Chapter 11-12 Exemplary Damages

• Jurisdiction: United States

11-12 Exemplary Damages

Exemplary damages in Texas are governed by Chapter 41 of the Texas Civil Practice and Remedies Code. To obtain exemplary damages, a plaintiff must plead and prove by clear and convincing evidence that the harm forming the basis for the award of exemplary damages resulted from fraud, malice, or gross negligence.²⁶³ Evidence of ordinary negligence, bad faith, or a deceptive trade practice will not suffice.²⁶⁴

Exemplary damages may not be awarded to a claimant who elects to have his recovery multiplied under another statute.²⁶⁵

Under specified circumstances, exemplary damages may be assessed against an employer for the criminal conduct of an employee.²⁶⁶

Subject to specified exceptions, exemplary damages against a defendant may not exceed an amount equal to the greater of:

• two times the amount of economic damages; plus
• an amount equal to any noneconomic damages found by the jury, not to exceed $750,000; or $200,000.²⁶⁷

This cap on exemplary damages does not apply to specified forms of felony conduct, including (among other felony conduct) forgery, commercial bribery, misapplication of fiduciary property or property of a financial institution, securing execution of a document by deception, fraudulent destruction or removal or concealment of a writing, and theft.²⁶⁸ Exemplary damage awards excepted from and in excess of the caps, despite being statutorily authorized, are still subject to federal constitutional due process guidelines and limitations.²⁶⁹

Plaintiff must specifically plead the basis for exemplary damages, as well as providing fair notice of any specified exception to the exemplary damage caps.²⁷⁰ Although for the sake of clarity it may be helpful for the defendant to plead any caps to exemplary damages, the caps do not constitute an affirmative defense and apply as a matter of law.²⁷¹ the defendant should plead federal constitutional due process limitations on any exemplary damages in excess of the caps, plus pleading for bifurcation of the exemplary damages phase of the case if desired.²⁷²

²⁶¹ Villiers v. Republic Fin. Servs., Inc., 602 S.W.2d 566, 570 (Tex. Civ. App.—Texarkana 1980, writ ref'd n.r.e.).

²⁶² Plains Expl. & Prod. Co. v. Torch Energy Advisors Inc., 473 S.W.3d 296, 302 n.4 (Tex. 2015).

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Notes:

^[263] Tex. Civ. Prac. & Rem. Code § 41.003(a).

^[264] Tex. Civ. Prac. & Rem. Code § 41.003(b).

^[265] Tex. Civ. Prac. & Rem. Code § 41.004(b).

^[266] tex. Civ. Prac. & Rem. Code § 41.005.

^[267] tex. Civ. Prac. &amp...