Presented at Houston Bar Association September 2008
Presented at Advanced Personal Injury Seminar 2007
By Randall O. Sorrels
Abraham, Watkins, Nichols, Sorrels, Agosto & Aziz
800 Commerce Street
Houston, TX 77002
Summary of 33.004 - You need two looks
At first glance, the Responsible Third Party (RTP) statute appears to be about as clearly written as one could ask from the Texas Legislature. The current version of Chapter 33.004 of the Civil Practice & Remedies Code (entitled "Designation of Responsible Third Party") was enacted by the 78th Texas Legislature in 2003 and can be summarized as follows:
- Defendant can designate an RTP by filing a motion for leave to designate that person as an RTP.
- "Responsible third party" is any person who is alleged to have caused or contributed to causing in any way the harm for which recovery of damages is sought.
- The motion must be filed 60 days before the trial date (with a good cause exception).
- A claimant can then join the RTP no later than 60 days after the designation, even if such joinder would otherwise be barred by limitations.
- The court must grant leave to designate unless another party files an objection to the motion for leave within 15 days after the motion is served.
- Even with an objection, the court must grant leave to designate unless the objecting party establishes the defendant did not plead sufficient facts and, if given leave to replead, the defendant fails to plead sufficient facts concerning the alleged responsibility satisfying the pleading requirements.
- Any responsible party, including, workers compensation protected employers, bankrupt parties, and parties over whom the court has no jurisdiction, can be designated as an RTP.
- An unknown criminal who committed a criminal act that was the cause of the loss or injury can be designated under certain additional circumstances.
- An unknown person can be designated as an RTP as a Jane Doe or John Doe until the person's identity is known.
- After adequate time for discovery, a motion to strike the designation of an RTP is allowed if there is no evidence to raise a genuine issue of fact regarding the designated person's responsibility for the claimant's injury or damages.
But on second glance, there does appear to be more than meets the eye, and while there is not a wealth of case law addressing the 2003 statute, the appellate courts to date recognize there are indeed nuances in the statute that need interpretation and there are also strategies being developed involving this statute.
II. Why do we have a Responsible Third Party Designation rule?
The responsible third party designation rule has evolved from various Texas contribution schemes - that is "the payment by each tortes of his proportionate share of the plaintiff's damages to any other tortes who has paid more than his proportionate part." General Motors Corp. v. Simmons, 558 S.W.2d 855, 859 (Tex. 1977). A review of the various contribution statutes requires analysis of the development of joint and several liability law in Texas. Although beyond the scope of this paper, it is fair to summarize the current state Texas law as a proportionate responsibility system that allows joint and several liability if a defendant's percentage of responsibility is greater than 50% or if certain criminal acts are involved with the defendant's conduct.
Proponents of the RTP designation argue that without this law, a jury would not be permitted to consider the fault of all of those who are responsible. While opponents of the RTP designation argue the responsible third party legislation lessens a defendant's potential to be jointly and severally liable, and turns "jury submission of proportionate responsibility into a free-for-all where the defendant could freely add anyone, even unknown parties, to the mix." David Holman, House Bill 4 Symposium Issue: Responsible Third Parties, 46 S. Tex. L. Rev. 869, 880 (2005).
While the "traditional" third party practice has been alive and well for many decades, the term "responsible third party" was first introduced into our statutory system in 1995. At the time, the Texas Legislature allowed an existing defendant in a case to join an RTP in the lawsuit. An RTP originally could not include a claimant's workers compensation protected employer, a bankrupt party, or a seller eligible for indemnity under Section 82.002 of the Texas Civil Practice & Remedies Code.
IV. 2003 House Bill 4 Changes.
The 2003 changes to Section 33.004 provide some significant changes to the original language and some significant advantages to defendants for suits filed after September 1, 2003. For example, no joinder is now required - just designation. Buena v. Cort Beverages, 2005 L (W.D. Tex., 2005). Now, defendants can wait until nearly the last minute to designate an RTP and it is difficult to imagine a scenario where a properly and timely pled good faith motion to designate an RTP would be denied under the current rules. Also, and probably, the biggest concern for plaintiffs, the 2003 changes allow parties who could never have been sued (and never could be sued) to be designated. This includes unknown parties who will never have their story told to the jury.
Seemingly, the only bones that were thrown to the plaintiffs' bar in 2003 were: (1) a 60-day extension of the statute of limitations was added for the plaintiffs if the plaintiffs' claim would otherwise be barred by limitations; and (2) the legislature reduced to writing the ability of a party moving to strike the designation of an RTP on the grounds there is no evidence the designated person is responsible for any portion of the claimant's alleged injury or damages. - to essence, this is a no evidence motion for summary judgment - which is not significantly different than the requirement there be sufficient evidence to submit a party's name to the jury in the court's charge.
V. ATTENTION DEFENSE LAWYERS: Timing is Everything.
A defense lawyer is well advised to add to his or her initial evaluation checklist the consideration of the designation of an RTP at a very early date. Just as there are tight deadlines on motions to transfer venue and special appearances, there are also tight deadlines with certain RTPs. The rule requires:
a. In the event the defendant believes an unknown person committed a criminal act that was the cause of the loss or injury that is subject to the lawsuit, the defendant must file the designation motion no later than 60 days after the filing of defendant's original answer; and
b. In a non-unknown criminal case, the motion must be filed on or before the 60th day before trial unless the court finds good cause to allow the motion to be filed at a later date.
This is important because if the trial court denies a defendant's motion for leave to designate a person as an RTP, mandamus may not be a remedy, and the case may be submitted to the jury without any reference to RTPs in the jury questions. In In re: Unitec Elevator Services Co., 178 S.W.3d 53 (Tex. App. - Houston [1st Dist.] 2005, no pet.), the First Court of Appeals denied Unitec's mandamus not only because of timing issues on some RTP's, but also because Unitec had an adequate remedy by appeal with respect to the trial court's denial of its motion for leave to designate another potential RTP.
In Unitec, plaintiffs alleged they sustained personal injuries while working for Southwestern Bell Telephone Company when the elevator in which they were riding fell three stories. Plaintiffs alleged Unitec Elevator Services Company was responsible for the maintenance of the elevator and had knowledge the elevator was having mechanical failures. Unitec attempted to designate three potential RTP's - Southwestern Bell, unknown vandals, and Center Point Energy.
Unitec first designated Southwestern Bell Telephone Company as a responsible third party, but the trial court sustained the plaintiffs' objection to Unitec's motion for leave to designate because Unitec failed to plead sufficient facts to support its allegations against Southwestern Bell. Unitec sought mandamus relief. The First Court of Appeals focused on the original order denying Unitec's motion for leave to designate and held Unitec had an adequate remedy by appeal with respect to the trial court's denial. The court did note mandamus may be appropriate under certain circumstances, citing In re Arthur Anderson LLP, 121 S.W.3d 471 (Tex. App. - Houston [14th Dist.] 2003, orig. proceeding), which was "dealing with the complex, intertwined facts surrounding the collapse of a major corporation," as opposed to "a relatively straight forward personal injury case." Unitec at 64.
Unitec then filed a second motion for leave to designate unknown vandals as responsible third parties. However, Unitec did not meet the procedural requirements for filing within 60 days after the filing of the defendant's original answer as required under Section 33.004(j). The appellate court noted the requirement of subsection (j) is clear and unambiguous, and requires a defendant to file an answer alleging an unknown person committed a criminal act that was a cause of the loss or injury that is subject to the lawsuit no later than 60 days from the original answer. Because Unitec did not timely file an answer containing the required allegations, Unitec was precluded from designating unknown vandals as responsible third parties.
Finally, Unitec later designated CenterPoint Energy as an RTP. Plaintiffs objected that Unitec did not timely file its motion and designation because it was filed within 60 days of trial. The trial court sustained plaintiffs' objections to the CenterPoint designation, and the Houston court held the trial court did not abuse its discretion by denying Unitec's motion for leave to designate CenterPoint.
PRACTICE TIP: A defense lawyer should quickly analyze a new lawsuit to determine if there were any unknown criminals that may have participated in causing the loss or injury, and file the appropriate answer within the 60 days of filing the original answer.
VI. Statute of Limitations Defense? Plaintiffs' Lawyers Beware.
a. The General Rule.
The 2003 amendments to Section 33.004 do help plaintiffs avoid a statute of limitations defense when a responsible third party is designated by a defendant. In Russell v. Wendy's International, Inc., 219 S.W.3d 329 (Tex. App. - Dallas 2007, no pet.), the Dallas Court of Appeals held Section 33.004(e) is a savings clause that does not allow a properly joined RTP as a defendant in the case to successfully assert a defense of statute of limitations.
Russell was employed as a service technician by Wendy's (a non-subscriber). After receiving an electrical shock at work, Russell timely filed suit against an electrical contractor ("Bugle"). After limitations had run, Bugle filed a third party action against Wendy's, contending Wendy's was a "responsible third party." Within 60 days, Russell joined Wendy's, which promptly filed an answer asserting a statute of limitations defense. Note: Wendy's was "joined" and not "designated" by a motion.
Wendy's asserted Chapter 33 required a timely motion and order to join a responsible third party, and because there was no such motion filed, Russell could not use Section 33.004(e) to extend his limitations as to Wendy's. Applying the pre-2003 amendments to Section 33.004, the court found both Bugle's filing and Russell's subsequent initiation of suit against Wendy's were permissible, notwithstanding the limitations argument. Plaintiff therefore was permitted to join a designated RIP as a defendant even if the statute of-limitations period had expired.
b. Statute of Repose.
The "statute of limitations" versus the "statute of repose" issue has not been addressed by the Texas Supreme Court, but the San Antonio Court of Appeals addressed the issue in Pochucha v. Galbraith Eng'g Consultants, Inc., 243 S.W.3d 138 (Tex. App. - San Antonio 2007, pet. denied). In this case, the plaintiffs purchased a home and later noticed a water leak after it rained. Engineers who inspected the house indicated that the French drain system under the foundation of the house was not properly designed and installed. Plaintiffs sued the construction company, who later filed a motion for leave to designate Galbraith (an engineering consultants firm involved in the original design of the French drain system) as a responsible third party. Notwithstanding the fact that over ten years had elapsed since the time Galbraith was involved, plaintiffs joined Galbraith as a defendant.
Galbraith moved for summary judgment seeking dismissal of the plaintiffs' claim on the ten- year statute of repose defense set forth in Section 16.008(a) of the Texas Civil Practice & Remedies Code. Galbraith argued because Section 16.008 is a statute of repose and Section 33.004(e) refers to "limitations," Section 33.004 (e) does not apply to extend the ten-year period contained in Section 16.008.
The San Antonio Court held Chapter 33 "applies to any cause of action based on tort in which a defendant, settling person, or responsible third party is found responsible for a percentage of the harm for which relief is sought." The court concluded when the legislature used the word "limitations" in Section 33.004(e), it was meant to apply to all, without regard to whether those periods were determined to be statutes of repose or statute of limitations.
c. Medical Malpractice Cases.
Health care providers may attempt to argue a strictly interpreted Section 74.251 of the Texas Civil Practice & Remedies Code trumps the RTP designation savings provision which would allow a health care provider to be brought in after limitations has expired. Section 74.251 states: "Notwithstanding any other law and subject to Subsection (b), no health care liability claim may be commenced unless the action is filed within two years from the occurrence of the breach or tort or from the date the medical or health care treatment that is the subject of the claim or hospitalization for which the claim is made is completed; ..." Tex. Civ. Prac. & Rem. Code Ann. §74.251. A review of the legislative history regarding the intended interaction of Section 33.004 (e) with Section 74.251 should allow a plaintiff to join a health care provider RTP after limitations has expired:
I have another question and this one deals with Article 4. When a defendant names a responsible third party as I understand it, under House Bill 4, the plaintiff has 60 days to bring the third party into the lawsuit, even if limitations would otherwise have run against that person. That's under § 33.004(e), page 20, line 27 to page 21, line 7. Is that true in a medical malpractice claim too? Is that also the same thing with medical malpractice, because on page 63 of the bill it seems to say that the two-year statute in those - the two-year statute of limitations in those cases applies notwithstanding any other law? What does that mean?
Well - the short answer is that it does, in fact, apply. If health care providers are going to have the benefit of the designation of a responsible third party, then they - then they have to be - they have to abide by the same rules under that provision and so this 60-day provision would apply in health care liability claims.
Note, however, the expert report filing requirements are not affected by Section 33.004 and there are many suggestions on how to address the filing requirements if a plaintiff is in any way concerned about the doctor being accused while unrepresented. Because the trial court may have full discretion in allowing an RTP, the plaintiff's lawyer should consider working with the potential RTP health care provider/defendant to make the rules work in their favor to get the RTP dismissed. Whether a court will hold the expert report filing requirements apply to the movant and are required under Section 33.004(l) is still an undecided question.
d. Legal Malpractice - Statute of Limitations?
One of the most common legal malpractice allegations asserted against plaintiffs' lawyers is the failure to timely file suit within the appropriate statute of limitations. Recall the requirement to prevail in a legal malpractice claim requires the following:
(a) Plaintiff must prove there is duty owed to him by the defendant;
(b) A breach of that duty;
(c) The breach proximately caused the plaintiff's injuries; and
(d) Damages occurred.
McKinley v, Stripling, 763 S.W.2d 407 (Tex. 1989). The plaintiff also has the burden to prove his suit would have been successful but for the negligence of his attorney, and "to show what amount would have been collectible had he recovered the judgment. " Jackson v. Urban, Coolidge, Pennington & Scott, 516 S.W.2d 948 (Tex. App. - Houston [1 st Dist.] 1974, writ ref'd n.r.e.).
If a lawyer is sued for failing to file within an appropriate limitations period, that lawyer should designate the actual party (who should have been sued within the appropriate limitations) as a responsible third party. This should force the plaintiff to then join that RTP (the original tortfeasor, for example) and limitations is defeated. Therefore, the accused attorney may ultimately be cleared of any financial responsibility for any original error that may have been made because the plaintiff would have to recover from the original tortfeasor.
One other note of interest: if the defendant/attorney designates the original tortfeasor as an RTP, and the legal malpractice plaintiff's attorney fails to timely join the original tortfeasor within the 60-day window, the defendant attorney should consider then designating the legal malpractice plaintiff's attorney as an RTP. What a circle this may create!
e. Naming a decedent.
Another question that hasn't been addressed is who to name if an RTP has died. "Responsible Third Party" is defined as "any person..." A dead person can't be a "person" under Texas law, so what do you do if an estate isn't opened? And what does the plaintiff's lawyer file if the defendant does name a decedent? A special exception or motion to strike?
VII. Pleading requirements.
Don't forget about the pleading requirements of Rule 13, that requires attorneys or parties to certify "they have read the pleading, motion or other paper; that to the best of their knowledge, information, and belief formed after reasonable inquiry the instrument is not groundless and brought in bad faith or groundless and brought for the purpose of harassment." Tex. R. Civ. P. Rule 13.
VIII. Federal Court Designation - Substantial or Procedural?
There is still an outstanding question whether the RTP statute would be applied in a case in federal court. In Kelly v. Wal-Mart Stores, Inc., 224, F.Supp. 2d 1082 (E.D. Tex. 2002), the Eastern District Court denied a properly joined third-party defendant's motion to dismiss. Looking at the old statute, the court noted, "however, Federal Rule of Civil Procedure 14(a) also describes when a defendant may join responsible third parties to an on-going civil action and according to Federal Rule of Civil Procedure 1, 'these rules govern the procedure in the United States district courts in all suits of a civil nature...' Accordingly, this court may follow Federal Rule of Civil Procedure 14(a) for determining whether Wal-Mart may join Enviro as a third-party defendant to this action." Kelly at 1084. The court noted that because no substantive provisions of Texas law were being ignored by the court's ruling, joinder would be allowed under the federal rules. See also Bigelow v New York Lighter Co., NO. A03 CA 340 LY (W.D. Tex. Nov. 25, 2003).
The Northern District also looked at the predecessor to the 2003 changes and held "[s]ince section 33.004 of the Code is only a joinder statute, and contribution and indemnity actions are allowed under Sections 33.016 and 33.017, of the Code, 'no substantive provisions of Texas law are being ignored by this court's ruling' to use Federal Rule 14 to determine whether to add third-party defendants to the case." Mareila v.4utoZone, Inc, 204_U.S.Dist. Lexis 24890 (N.D. Tex. 2004).
IX. Plaintiff's Procedure.
Note Section (e) of 33.004 allows a claimant to "join" a previously designated RTP not later than 30 days after the RTP is designated. Using a belt and suspenders approach, the plaintiff's attorney should not only amend its petition and name the RTP, but should also file a motion for leave to join and serve the RTP as a defendant to comply with the technical language of the statute.
X. Criminal Activities.
The criminal activities' provision (Sec. 33.004(j)) raises a number of issues that are not addressed in the statute including:
a. The crime can be a misdemeanor or a felony (including something ordinarily denoted by a traffic ticket);
b. The fact that the unknown person was never charged with a crime;
c. The burden of proof (beyond a reasonable doubt vs. by a preponderance of the evidence); and
d. Whether the elements of the crime, including criminal intent, must be proved.
A broad reading of the statute seems to allow the unknown criminal to be simply submitted to the jury without any of these issues being answered.
The 2003 changes to the designation of responsible third party statute have provided defendants an opportunity to deflect and/or decrease their liability exposure, deflect and/or decrease their potential for joint and several liability, and to assert various tactical advantages both logistically and timing-wise. Plaintiffs may take heart in the ability to name a party that should have been earlier named, but was missed for a variety of reasons. On the whole, however, the defendants appear to have gained greater advantage by the enactment of this statute.