Court Opinion

ID: 4040128
Source: CourtListenerOpinion
Date Created: 2016-09-28 22:26:04.69495+00
Date Added: 2024-06-11T14:28:10.250450
License: Public Domain

ACCEPTED

                                                                FIRST COURT OF APPEALS
                                                                        HOUSTON, TEXAS
                                                                      1/2/2015 4:28:10 PM
                                                                     CHRISTOPHER PRINE
                                                                                   CLERK
                      01-15-00003-CV
                NO. ___________________

                                                          FILED IN
                                                   1st COURT OF APPEALS
            IN THE COURT OF APPEALS                    HOUSTON, TEXAS
    FOR THE FIRST JUDICIAL DISTRICT OF           TEXAS
                                                   1/2/2015 4:28:10 PM
                  AT HOUSTON                       CHRISTOPHER A. PRINE
                                                           Clerk

  IN RE ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY

       Original Proceeding from 434th Judicial District
                 Of Fort Bend County, Texas
           Trial Court Cause No. 14-DCV-215228

RELATOR ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY’S
            PETITION FOR WRIT OF MANDAMUS

                                  Ronald J. Restrepo
                                  Texas State Bar No. 16791300
                                  rrestrepo@drhrlaw.com
                                  Sarah J. Allen
                                  Texas State Bar No. 24064810
                                  sallen@drhrlaw.com
                                  Alexandra Ledyard
                                  Texas State Bar No. 24087903
                                  aledyard@drhrlaw.com
                                  440 Louisiana Street, Suite 2300
                                  Houston, Texas 77002
                                  DOYLE, RESTREPO, HARVIN & ROBBINS, L.L.P.
                                  (713) 228-5100 (telephone)
                                  (713) 228-6138 (facsimile)
                                  Attorneys for Relator Allstate
                                  Fire and Casualty Insurance
                                  Company

           ORAL ARGUMENT REQUESTED
                       IDENTITY OF PARTIES AND COUNSEL

      Pursuant to Texas Rule of Appellate Procedure 52.3(a), the following is a
complete list of all parties, and the names and addresses of all trial and appellate
counsel:

Relator:

Allstate Fire and Casualty Insurance Company

Trial Counsel for Relator:

John M. Causey
State Bar No.0419100
Hope & Causey
100 I-45 North, Ste. 600
Conroe, Texas 77301
(936) 441-4673 (telephone)
(936) 441-4674 (telecopier)

Appellate Counsel for Relator:

Ronald J. Restrepo
Sarah J. Allen
Alexandra Ledyard
DOYLE, RESTREPO, HARVIN & ROBBINS, L.L.P.
440 Louisiana, Suite 2300
Houston, Texas 77002
(713) 228-5100 (telephone)
(713) 228-6138 (facsimile)

                                         i
Respondents: *

The Honorable Judge James H. Shoemake
Judge of the 434th Judicial District of Fort Bend County, Texas
301 Jackson Street
Richmond, Texas 77469
(281) 633-7653 (telephone)

The Honorable Judge John Hawkins
Associate Judge of the 434th Judicial District of Fort Bend County, Texas
301 Jackson Street
Richmond, Texas 77469
(281) 341-4457 (telephone)

Real Parties in Interest:

Charlene T. Howard and William D. Howard

Trial Counsel for Real Party in Interest:

Mario Martinez
Law Offices of Mario A. Martinez
23123 Cinco Ranch Blvd., # 208
Katy, TX 77494
(281) 665-7924 (telephone)
(281) 665-7929 (telecopier)

       *
        Relator includes both Judge James H. Shoemake and Judge John Hawkins as Respondents
because both signed the Order at issue in this mandamus proceeding. (See MR 44–45.)

                                            ii
                                             TABLE OF CONTENTS

IDENTITY OF PARTIES AND COUNSEL ...........................................................................i

TABLE OF CONTENTS ................................................................................................ iii

INDEX OF AUTHORITIES...............................................................................................v
STATEMENT OF THE CASE ........................................................................................ vii
STATEMENT OF JURISDICTION ................................................................................. viii
ISSUE PRESENTED.......................................................................................................ix
STATEMENT OF FACTS.................................................................................................1
ARGUMENT .................................................................................................................2

         I.       Standard of Review ............................................................................... 2
         II.      Mandamus relief is warranted in this case. ........................................... 2
                  A.        The trial court abused its discretion when it refused to
                            abate discovery on Plaintiffs’ extra-contractual and bad
                            faith claims because these claims do not accrue, and
                            would therefore be moot, unless and until Plaintiffs
                            first succeed on their breach of contract claim. .......................... 3

                            1.       Because Plaintiffs have not obtained a judgment
                                     establishing the liability and underinsured status
                                     of Mr. Carr, the other driver, Allstate has no
                                     contractual duty to pay UIM benefits. .............................. 3
                            2.       Allowing discovery on Plaintiffs’ extra-
                                     contractual claims before a determination on
                                     Plaintiffs’ breach-of-contract claims is an abuse
                                     of discretion. ..................................................................... 5
                  B.        Allstate has no clear and adequate remedy by appeal
                            because it will lose substantial rights by being required
                            to conduct discovery on claims that may be rendered
                            moot...........................................................................................10

                                                            iii
PRAYER .....................................................................................................................11

CERTIFICATES OF COMPLIANCE.................................................................................13

CERTIFICATE OF SERVICE ..........................................................................................14

APPENDIX
         October 23, 2014 Order Allowing Discovery on Plaintiffs’
         Extra-Contractual Claims ........................................................................Tab A

         In re United Fire Lloyds, 327 S.W.3d 250 (Tex. App.—San Antonio
                 2010, orig. proceeding). .............................................................. Tab B

         In re Progressive County Mut. Ins. Co., 439 S.W.3d 422
                (Tex. App.—Houston [1st Dist.] 2014, no pet.). ......................... Tab C

         In re Allstate County Mut. Ins. Co., No. 01-14-00068-CV,
                  2014 WL 5285850 (Tex. App.—Houston [1st Dist.]
                  Oct. 16, 2014, no pet. h.) . ..........................................................Tab D

                                                             iv
                                       INDEX OF AUTHORITIES

Cases                                                                                                Page(s)

Brainard v. Trinity Universal Ins. Co.,
      216 S.W.3d 809 (Tex. 2006). ......................................................................3–4

Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s London,
      327 S.W.3d 118 (Tex. 2010). .......................................................................... 4

Henson v. State Farm Bureau Cas. Ins. Co.,
     17 S.W.3d 652 (Tex. 2000). ............................................................................ 3

In re Allstate County Mut. Ins. Co.,
       No. 01-14-00068-cv, 2014 WL 5285850
       (Tex. App.—Houston [1st Dist.] Oct. 16, 2014, no pet. h.) . ............ 4, 9–10, 11

In re Am. Nat’l County Mut. Ins. Co.,
       384 S.W.3d 429 (Tex. App.—Austin 2012, orig. proceeding). ....................11

In re Progressive County Mut. Ins. Co.,
       439 S.W.3d 422 (Tex. App.—Houston [1st Dist.] 2014, no pet.) ..... 4–7, 9–11

In re Prudential Ins. Co. of Am.,
       148 S.W.3d 124 (Tex. 2004) (orig. proceeding). ..................................2–3, 11

In re United Fire Lloyds,
       327 S.W.3d 250 (Tex. App.—San Antonio 2010,
       orig. proceeding). ................................................................... viii, 2, 7–8, 9, 11

Progressive County Mut. Ins. Co. v. Boyd,
     177 S.W.3d 919 (Tex. 2005). .......................................................................... 5

U.S. Fire Ins. Co. v. Millard,
      847 S.W.2d 668 (Tex. App.—Houston [1st Dist.] 1993, no writ). ................. 3

Weir v. Twin City Fire Ins. Co.,
      622 F. Supp. 2d 483 (S.D. Tex. 2009).........................................................5–6

                                                       v
Womack v. Berry,
    291 S.W.2d 677 (Tex. 1956). .......................................................................... 7

Statutes                                                                                                     Page(s)

TEX. GOV’T CODE § 22.221.................................................................................... viii

Rules                                                                                                        Page(s)

TEX. R. APP. P. 52. ................................................................................................. viii

                                                           vi
                        STATEMENT OF THE CASE

Nature of the          This original proceeding arises from a lawsuit filed by
underlying case:       Real Parties in Interest Charlene T. Howard and
                       William D. Howard (“Plaintiffs”) against Relator
                       Allstate Fire and Casualty Insurance Company
                       (“Allstate”), among others. (MR 1–14). Plaintiffs seek
                       the recovery of underinsured motorist benefits under an
                       automobile policy issued by Allstate to Plaintiffs, as
                       well as damages for Allstate’s asserted bad faith and
                       statutory violations related to the handling of Plaintiffs’
                       claims. (MR 3–6).

Respondents:           The Honorable John Hawkins, Associate Judge of the
                       434th Judicial District of Fort Bend County, Texas, and
                       The Honorable James Shoemake, Judge of the 434th
                       Judicial District of Fort Bend County, Texas

Respondents’ actions   Plaintiffs filed suit in the underlying case alleging that
from which relief      Allstate breached the underinsured motorist provisions
sought:                of its policy to Plaintiffs when Allstate denied full
                       payment of their claim and, in doing so, committed bad
                       faith and violated various statutory provisions. (MR 7–
                       10). Allstate moved to sever and abate the bad faith and
                       extra-contractual claims until the preliminary issue of
                       coverage is resolved. (MR 22–31). The trial court
                       granted Allstate’s motion except that it allowed
                       discovery on Plaintiffs’ extra-contractual claims to
                       continue. (MR 44–46).

Order at issue:        The trial court’s October 23, 2014 order allowing
                       discovery on Plaintiffs’ extra-contractual and bad faith
                       claims (MR 44–46; see also App. at Tab A).

                                     vii
                           STATEMENT OF JURISDICTION

      This Court possesses jurisdiction to grant mandamus relief from the trial

court’s order allowing discovery on Plaintiffs’ bad faith and extra-contractual claims

before the preliminary issue of coverage is resolved because it constitutes a clear

abuse of discretion that impacts Allstate’s right to avoid the cost and expense of

preparing to defend claims that may be rendered moot for which no adequate remedy

exists by ordinary appeal. See TEX. GOV’T CODE § 22.221; TEX. R. APP. P. 52; In re

Progressive County Mut. Ins. Co., 439 S.W.3d 422, 427 (Tex. App.—Houston [1st

Dist.] 2014, no pet.) (holding that insurer had no adequate remedy by appeal where

trial court’s order allowing discovery on extra-contractual claims in an uninsured

motorist lawsuit would cause insurer to “lose substantial rights by being required to

prepare for claims that may be rendered moot and never even accrue”); In re United

Fire Lloyds, 327 S.W.3d 250, 256 (Tex. App.—San Antonio 2010, orig. proceeding)

(holding that insurer did not have adequate remedy by appeal where it would “lose

substantial rights by being required to prepare for claims that may be rendered moot

and may have not even yet accrued”).

                                         viii
                                 ISSUES PRESENTED

      1.     Whether the trial court’s refusal to abate discovery on Plaintiffs’ bad

faith and extra-contractual claims until the preliminary issue of coverage is resolved

is an abuse of discretion that warrants mandamus relief because Plaintiffs’ extra-

contractual and bad faith claims do not accrue, and would therefore be moot, unless

and until Plaintiffs first succeed on their breach of contract claim.

      2.     Whether Allstate has an adequate remedy by ordinary appeal where

Allstate will lose substantial rights by being required to conduct discovery on claims

that may be rendered moot.

                                           ix
                                     STATEMENT OF FACTS

       On or about August 11, 2011, Real Parties in Interest Charlene T. Howard and

William D. Howard (“Plaintiffs”) were involved in an automobile accident with

another vehicle driven by James Alexander Carr. 1 As a result of that accident,

Plaintiffs submitted claims to Allstate Fire and Casualty Insurance Company

(“Allstate”) for underinsured motorist (“UIM”) coverage. 2 After evaluating the

claims, Allstate made an offer to settle the Plaintiffs’ claims, 3 however, the Plaintiffs

did not accept. 4

       On or about June 5, 2014, Plaintiffs filed suit in the underlying case seeking

a declaration of coverage and the recovery of UIM benefits under an automobile

policy issued by Allstate to Plaintiffs (the “Policy”), as well as damages for

Allstate’s asserted bad faith and statutory violations related to the offering of those

benefits. 5 On August 11, 1014, Allstate filed a motion to sever and abate the

Plaintiffs’ extra-contractual and bad faith claims pending trial on the contractual

claim (the “Motion”).6 Plaintiffs responded to the Motion on October 5, 2014, 7 and

       1
           MR 3, ¶ 11.
       2
           Id. at ¶ 14.
       3
           See MR 22–23, Ex. 1.
       4
           See id., Ex. 2–3; see also MR 5.
       5
           MR 1–14.
       6
           MR 22–31.
       7
           MR 35–39.

                                              1
the trial court signed an order on October 23, 2014 conditionally granting the Motion

save and except discovery. 8

                                      ARGUMENT

I.    Standard of Review

      Mandamus will issue to correct a clear abuse of discretion for which the

relator has no adequate remedy at law. In re Prudential Ins. Co. of Am., 148 S.W.3d
124, 135–36 (Tex. 2004, orig. proceeding). A trial court has no discretion in

determining what the law is or in applying the law to the facts, and a clear failure by

the trial court to analyze or apply the law correctly constitutes an abuse of discretion.

In re United Fire Lloyds, 327 S.W.3d 250, 253 (Tex. App.—San Antonio 2010, orig.

proceeding). Mandamus relief is justified when parties stand to lose substantial

rights. Id. Mandamus relief is also appropriate to “spare private parties and the

public the time and money utterly wasted enduring eventual reversal of improperly

conducted proceedings.” In re Prudential Ins. Co. of Am., 148 S.W.3d at 136.

II.   Mandamus relief is warranted in this case.

      Mandamus relief is warranted in this case because the record establishes that

(A) the trial court abused its discretion when it refused to abate discovery on

Plaintiffs’ extra-contractual and bad faith claims until the preliminary issue of

      8
          MR 44–46.

                                           2
coverage is resolved, and (B) Allstate has no clear and adequate remedy at law. See

id. at 135–36.

      A.     The trial court abused its discretion when it refused to abate
             discovery on Plaintiffs’ extra-contractual and bad faith claims
             because these claims do not accrue, and would therefore be moot,
             unless and until Plaintiffs first succeed on their breach of contract
             claim.

             1.    Because Plaintiffs have not obtained a judgment establishing
                   the liability and underinsured status of Mr. Carr, the other
                   driver, Allstate has no contractual duty to pay UIM benefits.

      Underinsured motorist claims and bad faith claims are by their very nature

independent, and Texas courts have recognized them as “separate and distinct causes

of action which might each constitute a complete lawsuit within itself.” See U.S.

Fire Ins. Co. v. Millard, 847 S.W.2d 668, 672 (Tex. App.—Houston [1st Dist.] 1993,

orig. proceeding). In the context of underinsured motorist claims, “the [UIM]

insurer is under no contractual duty to pay benefits until the insured obtains a

judgment establishing the liability and underinsured status of the other motorist.”

Brainard v. Trinity Universal Ins. Co., 216 S.W.3d 809, 818 (Tex. 2006) (citing

Henson v. State Farm Bureau Cas. Ins. Co., 17 S.W.3d 652, 653–54 (Tex. 2000)).

In Brainard, the Texas Supreme Court explained the unique nature of a UIM case as

follows:

             The UIM contract is unique because, according to its
             terms, benefits are conditioned upon the insured’s legal
             entitlement to receive damages from a third party. Unlike
             many first-party insurance contracts, in which the policy

                                        3
             alone dictates coverage, UIM insurance utilizes tort law to
             determine coverage. Consequently, the insurer’s
             contractual obligation to pay benefits does not arise until
             liability and damages are determined.

Brainard, 216 S.W.3d at 818. As a result, Plaintiffs must succeed on their breach of

contract claim before any extra-contractual claims could even accrue.

      To succeed on their breach of contract claim, Plaintiffs must first establish

that UIM coverage for their injuries existed at the time of the accident. See Gilbert

Tex. Constr., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 124 (Tex.

2010) (“Initially, the insured has the burden of establishing coverage under the terms

of the policy.”); In re Allstate County Mut. Ins. Co., No. 01-14-00068-CV, 2014 WL
5285850, at *4 (Tex. App.—Houston [1st Dist.] Oct. 16, 2014, no pet. h.) (providing

that in order “[t]o prevail on these [extra-contractual] claims, the [plaintiffs] must

first establish that Allstate is liable under the insurance contract”).

      If they meet this initial burden, Plaintiffs must then establish that the other

driver, Mr. Carr, negligently caused the accident and was underinsured. In re

Progressive County Mut. Ins. Co., 439 S.W.3d 422, 427 (Tex. App.—Houston [1st

Dist.] 2014, no pet.). “Neither requesting UIM benefits nor filing suit against the

insurer triggers a contractual duty to pay.” Id. Accordingly, unless and until

Plaintiffs obtain a judgment not only establishing that the Policy provided UIM

coverage, but also establishing the liability and underinsured status of Mr. Carr,

Allstate has no contractual obligation to pay UIM benefits to Plaintiffs.

                                            4
              2.    Allowing discovery on Plaintiffs’ extra-contractual claims
                    before a determination on Plaintiffs’ breach of contract
                    claims is an abuse of discretion.

       Absent proof of a valid contract claim, Allstate should not be required to

provide discovery related to Plaintiffs’ extra-contractual and bad faith claims

because it is irrelevant, overly broad, and prejudicial. See In Progressive, 439
S.W.3d at 427 (finding severance and abatement of extra-contractual claims was

necessary to avoid prejudice because document requests relating to extra-contractual

claim were irrelevant to breach of contract claim and far broader than car accident

claim that must first be resolved). As already stated, in order to prevail on their

extra-contractual and bad faith claims, Plaintiffs must first demonstrate that Allstate

was contractually obligated to pay their UIM claim. See Progressive County Mut.

Ins. Co. v. Boyd, 177 S.W.3d 919, 922 (Tex. 2005) (recognizing bad faith claims are

generally negated by a lack of coverage under the insurance policy). Thus, unless

Plaintiffs can establish that Allstate breached the Policy by denying full payment of

Plaintiffs’ UIM claims, Allstate cannot be liable on Plaintiffs’ extra-contractual and

bad faith claims based on that denial, and all the time, effort, money, and judicial

resources spent conducting discovery on those claims will have been for naught. See

Weir v. Twin City Fire Ins. Co., 622 F. Supp. 2d 483, 486 (S.D. Tex. 2009) (Harmon,

J.) (“If there is no contractual duty to pay, [the insurer] cannot be in ‘bad faith,’ under

common law or statute, for not paying. [The insurer] cannot be guilty of not

                                            5
performing a proper investigation of his UIM claim because it is the trial of the UIM

claim, at which it will be determined who was at fault and the amount of damages,

that constitutes the investigation.”). It is for this reason that several courts of appeals,

including recent opinions from this Court, require the severance and abatement of

extra-contractual claims, including discovery on such claims, in UIM coverage cases

like this one.

       In a recent opinion, this Court specifically addressed the prejudice involved

in allowing discovery on extra-contractual claims to continue prior to a

determination on an uninsured motorist breach of contract claim.                See In re

Progressive County Mut. Ins. Co., 439 S.W.3d 422 (Tex. App.—Houston [1st Dist.]

2014, no pet.); see also App. at Tab C. In Progressive, an insured filed suit for

uninsured motorist benefits under her insurance policy, as well as damages for bad

faith and statutory violations related to the denial of those benefits. Id. at 422. The

insured served the carrier with a number of discovery requests, including all

documents related to lawsuits and claims against the carrier regarding the denial of

uninsured/underinsured motorist claims for over ten years. Id. at 427.

       In response to the insurer’s motion to sever the breach of contract claim from

the extra-contractual claims, the trial court judge signed an order abating the motion

to sever, allowing discovery to move forward on all claims, and deferring the other

issues covered by the motion until the pretrial hearing. Id. at 424. In concluding

                                             6
that severance and abatement of the extra-contractual claims was required in order

to avoid prejudice on behalf of the insurer, this Court held that the aforementioned

discovery requests sought documents “irrelevant to the breach-of-contract claim, and

the introduction of Progressive’s claims handling history in unrelated accidents at

the trial of [Plaintiff’s] breach-of-contract claim would be manifestly unjust.” Id. at

427. (citing Womack v. Berry, 291 S.W.2d 677, 682–83 (Tex. 1956)). The Court

went on:

             The trial court’s abatement of any decision on severance
             until the eve of trial requires the parties to engage in
             discovery on the extra-contractual claims and prepare
             for a trial on these claims, even though extra-contractual
             liability could only accrue if Progressive is found liable
             on the contract. Accordingly, the trial court’s decision to
             postpone severance, unless writ is granted, will require
             Progressive to expend resources answering discovery that
             is far broader than the car accident claim that must be
             resolved.

Id. at 427 (emphases added). Similarly, the trial court’s order—made the subject of

this mandamus—allowing discovery on Plaintiffs’ extra-contractual claims to go

forward subjects Allstate to irrelevant, overly broad, and prejudicial discovery.

      Other recent opinions confirm that the trial court’s refusal to abate discovery

on Plaintiffs’ extra-contractual claims is an abuse of discretion. In In re United Fire

Lloyds, the insured filed suit for UIM benefits under his employer’s insurance policy

as well as damages for bad faith and statutory violations related to the denial of those

benefits. 327 S.W.3d 250, 252 (Tex. App.—San Antonio 2010, orig. proceeding);

                                           7
see also App. at Tab B. After the insurer moved to sever and abate the extra-

contractual and bad faith claims, the insured filed a motion to bifurcate these claims

as an alternative to severance and abatement, arguing, like Plaintiffs argue here,9 that

“a severance would be judicially wasteful” and “prejudice him.” Id. at 253. In

reviewing the trial court’s decision to bifurcate, the San Antonio Court of Appeals

discussed the unique nature of a UIM claim in that a UIM insurer “has no contractual

duty to pay benefits until the insured obtains a judgment establishing the liability

and underinsured status of the other motorist.” Id. at 255. “As a result,” the court

continued, “a determination of [the insured’s] UIM claim may negate his bad faith

claims.” Id. at 256. Thus, the court held, the trial court had abused its discretion

when it refused to sever and abate the insured’s extra-contractual and bad faith

claims because an insurer should not be required to prepare to litigate claims that

could be rendered moot by a determination on the UIM claim:

               [W]e are constrained by the clear holding in Brainard, and
               hold that [the insurer] is under no contractual duty to pay
               UIM benefits until [the insured] establishes the liability
               and underinsured status of the other motorist. Therefore,
               [the insurer] should not be required to put forth the
               effort and expense of conducting discovery, preparing
               for trial, and conducting voir dire on bad faith claims that
               could be rendered moot by the portion of the trial relating
               to UIM benefits. To require such would not do justice,
               avoid prejudice, and further convenience. Under these
               circumstances, we conclude the trial court abused its

      9
          See MR 38.

                                            8
             discretion in bifurcating the case instead of severing and
             abating the UIM claim from the bad faith claims.

Id. (internal citations omitted) (emphases added).

      Similarly, this Court reached the same result in In re Allstate County Mutual

Ins. Co., No. 01-14-00068-CV, 2014 WL 5285850 (Tex. App.—Houston [1st Dist.]

Oct. 16, 2014, no pet. h.); see also App. at Tab D. In that case, the insureds filed

suit for UIM benefits under their insurance policy, as well as damages for bad faith

and statutory violations related to the denial of those benefits. Id. at *2. The insurer

moved to sever and abate the extra-contractual and bad faith claims from the

underlying coverage claim. In reviewing the trial court’s denial of the insurer’s

motion, the Court held that the severance of the settlement claims was mandatory.

Id. at *3. In doing so, the Court explained that the plaintiffs’ settlement claims

             would be negated by a determination that they lacked
             coverage under the insurance contract, requiring Allstate
             to prepare for and litigate the . . . claims, which may have
             not yet accrued and may be rendered moot by the breach
             of contract claim, would not do justice, avoid prejudice, or
             further convenience.

Id. at *5 (citing In re Progressive County Mut. Ins. Co., 439 S.W.3d at 426–28). The

Court went on to provide that “allowing the [insureds] to conduct broad discovery

into Allstate’s claims handling history regarding unrelated accidents and then

allowing the introduction of such information at the trial of the [their] breach of

                                           9
contract claim would be manifestly unjust.” Id. at *5 (citing In re Progressive

County Mut. Ins. Co., 439 S.W.3d at 426–27) (emphasis added).

      As in Progressive, Allstate, and United Fire, the trial court’s order denying

abatement of discovery on extra-contractual claims is an abuse of discretion because

it does “not do justice, avoid prejudice, or further convenience.” See In re Allstate

County Mut. Ins. Co., 2014 WL 5285850, at *5. Here, Allstate made an offer of

settlement on Plaintiffs’ claims for UIM benefits, which was not accepted.10 Thus,

consistent with Brainard and its progeny, unless and until Plaintiffs obtain a

judgment establishing UIM coverage, as well as the liability and underinsured status

of Mr. Carr, Allstate has no contractual obligation to pay UIM benefits. Without an

existing obligation to pay, Allstate should not be required to put forth the effort and

expense of conducting discovery on Plaintiffs’ bad faith and extra-contractual claims

because these claims have not yet accrued and could be rendered moot by the failure

of Plaintiffs’ breach of contract claim. Allowing Plaintiffs to conduct discovery on

their bad faith and extra-contractual claims will require Allstate “to expend resources

answering discovery that is far broader than the car accident claim that must be

resolved.” See In re Progressive County Mut. Ins. Co., 439 S.W.3d at 427. Thus,

the trial court’s refusal to abate discovery on these claims was an abuse of discretion

      10
           See MR 22–23, Ex. 1–3; see also MR 5.

                                             10
warranting mandamus relief. See In re Allstate County Mut. Ins. Co., 2014 WL
5285850, at *5; In re Prudential Ins. Co. of Am., 148 S.W.3d at 135–36.

      B.     Allstate has no clear and adequate remedy by appeal because it will
             lose substantial rights by being required to conduct discovery on
             claims that may be rendered moot.

      Allstate has a substantial right not to be required to put forth the expense of

conducting discovery on bad faith and extra-contractual claims that do not accrue,

and would therefore be moot, unless and until Plaintiffs first succeed on their breach

of contract claim. See, e.g., In re Progressive County Mut. Ins. Co., 439 S.W.3d at

428 (citing In re United Fire Lloyds, 327 S.W.3d at 256). If discovery on Plaintiffs’

extra-contractual claims is permitted to advance, Allstate will be required to conduct

discovery “on claims that may have not yet accrued and that could be rendered moot

by . . . the trial relating to breach of contract for underinsured motorist benefits.” See

In re Allstate County Mut. Ins. Co., 2014 WL 5285850, at *6 (citing In re

Progressive, 439 S.W.3d at 427–28); see also In re Am. Nat’l County Mut. Ins. Co.,

384 S.W.3d 429, 439 (Tex. App.—Austin 2012, orig. proceeding) (holding that

insurer did not have adequate remedy by appeal where it would “lose substantial

rights . . . by being required to prepare and try claims that may be rendered moot”).

Accordingly, the Court should conclude that Allstate has no adequate remedy by

appeal, and mandamus relief is warranted. Id. (citing In re Progressive County Mut.

Ins. Co., 439 S.W.3d at 427–28).

                                           11
                                       PRAYER

      WHEREFORE, PREMISES CONSIDERED, Relator Allstate Fire and

Casualty Insurance Company respectfully prays that this Court direct the trial court

to amend its October 23, 2014 order to abate discovery on Plaintiffs’ extra-

contractual and bad faith claims until there has been a full and final resolution of

Plaintiffs’ breach of contract claims. Allstate also prays and for such other and

further relief to which Allstate may be entitled.

                                        Respectfully submitted,

                                        DOYLE, RESTREPO, HARVIN & ROBBINS, L.L.P.

                                        By: ________________________________
                                              Ronald J. Restrepo
                                              Texas State Bar No. 16791300
                                              rrestrepo@drhrlaw.com
                                              Sarah J. Allen
                                              Texas State Bar No. 24064810
                                              sallen@drhrlaw.com
                                              Alexandra Ledyard
                                              Texas State Bar No. 24087903
                                              aledyard@drhrlaw.com

                                        440 Louisiana Street, Suite 2300
                                        Houston, Texas 77002
                                        (713) 228-5100 (telephone)
                                        (713) 228-6138 (facsimile)

                                        Attorneys for Relator Allstate
                                        Fire and Casualty Insurance Company

                                          12
                                  CERTIFICATION

      I hereby certify that I have reviewed Relator Allstate Fire and Casualty
Insurance Company’s Petition for Writ of Mandamus and conclude that every
factual statement in this petition is supported by competent evidence included in the
appendix or record.

                                       ____________________________________
                                       Sarah J. Allen

                          CERTIFICATE OF COMPLIANCE

       Relying on the word count function in the word processing software used to
produce this document, I hereby certify that this petition (excluding the caption,
identity of parties and counsel, table of contents, index of authorities, statement of
the case, statement of jurisdiction, statement of issues presented, signature,
certificate of service, certification, certification of compliance, and appendix)
contains 2,815 words. See TEX. R. APP. P. 9.4(i).

                                       ____________________________________
                                       Sarah J. Allen

                                         13
                              CERTIFICATE OF SERVICE

       As required by Texas Rule of Appellate Procedure 6.3 and 9.5(b), (d), (e),
I certify that I have served this document and the corresponding mandamus record
by electronic service or certified mail, return receipt requested, on all parties as listed
below on January 2, 2015 as follows:

       The Honorable Judge James H. Shoemake
       434th Judicial District of Fort Bend County, Texas
       301 Jackson Street
       Richmond, Texas 77469

       The Honorable Judge John Hawkins
       434th Judicial District of Fort Bend County, Texas
       301 Jackson Street
       Richmond, Texas 77469

       Mario Martinez
       Law Offices of Mario A. Martinez
       23123 Cinco Ranch Blvd., # 208
       Katy, Texas 77494
       Attorney for the Real Parties in Interest
       Charlene Howard and William Howard

       John M. Causey
       Hope & Causey
       100 I-45 North, Ste. 600
       Conroe, Texas 77301
       Trial Counsel for Relator
       Allstate Fire and Casualty Insurance Company

                                         ____________________________________
                                         Sarah J. Allen

                                            14
TAB A
·'     1'-DCV-215228
       OTDN
     ; Olher Dlspotitlon/Non-Fiml
     . 32699'8
                                                                                                           FILED
                                                                                                                AUG 1 l .2Q1~ ri
     I~I I~llllllllHllllll~llll~                          NO. 14-0CV-215228
                                                                                                     AT
                                                                                                           ~~~!{)~
                                                                                                                     v{.~~ V· ~I'
                                                                                                                     1

                                                                                                      Cte~ Olllrlct Co'-Jrt. Fer1°'1rnd Ct., TX

            CHARLENE T. HOW ARD                          AND         §     IN THE DISTRICT COURT OF
            WILLIAM D. HOWARD                                        §
                                                                     §
            VS.                                                      §     FORT BEND COUNTY, TEXAS
                                                                     §
            ALLSTATE FIRE & CASUALTY                                 §
            INSURANCE COMPANY AND LISA                               §    434TH JUDICIAL DISTRICT
            GRAVES

                                             ORDER GRANTING DEFENDANTS'
                                              MOTION TO SEVER AND ABATE

                   On this day came on for consideration Defendants' Motion to Sever and Abate. The Court,

        having considered the motion, the prevailing case law, and the response thereto, is of the opinion that

        said motion is meritorious. The Court, therefore

                  ORDERS that all of the        Plaintiff.~ ·   claims for extra-contractual violations, including those of

       the Texas Deceptive Trade Practices /\ct, violations of the fnsurance Code, violntions of Chapter 37

       & 38 of the Texas Civil Practice and Remedies Code, gross neglect and breach of the duty of good

       faith and fair dealing, arc hereby severed from the above captioned lawsuit and shall be re-designated

       as CAUSE NO.               f'f:pc\J 2J£'.)m~i1 ii¥ Q1 S??B,· IN THE DISTRICT COURT OF FORT ·
       BEND COUNTY, TEX A S 434TJ/ JUDICIAL DfTRJCT;
                                                                AC~o
                      is further ORDERED that !he"'following documents shall be placed in CAUSE NO.
                       [l
     ,t.\   ~r;r:::v- ~s2-z. 327 S.W.3d 250 (2010)

                                                                              Nature and Extent of Discretionary Power
                    327 S.W.3d 250                                       Mandamus
                Court of Appeals of Texas,                                  Matters of discretion
                      San Antonio.                                       A trial court has no discretion in determining
                                                                         what the law is or applying the law to the facts,
              In re UNITED FIRE LLOYDS.                                  and a clear failure by the trial court to analyze or
                                                                         apply the law correctly will constitute an abuse
       No. 04–10–00094–CV.            |    July 14, 2010.
                                                                         of discretion for mandamus purposes.
Synopsis
                                                                         Cases that cite this headnote
Background: Employee who had been involved in
motor vehicle accident with other motorist filed suit
against employer's automobile insurer, asserting claim for         [3]   Mandamus
underinsured motorist (UIM) benefits, as well as bad faith                  Matters of discretion
claims. Insurer filed motion to sever and abate UIM claim                To satisfy the clear abuse of discretion standard
from bad faith claims. Employee filed motion for a bifurcated            for issuance of a writ of mandamus, the relator
trial. The 49th Judicial District Court, Webb County, Jose               must show that the trial court could reasonably
A. Lopez, J., denied insurer's motion and granted employee's             have reached only one decision.
motion. Insurer filed petition for writ of mandamus.
                                                                         Cases that cite this headnote

Holdings: The Court of Appeals, Rebecca Simmons, J., held          [4]   Mandamus
that:                                                                       Remedy at Law
                                                                         Appellate court will not issue a writ of
[1] trial court was required to sever and abate UIM claim from           mandamus if there is a clear and adequate
bad faith claims, and                                                    remedy at law.

[2] insurer had no adequate remedy by appeal with respect to             Cases that cite this headnote
trial court's abuse of discretion in denying its motion to sever
and abate.                                                         [5]   Mandamus
                                                                              Nature and existence of rights to be
                                                                         protected or enforced
Writ conditionally granted.
                                                                         Since mandamus is intended as an extraordinary
                                                                         remedy, such interference is justified only when
                                                                         parties stand to lose their substantial rights.
 West Headnotes (14)
                                                                         Cases that cite this headnote

 [1]     Mandamus
            Remedy at Law                                          [6]   Action
                                                                              Severance of actions
         Mandamus
            Nature of acts to be commanded                               Action
                                                                              Nature and subject matter of actions in
         Mandamus will issue only to correct a clear
                                                                         general
         abuse of discretion for which the relator has no
         adequate remedy at law.                                         Trial court was required to sever and abate
                                                                         claim for underinsured motorist (UIM) benefits
         1 Cases that cite this headnote                                 brought by employee involved in motor vehicle
                                                                         accident with other motorist against employer's
                                                                         automobile insurer from employee's bad faith
 [2]     Appeal and Error

                © 2014 Thomson Reuters. No claim to original U.S. Government Works.                                             1
In re United Fire Lloyds, 327 S.W.3d 250 (2010)

        claims against insurer, as insurer was under
        no contractual duty to pay UIM benefits               [10]   Insurance
        until employee established the liability and                      Prerequisites for Claim of Breach or Bad
        underinsured status of the other motorist, and,              Faith
        thus, insurer should not be required to put forth            Insurance
        the effort and expense of conducting discovery,                  Bad faith in general
        preparing for a trial, and conducting voir dire on           Contractual claims based on an insurance policy
        bad faith claims that could be rendered moot by              and bad faith claims against an insurer are
        the portion of the trial relating to UIM benefits,           by their nature independent, but, in most
        in that to require such would not do justice, avoid          circumstances, an insured may not prevail on a
        prejudice, and further convenience.                          bad faith claim without first showing that the
                                                                     insurer breached the contract.
        6 Cases that cite this headnote
                                                                     2 Cases that cite this headnote
 [7]    Action
             Severance of actions                             [11]   Insurance
        Trial                                                            Necessity of Tort Liability
             Separate Trials in Same Cause                           In a case in which underinsured motorist
        Severance and bifurcation are distinct trial                 (UIM) benefits are sought from an automobile
        procedures; a “severance” divides the lawsuit                insurer, the UIM insurer is obligated to
        into two or more separate and independent                    pay damages which the insured is legally
        causes, but the “bifurcation” of a trial leaves the          entitled to recover from the underinsured
        lawsuit intact but enables the court to hear and             motorist. V.A.T.S. Insurance Code, art. 5.06–
        determine one or more issues without trying all              1(5) (Repealed).
        controverted issues at the same time.
                                                                     2 Cases that cite this headnote
        3 Cases that cite this headnote
                                                              [12]   Insurance
 [8]    Action                                                           Necessity of Tort Liability
             Severance of actions                                    Insurance
        Claims are properly severable if: (1) the                        Underinsurance; exhausted coverage
        controversy involves more than one cause of                  Insurance
        action, (2) the severed claim is one that would be                Determination of Tort Liability; Actions
        the proper subject of a lawsuit if independently             and Settlements
        asserted, and (3) the severed claim is not so
                                                                     An underinsured motorist (UIM) insurer is
        interwoven with the remaining action that they
                                                                     under no contractual duty to pay benefits until
        involve the same facts and issues.
                                                                     the insured obtains a judgment establishing
        Cases that cite this headnote                                the liability and underinsured status of the
                                                                     other motorist; neither requesting UIM benefits
                                                                     nor filing suit against the insurer triggers a
 [9]    Action                                                       contractual duty to pay.
             Severance of actions
        The controlling reasons for a severance of claims            2 Cases that cite this headnote
        are to do justice, avoid prejudice, and further
        convenience.                                          [13]   Insurance
                                                                         Uninsured or Underinsured Motorist
        2 Cases that cite this headnote
                                                                     Coverage

               © 2014 Thomson Reuters. No claim to original U.S. Government Works.                                     2
In re United Fire Lloyds, 327 S.W.3d 250 (2010)

        Insurance
            Necessity of Tort Liability
                                                                                      OPINION
        Insurance
            Claims and Settlement Practices                  Opinion by: REBECCA SIMMONS, Justice.
        For an insured to recover for underinsured
                                                             On February 8, 2010, relator United Fire Lloyds filed a
        motorist (UIM) benefits under an automobile
                                                             petition for writ of mandamus, seeking to compel the trial
        insurance policy, he must prove not only that
                                                             court to (1) vacate the October 7, 2009 Order Granting
        the purported underinsured motorist negligently
                                                             Plaintiff's Motion for a Bifurcated Trial, (2) vacate the
        caused the accident that resulted in the covered
                                                             October 13, 2009 Order Denying Defendant United Fire
        damages, but also that all applicable policy
                                                             Lloyd's Motion to Sever and Abate Plaintiff's Extra–
        provisions have been satisfied.
                                                             Contractual Claims, and (3) grant United Fire's Motion to
        1 Cases that cite this headnote                      Sever and Abate Plaintiff's Extra–Contractual Claims. We
                                                             conditionally grant mandamus relief.

 [14]   Mandamus
             Modification or vacation of judgment or
        order                                                                     BACKGROUND

        Employer's automobile insurer, against which         The underlying suit arose from a motor vehicle accident
        employee had brought claim for underinsured          involving Juan Garcia and Ramon Valverde. Garcia filed
        motorist (UIM) benefits as well as bad faith         suit against United Fire for underinsured motorist (“UIM”)
        claims, had no adequate remedy by appeal with        benefits under his employer's insurance policy. The original
        respect to trial court's abuse of discretion in      petition only alleged a claim for UIM benefits, but
        denying its motion to sever and abate UIM claim      subsequently filed petitions added extra-contractual (bad
        from bad faith claims, and, thus, mandamus
                                                             faith) claims. The Fourth *253 Amended Petition 2 alleged
        relief was appropriate, as if mandamus was not
                                                             the following bad faith claims in violation of the Texas
        granted, insurer stood to lose substantial rights
                                                             Insurance Code: (1) failing to commence an investigation of
        by being required to prepare for claims that might
                                                             Garcia's claim and failing to request from the claimant all
        be rendered moot and might have not even yet
                                                             items, statements, and forms in order to properly evaluate
        accrued.
                                                             Garcia's claim in violation of section 542.055; and (2)
        3 Cases that cite this headnote                      engaging in unfair settlement practices in violation of section
                                                             541.060. 3

                                                             United Fire contends it made a settlement offer in the amount
                                          1                  of $100,000 during mediation. However, no settlement
*252 Original Mandamus Proceeding.
                                                             agreement was ever reached. Later, United Fire filed a motion
Attorneys and Law Firms                                      to sever and abate Garcia's UIM claim from the bad faith
                                                             claims. As the basis for the motion, United Fire asserted
Clay E. Coalson, Donnell, Abernethy & Kieschnick,            a severance was necessary because the introduction of the
Corpus Christi, TX, Jose L. Gamez, Donnell, Abernethy &      settlement offer, the policy limits, and the facts concerning
Kieschnick, Edinburg, TX, for Appellant.                     United Fire's handling of the claim, as they relate to the
                                                             bad faith claims, would prejudice United Fire in the trial
Ronald A. Ramos, Nadine Nieto, Law Offices of Ronald
                                                             of the UIM claim, and would confuse, complicate, and
A. Ramos, P.C., Adam Poncio, Poncio Law Offices, P.C.,
                                                             considerably lengthen the trial. Garcia then filed a motion
San Antonio, TX, Bryan W. Jones, Texas Mutual Insurance
                                                             for a bifurcated trial as an alternative to the severance and
Company, Austin, TX, for Appellee.
                                                             abatement. As authority for his motion, Garcia relied on
Sitting: KAREN ANGELINI, Justice, REBECCA                    this court's opinion in In re Travelers Lloyds of Tex. Ins.
SIMMONS, Justice, MARIALYN BARNARD, Justice.                 Co., in which we concluded the trial court did not abuse
                                                             its discretion in bifurcating over severing the contractual

              © 2014 Thomson Reuters. No claim to original U.S. Government Works.                                        3
In re United Fire Lloyds, 327 S.W.3d 250 (2010)

claims from the bad faith claims. See 273 S.W.3d 368, 373–         controverted issues at the same time. Id. Claims are properly
75 (Tex.App.-San Antonio 2008, orig. proceeding). Garcia           severable if (1) the controversy involves more than one cause
contended a severance would be judicially wasteful, would          of action, (2) the severed claim is one that would be the
unduly prejudice him, and the disposition of the trial on the      proper subject of a lawsuit if independently asserted, and (3)
UIM claim would not eliminate the trial on the bad faith           the severed claim is not so interwoven with the remaining
claims. In response to the motion for a bifurcated trial, United   action that they involve the same facts and issues. Guar. Fed.
Fire asserted that a UIM claim is different from other types of    Sav. Bank v. Horseshoe Operating Co., 793 S.W.2d 652, 658
contractual insurance claims because there is no contractual       (Tex.1990). “The controlling reasons for a severance are to
duty to pay benefits until the insured obtains a judgment          do justice, avoid prejudice, and further convenience.” Id.
establishing liability and the underinsured status of the other
motorist. Therefore, United Fire claimed no bad faith claims        [10] Contractual claims based on an insurance policy and
had yet accrued, and the trial on the UIM claim would control      bad faith claims are by their nature independent. Akin, 927
the outcome of the bad faith claims. After a hearing, the trial    S.W.2d at 629. “But, in most circumstances, an insured may
court granted Garcia's motion for a bifurcated trial and denied    not prevail on a bad faith claim without first showing that the
United Fire Lloyd's motion to sever and abate. This petition       insurer breached the contract.” Id. In Akin, the Texas Supreme
for writ of mandamus ensued.                                       Court concluded that a severance may be necessary in some
                                                                   bad faith cases. Id. at 630. For instance, when evidence is
                                                                   admissible only with regard to the bad faith claim and would
                                                                   prejudice the insurer to such an extent that a fair trial on the
                         ANALYSIS
                                                                   contract claim would become unlikely. Id.
I. Standard of Review
 [1]    [2]    [3]     [4]     [5]   [6] Mandamus will issue onlyFollowing Akin, numerous intermediate courts of appeals
to correct a clear abuse of discretion for which the relator     have considered whether it is an abuse of discretion for
has no adequate remedy at law. In re Prudential Ins. Co.         a trial court to refuse to order a severance of contractual
of Am., 148 S.W.3d 124, 135 (Tex.2004) (orig. proceeding);       claims from bad faith claims when a settlement offer has
Walker v. Packer, 827 S.W.2d 833, 839–40 (Tex.1992) (orig.       been made. See, e.g., In re Miller, 202 S.W.3d 922, 925–
proceeding). “A trial court has no ‘discretion’ in determining   26 (Tex.App.-Tyler 2006, orig. proceeding [mand. denied] );
what the law is or applying the law to the facts,” and “a clear  In re Allstate Tex. Lloyds, No. 14–05–00762–CV, 2005 WL
failure by the trial court to analyze or apply the law correctly 2277134, at * 4 (Tex.App.-Houston [14th Dist] Sept. 2, 2005,
will constitute an abuse of discretion” *254 Walker, 827         orig. proceeding) (mem. op.); In re Allstate Indem. Co., 05–
S.W.2d at 840. “To satisfy the clear abuse of discretion         03–01496–CV, 2003 WL 22456345, at *1 (Tex.App.-Dallas
standard, the relator must show ‘that the trial court could      Oct. 30, 2003, orig. proceeding) (mem. op.); In re Trinity
reasonably have reached only one decision.’ ” Liberty Nat'l      Universal Ins. Co., 64 S.W.3d 463, 468 (Tex.App.-Amarillo
Fire Ins. Co. v. Akin, 927 S.W.2d 627, 630 (Tex.1996)            2001, orig. proceeding [mand. denied] ). Eventually, parties
(quoting Walker, 827 S.W.2d at 840). However, this court         began seeking bifurcation of the contractual claims from the
will not issue a writ of mandamus if there is a clear and        bad faith claims as an alternative to severance. See In re
adequate remedy at law. See Walker, 827 S.W.2d at 840.           Travelers, 273 S.W.3d at 373–75; In re Allstate Tex. Lloyds,
Since mandamus is intended as an extraordinary remedy, such      202 S.W.3d 895, 900 (Tex.App.-Corpus Christi 2006, orig.
interference is justified only when parties stand to lose their  proceeding [mand. denied] ) (concluding plaintiffs failed
substantial rights. Id. at 842.                                  to meet their burden that they would be prejudiced by
                                                                 the bifurcation of contractual claims under a homeowner's
                                                                 insurance policy and bad faith claims instead of severing and
II. Severance or Bifurcation?                                    abating the claims). But we are only aware of a few cases
 [7]    [8]    [9] Severance and bifurcation are distinct trial in the context of a UIM claim that have considered whether
procedures. Hall v. City of Austin, 450 S.W.2d 836, 837–38       severance and abatement is necessary over bifurcation. See
(Tex.1970). A severance divides the lawsuit into two or more     In re Allstate Prop. and Cas. Ins. Co., No. 02–07–00141–
separate and independent causes. Id. However, the bifurcation    CV, 2007 WL 1574964, at *1 (Tex.App.-Fort Worth May
of a trial leaves the lawsuit intact but enables the court to    30, 2007, orig. proceeding) (mem. op.) (holding it was an
hear and determine one or more issues without trying all         abuse of discretion to bifurcate *255 instead of severing

                © 2014 Thomson Reuters. No claim to original U.S. Government Works.                                            4
In re United Fire Lloyds, 327 S.W.3d 250 (2010)

and abating the UIM claim from the bad faith claims); In           severing and abating because it is disputed whether there is
re Allstate County Mut. Ins. Co., 209 S.W.3d 742, 746–47           a covered loss. United Fire argues it should not be required
(Tex.App.-Tyler 2006, orig. proceeding) (concluding it was         to prepare for a trial on bad faith claims when it has no
an abuse of discretion to bifurcate instead of severing the UIM    contractual duty to pay the UIM claim until Garcia obtains
claim from the bad faith claims). However, these cases fail to     a judgment establishing the underinsured motorist's liability
discuss the necessity of severance and abatement rather than       and underinsured status.
bifurcation in the context of a UIM claim.
                                                              Garcia responds that it is not disputed that he has a covered
 [11] [12] In a UIM case, “[t]he UIM insurer is obligated loss and the bad faith claims will not be mooted by a trial
to pay damages which the insured is ‘legally entitled to      on the UIM claim; therefore, this court should hold the
recover’ from the underinsured motorist.” Brainard v. Trinity trial court did not abuse its discretion in bifurcating the
Universal Ins. Co., 216 S.W.3d 809, 818 (Tex.2006) (citing    trial rather than severing and abating. 5 Garcia relies *256
TEX. INS.CODE art. 5.06–1(5)). In Brainard, the Texas         primarily on In re Travelers to support his argument. See
Supreme Court expounded on the uniqueness of a UIM case       273 S.W.3d at 373–75. However, we do not find In re
as follows:                                                   Travelers controlling because it was not a UIM case. Id. In
                                                                   re Travelers involved a suit filed by homeowners against
            The UIM contract is unique because,
                                                                   their homeowners' insurance carrier for breach of contract
            according to its terms, benefits are
                                                                   and bad faith for mishandling their claim. Id. at 370. This
            conditioned upon the insured's legal
                                                                   court concluded that “[b]ecause the trial of the [plaintiffs']
            entitlement to receive damages from
                                                                   extra-contractual claims is unaffected by the outcome of
            a third party. Unlike many first-
                                                                   their contractual claim, a single bifurcated trial preceded by
            party insurance contracts, in which the
                                                                   unified discovery and pretrial proceedings promotes judicial
            policy alone dictates coverage, UIM
                                                                   economy better than severance and abatement.” Id. at 374.
            insurance utilizes tort law to determine
                                                                   As a result, this court determined the trial court did not abuse
            coverage. Consequently, the insurer's
                                                                   its discretion in bifurcating the case because “[u]nder these
            contractual obligation to pay benefits
                                                                   circumstances, the primary justification for abatement of the
            does not arise until liability and
                                                                   extra-contractual claims—avoiding the effort and expense of
            damages are determined.
                                                                   conducting discovery on claims that may be rendered moot
See Brainard, 216 S.W.3d at 818 (citing Henson v. S. Farm          in a previous trial—is non-existent because the disposition
                                                                   of the contractual claim will not moot the extra-contractual
Bureau Cas. Ins. Co., 17 S.W.3d 652, 654 (Tex.2000)). 4
                                                                   claims.” Id.
Therefore, “the UIM insurer is under no contractual duty to
pay benefits until the insured obtains a judgment establishing
                                                                   This court's determination that bifurcation is an appropriate
the liability and underinsured status of the other motorist....
                                                                   alternative to severance is not applicable to the present case
Neither requesting UIM benefits nor filing suit against the
                                                                   because a UIM claim that involves a dispute as to whether
insurer triggers a contractual duty to pay.” Id.
                                                                   there is a covered loss is distinguishable from a homeowners'
                                                                   insurance claim where the existence of a covered loss is not
 [13] Therefore, in order for Garcia to recover under his
                                                                   disputed. Unlike the situation presented in In re Travelers,
UIM claim, he must prove not only that the purported
                                                                   United Fire disputes whether Garcia has a covered loss. As
underinsured motorist negligently caused the accident that
                                                                   a result, a determination of Garcia's UIM claim may negate
resulted in the covered damages, but also that all applicable
                                                                   his bad faith claims. See Progressive County Mut. Ins. Co. v.
policy provisions have been satisfied. See Allstate Ins. Co.
                                                                   Boyd, 177 S.W.3d 919, 922 (Tex.2005) (recognizing bad faith
v. Bonner, 51 S.W.3d 289, 291–92 (Tex.2001); Wellisch v.
                                                                   claims are generally negated by a lack of coverage under the
United Servs. Auto. Ass'n, 75 S.W.3d 53, 57 (Tex.App.-San
                                                                   insurance policy); Akin, 927 S.W.2d at 630–31 (recognizing
Antonio 2002, pet. denied) (holding that because an insurer is
                                                                   that judgment for the insurer on the coverage claim prohibits
not obligated to pay UIM benefits until the insured becomes
                                                                   recovery premised only on the bad faith denial of a claim,
legally entitled to those benefits, an insurer has the right to
                                                                   but does not necessarily bar all claims for bad faith); In re
withhold payment of UIM benefits until the insured's legal
                                                                   Miller, 202 S.W.3d at 925 (concluding that bad faith claims
entitlement is established). As a result, United Fire contends
                                                                   are negated by a lack of coverage under the insurance policy).
the trial court abused its discretion in bifurcating rather than

               © 2014 Thomson Reuters. No claim to original U.S. Government Works.                                              5
In re United Fire Lloyds, 327 S.W.3d 250 (2010)

                                                                           order. Typically in a mandamus situation, a party preserves
                                                                           its complaint by requesting an order and the trial court
As a result of the foregoing, we are constrained by the clear
                                                                           either grants or *257 does not grant the request to enter
holding in Brainard, and hold that United Fire is under no
                                                                           an order. See Axelson, Inc. v. McIlhany, 798 S.W.2d 550,
contractual duty to pay UIM benefits until Garcia establishes
                                                                           556 (Tex.1990). It is unclear what Garcia contends United
the liability and underinsured status of the other motorist.
                                                                           Fire waived since United Fire's complaint is that the trial
See Brainard, 216 S.W.3d at 818. Therefore, United Fire
                                                                           court improperly granted a bifurcated trial over severing and
should not be required to put forth the effort and expense of
                                                                           abating the UIM claim from the bad faith claims. United Fire
conducting discovery, preparing for a trial, and conducting
                                                                           does not appear to complain about the form or contents of
voir dire on bad faith claims that could be rendered moot
                                                                           the bifurcation order. Therefore, we do not find United Fire
by the portion of the trial relating to UIM benefits. To
                                                                           waived any complaints.
require such would not do justice, avoid prejudice, and further
convenience. See Guar. Fed. Sav. Bank, 793 S.W.2d at 658.
Under these circumstances, we conclude the trial court abused
its discretion in bifurcating the case instead of severing and                                       CONCLUSION
abating the UIM claim from the bad faith claims.
                                                                           We conclude the trial court abused its discretion in granting
 [14] We further conclude United Fire does not have an                     Juan Garcia's motion for a bifurcated trial and denying
adequate remedy by appeal because if mandamus is not                       United Fire's motion to sever and abate. Accordingly,
granted it stands to lose substantial rights by being required             we conditionally grant the writ of mandamus. The trial
to prepare for claims that may be rendered moot and may                    court is ordered to (1) vacate the October 7, 2009 Order
have not even yet accrued. See U.S. Fire Ins. Co. v. Millard,              Granting Plaintiff's Motion for a Bifurcated Trial, (2) vacate
847 S.W.2d 668, 675 (Tex.App.-Houston [1st Dist.] 1993,                    the October 13, 2009 Order Denying Defendant United
orig. proceeding); In re Trinity Universal Ins. Co., 64 S.W.3d             Fire Lloyd's Motion to Sever and Abate Plaintiff's Extra–
463, 468 (Tex.App.-Amarillo 2001, orig. proceeding [mand.                  Contractual Claims, and (3) grant United Fire's Motion to
denied] ).                                                                 Sever and Abate Plaintiff's Extra–Contractual Claims. The
                                                                           writ will issue only if the trial court fails to comply within
Finally, we address Garcia's contention that United Fire                   fourteen days.
waived any complaint as to the wording or form of the

Footnotes
1      This proceeding arises out of Cause No. 2008–CVE000521–D1, Juan Garcia, Plaintiff, Texas Mutual Insurance Co., As Subrogee
       of Juan Garcia, Intervenor v. United Fire Lloyds, pending in the 49th Judicial District Court, Webb County, Texas, the Honorable
       Jose A. Lopez presiding.
2      The live petition is the Fifth Amended Petition. However, it was filed after the trial court granted the motion to bifurcate. In considering
       whether the trial court abused its discretion in denying United Fire's motion to sever and abate, we limit our review to the record that
       was before the trial court at the time the “decision was made.” In re Bristol–Myers Squibb Co., 975 S.W.2d 601, 605 (Tex.1998).
3      Specifically, Garcia contends United Fire engaged in unfair settlement practices by: (1) failing to attempt in good faith to effectuate
       a prompt, fair, and equitable settlement of Garcia's claim after liability had become reasonably clear, (2) refusing, failing or
       unreasonably delaying a settlement offer on the basis that other coverage may be available, and (3) delaying or refusing settlement
       of a claim solely because there is other insurance of a different kind available to satisfy part of the loss.
4      We acknowledge Brainard involved a different issue than the case at hand: a determination as to when presentment of a contract
       claim was made in order to determine whether a party was entitled to attorney's fees in accordance with Chapter 38 of the Texas
       Civil Practice and Remedies Code. Id.
5      We note that in Garcia's Sur–Reply he provides, “The truth of the matter is the primary claims will be decided and then, if warranted,
       extra-contracial [sic] claims will be determined in the bifurcated portion of the trial.” However, later Garcia again contends that the
       extra-contractual claims will not be rendered moot by judgment in the first phase of the trial due to bifurcation.

End of Document                                                       © 2014 Thomson Reuters. No claim to original U.S. Government Works.

                © 2014 Thomson Reuters. No claim to original U.S. Government Works.                                                             6
TAB C
In re Progressive County Mut. Ins. Co., 439 S.W.3d 422 (2014)

                                                                        Cases that cite this headnote
                    439 S.W.3d 422
                Court of Appeals of Texas,
                  Houston (1st Dist.).                            [3]   Mandamus
                                                                           Matters of discretion
       In re PROGRESSIVE COUNTY MUTUAL                                  Because a trial court has no discretion in
           INSURANCE COMPANY, Relator.                                  determining what the law is, the trial court
                                                                        abuses its discretion, thus supporting claim for
       No. 01–14–00199–CV.           |   June 12, 2014.                 mandamus relief, if it clearly fails to analyze or
                                                                        apply the law correctly.
Synopsis
Background: Insured brought action against uninsured                    Cases that cite this headnote
motorist (UM) carrier to recover for breach of contract, breach
of the duty of good faith and fair dealing, and statutory
violations. The 215th District Court, Harris County, Elaine H.    [4]   Mandamus
Palmer, J., denied carrier's motion to sever and abate extra-              Remedy by Appeal or Writ of Error
contractual claims. Carrier petitioned for writ of mandamus.            In determining whether appeal is an adequate
                                                                        remedy, Court of Appeals considers whether the
                                                                        benefits outweigh the detriments of mandamus
                                                                        review.
[Holding:] The Court of Appeals, Harvey Brown, J., held that
severance of extra-contractual claims from breach of contract           Cases that cite this headnote
claim was required.

                                                                  [5]   Action
Writ conditionally granted.                                                  Severance of actions
                                                                        The trial court has broad discretion in
                                                                        the severance of causes of action. Vernon's
 West Headnotes (9)                                                     Ann.Texas Rules Civ.Proc., Rule 41.

                                                                        Cases that cite this headnote
 [1]    Mandamus
           Remedy by Appeal or Writ of Error                      [6]   Action
        Mandamus                                                             Severance of actions
           Matters of discretion                                        The trial court has a duty to order severance
        Court of Appeals may issue a writ of mandamus                   of causes of action when all of the facts and
        to correct a trial court's clear abuse of discretion            circumstances of the case unquestionably require
        or violation of duty imposed by law when no                     a separate trial to prevent manifest injustice,
        adequate remedy by appeal exists.                               there is no fact or circumstance supporting or
                                                                        tending to support a contrary conclusion, and the
        Cases that cite this headnote                                   legal rights of the parties will not be prejudiced
                                                                        thereby. Vernon's Ann.Texas Rules Civ.Proc.,
 [2]    Mandamus                                                        Rule 41.
           Matters of discretion
                                                                        1 Cases that cite this headnote
        A clear abuse of discretion occurs supporting
        mandamus relief when the trial court's decision
        is so arbitrary and unreasonable that it amounts          [7]   Action
        to clear error.                                                      Severance of actions

               © 2014 Thomson Reuters. No claim to original U.S. Government Works.                                           1
In re Progressive County Mut. Ins. Co., 439 S.W.3d 422 (2014)

        Claims are properly severable if: (1) the
        controversy involves more than one cause of          Attorneys and Law Firms
        action; (2) the severed claim is one that would be
                                                             *424 Mark R. Lapidus, Megan L. Knudsen, Lapidus
        the proper subject of a lawsuit if independently
                                                             Knudsen, PC, Houston, TX, for Relator.
        asserted; and (3) the severed claim is not so
        interwoven with the remaining action that it         Timothy R. Hightower, Alexandra Muthcler, Houston, TX,
        involves the same facts and issues. Vernon's         for Real Party in Interest.
        Ann.Texas Rules Civ.Proc., Rule 41.
                                                             Panel consists of Justices KEYES, BLAND and BROWN.
        Cases that cite this headnote

                                                                                      OPINION
 [8]    Action
             Severance of actions                            HARVEY BROWN, Justice.
        Severance of insured's extra-contractual claims
                                                             Relator, Progressive County Mutual Insurance Company
        from breach of contract claim was required in
                                                             seeks a writ of mandamus compelling the trial court to
        order to avoid prejudice and prevent manifest
                                                             (1) vacate its order denying Progressive's motion to sever
        injustice to uninsured motorist (UM) carrier
                                                             extra-contractual claims asserted against it and (2) enter an
        from need to expend resources answering
                                                             order abating those extra-contractual claims until the breach-
        discovery far broader than the car accident
                                                             of-contract claim brought by Alma Guia, the real party in
        claim; documents related to lawsuits and claims
                                                             interest, has been resolved. We conditionally grant the writ.
        against carrier regarding the denial of UM and
        underinsured motorist (UIM) claims for over
        ten years were irrelevant to contract claim, and
        introducing carrier's claims handling history in                             Background
        unrelated accidents at trial of breach-of-contract
                                                             Following an automobile collision with an uninsured
        claim would be manifestly unjust. Vernon's
        Ann.Texas Rules Civ.Proc., Rule 41.                  motorist's vehicle, Guia sued her insurer, Progressive. 1
                                                             While investigation into the claim was ongoing, Guia sued
        1 Cases that cite this headnote                      Progressive for breach of the uninsured motorist provisions in
                                                             her policy, violations of Chapter 542 of the Texas Insurance
 [9]    Mandamus                                             Code, violations of the Deceptive Trade Practices–Consumer
             Modification or vacation of judgment or         Protection Act, and breach of the duty of good faith and fair
        order                                                dealing. Guia served Progressive with a number of discovery
                                                             requests, some of which would not be relevant to the breach-
        Mandamus
                                                             of-contract claim. Progressive filed a motion to sever the
           Proceedings in civil actions in general
                                                             breach of contract claim for uninsured motorist coverage from
        Appeal was not adequate remedy for trial court's     the extra-contractual claims. The trial court judge signed an
        improper refusal to sever and abate insured's        order abating the motion to sever, allowing discovery to move
        extra-contractual claims from breach of contract     forward on all claims, and deferring the other issues covered
        claim against uninsured motorist (UM) carrier,       by the motion until the pretrial hearing. Progressive filed a
        and, thus, writ of mandamus would be granted if      writ seeking to compel severance and abatement.
        trial court failed to comply. Vernon's Ann.Texas
        Rules Civ.Proc., Rule 41.

        1 Cases that cite this headnote                                          Standard of Review

                                                              [1] [2] [3] [4] We may issue a writ of mandamus to
                                                             correct a trial court's clear abuse of discretion or violation
                                                             of duty imposed by law when no adequate remedy by
                                                             appeal exists. See Walker v. Packer, 827 S.W.2d 833, 839

              © 2014 Thomson Reuters. No claim to original U.S. Government Works.                                       2
In re Progressive County Mut. Ins. Co., 439 S.W.3d 422 (2014)

(Tex.1992) (orig. proceeding). A clear abuse of discretion      In Liberty National Fire Insurance Co. v. Akin, the Texas
occurs when the trial court's decision is so arbitrary and      Supreme Court considered whether severance was required
unreasonable that it amounts to clear error. See id. (quoting   in a case involving breach of contract and extra-contractual
Johnson v. Fourth Court of Appeals, 700 S.W.2d 916,             claims against an insurer under a homeowner's policy. 927
917 (Tex.1985)). Because a trial court has no discretion        S.W.2d 627 (Tex.1996). In refusing to grant mandamus relief,
in determining what the law is, the trial court abuses its      the Court rejected “an inflexible rule that would deny the
discretion if it clearly fails to analyze or apply the law      trial court all discretion and ... require severance in every
correctly. See id. at 840. “In determining whether appeal       case [involving bad-faith insurance claims], regardless of the
is an adequate remedy, [we] consider whether the benefits       likelihood of prejudice.” Id. at 630. Ultimately, the Court
outweigh the detriments of mandamus review.” In re BP           concluded that the contractual and extra-contractual claims
Prods. N. Am., Inc., 244 S.W.3d 840, 845 (Tex.2008) (orig.      in that case were interwoven, with most evidence admissible
proceeding).                                                    on both claims, and that any prejudicial effect could be
                                                                ameliorated by appropriate limiting instructions. See id. The
 [5]     [6] The trial court has “broad” discretion in the Court went on to
severance of causes of action. Morgan v. Compugraphic
Corp., 675 S.W.2d 729, 734 (Tex.1984); Black v. Smith, 956                   Several Texas appellate courts have
S.W.2d 72, 75 (Tex.App.-Houston [14th Dist.] 1997, orig.                     found severance may nevertheless
proceeding). However, that discretion is not unlimited. See                  be necessary in some bad faith
U.S. Fire Ins. Co. v. Millard, 847 S.W.2d 668, 671 (Tex.App.-                cases. A trial court will undoubtedly
Houston [1st Dist.] 1993, orig. proceeding). The trial court                 confront instances in which evidence
has a duty to order severance when *425 “all of the facts and                admissible only on the bad faith claim
circumstances of the case unquestionably require a separate                  would prejudice the insurer to such an
trial to prevent manifest injustice, and there is no fact or                 extent that a fair trial on the contract
circumstance supporting or tending to support a contrary                     claim would become unlikely. One
conclusion, and the legal rights of the parties will not be                  example would be when the insurer
prejudiced thereby.” Womack v. Berry, 156 Tex. 44, 291                       has made a settlement offer on the
S.W.2d 677, 682–83 (Tex.1956) (orig. proceeding).                            disputed contract claim. As we have
                                                                             noted, some courts have concluded
                                                                             that the insurer would be unfairly
                                                                             prejudiced by having to defend the
                Severance of Contractual and                                 contract claim at the same time and
                  Extra–Contractual Claims                                   before the same jury that would
                                                                             consider evidence that the insurer had
 [7] Texas Rule of Civil Procedure 41 governs severance of
                                                                             offered to settle the entire dispute.
claims. See TEX.R. CIV. P. 41. The rule provides, in part,
                                                                             While we concur with these decisions,
that “[a]ctions which have been improperly joined may be
                                                                             we hasten to add that evidence of this
severed ... on such terms as are just. Any claim against a
                                                                             sort simply does not exist in this case.
party may be severed and proceeded with separately.” Id. The
                                                                             In the absence of a settlement offer
predominant reasons for a severance are to do justice, avoid
                                                                             on the entire contract claim, or other
prejudice, and promote convenience. F.F.P. Op. Partners,
                                                                             compelling circumstances, severance
L.P. v. Duenez, 237 S.W.3d 680, 693 (Tex.2007). Claims are
                                                                             is not required.
properly severable if: (1) the controversy involves more than
one cause of action; (2) the severed claim is one that would be Id. (internal citations omitted); see also In re Miller, 202
the proper subject of a lawsuit if independently asserted; and  S.W.3d 922, 925–26 (Tex.App.-Tyler 2006, orig. proceeding
(3) the severed claim is not so interwoven with the remaining   [mand. denied] ); In re Trinity Universal Ins. Co., 64 S.W.3d
action that it involves the same facts and issues. Guar. Fed.   463, 468 (Tex.App.-Amarillo 2001, orig. proceeding [mand.
Sav. Bank v. Horseshoe Operating Co., 793 S.W.2d 652, 658       denied] ). Thus, in Liberty National, the Court opined a
(Tex.1990). Only the third element is in dispute here.          settlement offer by an insurer may create a situation where
                                                                 severance of an insured's contract claim is required. 927
                                                                 S.W.2d at 630 (Tex.1996).

               © 2014 Thomson Reuters. No claim to original U.S. Government Works.                                         3
In re Progressive County Mut. Ins. Co., 439 S.W.3d 422 (2014)

                                                                              the liability and underinsured status
There is no evidence in the record that Progressive made a                    of the other motorist. Therefore, [the
settlement offer to *426 Guia. However, Liberty National                      insurer] should not be required to
does not limit severance to cases where such an offer has been                put forth the effort and expense of
made, instead holding that “other compelling circumstances”                   conducting discovery, preparing for
may also require severance. Id. In the case before us,                        a trial, and conducting voir dire
Progressive argues that “other compelling circumstances”                      on bad faith claims that could be
should include the effort and cost associated with conducting                 rendered moot by the portion of
discovery on extra-contractual claims that have not yet                       the trial relating to [underinsured
accrued because the insured's breach-of-contract claim has                    motorist] benefits. To require such
not yet been decided.                                                         would not do justice, avoid prejudice,
                                                                              and further convenience. Under
Several courts of appeals have considered the issues of                       these circumstances, we conclude
severance and abatement in the context of uninsured motorist                  the trial court abused its discretion
or underinsured motorist insurance coverage; these courts                     in bifurcating the case instead of
have concluded that, when uninsured motorist claims are                       severing and abating the [underinsured
involved, severance of the extra-contractual claims was                       motorist] claim from the bad faith
required. See In re Am. Nat'l Cnty. Mut. Ins. Co., 384 S.W.3d                 claims.
429 (Tex.App.-Austin 2012, orig. proceeding) (concluding
trial court abused discretion by denying insurer's motion for    In re United Fire Lloyds, 327 S.W.3d at 256. 2
severance and abatement of extra-contractual claims where
settlement offer was made on underinsured motorist claim);        *427 [8] In this case, to prevail on her extra-contractual
In re Reynolds, 369 S.W.3d 638, 650–55 (Tex.App.-Tyler           claims against Progressive, Guia must demonstrate that
2012, orig. proceeding) (holding severance of underinsured       Progressive was contractually obligated to pay her uninsured
motorist claim was required to prevent prejudice); In re         motorist claim. To do this, Guia must first prove that she had
United Fire Lloyds, 327 S.W.3d 250, 257 (Tex.App.-San            uninsured motorist coverage, that the other driver negligently
Antonio 2010, orig. proceeding) (finding abuse of discretion     caused the accident and was uninsured, and the amount of her
in granting motion for bifurcation of trial rather than          damages. See In re Reynolds, 369 S.W.3d at 652. It appears
severance and abatement of extra-contractual claims); see        that the first issue is not in dispute. Therefore, Guia's breach-
also In re Old Am. Cnty. Mut. Fire Ins. Co., No. 13–             of-contract claim will essentially involve the issues in a
12–00700–CV, 2013 WL 398866 (Tex.App.-Corpus Christi             typical car wreck: the comparative negligence of Guia and the
January 30, 2013, orig. proceeding) (mem. op.) (holding          other driver and Guia's damages. The bad faith claim here is
that severance and abatement of extra-contractual claims         more complicated. In her most recent petition, she alleges that
is required in many instances when insured asserts claim         Progressive breached their duty of good faith and fair dealing,
to uninsured or underinsured motorist benefits); In re           violated the insurance code by failing to timely pay the
Farmers Tex. Cnty. Mut. Ins. Co., No. 07–11–00396–CV,            claim, and further alleges Progressive's conduct was knowing
2011 WL 4916303, (Tex.App.-Amarillo Oct. 17, 2011,               and intentional in violation of the Deceptive Trade Practices
orig. proceeding) (mem. op.) (denying mandamus because           Act. In discovery, Guia seeks production of all documents
complaint was not preserved, but agreeing that abatement of      related to lawsuits and claims against Progressive regarding
extra-contractual claims is required in most instances when      the denial of uninsured/underinsured motorist claims for over
an insured asserts claim to uninsured motorist benefits).        ten years. Examples of these requests include:

The San Antonio Court of Appeals explained its                     Request 3. Produce all documents of any type as to claims
determination that mandamus relief was proper to compel            asserted against Progressive during period from January
severance and abatement of an underinsured motorist claim          1, 2001, up to and including present day as a result of
from related bad faith claims as follows:                          nonpayment of uninsured/underinsured motorist claims in
                                                                   Texas regardless of whether a lawsuit was filed and/or
            [The insurer] is under no contractual                  liability was denied.
            duty to pay [underinsured motorist]
            benefits until [the insured] establishes

               © 2014 Thomson Reuters. No claim to original U.S. Government Works.                                            4
In re Progressive County Mut. Ins. Co., 439 S.W.3d 422 (2014)

                                                                         Walker, 827 S.W.2d at 839. The Corpus Christi Court of
    Request 4. Produce all documents of any type as to
                                                                         Appeals in In re United Fire Lloyds concluded the insurer
    all lawsuits filed against Progressive during period from
                                                                         did not have an adequate remedy by appeal because, if a
    January 1, 2001, up to and including present day, as a result
                                                                         writ of mandamus were not granted, the insurer stood to lose
    of nonpayment of uninsured/underinsured motorist claims
                                                                         substantial rights by being required to prepare for claims that
    in Texas regardless of whether liability was denied.
                                                                         might be rendered moot and never even accrue. In re Fire
    ...                                                                  Lloyds, 327 S.W.3d at 256 (citing U.S. Fire Ins. Co., 847
                                                                         S.W.2d at 675; In re Trinity Universal Ins. Co., 64 S.W.3d
    Request 16. A copy of each and every policy, manual,                 at 468).
    protocol, instruction booklet or similar writing concerning
    procedures for the investigation and handling of uninsured/          The Corpus Christi Court of Appeals agreed. See In re Old
    underinsured motorist claim which was in effect at the time          Am. Cnty. Mut. Fire Ins. Co., 2013 WL 398866. Likewise,
    Plaintiff made her claims in this case, and for the seven            other appellate courts have also found these claims do not
    years preceding Progressive's denial of Plaintiff's claim.           have an adequate remedy by appeal. See In re Am. Nat'l Cnty.
                                                                         Mut. Ins. Co., 384 S.W.3d 429, 439; In re Reynolds, 369
These requested documents are irrelevant to the breach-of-
                                                                         S.W.3d at 658; In re United Fire Lloyds, 327 S.W.3d at 256.
contract claim, and the introduction of Progressive's claims
handling history in unrelated accidents at the trial of Guia's
breach-of-contract claim would be manifestly unjust. See
Womack v. Berry, 291 S.W.2d at 682–83 (Tex.1956) (orig.                                             Conclusion
proceeding).
                                                                         Based on our review of the record, we conclude that Guia's
                                                                         extra-contractual claims against Progressive are severable,
The trial court's abatement of any decision on severance until
                                                                         the facts and circumstances of the case require a severance to
the eve of trial requires the parties to engage in discovery
                                                                         prevent manifest injustice, and the legal rights of the parties
on the extra-contractual claims and prepare for a trial on
                                                                         will not be prejudiced thereby. See Womack, 291 S.W.2d
these claims, even though extra-contractual liability could
                                                                         at 683. The trial court, therefore, abused its discretion in
only accrue if Progressive is found liable on the contract. See
                                                                         refusing to sever and abate the uninsured motorist claims
In re United Fire Lloyds, 327 S.W.3d at 256. Accordingly,
                                                                         from the bad faith claims pending the determination of
the trial court's decision to postpone severance, unless writ
                                                                         Progressive's liability for the uninsured motorist damages
is granted, will require Progressive to expend resources
                                                                         under the policy. See In re Am. Nat'l Cnty. Mut. Ins. Co., 384
answering discovery that is far broader than the car accident
                                                                         S.W.3d 429; In re Reynolds, 369 S.W.3d at 650–55; In re
claim that must be resolved.
                                                                         United Fire Lloyds, 327 S.W.3d at 257; see also In re Old Am.
                                                                         Cnty. Mut. Fire Ins. Co., 2013 WL 398866; In re Farmers
Consistent with In re Reynolds and In re United Fire Lloyds,
                                                                         Tex. Cnty. Mut. Ins. Co., 2011 WL 4916303.
we conclude that severance of insured's extra-contractual
claims is required in this instance to avoid prejudice.
                                                                         We conditionally grant Progressive's writ of mandamus and
                                                                         order the trial court to vacate the February 11, 2014 Order,
                                                                         grant Progressive County Mutual Insurance Company's
                 Adequate Remedy by Appeal                               Motion to Sever, and abate the extra-contractual claims. We
                                                                         are confident that the trial court will promptly comply, and
 [9] A writ of mandamus will issue only if there is no
                                                                         our writ will issue only if it does not.
adequate remedy available by direct appeal. See *428

Footnotes
1         The underlying case is Alma Guia v. Jessica Nicole Estes, Relinda Estes, Progressive Insurance Company and Progressive County
          Mutual Insurance Company; No. 2012–57535, in the 215th District Court of Harris County, Texas, the Honorable Elaine H. Palmer
          presiding.
2         The court relied on the Texas Supreme Court's reasoning in Brainard v. Trinity Universal Insurance Co., 216 S.W.3d 809 (Tex.2006),
          but acknowledged that Brainard concerned timing of presentment of contract claim to determine whether party was entitled to

                  © 2014 Thomson Reuters. No claim to original U.S. Government Works.                                                    5
In re Progressive County Mut. Ins. Co., 439 S.W.3d 422 (2014)

       attorney's fees under Chapter 38 of Texas Civil Practice and Remedies Code, rather than severance and abatement in the context
       of uninsured motorist claim. See In re United Fire Lloyds, 327 S.W.3d 250, 257 (Tex.App.-San Antonio 2010, orig. proceeding)
       (discussing Brainard, 216 S.W.3d at 818).

End of Document                                                 © 2014 Thomson Reuters. No claim to original U.S. Government Works.

               © 2014 Thomson Reuters. No claim to original U.S. Government Works.                                                6
TAB D
In re Allstate County Mut. Ins. Co., --- S.W.3d ---- (2014)
2014 WL 5285850

                                                                      involves the same facts and issues. Vernon's
                                                                      Ann.Texas Rules Civ.Proc., Rule 41.
                     2014 WL 5285850
       Only the Westlaw citation is currently available.              Cases that cite this headnote
      NOTICE: THIS OPINION HAS NOT BEEN
      RELEASED FOR PUBLICATION IN THE                           [2]   Action
 PERMANENT LAW REPORTS. UNTIL RELEASED,                                    Severance of Actions
 IT IS SUBJECT TO REVISION OR WITHDRAWAL.                             Controlling reasons to allow a severance
                                                                      are to avoid prejudice, do justice, and
                  Court of Appeals of Texas,
                                                                      promote convenience. Vernon's Ann.Texas
                    Houston (1st Dist.).
                                                                      Rules Civ.Proc., Rule 41.
            In re ALLSTATE COUNTY MUTUAL
                                                                      Cases that cite this headnote
             INSURANCE COMPANY, Relator.

          No. 01–14–00068–CV.           |   Oct. 16, 2014.      [3]   Action
                                                                           Severance of Actions
Synopsis
                                                                      Trial court has a duty to order severance when
Background: Insured brought action against underinsured
                                                                      all of the facts and circumstances of the case
motorist (UIM) carrier to recover for breach of contract,
                                                                      unquestionably require a separate trial to prevent
breach of duty of good faith in settlement, and
                                                                      manifest injustice, and there is no fact or
misrepresentation of insurance policy. The 240th District
                                                                      circumstance supporting or tending to support a
Court, Fort Bend County, Pedro Ruiz, J., denied carrier's
                                                                      contrary conclusion, and the legal rights of the
motion to sever and abate extra-contractual claims. Carrier
                                                                      parties will not be prejudiced thereby. Vernon's
petitioned for writ of mandamus.
                                                                      Ann.Texas Rules Civ.Proc., Rule 41.

                                                                      Cases that cite this headnote
Holdings: The Court of Appeals, Sherry Radack, C.J., held
that:                                                           [4]   Insurance
                                                                          Settlement Duties; Bad Faith
[1] severance of settlement claims was required, but
                                                                      An insurer generally cannot be liable for failing
                                                                      to settle or investigate a claim that it has no
[2] severance of misrepresentation claims was not required.
                                                                      contractual duty to pay.

                                                                      Cases that cite this headnote
Writ granted in part.

                                                                [5]   Insurance
                                                                          Uninsured or Underinsured Motorist
 West Headnotes (8)
                                                                      Coverage
                                                                      Insurance
 [1]       Action                                                         Necessity of Tort Liability
                Severance of Actions                                  Insurance
           Claims are properly severable if: (1) the                      Underinsurance; Exhausted Coverage
           controversy involves more than one cause of                In the context of underinsured motorist
           action; (2) the severed claim is one that would be         coverage, an insurer is under no contractual
           the proper subject of a lawsuit if independently           duty to pay underinsured motorist benefits
           asserted; and (3) the severed claim is not so              until the insured proves that the insured
           interwoven with the remaining action that it               has underinsured motorist coverage, that the

                 © 2014 Thomson Reuters. No claim to original U.S. Government Works.                                       1
In re Allstate County Mut. Ins. Co., --- S.W.3d ---- (2014)
2014 WL 5285850

        underinsured motorist negligently caused the                    promote convenience and judicial economy.
        accident that resulted in the covered damages,                  Vernon's Ann.Texas Rules Civ.Proc., Rule 41.
        the amount of the insured's damages, and that
        the underinsured motorist's insurance coverage is               Cases that cite this headnote
        deficient.

        Cases that cite this headnote
                                                               Attorneys and Law Firms
 [6]    Insurance
                                                               Ronald J. Restrepo, Nicole S. Bakare, N. Kimberly Hoesl,
            Duty to Settle or Pay
                                                               Doyle, Restrepo, Harvin & Robbins, L.L.P., Houston, TX, for
        Insurance                                              Appellant.
            Investigations and Inspections
        An insured generally must first establish that the     David L. Miller, Diane F. Burgess, Miller, Scamardi &
        insurer is liable on the contract before the insured   Carrabba, P.C., Houston, TX, for Appellee.
        can recover on extra-contractual causes of action
                                                               Panel consists of Chief Justice RADACK and Justices
        against an insurer for failing to promptly pay,
                                                               JENNINGS and KEYES.
        failing to settle, or failing to investigate an
        underinsured motorist insurance claim.
                                                                                         OPINION
        Cases that cite this headnote
                                                               SHERRY RADACK, Chief Justice.

 [7]    Action                                                  *1 Relator, Allstate County Mutual Insurance Company,
             Severance of Actions                              seeks a writ of mandamus compelling the trial court to (1)
        Severance of insured's settlement claims from          vacate its December 10, 2013 order denying Allstate's motion
        breach of contract claim was required in order         to sever and abate extra-contractual and bad faith claims
        to avoid prejudice and prevent manifest injustice      asserted against it and (2) enter an order severing and abating
        to underinsured motorist (UIM) carrier from            those extra-contractual and bad faith claims until the breach
        need to expend resources answering discovery           of contract claim brought by the real parties in interest,
        far broader than car accident claim; allowing          Raymond Briers, Jr. and Stacy Briers (collectively, Briers),
        insureds to conduct broad discovery into carrier's     individually and as representatives of the estate of Grant
        claims handling history regarding unrelated            Briers, has been resolved. 1 We partially grant relief.
        accidents and then allowing introduction of such
        information at trial of breach of contract claim
        would be manifestly unjust. Vernon's Ann.Texas
        Rules Civ.Proc., Rule 41.                                                      Background

        Cases that cite this headnote                          The Briers' minor son, Grant, was riding in a vehicle driven
                                                               and owned by DaYonajja Williams when the vehicle was
                                                               involved in a single-vehicle automobile collision. Grant died
 [8]    Action                                                 as a result of the automobile accident. Following Grant's
             Severance of Actions                              death, the Briers filed a claim for underinsured motorist
        Trial court acted within its discretion when it        benefits with Allstate, pursuant to a business auto policy
        denied underinsured motorist (UIM) carrier's           issued by Allstate to Raymond Briers Jr.'s employer, T &
        motion to sever insureds' misrepresentation            R Pipeline Services, Inc. Allstate denied the Briers' claim,
        claims from breach of contract claim;                  stating that neither Raymond nor Grant was an “insured”
        misrepresentation claims were asserted as              under the policy and therefore they were not covered for an
        alternative causes of action to the breach of          underinsured motorist claim.
        contract claim, and, therefore, requiring carrier
        to litigate the claims at the same time would

               © 2014 Thomson Reuters. No claim to original U.S. Government Works.                                         2
In re Allstate County Mut. Ins. Co., --- S.W.3d ---- (2014)
2014 WL 5285850

The Briers then filed suit against Allstate, seeking a            to clear error. See id. (quoting Johnson v. Fourth Court of
declaratory judgment stating that the Briers were covered by      Appeals, 700 S.W.2d 916, 917 (Tex.1985)). Because a trial
the policy and alleging, in a paragraph styled “Breach of         court has no discretion in determining what the law is, the trial
Contract,” that Allstate breached the underinsured motorist       court abuses its discretion if it clearly fails to analyze or apply
provisions of the insurance contract. The Briers also asserted    the law correctly. See id. at 840. “To satisfy the clear abuse of
the following extra-contractual causes of action: (1) that        discretion standard, the relator must show ‘that the trial court
Allstate acted in bad faith by failing to settle or make a good   could reasonably have reached only one decision.’”Liberty
faith attempt to settle the claim, which the Briers styled as     Nat'l Fire Ins. Co. v. Akin, 927 S.W.2d 627, 630 (Tex.1996)
“Bad Faith”; (2) that Allstate engaged in unfair settlement       (orig. proceeding) (quoting Walker, 827 S.W.2d at 840).
practices by failing to make a good faith settlement offer,
in violation of Texas Insurance Code section 541.060(a)           “In determining whether appeal is an adequate remedy, [we]
(2), styled as “Unfair Settlement Practices”; and (3) that        consider whether the benefits outweigh the detriments of
Allstate failed to properly investigate, evaluate, and pay        mandamus review.”In re BP Prods. N. Am., Inc., 244 S.W.3d
the Briers' claim, in violation of Texas Insurance Code           840, 845 (Tex.2008) (orig. proceeding). We also consider
section 541.060(a)(7), styled as “Failure to Promptly Pay         “whether mandamus will spare litigants and the public ‘the
Claims” (collectively, “settlement claims”).                      time and money utterly wasted enduring eventual reversal
                                                                  of improperly conducted proceedings.’”In re Team Rocket,
The Briers further alleged, in the event the trial court          L.P., 256 S.W.3d 257, 262 (Tex.2008) (orig. proceeding)
determined that they were not covered by the underinsured         (quoting In re Prudential Ins. Co. of Am., 148 S.W.3d 124,
motorist provisions in the policy, the following alternative      136 (Tex.2004) (orig. proceeding)).
causes of action: (1) that Allstate, Insurance Network of
Texas, Eddie Croix Insurance Agency, Inc., and Randy Croix
made material misrepresentations of fact and of law and failed
                                                                   Severance of Extra–Contractual and Bad Faith Claims
to disclose a matter required to be disclosed, in violation of
Texas Insurance Code section 541.061(3), (4), and (5), which       [1] [2] Texas Rule of Civil Procedure 41 governs severance
they styled as “Misrepresentation of the Insurance Policy”;       of claims. SeeTEX.R. CIV. P. 41. The rule provides, in
and (2) that Allstate, Insurance Network of Texas, Eddie          part, that “[a]ny claim against a party may be severed and
Croix Insurance Agency, Inc., and Randy Croix violated the        proceeded with separately.”Id. Claims are properly severable
Deceptive Trade Practices Act by representing that the Briers     if: (1) the controversy involves more than one cause of action;
were covered under the policy, when they were not, styled as      (2) the severed claim is one that would be the proper subject
“Violations of the DTPA” (collectively, “misrepresentation        of a lawsuit if independently asserted; and (3) the severed
claims”).                                                         claim is not so interwoven with the remaining action that it
                                                                  involves the same facts and issues. Guar. Fed. Sav. Bank v.
 *2 Allstate filed a motion to sever the extra-contractual        Horseshoe Operating Co., 793 S.W.2d 652, 658 (Tex.1990).
claims from the breach of contract claim and abate those          The controlling reasons to allow a severance are to avoid
claims until the preliminary issue of coverage could be           prejudice, do justice, and promote convenience. F.F.P. Op.
decided. The trial court denied the motion. Allstate filed this   Partners, L.P. v. Duenez, 237 S.W.3d 680, 693 (Tex.2007).
petition for a writ of mandamus, seeking to compel severance
and abatement.                                                     [3] The trial court has “broad” discretion in the severance
                                                                  of causes of action. Morgan v. Compugraphic Corp., 675
                                                                  S.W.2d 729, 734 (Tex.1984); Black v. Smith, 956 S.W.2d 72,
                    Standard of Review                            75 (Tex.App.-Houston [14th Dist.] 1997, orig. proceeding).
                                                                  However, that discretion is not unlimited. See U.S. Fire Ins.
We may issue a writ of mandamus to correct a trial court's        Co. v. Millard, 847 S.W.2d 668, 671 (Tex.App.-Houston [1st
clear abuse of discretion or violation of a duty imposed by       Dist.] 1993, orig. proceeding). The trial court has a duty to
law when no adequate remedy by appeal exists. See Walker v.       order severance when “all of the facts and circumstances of
Packer, 827 S.W.2d 833, 839 (Tex.1992) (orig. proceeding).        the case unquestionably require a separate trial to prevent
A clear abuse of discretion occurs when the trial court's         manifest injustice, and there is no fact or circumstance
decision is so arbitrary and unreasonable that it amounts         supporting or tending to support a contrary conclusion, and

               © 2014 Thomson Reuters. No claim to original U.S. Government Works.                                                3
In re Allstate County Mut. Ins. Co., --- S.W.3d ---- (2014)
2014 WL 5285850

the legal rights of the parties will not be prejudiced thereby     Because the settlement claims asserted solely against Allstate
....” Womack v. Berry, 156 Tex. 44, 291 S.W.2d 677, 683            differ from the misrepresentation claims asserted against
(1956) (orig. proceeding).                                         Allstate, Insurance Network of Texas, Eddie Croix Insurance
                                                                   Agency, Inc., and Randy Croix, we will consider the
 *3 In the context of insurance cases, a “breach of an             settlement claims separately from the misrepresentation
insurance contract claim is separate and distinct from bad         claims.
faith, Insurance Code or DTPA causes of action. Uninsured
motorist claims and bad faith claims have been recognized
as separate and distinct causes of action which might              Severance of the Settlement Claims Is Mandatory
each constitute a complete lawsuit within itself.”Millard,         In their settlement claims, the Briers allege that Allstate acted
847 S.W.2d at 672 (internal citations omitted); see Akin,          in bad faith by failing to settle their contractual claim, that
927 S.W.2d at 629; In re Am. Nat'l Cnty. Mut. Ins.                 Allstate failed to make a good faith settlement offer, and that
Co., 384 S.W.3d 429, 433 (Tex.App.-Austin 2012, orig.              Allstate failed to properly investigate their contractual claim.
proceeding); In re United Fire Lloyds, 327 S.W.3d 250,
254 (Tex.App.-San Antonio 2010, orig. proceeding). “But,            *4 [4] [5] [6] An insurer generally cannot be liable for
in most circumstances, an insured may not prevail on a bad         failing to settle or investigate a claim that it has no contractual
faith claim without first showing that the insurer breached        duty to pay. See Progressive Cnty. Mut. Ins. Co. v. Boyd, 177
the contract.” Akin, 927 S.W.2d at 629; see also In re             S.W.3d 919, 922 (Tex.2005); Akin, 927 S.W.2d at 629 (“But,
Progressive Cnty. Mut. Ins. Co., 439 S.W.3d 422, 426–              in most circumstances, an insured may not prevail on a bad
27 (Tex.App.-Houston [1st Dist.] 2014, orig. proceeding)           faith claim without first showing that the insurer breached
(stating that “extra-contractual liability could only accrue if    the contract.”); In re Old Am. Cnty. Mut. Fire Ins. Co., 2013
[insurer] is found liable on the contract”); In re Old Am.         WL 398866, at *4; In re State Farm Mut. Auto. Ins. Co.,
Cnty. Mut. Fire Ins. Co., No. 13–12–00700–CV, 2013 WL              395 S.W.3d at 237–38; In re Am. Nat'l Cnty. Mut. Ins. Co.,
398866, at *4 (Tex.App.-Corpus Christi Jan. 30, 2013, orig.        384 S.W.3d at 437–38; In re United Fire Lloyds, 327 S.W.3d
proceeding) (“[T]o prevail on their extra-contractual claims       at 256; In re Miller, 202 S.W.3d 922, 925 (Tex.App.-Tyler
against Old American, plaintiffs must first demonstrate that       2006, orig. proceeding); Millard, 847 S.W.2d at 673. In the
Old American was contractually obligated to pay their              context of underinsured motorist coverage, an insurer is under
uninsured motorist claim.”); In re State Farm Mut. Auto. Ins.      no contractual duty to pay underinsured motorist benefits
Co., 395 S.W.3d 229, 238 (Tex.App.-El Paso 2012, orig.             until the insured proves that the insured has underinsured
proceeding) (quoting Smith v. Allstate Ins., No. H–03–0651,        motorist coverage, that the underinsured motorist negligently
2007 WL 677992, at *5 (S.D.Tex. Feb. 27, 2007)) (“Texas            caused the accident that resulted in the covered damages, the
insurance law generally conditions recovery for bad faith          amount of the insured's damages, and that the underinsured
and extracontractual claims on a recovery for breach of the        motorist's insurance coverage is deficient. See Brainard v.
insurance contract itself”). And, in insurance cases involving     Trinity Universal Ins. Co., 216 S.W.3d 809, 818 (Tex.2006);
bad faith claims, the Texas Supreme Court has recognized           In re Old Am. Cnty. Mut. Fire Ins. Co., 2013 WL 398866,
that severance may be necessary if the “insurer has made a         at *4; In re United Fire Lloyds, 327 S.W.3d at 255. Thus,
settlement offer on the disputed contract claim” or if there are   an insured generally must first establish that the insurer is
“other compelling circumstances.” Akin, 927 S.W.2d at 630.         liable on the contract before the insured can recover on extra-
                                                                   contractual causes of action against an insurer for failing
There is no evidence in the record that Allstate made a            to promptly pay, failing to settle, or failing to investigate
settlement offer to the Briers. Nevertheless, Allstate argues      an underinsured motorist insurance claim. See Akin, 927
that there are “other compelling circumstances” requiring          S.W.2d at 629; In re Progressive Cnty. Mut. Ins. Co., 439
severance of the extra-contractual claims in this case, namely,    S.W.3d at 426–27; In re Old Am. Cnty. Mut. Fire Ins. Co.,
the time, effort, costs, and judicial resources associated with    2013 WL 398866, at *4; In re State Farm Mut. Auto. Ins.
litigating and preparing for trial on extra-contractual claims     Co., 395 S.W.3d at 238 (quoting Smith, 2007 WL 677992,
that have not yet accrued because the Briers have not yet          at *5); see also In re Am. Nat'lCnty. Mut. Ins. Co., 384
established a contractual right to recovery on the breach of       S.W.3d at 437–38 (holding that “any duty by an insurer to its
contract claim.                                                    insured, common-law or statutory, necessarily arises from the
                                                                   contractual relationship between the parties,” and that insurer
                                                                   has no duty to settle claim that it is not contractually obligated

                © 2014 Thomson Reuters. No claim to original U.S. Government Works.                                              4
In re Allstate County Mut. Ins. Co., --- S.W.3d ---- (2014)
2014 WL 5285850

to pay, insurer cannot be liable on bad faith claims arising          398866, at *4; In re State Farm Mut. Auto. Ins. Co., 395
from failure to investigate claim that it has no duty to pay, and     S.W.3d at 237–39; In re Am. Nat'l Cnty. Mut. Ins. Co., 384
insurer cannot be liable for insurance code violations related        S.W.3d at 437–39; In re United Fire Lloyds, 327 S.W.3d at
to delays in making offer on claims it has no duty to pay).           256; Millard, 847 S.W.2d at 673. Further, allowing the Briers
As a result, “Texas case law establishes that severance and           to conduct broad discovery into Allstate's claims handling
abatement of extra-contractual claims is required in many             history regarding unrelated accidents and then allowing the
instances in which an insured asserts a claim to uninsured or         introduction of such information at the trial of the Briers'
underinsured motorist benefits.”In re Old Am. Cnty. Mut. Fire         breach of contract claim would be manifestly unjust. 3 See In
Ins. Co., 2013 WL 398866, at *4; see also In re Progressive           re Progressive Cnty. Mut. Ins. Co., 439 S.W.3d at 426–27;
Cnty. Mut. Ins. Co., 439 S.W.3d at 426–28; In re Am. Nat'l            In re Old Am. Cnty. Mut. Fire Ins. Co., 2013 WL 398866,
Cnty. Mut. Ins. Co., 384 S.W.3d at 438–39; In re United Fire          at *4. Finally, severance of the Briers' settlement claims
Lloyds, 327 S.W.3d at 255–56.                                         from the breach of contract claim would not prejudice the
                                                                      parties' rights. Accordingly, we conclude that severance of the
 [7] In this case, the Briers allege that Allstate failed to settle   settlement claims was required. See Boyd, 177 S.W.3d at 922;
their claim, failed to make a good faith settlement offer to          Womack, 291 S.W.2d at 683; In re Progressive Cnty. Mut.
them, and failed to properly investigate, evaluate, and pay           Ins. Co., 439 S.W.3d at 426–28; In re Old Am. Cnty. Mut. Fire
their claim. To prevail on these claims, the Briers must first        Ins. Co., 2013 WL 398866, at *4; In re State Farm Mut. Auto.
establish that Allstate is liable under the insurance contract 2      Ins. Co., 395 S.W.3d at 237–39; In re Am. Nat'l Cnty. Mut.
by proving: (1) they were covered by the insurance policy             Ins. Co., 384 S.W.3d at 437–39; In re United Fire Lloyds, 327
Allstate issued to T & R Pipeline; (2) Williams negligently           S.W.3d at 256; Millard, 847 S.W.2d at 673.
caused the automobile collision that resulted in Grant's death;
(3) the amount of their damages; and (4) Williams was either
uninsured or underinsured. See In re Old Am. Cnty. Mut. Fire          Severance of the Misrepresentation Claims Is Not
Ins. Co., 2013 WL 398866, at *4; In re State Farm Mut. Auto.          Mandatory
Ins. Co., 395 S.W.3d at 237–38. There is no evidence in the            [8] The Briers alleged the misrepresentation claims as
record showing that the Briers have established that Allstate         alternatives to their breach of contract claim. Unlike the
is liable under the insurance contract. As a result, the Briers'      settlement claims, the misrepresentation claims do not allege
settlement claims would be negated by a determination in the          that Allstate failed to act in good faith to comply with
breach of contract claim that Allstate is not liable. See Boyd,       duties imposed by the insurance contract, but instead allege
177 S.W.3d at 922; In re Progressive Cnty. Mut. Ins. Co.,             that the Briers are entitled to damages even if they are
439 S.W.3d at 426–27 (stating that “extra-contractual liability       not covered by the insurance contract. In these claims, the
could only accrue if [insurer] is found liable on the contract”);     Briers alleged that Allstate, Insurance Network of Texas,
In re Old Am. Cnty. Mut. Fire Ins. Co., 2013 WL 398866,               Eddie Croix Insurance Agency, Inc., and Randy Croix made
at *4 (“[T]o prevail on their extra-contractual claims against        material misrepresentations and misstatements of law related
Old American, plaintiffs must first demonstrate that Old              to the insurance policy issued by Allstate to T & R Pipeline
American was contractually obligated to pay their uninsured           that the Briers relied on to their detriment. SeeTEX. BUS.
motorist claim.”); In re State Farm Mut. Auto. Ins. Co., 395          & COMM.CODE ANN. § 17.46(b)(5), (b)(12) (West 2011);
S.W.3d at 239; In re Am. Nat'l Cnty. Mut. Ins. Co., 384               TEX. INS.CODE ANN. §§ 541.061, 541.151 (West 2009);
S.W.3d at 438; In re United Fire Lloyds, 327 S.W.3d at 256;           Celtic Life Ins. Co. v. Coats, 885 S.W.2d 96, 97–100
Millard, 847 S.W.2d at 675.                                           (Tex.1994); Brown & Brown of Tex., Inc. v. Omni Metals,
                                                                      Inc., 317 S.W.3d 361, 381 (Tex.App.-Houston [1st Dist.]
 *5 Because the Briers' settlement claims would be negated            2010, pet. denied).
by a determination that they lacked coverage under the
insurance contract, requiring Allstate to prepare for and             The Briers sued Insurance Network of Texas, Eddie Croix
litigate the settlement claims, which may have not yet accrued        Insurance Agency, Inc., and Randy Croix as agents of Allstate
and may be rendered moot by the breach of contract claim,             and allege that the insurance policy at issue was sold by
would not do justice, avoid prejudice, or further convenience.        Randy Croix, as an agent for Allstate. Therefore, if Allstate is
See In re Progressive Cnty. Mut. Ins. Co., 439 S.W.3d at              liable for the allegations in the misrepresentation claims, the
426–28; In re Old Am. Cnty. Mut. Fire Ins. Co., 2013 WL               liability would be based on Randy Croix's actions as Allstate's

                © 2014 Thomson Reuters. No claim to original U.S. Government Works.                                                5
In re Allstate County Mut. Ins. Co., --- S.W.3d ---- (2014)
2014 WL 5285850

agent. See, e.g., Coats, 885 S.W.2d at 98 (“An insurance           Accordingly, we conclude that the trial court acted within its
company is generally liable for any misconduct by an agent         discretion when it denied Allstate's motion to sever insofar as
that is within the actual or apparent scope of the agent's         Allstate requested severance of the misrepresentation claims
authority.”); Omni Metals, Inc., 317 S.W.3d at 377–78, 381.        from the breach of contract claim. See Duenez, 237 S.W.3d
In its motion requesting severance, Allstate sought severance      at 693; Morgan, 675 S.W.2d at 734; Womack, 291 S.W.2d at
of the misrepresentation claims alleged against Allstate from      683.
the Briers' breach of contract claim. But the record before the
Court reflects neither that the other defendants filed a similar
motion nor that Allstate sought severance of the Briers' claims
                                                                                  Adequate Remedy by Appeal
asserted against it from the claims asserted against the other
defendants. As a result, the Briers' misrepresentation claims      If the Briers' settlement claims are tried with the breach of
against Allstate involve the same facts and issues as, and         contract claim, the trial court and the parties will be required
are interwoven with, the misrepresentation claims against          to conduct discovery, prepare for trial, and conduct voir dire
Insurance Network of Texas, Eddie Croix Insurance Agency,          on claims that may have not yet accrued and that could be
Inc., and Randy Croix, which claims would remain pending           rendered moot by the portion of the trial relating to breach
in the underlying lawsuit regardless of any severance of           of contract for underinsured motorist benefits. See In re
these claims against Allstate. See Guar. Fed. Sav. Bank, 793       Progressive Cnty. Mut. Ins. Co., 439 S.W.3d at 427–28; In
S.W.2d at 658.                                                     re Old Am. Cnty. Mut. Fire Ins. Co., 2013 WL 398866, at
                                                                   *4; In re Am. Nat'l Cnty. Mut. Ins. Co., 384 S.W.3d at 439;
 *6 Further, the misrepresentation claims are not bad              Millard, 847 S.W.2d at 675–76. Accordingly, we conclude
faith claims, are not dependent upon a determination               that Allstate has no adequate remedy by appeal. See In re
that Allstate has a contractual duty to pay underinsured           Progressive Cnty. Mut. Ins. Co., 439 S.W.3d at 427–28; In re
motorist benefits to the Briers, and will not be rendered          Old Am. Cnty. Mut. Fire Ins. Co., 2013 WL 398866, at *4;
moot if Allstate prevails on the breach of contract claim.         In re State Farm Mut. Auto. Ins. Co., 395 S.W.3d at 239; In
SeeTEX. BUS. & COMM.CODE ANN. § 17.46(b)(5), (b)                   re Am. Nat'l Cnty. Mut. Ins. Co., 384 S.W.3d at 439; In re
(12); TEX. INS.CODE ANN. § 541.061(3), (4), (5). The               United Fire Lloyds, 327 S.W.3d at 256; Millard, 847 S.W.2d
misrepresentation claims, like promissory estoppel claims,         at 675–76.
are asserted as alternative causes of action to the breach
of contract claim, alleging that Allstate, Insurance Network
of Texas, Eddie Croix Insurance Agency, Inc., and Randy
Croix are liable for the Briers' damages even if the Briers                                 Conclusion
are not covered by the insurance policy. CompareTEX.               Based on our review of the record, we conclude that the
BUS. & COMM.CODE ANN. § 17.46(b)(5), (b)(12); TEX.                 Briers' settlement claims are severable from the breach of
INS.CODE ANN. §§ 541.061(3), (4), (5), 541.151, with               contract claim, the facts and circumstances of the case require
Miller v. Raytheon Aircraft Co., 229 S.W.3d 358, 378–              a severance to prevent manifest injustice, and the legal rights
79 (Tex.App.-Houston [1st Dist.] 2007, no pet.)(stating            of the parties will not be prejudiced thereby. See Womack,
elements of promissory estoppel claim). Therefore, unlike          291 S.W.2d at 683. The trial court, therefore, abused its
the Briers' settlement claims, requiring Allstate to litigate      discretion in refusing to sever the Briers' settlement claims
the misrepresentation claims at the same time as the breach        from the breach of contract claim and abate the settlement
of contract claim would promote convenience and judicial           claims pending the determination of Allstate's liability for
economy.                                                           the breach of contract claim. See In re Am. Nat'l Cnty. Mut.
                                                                   Ins. Co., 384 S.W.3d at 439; In re Reynolds, 369 S.W.3d
Finally, Allstate has not offered evidence to demonstrate how      638, 650–55 (Tex.App.-Tyler 2012, orig. proceeding); In re
it will be prejudiced if it has to prepare for and litigate the    United Fire Lloyds, 327 S.W.3d at 257; see also In re Old Am.
misrepresentation claims in conjunction with the breach of         Cnty. Mut. Fire Ins. Co., 2013 WL 398866, at *4–5.
contract claim. See Allstate Ins. Co. v. Hunter, 865 S.W.2d
189, 194 (Tex.App.-Corpus Christi 1993, orig. proceeding).          *7 We further conclude, however, that the facts and
                                                                   circumstances of the case do not require severance of the
                                                                   Briers' misrepresentation claims from their breach of contract

                © 2014 Thomson Reuters. No claim to original U.S. Government Works.                                             6
In re Allstate County Mut. Ins. Co., --- S.W.3d ---- (2014)
2014 WL 5285850

                                                                         Nevertheless, because the trial court did not abuse its
claim and that the trial court properly exercised its discretion
                                                                         discretion when it determined that the “Misrepresentation of
in determining that the misrepresentation claims should be
                                                                         the Insurance Policy” claim and the “Violations of the DTPA”
tried with the breach of contract claim.
                                                                         claim should remain pending with the breach of contract
                                                                         claim, we deny Allstate's petition for writ of mandamus
Accordingly, we conditionally grant Allstate's petition for
                                                                         insofar as it requests an order compelling the trial court
writ of mandamus in part and order the trial court to (1)
                                                                         to sever and abate the Briers' “Misrepresentation of the
vacate the portion of the December 10, 2013 order that
                                                                         Insurance Policy” and “Violations of the DTPA” causes of
denies severance and abatement of the “Bad Faith,” “Unfair
                                                                         action.
Settlement Practices,” and “Failure to Promptly Pay Claims”
causes of action, (2) grant Allstate's motion to sever as to
                                                                         We are confident that the trial court will promptly comply,
those causes of action, and (3) abate those causes of action
                                                                         and our writ will issue only if it does not.
until the Briers' breach of contract claim is resolved.

Footnotes
1      The underlying case is Raymond Briers, Jr. and Stacy Briers, Individually, and as Representatives of the Estate of Grant Briers,
       Deceased v. Allstate County Mutual Insurance Company, Insurance Network of Texas, Ed die Croix Insurance Agency, Inc., and
       Randy S. Croix, cause number 12–DCV–198995, pending in the 240th District Court of Fort Bend County, Texas, the Hon. Pedro
       Ruiz presiding.
2      The Supreme Court has “left open the possibility that an insurer's denial of a claim it was not obliged to pay might nevertheless be in
       bad faith if its conduct was extreme and produced damages unrelated to and independent of the policy claim.”Progressive Cnty. Mut.
       Ins. Co. v. Boyd, 177 S.W.3d 919, 922 (Tex.2005). The Briers have not, however, alleged that Allstate engaged in any “extreme”
       conduct that “produced damages unrelated to and independent of the policy claim.”Id.; see In re Am. Nat'l Cnty. Mut. Ins. Co., 384
       S.W.3d 429, 438 (Tex.App.-Austin 2012, orig. proceeding). The Briers allege only that Allstate improperly denied their claim and
       failed to fairly investigate their claim. See Boyd, 177 S.W.3d at 922; In re Am. Nat'l Cnty. Mut. Ins. Co., 384 S.W.3d at 438.
3      In discovery, the Briers seek production of all documents related to lawsuits and claims against Allstate regarding the denial of claims
       under business automobile policies. Examples of these requests include:
            Request No. 33: Please produce all documents, communications or other tangible items evidencing the denial of any claim or
            attempt to deny a claim by ALLSTATE under any Business Automobile policy, from 2000—present, for a claim asserted by
            one insured based on another insured's status.
            Request No. 42: Please produce your claims denial journal and any related documents for the past 10 years, relating to the denial
            of any claim asserted pursuant to an ALLSTATE Business Automobile policy in Texas.

End of Document                                                     © 2014 Thomson Reuters. No claim to original U.S. Government Works.

                © 2014 Thomson Reuters. No claim to original U.S. Government Works.                                                         7