Senate Approves Loser-Pays Bill

The Senate unanimously passed a major tort reform bill today that would allow courts to grant attorneys' fees to prevailing parties under certain circumstances.

The bill from Rep. Brandon Creighton, R-Conroe, has undergone several adjustments since its inception. As it passed the House, it would have enacted a modified loser-pays rule that would allow winning parties to recover litigation costs in breach-of-contract suits or if a judge grants a motion to dismiss. (This would apply only in situations in which parties have not already made a contractual attorneys' fees arrangement.) It would also direct the Texas Supreme Court to create a procedure for the early dismissal of certain civil claims and expedite the discovery process for cases with claims between $500 and $100,000.

The Senate version would remove the provision allowing winner parties to recover fees in any breach-of-contract case. The upper chamber also tweaked the part that gave the most heartburn to the plaintiffs' bar and prompted Rep. Craig Eiland, D-Galveston, to refer to the legislation as "the loser pays and sometimes the winner pays, too" bill. The House bill would have awarded attorneys' fees to defendants if they made an offer to settle, and it was turned down if the jury finds for the plaintiff and makes an award less than 80 percent of the initial settlement offer. The Senate's version would not allow defendants in that scenario to recover litigation costs that add up to more than a plaintiff's final award from the jury — and adds a measure that would allow the plaintiff to collect fees, too, if they win a verdict that's more than 120 percent of the settlement offer.

It also strips an amendment by Rep. Roland Gutierrez, D-San Antonio, that would have required appraisal districts to pay attorneys' fees to plaintiffs who successfully contest property tax rates.

The measure now must return to the House for approval before it is sent to Gov. Rick Perry.

In a statement, Perry praised the legislation.

“HB 274 strengthens our legal system by relieving Texans of the burdens created by frivolous and drawn-out lawsuits, expediting legitimate legal claims and cracking down on junk lawsuits," he said.