Attorney Jim Williams Prevails in Texas Arbitration Hearing on Behalf of Insurance Provider in Breach of Warranty Claims

FW Press Release:

In an Austin, Texas Arbitration Hearing of  insurance claims, which included breach of warranty causes of action,  attorney Jim Williams of the Fort Worth law firm of Williams, McClure & Parmelee successfully defended a large national insurance provider against the claims brought against it as well as one of it’s subsidiaries. The hearing, completed on October 12, 2015, resulted in an American Arbitration Association Arbitrator’s award stating that “Claimant is hereby awarded Nothing.” Allegations included claims under the Deceptive Trade Practices Act, fraud and breach of contract claims, claims for attorney’s fees as well as insurance coverage and warranty claims. The Arbitrator, a former Texas Supreme Court Justice, concluded that the Respondent, represented by Jim Williams, had successfully defended the case, had correctly denied the coverage, and that Respondent should prevail on all allegations and defenses, resulting in a $ Zero Award…Williams, McClure & Parmelee

 

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas civil litigation attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]

 

Jim Williams Again Awarded Prestigious 2015 Top Attorney Recognition As Selected By Peers

Fort Worth, Texas–News

Press Release

 

Congratulations to Fort Worth Attorney James L. Williams who has again been awarded Top Attorney by Fort Worth Magazine in 2015 for his Injury Defense practice.

Mr. Williams has previously been awarded the AV® Preeminent™ Rating by Martindale-Hubbell®, the country’s leading legal directory. He achieved the highest possible rating (5.0 out of 5.0). The rating is awarded to less than five percent of all attorneys across the United States. This designation is a widely respected mark of achievement. The Martindale-Hubbell® Peer Review Ratings™ are an objective indicator of an attorney’s high ethical standards and professional ability, generated from evaluations of attorneys by other members of the bar and the judiciary. The rating is the highest possible rating given by LexisNexis Martindale, and is established on a peer-review basis. It signifies that Mr. Williams has been rated as having the best possible scores for legal abilities and ethical standards. It is a nationally-recognized acknowledgment of an attorney’s accomplishments and skills, and is known to position him among the elite practitioners in the country.

 

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas civil litigation and injury defense attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]

 

Texas Automobile Insurance Policy Litigation With Stowers Claim and Attorneys Involvement–Texas Insurance Defense Litigation

Opinion issued March 31, 2011
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-09-00457-CV
———————————
ROBERT B. TAYLOR AND R.B.T INVESTMENTS, INC. F/K/A GULF OXYGEN COMPANY, INC., Appellants
V.
ALLSTATE INSURANCE COMPANY AND ALLSTATE COUNTY MUTUAL INSURANCE COMPANY, Appellees
On Appeal from the 190th District Court
Harris County, Texas
Trial Court Case No. 08-08861/A
O P I N I O N
Appellants Robert B. Taylor and R.B.T. Investments, Inc. f/k/a Gulf Oxygen Company, Inc. (collectively, ―Taylor‖) appeal from a summary judgment rendered
2
in favor of appellees Allstate Insurance Company and Allstate County Mutual Insurance Company (collectively, ―Allstate‖) on the grounds that Taylor‘s sole cause of action against Allstate is a Stowers1 claim, and no Stowers claim can be made under the facts of this case. In two issues, Taylor asserts that the trial court erred by granting Allstate‘s ―no cause of action‖ motion for summary judgment and by denying Taylor‘s motion for leave to replead his claims against Allstate. We conclude that the trial court properly rendered summary judgment with respect to Taylor‘s claims against Allstate for negligence, vicarious liability, and tortious interference with Taylor‘s fiduciary and contractual relationship with his attorney but that the trial court erred in determining that no cause of action exists with respect to Taylor‘s breach of contract and statutory claims. We also conclude that the trial court did not abuse its discretion by denying Taylor‘s motion for leave to replead because Taylor had already been provided an opportunity to replead, and Taylor had in fact amended his pleadings at the time summary judgment was granted. We, therefore, affirm in part and reverse and remand in part.
Background
According to his pleadings, Taylor was involved in an automobile accident in 2005 in which the passenger of the other vehicle was catastrophically injured.
1 G.A. Stowers Furniture Co. v. Am. Indem. Co., 15 S.W.2d 544, 547 (Tex. Comm‘n App. 1929, holding approved).
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The family of the injured passenger brought suit against Taylor. Allstate retained John Causey, an independent contractor, as counsel for Taylor in the automobile accident suit. Taylor claims he had defenses to that suit, including his contention that he was entirely in his lane of traffic when the collision occurred, he was still or moving slowly at the time, and the passenger‘s failure to wear a seatbelt caused the injuries. At mediation, Taylor settled the automobile accident suit for an amount that exceeded his insurance coverage. Allstate tendered policy limits. Taylor filed this action against his former legal counsel and various insurance providers, ultimately including Allstate, to recover costs paid by Taylor to settle litigation against him arising out of the automobile accident.
Taylor‘s initial claim against Allstate was for negligence with respect to Allstate‘s handling Taylor‘s defense in the automobile accident case. Allstate filed special exceptions and moved for traditional summary judgment on the grounds that a Stowers claim is the only common law claim cognizable under Texas law for an insurer‘s alleged mishandling of a third party claim against the insured, and the facts pled by Taylor would not support a Stowers claim. Taylor filed a second amended petition to add claims against Allstate for breach of contract, tortious interference with Taylor‘s contractual and fiduciary relationship with Causey, vicarious liability for Causey‘s conduct in representing Taylor, and violations of provisions of the Insurance Code and Deceptive Trade Practices Act (―DTPA‖). In
4
response to Taylor‘s new claims, Allstate filed a supplement to its motion for summary judgment. Citing additional authority, the supplement referenced Taylor‘s new claims and re-urged its argument that a Stowers claim was Taylor‘s exclusive cause of action against Allstate. Taylor filed a response to Allstate‘s motion for summary judgment, in which he disputed that a Stowers claim was his exclusive remedy under Texas law, distinguishing some of the cases relied on by Allstate and pointing out that the Texas Supreme Court had remanded certain insured-insurer claims in one of the cases relied on by Allstate. Taylor then filed a supplement to his second amended petition to add claims against Allstate for additional violations of the DTPA and Insurance Code and asserting that Allstate breached the standard of care implicit in its contractual duty to defend.
The trial court rendered summary judgment in Allstate‘s favor. Taylor filed a motion to reconsider the summary judgment and for leave to replead, which the trial court denied. Subsequently, the trial court entered an order severing Taylor‘s claims against Allstate into a separate cause. After severance, Taylor filed a motion for new trial, which was not granted, and this appeal ensued.2
2 Although no party challenges our jurisdiction, we conclude in our sua sponte review that the language of the trial court‘s orders unambiguously expresses the trial court‘s intention that the summary judgment order become final and appealable upon issuance of the severance order. See In re Certain Underwriters
5
Standard of Review
We review the trial court‘s grant of summary judgment de novo. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009); Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). We review the evidence presented in the motion and response in the light most favorable to the party against whom the summary judgment was rendered, crediting evidence favorable to that party if reasonable jurors could and disregarding contrary evidence unless reasonable jurors could not. Fielding, 289 S.W.3d at 848; see City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). Issues not expressly presented to the trial court by written motion, answer, or other response shall not be considered on appeal as grounds for reversal. TEX. R. CIV. P. 166a(c).
A defendant-movant may establish its right to summary judgment by demonstrating that the law does not recognize the cause of action pled. E.g., Peeler v. Hughes & Luce, 909 S.W.2d 494, 497–98 (Tex. 1995); Higbie Roth Constr. Co.
at Lloyd’s London, No. 01-09-00851-CV, 2010 WL 184300, at *2 (Tex. App.—Houston [1st Dist.] Jan. 15, 2010, no pet.) (mem. op.) (finding finality where judgments stated: ―This judgment is [a] final judgment. All relief not expressly granted herein is denied.‖); In re Daredia, 317 S.W.3d 247, 249 (Tex. 2010) (indicating that a statement that the judgment in question is ―appealable‖ is a clearer indication of finality than a statement that the judgment is ―final.‖).
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v. Houston Shell & Concrete, 1 S.W.3d 808, 811 (Tex. App.—Houston [1st Dist.] 1999, pet. denied). In such an instance, the movant meets its summary judgment burden not by proving or disproving facts, but by showing that the plaintiff has not pled a viable cause of action. Higbie Roth Constr. Co., 1 S.W.3d at 811. To determine whether a cause of action exists under the circumstances pled, we construe the pleading broadly and assume the facts pled are true. Id. at 811–12. The summary judgment at issue in this appeal is largely a motion for judgment on the pleadings. Allstate filed only one piece of evidence in support of its motion for summary judgment — an affidavit tending to disprove certain facts relevant to a Stowers claim.
Taylor’s Tort Claims Against Allstate
Taylor alleges common law causes of action against Allstate for negligence and tortious interference with his contractual and fiduciary relationship with Causey, Taylor‘s legal counsel in the automobile accident suit; Taylor also alleges that Allstate is vicariously liable for conduct by Causey in the defense of that suit. Allstate argues, on appeal as it did below, that the only common law cause of action recognized under Texas law in the context of an insurer‘s handling of a third party claim against an insured is a Stowers claim, and no Stowers claim exists
7
here.3 See G.A. Stowers Furniture Co. v. Am. Indem. Co., 15 S.W.2d 544, 547 (Tex. Comm‘n App. 1929, holding approved). We hold that the trial court properly granted summary judgment on Taylor‘s tort claims against Allstate. A. Vicarious Liability
With respect to Taylor‘s vicarious liability claim, Allstate argues that Taylor‘s claims fail as a matter of law under the Texas Supreme Court‘s holding in State Farm Mutual Automobile Insurance Co. v. Traver, 980 S.W.2d 625, 627–29 (Tex. 1998). We agree. In Traver, the Texas Supreme Court explains that, in light of the special relationship between attorney and client and the special duties owed by an attorney to the client, an attorney must exercise unfettered control and discretion over his or her representation of the client. Id. at 627. The Court holds that this vesting of control and responsibility in the attorney necessarily precludes an insurer from exercising control over the attorney‘s representation of the insured to the degree necessary to justify the imposition of vicarious liability. Id. Thus, the Court concludes that an insured cannot bring a claim against his insurer on the
3 Taylor does not allege that Allstate ever refused him defense in the automobile accident suit. To the contrary, the parties appear to agree that Allstate performed its duty to defend — whether negligently or not — and tendered the full limits of its policy after receiving notice of the claim.
8
basis of vicarious liability for the conduct of the insured‘s attorney in a third party action. Id.
Because the attorney misconduct alleged by Taylor falls within this category of representative conduct over which the attorney must exercise absolute control, Taylor may not hold Allstate vicariously liable for Causey‘s alleged actions. We affirm the trial court‘s summary judgment with respect to Taylor‘s vicarious liability claim.
B. Negligence
Taylor‘s negligence claim alleges that Allstate ―failed to exercise ordinary care in discharging [its] duties and obligations to [Taylor] by conducting an inadequate investigation and providing an inadequate defense in the [automobile accident suit].‖ Allstate argues that Texas law does not recognize a negligence claim by an insured against his insurer based on alleged mishandling of the defense of a third party claim. We agree.
This court has previously declined to recognize a negligence claim against an insurer where the insurer does not refuse to defend or settle but, rather, the insured is dissatisfied with the quality of the defense provided. See Wayne Duddlesten, Inc. v. Highland Ins. Co., 110 S.W.3d 85, 96–97 (Tex. App.—Houston [1st Dist.] 2003, pet. denied). In Duddlesten, an insured asserted that its insurer acted negligently by paying several workers‘ compensation claims that the
9
insured believed were invalid. Id. After the trial court granted special exceptions and struck the insured‘s negligence claims, the insured appealed the decision. We affirmed the trial court‘s judgment, stating that we were not aware of any authority from the Texas Supreme Court expressly permitting an insured to sue its insurer for negligent handling of a claim outside the scope of Stowers and were unwilling to expand the scope of an insurer‘s duties to the insured without express authorization from the Texas Supreme Court. Id. at 97. In making this determination, we looked to the Texas Supreme Court‘s decision in Maryland Insurance Co. v. Head Indus. Coatings and Serv., Inc. [Head], 938 S.W.2d 27, 28 (Tex. 1996) (superseded in part by statute), as well as the Fifth Circuit‘s decision in Ford v. Cimarron Insurance Co., 230 F.3d 828, 832 (5th Cir. 2000).
In Head, the Texas Supreme Court declined to recognize a duty of good faith and fair dealing between an insurer and its insured, stating: ―Texas law recognizes only one tort duty in this context, that being the duty stated in [Stowers].‖ Head, 938 S.W.2d at 28. The context in Head was a claim in the name of an insured against its insurer for failing to defend and pay a third party claim. The Court also noted that ―an insured is fully protected against his insurer‘s refusal to defend or mishandling of a third-party claim by his contractual and Stowers rights.‖ Id. at 28–29.
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Four years after Duddlesten, the Texas Supreme Court reinforced the position it took in Head in a context where the claims arose out of the insurer‘s conduct in handling and settling a third party claim rather than a refusal to defend. See Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co., 236 S.W.3d 765, 776 (Tex. 2007). In Mid-Continent, one insurer asserted contribution and subrogation claims against a co-insurer for costs incurred in settling third party claims against a shared insured. Id. Among other arguments, the insurer asserted claims on the basis of its subrogation to the common law rights of the insured. Id. Citing Head, the Texas Supreme Court observed: ―An insurer‘s common law duty in this third party context is limited to the Stowers duty to protect the insured by accepting a reasonable settlement offer within policy limits. Stowers is the only common law tort duty in the context of third party insurers responding to settlement demands.‖ Id. (internal citation omitted). Because the elements of a Stowers claim had not been met, the Court concluded that the insured had no common law rights to which the co-insurer could be subrogated. Id.
In Ford, an insured sued his insurer for negligently handling his claim after a letter from the insurer stating that the insured was partially negligent in causing the fire was obtained by the fire extinguisher certification company that the insured was suing. Ford, 230 F.3d at 829–30. Looking to Texas Supreme Court authority, the Fifth Circuit rejected the insured‘s claim, observing that ―the Stowers duty is
11
the only common law tort duty Texas currently recognizes in third party insurance claims.‖ Id. at 832.
Other courts of appeals have taken similar tacks since Duddlesten. Our sister court, the Fourteenth Court of Appeals, recently handled an appeal involving facts similar to Duddlesten. See Methodist Hosp. v. Zurich Am. Ins. Co., No. 14-07-00663-CV, 2009 WL 3003251, at *3 (Tex. App.—Houston [14th Dist.] July 7, 2009, pet. denied). Methodist Hospital involved an insured, Methodist, who alleged that its insurer, Zurich, had acted negligently in handling and settling workers‘ compensation claims asserted against Methodist. Id. at *1–2. As Allstate has done here, Zurich moved for summary judgment on Methodist‘s negligence claims on the grounds that Texas law does not recognize a cause of action by an insured for its insurer‘s negligent handling of a third party claim outside the context of a Stowers claim. Id. at *4. The trial court granted summary judgment on Methodist‘s negligence claims, and the Fourteenth Court of Appeals affirmed. Id. at *6. The court held that, because the relationship between Methodist and Zurich was that of insured/insurer with respect to the third party claims at issue, ―Texas law negates Methodist‘s contention that Zurich owed a duty to perform with care.‖ Id.
The Dallas Court of Appeals has reached a consistent result under facts similar to those presented here. Cain v. Safeco Lloyds Inc. Co., 239 S.W.3d 895,
12
897–98 (Tex. App.—Dallas 2007, no pet.). Faced with negligence claims arising out of the insurer‘s handling of an automobile accident suit against its insured, the Dallas Court of Appeals held that Texas law does not recognize a cause of action for an insurer‘s negligent defense of a third party claim beyond Stowers and declined to expand the scope of the Stowers duty to allow for such a claim. Id. (citing Traver and Head, as well as Am. Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 849 (Tex. 1994)).
Taylor relies largely on Traver to argue that his claim for negligent defense is actionable, pointing out that: (1) the Court in Traver distinguished itself from Head on the basis that the claim asserted in Traver arose not out of a refusal to defend but allegations of inadequate defense, and (2) the Traver court remanded ―any remaining claims that [the insured] pled or might plead against [his insurer].‖ We are unpersuaded by these arguments. While Taylor‘s allegations of negligent defense can be factually distinguished from the allegations of improper refusal to defend in Head, this same distinction cannot be made with respect to Mid-Continent, Duddlesten, Methodist, or Cain, each of which involved allegations of negligence in the handling of a third party claim. Mid-Continent, 236 S.W.3d at 776 (insurer allegedly acted negligently in negotiating and refusing to participate in settlement of third party claim); Duddlesten, 110 S.W.3d at 97 (insurer allegedly acted negligently in failing to adequately investigate and dispute third party
13
claims); Methodist, 2009 WL 3003251, at *3–4 (insurer allegedly acted negligently in handling third party claims); Cain, 239 S.W.3d at 897–98 (insurer allegedly negligent in controlling details of defense of third party claim). Thus, questions potentially left open in Traver have been decided in subsequent decisions.
In accordance with Texas Supreme Court authority, as interpreted by this Court and other Texas courts of appeals addressing the issue, we hold that Texas law does not recognize a negligence cause of action under the circumstances of this case. We affirm the trial court‘s summary judgment on Taylor‘s negligence claims against Allstate.
C. Tortious Interference
Taylor asserts that Allstate committed tortious interference with a contractual and fiduciary relationship by:
tacitly, expressly and through the implied promise of future business, required Mr. Causey — and Mr. Causey assented — to put Allstate‘s interests ahead of Mr. Taylor‘s interests by consciously limiting Mr. Taylor‘s defense solely to engineering a settlement — a settlement in which Mr. Causey, although clearly not ready for trial and the case clearly was not ready for trial, coerced Mr. Taylor into accepting by telling him that the case would go to trial in a week and that there was a medical lien in excess of $8,000 which the jury would weigh heavily in [the automobile accident victim‘s family‘s] favor and against Mr. Taylor. None of these statement (sic) were true.
Allstate‘s argument for summary judgment broadly states that, under existing precedent, Stowers provides the sole tort duty in third party insurance cases. The motion does not distinguish between Taylor‘s negligence claim and
14
Taylor‘s tortious interference claim. In his response, Taylor globally contends insurance companies should be subject to the same laws as others, but he does not point us to any specific argument or authority permitting an insured‘s claim against his insurer for tortious interference with the attorney-client relationship between the insured and legal counsel retained by the insurer.
1. Tortious Interference with a Fiduciary Relationship
We have previously declined to recognize a cause of action for tortious interference with a fiduciary relationship. Alpert v. Crain, Caton & James, P.C., 178 S.W.3d 398, 407 (Tex. App.—Houston [1st Dist.] 2005, pet. denied) (declining to recognize the cause of action in a suit brought by an attorney‘s former client against both the attorney and the attorney‘s own legal counsel after the attorney allegedly breached his fiduciary duty to the former client); see also Traver, 980 S.W.2d at 632 (Gonzalez, J., joined by Abbott, J., concurring and dissenting) (noting that ―[s]ome courts have recognized that the tortious interference cause of action is applicable to the attorney-client relationship‖ but admitting that ―we have not been able to find a reported case reviewing a claim for tortious interference under similar facts[.]‖).4 Based on the arguments presented,
4 This court has also declined to recognize a cause of action against an attorney for aiding and abetting a client‘s breach of fiduciary duty to a third party by conduct within the scope of the attorney‘s representation of the client. Span Enters. v. Wood, 274 S.W.3d 854, 859 (Tex. App.—Houston [1st Dist.] 2008, no pet.).
15
we decline to recognize a cause of action for tortious interference with a fiduciary duty in this case.
2. Tortious Interference with a Contractual Relationship
In Head, the Court did not recognize a common law duty of good faith and fair dealing for an insurer in handling third party claims because the insured is fully protected against the insurer‘s refusal to defend or mishandling of a third party claim through his contractual and Stowers rights. Head, 938 S.W.2d at 28–29 (Tex. 1996). Here, Taylor‘s claims against Allstate arise out of its conduct in handling a third party claim; therefore, under analogous reasoning, Taylor is fully protected by his contractual and Stowers rights such that it is unnecessary to recognize cause of action for tortious interference in this context.
The control-based analysis in Travers may be read to counsel against a claim for tortious interference in this context. The Court in Travers reasoned that the elevated duties owed by an attorney to a client require the attorney to exercise the kind of unfettered control over his representation of the client that forestalls meaningful outside influence over the representation. Travers, 980 S.W. 2d at 627. In the context of handling the client‘s legal matter, an attorney‘s contractual relationship with his client is also, necessarily, a fiduciary relationship. Thus, unlike the other party to the contract in a typical tortious interference claim, an attorney is not free to act in his own best interest in performing, or choosing not to
16
perform, his contractual obligations to his client. Here, Taylor‘s claim for tortious interference with his contractual relationship with Causey is based on the same alleged conduct that is the basis for Taylor‘s claim for tortious interference with his fiduciary relationship with Causey, and all of this alleged conduct falls within Causey‘s legal representation of Taylor, over which Causey alone must exercise unfettered control.
We also note that Texas case law has given the insurer room to protect its legitimate interests in the defense of a third party claim by placing a burden of absolute loyalty to the insured on the attorney, who ―must at all times protect the interests of the insured if those interests would be compromised by the insurer‘s instructions.‖ Unauthorized Practice of Law Comm. v. Am. Home Assur. Co., Inc., 261 S.W.3d 24, 27 (Tex. 2008). Recognizing potential liability on the part of the insurer for advocating a defense strategy with which the insured disagrees undermines this balance and, where it exists, the insurer‘s right of control over the defense. The insurer‘s right of control is not absolute, and the insured is permitted to refuse the insurer‘s defense under certain circumstances, such as a serious conflict of interests between the insured and the insurer. See, e.g., N. Cnty. Mut. Ins. Co. v. Davalos, 140 S.W.3d 685, 689 (Tex. 2004) (holding that the alleged conflict of interest between the insured and the insurer over the best venue for the action did not destroy the insurer‘s right of control but noting that an insured ―may
17
rightfully refuse an inadequate defense and may also refuse any defense conditioned on an unreasonable, extra-contractual demand that threatens the insured‘s independent legal rights.‖).
We conclude that, under current Texas Supreme Court authority, Texas law does not recognize a cause of action by an insured against his insurer for tortious interference with the insured‘s relationship with his attorney arising out of the insured‘s handling of the defense of a third party claim under the circumstances alleged by Taylor in this action.
D. Taylor’s Contract Claims Against Allstate
Taylor contends that the trial court should not have granted summary judgment on his breach of contract claims on the basis of Allstate‘s ―no cause of action‖ summary judgment. Taylor points out that the Texas Supreme Court expressly contemplates the existence of some contractual right in the following statement: ―The court overlooked the fact that an insured is fully protected against his insurer‘s refusal to defend or mishandling of a third-party claim by his contractual and Stowers rights.‖ Head, 938 S.W.2d at 28–29; see also Traver, 980 S.W.2d at 629 (―We further concluded that rights granted under Stowers together with rights under the contract of insurance fully protected the insured against an insurance company‘s erroneous refusal to defend a third-party liability claim.‖).
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Allstate re-urges its argument that the Stowers doctrine represents the insured‘s exclusive basis for recovery against its insurer with respect to the insurer‘s handling of third party claims. In the context of Taylor‘s contract claims, Allstate relies largely on three courts of appeals‘ opinions: Cain, Duddlesten and Methodist. See Duddlesten, 110 S.W.3d at 96–97; Methodist, 2009 WL 3003251, at *7; Cain, 239 S.W.3d at 897–98. Allstate asserts that these cases hold, essentially, that the insurer‘s contractual duty to defend does not impose upon the insurer a duty to defend ―with care.‖
The no-cause-of-action analysis in Cain, Duddlesten and Methodist dealt with the insured‘s tort claims. See Duddlesten, 110 S.W.3d at 96–97; Methodist, 2009 WL 3003251, at *7; Cain, 239 S.W.3d at 897–98. Consistent with the Texas Supreme Court‘s prior holdings, these courts of appeals cases hold that Texas law does not recognize a claim for negligence based on the insurer‘s handling of the defense of a third party claim, whether the claims is asserted outside of the Stowers doctrine or as an extension of the doctrine. Duddlesten, 110 S.W.3d at 96–97; Methodist, 2009 WL 3003251, at *7; Cain, 239 S.W.3d at 897–98. These cases do not hold that Texas law does not recognize a cause of action for breach of contract between an insured and its insurer. We, therefore, disagree that a breach of contract claim may never lie against an insurer for its conduct in handling the defense of a third party claim against the insured.
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The nature and extent of the duties owed under a contract are determined by the contract‘s terms. See Duddlesten, 110 S.W.3d at 89–90 (―We will determine appellee‘s contractual duties by looking at language of the policy itself.‖). In fact, in each of the cases relied on by Allstate wherein a breach of contract claim was asserted, the court specifically analyzes the contract in question to determine the nature of the insurer‘s contractual duties. See Duddlesten, 110 S.W.3d at 89–90; Methodist, 2009 WL 3003251, at *8–10. Likewise, in Mid-Continent, to determine the insured‘s rights against his insurer to which a co-insurer may be subrogated, the Texas Supreme Court did not deny the existence of a breach of contract clause under Texas law but, rather, reviewed the policy in question to determine what rights were afforded the insured by the contract. Mid-Continent, 236 S.W.3d at 775–76. Furthermore, in Head, the Texas Supreme Court permitted the insured to recover breach of contract damages against its insurer. Head, 938 S.W.2d at 29.
Here, Allstate provided no analysis of the terms of Taylor‘s insurance contract with Allstate and did not file the contract with its motion for summary judgment. Without such analysis, we conclude that Allstate has not met its burden of proving that it was entitled to summary judgment on Taylor‘s breach of contract claims as a matter of law. Cf. TEX. R. CIV. P. 166a(c) (to prevail on a motion for traditional summary judgment, the movant must demonstrate that no genuine issue of material fact exists and it is entitled to judgment as a matter of law); KPMG
20
Peat Marwick v. Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999) (same). We reverse and remand the trial court‘s judgment with respect to Taylor‘s breach of contract claims.
E. Taylor’s Statutory Claims Against Allstate
Taylor‘s statutory claims against Allstate include numerous alleged violations of DTPA and Insurance Code. Taylor essentially argues that the trial court erred in granting summary judgment on these claims because the Stowers doctrine does not supplant an insured‘s statutory rights of action. Allstate makes no argument specific to Taylor‘s statutory claims. To the extent Allstate‘s broad assertions about the exclusivity of the Stowers claim can be read as an argument that the Stowers doctrine necessarily supplants all statutory causes of action an insured might otherwise have against its insurer in the context of defending third party claims, we disagree. None of the authority presented by Allstate supports the position that Texas law prohibits an insured from bringing otherwise valid statutory claims against an insurer. E.g., Duddlesten, 110 S.W.3d at 90–94 (reviewing insured‘s evidence and concluding evidence was insufficient to support insured‘s claims under DTPA and Insurance Code). Allstate makes no argument as to whether or not Taylor‘s DTPA and Insurance Code claims are otherwise invalid under the facts of this case as pled by Taylor.
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Because Allstate asserts only a general ―no cause of action‖ basis for summary judgment on Taylor‘s statutory claims and does not attack any of the elements of the statutory claims Taylor asserts, we conclude that Allstate has not met its burden of proving that it was entitled to summary judgment on Taylor‘s statutory causes of action as a matter of law. Cf. TEX. R. CIV. P. 166a(c); KPMG Peat Marwick, 988 S.W.2d at 748. We reverse and remand the trial court‘s judgment with respect to Taylor‘s statutory causes of action.
F. Taylor’s Warranty Claims Against Allstate
Although Taylor‘s pleadings refer to breach of warranty claims against Allstate, Taylor‘s appellate briefing does not address those claims. Nor did Taylor provide the trial court with a basis for denying summary judgment on these claims. For this reason, we hold that any error in granting summary judgment on these claims is waived. Wheeler v. Methodist Hosp., 95 S.W.3d 628, 646 (Tex. App.—Houston [1st Dist.] 2002, no pet.). We affirm the trial court‘s judgment with respect to Taylor‘s warranty claims.
We therefore sustain in part and overrule in part, Taylor‘s first issue.
Opportunity to Amend Pleadings
In his second issue, Taylor contends he should be given an opportunity to re-plead his claims. Taylor asserts: ―When a ‗no cause of action‘ summary judgment
22
is granted, the Trial Court abuses its discretion by not allowing the nonmovant the opportunity to replead,‖ citing Perry v. S.N., 973 S.W.2d 301, 303 (Tex. 1998).
The record shows that on the same day Allstate filed its motion for summary judgment, Allstate specially excepted to Taylor‘s allegations against Allstate on the grounds asserted in its motion for summary judgment. We agree with Allstate that, like the plaintiff in Perry, Taylor was put on notice of Allstate‘s summary judgment grounds and given an opportunity to replead before the trial court signed the summary judgment order. See Perry, 973 S.W.2d at 303. Taylor did, in fact, amend his pleadings after Allstate filed its special exceptions and motion for summary judgment and before the trial court ruled on the summary judgment motion. We conclude that the trial court properly denied Taylor‘s motion for leave to amend his pleadings. We overrule Taylor‘s second issue.
Conclusion
We reverse the portion of the trial court‘s judgment granting summary judgment on Taylor‘s breach of contract and statutory causes of action and remand those claims for further proceedings; we affirm the judgment in all other respects.
Elsa Alcala
Justice
Panel consists of Chief Justice Radack and Justices Alcala and Bland.

 

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Martindale AVtexas[2]

Texas Dwelling Insurance Policy Litigation in Fort Worth–Attorneys’ Fees Issues

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-10-00063-CV
COLUMBIA LLOYDS INSURANCE COMPANY
APPELLANT
AND APPELLEE
V.
ROBERT MAO AND VACHANA MAO
APPELLEES
AND APPELLANTS
————
FROM THE 342ND DISTRICT COURT OF TARRANT COUNTY
————
MEMORANDUM OPINION1
———-
I. INTRODUCTION
Columbia Lloyds Insurance Company issued a Texas Dwelling Policy that named Vachana Mao as insured and covered a rental house that she owned. After a fire occurred at the dwelling, Vachana reported the loss to Columbia Lloyds; Columbia Lloyds denied Vachana’s claim based on a vacancy clause in
1See Tex. R. App. P. 47.4.
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the policy. This litigation ensued, and the trial court granted Columbia Lloyds’s traditional and no-evidence motion for summary judgment on the Maos’ extracontractual claims; the trial court also granted the Maos’ motion for partial summary judgment on their breach of contract claim and awarded them actual damages of $30,000. The trial court granted Columbia Lloyds’s summary judgment on the Maos’ claim for attorney’s fees and for violations of the Prompt Payment of Claims Act (PPCA).
Columbia Lloyds and the Maos both perfected appeals. In one issue, Columbia Lloyds contends that the trial court erred by granting summary judgment for the Maos and by denying summary judgment for Columbia Lloyds on the Maos’ breach of contract claim because Columbia Lloyds conclusively established that the dwelling was vacant, triggering the vacancy exclusion of the policy. In three points, the Maos argue that the trial court erred by granting summary judgment for Columbia Lloyds on the Maos’ claim for attorney’s fees, their claim that Columbia Lloyds had violated the PPCA, and their extracontractual claims. For the reasons set forth below, we will reverse and remand in part and affirm in part.
II. FACTUAL AND PROCEDURAL BACKGROUND
The policy issued by Columbia Lloyds covered rental property located at 1109 Bewick in Fort Worth; a detached garage was also covered by the policy. The policy period was from January 19, 2006 to January 19, 2007, and the policy limit was $30,000 with a $300 deductible. The policy contained a vacancy clause
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that stated, ―During the policy term, if an insured building is vacant for 60 consecutive days immediately before a loss, we will not be liable for a loss by the perils of fire and lightning or vandalism or malicious mischief. Coverage may be provided by endorsement to this policy.‖
Judy Romero, a claims manager for Columbia Lloyds, received a phone call from Vachana on November 3, 2006, reporting that a fire had damaged the insured dwelling at 1109 Bewick on October 28, 2006. Romero noted on the ―Property Loss Notice‖ form that ―[t]he house was vacant per insured[––]tenant moved out in Feb.‖ Romero assigned the claim to Orena Claims Service.
Robert Orena inspected the dwelling on November 7, 2006, and took photographs; he determined that there were no contents in the house. Orena orally explained the vacancy clause to Vachana. Orena thereafter told Romero that the house was a total loss, that the origin of the fire was undetermined, and that the house had been vacant for more than sixty days.
Romero made the decision to deny the claim based on the vacancy clause in the policy and the facts supporting the vacancy (i.e., no contents in the house and no tenants in the house), and Romero told Orena to write a denial letter. Orena sent a letter dated November 10, 2006, to Vachana denying the claim based on the vacancy clause.
Following the letter, the Maos’ attorney sent a letter to Columbia Lloyds disputing the definition of ―vacancy‖ it had used. Romero printed out the definitions of ―vacancy‖ and ―unoccupied,‖ sent them to the Johnston Legal
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Group to obtain a legal opinion, and requested an examination under oath from Vachana.
During her examination under oath on May 14, 2007, Vachana stated that as of June 8, 2006, all of the prior tenant’s furniture had been moved out, and the insured dwelling was ―completely vacant.‖ She said that there was a sofa, an old bed, a gas range, and a refrigerator in the detached garage2 but that these appliances were not ―hooked up.‖ She explained that the house was in the process of being remodeled and that although the contractor’s proposal said that he would finish by July 12, 2006, she did not think that he had finished the work by that date because he kept coming in and out of the house.
On September 20, 2007, Romero sent a second denial letter to the Maos because the legal opinion that she had received from the Johnston Legal Group following the examination under oath confirmed that the vacancy clause applied.
The Maos filed suit against Columbia Lloyds, alleging claims for breach of contract, breach of the duty of good faith and fair dealing, common law fraud, violations of the Deceptive Trade Practices Act (DTPA), violations of the insurance code, and violations of the PPCA. The Maos also claimed they were entitled to attorney’s fees for their breach of contract and PPCA violation claims.
Columbia Lloyds answered, and in due course, the parties filed competing motions for summary judgment. The Maos moved for partial summary judgment
2Vachana said that the ―garage not burned down, just a little bit.‖
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on their breach of contract claim, arguing that as a matter of law the insured dwelling was not vacant at the time of the fire as the term ―vacant‖ is defined by Texas law. Columbia Lloyds moved for summary judgment on the Maos’ breach of contract claim, arguing that as a matter of law the property was vacant for sixty consecutive days prior to the fire. The Maos also moved for summary judgment on their extracontractual claims and on their claim for a violation of the PPCA. Eventually, the trial court signed a final judgment granting Columbia Lloyds’s motion for summary judgment on the Maos’ extracontractual claims and claim for violations of the PPCA and granting the Maos’ motion for partial summary judgment on their breach of contract claim; the trial court denied the Maos’ request for attorney’s fees under any theory of recovery.
III. STANDARD OF REVIEW
A. No-Evidence Summary Judgment Standard of Review
After an adequate time for discovery, the party without the burden of proof may, without presenting evidence, move for summary judgment on the ground that there is no evidence to support an essential element of the nonmovant’s claim or defense. Tex. R. Civ. P. 166a(i). The motion must specifically state the elements for which there is no evidence. Id.; Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009). The trial court must grant the motion unless the nonmovant produces summary judgment evidence that raises a genuine issue of material fact. See Tex. R. Civ. P. 166a(i) & cmt.; Hamilton v. Wilson, 249 S.W.3d 425, 426 (Tex. 2008).
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When reviewing a no-evidence summary judgment, we examine the entire record in the light most favorable to the nonmovant, indulging every reasonable inference and resolving any doubts against the motion. Sudan v. Sudan, 199 S.W.3d 291, 292 (Tex. 2006). We review a no-evidence summary judgment for evidence that would enable reasonable and fair-minded jurors to differ in their conclusions. Hamilton, 249 S.W.3d at 426 (citing City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005)). We credit evidence favorable to the nonmovant if reasonable jurors could, and we disregard evidence contrary to the nonmovant unless reasonable jurors could not. Timpte Indus., Inc., 286 S.W.3d at 310 (quoting Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006)). If the nonmovant brings forward more than a scintilla of probative evidence that raises a genuine issue of material fact, then a no-evidence summary judgment is not proper. Smith v. O’Donnell, 288 S.W.3d 417, 424 (Tex. 2009).
B. Traditional Summary Judgment Standard of Review
In a summary judgment case, the issue on appeal is whether the movant met the summary judgment burden by establishing that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We review a summary judgment de novo. Mann Frankfort, 289 S.W.3d at 848.
We take as true all evidence favorable to the nonmovant, and we indulge every reasonable inference and resolve any doubts in the nonmovant’s favor.
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20801, Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008); Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002). We consider the evidence presented in the light most favorable to the nonmovant, crediting evidence favorable to the nonmovant if reasonable jurors could, and disregarding evidence contrary to the nonmovant unless reasonable jurors could not. Mann Frankfort, 289 S.W.3d at 848. We must consider whether reasonable and fair-minded jurors could differ in their conclusions in light of all of the evidence presented. See Wal-Mart Stores, Inc. v. Spates, 186 S.W.3d 566, 568 (Tex. 2006); City of Keller, 168 S.W.3d at 822–24.
The summary judgment will be affirmed only if the record establishes that the movant has conclusively proved all essential elements of the movant’s cause of action or defense as a matter of law. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). If uncontroverted evidence is from an interested witness, it does nothing more than raise a fact issue unless it is clear, positive and direct, otherwise credible and free from contradictions and inconsistencies, and could have been readily controverted. Tex. R. Civ. P. 166a(c); Morrison v. Christie, 266 S.W.3d 89, 92 (Tex. App.—Fort Worth 2008, no pet.).
When competing motions for summary judgment are filed, and one is granted while the other is denied, we first review the order granting summary judgment. Hartford Cas. Ins. Co. v. Morton, 141 S.W.3d 220, 225 (Tex. App.––Tyler 2004, pet. denied). If we determine the order granting summary judgment
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was erroneous, we then review the trial court’s action in overruling the denied motion. Id. We determine all questions presented and may reverse the trial court’s judgment and render such judgment as the trial court should have rendered, including rendering judgment for the other movant. See Mann Frankfort, 289 S.W.3d at 848; Jones v. Strauss, 745 S.W.2d 898, 900 (Tex. 1988).
IV. A GENUINE ISSUE OF MATERIAL FACT EXISTS
ON THE APPLICABILITY OF THE POLICY’S VACANCY CLAUSE
In a single issue, Columbia Lloyds argues that the trial court erred when it granted a traditional summary judgment for the Maos on their breach of contract claim because the summary judgment evidence fails to conclusively establish that the dwelling was not vacant and that the trial court erred when it denied Columbia Lloyds’s traditional motion for summary judgment on the Maos’ breach of contract claim because the summary judgment evidence conclusively established that the dwelling was vacant for sixty consecutive days prior to the fire, triggering the vacancy exclusion in the policy.
As set forth above, the vacancy clause excluded coverage for fire damage occurring when the dwelling was vacant for sixty consecutive days before a fire. The policy does not define ―vacant.‖ The term vacant has been defined by case law as an ―entire abandonment, deprived of contents, empty, that is, without contents of substantial utility.‖ See Jerry v. Ky. Cent. Ins. Co., 836 S.W.2d 812, 815 (Tex. App.––Houston [1st Dist.] 1992, writ denied); Knoff v. United States
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Fid. & Guar. Co., 447 S.W.2d 497, 501 (Tex. Civ. App.––Houston [1st Dist.] 1969, no writ).
The summary judgment evidence on the vacancy issue included the Maos’ Request For Admission No. 11 asking Columbia Lloyds to admit ―[t]hat the fire on our [sic] about October 28, 2006 caused damage to the dwelling and contents in the dwelling at the property.‖ Columbia Lloyds answered, ―Denied. Answering further: Defendant admits that the fire caused damage to the dwelling but because there were no contents in the house, no contents were destroyed.‖ Deposition excerpts from Romero’s deposition indicate that the adjuster’s photos documented that nothing was in the actual dwelling, although a few items were in the detached garage. Romero also stated that she did not have any information that the Maos had abandoned the property; she knew that they were remodeling the home and that they were trying to sell it.
Vachana stated in her May 2007 examination under oath that as of the date of the fire, all of the prior tenant’s furniture had been moved out, and the insured dwelling was ―completely vacant.‖ She said that there was a sofa, an old bed, a gas range, and a refrigerator in the detached garage; that the appliances were not ―hooked up‖; and that the garage had no heating or air-conditioning and was not designed to be lived in. Vachana explained that although the remodeler’s proposal said that he would finish by July 12, 2006, she did not think that he had finished the work by that date because he kept coming in and out of the house.
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The remodeler, Valentin Leos, said that he started the remodel on July 12, 2006, and that he finished the job ―a month or month and seven days‖ before Vachana called and told him that the house had burned. Leos recalled that there was a refrigerator and a stove in the home, and he thought that there was a washer and dryer, but he was not sure if there was a dishwasher.
In her March 2009 summary judgment affidavit, Vachana averred that the home was in the process of being renovated until September 2006 but that it was not complete at the time of the fire because Leos still needed to put in new windows. She said that the utilities were connected because she showed the home to potential buyers approximately twice a week, that she had been to the home the week before the fire, and that she went to the home at least once a week. Vachana averred that there was a refrigerator, a washer, a dryer, and a dishwasher in the house and that there was a sofa, a heater, a bed, a refrigerator, and a range in the garage.
Generally, when contradictory summary judgment evidence exists on whether a dwelling was vacant within the meaning of the policy’s vacancy clause, it is a question for the jury. Germania Farm Mut. Aid Ass’n v. Anderson, 463 S.W.2d 24, 25 (Tex. Civ. App.––Waco 1971, no writ) (refusing to hold vacancy was established as a matter of law); accord Lundquist v. Allstate Ins. Co., 732 N.E.2d 627, 631 (Ill. App. Ct. 2000) (―[W]hether the subject dwelling was vacant or unoccupied at the time of the loss is a question of fact.‖); Cavin v. Charter Oak Fire Ins. Co., 384 N.E.2d 441, 443 (Ill. App. Ct. 1978) (holding fact issues existed
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regarding whether insured’s building was vacant and reversing summary judgment for the insurer where evidence showed that, at the time of loss, no tenants remained in the property, the property was furnished, the property was being renovated, and the insured was storing building materials in the dwelling); 6 Lee R. Russ & Thomas F. Segala, Couch on Insurance § 94:108 (3d ed. 1996) (―Whether or not insured premises have become vacant, unoccupied, or the like within the meaning of a forfeiture provision in an insurance policy is usually a question for the jury.‖).
Viewing all of the summary judgment evidence in the light most favorable to Columbia Lloyds, the nonmovant on the Maos’ traditional motion for summary judgment on their breach of contact claim that was granted, a genuine issue of material fact exists concerning whether the dwelling was not vacant for more than sixty consecutive days prior to the fire. That is, viewing the summary judgment evidence in this light, reasonable and fair-minded people could differ in their conclusions on whether the dwelling was not vacant for sixty consecutive days prior to the fire. See Wal-Mart Stores, Inc., 186 S.W.3d at 568. Based on the fact that no one lived in the dwelling; based on Orena’s photos of the dwelling after the fire; based on the remodeler’s proposal indicating repairs would be complete by July 12, 2006; and based on Vachana’s statement to Romero when she reported the fire that the dwelling was vacant, a reasonable and fair-minded person could conclude that the dwelling was abandoned, deprived of contents, and empty, that is, without contents of substantial utility for more than sixty days
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prior to the October 28, 2006 fire. Thus, the trial court erred by granting a traditional summary judgment for the Maos on their breach of contract claim.
We next address whether, viewing all of the summary evidence in the light most favorable to the Maos––the nonmovants on Columbia Lloyds’s traditional motion for summary judgment on the Maos’ breach of contract claim––the evidence conclusively establishes that the dwelling was vacant for more than sixty consecutive days prior to the fire. Viewing the summary judgment evidence in this light, reasonable and fair-minded people could differ in their conclusions on whether the dwelling was vacant for sixty consecutive days prior to the fire. Based on Vachana’s testimony that the dwelling was being remodeled, based on the remodeler’s testimony that he did not think he had completed the remodeling more than forty-five days prior to the fire, and based on Vachana’s testimony that she was trying to sell the dwelling and was showing it weekly to potential buyers, a reasonable and fair-minded person could conclude that the dwelling was not abandoned, deprived of contents, and empty, that is, without contents of substantial utility for more than sixty days prior to the October 28, 2006 fire. See Spates v. Republic Ins. Co., 756 S.W.2d 88, 91 (Tex. App.––San Antonio 1988, no writ) (holding fact question concerning date homeowners vacated the insured house precluded summary judgment for insurer based on vacancy clause).3
3See also Walch v. USAA, No. 02-01-00146-CV, 2002 WL 31628179, at *8 (Tex. App.––Fort Worth Nov. 21, 2002) (holding genuine issue of material fact existed concerning applicability of vacancy clause when unoccupied rental house was being renovated, contained appliances and building materials, utilities were
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Thus, the trial court did not err by denying Columbia Lloyds’s traditional motion for summary judgment on the Maos’ breach of contract claim.
Because––viewing the summary judgment evidence in the light most favorable to Columbia Lloyds––a genuine issue of material fact exists on whether the dwelling was not vacant for sixty consecutive days prior to the fire, we sustain Columbia Lloyds’s sole issue to the extent it seeks reversal of the summary judgment on the Maos’ breach of contract claim. Because––viewing the summary judgment evidence in the light most favorable to the Maos––a genuine issue of material fact exists on whether the dwelling was vacant for sixty consecutive days prior to the fire, we overrule Columbia Lloyds’s sole issue to the extent it seeks reversal of the trial court’s denial of its traditional motion for summary judgment on the Maos’ breach of contract claim. We will remand the Maos’ breach of contract claim to the trial court.
V. NO REVERSAL OF SUMMARY JUDGMENT
ON THE MAOS’ EXTRACONTRACTUAL CLAIMS
Columbia Lloyds filed a combined no-evidence and traditional motion for summary judgment addressing each of the Maos’ extracontractual claims. The no-evidence portion of Columbia Lloyds’s motion for summary judgment
on, and owner checked on house a couple times a week), op. withdrawn on denial of reh’g, 2003 WL 302220 (Tex. App.––Fort Worth Feb. 13, 2003, no pet.). Although the Walch opinion has been withdrawn and thus has no precedential value, we include it here because the Maos discuss it and attached a copy of the opinion to their brief. See Pearson v. K-Mart Corp., 755 S.W.2d 217, 219 (Tex. App.––Houston [1st Dist.] 1988, no writ) (discussing withdrawn supreme court opinion because both parties had referred to it in their briefs).
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specifically sets forth the elements of each of the Maos’ extracontractual claims: the breach of the duty of good faith and fair dealing claim, the DTPA and insurance code violation claims, and the common law fraud claim. Concerning the breach of the duty of good faith and fair dealing claim, Columbia Lloyds asserted that no evidence existed that Columbia Lloyds knew that its liability had become reasonably clear or that Columbia Lloyds had no reasonable basis to deny the Maos’ claim. Concerning the DTPA and insurance code violation claims, Columbia Lloyds asserted that no evidence existed that it had ―engaged in any unfair or deceptive act or practice in violation of Chapter 541, Subchapter B, of the Texas Insurance Code or § 17.46(b) of the Texas Business and Commerce Code.‖ Concerning the common law fraud claim, Columbia Lloyds asserted that no evidence existed that it made a false representation to the Maos with the intent that the Maos rely on it.
In their third point, the Maos argue that the trial court erred when it granted summary judgment for Columbia Lloyds on the extracontractual claims. The Maos’ brief challenges the trial court’s summary judgment on their breach of the duty of good faith and fair dealing claim, arguing that summary judgment evidence exists that Columbia Lloyds did not conduct a reasonable investigation. The Maos do not, however, separately address their alleged DTPA and insurance code violation claims or their common law fraud claim.4
4The Maos’ brief does not mention their fraud claim at all; their brief’s only mention of their DTPA and insurance code claims is the following sentence, ―The
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On appeal, an appellant must attack every ground upon which summary judgment could have been granted to obtain a reversal. Malooly Bros., Inc. v. Napier, 461 S.W.2d 119, 121 (Tex. 1970). A broad issue challenging the propriety of a summary judgment is sufficient to place all grounds for summary judgment before the appellate court, but does not relieve the appellant of the burden to challenge in his brief each of the grounds on which for the summary judgment could have been granted and to present argument and authorities for each possible basis for summary judgment. See, e.g., Cruikshank v. Consumer Direct Mortg., Inc., 138 S.W.3d 497, 502–03 (Tex. App.––Houston [14th Dist.] 2004, pet. denied); Pena v. State Farm Lloyds, 980 S.W.2d 949, 958 (Tex. App.—Corpus Christi 1998, no pet.).
Here, the Maos raise a general point on appeal that the trial court erred by granting summary judgment for Columbia Lloyds on all of its extracontractual claims, but––with the exception of their claim for breach of the duty of good faith and fair dealing––the Maos’ brief does not address each extracontractual claim separately nor point to specific summary judgment evidence constituting more than a scintilla of evidence on the specific element of each extracontractual claim challenged by Columbia Lloyds in the no-evidence portion of its motion for summary judgment. See Worldwide Asset Purchasing L.L.C. v. Rent-A-Center
crux of Plaintiff’s extra-contractual claims (breach of duty of good faith and fair dealing, Insurance Code/DTPA) go to whether or not Defendant conducted a reasonable investigation of the claim.‖
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East, Inc., 290 S.W.3d 554, 569 (Tex. App––Dallas 2009, no pet.). Accordingly, because on appeal the Maos do not challenge the specific no-evidence grounds on which the trial court could have granted summary judgment for Columbia Lloyds on the Maos’ DTPA and insurance code violation claims and common law fraud claim, we are required to affirm the summary judgments on those claims. See, e.g., Rangel v. Progressive County Mut. Ins. Co., No. 08-09-00138-CV, 2010 WL 3312624, at *4 (Tex. App.––El Paso Aug. 24, 2010, pet. denied); Juarez v. Longoria, 303 S.W.3d 329, 330 (Tex. App.––El Paso 2009, no pet.).
We next address the Maos’ challenge to the trial court’s summary judgment for Columbia Lloyds on the Maos’ breach of the duty of good faith and fair dealing claim. As previously mentioned, the Maos argue on appeal that more than a scintilla of summary judgment evidence exists on this claim because reasonable and fair-minded people could differ in their conclusions on whether Columbia Lloyds performed a reasonable investigation. The Maos argue that Columbia Lloyds’s conduct after its initial denial letter was ―pretextual‖ to retroactively support its unreasonable investigation and denial.
An insurer breaches its duty of good faith and fair dealing by denying or delaying a claim when the insurer’s liability has become reasonably clear. State Farm Fire & Cas. Co. v. Simmons, 963 S.W.2d 42, 44 (Tex. 1998) (citing Universe Life Ins. Co. v. Giles, 950 S.W.2d 48, 56 (Tex. 1997)). The focus is not on whether an insured’s claim was valid, but on the reasonableness of the insurer’s conduct in rejecting the claim. See Lyons v. Millers Cas. Ins. Co., 866
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S.W.2d 597, 601 (Tex. 1993). Evidence of coverage, standing alone, will not constitute evidence of bad faith denial. Provident Am. Ins. Co. v. Castaneda, 988 S.W.2d 189, 194 (Tex. 1998). Evidence showing only a bona fide coverage dispute does not rise to the level of bad faith. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Dominguez, 873 S.W.2d 373, 376 (Tex. 1994). Nor is bad faith established when a trier of fact, using hindsight, decides the insurer was simply wrong about the proper construction of the terms of the policy. See Lyons, 866 S.W.2d at 601. As long as an insurer has a reasonable basis to deny payment of a claim, even if that basis is eventually determined to be erroneous, the insurer is not liable for the tort of bad faith. Id. at 600. But insurers do have a duty to conduct a reasonable investigation of a claim and cannot insulate themselves from bad faith liability by investigating a claim in a manner calculated to construct a pretextual basis for denial. Simmons, 963 S.W.2d at 44. To withstand a no-evidence motion for summary judgment, a plaintiff in a bad faith case must present evidence that the insurer failed to attempt a prompt, fair settlement when the insurer’s liability has become reasonably clear. See Giles, 950 S.W.2d at 55.
The Maos argue that remodeling was taking place in the dwelling prior to the fire and that had Romero performed a reasonable investigation, she would have discovered evidence that Leos was working on the home during the sixty days prior to the fire. The Maos argue that ―Columbia Lloyds conducted little or no investigation prior to the November 10, 2006 denial.‖ And finally, the Maos argue that the action taken by Columbia Lloyds after its November 10, 2006
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initial denial letter was ―clearly done as a pretext to back-up Columbia Lloyd[s]’s denial, including Ms. Romero’s computer research and the EUO taken of the Maos.‖
To the extent that the Maos implicitly argue that Romero should have investigated the case herself, case law has held that an insurer can use information gathered by another party to fulfill its duty to conduct an investigation. See Pioneer Chlor Alkali Co. v. Royal Indem. Co., 879 S.W.2d 920, 941 (Tex. App.––Houston [14th Dist.] 1994, no writ) (holding that insurer conducted reasonable investigation by utilizing information gathered by its insured and therefore did not breach its duty of good faith and fair dealing). To the extent that the Maos argue that Romero’s investigation was insufficient, inadequate, or pretextual, the summary judgment evidence establishes that she relied on the adjuster’s photos and report, which revealed that there was nothing in the actual dwelling, as well as Vachana’s representation that the dwelling was vacant when she reported the claim. Viewing the summary judgment evidence in the light most favorable to the Maos, no summary judgment evidence exists that Orena’s report was not objectively prepared. See State Farm Lloyds v. Nicolau, 951 S.W.2d 444, 448–50 (Tex. 1997) (recognizing evidence casting doubt on reliability of expert’s report may support bad faith). No summary judgment evidence exists that it was unreasonable for Romero to rely on Orena’s investigation and report. Cf. Lyons, 866 S.W.2d at 601 (recognizing insurer’s reliance on report will not automatically shield insurer from bad faith finding when
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evidence exists that report was not objectively prepared or insurer’s reliance on report was unreasonable). No summary judgment evidence exists that Vachana did not tell Romero when she reported the fire that the dwelling was vacant. No summary judgment evidence exists that Columbia Lloyds conducted no investigation. No summary judgment evidence exists that Columbia Lloyds ignored certain information it possessed at the time of the denials or that the information it possessed was unreliable. See Castaneda, 988 S.W.2d at 197–98 (recognizing no evidence existed of pretextual denial of claim because no evidence existed that insurer ignored information that would lead a reasonable person to conclude that liability under the policy was reasonably clear or that there was no reasonable basis to deny the claim); Simmons, 963 S.W.2d at 47 (recognizing insurer repeatedly ignored evidence that its insureds did not burn down their home, resulting in outcome-oriented investigation); see also Spicewood Summit Office Condos. Ass’n, Inc. v. Am. First Lloyd’s Ins. Co., 287 S.W.3d 461, 470 (Tex. App.—Austin 2009, pet. denied) (recognizing insurer was entitled to summary judgment on insured’s DTPA and insurance code claims and on breach of duty of good faith and fair dealing claim when no evidence existed that inspector’s reports were not objectively prepared or that insurer’s reliance on reports was unreasonable); USAA v. Croft, 175 S.W.3d 457, 471 (Tex. App.––Dallas 2005, no pet.) (recognizing legally insufficient evidence existed to support bad faith finding when insurer relied upon engineer’s report and no evidence
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existed that report was not objectively prepared or that insurer’s reliance on report was unreasonable).
Viewing all of the summary judgment evidence in the light most favorable to the Maos, no summary judgment evidence exists that Columbia Lloyds denied the Maos’ claim when its liability had become reasonably clear or that Columbia Lloyds had no reasonable basis for denying the Maos’ claim. The trial court did not err by granting Columbia Lloyds’s no-evidence motion for summary judgment on the Maos’ breach of the duty of good faith and fair dealing claim.
We overrule the Maos’ third point.
VI. PPCA CLAIMS MUST BE REMANDED
In their first point, the Maos argue that the trial court erred by granting summary judgment for Columbia Lloyds on their claim for Columbia Lloyds’s violation of the PPCA. Because, as set forth above, we must remand the Maos’ breach of contract claim to the trial court, we also reverse the trial court’s grant of summary judgment to Columbia Lloyds on the Maos’ PPCA claim and remand that claim to the trial court. See Spicewood Summit Office Condos. Ass’n, 287 S.W.3d at 471 (remanding insured’s PPCA claim because insured’s breach of contract claim was reversed and remanded); Cater v. USAA, 27 S.W.3d 81, 84 (Tex. App.––San Antonio 2000, pet. denied) (holding that an insurance company’s good faith defense does not relieve the insurer from liability for damages for late payment, as long as the insurer is finally found liable for the claim); see also State Farm Lloyds v. Page, 315 S.W.3d 525, 531 (Tex. 2010)
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(recognizing that liability under the PPCA is premised on a finding of policy coverage); Higginbotham v. State Farm Mut. Auto. Ins. Co., 103 F.3d 456, 461 (5th Cir. 1997) (interpreting article 21.55 and its predecessor to conclude that an insurer’s good faith defense did not relieve the insurer of liability for damages for late payment, as long as the insurer is ultimately found liable for the claim). We sustain the Maos’ first point.
VII. REQUEST FOR ATTORNEY’S FEES MUST BE REMANDED
In their second point, the Maos argue that the trial court erred when it determined that they were not entitled to attorney’s fees. Because the Maos requested attorney’s fees based on their claims for breach of contract and for violations of the PPCA and because we are reversing and remanding those claims, we also remand the issue of attorney’s fees to the trial court for further consideration. See Spicewood Summit Office Condos. Ass’n, 287 S.W.3d at 471 (reversing and remanding the insured’s attorney’s fees in addition to its PPCA and breach of contract claims).
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VIII. CONCLUSION
Having disposed of all issues and points presented in both appeals, we reverse the trial court’s judgment with respect to the Maos’ claims for breach of contract, penalties under the PPCA, and attorney’s fees and remand for further proceedings consistent with this opinion; we affirm the trial court’s judgment with respect to the Maos’ extracontractual claims.
SUE WALKER JUSTICE
PANEL: WALKER, MEIER, and GABRIEL, JJ.
DELIVERED: March 24, 2011

 

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Martindale AVtexas[2]

Texas Stowers Action Litigation in CGL Policy–Texas Insurance Defense Attorneys as Witnesses

  1. 07-05-00188-CV

IN THE COURT OF APPEALS
FOR THE SEVENTH DISTRICT OF TEXAS
AT AMARILLO
PANEL E

JUNE 20, 2007

______________________________

 

YORKSHIRE INSURANCE CO., LTD., AND

OCEAN MARINE INSURANCE CO., LTD., APPELLANTS

V.

ROY SEGER, INDIVIDUALLY AND SHIRLEY FAYE HOSKINS,

INDIVIDUALLY AND AS ADMINISTRATOR OF THE ESTATE OF

RANDALL JAY SEGER, DECEASED, AND ALL AS ASSIGNEES OF

DIATOM DRILLING CO., A TEXAS LIMITED PARTNERSHIP, APPELLEES

_________________________________

 

FROM THE 84TH DISTRICT COURT OF HUTCHINSON COUNTY;

  1. 33,355; HONORABLE JOHN LAGRONE, JUDGE

_______________________________

 

Before QUINN, C.J., and HANCOCK, J., and BOYD, S.J. (1)

OPINION

We grant the Segers’ motion for rehearing. We withdraw our opinion of April 30, 2007, and substitute the following in its place.

Appellants, Yorkshire Insurance Co., Ltd., and Ocean Marine Insurance Co., Ltd., appeal a judgment entered against them awarding $26,732,876.71 in actual damages, $10,041,307.94 in pre-judgment interest, post-judgment interest at the rate of five percent per annum from the January 3, 2005 date of judgment, and costs, to appellees, Roy Seger and Shirley Faye Hoskins, individually and as administrator of the estate of Randall Jay Seger (collectively, “the Segers”). We affirm in part and reverse and remand for further proceedings.

Because of the complexity of the issues presented on appeal, we will outline the facts and circumstances leading to this appeal and identify other pertinent facts in our discussion of the specific issues presented.

Background

This is an appeal of a Stowers (2) action. The underlying incident giving rise to this action was the death of Randall Jay Seger. Randall did drilling work for two related companies, Diatom Drilling Co., L.P. (Diatom), and Employer’s Contractor Services, Inc. (ECS). ECS was a corporation established by Diatom’s general partner, Cynthia Gillman, to provide oil field services to Diatom and other drilling contractors. On July 13, 1992, while employed by ECS but providing services to Diatom, Randall was killed when a Diatom rig he was working on collapsed. Diatom, who was insured by a Lloyd’s of London-type comprehensive general liability (CGL) insurance policy at the time of the accident, notified the subscribing insurers (collectively, “the CGL insurers”) of the accident. Yorkshire and Ocean Marine (collectively, “Insurers”) were members of this group.

In June of 1993, Randall’s parents, the Segers, filed suit against Diatom, its partners, and ECS alleging negligence and gross negligence. The CGL insurers were not specifically notified of the suit at the time that it was filed. The suit sat virtually dormant until 1998. In 1998, Diatom demanded that the CGL insurers provide a defense to the Segers’ suit. The CGL insurers refused to provide a defense, contending that Randall’s death was not a covered occurrence and that Diatom failed to provide timely notice of suit.

After the CGL insurers refused to provide Diatom a defense, the Segers offered to settle their suit against Diatom for $500,000, the policy limits of the CGL policy. Diatom made demand on the CGL insurers to settle the claim based on this offer. The CGL insurers notified Diatom that two of the insurers had become insolvent and, therefore, the demand exceeded the available policy limits of the CGL policy. Based on this additional information, the Segers offered to settle the suit for $368,190, the policy limits available from the solvent CGL insurers. The Segers subsequently lowered their settlement offer to $250,000. The CGL insurers refused each of these settlement demands.

Prior to trial in the underlying lawsuit, the Segers non-suited Gillman, and Diatom’s counsel withdrew from representation. On March 27, 2001, the underlying suit was tried. Gillman was subpoenaed to attend and did attend as a witness. Gillman testified that she was appearing as the pro se representative of Diatom. However, the record reflects that Gillman’s participation in the proceeding was consistent with that of a witness rather than a party. Gillman’s limited “representation” of Diatom is evidenced by the fact that Diatom was not represented by counsel, presented no opening or closing argument, called no witnesses and presented no evidence. Gillman testified and, at the conclusion of her testimony, was dismissed. As a result of this trial, the trial court entered judgment against Diatom and awarded the Segers $15,000,000, plus pre- and post-judgment interest.

Following the entry of judgment in the underlying suit, Gillman contacted Diatom’s CGL insurers to inquire what they intended to do about the judgment. When Gillman received no response to her inquiry, she assigned Diatom’s rights against the CGL insurers to the Segers. The assignment reserved Diatom’s right to recover its attorney’s fees incurred in defense of the underlying suit, but otherwise assigned all of Diatom’s rights against the CGL insurers to the Segers. Following the assignment, the Segers filed suit against the CGL insurers seeking damages based on the insurers’ wrongful refusal to defend Diatom and negligent failure to settle the Segers’ claim when demand was made within policy limits.

Prior to trial on the Stowers action, the Segers settled their assigned claims against all of the remaining solvent CGL insurers, except Yorkshire and Ocean Marine, and the settling insurers were dismissed from the suit. As the Stowers litigation against Insurers moved toward trial, both the Segers and Insurers filed multiple motions for summary judgment. The trial court heard these motions, denied all of Insurers’ motions, and granted the Segers’ motion for partial summary judgment on the issues of “coverage, demand within limits, fully adversarial relationship, and trial.” Because each of these issues were resolved prior to trial, the only issues at the Stowers trial were the determination of Insurers’ negligence, causation, and damages. During the trial, the trial court directed the verdict as to damages based on the judgment the Segers obtained against Diatom in the underlying suit. The issues of negligence and causation were submitted to a jury. The jury returned a verdict in favor of the Segers.

Insurers appeal the trial court’s rulings on certain procedural issues, the competing motions for summary judgment, the denial of Insurers’ motion for directed verdict, and the granting of the Segers’ motion for directed verdict on damages. Insurers present six issues on appeal. Identifying these issues in the order that they will be addressed, Insurers contend that (1) the trial court erred in striking Insurers’ defenses for violations of the Insurance Code, (2) Randy’s death was not covered by the CGL policy because of the “leased-in worker” exclusion contained in the policy, (3) the Segers failed to make a settlement demand within Insurers’ several policy limits, (4) the Segers failed to conclusively establish their damages, (5) evidence of collusion between Diatom and the Segers was improperly concealed, and (6) the trial court judge should have recused himself and the Segers’ trial counsel should have been disqualified.

Summary Judgment Issues

Three of Insurers’ issues relate to matters that were decided by the trial court by summary judgment. These issues are the statutory preclusion of Insurers’ contract defenses, coverage, and demand within limits. (3) Each of these rulings will be reviewed using the same standard of review.

 

  1. Standard of Review

When both parties to a suit move for summary judgment, each party bears the burden of establishing that it is entitled to judgment as a matter of law. City of Garland v. Dallas Morning News, 22 S.W.3d 351, 356 (Tex. 2000). When the trial court grants one party summary judgment and denies the other, we review both parties’ summary judgment evidence, determine all questions presented, and render the judgment the trial judge should have rendered. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000). When the trial court does not specify the basis on which it granted summary judgment, the judgment will be affirmed on any meritorious ground expressly presented in the motion and which is preserved for appellate review. State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 380 (Tex. 1993).

Both parties moved for summary judgment on traditional and no-evidence grounds. See Tex. R. Civ. P. 166a. We review a summary judgment de novo to determine whether the prevailing party has established its right to summary judgment as a matter of law. See Dallas Cent. Appraisal Dist. v. Cunningham, 161 S.W.3d 293, 295 (Tex.App.-Dallas 2005, no pet.). In reviewing a summary judgment, we must examine the entire record in the light most favorable to the nonmovant, indulging every reasonable inference and resolving any doubts against the motion. See City of Keller v. Wilson, 168 S.W.3d 802, 824-25 (Tex. 2005).

 

  1. Global Preclusion of Insurers’ Contract-Based Defenses

In 1992, Insurance Code article 1.14-1, section 8, provided, “Except for lawfully procured surplus lines insurance . . . any contract of insurance effective in this state and entered into by an unauthorized insurer is unenforceable by such insurer.” See Act of Apr. 27, 1967, 60th Leg., R.S., ch. 185, § 1, 1967 Tex. Gen. Laws 400, 401, amended by, Act of May 27, 1993, 73rd Leg., R.S., ch. 999, § 3, 1993 Tex. Gen. Laws 4373, 4374, repealed by, Act of Apr. 30, 1999, 76th Leg., R.S., ch. 101, § 5, 1999 Tex. Gen. Laws 486, 538 (current version at Tex. Ins. Code Ann. § 101.201 (Vernon Supp. 2006) (4)). (5) In 1993, this section was amended and the language of the exception was changed from “lawfully procured surplus lines insurance” to “insurance procured by a licensed surplus lines agent from an eligible surplus lines insurer.” However, under both the former and amended versions of article 1.14-1, section 8, whether the exception applied to a particular transaction was determined by reference to the requirements for “Surplus Lines Insurance,” contained in article 1.14-2. See Act of Apr. 27, 1967, 60th Leg., R.S., ch. 185, § 1, 1967 Tex. Gen. Laws 400, 408-14, amended by, Act of May 27, 1993, 1993, 73rd Leg., R.S., ch. 999, § 16, 1993 Tex. Gen. Laws 4373, 4376-81, repealed by, Act of May 22, 2003, 78th Leg., R.S., ch. 1274, § 26, 2003 Tex. Gen. Laws 3611, 4138 (current version at § 981.001-.222). (6)

The Segers contend that Insurers cannot enforce any defenses derived from the CGL policy, as a matter of law, because Insurers were unauthorized insurers when the policy was issued. Insurers contend that, even though they were and are unauthorized insurers, the statute does not preclude an unauthorized insurer’s reliance on contract-based defenses in suits initiated by the insured (7) or, if the statute does preclude an unauthorized insurer from asserting its contract-based defenses, the preclusion is inapplicable to Insurers because they met the surplus lines insurance exception.

Initially, because the surplus lines exception changed with the 1993 amendments, we must determine the law applicable to the current case. The Segers contend that, because the policy at issue was entered into in 1992, the laws existing at the time the contract was made became part of the contract and govern the transaction. Insurers contend that the 1993 amendments were procedural or remedial in nature and, therefore, are properly applied retroactively. Courts generally presume that an amendment to a statute is to be applied prospectively and not retroactively. Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 219 (Tex. 2002). However, this general rule does not apply when the amendment is procedural or remedial, unless the retroactive application of the amendment would affect a party’s vested rights. Id. at 219-20.

The 1993 amendments to articles 1.14-1 and 1.14-2 were intended to provide “reasonable and practical safeguards” to protect Texas consumers. Amended article 1.14-2, § 1. An unauthorized insurer who issues a policy to a Texas consumer is penalized by, among other things, being precluded from enforcing any defenses contained within the unauthorized policy. See amended article 1.14-1, § 9; Lexington Ins. Co., 209 S.W.3d at 89. However, because surplus lines insurance is sometimes necessary to insure risks for which coverage cannot be obtained from a licensed, resident insurer, see amended article 1.14-2, § 1; Mid-Am. Indem. Ins. Co. v. King, 22 S.W.3d 321, 322 (Tex. 1995), unauthorized insurers may become “eligible” to issue surplus lines policies to Texas consumers, provided that the insurer complies with strict capitalization and registration requirements. See amended article 1.14-1, § 8; amended article 1.14-2, § 3; Mid-Am. Indem. Ins. Co., 22 S.W.3d at 323. As these surplus lines insurers remain unauthorized insurers, they are subject to the remedial penalties imposed on an unauthorized insurer conducting the business of insurance in the state, including the loss of their contract-based defenses, unless they strictly comply with the eligibility requirements of amended article 1.14-2. See Lexington Ins. Co., 209 S.W.3d at 89. Because the 1993 amendment to article 1.14-1, section 8, affects only the remedies available to an insured when article 1.14-2 is violated by the insurer, we hold that the amended versions of these articles apply to the present case. (8)

While the parties and the foregoing analysis cite the former and amended articles 1.14-1 and 1.14-2, these articles were repealed and recodified by the 76th and 78th Legislatures. See Act of Apr. 30, 1999, 76th Leg., R.S., ch. 101, § 5, 1999 Tex. Gen. Laws 486, 538; Act of May 22, 2003, 78th Leg., R.S., ch. 1274, § 26, 2003 Tex. Gen. Laws 3611, 4138. However, the Legislature expressly indicated that no substantive change in the law was intended by either Act. See Act of Apr. 30, 1999, 76th Leg., R.S., ch. 101, § 6, 1999 Tex. Gen. Laws 486, 538 (“This Act is intended as a recodification only, and no substantive change in law is intended by this Act.”); Act of May 22, 2003, 78th Leg., R.S., ch. 1274, § 27, 2003 Tex. Gen. Laws 3611, 4139 (same). As a result and based on our determination that the 1993 amendments should be applied retroactively, we will refer to the current codification of the law when possible.

It is undisputed that Insurers were unauthorized insurers at all times relevant to the present case. Section 101.201(a) provides that, “An insurance contract effective in this state and entered into by an unauthorized insurer is unenforceable by the insurer.” (9) However, the former article 1.14-1, § 8, the amended article 1.14-1, § 8, and the recodified section 101.201(b) provide an exception to this prohibition for surplus lines insurance. The Segers contend that Insurers could produce no evidence that the CGL policy in this case was “lawfully procured surplus lines insurance” or, alternatively, the Segers conclusively established that the CGL policy was not “lawfully procured surplus lines insurance” and, therefore, Insurers are precluded from asserting their contract-based defenses under former article 1.14-1, § 8. Insurers contend that they were entitled to rely on their contract-based defenses because they established that they met the surplus lines exception of amended article 1.14-1, § 8, as a matter of law.

The Segers’ motion for summary judgment states that, for an insurer to raise any contractual defense in a suit on the policy, the insurer must prove that it was either authorized to do business in Texas or that the insurance at issue was “lawfully procured surplus lines insurance.” The Segers indicate that all references to provisions of the Insurance Code in their motion are references to the version in effect when the coverage was issued in 1992, i.e., the pre-amended versions of articles 1.14-1 and 1.14-2. The Segers then allege that the CGL policy was issued in violation of former article 1.14-2, §§ 2, 5, 6(a), 6(c), 6(d), 6(e), 6A(a6), (10) 7(a), 7(b), and 8. Ultimately, the Segers contend that, because Insurers could present no evidence that they met the “lawfully procured surplus lines insurance” exception or because the Segers had conclusively established that the CGL policy was not “lawfully procured surplus lines insurance,” the Segers were entitled to summary judgment precluding Insurers from relying on their contractual defenses as a matter of law.

Because we have already held that the 1993 amendments to articles 1.14-1 and 1.14-2 were procedural or remedial and are to be applied retroactively, any violation of former article 1.14-1 or 1.14-2 are of no effect on Insurers’ ability to enforce its contract-based defenses in the policy. As we held above, the pre-amendment law, relied upon by the Segers to support its motion for summary judgment, was rendered ineffective by the 1993 amendments and, as a result, violations of the pre-amendment provisions would not result in a preclusion of Insurers’ contract-based defenses. Therefore, we conclude that the Segers’ motion failed to expressly present grounds that would entitle the Segers to summary judgment on coverage based on Insurers being precluded from asserting their contract-based defenses. See Tex. R. Civ. P. 166a(c). Further, because the Segers’ motion cites ineffective law, we conclude that the Segers’ motion failed to state the elements upon which Insurers could produce no evidence relating to Insurers’ right to assert its contract-based defenses. See Tex. R. Civ. P. 166a(i). Because the Segers’ summary judgment motion presents no grounds upon which the trial court could have granted summary judgment, we conclude that, to the extent the trial court based its grant of summary judgment on coverage on the global preclusion of Insurers’ contract-based defenses, the trial court erred.

Insurers appeal the denial of their motion for partial summary judgment on coverage. Because surplus lines insurance is excepted from the general statutory restriction on unauthorized insurers, the burden of proving every fact essential to the invocation of the exception rests on Insurers. See Cramer v. Sheppard, 140 Tex. 271, 167 S.W.2d 147, 155 (1942); Risk Managers Int’l, Inc. v. State, 858 S.W.2d 567, 570 (Tex.App.-Austin 1993, writ denied). Thus, for Insurers to be entitled to summary judgment on coverage, Insurers must establish that Insurers were eligible surplus lines insurers and that the CGL policy was procured through a licensed surplus lines agent as a matter of law, see § 101.201(b), and that the Segers’ claims are not covered by the CGL policy.

We will initially review the evidence regarding whether Insurers established that they were eligible surplus lines insurers as a matter of law. An “eligible surplus lines insurer” must comply with the requirements of sections 981.051-.065 of the Insurance Code. See § 981.002(1). The record contains a certification from Kathy A. Wilcox, Registration Officer of the Texas Department of Insurance, that indicates, at all times pertinent to the present case, both Yorkshire (11) and Ocean Marine (12) were unlicensed insurers which were eligible to provide surplus lines insurance under each iteration of the statute and at all times pertinent to the present case. We conclude that, because these certifications were uncontroverted, the evidence conclusively established that Insurers were eligible surplus lines insurers. (13)

However, more is required to meet the exception of section 101.201(b). In addition to the insurer being eligible to provide surplus lines insurance, the insurance must be procured through a licensed surplus lines agent. § 101.201(b). The record includes a statement from Matt Ray, Deputy Commissioner of the Licensing Division of the Texas Department of Insurance, indicating that London American Risk Specialists, Inc. (LARSI), held a surplus lines agency license that was issued on February 14, 1984 and was due to expire October 25, 2005, if not timely renewed. Notably, the cover note for the CGL policy specifically indicates that the insurance was placed through LARSI. However, the Segers correctly indicate that this evidence identifies LARSI as holding a license as a managing general agency. Section 981.220(b) restricts a surplus lines agent whose license is granted to it as a managing general agent, that is not also licensed under Article 21.14 of the Insurance Code, (14) to business that originates through a licensed general property and casualty agent. Thus, for LARSI’s surplus lines agent license to meet the exception found in section 101.201(b), the transaction must have been directed through an agent that was a licensed general property and casualty agent. § 981.220(b).

No record evidence establishes that the CGL policy was directed through an agent that was a licensed general property and casualty agent. (15) As such, Insurers have failed to prove every fact essential to the invocation of the section 101.201(b) surplus lines insurance exception and the trial court did not err in overruling Insurers’ partial summary judgment motion on coverage. See Cramer, 167 S.W.2d at 155; Risk Managers Int’l, Inc., 858 S.W.2d at 570. We affirm the trial court’s denial of Insurers’ partial summary judgment on the issue of coverage.

  1. Coverage

While we have held that the trial court erred in granting the Segers summary judgment on the issue of coverage to the extent that summary judgment was based on the preclusion of Insurers’ contract-based defenses, because the trial court did not specify the grounds upon which it granted summary judgment on the issue of coverage, we must affirm the judgment if it is supported by any meritorious ground expressly presented in the motion and preserved for appellate review. S.S., 858 S.W.2d at 380. In their motion for summary judgment, the Segers alternatively contended that Insurers could produce no evidence to support any of the contract-based defenses they alleged and, inter alia, contended that the “Excluding Leased-In Employees/Workers” language does not exclude the Segers’ claims from coverage as a matter of law. (16) As such, a determination that Insurers failed to present more than a scintilla of evidence of any of the defenses alleged or that the Segers affirmatively negated each defense would require affirmation of the trial court’s summary judgment on the issue of coverage. (17)

The CGL policy includes, in its cover note, an exclusion of “Leased-In Employees/Workers.” This phrase is not defined by the policy. Insurers contend that a standard “leased worker” exclusion was not included in the policy because a standard “leased worker” exclusion was not established until 1993. Of note, the policy does include a standard employee exclusion. The employee exclusion specifically excludes any liability for claims asserted by, or on behalf of, Diatom/ECS employees from coverage under the policy. Insurers contend that either Randall was actually an employee of Diatom and, therefore, the Segers’ claim is excluded by the standard employee exclusion or Randall was “leased in” by Diatom from ECS and coverage is excluded based on the leased-in worker exclusion contained on the CGL cover note.

The Segers claims are for bodily injury to Randall. The CGL policy generally covers claims for bodily injury or property damage. Thus, there is no dispute that the CGL policy generally covers the kind of claims alleged by the Segers. However, the parties hotly contest the application of the leased-in worker/employee exclusion to the Segers’ claim. Once general coverage is established, the burden of proving the existence and applicability of a policy exclusion rests with Insurers. Tex. R. Civ. P. 94; Comsys Info. Tech. Servs., Inc. v. Twin City Fire Ins. Co., 130 S.W.3d 181, 193 (Tex.App.-Houston [14th Dist.] 2003, pet. denied); Venture Encoding Serv., Inc. v. Atl. Mut. Ins. Co., 107 S.W.3d 729, 733 (Tex.App.-Fort Worth 2003, pet. denied).

The interpretation of insurance policies is governed by the same rules of construction applicable to other written contracts. State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 433 (Tex. 1995). In construing a written contract, the court’s primary concern is to ascertain the true intentions of the parties as expressed in the instrument. Id.; Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). Terms in an insurance contract will be given their ordinary meaning unless the policy shows that the words were meant in a technical or different sense. Sec. Mut. Cas. Co. v. Johnson, 584 S.W.2d 703, 704 (Tex. 1979). We must read all parts of the contract together and must strive to give meaning to every sentence, clause, and word to avoid rendering any portion inoperative. Balandran v. Safeco Ins. Co. of Am., 972 S.W.2d 738, 741 (Tex. 1998). If, after applying these rules of construction, an insurance policy remains ambiguous, we are to construe the language in a manner that favors coverage. Beaston, 907 S.W.2d at 433.

Looking to the CGL policy, the phrase “Leased-In Employees/Workers” is not defined anywhere in the policy. No standard leased worker exclusion is included in the policy. Reading all of the parts of the policy reveals that every exclusion in the contract excludes coverage for claims of insureds’ liability related to or arising from the event or persons identified by the various exclusions. The ordinary meaning of “lease” is an agreement for possession or use of property for a specified period or at will in exchange for a specified rent or compensation. See Merriam-Webster’s Collegiate Dictionary 798 (Frederick C. Mish, ed., 11th ed. 2003); Black’s Law Dictionary 898 (7th ed. 1999). The ordinary meaning of “worker” is a person that “exerts strength or faculties to do or perform something.” Merriam-Webster’s Collegiate Dictionary 1442-43 (Frederick C. Mish, ed., 11th ed. 2003). The ordinary meaning of the word “in,” when used as a modifier, is directed toward some destination or place. Merriam-Webster’s Collegiate Dictionary 627 (Frederick C. Mish, ed., 11th ed. 2003). Therefore, we conclude that, applying the ordinary meaning to the words used in the CGL policy and striving to give meaning to every part thereof, the condition “Excluding Leased-In Employees/Workers,” as a matter of law, unambiguously excludes from coverage all claims for a named insured’s liability for bodily injury or property damage brought by or on behalf of persons that perform work for the insured under an agreement with another allowing temporary use of the worker, even though the leased worker would not be an employee of insured. (18)

Looking to the testimony of Cynthia Gillman at the underlying Seger v. Diatom trial, Gillman testified that ECS had a Contract for Personnel Services with Diatom by which ECS would supply workers to perform work in fulfillment of Diatom’s drilling contracts. Gillman testified that Randall Seger was an employee of ECS that was doing work at the Diatom drilling site at the time of his death. Considering this evidence in the light most favorable to Insurers and indulging all reasonable inferences in their favor, we conclude that there is more than a scintilla of evidence that the Segers’ claims were excluded by the CGL policy. Further, we cannot say that the Segers have negated the applicability of the CGL policy’s “Excluding Leased-In Employees/Workers” condition as a matter of law. Therefore, we conclude that the trial court erred in granting the Segers summary judgment on the issue of coverage.

The Segers contend that the leased-in worker exclusion is ambiguous because the exclusion could reasonably be construed to exclude leased-in workers from being “insureds” under the policy, claims made by leased-in workers, or all claims, including wrongful death claims asserted by survivors of the leased-in worker, arising from the leased-in worker relationship. However, as indicated above, when the CGL policy’s provisions are read together, we conclude that the exclusion excludes from coverage all claims for a named insured’s liability for bodily injury or property damage brought by or on behalf of persons that perform work for the insured under an agreement with another allowing the temporary use of the worker. Thus, our construction of this condition excludes coverage for all claims for bodily injury or property damage whether brought by or on behalf of leased-in workers. We do not find the Segers’ interpretation of the condition as excluding leased-in workers from being “insureds” reasonable, since the CGL policy specifically identifies those parties, Diatom and ECS, that were “insureds” and would not need to specifically identify others as not being “insureds.” (19)

Having concluded that the trial court erred in granting summary judgment on the issue of coverage, we reverse that portion of the summary judgment. We affirm the trial court’s denial of Insurer’s motion for summary judgment on the issue of coverage.

  1. Demand Within Limits

To prove an insurer’s negligent failure to settle a claim, i.e., a Stowers claim, the insured must establish that (1) the claim is within the scope of coverage, (2) a demand was made that was within policy limits, and (3) the demand was such that an ordinary prudent insurer would have accepted it, considering the likelihood and degree of the insured’s potential exposure to an excess judgment. Am. Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 849 (Tex. 1994). A demand that exceeds the policy limits, even though reasonable, does not trigger the insurer’s duty to settle. Id. Insurers contend that, since the policy provided that each insurer was severally liable, the Segers’ collective settlement offers were ineffective to trigger Insurers’ Stowers liability because the Segers failed to make settlement demands within the several limits of Yorkshire and Ocean Marine. The Segers contend that their collective settlement demands were within the solvent policy limits available under the CGL policy and were sufficient to meet the second Stowers element. Further, the Segers rely on the CGL insurers’ admission that the Segers made a demand that was within the available policy limits.

The terms of the CGL policy provided that, in exchange for premium payments totaling $10,850, (20) the CGL insurers would provide coverage for the period of January 23, 1992 through January 23, 1993, with policy limits of $500,000 per accident/occurrence. The cover note, which was incorporated into the policy, indicated that Yorkshire insured 16.472 percent of the policy and that Ocean Marine insured 10 percent of the policy. It is undisputed that the Segers did not make demands upon Yorkshire and Ocean Marine separately that would fall within their proportionate share of the policy’s limits. However, it is also undisputed that the Segers did make demand for the stated policy limits, $500,000, and subsequently made demands for $368,190 and $250,000. In fact, at Insurers’ request, the trial court took judicial notice that the Segers offered to settle the underlying case for $250,000. Thus, the facts related to this issue are not in dispute. Rather, the question presented is whether the Segers’ collective settlement demand for $250,000 was sufficient to meet the “demand within policy limits” element of a Stowers action or were the Segers required to make separate demands upon each of the CGL insurers within each insurer’s proportionate share of the policy’s limits.

In a typical Stowers action, an insured brings suit against his insurer for the insurer’s negligent failure to settle a covered claim asserted against the insured for an amount within the applicable policy limits when the covered claim results in a judgment in excess of the policy limits. However, before an insured can prevail in a Stowers action, the claimant in the underlying proceeding must have made a settlement demand that was within the applicable policy limits. Id. Thus, it is the claimant in the underlying suit that determines whether the second element of a Stowers claim can be met by the insured. As a result, we believe that a claimant should be entitled to rely on the specific provisions of an insurance policy in making a settlement demand that is within the coverage of the policy. That it is the policy that dictates whether a settlement demand was within policy limits is bolstered by the Texas Supreme Court’s indication that a settlement demand that proposes to release the insured for “the policy limits,” in lieu of a demand for a sum certain, is sufficient to satisfy the “demand within limits” element of a Stowers action. See Id. at 848-49. Further, when a claimant makes such a demand and it is rejected by the insurer, we believe that proof that a settlement demand that was within the limits stated in the policy and that was rejected by the insurer is all that is necessary to satisfy the “demand within limits” element of a Stowers claim. Thus, in the present case, we conclude that the Segers’ collective settlement demand of $250,000, which falls within the $500,000 limit stated in the policy, was sufficient to satisfy the second element of a Stowers action against Insurers. (21) As the undisputed facts establish that the Segers made a settlement demand that was within the CGL policy limits as a matter of law, we affirm the trial court’s grant of summary judgment in favor of the Segers on this issue.

Damages

Insurers contend that the Segers presented no evidence to establish that Diatom suffered injury as a result of any negligence on the part of Insurers and, therefore, the trial court’s grant of directed verdict as to damages was in error. Insurers contend that (1) Diatom was judgment proof and, therefore, was not injured by Insurers’ negligence, (2) directed verdict was an improper method to determine damages, and (3) because the underlying judgment was not the result of a fully adversarial trial, it constituted no evidence of damages. The Segers contend that Diatom’s financial condition is immaterial to Insurers’ Stowers liability and that, because the damages awarded in the underlying judgment were the result of a fully adversarial trial, the damages awarded in that judgment are conclusive of the damages Diatom suffered as a result of Insurers’ negligence. We will address each of Insurers’ subpoints regarding this issue in the order in which they were presented.

In reviewing the granting of a no-evidence summary judgment, we must decide whether any probative evidence was presented that would raise a genuine issue of material fact regarding the issue upon which the summary judgment was granted. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241-42 (Tex. 2001) (per curiam). This is the same standard utilized in reviewing a directed verdict. See King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750-51 (Tex. 2003). In determining if the evidence raises a genuine issue of material fact, we review the evidence in the light most favorable to the party against whom the verdict is rendered. Morgan v. Anthony, 27 S.W.3d 928, 929 (Tex. 2000).

Insurers contend that, because Diatom was unable to pay any damages awarded by the judgment, the Segers cannot prove that Diatom suffered any harm as a result of Insurers’ negligent refusal to settle the Segers’ claims when demand was made within policy limits. The record does establish that Diatom is and was judgment proof. Diatom ceased doing business in 1993, sold all of its assets to make payments to creditors, and was involuntarily dissolved. As a result, Diatom possessed no assets from which it could pay any damages awarded to the Segers.

Insurers’ contention is analogous to the argument made by the insurer in YMCA of Metro. Fort Worth v. Commercial Standard Ins. Co., 552 S.W.2d 497 (Tex.Civ.App.-Fort Worth 1977, writ ref’d n.r.e.). In YMCA, the insurer argued that, because its insured had entered into a covenant with the plaintiffs not to execute the judgment against the insured, the insured had no obligation to pay the judgment and, consequently, was not harmed by the insurer’s negligent refusal to settle. Id. at 501. The court analyzed the language in the policy at issue and concluded that the policy was a liability policy rather than an indemnity policy. Id. at 504. Notably, the court cited the policy’s provision that, “The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages . . . .” After discussing the differences between a liability policy and an indemnity policy, (22) the court concluded that the policy was a liability policy and that the covenant not to execute did not release the insurer from liability, even though the insured was under no legal obligation to pay the damages awarded. See id.

The CGL insurance policy involved in the present case includes the exact language cited above in the YMCA policy. From this and other provisions of the policy, we conclude that the CGL policy is a liability policy rather than an indemnity policy. Therefore, we conclude that Diatom’s inability to pay the damages awarded in the underlying judgment does not affect Diatom’s liability under the judgment. See id. at 504. Thus, the fact that Diatom was judgment proof does not establish Insurers’ right to directed verdict on damages.

As support for its contention, Insurers cite Foremost County Mut. Ins. Co. v. Home Indem. Co., 897 F.2d 754, 757 (5th Cir. 1990), as holding that an underlying judgment constitutes no evidence of damages in a Stowers action if the judgment is accompanied by a covenant not to execute against the insured. (23) The Foremost court, however, recognized the general rule that “[i]n Texas a covenant not to execute by an insured does not release an insurance carrier from liability.” Id. at 758 (citing YMCA, 552 S.W.2d at 504-05). Further, the Foremost court specifically indicated that, “under our decision not to extend the YMCA rule the insurer who negligently refuses to settle will be able to use a covenant not to execute only to the disadvantage of another insurer that has breached its duty to the insured . . . and not to the disadvantage of its insured.” Id. at 760 (emphasis added). We conclude that the Foremost opinion is not controlling because it is clearly distinguishable from the present case. See Tex. Farmers Ins. Co. v. Soriano, 844 S.W.2d 808, 824-25 (Tex.App.-San Antonio 1992), rev’d on other grounds, 881 S.W.2d 312 (Tex. 1994) (discussing the limited application of the holding in Foremost). We affirm the trial court’s denial of Insurers’ motion for directed verdict as to damages.

Next, we must consider whether the trial court erred in giving conclusive effect to the damages found in the underlying judgment. (24) By directing verdict on the issue of damages in accordance with the damages found in the underlying judgment, it is evident that the trial court found that the judgment set Diatom’s damages as a matter of law. Insurers’ contention that directed verdict was an inappropriate vehicle to establish damages is premised on their position that the evidence that Diatom was judgment proof raised a fact issue regarding whether Diatom was damaged by the excess damages awarded in the underlying judgment. However, for the reasons discussed above, we conclude that Diatom’s financial status is immaterial to Diatom’s liability and, therefore, fails to raise a fact issue regarding damages in the present suit.

A directed verdict is appropriate only when “reasonable minds can draw only one conclusion from the evidence.” Collora v. Navarro, 574 S.W.2d 65, 68 (Tex. 1978). Review of a directed verdict requires that the evidence be viewed in the light most favorable to the party against whom judgment was entered and that all reasonable inferences from that evidence be resolved in that party’s favor. Morgan, 27 S.W.3d at 929.

The general rule is that, in a Stowers action, damages are fixed as a matter of law in the amount of the excess of the judgment rendered in the underlying suit in favor of the plaintiff over the applicable limits of the policy. See Allstate Ins. Co. v. Kelly, 680 S.W.2d 595, 606 (Tex.App.-Tyler 1984, writ n.r.e.). See also Rocor Int’l, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., 77 S.W.3d 253, 271 (Tex. 2002) (Baker, J., dissenting); State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d 696, 713 (Tex. 1996). Thus, absent evidence that the underlying judgment is not reliable evidence of the damages suffered by the insured in the underlying suit, the judgment conclusively establishes the damages suffered by the insured and is sufficient evidence to support a directed verdict.

While the general rule is that a judgment obtained by a plaintiff against an insured is conclusive to establish the amount of damages suffered by the insured in a subsequent Stowers action, see Kelly, 680 S.W.2d at 606, the Texas Supreme Court has created an exception to this general rule when the insured assigns his Stowers action to the plaintiff in the underlying suit, see Gandy, 925 S.W.2d at 714. When such an assignment occurs, the underlying judgment is not only not conclusive, but is inadmissible as evidence of damages, unless rendered as the result of a “fully adversarial trial.” Id. Insurers contend that they presented evidence that would raise a fact question as to whether the judgment from the underlying suit was the result of a fully adversarial trial and, therefore, that the trial court erred in directing the verdict on damages in accordance with the underlying judgment.

Prior to trial, the Segers filed a motion for partial summary judgment in which they contended, inter alia, that the evidence established that the parties to the underlying suit were in a “fully adversarial relationship at the time of trial” and that an “actual trial” had occurred. The trial court granted the Segers’ motion. However, we conclude that these findings by the trial court do not resolve whether the judgment in the underlying suit was the result of a fully adversarial trial. (25)

At the close of evidence in the Stowers action, the Segers offered the judgment in the underlying suit for the court’s review only and moved the trial court for directed verdict on damages based on the judgment. Insurers objected to admission of the judgment contending that it was not the result of a fully adversarial trial. The trial court overruled Insurers’ objection and granted the Segers’ motion for directed verdict on damages.

Directed verdict was proper, in this situation, only if no probative evidence was presented that would raise a genuine issue of material fact regarding the amount of damages suffered by Diatom as a result of Insurers’ negligent failure to settle the underlying suit. See Dow Chem. Co., 46 S.W.3d at 242. As the Segers’ only evidence of damages in the Stowers action was the judgment in the underlying suit, the trial court could only direct the verdict on damages if Insurers failed to raise a genuine issue of material fact regarding the reliability of the judgment as evidence of Diatom’s damages.

Insurers raised the question of whether the judgment in the underlying action was the result of a fully adversarial trial. As evidence that it was not, Insurers correctly indicated that Diatom was not represented by counsel at the trial in the underlying suit, made no opening or closing statements, offered no evidence, and conducted no cross-examination of the Segers’ witnesses. Further, Insurers cite the trial court’s own characterization of this proceeding as a nihil dicit prove up.

We conclude that this evidence is sufficient to raise a genuine issue of material fact regarding whether the underlying judgment upon which the trial court directed the verdict on damages was the result of a fully adversarial trial. See Gandy, 925 S.W.2d at 714. (26) As such, we reverse the damages portion of the judgment.

Evidentiary Exclusions

Insurers contend that they were denied evidence of collusion between the Segers and Diatom in the underlying proceeding because the trial court abused its discretion in sustaining Diatom’s assertions of attorney-client privilege and work product privilege. As Insurers’ issue challenges the exclusion of those documents that specifically relate to the underlying judgment and subsequent assignment, we will limit our review to those documents. (27) We must determine whether the trial court abused its discretion in upholding Diatom’s assertions of privilege and, if so, whether the exclusion of this evidence harmed Insurers. See May v. Barton’s Pump Serv., Inc., 153 S.W.3d 469, 477-78 (Tex.App.-Amarillo 2004, no pet.).

Some of the evidence sought by Insurers was included in the appellate record in this cause. These documents were made part of the record on December 28, 2004. They were included in the appellate record after Diatom asserted its claims of privilege. Nothing in this court’s file evidences any attempt by Diatom to recall these documents as privileged. (28) See Tex. R. Civ. P. 193.3(d). Therefore, for the present litigation, we conclude that Diatom’s prior assertion of privilege as to these documents has been waived.

Using these disclosed documents, Insurers contend that other documents relating to the underlying proceeding are discoverable and admissible. After reviewing all of the documents provided to the trial court for in camera inspection, the documents Insurers seek by this issue are duplicates of the documents that were included in the appellate record. As Diatom’s prior assertions of privilege regarding these documents have been waived, we overrule Insurers’ issue as moot.

Recusal of Judge

Insurers contend that the denial of their motion to recuse Judge LaGrone was an abuse of discretion because, as the judge that presided over the underlying trial, Judge LaGrone was a vital material witness in the Stowers suit and had personal knowledge of disputed material facts. The denial of a motion to recuse is reviewed for abuse of discretion. Brosseau v. Ranzau, 81 S.W.3d 381, 399 (Tex.App.-Beaumont 2002, pet. denied). Insurers contend that the Segers’ citation to Judge LaGrone’s statement in the underlying trial transcript that “The Court will call for trial in Cause No. 30,110, . . .” made Judge LaGrone a vital material witness in the Stowers action. However, the complete transcript of the underlying proceeding, which includes the statement Insurers complain of, was admitted into evidence in the Stowers action. Further, Judge LaGrone’s calling the underlying proceeding for trial did not constitute his participation “as . . . material witness in the matter in controversy.” Tex. R. Civ. P. 18b(2)(d). Certainly, as addressed above, Insurers may refute Judge LaGrone’s characterization of the underlying proceeding as a “trial,” but we do not conclude that the trial court abused its discretion in denying Insurers’ motion for recusal on this basis.

Additionally, Insurers contend that Judge LaGrone must have knowledge of disputed evidentiary facts regarding whether the underlying proceeding was, in fact, a fully adversarial trial. However, Insurers fail to identify any specific knowledge of disputed evidentiary facts purportedly held by Judge LaGrone. We will not find recusal appropriate solely on the basis of speculation regarding facts that may or may not be known by the presiding judge.

We overrule Insurers’ challenge to the denial of their motion to recuse.

Disqualification of Counsel

Finally, Insurers contend that two attorneys in the Segers’ counsel, Brian Heinrich and Joe Hayes, were disqualified from representing the Segers in their Stowers action because each (1) were witnesses in the Stowers action, see Tex. Disc. R. Prof. Cond. 3.08, and (2) were to be paid on a contingent basis, see Tex. Disc. R. Prof. Cond. 3.04. The denial of a motion for disqualification is reviewed for abuse of discretion. See Metro. Life Ins. Co. v. Syntek Fin. Corp., 881 S.W.2d 319, 321 (Tex. 1994). As both parties to the present dispute acknowledge, the disqualification of counsel is a severe remedy, which is not to be invoked lightly. See In re Nitla S.A. de C.V., 92 S.W.3d 419, 422 (Tex. 2002). Even if challenged counsel has committed a disqualifying act, the party requesting disqualification must demonstrate that counsel’s conduct caused actual prejudice. Id.

Assuming, without deciding, that Heinrich and/or Hayes were lawyer-witnesses such that they would be disqualified from representing the Segers in the Stowers action, Insurers have failed to present any evidence that they were harmed. Insurers cite a deposition of Professor Bob Schuwerk, which is not a part of the record, as concluding that Heinrich and Hayes violated Rules 3.04 and 3.08 of the Texas Disciplinary Rules of Professional Conduct. However, proof that an attorney violated a Rule of Professional Conduct, without a further showing of harm, is insufficient to justify disqualification. Id. Nothing in Insurers’ discussion of Schuwerk’s deposition identifies how they were harmed by any alleged violation of the Rules by either Heinrich or Hayes.

Insurers contend that the trial court took certain unrelated actions to avoid having to rule that Heinrich and Hayes were disqualified to represent the Segers in the Stowers action, however, this contention is wholly unsupported by evidence and is purely speculative. See Miller v. Hood, 536 S.W.2d 278, 285 (Tex.Civ.App.-Corpus Christi 1976, writ ref’d n.r.e.) (presumption of regularity and validity of trial court rulings unless facially invalid or invalidity shown in the record). Additionally, while Insurers contend that Hayes and Heinrich were disqualified because they were witnesses whose payment was contingent upon the outcome of the case, Insurers fail to identify any evidence establishing that Hayes or Heinrich were being paid on a contingent basis.

We overrule Insurers’ issue regarding the denial of their motion to disqualify Hayes and Heinrich.

Conclusion

We affirm the trial court’s denial of Insurers’ motion to recuse, denial of Insurers’ motion to disqualify counsel, and grant of summary judgment on the issue of whether the Segers made a sufficient settlement demand within the CGL policy limits. In all other respects, we reverse the judgment and remand this cause for new trial consistent with this opinion.

 

Mackey K. Hancock

Justice

 

  1. John T. Boyd, Chief Justice (Ret.), Seventh Court of Appeals, sitting by assignment.
  2. See generally G.A. Stowers Furniture Co. v. Am. Indem. Co., 15 S.W.2d 544, 548 (Tex.Comm’nApp. 1929, holding approved).
  3. We note that the trial court also entered summary judgment regarding issues related to damages, but, as the damages issue was ultimately decided by directed verdict, we will address it separately.
  4. Further reference to current provisions of the Insurance Code will be by reference to “section __” or “§ __.”
  5. Further citation to the pre-amendment version of article 1.14-1 will be by reference to “former article 1.14-1, § __.” Further citation to the post-amendment version of article 1.14-1 will be by reference to “amended article 1.14-1, § __.”
  6. Further citation to the pre-amendment version of article 1.14-2 will be by reference to “former article 1.14-2, § __.” Further citation to the post-amendment version of article 1.14-2 will be by reference to “amended article 1.14-2, § __.”
  7. Recently, the Texas Supreme Court clarified that the effect of the post-amendment provisions applicable to this case is to preclude unauthorized insurers from enforcing its policies. See Lexington Ins. Co. v. Strayhorn, 209 S.W.3d 83, 89 (Tex. 2006). Thus, we conclude that the Texas Supreme Court has specifically rejected Insurers’ contention that the applicable provisions do no more than preclude an unauthorized insurer from bringing suit.
  8. Other Texas courts have likewise applied post-amendment unauthorized and surplus lines insurance provisions retroactively, even when the policies were issued prior to 1993. See Lexington Ins. Co., 209 S.W.3d at 85, 89-90 (applying post-amendment article 1.14-1, § 11, to case involving insurance tax dispute covering taxes accruing from 1992 through 1995); Mid-Am. Indem. Ins. Co., 22 S.W.3d at 325 (requiring eligibility under post-amendment article 1.14-2 as prerequisite to bond exemption, even though the exemption specifically required eligibility at the time coverage issued, which was prior to 1993 amendments); Wheelways Ins. Co. v. Hodges, 872 S.W.2d 776, 779, 784 n.10 (Tex.App.-Texarkana 1994, no writ) (applying amended article 1.14-1, § 8, to case involving accident occurring in 1989 with suit against insurer filed in 1991).
  9. The same restriction on the enforcement of unauthorized insurance contracts may be found in both the former and amended law. See amended article 1.14-1, § 8; former article 1.14-1, § 8.
  10. Reference to the pre-amendment version of article 1.14-2, reveals that there was no section 6A. As section 6A was added by the 1993 amendments, but it did no more than authorize the establishment of the Surplus Lines Stamping Office. See amended article 1.14-2, § 6A.
  11. Specifically, the certification provides that Yorkshire was “an unlicensed insurer which is an eligible insurer for providing surplus lines insurance under article 1.14-2, Texas Insurance Code from September 1, 1989 thru November 12, 2001 and from July 1, 2002 thru the present.”
  12. Specifically, the certification provides that Ocean Marine was “an unlicensed insurer which is an eligible insurer for providing surplus lines insurance under article 1.14-2, Texas Insurance Code from November 1, 1989 thru the present.”
  13. Further, we note that the Segers do not contest Insurers’ general eligibility to provide surplus lines insurance.
  14. Relating to local recording agent licenses.
  15. We note that evidence was offered relating to this issue by Insurers, but this evidence was objected to by the Segers, the objection was sustained by the trial court, and Insurers failed to challenge the trial court’s ruling on appeal.
  16. By their appeal, Insurers urge error only in regard to the leased-in worker exclusionary defense to coverage. Thus, any objection to any other contractual defense has been inadequately briefed and is waived. See Knie v. Piskun, 23 S.W.3d 455, 460 (Tex.App.-Amarillo 2000, pet. denied); Lewis v. Deaf Smith Elec. Co-op., Inc., 768 S.W.2d 511, 512-13 (Tex.App.-Amarillo 1989, no writ.).
  17. As we have previously determined that Insurers have failed to establish their right to assert their contract-based defenses, Insurers would not be entitled to summary judgment on coverage, even if they established that a contractual provision excluded coverage as a matter of law. See Tex. R. App. P. 47.1.
  18. We focus on the term “worker” in an effort to harmonize the provisions of the policy. Claims for bodily injury by a leased-in worker that concurrently holds the status of an employee would be covered under the standard employee exclusion contained in the CGL policy. Thus, an exclusion for a leased-in employee would be redundant.
  19. We note that the Segers’ present no alternative interpretation of the phrase “leased-in employee/worker.” Other than the interpretation identified in this opinion, we can identify no other reasonable interpretation of this phrase and, therefore, conclude that the phrase is unambiguous.
  20. No issue has been raised regarding the timely payment of these premiums.
  21. We express no opinion regarding what, if any, effect the insolvency of certain severally liable insurers would have on whether a demand within stated policy limits, but exceeding the solvent insurers’ proportionate share of coverage, would have on the establishment of a “demand within limits” in the context of a subsequent Stowers action. In the present case, it is undisputed that, when the Segers made their $250,000 demand, the demand was within the available policy limits of the solvent CGL insurers.
  22. An insurer in a liability policy agrees to defend the insured and protect it from liability. If the insurer is unsuccessful in protecting insured from liability and must settle or, if a judgment is rendered against the insured, the insured is not required to pay the obligation before the insurer is required to pay. If a judgment is rendered against the insured, the insurer’s liability to pay attaches at that time. This obligation to pay continues until the judgment is satisfied.

Conversely, an indemnity policy provides that the insurer’s liability does not attach unless the judgment against the insured has actually been paid.

See id. at 504.

  1. While the Segers entered into a covenant not to execute the judgment against Gillman in the present case, we understand Insurers’ argument to analogize a covenant not to execute with a judgment proof insured. However, we conclude that the analysis and the result would be the same if Insurers were contending that the covenant not to execute precluded proof of harm to Diatom.
  2. Insurers contend that it was error for the judgment to have been admitted into evidence for the judge’s eyes only. However, the judgment was admitted into evidence. Because the trial court gave the judgment conclusive effect on the issue of damages and rendered a directed verdict in accordance with that judgment, the fact issue of the amount of damages suffered by Diatom was removed from the jury’s consideration. Therefore, whether the trial court erred in the manner in which it admitted the judgment is subsumed within the issue of whether the trial court erred in directing damages in accordance with this judgment and will be addressed below.
  3. In reviewing the Segers’ motion relating to these points, we note that the “fully adversarial relationship” issue in no way addressed the events occurring at the underlying trial. While the Court did not define “fully adversarial trial” in Gandy, we believe that a determination of whether a hearing constitutes a “fully adversarial trial” requires a review of the extent to which the parties to the proceeding participated. See Gandy, 925 S.W.2d at 713. When the judgment is an agreed judgment, default judgment, or when the underlying defendant’s participation is so minimal as to evidence that the hearing was not adversarial, the judgment resulting from that hearing may not be admitted as evidence of damages in the Stowers action. See id. at 713, 714. As such, the determination of whether the hearing was fully adversarial requires review of the underlying proceedings.
  4. In no event, however, is a judgment for plaintiff against defendant, rendered without a fully adversarial trial, binding on defendant’s insurer or admissible as evidence of damages in an action against defendant’s insurer by plaintiff as defendant’s assignee” (emphasis added).
  5. The documents submitted for the trial court’s in camera review include documents that were prepared for the purpose of facilitating the rendition of legal services in defense of Insurers’ third-party action against Diatom. These documents appear to be privileged under Texas Rule of Evidence 503(b), but, in any event, are not sought by Insurers through this issue.
  6. However, the conclusion that Diatom has not attempted to “snap back” these documents is not a determination that it has waived its claim of privilege. Because Diatom is no longer a party to the present action, Insurers’ identification of the disclosure of these documents does not necessarily result in Diatom’s actual knowledge of the disclosure.

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas civil litigation and injury defense attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]

Stanley Martin Companies, LLC Sued By EEOC For Pay Discrimination–Texas Employment Law Defense Attorneys

Female Purchasing Manager Was Paid Less Than Males in the Same Position, Federal Agency Charges

WASHINGTON – Stanley Martin Companies, LLC, one of the largest homebuilders in the Mid-Atlantic Region, violated federal law by failing to promote a qualified female employee to a purchasing manager position and then paid her less than her male coworkers after promoting her, the U.S. Equal Employment Opportunity Commission (EEOC) charged in a lawsuit announced today.

EEOC alleged Carrie Smith began working as a budget analyst at Stanley Martin’s office in Reston, Va., in January 2013. After being hired, Stanley Martin assigned Smith to perform purchasing manager duties but would not pay her the same salary paid to male purchasing managers or promote her to the position. When Stanley Martin finally promoted Smith to the purchasing manager position, she was paid less than the male purchasing managers.

Title VII of the Civil Rights Act of 1964 prohibits discrimination based on sex, including pay discrimination and in making promotion decisions. The Equal Pay Act of 1963 also prohibits compensation discrimination based on sex. EEOC first attempted to reach a pre-litigation settlement through its conciliation process before filing suit in U.S. District Court for the Eastern District of Virginia, Alexandria Division (EEOC v. Stanley Martin Companies, LLC, Civil Action No. 1:15-cv-01246-AJT-IDD).

Washington Field Office Acting Director Mindy Weinstein said, “Unfortunately, pay discrimination remains a serious problem in the workplace. The Commission will take strong action to eradicate gender-based pay disparities and other gender-based barriers to equal employment opportunity.”

“Ms. Smith was doing equal work and had the same job responsibilities as the male purchasing managers, so she was entitled to equal pay,” said EEOC Regional Attorney Debra M. Lawrence.

Enforcement of equal pay laws and targeting compensation systems and practices that discriminate based on gender is of one of six national priorities identified by EEOC’s Strategic Enforcement Plan.

EEOC’s Washington Field Office has jurisdiction over the District of Columbia and the State of Virginia counties of Arlington, Clarke, Fairfax, Fauquier, Frederick, Loudoun, Prince William, Stafford and Warren, and the State of Virginia independent cities of Alexandria, Fairfax City, Falls Church, Manassas, Manassas Park and Winchester.

EEOC enforces federal laws prohibiting employment discrimination. Further information about the agency is available at its website, www.eeoc.gov.

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas civil litigation attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]

Lawsuits By Graduates Against Law Schools For Breach of Contract and Other Causes of Action Are Failing

October 16, 2015

Disgruntled law graduates began suing their alma maters in 2011, accusing law schools of misleading recruits about their chances of finding a job. But to date, none of those cases have succeeded, and just last week another suit filed in Florida was dismissed. Of the 15 similar lawsuits filed, only a handful remain, and none of have been certified as a class action. The lawsuits challenged the accuracy of employment statistics and salary data the schools reported to attract new students. A U.S. district court judge in Florida wrote that prospective students of Florida Coastal School of Law were “a sophisticated subset of education consumers, capable of sifting through data and weighing alternatives.”

See: http://blogs.wsj.com/law/2015/10/15/jobless-grads-who-sued-law-schools-find-more-rejection-in-court/?mod=WSJBlog

 

 

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas civil litigation attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]

Attorneys’ Fees and Fee Shifting in Texas Work Injury Case Involving Prescription Drug Use

Opinion issued March 31, 2011.
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-10-00271-CV
———————————
COMMERCE & INDUSTRY INSURANCE COMPANY, Appellant
V.
KIMBERLY FERGUSON-STEWART, BENEFICIARY TO BRUCE STEWART, DECEASED, Appellee
On Appeal from the 133rd District Court
Harris County, Texas
Trial Court Case No. 2006-45381
O P I N I O N
This appeal arises from a worker’s compensation case involving an injury to Bruce Stewart, deceased. After trial, the trial court entered judgment on the jury findings supporting the workers’ compensation award and also awarded attorneys’
2
fees in favor of Kimberly Ferguson-Stewart, Stewart’s beneficiary. On appeal, CIIC challenges the trial court’s exclusion of evidence showing Stewart’s history of prescription pain medication use. CIIC also claims, based on Transcontinental Insurance Co. v. Crump, 330 S.W.3d 211 (Tex. 2010), that Stewart waived her right to recover the fees by trying the reasonableness and necessity of those fees to the bench rather than the jury. We hold that the trial court did not abuse its discretion in excluding certain evidence of Stewart’s prescription drug use. We further hold that, under Crump, CIIC was entitled to have jury findings on the attorneys’ fees issues. We therefore reverse the attorneys’ fee award in light of the change in law occasioned by Crump and remand that issue to the trial court for a jury trial.
Background
On May 25, 2004, Stewart reported an on-the-job injury in which he sustained injuries when a large bolt fell from above, striking him on the neck and shoulder. No one witnessed the accident. Stewart went to the emergency room, where he received medical treatment and a prescription for pain medication. Stewart attempted to return to work, but the medication’s side effects made him unable to do so.
After exhausting its administrative remedies, CIIC sought judicial review of the findings that Bruce Stewart (1) sustained an injury in the course and scope of
3
employment on May 25, 2004, and (2) sustained disability from June 2, 2004 through September 21, 2004.1 The jury returned a verdict against CIIC, and the trial court entered judgment on the verdict. The trial court also entered an order granting Ferguson-Stewart’s motion for approval of attorneys’ fees, finding that the fees she incurred were reasonable and necessary. Discussion I. Workers’ Compensation Act Appeals
The Texas Supreme Court has held that a Texas Workers’ Compensation Commission (TWCC) Appeals Panel’s final decision may be appealed to the courts under a ―modified de novo review.‖ Texas Workers’ Compensation Comm’n v. Garcia, 893 S.W.2d 504, 530 (Tex. 1995). Under this modified de novo review, all issues regarding compensability of the injury may be tried by the jury or court. Id. at 528; see TEX. LAB. CODE ANN. §§ 410.301, .304 (Vernon 2006). The court, although informed of the TWCC’s decision, is not required to accord it any particular weight. Garcia, 893 S.W.2d at at 515. The fact finder does not review the Appeals Panel’s decision for ―reasonableness,‖ but rather independently decides the issues by a preponderance of the evidence. Id. at 531. The party
1 Stewart died after the period of disability, but before the administrative proceedings had concluded.
4
appealing the TWCC’s ruling bears the burden of proof by a preponderance of the evidence. TEX. LAB. CODE ANN. § 410.303 (West 2006). II. Evidentiary challenge
CIIC claims error in the trial court’s exclusion of: Medical records in which doctors described how Bruce Stewart engaged in drug-seeking behavior in connection with a prior work-related injury;
Pharmacy records demonstrating that between 2001 and 2004, Bruce Stewart received prescriptions from four different physicians for, among other drugs, hydrocodone’
The DWC’s unredacted order granting benefits in this case, which recites that Bruce Stewart’s death resulted from hydrocodone toxicity; and
Testimony from Bruce Stewart’s treating physician that Stewart’s ingestion of hydrocodone in excess of the prescribed amount did not comply with his treatment plan.
We review a trial court’s decision to exclude testimony under an abuse of discretion standard. Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 906 (Tex. 2000). The test for abuse of discretion is whether the trial court acted without reference to any guiding rules and principles. C.M. Asfahl Agency v. Tensor, Inc., 135 S.W.3d 768, 798 (Tex. App.—Houston [1st Dist.] 2004, no pet.). We must uphold an evidentiary ruling if there is any legitimate basis for it. Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998). Even if the trial court erred in its evidentiary ruling, we reverse only if the error probably
5
caused the rendition of an improper judgment. Auld, 34 S.W.3d at 906; see TEX. R. APP. P. 81(b)(1).
The record shows that CIIC, invoking Texas Rule of Evidence 402, sought to admit this evidence on general relevance grounds and for purposes of impeachment. See TEX. R. EVID. 402. Ferguson-Stewart objected to its admission on the grounds that the evidence was irrelevant or would have an unfairly prejudicial effect that would substantially outweigh any probative value. TEX. R. EVID. 401, 403.
The workers’ compensation statute makes employees ineligible for benefits if they are intoxicated—by ingesting alcohol or other drugs—at the time of the injury. TEX. LAB. CODE ANN. § 406.032(a)(1) (West 2006) (providing that ―[a]n insurance carrier is not liable for compensation if the injury occurred while the employee was in a state of intoxication.‖); see Tex. Mut. Ins. Co. v. Havard, No. 01-07-00268-CV, 2008 WL 598347 (Tex. App.—Houston [1st Dist.] Mar. 6, 2008, no pet.) (mem. op.). CIIC did not raise intoxication as a defense in the administrative proceeding. When CIIC proffered the evidence to the trial court, Ferguson-Stewart responded that Bruce Stewart
may have failed a past drug screen, but the fact is when he went back to work there, he passed the drug screen to start working, and then after the accident he passed another one. So the fact that he ever failed one before wouldn’t be relevant.
6
CIIC contends that the proffered evidence is relevant for the purposes of impeachment because it identifies a possible motive for Bruce Stewart to falsify or fabricate a worker’s compensation claim. Texas courts have consistently upheld the exclusion of evidence of a witness’s prior drug use for general impeachment purposes. See TEX. R. EVID. 608(b) (prohibiting use of ―specific instances of conduct of a witness, for the purpose of attacking or supporting the witness’[s] credibility, other than conviction of crime . . .‖); Lagrone v. State, 942 S.W.2d 602, 612 (Tex. Crim. App. 1997) (noting that, in adopting Rule 608(b), Texas courts ―implicitly abolished the impeachment of witnesses with evidence of drug addiction‖). Any connection between Bruce Stewart’s use of prescription pain medication and his worker’s compensation claim rests on speculation.2 The record thus supports the trial court’s exercise of discretion in excluding the evidence on the grounds that the danger of unfair prejudice substantially outweighed the evidence’s probative value. TEX. R. EVID. 403.
2 In particular, CIIC points to evidence that Stewart expressed his intent to ask for prescription pain medication to replace over-the-counter ibuprofen recommended by the doctor if he ―start[ed] hurting‖ and called for the prescription two hours later. This evidence equally supports an inference that Stewart needed stronger medication to combat his pain. See Lozano v. Lozano, 52 S.W.3d 141, 148 (Tex. 2001). The trial court was within its discretion to exclude this evidence, given the issues the jury was to decide.
7
III. Attorneys’ fees
Under section 408.221(c) of the Labor Code, an insurance carrier that seeks judicial review of an appeals panel decision is liable for a claimant’s reasonable and necessary attorneys’ fees as a result of the appeal if the claimant prevails on an issue on which the carrier seeks judicial review. See TEX. LAB. CODE ANN. § 408.221(c) (West 2006). In her answer, Ferguson-Stewart pleaded for reasonable and necessary attorneys’ fees and expenses ―[u]nder Chapter 408, Subchapter L, § 408.221(c) of the Texas Labor Code.‖
We first address CIIC’s contention that Ferguson-Stewart failed to plead for attorneys’ fees. In Texas, a pleading must give fair and adequate notice to the opposing party sufficient to prepare a defense. Hagberg v. City of Pasadena, 224 S.W.3d 477, 482 (Tex. App.—Houston [1st Dist.] 2007, no pet.). Where the opposing party fails to use special exceptions to identify alleged defects in a pleading, we construe the pleadings liberally in favor of the pleader. Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 897 (Tex. 2000).
CIIC asserts that, by identifying some of her named attorneys in her fee request but not others, Ferguson-Stewart limited her recovery to the fees she incurred in connection with the named attorneys’ representation only. The pleading, however, contains no such exclusive language, and CIIC did not specially except to Ferguson-Stewart’s pleadings on that ground. We hold that
8
Ferguson-Stewart’s pleading gave CIIC fair and adequate notice of her intent to seek recovery of all reasonable and necessary attorneys’ fees she incurred in her defense. In its main contention on this issue, CIIC claims that Ferguson-Stewart waived her right to recover attorneys’ fees because she failed to secure jury findings on the reasonableness and necessity of the fees, instead submitting the fee request to the trial court in a post-trial motion. CIIC relies on Transcontinental Insurance Co. v. Crump, decided after the conclusion of trial in this case, in which the Texas Supreme Court held that ―an insurance carrier is entitled to have a jury determine the disputed amount of reasonable and necessary fees for which it is liable under 408.221(c).‖ 330 S.W.3d 211, 232 (Tex. 2010).
We agree that, in light of Crump, CIIC was entitled to jury findings on fees. Thus, we hold that the attorneys’ fees award must be reversed. CIIC states that we must go further—and render judgment in its favor upon our reversal—because Ferguson-Stewart waived her claim for fees by failing to secure jury findings in its support. We disagree. The trial court’s order recites that it held a hearing on the reasonableness and necessity of Ferguson-Stewart’s attorneys’ fees, and the trial court found that the fees incurred were reasonable and necessary.3 Ferguson-
3 The reporter’s record does not include this hearing, and CIIC does not challenge the legal sufficiency of the evidence before the trial court on the reasonableness and necessity of Ferguson-Stewart’s attorneys’ fees. We presume the evidence
9
Stewart pursued her claim for fees and obtained findings, albeit from the incorrect factfinder. When a party produces some evidence of fees, and the trial court errs in determining them, remand is appropriate. Cf. Tony Gullo Motors v. Chapa, 212 S.W.3d 299, 314–15 (Tex. 2006) (holding that plaintiff did not waive her request for attorney’s fees by failing to segregate recoverable fees from unrecoverable ones and remanding for new trial on issue); Lubbock Cnty. v. Strube, 953 S.W.2d 847, 858 (Tex. App.—Austin 1997, pet. denied) (remanding for new trial on attorney’s fees issue).
Remand for a jury trial is appropriate when a trial court improperly fails to heed the request for a jury. See Gen. Motors Corp. v. Gayle, 951 S.W.2d 469, 477 (Tex. 1997) (instructing trial court to conduct jury trial where trial court refused to empanel a jury). The remedy here is not a judgment on the merits, but instead a trial before the appropriate fact finder. Unlike most fee-shifting statutes, which allow, but do not require, a prevailing party to recover attorneys’ fees, the provision applicable to this proceeding makes the insurer liable for the claimant’s fees when the insurer seeks judicial review of compensability or eligibility issues and the claimant prevails. Compare TEX. CIV. PRAC. & REM. CODE ANN. § 38.001 (providing that ―a person may recover reasonable attorneys’ fees from an
presented at the hearing supports the trial court’s ruling. See TEX. R. APP. P. 34.6(c); Mason v. Our Lady Star of Sea Catholic Church, 154 S.W.3d 816, 819 (Tex. App.—Houston [14th Dist.] 2005, no pet).
10
individual or corporation . . .‖) with TEX. LAB. CODE ANN. § 408.221(c) (providing that ―an insurance carrier that seeks judicial review . . . of a final decision of the appeals panel regarding compensability or eligibility for, or the amount of, income or death benefits is liable for reasonable and necessary attorney’s fees . . . incurred by the claimant . . . if the claimant prevails on an issue on which judicial review is sought by the insurance carrier‖) (emphasis added). The supreme court’s analysis in Crump shows that its conclusion was not an obvious one. As the court observed, section 408.221 not only ―is silent on the critical judge-or-jury question,‖ but is also ambiguous, reasonably supporting conflicting conclusions on the issue. Id. at 229. The court also noted that, before the fee-shifting provision was added in 2001, the trial court, ―without the aid of a jury,‖ determined the amount of fees that a claimant’s attorney could recover. Id. at 229–30. We reverse the award of attorneys’ fees contained in the judgment and remand the issue of attorneys’ fees for jury trial.
Conclusion
We hold that the trial court did not abuse its discretion in excluding the evidence of Bruce Stewart’s history of prescription drug use. Following Crump,
11
we also reverse the award of attorneys’ fees contained in the judgment and remand the issue of Ferguson-Stewart’s attorneys’ fees for trial. We affirm the remainder of the judgment.
Jane Bland
Justice
Panel consists of Chief Justice Radack and Justices Alcala and Bland.

 

 

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas civil litigation attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]

Injury to Plaintiff’s Head/Skull in Texas Work Injury Defense Case

In The

 

Court of Appeals
Ninth District of Texas at Beaumont

____________________
NO. 09-06-305 CV

____________________
LIBERTY MUTUAL INSURANCE CO., Appellant

V.

MARIO CAMACHO, Appellee
On Appeal from the 359th District Court

Montgomery County, Texas

Trial Cause No. 01-10-06715-CV

 

OPINION

We resolve two principal questions in this appeal. First, we determine if the evidence in this workers’ compensation case is legally sufficient to support the jury’s finding that Mario Camacho suffered a skull injury. Second, we decide whether the trial court improperly instructed the jury to give the decision of the Texas Workers’ Compensation Commission no special weight. We answer both questions in the affirmative and reverse and remand the case for a new trial.

TRIAL TESTIMONY AND VERDICT

Camacho was a rancher with more than twenty years’ experience at the time of his injury and a long-term employee of JMR Ranching. In September 1991, Camacho’s horse reared up and struck him in the face. He fell from the horse to the ground. Selma Steele, co-owner of the ranch, received a telephone call about Camacho’s accident and arrived at the scene shortly thereafter. When she arrived, Camacho “had a big knot on his head and a knot over the left eye and his nose was bleeding.” While on the way to Steele’s home in her car, Camacho fell over and appeared to have gone to sleep. Steele took Camacho to the hospital. Camacho was initially treated at the Tomball Regional Hospital Emergency Room. Dr. John Sanders, the emergency room physician, diagnosed Camacho as having suffered a concussion. Dr. Sanders ordered the following tests: (1) a CT scan of the head, without contrast, which was reported as normal; (2) a bone scan, which was reported as normal with the exception of degenerative changes in the cervical spine; (3) an x-ray of the nasal bones, which was reported as showing no evidence of fracture; and (4) an x-ray of the cervical spine, which was reported as showing no acute fracture.

Dr. Susan Garrison, a physician certified by the American Board of Physical Medicine and Rehabilitation, reviewed Camacho’s records at Liberty Mutual’s request in 2005 in order to address whether Camacho suffered a skull injury due to his 1991 fall. Dr. Garrison, the only medical doctor to testify at trial, stated that Camacho’s tests, x-rays, bone scans, and CT scans showed “no evidence of injury to the skull as a result of that accident.” In her opinion, Camacho had a closed head injury but he “did not have an injury to the skull.” Dr. Garrison clarified that her opinions were based upon the reports of the tests administered at Tomball Regional because the actual films of the tests had been destroyed by the hospital. Dr. Garrison further testified that because the bone scan was done with contrast material, if Camacho had suffered a bone bruise of the skull, the test “would have lighted up, and it didn’t light up.” Dr. Garrison did not see or treat Camacho.

Dr. Richard Pollock, a neuropsychologist, testified that he began treating Camacho in 1994. According to Dr. Pollock, Camacho’s hospital records reflected that he suffered a closed head injury in the accident. Dr. Pollock categorized Camacho as an incurable imbecile and testified that Camacho’s condition was permanent. Dr. Pollock also opined that Camacho “is not capable of living independently.”

Camacho testified at trial regarding the effects of his injury on his ability to work and to engage in daily activities of living. He did not testify about how his injury occurred.

At the conclusion of the trial, the trial court submitted one issue to the jury accompanied by instructions. The court submitted the following instructions pertinent to this appeal:

You are instructed that the Texas Workers’ Compensation Commission Appeals found that the Plaintiff did not sustain an injury to the skull that resulted in incurable imbecility. The party dissatisfied with the decision of the Appeals Panel may file suit in District Court for Judicial Review. The decisions of the Texas Workers’ Compensation Commission are to be given no special weight. You, as jurors, decide the weight and credibility of the evidence submitted before you. The jury returned its verdict, finding that Camacho “sustained an injury to his skull that resulted in incurable imbecility.” Subsequently, the trial court awarded Camacho lifetime income benefits in accordance with the jury’s verdict.

 

SKULL INJURY ISSUE

Liberty Mutual contends that Camacho failed to present legally sufficient evidence establishing that he suffered a skull injury. Although at trial it challenged whether Camacho’s injury caused his imbecility, on appeal, Liberty Mutual does not challenge that aspect of the jury’s finding. Rather, Liberty Mutual argues that the lifetime benefits provision required Camacho to prove an injury to the bones of his skull in order to recover lifetime benefits. The statutory language in effect at the time of Camacho’s injury provided, in pertinent part:

(a) Income benefits shall be paid until the death of the employee for:

. . . .

 

(6) an injury to the skull resulting in incurable insanity or imbecility.

 

Act of Dec. 12, 1989, 71st Leg., 2d C.S., ch. 1 § 4.31, 1989 Tex. Gen. Laws 42 (amended 1997) (current version at Tex. Lab. Code Ann. § 408.161(6) (Vernon 2006)).

Liberty Mutual contends that an injury to the “skull” is an absolute requirement under the version of the statute at issue, and that a brain or head injury, without a skull injury, is insufficient. (1) In support of its argument, Liberty Mutual cites Barchus v. State Farm Fire & Casualty Co., 167 S.W.3d 575 (Tex. App.-Houston [14th Dist.] 2005, pet. denied), and asserts that the Fourteenth Court of Appeals decided that the statute at issue requires an injury to the skull. However, in Barchus, the trial court’s finding that Barchus had sustained an injury to his skull was not challenged on appeal. Id. at 580. Rather, the issue addressed was whether the Compensation Act required the claimant to prove that his skull had been fractured in order to receive lifetime income benefits. See id. In contrast, the case before us requires that we interpret the statute’s meaning in its use of the term “skull” in order to determine whether a blow to the head, which results in imbecility, fulfills the requirements of the statute.

Standard of Review

The jury found that Camacho sustained an injury to his skull that resulted in incurable imbecility. Because Camacho’s claim was denied at the administrative level, Camacho had the burden to prove by a preponderance of the evidence that he sustained an injury to his skull. Tex. Lab. Code Ann. § 410.303 (Vernon 2006). In reviewing a jury verdict for legal sufficiency, we consider all of the evidence in the light most favorable to the prevailing party, “crediting favorable evidence if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not.” City of Keller v. Wilson, 168 S.W.3d 802, 807 (Tex. 2005); Associated Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 285-86 (Tex. 1998). Thus, on this record we must credit favorable evidence for Camacho if reasonable jurors could, and disregard evidence contrary to the jury’s finding that Camacho suffered a skull injury, unless reasonable jurors could not.

Statutory Construction

To resolve this appeal, we must determine whether a severe blow to the head causing bruising and a concussion that renders an employee an imbecile constitutes a skull injury for purposes of the lifetime benefits provision of the Workers’ Compensation Act. See Act of Dec. 12, 1989, 71st Leg., 2d C.S., ch. 1 § 4.31, 1989 Tex. Gen. Laws 42 (amended 1997). The Act has never defined the term “skull.” See id.; see also Tex. Lab. Code Ann. § 401.011(Vernon 2006).

A court’s objective in construing a statute is to “determine and give effect to the Legislature’s intent.” Nat’l Liab. & Fire Ins. Co. v. Allen, 15 S.W.3d 525, 527 (Tex. 2000). When the meaning of a word in a statute is not ambiguous, we ordinarily give the word its common meaning. Id.; Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 865 (Tex. 1999). In ascertaining legislative intent, our review is not confined to isolated words, phrases, or clauses; rather, we examine the entire act. Meritor Auto., Inc. v. Ruan Leasing Co., 44 S.W.3d 86, 90 (Tex. 2001); see Tex. Gov’t Code Ann. § 311.011(a) (Vernon 2005) (instructing courts to construe words and phrases in context).

The Code Construction Act lists factors that may be considered in construing a statute, whether or not the statute is ambiguous on its face. Tex. Gov’t Code Ann. § 311.023 (Vernon 2005). These factors include, among other things, (1) the statute’s objectives; (2) the circumstances under which the statute was enacted; (3) the statute’s legislative history; (4) common law, former law, and similar provisions; (5) the consequences of the statutory construction; and (6) administrative construction of the statute. Id. § 311.023(1)-(6); In re Canales, 52 S.W.3d 698, 702 (Tex. 2001). We also presume that the Legislature intended a just and reasonable result. Tex. Gov’t Code Ann. § 311.021(3) (Vernon 2005); Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 493 (Tex. 2001).

Commonly used dictionaries assist in determining a word’s common use. See generally Powell v. Stover, 165 S.W.3d 322, 326 (Tex. 2005); Tex. Dep’t of Protective & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d 170, 196 (Tex. 2004). One dictionary defines “skull” to mean:

1 a: the skeleton of the head of a vertebrate : the bony or cartilaginous case or framework that encloses and protects the brain and chief sense organs, supports the jaws, . . . and consists of the cranium, the bony capsules of the nose, ear, and eye, and the jaws b: the cranium together with those bones that are immovably fused with it (as the mammalian upper jaw) 2 : the seat of understanding or intelligence : MIND . . . .

Webster’s Third New International Dictionary 2135 (2002). In construing a statute, we are also required to examine the context of the statute and the Legislature’s intent. The context of the statute at issue does not limit itself to injuries to the bones of the skull; in fact, an injury to the bones of the skull that did not result in imbecility would not result in the award of lifetime income benefits. Thus, the statute appears to be triggered by two events: a blow to the head and an injury to the brain that results in imbecility or insanity. Thus, the context of the statute supports defining the term “skull” in a manner that includes a blow to the head that causes imbecility.

“The primary purpose of the Texas Workers’ Compensation Act is to benefit and protect injured employees.” Barchus, 167 S.W.3d at 578. If we accepted Liberty Mutual’s contention regarding the meaning of the word “skull,” imbeciles receiving a fracture or bone bruise would receive lifetime benefits, while imbeciles whose skulls had been harmed by a blow but who had no demonstrable bone injury would not. Since the purpose of the statute is to benefit and protect injured workers, and because both of these classes suffer from severe, permanent, and disabling injuries, it appears more consistent with the purposes of the Act to apply the broader definition of the term “skull” to allow the recovery of lifetime benefits to both classes of injured employees. “It is well settled that the Workers’ Compensation Act should be liberally construed in favor of the worker.” Lujan v. Houston Gen. Ins. Co., 756 S.W.2d 295, 297 (Tex. 1988) (citing Hargrove v. Trinity Universal Ins. Co., 152 Tex. 243, 245, 256 S.W.2d 73, 75 (1953)). Construing the term “skull” to require an injury to the bones of the skull, as opposed to an injury to “the seat of understanding,” would not protect workers who receive severe blows to the head but who do not suffer a skull fracture or other identifiable injury to the bones of the skull.

Liberty Mutual argues that we should utilize the more narrow definition of the term “skull” used by the Texas Workers’ Compensation Commission. While we generally consider an administrative agency’s interpretation of a term, it is not binding and carries no presumption of validity. Barchus, 167 S.W.3d at 578. The Barchus court stated: “To the extent the Commission has concluded that a claimant must show evidence that he fractured his skull to be entitled to [lifetime income benefits], we find that such conclusion is inconsistent with the plain language of the statute.” Id. at 580. We agree that adopting a narrow definition of “skull injury” that would require evidence of skeletal damage is inconsistent with the Legislature’s intent to compensate for life severely injured employees who are injured directly by a blow to their head. See id.

Finally, we note that the lifetime benefits provision at issue requires proof of an “injury” to the skull. Act of Dec. 12, 1989, 71st Leg., 2d C.S., ch. 1 § 4.31, 1989 Tex. Gen. Laws 42 (amended 1997). The term “injury” was broadly defined as “damage or harm to the physical structure of the body and those diseases or infections naturally resulting from the damage or harm.” Id., 1989 Tex. Gen. Laws 3 (see current version at Tex. Lab. Code Ann. § 401.011(26) (Vernon 2006) wherein the term is similarly defined). In this case, it was not disputed that Camacho suffered a closed head injury. A blow to the head that causes bruising and unconsciousness and results in a diagnosis of a closed head injury is, in our opinion, sufficient harm to the skull to meet this statute’s requirement of a skull injury. Therefore, we overrule Liberty Mutual’s legal sufficiency challenge to the jury’s finding that Camacho sustained a skull injury. Issue one is overruled.

JURY INSTRUCTION

In issue three, Liberty Mutual asserts that the trial judge improperly instructed the jury to “give no special weight” to the decision of the Texas Workers’ Compensation Commission. Camacho responds that the trial court’s instruction “was a correct statement of the law.” We review whether a trial court erred in giving a jury instruction under an abuse of discretion standard. Tex. Dep’t of Human Servs. v. E.B., 802 S.W.2d 647, 649 (Tex. 1990).

In jury trials, the Workers’ Compensation Act requires the trial court to inform the jury “of the appeals panel decision on each disputed issue . . . that is submitted to the jury.” Tex. Lab. Code Ann. § 410.304(a) (Vernon 2006). Following the Legislature’s enactment of the Act, the Texas Supreme Court in Texas Workers’ Compensation Commission v. Garcia, 893 S.W.2d 504, 528 (Tex. 1995), rejected a challenge to the constitutionality of this particular provision of the Act. The Supreme Court stated:

 

The Act does specify certain limiting procedures not found in a pure trial de novo. First, the jury is informed of the Commission’s decision. Because the jury is not required to accord that decision any particular weight, however, this procedure does not impinge on the jury’s discretion in deciding the relevant factual issues. We hold that this procedure does not violate a claimant’s right to trial by jury.

Id. The Supreme Court stated that the jury is not required to give the decision any “particular weight;” however, the Court did not affirmatively direct that juries are to give appeals-panel decisions “no special weight.” Id. Further, the Supreme Court did not direct trial courts to give an instruction to the jury regarding the weight, or lack thereof, of the appeals-panel’s decision. Id.

The Supreme Court’s language in Garcia suggests that a juror is free to give the appeals-panel decision no weight, some weight, or significant weight, depending on that particular juror’s view of the evidence. See id. Although the jury is not bound to follow the appeals-panel decision, it may give it weight if it so chooses. In this case, however, by affirmatively instructing the jury to give the decision “no special weight,” the jurors were instructed to all but disregard the decision of the appeals-panel. There is a material difference between an instruction that leaves the jury free to accord the decision of the appeals-panel the weight the jury thinks it deserves, and an instruction that tells the jury to discount, if not disregard, the decision. Lemos v. Montez, 680 S.W.2d 798, 801 (Tex. 1984) (“There is a material difference between an instruction that the happening ‘is not’ negligence and an instruction that the happening ‘does not necessarily imply’ negligence.”). “The jury does not need either instruction. This court has treated addenda to the charge as impermissible comments that tilt or nudge the jury one way or the other.” Id.

An instruction by a trial court that misstates the law or misleads the jury is improper. Steak & Ale of Tex., Inc. v. Borneman, 62 S.W.3d 898, 905 (Tex. App.-Fort Worth 2001, no pet.) (citing Jackson v. Fontaine’s Clinics, Inc., 499 S.W.2d 87, 90 (Tex. 1973)). “A requested instruction that is affirmatively incorrect is not ‘substantially correct’ as that term is used in Rule 278’s requirement that proposed questions and instructions be substantially correct.” Baylor Univ. v. Coley, 50 Tex. Sup. Ct. J. 621, 2007 WL 1162489, at *7 (Tex. April 20, 2007) (Johnson, J., concurring). Moreover, the Rules of Civil Procedure prohibit the trial court from making a “comment directly on the weight of the evidence” in its jury charge. See Tex. R. Civ. P. 277.

In some instances, it is error for the trial court to give the jury an instruction even when it is a substantially correct statement of the law. For example, in Acord v. General Motors Corporation, 669 S.W.2d 111 (Tex. 1984), the Supreme Court reversed a jury verdict based on charge error when the trial court instructed the jury that a manufacturer is not an insurer of the product it designs. 669 S.W.2d at 113, 116. Although the instruction was a correct statement of law, the Supreme Court found harmful error and said: “In a closely contested case as is the one at bar, to single out for the jury that General Motors was neither an insurer nor a guarantor of a perfect or accident-proof product, which incorporated ultimate safety features, was a comment on the case as a whole. As such, it constituted harmful error.” Id. at 116.

We hold that the instruction submitted by the trial court in this case constituted an impermissible comment that tilted or nudged the jury’s consideration of the decision of the appeals-panel. The instruction to the jury singled out one piece of evidence admitted at trial, and implied that the jury should treat the appeals-panel decision differently than it was to treat the other evidence admitted at trial; in that way, the instruction served to comment on the case as a whole. We further hold that the instruction the trial court submitted was not a substantially correct statement of law. For these two reasons, we conclude the trial court erred in instructing the jury to give the appeals-panel decision “no special weight.”

HARM

In cases involving an incorrect jury instruction, an appeals court reverses only if the instruction “‘was reasonably calculated to and probably did cause the rendition of an improper judgment.'” Bed, Bath & Beyond, Inc. v. Urista, 211 S.W.3d 753, 757 (Tex. 2006) (quoting Reinhart v. Young, 906 S.W.2d 471, 473 (Tex. 1995)). We examine the entire record to evaluate whether the instruction probably caused the rendition of an improper verdict. Id.

The appeals-panel decision involved both the issue of Camacho’s injury and the issue of his imbecility. The issue at trial regarding Camacho’s imbecility was closely contested. Dr. Garrison testified that Camacho was not an imbecile. The jury also heard Dr. Pollock’s testimony that Camacho’s testing showed that he functioned below a first grade level and that he had an IQ score in the upper 60’s. Dr. Pollock additionally testified that Camacho was not capable of independent living because of his severe cognitive impairment and that he functioned at an imbecilic level. However, Dr. Pollock acknowledged that the records of another neuropsychologist contained a contrary opinion that Camacho did not suffer from incurable imbecility. Liberty Mutual’s evidence also included a letter from Dr. Francisco Perez, a neuropsychologist. Dr. Perez’s letter states, “I don’t believe there is any evidence of a cerebral dysfunction or any sequela from a head injury.” The record also contains a report by Dr. Jeremiah Twomey, who practices occupational medicine, in which he opined, “I do not feel that the records I reviewed qualify him for lifetime benefits on the basis of psychological impairment to the level of imbecility.” Finally, the report of Dr. John Cassidy, a psychiatrist, states: “This patient does not meet [the] criteria of statute 408.161 (a) (6) of the TWCC Act for incurable insanity or imbecility.”

Camacho also addressed his physical limitations during his testimony at trial. Camacho testified that he continued to drive on the ranch, but not in the city, and that he could no longer train horses. Camacho indicated that he could bathe and dress himself, saddle and water horses, sometimes feed the cattle, load light things, participate in moving cattle from one pen to another, and assist in taking cattle to auctions.

The trial court instructed the jury that an imbecile was “a mentally deficient person, especially a feebleminded person having a mental age of three to seven years and requiring supervision in the performance of routine daily tasks or caring for himself.” From the above discussion, it is apparent that the evidence on whether Camacho functioned as an imbecile conflicted.

The purpose of instructing the jury on the decision of the appeals-panel distinguishes it from cases when courts have found general instructions to the jury improper, but nevertheless, harmless. See generally Urista, 211 S.W.3d at 756 (harmless error rule applied to improper submission of unavoidable accident instruction). In this case, the instruction regards a specific piece of evidence: the appeals-panel decision. Because the instruction applies to specific evidence, there is a danger that the jury may infer from the instruction given here, that the trial judge disagrees with the appeals-panel’s resolution of the dispute. Also, the instruction in Urista was a substantially correct statement of law; here, the instruction is not substantially correct. Finally, under Urista’s facts, it was unclear whether the instruction caused the jury to find as it did. See id. at 758. Here, the jury rejected Liberty Mutual’s case that was supported by evidence from several physicians while accepting Camacho’s case that relied on the testimony of one expert witness who was not a physician.

In conclusion, the jury was entitled to give the decision of the appeals-panel whatever weight it thought the decision deserved. The trial court’s instruction to give the decision “no special weight” was an incorrect statement of the law and served to nudge the jury toward responding affirmatively in deciding whether the injury resulted in incurable imbecility. We hold that the erroneous submission of the instruction at issue probably caused the rendition of an improper verdict.

In issues two, four and five, Liberty Mutual raises additional issues. Because reviewing these issues would afford Liberty Mutual no greater relief than the relief granted herein, we do not address these three issues. See Tex. R. App. P. 47.1. Because the trial judge improperly instructed the jury, we reverse the judgment and remand this cause for the purpose of a new trial.

REVERSED AND REMANDED.

 

____________________________

HOLLIS HORTON

Justice

 

Submitted on March 22, 2007

Opinion Delivered June 21, 2007

Before Gaultney, Kreger, and Horton, JJ.

1. In contrast, since 1997, the compensation statute provides for lifetime benefits for “a physically traumatic injury to the brain resulting in incurable insanity or imbecility.” Tex. Lab. Code Ann. § 408.161 (a)(6) (Vernon 2006).

 

 

 

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas civil litigation and work injury defense attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]

Woe to Those Who Call Evil Good and Good Evil

QUOTES ON LIBERTY AND JUSTICE, TRUTH AND DUTY:

 

” Woe to those who call evil good
and good evil,
who put darkness for light
and light for darkness,
who put bitter for sweet
and sweet for bitter.”

-Isaiah 5:20

 

“The best freedom movement is one that’s devoted to all kinds of freedom — both economic and personal. I would like to see the movement keep its focus on keeping the government small.”

-Katherine Timpf

 

“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

-The Tenth Amendment to the U.S. Constitution

 

“When you think of the long and gloomy history of man, you will find more hideous crimes have been committed in the name of obedience than have ever been committed in the name of rebellion.”

-C.P. Snow

 

“Without the fear of God, men do not even observe justice and charity among themselves.” Institutes of the Christian Religion

-John Calvin 

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas defense attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]