited to the amount that his insurance company has paid to health care providers. Tort reform groups claim this is a windfall for the plaintiff and will drive up insurance rates. [ See "Veto Sought for Bill Addressing Change in Collateral Source Rule,"Texas Lawyer , May 28, 2007, page 1.] The TTLA and the TLR found common ground on at least one piece of jury reform legislation. Both groups testified in favor of S.B. 1300, a bill authored by state Sen. Jeff Wentworth, R-San Antonio and chairman of the Senate Jurisprudence Committee. It sought to clarify legal proceedings for jurors by allowing them to take notes using writing materials furnished by the court; by allowing jurors, under certain safeguards, to ask questions of witnesses and the judge; and by allowing attorneys to make interim summations. Although the bill made it out of committee, says Katie Henry, Wentworth’s general counsel, “it was put on the intent calendar so late in the game, it didn’t have time to make it to the Senate floor for a vote.” Although neither the tort reform advocates nor the trial lawyers can claim a major victory this session, Harvey believes the Legislature has grown less hostile to the concerns of personal injury plaintiffs. “What we saw was a large group of legislators who were more willing to take another look at the pro-defendant reforms done in 2003,” says Harvey. “I think the legislation that did pass were the early steps to reverse some of these reforms, and we think they will continue into the next session.” � Mark Donald

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