national-american-insurance-company-texas-department-of-insurance-division ( 2013 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-09-00680-CV
National American Insurance Company; Texas Department of Insurance, Division of
Workers’ Compensation; Rod Borderlon, in his Official Capacity as Commissioner of the
Division of Workers’ Compensation; and the Subsequent Injury Fund, Appellants
v.
Texas Property and Casualty Insurance Guaranty Association for Paula Insurance
Company, an impaired carrier, Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 53RD JUDICIAL DISTRICT
NO. D-1-GN-08-002865, HONORABLE MARGARET A. COOPER, JUDGE PRESIDING
MEMORANDUM OPINION
National American Insurance Company (NAIC); the Texas Department of Insurance,
Workers’ Compensation Division (the Division); Rod Borderlon, in his official capacity as
Commissioner of the Division of Workers’ Compensation; and the Subsequent Injury Fund (SIF)
appeal the trial court’s summary judgment that appellee Texas Property and Casualty Insurance
Guaranty Association is not obligated to reimburse NAIC for workers’ compensation benefits NAIC
paid on behalf of two injured workers. In a declaratory judgment action brought by the Guaranty
Association, the trial court granted the Guaranty Association’s motion for summary judgment and
denied NAIC’s cross motion. In four issues, appellants argue that (i) the Guaranty Association’s
action is an improper collateral attack on a prior judgment, (ii) NAIC’s claim for reimbursement is
covered by the Property and Casualty Insurance Guaranty Act (the Guaranty Act),1 (iii) because
NAIC’s claim is covered by the Guaranty Act, the Guaranty Association is obligated to reimburse
NAIC, and NAIC was entitled to summary judgment as a matter of law, and (iv) the trial court erred
in granting summary judgment on a claim not asserted in the Guaranty Association’s motion. For
the reasons that follow, we affirm the trial court’s judgment.
FACTUAL AND PROCEDURAL BACKGROUND
In 2000, two workers were injured while in the course and scope of their employment.
Both workers filed workers’ compensation claims, and a dispute arose as to which of two companies
employed them and therefore which of two insurers was obligated to pay workers’ compensation
benefits, NAIC or Paula Insurance Company. See Tex. Lab. Code § 406.031(a)(2) (employer liable
for compensation for employee’s injury without regard to fault if injury arises out of and in course
and scope of employment). NAIC and Paula submitted the dispute to the Texas Workers’
Compensation Commission.2 Following two interlocutory orders requiring NAIC to pay temporary
benefits to one of the workers, the commission held a benefit contested case hearing. See id.
§§ 410.151–.169. The hearing officer found that the workers were employed by the business insured
by NAIC and ordered NAIC to pay income and medical benefits to both workers. NAIC appealed
1
See Act of May 25, 1971, 62nd Leg., R.S., ch. 360, § 1, 1971 Tex. Gen. Laws 1362, 1372,
repealed by Act of May 24, 2005, 79th Leg., R.S., ch. 727, §18(a)(6), 2005 Tex. Gen. Laws 1752,
2187 (formerly codified at Tex. Ins. Code art. 21.28-C).
2
The Texas Workers’ Compensation Commission was abolished on September 1, 2005, and
its functions were assumed by the Texas Department of Insurance, Division of Workers’
Compensation. See Tex. Lab. Code § 402.001.
2
to the commission’s appeals panel, see id. §§ 410.201–.208, which rendered a final decision
affirming the hearing examiner’s decision. See id. §§ 410.203–.204.
NAIC sued Paula in McLennan County district court seeking judicial review of the
commission’s decision. See id. §§ 410.251–.258. While the suit was pending, the Texas
Commissioner of Insurance declared Paula an impaired carrier.3 As a result, the Guaranty
Association became required to pay the covered claims and discharge the policy obligations of
Paula. See Former Tex. Ins. Code art. 21.28-C § 8. The Guaranty Association intervened in
NAIC’s suit against Paula Insurance, declaring that it was the real party in interest and obtaining
removal to Travis County by agreement. See id. art. 21.28-C § 10(g) (venue in suit against
Guaranty Association mandatory in Travis County).
Following a jury trial, the district court rendered judgment on the verdict in favor
of NAIC (the prior judgment), reversing the decision of the commission appeals panel and ordering
that the Guaranty Association “is liable for all workers’ compensation benefits for [the two workers]
pursuant to the provisions of the Texas Labor Code” and that NAIC “is discharged of any liability
to [the two workers] for workers’ compensation benefits.” The Guaranty Association appealed to
this Court, which affirmed the trial court’s judgment. See Texas Prop. & Cas. Guar. Ass’n v.
3
Under the Guaranty Act, an insurer is impaired if it has been either (1) placed in
receivership by order of a court of competent jurisdiction based on a finding of insolvency and
designated impaired by the commissioner of insurance or (2) designated impaired and placed in
conservatorship by the commissioner of insurance. See Former Tex. Ins. Code art. 21.28-C, § 5(9).
Although the Guaranty Act was re-codified in 2007 at Texas Insurance Code §§ 462.001– .351, the
version of the statute in effect when the carrier became impaired applies to claims under policies
issued by the impaired carrier. See Latter v. Autry, 853 S.W.2d 836, 836 n.1 (Tex. App.—Austin
1993, no writ). For ease of reference, we refer to the Guaranty Act as Former Tex. Ins. Code
art. 21.28-C, the version which was in effect in June 2002 when Paula became an impaired insurer.
3
National Am. Ins. Co., 208 S.W.3d 523 (Tex. App.—Austin 2006, pet. denied). The Guaranty
Association appealed to the supreme court, which denied petition for review. See Texas Prop. &
Cas. Guar. Ass’n v. National Am. Ins. Co., No. 06-0391, 2007 Tex. LEXIS 1107, at *1 (Tex. Dec.
14, 2007) (decision without published opinion). This court issued mandate affirming the trial
court’s judgment on May 30, 2008.4
In May and July 2008, citing section 410.033 of the Texas Labor Code, NAIC made
written requests to the Guaranty Association for reimbursement for income and medical benefits
NAIC had paid from the date of the commission’s first interlocutory order through the conclusion
of the appellate process. See Tex. Lab. Code § 410.033. The Guaranty Association refused to
reimburse NAIC and filed this action for declaratory relief seeking a declaration that it is not liable
to reimburse NAIC for any amounts that NAIC paid in workers’ compensation benefits for the two
workers. The Guaranty Association named appellants as parties having or claiming an interest in
the action.5 See Tex. Civ. Prac. & Rem. Code § 37.006(a). NAIC filed a counterclaim against the
Guaranty Association and cross-claims against Borderlon’s predecessor as Commissioner of
Insurance, Workers’ Compensation Division and John Casseb as administrator of SIF for
reimbursement of workers’ compensation benefits paid to the two workers.
4
Available at http://www.3rdcoa.courts.state.tx.us/opinions/event.asp?EventID=361660.
5
Initially, the Guaranty Association named Albert Betts as a party in his official capacity as
Commissioner of Insurance, Workers’ Compensation Division. Betts subsequently left his position
and was succeeded by appellant Rod Borderlon. In addition, the Guaranty Association named as
parties having or claiming an interest Mike Geeslin, in his official capacity as Commissioner of
Insurance, and John Casseb, in his official capacity as Administrator of the Subsequent Injury Fund.
Geeslin was subsequently dismissed pursuant to a plea to the jurisdiction. Casseb was never served.
4
The Guaranty Association filed a motion for summary judgment based on provisions
of the Labor and Insurance Codes. The Guaranty Association contended that section 410.033 of
the Labor Code does not require it to reimburse NAIC because the Guaranty Association is not an
insurance carrier, NAIC’s request is not a “covered claim” under the Guaranty Act, and there was
no interlocutory order under section 410.033. See Tex. Lab. Code § 410.033; Former Tex. Ins.
Code art. 21.28-C, § 5(8). NAIC filed a cross motion, conceding that the Guaranty Association is
not an insurance carrier, but joining issue on the remainder of Guaranty Association’s grounds for
summary judgment and arguing alternatively that SIF is liable to reimburse NAIC. The trial court
granted the Guaranty Association’s motion, denied NAIC’s motion, and entered an order declaring
that the Guaranty Association “is not liable to reimburse N[AIC] for any amounts that N[AIC] paid
in workers’ compensation benefits for” the two workers. The trial court then severed Guaranty
Association’s claim for declaratory relief from NAIC’s cross-claims, allowing the summary
judgment order to become final. This appeal followed.
ANALYSIS
Collateral Attack
In their first issue, appellants contend that the trial court lacked jurisdiction to hear
the Guaranty Association’s action because it is an impermissible collateral attack on the prior
judgment. Whether a court has subject matter jurisdiction is question of law which we review
de novo. Texas Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). “A
collateral attack is an attempt to avoid the binding force of a judgment in a proceeding not instituted
5
for the purpose of correcting, modifying, or vacating the judgment, but in order to obtain some
specific relief which the judgment currently stands as a bar against.” Browning v. Prostok,
165 S.W.3d 336, 346 (Tex. 2005). A suit need not seek to void a prior judgment to constitute a
collateral attack. See Rapid Settlements, Ltd. v. SSC Settlements, LLC, 251 S.W.3d 129, 140 (Tex.
App.—Tyler 2008, orig. proceeding). Even if an action has an independent purpose and
contemplates some other relief, it is a collateral attack if it necessarily overrules a previous
judgment in some fashion. Browning, 165 S.W.3d at 345 (citing Miller v. Meinhard-Commercial
Corp., 462 F.2d 358, 360 (5th Cir. 1972)). Collateral attacks on judgments are generally disallowed
because it is the policy of the law to give finality to the judgments of the courts. Id.
The Guaranty Association’s action sought declaratory relief. The purpose of a
declaratory judgment action is “to settle and afford relief from uncertainty and insecurity with
respect to rights, status, and other legal relations[.]” Tex. Civ. Prac. & Rem. Code § 37.002(b).
The declaratory judgment act does not confer jurisdiction; rather it makes available the remedy of
a declaratory judgment for a cause of action already within the court’s jurisdiction. Tex. Natural
Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 855 (Tex. 2002); Martin v. Dosohs I, Ltd.,
2 S.W.3d 350, 353 (Tex. App.—San Antonio 1999, pet. denied). A declaratory judgment action
is proper only if a justiciable controversy exists as to the rights and status of the parties
and the controversy will be resolved by the declaration sought. Bonham State Bank v. Beadle,
907 S.W.2d 465, 467 (Tex. 1995).
Although one Texas appellate court has disagreed, see Beadle v. Bonham State Bank,
880 S.W.2d 160, 162 (Tex. App.—Texarkana 1994), aff’d in part and rev’d in part on other
6
grounds, 907 S.W.2d 465 (Tex. 1995), the majority of Texas courts hold that declaratory relief is
not available for the interpretation of a prior judgment. See Martin, 2 S.W.3d at 353; Texas Dep’t
of Ins., Div. of Workers’ Comp. v. Insurance Co. of State of Pa., 306 S.W.3d 897, 904 (Tex.
App.—Austin 2010, no pet) (Puryear, J., dissenting) (reviewing cases holding declaratory relief
inappropriate vehicle for interpreting prior judgments). Thus, if the Guaranty Association’s action
for declaratory relief attempts to avoid or requires us to interpret or modify the prior judgment, it
is an impermissible collateral attack, and the trial court lacked subject matter jurisdiction. See
Goldberg v. Commission for Lawyer Discipline, 265 S.W.3d 568, 577 (Tex. App.—Houston [1st
Dist.] 2008, pet. denied); Martin, 2 S.W.3d at 353.
In its petition for declaratory judgment, the Guaranty Association did not expressly
seek to void or clarify its rights under the prior judgment. It asked the court to declare its rights and
status under certain statutory provisions and declare that it is not required to reimburse NAIC for
benefits paid to the two workers. The Guaranty Association maintains that the issue of its
obligation to reimburse NAIC is separate from its obligation to pay benefits to the two injured
workers and that since the prior judgment did not address reimbursement, this action does not seek
to interpret or modify the prior judgment and does not constitute a collateral attack. Appellants
contend that the Guaranty Association’s request for a declaratory relief is, in essence, a collateral
attack because the issue of reimbursement was decided by the prior judgment holding the Guaranty
Association liable for “all benefits” for the workers and its declaratory judgment action is an effort
to avoid or have this Court modify that holding.
7
The concept that a trial court lacks subject matter jurisdiction to entertain declaratory
judgment actions to interpret or modify a prior judgment “is based on three related and overlapping
principles.” Insurance Co. of State of Pa., 306 S.W.3d at 902. First, the declaratory judgment act
does not include “judgments” among the instruments that courts may construe. See Tex. Civ. Prac.
& Rem. Code § 37.004(a); Insurance Co. of State of Pa., 306 S.W.3d at 902; Speaker v. Lawler,
463 S.W.2d 741, 742 (Tex. Civ. App.—Beaumont 1971, writ ref’d n.r.e.). Second, there is no
justiciable controversy because the underlying controversy has already been resolved. Insurance
Co. of State of Pa., 306 S.W.3d at 902; see also Martin, 2 S.W.3d at 353–55. Third, seeking an
interpretation or modification of a prior judgment, even without asking for its invalidation, if
permitted, would allow litigants to circumvent the procedural limitations on direct and collateral
attacks. Bonham, 907 S.W.2d at 468; Insurance Co. of State of Pa., 306 S.W.3d at 902.
These principles are not implicated here. The justiciable controversy underlying the
prior judgment was which of the two carriers, NAIC or the Guaranty Association for Paula
Insurance, was liable for workers’ compensation benefits for the two injured workers as the
insurer of the workers’ employer. See Tex. Lab. Code § 406.031(a)(2); National Am. Ins. Co.,
208 S.W.3d at 523. In contrast, the controversy underlying the Guaranty Association’s declaratory
judgment action concerns NAIC’s rights vis-a-vis the Guaranty Association under section 410.033
of the Labor Code and the Guaranty Act. The declaratory judgment action regarding reimbursement
thus involves the existence of a statutory right that is distinct from the duty of an employer’s insurer
to pay benefits, the issue determined by the prior judgment. See Insurance Co. of State of Pa.,
306 S.W.3d at 903. Further, the Guaranty Association’s request for declaratory relief does not seek
8
an impermissible interpretation of the prior judgment. Whether the Guaranty Association is liable
to reimburse NAIC for benefits it has paid depends on interpretation of section 410.033 of the Labor
Code and the Guaranty Act, not on construction of the prior judgment. See id.
On the record before us, we conclude that the Guaranty Association’s action for
declaratory relief involves a separate and distinct issue from that decided by the prior judgment,
implicating different statutory provisions, see id., and thus does not attempt to avoid the binding
force of, or seek relief barred by, the prior judgment. See Browning, 165 S.W.3d at 345–46. Nor
does the Guaranty Association’s request seek to relitigate the merits of the controversy already
decided by the prior judgment, see Wagner v. D’Lorm, 315 S.W.3d 188, 195 (Tex. App.—Austin
2010, no pet.); Rapid Settlements, 251 S.W.3d at 140, or require us to interpret, modify, or overrule
in any fashion the prior judgment. See Browning, 165 S.W.3d at 345; Insurance Co. of State of Pa.,
306 S.W.3d at 903. We therefore further conclude that the Guaranty Association’s action for
declaratory judgment does not constitute an impermissible collateral attack. See Browning,
165 S.W.3d at 345–46; Wagner, 315 S.W.3d at 195; Insurance Co. of State of Pa., 306 S.W.3d
at 903.
Jurisdiction over Reimbursement Claim
In their first issue, appellants also contend that the trial court lacked jurisdiction
because the Division has exclusive jurisdiction to determine the issue of reimbursement. Whether
an agency has exclusive jurisdiction depends upon statutory interpretation and is a question of law
which we review de novo. In re Entergy Corp., 142 S.W.3d 316, 321–22 (Tex. 2004); Subaru of
Am., Inc. v. David McDavid Nissan, Inc. 84 S.W.3d 212, 221 (Tex. 2002). An administrative
9
agency has exclusive jurisdiction when the legislature gives it the sole authority to make the initial
determination in a dispute. Subaru of Am., 84 S.W.3d at 221 (citing Cash Am. Int’l, Inc. v. Bennett,
35 S.W.3d 12, 15 (Tex. 2000)). Courts are not divested of subject matter jurisdiction they would
otherwise possess unless a statute expressly grants an administrative agency exclusive jurisdiction.
Id.; Bexar Metro. Water Dist. v. City of Bulverde, 156 S.W.3d 79, 90 (Tex. App.—Austin 2004, pet.
denied). Therefore, because statutory construction is an inherently judicial function, the trial court
had jurisdiction to construe the statutes at issue in the Guaranty Association’s motion for summary
judgment absent an explicit grant of exclusive jurisdiction to the Division. See Subaru of Am.,
84 S.W.3d at 221; Texas Dep’t of Ins. v. Reconveyance Servs., 240 S.W.3d 418, 433 (Tex.
App.—Austin 2007), rev’d on other grounds, 306 S.W.3d 256 (Tex. 2010); Bexar Metro. Water
Dist., 156 S.W.3d at 90.
The legislature has granted the Division exclusive jurisdiction over claims for
workers’ compensation policy benefits, which include medical, income, death, and burial benefits.
See Tex. Lab. Code § 401.011(5); American Motorists Ins. Co. v. Fodge, 63 S.W.3d 801, 803 (Tex.
2001); In re Texas Mut. Ins. Co., 157 S.W.3d 75, 81 (Tex. App.—Austin 2004, orig. proceeding).
However, we have already concluded that the right to reimbursement for a claim paid by a carrier
is distinguishable from the duty of an employer’s insurer to pay benefits. See Insurance Co. of State
of Pa., 306 S.W.3d at 903. Further, while this Court has held that the Division’s exclusive
jurisdiction to resolve a benefits dispute may extend to policy interpretation and determination of
coverage periods, see In re Texas Mut., 157 S.W.3d at 81, appellants cite no authority, and we have
10
found none, for the proposition that the Division’s exclusive jurisdiction to determine policy benefit
claims extends to claims for reimbursement of benefits already paid by a carrier.
Appellants contend that this Court’s decisions in In re Texas Mutual Insurance
Company, 157 S.W.3d 75 (Tex. App.—Austin 2004, pet. denied) and Texas Mutual Insurance
Company v. Texas Department of Insurance, Division of Workers’ Compensation, 214 S.W.3d 613
(Tex. App.—Austin 2006, no pet.) support the proposition that the Division has exclusive
jurisdiction over NAIC’s claim for reimbursement. In re Texas Mutual Insurance Company
involved two claims—a breach of contract claim, whose resolution required a determination of
policy coverage dates and a claimant’s entitlement to workers’ compensation benefits, and a
negligence claim, whose resolution did not require a benefits determination. 157 S.W.3d at 80–81.
We noted that the Division’s resolution of a benefits dispute may require it to address coverage
issues as necessary to resolve the benefits dispute and concluded that the Division’s exclusive
jurisdiction extended to the breach of contract claim, but not to the negligence claim. Id. In Texas
Mutual v. Texas Department of Insurance, we concluded that the claims were similar to the
negligence claim in In re Texas Mutual Insurance Company in that they did not concern an
entitlement to workers’ compensation benefits and held that the Division’s exclusive jurisdiction
did not extend to them. 214 S.W.3d at 619. In this case, the workers’ entitlement to benefits has
been determined, and, like the negligence claim in In re Texas Mutual Insurance Company and the
claims in Texas Mutual v. Texas Department of Insurance, NAIC’s claim for reimbursement does
not require a resolution of or concern that issue. Appellants’ reliance on these cases is misplaced.
11
Had NAIC raised the issue of reimbursement in the administrative proceeding, the
Division could have considered it. See Texas Workers’ Comp. Comm’n Appeals Panel No. 7,
Appeal No. 961448, 1996 TX Wrk. Comp. LEXIS 4679 (Sept. 9, 1996); Texas Workers’ Comp.
Comm’n Appeals Panel No. 50, Appeal No. 941124, 1994 TX Wrk. Comp. LEXIS 5395
(Oct. 6, 1994). However, the Division’s jurisdiction to consider reimbursement in a policy benefit
dispute does not establish the Division’s exclusive jurisdiction over the issue. See Texas Mut. Ins.
Co., 214 S.W.3d at 619 (division’s jurisdiction to consider coverage issues in benefits dispute does
not give it “exclusive jurisdiction over any and all workers’ compensation coverage disputes
wherever they might arise”).
To the extent that appellants contend that sections 409.009, 410.032, and 410.033
of the Labor Code comprise part of a comprehensive and exclusive regulatory scheme and reflect
a legislative intent that the Division has exclusive jurisdiction over a carrier’s reimbursement claim,
see Tex. Lab. Code §§ 409.009, 410.032, 410.033, we find that argument unpersuasive. None of
these provisions expressly provides for the Division’s exclusive jurisdiction over such claims.
Conspicuously absent is any language granting a party seeking reimbursement a hearing before the
Division. Cf. Tex. Lab. Code § 408.027(e) (“The insurance carrier [from whom a health care
provider seeks reimbursement] is entitled to a hearing as provided by Section 413.031(d).”).
Appellants do not cite, and we have not found, other statutory provisions reflecting a pervasive
scheme to confer extensive authority on the Division over reimbursement claims between carriers.
See Apollo Enters. v. ScriptNet, Inc., 301 S.W.3d 848, 960 (Tex. App.—Austin, 2009, no pet.)
(citing multiple provisions granting Division extensive authority to regulate reimbursement amounts
12
and deadlines; review, audit, and enforce payment obligations; and conduct hearings in connection
with carriers’ reimbursements to health care providers). In addition, section 409.009 permits, but
does not require, the filing of a subclaim with the Division for reimbursement by an insurer that has
provided benefits and been denied reimbursement by a carrier. See id. § 409.009. Because
“[a]brogating common-law claims is disfavored” unless the statute “clearly or plainly” reflects the
legislature’s intent to supplant the common-law remedy with the statutory one, Cash Am. Int’l, Inc.
v. Bennett, 35. S.W.3d 12, 15–17 (Tex. 2000), we cannot conclude that the legislature has charged
the Division with exclusive jurisdiction over a carrier’s claim for reimbursement such as NAIC’s
claim. In the absence of express statutory language or a pervasive legislative scheme to the
contrary, we conclude that the trial court had jurisdiction to construe the statutes in issue and
determine the question of reimbursement. See Subaru of Am., 84 S.W.3d at 221; Reconveyance
Servs., 240 S.W.3d at 433. We overrule appellants’ first issue.
Competing Summary Judgments
Having concluded that the trial court had jurisdiction, we turn to the merits of the
parties’ competing motions for summary judgment. We review the trial court’s decision to grant
summary judgment de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).
To prevail on a summary judgment motion, the movant must demonstrate that there are no genuine
issues of material fact and that it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c);
Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 216 (Tex. 2003). When both parties
move for summary judgment on the same issues and the trial court grants one motion and denies
the other, the reviewing court considers the summary judgment evidence presented by both sides,
13
determines all questions presented and, if the reviewing court determines that the trial court erred,
renders the judgment the trial court should have rendered. Dorsett, 164 S.W.3d at 661 (citing FM
Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000)). When the trial court does
not specify the grounds on which the summary judgment was granted, we must affirm if any of the
summary judgment grounds are meritorious. Texas Workers’ Comp. Comm’n v. Patient Advocates,
136 S.W.3d 643, 648 (Tex. 2004); Knott, 128 S.W.3d at 216.
Covered Claim
In their second issue, appellants argue that the Guaranty Association is obligated to
pay NAIC’s claim for reimbursement because it is a claim that is covered by the Guaranty Act. See
Former Tex. Ins. Code art. 21.28-C §5(8). Our resolution of this issue turns on construction of the
Guaranty Act. Statutory construction is a legal question, which we review de novo. In re
Caballero, 272 S.W.3d 595, 599 (Tex. 2008). Of primary concern is the express statutory language.
See Galbraith Eng’g Consultants, Inc. v. Pochucha, 290 S.W.3d 863, 867 (Tex. 2009). We use
definitions prescribed by the legislature and any particular meanings the words have acquired. Tex.
Gov’t Code § 311.011(b); City of Rockwall v. Hughes, 246 S.W.3d 621, 626 (Tex. 2008).
Otherwise, we apply the plain meaning of the text unless a different meaning is apparent from the
context, or the plain meaning leads to absurd results. Marks v. St. Luke’s Episcopal Hosp.,
319 S.W.3d 658, 663 (Tex. 2010). We consider the entire act, not isolated portions, as well as the
nature and purpose of the act and the consequences that would follow from each construction.
20801, Inc. v. Parker, 249 S.W.3d 392, 396 (Tex. 2008); In re Canales, 52 S.W.3d 698, 702 (Tex.
2001); Sharp v. House of Lloyd, 815 S.W.2d 245, 249 (Tex. 1991).
14
The Guaranty Association is an unincorporated nonprofit legal entity created by the
Guaranty Act and composed of all licensed property and casualty insurers that write business in
Texas. See Former Tex. Ins. Code art. 21.28-C § 6. It is funded by assessments against those
member companies. See id. § 18. When a member insurer becomes impaired, those funds are
available to offer some protection to those insured by the impaired carrier and third-party liability
claimants against the impaired carrier. See id. § 2(2).
The Guaranty Act provides that the Guaranty Association “shall undertake to
discharge the policy obligations of . . . impaired insurer[s] . . . to the extent that the policy
obligations are covered claims under [the Guaranty] Act.” Id. § 8(b). Under the Guaranty Act,
“covered claim” means “an unpaid claim of an insured or third-party liability claimant that arises
out of and is within the coverage . . . of an insurance policy to which the Act applies, issued or
assumed . . . by an insurer licensed to do business in this state, if that insurer becomes an impaired
insurer . . . .” Id. § 5(8). The Guaranty Association maintains that because NAIC is neither an
insured nor a third-party liability claimant, its claim does not fall within the definition of a covered
claim. We agree.
It is undisputed that NAIC is not an insured of Paula Insurance. It is equally clear
that NAIC is not a third-party liability claimant. Although the Guaranty Act does not define
“third-party liability claimant,” the supreme court has “distinguished between first-party claims and
third-party claims on the basis of the claimant’s relationship to the loss.” Lamar Homes, Inc.
v. Mid-Continent Cas. Co., 242 S.W.3d 1, 17 (Tex. 2007). A third-party claim is stated when an
insured seeks coverage for injuries to a third party. Id. (citing Universal Life Ins. Co. v. Giles,
15
950 S.W.2d 48, 54 n.2 (Tex. 1997)). Similarly, third-party insurance traditionally refers to liability
policies that protect and indemnify an insured against the claims of unnamed third parties. Id. at
18; see also Black’s Law Dictionary 873 (9th ed. 2009) (defining third-party insurance as agreement
to cover loss resulting from insured’s liability to third party); Coats v. Ruiz, 198 S.W.3d 863, 883
(Tex. App.—Dallas 2006, no pet.) (holding that passenger’s claims against driver were third-party
claims such that driver’s insurer did not owe passenger first-party duties). Thus, a third-party
liability claim seeks damages for injuries to a third party caused by an insured, for which the insured
has obtained liability insurance coverage. Lamar Homes, 242 S.W.3d at 17–18.
NAIC’s claim for reimbursement does not fall within the ordinary and traditional
meaning of third-party claim. NAIC is not asserting a claim against an insured of Paula Insurance
for damage or injuries to NAIC for which the insured seeks coverage from the Guaranty Association
on behalf of Paula Insurance as an impaired carrier. Therefore, we conclude that NAIC is not a
“third-party liability claimant” within the meaning of “covered claim” and NAIC’s claim for
reimbursement from the Guaranty Association is not a “covered claim” under the Guaranty Act for
which the Guaranty Association is liable. See Former Tex. Ins. Code art. 21.28-C § 5(8). We
overrule appellants’ second issue.
Remaining Issues
In their fourth issue, appellants contend that the trial court erred in granting the
Guaranty Association’s motion for summary judgment on a claim for declaratory relief that was not
asserted in the motion. According to appellants, the Guaranty Association sought a declaration that
section 410.033 of the Labor Code does not require the Guaranty Association to reimburse NAIC,
16
and the trial court entered a broader declaration that the Guaranty Association is not liable to
reimburse NAIC. In essence, NAIC complains that the summary judgment grants greater relief than
the Guaranty Association requested.
On the record before us, we conclude that the trial court’s judgment did not grant
declaratory relief on a claim that was not asserted in the motion. Viewing the pleading as a whole,
we read the Guaranty Association’s motion for summary judgment as requesting a declaration that
it is not liable to reimburse NAIC for benefits NAIC has paid. The Guaranty Association
specifically stated in the first sentence of the motion that it sought “a declaratory judgment that it
is not required to reimburse [NAIC] for workers’ compensation benefits that [NAIC] paid . . . .”
In addition, the record reflects that at the hearing on NAIC’s motion for clarification of the
summary judgment order, the trial court twice stated its conclusion that the Guaranty Association
was requesting a declaration that it was not liable to reimburse NAIC, citing the first paragraph of
the motion. We conclude that the trial court reasonably could and did construe the Guaranty
Association’s motion as a request for a declaration that it is not liable to reimburse NAIC and that
the trial court’s order does not grant relief not requested in the motion. We overrule NAIC’s
fourth issue.6
6
Having sustained the summary judgment on the ground that NAIC’s claim is not a covered
claim under the Guaranty Act, we need not reach appellants’ third issue, in which they contend that
because NAIC’s claim for reimbursement is a covered claim under the Guaranty Act, NAIC was
entitled to summary judgment as a matter of law.
17
CONCLUSION
We affirm the trial court’s summary judgment in favor of the Guaranty Association.7
__________________________________________
Melissa Goodwin, Justice
Before Justices Puryear, Henson, and Goodwin;
Justice Henson Not Participating
Affirmed
Filed: August 28, 2013
7
The Guaranty Association has filed a motion to dismiss, which is pending before this
Court. We dismiss the motion as moot.
18