Certificate of Merit Requirements in Texas

Introduction

Under Texas law, in actions for damages arising out of the provision of professional services by a licensed or registered professional, the plaintiff must file a certificate of merit with the original petition.[1]  The purpose of the statute is to deter and quickly end nonmeritorious claims.[2]  The actions creating the claim do not need to “constitute the provision of professional services,” instead, “the acts creating the claim must ‘aris[e] out of the provision of professional services.”[3]  If a plaintiff's cause of action involves a professional's education, training, and experience in applying special knowledge or judgment, it “arises out of the provision of professional services.”[4]  Failure to file the affidavit with the complaint will result in dismissal with or without prejudice.[5]  Although a trial court is required to dismiss a complaint if the plaintiff does not file a certificate of merit, it may use its discretion to determine whether to dismiss with or without prejudice.[6]

Whether the Claims Arise Out of Provision of Professional Service

A certificate of merit is required in cases where the defendant is a licensed or registered professional, and the plaintiff's claimed damages arise from the defendant’s provision of professional services.[7]  A claim arises out of the provision of professional services if the claim implicates the professional's education, training, and experience in applying special knowledge or judgment.[8]

[P]ractice of engineering means the performance of or an offer or attempt to perform any public or private service or creative work, the adequate performance of which requires engineering education, training, and experience in applying special knowledge or judgment of the mathematical, physical, or engineering sciences to that service or creative work.[9]

Thus, professional engineering services are being provided when they implicate a professional engineer’s education, training, and experience in applying special knowledge or judgment.[10]

Who is a Licensed or Registered Professional?

A licensed or registered professional includes a licensed architect, licensed professional engineer, registered professional land surveyor, registered landscape architect, and/or any business entity in which the licensed or registered professional practices.[11]

Affidavit Requirements

A plaintiff must file an affidavit of a third-party expert, which sets forth the negligence or other action, error or omission for each theory of recovery including “any error or omission in providing advice, judgment opinion, or a similar professional skill claimed to exist and the factual basis for each such claim.”[12]  The affidavit must state each theory of recovery for which damages are sought and the negligence or other action, error or omission of the licensed or registered professional.[13]  The third-party licensed professional who submits the affidavit must be licensed or registered in Texas and be actively engaged in the practice of such profession.[14]

Trial Court Discretion to Dismiss With or Without Prejudice

Although a trial court is required to dismiss a complaint if the plaintiff does not attach a certificate of merit, it is a discretionary decision whether to dismiss with or without prejudice.[15]  In fact, Section 150.002 of the Texas Civil Practice and Remedies Code expressly states “dismissal may be with prejudice.”[16]  Therefore, it may also be made without prejudice.  When interpreting statutory language, the goal of the analysis is to give effect to the Legislature’s intent.[17]  A court relies on the plain meaning of a statute's words as expressing legislative intent, unless a different meaning is supplied, is apparent from the context, or the plain meaning of the words leads to absurd or nonsensical results.[18]  Words and phrases must be “read in context and construed according to the rules of grammar and common usage.”[19]  When used in a statute, “may” indicates the provision is discretionary.[20]  However, the use of “may” does not allow trial courts discretion to “make decisions in an arbitrary or unreasonable manner, without reference to guiding rules or principles,” nor does the statute give a trial court guidance in determining whether to dismiss without prejudice.[21]

In Pedernal Energy, LLC v. Bruington Eng'g, Ltd., the Texas Supreme Court interpreted the specific discretionary language of the certificate of merit statute.[22]  In holding the statute did not require dismissal with prejudice, the Court stated the only reasonable interpretation shows that when the first sentence is read in conjunction with the second sentence, “it is clear that the Legislature intended the dismissal language in the first sentence to reference dismissal without prejudice.”[23] The Court also noted there is no other reasonable interpretation, otherwise the language, “dismissal may be with prejudice,”[24] would be “surplusage and meaningless.”[25]

Waiver of Certificate of Merit

Because Section 150.002 imposes a mandatory, non-jurisdictional filing requirement, a defendant may waive its right to seek dismissal under the statute.[26]  Waiver is largely a matter of intent, and for implied waiver to be found through a party’s actions, intent must be clearly demonstrated by the surrounding facts and circumstances.[27]  Evidence of waiver generally takes one of three forms: (1) express renunciation of a known right; (2) silence or inaction, coupled with knowledge of the known right, for such an unreasonable period of time as to indicate an intention to waive the right; or (3) other conduct of the party knowingly possessing the right of such a nature as to mislead the opposite party into an honest belief that the waiver was intended or assented to.[28]  Waiver is ordinarily a question of fact, but when the surrounding facts and circumstances are undisputed, the question becomes one of law.[29]  Some factors courts have considered in determining whether a party waived the requirement of a certificate of merit are: the moving party's degree of participation in discovery; whether the party sought affirmative action or judgment on the merits; and at what time during the judicial process the party sought dismissal.[30]

In Crosstex Energy Servs. L.P. v. Pro Plus Inc., the Texas Supreme Court considered whether defendant’s conduct constituted a waiver of the plaintiff's certificate of merit requirement.[31]  Since waiver is primarily a function of intent, to conclude a defendant waived the requirement, the court must determine the circumstances and surrounding facts clearly demonstrated the intent to waive.[32]  The Court held the defendant’s conduct did not demonstrate such intent to waive merely by “substantially invoking the judicial process through participating in discovery, filing an answer, joining continuance and docket control orders, and entering a Rule 11 agreement three days before filing a motion to dismiss; and failing to file a special exception…”[33]

On the contrary, in Murphy v. Gutierrez, the court held the defendant’s extensive participation in discovery, and in court-ordered mediation, as well as seeking both traditional and no-evidence summary judgments, taken together, constituted “conduct consistent with a party who has intentionally relinquished the known right of moving to dismiss under Section 150.002.”[34]  The court also considered the fact that the defendant waited over three and a half years to re-urge his motion to dismiss.[35]

The Court’s focus on the difference in the absence of a waiting period on the one hand, and an extensive waiting period on the other was the determining factor the Court considered when deciding whether a defendant’s conduct constituted a waiver.

The “Good Cause” Extension and its Statute of Limitations Issue

Under Section 150.002, a plaintiff may receive an extension if the statute of limitations will expire within 10 days of the date of filing the petition.[36]  In such cases, the plaintiff is allowed an extension of 30 days after filing to supplement the pleadings with a certificate of merit.[37]  The trial court may extend this deadline beyond 30 days for good cause and after a hearing.[38]  However, the “good cause” extension may actually work against the plaintiffs the extension is trying to protect.

In Crosstex Energy, the Texas Supreme Court considered whether Section 150.002's “good cause” extension is available only when a party files suit within ten days of the end of the limitations period.[39]  The parties entered a Rule 11 agreement to move expert designation dates beyond the statute of limitations period.[40]  After the limitations ran, the defendant moved to dismiss for failure to file a certificate of merit with the original petition.[41]  The trial court denied the motion and granted the plaintiff an extension.[42]  However, the court of appeals reversed the trial court’s ruling and remanded the case.[43]  On interlocutory appeal, the Supreme Court held the “good cause” exception is contingent upon a plaintiff: (1) filing within ten days of the expiration of the limitations period; and (2) alleging that such time constraints prevented the preparation of an affidavit.[44]  The extension exception states:

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… 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.[45]

The parties disputed whether the statute’s scope was limited to a plaintiff who filed the lawsuit during the final ten days of the limitations period or whether it extends to all plaintiffs, regardless of when they file the lawsuit.[46]  The Court reasoned the statute must be read as a whole rather than each provision in isolation.[47]  The use of “and” in the statute means both conditions, (1) filing within ten days of the expiration of the limitations period; and (2) alleging that such time constraints prevented the preparation of an affidavit, must be satisfied in order for the extension to apply.[48]

This loophole in the statute incentivizes defendants to wait until the statute of limitations runs before moving to dismiss.  This will serve as an additional hurdle for plaintiffs further limiting their access to the judicial process.

Conclusion

The certificate of merit requirement in Texas serves as a barrier to nonmeritorious claims.  When a plaintiff files a lawsuit arising out of the provisions of professional service, a plaintiff must file an affidavit that the claim has merit.  Failure to file such affidavit will result in dismissal of the lawsuit, but the dismissal may be with or without prejudice.  A defendant may waive its right to seek dismissal under the statute if there is evidence of intent to waive such right.

While the statute does serve a useful purpose, it is not without issue.  The “good cause” extension may actually work against the plaintiffs it is trying to protect.  By allowing defendants to seek dismissal on the grounds of failure to file the certificate of merit after the statute of limitations has run, plaintiff is barred from re-filing the lawsuit due to a minor technicality.


[1] Crosstex Energy Servs. L.P. v. Pro Plus Inc., 430 S.W.3d 384, 387 (Tex. 2014) (quoting Tex. Civ. Prac. & Rem. Code § 150.002(a)).

[2] CTL/Thompson Tex., LLC v. Starwood Homeowner's Ass'n, Inc., 461 S.W.3d 627, 630 (Tex. App.—Fort Worth 2015, pet. denied).

[3] Pelco Constr., Inc. v. Dannenbaum Eng’g Corp., 404 S.W.3d 48, 54–55 (Tex. App—Houston [1st Dist.] 2013, no pet.) (citing Tex. Civ. Prac. & Rem. Code § 150.002(a)).

[4] TDIndustries, Inc. v. Rivera, 339 S.W.3d 749, 754 (Tex. App.—Houston [1st Dist.] 2011, no pet.) (holding the negligence of an employee who does not hold any engineering license did not implicate a professional engineer’s education, training or experience in applying special knowledge or judgment); see also, RCS Enterprises, LP v. Hilton, No. 02-12-00233-CV, 2013 WL 6795390 (Tex. App.—Fort Worth 2013, no pet.) (holding defendant engineering firm and president were not providing engineering services when employed as third-party inspection agency and third-party inspector, and thus plaintiff buyers were not required to file certificate of merit).

[5] Tex. Civ. Prac. & Rem. Code § 150.002(e).

[6] TIC N. Cent. Dallas 3, L.L.C. v. Envirobusiness, Inc., 463 S.W.3d 71, 76 (Tex. App.—Dallas 2014, pet. denied).

[7] Pedernal Energy, LLC v. Bruington Eng'g, Ltd., 2017 WL 1737920 (Tex. Apr. 28, 2017); see also Crosstex Energy, 430 S.W.3d at 387.

[8] TDIndustries, 339 S.W.3d at 754; see also, RCS Enterprises, 2013 WL 6795390 at *2.

[9] Tex. Occ. Code § 1001.003(b).

[10] RCS Enterprises, 2013 WL 6795390 at *2.

[11] Tex. Civ. Prac. & Rem. Code § 150.001.

[12] Tex. Civ. Prac. & Rem. Code § 150.002.

[13] Id.

[14] Id.

[15] TIC N. Cent. Dallas 3, 463 S.W.3d at 76.

[16] Tex. Civ. Prac. & Rem. Code § 150.002(e) (emphasis added).

[17] Pedernal Energy, 2017 WL 1737920 at *4 (citing Tex. Mut. Ins. Co. v. Ruttiger, 381 S.W.3d 430, 452 (Tex. 2012)).

[18] Id. (citing Crosstex Energy, 430 S.W.3d at 389–90).

[19] Id. (citing TEX GOV’T CODE § 311.011).

[20] Id. (citing TEX GOV’T CODE § 311.016(1)) (emphasis added).

[21] Id. (citing CTL/Thompson Tex., LLC v. Starwood Homeowner's Ass'n, Inc., 390 S.W.3d 299, 301 (Tex. 2013)).

[22] Id. at *1.

[23] Id. at *4.

[24] Tex. Civ. Prac. & Rem. Code § 150.002(e).

[25] Pedernal Energy, 2017 WL 1737920 at *4.

[26] Frazier v. GNRC Realty, LLC, 476 S.W.3d 70, 73 (Tex. App.—Corpus Christi 2014, pet. denied).

[27] Id. at 74.

[28] Id. (citing Alford, Meroney & Co. v. Rowe, 619 S.W.2d 210, 213 (Tex. 1981)).

[29] Crosstex Energy, 430 S.W.3d at 394–95.

[30] See Murphy v. Gutierrez, 374 S.W.3d 627, 633 (Tex. App.—Fort Worth 2012, pet. denied); Palladian Bldg. Co. v. Nortex Found. Designs, Inc., 165 S.W.3d 430, 434 (Tex. App.—Fort Worth 2005, no pet.); Ustanik v. Nortex Found. Designs, Inc., 320 S.W.3d 409, 414 (Tex. App.—Waco 2010, pet. denied); Landreth v. Las Brisas Council of Co–Owners, Inc., 285 S.W.3d 492, 500–01 (Tex. App.—Corpus Christi 2009, no pet.).

[31] Crosstex Energy, 430 S.W.3d at 386.

[32] Id. at 393.

[33] Id. at 394.

[34] Murphy, 374 S.W.3d at 633–35.

[35] Id. at 635.

[36] Tex. Civ. Prac. & Rem. Code § 150.002(c).

[37] Id.

[38] Id.

[39] Crosstex Energy, 430 S.W.3d at 386 (emphasis added).

[40] Id.

[41] Id.

[42] Id.

[43] Id.

[44] Id. at 391.

[45] Tex. Civ. Prac. & Rem. Code § 150.002(c) (emphasis added).

[46] Crosstex Energy, 430 S.W.3d at 390.

[47] Id.; see also TGS–NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432, 441 (Tex. 2011) (holding “it is a fundamental principle of statutory construction and indeed of language itself that words' meanings cannot be determined in isolation but must be drawn from the context in which they are used.”).

[48] Id. at 391.

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