Houston Litigation Blog : Houston Insurance Defense Lawyer & Attorney : McCormick Hancock Newton Law Firm : Defense Counsel and Civil Trial Lawyers : Serving Harris County, South Texas, Gulf Coast

Historically, risk managers and general counsel shudder at the thought of being sued in a State Court in Texas.  Images of huge verdicts and punitive damages have caused more than one general counsel to develop an ulcer over Texas litigation.   However, the current litigation climate in Texas is more favorable for defendants than it has ever been in the last twenty years. The 2005 Vioxx trial and the more recent litigation over the BP plant explosion notwithstanding, here is our countdown of the five reasons that now is the best time to try a case in Texas if you are a defendant in one of the major metropolitan areas:

5.         Comprehensive tort reform legislation that greatly limits the ability to make a big strike, including:

• Restrictions on joint and several liability;
• Ability to name responsible third parties including immune employers and governmental entities;
• Restrictive standards and a higher burden of proof for punitive damages;
• Punitive damage caps;
• Limits on the recovery of medical expenses to the amounts paid or incurred;
• Earning capacity recoveries limited to after tax amounts.

4.         Conservative trial courts. The majority of trial court judges currently sitting in Texas are Republicans.  While individual judges can sometimes be difficult to deal with regardless of party affiliation, more and more of the judges sitting on the trial court bench in this state are young and conservative.  They are generally more inclined to grant summary judgment, limit evidence at trial and grant a JNOV in the event of an unfavorable jury verdict.  

3.         Conservative Intermediate Courts of Appeal. Like the trial court benches, most of the intermediate courts of appeal in this state are populated by Republican judges.  These judges tend to favor Defendants more often than Plaintiffs. 

2.         Texas Supreme Court. The most conservative supreme court in the history of Texas, the current court consists of nine judges all Republican and almost all appointed by a very pro-business governor. This court has shown itself over the last several years to be heavily pro-business and pro-insurance. 

1.         Texas juries.   The main reason for the more favorable litigation climate of this State has been a fundamental change in the attitudes of most jurors.  Regardless of the position one takes on tort reform issues, most lawyers in this State agree that the campaigns of the last decade have had a profound affect on jury attitudes.  Although they can rarely articulate what a frivolous lawsuit is, most Texans today believe the courts of this State are inundated with them.  Rather than sympathize with an injured Plaintiff, jurors tend to view all Plaintiffs with a measure of skepticism.  Years ago, it was sometimes difficult to get a jury that could be fair to a large Fortune 500 company.  Now, more often than not, it is difficult for trial judges to seat a jury that will commit to be fair to a Plaintiff, much less award damages for intangibles such as pain and suffering or mental anguish.  

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Pending before the Texas Supreme Court is an important case that could have serious implications for the construction industry. In Lamar Homes v. Mid-Continent Casualty Company, the Supreme Court has been asked to answer a certified question posed by the 5^th Circuit Court of Appeals. Specifically, the Court has been asked to address whether allegations of construction defects and loss of use of a residence against the general contractor constitute an accident or occurrence and property damage within the context of a CGL policy.

 

We are watching this case closely as it could have a profound affect on many of our clients in the construction industry. Typically, most construction cases are defended by the contractor’s CGL policy as long as there are allegations that the defective work of the contractor caused damage to “other property.” In addition, the general contractor is usually covered for defective work performed by a subcontractor. However, recently, insurers have begun taking a hard line approach to defending these cases. Many now disclaim coverage outright or file declaratory judgment actions while defending under a reservation of rights. More and more, insurers are challenging whether a construction defect is an “occurrence” under the terms of the policy.

Unfortunately for the construction industry, the current Supreme Court is a very pro-insurance court. If past results are a predictor of future performance, expect the Court to come down on the side of the insurers.

 

In practice a pro-insurance ruling will make it difficult for a small or medium sized subcontractor to get work.     Because claims for defective work by a subcontractor will no longer be covered, most general contractors will be more careful in the selection of subcontractors.  The subcontractor’s ability to satisfy construction defect claims or fulfill indemnity obligations may take on an important role in the selection of subcontractors. In the past, a general contractor could expect the subcontractor’s insurance company to fulfill the sub’s indemnity obligations to the general. However, when these claims cease to be covered, the general will only be able to look to the subcontractor for indemnity. Even if a smaller sub has performed good work in the past, most general contractors will not be willing to take a chance on the smaller sub meeting its indemnity obligation in the event of a construction defect. 

 

More on this issue to come after the Supreme Court issues it opinion, expected some time this fall.

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Here is a link to the “Judicial Hellholes” Report of 2005 published by the American Tort Reform Association. www.atra.org/reports/hellholes/

 

In Texas, the following counties made the list of judicial hellholes: Jefferson, Brazoria, Cameron, Hidalgo, Nueces and Starr. With the exception of Brazoria County, the others do not come as much of a surprise. Our firm has handled cases in most of these counties and they have traditionally been considered as some of the most liberal venues in the State. Brazoria County apparently made the list on the strength of the Vioxx trial that went to verdict last year. Generally, speaking one verdict should not be sufficient for a particular venue to be dubbed a judicial hellhole.

 

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The best way to survive a bad venue is by retaining a good local counsel. This requires more than simply hiring the local office of a national law firm or thumbing through Martindale-Hubble. There are two general types and you should put some thought into what you really need. First, there are local counsel that are good trial lawyers. This type is familiar with the courts, local rules and jurors.  They are also familiar with the peculiarities of the geographical area. They are experienced trial lawyers and can serve as lead trial counsel or in a supporting role in your trial team. The second type of local counsel may or may not have all of the qualities of the first. He may not be a particularly talented trial lawyer or even be particularly helpful with the local rules. What distinguishes the second type of local counsel is his influence with the judge. The influential local counsel may be a distant relative of the judge, former law partner, mentor or golf buddy. Typically, one of the main factors that results in a venue being bad is the influence your opponent has with the judge. Retaining an influential local counsel can often help even the playing field.   While an influential local counsel will not guarantee that the judge will rule in your favor, his presence on your trial team will at least help your arguments be heard.  

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