S.B. No. 25
AN ACT
1-1 relating to exemplary damages in civil suits.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Chapter 41, Civil Practice and Remedies Code, is
1-4 amended to read as follows:
1-5 CHAPTER 41. EXEMPLARY DAMAGES
1-6 Sec. 41.001. DEFINITIONS. In this chapter:
1-7 (1) "Claimant" means a party, including a plaintiff,
1-8 counterclaimant, cross-claimant, or third-party plaintiff, seeking
1-9 recovery of exemplary damages. In a cause of action in which a
1-10 party seeks recovery of exemplary damages related to injury to
1-11 another person, damage to the property of another person, death of
1-12 another person, or other harm to another person, "claimant"
1-13 includes both that other person and the party seeking recovery of
1-14 exemplary damages.
1-15 (2) "Clear and convincing" means the measure or degree
1-16 of proof that will produce in the mind of the trier of fact a firm
1-17 belief or conviction as to the truth of the allegations sought to
1-18 be established.
1-19 (3) "Defendant" means a party, including a
1-20 counterdefendant, cross-defendant, or third-party defendant, from
1-21 whom a claimant seeks relief with respect to exemplary damages.
1-22 (4) "Economic damages" means compensatory damages for
1-23 pecuniary loss; the term does not include exemplary damages or
1-24 damages for physical pain and mental anguish, loss of consortium,
2-1 disfigurement, physical impairment, or loss of companionship and
2-2 society.
2-3 (5) <(3)> "Exemplary damages" means any damages
2-4 awarded as <an example to others, as> a penalty<,> or by way of
2-5 punishment. "Exemplary damages" includes punitive damages.
2-6 (6) <(4)> "Fraud" means fraud other than constructive
2-7 fraud.
2-8 (7) <(5) "Gross negligence" means more than momentary
2-9 thoughtlessness, inadvertence, or error of judgment. It means such
2-10 an entire want of care as to establish that the act or omission was
2-11 the result of actual conscious indifference to the rights, safety,
2-12 or welfare of the person affected.>
2-13 <(6)> "Malice" means:
2-14 (A) a specific intent <conduct that is
2-15 specifically intended> by the defendant to cause substantial injury
2-16 to the claimant; or
2-17 (B) an act or omission:
2-18 (i) which when viewed objectively from the
2-19 standpoint of the actor at the time of its occurrence involves an
2-20 extreme degree of risk, considering the probability and magnitude
2-21 of the potential harm to others; and
2-22 (ii) of which the actor has actual,
2-23 subjective awareness of the risk involved, but nevertheless
2-24 proceeds with conscious indifference to the rights, safety, or
2-25 welfare of others <that is carried out by the defendant with a
2-26 flagrant disregard for the rights of others and with actual
2-27 awareness on the part of the defendant that the act will, in
3-1 reasonable probability, result in human death, great bodily harm,
3-2 or property damage>.
3-3 Sec. 41.002. APPLICABILITY. (a) This chapter applies to
3-4 any <an> action in which a claimant seeks exemplary damages
3-5 relating to a cause of action <as defined by Section 33.001>.
3-6 (b) This chapter establishes the maximum exemplary damages
3-7 that may be awarded in an action subject to this chapter, including
3-8 an action for which exemplary damages are awarded under another law
3-9 of this state. This chapter does not apply to the extent another
3-10 law establishes a lower maximum amount of exemplary damages for a
3-11 particular claim<:>
3-12 <(1) an action brought under the Deceptive Trade
3-13 Practices-Consumer Protection Act (Subchapter E, Chapter 17,
3-14 Business & Commerce Code) except as specifically provided in
3-15 Section 17.50 of that Act;>
3-16 <(2) an action brought under Chapter 21, Insurance
3-17 Code;>
3-18 <(3) an action brought under the workers' compensation
3-19 laws of this state (Article 8306 et seq., Revised Statutes);>
3-20 <(4) an action to recover exemplary damages against an
3-21 employer by the employee's beneficiaries in a death action arising
3-22 out of the course and scope of employment where the employer is a
3-23 subscriber under the workers' compensation laws of this state
3-24 (Article 8306 et seq., Revised Statutes);>
3-25 <(5) an action brought under Chapter 246, Acts of the
3-26 63rd Legislature, Regular Session, 1973, Home Solicitation
3-27 Transactions (Article 5069-13.01 et seq., Vernon's Texas Civil
4-1 Statutes);>
4-2 <(6) an action brought under Chapter 547, Acts of the
4-3 63rd Legislature, Regular Session, 1973, Debt Collection Practices
4-4 (Article 5069-11.01 et seq., Vernon's Texas Civil Statutes);>
4-5 <(7) an action brought under Chapter 54, 91, or 92,
4-6 Property Code;>
4-7 <(8) an action brought under the Texas Manufactured
4-8 Housing Standards Act (Article 5221f, Vernon's Texas Civil
4-9 Statutes);>
4-10 <(9) an action brought under the Texas Motor Vehicle
4-11 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes);>
4-12 <(10) an action brought under the Texas Proprietary
4-13 School Act, Chapter 32, Education Code;>
4-14 <(11) an action brought under Section 9.507 or Section
4-15 27.01, Business & Commerce Code;>
4-16 <(12) an action brought under Chapter 36, Family Code;>
4-17 <(13) an action brought under the Health Spa Act
4-18 (Article 5221l, Vernon's Texas Civil Statutes);>
4-19 <(14) an action brought under the Business Opportunity
4-20 Act (Article 5069-16.01 et seq., Vernon's Texas Civil Statutes); or>
4-21 <(15) an action brought under the Texas Timeshare Act
4-22 (Article 6573c, Vernon's Texas Civil Statutes)>.
4-23 (c) Except as provided by Subsections (b) and (d), in <In>
4-24 an action to which this chapter applies, the provisions of this
4-25 chapter prevail over all other law to the extent of any conflict.
4-26 (d) Notwithstanding any provision to the contrary, this
4-27 chapter does not apply to Section 15.21, Business & Commerce Code
5-1 (Texas Free Enterprise and Antitrust Act of 1983), an action
5-2 brought under the Deceptive Trade Practices-Consumer Protection Act
5-3 (Subchapter E, Chapter 17, Business & Commerce Code) except as
5-4 specifically provided in Section 17.50 of that Act, or an action
5-5 brought under Chapter 21, Insurance Code.
5-6 Sec. 41.003. STANDARDS FOR RECOVERY OF EXEMPLARY DAMAGES.
5-7 (a) Except as provided by Subsection (c), exemplary <Exemplary>
5-8 damages may be awarded only if the claimant proves by clear and
5-9 convincing evidence that the <personal injury, property damage,
5-10 death, or other> harm with respect to which the claimant seeks
5-11 recovery of exemplary damages results from:
5-12 (1) fraud;
5-13 (2) malice; or
5-14 (3) wilful act or omission or gross neglect in
5-15 wrongful death actions brought by or on behalf of a surviving
5-16 spouse or heirs of the decedent's body, under a statute enacted
5-17 pursuant to Section 26, Article XVI, Texas Constitution. In such
5-18 cases, the definition of "gross neglect" in the instruction
5-19 submitted to the jury shall be the definition stated in Section
5-20 41.001(7)(B) <gross negligence>.
5-21 (b) The claimant must prove by clear and convincing evidence
5-22 the elements of exemplary damages as provided by this section
5-23 <Subsection (a)(1), (a)(2), or (a)(3)>. This burden of proof may
5-24 not be shifted to the defendant or satisfied by evidence of
5-25 ordinary negligence, bad faith, or a deceptive trade practice.
5-26 (c) If the claimant relies on a statute establishing a cause
5-27 of action and authorizing exemplary damages in specified
6-1 circumstances or in conjunction with a specified culpable mental
6-2 state, exemplary damages may be awarded only if the claimant proves
6-3 by clear and convincing evidence that the damages result from the
6-4 specified circumstances or culpable mental state.
6-5 Sec. 41.004. FACTORS PRECLUDING RECOVERY. (a) Except as
6-6 provided by Subsection (b), exemplary <Exemplary> damages may be
6-7 awarded only if damages other than nominal damages are awarded.
6-8 (b) A claimant may recover exemplary damages, even if only
6-9 nominal damages are awarded, if the claimant establishes by clear
6-10 and convincing evidence that the harm with respect to which the
6-11 claimant seeks recovery of exemplary damages results from malice as
6-12 defined in Section 41.001(7)(A). Exemplary damages may not be
6-13 awarded to a claimant who elects to have his recovery multiplied
6-14 under another statute.
6-15 Sec. 41.005. HARM RESULTING FROM CRIMINAL ACT. (a) In an
6-16 action arising from harm resulting from an assault, theft, or other
6-17 criminal act, a court may not award exemplary damages against a
6-18 defendant because of the criminal act of another.
6-19 (b) The exemption provided by Subsection (a) does not apply
6-20 if:
6-21 (1) the criminal act was committed by an employee of
6-22 the defendant;
6-23 (2) the defendant is criminally responsible as a party
6-24 to the criminal act under the provisions of Chapter 7, Penal Code;
6-25 (3) the criminal act occurred at a location where, at
6-26 the time of the criminal act, the defendant was maintaining a
6-27 common nuisance under the provisions of Chapter 125, Civil Practice
7-1 and Remedies Code, and had not made reasonable attempts to abate
7-2 the nuisance; or
7-3 (4) the criminal act resulted from the defendant's
7-4 intentional or knowing violation of a statutory duty under
7-5 Subchapter D, Chapter 92, Property Code, and the criminal act
7-6 occurred after the statutory deadline for compliance with that
7-7 duty.
7-8 (c) In an action arising out of a criminal act committed by
7-9 an employee, the employer may be liable for punitive damages but
7-10 only if:
7-11 (1) the principal authorized the doing and the manner
7-12 of the act;
7-13 (2) the agent was unfit and the principal acted with
7-14 malice in employing or retaining him;
7-15 (3) the agent was employed in a managerial capacity
7-16 and was acting in the scope of employment; or
7-17 (4) the employer or a manager of the employer ratified
7-18 or approved the act.
7-19 Sec. 41.006. AWARD SPECIFIC TO DEFENDANT. In any action in
7-20 which there are two or more defendants, an award of exemplary
7-21 damages must be specific as to a defendant, and each defendant is
7-22 liable only for the amount of the award made against that
7-23 defendant.
7-24 Sec. 41.007 <41.006>. PREJUDGMENT INTEREST. Prejudgment
7-25 interest may not be assessed or recovered on an award of exemplary
7-26 damages.
7-27 Sec. 41.008 <41.007>. LIMITATION ON AMOUNT OF RECOVERY.
8-1 (a) In an action in which a claimant seeks recovery of exemplary
8-2 damages, the trier of fact shall determine the amount of economic
8-3 damages separately from the amount of other compensatory damages.
8-4 (b) Exemplary <Except as provided by Section 41.008,
8-5 exemplary> damages awarded against a defendant may not exceed an
8-6 amount equal to the greater of:
8-7 (1)(A) two <four> times the amount of economic
8-8 <actual> damages; plus
8-9 (B) an amount equal to any noneconomic damages
8-10 found by the jury, not to exceed $750,000; or
8-11 (2) $200,000<, whichever is greater>.
8-12 (c) Subsection (b) does not apply to a cause of action
8-13 against a defendant from whom a plaintiff seeks recovery of
8-14 exemplary damages based on conduct described as a felony in the
8-15 following sections of the Penal Code if, except for Sections 49.07
8-16 and 49.08, the conduct was committed knowingly or intentionally:
8-17 (1) Section 19.02 (murder);
8-18 (2) Section 19.03 (capital murder);
8-19 (3) Section 20.04 (aggravated kidnapping);
8-20 (4) Section 22.02 (aggravated assault);
8-21 (5) Section 22.011 (sexual assault);
8-22 (6) Section 22.021 (aggravated sexual assault);
8-23 (7) Section 22.04 (injury to a child, elderly
8-24 individual, or disabled individual);
8-25 (8) Section 32.21 (forgery);
8-26 (9) Section 32.43 (commercial bribery);
8-27 (10) Section 32.45 (misapplication of fiduciary
9-1 property or property of financial institution);
9-2 (11) Section 32.46 (securing execution of document by
9-3 deception);
9-4 (12) Section 32.47 (fraudulent destruction, removal,
9-5 or concealment of writing);
9-6 (13) Chapter 31 (theft) the punishment level for which
9-7 is a felony of the third degree or higher;
9-8 (14) Section 49.07 (intoxication assault); or
9-9 (15) Section 49.08 (intoxication manslaughter).
9-10 (d) In this section, "intentionally" and "knowingly" have
9-11 the same meanings assigned those terms in Sections 6.03(a) and (b),
9-12 Penal Code.
9-13 (e) The provisions of Subsections (a) and (b) may not be
9-14 made known to a jury by any means, including voir dire,
9-15 introduction into evidence, argument, or instruction.
9-16 Sec. 41.009. BIFURCATED TRIAL. (a) On motion by a
9-17 defendant, the court shall provide for a bifurcated trial under
9-18 this section. A motion under this subsection shall be made prior
9-19 to voir dire examination of the jury or at a time specified by a
9-20 pretrial court order issued under Rule 166, Texas Rules of Civil
9-21 Procedure.
9-22 (b) In an action with more than one defendant, the court
9-23 shall provide for a bifurcated trial on motion of any defendant.
9-24 (c) In the first phase of a bifurcated trial, the trier of
9-25 fact shall determine:
9-26 (1) liability for compensatory and exemplary damages;
9-27 and
10-1 (2) the amount of compensatory damages.
10-2 (d) If liability for exemplary damages is established during
10-3 the first phase of a bifurcated trial, the trier of fact shall, in
10-4 the second phase of the trial, determine the amount of exemplary
10-5 damages to be awarded, if any.
10-6 Sec. 41.010. CONSIDERATIONS IN MAKING AWARD. (a) Before
10-7 making an award of exemplary damages, the trier of fact shall
10-8 consider the definition and purposes of exemplary damages as
10-9 provided by Section 41.001.
10-10 (b) The determination of whether to award exemplary damages
10-11 and the amount of exemplary damages to be awarded is within the
10-12 discretion of the trier of fact.
10-13 Sec. 41.011. EVIDENCE RELATING TO AMOUNT OF EXEMPLARY
10-14 DAMAGES. (a) In determining the amount of exemplary damages, the
10-15 trier of fact shall consider evidence, if any, relating to:
10-16 (1) the nature of the wrong;
10-17 (2) the character of the conduct involved;
10-18 (3) the degree of culpability of the wrongdoer;
10-19 (4) the situation and sensibilities of the parties
10-20 concerned;
10-21 (5) the extent to which such conduct offends a public
10-22 sense of justice and propriety; and
10-23 (6) the net worth of the defendant.
10-24 (b) Evidence that is relevant only to the amount of
10-25 exemplary damages that may be awarded is not admissible during the
10-26 first phase of a bifurcated trial.
10-27 Sec. 41.012. JURY INSTRUCTIONS. In a trial to a jury, the
11-1 court shall instruct the jury with regard to Sections 41.001,
11-2 41.003, 41.010, and 41.011.
11-3 Sec. 41.013. JUDICIAL REVIEW OF AWARD. (a) Except as
11-4 provided for in Subsection (b), an appellate court that reviews the
11-5 evidence with respect to a finding by a trier of fact concerning
11-6 liability for exemplary damages or with respect to the amount of
11-7 exemplary damages awarded shall state, in a written opinion, the
11-8 court's reasons for upholding or disturbing the finding or award.
11-9 The written opinion shall address the evidence or lack of evidence
11-10 with specificity, as it relates to the liability for or amount of
11-11 exemplary damages, in light of the requirements of this chapter.
11-12 (b) This section does not apply to the supreme court with
11-13 respect to its consideration of an application for writ of error.
11-14 <Sec. 41.008. EXCEPTION. Section 41.007 does not apply to
11-15 exemplary damages resulting from malice as defined by Section
11-16 41.001(6)(A) or to an intentional tort.>
11-17 <Sec. 41.009. PROVISIONS NOT TO BE MADE KNOWN TO JURY. The
11-18 provisions of Section 41.007 may not be made known to the jury
11-19 through any means, including voir dire, introduction into evidence,
11-20 or instruction.>
11-21 SECTION 2. This Act takes effect September 1, 1995, and
11-22 applies only to a cause of action that accrues on or after that
11-23 date. A suit filed before the effective date of this Act is
11-24 governed by the law applicable to the claim that existed
11-25 immediately before the effective date of this Act, and that law is
11-26 continued in effect for that purpose.
11-27 SECTION 3. The importance of this legislation and the
12-1 crowded condition of the calendars in both houses create an
12-2 emergency and an imperative public necessity that the
12-3 constitutional rule requiring bills to be read on three several
12-4 days in each house be suspended, and this rule is hereby suspended.