February 15, 2003
Legislative Black Caucus and Mexican American Legislative Caucus response to HUB Report Press Conference
Senate Press Room, 2E.9, Capitol
2/17/2003 - 12:45 pm
Note: HB 3/HJR 39 will be heard in Civil Practices on Wednesday at 2:00 in E2.026.

If you want a full list committee meetings for the week and did not receive that information in an earlier newsletter, please call 512-476-9078.
Constitutional Amendment Authorizes Limits on Non-economic Damages

Rep. Joe Nixon (R-Houston), chair of the House Civil Practices Committee, has introduced H.J.R. 39, which authorizes the legislature to limit awards of non-economic damages in both medical liability and other types of claims.

Specifically, H.J.R. 39:

*Defines "economic damages" to mean compensatory damages for any pecuniary loss or damage, not including damages for physical pain and suffering, mental anguish and suffering, loss of consortium, loss of companionship and society, disfigurement, or physical impairment.

*Authorizes the legislature to limit liability for damages other than economic damages of a health care provider with respect to treatment, lack of treatment, or other alleged departure from an accepted standard of medical care or safety. Limits may apply to any common law or statutory cause of action, and any cause of action based on or sounding in tort, contract, or any other theory or combination of theories of liability.

*Further authorizes the legislature, by statute enacted after January 1, 2005, to limit liability for damages other than economic damages for any other cause of action.

*Applies to any statute enacted by the 78th Legislature, Regular Session, 2003, and any subsequent regular or special session of the legislature.


Bill Limits Homebuilder Liability

Senator Robert Duncan (R-Lubbock), chair of the Senate Jurisprudence Committee, has introduced legislation to establish an alternative dispute resolution process for disputes between homebuilders and consumers. S.B. 383 is entitled the Texas Residential Construction Commission Act. The House companion is H.B. 730 by Rep. Phil King (R-Weatherford) and Rep. Allan Ritter (D-Nederland).

S.B. 383:

*Defines a "construction defect" to involve the failure of a home to meet the applicable warranty and building standards during the warranty period and any physical damage to the home proximately caused by that failure.

*Excludes from the definition of "construction defect" any defect or damage that arises from the negligence of a person other than the builder or the builder's agent, subcontractor, employee, or supplier or failure of any person other than the builder to mitigate damages arising from a defect, to maintain the home, normal wear and tear, or normal shrinkage or settling within applicable building standards.

*Establishes the Texas Residential Construction Commission, consisting of nine members, six from the residential construction industry, two from the general public, and one a licensed engineer;

*Among other powers, the Commission is charged with governing a state-sponsored inspection and dispute resolution process, establishing limited statutory warranty and building standards for the residential construction industry, approving third party warranty programs, and approving third-party inspectors;

*Establishes a state-sponsored dispute resolution process applying to claims arising from a defect, other than a claim solely for personal injury, damage, or death, or for damage to goods, if the claim is made before the 10th anniversary date of the initial transfer of title of the home to the initial purchaser;

*Requires a homeowner to submit to the state-sponsored dispute resolution process before filing a lawsuit;

*Requires the claim to be made before the second anniversary date of the discovery of the conditions claimed to be caused by the defect;

*Mandates a state-sponsored inspection of the home to determine if a defect exists and grants a presumption in favor of the inspection in any subsequent lawsuit;

*Provides that if the defect involves a structural matter, the inspector must be an experienced structural engineer or architect, and prohibits a state-approved third party inspector from deriving more than 10 percent of his or her annual gross income from expert witness fees from litigation;

*Establishes a process for a homeowner to request a state-sponsored inspection and dispute resolution, gives the builder a right to inspect, and provides for the appointment of a third-party inspector who makes a recommendation to the commission;

*Provides an appeal to a state panel of three inspectors appointed by the executive director of the commission if a homeowner or builder disagree with the inspector's recommendation;

*Requires the commission to adopt by rule limited statutory warranties and residential building standards, including a one-year warranty for workmanship and materials, a two-year warranty for plumbing, electrical, air conditioning, and heating, and a 10-year warranty for major structural components;

*Provides that the statutory warranties supercede all implied warranties and are exclusive;

*Establishes standards for the approval of third-party warranty companies and allows the builder to limit liability, except for personal injury or damage to personal property;

*Provides that this law is the exclusive remedy for the actions it governs and no additional liability exists outside this law unless expressly contracted for in writing by the builder and homeowner;

*Amends Chapter 27, Property Code (Residential Construction Liability Actions), to incorporate the mandatory state-sponsored dispute resolution system; and

*Amends Chapter 42, Civil Practice and Remedies Code, to prohibit the recovery of damages for mental anguish in an action arising from a residential construction defect.

S.B. 383 should be carefully reviewed by any attorney handling matters relating to residential construction defects. It makes significant changes to the law governing actions arising from residential construction defects and feeds directly into RCLA and its limitations on construction-related lawsuits. The bill could also shift liability for repairs to residential property from homebuilders to other contractors and insurers, thus affecting homeowner insurance rates.