in Re Allstate Fire and Casualty Insurance Company and Latina Pruitt ( 2018 )

Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION
No. 04-18-00676-CV
IN RE ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY and Latina Pruitt
Original Mandamus Proceeding 1
Opinion by: Rebeca C. Martinez, Justice
Sitting: Sandee Bryan Marion, Chief Justice
Rebeca C. Martinez, Justice
Irene Rios, Justice
Delivered and Filed: December 19, 2018
PETITION FOR WRIT OF MANDAMUS CONDITIONALLY GRANTED
In this original proceeding, relators assert the trial court erred by not abating the real party
in interest’s extra-contractual claims while his breach of contract claim for underinsured motorist
benefits remains pending. We agree and conditionally grant the petition.
BACKGROUND
The real party in interest (hereinafter, the “plaintiff”) was involved in an automobile
accident with another driver. Plaintiff settled with the other driver’s insurance company for the
policy limits. Plaintiff also made a claim to his insurance company, Allstate Fire and Casualty
Insurance Company (“Allstate”) for injuries, damages, and expenses sustained due to the
underinsured motorist. According to plaintiff, Allstate and its claims adjuster, Latina Pruitt,
1
This proceeding arises out of Cause No. 2017CV01324, styled Samuel Bernal v. Allstate Fire and Casualty Insurance
Co. and Latina Pruitt, pending in the County Court at Law No. 10, Bexar County, Texas, the Honorable David J.
Rodriguez presiding.
04-18-00676-CV
(collectively, the “relators”) failed to pay in accordance with the terms of the policy. Therefore,
plaintiff later sued relators for breach of contract seeking recovery of underinsured motorist
(“UIM”) benefits under his policy with Allstate. Plaintiff also raised extra-contractual claims for
violations of the Texas Insurance Code. Plaintiff declined Allstate’s offer to settle the dispute for
$500. Plaintiff then served Allstate with discovery requests, and Allstate objected to many of the
requests on the grounds that the requested information was not relevant to the threshold
requirement of UIM liability.
The relators filed a motion asking the trial court to (1) sever plaintiff’s contractual claim
from his extra-contractual claims and (2) abate the extra-contractual claims until the contract claim
is resolved. Plaintiff did not challenge the request for a severance but objected to an abatement.
The trial court granted the severance and denied the abatement. Relators then filed their petition
for writ of mandamus in this court. The plaintiff declined the opportunity to file a response.
In their petition, relators argue the trial court erred by not granting the abatement because
the plaintiff may not litigate his extra-contractual claims until after he obtains a judgment on his
breach of contract claim establishing (1) the other driver was at fault, (2) the extent of the resulting
damages, and (3) the other driver is underinsured. Relators assert that until plaintiff obtains this
judgment, Allstate is under no contractual duty to pay UIM benefits. Therefore, relators conclude
that because the extra-contractual claims have not yet accrued, that case should be abated.
STANDARD OF REVIEW
Mandamus is an extraordinary remedy. In re Sw. Bell Tel. Co., L.P., 235 S.W.3d 619, 623
(Tex. 2007) (orig. proceeding). Mandamus will issue only to correct a clear abuse of discretion
when there is no other adequate remedy at law. See In re Prudential Ins. Co. of Am., 148 S.W.3d
124, 135-36 (Tex. 2004) (orig. proceeding); Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex.
1992) (orig. proceeding). Mandamus relief is appropriate when a trial court abuses its discretion
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in denying a motion to sever and abate extra-contractual claims in an UIM case. See, e.g., In re
United Fire Lloyds, 327 S.W.3d 250, 257 (Tex. App.—San Antonio 2010, orig. proceeding). The
insurer has no adequate remedy at law because the insurer would lose substantial rights by being
required to prepare and try claims that may be rendered moot. In re Farmers Tex. Cty. Mut. Ins.
Co., 509 S.W.3d 463, 466 (Tex. App.—Austin 2015, orig. proceeding).
DISCUSSION
The Texas Insurance Code provides as follows:
In this section, “uninsured or underinsured motorist coverage” means the
provisions of an automobile liability insurance policy that provide for coverage in
at least the limits prescribed by Chapter 601, Transportation Code, that protects
insureds who are legally entitled to recover from owners or operators of uninsured
or underinsured motor vehicles damages for bodily injury, sickness, disease, or
death, or property damage resulting from the ownership, maintenance, or use of any
motor vehicle.
TEX. INS. CODE § 1952.101(a) (emphasis added).
The Texas Supreme Court has interpreted this language to mean “the UIM insurer is under
no contractual duty to pay benefits until the insured obtains a judgment establishing the liability
and underinsured status of the other motorist.” Brainard v. Trinity Universal Ins. Co., 216 S.W.3d
809, 818 (Tex. 2006) (interpreting prior version of statute). “Neither requesting UIM benefits nor
filing suit against the insurer triggers a contractual duty to pay.” Id. “Where there is no contractual
duty to pay, there is no just amount owed.” Id. The Brainard Court held the plaintiff’s argument
that a “UIM policy is to be treated like other contracts, for which damages are liquidated in a
judicial proceeding and attorney’s fees incurred are recoverable, misinterprets the nature of UIM
insurance”:
The UIM contract is unique because, according to its terms, benefits are
conditioned upon the insured’s legal entitlement to receive damages from a third
party. Unlike many first-party insurance contracts, in which the policy alone
dictates coverage, UIM insurance utilizes tort law to determine coverage.
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Consequently, the insurer’s contractual obligation to pay benefits does not arise
until liability and damages are determined.
Id.; see also In re State Farm Mut. Auto. Ins. Co., 395 S.W.3d 229, 237 (Tex. App.—El Paso 2012,
orig. proceeding) (“In a case where an insured asserts a claim for uninsured/underinsured benefits,
abatement of the extra-contractual claims is required in most instances.”); United Fire Lloyds, 327
S.W.3d at 256 (applying Brainard to issue of abatement and concluding insurer should not be
required to incur litigation expenses on claims that could be rendered moot by the portion of the
trial related to UIM benefits).
In his response to relators’ motion to abate, plaintiff relied on the Texas Supreme Court’s
prior decision in USAA Texas Lloyds Co. v. Menchaca, 14-0721, 2017 WL 1311752 (Tex. Apr. 7,
2017), reh’g granted (Dec. 15, 2017), 2 to argue that because much of the same evidence can be
used in both his contractual and extra-contractual claims, abating the extra-contractual claims
could prevent meaningful discovery in the underlying breach of contract case. Plaintiff also
asserted, with no elaboration, that the extra-contractual claims were “so interwoven with the
underlying contractual claims that they involve the same facts and issues.”
Plaintiff also relied on two cases to argue an insurance company will attempt to use
abatement against a plaintiff “as an umbrella granting some kind of special immunity from
discovery.” However, in both cases, the insured’s extra-contractual claims were severed and
abated pending resolution of their contractual claims against the insurer. See In re Luna, 13-16-
00467-CV, 2016 WL 6576879, at *1 (Tex. App.—Corpus Christi Nov. 7, 2016, orig. proceeding)
(mem. op.); In re Garcia, 04-07-00173-CV, 2007 WL 1481897, at *1 (Tex. App.—San Antonio
2
The Texas Supreme Court later withdrew its December 15, 2017 opinion and issued a new opinion in its place
following rehearing. See USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479 (Tex. 2018). In that opinion, the Court
“unanimously reaffirm[ed] the legal principles and rules announced in that [2017] opinion” and “provide[d] additional
guidance” regarding the procedural effect of the Court’s holdings. Id. at 484.
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May 23, 2007, orig. proceeding) (per curiam) (mem. op.). In each case, the insured noticed the
deposition of the real party in interest’s (State Farm) representative in the breach of contract case.
State Farm successfully moved to quash the deposition, and the insured sought mandamus relief.
In both cases, one of State Farm’s arguments was that the insured was not entitled to the discovery
because extra-contractual matters were not relevant to the contractual claims. Luna, 2016 WL
6576879, at *4, *6; Garcia, 2007 WL 1481897, at *1. In both cases, the appellate court disagreed
with State Farm’s characterization of the sought-after discovery.
The Luna and Garcia courts noted the topics encompassed by the deposition notice
corresponded to State Farm’s defenses and theories or had a direct bearing on the damages in the
insured’s breach of contract case. Luna, 2016 WL 6576879, at *7; Garcia, 2007 WL 1481897, at
*2. Both courts held the trial court abused its discretion by quashing the deposition because
doing so unreasonably restricted [the insured’s] access to relevant information.
Without the opportunity to fully discover information about State Farm’s multiple
defenses, [the insured] is effectively prevented from verifying or refuting those
defenses. Moreover, as State Farm acknowledges in its brief, [the insured] must
establish at trial that “her damages exceed the underlying liability insurance limits
and any other offsets or credits State Farm may be entitled to.” Thus, quashing the
deposition in its entirety severely compromises [the insured’s] ability to present and
prove her case.
Garcia, 2007 WL 1481897, at *2; see also Luna, 2016 WL 6576879, at *7 (citing to Garcia and
holding same).
We disagree with plaintiff’s argument that these cases stand for the proposition that a
plaintiff may always seek discovery on matters relevant to his extra-contractual claims while his
breach of contract claim is still pending. In both Luna and Garcia, the trial court had severed and
abated the extra-contractual claims, and both appellate courts allowed discovery in the breach of
contract case to proceed to the extent such discovery was relevant to the claims and defenses raised
by the parties in that case.
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Here, in his response to relators’ motion to abate, plaintiff did not state what evidence
relevant to his contractual claim is also relevant to his extra-contractual claims. Nor did he state
what specific evidence relevant to his contractual claim he would be prevented from obtaining if
the extra-contractual claims were abated. See Luna, 2016 WL 6576879, at *7-8 (holding trial court
abused its discretion by quashing deposition because topics encompassed by deposition notice
corresponded to State Farm’s defenses and theories or had a direct bearing on the damages in the
insured’s breach of contract claim); Garcia, 2007 WL 1481897, at *2 (same). On the other hand,
in their petition for writ of mandamus, relators point to plaintiff’s discovery requests in which he
seeks information regarding, among other things, the identity of Allstate’s claims personnel,
information related to Allstate’s investigation and evaluation of plaintiff’s claim, information
about the existence and identity of any review committees, the history of complaints filed with
Allstate and any denial logs, and Allstate’s net worth.
As stated above, Allstate “is under no contractual duty to pay benefits until [plaintiff]
obtains a judgment establishing the liability and underinsured status of the other motorist.”
Brainard, 216 S.W.3d at 818; United Fire Lloyds, 327 S.W.3d at 256. Here, liability for the UIM
claim has not been judicially determined in plaintiff’s breach of contract case, the extra-contractual
claims are not yet ripe, and the extra-contractual claims could be rendered moot by the underlying
liability determination in the breach of contract case.
CONCLUSION
For the reasons stated above, we conclude relators showed the trial court erred by not
granting the abatement. Also, for these reasons, relators do not have an adequate remedy at law.
Id. Therefore, we conditionally grant the petition for writ of mandamus and direct the trial court
to, within fifteen days from the date of this opinion, vacate that portion of its December 18, 2017
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Order on Defendants’ Motion to Sever and Abate denying relators’ motion to abate and issue an
order granting the motion and abating the severed cause.
Rebeca C. Martinez, Justice
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