Frivolous or groundless lawsuits are those that are not based on facts or the law. We recall extreme examples of frivolous lawsuits from news reports, and we know these cases can be expensive, stressful and time consuming for those fighting them. That’s why it is critical for Texas to have a process for courts to deal with frivolous lawsuits.
Texas has long required lawyers to certify that a lawsuit is not groundless and is not brought in bad faith, to harass a defendant, or to delay or increase the cost of litigation. Over the years, both the Texas Legislature and Texas Supreme Court have taken steps to strengthen the law to ensure frivolous lawsuits don’t tie up our courts and create unnecessary and expensive litigation against Texans.
1995: Sanctions for Frivolous Pleadings
In Texas, the rules governing procedures for lawsuits can be implemented in two ways: through bills passed by the Texas Legislature or through rules of civil procedure created by the Texas Supreme Court. In both of these systems, Texas has codified and updated its frivolous lawsuit provisions over the past 30 years.
In a law passed in 1987, the Legislature declared that if a court determines that a pleading is groundless and filed for an improper purpose—to harass, cause delay or increase cost—the court is required to impose a sanction that could include striking the pleading, dismissing the party’s case or ordering the offending person to pay the other side’s expenses and attorney’s fees. But under this 1987 law, the sanction could not be imposed until 90 days later, during which time the offending party could withdraw the pleading and largely avoid the sanction.
In 1990, the Texas Supreme Court amended its frivolous pleadings rule to require notice and a hearing before a sanction could be imposed, but also to eliminate the rule’s pre-existing 90-day grace period. This rule change effectively repealed conflicting laws that had been previously passed by the Legislature, including the 1987 statute.
In 1995, the Texas Legislature passed Senate Bill 31, a new frivolous pleadings statute. The new statute provides that signing a pleading certifies to the best of the signer’s knowledge that:
- the pleading is not being presented for any improper purpose, including to harass or cause unnecessary delay or needless increase in the cost of litigation;
- each legal contention is warranted by the law;
- each allegation about facts has evidentiary support; and
- each denial of a factual contention is warranted on the evidence.
If a court determines a person has signed a pleading or motion in violation of the statute, it may impose a sanction which may include directing the violator to perform or refrain from performing an act, an order to pay a penalty into court, or an order to pay to the other party the amount of the reasonable expenses incurred because of the filing of the pleading, including reasonable attorney’s fees.
2011: Loser Pays on Motion to Dismiss
Before 2011, procedural rules governing civil cases in Texas did not overtly allow a court to dismiss a frivolous case. To deal with a frivolous case in Texas, a party would move for a summary judgment, effectively a motion to dismiss the case. However, these motions typically would not be entertained by a court until the plaintiff was allowed to conduct expensive pre-trial discovery.
In 2011, the Texas Legislature passed House Bill 274 to require the Texas Supreme Court to create a rule to dismiss cases that have “no basis in law or fact,” and to require that the motion to dismiss be granted or denied within 45 days of its filing. The law also allows the prevailing party to be awarded his costs and reasonable attorney fees. The rules apply to all civil cases except those brought under the Family Code.
2003, 2011: Offer of Settlement
One method to discourage frivolous lawsuits and encourage a quick resolution of all lawsuits is to allow defendants to make an offer of settlement to the plaintiff early in the litigation process. If a plaintiff declines the settlement offer and chooses to pursue the lawsuit, and if at the end of the case the settlement offer would have been better for the plaintiff than the court’s judgment turns out to be, then the plaintiff must pay the defendant’s attorney’s fees.
For example, a week after a lawsuit is filed, the defendant offers the plaintiff $1,000 to settle the case, which the plaintiff refuses. After 18 months of expensive litigation, the jury awards the plaintiff $800. Under an offer of settlement law, the court must award the defendant the amount of attorney’s fees she spent defending herself in the plaintiff’s lawsuit from the date on which her settlement offer was refused by the plaintiff.
In TLR’s first legislative session in 1995, House Bill 668 amended two of Texas’ consumer protection statutes—the Deceptive Trade Practices Act and Unfair Claim-Settlement Practices Act—to include offer of settlement provisions. (See also Consumer Protection).
Based on that model, in House Bill 4 of 2003, the Texas Legislature passed a new offer of settlement statute to apply to virtually all kinds of cases filed in Texas courts. Under the statute, either the plaintiff or defendant may make a settlement offer, although the process may be initiated only by the defendant. This keeps it from becoming a one-way “defendant pay” rule that would result when the plaintiff is unable to pay an award to the defendant (which is particularly common in personal injury cases). However, the 2003 law limited the amount that could be assessed against a plaintiff to the sum of all punitive damages plus all non-economic damages plus one half of actual damages awarded to the plaintiff.
In 2011 in House Bill 274, the Legislature amended the 2003 statute to expand the amount of attorney fees and litigation costs that could be assessed against a plaintiff who rejected a settlement offer that was better than the ultimate judgment to the entire amount of damages awarded to the plaintiff.