Survival of a Cause of Action in Texas

While survival actions do not arise frequently, they do occur often enough in Texas that a short discussion of them is warranted in this blog. Usually they occur when a family member brings a claim on behalf of the estate and also on the family member’s behalf, individually. For purposes of this blog discussion, the claims or cause of actions are for a non-personal injury claims.  A few issues should immediately come to mind. Does the person bringing the claim have standing and/or capacity to bring the claim, how long does the representative have to bring the claim in Texas and if a claim is viable, what damages, if any, are recoverable by that person under Texas law?

A plaintiff asserting a survival action on behalf of a decedent must have standing and legal capacity to sue. Austin Nursing Center, Inc. v. Lovato, 171 S.W.3d 845, 848 (Tex. 2005). Standing in the survival context is whether the person is personally aggrieved and has a justifiable interest, while capacity refers to the legal authority to prosecute the action. Without standing, a court lacks subject matter jurisdiction. Capacity is a defect raised by a verified pleading in the court. See Tex. R. Civ. P. 93.  As to capacity, a decedent’s estate is not recognized as a legal entity and may not use or be sued in its own name. Austin Nursing Center, Inc. v. Lovato, 171 S.W.3d 845, 850-51 (Tex. 2005).  If a legal representative of the estate has been appointed, the representative is the appropriate person to bring an action on behalf of the estate, because the representative is charged with the estate’s administration and technically represents all persons, creditors, and heirs with an interest in the estate. Therefore, only an estate’s personal representative has capacity to bring a survival action on behalf of the estate. Austin Nursing Center, Inc. v. Lovato, 171 S.W.3d 845, 850-51 (Tex. 2005).

Heirs at law can maintain a survival suit during the four year period that Texas law allows for instituting administration proceedings if they allege and prove that no administration is pending and none necessary. Shepherd v. Ledford, 962 S.W.2d 28, 31-32 (Tex. 1998). A key point to remember is that a survivial action is completely derivative of the decedent’s rights. The wrong that is being sued upon is something that occurred to the decedent and the damages recoverable are those sustained by the decedent when the decedent was alive and not any damages claimed independently by the representative. In other words, it is the damage suffered solely by the decedent who would have received it had it been obtained prior to his death.  See Russell v. Ingersoll-Rand Co., 841 S.W.2d 343, 345 (Tex. 1992).

Because the damages recoverable under the survival statute are limited to damages sustained by decedent prior to death, property damages are also recoverable. Landers v. B.F. Goodrich Co., 369 S.W.2d 33, 35 (Tex. 1963).  Under limited circumstances, exemplary damages may also be recovered in a survival action. Gen Chem Corp. v. De La Lastra, 852 S.W.2d 916, 924 (Tex. 1993).  The circumstances under which exemplary damages may be awarded and statutory limits on the amounts of such damages are governed by statute and common law and apply to personal injury actions.  Exemplary damages are not available for claims solely related to property damage.  See e.g., Tex. Civ. Prac. & Rem. Code ann. §71.012 (survival action for personal injury).  See Aldridge v. Stout, 36 S.W.2d 1110 (Tex.App.—Fort Worth 1931, n.w.h.) (holding that actual damages to property can be recovered for value of property but not for exemplary damages); see also Ferrill’s Administratrix v. Mooney’s Executors, 33 Tex. 219, 1870 WL 5730 (Tex. 1870) (allowing recovery of actual damages and in dicta stating exemplary damages not available).  While a representative or heir can recover the value of the damage to personal property, they cannot recover exemplary damages.  A claim for property damage in this context usually arises when there is an allegation of conversion or wrongful repossession.  Both wrongful repossession and conversion claims would normally allow recovery for exemplary damages but not in a survival cause of action solely for property damages. As a result, the potential exposure of a defendant is reduced significantly.

The opinions contained in this blog are the author’s and any comments, suggestions and replies should be directed to John Jones at JJONES@bickerstaff.com.

Overview and Structure of Texas Usury Laws

To understand Texas usury laws, the place to start is with the Texas Constitution.  Article XVI, §11 of the Texas Constitution is entitled “Usury; Rate of Interest in Absence of Legislation.”  In the absence of legislation, the maximum rate of interest for contracts is ten percent.  If neither party agreed to a rate of interest, the interest rate is capped at six percent.

Under Texas law, interest means “compensation for the use, forbearance or detention of money.”  The term “interest” does not include time price differential nor does it include compensation or other amounts that under applicable law are not considered interest.  Texas Finance Code 301.002(4) defines “use” of money and it is essentially money lent and outstanding before maturity.  “Forbearance” occurs when debt is and about to become due and parties agree to extend the time for payment.  “Detention” arises when a debt is due and Obligor withholds payment without a new contract allowing the Obligor to do so.

Titles 4 and 5 of the Texas Finance Code are the other primary sources of authority for usury laws in Texas.  Title 4 has three subtitles – A, B, and C.  Subtitle A is set out in Chapters 301 through 308 and 339 of the Texas Finance Code and is the principal usury statute. Chapter 305 is the penalty provision and provides different penalites based on the type of the loan (i.e. commercial versus consumer) and also for the recovery of attorneys’ fees.  Subtitle B is set out in Chapters 341, 342, 342E, 342F, 342G, 343, 345, 346, 347, 348, 349, 305, 351, 352 and 353.  Subtitle B is different because it is also a usury statute and a borrower protection statute related to disclosures, anti-discriminatory and other prohibitions.  Chapter 349 of Subtitle B contains penalty provisions for charging fees that are not permitted and for violations of disclosure provisions. Subtitle C of Title 4 regulates pawnshops.

Title 5 of the Texas Finance Code covers false credit information (Chapter 391), debt collection (Chapter 392), credit service organizations (Chapter 393), debtor assistance (Chapter 394), community reinvestment work group (Chapter 395), and private child support enforcement agencies (Chapter 396).

A number of transactions, assuming certain facts, are outside the scope of the Texas Finance Code.  Examples are bona fide investments, leases, sales-leasebacks, and broker transactions to name a few.  See Kinerd v. Colonial Leasing Co., 800 S.W.2d 187 (Tex. 1990) (commercial time-price-differentials); Holley v. Watts, 629 S.W.2d 694 (Tex. 1982) (sale-leasebacks).

Texas usury laws are strictly construed and penal in nature but there are various defenses available. Usury plaintiffs may not prevail unless the defendant’s actions clearly fit within the express terms of the statute. Texas also allows pre-suit notices and corrective action defenses.  Pre-suit notices and defenses are set out in Chapter 305 and Chapter 349 of the Texas Finance Code.  An excellent source for detailed information on usury is the Usury Law Handbook (West Publishing 1997 and Cum. Supp. 2010) by Nicewander, Sheehan and West.

The opinions and views in this blog are the author’s and not those of the Bickerstaff Heath Law Firm.  Comments, suggestions and replies can be sent to me at JJONES@bickerstaff.com.

Legislative Update-Taxpayer Relief and Attorney-Client Privilege

Two brief legislative updates. One is on the American Taxpayer Relief Act of 2012 and the other on the passing of H.R. 4014 amending the Federal Deposit  Insurance Act. H.R. 4014, now Public Law 112-215, sponsored by Representative Huizenga of Michigan, amended the Federal Deposit Insurance Act to add the Consumer Financial Protection Bureau (“CFPB”) to the definition of covered agencies and prohibits information submitted to the CFPB in the course of its supervisory or regulatory process from being considered a waiver of the attorney-client privilege under federal or state law.  Although the CFPB had tried to address this issue with CFPB Bulletin 12-01, the new law should now protect the attorney-client privilege when information is provided to the CFPB.

The American Taxpayer Relief Act of 2012 is also known as the “Fiscal Cliff” Legislation and certainly does not feel like taxpayer relief as it did not address payroll tax issues but did manage to provide extensions of tax breaks to various special interests. The Equipment Leasing and Finance Association/Ernst and Young have put together a great 19 page summary of the Fiscal Cliff provisions and graciously agreed to allow re-distribution. If you are interested in a copy, please email me separately and I will provide a copy.  The American Taxpayer Relief Act (the “Act”) extends the 2001 tax relief provisions by permanently extending the 10%, 25%, 28% and 33% income tax rates on income at or below $400,000 (for individual filers), $425,000 (head of households) and $450,000 (for married filing jointly). The Act also permanently repealed the personal exemption phaseout and itemized deductions for certain taxpayers and extended the marriage penalty relief for the standard deduction. The Act further extended capital gains and dividend rates on income at or below $400,000 and made permanent the individual alternative minimum tax (AMT) relief.  Numerous business credits were also provided for and extended including investments in low income communities, plug-in electric motorcycles and 3-wheeled vehicles along with allowing, in some instances, accelerated depreciation deductions to recover the cost of capital. The Act covers numerous other topics. A copy of the entire text of the senate bill can be found at www.gpo.gov/fdsys/pkg/BILLS-112hr8eas/pdf/BILLS-112hr8eas.pdf.

The opinions of this blog are the author’s and not those of the Bickerstaff Heath Law Firm. Any comments, suggestions, replies or requests can be emailed to me at JJONES@bickerstaff.com.