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September 2011

Texas Legislature Changes "Responsible Third Party" Rules

The Texas Legislature, in its most recent session, made two important changes that affect the ability of parties to a lawsuit to name a "responsible third party" ("RTP").  The changes will be applicable to all lawsuits filed on or after September 1, 2011.  The practice of designating an RTP allows a defendant to require the fact finder, at trial, to determine the percentage of responsibility, if any, to be assigned to the RTP, when determining the liability of all parties submitted on specific types of claims, such as negligence.  This practice has provided a strategic advantage to Texas defendants in recent years.  Once properly designated, a plaintiff then had sixty (60) days to add the RTP as an actual defendant even if the statute of limitations had run on the plaintiff's cause of action against the designated RTP.

First, the Legislature eliminated the "end-run" around the statute of limitations for RTPs.  Thus, if a defendant moves to designate a person or entity as an RTP and limitations has run on the designated RTP, the plaintiff will no longer be able to avoid the limitations defense.  Tex. Civ. Prac. & Rem. Code § 33.004(e). (Repealed by H.B. 274§ 5.02 82nd Leg.)  This change may not have direct implications for defendants already named but will eliminate the danger of lawsuits in which entities were named as defendants long after the statute of limitations had expired based on this statutory loophole.  This change may also have the effect of encouraging attorneys for plaintiffs to name more defendants in their original actions out of the fear that those parties may be named as RTPs at a later time.

Second, in lawsuits filed on or after September 1, 2011, a defendant may not designate a person as an RTP, after the statute of limitations has expired, if the defendant "has failed to timely comply with its obligations, if any, to timely disclose that the person may be designated as a responsible third party under the Texas Rules of Civil Procedure."  Tex. Civ. Prac. & Rem. Code § 33.004(d).  The phrase "failed to timely comply with its obligations" is not defined and thus it is unclear what the Texas Legislature means by this language.  Therefore, this phrase will be open to interpretation by Texas courts, and could even mean that a defendant must name a potential RTP as early as the date a defendant's responses to requests for disclosure are due under Texas Rule of Civil Procedure 194.  Until the phrase has been interpreted by the courts, it will be prudent for defendants to name any potential RTP as soon as reasonably possible, once that person or entity's identity and role becomes known especially in situations in which the statute of limitations has expired or is about to expire. 

The conservative Texas Legislature's "tweeks" to responsible third party practice should prove to be favorable overall for tort defendants, particularly the closing of the statute of limitations loophole as described above.  However, defendants will need to be extremely mindful of timely disclosing RTPs in the discovery process, especially in cases in which the statute of limitations may have some application.

Commercial Litigation

Steven D. Selbe

Commercial Litigation
Product & General Liability