When pursuing or defending a personal injury claim, it is important to keep in mind that claims for exemplary damages do not automatically justify digging into a defendant’s financial information. A defendant’s financial information may very well be relevant such claims; however, the Texas legislature has required more than a showing of mere relevance to obtain such potentially sensitive information.
Specifically, under Section 41.0115 of the Texas Civil Practice and Remedies Code, a party seeking discovery of a defendant’s net worth must first file a motion with the Court. Only after such a motion is filed, notice is given, and a hearing is held, may a trial court authorize discovery of a defendant’s net worth.
In addition to providing a specific method for pursuing discovery of such information, the Texas legislature has defined the burden on the party seeking such discovery. A trial court may only authorize discovery of evidence of a defendant’s net worth if the court finds that the claimant has demonstrated a “substantial likelihood of success” on the merits of the claim for exemplary damages.
Even when a court determines that this heavy burden has been met, the party seeking net worth information is not entitled to anything and everything. Instead, the Texas legislature has instructed Texas courts to “only authorize use of the least burdensome method available to obtain the net worth evidence.” Tex. Civ. Prac. & Rem. Code § 41.0115(b).
Section 41.0115 is important to keep in mind when seeking or objecting to discovery of a defendant’s financial information and potential net worth. To obtain such information, the party seeking it must follow the procedures described in Section 41.0115 and meet the burden of proof. If the party seeking such information fails to follow the correct procedure, the party opposing such discovery should timely object on such grounds.
One last issue to keep in mind when seeking or opposing the discovery of evidence of net worth in connection with an exemplary damage claim is the potential effect on the timing of a No-Evidence Motion for Summary Judgment under Rule 166a(i) of the Texas Rules of Civil Procedure. Because the party seeking discovery of net worth information pursuant to Section 41.0115 must demonstrate a substantial likelihood of success of the merits of an exemplary damage claim, Section 41.0115(d) instructs the court to “presume that the requesting party has had adequate time for the discovery of facts relating to exemplary damages for purposes of allowing the party from whom net worth discovery is sought to move for summary judgment on the requesting party’s claim for exemplary damages.” Depending on when the party seeking such discovery files a motion under Section 41.0115, this could open the door to a Rule 166a(i) motion much earlier in the litigation than would otherwise be permissible.
