1Under § 205(a)(5) of the E-Government Act of 2002 and the

definition of “written opinion” adopted by the Judicial Conference

of the United States, this is a “written opinion[ ] issued by the

court” because it “sets forth a reasoned explanation for [the]

court’s decision.” It has been written, however, primarily for the

parties, to decide issues presented in this case, and not for

publication in an official reporter, and should be understood

accordingly.

 IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

CONTINENTAL CASUALTY §

COMPANY, §

 §

Plaintiff, §

 § Civil Action No. 3:04-CV-1866-D

VS. §

 §

ST. PAUL FIRE & MARINE §

INSURANCE COMPANY, §

 §

Defendant. §

MEMORANDUM OPINION

 AND ORDER 

The question presented by defendant’s motion for summary

judgment is whether it has established beyond peradventure that it

is entitled to dismissal of this lawsuit based on the affirmative

defense of release. Concluding that there is a genuine issue of

material fact, the court denies the motion.1

I

This is a removed action by plaintiff Continental Casualty

Company (“Continental”) and intervenor First Specialty Insurance

Corporation (“First Specialty”), two excess insurance carriers,

against defendant St. Paul Fire & Marine Insurance Company (“St.

 

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2First Specialty intervened following removal of the case.

3Continental originally sued USA Truck, but it dismissed it

without prejudice by notice of dismissal.

4

Continental also seeks related declaratory relief.

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Paul”), a primary insurance carrier.2 Continental and First

Specialty allege that St. Paul negligently failed to settle within

its policy limits an underlying state-court lawsuit brought against

USA Truck, Inc. (“USA Truck”)3 and its driver.4 USA Truck carried

an insurance policy with St. Paul that provided $5 million in

primary limits, with a $2 million self-insured retention.

Continental and First Speciality provided excess insurance.

St. Paul has raised the affirmative defense of release. It

maintains that USA Truck, individually and on behalf of its

employees, has fully settled and released all controversies arising

out of and related to the underlying suit, and that the settlement

and release between USA Truck and St. Paul bars the present lawsuit

by Continental and First Speciality. St. Paul reasons that Texas

law does not recognize a direct negligence cause of action under

any theories that Continental and First Speciality have pleaded,

and that the release executed by USA Truck precludes them from

recovering against St. Paul on claims for equitable subrogation.

Continental and First Speciality oppose St. Paul’s motion. In

related arguments, they essentially contend that USA Truck never

entered into a valid and binding release, and that, even if it did,

 

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5Briefing concluded on February 15, 2006 with the filing of

First Speciality’s surreply brief.

6In addition to St. Paul’s summary judgment motion,

Continental has filed November 15, 2005 objections to St. Paul’s

summary judgment evidence and St. Paul has filed December 21, 2005

objections to First Speciality’s summary judgment evidence.

Because in deciding this motion the court has not relied on

evidence that is the subject of an objection, the objections are

overruled as moot.

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the release does not preclude them from exercising their rights of

equitable subrogation on behalf of USA Truck and its driver.

After St. Paul removed this case, the court granted the

parties’ joint motion for bifurcation, partial abatement, and

modification of scheduling order, permitting St. Paul to file a

summary judgment motion on its affirmative defense of release and

narrowing the discovery to that defense until the issue is

resolved. The parties have briefed the motion,5

 and it is ripe for

disposition.6

II

Under Texas law, release is an affirmative defense on which

St. Paul will have the burden of proof at trial. See, e.g., MG

Bldg. Materials, Ltd. v. Moses Lopez Custom Homes, Inc., 179 S.W.3d

51, 64 (Tex. App. 2005, pet. denied) (“A release is designated as

an affirmative defense . . . .”). When the party who will have the

burden of proof at trial concerning an affirmative defense seeks

summary judgment on the basis of that defense, it “must establish

‘beyond peradventure all of the essential elements of the . . .

 

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defense.’” Bank One, Tex., N.A. v. Prudential Ins. Co. of Am., 878

F. Supp. 943, 962 (N.D. Tex. 1995) (Fitzwater, J.) (quoting

Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986)). 

To prevail on its motion, St. Paul must at a minimum establish

that it and USA Truck entered into the written release on which St.

Paul relies. According to the summary judgment record, USA Truck’s

counsel, W. Todd Barnett, Esquire (“Barnett”), faxed the signature

page of the release to St. Paul’s counsel, Christopher W. Martin,

Esquire (“Martin”), on August 25, 2004 at 6:17 p.m. D. App. 307,

423. He included these instructions: “Please send me St. Paul’s

execution page in the morning,” and “[p]lease hold USA Truck’s

execution page in trust until St. Paul has delivered its fully

executed signature page to my offices.” Id. at 423. Additionally,

the release provides that “[t]his Settlement Agreement shall become

effective following execution by USA TRUCK and ST. PAUL.” Id. at

424. The parties have stipulated that at 2:13 p.m. on August 26,

2004, USA Truck’s counsel wrote St. Paul’s counsel stating that USA

Truck had revoked its offer to settle with and release St. Paul.

Id. at 307, 427. Continental and First Speciality maintain that

USA Truck revoked the settlement offer before it was accepted, so

there is no binding release.

St. Paul contends that the release is binding because St. Paul

executed the release and on August 26, 2004 at 12:08 p.m. delivered

it to its counsel in Houston, before USA Truck attempted to revoke

 

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it at 2:13 p.m. the same day. It maintains that although delivery

is generally an element of a contract’s formation, courts have

recognized instances where delivery is not necessary. St. Paul

posits that the written offer constitutes the terms by which

notification must be judged, and since the release provides that it

becomes effective following execution by USA Truck and St. Paul,

and did not require notice of acceptance, communication, or

delivery, the release became effective immediately on execution by

USA Truck and St. Paul, which occurred no later than August 26,

2004 at 12:08 p.m., before USA Truck attempted to revoke the

agreement approximately two hours later. It reasons that

Continental and First Speciality cannot rely on the instructions in

Barnett’s facsimile to Martin. St. Paul also maintains that it

delivered the agreement when it parted with possession of its

executed signature on August 26, 2004 at 12:08 p.m.

St. Paul has not met the heavy “beyond peradventure” standard

to obtain summary judgment on an affirmative defense as to which it

will have the burden of proof at trial. It cites International

Filter Co. v. Conroe Gin, Ice & Light Co., 277 S.W. 631 (Tex.

1925), for the proposition that 

 

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7The court assumes for purposes of this decision that delivery

could have taken place via facsimile and did not require physical

delivery of the original document.

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there can be no doubt that where a person in

an offer made by him to another person,

expressly or impliedly intimates a particular

mode of acceptance as sufficient to make the

bargain binding, it is only necessary for the

other person to whom such offer is made to

follow the indicated method of acceptance.

Id. at 632 (quoting Carlill v. Carbolic Smoke Ball Co., 1 Q. B.

256); see D. Br. 11. In this case, there is at a minimum a genuine

issue of material fact whether USA Truck’s written instructions for

acceptance were contained not only in the release itself but also

in the facsimile that Barnett sent to Martin. If the written

instructions were also contained in the facsimile, then St. Paul

arguably did not accept USA Truck’s offer before it was revoked,

because USA Truck’s notification of revocation occurred on August

26, 2004 at 2:13 p.m., before St. Paul delivered its fully executed

release (including signature page) to Barnett’s offices on August

26, 2004 at 2:34 p.m.7 St. Paul argues that Barnett’s facsimile,

“although a professional courtesy . . . was not part of the

contractual terms offered by USA Truck nor accepted by St. Paul.”

D. Reply Br. 7. It has not established as a matter of law,

however, that the instructions in the facsimile could not have been

part of the offer, and there is a genuine issue of material fact

whether they were.

Accordingly, because St. Paul has not established beyond

 

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8Because the court is denying summary judgment on this basis,

it need not reach any of the other arguments the parties have

raised in the briefing.

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peradventure that USA Truck and St. Paul entered into a binding

release, its motion for summary judgment is denied.8

* * *

St. Paul’s October 11, 2005 motion for summary judgment is

denied.

SO ORDERED.

April 14, 2006.

_________________________________

SIDNEY A. FITZWATER

UNITED STATES DISTRICT JUDGE

 

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