1 Real Parti es in in terest include Lili th Brainard, Sally Brainard W icker, E. Sw asey F. Brainard, II, Am y Braina rd, Be rklee Bra inard Clements , Sena Brainard and the E state of Edward H. Brainard, II, col lecti vely refer red to as the Brai nards. NO. 07-01-0377 -CV IN THE COU RT OF APP EALS FOR THE SEVENT H DISTRICT OF TEXAS

AT AMA RILLO PANE L D OCTOBER 30, 2001

______________________________ IN RE TRIN ITY UNIV ERSA L INSURA NCE COM PANY , RELATOR

_______________________________ Before BOYD, C.J., and QUINN and REAVIS, JJ. Bythis ori ginal proceedi ng, relat or Tri nity Unive rsal Insur ance Company (Trinity)
see ks a writ of mandam us to compel respondent, the Honorable Steven R. Em m ert , presiding judge of the 31 stDistrict Court of Gray Count y, to vacate h is order sign ed Septem ber

14, 2001, and en te r an order granting Trinity’s motion for severance and abatem entin its entirety in cause numb er 31,677 styled Lilith Brainard, et al

. v. Prem ier Well Service, Inc., et al . (Prem ier). 1 For t he rea son s ex pre ssl y be low , we co ndit iona lly grant the peti tion for writ ofmandam us.2 The order of dism issal as to Prem ier and its operator did not dismiss theBrainards’

claims against T rini ty. 2 Trinity issued its insuran ce policy to Brainar d Cattle Com pany, E.S. F. Brainard, et al. for a po li c y period com menc ing August 26, 1998 through August 26, 1999. Am ong other provisions, the policy included an uninsured/unde ri nsured (UIM) motorists insu rance endorsem ent. Edward H. Brainard, II, an insured under the poli cy, sustained fatal injuries in a head on collision with a mo torized work over rig ow ned and operated by an em ployee of Prem ier. Af

ter theBr aina rdsfiled the ir

origi nal peti tion i n the underl ying acti on against Prem ierand its employee seeki ng t o recover dam ages occasioned by the accident and discovered that the limits of liability insurance for Prem ier did not exceed one m illi on doll ars, the Brainards ma de a written claim on April 18, 2000 for UIM benefits and Trinity acknowledged receipt of t he claim and requested supporting information. Bytheir second am ended petition filed October 30, 2000, the Brainards j oined Trini ty as a defendant and asserted several claims pursuant to the contract, including cl ai ms und er t he U IM end ors em ent and goo d fa ith/ unf

air settleme nt practices and art icle 21.55 of the Texas

Insurance Code entitled Prom pt Paym ent of Claims. Tex. Ins. Code Ann. art. 21.55 (Vernon P amph Supp. 2001). Following the Brainards’ settlem ent with and dismissal of their claims against P remier and t he o perator of its equipmen t, 2 by order signed June 11, 2001, am ong other things, the trial court denied Trinity’s first mot ion for
severance. Then, on June 29, 200 1, Trinity filed i t’s second m otion for severance and3

aba tem ent , w hich thetria l cou rt p art ially granted. The trial court severed the Brainard s’ good faith/unfair settlement p ractices and article 21.21 claims, but denied seve rance of the art icle 21 .5 5 c l ai m. Because the Brainards do not challenge the severance of their good fait h/u nfa ir

set tlem ent pra ctices a nd a rtic le 21.21 claims, the question presented for our decision is whether the t rial court abused its discretion in faili ng to gr a nt the m otion for
severance of the Brainar ds’ claims under article 21.55 as applicable to their UIM clai ms.
Standards of Review
Sever ance. Rule 4 1 of the Te xas Ru les of Civil Procedure provides that “[a]ny claim against aparty m ay be s evered a nd pro ceed ed with separatel y.” In McGuire v. Com merc ial Union Insurance Co. of N.Y., 431 S. W.2d 34 7, 3 51 ( Tex . 19 68) , th e Co urt held thattheruleref

ersto aclai m “w hich is a s eve rab le part of a controversy which involves
m ore th an one cause of act ion. [Citation omitted]. R ule 41 grants the trial judge broa d discretion in the ma tter of consolidation and severance of caus es.” Id. The object ive of
a severance is to do just ice, avoid prejudice, and furthe r convenience. Guaranty Federal
v. Horseshoe Operating, 793 S. W.2d 65 2, 6 58 ( Tex . 19 90) . A clai m is p rop erly

severa ble if (1) the controversy involves more than one cause of action, (2) the severed c laim is one thatwould be the proper s ubject of a law suit if independently asserted, and (3) the sev ered claim is not so interwoven with the rem aining action that they involve the sam e facts and issues. Id ; Lusk

v. Pu ryear, 8 96 S.W.2d 377, 379 (Te x. Ap p. -- Ama rillo 1995, orig. proceed ing). The rule, however, does not contem plate the severance of one cause of4

action into two or more parts. Pierce v. Reynol ds, 160 T ex. 198, 3 29 S.W.2d 76, 78 (1959).
Manda mus . Because Trinity’s challenge to the order denying severance as to t he art icle 21. 55 c laimis a ddr ess ed to an abu se of dis cre tion ves ted in the trial court, Trinity carries a heavy burden. To prevail Trini ty “m ust establish, under the circum stances of the
cas e, t hat

thefac ts a nd la w

per m itthe trial court to m ake but one decisi on.” Johnson v. Fourth Court of Appe als, 700 S .W.2d 916, 917 (Te x. 1 985). In reviewing rulings within the trial court’s discretion, we m aynot substitute our j udgme nt for that of the trial court. Id. at 918. Nor m ay we res olve factual disputes in mandam us proceedings. Brady v. Fourteenth Court of Appeals, 795 S .W .2d 712, 714 (Tex . 1990). How ever, our review of the t rial court’s determ ina tio n of applicable law is less deferential because a trial court has no discretion to determ ine what the law is or apply the law to thefacts . Walker v. Pac ker, 827 S.W.2d 833, 840 (Tex. 1992). Thus, a clear failure of the trial court to analyze or apply the law correctly w ill constitute an abuse of discretion.
A w rit o f m and am us w ill issue only where there is no ad equate remed y at law and to correct

“a clear abuse of discretion.” (Em phasis added). Johnson , 700 S.W.2d at 918. The test for abuse of disc retion is whether the trial court acted w ithout reference to any guiding rules and principles or whether the act was arbitrary and un reasonable. Down er
v. Aquam arine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985). The fac t that a trial judge ma y decide a m atter within h is discretion in a different manner than an appellate5

judge in similar circumstances does not dem onstrate that an abuse of discretion has occurred. Id.
An alys is
We com m enc e ou r an alys is by foc usin g on Trin ity’s grou nds for its m otion fo r severance and the coverage provision of the UIM endorsem ent. By its second m otion for severance and abatem ent, in sum mary , Trinity contended:
First. The UIM claim should be severed fromthe ext ra -c on tr ac tu al cl ai ms because evidence of s ettlement n egotiations and insurance policy limits may be r elevant to the ex

tra-contractual claims but is not adm issible as to the UIM claims. Secon d. Trinity should not be required to undergothe ex pense of discov ery as to the ex

tra-contractual claims, w hen the re isa substantial possibility that the da ma ges awarded in the contract claim w ill not exceed the limit of the tortfeasor’s policy, an d thus will not even tri gger th e UIM endors ement , which would preclude any neces sity to discover or litigate th e e xt racontractual claims. The coverage p rovisi on of the UIM endorsement in the pol icy provi des:
We w ill pay damages which an insured is legally entitl ed to recover fromthe ow ner or operator of an uninsured m otor ve hicle becau se of b odily inju ry sustained by

an insured, or property dam age caused by an accident. The owner’s or operat or’s liabil ity for these dam ages m ust arise out of the ownership, m aintenance or use of the uninsured m otor vehicle. Any judgm ent for dam ages arising out of a suit brought w ithout our written consent is not binding on us. If we and you do not agree as to w hether or nota v ehic le is actually uninsured, the burden of p roo f asto t hat iss ue s hall be on us.6

By their second am ended petition by which Trinity was joined as a defend ant, t h e Brainards alleged that although they had m ade a claim for UIM benefits und er the poli cy before filin g su it ag ains t Tr inity, no ben efits were paid under the policy. In ad dition to contract dam ages, the Brainards also sought to recover interest and attorney’ s fees under article 21.55, in addition to claims of good faith/unfair settlem ent practices.

Se ve ra bi l i ty of

UI M a nd Ar ti cl e 2 1. 55 Cl ai ms Although the Brainards do not challenge Trinity’s statem ent that it m ade an offer to set tle the UIM claim, they contend severan ce was not proper under Lusk v. P uryear, 896 S.W.2d 377 ( Tex .A pp. --A m arillo199 5, o rig. pro cee ding ). F romthelim ited record , it appearsthat the tria l court based its decisi on to deny the seve rance of the UIM prom pt paym enton our d ecision i n Lusk ; however, Lusk is not controlling because of the provisions of the UIM endorsem ent, the recent decision in Allstate Ins. Co. v. Bonner, 51 S.W.3d 289 (Tex. 2001), and other reasons discus sed below.
Lusk did not involve a claim for UIM benefits. In Lusk , w e he ld thata cross-action against an insurer for breach of contract and for statutorydam age s fo r fa ilure to p rom ptly paypersonal injury protection benefits constitu ted one cause of ac tion and that a
severance of the claims was im proper. 89 6 S.W.2d at 380. How ever, unlike personal inj uryprotectio n benefit cove rage, the provi sions of the UIM endorse ment co ndit io n paym entof benefits upon a determ ination of liabi lity of the UIM m otorist and dam ages. In7

Henson v. Texas Farm Bureau Mut. Ins. Co, 989 S.W.2d 837 , 83 9-4 0 (T ex .A pp. --A m arillo 199 9), aff’d , 17 S.W .3d 652 (Tex. 2000), we deni ed an award of prejudgment interest be cause thecon ditio n pr ece den t pr

ovis ion in thecon tra ct f or p aym ent

of t he U IM clai m remained to be determ ined when theUI M c laimwas pres ented. The Brainards’ claim for UIM benefits is contrac tual in nature. See Henson , 17 S.W.3d at 653-54; see also U.S. Fire Ins. Co v. Millard, 847 S.W.2d 668, 672-73 (Tex.App. --Houston [1 stDist.]1993, orig. proceeding) (holdi ng that a breach of i nsurance contra ct claim is separat e and disti nct from bad faith, Insurance Code, or DTPA claim s, and [ u]n insured mo torist claims and bad fa ith claims have been recognized as separate and distinct causes of action wh ich might each constitute a com plete lawsuit within itself.
Citi ng State FarmIns. Co. v. W ilborn, 835 S.W .2d 260, 261 (Tex.A pp.--Houston [14 th Dist.] 1992, orig. proceeding). I n Bonne r, 51 S.W.3d at 291-92, which involved a prom pt paym entclaim under UIM endorsem ent, the Court held that in order to es tablish a UIM claim und er t he p olicy , th e cla im ant m ust pro ve n ot o nly t hat

theUI M d riv er negligent ly caused the accident that resulted in the covered damag es, but also that al l appl ica ble poli cyprovisi ons were satisfie d. The Court al so denied an award of attorney’s fees under section 6 of articl e 21.55. Also, i n State Farm Mut. Auto Ins. Co. v. Grayson, 983 S.W.2d 769, 770 (Tex.A pp.--San Antonio 1998, no pet.), cited with approval in Bonner , 51 S.W.3d at292, the court stated the rules that a claimant m ust (1) establish the negligence of the3 Sever ance of the art icle 21.55 c laim w ill not require additi onal l itig ation becau se the trial court did order a severance of the bad fa ith and article 21.21 claims. 8 UIM operator and the am ount of claimant’ s dam ages, and (2) that the ope rator wasin fact uninsured.
S tate Fa rm Ins. Co. v. Wilborn, 835 S.W .2d 260 (Tex.A pp.--Houston [14 th Dist.] 1992, orig . pr

oce edin g) and U.S. Fire Ins. Co. v. Millard, 847S.W.2d 668 (Tex .App.
-- Houston [1 stDist.] 1993, orig. proceeding) recognize that bec ause uninsu red motorist cl ai ms and bad faith claims are sepa rat e and distinct causes of act ion and each m ay constitute a complete lawsuit, seve ran ce of the claim s and abatem ent of the bad faith cl ai ms is appropr iate because of the irre concil able confl ict between the respective parties’ inte res ts i f

severance is denied. Further, in Mil lard , 847 S.W.2d at 673, in its discussion of abatem ent the court recognized that judicial efficiency ma y be enhanced by severance and abatement because litigation of the extra-contractual claims m ay never be required because of the resu lts of t he contract litigation, which is addressed in Trinity’s second ground. 3 Because (1) the claim for UIM benefits is contractual and the claim fo r penalty under article 21.55 controversy involves m ore than one cause of a ction, (2) the severed claim is o ne t hat

w ould be the proper subj ect of a laws uit if independently asserted, and (3) the article 21.55 claim is not so interw oven with the tort ac

tion and contract action that theyinvolve the sam e fac ts an d issues, the claim for dam ages under article 21.55 was severable.9 Mandam us Having determ ined that the a rticle 21.55 claim was severable, we m ust now determ ine whether a writ of m andam us is appropriate, which requires that w e find that (1) the tr ia l c ou rt ab us ed it s di scr et io n, an d ( 2) th at Tr in it y ha s no ad eq ua te re medy at la w. Regarding the abuse of disc ret ion f

indin g, o ur a nalysis abo ve d em ons tra testha t it is clear thata UIM claim does no t m ature unt il the claimant es tablishes that the negligence of the UIM m oto rist

(1)cau sed theacc iden t an d th e am oun t of dam age s, ( 2) t he m oto rist w as in fact underi ns ured, and (3) severance of t he article 21.55 claim as it relates to the U IM claim is appropriate, and the trial court abused its discretion in denying the severance of the article 21.55 claim. Regarding the adequate rem edyat law factor, Trinity contends that it has none and thatmandam us is necessary be cause of the unacceptable dilem ma presented if it is forced to try both the fu nda m ent al i ssues of liability in conjunction with claims addressing its evaluati on of li abil ity. Wilb orn , 835 S.W.2d at 262 . As in Mil lard , 847 S.W.2d at 675-76,
we conclude tha t Trini ty has a substanti al ri ght to the exclusio n from evi de nce of its settlement

offersand negotiations in the trial of the UIM claim. A lso, severance is favored for re as on s o f ju di ci al ec on omy and to avoid the potential of unnecessary ex pense to the parties for similar reasons. Id

. W e conclude that Trinity does not have an adequate re medy at la w.10 Laches and Mo tion for Sanctions
We have not overlooked the Brainards’ defense of laches and m otion for sanctions. Contending th at Tr in it y kn ew o r s ho ul d h av e kn own t hat the trial court intended to deny
severance of the article 21.55 claim since at least August 8, 2001, th e Brainar ds ass ert thatlaches bars m andam us and that Trinity should be sanctioned because the m andam us proceeding was m erely brought for delay. We disa gre e. E ven if counse l for Trinity w

ere awa re in ea rly Au gust tha t the trial court had decided to deny the se verance as to the art icle 21.55 c laim, the trial co urt did not sign its or

der gra n ti ng th e mo ti on as to so me cl ai ms and denying the severance as to the article 21.55 clai m until Septemb er 14, 2001. Because the petition for ma ndamu s was f iled on Septembe r 17, 2001, laches does not apply and the Brainards’ m otion for sanctions is denied. Concluding that the trial court abused its discretion in denying severance of the articl e 21.55 clai m as related to the Braina rds’ UI M c l ai m, and finding that Trinity has no adequate rem edy

at l aw , we co ndit iona llygrant the petition for w rit of m andam us. We are confidentthe trial court will now grant the m otion to sever the article 21.55 claim from the contract claim in accordance w ith this opinion. W e instruct the Clerk to issue the w rit o nly if the tri al court fai ls to grant th e motion within thi rty days.

Don H. Rea vis Justice Publish.