### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-10-00385- CV

John H . Carney & Associate s, Appellan t

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

F ROM TH E DISTRI CT COURT O F TRAVIS CO UNTY, 200 TH JUDICI AL DISTRICT NO. D-1 -GN-0 8-0 0140 4, H ONO RAB LE STEP HEN Y ELENOSK Y , JUDGE P RESIDING

O P I N I O N

J ohn H. C arne y & Associates (“Carne y ” or “the Car n ey l aw firm”) sued t he Tex as Property and Casualty I nsuranc e Guar anty Associat io n ( “ th e A s s o c ia ti o n ”) to rec over damag es it was

awa rded in a judgme nt ag ainst an insolve n t insurance company , Texas Select L loy ds I nsuranc e Company (“Te x as Select”)

. Carney contends that the judgme nt constitutes a “cove red claim” under
former article 21.28-C, section 5(8) of the Texas Property and Casualty I nsuranc e Guar anty Act (“the
Gu ara nty Act”) beca

use the judgme nt was based on an assig ned interest in the proce eds of a 1

Act of May 30, 2005, 79th L eg ., R.S., ch. 995, § 3, 2005 Tex. Gen. L aws 3 3 0 7 , 3 3 6 0 1 (re peale d 2005) (cur

rent version at Tex. I ns. Code Ann. §§ 462.201-.203, .205-.210, .213-.214, .305 (West 2009)). Unless otherwise stated, all ref ere nces to the Guar anty Ac t are based on the 2006 version of the law, the version in eff ect when Texas Select went into rec eiver ship. See Campos v. Texas Prop. & Cas. Ins. Guar. Ass’n , 282 S.W .3d 226, 228 n.1 (Tex. App.–Austin 2009, no pet.) (dete rmining that applicable version of Guar anty Act is one in eff ect when insur e r b e c a

me im p a ired). The parties cite to the curr ent version of the statute, T e x
. I n s
. C o d e A n n
. § § 4 6 2

. 0 0 2

- . 3 5 1 (West 2009), which is a nonsubstantive codifica tion of the statute with an eff ective date of April 1, 2007.first-par

ty claim under a homeowner s policy that Texas Sele ct issued. The Association moved for
summary judgme nt on a number of g rounds, including that the Carney law firm is not entitled to seek
compensa tion under t h e Gu ara nty Act as an assig nee of the insured. The trial court g rante d the

m otion without specify

ing the g rounds on which summary judgme nt was based. We will af fi rm the judg ment.

F ACTUAL AND P ROCEDURAL BACK GR OUND

T h e A s s o c i a t i o n i s a s t a t u t o r i l y c r e a t e d e n t i t y w h o s e p u r p o s e i s t o p a y “ c o v e r e d c l a i m s ”

o f i m p a i r e d i n s u r a n c e c o m p a n i e s d o i n g b u s i n e s s w i t h i n t h e s t a t e
. B y a s s e s s i n g c o n t r i b u t i o n s fr o m 2

s o l v e n t m e m b e r i n s u r e r s , t h e A s s o c i a t i o n m a i n t a i n s a g u a r a n t y f u n d t h a t a s s u m e s i n s o l v e n t i n s u r e r s ’

o b l i g a t i o n s w i t h r e s p e c t t o s t a t u t o r i l y d e fi n e d “ c o v e r e d c l a i m s
. ” Be ca u se the Association was 3
established for the purpose of providing a limit ed form of protec tion fo r p o l i cy holders and

See generally ar t

. 2 1

. 2 8 -C §§ 1-27, Act of Aug

. 25, 1991, 2d C.S., ch. 12, § 1.20, 2 1991 Tex. Gen. L aws 252, 264-73, amende d by Act of May 30, 1993, 73d L eg. , R

. S

. , ch. 685, §§ 9.01-.22, 1993 Tex. Gen. L aws 2559, 2632-37, amende d by Act of May 16, 1995, 74th L eg ., R.S., ch. 275, 1995 Tex. Gen. L aws 2616, amende d by Act of May 27, 1995, 74th L eg ., R.S., ch. 1055, §§ 3-11, 1995 Tex. Gen. L aws 5216, 5218-20, amen ded b y Ac t of J une 1, 1997, 75th L eg
. R.S., ch. 594, § 1.13, 1997 Tex. Gen. L aws 2076, 2078, amende d by Act of May 22, 1 9 9 7 , 75th L eg ., ch. 764, § 1 , 1 9 9 7 T ex
. Gen. L aws 2475-76; amende d by Act of J une 1, 1997, 75th L eg ., R.S., ch. 1412, § 1, 1997 Tex. Gen. L aws 5289, 5289-90, a mended by Act of May 22, 1997, 75th L eg ., R.S., ch. 1423, §§ 11. 5 2 -. 5 3 , 1997 Tex. Gen. L aws 5329, 5399, amende d by Act of May 30, 1999, 76th L eg ., R.S., ch. 1126, §§ 5, 6, 1999 Tex. Gen. L aws 4009, 4013, amende d by Act of May 30, 2003, 78th L eg ., R.S., ch. 1218, §§ 1-7, 2003 Tex. Gen. L aws 3458, 3458-62, amende d by Act of May 30, 2005, 79th L eg ., R.S., ch. 995, §§ 2-8, 2005 Tex. Gen. L aws 3307, 3 359-362 (re peale d 2005) (c urre nt version at Te x . I ns. Code Ann. §§ 462.002-.351). Article 21.28–C § 5(8), Act of May 30, 2005, 79th L eg ., R.S., ch. 995, § 3, 2005 Tex. Gen. 3 L aws 3307, 3360 (re peale d 2005) (cur rent version at Tex. I ns. Code Ann. §§ 462.201-.203, .205-.210, .213-.214, .305)

. 2third-par

ty claimants in the event of insurer inso l v en cy , some claims that might otherwise be
compensa ble if prese nted to a solvent insurer are excluded from cover ag e under the Guar anty Act. 4
This action ag ainst the Association has its ori gins in a dispute over attorney ’s fee s betwee n the Carney law firm, a Dallas-ba sed firm, and its former client, J oy L incoln. L incoln hired
the firm to repr esent her in a claim for residential mold damag e ag ainst her homeowner s insurer,
Texas Select. I n the attorney -client ag ree ment, L incoln ag ree d to pay Carney “for ty perc ent (40%)
of all money rec eived and proper ty collecte d, or debt from which [L incoln] is relieve d, including any sums paid for proper

ty damag e, reme diation, a nd alterna tive living expenses.” The fe e ag ree ment

was secur ed b y an as signme nt of an interest in L incoln’s claim ag ainst Texas Select, but not an assig nment of the insura

nce policy

itself:

To s ecur e the perf

ormanc e of Client’s obliga tions to Attorney , the Client here by transfe rs and assig ns to the Attorney an undivided interest in the Client’s claim, such interest being eq u i v alent to the amount of perc entag e that the Client, by this Ag ree ment, promises to pay for the service s of the Attorney

. Attorney is authorized to execute a UCC-1 sec urity ag ree ment to evidence this li en.

L incoln also ag ree d not to settle the lawsuit without the Carney law firm’ s approva l:

No settlement of any nature shall be made for any of the afor esa i d cl aims of the Client without the complete approva l of the Client, and all offe rs of settlement shall be communicated to the Client; the Clie n t s h al l not obtain any settlement on the afor esaid c laims without t he complete approva l of the Attorney

.

See id

. 4
3L ess t h an a y ear afte r Carney prepa red and filed L incoln’s lawsuit ag ainst Texas Select, L incoln discharg ed the Carney law firm and reta ined David Gibson, a former associate at the
firm. One day later, L incoln executed a partial settlement ag ree ment with Texas Select. Be fore
Texas Select made p aym ent on the partial settlement, Carney sent a letter to Texas Select and its

at t o rn ey advising them of the chang e in L incoln’s leg al repr esenta tion and notify ing them o f Carney ’s assig ned interest. Carne y al s o requested that “all pay ments, AL E, settlements [si c]

5
distributio n s o r o t h erwise” be made jointly pay able to the Carney law firm. I n acc ordanc e with Carney ’s reque st, the partial settlement pay ment was made pay able to L incoln, Gibson, and the Carney law firm. To further protec t its in tere sts in the assig ned matter, the Carney law firm
intervene d in the pending lawsuit ag ainst Texas Select. The intervention was subsequently sever ed
into a separate cause , and when Texas Select settl ed L incoln’s re m ai n i n g claims in the m old case for $200,000.00, the pay ment was made only to L incoln and Gibson, without the Carn ey law
firm’s conse nt. The course of the ensuing litigation among the rele vant parties is less than clea r from
the rec ord and the parties’ briefs. I t appears t h at t h e intervention proce eding continued afte r
L incoln’s claims we re settled, and L incoln filed a counter claim of an unknown nature ag ainst Carney

. Acc ording to Carney ’s brief, C ar n ey and L incoln later executed a partial settlement and
limit ed rele ase of unspecifie d claims in t h e s ev er ed intervention proce eding

. The terms of the
settlement ag ree ment have not been disclosed in this proce eding

. Aside from the partial settlement

We assume “AL E” is an a crony m for adjusted living expenses. 5
4and rele ase, it is unclea r how, when, or if the intervention case was ult i m at el y re s o l v ed and what role, if a ny , Texas Select and Gibson play ed in that proc eeding

. Whil e the intervention proce eding was pending , howeve r, Carney sued Texas Select
i n a s ep ar ate lawsuit in the County Court at L aw for Dallas County , and it is that proce eding t h at play s a central role in the C arne y law firm’s claim aga inst the Association. I n the l awsu i t aga i n st
Texas Select, the Carney law firm claimed it was en t itled to attorney ’s fee s pursuant to the conting ency fee ag ree ment with L incoln and alleg ed that L incoln and Texas Sele ct knowing ly and improperly circ umvented Carney ’s assig ned interest when they settled the mold c ase. The Carney
law firm b ro u gh t s u i t in its own name pursuant to the assignment from L incoln and asserted both first-par ty claims under L incoln’s i nsuran ce policy and ex tra-c ontrac tual claims, including claims
for dece ptive trade prac tices under former article 21.21 of the Texas I nsuranc e Code, unfair claims
prac tices under former article 21.55 of the insurance code, brea ch of the duty of g ood faith and fair dealing , neg lige nce, neg lige nce per se, neg lige nt misrepre sentat i o n , and intentional infliction of
emotional distress. Alterna tively , and in lieu of re co v er i n g actua l and ex emplary damag es on the
fo re go i n g claims, Carney soug ht to ratify the disputed settlement ag ree ment and take 40% of th e $200,000.00 settlement that L incoln executed with Texas Select.

Following a bench tri al , t h e county court at law awa rded Carney $80,000.00, plus
pre- judgme nt interest, post -judg ment interest, and court costs. Texas Select perfec ted an appea l, 6

The damag es awa

rded wer e equal to 40% of the $200,000.00 settlement proce eds, strong ly 6 sug g esting that judgme nt was awa rded based on the terms of the settlement ag ree ment and assig nment. Howeve r, there are no finding s of fac t or conclusions of law in the summary judgme nt rec ord, and w e ca

nnot asce rtain with ce rtainty the basis or ba ses for the court’s judg ment. 5but while the appea l was pending , Texas Select was desig nated an impaired insurer and place d into

rec eiver s h i p
. When the appea l was abate d pursuant to the automatic stay provisions of former
article 21A.008(d) of the insurance code, Carney prese nted the judgme nt to the Association for 7
pay ment under the Guar anty

Act, but the Associa

tion denied the cla im. 8
The Carney law firm then filed the underly ing lawsuit, alleg ing that the Association

err oneously denied its claim on the basis of a provision in the Guar anty Act that excludes attorney ’s
fee s from the definition of a “cove red claim.” The firm did not dispute that attorney ’s fee s are not 9
compensa ble under the Act; rathe r, it a sserted that, in char acte rizing its claim as one for attorney ’s
fee s, the Association improperly focuse d on t h e reason for the assig nment—to secur e pay ment of attorney ’s fee s—rather than the nature of the claim, which wa s an assig ned undivided intere st in a first-par ty claim ag ainst the insurer. Carney alleg ed that, as an assig nee of an interest in the insured’s post-loss claims under the insurance policy , the law firm was entitled to compensa tion under the Act
to the same e x tent as if it wer e a na med insured.
The Association moved for summary judgme nt, challeng ing both the compensa bility

o f C ar n ey ’s claim under the Guar anty Act and the validity of the assig nment. Specifica lly , th e Association alleg ed that, as a matter of law, Carney did not have a cover ed claim beca use (1) Carney

was neither an insured nor a loss pay ee at the time of the insured events, and t h e as s i gn m ent was

Act of May 30, 2005, 79th L eg ., R.S., ch. 995, § 1 , 2005 Tex. Gen. L aws 3307, 3314-15 7 (re desig nated 2007) (cur

rent ve rsion at Tex. I ns. Code Ann. § 443.008(d) ( West 2009)). There is no indication in the rec ord as to whether the Carney law firm also filed a claim with 8 the re ceive rship estate ba sed on its judgment. Article 21.28–C § 5(8), Act of May 30, 2005, 79th L eg ., R.S., ch. 995, § 3, 2005 Tex. Gen. 9 L aws 3307, 3360 (r epea led 2005) (c urre nt version at Te x . I ns. Code Ann. § 462.208). 6ineffe ctive to confe r standing as an insured under the Guar anty Act; (2) the assig nment was invalid

beca use T ex as Select did not consent in writing to the assig nment, as require d by the policy ; (3) claims for attorney ’s fee s are not compensa ble under the Act; and (4) rele vant policy limit s had
alre ady been exhausted. The Association also asser ted that there was no evidenc e that Carney had

an insurable interest in the premises at the time of the insured events and no evidenc e that Carney ’s
claim was within the limit s and cover ag e of L incoln’s policy , considering the exhaustion of rele vant policy limit s and the policy ’s exclusion for loss caused by mold.
I n response , the Carney law firm arg ued that its liquidated claim ag ainst Texas Select

must be honored under t h e Guar anty Act beca use the claim meets the statutory definition of a “cove red claim” and no exception applies. Carney further asser ted that the Association was bound by the judgme nt ag ainst Texas Select and could not contest the validity of the assig nment or

cover ag e under the Texas Select policy , including the applicability of any policy exclusions. Carney
also maintained that the a ssignment of L incoln’s pos t-loss claims under the policy was va lid even
without Tex as Selec t’s consent a nd confe rre d standing to make a c laim under the Guar anty Act in
the abse nce of

any express statutory

limit ation to the contra

ry
. The trial court g rante d the Association’s mo t i o n without stating the g rounds, and Carney perf ecte d this appeal.

STANDARD OF REVIEW Whether summary

judgme nt is proper is a que stion of law that we r eview de novo, viewing the evidenc e in the light most favor able to the nonmov an t an d disreg arding all contra ry evidenc e and infere nces unless a rea sonable fac t-find er co u l d not. City of Keller v. W ilson ,
7168 S.W .3d 802, 822 (Tex. 2005); Valence Operating Co. v. Dorsett , 164 S.W .3d 656, 661 (Tex.

2005). “Traditi o n al ” sum mary judgme nt is proper if (1) there is no g enuine issue of m ater ial fac t, and (2) the movant is entitled to judgme nt as a matter of law. Tex. R. Civ. P. 166a(c ). A defe ndant
who conclusively neg ates at least one essential element of a plaintiff’s cause of action is entitled to
summary judgme nt on that claim. IHS Cedars Treat me n t C t r
. of DeSoto, Tex., Inc. v. Mason , 143 S.W .3d 794, 798 (Tex. 2003). “To preva i l o n a n o-evide nce summary -judg ment motion, a
movant must alleg e that there is no evidenc e of an essential element of the adver se party ’s claim.”
Southwest Elec. Power Co. v. Grant , 7 3 S

. W

. 3d 211, 215 (Tex. 2002) (citing Tex. R. Civ. P. 166a(i))

. The burden then shifts to the nonmovant to produce more th an a scintilla of probative
evidenc e to support eac h challeng ed element of its claims, and absent such evidenc e, the movant is

en t itled to summary judgme nt. Forbes, Inc. v. Granada Bioscience s , 124 S.W .3d 167, 1 7 2 (T ex
. 2003). When the trial court’s order g ranting summary judgme nt does not specify the g rounds relied
upon, we must aff

irm summary

judgme nt if any of the g rounds asser ted in the summary -judg ment motion are meritorious. FM Props. Operati n g C o
. v. City of Austin , 22 S.W .3d 868, 872 (Tex. 2000).

DISCUSSIO N

The Guar anty Act provides a partial safe ty net t o p olicy holders and third-par

ty claimants in the event of insurer insolvency by supply ing a mechan i s m for the timely pay ment of

cover ed claims under cer

tain insurance policies

. The Association is not an insurance company , and 1 0

See Article 21.28-C § 2, Act of Aug

. 25, 1991, 72d L eg ., 2d C.S., ch. 12, § 1.20, 1991 Tex. 1 0 Gen. L aws 252, 264 (re peale d 2005) (“The purpose of t his Act is to: (1) pr ovide a mec hanism for 8its duties are not co-e x tensive with the inso l v ent insurer’ s obliga tions under its policies: “[T] he
association shall not be considere d to be in the business of insurance , shall not be considere d to have
assumed or succe ed ed to any liabiliti es of the impaired insurer, and shall not be considere d to otherwise stand in the shoes of the impaired insurer for any purpose
. . . .” Rather, the Association 1 1 is a statutory

entity that depends on the Guar anty Act for its ex istence and for the def inition of the scope of its powers, oblig ations, and protec tions.
Under the Guar anty Act, the Association’s authority is limit ed t o t h e pay ment of
“cove red c laims” as that ter m is defined by

the Act:

“Covere d claim” means an unpaid claim of an insured or third-party liabili ty cl a i ma n t t h at arises out of and is within the cover ag e and not in excess of t h e applicable limit s of an insurance policy to which the Act applies, issued or assumed (whe reby an assumption cer tificate is issued to the insured) by an insurer licensed to do business i n this state, if that insurer become s an impaired insurer and the third-par ty claimant or liabi l i t y cl aim ant or insured is a resident of this state at the time of the insure d event, or the claim is a first-party claim for damag e to proper ty that is permane ntly

located in this state. 1 2

the pay ment of cover ed claims under cer tain insurance policies to avoid excessive delay in pay ment; (2) avoid financ ial loss to claimants or policy holders beca

use o f the impairment of an insurer; (3) assist in the de tection and pr evention of insure r insolvencies; and (4) provide an association to assess the cost of that protec tion among insurers.” ) (cur rent version at Tex. I ns. Code Ann. § 462.002 (West 2009)). Article 21.28-C § 8(b), Ac t o f May 27, 1995, 74th L eg ., R.S., ch. 1005, § 6, 1995 Tex. 1 1 Gen. L aws 5216, 5219 (re p ea l ed 2005) (cur rent version at Tex. I ns. Code Ann. § 462.102 (West 2009)).
Ar ticle 21.28–C § 5(8), Act of May 30, 2005, 79th L eg ., R.S., ch. 995, § 3, 2005 Tex. 1 2 Gen. L aws 3307, 3360 (re peale d 2005) (cur rent version at Tex. I ns. Code Ann. § 462.201) (empha sis added). 9The definition of “cove red claim” does not include all claims that might have been compensa ble by
the insurer had it not become insolvent. F o r e x a m p l e , t h e r e m e d y t h e A c t p r o v i d e s i s n o t a v a i l a b l e t o

a n y c l a i m a n t w h o w a s n o t a T e x a s r e s i d e n t a t t h e t i m e o f t h e i n s u r e d e v e n t , u n l e s s t h e c l a i m i s a fi r s t

- p a r t y c l a i m i n v o l v i n g p r o p e r t y p e r m a n e n t l y l o c a t e d i n t h i s s t a t e
. T h e e x c e p t i o n t o t h e r e s i d e n c y 1 3

r e q u i r e m e n t fo r fi r s t

- p a r t y p r o p e r t y d a m a g e c l a i m s r e fl e c t s ye t a n o t h e r l i m i t a t i o n i n c o v e r a g e b e c a u s e i t e x c l u d e s n o n r e s i d e n t t h i r d

- p a r t y l i a b i l i t y c l a i m a n t s e v e n i f t h e i r c l a i m s i n v o l v e p r o p e r t y t h a t i s
p e r m a n e n t l y l o c a t e d i n t h i s s t a t e a n d e v e n t h o u g h a n o n r e s i d e n t fi r s t

- p a r t y c l a i m a n t c o u l d r e c o v e r i n t h e

s a m e c i r c u m s t a n c e s
. C e r t a i n c a t e g o r i e s o f d a m a g e s a r e a l s o e x p r e s s l y e x c l u d e d fr o m t h e d e fi n i t i o n 1 4

o f c o v e r e d c l a i m s , i n c l u d i n g a t t o r n e y’ s fe e s , c o u r t c o s t s , a n d p u n i t i v e , e x e m p l a r y, e x t r a - c o n t r a c t u a l , a n d
b a d

- fa i t h d a m a g e s
. L i k e w i s e , a n i n s u r e r w h o h o l d s s u b r o g a t i o n r i g h t s a g a i n s t a n i n s o l v e n t i n s u r e r o r 1 5
i t s i n s u r e d c a n n o t u t i l i z e t h e r e m e d y p r o v i d e d i n t h e G u a r a n t y A c t t o s a t i s fy i t s c l a i m . And, for those 1 6
claims that are cover ed, t h er e i s an ag g reg ate statutory cap of $300,000.00, except for worke rs’

Id. 1 3 Id. 1 4 Id

. (“ ‘Covere d claim’ shall not include supplementary pay ment obliga tions, including 1 5 adjustment fee s and expenses, attorney ’s fee s and expenses, court costs, interest and penalties, and interest and bond premiums incurre d prior to the deter mination that an insurer is an impaired insurer under this Act

. . . [or] any claim for rec overy of punitive, exemplary , extracontrac tual, or bad-f aith damag es . . . .”) (cur

rent ve rsion at Tex. I ns. Code Ann. §§ 462.208, .210). Id. (“‘ Covered Claim’ shall not include

. . . any amount that is direc tly or indirectly due any 1 6 reinsur e r , in s u

r e r , s e lf

- in s u r e r , in s u r a n c e p o o l, o r u

n d e r w r it ing association, as subrog ation rec overie s, reinsura nce rec overie s, contribution, indemnification, or otherwise, and the insured of an impaired insurer is not liable

. . . for any [such] rec overy
. . . to the extent of the applicable liability limit s of the policy written and issued to the insured by the insolvent insure r.”) (cur rent ve rsion at Tex. I ns. Code. Ann. § 462.207). 10compensa tion claims, which are to be paid in full. The prese nce of these limit ations demonstrates 1 7
that the leg islature intended for the Guar anty Act to cover some, but not all, losses. See Unisys Corp.

v. Texas Life, Acc ident, Hea l th & Hosp. Serv. Ins. Guar. Assoc. , 943 S.W .2d 133, 140 (Tex. App.—Austin 1997, writ denied)

.

The Association contends, among other things, that Carney ’s loss is not one the Act
exis ts to help remune rate beca use the Carney law firm is neither an insured nor a third-par ty liability
claimant. The firm responds, howeve r, that it “stands in the shoes” of a named insured by virtue of

an assig ned interest in L incoln’s first-par ty proper ty damag e claims under the Texas Select policy

. Acc ordin g to Carney , once L incoln suffe red a cover ed loss, her rig ht to pay ment under the Texas
Select policy beca

me an alienable ch o s e i n action that was validly assig ned to Carney and was subsequently reduc ed to an unassailable judgme nt that must be honored under the Guar anty Act as if L incoln wer e prese nting the claim herse lf. At the same time, Carney asser ts that the Association
is not entitled to defe nses that might have been avail ab l e i f L i ncoln wer e seeking compensa tion, including defe nses based on the rele ase she signe d with Texas Select, applicable policy exclusions,
and the r ight to an of

fset for amounts Texas Select previously paid to L incoln. Although the Carney law fi rm rec eived a partial assig nment of L incoln’s rig ht to
pay ment under the Texas Select policy , i t i s u n d i s puted that the insurance policy itself was not assig ned to Carney and Carney is not otherwise a named insured there under. Howeve r, the g ener al

Id. (“I ndividual cover ed claims (including any and all deriva tive claims by more than one 1 7 person which arise fr o m t h e s am e occur renc e, which shall be considere d collectively as a single claim under this Act) shall be limit ed to $300, 0 0 0 , except that the association shall pay the full amount of any cover ed claim arising out of a worke rs’ compensa tion claim made under a worke rs’ compensa tion policy .”) ( curr ent ver sion at Tex. I ns. Code Ann. § 462.213).
11rule is that the rig ht to sue for money damag es is a chose in action, which is a proper ty rig ht that can b e as s i gn ed unless assig nment is prohibited by statute or i s contra ry to public policy

. State Fa r m Fire & Cas. Co. v. Gandy , 925 S.W .2d 696, 707 (Tex. 1996) (“[F]ree alienation of choses in action [i s] t he g ener al rule, but . .

. [e] ven today , the gene ral rule is that a contra ctual assig nment may be ‘inoperative on g rounds of public policy .’” (citing Restatement (S econd) of Contrac ts § 317(e)( b) (1981)) ; Seiter v. Marschall , 147 S.W

. 226 (Tex. 1912) (obser ving that assig nment of partial interest
in assig nor’s cause of action convey ed afte r adver se judgme nt on claim co u ld be prosec uted in assig nor’s name on appea l to extent of assig nee’ s interest in claim); Camden Fire Ins. Ass’n v. Eck el , 14 S.W .2d 1020, 1021-22 (Tex. Comm’n. App

. 1 929, judgm’ t adopted) (holding that insurance
company could sue in insured’s name following assig nment of insured’s interest ag ainst tortfea sor);
Vinson & Elkins v. Mor a n , 946 S.W .2d 381, 390 (Tex. App.—Houston [14t h Dist.] 1997, writ dism’d) (“‘ [E] very

thing whic h can be called a debt can be assig ned, and the assig nee ma y rec over either in his own name or in that of his assig n o r. I n o t h er words, any chose in action may be assig ned and suit broug ht there on by the equitable holder.’” (quoting Citi zens State Bank v. O’Leary , 167 S.W .2d 719, 721 (Tex. 1942))) ; Renge r Mem ’l Hosp. v. Texas, 674 S.W .2d 828, 830 (Tex. App.—Austin 1994, no writ) (“A cause of action is a prope rt y ri gh t and may be assig ned except wher e such assig nment is expressly prohibited by statute.” (citations omitted)). An assig nee “stands
in the s hoes” of the assignor but acquir es no g rea ter right than the a ssignor possessed. Dee r Park
Bank v. Aetna Ins. Co. , 493 S.W .2d 305, 306 (Tex. Civ. App.—B eaumont 1973, no writ) (quoting Gulf Coast Factors, Inc. v. Hamilton Supply Co. , 389 S.W .2d 341, 346 (Tex. Civ. App.—Houston 1965, no writ)). The issue prese nted in this case is whether the Guar anty Act trumps these g ener al

12common-law principles conce rning assig nments. As we see it, this threshold issue is not about the

validity of the assig nment but rathe r conce rns the availability of the particula r reme dy the Guar anty Act is intended to provide.

Statu tory Const

ruction Principles
Whether an assig nee can rec o v er as an “ins ured” under the Guar anty Act is a
matter of statutory cons t ru ct i on, which is a question of law. First Am. Titl e Ins. Co. v. Combs , 258 S.W .3d 627, 632 (Tex. 2008). Our primary objective in c onstruing statutes is to g ive eff ect to the leg islature’s intent, which we seek “fir s t an d fo re m o st” in the statutory text

. Id

. Absent leg islative definition, we rely on the plain meaning of the text unless a differ ent meaning is appar ent from the context or application of the plain lang uag e would lead to absurd results. City of Rock wall

v. Hughes , 246 S.W .3d 621, 625-26 (Tex. 2008); see Tex. Gov’t Code Ann. § 311.011 (West 2005) (“Words and phrase s shall be rea d in c ontext and construed acc ording to the rules of g rammar and
common usag e.”) . We look to the entire act in deter mining the leg islature’s intent with re spect to specific provisions. Railroad Comm’n v. Texas Citi z ens for a Safe Future & Clean W ater , 336 S.W .3d 619, 628 (Tex. 2011); Upjohn Co. v. Rylander , 38 S.W .3d 600, 607 (Tex. App.—Austin 2000, pet. denied)

.

“When a statute’s lang uag e is nebulous and ‘[t] he point of disag ree ment lies betwee n two plausible interpre tations,’ we resort t o additional construction aids to divine the L eg islature’s
intent.” In re Smith , 333 S.W .3d 582 (Tex. 2011) (quoting HCBeck , Ltd. v. Rice , 284 S.W .3d 349,
355 (Tex. 2009) (alter ation in or igina l)). The Code Construction Act outlines a number of fac tors that may be conside red to a id construction, including the:

13(1) objec t sought to be a ttained; (2) c ircumstance s under whic h the statute wa s enac ted; (3) leg islative history ; (4) common law or former statutory provisions, including laws on the same or simil ar subjects; (5) c onsequenc es of a

particula r construc tion; (6) a dminist rative c onstruction of the statute; and (7) title (c aption), pre amble, and e merg ency provisions.

Tex. Gov’t Code Ann. § 311.023 (West 2005). I n addition, the Guar anty Act require s t h at it
“be liberally construed to eff ect the purposes
. . . of this Act, which will constitute an aid and g uide to interpreta tion.” 1 8

Interpretation and Appl

ication of th e Guaranty Act
The Guar anty Act’s plain lang uag e limit s “co v er ed claims ” to unpaid claims of
“insureds” and “third- party claimants.” The term “insure d” is not defined in the A ct, but the term
“cla imant” is define d as “any insured making a first-par ty claim or any person instit uting a liability
claim. A person who is an aff iliate of the impaired insurer may not be a claimant.” Assigne es are 1 9

Article 21.28-C § 4, Act of Aug

. 25, 1991, 72d L eg ., 2d C.S., ch. 12, § 1.20, 1991 Tex. 1 8 Gen. L aws 252, 264 (re pealed 2 0 0 5 ) (c u rrent version at Tex. I ns. Code Ann. § 462.003 (West 2009)). Article 21.28–C § 5(5), Act of Aug

. 25, 1991, 72d L eg ., 2d C.S., ch. 12, § 120, 1991 Tex.

1 9 Gen. L aws 252, 264 (re peale d 2005) (cur rent version at Tex. I ns. C ode Ann. § 462.004(4) (West 2009)).
14not specific ally mentioned in any provision of the Act, except in a provision making the Association

an assig nee of a claimant rec overing under the Act

. T h er e is also no universally applicable 2 0
definition of “insured” in the insurance code, but Bla ck’s L aw dictionary d ef i n es i t t o mean “[a] person who is c overe d or protec ted by an insuranc e poli cy .” Black’ s Law Dictionar

y 879 (9th ed. 2009). The plain lang uag e of the statute does not y ield a definitive answe r, and the parties have not cited—nor ha

ve we found—any

other a uthority that provides a de finitive answer

. Carney , howeve r, points to lang uag e in the Act that p u rp o rt edly rec og nizes the
compensa bility of assig ned interests or evidenc es leg islative intent to expand the scope of the term “insured” bey ond those named in the applicable policy of insurance

. First, Carney points to the
definition of “covere d claim,” which states t hat t he term means “an unpaid claim of an ins ured or third-par ty liability clai m ant

. . . if

. . . the t hird-par ty claimant or liability claimant or insured is a resident of this state at the time of the insured event, or the claim is a first-party claim for dam age
to property that is permane ntly located in this state .” Carney contends that the emphasized portion 2 1
of t he def inition ex pands the scope of the ter m “insured” to any one who holds a “ first-par ty claim
for damag e to proper

ty that is perma

nently located in this state,” and as L incoln’s assig nee, Carney
is holding such a claim. This portion o f t h e d efinition, howeve r, does not expand the m eaning of
“insured” ; r ather , this langua g e re stricts the definition by imposing a residenc y require ment and is

not helpful i n asce rtaining the i ntended scope of the t erm “insured. ” To the ex tent Carney arg ues

Article 21.28–C § 11(a) , Act of May 29, 1993, 73d L eg ., R.S., ch. 685, § 9.14, 1993 Tex. 2 0 Gen. L aws 2559, 2635 (r epea led 2005) (c urre nt version at Te x . I ns. Code Ann. § 462.307). Act of May 30, 2005, 79th L eg ., R.S., ch. 995, § 3, 2005 Tex

. Ge n
. L aw s 3 3 0 7, 3360 2 1 (re peale d 2005) (c urre nt version at Te x . I ns. Code Ann. § 462.201) (e mphasis added)

. 15that the emphasized text is a stand-alone definition of “cove red claim,” we re j ec t that contention
beca use Carney ’s proposed construction ignor es the g rammatica l structure of the definition of
“cove red claim” in a way that would write out substantive require ments of the term, including that the claim be unpa id, within poli cy limit s, and within policy cover ag e. The second contextual clue Carney relies on is lang uag e in the Guar ant y Ac t that applies the $300,000.00 ag g reg ate damag es cap to “[i] ndividual cover ed claims (including any and
all derivative claims by more than one person which arise from the same occur renc e, which shall be
considere d collectively

as a sing le claim under

this Act) . . . .” The full import and int ent of this 2 2 lang uag e is unclea

r, but it does not nece ssarily support Carney ’s i nterpre tation of t he Act beca use deriva tive claims can—a nd fre quentl y do—occur in connec tion with third-par ty liability claims
without the exi stence of an a ssignment r elationship betwee n the par ties. Although there are no case s direc tly on point, we note that this Court has previously
considere d and reje cted a construction of the statute that would have denied a statutory benef iciary
under the Texas Workers’ Compensation Act the right to rec over unpaid death benef its from the
Association beca

use the benef

iciary was neither an insured making a first-par ty claim nor a person ins t i t uting a liability claim. Texas Prop. & Cas. Ins. Guar. Assoc. v. W orkers’ Comp. Comm’n , No

. 0 3 -0 0 -0 0 467-CV, 2001 WL 194084, at *2 (Tex. App.—Austin Fe b. 28, 2001, pet. denied) (mem. op.). That case is di s t i n guishable, howeve r, beca use claims involving the Workers’ Compensation Act enjoy specia l status under the Guar anty Act, and the Act expressly provides that

Ar ticle 21.28–C § 5(8), Act of May 30, 2005, 79th L eg ., R.S., ch. 995, § 3, 2005 Tex. 2 2 Gen. L aws 3307, 3360 (re peale d 2005) (cur rent version at Tex. I ns. Code Ann. § 462.213) (empha sis added). 16the Workers’ Compensation Act controls in the event of a conflict betwee n the two acts. Id

. There 2 3 is nothing in the conte x t of the statute that dire cts a similar re sult in t his case.

We rec og nize that rea ding the term “insured” to include an insured’s assig nee o r assig nees woul d ar gu ably be consonant with how t he common law treats assig nments of rights to insurance proce eds and that such a construction is not expres s l y p rohi bited by the Guar anty Act. Equally plausible, howeve r, is that the leg islature meant what it said and nothing more. Ordinar ily ,

we might not ascr ibe much signific ance to the fac t that assig nees are not specific ally included in the Act, espec ially g iven the common law overla y and the number of express statutory exceptions. See
id. (obser ving that, if leg islature intended to exclude worke rs’ compensation insurance or death
benef its, those cate g ories of claims would have been i n cluded along with extensively enumer ated
exclusions in Guar anty Act). When the leg islature intends to impose limit s on a statutory reme dy , i t k n o ws how to do so, and it has demonstrated that ability in the Act by enac ting a number o f express exceptions.

On the other hand, the leg islature also knows how to expand a class o f co v ere d claims, claimants, and damag es but did not expli citly extend the Guar anty Act reme dy to assig nees,

even though assig nment arr ang ements i n the proper ty and casua lty insurance context are not

uncommon. Moreove r, when we compar e the lang uag e in the Guar anty Act with simil ar laws—both
those exis ting today and those e nacte d contempora neously with the Act—the absenc e of lang uag e

See also article 21.2 8 -C § 2 5(b), Act of May 30, 2003, 78th L eg ., R.S., ch. 1218, § 7, 2 3 2003 Tex. Gen. L aws 3458, 3462 (re peale d 2005) (cur rent version at Tex. I ns. Code Ann. § 462.010 (West 2009)). 17specific ally g iving cover ag e rig hts to assig nees become s more conspicuous and sug g estive of an

intent to restrict the scope of the re medy the Act pr ovides.

Sim ilar Laws an d Other Stat utory Con struction Aids

The L ife, Acc ident, Hea lth and Hospital Service I nsuranc e Guar anty Association Act (the “L ife, Acc ident, Hea lth and Hospital Guar anty Act”) , former article 21.28-D of t h e Texas
I nsuranc e Code (now chapte r 463 of the Texas I nsuranc e Code) serve s a simil ar purpose and 2 4
function to the Property and Casualty I nsuranc e Guar anty Act but for differ ent ty pes of insurance

arr ang em en t s
. These two statutory scheme s, which have stood side by side since 1973, are signific antly dis p arate in their trea tment of assig nees. I n contra st to the Property and Casualty
I nsuranc e Gua

ranty Act, the L ife, Ac cident, He alth and Hospital Gua ranty Act ex pressly provides

cover ag e for

claims held by

assig nees unde r ce rtain insuranc e policies:

Sec. 3. (a) Subject to Subsections (a- 1) and (a- 2) of this section [concerning residenc y require men t s and nonduplication of benef its] , this Act provides cover ag e for a policy o r co ntrac t specifie d in Subsection (b) of this section to the following persons:

See generally Art. 21.28–D §§ 1-21, Act of Aug

. 25, 1991, 2d C.S., ch. 12, § 1.21, 2 4 1991 Tex. Gen. L aws 252, 283-98, a me n ded by Act of May 30, 1993, 73d L eg ., ch. 685, §§ 10.01-.02, 199 3 T ex
. Gen. L aws 2559, 2638, amende d by Act of May 30, 1997, 75th L eg ., ch. 184, § 1, 1997 Tex. Gen. L aws 1042, 1042-43 , a me n ded b y Ac t of May 22, 1997, 75th L eg ., ch. 1423, §§ 11.54-.55, 1997 Tex. Gen. L aws 5329, 53 9 9 , a me n ded by Act of May 23, 2001, 77th L eg ., ch. 848, § 1 , 2001 Tex. Gen. L aws 1693, 1693, amende d by Act of May 27, 2005, 79th L eg ., ch. 753, §§ 1-8, 2005 Tex. Gen. L aws 2580, 2580-90 (re peale d 2005) (cur rent version at Tex. I ns. Code Ann. §§ 462.002-. 3 5 1 ). Al l ref ere nces to the L ife, Acc ident, Hea lth and Hospital Guar anty Act are to the version of the law in ef fec t in 2006, when Texas Sele ct beca me impaired. L ike the Property and Casualty I nsuranc e Act, the curr ent version of the Gua ra n t y Ac t, Tex. I ns. Code Ann. §§ 463.001-451 ( West 2009), refle cts a nonsubstantive c odification of the law with an eff ective da te of Apr il 1, 2007. 18(1) a person, other than a nonresident cert ificate holder under a g roup policy or contra ct, who is the benef iciary , assignee , or pay ee of a person c overe d under Par ag raph ( 2) of this subsection; (2) a person who is a

n owner of or cer

tificate holder under the policy or contra ct, other than an unalloca t ed annuity contra ct or structure d settlement annuity , and who: (A) is a resident; or (B ) is not a re sident, but only under [limit ed conditions]. 2 5

The term “owne r” includes only the actua l insured or one to whom the policy was proper ly assig ned:

“Owne r” means the owner of a policy or contra ct and “policy owner ” and “contr act owner ” mean the person who is ide ntified as the leg al owner under the terms of the policy or contra ct or who is otherwise vested with leg al title to the policy or contra ct throug h a valid assig nment completed in acc ordanc e with the terms of the policy or contra ct and is proper ly rec orded as the owner on the books of the insurer. The terms owner , contra ct owner , and policy o wn er do not include persons with a mere benef icial intere st in a policy

or contra ct. 2 6

Thus, in the L ife, Acc ident, Hea lth and Hospital Guar anty Act, t h e l egislature expli citly provides

cover ag e for holders of assig nments even if the policy itself has not been assig ned. The Property and Casualty I nsuranc e Guar anty Act does not. The di ch o t o m y evidenc ed in the two acts has exis ted
since the L ife, Accident, Health and Hospit al Guaranty Act was first enac ted i n 1973 (two y ear s 2 7

Art. 21.28-D § 3( a), A ct of May 27, 2005, 79th L eg ., ch. 753, § 1, 2005 Te x . Gen. L aws 2 5 2580, 2580-90 (empha sis added) (re peale d 2005) (cur rent version at Tex. I ns. Code Ann. § 463.201(a) ). Id. § 5(8a) , Act of May 27 , 2 0 0 5 , 7 9th L eg ., ch. 753, § 2, 2005 Tex. Gen. L aws 2580, 2 6 2580-90 (c urre nt version at Te x . I ns. Code Ann. § 463.003(7-a )). Act of May 21, 1973, 63d L eg ., R.S., ch. 408, 1973 Tex. Gen. L aws 1052 (cur rent version 2 7 at Tex. I ns. Code Ann. §§ 462.002-.351). 19afte r the Property and Casualty I nsuranc e Guar anty Act was enac ted) and has survived a substantive

revision of both ac ts in 1991 as we ll as their codific ation in 2005. 2 8 2 9
Two other statutes enac ted in the same leg islative sess i o n t h at g ave birth to the Property and Casualty I nsuranc e Guar anty Act further highlig ht t he failure to include assig nees within the scope of the Act. I n 1971, the leg islature enac ted n o t only the Property and Casualty
I nsuranc e Guar anty Act but also the L ife, Hea lth and Acc ident Guar anty Act (for mer article 21.28–E
of the insurance code, repe aled) and the I nsuranc e Companies Asset Protection Act (for mer article 3 0
2 1

. 3 9

– A o f the insurance code, now chapte r 422 of the insurance code)

. Eac h of these acts wa s desig ned to help safe g uard the public from insurer insolvency , and the latter two expli citly included assig nees w ithin the scope of their protec tion.
At the time of enac tment, the st ated purpose of the L ife, Hea lth and Acc ident
Guar anty Act was identical to the stated purpose of the Property and Casualty I nsuranc e Guar anty Act:

This Act is for the purposes and finding s set forth in Section 1 of Article 21.28–A of the I nsuranc e Code and in supplementation there to by providing funds in addition to assets of impaired insurers for the protec t i o n of t he holders of “covere d claims” as

Act of A ug . 25, 1991, 2d C.S., ch. 12, §§ 1.20-.21, 1991 Tex. Gen. L aws 252, 264-98. 2 8
Act of May 24, 2005, 79th L eg ., R.S., ch. 727, § 1, 2005 Tex. Gen. L aws 1752, 1888-1926. 2 9 Despite the similarity

in name and f

unction of t his act to the L ife, Accident, Health, and 3 0 Hospital Service I nsuranc e Gu ar an t y As sociation Act enac ted in 1973 as article 21.28–D of the I nsuranc e Code, the two acts are not the same. The bill analy sis for the 1973 enac tment states that it was “similar in intent to Article 21.28–C, ‘Proper ty and Casualty I nsuran ce Gu aranty Act’ and Article 21.28–E, ‘L ife, Hea lth and Acc ident Guar anty Act’ as excluded in section 3 of this Act.” Bill Analy sis, Tex . S.B. 777, 63d L eg ., R.S. (1973). 20define d here in throug h pay ment and throug h contra cts of reinsura nce or assumption of liabilities or of substituti on or otherw ise. 3 1

The definition of “cove red claim,” howeve r, was decide dly differ ent. Whil e the L ife, Hea lth an d
Acc ident Guar anty Act provided that a “cove red claim” included “a n y p o l i cy b enef it

. . . to the

owner , benef

iciary , assignee , cer

tificate holder, or third party benef iciary , arising from an insurance policy to w hich this Ac t a pplies

. . . ,” the Property and Casualty I nsuranc e Guar anty Act define d

3 2

cover ed claims only as “an unpaid claim of an insured or third-par ty liability claimant which arises

out of and is within the cover ag e and not in excess of the applicable limit s of an insurance policy to which this Act applies . . . .” 3 3

Simi larly , the I nsuranc e Companies Asset Protection Act require d insurers to “have
and maintain unencumbe re d assets in an amount equal to rese rve liabiliti es” and provided “pre fer ential claims ag ainst [t he insurers’ assets] in favor of o wn ers, benef iciarie s, assignees ,

ce rt i fi cate holders, or third party benef iciarie s of i nsuranc e poli cies .

. . .” That Act applied t o a 3 4
broad rang e of insurance products, including mutual life, health, acc ident, fire, and casua lty policies,
and claimants wer e define d as “any owner s, benef iciarie s, a s s i

g n ees , cer

tificate holders, or

Article 21.28–E § 2, Act of May 31, 1971, 62d L eg ., R.S., ch. 1034, § 1, 1971 Tex. Ge n. 3 1 L aws 3378, 3379 (a s amende d, repe aled 2005)

. Id. § 5(2) ( emphasis adde d). 3 2 Article 21.28–C § 5(2), Act of May 12, 1971, 62d L eg ., R.S., ch. 360, § 1, 1971 Tex. Gen. 3 3 L aws 1362, 1363 (as amende d, repe aled 2005) (cur rent version at Tex. I ns. Code Ann. § 462.201). Article 21.39–A § 2, Act of May 20, 1971, 62d L eg ., R.S., ch. 361, § 1, 1971 Tex. Gen. 3 4 L aws 1372, 1372-75 (as amende d, repe aled 2005) (cur rent version at Tex. I ns. Code Ann. § 422.002) (empha sis added).
21third-par

ty benef iciarie s of any

insurance benef

it or rig ht a

rising out of and within the cove rag e of

an insurance policy cover ed by this Act.” Fur thermore , all claimants wer e g iven equal status under 3 5

t h e t erms of the Asset Protection Act. The terms of t he Asset Protection Act in its prese nt for m 3 6

rema in essentially the same. Tex. I ns. Code Ann. §§ 422.002, .003(2), .004, .005, .054 (West 2009). Although the purpose, scope, and function of this act materia lly d iffer from the Property and Casualty I nsuranc e Guar anty Act, the incong ruity in the text ual trea tment of assig nees fu rt her
convey s an intent to limi t the scope of the Guar anty

Act re medy

. The leg islative history is unhelpful in offe ring any insight reg arding the appar ent disparity in the scope of these statutes. We note, howeve r, that the National Association of I nsuranc e Commi ssioners (NAI C) adopted a model law in 1969 that is simil ar in many respe cts to the Guar anty
Act. NAI C Model L aws, Reg ulations and Guidelines 540-1, Volume I I I , § 5 & L eg islative History (2010). Given the striking simil arities betwee n some of the provisions in the model law and Texas’s
Gu ar anty Act, the leg islature was no doubt awa re of the model law when the Guar anty Act was

enac ted but did not adopt the model law wholesale

. A n o t ab le differ ence betwee n the two is the
b re ad t h of t he terms “cla imant” and “cove red claim” i n the m odel l aw. Unlike t he Guaranty Act,
“cove red claim” is define d in the model law as “[a]n unpaid claim

. . . submitt ed by a claimant

. . .,”
and “cla imant” is de fined as “any person instituting a c overe d claim, provided tha t no person who
is a n aff iliate of the insolvent insure r may be a claimant.” Id. Thus, the model law did not restric t

Id. §§ 3, 4 (cur

rent ve rsion at Tex. I ns. Code Ann. §§ 422.003-.005) ( emphasis adde d). 3 5 Id. § 5 (cur

rent ve rsion at Tex. I ns. Code Ann. § 422.054). 3 6
22“cove red c laims” to unpaid claims of “insure ds” and “ third-par ty claimants.” This is a sig nificant
deviation that ag ain sug g ests an intent to restric t the scope of rec overy under Texas’s Guar anty Act.

All fifty states have enac ted some version of the model law, and there are many simil arities and dif

fer ence s betwee n the laws of othe r states and our law. For example, California
and New Mexi co expressly exclude assig nees from rec overy under their g uara nty acts, while
Minnesota expressly includes assig nees as cove re d cl aimants. Compare Calif. I ns. Code § 1063(c) (9)( b) (“‘ Covered claims’ does not include

. . . a claim by a person other than the orig inal
claimant under the insurance policy in his or her own name
. . . and does not include a claim asser ted by an assig nee or one cl ai m ing by rig ht of subrog ation, except as otherwise provided in this chapte r.”) and N.M. Stat. Ann. art. 59A- 43-4(C) ( “Covere d claim shall not include any amount of

an un p ai d claim paid to an insured or liability claimant of an insolvent insurer by any person
. . . wh et h er o r n o t any assig nment is taken by such person.” ) with Minn. Stat. Ann. § 60C.09(1) (“A

cover ed claim is any unpaid claim

. . . which

. . . is made by :
. . . an assig nee of a person who except for the assig nment might have [ot herw ise had a claim under the Act].”). Most states, like Texas, are silent reg arding availability of the re medy

for a ssigne es. Although t h e Guaranty Act admonishes us to liberally construe its provisions to eff ectua te its purposes, there is strong circ umstantial evidenc e that the le g is la tu r e in te n d e d to exclude assig nees f

rom sharing in the reme dy provided by the Act. I t is evident that the Gua ranty Act wa s intended as a limit ed reme dy for some, but not all, third-par ty liability claimants and insureds to help
ameliora te financ ial loss due to insurer insolvency . The Ac t does not exi st to ensure that all debts

ar e m ad e go od and all wrong s reme died. I f assig nees wer e allowed to seek a reme dy under the

23Guar anty Act, a party excluded by the statute could never theless obtain rec overy by stepping into the
shoes of a qualify ing a ssignor . Such a re sult would frustrate the clea r intent of the leg islature.
The plain lang uag e of the Guar anty Act is silent conce rning the rig ht of an assig nee
to seek the limit ed reme dy provided by the Act, and principles of statutory construction could y ield

more than one rea sonable interpre tation of the Act. On balanc e, howeve r, we are persua ded that the disparate trea tment conce rning the rig hts of assig nees ref lected in simil ar laws and the limit ed nature of the reme dy provided in the Act evidenc e the leg islature’s intent to limit its reme dy t o i n s u reds
named in the underly

ing policy or those who are otherwise vested with leg al title to the p o licy

. Be cause it is undisputed that Carney is not an insured under the Texa s Select policy , the reme dy provided in the Guar anty Act is not available in this case
. Our holding is limit ed to Carney ’s rig hts
under the Guar anty Act; we do not addre ss whether Carney or those simil arly situated are prec luded
from see king othe r re medies that mig ht be ava ilable under the law.

CONCLUSION
The reme dy provided in the Gua ra n t y Act is limit ed to insureds and third-par ty claimants. B eca

use Carne y

is neither, we aff

irm the trial cour

t’s summary

judgme nt.

_________________________________________ J . Woodfin J ones, Chief Just ice
Be fore Chief J ustice Jones, J ustices Henson a nd Goodwin
Affir med Filed: Aug ust 26, 2011

24