Texas Supreme Court Adopts New Rules for Dismissal of Baseless Causes of Action and for Expedited Actions
The Texas Supreme Court has adopted new rules of civil procedure and evidence to provide a method for the dismissal of “baseless” causes of action and to provide rules for expedited proceedings in cases involving less than $100,000 in damages. The rules were promulgated in response to a 2011 statute requiring the Supreme Court to adopt such rules.
Dismissal of Baseless Causes of Action
New Texas Rule of Civil Procedure 91a allows a court to dismiss a cause of action that has no basis in law or fact. A cause of action has no basis in law if the allegations, taken as true, 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.
A party seeking dismissal under Rule 91a has to file a motion to dismiss within 60 days of receiving the first pleading containing the challenged cause of action and the court must rule on the motion within 45 days after the motion is filed. The court may hold an oral hearing but is not required to. The ruling must be based solely on the pleading and the court cannot consider any evidence outside of the challenged pleading.
While Rule 91a is procedurally similar to the dismissal practice under Federal Rule 12(b)(6), the state rule has one important difference. In actions between private parties, the court “must award the prevailing party . . . all costs and reasonable and necessary attorneys fees” incurred in connection with filing or opposing the motion. The rule does not specify whether the fees have to be paid immediately or whether payment can be deferred until final resolution of the case. There are no exceptions to the loser pays provision. That means that there is a risk to filing a motion to dismiss in an unfavorable court where the judge is unlikely to grant the motion.
Rule 91a becomes effective on March 1, 2013 and applies to all cases pending on that date.
New Texas Rule of Civil Procedure 169 addresses cases in which the only relief sought is monetary relief of $100,000 or less including attorney fees, prejudgment interest, statutory penalties, and court costs. Discovery in such cases is limited under Texas Rule of Civil Procedure 190.2 (including no more than six hours per party for examination and cross-examination of all witnesses in oral depositions and reduced written discovery) and the discovery period is limited to 180 days from the date the first request for discovery of any kind is served on a party. On a party’s request, trial must be set for a date within 90 days of the end of the discovery party. Trial can be continued no more than two times not to exceed a total of 60 days. Each side is limited to eight hours to complete jury selection, opening statements, examination of witnesses and presentation of evidence, and closing arguments. A court can extend the time limit to no more than 12 hours per side. The court cannot award more than $100,000 in recovery.
The parties in an expedited action can agree to alternative dispute resolution, but the procedure cannot last more than half a day, cannot exceed a total cost of twice the amount of applicable civil filing fees, and must be completed at least 60 days before the initial trial setting.
A case can be removed from the expedited process on a showing of good cause or if a claimant other than a counter-claimant seeks recovery of more than $100,000 or seeks nonmonetary relief.
In order to determine which cases will qualify for proceeding under Rule 169, the Texas Rules of Civil Procedure are being amended to require pleading with more specificity the relief that is being sought. Any pleading containing a claim for relief must specify whether the claimant is seeking (a) only monetary relief of $100,000 or less, (b) monetary relief of less than $100,000 as well as non-monetary relief, (c) monetary relief between $100,000 and $200,000, (d) monetary relief of over $200,000 but less than $1,000,000, or (e) more than $1,000,000. If the pleading does not specify the relief sought, the party may not conduct discovery until the pleading is amended.
The Texas Association of Defense Counsel and the Defense Research Institute opposed adoption of Rule 169 because the rule leaves the decision to invoke the expedited process solely in the hands of the plaintiff and does not include counterclaims in considering the amount of the relief sought. The Texas Supreme Court adopted the rule over those objections.
Rule 169 may substantially reduce attorney’s fees and discovery costs in certain cases. By careful pleading, a plaintiff will be able to dictate whether a case is brought within the expedited procedures of Rule 169. The rule becomes effective on March 1, 2013, and applies to cases filed on or after that date.