Court Opinion

ID: 4352605
Source: CourtListenerOpinion
Date Created: 2018-12-20 12:37:53.326214+00
Date Added: 2024-06-11T14:43:49.471089
License: Public Domain

Fourth Court of Appeals
                                        San Antonio, Texas

                                   MEMORANDUM OPINION
                                            No. 04-18-00676-CV

    IN RE ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY and Latina Pruitt

                                     Original Mandamus Proceeding 1

Opinion by:       Rebeca C. Martinez, Justice

Sitting:          Sandee Bryan Marion, Chief Justice
                  Rebeca C. Martinez, Justice
                  Irene Rios, Justice

Delivered and Filed: December 19, 2018

PETITION FOR WRIT OF MANDAMUS CONDITIONALLY GRANTED

           In this original proceeding, relators assert the trial court erred by not abating the real party

in interest’s extra-contractual claims while his breach of contract claim for underinsured motorist

benefits remains pending. We agree and conditionally grant the petition.

                                              BACKGROUND

           The real party in interest (hereinafter, the “plaintiff”) was involved in an automobile

accident with another driver. Plaintiff settled with the other driver’s insurance company for the

policy limits. Plaintiff also made a claim to his insurance company, Allstate Fire and Casualty

Insurance Company (“Allstate”) for injuries, damages, and expenses sustained due to the

underinsured motorist. According to plaintiff, Allstate and its claims adjuster, Latina Pruitt,

1
 This proceeding arises out of Cause No. 2017CV01324, styled Samuel Bernal v. Allstate Fire and Casualty Insurance
Co. and Latina Pruitt, pending in the County Court at Law No. 10, Bexar County, Texas, the Honorable David J.
Rodriguez presiding.
                                                                                        04-18-00676-CV

(collectively, the “relators”) failed to pay in accordance with the terms of the policy. Therefore,

plaintiff later sued relators for breach of contract seeking recovery of underinsured motorist

(“UIM”) benefits under his policy with Allstate. Plaintiff also raised extra-contractual claims for

violations of the Texas Insurance Code. Plaintiff declined Allstate’s offer to settle the dispute for

$500. Plaintiff then served Allstate with discovery requests, and Allstate objected to many of the

requests on the grounds that the requested information was not relevant to the threshold

requirement of UIM liability.

       The relators filed a motion asking the trial court to (1) sever plaintiff’s contractual claim

from his extra-contractual claims and (2) abate the extra-contractual claims until the contract claim

is resolved. Plaintiff did not challenge the request for a severance but objected to an abatement.

The trial court granted the severance and denied the abatement. Relators then filed their petition

for writ of mandamus in this court. The plaintiff declined the opportunity to file a response.

       In their petition, relators argue the trial court erred by not granting the abatement because

the plaintiff may not litigate his extra-contractual claims until after he obtains a judgment on his

breach of contract claim establishing (1) the other driver was at fault, (2) the extent of the resulting

damages, and (3) the other driver is underinsured. Relators assert that until plaintiff obtains this

judgment, Allstate is under no contractual duty to pay UIM benefits. Therefore, relators conclude

that because the extra-contractual claims have not yet accrued, that case should be abated.

                                    STANDARD OF REVIEW

       Mandamus is an extraordinary remedy. In re Sw. Bell Tel. Co., L.P., 235 S.W.3d 619, 623

(Tex. 2007) (orig. proceeding). Mandamus will issue only to correct a clear abuse of discretion

when there is no other adequate remedy at law. See In re Prudential Ins. Co. of Am., 148 S.W.3d
124, 135-36 (Tex. 2004) (orig. proceeding); Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex.

1992) (orig. proceeding). Mandamus relief is appropriate when a trial court abuses its discretion
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                                                                                       04-18-00676-CV

in denying a motion to sever and abate extra-contractual claims in an UIM case. See, e.g., In re

United Fire Lloyds, 327 S.W.3d 250, 257 (Tex. App.—San Antonio 2010, orig. proceeding). The

insurer has no adequate remedy at law because the insurer would lose substantial rights by being

required to prepare and try claims that may be rendered moot. In re Farmers Tex. Cty. Mut. Ins.

Co., 509 S.W.3d 463, 466 (Tex. App.—Austin 2015, orig. proceeding).

                                           DISCUSSION

       The Texas Insurance Code provides as follows:

       In this section, “uninsured or underinsured motorist coverage” means the
       provisions of an automobile liability insurance policy that provide for coverage in
       at least the limits prescribed by Chapter 601, Transportation Code, that protects
       insureds who are legally entitled to recover from owners or operators of uninsured
       or underinsured motor vehicles damages for bodily injury, sickness, disease, or
       death, or property damage resulting from the ownership, maintenance, or use of any
       motor vehicle.

TEX. INS. CODE § 1952.101(a) (emphasis added).

       The Texas Supreme Court has interpreted this language to mean “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) (interpreting prior version of statute). “Neither requesting UIM benefits nor

filing suit against the insurer triggers a contractual duty to pay.” Id. “Where there is no contractual

duty to pay, there is no just amount owed.” Id. The Brainard Court held the plaintiff’s argument

that a “UIM policy is to be treated like other contracts, for which damages are liquidated in a

judicial proceeding and attorney’s fees incurred are recoverable, misinterprets the nature of UIM

insurance”:

       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 alone
       dictates coverage, UIM insurance utilizes tort law to determine coverage.

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                                                                                                   04-18-00676-CV

         Consequently, the insurer’s contractual obligation to pay benefits does not arise
         until liability and damages are determined.

Id.; see also In re State Farm Mut. Auto. Ins. Co., 395 S.W.3d 229, 237 (Tex. App.—El Paso 2012,

orig. proceeding) (“In a case where an insured asserts a claim for uninsured/underinsured benefits,

abatement of the extra-contractual claims is required in most instances.”); United Fire Lloyds, 327
S.W.3d at 256 (applying Brainard to issue of abatement and concluding insurer should not be

required to incur litigation expenses on claims that could be rendered moot by the portion of the

trial related to UIM benefits).

         In his response to relators’ motion to abate, plaintiff relied on the Texas Supreme Court’s

prior decision in USAA Texas Lloyds Co. v. Menchaca, 14-0721, 2017 WL 1311752 (Tex. Apr. 7,

2017), reh’g granted (Dec. 15, 2017), 2 to argue that because much of the same evidence can be

used in both his contractual and extra-contractual claims, abating the extra-contractual claims

could prevent meaningful discovery in the underlying breach of contract case. Plaintiff also

asserted, with no elaboration, that the extra-contractual claims were “so interwoven with the

underlying contractual claims that they involve the same facts and issues.”

         Plaintiff also relied on two cases to argue an insurance company will attempt to use

abatement against a plaintiff “as an umbrella granting some kind of special immunity from

discovery.” However, in both cases, the insured’s extra-contractual claims were severed and

abated pending resolution of their contractual claims against the insurer. See In re Luna, 13-16-

00467-CV, 2016 WL 6576879, at *1 (Tex. App.—Corpus Christi Nov. 7, 2016, orig. proceeding)

(mem. op.); In re Garcia, 04-07-00173-CV, 2007 WL 1481897, at *1 (Tex. App.—San Antonio

2
  The Texas Supreme Court later withdrew its December 15, 2017 opinion and issued a new opinion in its place
following rehearing. See USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479 (Tex. 2018). In that opinion, the Court
“unanimously reaffirm[ed] the legal principles and rules announced in that [2017] opinion” and “provide[d] additional
guidance” regarding the procedural effect of the Court’s holdings. Id. at 484.

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                                                                                      04-18-00676-CV

May 23, 2007, orig. proceeding) (per curiam) (mem. op.). In each case, the insured noticed the

deposition of the real party in interest’s (State Farm) representative in the breach of contract case.

State Farm successfully moved to quash the deposition, and the insured sought mandamus relief.

In both cases, one of State Farm’s arguments was that the insured was not entitled to the discovery

because extra-contractual matters were not relevant to the contractual claims. Luna, 2016 WL
6576879, at *4, *6; Garcia, 2007 WL 1481897, at *1. In both cases, the appellate court disagreed

with State Farm’s characterization of the sought-after discovery.

        The Luna and Garcia courts noted the topics encompassed by the deposition notice

corresponded to State Farm’s defenses and theories or had a direct bearing on the damages in the

insured’s breach of contract case. Luna, 2016 WL 6576879, at *7; Garcia, 2007 WL 1481897, at

*2. Both courts held the trial court abused its discretion by quashing the deposition because

        doing so unreasonably restricted [the insured’s] access to relevant information.
        Without the opportunity to fully discover information about State Farm’s multiple
        defenses, [the insured] is effectively prevented from verifying or refuting those
        defenses. Moreover, as State Farm acknowledges in its brief, [the insured] must
        establish at trial that “her damages exceed the underlying liability insurance limits
        and any other offsets or credits State Farm may be entitled to.” Thus, quashing the
        deposition in its entirety severely compromises [the insured’s] ability to present and
        prove her case.

Garcia, 2007 WL 1481897, at *2; see also Luna, 2016 WL 6576879, at *7 (citing to Garcia and

holding same).

        We disagree with plaintiff’s argument that these cases stand for the proposition that a

plaintiff may always seek discovery on matters relevant to his extra-contractual claims while his

breach of contract claim is still pending. In both Luna and Garcia, the trial court had severed and

abated the extra-contractual claims, and both appellate courts allowed discovery in the breach of

contract case to proceed to the extent such discovery was relevant to the claims and defenses raised

by the parties in that case.

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                                                                                       04-18-00676-CV

       Here, in his response to relators’ motion to abate, plaintiff did not state what evidence

relevant to his contractual claim is also relevant to his extra-contractual claims. Nor did he state

what specific evidence relevant to his contractual claim he would be prevented from obtaining if

the extra-contractual claims were abated. See Luna, 2016 WL 6576879, at *7-8 (holding trial court

abused its discretion by quashing deposition because topics encompassed by deposition notice

corresponded to State Farm’s defenses and theories or had a direct bearing on the damages in the

insured’s breach of contract claim); Garcia, 2007 WL 1481897, at *2 (same). On the other hand,

in their petition for writ of mandamus, relators point to plaintiff’s discovery requests in which he

seeks information regarding, among other things, the identity of Allstate’s claims personnel,

information related to Allstate’s investigation and evaluation of plaintiff’s claim, information

about the existence and identity of any review committees, the history of complaints filed with

Allstate and any denial logs, and Allstate’s net worth.

       As stated above, Allstate “is under no contractual duty to pay benefits until [plaintiff]

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

Brainard, 216 S.W.3d at 818; United Fire Lloyds, 327 S.W.3d at 256. Here, liability for the UIM

claim has not been judicially determined in plaintiff’s breach of contract case, the extra-contractual

claims are not yet ripe, and the extra-contractual claims could be rendered moot by the underlying

liability determination in the breach of contract case.

                                          CONCLUSION

       For the reasons stated above, we conclude relators showed the trial court erred by not

granting the abatement. Also, for these reasons, relators do not have an adequate remedy at law.

Id. Therefore, we conditionally grant the petition for writ of mandamus and direct the trial court

to, within fifteen days from the date of this opinion, vacate that portion of its December 18, 2017

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                                                                                  04-18-00676-CV

Order on Defendants’ Motion to Sever and Abate denying relators’ motion to abate and issue an

order granting the motion and abating the severed cause.

                                                    Rebeca C. Martinez, Justice

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