After approving a handful of amendments, the Texas House this afternoon voted 96-49 to pass a bill that includes civil justice system reforms like loser pays and dismissal of suits that lack merit.
During debate, lawmakers expressed the most concern about a provision in House Bill 274 that would entitle a defendant to collect attorney’s fees if the plaintiff rejected a settlement offer.
H.B. 274 author Rep. Brandon Creighton, R-Conroe, amended his bill to broaden a provision for expediting suits through the justice system. The amendment says the provision would apply to claims that total more than $500 but don’t exceed $100,000. The lower limit within the original bill was $10,000.
Another Creighton amendment limits a provision in H.B. 274 that awards attorney’s fees to prevailing parties in breach-of-contract suits. The law only would apply if the parties didn’t have a previous agreement about attorney’s fees, the amendment says.
“If you’ve worked out attorney’s fees and cost shifting in your documents, then that controls,” Creighton told lawmakers.
Creighton agreed to revise the legislative intent statement accompanying the bill to clarify that the provision allowing courts to dismiss cases that lack merit or lack legal remedy wouldn’t apply to class actions, suits under the tax or family codes, or suits about workers’ compensation and eminent domain.
Also, in an exchange with Rep. Craig Eiland, D-Texas City, Creighton confirmed that the legislative intent of the bill is that when defendants file a motion to dismiss, the plaintiff would have the option to file a motion to replead.
Multiple lawmakers voiced concern over a provision in Creighton’s bill that would entitle defendants to collect attorney’s fees after they file a declaration seeking settlement but the plaintiff later rejects the settlement offer; fees would be available for litigation occurring after the plaintiff’s rejection. Even if the plaintiff eventually won a verdict in a jury trial, he would still have to pay the defendant’s attorney’s fees, says Eiland.
“This is not just the loser pays bill. This is the loser pays, and sometimes the winner pays,” Eiland told lawmakers.
Eiland told lawmakers the story of one of his clients who rejected a settlement offer of $80,000, because it contained a confidentiality clause that the client believed would prevent him from clearing his name of a crime he said he didn’t commit. The case went to trial, and Eiland’s client eventually won just $75,000. Under Creighton’s bill, Eiland said, his client would still have to pay the other party’s attorney’s fees, even if they totaled more than the jury verdict.
“I don’t think that’s right. That’s what this bill does,” said Eiland.
Rep. Harold Dutton Jr., D-Houston, also opposed the offer-of-settlement provision, because he said in some types of cases, current law prohibits plaintiffs from collecting attorney’s fees, but Creighton’s bill doesn’t limit the types of cases in which a defendant that makes an offer to settle can collect attorney’s fees from a plaintiff who rejects it. So there could be suits where a plaintiff couldn’t collect attorney’s fees, but a defendant could, Dutton says.
Creighton defended the provision, saying it would level the playing field: Plaintiffs file suits, and defendants offer settlement.
“What this does is it encourages both sides to deal with each other genuinely to deal with the case,” Creighton said. He added: “Defendants will be more encouraged to come to the table with a more genuine offer or counter offer.”
Dutton also expressed concerns about the bill’s requirement for the Texas Supreme Court to make the rules that would implement provisions of H.B. 274. He offered an amendment that would have required the Legislature to review and approve all the rules before they went into effect, but lawmakers rejected the amendment.