in Re Mountain Valley Indemnity Company, Shane Waddell, Lonnie Tidwell, National General Insurance Company, and Prostar Adjusting ( 2020 )

In The
Court of Appeals
Ninth District of Texas at Beaumont
__________________
NO. 09-20-00155-CV
__________________
IN RE MOUNTAIN VALLEY INDEMNITY COMPANY,
SHANE WADDELL, LONNIE TIDWELL, NATIONAL GENERAL
INSURANCE COMPANY, AND PROSTAR ADJUSTING
__________________________________________________________________
Original Proceeding
60th District Court of Jefferson County, Texas
Trial Cause No. B-204896
__________________________________________________________________
MEMORANDUM OPINION
In a petition asking for a writ of mandamus based on the trial court’s allegedly
erroneous ruling denying their motion to transfer venue, Mountain Valley Indemnity
Company, Shane Waddell, Lonnie Tidwell, National General Insurance Company,
and Prostar Adjusting, as Relators, argue that venue for this case lies in Montgomery
County and not Jefferson County where the plaintiff filed it. According to the
Relators, the trial court abused its discretion by refusing to apply a mandatory venue
provision, section 15.011 of the Texas Civil Practice and Remedies Code, to the case
and transfer it to the county where the plaintiff’s home, which is the insured property,
1
is located. 1 And failing that, the Relators say that permissive venue does not exist in
Jefferson County because the evidence in the venue hearing failed to establish that
all or a substantial part of the plaintiff’s claims arose in Jefferson County.
We temporarily stayed the proceedings and asked that James Warren Stutts,
the real party in interest, file a response. 2 After considering the petition, Stutts’s
response, and the evidence from the venue hearing, we conclude the Relators have
not shown that section 15.011, the mandatory venue provision they rely on in this
proceeding, applies to Stutts’ claims. With respect to the Relators’ argument that
permissive venue does not exist to support maintaining the case in Jefferson County,
we conclude the Relators have not shown they do not have an adequate remedy to
correct the trial court’s permissive venue ruling if the evidence admitted in the trial
demonstrates that Stutts could sue them under a permissive venue statute in Jefferson
County. We lift this Court’s order staying the proceedings in the trial court, and we
deny the Relators’ petition for relief.3
Background
In December 2017, a pipe burst in Stutts’ attic, allowing water to escape from
the pipe, which damaged his home and some of its contents. Stutts filed an insurance
claim against Mountain Valley under the policy it issued insuring his home, but
1
Tex. Civ. Prac. & Rem. Code Ann. § 15.011.
2
See Tex. R. App. P. 52.10.
3
See id. 52.8(a).
2
Mountain Valley and its agents failed to resolve his claims in a manner that satisfied
Stutts. While handling the claim, the insurance company examined Stutts after
placing him under oath about his claim in Jefferson County.
In November 2019, Stutts sued Mountain Valley, GEICO Insurance Agency,
Inc., National General Insurance Company, Prostar Adjusting, Lonnie Tidwell, and
Shane Waddell based on tort, contract, and statutes that apply to an insurance
carrier’s duties when handling claims for benefits available under policies of
insurance. Stutts alleged the defendants were liable to him for their respective roles
under either the policy, for selling the policy, or their conduct in the manner they
handled his claim. While Stutts lives in Montgomery County, Texas, which is where
the home insured under Mountain Valley’s policy is located, Stutts sued the
defendants in Jefferson County, Texas. The record shows that after Stutts sued, the
parties participated in an appraisal process involving a court-appointed appraiser
who resides in Jefferson County.
In Stutts’ live pleading, his Second Amended Petition, Stutts alleged venue
was proper in Jefferson County because a substantial part of the defendants’ conduct,
as it relates to the manner his claim was handled, occurred in Jefferson County.
In response to Stutts’ petition, four of the defendants, Mountain Valley,
National General, Prostar Adjusting, and Waddell filed motions to transfer venue.
They alleged that venue was improper in Jefferson County and asked the trial court
3
to transfer the case to Montgomery County. Shortly after these four defendants filed
their joint motion to transfer, Tidwell joined the joint motion. He also asked that the
trial court transfer the case to Montgomery County.4 In the joint motion to transfer
they initially filed, the defendants alleged two venue claims. First, they denied that
permissive venue in Jefferson County existed, asserting that Stutts could not
establish his claims arose in whole or in part based on their conduct in Jefferson
County. Second, they argued that the permissive venue provision applicable to
Stutts’ claims, section 15.032 of the Civil Practice and Remedies Code, required
Stutts to sue them in Montgomery County because under section 15.032 it is the
“county in which the insured property was situated” when his loss occurred.5
Before the trial court ruled on the defendants’ joint motion, Stutts amended
his petition twice. 6 The five defendants to the joint motion also amended their motion
to transfer, raising four venue claims. First, they alleged Stutts could not establish
4
The sworn mandamus record before us does not show whether GEICO
Insurance joined the motion or filed a separate motion to transfer venue. It has not
filed a brief in this original proceeding and is not represented by the firm that signed
the brief as counsel for the five Relators who filed the petition. The mandamus
record reveals that GEICO is the agency that sold Stutts the policy that he alleges
covers his claims.
5
See Tex. Civ. Prac. & Rem. Code Ann. § 15.032. The Relators have not
argued that section 15.032 required the trial court to transfer venue to Montgomery
County in the petition they filed challenging the trial court’s rulings.
6
GEICO Insurance Agency is the sixth defendant, and we cannot tell from the
mandamus record before us whether it appeared and whether or not it filed a
separate motion to transfer venue. GEICO is also not a party to the mandamus
proceeding that the Relators filed in this Court.
4
that all or a substantial part of his claims arose from their conduct in Jefferson
County. Second, they argued that a mandatory venue provision, section 15.011 of
the Texas Civil Practice and Remedies Code, fixed venue for Stutts’ claims in
Montgomery County, since that is the county where his home is located. 7 Third, they
reiterated their claim that section 15.032 of the Texas Civil Practice and Remedies
Code did not authorize Stutts to sue them in Jefferson County because that statute
required them to sue in the county where the property involved in the claim is
situated. Fourth, they asked the court to transfer the case to Montgomery County
because it offers a more convenient forum for the parties to litigate the dispute.8
The trial court conducted a hearing on the motion to transfer in May 2020.
Following the hearing, the trial court denied the joint motion. The order the trial
court signed does not explain the basis for the court’s ruling denying the motion.
Less than a month later, the parties to the joint motion to transfer filed a joint
petition seeking a writ of mandamus from this Court. Generally, they argue the trial
court abused its discretion by denying their joint motion and in refusing to transfer
7
Id. § 15.011 (a mandatory venue provision for actions for recovery of
damages to real property); § 15.032 (a mandatory venue for suits against fire,
marine, or inland insurance companies).
8
See id. § 15.002(b) (providing that courts may transfer an action from a
county of proper venue to any other county of proper venue “[f]or the convenience
of the parties and witnesses and in the interest of justice”).
5
the case to Montgomery County. 9 While the Relators’ joint motion raised four
grounds for transfer, they raise just two of these to support the petition they filed
here. First, the Relators argue that section 15.011 of the Civil Practice and Remedies
Code is a mandatory venue provision requiring Stutts to sue them in Montgomery
County since that’s where his home is located. 10 Second, the Relators contend Stutts
failed to present sufficient evidence in the venue hearing to establish that an issue of
material fact exists on his allegations that his claims against the defendants arose in
substantial part in Jefferson County. 11
Analysis
Mandatory Venue
The Legislature has given parties the right to petition for mandamus should
trial courts refuse to enforce a mandatory venue provision set out in Chapter 15 of
the Civil Practice and Remedies Code, which includes section 15.011, the section at
issue Relators have relied on here.12 Generally, the plaintiff suing in a Texas court
may sue the defendant in any county that it chooses so long as the plaintiff’s
9
See Tex. R. App. P. 52.1 (authorizing parties to commence appellate
proceedings for extraordinary relief, including petitions for mandamus, in the
appropriate appellate court).
10
See Tex. Civ. Prac. & Rem. Code Ann. § 15.011.
11
Id. § 15.002(a)(1) (authorizing parties to sue in the county where “all or a
substantial part of the events or omissions giving rise to the claim occurred” if no
mandatory venue provision applies to the plaintiff’s lawsuit).
12
Id. §§ 15.011, .0642.
6
pleadings alleges facts sufficient to show the county where the plaintiff sued is a
county of permissive venue.13 Should a defendant challenge the plaintiff’s choice of
venue by filing a motion to transfer venue, deny the plaintiff’s venue allegations,
and object to venue in the county where the plaintiff sued, the trial court must
determine in a hearing whether the plaintiff has presented prima facie evidence
sufficient to show venue is permissible in the county where the plaintiff sued.14 If
the plaintiff in the venue hearing fails to establish the county where the suit was filed
is a county of permissive venue, the trial court must transfer the suit to the county
where the defendant suggested the case should have been filed, as long as that county
is a county of proper venue.15 And more, when a mandatory venue statute provides
the rule controlling venue for the plaintiff’s claims, the court must transfer the case
to that county if the mandatory venue provision applies.16
In their petition, the Relators advance two of the same arguments they made
in their joint motion. First, they argue that section 15.011 is a mandatory venue
provision that required the trial court to transfer Stutts’ suit to Montgomery County
because his action seeks damages to real property, Stutts’ home. In simple terms,
Mountain Valley equates the damages Stutts seeks under his homeowner’s policy as
13
In re Masonite Corp., 997 S.W.2d 194, 197 (Tex. 1999) (orig. proceeding).
14
Id.
15
Tex. Civ. Prac. & Rem. Code Ann. § 15.063.
16
Id. §§ 15.011-.020.
7
damages to real property. Second, the Relators argue that the evidence in the venue
hearing fails to show that all or a substantial part of his claims arose in Jefferson
County.
We disagree with the underlying premise of the Relators’ argument, which
equates an action for recovery of damages to real property subject to the mandatory
venue rules in section 15.011 with an action for claims from the alleged breach of
an insurance policy in which the insurer contractually agreed to pay certain property
damages claims. It’s true that Stutts’ policy contains a contract provision that
measures the loss (to some degree) by using a reasonable cost to repair calculation
of damages. 17 Even so, Stutts’ action is for damages under a contract, not to recover
17
In pertinent part, section I, part C2 of Stutts’ homeowner’s policy provisions
that explain the contract measure of damages for claims involving damages to the
dwelling provides as follows:
2. Buildings covered under Coverage A or B at replacement cost without
deduction for depreciation, subject to the following:
a. If, at the time of loss, the amount of insurance in this policy on
the damaged building is 80% or more of the full replacement cost
of the building immediately before the loss, we will pay the cost
to repair or replace, after application of any deducible and without
deduction for depreciation, but not more than the least of the
following amounts:
(1) The limit of liability under this policy that applies to the
building;
(2) The replacement cost of that part of the building damaged
with material of like kind and quality and for like use; or
8
damages the Relators inflicted on Stutts’ home. Stutts has not sued the defendants
claiming they damaged any real property that he owns.
The question of whether section 15.011 applies when a homeowner sues an
insurance company to recover damages under the policy is a matter of first
impression in this Court, but it is not a matter of first impression in the State. In
Allison v. Fire Insurance Exchange, the Austin Court of Appeals construed section
15.011 not to exclude actions arising under the contract or for the insurance
company’s handling of the claim reasoning the homeowner’s lawsuit did not involve
an action to recover damages to real property.18 While Stutts’ policy includes a
measure of the loss payable under the policy as the “necessary amount actually spent
to repair or replace the damaged building[,]” should that amount be less than the
other measures of damages in the policy, the claim remains a contract action for
damages under the policy, it is not an action to recover damages to real property
governed by section 15.011.19 Thus, in Allison, the Austin Court of Appeal rejected
the insurance company’s arguments claiming venue of the suit was improper in
(3) The necessary amount actually spent to repair or replace the
damaged building.
18
Allison v. Fire Ins. Exch., 98 S.W.3d 227, 241-44 (Tex. App.—Austin 2002,
pet. granted, judgm’t vacated w.r.m.).
19
Tex. Civ. Prac. & Rem. Code Ann. § 15.011.
9
Travis County when the plaintiff sued the company there based on claims arising
under a homeowner’s policy that insured a home in Hayes County. 20
The arguments in the Relators’ petition also ignore what appears to us to be a
fatal flaw with their argument about the intended reach of section 15.011. That’s
because section 15.032, one of the venue statutes the Relators relied in the trial court,
is a permissive venue provision that created permissive venue for a homeowner’s
suit against a homeowner’s carrier to be filed in more than just the county where the
property is located.21 Thus, we cannot agree that the Legislature intended to create a
mandatory rule for suits against fire insurance carriers like Mountain Valley for
benefits under the policy given the fact that the Legislature opted in section 15.032
to allow homeowners more than one county in which to file the suit.22
The conclusion that section 15.011 is not a mandatory venue provision that
applies to Stutts’ claims that arose under the homeowner’s policy issued by
Mountain Valley resolves the arguments the parties have raised in a way that is
20
Allison, 98 S.W.3d at 241.
21
See Civ. Prac. & Rem. Code Ann. § 15.032 (a permissive venue statute that
allows suits against fire insurance companies to be filed in the county where the
property is located, in the county where the company’s office is located, in the
county where the loss occurred, or in the county where the policyholder or policy
beneficiary resided when the cause of action accrued).
22
We reiterate that in their petition for mandamus, the Relators have not
argued that the permissive venue rule in section 15.032 controls over the more
general permissive venue rule, section 15.011, such that the trial court erred by
failing to transfer the suit to Montgomery County based on the application of
section 15.032 to the plaintiff’s suit.
10
consistent with the requirements of the Code Construction Act. Under that Act, the
courts must harmonize sections of a statute that appear to conflict by allowing both
sections to have the meaning the Legislature likely intended.23 Mountain Valley’s
construction of section 15.011 would not do that, since it would limit homeowners
suing under their insurance policies to sue only in one county when the Legislature
intended to give them other options about where they could sue. 24
The Relators argue that the resolution we have reached of their petition
conflicts with the Texas Supreme Court’s holding in Yzaguirre v. KCS Resources,
Inc.25 In Yzaguirre, the Texas Supreme Court addressed the proper venue for claims
filed by the lessors under three oil and gas leases. The leases concerned mineral
interests in property that is located in Zapata County. The Court was asked to decide
whether the venue for the suit was proper in Dallas County or whether, instead, a
pre-1995 version of section 15.011 required the lessors to sue the lessee in Zapata
County.26 The Court stated that claims to recover damages under an oil and gas lease
are for past and accrued royalties, and as such are properly characterized as claims
to recover personal property. The court concluded that as properly characterized, the
23
See Tex. Gov’t Code Ann. §§ 311.025(b), .026 (requiring courts to
harmonize statutes to give effect to both).
24
Compare Tex. Civ. Prac. & Rem. Code § 15.032, with id. § 15.011.
25
Yzaguirre v. KCS Res., Inc., 53 S.W.3d 368 (Tex. 2001).
26
Id. at 370-71.
11
claims did “not involve recovering real property[.]”27 In a footnote, the Court
recognized that the Legislature amended section 15.011 in 1995, and that since that
time “[s]uits to recover damages to real property are also subject to mandatory venue
under the current version of section 15.011.” 28 That said, the opinion expressly
characterized the lessors’ claims as claims that did not involve recovering real
property. Relators argue that in 1995, by amending section 15.011, the Legislature
“substantially broadened the statute by requiring that any suit seeking damages to
real property [be] brought in the county where the real property is located.” Even so,
the Court in Yzaguirre neither discussed, nor addressed, whether the post-1995
amendment would have changed the Court’s view that claims under contracts are
actions to recover personal property.
We conclude Yzaguirre’s characterization of a claim under a contract as an
action for personal property is consistent with our resolution of the petition before
us here. Stutts’ claims are to recover personal property, not real property, so we agree
with the trial court’s decision that section 15.011 does not provide the controlling
rule that applies in the case. Stated another way, Stutts has not filed an action for
damages to real property; instead, his action is for personal property because his suit
is based on an insurance policy that he alleges covered the loss. We conclude the
27
Id. at 371.
28
Id. at n.1.
12
trial court did not clearly abuse its discretion when it overruled the Relators’ motion
to transfer after finding section 15.011 did not apply to Stutts’ claims.29
The Permissive Venue Ruling
Generally, the appellate courts will not address alleged errors in a permissive
venue ruling by deciding the claims on their merits in an original proceeding on a
writ.30 The appellate courts follow this rule because defendants have an adequate
remedy through regular appeals to remedy erroneous venue rulings.31 Mandamus is
not the ordinary remedy for most errors, so before the appellate courts will extend
relief to a party who petition for a writ of mandamus, the petitioner must show (1)
the trial court clearly abused its discretion in the ruling that is challenged, and (2) a
regular appeal will be inadequate to cure the alleged error.32
Given this two-pronged test, we need not decide whether the trial court erred
by finding that all or a substantial part of Stutts’ claims arose from the defendants’
conduct in Jefferson County. Instead, we focus on whether a regular appeal is
adequate.33 To evaluate whether regular appeals are adequate, we balance the
29
See Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) (orig. proceeding).
30
See id. at 840.
31
Id.
32
See id. at 839-40
33
Id.
13
benefits of reviewing the case on its merits now against the detriment of doing so at
this time on a less than fully developed record.34
Generally, permissive venue rulings are not subject to mandamus review
unless the record shows the trial court acted “with such disregard for guiding
principles of law that the harm [to the relators] becomes irreparable.”35 Should Stutts
fail to prove that there was tortious or wrongful conduct in Jefferson County as it
relates to his claims, any judgment he might obtain would be reversed and the
Relators will have the opportunity to try the case again in Montgomery County.36
The Relators did not develop a record to establish the expenses they might
reasonably incur by trying the case in Jefferson County. Nor have they shown that
no mechanism exists by which they could recover the expenses they may incur in
the litigation should they prevail. 37 We conclude the Relators have failed to show
34
In re Team Rocket, L.P., 256 S.W.3d 257, 262 (Tex. 2008) (orig.
proceeding).
35
In re Masonite Corp., 997 S.W.2d 194, 197 (Tex. 1999) (orig. proceeding)
(internal citations omitted).
36
See Tex. Civ. Prac. & Rem. Code Ann. § 15.064(b) (“On appeal from the
trial on the merits, if venue was improper it shall in no event be harmless error and
shall be reversible error.”); Union Pac. R.R. Co. v. Cezar, 293 S.W.3d 800, 819
(Tex. App.—Beaumont 2009, no pet.) (reversing and remanding verdict favoring
the plaintiff with instructions based on erroneous venue ruling, awarding the
appellant a new trial and requiring the trial court to transfer the case against the
appellant after remand from Jefferson County to Harris County).
37
See e.g., Tex. Civ. Prac. & Rem. Code Ann. § 42.004 (providing parties in
civil case with rights to recover litigation costs).
14
that a regular appeal will be inadequate if Stutts fails to establish that permissive
venue exists in Jefferson County for the suit.38
Conclusion
We hold the Relators may obtain relief from the trial court’s permissive venue
ruling and the trial court did not abuse its discretion in denying the Relators’ joint
motion to transfer venue based on the arguments they presented under a mandatory
venue statute that does not apply to the claims at issue, claims to recover for damages
to personal property arising under a homeowner’s policy. For these reasons, the
Relators’ petition for mandamus is denied.
PETITION DENIED.
PER CURIAM
Submitted on July 17, 2020
Opinion Delivered September 17, 2020
Before Kreger, Horton and Johnson, JJ.
38
See id. §§ 15.002(a)(1), .011, .032, .064(b).
15