Texas Tort Reform Update: New Rules Coming

Posted on Apr 3, 2012

Texas continues to be among the leading states in tort reform. The bulk of Texas tort reform was accomplished in 2003, in which the Legislature passed reforms in the areas of medical malpractice, damages caps, products liability, proportionate liability, and settlement practices. The 79th legislative session in 2005 did not produce nearly as many reform measures. While no single legislative session has been quite as sweeping as the 78th in 2003, Texas has seen some important changes in tort law since 2005.[1]


Overview: In 2007, Texas passed an amendment to its venue statutes that limited plaintiffs’ ability to choose notoriously plaintiff-friendly venues in Jones Act cases.

Jones Act Venue Reform: Amendment to Texas Civil Practice & Remedies Code § 15.0181. Before 2007, a seaman injured in the Port of Houston could sue 400 miles away in the Rio Grande Valley if he happened to live there. In 2007, the Texas Legislature eliminated the venue loophole that allowed Jones Act plaintiffs to sue in their county of residence. This amendment was prompted by an increase in Jones Act litigation against dredgers in Hidalgo, Starr, Zapata and Cameron counties, where as of 2003, almost 60% of Jones Act lawsuits against dredgers in the entire United States were being filed. Texans for Lawsuit Reform, The Fight for the Texas Maritime Industry: Why HB 1602 is Critical, Advocate, Summer 2007, page 3 (2007). Under the general venue statute, other Texas plaintiffs may not sue in their county of residence unless the defendant has no place of business in Texas and the accident did not occur in Texas.

The venue amendment did not relegate Jones Act plaintiffs to the general venue statute, but did impose substantial reform from the former rule. The amendment affects venue choices based on the location of the injury, and has drawn criticism for its complexity. The venue rule now provides as follows:

For injuries in Texas, Jones Act plaintiffs may now sue:

(i) in the county in which the cause of action accrued; or

(ii) in the county of the defendant’s principal office in Texas at the time the cause of action accrued.

For an injury in Louisiana, Mississippi, Alabama and Florida, ashore and on beach reclamation projects, or for an injury on the inland waters of Louisiana, Mississippi, Alabama, Arkansas, Tennessee, Missouri, Illinois, Kentucky, or Indiana or of Florida along the Gulf of Mexico shoreline of Florida from the Florida-Alabama border down to and including the shoreline of Key West, Florida, Jones Act plaintiff may now sue:

(i) in the county of the defendant’s principal office in Texas at the time the cause of action accrued if the office is in a coastal county;

(ii) in Harris County if the plaintiff lives in Harris County;

(iii) in Galveston County if the plaintiff lives in Galveston County;

(iv) in either Harris county or Galveston county if the plaintiff does not live in either of those counties; or

(v) in the county of plaintiff’s residence at the time the cause of action accrued if the defendant does not have a principal office in a Texas coastal county.

For an injury anywhere else in the world, a Texas Jones Act plaintiff may now sue in:

(i) the county of the defendant’s principal office in Texas at the time the cause of action accrued;

(ii) in the county in which all or a substantial part of the events or omissions giving rise to the claim occurred; or

(iii) in the county of the plaintiff’s residence at the time the cause of action accrued.

Tex. Civ. Prac. & Rem. Code § 15.0181.


Overview: In 2009, the Texas Supreme Court ruled that a premises owner could qualify for protection from suit under the Worker’s Compensation Act if it acted as its own general contractor and offered coverage to its employees in compliance with the Act. Texas also allowed the Residential Construction Commission to be dissolved by allowing its enabling legislation to expire.

Premises Owners Qualify for Workers’ Compensation Bar to Suit: Texas law was in a state of uncertainty as to a premises owner’s right to assert an exclusive remedy defense under the Texas Workers’ Compensation Act[2] if it acted as its own general contractor. Prior to 2009, if Worker A was injured on the job while employed by A Corp., a premises owner acting as its own general contractor that offered Worker’s Compensation coverage, Texas courts were split as to whether Worker A could bring suit against A Corp for negligence. On the other hand, if Worker B was injured on the job while employed by B Corp., a general contractor in privity with the premises owner, Worker B would be barred from bringing suit. Given the importance of mineral refining to the Texas economy and the high volume of tort claims arising from refinery accidents, this was a crucial legal question to answer.

In Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 436-438 (Tex. 2009), the Texas Supreme Court upheld a premises owner’s right to claim “employer status” under the Act. This status allows premises owners to claim the same exclusive remedy defense as a general contractor, provided the premises owner meets the Act’s definition of a “statutory employer.” A premises owner meets the definition if it acts as its own general contractor, includes workers’ compensation coverage for employees in the applicable contract, and pays the workers’ compensation premiums out of the contract price. In Entergy, the Court noted that the Act does not expressly preclude a premises owner from qualifying as a statutory employer, and allowing them to so qualify promotes the public policy of encouraging coverage.

Sunset of the Residential Construction Commission: Before 2009, a residential construction defect case was subject to a lengthy and mandatory administrative process conducted by the Residential Construction Commission before a court could adjudicate the dispute. The result of the administrative dispute resolution proceeding raised only a rebuttable presumption in any further litigation. The dissolution of the RCC streamlined the disposal of residential construction claims by doing away with the administrative agency all together.

Texas passed the Texas Residential Construction Commission Act[3] in 2003, which governed the warranties applicable to design, construction and repair of residential buildings and created the Residential Construction Commission. The Commission was charged with registering builders, collecting fees for homes built by registered builders, and establishing limited warranties and building standards for residential construction. Under the RCCA, residential construction disputes were subject to a mandatory administrative resolution process as a condition precedent to filing suit. The Commission and its enabling legislation were subject to the sunset laws applicable to administrative agencies, found in the Texas Government Code. Because no extending legislation was passed, the Commission was dissolved effective September 1, 2009. However, it continued in effect for one year for purposes of completing pending proceedings. The dissolution eliminated any requirement that a residential construction dispute be submitted to administrative proceedings before suit.

The RCCA’s expiration also has significant effect on the applicable building standards for residential construction in Texas. For construction begun before the June 1, 2005 effective date of the RCCA, Texas law recognized common law implied warranties of habitability and good and workmanlike construction. Humber v. Morton, 426 S.W.2d 554, 555 (Tex. 1968). For construction begun between June 1, 2005 and September 1, 2009, the RCC standards are still applicable. It is not clear whether the common law implied warranties recognized before the passage of the RCCA are now applicable to construction begun after September 1, 2009.


In 2011, the Texas Legislature passed the Omnibus Tort Bill, which contained provisions preventing circumvention of statutes of limitation and clarified 2003 legislation that provides for recovery of fees and costs when a litigant rejects a reasonable settlement offer. The bill also charged the Supreme Court with promulgating rules to promote more time- and cost-effective litigation resolution.

Substantive Reforms

Limitations Loophole and Responsible Third Parties: Prior to the 2011 amendment of Texas Civil Practice & Remedies Code § 33.004, if a defendant designated a responsible third party, a plaintiff could join the third party as a co-defendant even if the statute of limitations would otherwise bar the joinder. As explained in the prior Texas edition of this compendium, Texas law allows a defendant to designate a third party as responsible for a plaintiff’s damages without joining the third party in the lawsuit. The designating defendant may submit evidence to a jury of the third party’s fault in order to reduce damages allocable to the designating defendant. Under the former scheme, a savvy plaintiff could sue a dummy entity which it controlled, have the dummy entity designate a responsible third party well after limitations had run, and still be able to maintain suit. The 82nd Legislature repealed § 33.004(e), which allowed this circumvention. The repeal is effective with respect to civil actions commenced on or after September 1, 2011.

“Loser Pays”: Texas clarified what has been called the “Loser Pays” scheme in 2011. This popular handle of Texas Civil Practice & Remedies Code § 42.004 is a misnomer. The statute is really a “consider reasonable settlement offers seriously” law, which encourages parties to settle out of court. Under the statute, a defendant will recover its attorney’s fees and costs from the plaintiff if the plaintiff rejects a settlement offer made within sixty days of suit, and then recovers less than 80% of the settlement offer at trial. On the other hand, if a defendant rejects a plaintiff’s counter-offer, and the plaintiff then recovers 120% of the counter-offer amount at trial, the plaintiff will recover its costs and fees from defendant. This rule has been effective since January 1, 2004, and was part of HB 4 in 2003. The 2011 amendment limits the amount of fees and costs recoverable by either party to the amount recovered by the claimant before adding or subtracting any award of litigation costs and fees. The amendment rewrites § 42.004(d), which formerly provided a fee and cost recovery cap computed by subtracting the amount of any statutory or contractual liens from the sum of 50% of the economic damages and all non-economic damages and exemplary or additional damages.

Procedural Reforms

Motion to dismiss: As of now, Texas defendants must address a plaintiff’s pleading defects via special exceptions, which entails identifying each defect and specifying why it is objectionable. By contrast, as of the spring of 2011, forty-two of the fifty states had adopted procedures for dismissing lawsuits that fail to state a claim upon which relief may be granted. Texans for Lawsuit Reform, The 2011 Omnibus Tort Reform Bills, Advocate, Spring, 2011, page 4 (2011). The 82nd Legislature brought Texas up to speed on this front by directing the Texas Supreme Court to develop procedures for a motion to dismiss. The goal of this legislation is to allow quicker disposition of meritless lawsuits. As a matter of current Texas state court practice, the legal tenability of claims is not normally addressed until the summary judgment stage, after substantial fees have been incurred. The lack of a vehicle to dispose of meritless claims early in the litigation increases the “nuisance value” of even the most frivolous lawsuit. The new motion to dismiss procedures will allow defendants an opportunity to challenge the legality of claims early in a case, thereby lessening its nuisance value. These new rules from the Texas Supreme Court are expected in the spring of 2012.

New discovery guidelines: As of now, Texas lawsuits involving claims over $10,000 are governed by one of three discovery plans. Under Levels 1 and 2, each side is allowed 25 interrogatories, unlimited requests for production, unlimited requests for admission, and may request an infinite number of documents, so long as the requests otherwise comply with the discovery rules. A Level 3 plan is a custom plan devised by the parties’ agreement or court order, and is available for disputes over any amount. The court may order a Level 3 plan on its own motion, and must order a Level 3 plan on a party’s motion. The Level 1 discovery scheme, which is the default plan for disputes over $50,000 or less, limits depositions to six hours per side. The Level 2 discovery plan, which is the default plan for suits over more than $50,000, allows 50 hours of depositions per side. Claims for less than $10,000 may currently be handled in small claims court, with expedited procedures.

2011 legislation directs the Supreme Court to promulgate new discovery rules for expediting and lowering discovery costs in cases in which the amount in controversy is between $10,000 and $100,000. Possible innovations in the new discovery rules could be limits on requests for production and limits on the number of documents that can be requested by a party.

Interlocutory appeal of controlling question of law: The Omnibus Tort Bill gives Texas trial courts the opportunity to allow an interlocutory appeal of a “controlling question of law.” As Texas litigation practice stood before this bill, unless a trial court order fell within the scope of a few statutes allowing interlocutory appeals, a litigant had to wait until final judgment to appeal the order. The Supreme Court has yet to reduce the legislature’s intent into concrete procedures.

[1] The Texas Legislature convenes only in odd-numbered years unless a special legislative session is called.

[2] Texas Labor Code § 401.001 et. seq.

[3] Former Texas Property Code § 401.007