Opinion ID: 1494727
Heading Depth: 2
Heading Rank: 1

Heading: Maldonado's Claim

Text: Initially, State Farm asserts that there is no evidence that it was liable to make payments under the insurance policy. As such, we first consider whether Maldonado may recover from State Farm on the policy. To recover on the insurance policy as a third-party beneficiary, Maldonado must initially show that Robert, the insured, complied with the conditions precedent and terms of the policy. See State Farm County Mut. Ins. Co. v. Ollis, 768 S.W.2d 722, 723 (Tex.1989); Klein v. Century Lloyds, 154 Tex. 160, 275 S.W.2d 95, 96 (1955). State Farm contends that Robert, and therefore Maldonado, is not entitled to sue or recover for breach of contract because the defamation trial violated the actual trial condition of the policy. We agree. The actual trial condition reads: A person or organization may sue [State Farm] to recover on an agreed settlement or on a final judgment against an insured obtained after an actual trial. (emphasis ours). An actual trial contemplates a genuine contest of issues. See Wright v. Allstate Ins. Co., 285 S.W.2d 376, 379-80 (Tex.Civ.App.-Dallas 1955, writ ref'd n.r.e.) (`judgment following [an] actual trial' relates to ... a contest of issues leading up to a final determination by court or jury, in contrast to a resolving of the same issues by agreement of the parties; i.e., without a contest. ) (emphasis in original); see also Emscor Mfg., Inc. v. Alliance Ins. Group, 879 S.W.2d 894, 908 (Tex.App.- Houston [14th Dist.] 1994, writ denied). Although Maldonado presented evidence to a judge who later made findings of fact and conclusions of law, this evidence was uncontested. Robert did not appear at trial. His attorney did not cross-examine any witnesses or put on any of his own. Robert's attorney made no argument to the court contesting liability or damages and at one point even referred to the trial as a hearing. In sum, there was no real contest of issues. This is not a situation where the insured has entered into an agreed judgment or settlement as a result of the insurance company's refusal to offer the insured a defense. On the facts before us, we hold that this was not an actual trial as contemplated by the insurance policy. Because State Farm agreed to defend Robert under a reservation of rights and Robert failed to satisfy a condition precedent of the insurance policy, Robert cannot sue or recover on the policy. Maldonado claims she is entitled to sue State Farm for recovery under the policy as a third-party beneficiary by virtue of her final judgment against Robert. See Ollis, 768 S.W.2d at 723. However, as a third-party beneficiary, Maldonado steps into the shoes of Robert, the insured, and therefore is bound by the conditions precedent in the insurance policy. Klein, 275 S.W.2d at 96. Because Robert failed to satisfy the actual trial condition of the insurance policy and was therefore not entitled to sue State Farm, Maldonado is also not entitled to sue or recover on the policy as a third-party beneficiary. We hold that because Robert did not comply with all conditions precedent to recover under the insurance policy, neither he nor Maldonado is entitled to sue or recover on the contract.