Texas Legislative Update 2023
The Texas Legislature’s general session concluded on May 29, 2023 with several very important pieces of legislation being passed. The Legislature was unable to resolve issues related to property tax relief and border security and Governor Abbott has a called for a Special Session to address those issues. Several of the bills which did pass will impact both construction and businesses in the State of Texas and include the following.
HB 1255 – Limitation Periods on Arbitration Proceedings
Summary: HB 1255 makes it clear that statutes of limitation apply and will bar claims in arbitration. New added Section 16.073 of the Civil Practice and Remedies Code provides that “a party may not assert a claim in an arbitration proceeding if the party could not bring suit for the claim in court due to the expiration of the applicable limitations period.” However, under the proposed section 16.073, the party “may assert a claim in an arbitration proceeding after expiration of the applicable limitations period if: (1) the party brought suit for the claim in court before the expiration of the applicable limitations period; and (2) a court ordered the parties to arbitrate the claim.”
HB 2022 – Revisions to the Residential Construction Liability Act (RCLA)
Summary: HB 2022, amends Chapter 27 of the Property Code (otherwise known as the RCLA) in several significant ways, as follows.
– A contractor is liable for damages only to the extent a defective condition proximately causes actual physical damage to the residence, an actual failure or lack of capability of a building component to perform its intended function or purpose, or a verifiable danger to the safety of the occupants of the residence.
– A contractor is not liable for damages caused by the failure of a person other than the contractor to timely notify the contractor of a construction defect.
– A contractor is not liable for normal cracking or shrinkage cracking.
– To maintain a breach of a warranty of habitability, a claimant must establish that a construction defect was latent on the date the residence was completed or title was conveyed to the original purchaser and the defect has rendered the residence uninhabitable for its intended use as a home.
– A contractor must have up to 3 inspections during the 35-day right to cure period after being provided with notice of the alleged defects.
– Recoverable damages will be limited only to economic damages as listed in the statute.
– The court or arbitration tribunal may find that an offer of settlement by the contractor made after the applicable deadline is timely if the claimant failed to provide the contractor with evidence of the defect, or amended a claim to add a new alleged defect (or under circumstances beyond the contractor’s control).
– Limitations applies to an arbitration proceeding as they do to a filing in court.
HB 2024 Shortened Statutes of Repose for Residential Construction
Summary: HB 2024 amends section 16.008 of the CPRC (otherwise known as the Statute of Repose against Design Professionals) and would require a person bringing a claim arising out of the design, planning, or inspection or a new residence, an alteration of or repair or addition to an existing residence, or an appurtenance to a residence against a registered or licensed architect, engineer, interior designer, or landscape architect no later than 8 years after the substantial completion of the improvement or the beginning of operation of the equipment in an action arising out of a defective or unsafe condition of the real property, the improvement, or the equipment.
In addition HB 2024 also amended section 16.009 of the CPRC (Statute of Repose against Contractors) to establish a 10-year limitations period in a similar action against a person who constructs or repairs the improvement. But it establishes a 6-year limitations period if the defendant is a contractor who has provided a written warranty for the residence with coverage for a minimum period of one year for workmanship and materials, two years for plumbing, electrical, and HVAC, and five years for major structural components.
HB 19 – Creation of a Specialty Business Court
Summary: HB 19, creates a business trial court system in Texas. This bill has been introduced several times over the years and makes major changes in how large business disputes will be handled in Texas and which judges will be allowed to preside over these case. It also completely removes the judges from being elected or subject to election retention. HB 19 does the following:
This specialty court would have jurisdiction over cases in which the amount in controversy exceeds $5 million and involve most claims directly against the business arising from the financial transactions of the business
The court would also have jurisdiction over commercial disputes in which the amount in controversy exceeds $10 million and involve: (1) an action arising out of a “qualified transaction” (as defined in the bill); (2) an action that arises out of a contract or commercial transaction in which the parties to the contract or transaction agreed to that the business court has jurisdiction over the action, except an action arising out of an insurance contract; and (3) an action that arises out of a violation of the Finance Code or Business & Commerce Code by an organization or an officer or governing person acting on behalf of an organization, other than a bank, credit union, or savings and loan association.
Actions seeking injunctive or declaratory relief so long as it involves a dispute falling within the scope of the jurisdictional grant for the business court; and
Any other claim related to a case or controversy within the court’s jurisdiction that forms part of the same case or controversy. A claim within the business court’s supplemental jurisdiction may only proceed upon agreement of all parties and the judge.
– Unless such claims fall within the court’s supplemental jurisdiction, actions outside of the business court’s jurisdiction are those brought by or against a governmental entity; those seeking to foreclose a lien on real or personal property; personal injury or death claims; claims under the DTPA, the Estates Code, the Family Code, the Insurance Code, Title 9 of the Property Code, and Texas’s covenants not to compete statute; claims related to mechanics and materialman’s liens; claims arising from the production or sale of farm products; claims related to consumer transactions; or claims related to duties and obligations under an insurance policy.
– Provides that claims within the jurisdiction of the business court may be directly filed there.
– Established a procedure for removing claims (or parts of claims) not within the jurisdiction of the business court to a county in which the claim could have originally been filed.
– Provides a process for removing an action (or parts of actions) from a district or county court to the business court on motion of a party.
– The legislation also created a new statewide 15th Court of Appeals which will have exclusive jurisdiction over appeals from the specialty business court.
– The legislation also provides for certain requirements of a business court judge to be at least 35 years of age, a U.S citizens, a Texas resident for two years preceding appointment, a Texas licensed attorney with at least 10 years of experience in Texas in practicing complex business litigation or business transaction law, serving as a judge of a Texas civil court, or any combination of the above.
– Provides for the gubernatorial appointment of judges.
– Provides for two-year terms with the possibility of reappointment.
– Provides a salary equal to the sum of a district judge’s salary and the maximum amount of county contributions and supplements allowed by law to be paid to a district judge.
– Bars a business court judge from private practice while in office.
– Provides for the appointment of visiting judges by the chief justice of the Supreme Court.
– Provides that a party has a right to a jury trial where required by the constitution in the county in which venue is proper under, if the case was removed to the business court, in the county in which the case was originally filed.
– Requires a jury trial in a case filed initially in business court to be held in any county of proper venue, as chosen by the plaintiff.
– Allows the parties to agree to hold a jury trial in another county.
– Requires the Texas Supreme Court to adopt rules relating to written opinions.
– Provides for the central administration of the business court in Travis County, with judges maintaining chambers in the county seat of their county of residence.
– Provides that the business court will be composed of geographic divisions that correspond to the state’s eleven administrative judicial regions. Judges will be appointed to each business court division, with two judges in five of the divisions and one judge in each of the remaining six divisions.
– Allows parties to appear by remote proceedings.
– Authorizes the business court to set filing fees.
HB 1745 – Civil Actions or Arbitration Involving Transportation Network Companies (Rideshare Companies)
Summary: HB 1745 adds Chapter 150E to the Civil Practice and Remedies Code and requires a claimant bringing a personal injury action against a transportation network company (basically Uber, Lyft and other type ride share companies) to file with the petition (or at the initiation of arbitration) an affidavit by claimant’s counsel setting forth specifically for each theory of recovery (1) the negligence, if any, or other action, error, or omission of the company; and (2) the factual basis for each claim. HB 1745 further require a third-party expert affidavit attesting that the damages exceed the applicable insurance coverage and require a court or arbitration tribunal to dismiss the action for failure to file the affidavits.
HB 1745 also makes an order granting or denying a motion to dismiss immediately appealable as an interlocutory appeal or grounds to file an application to a court to review the order of the arbitration tribunal.
Further, HB 1745 would prevent a transportation network company from being held vicariously liable if the company did not commit a state or federal crime and has fulfilled its obligations with respect to the company driver.
If you have any questions about these or any other Legislative developments, please contact us at info@gstexlaw.com.
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