The Texas Theft Liability Act (“TTLA”), Chapter 134 of the Texas Civil Practice and Remedies Code, was originally enacted in the late 1980’s to create a statutory civil cause of action against individuals who steal property from another, which did not previously exist in the state. Prior to that time, theft was of course a criminal offense, but the penalty was minimal and the property owner had relatively little recourse to sue to recover the value of what was lost from the defendant.
Specifically, the TTLA creates a civil cause of action for committing certain types of theft as defined by Chapter 31 of the Texas Penal Code, and a person who commits one of the enumerated types of theft is liable for the damages resulting from the theft, plus statutory damages of up to $1,000 and attorney’s fees. Tex. Civ. Prac. & Rem. Code §§ 134.003(a) and 134.005. Under the TTLA, “theft” means unlawfully appropriating property or unlawfully obtaining services as described by Section 31.03, 31.04, 31.06, 31.07, 31.11, 31.12, 31.13, or 31.14 of the Texas Penal Code. Tex. Civ. Prac. & Rem. Code § 134.002(2). Under section 31.03 of the Texas Penal Code, a person commits an offense if he unlawfully appropriates property with intent to deprive the owner of property. Tex. Pen. Code § 31.03(a). Deprive means to withhold property from the owner permanently or for so extended a period of time that a major portion of the value or enjoyment of the property is lost to the owner. Tex. Pen. Code § 31.01(2)(A). It is this section that is the most often used in cases filed under the TTLA.
At first, the TTLA was primarily used by store owners to sue shoplifters for the value of the stolen property, as well as civil penalties and attorney’s fees. But over time, the TTLA began to be used in other types of lawsuits as well. Up until September 2013, another enumerated “theft” violation listed in Section 134.002 of the TTLA was a violation of Section 31.05 of the Texas Penal Code, which relates to theft of trade secrets. Under Section 31.05 of the Texas Penal Code, a person commits the criminal offense of theft of trade secrets if, without the owner’s consent, the person knowingly (1) steals a trade secret, (2) makes a copy of an article representing a trade secret; or (3) communicates or transmits a trade secret. Tex. Pen. Code § 31.05(b).
This gave plaintiffs in cases involving theft – or misappropriation – of trade secrets a statutory cause of action under the TTLA, in addition to a common law claim for misappropriation. This was significant because it provided successful plaintiffs with both statutory penalties and attorney’s fees, which were not recoverable under the common law. With the passage of the Texas Uniform Trade Secrets Act in September 2013, however, the Legislature removed Section 31.05 from the list of enumerated thefts in the TTLA. Thus, theft of trade secrets is no longer a violation of the TTLA. However, theft of property is still a violation of the TTLA. Thus, employers still often use this statute to assert a claim against former employees whom they believe took company property or information with them when they left – even if the information does not rise to the level of a trade secret.
Another unique provision in the TTLA that remains to this day, is that it is a true “loser pays” statute, which is quite rare under both Texas and federal law. Under the plain language of the TTLA, each person who prevails in a suit under the act shall be awarded court costs and reasonable and necessary attorney’s fees. Tex. Civ. Prac. & Rem. Code § 134.005(b). “Shall” is generally construed as mandatory, unless legislative intent suggests otherwise. Albertson’s, Inc. v. Sinclair, 984 S.W.2d 958, 961 (Tex. 1999). Accordingly, courts have held that the award of fees to a prevailing party in a TTLA action is mandatory. Moak v. Huff, No. 04-11-00184-CV, 2012 WL 566140, at *10 (Tex. App. – San Antonio Feb. 15, 2012, no pet.).
For purposes of the TTLA, the “prevailing party” is the party to a suit who successfully prosecutes the action or successfully defends against it. Brinson Benefits, Inc. v. Hooper, No. 05-15-00123-CV, 2016 WL 3660111, at *3 (Tex. App. – Dallas July 7, 2016, no. pet. h.). Therefore, a defendant who successfully defeats a TTLA claim is considered the prevailing party and is entitled to recover his attorney’s fees and costs. See Peoples v. Genco Fed. Credit Union, No. 10–09–00032–CV, 2010 WL 1797266, at *7 (Tex. App. – Waco May 5, 2010, no pet.)(mem.op.); See also, Air Routing Int’l Corp. (Canada) v. Britannia Airways, Ltd., 150 S.W.3d 682, 686 (Tex. App. – Houston [14th Dist.] 2004, no pet.)
In conclusion, a plaintiff who believes he is the victim of theft has a powerful tool in the TTLA because it gives him the possibility of recovering the value of the property, plus statutory penalties, and mandatory attorney’s fees if he prevails. But, this is a double-edged sword because if the plaintiff loses the TTLA claim, he is required to pay the defendant’s attorney’s fees. And, if the plaintiff voluntarily dismisses the TTLA claim before trial with prejudice, the defendant will still be deemed to be the prevailing party and will be entitled to recover his attorney’s fees under the TTLA. Arrow Marble, LLC v. Estate of Killion, 441 S.W.3d 702, 708 (Tex. App. – Houston [1st Dist.] 2014, no pet.). This is not the case, however, if the plaintiff dismisses his TTLA claim before trial without prejudice. See Cricket Commc’ns, Inc. v. Trillium Indus., Inc., 235 S.W.3d 298, 311 (Tex. App. – Dallas 2007, no pet.).
© Eric C. Wood, 2016