Case Law Update – Responsible Third Parties (RTPs)

In Texas, defendants are able to shift liability to responsible third parties (RTPs) by merely filing a motion for leave to designate. Although, the term RTP is really a misnomer, as a RTP will never be held responsible for any of the inured victim’s damages. The only way to ever truly hold a RTP responsible is for the injured victim to add that RTP as a proper defendant in the litigation. Of course, this will not solve all problems, as plaintiffs still cannot recover damages from immune employers protected by the Texas Workers Compensation Act, bankrupt parties, and unknown parties. In short, RTP practice allows defendants to shift liability and to avoid joint and several liability with greater frequency.

One of the few advantages given to plaintiffs by the RTP statute (CPRC 33.004) is the ability to sue a RTP as a defendant, even after the limitations period has expired with regards to that particular party. Essentially, the injured victim (plaintiff) must file suit against a party within the limitations period (this may not even be required). That defendant then designates some other party as a RTP. Even if the limitations period has expired against that particular RTP, the plaintiff can join the RTP as a defendant and defeat any limitations defense by the newly added defendant, provided that the plaintiff joined that defendant within 60 days of the designation as a RTP.

In a recent case, the San Antonio Court of Appeals considered the application of the RTP statute and the limitations savings provision in the context of an agreement between the plaintiff and the defendant. Flack v. Hanke, 2009 Tex. App. LEXIS 3639 (Tex. App.–San Antonio May 27, 2009, no pet. h.). In Flack, the plaintiff (Flack) sued the defendant (Hanke) within the 2 year limitations period. After 2 years had expired from the date of the injury, Flack and Hanke entered a settlement agreement. The agreement provided that Hanke would designate two other parties as RTPs and that Flack would then file suit against those two parties (A and B) to make them defendants in the lawsuit. After Flack and Hanke did this, Hanke was dismissed from the case.

The two new defendants each filed motions for summary judgment based on limitations. One of the defendants (A) also filed a motion to strike its own designation as a RTP. The trial court granted all the motions and Flack appealed. On appeal, the court held that Flack timely filed suit against the two RTPs (A and B) within the 60 window allowed by the RTP statute. The court held that this joinder was proper, even after the limitations period had expired against A and B. The court held the joinder as proper, even in light of the agreement between Flack and Hanke. Thus, according to this court, the plaintiff and the defendant may reach a settlement agreement that allows the plaintiff to institute suit against parties outside the limitations period, provided plaintiff complies with the RTP statute. The court also held that although Hanke was a “settling person” at the time of the designation of A and B, Hanke was also still a “defendant” and was allowed to designate RTPs. The court noted that nothing in the definitions of “settling person” or “defendant” made the definitions mutually exclusive.

With regards to A’s argument that its limitations defense should prevail, given that it was struck as a RTP, the court held that only a party can move to strike the designation of a RTP. The court noted that A was in fact a party at the time that it moved to strike its own designation as a RTP. However, the court held that once Flack had joined A as a defendant in the suit, A lost its status as a RTP and, thus, A could not move to strike its designation as a RTP because it was no longer a RTP. A had become a defendant and had lost RTP status. In the end, the court remanded the case to the trial court to allow Flack to proceed to trial against A and B. Thus, those representing plaintiffs should be aware of the possibilities in adding defendants after limitations. The plaintiff can even make it a condition of a settlement agreement with a defendant.