Court Opinion

ID: 9767749
Source: CourtListenerOpinion
Date Created: 2023-08-29 05:24:59.646534+00
Date Added: 2024-06-11T07:30:32.712719
License: Public Domain

ROBERTSON, Justice,
concurring and dissenting.
I concur in the disposition of the appellant’s first two points of error and in the last point of error. I dissent to the disposition of the third point.
After CHM was acquired by NME, CHM dissolved its corporate status. During trial, three former directors of CHM, its excess insurance carrier, and the excess carrier’s reinsurer became dissatisfied with the action of the primary carrier, U.S. Fire and Casualty Insurance Company and its lawyers in defending CHM’s interests. Consequently, CHM’s three former directors, Ranger Insurance Company (CHM’s excess liability insurer), and Employees Reinsurance Company (Ranger’s reinsurer) entered into a “Covenant Not to Execute and Assignment of Claims” with plaintiffs. By the terms of this agreement, plaintiffs reserved the right to proceed to judgment against CHM but promised not to execute on a judgment against CHM, if one were rendered by the trial court. The reinsurer for CHM’s excess liability insurance carrier agreed to pay plaintiffs the policy limit amount of $20,000,000. In return, CHM’s three former directors agreed to file suit based on “bad faith settlement” claims against USF & C and its trial counsel after entry of judgment against CHM. Additionally, the agreement provided for assignment of fifty percent of these causes of action to plaintiffs and fifty percent to the excess carrier. Counsel for CHM’s primary carrier did not participate in the negotiation or approval of this agreement.
The case was submitted to the jury and, as pointed out by the majority opinion, the jury absolved CHM of any negligence and the trial judge found in his judgment that “the verdict was for the Defendant, Contemporary Health Management, Inc.” The *748trial judge, however, assessed 60.3% of the guardian ad litem’s fee against CHM.
On the prior appeal, we held that “[b]e-cause CHM was a prevailing party on the merits of the case, the trial court erred in taxing 60% of the costs against CHM without stating good cause on the record.” Following remand, the trial court signed an amended judgment and, for good cause, found:
Good cause is specifically set forth and established in the record of this trial, and this Court hereby finds that good cause exists for the taxing of 60% of the guardian ad litem fees and court costs to Contemporary Health Management, Inc., on the following grounds:
1. Good cause exists because Contemporary Health Management, Inc. benefit-ted from the settlement, release and covenant not to execute in that:
a. CHM’s liability for damages was thereby extinguished; and
b. CHM was released from all liability.
2. Good cause exists because Contemporary Health Management, Inc.’s former directors, James H. Jones, Stanley M. Craig and Albert G. Dwarshus, Jr., benefitted from the settlement, release and covenant not to execute in that the directors were effectively released from future potential liability and held harmless.
3. Good cause exists because Contemporary Health Management, Inc.’s excess carrier, Ranger Insurance Company, benefitted from the settlement, release and covenant not to execute in that its potential liability was extinguished and it was released from all future liability.
4. Good cause exists because Contemporary Health Management, Inc.’s reinsurance carrier, Employers Reinsurance Company, benefitted from the settlement, release and covenant not to execute in that its potential liability was extinguished and it was released from all future liability.
5. Good cause exists because Contemporary Health Management, Inc., through its various insurance carriers, paid $20 million, or approximately 80% of the total settlement of $22.6 million[.]
The reasons given by the trial court for taxing costs against the successful party simply do not state good cause. To begin with, in the first four reasons, the trial court finds good cause because the liability of CHM, its former directors, its excess insurance carrier and its reinsurance carrier was “extinguished” and/or they were “released from future liability” by the “Covenant Not to Execute and Assignment of Claims.” However, the liability of CHM and its primary insurer was not “extinguished” and “released” until the jury returned its verdict of no negligence. Although the trial judge’s findings repeatedly refer to the covenant as a “release,” it was not a release because it did not surrender a cause of action and did not discharge liability. Knutson v. Morton Foods, Inc., 603 S.W.2d 805, 810 (Tex.1980) (Denton, J., concurring) (citations omitted); Gillette Motor Trans. Co. v. Whitfield, 186 S.W.2d 90, 93 (Tex.Civ.App.-Fort Worth 1945, writ ref’d w.o.m.); Robertson v. Trammell, 98 Tex. 364, 83 S.W. 1098 (1904). To the contrary, the agreement sought to create liability: the parties took steps to ensure that the conflict with CHM was not settled in order to spawn new lawsuits against CHM’s primary insurer and its trial counsel. Secondly, even if the covenant was a “release,” this could not be good cause, or else any limitation of liability, any compromise or settlement, in any case would provide good cause for taxing costs against a successful party. Definitely, the Rules do not intend such a result: when the law favors compromise and settlement, it would be inconsistent to punish a party who prevails on the merits for having attempted to limit its liability.
The fifth reason recited by the court does not state good cause in that it totally disregards the fact that CHM was the successful party. When the plaintiffs submitted the question of liability to the jury, the jury found that CHM was not negligent. The fact that CHM’s excess insurer and the excess carrier’s reinsurer paid $20 *749million in the settlement of damages has nothing to do with whether 60.3% of the guardian ad litem’s fee should be borne by CHM, who was the successful party, and its primary insurer. Appellant best states it in its brief:
The terms of the “Covenant Not to Execute” blatantly show that Plaintiffs, CHM’s excess insurer and the excess carrier’s reinsurer were aggressively trying to create liability on the part of CHM’s primary carrier, not release liability. Failing in this endeavor, they now seek to gain costs to be paid by the primary carrier even though they could not succeed in obtaining a verdict to be paid by the primary carrier. (emphasis supplied).
While I agree “good cause” is an “elusive concept” (Rogers v. Walmart Stores, Inc., 686 S.W.2d 599, 601 (Tex.1985)), it is not so elusive as to defy logic.
The trial court clearly abused its discretion in finding any of these five reasons to be good cause for taxing costs against CHM, the successful party. Because the majority determines otherwise, I dissent.