2009 Texas Code
CIVIL PRACTICE AND REMEDIES CODE
TITLE 2. TRIAL, JUDGMENT, AND APPEAL
CHAPTER 42. SETTLEMENT  

CIVIL PRACTICE AND REMEDIES CODE

TITLE 2. TRIAL, JUDGMENT, AND APPEAL

SUBTITLE C. JUDGMENTS

CHAPTER 42. SETTLEMENT

Sec. 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, Sec. 2.01, eff. Sept. 1,

2003.

Sec. 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, Sec. 2.01, eff. Sept. 1,

2003.

Sec. 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, Sec. 2.01, eff. Sept. 1,

2003.

Sec. 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, Sec. 2.01, eff. Sept. 1,

2003.

Sec. 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, Sec. 2.01, eff. Sept. 1,

2003.