§ 42.002.Applicability and Effect

The applicability section, and its third subsection is what makes the chapter optional in practice.

The settlement procedures apply only to claims for monetary relief.

Six exclusions follow: a class action; a shareholder’s derivative action; an action by or against a governmental unit; an action brought under the Family Code; an action to collect workers’ compensation benefits; and an action filed in a justice of the peace court or a small claims court.

The exclusions share a common thread. Each involves a party or a proceeding for which a cost-shifting pressure to settle would be inappropriate — representative litigation, public bodies, family matters, statutory benefits, and small claims where the costs would swamp the sum in dispute.

Subsection (c) is the provision that governs how the chapter is used: it does not apply until a defendant files a declaration that the settlement procedure is available in the action.

So the mechanism is opt-in, and only a defendant can open it. A claimant cannot invoke the chapter; a claimant can only respond once a defendant has.

That asymmetry is deliberate, and it reflects who the chapter pressures. A claimant who rejects a reasonable offer and recovers less than 80 percent of it pays the defendant’s costs.

With multiple defendants the procedure is available only in relation to the defendant that filed and to the parties making or receiving offers in relation to that defendant.

Subsections (d) and (e) preserve ordinary settlement practice. Nothing limits anyone’s ability to make an offer that does not comply with the chapter, or to offer in an excluded action — and such an offer does not entitle any party to recover litigation costs under it.

So the chapter creates a formal track alongside ordinary negotiation, and only offers on that track carry consequences.