January 30, 2013

State "Loser Pays" Laws Could Seriously Impact Rights of Injury Victims

by Lebowitz & Mzhen

Texas_Capitol_night.jpgThe campaign by some people, businesses, and organizations to crack down on perceived abuse of the court system, largely in the area of personal injury litigation, is commonly known as “tort reform.” It has resulted in various laws at the state and federal level that set caps on damages for certain claims or make adjustments to the jurisdiction of various courts to hear specific types of cases. One law passed two years ago in Texas, referred to by some as the “loser pays” law, may have a significant impact on people’s ability to seek relief for injuries in state and federal court, both by allowing quick dismissal of purportedly “frivolous” lawsuits and by putting plaintiffs at risk of hefty attorney’s fee judgments.

HB 274, titled “An act relating to the reform of certain remedies and procedures in civil
actions and family law matters,” was signed into law by Texas Governor Rick Perry on May 30, 2011. The bill gives trial courts the expedited authority to dismiss “frivolous lawsuits” if they lack any “basis in law or fact,” and it directs the state supreme court to develop proposed rules on determining what constitutes a “frivolous” lawsuit. Part of the problem with the discussion surrounding this law, of course, is that most defendants, upon receiving notice of a lawsuit against them, respond by calling the suit “frivolous.” This makes it difficult for those of us who advocate for injured plaintiffs to tell if a lawsuit truly lacks merit or is simply inconvenient for a defendant.

On November 13, 2012, the Texas Supreme Court issued proposed rules pursuant to HB 274, including a rule for dismissal of “frivolous” lawsuits. The court proposed adding a new rule, Rule 91a, to the Texas Rules of Civil Procedure. The new rule would allow a motion to dismiss in many lawsuits within sixty days of service of a complaint. A hearing on the motion must be held at least twenty-one days after such a motion is filed, but the court must rule on the motion within forty-five days of its filing. Dismissal would be based on a finding that a lawsuit “has no basis in law or fact,” which, according to the proposed rule, means that “no reasonable person could believe the facts pleaded.” The court is accepting comments from interested parties until February 1, 2013.

The Texas law’s provisions regarding attorney’s fees are what have made it particularly controversial. Legislation passed in Texas in 2003 stated that, if a plaintiff rejects a settlement offer, goes to trial, and receives a verdict, the amount of the judgment must be at least eighty percent of the settlement offer. If not, the plaintiff is liable for the defendant’s attorney’s fees from the date of the settlement rejection. The statute also allowed for recovery of fees by a plaintiff if the defendant rejected a settlement offer and the jury verdict was at least 120 percent of the rejected offer. The new law removes most of the limits set on the amount of attorney’s fees a court may award, putting a losing plaintiff, or even a prevailing plaintiff with a small damage award, at risk of liability for a defendant’s entire legal bill.

The personal injury attorneys at Lebowitz & Mzhen represent the rights of people in the Washington, DC area who have suffered injuries due to the illegal, tortious, or negligent conduct of others. For a free and confidential consultation, contact us today online or at (800) 654-1949.

Web Resources:

Adoption of Rules for Dismissals and Expedited Actions (PDF file), Misc. Docket No. 12-9191, Supreme Court of Texas, November 13, 2012

HB 274, An act relating to the reform of certain remedies and procedures in civil actions and family law matters (PDF file), 82nd Texas Legislative Session, May 30, 2011

More Blog Posts:

Supreme Court Reviews Class Action Reform Law, Maryland Accident Law Blog, January 21, 2013

Federal Tort Claims Act Requires a Clear Allegation Against a Federal Employee or Agency, DC Court Rules: Moorman v. United States, Washington DC Injury Lawyer Blog, November 16, 2012

Supreme Court Rules that Federal Law Preempts State Wrongful Death Lawsuit Over Asbestos Exposure: Kurns v. Railroad Friction Products Corp., Washington DC Injury Lawyer Blog, October 12, 2012

Photo credit: Larry D. Moore [CC-BY-SA-3.0 or GFDL], via Wikimedia Commons.