1 ... S eeT EX . R. A PP . P. 47. 4. 

## COURT OF APPEALS SECOND DISTRICTOFTEXAS FORT WORTH
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VAL E AN CH I L DE R S AP P E L L ANT V . G A LL A G H ER BA SSET T A PPELL EES SER VI CES, I NC . , M YRTI S L AC Y, AN D Z UR I CH AM E RI CAN I NSUR ANCE COM P ANY

----- ----- -- FR O M THE 17TH DI STRI CT CO URT O F TARRA NT CO UN TY

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### M E M ORANDU M OP I NI ON 1

----- ----- -- I . I nt r oduc t i on I n t w o poi nt s, A ppel l antV al ean C hi l der s ( “C hi l der s”) assert s t hatt he t r i al
c o u rt e rr e d i n g ran ti n g su m m a ry j u d g m e n t to A p p e l l e e s G a l l a g h e rB a ss e tt S er vi ces, I nc. ( “G al l agher ”) , M yrt i s Lacy ( “Lacy”), a n d Zuri ch A m er i can2

I ns ur anc e Com pan y ( “Zur i ch” ) ( col l ec t i vel y “ G LZ” ) . W e a f f i r m i n part , an d
rev e rse an d rem a n d i n p a rt .

I I . Fa ct ualan d Pr oce duralBac kground T h i s i s th e c a se o f “w h e n d o e s th e sta tu te b e g i n to run ? ” T h i s b a d -f a i th l aw sui tor i gi nat ed w i t h a w or k er s’ com pensat i on cl ai m f i l ed by C hi l der s,
w he r e i n s hea l l e ge d s hes us t a i ne d a c om pe ns a bl e i nj ury on F e br ua r y 4, 2003 . Th e d e fen dantsi ncl ude G al l agher , a t hi r d part y adm i ni st r at orw hi ch adj ust ed C hi l der s’ w or ke r s’ co m pen sa t i on c l ai m ; La cy, a n e m pl oye e o fG al l agh erw ho
w as t he l i censed adj ust erhand li ng t he cl ai m , and Z ur i ch, t he w or ker s’
c o m p e n s a t io n c a r r ie rf o rt h e c la im s . B e c a u s e n u m e r o u s d a t e sa r e in v o lv e d in th i s q u e sti o n i n v o l v i n g the ap p rop ri a te sta tu te o f l i m i tati o n s, w e w i l l se t f o rt h a t i m e l i ne ofpert i nent event s:

• 2/ 4/ 03

- A l l eged i nj ur y occur r ed

• 3 /6 /0 3 -T h e i n j u ry i s re p o rt e d b ythis d a te

• 3 /7 /0 3 -T h e c la im isd is p u t e d b yt h e c a r r ie r a s b e in g u n t im e ly f i l ed ( t he “f i r stdi sput e”)

• 3/ 29 /03

- C hi l der s r equest s a benef i tr evi ew conf er ence.

• 5 /1 5 /0 3 -B e n e fi t re v i e w c o n f e re n c e i s h e l d a n d C h i l d e rs p r e v a ils

• 7/ 16/ 03- Fi r stpa rtofco nt es t ed ca sehe ar i ng

• 8/ 31 /03

- Tw o year s bef or e sui ti s f i l ed2 ... W e w i l l c o l l e c ti v e l yre fe r to th e 1 / 2 / 0 4p a n e l ru l i n g a n d Z u ri c h ’s

7 /8 /0 4d i s p u te o f C h i l d e rs ’ c l a i m a s th e “ s e c o n d d i s p u te .” 3 • 10/ 2/ 03- C onc l us i on ofco nt es t ed ca sehe ar i ng

• 1 0 /1 3 /0 3 -C o n te s te d c a s e h e a ri n g ru l i n g i s i n fa v o r o f C h i l d e rs

• 1 /2 /0 4 -A p p e a l s p a n e l ru l i n g i n fa v o r o f C h i l d e rs

• 7/ 8/ 04

- C hi l der s’ C l ai m i s agai n di sput ed by t he car r i erbased on al l eged new evi dence 2

• 9/ 28/ 04- D ec i si on a nd Or derby H ea r i ng Of f i ce ri n f a v o rof C h i l d e rs

• 8/ 31 /05

- Bad f ai t h sui tf i l ed O n M ar ch 6, 2007 , G LZ f i l ed a m ot i on f ors um m ary j udgm entba se d on t he t w o- yea rs t at ut e of l i m i t at i ons . The t r i al co urtf ound t hatChi l der s di d not t i m el y f i l e s ui tw i t hi n t w o ye ar s oft he a cc r ualofhe rca us e o fac t i on a nd
accor di ngl y gr ant ed sum m ar y j udg m enti n f avorofG LZ. A m ot i on f ornew t r i al
w asove r r ul ed by o per at i on ofl aw , an d t hi s app ea l f ol l ow ed. I I I . The I ss ue G L Z a s s e rts th a t th e tri a l c o u rt a c te d c o rre c tl yi n g ra n ti n g s u m m a ry j u d g m e n t b a s e d o n l i m i ta ti o n s b e c a u s e th e c a s e w a s n o t fi l e d w i th i n tw o y e a rs o ft h e t im e t h a t Z u r ic h in it ia llyd e n ie d C h ild e r s ’ w o r k e r ’s c o m p e n s a t io n c la im . G LZ al so assert s t hat t hi s i s al so t r ue f ort he second den i al oft he cl ai m because C h i l d e rs su ffered n o d a m a g e fr o m the se c o n d d e n i a l a n d the re i s n o au th o ri ty4

t hata subsequentdeni al r est art s t he cl ock r unn i ng on t he st at ut e ofl i m i t at i ons. C hi l der s as se rt s t hatt he st at ut e o fl i m i t at i onsdi d not b e g i n r unni ng on t he f i r stdeni al ofhercl ai m unti l she had exhaust ed heradm i ni st r at i ve r em edi es on F ebr uary 2, 2004 , an d, r ega r dl es s, t he se con d den i al beg an t he st at ut e o f l i m i t at i ons r unn i ng on June 2 8 , a nd Ju l y 8, 20 04 . H ence, she ar gues her l aw su i t w as t i m el y br ought on A ugus t31, 2005 r ega r di ng bo t h de ni al s, an d t he tri a l c o u rt e rre d i n g ra n ti n g s u m m a ryj u d g m e n t. I V . St andar d ofRev i ew A de f end antw ho c onc l us i vel y ne gat esatl ea st one es se nt i al el em entof
a c a u s e o f a c ti o n i s e n ti tl e d to s u m m a ryj u d g m e n t o n th a t c l a i m . IHSCe da rs Trea tm ent

Ctr. of D eSoto, Tex. , In c. v. Mas on , 143 S. W . 3d 794, 798 ( Tex. 2 0 0 4 ); seeT EX . R. C IV . P . 1 6 6 a (b), (c). W h e n rev i e w i n g a su m m a ry j u d g m e n t,
w e ta k e a s tru e a l l e v i d e n c e fa v o ra b l e to th e n o n m o v a n t, a n d w e i n d u l g e e v e ry re a s o n a b l e i n fe re n c e a n d re s o l v e a n yd o u b ts i n th e n o n m o v a n t’s fa v o r. IHS Ce da rsT

rea tm en t C tr. , 1 4 3 S .W .3 d a t 7 9 8 . A def endan ti s ent i t l ed t o sum m ar y j udg m enton an af f i r m at i ve def ense i ft he def endan tconcl usi vel y pr oves al l t he el em ent s oft he af f i r m at i ve def ense. Rhon e-Poulenc, I

nc. v. Steel, 9 9 7 S .W .2 d 2 1 7 , 2 2 3 (T e x . 1 9 9 9 ); seeT EX . R. C IV . P. 166a( b) , ( c) . To ac com pl i sh t hi s, t he def end ant - m ova nt m us tpr es ent
su m m ary j udgm entev i den cet hates t abl i sh esea ch el em en t oft he af f i r m at i ve5

d e fe n s e a s a m a tte r o f l a w . Ryl and Group, I

nc. v. Hood, 924 S. W . 2d 120, 121 (T e x . 1 9 9 6 ). W h e n re v ie w in g a s u m m a r y j u d g m e n t , w e t a k e a s t r u e a ll
e v id e n c e f a v o r a b le t o t h e n o n m o v a n t , a n d w e in d u lg e e v e r yre a s o n a b le i n fe re n c e a n d re s o l v e a n yd o u b ts i n th e n o n m o v a n t’s fa v o r. IHSCe da rs Trea tm ent

Ctr. of D eSoto, Tex. , In c. v. Mas on , 143 S. W . 3d 794, 798 ( Tex. 2 0 0 4 ). V . L i m it at i ons A st at ut e ofl i m i t at i ons begi ns t o r un w hen t he cause ofact i on accr ues. Tectoni c Realty I

nv. Co. v. CN

A Ll oyd’ s of Tex. I ns . Co. , 812 S. W . 2d 647, 652 (T e x . A p p .— D a l l a s 1 9 9 1 , w ri t de n i e d ). A c a u se o f a c ti o n a c c rue s w h e n fac ts
c o m e i n to e x i s te n c e th a t a u th o ri z e a c l a i m a n t to s e e k a j u d i c i a l re m e d y . Celtic L ife Ins . Co . v. Co a ts , 885 S. W . 2d 96, 100 ( Tex. 1994 ) . A bad f ai t h c aus e o f act i on i nvol vi ng a n in sur ance cl ai m accr ues on t he dat e t he i nsur erdeni es c o v e ra g e . Mur

ray v. San Jaci

nto Agency

, I nc . , 800 S . W . 2d 826, 828 ( Tex. 19 90 ) . Thi s sam e rul e i s appl i cabl e t o i nsur ance code and D TP A cl ai m s. Stevensv. S ta teFa r m Fi re & Cas . Co. , 929 S . W . 2d 665, 671 ( Tex. A pp. — Tex ar kana 1 99 6, w r i tdeni ed) . I nt ent i onal i nf l i ct i on of em ot i onal di st r ess i sa l s o g o v e rn e d b yth e tw o y e a r s ta tu te o f l i m i ta ti o n s . Bh al l i v. Methodi

st Hosp. , 8 9 6 S .W .2 d 2 0 7 , 2 1 1 (T e x . A p p .— H o u s t o n [1 s tD is t .] 1 9 9 5 , w r it den i ed) . Hence , al l of C hi l der s’ cl ai m s ar e gove r ned by a t w o- yea r st at ut e o f6

l i m i t at i ons , an d a l l s t em f r om t he bad f ai t h a l l ega t i ons . S e eg en era llyT EX . I NS . C ODE A NN . 2 1 .2 1 § 1 6 (d ) (V e rn o n 2 0 0 5 ), repeal ed by Acto fM a y 23, 2003 , 78t h L e g. , R. S. , c h. 1274, § 26( a ) ( 1) , 2003 T EX . G EN . L AW S 3 6 1 1 , 4 1 3 8 ; T EX . I NS . C ODE § 541 . 162 ( V er non Su p p 2 0 0 8 ); T EX . B US . & C OM . C ODE A NN . § 1 7 .5 6 5 (V e rn o n S u p p . 2 0 0 8 ); T EX . C IV . P RA C . & R EM . C ODE§ 16. 003 ( a) ( V er non S u p p . 2 0 0 8) . W e m us tt her ef or e a ddr es s w het herChi l der s’ ca us e o fac t i on a c c r ue d m or e t ha n t w o ye a r s pr i or t o t he da t e t ha ts hef i l e d s ui t
— Augu s t31, 2 0 0 5

— to d e te rm i n e w h e th e r th e g ra n ti n g o f G L Z ’sm o ti o n fo r s u m m a ry j u d g m e n t i s p ro p e r. V I. A n a ly s is A . The Fi r stD eni al

— M a r c h 2003 Bo t h part i es ci t e and di scuss A m er i can Motor

i sts I ns uranc e Co. v. Fod

ge , 63 S. W . 3d 801 ( Tex. 200 1) , as i t i m pac t s t he l i m i t at i onsi ss ue. The que st i on pr esent ed t o ourSu pr em e C ourtw as
w het hera com pensat i on cl ai m ant can pr osecut e a l aw sui tagai nst a ca r r i er t o r ec ove r ben ef i t s and dam age s r es ul t i ng f r om a d eni al of benefi t s w i t hou ta pr i ordet er m i nat i on byt he T exas W or ker s’ C om pensat i on C om m i ssi on t hatbenef i t s ar e due her . W e hol d t hat sh e c ann otdo s o. Id . at802. Thi s ca ses t and s f ort he pr opos i t i on th a t j u s t a s a c ourtca nnot
aw ar d com pensat i on benefi t s und er t he W or ker ’ s C om pensat i on A ctbecause t hatde t er m i nat i on m us t go t hr ough t he adm i ni st r at i ve pr oce ss , nei t herca n t he7

cou rt aw ar d dam age s f or t he den i al ofco m pen sa t i on be nef i t s abs enta hol di ng m a d e th ro u g h th e a d m i n i s tr a t i v e p ro c e s s th a t s u c h b e n e fi ts w e re d u e . Id . at 8 0 4 . H e n c e , “th e p roc e ss p rec l u d e s b a d fai th l i a b i l i ty fo r de n y i n g b e n e fi ts to
w hi ch t he cl ai m anti s notent i t l ed. ” Id . C hi l der s t akes t he posi t i on t hat as a r esul toft he Fodg e h o ld in g , t h e r e is
n o c l a i m fo r b a d fa i th u n ti l th e p ro c e d u r e s u n d e r th e T e x a s W o rk e rs C om pen sa t i on Acth a v e b e en con cl ude d be ca us e, i n e ss enc e, s he hasno ent i t l em entt o be nef i t s t hatha ve bee n w r ongf ul l y de ni ed, unt i l t haten t i t l em ent h a s b e e n d e t e r m in e d u n d e rt h e A c t . W e r e it o t h e r w is e , s h e a r g u e s , p r e s u m a b ly i t co u l d n e c e ss i tate fi l i n g a b a d fai th ca se foll o w i n g th e i n i ti a l d e n i a l o f be n e fi ts by t he car r i er , onl y t o have t he case di sm i ssed i funder th e A c ti tw as s u b s e q u e n tl yd e te rm i n e d th a t s h e h a d n o t b e e n e n ti tl e d to b e n e fi ts . G LZ t akes t he posi t i on t hat n o t o n ly has ourSu pr em e C ourtr ej ect ed C h ild e r s ’s a r g u m e n tre g a r d in g t h e a c c r u a l o f t h e lim it a t io n s p e r io d , b u tt h a tif herpos i t i on w asco r r ec t , a cl ai m antco ul d de l ay i nde f i ni t el y c om pl et i n g t he
a d m in is t r a t iv e p r o c e s s a n d t h e n h a v e a n a d d it io n a l t w o y e a r s in w h ic h t o f ile
su i t f o r b a d f a i t h . I n s h o rt , t h e y a r g u e t h e r e i s n o s t a t u t e , c a se l aw , or re a s o n i n g to s u p p o rt h e r p o s i ti o n . A s o u r s i s te r c o u rt h a s e x p l a i n e d ,8

dam ages const i t ut i ng r ecover y ofl ostcom pensat i on ben ef i t s m ust be pur sued vi a t he A ct r egar dl ess of t he l egal t heor y t hr oug h w hi ch t heyar e s ought . Thus , t he i nj ury s oughtt o ber ec om p ens ed and th e p u rpo se o f t h e rel i e f are a l l i m p o rt a n t. I f t h e rel i e f se rve s to r ecom pense t he w r ong ori nj ur y w h ich w as or i gi nal l y r edr essed u n d e rt h e A c t. . . t h e n t h e A c t c o n t r o ls t h e irre c o v e r y . B u t , ifit serves t o r ecom pense som e w r ong i ndep enden toft he or i gi nal i n j u ry c o m p e n sa b l e u n d e r t h e A c t . . . th e n the A c t an d i ts r est r i ct i ons ar e i napp l i cabl e. . . . Escaj eda di d not have t o exhau st a n yad m i n i strati v e rem e d y , a n d the tr i a l co u rth a d j u ri sd i c ti o n to con si dert hatas pec tofhe r21. 21 and 1 7 .4 6( a) s ui t . Fi nal l y, t hou gh t hi s coul d r esul ti n pi ecem eal l i t i gat i on, t he T exas Su pr em e C o u rtlo n g a g o re c o g n iz e d a n d a p p r o v e d t h a tp o s s ib ilit yin a s u it s u c h a s th i s . Es ca j edav. Ci

gnaI ns . Co. of

Tex. , 934 S . W .2 d 402 , 406- 07 ( Tex. A p p .— A m a ri l l o 1 9 9 6 , n o w ri t). T h e p a rti e s d i s p u te w h e th e r Fodg eha s ove r r ul ed Escaj eda. W i t hout b e c o m in g in v o lv e d in t h a td is p u t e , itisa p p a r e n tt h a tp a rto ft h e re a s o n in g in Es c a jedai s so un d. M uc h o fou rj uri sp r ud en ce i nv ol ve s t he ab i l i t y to av a il
one se l fofourco urt sy st em onl y a f t erad m i ni st r at i ve r em edi esar e e xha us t ed. T h is p r e s u p p o s e s , o fc o u r s e , t h a tt h e re q u e s t e d re m e d yin o u rc o u rt s y s t e m is t he sa m e a s w a s s o u g h t i n t he adm i ni st r at i ve pr oce ss . Her e, how eve r , t he
r edr ess s oug ht t hr oug h t he courtsyst em — t he bad f ai t h cl ai m — i s nott he sam e re d re s s a s s o u g h t th ro u g h th e a d m i n i s tra ti v e p ro c e s s — th e w o rk e r’s
com pen sa t i on c l ai m . Ther ef or e, w e h ol d t hatt he ac cr ualoft he l i m i t at i ons per i od f or a bad f ai t h cl ai m doe s not aw ai t t he out com e oft he adm i ni st r at i ve9

pr oce ss , butr at herbe gi nsatt he sa m e t i m e a s a n y ot herba d f ai t h c l ai m not
con nec t ed t o ourW or ke r ’ s C om pen sa t i on A ct r em edi es , and t hat ac cr uali s on t he d a t e t h e i n s u r e r wr o n g f u l l y d e n i e s c o v e r a g e . W e o v e r r u l e Ch i l d e r s ’ f i r st i ssue. B. The S econd D eni al

— Ju ne /Ju l y 2004 I ti s undi sp ut ed th a t Chi l der s f i l ed su i tw i t hi n t w o ye ar s oft he se con d den i al ofhe rbe nef i t s, w hi ch t he part i esha ve r ef er r ed t o a s t he “s ec ond di sput e. ” G LZ t ak est he pos i t i on t hat C hi l der s w asal l ege dl y “ i nj ur ed”asa r es ul tof t he i ni t i al deni al ofhercl ai m on M ar ch 7 , 20 03 , and t hatt her e w as no new dam a g e o r in j ur y r esul t i ng f r om t he second di sput e. G LZ al so ar gues t hat
a lt h o u g h d a m a g e m a yc o n t in u e t o o c c u r a f t e r a w r o n g f u l d e n ia l o fb e n e f it s , t h is d o e s n o t p re v e n t l i m i ta ti o n s f r o m c o m m e n c i n g to ru n . S ee Mur ray , 800 S. W . 2d at828. H enc e, t heyas se rtt hatt he se con d de ni al di d notr es t artt he l i m i ta ti o n s c l o c k . C h ild e r s t a k e s t h e p o s i t io n t h a tt h e f a c t s o ft h is c a s e a r e c le a r ly di st i ngui sh abl e f r om Murra y. I n t he Mur ray ca se , da m age s con t i nue d t o oc cur aft ert he den i al , w her ea s her e, t he i ni t i al cl ai m and di sp ut e w er e r es ol ved an d ben ef i t s w er e pai d. Then, ar gue s C hi l der s, s he w asag ai n da m age d w hen t he10

s e c o n d d is p u t e o c c u r r e d , t h a tis , w h e n t h e r e w a s a n o t h e rd e n ia l o n a lle g e d ly
n e w g ro u n d s a n d b e n e fi ts a g a i n w e re s to p p e d . W e a gr ee w i th C hi l der s’ ar gum ent . The f i r stde ni al ha d be en f ul l y a nd f i nal l y r es ol ved i n C hi l der s f avo r bef or e t he se con d t w o de ni al s occ ur r ed i n Ju ne and Jul y of2004 . Thes e a re s e par at e i nci den t s t heo r et i ca l l y gi ven r i set o a new bad f ai t h cl ai m . I ft i m el y cl ai m s f or addi t i onal paym ent s by an i nsur ed can giv e ris e to “t he st at ut e ofl i m i t at i ons r unn i ng anew , ” t hen i tf ol l ow s t hat
a d d it io n a l d e n ia ls o fc o v e r a g e a f t e ra n i n i t i a l d e n ia l h a s b e e n f u llya n d f in a lly
re s o l v e d s ta rts th e ru n n i n g o f th e s ta tu te o f l i m i ta ti o n s o n th e n e w d e n i a l . Pena
v. State Far

m Ll oyds , 980 S . W . 2d 949, 954 ( Te x. App . — Cor pu s Chr i s t i 1998 , no pet. ) . W e sust ai n C hi l der s’ i ssue num bert w o and ho l d t hat t he l aw sui tf i l ed by Chi l der s on August 31, 200 5, w as not bar r ed by t he st at ut e ofl i m i t at i ons asi tr el at ed t o t he di sp ut es of t he cl ai m by t he ca r r i er f i l ed June28, 2004 , an d Jul y 8, 2004 . O urdi sp os i ti on ofi ss ue oneaf f i r m s t hatt he st at ut e o f l i m i tati o n s h a d run o n h e r A u g u st 3 1 , 2 0 0 5 l a w su i t a s i t r e l a ted to th e d i sp u te oft hec l a i m b y t hec a r r i e rf i l e d M a r c h 7, 2003 .11 V I I . Concl us i on H a v i n g o v e rru l e d C h i l d e rs ’ fi rs t i s s u e a n d s u s ta i n e d h e r s e c o n d i s s u e , w e a ffi rm the tr i a l co u rt ’s j u d g m e n t i n p a rt , a n d rev e rse an d rem a n d i n p a rt .

B OBM CC OY J U S T I C E PA N EL A : C A YC E, C. J. ; D A U PH I N O T and M C C O Y, JJ. C A YC E, C. J. , co ncu r s w i t houtopi ni on. DEL I VERE D: Apr i l 3, 2008