Court Opinion

ID: 4219593
Source: CourtListenerOpinion
Date Created: 2017-11-10 00:16:48.2667+00
Date Added: 2024-06-11T14:42:00.469899
License: Public Domain

Opinion issued October 5, 2017

                                       In The

                                 Court of Appeals
                                      For The

                              First District of Texas
                               ————————————
                                 NO. 01-17-00363-CV
                               ———————————
    IN RE LIBERTY COUNTY MUTUAL INSURANCE COMPANY, Relator

             Original Proceeding on Petition for Writ of Mandamus

                                     OPINION

       In this original proceeding, Liberty County Mutual Insurance Company seeks

relief from the trial court’s order compelling discovery related to severed and abated

claims arising from uninsured/underinsured motorist insurance coverage.1 We

conditionally grant relief.

1
       The underlying case is Latrisha Morris v. Liberty County Mutual Insurance
       Company, cause number 2016-28433, pending in the 165th District Court of Harris
       County, Texas, the Honorable Ursula A. Hall presiding.
                                     Background

      The underlying suit arises out of a car accident that occurred in May 2014.

Latrisha Morris was injured when her vehicle was struck by a vehicle driven by

Amitbhali Momim.

      Morris was insured under an automobile insurance policy underwritten by

Liberty Mutual. The insurance policy provides for uninsured/underinsured motorist

coverage. Under this provision, Liberty Mutual is obligated to “pay compensatory

damages which [Morris] is legally entitled to recover from the owner or operator of

an ‘uninsured motor vehicle’ because of ‘bodily injury:’ (1) sustained by an

‘insured;’ and (2) caused by an accident.”

      In May 2016, Morris sued Momim and Liberty Mutual, asserting that

Momim’s negligence caused the accident and that Momim was not insured for it.

Against Liberty Mutual, Morris sought declaratory relief that Liberty was

contractually liable under the insurance policy, and asserted both contractual and

extra-contractual fraud and statutory claims against it based on its failure to pay

policy benefits.

A.    Severance and Abatement of Extra-Contractual Claims

      Liberty Mutual moved to sever the contractual and extra-contractual claims

against it into a separate action and to abate all activity related to these claims. See

Brainard v. Trinity Universal Ins. Co., 216 S.W.3d 809, 818 (Tex. 2007). The trial

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court granted the motion in part, and it severed and abated all pending causes of

action against Liberty Mutual except for Morris’s claims for breach of contract and

declaratory judgment. Thus, the extra-contractual claims were severed and abated

but the contractual claims continued to proceed in the underlying case.

B.    Plaintiff’s Discovery Requests

      Morris subsequently served Liberty Mutual with interrogatories, requests for

admissions, and requests for production. These requests sought discovery of Liberty

Mutual’s claims history, the basis for its alleged denial of Morris’s claim for

uninsured motorist coverage, prior similar lawsuits, and internal policies and

procedures concerning uninsured motorist investigations. Examples from the

interrogatories include requests that Liberty Mutual:

          “[S]tate the amount of all settlement offers made by [Liberty Mutual]
           in an effort to resolve Plaintiff’s claim prior to suit being filed and the
           method you used and how you calculated this amount and/or Plaintiff’s
           damages.”

          “State the procedures relied upon and the criteria utilized by [Liberty
           Mutual] in its investigation of Plaintiff’s claim to evaluate and place a
           dollar value on her claim.”

          “Identify every person who participated to any degree in the
           investigation and adjusting of the claims, defenses, or issues involved
           in this case, describe the involvement of each person identified, list their
           qualifications, state the dates of each investigation, and whether it was
           reduced to writing and describe in detail the investigation and
           information gathering process that they utilized to assist you in your
           decision to deny or adjust payment of Plaintiff’s claim.”

                                          3
           “Identify every person who has complained, within the past five (5)
            years in Texas, about any claim adjustment and/or denial based on any
            of the reasons that you contend support your adjustment and/or denial
            of Plaintiffs claim.”

           Provide the following information for the last five years: (a) “the total
            number of written claims filed, including the original amount filed for
            by the insured and the classification by line of insurance of each
            individual written claim;” (b) “the total number of written claims
            denied,” (c) “the total number of written claims settled, including the
            original amount filed for by the insured, the settled amount, and the
            classification of line of insurance of each individual settled claim;” (d)
            “the total number of written claims for which lawsuits were instituted
            against [Liberty Mutual], including the original amount filed for by the
            insured, the amount of final adjudication, the reason for the lawsuit, and
            the classification by line of insurance of each individual written claim;”
            and (e) “the total number of complaints, their classification by line of
            insurance, the nature of each complaint, the disposition of these
            complaints, and the time it took to process each complaint.”

      Liberty Mutual filed objections and responses to the requests, contending that

the requested discovery was irrelevant to any current cause of action because a cause

of action for uninsured motorist benefits does not arise until the underlying tort suit

is resolved:

      To the extent Plaintiff seeks to recover [uninsured motorist] benefits,
      there has been no legal determination that Defendant is under any
      contractual duty to pay benefits, and there presently exists no legally
      cognizable basis for Plaintiff to request information concerning any
      cause of action for Breach of Contract, Common Law Bad Faith, and/or
      violations of the Texas Insurance Code or Texas Deceptive Trade
      Practices Act, Breach of Fiduciary Duty, Fraud or recovery of attorney's
      fees because they are immaterial and irrelevant to the underlying tort
      lawsuit and thus not reasonably calculated to lead to the discovery of
      admissible evidence as to any viable claims or causes of action against
      this Defendant. See Brainard v. Trinity Universal Insurance Company,
      216 S.W.3d 809, 818 (Tex. 2007).

                                          4
      Liberty Mutual’s claims adjuster, Marianne Cagle, reviewed and verified the

discovery responses. Morris requested Cagle’s deposition. Consistent with its

objections to the discovery requests, Liberty Mutual responded that there was no

basis to depose Cagle until the issues of liability, damages, and coverage are

resolved.

C.    Liberty Mutual’s Motion to Quash Deposition

      Liberty Mutual moved to quash the deposition of Cagle as overbroad,

harassing, and irrelevant to the issues of liability, damages, and coverage. Liberty

Mutual stipulated that it had issued a policy of insurance to Morris, that the policy

included uninsured motorist benefits, and that the underlying accident is a covered

event. But Liberty Mutual asserted that “the only issues involved in this lawsuit is

the liability of [Morris] and the alleged tort-feasor, Amitbhali Momim, that were

both involved in the underlying motor vehicle accident and the amount of [Morris’s

damages resulting from the underlying motor vehicle accident.” Liberty Mutual

contends that the deposition is sought regarding Cagle’s role as a claims adjuster and

necessarily seeks discovery as to the abated extra-contractual claims.

      Morris responded that she seeks to depose Cagle “as the person who had

information regarding Defendant’s discovery responses, including [Morris’s]

declaratory judgment claim.”

                                          5
      After conducting a hearing, the trial court denied Liberty Mutual’s motion to

quash and directed it to produce Cagle for deposition within sixty days.

      Morris then amended her petition in the underlying case to remove all claims

against Liberty Mutual except her claim for declaratory judgment. A determination

has not been made as to Momim’s negligence and/or liability for the underlying

accident, the existence and amount of Morris’s damages, or Momim’s status as an

underinsured motorist.

                                 Standard of Review

      Discovery matters are generally within the trial court’s sound discretion, but

“mandamus will issue to correct a discovery order if the order constitutes a clear

abuse of discretion and there is no adequate remedy by appeal.” In re Colonial

Pipeline Co., 968 S.W.3d 938, 941 (Tex. 1998); see Walker v. Packer, 827 S.W.2d
833, 839 (Tex. 1992). A clear abuse of discretion occurs when the trial court’s

decision is so arbitrary and unreasonable that it amounts to clear error. See Walker,
827 S.W.2d at 839 (quoting Johnson v. Fourth Court of Appeals, 700 S.W.2d 916,

917 (Tex. 1985)). Because a trial court has no discretion in determining what the law

is, the trial court abuses its discretion if it clearly fails to analyze or apply the law

correctly. See id. at 840. “To satisfy the clear abuse of discretion standard, the relator

must show ‘that the trial court could reasonably have reached only one decision.’”

Liberty Nat’l Fire Ins. Co. v. Akin, 927 S.W.2d 627, 630 (Tex. 1996) (quoting

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Walker, 827 S.W.2d at 840). “In determining whether appeal is an adequate remedy,

appellate courts consider whether the benefits outweigh the detriments of mandamus

review.” In re BP Prods. N. Am., Inc., 244 S.W.3d 840, 845 (Tex. 2008).

                                    Discussion

      In seeking mandamus relief, Liberty Mutual contends that (1) discovery

beyond the issues of liability and damages regarding the underlying accident is

irrelevant because it is not liable until these issues have been determined; and

(2) Cagle’s assistance with answering interrogatories regarding Morris’s policy is an

insufficient basis to allow the deposition at this stage of the case. Liberty Mutual

further asserts that it lacks an adequate remedy by appeal because it is being

compelled to bear the burden of providing a deposition not relevant to any current

claim. In response to the petition, Morris argues that (1) she is entitled to depose

Cagle because “[t]he deposition of a witness who provides discovery responses is

relevant” and (2) Liberty has an adequate remedy by appeal.

   A. Scope of Discovery

      A trial court must make an effort to impose reasonable limits on discovery. In

re Am. Optical, 988 S.W.2d 711, 713 (Tex. 1998). Although the scope of discovery

is broad, requests must show a reasonable expectation of obtaining information that

will aid the dispute’s resolution. In re CSX Corp., 124 S.W.3d 149, 152 (Tex. 2003)

(citing Am. Optical, 988 S.W.2d at 713). Thus, discovery requests—including

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depositions—must be reasonably tailored to include only matters relevant to the

case. Id. Information is relevant if it tends to make the existence of any fact that is

of consequence to the determination of the action or defense more or less probable

than it would be without such information. See TEX. R. EVID. 401.

      Because Morris dismissed her breach of contract claim and her extra-

contractual claims have been severed and abated, Morris’s only pending claim in the

underlying case is her request for a declaratory judgment regarding Liberty Mutual’s

obligation to pay uninsured motorist benefits under the policy. For the reasons

discussed below, we conclude that the trial court erred in denying Liberty Mutual’s

motion to quash because the information sought through Cagle’s deposition is

neither relevant to Morris’s pending claims nor reasonably calculated to lead to the

discovery of admissible evidence. See TEX. R. CIV. P. 192.3(a); TEX. R. EVID. 401.

      1. The pending claims are limited to third party liability for the accident.

      The scope of relevant discovery in uninsured motorist cases differs from other

insurance disputes because, unlike most first-party cases in which the terms of the

policy alone dictate the outcome, uninsured motorist coverage hinges on the liability

of the alleged uninsured, at-fault third-party motorist, under applicable tort law. See

Brainard, 216 S.W.3d at 818 (citing Henson v. S. Farm Bur. Cas. Ins. Co., 17
S.W.3d 652, 654 (Tex. 2000)). Consequently, “the insurer’s contractual obligation

to pay benefits does not arise until liability and damages are determined.” Id.; see

                                          8
also In re United Fire Lloyds, 327 S.W.3d 250, 255 (Tex. App.—San Antonio 2010,

orig. proceeding)

      To recover benefits under an uninsured motorist policy, a policy beneficiary

must show (1) that the insured has underinsured motorist coverage, (2) that the

underinsured motorist negligently caused the accident that resulted in the covered

damages, (3) the amount of the insured’s damages, and (4) that the underinsured

motorist’s insurance coverage is deficient. See Brainard 216 S.W.3d 809 at 818;

State Farm v. Nickerson, 216 S.W.3d 823, 824 (Tex. 2006); Norris, 216 S.W.3d at

822-23; Henson, 17 S.W.3d at 654; In re Progressive County Mut. Ins. Co., 439
S.W.3d 422, 426-27 (Tex. App.—Houston [1st Dist.] 2014, no pet.); In re United

Fire Lloyds, 327 S.W.3d at 255. Accordingly, “a claim for [uninsured motorist]

benefits is not presented until the trial court signs a judgment” resolving these issues.

Brainard, 216 S.W.3d at 818.

      Liberty Mutual stipulated in its pleadings and responses that (1) Morris was

insured for uninsured motorist benefits under its policy; and (2) the underlying

accident was a covered occurrence under the policy’s provisions. This stipulation

narrows the relevant issues in the present case to those of a “typical car wreck”

case—namely, (1) Momim’s liability for the underlying car accident, (2) Momim’s

uninsured/underinsured status, and (3) the existence and amount of Morris’s

damages. See In re Progressive, 439 S.W.3d at 427.

                                           9
      In determining whether Morris is entitled to discovery on her declaratory

judgment claim prior to a judgment on liability and damages regarding the

underlying accident, we are guided by case law requiring the severance and

abatement of extra-contractual claims. See, e.g., In re Progressive, 439 S.W.3d at

426-27. An insured must first establish that the insurer is liable on the contract before

the insured can recover on extra-contractual causes of action against an insurer for

failing to pay or settle an underinsured motorist insurance claim. Thus, extra-

contractual claims must be severed and abated until the underinsured motorist breach

of contract claim is determined. See In re Allstate Cnty Mut. Ins. Co., 447 S.W.3d
497; In re Progressive, 439 S.W.3d 422. The rationale for requiring abatement and

severance of these types of claims is that they may be rendered moot by a

determination of underlying liability. See U.S. Fire Ins. Co. v. Millard, 847 S.W.2d
668, 673 (Tex. App.—Houston [1st Dist.] 1993, orig. proceeding) (“Abatement of

the bad faith claims must necessarily accompany severance of those claims from the

contract claim. Without abatement, the parties will be put to the effort and expense

of conducting discovery and preparing for trial of claims that may be disposed of in

a previous trial.”); In re United Fire Lloyds, 327 S.W.3d at 265 (holding that

abatement of the insured’s extra-contractual claims was required to “do justice,

avoid prejudice, and further convenience.”).

                                           10
      We apply similar reasoning to the case at hand. Because Liberty Mutual’s

contractual obligations do not ripen until after Morris has obtained a judgment

against Momim on liability, damages, and coverage, the requested discovery is

irrelevant to any current claims, which are the building blocks for an eventual

determination of the parties’ contractual rights. See In re Progressive, 439 S.W.3d

at 426-27; In re United Fire Lloyds, 327 S.W.3d at 256. An insurer is not required

to incur litigation expenses on these issues because they may be rendered moot by

the trial of the underlying accident. 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 re Am.

Nat. Cnty. Mut. Ins. Co., 384 S.W.3d 429, 437 (Tex. App.—Austin 2012, no pet.).

      Our decision in In re Progressive is instructive. Progressive concerned,

among other things, a trial court’s refusal to abate discovery in an uninsured motorist

case. 439 S.W.3d at 428. Our court recognized that, “to prevail on her extra-

contractual claims . . . [the plaintiff] must demonstrate that [the insurer] was

contractually obligated to pay her uninsured motorist claim.” Id. at 427. Because the

existence of coverage for the accident was not in dispute, this “will essentially

involve the issues in a typical car wreck: the comparative negligence of [the plaintiff]

and the other driver and [the plaintiff’s] damages.” Id. We reasoned that requiring

the parties to engage in discovery on matters unrelated to these issues—including

the insurer’s uninsured motorist claims-handling history and its internal policies and

                                          11
procedures concerning the investigation of uninsured motorist claims—before the

underlying liability was determined would be “manifestly unjust.” Id. On this basis,

we held that the trial court erred in refusing to abate discovery as to issues beyond

the underlying car accident. Id. at 427-28.

      As in Progressive, Liberty Mutual has conceded the existence of coverage—

namely, that Morris was an insured under the policy and that the underlying accident

was a covered occurrence under the policy’s UIM provisions. Accordingly, the

remaining issues are those relating to the underlying accident: (1) Momim’s liability

for the car accident, (2) Momim’s uninsured/underinsured status, and (3) the

existence and amount of Morris’s damages. It is undisputed that there has been no

judgment or other judicial determination as to any of these issues. Absent such

judgment, Liberty Mutual owes no contractual or extra-contractual UIM duties.

      The deposition of Cagle is irrelevant to the issues currently pending in the

case. Cagle’s only connection to the underlying car accident and resulting damages

is that she is a claims adjuster for the insurance company that underwrites Morris’s

policy and signed the company’s discovery responses. Cagle’s testimony would not

have “any tendency to make a fact more or less probable” as to any of the relevant

issue in the current case. TEX. R. EVID. 401. Although Cagle’s testimony as to

Liberty Mutual’s claim-handling activities or its general policies and procedures is

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relevant to Morris’s extra-contractual claims, those claims have been properly

severed and abated. See In re Progressive, 439 S.W.3d at 427.

      In sum, Morris requests a deposition of a claims adjuster when she does not

have a justiciable cause of action against Liberty Mutual for uninsured motorist

benefits. The information Morris seeks to discover may become relevant, but not

unless Morris obtains a judgment establishing (1) Momim’s liability for the

underlying car accident, (2) Momim’s uninsured/underinsured status, and (3) the

existence and amount of Morris’s damages.

      2. Morris has not otherwise demonstrated a basis for the discovery.

      Morris further argues that she is entitled to depose Cagle because Cagle

“assisted or provided information in answering [Liberty Mutual’s] interrogatories”

and verified its interrogatory answers. Morris’s circular argument that the mere act

of objecting to requests that are beyond the scope of permissible discovery can itself

serve as the basis for obtaining discovery on the same irrelevant issues would, if

permitted, render discovery requirements meaningless.

      Liberty Mutual objected to the majority of the questions propounded in the

interrogatories as outside the scope of permissible discovery. The interrogatories

primarily sought information regarding Morris’s extra-contractual claims, which

were severed and abated by the trial court. Liberty Mutual’s objections that

discovery on the severed and abated claims was improper are well-founded. See In

                                         13
re Farmers Tex. Cnty. Mut. Ins. Co., 509 S.W.3d 463, 467 (Tex. App.—Austin 2015,

orig. proceeding) (“The record, however, includes discovery requests propounded

by [plaintiff] that are broader than his breach of contract claim, his factual allegations

in his pleadings, and a copy of the section of his insurance policy addressing the

relevant UIM coverage . . . .”). Nothing in Liberty Mutual’s interrogatory answers

suggests that Cagle has any knowledge relevant to the issues of Momim’s liability,

damages, or underinsured status. Discovery propounded on irrelevant issues does

not become relevant by a party correctly objecting to its relevance and providing the

required designations.

      Apart from its objections, Liberty Mutual provided answers in response to

interrogatories pertaining to Morris’s medical records. These answers, however,

merely refer to Morris’s medical records. For instance, Interrogatory No. 4 requested

that Liberty Mutual “identify each medical bill you received for Latrisha Morris,

including the date received, the amount submitted, the name of the provider, the

amount paid for each bill and the reason for denial of Uninsured benefits for each

bill since May 5, 2014.” Liberty Mutual objected that the request was in part

irrelevant, but responded as follows: “Subject to and without waiving the foregoing

objections, see copies of all medical bills of Plaintiff received by Defendant [with

corresponding label numbers] . . .”

                                           14
      Morris’s medical records are relevant to the amount of damages she claimed

as a result of the accident, but Cagle’s verification of the interrogatories is an

insufficient basis to allow the deposition. The only relevant testimony Cagle could

provide would consist of confirming that Liberty Mutual had produced the medical

records that it had been provided. Morris has independent and superior access to her

own records, and deposing Cagle on their contents would be unreasonable and

unduly burdensome. See TEX. R. CIV. P. 192.4(a) (providing that discovery should

be limited when “the discovery sought is unreasonably cumulative or duplicative, or

is obtainable from some other source that is more convenient, less burdensome, or

less expensive”); see also In re Arras, 24 S.W.3d 862, 864 (Tex. App.—El Paso

2000, no pet.) (granting mandamus relief challenging order requiring claims

representative to submit to deposition because plaintiffs already received “the exact

information” from car accident defendants and thus “the information sought by

Plaintiffs is clearly obtainable from some other source that is more convenient, less

burdensome, or less expensive” and “the information sought via deposition and

subpoena duces tecum is unreasonably cumulative and/or duplicative.”).

      Finally, the discovery that Morris seeks may become relevant once liability

for the car accident is determined. Morris relies on the decisions in In re Luna and

In re Garcia to contend that the verifying agent who answers discovery requests is

always subject to deposition. See In re Luna, No. 13-16-00467-CV, 2016 WL
15
6576879, at *1 (Tex. App.—Corpus Christi, Nov. 7, 2016, orig. proceeding); In re

Garcia, No. 04-07-00173-CV, 2007 WL 1481897, at *1 (Tex. App.—San Antonio

May 23, 2007, orig. proceeding). In both cases, the courts of appeals granted

mandamus relief to allow the deposition of an insurer’s representative in actions for

uninsured motorist coverage. But these cases are distinguishable because both cases

arose after liability of the third party driver had been determined and the coverage

dispute had ripened. In Luna, the plaintiff had obtained a default judgment against

the other motorist in her personal injury suit. See 2016 WL 6576879, at *1. In

Garcia, the plaintiff had “collected from the other motorist's liability insurer at the

full policy limits.” 2007 WL 1481897, at *1. But the insurer disputed the plaintiff’s

actual damages. See id. at *2. Unlike Garcia, there is no indication at this stage of

Morris’s case that Cagle’s deposition is relevant to any asserted defense, as questions

about uninsured motorist coverage await determination of primary liability and

damages.

   B. Adequate Remedy by Appeal

      Finally, to be entitled to mandamus relief, Liberty Mutual also must

demonstrate that it lacks an adequate remedy by appeal. Because we conclude that

the order compels discovery irrelevant to the underlying case, Liberty Mutual

necessarily lacks an adequate remedy by appeal. See In re CSX Corp., 124 S.W.3d

at 153. (“We have said that where a discovery order compels production of ‘patently

                                          16
irrelevant or duplicative documents’ . . . there is no adequate remedy by appeal

because the order ‘imposes a burden on the producing party far out of proportion to

any benefit that may obtain to the requesting party.’”) (quoting Walker, 827 S.W.2d

at 843). Insurers have a substantial right not to undergo the expense of conducting

discovery on issues that ultimately may be unnecessary because of the result in the

underlying tort case. See In re Old Am. Cnty. Mut. Ins. Co., No. 13–11–00412–CV,

2012 WL 506570, at *5 (Tex. App.—Corpus Christi Feb. 16, 2012, orig.

proceeding); see also United Fire Lloyds, 327 S.W.3d at 257. Insurers similarly have

been held to lack an adequate remedy by appeal when required to respond to

discovery for extra-contractual claims that may be rendered moot by the

determination of the breach of contract claims. See Allstate, 447 S.W. at 504; In re

Progressive, 439 S.W.3d at 427–28; see also In re State Farm, 395 S.W.3d at 239.

If mandamus is not granted, Liberty Mutual would be required to prepare for and

respond to discovery concerning claims that similarly lack justiciability. See Millard,
847 S.W.2d at 675; In re Trinity Universal Ins. Co., 64 S.W.3d 463, 468 (Tex.

App.—Amarillo 2001, orig. proceeding).

                                     Conclusion

      For the forgoing reasons, we conditionally grant the petition for writ of

mandamus and direct the trial court to (1) vacate its order compelling the deposition

and (2) grant Liberty Mutual’s motion to quash. We are confident that the trial court

                                          17
will promptly comply, and our writ will issue only if it does not. We dismiss any

pending motions as moot.

                                            Jane Bland
                                            Justice

Panel consists of Chief Justice Radack and Justices Keyes and Bland.

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