Recent Legislative Changes to the Certificate of Merit Requirements in Texas
This is a follow-up to our prior post summarizing the Certificate of Merit Requirements in Texas. In this post, we explore recent legislative changes to the certificate of merit requirements and the application of such requirements to third-party claims.
Legislative Changes in Affiant Requirements
In June 2019, the Texas Legislature amended the certificate of merit statute in order to provide more clarity and protections for licensed or registered design professionals in lawsuits asserted against them arising out of their provision of professional services. The amendments notably changed the requirements concerning the qualifications necessary for the affiant, expanded the scope of pleadings that must be filed with a certificate of merit, and expanded the type of parties that must file a certificate of merit.
Before the 2019 amendments, when describing the ability and certification requirements of the affiant, i.e., the party drafting the certificate of merit, Section 150.002(a)(3) of the Texas Civil Practice and Remedies Code stated the affiant must be “knowledgeable in the area of practice of the defendant.” This vague and ambiguous wording required only that the affiant was “knowledgeable” in the area or practice. There was no requirement the affiant was actively practicing or providing professional design services. The language, therefore, was inclusive of practicing professionals, professional experts, and former professionals (retirees). This created a cottage industry of professional experts that prepared certificate of merits even though they had not actually practiced in providing professional design services for years, or decades in many cases.
After the 2019 amendments, Section 150.002(3) now requires that the affiant “practices in the area of practice of the defendant.” The new language is more restrictive than the old language in that it significantly reduces the pool of individuals that can properly serve as affiants. Retired third-party professionals that no longer actively practice are not permitted to prepare valid certificates of merit. Further, movants may no longer use professional experts who do not actively practice, potentially including experts whose sole job is providing expert services. The amendments provide more protections for defendants by requiring the affiant to be up-to-date on the latest technology and procedure, while placing more of a monetary burden on the plaintiff by requiring them to hire a practicing professional at a higher cost.
The more restrictive language in Section 150.002(3) of the Texas Civil Practice and Remedies presents movants with significant hurdles. The movant now must be prepared, often months in advance of filing suit, to locate an actively practicing professional to prepare a certificate of merit. Many professionals are reluctant to get involved with the litigation process. This further reduces the available professionals to prepare certificate of merit affidavits. Consequently, it is important for movants to plan ahead and allow for adequate time to locate and retain an expert sufficiently qualified to prepare a certificate of merit. It is also important to vet prospective experts to confirm they are actively practicing in the particular discipline forming the basis of the claims in dispute.
Legislative Changes in Third-Party Claims Language
The legislative changes, in some part, were a response to the decisions in Engineering and Terminal Services, L.P. v. TARSCO, Inc. and Orcus Fire Protection, LLC. and Jaster v. Comet II Construction, Inc., in which Texas courts held the certificate of merit requirement did not apply to third-party claims. (Engineering and Terminal Services, L.P. v. TARSCO, Inc., 525 S.W. 3d 394 (Tex. App.—Houston [14th Dist.] 2017, pet. denied); Orcus Fire Protection, LLC. and Jaster v. Comet II Construction, Inc., 438 S.W.3d 556 (Tex. 2014).) In both of these cases, as well as other previous decision, courts applied a strict interpretations of the terms “complaint” and “plaintiff.” Courts previously held “plaintiff” to mean only the original petitioner, and “complaint” to mean the original complaint, petition, amendment, or supplement that initially brings the cause of action.
In Jaster the Texas Supreme Court held the certificate of merit requirement did not apply to third-party plaintiffs seeking indemnity and contribution because the affidavit requirement was limited to actions “for damages.” Further, in ETS, the Houston Fourteenth Court of Appeals held if the legislature intended the certificate of merit requirement to apply to parties filling third-party claims, it should have used broader terms in defining the filling party. (ETS, 525 S.W. 3d at 400.) Instead of using the term “plaintiff,” it should have used a term like “claimant,” so as to clarify the requirement applied both to first-party and third-party claims. (Id.)
The legislature responded to these opinions through the 2019 amendments to the statute. The amendments replaced the term “plaintiff” with the term “claimant,” and defined “claimant” as any “party, including a plaintiff or third-party plaintiff, seeking recovery for damages, contribution, or indemnification.” (Tex. Civ. Prac. & Rem. Code § 150.001.) The amended language now specifically calls for the inclusion of third-party plaintiffs in the certificate of merit requirement. The amendments also defined, for the first time, the term “complaint” to mean “any petition or other pleading . . .” (Id.) The amended language is more inclusive for third-party claimants.
Overall, the amendments call for more on the part of the third-party plaintiff seeking to assert contribution or indemnity claims against design professionals. Instead of filling a third-party complaint containing minimal allegations alleging a design error, the third-party plaintiff must now support the allegations in the complaint with a certified affidavit proving a basis for the wrongdoing. This is a key issue that all parties in the construction project hierarchy must be aware of in connection with construction defect litigation. This is particularly true for insurance carriers providing coverage on behalf of general contractors and other trades that will frequently look to assert third-party claims in an effort to mitigate against the potential exposure of insureds.
If confronted with a potential professional negligence claim, it is important to consult with an experienced construction attorney with knowledge addressing the certificate of merit requirements. This is true whether affirmatively asserting a claim or defending against a design error lawsuit. The KRCL Construction Team has significant experience assisting clients through this cumbersome process.
KRCL would like to give special thanks to Ruwendika deSilva for her significant assistance in the preparation of this blog post. Ms. deSilva was a summer associate in the Firm's Houston office in 2020. She is currently a third-year law student at South Texas College of Law -- Houston.