Court Opinion

ID: 2866347
Source: CourtListenerOpinion
Date Created: 2015-09-06 01:37:37.101898+00
Date Added: 2024-06-11T12:42:48.127699
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                                     NO. 03-03-00079-CV

   Jeanne N. Taylor, D.D.S., d/b/a Jeanne N. Taylor D.D.S., Individually, and on behalf
                        of all others similarly situated, Appellant

                                                v.

                               State Farm Lloyds, Inc., Appellee

     FROM THE DISTRICT COURT OF TRAVIS COUNTY, 201ST JUDICIAL DISTRICT
       NO. GN103375, HONORABLE SUZANNE COVINGTON, JUDGE PRESIDING

                                         OPINION

               Appellant Jeanne N. Taylor, D.D.S. appeals a district-court summary judgment

dismissing her suit against appellee State Farm Lloyds, Inc. Taylor alleged in her suit that State

Farm violated articles 5.06-1 and 5.06-3 of the Texas Insurance Code when it issued Taylor’s

business a multi-peril insurance policy with “hired and non-owned auto liability” coverage without

providing personal injury protection (“PIP”) or uninsured/underinsured motorist coverage

(“UM/UIM”). See Tex. Ins. Code Ann. arts. 5.06-1, -3 (West 1981). State Farm moved for

summary judgment, and Taylor moved for partial summary judgment. The district court granted

State Farm’s motion, and dismissed Taylor’s case. We affirm the summary judgment in favor of

State Farm.
                                         BACKGROUND

               Taylor purchased multi-peril insurance for her business from State Farm in 1993. At

that time, multi-peril insurance policies were promulgated by the Texas Department of Insurance

(“TDI”). Within that policy, State Farm offered limited non-owned auto liability insurance. Taylor

purchased hired auto liability insurance as an endorsement to her multi-peril policy. In 1996, TDI

allowed State Farm to write its own multi-peril policy subject to TDI’s approval. At that time, State

Farm issued hired and non-owned auto liability insurance as an endorsement to Taylor’s multi-peril

policy. None of the hired and non-owned auto liability coverage State Farm issued included PIP or

UM/UIM coverage. Taylor contends that State Farm was required to issue PIP and UM/UIM

coverage by the Texas Insurance Code. State Farm rejoins that TDI has the authority to regulate

certain auto insurance by other provisions of the insurance code when TDI determines that it is

appropriate. State Farm further asserts that TDI has chosen to regulate hired and non-owned auto

coverage under the multi-peril subchapter of the insurance code rather than the auto liability

subchapter, and therefore, PIP and UM/UIM coverages are not mandatory with regard to the hired

and non-owned auto liability insurance that forms a limited part of the multi-peril insurance Taylor

purchased for her business.

                                   STANDARD OF REVIEW

               Because the propriety of a summary judgment is a question of law, we review the trial

court’s decision de novo. Natividad v. Alexsis, Inc., 875 S.W.2d 695, 699 (Tex. 1994); Texas Dep’t

of Ins. v. American Home Assurance Co., 998 S.W.2d 344, 347 (Tex. App.—Austin 1999, no pet.).

The standards for reviewing a motion for summary judgment are well established: (1) the movant

for summary judgment has the burden of showing that no genuine issue of material fact exists and

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that it is entitled to judgment as a matter of law; (2) in deciding whether there is a disputed material

fact issue precluding summary judgment, evidence favorable to the nonmovant will be taken as true;

and (3) every reasonable inference must be indulged in favor of the nonmovant and any doubts

resolved in its favor. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985). When

the trial court grants one party’s motion for summary judgment and denies the other, we review both

motions and if we find the trial court erred, we will reverse and render the judgment the trial court

should have rendered. See Bradley v. State, 990 S.W.2d 245, 247 (Tex. 1999).

                                           DISCUSSION

                The issue presented is whether PIP and UM/UIM coverage is mandatory when an

endorsement for hired and non-owned auto liability is added to a business’s multi-peril insurance

policy. When the district court granted State Farm’s motion for summary judgment, it did not

specify the grounds upon which it relied. Thus on appeal, Taylor argues that the district court erred

in granting the summary judgment by questioning every possible ground advanced.1 Taylor asks:

(1) Did she have standing to seek declaratory relief?; (2) Did she have to exhaust administrative

remedies before bringing suit?; (3) Is “hired and non-owned auto liability coverage” under this policy

properly classified as “automobile liability coverage” subject to mandatory PIP and UM/UIM

coverage?; (4) If “hired and non-owned auto liability coverage” is “automobile liability coverage,”

may TDI cancel or lessen coverage (PIP and UM/UIM) mandated by the legislature?; and (5) If TDI

does have the authority to cancel or lessen mandated coverages, has it exercised any authority to do

so?

        1
        Grounds one and two would more properly be grounds for dismissal for lack of jurisdiction
not summary judgment. We nevertheless address these jurisdictional issues raised by appellant.

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Does the court have subject matter jurisdiction?

               By Taylor’s first issue she asks whether she has standing to bring this suit. We

understand Taylor’s question really to be whether the court has subject matter jurisdiction contingent

on the “ripeness” of her suit. It is fairly clear that Taylor has standing—she is the appropriate person

to bring the action. We will therefore address Taylor’s jurisdictional question as to the “ripeness”

of her suit. We hold that her suit is ripe for consideration.

               Taylor sought a declaratory judgment in district court to determine whether State

Farm had violated the Texas Insurance Code by issuing hired and non-owned auto liability insurance

without providing PIP or UM/UIM coverage. The purpose of a declaratory judgment is “to settle

and to afford relief from uncertainty and insecurity with respect to rights, status, and other legal

relations; and it is to be liberally construed and administered.” Tex. Civ. Prac. & Rem. Code Ann.

§ 37.002(b) (West 1997). However, the Uniform Declaratory Judgments Act (“UDJA”) does not

confer jurisdiction on a trial court but rather makes declaratory judgment available as a remedy for

a cause of action already within the court’s jurisdiction. Chenault v. Phillips, 914 S.W.2d 140, 141

(Tex. 1996) (holding that mere request for declaratory judgment does not establish jurisdiction);

State v. Morales, 869 S.W.2d 941, 947 (Tex. 1994); Texas Ass’n of Bus. v. Texas Air Control Bd.,

852 S.W.2d 440, 444 (Tex. 1993). Thus, this Court must determine whether Taylor’s request for

declaratory relief is germane to a justiciable controversy already within the court’s jurisdiction.

               A justiciable controversy need not be “a fully ripened cause of action.” Texas Dep’t

of Pub. Safety v. Moore, 985 S.W.2d 149, 153 (Tex. App.—Austin 1998, no pet.) (citing Ainsworth

v. Oil City Brass Works, 271 S.W.2d 754, 760 (Tex. Civ. App.—Beaumont 1954, no writ)).

However, the fact situation must manifest the “‘ripening seeds of a controversy’ . . . even though the

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differences between the parties as to their legal rights have not reached the state of an actual

controversy.” Ainsworth, 271 S.W.2d at 761, cited in Moore, 985 S.W.2d at 154. In other words,

there must either be a pending cause of action between the parties or such a clear indication of the

extent of the parties’ differences that a court may presume one is imminent.

               In the present case, although Taylor has not filed a claim against State Farm on the

hired and non-owned auto liability coverage in her multi-peril policy, she asserts that State Farm has

already violated articles 5.06-1 and 5.06-3 of the insurance code by issuing automobile insurance

without including PIP and UM/UIM coverage. See Tex. Ins. Code Ann. arts. 5.06-1, -3. The

language of both articles suggests that if Taylor’s understanding of the insurance code is accurate

(that hired and non-owned auto liability coverage must be issued with PIP and UM/UIM coverage),

State Farm has indeed already violated the statute and has thereby infringed Taylor’s legal rights.

Whether State Farm was required to issue hired and non-owned automobile insurance with PIP and

UM/UIM coverage is a question of law that may be appropriately decided by Taylor’s invocation of

the UDJA. As such, Taylor’s controversy is ripe for adjudication, and the court has subject matter

jurisdiction to hear her case.

Did Taylor have to exhaust administrative remedies?

               In her second issue, Taylor asks whether she was required to exhaust any

administrative remedies before bringing her suit in district court. Requiring exhaustion of

administrative remedies is a well-established doctrine, but it has numerous exceptions. Taylor did

not file a formal complaint with TDI. However, when pure questions of law are involved, the

doctrine of exhaustion of administrative remedies does not apply. See Grounds v. Tolar Indep. Sch.

Dist., 707 S.W.2d 889, 892 (Tex. 1986). In this case, the facts are undisputed and the question

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before the trial court is a pure question of law—whether hired and non-owned auto liability

insurance must be issued with PIP and UM/UIM coverage under the Texas Insurance Code.

Concluding that Taylor did not need to exhaust her administrative remedies prior to raising this issue

of law before the trial court, we agree that this could not form the basis for summary judgment.

Did TDI have authority?

               In her third and fourth issues, Taylor asks whether hired and non-owned auto liability

insurance is properly classified as “auto liability insurance” as contemplated by article 5, subchapter

A of the insurance code, and, if so, whether PIP and UM/UIM coverage must be issued with hired

and non-owned auto liability coverage. See Tex. Ins. Code Ann. art. 5 (West 1981). We conclude

that hired and non-owned auto liability insurance is distinguishable from “auto liability insurance”

as contemplated by article 5, subchapter A of the insurance code, and therefore State Farm need not

provide PIP and UM/UIM coverage along with the hired and non-owned auto coverage in Taylor’s

multi-peril policy on her business.

               We begin our analysis with rules of statutory construction. Determining legislative

intent is the overriding goal of statutory interpretation. Continental Cas. Co. v. Downs, 81 S.W.3d
803, 805 (Tex. 2002). In order to ascertain legislative intent, we first look to the plain and common

meaning of the words used by the legislature. Tex. Gov’t Code Ann. § 311.011 (West 1998); Kroger

Co. v. Keng, 23 S.W.3d 347, 349 (Tex. 2000); Tex. Workers’ Comp. Comm’n v. Tex. Builders Ins.

Co., 994 S.W.2d 902, 908 (Tex. App.—Austin 1999, pet. denied). Unless a statute is ambiguous,

courts abide by the clear language of the statute and enforce it as written. Republic Bank Dallas,

N.A. v. Interkal, Inc., 691 S.W.2d 605, 607 (Tex. 1985).

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               Statutes are interpreted by considering the entire statute, not just disputed provisions.

Thomas v. Cornyn, 71 S.W.3d 473, 481 (Tex. App.—Austin 2002, no pet.). Disputed provisions are

to be considered in context, not in isolation. See Fitzgerald v. Advanced Spine Fixation Sys., 996
S.W.2d 864, 866 (Tex. 1999). Courts consider such things as the circumstances under which the

statute was enacted, former statutory provisions on the same or similar subjects, and the

consequences of a particular construction when interpreting statutes. Keng, 23 S.W.3d at 349. We

do not give one provision an interpretation that is inconsistent with the other provisions of the act.

Id.

               In the case at hand, Taylor’s assertion that State Farm was required to issue PIP and

UM/UIM coverage with her hired and non-owned auto liability endorsement relies on the following

provisions of the insurance code:

       No automobile liability insurance policy . . . covering liability arising out of the
       ownership, maintenance, or use of any motor vehicle shall be delivered or issued for
       delivery in this state unless coverage is provided therein or supplemental thereto . . .
       for the protection of persons insured there under who are legally entitled to recover
       damages from owners or operators of uninsured or underinsured motor vehicles
       ....;

       No automobile liability insurance policy . . . covering liability arising out of the
       ownership, maintenance, or use of any motor vehicle shall be delivered or issued for
       delivery in this state unless personal injury protection is provided therein or
       supplemental thereto.

Tex. Ins. Code Ann. arts. 5.06-1, -3.

               On the other hand, State Farm’s conclusion that TDI has the authority to regulate

certain auto insurance under other subchapters of the insurance code relies upon the following

provision—found at the beginning of the subchapter dealing with automobile insurance:

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        There shall be excluded from regulation under the provisions of this subchapter
        [subchapter A] any insurance against liability for damages arising out of the
        ownership, operation, maintenance or use of or against loss of or damage to motor
        vehicles . . . which may, in the judgment of the Board, be a type or class of insurance
        which is also the subject of or may be more properly regulated under the terms or
        provisions of other insurance rating laws . . . . If such a situation shall be found to
        exist, the Board shall make an order declaring which of said rating laws shall be
        applicable . . . .

Id. at art. 5.02.

                    Taking the provisions together and noting their relative placements within the

subchapter dealing with automobile insurance, it is clear that article 5.02 grants TDI the discretion

to except some kinds of auto insurance from subchapter A’s mandatory PIP and UM/UIM coverage.

                    State Farm urges the Court to accept the Sidelnik decision as controlling the case

before us. Sidelnik v. American States Ins. Co., 914 S.W.2d 689 (Tex. App.—Austin 1996, writ

denied). In Sidelnik, an umbrella insurance policy was at issue. Any auto coverage encompassed

within that umbrella policy was excess to the primary insurance coverage the insured had to obtain

before being issued the umbrella policy. Id. The facts at hand do not exactly fit the Sidelnik

scenario. Although it is true, as a practical matter, that in most cases hired and non-owned auto

coverage operates much like an excess policy—excess to the primary coverage owned by the

user—there are situations in which the hired and non-owned auto policy could be the only, and thus

primary, coverage. For that reason, Sidelnik does not control the question presented regarding this

multi-peril policy.

                    Nevertheless, TDI has unambiguous authority under article 5.02 to exclude some auto

insurance from the requirements of subchapter A when in its judgment it is a type of insurance

“more properly regulated under the terms or provisions of other insurance rating laws.” Tex. Ins.

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Code Ann. art. 5.02. As discussed above, Taylor’s hired and non-owned auto liability coverage was

issued as an endorsement—a small part of her multi-peril business policy. Neither endorsement was

rated based on the risk characteristics of the car or driver. And in fact, Taylor only paid $3.07 per

$100 in anticipated annual rental expenses per year for her hired auto liability endorsement and

approximately $4.00 a year for her non-owned auto liability endorsement. We reject Taylor’s

reading of articles 5.06-1 and 5.06-3 and overrule issues three and four.

Did TDI exercise its authority?

               Having concluded that TDI does have the authority to remove hired and non-owned

auto liability policies, such as Taylor’s endorsement to a multi-peril policy, from the regulation of

article 5, subchapter A, we address Taylor’s fifth issue, asking whether TDI has exercised the

authority to classify a multi-peril policy with hired and non-owned auto liability coverage under a

different subchapter. We conclude that TDI has exercised its authority to do so.

               Taylor argues that in the event TDI wanted to except hired and non-owned auto

liability from subchapter A, it had to do so by an order that specifically invoked its authority to do

so under article 5.02. We disagree. In 1992, TDI ordered that garage insurance, “including all

coverages and endorsements included in the Texas Garage Policy, except for those coverages

specifically rated on the basis of risk characteristics of the automobile or person driving,” be

regulated under the multi- peril subchapter of the insurance code. At that time, as well as today,

hired auto liability insurance was an endorsement under the Texas Garage Policy that was not

specifically rated on the basis of risk characteristics of the automobile or person driving. As for the

limited non-owned auto liability insurance, it had been included within the Texas Business Owners

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Policy promulgated by TDI. The fact that TDI did not expressly state that it was using the discretion

afforded it under article 5.02 does not render either order invalid. We overrule Taylor’s fifth issue.

                                          CONCLUSION

               Because the district court appropriately granted State Farm’s summary judgment and

properly denied Taylor’s partial summary judgment, we affirm the judgment.

                                               Bea Ann Smith, Justice

Before Justices Kidd, B. A. Smith and Puryear

Affirmed

Filed: October 2, 2003

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