CIVIL PRACTICE & REMEDIES CODE
CHAPTER 42. SETTLEMENT
§ 42.001. DEFINITIONS. In this chapter:
(1) 'Claim' means a request, including a counterclaim,
cross-claim, or third-party claim, to recover monetary damages.
(2) 'Claimant' means a person making a claim.
(3) 'Defendant' means a person from whom a claimant
seeks recovery on a claim, including a counterdefendant,
cross-defendant, or third-party defendant.
(4) 'Governmental unit' means the state, a unit of
state government, or a political subdivision of this state.
(5) 'Litigation costs' means money actually spent and
obligations actually incurred that are directly related to the case
in which a settlement offer is made. The term includes:
(A) court costs;
(B) reasonable fees for not more than two
testifying expert witnesses; and
(C) reasonable attorney's fees.
(6) 'Settlement offer' means an offer to settle or
compromise a claim made in compliance with this chapter.
Added by Acts 2003, 78th Leg., ch. 204, § 2.01, eff. Sept. 1,
2003.
§ 42.002. APPLICABILITY AND EFFECT. (a) The
settlement procedures provided in this chapter apply only to claims
for monetary relief.
(b) This chapter does not apply to:
(1) a class action;
(2) a shareholder's derivative action;
(3) an action by or against a governmental unit;
(4) an action brought under the Family Code;
(5) an action to collect workers' compensation
benefits under Subtitle A, Title 5, Labor Code; or
(6) an action filed in a justice of the peace court.
(c) This chapter does not apply until a defendant files a
declaration that the settlement procedure allowed by this chapter
is available in the action. If there is more than one defendant,
the settlement procedure allowed by this chapter is available only
in relation to the defendant that filed the declaration and to the
parties that make or receive offers of settlement in relation to
that defendant.
(d) This chapter does not limit or affect the ability of any
person to:
(1) make an offer to settle or compromise a claim that
does not comply with this chapter; or
(2) offer to settle or compromise a claim to which this
chapter does not apply.
(e) An offer to settle or compromise that is not made under
this chapter or an offer to settle or compromise made in an action
to which this chapter does not apply does not entitle the offering
party to recover litigation costs under this chapter.
Added by Acts 2003, 78th Leg., ch. 204, § 2.01, eff. Sept. 1,
2003.
§ 42.003. MAKING SETTLEMENT OFFER. A settlement offer
must:
(1) be in writing;
(2) state that it is made under this chapter;
(3) state the terms by which the claims may be settled;
(4) state a deadline by which the settlement offer
must be accepted; and
(5) be served on all parties to whom the settlement
offer is made.
Added by Acts 2003, 78th Leg., ch. 204, § 2.01, eff. Sept. 1,
2003.
§ 42.004. AWARDING LITIGATION COSTS. (a) If a
settlement offer is made and rejected and the judgment to be
rendered will be significantly less favorable to the rejecting
party than was the settlement offer, the offering party shall
recover litigation costs from the rejecting party.
(b) A judgment will be significantly less favorable to the
rejecting party than is the settlement offer if:
(1) the rejecting party is a claimant and the award
will be less than 80 percent of the rejected offer; or
(2) the rejecting party is a defendant and the award
will be more than 120 percent of the rejected offer.
(c) The litigation costs that may be recovered by the
offering party under this section are limited to those litigation
costs incurred by the offering party after the date the rejecting
party rejected the settlement offer.
(d) The litigation costs that may be awarded under this
chapter may not be greater than an amount computed by:
(1) determining the sum of:
(A) 50 percent of the economic damages to be
awarded to the claimant in the judgment;
(B) 100 percent of the noneconomic damages to be
awarded to the claimant in the judgment; and
(C) 100 percent of the exemplary or additional
damages to be awarded to the claimant in the judgment; and
(2) subtracting from the amount determined under
Subdivision (1) the amount of any statutory or contractual liens in
connection with the occurrences or incidents giving rise to the
claim.
(e) If a claimant or defendant is entitled to recover fees
and costs under another law, that claimant or defendant may not
recover litigation costs in addition to the fees and costs
recoverable under the other law.
(f) If a claimant or defendant is entitled to recover fees
and costs under another law, the court must not include fees and
costs incurred by that claimant or defendant after the date of
rejection of the settlement offer when calculating the amount of
the judgment to be rendered under Subsection (a).
(g) If litigation costs are to be awarded against a
claimant, those litigation costs shall be awarded to the defendant
in the judgment as an offset against the claimant's recovery from
that defendant.
Added by Acts 2003, 78th Leg., ch. 204, § 2.01, eff. Sept. 1,
2003.
§ 42.005. SUPREME COURT TO MAKE RULES. (a) The supreme
court shall promulgate rules implementing this chapter. The rules
must be limited to settlement offers made under this chapter. The
rules must be in effect on January 1, 2004.
(b) The rules promulgated by the supreme court must provide:
(1) the date by which a defendant or defendants must
file the declaration required by Section 42.002(c);
(2) the date before which a party may not make a
settlement offer;
(3) the date after which a party may not make a
settlement offer; and
(4) procedures for:
(A) making an initial settlement offer;
(B) making successive settlement offers;
(C) withdrawing a settlement offer;
(D) accepting a settlement offer;
(E) rejecting a settlement offer; and
(F) modifying the deadline for making,
withdrawing, accepting, or rejecting a settlement offer.
(c) The rules promulgated by the supreme court must address
actions in which there are multiple parties and must provide that if
the offering party joins another party or designates a responsible
third party after making the settlement offer, the party to whom the
settlement offer was made may declare the offer void.
(d) The rules promulgated by the supreme court may:
(1) designate other actions to which the settlement
procedure of this chapter does not apply; and
(2) address other matters considered necessary by the
supreme court to the implementation of this chapter.
Added by Acts 2003, 78th Leg., ch. 204, § 2.01, eff. Sept. 1,
2003.
