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THE RACE FOR THE WHITE HOUSE

Texans Still at Odds Over Bush's Legal Reforms

September 22, 2004|David G. Savage | Times Staff Writer

BELLAIRE, Texas — On his first day as governor of Texas, George W. Bush declared that limiting lawsuits was an "emergency issue" for his state.

"We must put a stop to the frivolous and junk lawsuits which clog our courts," he said in January 1995, a popular line he has repeated often since then.

Getting rid of "frivolous" suits -- or even defining them -- proved difficult, but the new governor won limits on how much money could be awarded in the biggest cases. For example, punitive damages were capped at twice the amount of a victim's loss.

But the legal-reform movement Bush launched in Texas has gone far beyond questions of monetary awards. Among other things, it has led to limits on the right to sue in the first place.

"Texas has gone from one of the most friendly states for consumer protection to one of the most anti-consumer states," said University of Houston law professor Richard M. Alderman, an expert on consumer rights. "It all began in 1995. Bush oversaw a significant retreat for consumer protection, and it was all done under the guise of attacking 'frivolous' lawsuits."

The impact has been felt by home buyers such as Mary and Keith Cohn, whose elegant new residence in this well-off Houston suburb came with a leaky roof that led to rotting and moldy wallboard throughout the structure. After their daughters became ill, the Cohns moved out. The repairs ultimately cost more than $300,000.

To their astonishment and dismay, they learned that when the builder refused to repair most of the damage, they could not sue him for redress. Instead, they could pursue private arbitration, a process they considered stacked against them.

"This is the largest purchase of your life," said Mary Cohn, "but you have zero consumer protection."

Since leaving Texas for Washington, Bush has continued to voice his disdain for "frivolous and junk lawsuits," although his administration has pushed only two relatively modest changes so far: capping noneconomic damages in medical malpractice claims and funneling class-action lawsuits into federal courts. Democrats in the Senate have stalled both proposals.

But Bush served notice at this summer's Republican National Convention that if reelected, he plans to make "tort reform" a key part of his second-term agenda. In the president's view, lawsuits raise costs for businesses, doctors and ultimately consumers. He says there are better ways to protect the public against shoddy products and services.

Bush's legacy in Texas, supporters here say, was the reining in of a civil justice system that was out of control.

"This state was known for egregious abuses of the legal system," said Ken Hoagland, a spokesman for Texans for Lawsuit Reform. "It was entrepreneurial law. The trial lawyers would find a moneymaking cause and then go recruit some plaintiffs. But since 1995, we've really changed the landscape."

To hear critics tell it, however, Bush-style legal reform is bad news for consumers.

Until the mid-1990s, Texas had one of the nation's strongest consumer-protection laws. Known as the Deceptive Trade Practices Act, it allowed cheated consumers to sue and take their claims before a jury. The targets of these suits ranged widely: car dealers, health clubs, home-repair contractors, promoters of get-rich-quick and weight-loss schemes, even marketers of fake sports memorabilia.

In legal changes, some begun under Bush and others that occurred after he became president, the pro-business Texas Legislature and state Supreme Court made it harder for consumers to sue and win damages. One industry after another -- including real estate brokers, architects and engineers -- won protections against being sued.

No industry was more effective in protecting its interests than the politically powerful homebuilders.

Even before Bush became governor, the builders won passage of the Residential Construction Liability Act, which gave them the "right to repair" defects before homeowners could sue. But a series of amendments under Bush, and more since his tenure, tilted the law heavily toward builders, critics say.

In practice, the "right to repair" became the "right to delay" without penalty, according to aggrieved buyers. Later amendments made it harder for homeowners to prove that damage was caused by the original construction. If the builder was shown to be at fault, the law limited how much money could be awarded.

At the same time, builders began adding arbitration clauses to their contracts so that unhappy homeowners were forced to take their complaints before a privately hired arbitrator, rather than a judge and jury. As of last year, inspectors chosen by an industry-dominated panel determined the facts on which the arbitration was decided.

None of the legal changes was promoted as a means to shortchange consumers. Rather, industry lobbyists said it was better for both buyers and sellers if disputes were resolved quickly and without costly lawsuits.

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