STATE LAW SUMMARY Overview of the State of Texas

Updated 2013 Preparer: David L. Sargent Hermes Sargent Bates, L.L.P. Dallas, Texas Table of Contents

Overview of the Texas Court System

A. Trial Courts B. Appellate Courts

Procedural

A. Venue B. Statute of Limitations C. Time for Filing an Answer D. Dismissal Re-Filing of Suit

Liability A. Negligence B. Negligence Defenses C. Gross Negligence, Recklessness, Willful and Wanton Conduct D. Negligent Hiring and Retention E. Negligent Entrustment F. Dram Shop G. Joint and Several Liability H. Wrongful Death and/or Survival Actions I. Vicarious Liability J. Exclusivity of Workers’ Compensation

Damages A. Statutory Caps on Damages B. Compensatory Damages for Bodily Injury C. Collateral Source D. Pre-Judgment / Post Judgment Interest E. Damages for Emotional Distress F. Wrongful Death and/or Survival Action Damages G. Punitive Damages H. Diminution in Value of Damaged Vehicle I. Loss of Use of Motor Vehicle

Evidentiary Issues

A. Preventability Determination B. Traffic Citation from Accident C. Failure to Wear a Seat Belt D. Failure of Motorcyclist to Wear a Helmet E. Evidence of Alcohol or Drug Intoxication F. Testimony of Investigating Police Officer G. Expert Testimony H. Collateral Source I. Recorded Statements J. Prior Convictions K. Driving History L. Fatigue M. Spoliation

Settlement

A. Offer of Judgment B. Liens C. Minor Settlement D. Negotiating Directly With Attorneys E. Confidentiality Agreements F. Releases G. Voidable Releases

Transportation Law A. State DOT Regulatory Requirements B. State Speed Limits C. Overview of State CDL Requirements

Insurance Issues

A. State Minimum Limits of Financial Responsibility B. Uninsured Motorist Coverage C. No Fault Insurance D. Disclosure of Limits and Layers of Coverage E. Unfair Claims Practices F. Bad Faith Claims G. Coverage - Duty of Insured H. Fellow Employee Exclusions

Overview of the State of Texas Court System

A. Trial Courts Texas utilizes a variety of trial courts, including district, county, and justice of the peace courts. Districts courts are the highest trial court in Texas and require an amount in controversy that exceeds $500. County courts at law are statutorily created courts that typically have concurrent jurisdiction with district courts. However, in most counties the county courts at law have a jurisdictional cap of $200,000. Texas also utilizes constitutional county courts, which handle matters with an amount in controversy

between $200.01 and $10,000. Justice of the peace courts have original jurisdiction over matters with an amount in controversy of $200 or less. They also have jurisdiction, along with district and county courts, over cases with an amount in controversy up to $10,000. In 2011, the Texas Legislature repealed the statute governing small claims courts and instructed justice of the peace courts to hold small claims courts. These changes take effect on May 1, 2013. Generally, the southern region of Texas, known as “the Valley,” is known for having plaintiff-friendly venues. Additionally, Dallas and Houston have become plaintiff-friendly in recent years. Much of north and west Texas, as well as many of the more rural counties throughout the state tend to be defense-friendly venues. Mediation requirements vary across the state and typically are determined by the local rules. Most courts require the parties to mediate before trial. Some courts will enter an order that appoints a mediator if the parties cannot agree on one. However, others leave the issue to the discretion of the parties. Trials in district court have twelve jurors and require the consensus of ten jurors to reach a verdict, while trials in county courts typically have six jurors and require a consensus of five for a verdict. TEX. R. CIV. P. 292. Awards of exemplary (punitive) damages must be unanimous and based on clear and convincing evidence. Procedurally, Texas created an expedited action/trial process, which took effect on March 1, 2013 and is set forth in Rule 169 of the Texas Rules of Civil Procedure. The expedited action process applies when all claimants affirmatively plead that they seek only monetary relief aggregating $100,000 or less, including damages of any kind, penalties, costs, expenses, pre-judgment interest, and attorney fees. TEX. R. CIV. P. 169(a). Accordingly, a plaintiff must include in his pleading a statement that the damages sought are either: (1) less than $100,000; (2) less than $100,000 without a claim for non-monetary relief; (3) between $100,000 to $200,000; (4) between $200,000 to $1,000,000; or (5) monetary relief over $1,000,000. TEX. R. CIV. P. 47(c). Failure to do so stays all discovery until such a statement is included. TEX. R. CIV. P. 47. Once a case is under the expedited action rules, discovery is governed by Rule 190.2. An expedited action is subject to significant limitations in both discovery and at trial. In particular, each party gets only six hours to examine and cross-examine all witnesses in oral depositions. Additionally, requests for production, requests for admission, and interrogatories are all limited to 15 each. At trial, each side is allowed no more than eight hours to complete jury selection, opening statements, presentation of evidence, examination and cross-examination of witnesses, and closing arguments. A court must set a case for trial within 90 days after the discovery period ends and may only continue a case twice, not to exceed a total of 60 days.

B. Appellate Courts

Texas has fourteen civil appellate districts. These regional courts of appeals have appellate jurisdiction over the trial courts located in their respective districts. A panel of three justices typically presides over cases before these courts. The Texas Supreme Court has final appellate jurisdiction in all civil and juvenile cases. Nine elected justices preside on the Supreme Court. The Texas Court of Criminal Appeals is the highest state court for appeals resulting from criminal cases. Procedural

A. Venue Proper venue in Texas is determined according to a hierarchical scheme found in Chapter 15 of the Texas Civil Practice & Remedies Code. When a mandatory venue provision applies, then the suit must be filed in a county satisfying the mandatory venue requirement. For example, a suit involving real property must be brought in the county in which all or part of the real estate is located. If a mandatory venue provision does not apply, then venue is determined by the general venue rule. Specifically, a lawsuit must be filed in (a) the county where all or a substantial part of the events giving rise to the claim occurred, (b) the county of a natural person defendant’s residence at the time the cause of action accrued, (c) the county of the principal office of a non-natural person defendant, or (d) the county where the plaintiff resided when the cause of action accrued and if none of the other provisions applies. Additionally, subchapter C of Chapter 15 of the Texas Civil Practice & Remedies Code provides some permissive venue rules that are available as alternatives to the general venue rule for certain circumstances.

B. Statute of Limitations The statute of limitations for personal injury and wrongful death in Texas is two years from the day the cause of action accrues. TEX. CIV. PRAC. & REM. CODE § 16.003(a). A tort action generally accrues for purposes of the statute of limitations when the defendant's wrongful act causes the injury. Moreno v. Sterling Drug, Inc., 787 S.W.2d 348, 351 (Tex. 1990). For wrongful death claims, the cause of action accrues on the death of the injured person. TEX. CIV. PRAC. & REM. CODE § 16.003(b). If a minor child is injured, the statute of limitations on tort claims brought by or on behalf of the child do not expire until two years after the child’s eighteenth birthday, unless the child has been emancipated by court order or is married. S.V. v. R.V., 933 S.W.2d 1, 8 (Tex. 1996). Additionally, if the minor incurs medical expenses, the claim for damages belongs to the minor’s parents and the two year statute of limitations begins to run when the accident occurs, regardless of the fact that the statute of limitations is tolled for the

minor. See Sax v. Votteler, 648 S.W.2d 661, 666 (Tex. 1983); Morrell v. Finke, 184 S.W.3d 257, 290 (Tex.App.—Ft. Worth 2005, pet. denied); Garza v. Garza, 182 S.W.3d 69, 71 (Tex. App.—San Antonio, 2005, no pet.).

C. Time for Filing An Answer An answer is due by 10:00 a.m. on the Monday next following the expiration of twenty days after the date of service of the petition and citation. If the twentieth date falls on a Monday, then the answer is due the following Monday.

D. Dismissal Re-Filing of Suit A plaintiff may make an oral request for or written notice of a non-suit of a case at any time before all of its evidence has been introduced at trial. TEX. R. CIV. P. 162. Such non-suit may be without prejudice and takes effect immediately upon the filing of a notice of non-suit or a request has been made in open court. Liability

A. Negligence In order to be successful in an action for negligence, a plaintiff must prove that the defendant owed the plaintiff a duty, that the defendant breached that duty, that the breach proximately caused the occurrence in question, and that the plaintiff suffered damages. Nabors Drilling, Inc. v. Escoto, 288 S.W.3d 401, 404 (Tex. 2009); Lucas v. Texas Industries, Inc., 696 S.W.2d 372, 376 (Tex. 1984). Under the doctrine of negligence per se, the unexcused violation of a motor vehicle statute constitutes negligence as a matter of law. Moughon v. Wolf, 576 S.W.2d 603, 604 (Tex. 1978). In order for the violation of a statute to constitute negligence per se, the injury must be one that the statute was intended to prevent, and the purpose of the statute must have been to protect the class of persons to which the injured party belongs. East Texas Motor Freight Lines v. Loftis, 223 S.W.2d 613, 615 (Tex. 1949); Mundy v. Pirie-Slaughter Motor Co., 206 S.W.2d 587 (Tex. 1947). Courts have held that if violation of the statute is conditioned on proof that a defendant failed to act “safely,” “in safety,” or “prudently,” the statute will not support a negligence per se claim as it establishes a conditional rather an absolute duty and it requires an inquiry by the trier of fact to determine the reasonableness of the defendant’s conduct. Perry v. S.N., 973 S.W.2d 301, 305-06 (Tex. 1998); Ordonez v. McCurdy, 984 S.W.2d 265, 271 (Tex.App.—Houston [1st Dist.] 1998, no pet.). After a statutory violation has been established as negligence per se, the plaintiff must still prove that the statutory violation was the proximate cause of the plaintiff’s injuries. Missouri Pacific Railroad Co. v. American Statesman, 552 S.W.2d 99, 103 (Tex. 1977). Texas no longer follows the strict doctrine of contributory negligence in which any negligence on the part of the plaintiff that contributed to the injury barred the plaintiff’s recovery. Instead, Texas now employs a comparative negligence and proportionate responsibility scheme. In an action to recover damages for negligence resulting in personal injury, property damage, or death, a plaintiff may recover damages only if his

percentage of responsibility is less than or equal to 50 percent. TEX. CIV. PRAC. & REM. CODE § 33.001(a). If the plaintiff is not barred from recovery, then the court is required to reduce the amount of damages to be recovered by a percentage equal to the claimant's percentage of responsibility. TEX. CIV. PRAC. & REM. CODE § 33.012.

B. Negligence Defenses Under Texas’ comparative negligence and proportionate responsibility scheme, a number of common law affirmative defenses have become factors in the apportionment of responsibility. For example, assumption of the risk is no longer an affirmative defense in most circumstances and is primarily a factor for determining portions of responsibility and negligence. Del Lago Partners v. Smith, 307 S.W.3d 762, 772 (Tex. 2010). Additionally, a defendant can assert in response to a negligence claim several inferential rebuttals, which seek to disprove an essential element of the plaintiff’s case by proof of other facts. Dillard v. Texas Elec. Coop., 157 S.W.3d 429, 430 (Tex. 2005). Inferential rebuttals include the following defenses:

- A sudden emergency is a defense when (1) a person was suddenly and unexpectedly confronted with a situation that was not proximately caused by any negligence on that person’s part, (2) a reasonable person would have believed the situation required immediate action without time for deliberation, and (3) the person acted as an ordinarily prudent person under those circumstances would have acted. McDonald Transit, Inc. v. Moore, 565 S.W.2d 43, 44 (Tex. 1978).

- The sole proximate cause arises when the only cause of the incident in question was not by the plaintiff or the defendant. Dillard, 157 S.W.3d at 432.

- An unavoidable accident occurs when an event is proximately caused by an unforeseeable, nonhuman condition, and not by the negligence of any party. Id.

- A new and independent cause is one that intervenes between the original wrong and the final injury so that the injury is attributed to the new cause rather than the original and more remote cause. Dew v. Crown Derrick Erectors, Inc., 208 S.W.3d 448, 450 (Tex. 2006).

- An act of God is an act that was caused directly and exclusively by the pure violence of nature, was without human intervention, contribution, or cause, and could not have been prevented by reasonable foresight or care. Scott v. Atchison, Topeka & Santa Fe Ry., 572 S.W.2d 273, 279 (Tex. 1978). A defendant may escape liability by establishing that the act complained of was caused solely by such an act of God.

The Texas Rules of Civil Procedure also recognize the following affirmative defenses: accord and satisfaction, arbitration and award, discharge in bankruptcy, duress, estoppel, release, and statute of limitations. TEX. R. CIV. P. 94.

C. Gross Negligence, Recklessness, Willful and Wanton Conduct

In Texas, gross negligence is defined as that “entire want of care as to establish that the act or omission was the result of actual conscious indifference to the rights, safety, or welfare of the person affected.” Transportation Ins. Co. v. Moriel, 879 S.W.2d 10, 20 (Tex. 1994). An employer can be held vicariously liable for the gross negligence of an employee if the employer: (1) authorized or directed the wrongful act; (2) the employee was unfit and the principle was reckless in employing him or her; (3) the employer notified or approved of the act; or (4) the employee was in a managerial capacity and was acting within the scope of his employment. Group Hospital Services, Inc. v. Daniel, 704 S.W.2d 870, 877 (Tex. App.—Corpus Christi 1985, no writ); Union Transports, Inc. v. Braun, 318 S.W.2d 927, 941 (Tex. Civ. App.—Eastland 1958, no writ).

D. Negligent Hiring and Retention The basis of liability under the doctrine of negligent hiring is the employer's own negligence in hiring or retaining an incompetent servant whom the employer knows or by the exercise of reasonable care should have known was incompetent or unfit, thereby creating an unreasonable risk of harm to others. Estate of Arrington v. Fields, 578 S.W.2d 173, 178 (Tex.Civ.App.—Tyler 1979, writ ref’d n.r.e.). In order for the employer to be liable, the negligence in hiring the employee must be the proximate cause of the plaintiff’s injuries. Liability is not dependent upon a finding that the employee was acting within the course and scope of employment when the wrongful conduct occurred. An employer can also be directly liable for exemplary damages for gross negligence in the hiring or supervision of an employee even if the employee is only found liable for ordinary negligence. Id. at 179.

E. Negligent Entrustment The elements of negligent entrustment are: (1) the defendant entrusted the vehicle to another; (2) the person to whom the defendant entrusted the vehicle was an incompetent, unlicensed, or reckless driver; (3) at the time of the entrustment, the defendant knew or should have known that the driver was incompetent, unlicensed, or reckless; (4) the driver was negligent; and (5) the driver’s negligence proximately caused the accident in question. Schneider v. Esperanza Transmission Co., 744 S.W.2d 595, 596 (Tex. 1997). Punitive damages may be awarded if the driver was unfit and the owner of the vehicle was grossly negligent in entrusting the vehicle to the driver. Hanna v. Lott, 888 S.W.2d 132, 137 (Tex.Civ.App.—Tyler 1994, no writ). The owner of a vehicle may be found liable for gross negligent entrustment even if the driver is only liable for ordinary negligence. Montgomery Ward & Co. v. Marvin Riggs Co., 584 S.W.2d 863, 867 (Tex.Civ.App.—Austin 1979, writ ref’d n.r.e.).

F. Dram Shop The Texas Dram Shop Act provides that commercial providers of alcohol may be liable for the actions of their intoxicated customers if:

(1) it was apparent to the provider that the individual being sold, served, or provided with alcohol was obviously intoxicated to the extent that he presented a clear danger to himself and others; and (2) the patron’s intoxication was the proximate cause of the damages suffered.

TEX. ALCO. BEV. CODE § 2.02(b); Smith v. Sewell, 858 S.W.2d 350, 351 (Tex. 1993). The provider does not have to actually witness intoxicated conduct. Rather, it is enough that the recipient’s intoxication was apparent, i.e., visible, evident, and easily observed. Bruce v. KKB, Inc., 52 S.W.3d 250, 256 (Tex. App. – Corpus Christi 2001, pet. denied); Perseus, Inc. v. Canody, 995 S.W.2d 202, 206 (Tex. App. – San Antonio 1999, no pet.). A “commercial provider” under the Act is “a person who sells or serves an alcoholic beverage under authority of a license or permit issued under the terms of this code or who otherwise sells an alcoholic beverage to an individual.” TEX. ALCO. BEV. CODE § 2.01(1); see Graff v. Beard, 858 S.W.2d 918, 919 (Tex. 1993) (distinguishing a commercial provider from a social host). A corporation with an ownership interest in a corporation holding a permit and which shares space, employees, business facilities, or service is also subject to liability under the Act. TEX. ALCO. BEV. CODE § 106.14(a). The Texas Dram Shop Act contains a “safe harbor” provision that eliminates providers’ liability under the Act under certain circumstances. TEX. ALCO. BEV. CODE § 2.02(b), 106.14(a); see 20801, Inc. v. Parker, 249 S.W.3d 392, 394 (Tex. 2008); Duenez, 237 S.W.3d at 683–85. Specifically, the actions of an employee shall not be attributable to the employer if:

(1) the employer requires its employees to attend a Texas Alcoholic Beverage Commission (TABC) approved seller training program; (2) the employee has actually attended such a TABC training program; and (3) the employer has not directly or indirectly encouraged the employee to violate such law.

TEX. ALCO. BEV. CODE § 106.14(a).

G. Joint and Several Liability Section 33.013 of the Texas Civil Practice and Remedies Code provides that a defendant is only liable for the percentage of the damages found by the trier of fact to be equal to that defendant’s percentage of responsibility. It further provides that each liable defendant is jointly and severally liable for the damages recoverable if the percentage of responsibility attributed to that defendant is greater than fifty percent or if

the defendant acted with specific intent to do harm to others and engaged in certain criminal activity. When multiple defendants are held jointly and severally liable, they are each liable for the entire amount of damages together or separately. In such a scenario, the plaintiff may elect to seek collection of a judgment from only one of the defendants held liable to the plaintiff or may elect to seek collection of the judgment from each defendant held jointly and severally liable. In sum, responsibility may be apportioned between the claimant(s), each defendant, any settling persons, and any properly designated responsible third parties. If a defendant pays 100% of the plaintiff’s damages, that defendant can seek contribution from any other defendants in proportion to each defendant’s percentage of responsibility. In Texas, a responsible third party is any person who is alleged to have caused or contributed to causing in any way the harm for which recovery of damages is sought by conduct or activity that violates an applicable legal standard. TEX. CIV. PRAC. & REM. CODE § 33.011(6).   In other words, Texas does not have the requirement that a third party who bears some responsibility to the plaintiff be joined as a party before its liability can be submitted to a jury.   TEX. CIV. PRAC. & REM. CODE § 33.003 (4). A simple designation filed with the court will suffice.  By way of example, those who may be joined as a responsible third party include (1) a person not subject to the court’s jurisdiction, (2) a person whom the plaintiff could not sue, (3) a person who is bankrupt, and (4) an employer.  See Frost et al., The Impact of HB 4 on the Court’s Charge to the Jury,  Law Practice After HB4,  UT CLE, ch. 7, p. 3 (2003). The effect of the defendant designating a responsible third party is that the joinder requires the jury to determine the third party’s percentage of responsibility thereby reducing the percentage of responsibility of the defendant.  TEX. CIV. PRAC. & REM. CODE  § 33.012. The third party must be joined as a defendant in the suit in order to be liable to the plaintiff for damages.

H. Wrongful Death and/or Survival Actions A truck driver is liable for damages arising from injuries that cause a person's death if the injury was caused by the driver's wrongful act, neglect, carelessness, unskillfulness, or default. TEX. CIV. PRAC. & REM. CODE § 71.002(b). Moreover, a person is liable for damages arising from an injury that causes death if the person is the proprietor, owner, charterer, or hirer of a vehicle for the transportation of goods or passengers, and the injury was caused by the person's or his agent's or servant's wrongful act, neglect, carelessness, unskillfulness, or default. TEX. CIV. PRAC. & REM. CODE § 71.002(c). The Wrongful Death Act states that a wrongful death action may be brought only by the surviving spouse, children, and parents of the deceased. TEX. CIV. PRAC. & REM. CODE § 71.004(a). A cause of action for personal injury to the health, reputation, or person of a deceased person may be instituted and prosecuted as if the person were alive. TEX. CIV. PRAC. & REM. CODE § 71.021. If a deceased person's estate has a legal representative, then the legal representative can bring a survival action. Mitchell v. Akers, 401 S.W.2d 907, 909

(Tex. Civ. App.—Dallas 1966, writ ref'd n.r.e.). If no legal representative exists, then all heirs may join and bring an action on behalf of the estate. Id.

I. Vicarious Liability Under the doctrine of respondeat superior, an employer is liable for the torts of an employee if: (1) the act is within the employee’s general authority; (2) the act is in furtherance of the employer’s business; and (3) the act is aimed to accomplish the objective for which the employee was hired. Minyard Food Stores v. Goodman, 80 S.W.3d 573, 577 (Tex. 2002). If the employee was acting within the course and scope of employment at the time he or she committed the wrongful act, liability for the wrongdoing is imputed to the employer. Baptist Mem’l Hospital v. Sampson, 969 S.W.2d 945, 947 (Tex. 1998). Evidence that a person's name appears on a vehicle raises the presumption that person is the owner of the vehicle and that the person driving the vehicle is the employee of the owner. McGee v. Phillips Petroleum Co., 373 S.W.2d 773, 775 (Tex. Civ. App.—El Paso 1963, writ ref'd n.r.e.). Moreover, if established at the time of the accident that the driver is an employee of the owner of a vehicle then a presumption arises that the driver was acting within the course and scope of employment. Salmon v. Hinojosa, 538 S.W.2d 22, 23-24 (Tex. Civ. App.—San Antonio 1976, no writ). These presumptions are not evidence, however, and if contrary evidence is introduced, the presumptions disappear, and the burden is on the plaintiff to introduce independent evidence. Robertson Tank Lines, Inc. v. Van Cleave, 468 S.W.2d 354, 358 (Tex. 1971). The relationship of employer and employee is temporarily suspended and the employer is not liable for the employee's acts when an employee strays from his or her work for a personal purpose not connected with the employer's business. Southwest Dairy Products Co. v. De Frates, 132 Tex. 556, 125 S.W.2d 282, 283 (1939). When the deviation from the employer's business involves purely personal pursuits, the employer is not liable for injury resulting therefrom regardless of whether the deviation occurred during working hours, whether the employer consented or objected to the deviation, or whether the deviation was but only a brief moment. Mitchell v. Ellis, 374 S.W.2d 333, 336 (Tex. Civ. App.--Ft. Worth 1963, writ ref'd); Hein v. Harris Co., 557 S.W.2d 366, 368 (Tex. Civ. App.—Houston [1st Dist.] 1977, writ ref'd n.r.e.). There is no Texas case law concerning "Placard Liability."

J. Exclusivity of Workers’ Compensation Section 408.001(a) of the Texas Labor Code states that:

Recovery of workers’ compensation benefits is the exclusive remedy of an employee covered by workers’ compensation insurance coverage or a legal beneficiary against the employer or an agent or employee of the employer for the death of or a work-related injury sustained by the employee.

The immunity of the employer extends to co-employees by virtue of the clear language of the statute. While the employee may pursue an action against a third party, he cannot pursue any action against the employer. Damages

A. Statutory Caps on Damages Generally, personal injury cases in Texas do not face a statutory cap on the ordinary damages. Notable exceptions include medical malpractice cases and suits against a governmental entity under the Tort Claims Act. Exemplary damages are capped as previously discussed above.

B. Compensatory Damages for Bodily Injury In Texas, plaintiffs may generally recover the following damages in personal injury cases:

- Past and future medical expenses are recoverable on a showing that the past expenses were reasonable and necessary and were paid or incurred by or on behalf of the plaintiff. TEX. CIV. PRAC. & REM. CODE § 41.0105; Waltrip v. Bilbon Corp., 38 S.W.3d 873, 879 (Tex.App.—Beaumont 2001, pet. denied). An award of future medical expenses requires the plaintiff to show that there is a reasonable probability that future expenses will result from the plaintiff’s injury. Pilgrim’s Pride Corp. v. Cernat, 205 S.W.3d 110, 121 (Tex.App.—Texarkana 2006, pet. denied);

- Past mental anguish may be evidenced in two ways. (1) It requires a showing that the plaintiff suffered a physical injury. City of Tyler v. Likes, 962 S.W.2d 489 (Tex. 1997). (2) If the plaintiff did not suffer a physical injury, then there must be a showing of a substantial disruption in the plaintiff’s daily routine due to the nature, duration, or severity of the plaintiff’s anguish or there must be evidence of a high degree of mental pain and distress that goes beyond mere worrying, anxiety, or embarrassment. Parkway Co. v. Woodruff, 901 S.W.2d 434 (Tex. 1995);

- Past and future disfigurement may be shown by evidence of impairment and injury to the beauty, symmetry, or appearance of a person, which is rendered unsightly, misshapen, imperfect, or deformed in some manner. Goldman v. Torres, 341 S.W.2d 154, 160 (Tex. 1960);

- Physical impairment, which generally stems from a loss of normal life or loss of enjoyment of life, requires a showing of a substantial physical impairment beyond and in addition to any pain and suffering or loss of earning capacity. Golden Eagle Archer, Inc. v. Jackson, 116 S.W.3d 757 (Tex. 2003);

- Past physical pain and suffering may be awarded on a showing that pain occurred. Lee v. Andrews, 545 S.W.2d 238, 248 (Tex.App.—Amarillo 1976, writ

dism’d). Future pain and suffering may be awarded on a showing that there is a reasonable probability the injury and pain will continue affecting the plaintiff in the future. Fisher v. Coastal Transp. Co., 230 S.W.2d 522, 524 (Tex. 1950);

- Loss of earning capacity is recoverable on a showing that the plaintiff suffered a diminished ability to earn a living as supported by sufficient evidence that allows the jury to measure that capacity in monetary terms. Bonny v. San Antonio Transit Co., 324 S.W.2d 117, 121 (Tex. 1959); Bituminous Cas. Corp. v. Cleveland, 223 S.W3d 485, 491 (Tex.App.—Amarillo 2006, no pet.);

- Loss of wages or earnings is the recoverable amount of actual income lost as a result of the plaintiff’s inability to work since the injury. Koko Motel, Inc. v. Mayo, 91 S.W.3d 41, 51 (Tex.App.—Amarillo 2002, pet. denied); and

- Loss of consortium is a claim that is derivative of the injured person’s claim and

is based on the loss of companionship, care, and society that stems from the injury to a parent, child, or spouse. Reagan v. Vaughn, 804 S.W.2d 463, 467 (Tex. 1990).

C. Collateral Source

Section 41.0105 of the Texas Civil Practice and Remedies Code provides that the “recovery of medical or health care expenses incurred is limited to the amount actually paid or incurred by or on behalf of the claimant.” This means that the amounts charged prior to any adjustments, discounts, or other write-offs (as a result of insurance or some other arrangement) may not be collected by a plaintiff. The Texas Supreme Court held in Haygood v. De Escabedo, 356 S.W.3d 390, 391 (Tex. 2011), section 41.0105 “limits recovery, and consequently the evidence at trial, to expenses that the provider has a legal right to be paid.” This means that the amounts charged prior to any adjustments, discounts, or write-offs (as a result of insurance or some other agreement) are not admissible and may not be collected by a plaintiff. However, simply because an amount was paid on the plaintiff’s behalf by an insurance company does not mean that the plaintiff may not collect that amount at trial. The policy behind this rule is that discounting the plaintiff’s recovery by amounts paid by insurance, in addition to the adjustment and write-off amounts, would operate so as to benefit a third-party tortfeasor. Note that the collateral source rule, in other instances, still applies in Texas.

D. Pre-Judgment/Post judgment Interest Pre-judgment interest is generally applicable to tort causes of action. However, it must be specially pleaded in the petition, unless the prejudgment interest is contractual or statutory or unless the claim falls within an exception found in § 304.102 of the Texas Finance Code. Prejudgment interest is computed as simple interest, not as compound interest, and starts to accrue on either the 180th day after the defendant receives written

notice of the claim or the day suit is filed, whichever is earlier. Johnson & Higgins v. Kenneco Energy, Inc., 962 S.W.2d 507, 531-32 (Tex. 1998). Post-judgment interest may be collected from the date a monetary judgment is signed until the date the judgment is satisfied. TEX. FIN. CODE § 304.005(a). In order to recover the interest, the applicable rate must be provided in the judgment. The statutory rate of interest for calculating pre and post-judgment interest is the prime rate as published by the Board of Governors of the Federal Reserve System on the date of computation. TEX. FIN. CODE § 304.003(c)(1). The exception is when a contract specifically provides for an applicable interest rate.

E. Damages for Emotional Distress Texas does not recognize a cause of action for negligent infliction of emotional distress and only recognizes a cause of action for intentional infliction of emotional distress in very narrow (and rare) circumstances. Hoffmann-La Roche, Inc. v. Zeltwanger, 144 S.W.3d 438, 447 (Tex. 2004). The elements required to establish intentional infliction of emotional distress include:

(1) The plaintiff is a person;

(2) The defendant acted intentionally or recklessly; (3) The emotional distress suffered by the plaintiff was severe; (4) The defendant’s conduct was extreme and outrageous; (5) The defendant’s conduct proximately caused the plaintiff’s emotional distress; (6) No alternative cause of action would provide a remedy for the severe

emotional distress caused by the defendant’s conduct.

F. Wrongful Death and/or Survival Action Damages In a wrongful death action, the jury awards damages in an amount proportionate to the injury resulting from the death. TEX. CIV. PRAC. & REM. CODE § 71.010(a). The jury divides and apportions the award among the statutory beneficiaries. TEX. CIV. PRAC. & REM. CODE § 71.010(b). Exemplary damages may be recovered in addition to actual damages when death occurs because of a willful act or omission or gross negligence of the defendant. TEX. CIV. PRAC. & REM. CODE § 71.009. Parents bringing a wrongful death action because of the death of a minor child can recover the pecuniary value of the child's services from the time of death until the time when the child would have reached the age of majority less the cost of child support, education, and maintenance during the period of minority, plus the value of any pecuniary contributions the child in reasonable probability would have made to the parent after reaching the age of majority. Rio Grande, E1 Paso and Santa Fe R.R. Co.

v. Dupree, 56 S.W.2d 900, 902-3 (Tex. Civ. App.—E1 Paso 1933, writ dism’d). The parent may also recover damages for the loss of companionship and society of the minor child and for mental anguish caused by the death of the child. Sanchez v. Schindler, 651 S.W.2d 249, 251-254 (Tex. 1983).

Additionally, a surviving spouse that brings a wrongful death claim can recover any financial contributions that the spouse would have in reasonable probability received from the deceased spouse, plus the pecuniary value of intangible services that the surviving spouse would have in reasonable probability received, such as counseling, care, and attention. Texas Consolidated Transportation Co. v. Eubanks, 340 S.W.2d 830, 833 (Tex. Civ. App.—Waco 1960, writ ref'd n.r.e.). The loss of consortium is also recoverable. Texas Dep’t of Transportation v. Ramming, 861 S.W.2d 460, 467 (Tex. Civ. App. —Houston [1st Dist.] 1993, writ denied). A minor child can recover that amount which the deceased parent would have in reasonable probability contributed for the child's maintenance. Eubanks, 340 S.W.2d at 835. Moreover, a minor child can recover the value of the services that the parent would have rendered in training, advising, and educating the child. Id. Adult children can recover under the Wrongful Death Act for the loss of prospective contributions that the adult child would have received from the deceased parent. P.T. & E. Company v. Beasley, 698 S.W.2d 190, 196 (Tex. Civ. App.—Beaumont 1985, writ ref’d n.r.e.). Both minor and adult children can recover damages under the Wrongful Death Act for the loss of companionship of his or her parents and for mental anguish caused by the death of the parent. Johnson v. Higgins, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507 (Tex. 1998); Cavnar v. Quality Control Parking, Inc., 696 S.W.2d 549, 551 (Tex. 1985), overruled on other grounds. The damages recoverable under the Survival Act are generally limited to physical pain and suffering, mental suffering, and property damage sustained by the decedent prior to death. Martinez v. Angerstein, 517 S.W.2d 811, 816-816. (Tex. Civ. App.—Corpus Christi 1974, writ dism.) (physical pain and suffering, property damage); City of Austin v. Selter, 415 S.W.2d 489, 502 (Tex. Civ. App.—Austin 1967, writ ref'd n.r.e.) (mental suffering). Funeral expenses are generally recoverable in a survival action. Landers v. B.F. Goodrich Co., 369 S.W.2d 33, 35 (Tex. 1963). Exemplary damages are recoverable if the plaintiff can prove that the defendant acted with fraud, malice, or gross negligence. TEX. CIV. PRAC. & REM. CODE § 41.003.

G. Punitive Damages Exemplary damages may only be awarded if the claimant proves by clear and convincing evidence that the harm with respect to which the claimant seeks to recover exemplary damages results from fraud, malice or gross negligence, and the jury finds unanimously with regard to liability and the amount of damages. TEX. CIV. PRAC. & REM. CODE § 41.003(a), (d).

For purposes of punitive damages, gross negligence means an act “which when viewed

objectively from the standpoint of the actor at the time of its occurrence involves an extreme degree of risk, considering the probability and magnitude of the potential harm to others; and of which the actor has actual, subjective awareness of the risk involved, but nevertheless proceeds with conscious indifference to the rights, safety or welfare of others.” TEX. CIV. PRAC. & REM. CODE § 41.001(11). Further, in determining the amount of exemplary damages, the trier of fact will consider evidence of (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 the such conduct offends the public sense of justice and propriety, and (6) the net worth of the defendant. TEX. CIV. PRAC. & REM. CODE § 41.011.

Additionally, exemplary damages are statutorily limited to the greater of (1) two times the amount of economic damages plus an amount equal to the noneconomic damages not to exceed $750,000; or (2) $200,000. TEX. CIV. PRAC. & REM. CODE § 41.008(b).

H. Diminution in Value of Damaged Vehicle In a suit for injury to personal property, the plaintiff can recover damages for the loss or reduction of the property’s value. City of Tyler v. Likes, 962 S.W.2d 489, 496-497 (Tex. 1997). The primary method of valuation is market value. International-Great N.R.R. v. Casey, 46 S.W.2d 669, 670 (Tex. Comm’n App. 1932, holding approved). If the market value cannot be determined, other methods of valuation can be used, including replacement value, actual value, and sentimental value. Id. The plaintiff has the burden of showing which method of valuation other than market value is appropriate. Moran Corp. v. Murray, 381 S.W.2d 324, 328 (Tex. App.—Texarkana 1964, no writ). Diminished value does not need to be specifically pleaded. Pringle v. Nowlin, 629 S.W2d 154, 156 (Tex. App.—Fort Worth 1982, writ ref’d n.r.e.); Moran Corp., 381 S.W.2d at 328; Dallas Ry. & Terminal Co. v. Strickland Transp., 225 S.W.2d 901, 903 (Tex. App.—Amarillo 1949, no writ). Although sentimental value damages do not need to be specifically pleaded, the pleadings should contain facts sufficient to put the defendant on notice that the plaintiff is seeking sentimental damages.

Market value is the price that property would bring if it were offered for sale by a willing but not obligated seller and purchased by a willing but not obligated buyer. Exxon Corp. v. Middleton, 613 S.W.2d 240, 246 (Tex. 1981). When personal property is damaged or destroyed, the market value is the difference in the value of the item immediately before and immediately after the damage. Thomas v. Oldham, 895 S.W.2d 352, 359 (Tex. 1995). Furthermore, the market value must be determined in the county where the damage occurred. Id. The types of personal property subject to market valuation for loss include automobiles, machines, and equipment. Id.; Pasadena State Bank v. Issac, 228 S.W.2d 127, 128 (Tex. 1950). A plaintiff may recover cost of repair in addition to market value only if the market value is determined after repairs were made. Parkway Co. v. Woodruff, 901 S.W.2d 434, 441 (Tex. 1995).

Market value may be proven by expert testimony, appraisal guides and photos, and cost of repair. See Thomas v. Oldham, 895 S.W.2d 352, 359 n.10 (Tex. 1995); see also Celanese Ltd. v. Chemical Waste Mgmt., 75 S.W.3d 593, 598 (Tex. App.—Texarkana

2002, pet. denied); Jones v. Wallingsford, 921 S.W.2d 463, 464-65 (Tex. App.—Eastland 1996, no writ). The plaintiff cannot rely on the purchase price of the property or the amount the plaintiff’s insurance company paid for the loss to determine market value. See Taiwan Shrimp Farm Vill. Ass’n v. U.S.A. Shrimp Farm Dev., Inc., 915 S.W.2d 61, 71 (Tex. App.—Corpus Christi 1996, writ denied); see also Hartford Ins. Co. v. Jiminez, 814 S.W.2d 551, 552 (Tex. App.—Houston [1st Dist.] 1991, no writ).

Other valuation methods that may be utilized are the replacement value of the property, the actual or intrinsic value to the owner of the property, and sentimental value of the property. International-Great N.R.R. v. Casey, 46 S.W.2d 669, 670 (Tex. Comm’n App. 1932, holding approved). Replacement value is measured by the cost of replacing or reproducing the property, less any offset for enhancement value. Shaw Tank Cleaning Co. v. Texas pipeline Co., 442 S.W.2d 851, 854-55 (Tex. App.—Amarillo 1969, writ ref’d n.r.e.). Actual or intrinsic value is measured by the value of the property to the owner in the condition the property was in when it was damaged, excluding any fanciful or sentimental consideration. Gulf States Utils. Co. v. Low, 79 S.W.3d 561, 566 (Tex. 2002). This method of valuation is primarily used for, but not limited to use for, household furniture, family records, clothing, personal effects, and family portraits. Id. Finally, sentimental value is the reasonable special value of the property to its owner, considering the owner’s feelings for the property. Brown v. Frontier Theatres, Inc., 369 S.W.2d 299, 305 (Tex. 1963). In order to use this method of valuation the property must have had special value to the plaintiff as an heirloom. Id. at 304.

I. Loss of Use of Motor Vehicle The primary purpose for allowing loss of use damages is to award the owner actual pecuniary compensation for the loss. Chemical Express Carriers, Inc. v. French, 759 S.W.2d 683, 687 (Tex. App.—Corpus Christi 1988, writ denied).

The usual measure of damages for loss of use of damaged property is the reasonable cost of renting a replacement. Luna v. North Star Dodge, Inc., 667 S.W.2d 115, 119 (Tex. 1984). The plaintiff can recover damages for the time period the plaintiff was deprived of the use of its property. Id. The plaintiff is not limited to the time reasonably required to repair the property if the plaintiff was unable to have the property fixed for financial or other reasons. Mondragon v. Austin, 954 S.W.2d 191, 194 (Tex. App.—Austin 1997, pet. denied). Further, the expense associated with the ownership and use of the property (e.g., maintenance and repair) must be deducted from the award for loss of use. Alexander Schroeder Lumber Co. v. Merritt, 323 S.W.2d 163, 165-166 (Tex. App.—Texarkana 1959, no writ). Finally, the amount of damages that a plaintiff can recover for loss of use is not limited to the total value of the property. Mondragon, 954 S.W.2d at 196.

Loss of use is recoverable in addition to the cost of repairs if the plaintiff proves it was deprived of the use of the property for the period between the date the property was damaged and the date it was repaired. Id. at 195-96. Loss of use is also recoverable when property is converted but returned. Winkle Chevy-Olds-Pontiac, Inc. v. Condon, 830 S.W.2d 740, 746 (Tex.App.—Corpus Christi 1992, writ dism’d). Conversely, the

plaintiff cannot recover loss of use damages when property cannot be repaired because it was totally destroyed. Hanna v. Lott, 888 S.W.2d 132, 139 (Tex. App.—Tyler 1994, no writ).

Loss of use damages are special damages and must be specifically pleaded. Cagle et al., Classification of Damages, 51 Baylor L. Rev. at 672; see TEX. R. CIV. P. 56. In order to recover for loss of use, the plaintiff must show 1) the reasonable rental value of a substitute item; and 2) the time period the plaintiff was deprived of using the damaged item. Luna, 667 S.W.2d at 119. The reasonable rental value may be determined by the day, week, or month. Kollision King, Inc. v. Calderon, 968 S.W.2d 20, 23 (Tex. App.—Corpus Christi 1998, no pet.). The plaintiff can recover damages for loss of use even if it does not actually spend money renting a replacement. Luna, 667 S.W.2d at 118. Evidence about the inconvenience of not having the use of the item is not sufficient to support damages for loss of use. First Nat’l Bank v. Gittelman, 788 S.W.2d 165, 169-170 (Tex. App.—Houston [14th Dist.] 1990, writ denied). Evidentiary Issues

A. Preventability Determination A determination by a carrier or accident review board that an accident was preventable will likely be admissible in Texas. However, such a finding by itself does not rise to the level of a judicial admission that would be conclusive on liability. Mendoza v. Fidelity & Guaranty Ins. Underwriters, Inc., 606 S.W.2d 692, 694 (Tex. 1980); see also Gonzales v. Castillo, 2000 Tex. App. LEXIS 530, *11 (Tex.App.—San Antonio Jan. 25, 2000).

B. Traffic Citation from Accident Evidence concerning whether or not a traffic citation was issued is not admissible. Issacs v. Plains Transport, Co., 367 S.W.2d 152, 153 (Tex. 1963). However, if the individual pleads guilty to the charge, the guilty plea is admissible as a statement against interest. Cox v. Bohman, 683 S.W.2d 757, 758 (Tex. App.—Corpus Christi 1984, writ ref’d n.r.e.).

C. Failure to Wear a Seat Belt Prior to its repeal in 2003, § 545.413(g) of the Texas Transportation Code provided that a plaintiff’s failure to wear a safety best was not admissible in a civil matter. Since its repeal, however, Texas law has yet to develop a conclusive answer to the admissibility of a plaintiff’s failure to wear a safety belt. Taylor v. Alonso, 2012 Tex. App. LEXIS 7662, *21 (Tex.App.—Houston [1st Dist.] Aug. 30, 2012). In fact, no Texas Supreme Court cases or appellate court cases have discussed the significance or effect of the provision’s repeal. Id. A few federal courts have interpreted the effect of the legislature’s repeal of § 545.413(g) and found that it does not mean that a plaintiff’s failure to wear a seat belt is now per se admissible. Idar v. Cooper Tire & Rubber Co., 2011 U.S. Dist. LEXIS 67779, *9 (S.D. Tex. June 6, 2011). Rather, the legislative intent was to change the

admissibility of such evidence from a substantive to a procedural issue. Trenado v. Cooper Tire & Rubber Co., 2010 U.S. Dist. LEXIS 144889 (S.D. Tex. Jan 26, 2010). The Texas Supreme Court has long held that a plaintiff’s damages will not be mitigated or otherwise reduced simply because the plaintiff failed to wear a seat belt. Carnation Co. v. Wong, 516 S.W.2d 116, 117 (Tex. 1974).

D. Failure of Motorcyclist to Wear a Helmet Generally, a plaintiff’s failure to wear a helmet while on a motorcycle is admissible as a factor in the proportionate responsibility analysis, whether the failure is characterized as assumption of the risk, misuse, or failure to mitigate or avoid damages. See Kennon v. Slipstreamer, Inc., 794 F.2d 1067 (5th. Cir. Tex. 1986).

E. Evidence of Alcohol or Drug Intoxication Under the Texas Transportation Code, “intoxicated” has the same meaning and definition as found the Texas Penal Code. That is, “(A) not having the normal use of mental or physical faculties by reason of the introduction of alcohol, a drug, a dangerous drug, a combination of two or more of those substances, or any other substance into the body; or (B) having an alcohol concentration of 0.08 or more.” TEX. PEN. CODE § 49.01(2). Evidence of impairment on the part of a driver is admissible, subject to the same evidentiary standards as any other evidence. When the evidence requires technical or expert testimony, then the proper foundation and predicate must be provided. E.I. du Ponte de Nemours & Co. v. Robinson, 923 S.W.2d 549, 553 (Tex. 1995). Additionally, because § 522.101(a) of the Texas Transportation Code prohibits a person from driving a commercial motor vehicle while having a measureable or detectable amount of alcohol in the person’s system, evidence or testimony regarding a detectable amount of alcohol on a truck driver’s breath or in his system could be admissible even when the evidence is collectively insufficient to prove or establish intoxication.

F. Testimony of Investigating Police Officer For the investigating police officer to be able to testify about his opinions, such as how he believes the accident occurred and what he believes caused the accident, the officer must be qualified as an expert and a proper foundation must support the reliability of his expert testimony. The basis for such testimony may stem from the witness’s experience. The court must determine, however, that “there is not too great an analytical gap between the data and the opinion proffered.” Ter-Vartanyan v. R&R Freight, 111 S.W.3d 779, 782 (Tex.App.—Dallas 2003, pet. denied)(citing Gammill v. Jack Williams Chevrolet, Inc., 972 S.W.2d 713, 726 (Tex. 1998).

G. Expert Testimony Texas has adopted the standard explained in Daubert. Specifically, before a jury may hear an expert’s testimony, it must meet the qualifications and be found to be

sufficiently reliable by the court. The Texas Supreme Court has provided six factors that should be considered when determining reliability:

(1) The extent to which the theory has been or can be tested;

(2) The extent to which the technique relies upon the subjective interpretation of the expert;

(3) Whether the theory has been subjected to peer review and publication;

(4) The technique’s potential rate of error;

(5) Whether the underlying theory or technique has been generally accepted as valid by the relevant scientific community; and

(6) The nonjudicial uses that have been made of the theory or technique. E.I. du Ponte de Nemours & Co. v. Robinson, 923 S.W.2d 549, 553 (Tex. 1995).

H. Collateral Source The collateral source rule in Texas operates to preclude a defendant in a tort case from revealing to the jury that the plaintiff obtained payments and/or benefits from a collateral source, thereby preventing a reduction in the plaintiff’s damages based on the argument that the funds have already been received from another source. In Haygood v. De Escabedo, 356 S.W.3d 390, 391 (Tex. 2011), the Texas Supreme Court held that § 41.0105 of the Texas Civil Practice and Remedies Code “limits recovery, and consequently the evidence at trial, to expenses that the provider has a legal right to be paid.” Therefore, not only can a plaintiff not collect the amounts charged prior to any adjustments, discounts, or write-offs (as a result of insurance or some other agreement), but those amounts are also inadmissible at trial.

I. Recorded Statements Recorded statements are hearsay under the Texas Rules of Evidence. Therefore, the initial admissibility of such statements depends on whether they fit within an exception to the hearsay rule. See TEX. R. EVID. 803. However, recorded statements can also be utilized and admitted as impeachment evidence, such as prior inconsistent statements by the testifying witness. TEX. R. EVID. 613. A recorded statement may also be used to refresh the recollection of a witness. TEX. R. EVID. 803(5).

J. Prior Convictions Recorded statements are hearsay under the Texas Rules of Evidence. Therefore, the initial admissibility of such statements depends on whether they fit within an exception to the hearsay rule. See TEX. R. EVID. 803. However, recorded statements can also be utilized and admitted as impeachment evidence, such as prior inconsistent statements

by the testifying witness. TEX. R. EVID. 613. A recorded statement may also be used to refresh the recollection of a witness. TEX. R. EVID. 803(5).

K. Driving History A driver’s driving history is generally inadmissible because specific instances of prior wrongs or acts cannot be used to show conformity with the prior conduct. TEX. R. EVID. 404(b). Rule 608 of the Texas Rules of Evidence also prohibits the use of specific instances of conduct by a witness for the purpose of attacking or supporting the credibility of the witness. However, specific instances of conduct may be used on cross-examination to impeach a witness depending on the development of the testimony. On the other hand, when the case involves a negligent entrustment or negligent hiring cause of action, then a driver’s driving history would be relevant and admissible evidence.

L. Fatigue Evidence of driver fatigue, particularly when stemming from hours of service violations or log book violations, may be established through the cross-examination of the truck driver involved in the accident in question. This is because drivers are charged with knowing and following the Federal Motor Carrier Safety Administration’s rules and regulations, which include hours of service rules. However, when such testimony is unavailable or fails to elicit the desired testimony as to driver fatigue, presenting alternative evidence would require the use of an expert witness (assuming other commercial drivers are not involved in the suit).

M. Spoliation Spoliation of evidence is the destruction of relevant evidence. Clark v. Randalls Food, 317 S.W.3d 351, 356 (Tex.App.—Houston [1st Dist.] 2010, pet. denied). The destruction of evidence may be intentional or it may be done negligently and unintentionally. The basics elements of spoliation of evidence are the same for intentional and negligent or unintentional spoliation. The requesting (non-spoliator) party has the burden to show:

1) That the alleged spoliator had a duty to preserve the evidence;

2) That the alleged spoliator breached that duty; and

3) That the spoliation prejudiced the requesting party’s ability to present its case or defense.

Adobe Land Corp. v. Griffin, L.L.C., 236 S.W.3d 351, 357 (Tex.App.—Fort Worth 2007, pet. denied) (citing Trevino v. Ortega, 969 S.W.2d 950, 954-55 (Tex. 1998) (Baker, J., concurring)). Generally, courts have limited a spoliation presumption jury instruction to two circumstances. First, when a party deliberately destroys relevant evidence, which leads

to the presumption that it did so because the evidence was unfavorable to its case. Wal-Mart Stores, Inc., 106 S.W.3d at 721. Second, courts also apply the presumption instruction when a party controlling the missing evidence cannot explain its failure to produce it. Id. at 722. Settlement

A. Offer of Judgment Texas offers incentives for the parties to make and accept reasonable settlement offers. The offer of settlement rule allows both plaintiffs and defendants to shift the costs of litigation when an offer is unreasonably rejected. TEX. CIV. PRAC. & REM. CODE § 42.004. More specifically, if an offer is made and rejected, and the judgment is significantly less favorable to the rejecting party than the settlement offer, the offering party may recover litigation costs from the rejecting party. TEX. CIV. PRAC. & REM. CODE § 42.004(a). Significantly less favorable means (1) when the rejecting party is the claimant and the award is less than eighty (80) percent of the rejected offer, or (2) when the rejecting party is a defendant and the award is more than one hundred twenty (120) percent of the rejected offer. TEX. CIV. PRAC. & REM. CODE § 42.004(b)(11).

B. Liens Cases involving a plaintiff that is or may become eligible for Medicare or Medicaid are subject to the federal mandatory reporting requirement found in the Medicare Secondary Payer Statute. 42 U.S.C. § 1395y(b). Prudent practice extends this notification and reporting aspect of personal injury cases involving Medicare/Medicaid to other lienholders that may be involved. For example, a workers’ compensation lien, which is a very strong lien in Texas for which intervention is not required on its part, should be addressed and covered. In this way, generally, when a case has identified lienholders involved, then any settlement should include arrangements to ensure that those liens are satisfied or otherwise negotiated and approved.

C. Minor Settlement A cause of action on behalf of a minor in Texas must be brought by a “next friend.” TEX. R. CIV. P. 44. Once a settlement has been reached between the parties, the court must approve and accept the settlement in order for it to be binding. For the court to do so, it will typically require testimony from the “next friend” that the settlement is in the child’s best interest. When a conflict of interest exists between the “next friend” and the minor (such as when the “next friend” is responsible for paying the child’s medical bills), then a guardian ad litem should be requested and appointed for the minor. See Brownsville-Valley Reg’l Med. Ctr. V. Gamez, 894 S.W.2d 753, 755 (Tex. 1995). The guardian ad litem will review the proposed settlement and the details of the minor’s case. Once he or she does so, then the guardian ad litem will advise the court as to whether the settlement is in the child’s best interest.

D. Negotiating Directly With Attorneys

Claims professionals may negotiate directly with attorneys. However, when suit has been filed and a defense attorney has entered an appearance on behalf of an insured, then a plaintiff attorney may be reluctant to negotiate with claims personnel without prior consent or authorization to do so from the defense counsel.

E. Confidentiality Agreements Non-disclosure agreements and confidentiality agreements are generally enforceable in Texas subject to the same requirements of contract law. See Zep Mfg. Co. v. Harthcock, 824 S.W.2d 654, 659 (Tex.App.—Dallas 1992, no pet.). In the employment context, such agreements are contracts in which an employee makes a covenant not to disclose certain information acquired during employment. Id. In this way, the Texas common law protects an employer’s confidential information and trade secrets from misappropriation, use, or disclosure. The main variables that could negate the enforceability of a non-disclosure agreement are if the confidential information was obtained before the agreement was entered into or if the information that was once confidential and a “trade secret” has now lost that confidential status with the consent of the employer. CRC-Evans Pipeline Int'l v. Myers, 927 S.W.2d 259, 265-66 (Tex.App.—Houston [1st Dist.] 1996, no pet.). However, generally non-disclosure and confidentiality agreements are not subject to the same reasonable time, geographical, and scope of activity requirements that govern non-compete agreements. Zep Mfg. Co., 824 S.W.2d at 659.

F. Releases A release is a contractual agreement wherein the releasing party surrenders legal rights, obligations, or causes of action against the other party. Dresser Indus. v. Page Petroleum, 852 S.W.2d 505, 508 (Tex. 1993). “It operates to extinguish the claim or cause of action as effectively as would a prior judgment between the parties and is an absolute bar to any right of action on the released matter.” Id. A release of claims may be broad or narrow, but it must clearly specify the subject matter being released and the claims to be released must fall within that subject matter in order to be discharged. Victoria Bank & Trust Co. v. Brady, 811 S.W.2d 931, 938 (Tex. 1991).

G. Voidable Releases Since releases are contractual, the law of contracts governs when a release may be void or voidable. Generally, however, absent a factor such as fraudulent inducement or duress, releases are valid and enforceable regardless of whether the individual releasing a claim was represented by counsel. See Texas & P. R. Co. v. Presley, 152 S.W.2d 1105 (Tex. 1941). Transportation Law

A. State DOT Regulatory Requirements

Texas has adopted and incorporated the FMCSR for interstate and interstate commercial transportation within the state. 37 Tex. Admin. Code § 4.11(a). However, § 4.12 provides a few exemptions and modifications to the Federal Regulations as applied to intrastate commercial transportation in Texas.

B. State Speed Limits Texas Transportation Code § 545.352 sets the standard speeds in Texas as follows:

- 30 mph in an urban district on a street other than an alley;

- 15 mph in an alley;

- 70 mph on a state or U.S. highway outside an urban district;

- 60 mph on a highway outside an urban district that is not numbered by the state or U.S.

- 15 mph on a beach.

Additionally, the Transportation Code gives counties and municipalities the authority to change and modify speed limits within their territorial jurisdictions.

C. Overview of State CDL Requirements All first time applicants for a Texas commercial driver’s license must: - Apply in person;

- Present documents that verify his or her identity;

- Present proof of Social Security Number;

- Meet the medical certification requirement;

- Meet the non-resident requirement if the person is not a Texas resident;

- Present proof of Texas vehicle registration and liability insurance on all vehicles

he or she owns;

- Complete the CDL application;

- Consent to be photographed, fingerprinted, and provide his or her signature at the time of application;

- Pass the vision exam;

- Pass the required written test for desired type of license, including endorsements, A & B rules test, and skill tests in the appropriate vehicle;

- Complete the hazardous material endorsement procedures;

- Pay the required fee; and

- Provide a commercial motor vehicle for the driving exam, and present current liability insurance, Texas vehicle registration, and inspection for the vehicle.

http://www.txdps.state.tx.us/DriverLicense/CommercialLicense.htm. Insurance Issues

A. State Minimum Limits of Financial Responsibility In Texas, drivers are required to have minimum coverage of $30,000 per injured person, $60,000 for everyone injured in an accident, and $25,000 for property damage. TEX. TRANSP. CODE § 601.072(a-1).

B. Uninsured Motorist Coverage Insurers are required to include uninsured/underinsured motorist (UM/UIM) coverage in an automobile liability insurance policy in Texas. TEX. INS. CODE § 1952.101(b). However, any insured named in the policy may reject UM/UIM coverage in writing. TEX. INS. CODE § 1952.101(c). When the policy is up for renewal or supplemented, the insurer is not required to provide the coverage unless a request for the coverage has been made in writing.

C. No Fault Insurance Texas does not have no fault insurance. However, Texas does have similar alternatives, which include personal injury protection (PIP) and medical payment (MedPay) coverage. Both PIP and MedPay provide limited coverage for accidents regardless of fault. Generally, PIP covers medical and funeral expenses, as well as partial lost wages. MedPay also covers medical and funeral expenses, but not loss in income.

D. Disclosure of Limits and Layers of Coverage Rule 192.3(f) of the Texas Rules of Civil Procedure requires the disclosure of “the existence and contents of any indemnity or insurance agreement under which any person may be liable to satisfy part or all of a judgment rendered in the action or to indemnify or reimburse for payments made to satisfy the judgment.”

E. Unfair Claims Practices Section 542.003 of the Texas Insurance Code and § 21.203 of the Texas Administrative Code prohibit an insurer from engaging in unfair claims practices and settlements, which include the following acts:

1) Knowingly misrepresenting to a claimant pertinent facts or policy provisions relating to coverage at issue;

2) Failing to acknowledge with reasonable promptness pertinent communications

relating to a claim arising under the insurer’s policy;

3) Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under the insurer’s policies;

4) Not attempting in good faith to effect a prompt, fair, and equitable settlement of a claim submitted in which liability has become reasonably clear;

5) Compelling a policyholder to institute a suit to recover an amount due under a policy by offering substantially less than the amount ultimately recovered in a suit brought by the policyholder;

6) Failing to maintain the information required by section 542.005; or committing another act the commissioner determines by rule constitutes an unfair claim settlement practice.

F. Bad Faith Claims

An insurer owes a duty of good faith and fair dealing to its insured. However, the duty of good faith and fair dealing is independent from the insurance policy, so the breach of these duties is not a contractual breach. Union Bankers Ins. Co. v. Shelton, 889 S.W.2d 278, 283 (Tex. 1994). The elements of a claim for bad faith include:

(1) An insurer owed the insured a duty of good faith and fair dealing based upon an insurance policy between the two. Arnold v. Nat’l County Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex. 1987);

(2) The insurer breached its duty when it denied or delayed payment when liability was reasonably clear or cancelled an insurance policy without a reasonable basis. State Farm Fire & Cas. Co. v. Simmons, 963 S.W.2d 42, 44 (Tex. 1998); and

(3) The insurer’s breach proximately caused the insured’s damages. Provident Am. Ins. v. Castaneda, 988 S.W.2d 189, 193 (Tex. 1998).

In addition to its duty of good faith and fair dealing towards its insured, an insurer has a duty to exercise ordinary care when settling a third-party claim against its insured. This duty is known as the Stowers Doctrine and is the only common law duty an insurer owes its insured when handling a third-party claim. Mid-Continental Ins. Co. v. Liberty Mut. Ins. Co., 236 S.W.3d 765, 776 (Tex. 2007). The elements of a Stowers claim are:

(1) The claim against the insured was within the scope of coverage at the time the offer was made;

(2) The demand was within policy limits; and

(3) The terms of the demand were such that an ordinary prudent insurer would

accept it, considering the likelihood and degree of the insured’s potential exposure to an excess judgment.

American Physicians Ins. Exch. v. Garcia, 878 S.W.2d 842, 849 (Tex. 1994). When these conditions coincide and the insurer’s negligent failure to settle results in an excess judgment against the insured, the insurer is liable under the Stowers Doctrine for the entire amount of the judgment, including the part exceeding the insured’s policy limits.” Phillips v. Bramlett, 288 S.W.3d 876, 879 (Tex. 2009).

G. Coverage – Duty of Insured Most insurance policies in Texas include a cooperation clause which requires the insured to cooperate with the investigation, settlement, and defense of any claims or suits. This typically includes providing notice of any adverse claim or suit to the insurer, which is a condition precedent to the insurer’s liability on the policy and defense of the claim. The insured’s duty to cooperate, however, has long been recognized under Texas common law. See Progressive County Mut. Ins. Co. v. Trevino, 202 S.W.3d 811, 818 (Tex.App.—San Antonio 2006, pet. denied).

H. Fellow Employee Exclusions Fellow employee exclusions are required in certain circumstances and enforceable under Texas law. Truck Ins. Exch. v. Musick, 902 S.W.2d 68, 71 (Tex.App.—Fort Worth 1995, writ denied). Most liability insurance policies include the provision that the insurance policy does not apply to bodily injury to any fellow employee of the insured arising out of and in the course of the fellow employee’s employment. Section 601.075 of the Texas Transportation Code provides that: A motor vehicle liability insurance policy may not insure against liability:

(1) For which the insured or the insured’s insurer may be held liable under a workers’ compensation law;

(2) For bodily injury to or death of an employee of the insured while engaged in the employment, other than domestic, of the insured, or in domestic employment if benefits for the injury are payable or required to be provided under a workers’ compensation law; or

(3) For injury to or destruction of property owned by, rented to, in the care of, or transported by the insured.