Allstate Property and Casualty Insurance Company v. Jose G. Gutierrez ( 2008 )

COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
ALLSTATE PROPERTY AND §
CASUALTY INSURANCE COMPANY, No. 08-06-00247-CV
§
Appellant, Appeal from the
§
v. 34th Judicial District Court
§
of El Paso County, Texas
JOSE G. GUTIERREZ, §
(TC# 2003-4946)
Appellee. §
OPINION
Allstate Property and Casualty Insurance Company (“Allstate”) appeals from the
judgment ordering it to pay Mr. Gutierrez damages in a breach of contract suit for failing to pay a
claim under his uninsured motorist coverage in his policy. We reverse and render that
Mr. Gutierrez take nothing in his suit against Allstate.
On November 14, 1999, Mr. Gutierrez was involved in a three-car accident with
Mr. Alamo and Ms. Velasquez. Mr. Gutierrez was attempting a u-turn on Paisano Street when
the cars struck his van. Mr. Gutierrez subsequently made a claim on his Allstate insurance policy
under his uninsured motorist coverage. Allstate denied his claim stating that there was no
uninsured motorist coverage for accidents where the policyholder is at fault. On November 12,
2003, Mr. Gutierrez brought suit against Allstate for breach of contract for failing to honor his
claim under his uninsured motorist insurance coverage.
During the trial, Allstate introduced evidence through the testimony of Mr. Alamo and
Mr. Robertson, a senior claims representative for Allstate, that Mr. Alamo and Ms. Velasquez
had liability insurance at the time of the accident. Mr. Robertson also stated that Allstate
determined that Mr. Gutierrez was at fault for the accident, and thus was not covered under his
policy for claims involving uninsured motorists.
After the close of evidence, Allstate moved for directed verdict on the basis of the
insurance coverage of the other drivers, which was denied. Allstate argued that the plaintiff only
pled a breach of contract on the basis of his uninsured motorist coverage, not under-insured
coverage, and, in fact, both other drivers had liability insurance. Plaintiff responded that what
was pled was breach of contract whether it be uninsured or under-insured coverage, and the only
reason for the denial was that Allstate felt Mr. Gutierrez was at fault. The court submitted two
questions to the jury on the issues of negligence and damages. The jury found all the drivers
negligent allocating 10 percent to Mr. Gutierrez, 50 percent to Mr. Alamo, and 40 percent to
Ms. Velasquez. The jury awarded Mr. Gutierrez $2,000 for property damage, $10,000 for past
physical pain, and $10,000 for future physical pain.
After the verdict, Allstate moved for entry of judgment based on the evidence of
insurance coverage available to the other drivers and the application of Article 5.06-1(5) of the
Texas Insurance Code.1 Mr. Gutierrez responded that Allstate never pled the other drivers had
insurance or that it was entitled to an offset because of that insurance coverage, and waived the
right to a setoff. Mr. Gutierrez stated that the case was tried as one as to fault, and if he was not
at fault then Allstate was liable. Allstate then filed a motion for leave to amend its pleadings, and
had a hearing. The trial court reserved ruling on the motion to amend, and the same day entered
1
This article was repealed and is now codified in the Texas Insurance Code effective
April 1, 2007. TEX .INS.CODE ANN . § 1952.106 (Vernon pamphlet 2008). We will cite to the
codified section.
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a judgment on the verdict, but reduced the award to Mr. Gutierrez by 10 percent for his
negligence in the accident for a total of $19,800. Appellant raises four issues on appeal: (1)
whether undisputed evidence of liability insurance available to the other negligent drivers in an
accident preclude a breach of contract claim for uninsured motorist coverage; (2) whether the
trial court was required to offset Mr. Gutierrez’s damages with the amounts recoverable from the
liability insurance available to the other drivers; (3) whether the failure of Mr. Gutierrez to
introduce the relevant provisions of his Allstate policy preclude his breach of contract claim; and
(4) whether the trial court abused its discretion by denying Allstate’s motion for leave to amend
its answer.
The Texas Rules of Civil Procedure provide:
If evidence is objected to at the trial on the ground that it is not within the
issues made by the pleading, or if during the trial any defect, fault or omission in a
pleading, either in form or substance, is called to the attention of the court, the
court may allow the pleadings to be amended and shall do so freely when the
presentation of the merits of the action will be subserved thereby and the objecting
party fails to satisfy the court that the allowance of such amendment would
prejudice him in maintaining his action or defense upon the merits. The court
may grant a postponement to enable the objecting party to meet such evidence.
TEX .R.CIV .P. 66.
Review of a denial of a motion for leave to amend pleadings is done under an abuse of
discretion standard. State Bar of Texas v. Kilpatrick, 874 S.W.2d 656, 658 (Tex. 1994). A
reviewing court has no discretion to refuse an amendment unless the opposing party presents
evidence of surprise or prejudice or the amendment asserts a new cause of action or defense, and
thus is prejudicial on its face, and the opposing party objects to the amendment. Greenhalgh v.
Service Lloyds Ins. Co., 787 S.W.2d 938, 939 (Tex. 1990), citing Hardin v. Hardin, 597 S.W.3d
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347, 350-51 (Tex. 1980). The burden of showing prejudice or surprise rests on the party resisting
the amendment. Greenhalgh, 787 S.W.2d at 939. An amendment is mandatory if it is merely
procedural in nature such as conforming the pleadings to the evidence at trial. Stephenson v.
LeBoeuf, 16 S.W.3d 829, 839 (Tex.App.--Houston [14th Dist.] 2000, pet. denied), citing Chapin
& Chapin, Inc. v. Texas Sand & Gravel Co., 844 S.W.2d 664, 665 (Tex. 1992). An amendment
is not mandatory if it changes the nature of the trial. See Chapin, 844 S.W.2d at 665. A
proposed trial amendment that asserts a new cause of action may be prejudicial on its face, but
this does not make it prejudicial as a matter of law. LeBoeuf, 16 S.W.3d at 839. The amendment
must be evaluated in the context of the entire case. Id. To be prejudicial, the amendment must
reshape the nature of the trial, the opposing party could not anticipate it in light of the
development of the case up to the time the amendment was requested, and the opposing party’s
presentation of the case would be detrimentally affected by the filing of the amendment. Id. In
anticipating the amendment, it is not whether the opposing party did anticipate it, but rather
whether it could have been anticipated. Id. It is well established that a party may amend its
pleading after verdict but before judgment. Greenhalgh, 787 S.W.2d at 940.
Appellant filed a motion for leave to amend its pleadings to assert the affirmative defense
of offset under Article 5.06-1(5) of the Texas Insurance Code and under Rule 93(15) of the Texas
Rules of Civil Procedure that Mr. Gutierrez did not perform all conditions precedent as required
by the policy. At the hearing, the trial court reserved ruling on the motion, but that same day
rendered judgment against Allstate. In doing so, the court implicitly denied Allstate’s motion for
leave to amend. TEX .R.APP .P. 33.1(a)(2)(A).
In this case, the amendment would conform the defendant’s pleadings to the evidence
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presented at trial. During the trial, Mr. Alamo testified that he had a liability insurance policy
with Progressive at the time of the accident. The policy was for the minimum amount required
by law. Ms. Velasquez stated that her mother had full coverage on the car through a policy with
Allstate. Mr. Robertson testified that Ms. Velasquez was covered under her mother’s insurance
policy with Allstate. The insurance policy provided $20,000 per person for bodily injury up to
$40,000 per occurrence, $15,000 of coverage for property damage, collision, and comprehensive
insurance along with uninsured and under-insured coverage for bodily injury and vehicle
damage. Mr. Robertson also stated that the minimum requirement for insurance coverage in
1999 was the same as it is today, $20,000 per person for bodily injury with a $40,000 limit per
occurrence and $15,000 for property damage. Mr. Gutierrez made no objections during the
presentation of this evidence.
The amendment would assert a new defense for Allstate, but in looking at the context in
which it was raised, the amendment should have been allowed. It did not reshape the nature of
the trial. No new facts would need to be introduced into evidence. The amendment would not
have affected the presentation of Mr. Gutierrez’s case. His claim for breach of contract would
not be changed by allowing the amendment.
Mr. Gutierrez brought suit for breach of contract for denying coverage under his
uninsured motorist clause. In an uninsured insurance claim there is no right to offset; only in an
under-insured situation is there a right to offset. TEX .INS.CODE ANN . §§ 1952.101 - 1952.106
(Vernon pamphlet 2008). An under-insured claim was never mentioned until the hearing on the
motion for directed verdict. Until that time, there was no reason for Allstate to plead an offset
since it was not applicable to an uninsured claim. The trial court abuses its discretion in refusing
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to permit the filing of a trial amendment so as to conform the pleadings to the evidence
previously introduced without objection. See American Produce & Vegetable Co. v. J.D.
Campisi’s Italian Restaurant, 533 S.W.2d 380, 386 (Tex.Civ.App.--Tyler 1976, writ ref’d n.r.e.).
Mr. Gutierrez could have anticipated an offset claim when evidence of the insurance policies for
the other drivers in the accident was introduced. It is difficult to see how the claim for offset
would have changed the nature of the trial. Mr. Gutierrez did not provide evidence of how he
would be prejudiced by the amendment.
If issues are tried by implied consent, the filing of trial amendments should be freely
permitted. Shaw v. Tyler Bank & Trust Co., 285 S.W.2d 782, 790 (Tex.Civ.App.--Texarkana
1956, writ ref’d n.r.e.). Where there is no specific pleading, but testimony is given without
objection, the issue is triable under the Rules of Civil Procedure on the ground of implied
consent. Id. The issue was tried by consent since there were no objections to the evidence. The
trial court should have allowed Allstate to amend its pleadings. We sustain Appellant’s fourth
issue.
In its second issue, Appellant contends that the court was required to offset
Mr. Gutierrez’s damages with the amounts recoverable from the liability insurance available to
Mr. Alamo and Ms. Velasquez. During the hearing on the motion for directed verdict, Allstate
argued that it should have judgment entered in its favor since the evidence showed that the
drivers were not uninsured if anything they were only under-insured. Mr. Gutierrez responded
that the suit was for breach of contract whether it be uninsured or under-insured. An insured’s
right to under-insured motorist benefits does not arise until the issue of fault and damages
exceeding the negligent party’s policy limits are established. Henson v. So. Farm Bureau
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Casualty Ins. Co., 17 S.W.3d 652, 654 (Tex. 2000). Recovery from under-insured motorist
coverage may be had only for damages sustained in an amount in excess of the total amount of
the tortfeasor’s liability coverage. Olivas v. State Farm Mutual Automobile Ins. Co., 850 S.W.2d
564, 565 (Tex.App.--El Paso 1993, writ denied). Benefits under an under-insured motorist
policy are the actual damages less the amount recovered or recoverable from the negligent party.
Stracener v. United Svcs. Auto. Ass’n, 777 S.W.2d 378, 380 (Tex. 1989). Having held that the
court should have allowed the trial amendment for leave to amend the pleadings, Allstate was
entitled to have the damages reduced by the amount of insurance recoverable from the liable
drivers. TEX .INS.CODE ANN . § 1952.106. We sustain Appellant’s second issue. We decline to
reach the remainder of Appellant’s issues since sustaining Issues Two and Four are dispositive.
Accordingly, we reverse and render judgment that Mr. Gutierrez take nothing in his suit
against Allstate.
October 2, 2008
DAVID WELLINGTON CHEW, Chief Justice
Before Chew, C.J., McClure, and Carr, JJ.
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