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SE Texas Record

December 4, 2018

‘Massive’ judgments earn Texas ‘Dishonorable Mention’ on ‘Judicial Hellhole’ report

By David Yates

WASHINGTON – Once a regular on the list, Texas managed to avoid landing a “Judicial Hellhole’ ranking this year, but did secure a “Dishonorable Mention” for dishing out massive damage awards, including the largest in the nation for 2018.

The American Tort Reform Foundation released its annual “Judicial Hellholes” report on Dec. 4, citing two lucrative Texas verdicts.

The first is for a “massive judgment” against Toyota in a manufacture liability suit.

On Aug. 17, a Texas jury awarded $242.1 million dollars in damages to a couple whose children were injured in a car accident, even though the vehicle exceeded federal safety standards, the report states.

The jury found the front seats in the family’s Lexus ES 300 were defective and unreasonably dangerous. The accident occurred when the driver of a Honda Pilot rear-ended the Lexus going 40 miles-per-hour while the Lexus was stopped in traffic on the highway.

The jury found Toyota and its non-manufacturing seller to be 95 percent liable, and the driver who crashed into their completely stopped car only 5 percent liable.

According to the plaintiffs, Toyota was liable for an alleged design defect and failure to warn that the seat back and restraint system could collapse backward in a rear-end collision.

“The jury found liability and award damages on a design defect theory despite the fact the product exceeded federal safety standards, there was no evidence of a safer alternative design, and the court had refused to allow Toyota to present its own expert rebuttal testimony,” the report states.

“Additionally, the jury found liability for failure to warn despite the fact the plaintiffs admitted they had never read the owner’s manual.”

Toyota is appealing the decision and ATRA will file an amicus curiae brief in support.

The second judgment mentioned, the largest in the nation for 2018, came out of Bexar County in October when a Texas trial judge entered a judgment ordering Amrock, a title insurance and real property valuation company, to pay just under $740 million to HouseCanary, a start-up technology company.

Amrock is owned by Rock Holdings, which also owns lending giant Quicken Loans.

A jury awarded HouseCanary $706 million in actual and punitive damages, after finding that Amrock maliciously misappropriated Amrock’s trade secrets. Before signing the judgment, the trial court added another $29 million in interest and $4.5 million in attorney’s fees, resulting in the nation’s largest judgment in 2018.

“Texas law does not allow the award of speculative damages,” the report states. “For that reason, it is very difficult for a company that has shown modest profits to recover a significant amount of money for lost future profits.

“But the restrictive nature of Texas’s law on lost-profits damages did not impede the trial court from signing a historic judgment in favor of a start-up company with virtually no history of success in the market.”

This is the second year in a row Texas managed to avoid a “judicial Hellhole” ranking.

In fact, last year ATRA even cited Texas’ efforts to pass hail lawsuit reform as a “Point of Light.”

The praise came after Hidalgo County, arguably the birthplace of mass hailstorm litigation, made the list for a second straight year.

Some groups believe there’s always room for improvement.

“While lawsuit reforms have greatly improved our state’s civil justice system and reduced abuse over the past couple of decades, there are still some Texas cases and jury awards that continue to raise eyebrows,” said Marcus Jahns, chairman of Texans Against Lawsuit Abuse.

“Many Texans are rightly concerned that massive jury awards are disproportional to the damage done, and, in some cases, the personal injury lawyer is simply going after a third party with the deepest pockets rather than the party most directly responsible for the injury.”


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