Before we begin this article in an aspect of personal injury law, let us explain that an entity which provides insurance is known as an insurer, insurance company, insurance carrier or underwriter. A person or entity who buys insurance is known as an insured or as a policyholder. As usual, the last couple of years was an engaging time for courts ruling on Texas personal injury law cases. The most significant case was the Texas Supreme Court decision in the United Services Automobile Association Texas Lloyds Companies v. Menchaca, 545 S.W.3d 479 (Tex. 2018). The first opinion was issued on April 7, 2017, but the court withdrew its first opinion, and re-issued a new opinion and judgment on April 13, 2018. The court stated its reasoning for the new opinion was to “fulfill our duty to eliminate confusion regarding the court’s previous decisions addressing insureds’ claims against their insurance companies.” Following the new Menchaca decision, there was a lot of cases reanalyzing holdings in light of Menchaca and prolonging to the lower courts to revisit the relevant issues given the new case law. In addition to Menchaca, a federal district court investigated the new pre-suit notice laws outlined in Texas Insurance Code section 542A.003, and gave attorneys guidance as to how these legal requirements will be enforced. While another court administered that an insurer did have a commitment to defend an insured against claims, she carelessly operated a car, even though her husband, who was excluded from the policy, was driving the car. The Texas Supreme Court adhered that an insurance carrier cannot circumlocutorily recover from an injured party the proceeds which it contractually agreed not to haul into court directly from a third party. And in an underinsured motorist case, the superior court put an end to the contractual and extra-contractual claims, but refused to recede the extra-contractual claims. Extracontractual damages are awarded in “bad faith” claims against insurance companies. They are a form of punitive damages, intended to punish extreme insurer conduct. On appeal, the insured disputed that under the new ruling in the Menchaca reduction of extra-contractual claims. They are no longer required in a UIM, or uninsured motorist, case where the UIM claim is disputed. The court of appeals disagreed, and directed the trial court to diminish the extra-contractual claims.
Using a personal injury attorney, the person sued the automobile liability insurer for settling a car accident claim against him without his permission. Insured, using a personal injury attorney, filed suit in a court alleging fraud, violations of the Chapter 541 of the Insurance Code and violations of Texas Deceptive Trade Practices Consumer Protection Act. Insurer responded with the common response of the no-evidence motions for summary judgment proclaiming that the terms of its insurance policy allowed it to negotiate the claims it found appropriate. There was no evidence it violated the Texas Deceptive Trade Practices Consumer Protection Act, committed fraud, or violated Chapter 541. The court granted insurer’s motion and insured adjured to the county court at law. Insurer again filed its motions for summary judgment and insured responded, alleging, that the insurer was relying on the wrong policy because it was different from the “approved” policy he obtained from the Commissioner of Insurance. The county court granted summary judgment in favor of insurer without specifying whether it was on sanctioned or no-evidence grounds. Insured appealed, arguing the insurer’s summary judgment motion was based on a “fabricated” policy and that was distinguished from an insignificant and unimportant detail. Insurer responded, represented by their personal injury attorney, acknowledging there was a dispute about which policy was in force at the time of the collision, but argued it was entitled to summary judgment.
The court held “although the structure of the language of the policies differed slightly, the language of the relevant portions of the two policies setting out [insurer]’s obligations is nearly identically worded.” Both policies, it held, “seem to impose the same prepossessions and obligations on [insurer]” and did not create a fact issue whether insurer was authorized to settle the claim. Never-the-less, “for the sake of argument,” it reviewed the remaining issues as though the insured’s version of the policy was correct. Insured argued policy language that insurer would pay for damages for which an insured “is legally liable” required it to determine if insured was legally responsible for damages and prohibited it from paying if insured was not. Insurer disagreed, arguing the “legally liable” language required it to pay damages after a court or other ruling body determined its insured was responsible for damages, but that its authority to settle claims was completely separate and allowed it to settle claims “without the need for a legal determination of responsibility to avoid the expense of litigation when it determines that settling is ‘appropriate.’” The court held the insurer’s “construction is consistent with the plain meaning of the provisions requiring [it] to pay when an insured is legally liable for damages and empowering [it] with the discretion to settle suits or claims where appropriate.” After reviewing applicable appellate law and finding insurer’s interpretation consistent, the court found the terms of its policy were not ambiguous and gave the insurer discretion to settle claims without its insured’s consent and without the need for a judicial determination. Martin-De-Nicolas v. AAA Texas County, No. 03-17-00054-CV.
Insured sued underinsured motorist (“UIM”) insurer and its claims handler for breach of contract of the Texas Insurance Code, including failing to attempt in good faith to bring a prompt, fair, and equitable settlement; failing to immediately provide a reasonable explanation of the basis for the insurer’s denial of a claim or offer of a settlement; failing within a reasonable time to affirm or deny coverage of a claim; refusing to pay a claim without conducting a proper investigation; and requiring the insured to file a lawsuit to have the insurer adhere to with its contractual duties. Insurer filed special exceptions, alleging insured’s claim of the “exhaustion doctrine” was not recognized in Texas and her breach of contract claims were premature under the Supreme Court’s decision in Brainard v. Trinity Universal Insurance Co., 216 S.W.3d 809 (Tex. 2006) (insurer under no obligation to pay UIM claim until insured obtains judgment establishing the liability of the other driver). Insured moved to strike. After allowing the insured a chance to amend her petition (which she refused), the trial court sustained the insurer’s special demurrer, denied insured’s motion to strike, and dismissed her claims with animosity.
The court of appeals declared the trial court’s order and holding that, because the insured’s petition did not say she got a judgment against the other driver, “she failed to establish the existence of a duty or obligation” on the insurer and her breach of contract claims were incomplete. The court held the insured’s “exhaustion doctrine” claim—that she was legally entitled to her UIM policy benefits because her settlement drained all policy limits—was in direct conflict with Brainard’s holding that a settlement did not provoke insurer’s contractual duty to pay. “Whatever the virtues of a contrary rule might be, as an intermediate court, we are bound to follow the rule laid down in Brainard unless and until the supreme court reconsiders or revises it.” Weber v. Progressive County, case number 05- 17-00163-CV.
Insured sued his underinsured motorist (UIM) insurer after his friend was injured in a car accident while riding as a passenger in a stolen vehicle. Insurer denied the claim based on an exclusion in its policy that “coverage…will not apply…[t]o bodily injury sustained by you or a family member while using any vehicle, other than a covered auto, without the permission of the owner of said vehicle.” Insured filed enunciatory action asking the court to disregard the exclusion because his friend, as passenger, was not “using” the vehicle. Insurer sought and obtained summary judgment and insured appealed. The court of appeals held the insured’s friend was “using” the vehicle as that term is understood within the context of vehicle insurance policies and that his “status as a passenger, alone, establishes ‘use’ of the vehicle.” It relied on a three-part test out- lined in Mid-Century Insurance Company of Texas versus Lindsey, 997 S.W.2d 153 (Tex. 1999): (1) the collision must have arisen out of the inherent nature of the automobile; (2) it must have arisen within the “territorial limits” of an automobile, and the actual use must not have terminated; and (3) the automobile must produce the injury and not “merely contribute” to it. Having found the insured’s friend fulfilled these three elements for use of the vehicle, the court came to a decision on the judgment of the trial court. Salinas v. Progressive County, case number 07-16-00361. For any questions or concerns on your accident, please contact us anytime. We are personal injury lawyers in Corpus Christi here to provide you assistance on understanding the laws surrounding any injury you have sustained. We look forward to your inquiry.
Seldon, S. E., Seldon, J. D., & Grebe, D. Annual Survey of Texas Law. Retrieved from http://www.jtexconsumerlaw.com/V22N2/V22N2_InsuranceLaw.pdf