### TEXA S C OU R T OF A PPEAL S, THIR D DIST R ICT , AT AU STIN

NO. 03-03-00764- CV

Bobb y W e bb, A ppe lla nt

v. Texas P ropert y and Casu alty Insu rance G uaranty Association, Appellee

F ROM THE DISTRICT CO URT OF TRAVIS COUNTY , 261ST JUDICI AL DISTRICT NO. GN303708 , HO NORAB LE DARLENE B Y RNE, JUDGE P RESIDING

M E M O R

A N D U M O P I N I O N
I n 1998, while driving throug h L ouisiana, appellant Bobby Webb was involved in an
acc ident cause d by

a vehic le driven by

L eroy Shiloh. S hi l o h wa s em ploy ed by and ac ting in the
course and scope of his employ ment with CX Transportation, a s u b d i v i s ion of TI C United Corporation, which is a Tex as resident. I n Marc h 1999, Webb sued Shiloh and CX Transportation in a L ouisiana district court, a nd TI C U nited appea

red on behalf

of CX Tra

nsportation, submitt ing to the jurisdiction of the L ouisiana cour t. Whi le that suit wa s p ending , TI C United filed for ba nk ru ptc y in T e xas. Whil e TI C U nit e d’ s b ank ru ptc y pr oc e e din g wa s pe nd ing , We bb a me nd e d h is lawsuit to add as a defe ndant Reliance National I nsuranc e Company , TI C U nited’s insurer , which had home of

fice s in W iscons i n an d ad minist rative of fice s in New Yor

k. There afte r, Reliance National wa s decla

red a n impaired insure r by

the Pennsy lvania De partment of I nsuranc e.2 I n September 2003, Webb fi l ed t h i s suit aga inst appellee the Texas Property and Casualty I nsuranc e Guar anty Association (“the Association”) , asser ting a rig ht to recove r under the Texas Property

and Casualty

I nsuranc e Gua

ranty Act (“ the Guar anty Act” or “the Ac t”). See T e x. I ns. Code Ann. ar

t. 21.28-C (West Supp. 2004-05). T he Association filed a plea to the jurisdiction,
a sse rt ingthat We bb la c ke d sta nd ingto s ue the As so c ia tio n, ba sin g its argume nt o n th e g e ne ra l r ule that an injured third- party lacks standingto sue an insure r until liabili ty is established. See O wens v. Allstate Ins. Co. , 996 S.W .2d 207, 208 (Tex. App.—Dallas 1998, pet. denied). The Association further argued that ther e wa s no justiciable controve rsy with o u t a d et ermination of Reliance National’s leg al obliga

tion to pay damag es and that without that deter mination, Webb was see king an improper

advisory opinion. Webb counte red that he nee d not show that he would be a ble to bring a dire ct ac tion ag ains t R eliance National bec ause the lang uag e of the Guar anty Act provide s for a direc t action ag ainst the Association and a n action ag ainst TI C United would be a wa ste of time and
re so ur c e s. Th e tr ia l c ourt g ra nte d th e As so c ia tio n’ s p le a and dis mis se d th e c a se . We bb a pp e a ls,
co n t en d i n g that he should be a llowed to proce ed dire ctly ag ainst the Association without being
re qu ir e d f ir st t o o bta in a

jud g me nt a g a ins t T I C U nit e d, wh ic h is ba nk ru pt a nd wh os e ins ur e r is in liquidation. W ebb conte nds that the As s o ciation i s obligated to pay his “cove red c laim” and that
re qu ir ing him to ob ta in a jud g me nt a g a ins t TI C Un ite d wo uld thw art the purp os e s of the Gu a ra

nty Act. We af

firm the trial c ourt’s orde r g ranting the plea to the jur isdiction.
Stand ard of Review A p le a to the jur isd ic tio n see ks the dis mis sa l of a c a us e of a c tio n w ith ou t r e g a rd

to the merits of the claims. Bland Indep. Sc h. Dist. v. Blue , 3 4 S
. W
. 3 d 5 4 7 , 5 5 4 ( T e x . 2 0 0 0 )
. In3

revie wing the g ranting of a ple a to the jurisdiction, we liber ally construe the pleading s in favor of j u risdiction and look to the plaintiff’s intent. Texas Ass’n of Bus. v. Tex as Air Contr ol Bd. , 852 S.W. 2d 44 0, 44 6 ( Te x. 19 93 ); City of Sa n Ange lo v. S mi th , 6 9 S. W. 3 d

3 0 3 , 3 0 5
- 0 6 ( T e x. App.—Austin 2002, pet. denied) . To preva il on its plea to the jurisdiction, the defe ndant must show that, assuming a ll f

ac t u al al leg ations in the plaintiff’s plea dings a re true , there is a jurisdictional defe ct appa

rent on the f

ace of the plea dings that would be impossible to cure. Sm ith , 69 S.W .3d at 305. I n decidinga plea

to the jurisdiction, the trial court should he ar evidenc e as nece ssary to the jur isd ict io nal i ssu e s, bu t th e pla int if f i s n ot r e qu ir e d to pr e vie w h is c a se on the me ri ts t o e sta

bli sh jurisdiction. Blue , 34 S.W .3d at 554-55.

Sub je c t- ma tte r j ur isd ic tio n r e fe rs to t he kin d o f c on tr ov e rs ie s a c ourt ha s a uth or ity to hear , authority

conf er re d b y constitution, st atutes, and the pleading s. CSR Ltd. v. Li nk , 925 S.W .2d 591, 594 (Tex. 1996). Subject-matte r j urisdiction includes the issues of standing and ripene ss. Pe rry

v . D e l R io , 66 S.W.3 d 239 , 249 (T e x. 20 01 ) ( ri pe ne ss) ; Blue , 34 S.W .3d at 553-54 (standing ). Standing implicates the Texas Constit ution’s ope n courts provision, which c ontemplates
co u rt ac ce s s only

for litiga nts suffer ing a

n injury
. Te

x as As s’ n o

f B us . , 8 5 2 S. W. 2 d

a t 4 4 4
. “The g ener al test for standingin Texas re q u i res that there ‘( a) sha ll be a re al controve rsy betwee n the parties, whic h (b) will be a ctually d et er m i ned by

the judicial dec laration sought.’” Id . at 446 ( q u o t i n g Bo ar

d o f W ate r E ng ine e rs v . Ci ty

of S an An ton io , 2 8 3 S. W. 2 d

7 2 2 , 7 2 4 ( T e x. 1 9 5 5)). Ripeness is one aspe ct of justiciability
. Pe rry , 6 6 S
. W
. 3d at 249. I n examining the ripe ness of a claim, we de termine whe ther a dispute has mature d to a point warr anting a co u rt decision, asking4

whether the claim involves unce rtain or c ontinge nt future e vents. Id . An opinion issued in an unripe
case is an improper a dvisory opi n i on beca

use it addre sses only

hy pothetical injuries and doe s not
reme dy actua l or imminent harm. Se e Te x as As s’ n o

f B us . , 852 S.W .2d at 444. A cla imant seeking to establish ripeness ne ed only show that the fa cts have develope d sufficie ntly that injury

is imminent or likely
. W

aco Inde p. Sch. Dist. v. Gibson , 22 S.W .3d 849, 852 (Tex. 2000).

Discussion O na p p e a l , W e b b a s s e rt s t h a tt h e G u ar an t y A c tp r o v i d e s h i m , ani n j u r e d t h i r d

- p a rt y, a dire ct ca

use of a ction ag ainst the Association. S ee T ex . I n s. Code Ann. ar t. 21.28-C. The As so c ia tio n a

rgue s th a t We bb is b arr e d f ro m br in ging this s uit

by bo th s tand ingand

ri pe ne ss
c on sid e ratio ns . N e ith e r p art y dis pu te s th a t th e re ha s b e e n no ju di cia l de te rm inatio n o f l ia bil ity ag ainst CX Transportation, TI C United, or any related entity
. The rec ord does not ref lect whe ther Reliance National made any kind of cover ag e decision befor e being decla red impaired, and it does not appea r that Webb filed a c laim with Reliance National’s rec eiver or that the re ceive r or a ny other responsible pa

rty has made any

cover ag e dete rmination. A rti c le 2 1
. 2 8

- C is to b e c o n s tr u e d w it h arti c le 2 1
. 2 8. S

ee B erke l v. Texas Prop. & Cas. In s . Guar . Ass’n , 9 2 S. W.3 d 5 84 , 5 88 (T e x. Ap p. —A us tin 20 02 , p e t. d e nie d) ; Chandler v. J or ge A. Gu tie rre

z, P. C. , 906 S.W .2d 195, 199 (Tex. App.—Austin 1995, writ denied). U nder
art ic le 21 .2 8, wh ic h g ov e rn s the liq uid a tio n, re or g anizatio n, and c on se rv a tio n o f i ns olv e nt i ns ur e rs , a rec eiver stands in pla ce of an insolvent insurer. Eagle L ife Ins. Co. v. He rnandez , 743 S.W .2d 671, 67 1 (T e x. Ap p. —E l Pa so 19 87 , wr it d e nie d) ; see Tex. I ns. Code Ann. art. 21.28 (West Supp. 2004-5

05 ). I f a liq uid a tio n, re ha

bil itatio n, or c on se rv a tio n o rd e r i s e nte re d, a ll p art ie s w ithc la ims a g a ins t the insolvent insure r must submit the ir claims to the rec eiver within the time frame provided by the
c ourt
. T e x. I n s . C o d e A n n . art
. 2 1
. 2 8 , § 3 ( a )
. T o s u e a r e c e i v e r f o r a r e j e c t e d c l a i m , a p art y m us t provide proof

that it tim ely

filed its claim with the rec eiver
. Chandler , 906 S.W .2d at 199. The Gua ranty Act is intended to “provide a mechanism for the pa y ment of cove red claims under c erta in insurance policies to avoid excessive dela y in pay ment” and to “ avoid financ ial loss to claimants or policy holders bec ause of

th e i m pairment of a

n insurer.” Tex. I ns. Code Ann.
art . 2 1. 28 -C , § 2; see Chandler , 906 S.W .2d at 199. The Guar anty Act is requir ed to pay

“cove red
c l a i m s ” a g a i n s t an i n s o l v e n t i n s u r e r , T e x. I n s . C o d e A n n . art
. 2 1
. 2 8

- C , § § 2 , 8( a ), a ndis t o “under take to discha

rg e the policy

obligations” of an impaire d insurer a s far as t hose oblig ations are covered by

the Act, id ., § 8(b), but the Assoc iation is not considered to be in the business of in s u r an c e o r to h a v e a s s u me d th e im p a ir e d in s u r e r ’ s li a

b il it ie s . Id . A rt ic le 21 .2 8 s pe c if ic a lly includes unl iquidated or unde termined c laims in it s provisions for filing claims with a re ceive r. Id
. art
. 21 .2 8, § 3( d)
. Th e Gu ara nty Ac t, h ow e ve r, do e s n ot r e fe r t o unli qu idate d o r u nd e te rm ine d c la ims i n i ts definition of a “c overe d claim.” Id
. art
. 2 1
. 2 8

- C , § 5 ( 8 )
. A “ c o v e r e d c l a i m ” i s “ anu npa id claim of a

n insured or third- party

l i ab i l i t y claimant that arises out of and is within the cove rag e.” Id
. Webb a cknowledg es that g ener ally an injured third-par ty claimant cannot sue an insurer dire ctly

until there has be en a de termination of the insure d’s liability and, ther efore, the insurer’ s obligation to pay the claim. See M oxon v. R ay , 8 1 S. W.2 d 4 88 , 4 89 (T e x. 19 35 ); Jones v

. CGU Ins. Co. , 78 S.W.3 d 6 26 , 6 29 (T e x. Ap p. —A us tin 20 02 , n o p e t.) ; Owens , 996 S.W .2d at 208.6

He likens his situation t o that of the c laimant in Bailey v . Brodhead , howeve r, and argues t hat under Bailey’s logic , he should be allowed to proc eed w ith a direc t action ag ainst the Association without first obtaining a judg ment ag ainst TI C United. See 838 S.W .2d 922 (Tex. App.—Austin 1992, no writ). I n Bailey , an injured third- party clai m an t fi led a c laim with an insolvent insurer’s
rec eiver within the timetable set out by article 21.28. Id . at 924. The r ece iver re jected the claim, and the claimant s u ed wi thin the statutorily mandated timetable
. Id . The re ceive r then a sserted a lim itatio ns de fe ns e , arguin g that, a lth ou g h the c la im and laws uit we re tim e ly fi le d un de r artic le 21.28, the two-y ear

statute of limitations had run as to the cla imant’s claim ag ainst the insured. Id
. Be cause the claimant no long er ha d a viable c laim ag ainst the insured, the rec eiver argued that it had
no obligation to pay

the claim. Id
. We he ld t

hat be c a us e the statut e a llo ws fo r t he fi lin g of

a c la im wi th a re c e ive r a

nd a c la ima nt n e e d n ot o bta in a jud g me nt a g a ins t the ins ur e d to wi n a su it a g a ins t
a re c e ive r, it w a s n ot n e c e ssa ry to s ue the ins ur e d, a “ po te nti a lly us e le ss a c t,” be fo re su ingon a c la im timely filed with and re

jected by the re ceive r. Id . at 92 5. I ns te a d, the tim e ly fi lin g of the c la im w ith the re ceive r to ll e d th e r

u n n in g o f li mi tati o n s a s to a c la im a g a in s t th e in s u r e d an d d e f e a te d the
rec eiver ’s def

ense of limit ations. Id
. First, we not e t h at the claims in Bailey wer e broug ht pursuant to article 21.28, not under the Guar anty

Act. Id . at 925. Second, B ailey sued t h e re ce i v er, not the A ssociation. Id . at 924. Finally , the suit was broug ht afte r t he rece iver made a li ability and cove rag e dete rmination and reje cted the c laim. Id
. Article 21.28 allows a claimant to br ing an action ag ainst a rec eiver afte r theT h e “ a c ti o n s ” r e f e r r e d to in th e A c t r e late to a c ti o n s ta k e n b y th e A s s o c iati on and allow 1 ag g rieve d insurers to appea l such ac tions to t he Commissi oner of I nsuranc e; final a ctions or orde rs by the commissioner ar e subjec t to judicial review in Tr avis County
. See Te x. I ns . Co de Ann. a rt
. 21.28-C, §§ 9(f) (3), 10( f), ( g ) (West Supp. 2004-05). 7 reje ction of a claim. Tex. Ins. Code Ann. art. 21.28, § 3(h). The Guar anty Act contain s n o such provisions for an a ction ag ainst the Association. Thus, Bailey is disti ng uishable fr om this case. 1 As we discusse d in Berke l , the Gu ara nty Ac t wa s inte nd e d to pro vid e fu nd s “ that a
rece iver may

draw upon to pay

cover ed cla ims.” 92 S.W .3d at 588 ( emphasis added). The Association is ch arg ed with investig ating , compromising, se ttling, and pa y ing c laims owed by

an impaired insurer as required by statute. Id . at 589. Howe ver, it is for a rec eiver to initi ally

approve or rej ec t a cl ai m fi led ag ainst an insurer , and, if the c laim is covere d by a g uara nty fund, re fer

the claim to the appr opriate guara nty association for

proce ssing. Id . at 59 0- 91 & n. 4 ( c iti ngTe x. I ns . Code Ann. ar

t. 21.28, § 3(h), (i)) . The Assoc iation must pay “cover ed cl aim s.” Id . at 591 (c iting Te x. I ns . Co de Ann. art . 21. 28 -C , § 8( a ))
. I n othe r wo rd s, a c la ima nt mus t fir st f

ile his c la im w ith the re ceive r, who de termines whe ther the c laim is covere d. I f the re ceive r re ject s t h e cl ai m , the claimant may

then proc eed a g ainst the rec eiver in the re ceive rship court. See Tex. I ns. Code Ann.
art . 2 1. 28 , § 3( h) ; Berke l , 92 S.W. 3d a t 59 0; Bailey , 838 S.W .2d at 925. I f the re ceive r dete rmines the claim is cove red by

the fund cre ated under t he Act, he or she should then ref er the claim to the As so c ia tio n f

or pa y me nt. Te x. I ns . Co de Ann. art . 2 1. 28 , § 3( i) ; Berke l , 92 S.W .3d at 588. The
rec eiver , not the Association, makes fac tual deter minations a s to w hat claims are cover ed. Berke l , 92 S.W. 3 d

a t 5 9 0 ( r e c e iv e r ’ s “ d e te r mi n a ti o nis f

in a l a n d b in d in g u n le s s s e t a s id e in th e ma nner authorized by

the statutes”)
.8 This Court has hel d that a suit broug ht ag ainst the Association byan injured thirdparty should be dismissed wher e it is clea r t hat t he thi rd-pa

rty could not maintain a cla im ag ainst the insurer. See W

oods v. Texas Prop. & Cas. I ns. Guar. Assn’n , No. 03-01-00138- CV, 2001 Tex. App. L EX I S 80 67 , at *6 -7 (Aus tin De c . 6, 200 1, pe t. de nie d) (n ot d e sig nate d f or pu bli c a tio n) ; Rodriguez v. T exas. Prop. & Cas. Ins. Guar. Ass’n , No. 03-98-00518- CV, 1999 Tex. App. L EXI S 6910, at *7-8 (Austin Sept. 10, 1999, no pet.) ( n ot desig nated f or publication). W

oo ds and Ro dr igu e

z involved sim ila r f a c tua l si tuatio ns —in

bo th c a se s, the thi rd -p art ie s se ttl e d th e ir dis pu te s w iththe ins ur e ds , signingrele ases that vitiated a ll claims ag ainst the i nsureds. 2001 Te x . App. L EXI S 8067, at *3-4; 1999 Tex. App. L EXI S 6910, at *4-5. I n W oods , the As so c ia tio n int e rv e ne d in th e recei ver sh ip proce eding in order to a ssume its statutory duty to proce ss cover ed claims in the impaired insure r’s estate. 2001 Te x . App. L EXI S 8067, at *2. After Woods signe d the re lease , the Association moved for summary

judgme nt arguing that Woods no longe r ha d a v iable cla im ag ainst the insureds. Id
. at *2-3. In Rodriguez , the plaintiffs obtained a n ag ree d judgme n t o f liability on the par

t of the in s u r e d s an d th e n f

il e d a c la im in th e r e c e iv e r s h ip p r o c e e d in g f o r th e im p a ir e d in s u r e r . 1 9 9 9 T e x. App. L EXI S 6910, at *3, 5-6. The r ece ivership cour t rejec ted the cla ims, and the plaintiffs then sued the Association, which moved for summ ary judgme nt on the g rounds that by signinga re lease as par

t of the a g ree d judgme nt, the plaintiffs g ave up a ny claim they

had ag ainst the insureds. Id
. at *5-7. We he ld that the re le a se s of lia bil ity de fe a te d any su its a g a ins t th e receiv e rs or the Association becau s e th e th ir d

- p arti e s n o lo n g e r h a d an y v ia b le c la im s a g a in s t th e in s u r e d s . 2 0 0 1 T ex. App. L EXI S 8067, at *6-7; 1999 Tex. App. L EXI S 6910, at *7-8.Both W oo ds and Ro dr igu e

z inv olv e d c la ims fi le d b y inj ur e d th ir d- pa

rt ie s in re c e ive rs hip 2 proce eding s. W

oods v. Texas Prop. &Cas. I ns. Guar. Assn’n , No. 03-01-00138- CV, 2001 Tex. App. L EX I S 80 67 , at *2- 3 (A us tin De c . 6 , 2 00 1, pe t. d e nie d) (n ot d e sig nate d f or pu bli c a tio n) ; Rodriguez v. T exas. Prop. & Cas. Ins. Guar. Ass’n , No. 03-98-00518- CV, 1999 Tex. App. L EXI S 6910, at *3-5 (Austin Sept. 10, 1999, no pet.) (not desig nated f or publication). Although Re liance N ational was not based in or de clar ed impaire d in Texas, nothing in the 3 statutes allows a dire ct suit ag ainst the Association in situations invol ving non- Texas insurers. Web b a sse rt s th a t he “ wi ll n o d ou bt f a c e a wa ive r c la im i f he make s any re pr e se ntatio n to 4 the bankr uptcy court .
. . that he will not seek to enf orce a judg ment ag ainst” TI C United. Howeve r, case law provide s that an injured third-par ty may ag ree not to e nforc e a judg ment ag ainst an insured and sti ll p ro c e e d a g a ins t th e ins ur e r, a s lon g a s the thi rd -p art y do e s no t re le a se the ins ur e d f ro m a ll liability
. Compare Hort on v. State De p’t of Ins. Rec eive r J. Robert Hunte r , 9 0 5 S. W. 2 d 5 9 , 6 2 ( T e x. Ap p. —A us tin

19 95 , n o wr it) (t

hir d- pa rt y se ttl e d w ithins ur e d a

nd sig ne d c ov e na

nt n ot t o e xec ute jud g me nt i n e xch ang e fo r as sig nme nt o f i ns ur e d’ s r ig hts to p ro c e e d a g a ins t in sure r a nd re c e ive r; he ld that ag ree ment not to enforc e does not vitiate a ll claims ag ainst insured and third- party may there fore proce ed aga inst rece iver), with Po ol v . D ur ish , 848 S.W .2d 722, 723-24 (Te x . App.—Austin 1992, 9 We r e c og nize that th e sit uatio n h e re is di ffe re nt— Web b h a s n ot r e le a se d CX Transpor tation or TI C United from liability
. Howeve r, neither W oo ds nor Ro dr igu e

z is inconsistent 2 with our holding today and we believe that the logic underly ing those case s c arr ie s so me we ig ht i n this case. The plaintiffs in W oo ds and Ro dr igu e

z could not succe ed in their suits against t he
re c e ive rs or

the As so c ia tio n—

the fa c ts s ho we d th a t th e ir c la ims a g a ins t th e ins ur e ds ha d n o me ri t beca use the insure ds were no longe r liable to the plaintiffs. I n other wor ds, without li ability by the insureds, the Assoc iation, throug h the re ceive rs, had no duty to the plaintiffs. Webb has not soug ht to h a ve the ins ur e ds ’ l ia

bil ity de te rm ine d b y

the re c e ive r and , th

us , h a s n ot e sta

bli sh e d th a t hi s c la ims
are cover ed so as to trig g er a n Association duty
. The statute does not a llow a third-par ty to skip the 3 filing of a claim with the rec eiver and proc eed w ith direct ac tion ag ainst the Association without any finding of liability

having been ma de. See Te x. I ns . Cod e Ann. art . 2 1. 28 -C , § 8; Berke l , 92 S.W .3d at 590. Ther efor e, Webb’s suit ag ainst the Association is premature a nd not justi ciable. 4writ denied) (third-pa rty settled and e x ecute d “full, complete and f i n al dischar g e and r elea se” of insured; held that due to r elea se, third-pa rty reta ined no claim ag ainst insured or, ther efor e, insurer ). 10 Conclusion Webb is corre ct that the Association is o b l i gat ed to pay “cove red c laims” and that such cla ims can include c laims made by third-par ties. Howeve r, as discusse d above, the Association does not make a

n independe nt determination of whic h claims are “cove red.” We hold that a thirdpa rt y c la ima nt a g a ins t an imp a ir e d ins ur e r may no t purs ue a dir e c t c la im a g a ins t the As so c ia tio n unti l it is shown that a determination has be en made as t o wh et h er t he cla im is a “cove red c laim.” Wit hout such a determination, there is no justi ciable dispute or controve rsy

betwee n Webb and the Association. We there fore af fi rm the trial cour

t’s g ranting of the Assoc iation’s plea to the jurisdiction.

__________________________________________ David Pury ear , J ustice Be fore J ustices B . A. Smith, P ury ear and Pember

ton Affir med Filed: June 8, 2005