### TEXA S COU RT O F AP PEAL S, THIR D DISTRIC T, AT AU STIN
NO. 03-01-00138-CV Mary E. Wo ods, Appel

lant
v. Texas P roper

ty and Casualty Insurance Guaranty Association, Appellee

FROM THE DISTRICT CO URT OF TRAVIS COUNTY, 201S T JUDICIAL DIST RICT NO. 92-15947, H ONORABLE SUZANNE COVINGTON, JUDGE PRESIDING Appe llantMa ry E. Wo o ds filed su it ag ain st Ha r o ld Tisda le , doing b usi ness as Bestway Trai l er Re pai r (“B estwa

y ”), and Jero me Rhodes, t he driver of o ne of Best way’strailers, to recover dam ages ari si ng out of a

n a utomob i l e ac ciden

t. Nati onal

Coun ty M utual Fi re Insu ra nce C omp any (“Nationa l” ) was the i

nsuran ce ca rr ier fo rBe st wa y and Rh o de s. Na t io na l wa s s ub se qu en t ly pla ced i n to re ceiver ship, and t he T exa s P rop er ty an d C as ual ty Gu ar an ty A ss oci ati on (“ Gu ar an

ty Associ ation”) in tervened in the receiv

ership proceeding to assume i ts st atut ory obli

gation to pro cess covered cl ai

ms in the National

estat e. Woo ds, Rhodes, and Bestway settled thei r clai ms . The trial courtthen rende

redsummary judg ment t hat Woo ds t ake not hing aga inst t he Gua ra nt y Assoc iatio n. W e wi l l af f i rm th e tr i al cou rt’ s j udgm

en t. BACKGROUND In Au gu st 19 84 , Wo o ds wa s inju re d in an ac cident in which the vehicle dr iven by Woods hi t an obje ct that fell

from a veh ic le driv en b y R hodes and owne d by

Bestway . Woods file d1 Al

though the settlem

ent agreem

ent was exe cuted, t he f

in al judgm ent was nev

er obtained. 2 sui t again st Rhodes and Bestway. National wasthe i ns uran ce c arrier f

or Rhode s an

d Bes tway . In October 1988, National

was placed i

nto receive

rshi p. Woods su

bs eq ue ntl y adde d the re ce i

ve r f or National as a def endan t t o t he sui

t. In 1994, t he Gu ar an t y Ass o cia t io n int er ve ne d in t he r ec eiv er ship proceedin gs to assume i

ts stat uto ry obl

iga tion to pro cess covered cl ai ms in the National

estate. In June 1997, W

oods sett le d her cl

ai ms agai nst Rhodes, Ti sdale, and Bestwa y ( t he “i nsured pa r t ies ”) an d e nt er ed int o a s et t leme nt ag r ee men t en t it le d “Covenant not t o E xecu t e and Assignment .” The agr eement was signed by Woods and the i

nsured par t ies. I n t he ag re ement , t he in sured parties ad

mi tt ed to joi nt and sev

eral l ia bi li ty i n the am ount o f $500,000. 1 Woo ds, in tu rn, did “h ereby ful ly and f in al ly relea se, acqui

t and forever

discha rg e” t he insur ed p ar t ies; t he ag re ement provided t ha t it was i

ntended as a

“rel ease of al l l ia bi li ty” an d that t he i

nsured partie s “shall never be liable
. . . f

or any clai m , dem and, cau se of

action, su

i t or li ab i l i ty of an y ki nd of wh atsoever nature.” Rather, in

the agreem

ent the i nsured partie s assi

gned to Woods t he ri gh t to s at isfy he rcla im exclus ively

fro m the p ro cee ds o f any rec ove ry fro m Nat ional o r a ny rece iver fo r N at ional, t he Gu ar an ty A ss oci ati on or any other guaranty

associ ation that

could provide pay

me nt, or any af

fi li ate, assi gnee, or recei

ver o f any o f t h ose

n am ed en ti ti es . Th us , by wa y of th e r el ea se an d a ss i gn men t, Woods was not ent itled t o r eco ver fro m the a sset s o f the insure d pa rt ies. Wo od s and t he ins ure d pa rties , howev er , w er e th

e on l y pa rties to th e a gr eemen t. The Guara

nty As soci ati on m oved f or sum mary jud gme nt de nying liabilit y o n t he ba sis t ha t Woods no longer h

ad a vi abl e cause of a

ction agai nst the i nsured partie s becaus e Woods ha d3

relea sed the m f rom al l l ia bi li ty i n the settlem

ent agreem

ent. In Feb

ruary 2001, the trial

court granted the motion an

d rendered j udgme

nt that Woods t ake nothi

ng. DISCUSSI ON In a s i ng l e p oi nt of err or, W oodsch al l en ge s w he the r th e l an gua gecon tai ned in t he “Co venant not t o E xecu t e and Assignment ” pr event ed r eco ver y against t he Gu ar ant y Assoc iatio n.

Ar t icle 21. 28 o f the Te xas I nsur ance Co de g ove rns c laims and sui ts aga i nst recei vers appoin ted to take charge o f i

mpai red insurers. An i

nj ured part y wh

o has acause of action against a pe rs on insu r ed by an impa ire d in su r er may file a c laim wit h a n a pp o in ted rec ei ver. The rece i ver, however, may only appr ove t he claim if the claimant “w o uld be ab le to obtain a

judgm ent upon such
cause of action aga

in st such i nsured.” SeeTex. Ins. Code An n. art. 21.28, § 3(e) (We st Supp . 2001)
. Woods f i l ed a c l ai m an d sui t ag ai n st N ati onal’s re ce i

v er ; h owev er , a s th

e statu tory succ es sor

to ce r t ain “co vered cl

ai m s” ag ai n st th e r ec ei v er sh i p e sta te of th e i m pai re d i n su re r, th e G ua ra n ty A ss oci ati on i s a proper pa

rty to an y pen di ng l i tig ati on i nv olv i ng a cove red cl ai m . SeeTex. Ins. Code Ann. art. 21.28- C, § 5(8) (West Su pp. 200 1) (d efining “ cov er ed cl ai m ”) . A cc ordi

n gl y , the G ua ra n ty A ss oci ati on in tervened i n the recei

versh ip proceedi

ng an d obtaine d

a su m mary j udg men t ba se d on the af f i rm ati ve de f en se of re lease. The Gua ra nt y Assoc iatio n co nt ends t hat t he la nguage contai

ned in the agreem

ent released the i

nsured partie s of l

ia bi li ty f or any ca use of acti on. We agree. The st anda rd s for re viewing a su mmary judgment ar e we ll esta blished: ( 1) t he mova nt f orsum ma ry j udgme nt hasth e b

ur den of sh owi n g th at n o ge n ui n e iss ue of mate rial f ac t ex i sts and that t he mova nt is entitled to judgme

nt as a m atter of law; (2) i

n deci din g whether ther e i s a di sputed
mate rial f ac t i ss ue pr ec l udi n g sum mar y j udgm en t, e v i den ce

f av ora b l e to t he no nmo va nt is taken as4

true; and (3) ever y reas ona ble inferenc e must be indulge d in favo r o f the nonmo vant and an y dou b ts resolved i n the nonm

ovan t’s f av or. Nixon v. M

r. Pro p. Mgmt . Co., 690 S.W.2d

546 , 5 48- 549 (T ex. 1985)
. As a g en er al r ule , a p ar t y wh o r ele as es an insu r ed fr o m liabi l i ty reta i ns no c au se of
ac ti on agai nst the i ns urer. Pool

v. Dur ish, 848 S. W.2 d 72 2, 723 (T ex. App. —Au stin 1992 , wr it den i ed). This r ule ap plies bec aus e “[t ]he insura nc e p o lic y does n ot bi nd th e i ns urer f or pri mary l i ab i l i ty t o an inju r ed pa r t y, b ut it s lia bilit y is c o nt r ac t ua l .
. . . It contemplates that the insured m ust be li abl e to t he i nj ured person . . . before the i nsurer can

be h el d li abl e.” Id. (citi

ng Hutcheson v. Estate of Se’ christ , 459 S.W.2 d 495, 496- 97 (T ex. Civ. App.—Amarill o 19 70, w rit re f’d

)). Th e set t lement of a ll claim

s bet wee n Woo ds a nd

t he insur ed p ar t ies de st ro yed t he required l in k between th e liabi li ty of the insured part ies an d the receiver’s correspo ndi ng responsibi

li ty to pay. Woods, however, contends t hat she r et ained t he r ight t o p ur sue her cau se o f act ion. She co nt ends t hat t he set t lement ag

re em en t wa s s i m pl y an ag re em en t n ot to e x ecute

the agreed j udgme

nt and that she was entitled t o sa t isfy he rcla im exc lus ive ly fro m t he p ro cee ds o f any rec ove ry fro m Nat ional o r a ny recei ver for National, the Guaranty Associa tion or any

ot her guaranty

associ ation that could provide pa y men t, or any af

fi li ate, assign

ee, or r eceiv

er of any of

those nam

ed enti ties. W oods and the insured part ies, howe

ver, were t h e on

l y pa rties to th e a gr eemen t. N ei th er th e r ec ei v er n or th e G ua ra n ty A ss oci ati on was a party to t he agreem

ent. More im

port antly , in the agreem

ent Woods “he r eb y fully and f i na l l y releas e[d], acqu

i t[ed] an d f oreve r di sch arge[ d]” th e i

ns ured p arti es, “

releas e[d the in sured part ies] o f all liabilit y[, ] ” a nd pr o vid ed t ha t t he insu r ed pa r t ies “sh all ne ve rbe liable
. . . fo ran y cla im, dem and, ca us e o f a ct io n, su it o rliab ilit y o f an y kind o f what so ever nat ur e. ” T he langu age of t he5

agreement is un

amb iguous. Woo ds reta in ed no clai m agai nstt he insur ed p ar t ies aft er she relea sed them f rom al l l i ab i l i ty . Th e “ Cov en an t n ot to Exe cut e and Assignment ” wa s mor e t han an a gr eement not to execute an agreed judgment as Woods co ntends. Rather, the sett lem ent agreement was a com pl ete re l ea se th at f ai l ed to re ser ve an

y caus e of action ag ai

nst the rec ei

ver. See Hor

ton v. State Dep’t of I ns. , 90 5 S
. W. 2d 59 , 62 n. 1 ( T ex . Ap p. —A us t in 1995, no writ) (distingui

shed b etween cases wh eresom

e l i ab i l i ty re tai n ed , s i m pl y ag re ed n ot to exec ut e o n judg ment a nd ca ses s uch a s pr ese nt case, wher e no final j udg ment o bt ained a nd sett lem ent agreement pro vides for unconditional release of l i ab i l i ty of i ns ured). Ther ef

ore , Woods

ca n n ot pu rs ue an y re cov er y f rom th e r ec ei v er or i ts s tatutory suc ces so r t o c ove re d claims ag ainst t he r ece ivership e st at e o f the impaired insure r, t he Gua ra nt y Assoc iatio n. CONCLU SION

W e ov er ru l e a pp el l an t’s poi n t of er ror a n d a f f i rm th e tr i al cou rt’ s j udgm

en t.

Davi d Puryear, Justice Bef ore Chi ef J

ustice A boussie, Justices

B. A. Sm ith an d Puryear Af fi rmed File d: Decem

ber 6, 2001 Do No t Publis

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