Court Opinion

ID: 9638501
Source: CourtListenerOpinion
Date Created: 2023-08-22 15:45:04.39741+00
Date Added: 2024-06-11T18:10:06.917681
License: Public Domain

BUTTS, Justice,
dissenting.
A dissent is appropriate because of the facts in this case and the law which should be applied.
The majority opinion holds the law to be that when the insurer declines to defend a suit against its insured, the agreed judgment as to damages between the injured third party and the insured in the first case precludes the insurer from contesting the question of coverage liability in the second suit. Hargis v. Maryland American General Insurance Co., 567 S.W.2d 923, 927 (Tex.Civ.App.—Eastland 1978, writ ref’d n.r.e.) held to the contrary. In that case a prior agreed judgment did not preclude the insurer from contesting the issue of coverage, as it does not in the present case. The findings and judgment in the first case are not dispositive of the disputed issue of coverage. See RESTATEMENT (SECOND) OF JUDGMENTS § 57(2) (1982); Massachusetts Bonding & Insurance Co. v. Orkin Exterminating Co., 416 S.W.2d 396 (Tex.1967); National Union Fire Insurance Co. v. Bourn, 441 S.W.2d 592 (Tex.Civ.App.—Fort Worth 1969, writ ref’d n.r. e.).
The insurer elected, under the facts alleged in the third amended petition, not to defend in the first suit against CSI. However, its election to do so, even if it was ruled to be wrongful, does not result in the loss of its contract rights to deny liability for coverage.
In its motion for judgment notwithstanding the verdict, the insurer argued “there is no finding that establishes coverage for the damages agreed to in the underlying, agreed judgment.” It was established that repairs to the interior and exterior of the house were not made until after 1981. It is prima facie evidence the insurance policy was in effect only from August 1, 1980 until August 1, 1981. The plaintiff’s third amended original petition also contains allegations that damages from the leaking roof began in August 1979, prior to the effective date of the policy. The subject house was 40 years old with a flat roof covered with gravel. In 1977 CSI sprayed the roof with a plastic material designed to cover the existing roof. It was established that leaking began in 1979. At that time CSI sprayed again. The motion for judgment n.o.v. also seeks relief because “it was plaintiffs’ burden to obtain a finding that at least a part of their damages was sustained during the policy period. Otherwise *181there would be no duty by defendant to pay.”
The jury answered only two special issues: whether, as a result of the occurrence of August 6, 1980, the amount of the damages, excluding the roof, in the judgment was reasonable, and, whether the amount of attorney’s fees in the prior judgment was reasonable. The insurer objected to the special issues submitted.
It is undisputed the insurer was not a party to the first cause. The doctrines of res judicata and collateral estoppel operate against parties and their privies. Bonniwell v. Beech Aircraft Corp., 663 S.W.2d 816, 818 (Tex.1984). The respective positions of the insurer and the insured regarding coverage were in conflict. It is clear there was no privity (identical legal right). See Employers Casualty Co. v. Tilley, 496 S.W.2d 552 (Tex.1973). Thus, these doctrines are inapplicable in the present case, and the majority opinion mistakenly rests its decision on these doctrines.
The insurer’s objection to Special Issue One was, in part, that it was a comment on the weight of the evidence, causing the jury to believe the court found the damages alleged in the interior and exterior of the house were the result of an occurrence of August 6, 1980, when the evidence was very much in dispute as to when such damage actually occurred. Among other objections to Special Issue One, the insurer complained there should be a finding that plaintiff sustained damages subsequent to the effective date of the policy, or coverage liability would not be shown.
The objection to the attorneys’ fees special issue was that there was no evidence or finding as to how much would be a reasonable fee for recovery of damages by the Blocks against CSI which would be covered by the policy.
The objections to the special issues went to the period of coverage by the policy. A review of the statement of facts indicates this was without question a seriously contested issue. The burden of proof was on the plaintiffs to show the loss occurred and their claim fell within the coverage period, and a special issue upon which the jury could base its finding should have been submitted. This was not an affirmative defense to be pleaded and disproved by the insurer. The insured’s general denial put the burden on plaintiffs to prove coverage. The objections to the special issues properly preserved the insurer’s points to form the basis for its motion for judgment n.o.v. TEX.R.CIV.P. 301.
The trial court correctly denied the Block’s motion for directed verdict. I would hold it correctly granted the insurer’s motion for judgment n.o.v. The prior judgment agreed to by CSI and the Blocks was introduced in evidence by the Blocks, and testimony regarding the roof, alleged damages to the interior and exterior of the house, and attorney’s fees, all subjects of the first judgment, was introduced by both parties. There is no case with similar facts cited by the majority to show how the present insurer’s position constitutes a collateral attack on a judgment. It is clear this is not a collateral attack on a judgment. Further, the doctrines of res judica-ta or collateral estoppel do not apply in this case.
The majority says the trial court should have granted the directed verdict because all elements of the cause of action were established as a matter of law, either through evidence presented at trial, or as determined in the agreed judgment. The actual motion, for directed verdict did not allege this but was based on what the Blocks mistakenly perceived to be the burdens of proof of the insurer: The insurer presented no evidence that the agreed judgment was procured by fraud; or that the amount of the judgment was unreasonable; or that the insurer had not wrongfully refused to defend. [The trial court ruled that the insurer had wrongfully refused to defend.]
In this, the second suit, the Blocks had the burden to prove that the damages to the interior and exterior of the house, for which CSI agreed it was liable, occurred during the period of coverage for which the insured was liable to CSI. The insured *182strongly disputed coverage liability. This was an element upon which a finding should have been made. The plaintiff failed to establish this element.
The motion for directed verdict was premised on the belief that the agreed judgment precluded the insured from contesting liability, thereby forbidding denial of policy coverage of the damages before August 1, 1980 and after August 1, 1981. No jury issues establishing coverage were submitted. The reason the trial court could not enter a judgment for the Blocks, who made a motion for judgment on the verdict, was that the jury verdict would not support that judgment. While the court may have granted a new trial under these circumstances, it chose not to do so. Therefore, this court is in no better position to grant the motion for instructed verdict and render judgment.
I would affirm the judgment of the trial court. I respectfully dissent.