December 25, 2012
Texas judiciary adopts new rules expedited rules for small controversies; less frivolous litigation
In 1998, the Texas judiciary overhauled its discovery rules to reduce the expense and delay of litigation. Among the many changes made was the adoption of Rule 190 which created three levels of discovery control plans based on the amount of monetary relief being sought. In 2011, the Texas Legislature took another step to address the cost and time-consuming nature of litigation when it passed HB 274, directing the Texas Supreme Court to promulgate four new sets of rules of procedure to further "reduce the expense and delay of litigation, while maintaining fairness to litigants." The court adopted the first two sets of rules on offers of judgment and permissive appeals in August 2011. In November 2012, the court adopted the final two sets of rules that establish mandatory expedited proceedings in civil actions seeking $100,000 or less and motions to dismiss meritless claims.
To effectuate expedited proceedings, the court added Texas Rule of Civil Procedure 169 and amended Rules 47 and 190. Texas Rule of Civil Procedure 47 — Claims for Relief — now requires all claimants (via original petition, counterclaim, crossclaim or third-party claim) to affirmatively state one of five recognized options listing the maximum amount of monetary damages being sought in the lawsuit. Failure to comply with this new requirement precludes discovery until the pleading is amended. The amount of relief being claimed also limits the amount the party can recover in a judgment.
For purposes of expediting proceedings, only the first of the five recovery options is for only monetary relief of $100,000 or less (unless the suit involves a claim governed by the Family Code, Property Code, Tax Code and Chapter 74 of the Civil Practice and Remedies Code) is relevant. Suits that fall into that category are now governed by new Rule 169 — Expedited Actions — and the opt-out exceptions to Level 1's discovery limits have been removed from Rule 190.2 such that parties can no longer agree to modify the discovery limitations and courts are no longer required to modify the different discovery control plan as a consequence of newly discovered information. See Rule 190.2 (deleting old subsection b (exception)) and 190.5 (providing the court discretion to not extend discovery). A plaintiff can only avoid the expedited process by seeking nonmonetary relief or asking for relief in excess of $100,000. A defendant or third party can only remove the suit from the expedited rules by filing a pleading that seeks non-monetary relief or additional monetary relief such that the total of relief sought by all claimants is in excess of $100,000. Such pleadings, however, must be filed with the leave of court if they are filed within 30 days of the close of discovery or trial.
Expedited proceedings are allowed a limited amount of discovery and trial time. Discovery is limited to Level 1 as set forth in Rule 190.2. Rule 190.2 has also been modified to add limits to the number of requests for production and admissions and to limit the discovery period to 180 days. Under the old rule, parties were not limited to a certain number of requests. Now parties are limited to 15 requests for production and 15 requests for admission. Interestingly, to offset the possible burden of these discovery limitations, the court is now allowing parties in Level 1 cases to ask the opposing party (through requests for disclosure) to produce "all documents, electronic information and tangible items that the disclosing party has in its possession, custody or control and may use to support its claims and defenses." Rule 192.1(b)(6). The court also cannot order the parties to engage in alternative dispute resolution, unless the parties agree or are required by contract to do so.
Upon the request of any party, the court must set the case for a trial date within 90 days after the discovery period ends. At trial, each side (not party) is also limited to five hours — from voir dire to closing arguments — excluding objections, juror challenges and bench conferences. The expedited process also limits when an expert can be challenged, but at a $100,000 controversy limit it is unlikely that many experts will be involved. Further, courts may not require parties in cases governed under this Rule to engage in alternative dispute resolution.
Dismissal of Baseless Causes of Action
In addition to expediting certain cases, the court also created a mechanism to allow early challenges to claims that parties believe have no basis in law or fact. This new motion is governed by newly created Texas Rule of Civil Procedure 91a and requires courts to grant or deny the motion within 45 days of its filing. This new rule does not apply to cases governed by the family code or brought by inmates under Chapter 14 of the Texas Civil Practice and Remedies Code. A claim has "no basis in law" if "the allegations, taken as true, together with the inferences reasonably drawn from them, do not entitle the claimant to the relief sought." A cause of action has no "basis in fact" if "no reasonable person could believe the facts pleaded." Rule 91a(1).
As an incentive to voluntary nonsuit challenged claims or a withdrawal of a motion that a party realizes cannot win, the court has added a fee shifting provision to this rule that attaches if the motion or challenged claim remains pending seven days before the hearing or if a response is filed, the motion or challenged claim remains pending before the hearing. Rule 91a(7) provides that, with the exception of actions involving governmental entities and public officials operating in their official capacities, the prevailing party will be awarded costs and attorneys fees.
To invoke these provisions, the motion must:
Be filed within 60 days after the challenged cause of action was first pled against the movant.
Specifically state that the motion is made pursuant to this rule.
Identify each challenged action and state specifically why that action has no basis in law, fact or both.
Like summary judgment motions, the motion must be filed at least 21 days before it is heard by the court and a response must be made no later than seven days before the hearing. However, unlike summary judgment motions, the only evidence a court is to consider in its ruling on this motion is the pleading of the cause of action and any applicable pleading exhibits. In this way, the motion is similar to Rule 12(b)(6) of the Federal Rules of Civil Procedure, except in the Texas Rule the party who loses pays the other party's reasonable fees and costs.
Because the $100,000 cap for expedited actions includes all types of damages, including attorneys' fees and interest, the expedited rules will likely end up applying only to small controversies. But, it will streamline those cases causing them to be resolved more quickly and with less expense. A trial could occur within one year of the filing of suit (or even earlier if the court desires), with limited discovery, no mediation and perhaps a two-day trial.
The dismissal rule should prevent frivolous lawsuits from being filed and end the practice of parties with real claims from adding every potential claim its can think of to the pleadings. If a lawsuit or individual claims are found to have no basis in law or fact and are dismissed under TRCP 91a, a plaintiff filing a frivolous lawsuit or making frivolous claims will have to pay the defendant's attorneys' fees if the court grants the motions. Conversely, defendants will have to pay the plaintiff's attorneys' fees if they file frivolous motions to dismiss. This should serve as a deterrent to frivolous lawsuits and motions to dismiss as well as reduce the shotgun approach of listing claims in original complaints.
These changes to the Texas Rules of Civil Procedure are open to public comment until Feb. 1, 2013, and as such could be modified before going into effect on March 1, 2013.