“Loser Pay” Provision

Some of this year’s earlier legislation arising out of Texas House Bill 274 regarding lawsuits has recently gone into effect. Part of that legislation directed the Texas Supreme Court to develop certain procedural guidelines to implement that legislation. One area that has recently been reviewed by several stake holders in the litigation practice involves the dismissal of causes of action that have no basis in law or in fact. This is part of the loosely called “Loser Pay” provision.

The proposed guidelines are the product of work done by various members of the Texas Association of Defense Counsel, the Texas Trial Lawyers Association, and the Texas Chapter of The American Board of Trial Advocates. Deadlines imposed by these procedural guidelines include a requirement that a motion to dismiss one or more causes of action in a pleading must be filed within 60 days of the date the moving party was first served with the pleading. The court must set the motion to dismiss for oral hearing as promptly as practicable and must either grant or deny the motion within 45 days of the date the motion is filed.

In ruling on the motion to dismiss, the court is constrained in what evidence it can consider and must accept all actual allegations in the pleading as true. There is also a constraint on what additional evidence may be considered by the judge in ruling on the motion. Finally, the court cannot convert the motion to dismiss under this rule to a motion for summary judgment. The proposal also addresses the ability of a party to amend its pleadings prior to hearing the of motion to dismiss. But an official record must be kept of the oral hearing on the motion to dismiss, and ultimately the court will be required to award costs and reasonable and necessary attorney’s fees to the prevailing party.

Don’t hesitate to contact me at (713) 222-7211. I can provide you the proposed guidelines, or any additional information on this topic.