The 84th Texas Legislature has passed two bills, pending approval from Governor Greg Abbott, that are intended to protect Texas companies and citizens who are involved in personal injury lawsuits.

House Bill 1692

HB 1692 is a bill intended to protect companies and citizens from lawsuits filed by foreign plaintiffs in Texas courts involving incidents that occur outside of Texas state borders. Previously,  there was a forum non conveniens law contained within section 71.051 of the Texas Civil Practice and Remedies Code, which prohibited the dismissal of personal injury or wrongful death claims filed by nonresidents on ground of forum non conveniens, so long as one plaintiff in the lawsuit was a legal resident of Texas.

The bill, which can be viewed here, allows parties in lawsuits to file for a change of venue via forum non coveniens. This allows a party to potentially change the venue of the lawsuit if there is a more convenient and appropriate venue available. Generally, these motions are granted at the discretion of the presiding judge, and judges in the U.S. take a number of factors into consideration including location of witnesses, availability of evidence, and potential undue hardship for defendant. Courts allow changes of venue for judicial efficiency but the Texas prohibition of changing forums in certain situations caused much hardship for at least one prominent automotive company.

In Re: Ford Motor Company

The impetus for this law change came from a 2014 Texas Supreme Court Case (In re Ford Motor Company, 442 S.W. 3d 265 [Tex. 2014]). In this case, the company was required to defend a Texas wrongful death claim involving two Mexican residents who were in a car accident which took place in Mexico. The survivor of the crash sued the estate of a Mexican decedent in Texas state court, even though he was not a Texas resident. The court in that case allowed the suit to go forward in Texas, even though logically it may have made more sense to try the case in a Mexican court. The legislature felt that this reading of the law was unfair to the Ford Motor Company and wanted to clarify the law in order to prevent similar situations from arising in the future.

The new law clarifies that the legal residency exception only applies to plaintiffs who are legal residents of Texas or derivative claimants of legal residents of Texas. The law also provides that the forum non coveniens anaylsis will be made individually with respect to all claimants. “Plaintiff” has also been redefined to exclude representatives, administrators, guardians, and next friends unless they are a derivative claimant of a Texas resident.

This law, if signed by Abbott, will only apply to new lawsuits.

Senate Bill 735

Prior to this bill, personal net worth evidence was almost always discoverable in personal injury cases, as long as the discovery of that evidence was related to a claim for punitive damages. Texas lawmakers took issue with this practice because although there are many claims for punitive damages, there are relatively few instances where punitive damages are actually awarded. That means that more often than not, parties in personal injury lawsuits had their personal net worth revealed in cases where no punitive damages were awarded.

Lunsford v. Morris

In Lunsford v. Morris, 746 S.W.2d 471 (Tex. 1988) the Texas Supreme Court set a precedent that allowed the discovery of net worth evidence in relation to punitive damages claims. This was later codified into law but the the Texas Civil Practice and Remedies Code did not give any judicial guidance as to what net worth actually was, and what materials were actually discoverable. Predictably, this has led to a range of inconsistent applications of the law and lawmakers saw this as a correctable issue.

The new law defines net worth as “the total assets of a person minus the total liabilities of the person on a date determined appropriate by the trial court.” More importantly, the new law makes the discovery of net worth evidence valid only when the plaintiff “has demonstrated a substantial likelihood of success on the merits of a claim for exemplary damages.” The new law tries to more accurately reflect the reality of punitive damage claims, which are rarely awarded in Texas courts. The new law protects the privacy of individuals and companies who do not wish to have their personal net worth broadcast to the courts without good cause.

This law, if signed by Governor Abbott, will take effect on September 1, 2015 and will only apply to new actions commenced on or after that date.

If you’ve been injured due to someone else’s negligence, please call our Dallas personal injury lawyers at 1-800-ATTORNEY. We provide free consultations, and we are available 24 hours a day to answer any questions you may have.