A Refresher On Exceptions To The 'American Rule' In Texas

Law360, New York (May 5, 2017, 12:27 PM EDT) -- Deeply rooted in this country’s jurisprudence is the “American Rule,” which recognizes that parties to a lawsuit must bear their own litigation expenses. Texas entities and foreign entities doing business in Texas (or performing a contract governed by Texas law) should be aware that: (i) Texas generally follows the American Rule[1]; but (ii) the Texas legislature also departed from that rule when enacting §38.001(8) of the Texas Civil Practice and Remedies Code, which allows a party to recover attorneys’ fees on valid contract claims.

Courts — including appellate courts in Texas — seem split on the extent to which a party...

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