This session, many legislators were dedicated to making changes to the civil justice system in Texas. The hard work of Rep. Joe Nixon and Sen. Bill Ratliff paid off with the passing of House Bill 4. This bill marks the first major change in tort reform since the 1995 legislation and will bring significant changes to the Texas civil litigation process. For those that are not familiar with the term "tort," simplistically, it is a legal term referring to a wrong committed against another, independent of contract and not a criminal act. "Tort Reform" brings about changes in different Texas statutes that pertain to the parties involved in civil disputes. These statutes affect subcontractors and suppliers involved in civil actions regardless of whether they are plaintiffs or defendants.

There are many changes made by the 133-page bill. Some are specific to certain businesses, such as health care, while others will apply to all businesses. Below is a brief discussion of a few topics with direct relevance to construction. A comprehensive summary of the entire bill and the complete text of the bill can be found at the Legislation page of the TCA Web site: www.texcon.org.

One important feature of HB 4 is the settlement offer procedure. This provides incentives for parties to make and accept reasonable settlement offers early in lawsuits by shifting litigation-related costs when a party refuses a pre-trial settlement offer that turns out to be as good as or better than what that party ultimately wins. New Texas law will allow a defendant to initiate this cost-shifting mechanism, and once he or she does, any party may make a written offer of settlement to one or more of the other parties. With the cost-shifting procedure in effect, if a defendant makes an offer that is rejected, and the plaintiff does not obtain judgment for at least 80 percent of the amount, the attorney fees and costs incurred after rejection must be paid by the plaintiff.

But on the flip side, if a plaintiff makes an offer that is rejected, and the judgment exceeds 120 percent of the amount, the attorney fees and costs incurred by the plaintiff after rejection must be paid by the defendant. The amount of these fees and costs shifted cannot exceed the sum of non-economic damages plus punitive damages plus 50 percent of the economic damages.

HB 4 also changes laws governing proportionate responsibility to assure that Texas juries may assess fault to all parties who contributed to the claimant's harm. This ensures that defendants will only be responsible for the portion of fault attributable to them because a jury is allowed to consider the conduct of all potentially responsible persons when determining fault for a plaintiff's injury. This fault can be allocated to any responsible person, including a bankrupt, criminal, person beyond the court's jurisdiction, or employer with workman's compensation immunity. A defendant pays only the assessed percentage of the judgment. This provision will have significant implications in employee injury actions for employer subcontractors who are indemnitors under broad form indemnification clauses.

Another construction-related provision of HB 4 will require a plaintiff filing suit against an architect or licensed professional engineer to file a "Certificate of Merit" with its complaint. The Certificate of Merit must be in affidavit form and must set forth at least one negligent act, error, or omission claimed to exist and must be signed by an expert witness who holds a Texas license in the field and actively practices the same subject area as the defendant.

For non-manufacturing suppliers, the bill gives greater protection that currently exists. A seller that does not manufacture the product will not be liable for harm caused by the product. There are exceptions if it is proved that the seller: helped to design the product; altered the product; installed the product; made wrong factual representations about the product; exercised control over the warnings or instructions about the product; knew of the defect at the time of the sale; or the manufacturer is insolvent or not subject to the jurisdiction of the court.

The statute of repose of 15 years might help contractors. Recently, manufacturing workers have attempted to bring actions against contractors by claiming they were exposed to asbestos or other dangerous products from construction operations in the manufacturing plants. Some of these actions are for alleged exposures that occurred many years ago. The changes made in HB 4 might limit some of these actions.