LIMITATIONS ON YOUR RIGHT TO RECOVER DAMAGES IN TEXAS

Money.jpegMany people don’t know that the Texas legislature has passed a law that puts limits on their right to recover damages when they have been injured by the gross negligence of others. This limitation on damages is contained in Chapter 41 of the Texas Civil Practices and Remedies Code. This statute applies to any action in which a plaintiff seeks recovery of monetary damages relating to a cause of action. Chapter 41 establishes the maximum damages that may be awarded in certain types of lawsuits, including an action for which damages can be awarded under other Texas law. However, Chapter 41 does not apply to the extent another law establishes a lower maximum amount of damages for the particular claim.

In an action to which Chapter 41 applies, the provisions of Chapter 41 will prevail over all other law to the extent there is any conflict. But the statute does not apply to suits brought under Section 15.21 of the Texas Business & Commerce Code (Texas Free Enterprise and Antitrust Act of 1983); an action brought under the Texas Deceptive Trade Practices-Consumer Protection Act (Subchapter E, Chapter 17, Business & Commerce Code) except as specifically provided in Section 17.50 of that Act; an action brought under Chapter 36 of the Texas Human Resources Code; or an action brought under Chapter 21 of the Texas Insurance Code.

Chapter 41 provides that exemplary damages may only be awarded if the plaintiff proves that the harm for which the plaintiff seeks the recovery of exemplary damages in the suit results from:

  • fraud;
  • malice; or
  • gross negligence.

“Fraud” means fraud other than constructive fraud.

“Malice” means a specific intent to cause substantial injury or harm to the plaintiff.

“Gross negligence” means an act or omission, which when viewed from the standpoint of the actor, involves an extreme degree of risk considering the probability and magnitude of the potential harm to others and which the actor has actual awareness of the risk involved, but nevertheless proceeds with conscious indifference to the rights, safety, or welfare of others.

The plaintiff must prove by clear and convincing evidence the elements of exemplary damages described above. The plaintiff’s burden of proof may not be shifted to the defendant or be established by evidence of ordinary negligence, bad faith, or a deceptive trade practice.

If the plaintiff relies on a statute establishing a cause of action which authorizes exemplary damages in specified circumstances or in conjunction with a specified culpable mental state, exemplary damages may be awarded only if the plaintiff proves by clear and convincing evidence that the damages result from the specified circumstances or the culpable mental state.

The statute establishes several factors that preclude the recovery of exemplary damages. Exemplary damages may only be awarded if damages other than nominal damages are awarded and exemplary damages may not be awarded to a plaintiff who elects to have his recovery multiplied under another statute, such as the Texas Deceptive Trade Practices Act.

In any action in which there are two or more defendants, an award of exemplary damages must be specific as to a defendant and each defendant is only liable for the amount of the award made against that defendant.

Chapter 41 places limitations on the amount that can be awarded for exemplary damages. In an action in which a plaintiff seeks recovery of damages, the jury must determine the amount of economic damages separately from the amount of other compensatory damages. The exemplary damages that can be awarded against a defendant may not exceed an amount of:

  • two times the amount of economic damages; plus an amount equal to any noneconomic damages found by the jury, not to exceed $750,000; or
  • $200,000, whichever is greater.

“Exemplary damages” means any damages awarded as a penalty or by way of punishment but not for compensatory purposes. Exemplary damages include punitive damages.

“Economic damages” means compensatory damages intended to compensate the plaintiff for actual economic or pecuniary loss. Economic damages do not include exemplary damages or noneconomic damages. However, with regard to certain economic damages, Chapter 41 limits the recovery of damages for medical or health care expenses to the amount actually paid or incurred by or on behalf of the plaintiff.

“Noneconomic damages” means damages awarded for the purpose of compensating the plaintiff for physical pain and suffering, mental or emotional pain or anguish, loss of consortium, disfigurement, physical impairment, loss of companionship and society, inconvenience, loss of enjoyment of life, injury to reputation, and all other nonpecuniary losses of any kind other than exemplary damages.

Chapter 41 provides for a bifurcated trial on the issue of punitive damages. Following a motion filed by a defendant, the court is required to provide for a bifurcated trial on the issue of the defendant’s liability for exemplary damages. The motion must be made prior to the selection of the jury or at the time required by any pretrial order issued by the court. If there is more than one defendant, the court is required to provide for a bifurcated trial on the motion of any of the defendants.

In the first phase of a bifurcated trial, the jury is required to determine liability for compensatory and exemplary damages and the amount of compensatory damages. Evidence that is relevant only to the amount of exemplary damages that may be awarded is not admissible during the first phase of a bifurcated trial.
If liability for exemplary damages is established during the first phase of the bifurcated trial, the jury, in the second phase of the trial, is required to determine the amount of exemplary damages to be awarded, if any.

In determining the amount of exemplary damages during the second phase of the bifurcated trial, the jury must consider the following factors:

  1. the nature of the wrong;
  2. the character of the conduct involved;
  3. the degree of culpability of the wrongdoer;
  4. the situation and sensibilities of the parties concerned;
  5. the extent to which such conduct offends a public sense of justice and propriety; and
  6. the net worth of the defendant.

Exemplary damages may be awarded only if the jury was unanimous in regard to finding liability. Prejudgment interest may not be assessed on an award of exemplary damages.

At the Law Office of Stephen O’Rear, P.C. we help people when they have been injured by the malice or gross negligence of others.