Keep Austin Weird: Litigation Sticker Shock Sticks for Now

Kasi Chadwick, Philip A. Dunlap

September 22, 2017

In a breach of contract action in Texas, many believe that attorney’s fees are universally recoverable for the prevailing plaintiff as a matter of Texas law. As Chapter 38 of the Texas Civil Practice and Remedies Code—the statute controlling the mandatory award of attorney’s fees in breach of contract actions—as presently written, this is not true.

Chapter 38 only allows for recovery of attorney’s fees against “an individual or a corporation” for the prevailing party in a breach of contract action. In the last session, Representative Farrar authored HB 744 to make breach of contract attorney’s fees recoverable from “an individual, corporation, or other legal entity…” For more on Chapter 38 as presently enacted and the specifics of HB 744, click here.

Earlier this year, the Texas legislature again took up an amendment to Chapter 38 to broaden the scope of recoverable attorney’s fees for the prevailing party in a breach of contract action. Like the legislation that came before it, this attempt was unsuccessful.

While HB 744 made it out of the Texas House, it died in the Senate. Almost upon arrival in the Senate, HB 744 was referred to the State Affairs Committee for further review, but it was not revisited before the Texas legislature adjourned. This is the second bill attempting to broaden Chapter 38’s fee recovery that has failed to matriculate to the governor’s office.

Arguably, expanding the scope of Chapter 38’s fee award would make Texas courts more accessible to those plaintiffs who might not otherwise pursue their claims for fear of litigation sticker shock. Likewise, Chapter 38’s fee award as presently enacted may insulate potential defendants (e.g. partnerships), for the same reasons. Because HB 744 didn’t make it this time, at least for now, the sticker shock may stick. Keep Austin weird.