The Texas House of Representatives recently passed a bill that will cause lawsuit losers to pay the legal fees of the winner. While that may sound like a great idea at surface level, let’s break it down a little bit.
Right now, Texas does not have an automatic provision that allows a lawsuit winner to recover his attorneys’ fees. The new bill would require a party to pay the legal fees of the other party if the lawsuit is tossed out by the court for failing to state a valid legal claim. So, the “loser pays” provisions would not come into play in every lawsuit. Supporters of this portion of the bill believe that this will help to diminish the number of groundless and frivolous lawsuits that are filed. Opponents argue that the bill may keep potentially valid lawsuits from being filed for fear of having to pay attorney fees. Would you sue Wal-Mart, for example, if there was any chance that you might have to pay their attorneys?
A second portion of the bill is being sarcastically called a “losers pay and sometimes winners pay, too” law. This section would change an existing rule in Texas law. The rule works in two directions:
- Patty sues Darryl. Darryl offers Patty $100 to settle the lawsuit. Patty says “NO!” At trial Patty wins $80. In this case, Patty would have to pay Darryl’s legal fees from the date that she said “no” to his settlement offer because she only won 80% of what he offered her.
- Patty sues Darryl. Patty offers to Darryl, “Give me $100, and we’ll call this thing off.” Darryl says “NO!” At trial the Patty wins $120. In this case Darryl would have to pay Patty’s legal fees from the date that he said “no” to her settlement offer because she won 120% of what she offered him.
[See Texas Civil Practice and Remedies Code § 42.004]
As it stands, the amount of attorney fees you can be awarded under this rule is capped. The new bill would remove the cap – meaning that you could be awarded ALL of your attorney fees from the date the settlement offer is rejected forward. It could have the effect that a lawsuit winner (see example 1) could be turned into a loser because she has to pay more in the other party’s attorney fees than she won. It could also seriously encourage defendants and plaintiffs to make (and accept) reasonable settlement offers.
A third section of the bill would allow homeowners to collect their legal fees from tax appraisal districts if the homeowners successfully contest their tax appraisal. Interestingly, the bill does not permit the appraisal districts to collect legal fees from unsuccessful appraisal challengers. Opposition to this section of the bill believe that this one-sided approach would impose a heavy financial burden on taxing districts which will ultimately end up being passed on to the taxpayers. Rep. Roland Gutierrez, who proposed this amendment to the bill, stated that the taxing agencies should be entitled to nothing because “they have their own attorneys.”
This bill will now move on to the Texas Senate for more debate and voting.
For more information on Texas law contact The Wright Firm at 972-353-4600 or visit our website at www.thewrightlawyers.com.
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