Court Opinion

ID: 4434385
Source: CourtListenerOpinion
Date Created: 2019-08-29 10:13:25.047302+00
Date Added: 2024-06-11T14:27:54.251153
License: Public Domain

AFFIRMED and Opinion Filed August 28, 2019

                                         S   In The
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                      No. 05-18-00564-CV

  REGENCY DEVELOPMENT & CONSTRUCTION SERVICES, LLC, Appellant
                               V.
RALPH CARRINGTON D/B/A CARRINGTON AIR CONDITIONING AND HEATING,
CARRINGTON AC AND HEAT, LLC, ANTHONY TURPIN, TURPIN & TURPIN, AND
                TURPIN AND TURPIN, INC., Appellees

                           On Appeal from the 95th District Court
                                   Dallas County, Texas
                            Trial Court Cause No. DC-16-15186

                             MEMORANDUM OPINION
                          Before Justices Bridges, Brown, and Nowell
                                  Opinion by Justice Bridges
       Regency Development & Construction Services, LLC, appeals the trial court’s summary

judgments in favor of Ralph Carrington d/b/a Carrington Air Conditioning and Heating and

Anthony Turpin, Ralph Carrington and Carrington AC and Heat LLC, and Turpin and Turpin, Inc.

In two issues, Regency argues the trial court erred in granting summary judgment on the grounds

that Regency had no evidence of damages because its insurance carrier paid the underlying

personal injury settlement and defense costs, and none of the other summary judgment grounds

asserted by any of the appellees had merit. We affirm the trial court’s judgments.

       As stated in Regency’s fourth amended petition, the facts are that Regency signed a

contract with “Carrington AC & Heating” to perform HVAC work at a jobsite where Regency was
the general contractor. The HVAC subcontract was signed by “Ralph N. Carrington, Owner.” At

the time the contract was signed, Carrington’s HVAC business was operating either as a sole

proprietorship using the LLC as a subcontractor, as an LLC, or both. Regency alleged Carrington

the sole proprietorship and Carrington LLC were a single business enterprise or a joint enterprise

because they were not operated as separate entities, they did not have an implied agreement

between them, and they combined their resources to achieve a common business purpose. As a

result, Regency argued, Carrington the individual and Carrington LLC were each liable for the

actions of the other.

       Carrington’s agreement with Regency required Carrington to obtain general liability

insurance and add Regency as an additional insured on the policy. Carrington contacted his

insurance agent, Anthony Turpin, to obtain the required coverage. Turpin was provided with the

written insurance requirements or had access to such requirements. After determining what

additional coverage Carrington was required to purchase, Turpin sent a certificate of insurance to

Regency that indicated Regency was an insured under Carrington’s general liability policy.

However, Regency was not actually added as an additional insured at the time Turpin said it was.

       Under the HVAC subcontract agreement with Regency, Carrington was also obligated to

indemnify Regency for claims arising out of the HVAC work performed under the subcontract.

The subcontract required Carrington or Carrington LLC to have insurance coverage in place

ensuring this indemnity obligation owed to Regency.

       Although Carrington did not know it, Turpin sold Carrington a general liability policy of

the type that would rarely provide the coverage Carrington needed under construction contracts.

In effect, Regency alleged, the additional insured endorsement Turpin sold Carrington was

worthless, and a certificate of insurance stating general liability coverage was in place created a

false impression regarding the existence of coverage.

                                               –2–
       On January 13, 2014, while performing HVAC work at the jobsite, Raymond Kirchmeyer

was injured. Kirchmeyer sued Regency and other defendants for his injuries. On December 31,

2015, Kirchmeyer filed his fourth amended original petition alleging negligence claims against

Regency.

       Regency tendered the lawsuit to Carrington and Carrington’s insurer for defense and

indemnity under the subcontract and as an additional insured under Carrington’s liability policy.

Carrington did not accept the defense of Regency in the lawsuit. Further, Carrington’s insurer

denied Regency’s request for defense and indemnity as an additional insured, stating the policy at

issue did not cover Carrington for claims arising out of injuries to Carrington’s employees.

       On January 13, 2016, Regency filed a third party petition against Carrington d/b/a

Carrington Air Conditioning and Heating and Turpin d/b/a Turpin and Turpin. On October 20,

2016, Regency filed a second amended third party petition against Carrington and Turpin alleging

claims of breach of contract, negligence, negligent misrepresentation, DTPA violations, breach of

fiduciary duty, fraud, and fraudulent concealment. On November 28, 2016, the trial court entered

an order severing Regency’s third-party claims from the Kerchmeyer lawsuit.

       By check dated January 20, 2017, Regency’s insurer, The Cincinnati Insurance Company,

paid $3,000,000 to Kirchmeyer, and Kirchmeyer settled his lawsuit against Regency.

       On August 9, 2017, Carrington d/b/a Carrington Air Conditioning and Heating filed a

traditional and no evidence motion for summary judgment asserting, among other things, that there

was no evidence Regency paid any portion of (1) the $3,000,000 settlement paid to resolve

Kirchmeyer’s claims and (2) the attorney’s fees and expenses incurred in defending Regency

against Kirchmeyer’s claims. Therefore, the motion alleged, there was no evidence Regency had

been damaged.

                                               –3–
       On August 15, 2017, Regency filed its third amended petition adding Carrington AC and

Heat, LLC and Turpin and Turpin, Inc. as defendants. On September 18, 2017, Regency filed its

joint response to the motions for summary judgment of Turpin and Carrington. The response

argued the indemnity provision of the contract between Regency and Carrington was enforceable,

and “the only evidence of damages sets out the defense costs and settlement payments incurred by

Regency.”     Regency claimed it “incurred attorney’s fees of $126,730.00 and expenses of

$121,728.47 in defense of the Kirchmeyer lawsuit” and “also paid $3,000,000 in settlement.”

Regency argued the “contention that an insurer paid the defense costs and made the settlement

payment” was not a defense to liability because such a defense was in contradiction to the collateral

source rule. Citing Haygood v. De Escabedo, 356 S.W.3d 390 (Tex. 2011), Regency argued a

tortfeasor’s liability is not reduced because of benefits received by the plaintiff from someone else:

a collateral source.

       On October 6, 2017, the Turpin defendants filed an amended motion for summary

judgment to declare indemnity void asserting that the indemnity provisions in the subcontract

between Carrington and Regency did not apply to the circumstances presented in this case. Turpin

further argued the indemnity provisions were void under Texas law and there was no evidence

Regency paid any damages. Therefore, Turpin argued, there were no damages or attorney’s fees

for which indemnity could apply.

       On November 4, 2017, the trial court signed an order granting the traditional and no

evidence summary judgment motions of Ralph Carrington d/b/a Carrington Air Conditioning and

Heating and Anthony Turpin d/b/a Turpin and Turpin on the ground that Regency’s insurance

carrier, Cincinnati Insurance Company, not Regency, paid all defense costs and indemnity

amounts. However, the order did not dispose of all parties because Regency had added Carrington

AC and Heat, LLC and Turpin and Turpin, Inc.

                                                 –4–
       On November 17, 2017, Carrington individually filed his second and Carrington AC and

Heat, LLC filed its first traditional and no evidence motion alleging, among other things, that there

was no evidence Regency paid any portion of (1) the $3,000,000 settlement paid to resolve

Kirchmeyer’s claims and (2) the attorney’s fees and expenses incurred in defending Regency

against Kirchmeyer’s claims.

       On February 15, 2018, Turpin and Turpin, Inc. filed its motion for partial summary

judgment “as to all claims by regarding all claims of Regency” asserting, among other things, there

was “no evidence of any payment or damage by Regency for which indemnity may be made.”

       On February 28, 2018, the trial court granted Carrington and Carrington AC and Heat,

LLC’s motions for summary judgment on the ground that Regency’s insurance carrier, Cincinnati

Insurance Company, not Regency, paid all defense costs and indemnity amounts. On March 9,

2018, the trial court granted Turpin and Turpin, Inc.’s motion for partial summary judgment

without stating the grounds upon which it was granted.

       On April 5, 2018, Regency filed its motion for reconsideration in which Regency argued

the trial court’s orders granting summary judgment violated the collateral source rule, which “bars

a wrongdoer from offsetting its liability with insurance benefits paid to its opponent.” Regency’s

motion claimed, for the first time, that “ownership of Regency’s multiple claims against each of

the defendants was contractually conveyed to Cincinnati Insurance Company, and it has the right

to sue in Regency’s name.” Regency’s motion was supported by the affidavit of its president

stating that, “At the insurance company’s request, suit was brought in Regency’s name against

Carrington and its insurance agent to enforce their responsibilities.” Also attached to Regency’s

motion was a copy of the Cincinnati insurance policy providing that, if Regency had the rights to

recover all or part of any payment made by Cincinnati under the “Coverage Part” of the policy,

                                                –5–
those rights were transferred to Cincinnati, and Regency would “bring ‘suit’ or transfer those rights

to [Cincinnati] and help [Cincinnati] enforce them” at Cincinnati’s request.

       On April 16, 2018, Carrington non-suited his remaining claims against Turpin individually

and Turpin and Turpin, Inc. On May 3, 2018, the trial court entered an order non-suiting

Carrington’s claims and causes of action and finding that, with the non-suit, there were “no

remaining claims or causes of action in the case.” This appeal followed.

       In its first issue, Regency argues the trial court erred in granting summary judgment for

Carrington and Turpin on the grounds that Regency had no damages because its insurance carrier

paid the underlying personal injury settlement and defense costs. Regency argues this was

erroneous because it violates the collateral source rule and unfairly rewards Carrington for failing

to obtain appropriate insurance and Turpin for selling a worthless policy and then issuing a false

additional insured certificate.

       The standards of review for traditional and no-evidence summary judgments are well

known. See Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009). In a traditional motion

for summary judgment, the movant has the burden to demonstrate that no genuine issue of material

fact exists, and it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c). We review a

no-evidence summary judgment under the same legal sufficiency standard used to review a

directed verdict. TEX. R. CIV. P. 166a(i); Gish, 286 S.W.3d at 310. To defeat a no-evidence

summary judgment, the nonmovant is required to produce evidence that raises a genuine issue of

material fact on each challenged element of its claim. Gish, 286 S.W.3d at 310; see also TEX. R.

CIV. P. 166a(i).

       In reviewing both a traditional and no-evidence summary judgment, we consider the

evidence in the light most favorable to the nonmovant. Smith v. O’Donnell, 288 S.W.3d 417, 424

(Tex. 2009). We credit evidence favorable to the nonmovant if reasonable jurors could, and we

                                                –6–
disregard evidence contrary to the nonmovant unless reasonable jurors could not. Gish, 286
S.W.3d at 310.

       When a party files a hybrid summary judgment motion on both no-evidence and traditional

grounds, we generally first review the trial court’s judgment under the no-evidence standard of

review. Rico v. L-3 Commc’ns Corp., 420 S.W.3d 431, 439 (Tex. App.—Dallas 2014, no pet.).

Should we determine summary judgment was appropriate under the no-evidence standard, we need

not address issues related to the traditional summary judgment motion. Id. However, if the court

is required to affirm the trial court’s ruling on traditional grounds, then we only address the

traditional grounds. See Shih v. Tamisiea, 306 S.W.3d 939, 945 n.8 (Tex. App.—Dallas 2010, no

pet.); see also Diaz v. D.R. Wright Enter., Inc., No. 05-17-00172-CV, 2018 WL 3484227, at *4

(Tex. App.—Dallas July 19, 2018, no pet.) (mem. op.).

       A central issue to the summary judgments in this case is whether the collateral source rule

precluded summary judgment on the grounds that Regency had no damages because its insurance

carrier paid the underlying settlement and defense costs. The collateral source rule precludes any

reduction in a tortfeasor’s liability because of benefits received by the plaintiff from someone

else—a collateral source. Haygood, 356 S.W.3d at 394–95. The primary justification of the

collateral source rule is that a wrongdoer should not become a third-party beneficiary of insurance

benefits purchased by the victim. See Mid-Century Ins. Co. of Tex. v. Kidd, 997 S.W.2d 265, 274

(Tex. 1999). Here, the insurance payments were made to Kirchmeyer, not Regency. Separate

from the issue of Regency’s claims against Carrington and Turpin, the insurance payments were

made to settle Kirchmeyer’s claims against Regency. If Kirchmeyer received insurance or other

benefits from someone else–worker’s compensation benefits, for instance–the collateral source

rule would preclude any reduction in the payments made by Cincinnati on Regency’s behalf. See

                                               –7–
id. We conclude that, under the facts of this case, the collateral source rule does not apply to

Regency.

       Two of the challenged summary judgments expressly relied on the grounds that Regency

presented no evidence of damages because Cincinnati paid the underlying settlement and defense

costs, and the third summary judgment was urged on this ground, though the summary judgment

order did not state the basis for its judgment. Regency does not dispute that Cincinnati paid the

settlement and defense costs. The record shows Regency consistently represented throughout the

underlying suit that it was Regency alone, and not any other party, bringing suit. As we have

discussed, Regency made no payments and received no payments from any other party. Although

Regency had no damages, to the extent Cincinnati might have had a claim against Carrington or

Turpin, Cincinnati failed to participate in the underlying lawsuit.

       There are two types of subrogation. Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co., 236
S.W.3d 765, 774 (Tex. 2007).        Contractual (or conventional) subrogation is created by an

agreement or contract that grants the right to pursue reimbursement from a third party in exchange

for payment of a loss. Id. Equitable (or legal) subrogation does not depend on contract but arises

in every instance in which one person, not acting voluntarily, has paid a debt for which another

was primarily liable and which in equity should have been paid by the latter. Id. A party claiming

subrogation must plead its right to subrogation. Wells Fargo Bank, N.A. v. Leath, 425 S.W.3d 525,

540 (Tex. App.—Dallas 2014, no pet.).

       Here, Cincinnati did nothing to assert its right to contractual subrogation.        See id.

Accordingly, Cincinnati’s possible entitlement to contractual subrogation or right to some

unspecified recovery from Carrington or Turpin was not before the trial court. See id. Further,

Regency did not plead its status as “subrogee” or assert at any time that it was suing “pursuant to

its legal and contractual subrogation rights.” See STICO Mut. Ins. Co., RRG v. Advanced Polymer

                                                –8–
Coatings, Inc., 412 S.W.3d 56, 57 (Tex. App.—El Paso 2013, no pet.) (pleading status as

“subrogee” conferred standing on insurer to bring suit under equitable subrogation against third

party liable to insured).

        Cincinnati also failed to intervene in the underlying suit. Not until after the trial court’s

summary judgments did Regency attempt to argue that Cincinnati had “the right to sue in

Regency’s name.” Generally, one cannot intervene after final judgment. Tex. Mut. Ins. Co. v.

Ledbetter, 251 S.W.3d 31, 36 (Tex. 2008). But when a subrogee’s interest has been adequately

represented and then suddenly abandoned by someone else, it can intervene even after judgment

or on appeal so long as there is neither unnecessary delay nor prejudice to the existing parties. Id.

Here, however, no attempt was made to adequately represent Cincinnati’s interest as subrogee,

and any attempt to do so after the trial court’s summary judgments came too late. See id. We

conclude the trial court did not err in granting summary judgment against Regency on the grounds

that Regency had no damages because its insurance carrier paid the underlying settlement and

defense costs. See Gish, 286 S.W.3d at 310. We overrule Regency’s first issue.

        Because of our disposition of Regency’s first issue, we need not address Regency’s second

issue challenging the other summary judgment grounds raised by Carrington and Turpin.

        We affirm the trial court’s judgments.

                                                   /David L. Bridges/
                                                   DAVID L. BRIDGES
                                                   JUSTICE

180564F.P05

                                                 –9–
                                         S
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                       JUDGMENT

 REGENCY DEVELOPMENT &                               On Appeal from the 95th District Court,
 CONSTRUCTION SERVICES, LLC,                         Dallas County, Texas
 Appellant                                           Trial Court Cause No. DC-16-15186.
                                                     Opinion delivered by Justice Bridges.
 No. 05-18-00564-CV          V.                      Justices Brown and Nowell participating.

 RALPH CARRINGTON D/B/A
 CARRINGTON AIR CONDITIONING
 AND HEATING, CARRINGTON AC
 AND HEAT , LLC, ANTHONY TURPIN,
 TURPIN & TURPIN, AND TURPIN AND
 TURPIN, INC., Appellee

     In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED.

       It is ORDERED that appellee RALPH CARRINGTON D/B/A CARRINGTON AIR
CONDITIONING AND HEATING, CARRINGTON AC AND HEAT , LLC, ANTHONY
TURPIN, TURPIN & TURPIN, AND TURPIN AND TURPIN, INC. recover their costs of this
appeal from appellant REGENCY DEVELOPMENT & CONSTRUCTION SERVICES, LLC.

Judgment entered August 28, 2019.

                                              –10–