THE LATEST TORT REFORM: THE CERTIFICATE OF MERIT Allison J. Snyder, Esq. PORTER & HEDGES, L.L.P. 1000 Main Street, 36 th Floor Houston, Texas 77002 713-226-6000 www.asnyder@porterhedges.com
THE LATEST TORT REFORM: THE CERTIFICATE OF MERIT A. The Statute In 2003, the Texas legislature enacted a number of laws aimed at tort reform. One of these laws has been codified in Chapter 150 of the Texas Civil Practice & Remedies Code. Chapter 150 establishes a requirement that any civil action alleging negligence on the part of a design professional be supported by the contemporaneous filing of an affidavit identifying the specific negligent act or omission and the underlying factual basis for the allegation. The affidavit must be obtained from a third-party design professional, and is commonly referred to as the Certificate of Merit. Chapter 150 places the certificate of merit requirements only on those suing design professionals. (A Form Version of a Certificate of Merit Affidavit is attached as Appendix A.) The statute was slightly altered by the 2005 legislature and now reads as follows: Section 150.001. DEFINITION. In this chapter, (1) Design professional means licensed architect, licensed professional engineer, or any firm in which such licensed professional practices, including but not limited to a corporation, professional corporation, limited liability corporation, partnership, limited liability partnership, sole proprietorship, joint venture, or any other business entity. (2) "Practice of architecture" has the meaning assigned by Section 1051.001, Occupations Code. 1 Section 150.002. CERTIFICATE OF MERIT. (a) In any action or arbitration proceeding for damages arising out of the provision of professional services by a licensed or registered professional, the plaintiff shall be required to file with the complaint an affidavit of a third-party licensed architect, registered professional land surveyor, or licensed professional engineer competent to testify, holding 1 The above definition was amended by H.B. 1573, 2, 79 th Leg., effective September 1, 2005 without reference to the conflicting amendment made by H.B. 854, 1, 79 th Leg., effective May 27, 2005 which provides: 150.001 In this chapter, licensed or registered professional means a registered architect, registered professional land surveyor, or licensed professional engineer.
the same professional license as, and practicing in the same area of practice as the defendant, which affidavit shall set forth specifically at least one negligent act, error, or omission claimed to exist and the factual basis for each such claim. The third-party professional engineer, registered professional land surveyor, or licensed architect shall be licensed in this state and actively engaged in the practice of architecture, surveying, or engineering. (b)the contemporaneous filing requirement of Subsection (a) shall not apply to any case in which the period of limitation will expire within 10 days of the date of filing and, because of such time constraints, the plaintiff has alleged that an affidavit of a third-party licensed architect, registered professional land surveyor, or professional engineer could not be prepared. In such cases, the plaintiff shall have 30 days after the filing of the complaint to supplement the pleadings with the affidavit. The trial court may, on motion, after hearing and for good cause, extend such time as it shall determine justice requires. (c) The defendant shall not be required to file an answer to the complaint and affidavit until 30 days after the filing of such affidavit. (d) The plaintiff's failure to file the affidavit in accordance with Subsection (a) or (b) shall result in dismissal of the complaint against the defendant. This dismissal may be with prejudice. (e) An order granting or denying a motion for dismissal is immediately appealable as an interlocutory order. (f) This statute shall not be construed to extend any applicable period of limitation or repose. (g) This statute does not apply to any suit or action for the payment of fees arising out of the provision of professional services. 2 Generally, this language provides that when suing any licensed professional, a certificate of merit, or affidavit, from a design professional holding the same professional license and practicing in the same area of practice as the defendant must be attached. This effort was made to shield design professional from frivolous claims. B. The Advantages & Disadvantages of Chapter 150 Although Chapter 150 was enacted as part of the Texas legislature s tort reform effort, the statute applies to more than just torts. Indeed, by its very language, the statute applies to 2 TEX. CIV. PRAC. & REM. CODE 150.001-.002 (West 2005)(emphasis added). 2
any action or arbitration proceeding for damages arising out of the provision of professional services by a licensed or registered professional... TEX. CIV. PRAC. & REM. CODE 150.002(a). This broad wording would encompass a breach of contract claim against a design professional arising from the failure to perform in accordance with a contractually required standard of care. Thus, the broad sweep of Chapter 150 is one of the greatest advantages offered by the statute. 3 Another advantage offered to design professionals by Chapter 150 can be found in the point of the statute itself: It creates a screening process for weeding out presumably groundless suits. TEX. CIV. PRAC. & REM. CODE 150.002(d). Before the 2005 amendments, dismissals were purely discretionary. Now however, failure to comply makes the dismissal mandatory. However, the court or arbitrators still have the discretion to dismiss with or without prejudice. Although the legislature attempted to close some loopholes with the 2005 amendments, all were not closed. For example, the statute does not adequately address the area of designbuild construction when the design/builder contracts with architects and engineers to do the actual design. Previously, the narrow definition of design professional did not include designbuild contractors who might employ in-house design professionals. The definition of design professionals would now encompass such a firm. The definition does not, however, encompass a design build contractor who enters contracts with the design professionals to perform the design. Assume that in such a situation after the project is completed, the owner sues the designbuilder for negligence in its design. The owner would not have to comply with the requirements of Chapter 150 because the design-builder does not fall within the definition of licensed or registered professional. See TEX. CIV. PRAC. & REM. CODE 150.001. Notice, however, that 3 Prior to the 2005 amendments, the statute applied to any action for damages alleging professional negligence by a design professional. 3
if a design builder sought to make a claim against an architect or engineer that it hired, then the design builder would have to comply with Chapter 150. Thus, Chapter 150 does not lend itself to consistent application. In addition, Chapter 150 does not indicate whether the protections of the statute extend to those who, while registered or licensed elsewhere, are not licensed in Texas. For example, the statute does not appear applicable to those who create shop drawings. Consequently, design professionals in other states would not receive the protections of Chapter 150. Another problem with Chapter 150 concerns the affidavit requirement. The language of the statute indicates that the affiant can be either a registered architect or a licensed engineer, but then states the additional requirement that the affiant be in the same area of practice. It makes sense that a claim against an architect needs an affiant who is an architect, and likewise for engineers. However, the clause requiring a professional to be in the same area of practice seems to denote something more specific. For example, if a plaintiff is suing a structural engineer, does the plaintiff need to obtain the affidavit of another structural engineer? So far, there is no answer to this question. The third-party design professional who provides the certificate of merit must be actively engaged in the practice of architecture, surveying, or engineering. TEX. CIV. PRAC. & REM. CODE 125.002(a). A certificate of merit may be challenged on the grounds that the affiant is not actively engaged in the practice of architecture or engineering. Imagine a scenario where a plaintiff sues an electrical engineer and obtains the affidavit of a highly regarded, but retired electrical engineer. By the literal terms of Chapter 150, it would appear that the affidavit would be defective, although the affiant would clearly have the expertise to testify to the matters at hand. 4
C. General Commentary Prior to the 2005 amendments, the Texas Construction Bar generally regarded Chapter 150 as a paper tiger. The legislature intended to add some teeth to the statute with the 2005 amendments. However, because the mandatory dismissal can be with or without prejudice, it is doubtful that the statute will be that successful in weeding out claims. D. Chapter 150 & Texas Case Law To date, there is only one unreported opinion of which we are aware that involves Chapter 150. In that case, the Fort Worth Court of Appeals held that the statute, as enacted in 2003, allowed a court to dismiss with or without prejudice. See Palladian Building Co., Inc. v. Nortex Foundation Designs, Inc., 2005 WL1048081 (Tex. App. Fort Worth May 5, 2005, no pet.) In Palladian, the appellate court found that the trial court did not abuse its discretion in dismissing a suit with prejudice when the plaintiff failed to include a certificate of merit. 5
APPENDIX A FORM VERSION OF CERTIFICATE OF MERIT AFFIDAVIT [INSERT STYLE OF CASE] THE STATE OF TEXAS COUNTY OF [INSERT COUNTY] AFFIDAVIT OF [DESIGN PROFESSIONAL] BEFORE ME, the undersigned authority, on this day personally appeared [name of design professional], who being by me duly sworn on oath deposed and said: 1. My name is [insert name]. I am over the age of twenty-one (21) years, I have never been convicted of a felony, and I am competent to make this affidavit. I have personal knowledge of the matters contained in this affidavit, and they are true and correct. 2. This affidavit is submitted pursuant to the requirements of TEXAS CIVIL PRACTICE AND REMEDIES CODE 150.002, with respect to the [design professional services] provided by [insert company name] in the design and construction of the [project, state location]. 3. I am a licensed professional [engineer or architect] in the state of Texas, I am competent to testify, and I am actively engaged in the practice of [engineering or architecture]. A true and correct copy of my resume is attached hereto as Exhibit A, and is incorporated herein by reference for all purposes. 4. Based on my research, experience in the industry, and review of Project Documents, as described hereinbelow, [insert company name], is engaged in, and was retained on the Project, to perform [explain services]. 5. As shown in my resume, Exhibit A, I am licensed to practice [engineering or architecture], and have, for the past [ ] years, been actively engaged in providing [insert duties] for clients similar in nature and geographic location to the Project. 6. Based on my education and professional experience, I have personal knowledge of the acceptable standards for the practice of [insert services] in the state of Texas and the greater [citywide] area, which was the task to be performed by [name of company] on this Project. 6
7. I have reviewed the following documents (the Project Documents herein) relating to the Project and [name of company] s services in this matter: [INSERT ALL DOCUMENTS REVIEWED] 8. Based on my education, experience, and a review of the Project Documents, it is my professional opinion that [name of company] is responsible for at least the following act, error, or omission that exists on the Project: [Explain act, error, or omission specifically] 9. These acts, errors, and/or omissions show that [name of company] failed to meet the applicable work product standards of design professionals. 10. My investigation is ongoing, and further examination of the Project may lead to the discovery of additional negligent acts, errors, and/or omissions in the work performed by [name of company]. As a result, I reserve the right to supplement and/or expand my opinions and conclusions with respect to the performance of [name of company]. Further affiant sayeth naught. [NAME OF DESIGN PROFESSIONAL] SUBSCRIBED AND SWORN TO before me by the said, on this the day of [date], to certify which witness my hand and seal of office. NOTARY PUBLIC IN AND FOR THE STATE OF TEXAS My Commission Expires: 7