Court Opinion

ID: 2893704
Source: CourtListenerOpinion
Date Created: 2015-09-07 22:48:24.257817+00
Date Added: 2024-06-11T08:52:27.203313
License: Public Domain

NO. 07-05-0258-CV

                             IN THE COURT OF APPEALS

                      FOR THE SEVENTH DISTRICT OF TEXAS

                                     AT AMARILLO

                                        PANEL C

                                  JULY 13, 2006
                         ______________________________

                            GRACE EMILY ARCHER, M.D.,

                                                                     Appellant

                                            v.

       THE MEDICAL PROTECTIVE COMPANY OF FORT WAYNE, INDIANA
         and MEDICAL INSURANCE SERVICES, Individually and d/b/a THE
    MEDICAL PROTECTIVE COMPANY OF FORT WAYNE, INDIANA, CHARLES
     E. MOSS and PETERSON, FARRIS, MOSS, PRUITT & PARKER, P.C. f/k/a
                PETERSON, FARRIS, DOORES & JONES, P.C.,

                                                                     Appellees
                       _________________________________

             FROM THE 108TH DISTRICT COURT OF POTTER COUNTY;

                    NO. 91,411-E; HON. ABE LOPEZ, PRESIDING
                       _______________________________

                                     Opinion
                         _______________________________

Before QUINN, C.J., and REAVIS and HANCOCK, JJ.

      The appeal before us involves intriguing questions. That of primary importance

concerns the effect, if any, of a judgment absolving an insured of liability for negligence

upon the extra-contractual duties owed by the insurer to its insured. Here, Grace Emily

Archer, M.D. stood as the insured. Medical Protective Company (MPC) was her insurer.
Moreover, Archer was sued by one of her patients for medical malpractice. Prior to trial,

the patient supposedly offered to settle the litigation for a sum within policy limits. MPC

allegedly refused to settle. Thereafter, a jury found Archer had committed malpractice and

awarded damages exceeding her policy limits. The trial court entered judgment upon the

verdict, which judgment Archer appealed. Eventually, this court reversed the judgment and

rendered its own judgment absolving Archer of liability. Thereafter, Archer sued both MPC,

her trial counsel (Charles Moss), and counsel’s law firm (Peterson, Farris, Moss, Pruitt &

Parker, P.C.) to recover for damages purportedly relating to their failure to settle the

underlying medical malpractice cause before trial.1 After the trial court granted the

summary judgment motions of MPC, Moss and his law firm, Archer appealed.

        Before us, Archer contends that our decision absolving her of liability in the

underlying medical malpractice case had no effect upon her claims against her insurer and

counsel. Nor were her claims time barred. Upon reviewing the contentions of all involved,

we affirm the summary judgment in part and reverse and remand it in part.

        Issue One – Stowers

        It is beyond doubt that an insured can sue his insurer for negligently failing to settle

a third party’s claim against the insured. Trinity Universal Ins. v. Bleeker, 966 S.W.2d 489,

491 (Tex. 1998); see G.A. Stowers Furn. Co. v. American Indem. Co., 15 S.W.2d 544, 547

(Tex. Comm’n App. 1929, holding approved) (stating that an insurance company is held

to that degree of care and diligence which an ordinarily prudent person would exercise in

the management of his own business, and if an ordinarily prudent person, in the exercise

        1
          Medical Protective Insurance Services, Inc. was also sued. However, for purposes of this opinion,
both it and M edical Pro tective Com pan y are referre d to as an d en com pas sed by the m onik er M PC .

                                                    2
of ordinary care, as viewed from the standpoint of the insured, would have settled the case,

then the insurer may be liable in damages if it did not). So too is it true that, as a matter

of law, an insurer who refuses to settle a claim within its policy limits before trial is not

negligent if its insured is absolved of liability for the underlying claim. Nationwide Mut. Ins.

Co. v. Holmes, 842 S.W.2d 335, 338-39 (Tex. App.–San Antonio 1992, writ denied). In

other words, if X sued Y and offered to settle the claim for a sum within the limits of Y’s

insurance policy with Z, Z is not subject to Stowers liability if Y is absolved of responsibility

for the alleged injuries of X. The insurer, as a matter of law, has not acted negligently, or

unreasonably, under those circumstances. Id. And, those are the circumstances we have

here.

        Though a jury found Archer liable to her patient and judgment was entered upon its

verdict, this court reversed the decree. See Archer v. Warren, 118 S.W.3d 779 (Tex. App.

– Amarillo 2003, no pet.). So too did we render judgment denying the patient recovery

against Archer. Consequently, Archer was absolved of liability, and, per Nationwide, that

effectively insulated MPC from any purported Stowers claim arising from its refusal to settle

the cause prior to trial. Furthermore, the assertions of Archer to the contrary do not change

this outcome.

        While it may be that the rendition of a final judgment may give rise to damages, see

e.g., Street v. Honorable Second Court of Appeals, 756 S.W.2d 299, 301 (Tex. 1988) (so

acknowledging), that alone is not enough to warrant the imposition of liability. Indeed, one

may suffer injury even though no one else was negligent. See Carter v. Steere Tank Lines,

Inc., 835 S.W.2d 176, 186-87 (Tex. App.–Amarillo 1992, writ denied) ( Boyd, J.,

                                               3
concurring) (stating that the “pertinent question . . . is not whether an accident could or did

result, but whether an accident was reasonably foreseeable. However tempting it might

be to apply a ‘can and did test,’ to do so would be to replace foreseeability with hindsight”).

So, simply because Archer may have been injured by the rendition of a final judgment, that

alone does not mean MPC breached any duty imposed upon it by Stowers. And, it is the

absence of a breached duty (given our reversal of the underlying judgment) that posed the

insurmountable obstacle here.

       Moreover, our interpretation of the Stowers doctrine is supported by the very case

Archer relied upon. In Street, supra, the Supreme Court did acknowledge that to the extent

a judgment is not superseded, the presence and enforcement of the judgment may cause

injury. Street v. Honorable Second Court of Appeals, 756 S.W.2d at 301. Yet, it also

opined that limitations applicable to a Stowers claim did not begin to run “until all appeals

have been exhausted.” Id. at 302 (Emphasis added). “Regardless of whether the

judgment is superseded, an insured who wishes may still wait until the underlying action

has been completely resolved before bringing a Stowers suit,” the court continued. Id.

This was so because “[n]o valid public policy is served by forcing an insured to bring an

action which may ultimately prove unnecessary.” Id. (Emphasis added). The latter

passage is quite telling, especially when coupled with the pronouncement that limitations

do not accrue until “all” appeals have ended. Together, they reveal that while one need

not await until all appeals have ended to sue, all the elements to an enforceable Stowers

claim have yet to accrue while appeals remain pending. If this were not so, then the

                                              4
Supreme Court had no basis upon which to say that limitations do not begin to run until the

disposition of all appeals.

        Simply put, limitations begin to tick when a claim accrues. Moreno v. Sterling Drug,

Inc., 787 S.W.2d 348, 351 (Tex. 1990). And, a claim accrues upon there arising a

breached duty causing legal injury. Deloitte & Touch v. Weller, 976 S.W.2d 212, 215 (Tex.

App.– Amarillo 1998, pet. denied). If that point were to occur, viz a Stowers claim, upon

entry by the trial court of a final judgment, the limitation would begin to run at that point.

So, if limitations do not begin until all appeals are over, then, logically, the claim has yet to

accrue while appeals remain pending. Moreover, we conclude that the missing element

is that of a breached duty for it cannot be the presence of an injury given the language in

Street acknowledging that the entry of a judgment itself causes injury.2

        In sum, because Archer eventually won the underlying suit initiated by her patient,

she had no Stowers claim against MPC. So, the trial court did not err in entering a

summary judgment favoring the insurer.

        Issue Two – Unfair Settlement Practices/Breached Duty to Negotiate Settlement

        Archer also asserts that the trial court erred in granting summary judgment upon her

claims against MPC involving unfair settlement practices and breached duty to negotiate

a settlement. Both causes of action were addressed in MPC’s motion for summary

judgment. Moreover, both were founded upon the same allegations underlying her

Stowers claim. Simply put, Archer contended that MPC had a duty to reasonably negotiate

        2
         This, in turn, leads us to answer the question of when “may [a Stowers claim] ultim ately prove
unnecessary” while the underlying suit remains on ap pe al by saying that it m ust be when the insured is
abs olved of liability via a decision of the app ellate court.

                                                   5
and settle the suit for a sum within the $200,000 policy limit. We overrule the contention

for the reasons mentioned in overruling her Stowers contention. Our having rendered a

judgment in Archer’s favor in the underlying suit, we hold, as a matter of law, that MPC

breached none of the duties implicit in the two causes of action.

       Issue Three – Breach of Contract and Aiding and Abetting

       Next, Archer contends that the trial court erred in granting summary judgment on

her claims against MPC for breached contract and aiding and abetting her attorney’s

various breaches of duty.       It so erred, she continues, because neither claim was

encompassed within the motion for summary judgment. Yet, in its motion, MPC averred

that it was “entitled to judgment as a matter of law on all causes of action alleged by”

Archer. (Emphasis added). And, it believed itself so entitled because we reversed and

rendered judgment for Archer in the underlying suit. Given MPC’s use of the phrase “on

all causes of action” when propounding the grounds for its summary judgment and the

plain meaning of the word “all,” we cannot but disagree with Archer’s contention. The

allegations of breached contract and aiding and abetting were indeed covered. Thus, we

overrule this issue as well.

       Issue Four – Legal Malpractice

       In this issue, Archer contends that the trial court erred in entering summary

judgment for her trial counsel and his firm (collectively referred to as Moss). We sustain

the issue in part and overrule it in part.

       Three causes of action had been asserted against Moss. They were claims for legal

malpractice, breach of fiduciary duty, and breach of the duty to act in good faith and deal

                                             6
fairly. Furthermore, the claims were based upon counsel’s 1) neglecting a legal matter, 2)

failing to “carry out completely the obligations . . . owed to Archer, including but not limited

to failing to adequately evaluate the case and . . . communicate to Archer the same

information . . . communicated to” MPC, and 3) failing to “represent Archer’s interests

notwithstanding the interests of [MPC] in a situation in which the representation of Archer

was adversely limited by [counsel’s] own interests in keeping the business and favor of”

MPC.

       In addressing each of the aforementioned allegations, Moss accused Archer of

simply splitting one claim into the three different causes of action. Her sole complaint, in

his view, was nothing more than a claim for legal malpractice. This theme framed the

parameters of his motion for summary judgment (as well as his appellate brief wherein he

posited that her “claims for breach of fiduciary duty are in reality nothing more than claims

for legal negligence that Archer should not be permitted to fracture”). In other words, the

grounds alleged in the summary judgment motion referred to the malpractice action, as

opposed to the choses sounding in breached fiduciary duty. Additionally, those grounds

were limitations, the lack of causation, and the effect of our prior decision reversing and

rendering judgment in the underlying suit between Archer and her patient.

       Yet, our interpretation of the record and Archer’s pleadings differs from that of Moss.

We agree that under Texas law, a plaintiff cannot fracture a legal malpractice claim into

multiple causes of action. Aiken v. Hancock, 115 S.W.3d 26, 28 (Tex. App.–San Antonio

2003, pet. denied). We also acknowledge that the allegations of misdoing in Archer’s live

pleading were somewhat spartan. Nonetheless, they easily can be divided into two

categories. The first concerns the quality of Moss’ performance, e.g., his neglecting

                                               7
matters, mis-evaluating the case, and omitting to communicate with his client. So

concerned, they can be viewed as claims involving legal malpractice. See id. at 28 (noting

that the thrust of a legal malpractice claim involves the adequacy of counsel’s

representation). The second concerns a matter of divided loyalties, e.g., the pursuit of his

own pecuniary interests over the interests of his client. So focused, they can be viewed

as claims involving breached fiduciary duties. See Aiken v. Hancock, 115 S.W.3d at 28

(noting that claims of breached fiduciary duties involve conflicts of interest, self-dealing, the

use of confidential information, among other things). Given that her allegations can be so

classified, we cannot say that she impermissibly fractured one malpractice claim into

multiple causes of action.

       Next, with regard to the malpractice claims, Moss attempted to defeat them via

summary judgment by alleging that they were negated by the reversal and rendition of the

judgment in the underlying suit between Archer and her patient. So too did he contend that

limitations, the lack of a sufficient causal relationship, and the want of any “reasonable

possibility of recovery under any state law claims” also defeated her causes of action. Also

alleged was that our reversal and rendition of the underlying judgment established that

Moss “conformed to the standards set by the legal profession.”

       Now, in granting summary judgment, the trial court specified no particular ground

upon which it relied. Thus, it was encumbent upon Archer to illustrate why none supported

the trial court’s decision.     Pruett v. City of Amarillo, 947 S.W.2d 718, 720 (Tex.

App.–Amarillo 1997, writ denied). Thus, for instance, she was obligated, on appeal, to

show why our reversal of the underlying judgment did not establish that Moss’ conduct

                                               8
conformed to the performance standards required of lawyers as a matter of law. Instead

of doing so, however, Archer simply stated, in her appellate brief, that Moss was obligated

to offer evidence illustrating that he complied with pertinent legal standards and did not do

so. Why our opinion reversing the underlying judgment, which opinion Moss attached to

his summary judgment motion, was not that evidence went unexplained. Nor did she

explain why that opinion and its effect failed to establish, as a matter of law, that Moss

complied with the legal standards governing his performance. And, in failing in those

respects, Archer did not negate the ground as basis for entering summary judgment upon

her malpractice claims. In short, Archer failed to carry her burden of proof on appeal viz

her allegation that the trial court erred in denying her malpractice claim.

       Left, however, are the claims founded upon Moss’ purported divided loyalties.

Furthermore, none of his summary judgment grounds can be read as attacking them.

Again, as evinced by his summary judgment motion and accompanying brief, each one

was directed against Archer’s legal malpractice claim, as opposed to her claims sounding

in breached fiduciary duties. So, because 1) we have held the allegations in Archer’s live

pleading to fall within the realm of different causes of action, and 2) the grounds uttered

for summary judgment pertained simply to Archer’s claims for malpractice, the trial court

erred in granting judgment upon those causes sounding in theories other than legal

malpractice.

       Accordingly, we reverse that portion of the summary judgment wherein the trial court

ordered that Archer take nothing upon her claim that Moss supposedly breached fiduciary

duties owed her due to his pursuit of his own pecuniary interest and remand that allegation

                                             9
and cause of action to the trial court. In doing so, the court makes no comment as to the

viability of Archer’s claim. In all other respects, the summary judgment is affirmed.

                                                 Brian Quinn
                                                 Chief Justice

Reavis, J., concurs.

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