Court Opinion

ID: 9762478
Source: CourtListenerOpinion
Date Created: 2023-08-29 02:25:08.037064+00
Date Added: 2024-06-11T07:29:34.888885
License: Public Domain

MURPHY, Justice,
dissenting.
The majority dismisses the instant appeal by concluding that appellant, who had filed a post-judgment plea in intervention and motion to set aside the judgment, had no standing to appeal and that this court had no jurisdiction to hear the appeal. Because I believe appellant had standing to appeal the judgment and that the trial court abused its discretion in denying the motion to set aside judgment, I respectfully dissent.
The majority justifies its dismissal by citing the general rule that, after entry of judgment, a plea in intervention comes too late for consideration unless the trial court sets aside its final judgment. See Citizens State Bank v. Caney Inv., 746 S.W.2d 477, 478 (Tex.1988); First Alief Bank v. White, 682 S.W.2d 251, 252 (Tex.1984); Comal County Rural High School Dist. No. 705 v. Nelson, 158 Tex. 564, 314 S.W.2d 956, 957 (Tex.1958); Express-News Corp. v. Spears, 766 S.W.2d 885, 888 (Tex.App.—San Antonio 1989, no writ). Because appellant filed its plea after entry of judgment, the majority concludes that appellant, having never become a party of record, was not entitled to the remedy of appeal. Although the general rule is that only parties of record may appeal a judgment, Gunn v. Cavanaugh, 391 S.W.2d 723, 725 (Tex.1965), an exception to this rule is applicable here. Under this exception, involving the “doctrine of representation,” one may be deemed a party if “the ‘represented’ individual is bound by a judgment rendered in a case to which he is not a party.” American Physicians Ins. Exch. v. Cardenas, 717 S.W.2d 707, 708 (Tex.App.—San Antonio 1986, writ ref’d n.r.e.) (quoting Grohn v. Marquardt, 487 S.W.2d 214, 217 (Tex. Civ.App.—San Antonio 1972, writ ref’d n.r. e.).
In Cardenas, appellant was the insurer of a defendant but had not participated in the suit because it claimed the alleged negligent acts occurred prior to the time of its coverage. Id. at 708. After the trial court entered judgment adverse to appellant’s insured, finding that the negligent acts occurred during the time of coverage, appellant sought to appeal by writ of error. Id. The appellate court found the exception involving the doctrine of virtual representation applicable because the insurer could be bound by the judgment against its insured. Id. Although the court ultimately held that appellant had waived its right of appeal, id., Condenas supports application of the exception to the instant case.
Appellant is the insurer for the defendant, Godfrey. Appellant did not provide a defense for Godfrey because the insurer for the co-defendant City provided defense counsel for Godfrey, representing that the City’s policy covered Godfrey. The judgment entered against Godfrey found him responsible for 80% of the negligence and awarded appellees total damages of $1,045,841.28. As Godfrey’s insurer, appellant is bound by the judgment against its insured. Thus, the exception involving the doctrine of virtual representation applies to deem appellant a party with a right to appeal. See Cardenas, 717 S.W.2d at 708. Furthermore, appellant did not waive its right to appeal by rejecting a right to participate in the trial court. See id. at 709.
Because appellant had a right to appeal, the majority should have analyzed appellant’s contention that the trial court erred in denying its plea in intervention. A party seeking to intervene after the entry of judgment has a difficult burden in that it must persuade the trial court to set aside its judgment before the trial court may consider the plea in intervention. See Citizens State Bank, 746 S.W.2d at 478; First Alief Bank, 682 S.W.2d at 252; Comal County, 314 S.W.2d at 957; Express-News, 766 S.W.2d at 888. If appellant could not intervene until the judgment was set aside, however, the crucial inquiry in this case should not be appellant’s status as an intervenor or the untimeliness of its plea, but the trial court’s denial of appel*338lant’s motion to set aside the judgment. See Express-News, 766 S.W.2d at 889 (Cardena, C.J., dissenting). The majority’s dismissal of the appeal fails to address this critical issue.
The majority cites several intervention cases that merit further discussion. In Comal County Rural High School Dist. No. 705 v. Nelson, 314 S.W.2d 956, the trial court denied a motion for leave to file petition in quo warranto filed by the State of Texas after the trial court had entered an order dismissing the cause. Id. at 957. Because the trial judge had refused to set aside his order of dismissal, the supreme court held that the court of appeals was without the power to set aside the trial court’s judgment and thus, allow the State’s intervention. See id. The plaintiffs in Comal, however, had lost the right of appeal or to complain of the dismissal because they had neither excepted to the court’s ruling nor filed a notice of appeal. Id. Thus, no practical purpose existed for allowing the State to intervene. This is significantly different from the facts in the instant case wherein the judgment apportioned eighty percent of the negligence against appellant’s insured and found appellant’s insured jointly and severally liable for the award of more than $1,000,000.00 in damages.
In both Citizens State Bank v. Caney Inv., 746 S.W.2d 477 (Tex.1988) and First Alief Bank v. White, 682 S.W.2d 251 (Tex.1984), the third parties had attempted to intervene long after the trial courts had lost the plenary power to vacate, set aside, or modify the judgments. See Citizens, 746 S.W.2d at 478 (petition in intervention filed almost a year after judgment entered); First Alief, 682 S.W.2d at 251 (intervention sought eighty-four days after judgment signed). Thus, the holdings in these cases are not dispositive in the instant ease where appellant sought to intervene while the court retained plenary power to set aside the judgment.
A somewhat more analogous case is Express-News Corp. v. Spears, 766 S.W.2d 885 (Tex.App.—San Antonio 1989, no writ). In Express-News, the trial court had sealed all trial court records following entry of judgment. Id. at 886. Appellant sought to intervene fourteen days after the judgment was signed, asking the court to vacate the sealing order on the grounds of public right of access. Id. 886-87. The trial court denied appellant’s attempt to intervene after a hearing and granted appellee’s motion to strike the plea. Id. at 887. On appeal, the court acknowledged that the plea had been filed while the court had “plenary power to modify or vacate the judgment if it chose.” Id. at 888 (emphasis in original). Yet, the court then stated that, because the plea in intervention was filed after entry of final judgment, “the trial court had no choice but to deny it.” Id. This is an incorrect statement of the rule.
Rather than requiring a trial court to deny any post-judgment plea in intervention, the rule created in Comal County requires a trial judge to deny the plea only if the judgment is not set aside. See Comal County, 314 S.W.2d at 957. If, on the other hand, the judge sets aside the judgment, then the plea may be considered. See id. Thus, the pivotal question is whether the trial court erred in denying the third party’s motion to set aside the judgment. See Express-News, 766 S.W.2d at 889 (Cárdena, C.J., dissenting).
The trial court’s decision to grant or deny a motion to vacate or set aside the judgment is one within the trial court’s discretion and it must be upheld absent a clear showing of abuse of discretion. Hartford Accident & Indem. Co. v. Gladney, 335 S.W.2d 792, 795 (Tex.Civ.App.—Waco 1960, writ ref’d n.r.e.). To establish a clear abuse of discretion, appellant must show that “the trial court’s action was arbitrary or unreasonable in light of all the circumstances of the particular case.” Smithson v. Cessna Aircraft Co., 665 S.W.2d 439, 443 (Tex.1984); Landry v. Travelers Ins. Co., 458 S.W.2d 649, 651 (Tex.1970). Thus, a review of the unique circumstances in this case is in order.
At the time the injury occurred, Godfrey was a volunteer coach in a summer recreation program sponsored by the City of La *339Marque. The record reveals that the City’s insurer, Employers Casualty Company, admitted the City’s insurance policy covered volunteer workers. Employers also notified Godfrey’s insurer, appellant, that Employers was handling the claim against the City on behalf of Godfrey. Thus, counsel retained to represent the City also represented Godfrey.
Prior to trial, appellees (plaintiffs in the trial court) demanded $500,000.00 to settle the case and left this offer open until 5:00 p.m., November 15, 1988. Employers, whose policy limits were $500,000.00, advised appellant that it planned to offer $350,000.00 to appellees and it expected appellant to contribute %ths of the total amount demanded. Furthermore, the record shows that, if appellant refused to contribute to this settlement, Employers intended to settle on behalf of the City and let appellees proceed to trial against God-frey.
Documentation of telephone conversations and letters indicate that on November 15, prior to the 5:00 p.m. deadline, counsel for appellant advised appellees’ counsel that it would pay $132,000.00 f/sths of the total); however, Employers then refused to pay the pro rata share (%ths) previously agreed upon and indicated willingness to pay only 50% of the total. On November 18, 1988, appellees’ counsel informed appellant that its acceptance of the settlement offer did not create a contract because the settlement offer had been contingent upon Employers’ willingness to pay 6/sths of the total. Appellees’ counsel also requested appellant to tender its policy limits of $350,-000.00.
Counsel for appellant testified that she learned Employers had changed its position with regard to coverage and was now claiming the City’s policy did not cover Godfrey. Upon learning of this change of position, appellant unsuccessfully attempted to contact counsel for Godfrey regarding the conflict of interest in representing both the City and Godfrey. Within a few days, however, appellant learned that new defense counsel had been retained to represent Godfrey. After informing Godfrey of Employers’ change of position regarding coverage, appellant advised Godfrey to retain- his own attorney at appellant’s expense.
On Monday, November 21, 1988, the trial court held a hearing regarding a proposed settlement agreement between appellees and the City. Under this agreement, the City agreed to pay appellees $300,000.00 and to issue a guaranty for an additional $50,000.00. A further provision of this agreement was a covenant not to execute whereby appellees agreed not to execute against the co-defendant, Godfrey. God-frey also agreed to assign to appellees all causes of action he might have against appellant, his insurer. In return, appellees agreed to reimburse the City’s insurer for the $350,000.00 payment, and to split any recovery over $525,000.00, with Godfrey receiving 10% and appellees receiving 90%. Thus, Godfrey stood to benefit from the City’s settlement with appellees.
The trial court approved this agreement and immediately granted appellees’ motion to remove the case from the jury docket and to set it on the nonjury docket. Appellant’s counsel unsuccessfully attempted to meet with Godfrey at the courthouse prior to, and after, the hearing. Appellant learned later that evening that Godfrey refused to retain a lawyer to represent him independently.
A bench trial ensued on the following day, November 22, 1988. At trial, defense counsel for the City and Godfrey made no objections to any evidence offered by appel-lees and, at the conclusion of appellee’s case, defense counsel rested. At this time, counsel for appellant objected to the lack of a defense on behalf of Godfrey and sought a three week continuance to prepare a defense for him. The trial court denied this request.
The trial court rendered final judgment on December 2, 1988 and on December 22, 1988, appellant filed its plea in intervention asserting that Godfrey had filed suit against appellant on December 5, thus giving appellant a justiciable interest in the case at bar. Appellant claimed it could not defend its interest through representation *340of Godfrey because Godfrey had aligned himself with the plaintiffs-appellees. Appellant’s plea also presented the defense of settlement, which described their acceptance of plaintiffs’ settlement offer on November 15, 1988. On February 24, 1989, the trial court entered an order denying “Intervenor Central Mutual Insurance Company’s Motion to Set Aside Judgment.”
Appellant’s motion to set aside the judgment was unlikely to succeed where trial was to the bench and the trial court knew the terms of the “Mary Carter” agreement, including the fact that Godfrey stood to benefit from it, and that appellant had sought a continuance to prepare a defense for Godfrey during trial, which the trial court had denied. Because the trial court was, or should have been, aware of the lack of a defense presented by Godfrey’s counsel at trial and that appellant would be bound by the judgment against its insured, I believe the trial court acted unreasonably in denying appellant's motion to set aside the judgment. Thus, I would hold that the trial court’s denial of appellant’s motion to set aside the verdict, in light of the unusual circumstances involved in this case, was an abuse of discretion.