Supremes reverse summary judgment because of contradictions in auto insurance policy documents that require extrinsic evidence for resolution by the fact finder.
Progressive County Mutual Ins. Co. v. Kelley, (Tex. 2009)
No. 08-0073 (Tex. Mar. 27, 2009)(per curiam) (insurance policy documents were ambiguous, thus raising issues of fact precluding summary judgment) (contract construction, insurance coverage dispute, contract consisting of multiple documents, definiteness, ambiguity)
FROM THE OPINION:
In this case, we consider whether two documents issued by an insurance company constitute two separate insurance policies or a single policy. We hold that this is a fact question and remand to the trial court.
Regan Kelley was struck by a car while riding her horse. Medical expenses for her injuries are alleged to have exceeded $1 million. After receiving $100,000 in benefits from the motorist’s insurer, Kelley made a claim with Progressive County Mutual Insurance Company (“Progressive”) for underinsured benefits under a policy issued to her parents, which also covered Kelley. At the time of the accident, Kelley was an adult living with her parents. Progressive paid the policy limit of $500,025. To cover the remaining damages, Kelley then made a claim under an alleged second policy with a limit of $500,025, also issued by Progressive. At the time of the accident, Progressive insured five of the Kelleys’ vehicles. Four vehicles were listed on a two-page document, and the fifth was listed on a separate two-page document. However, the documents had separate policy numbers. Nevertheless, Progressive denied there was a second policy and refused to make any additional payments.
* * *
After reviewing the face of the documents and extrinsic evidence, we hold that the documents are ambiguous, and therefore, a fact finder should resolve the meaning. See J. M. Davidson, 128 S.W.3d at 230–31; Coker, 650 S.W.2d at 394 (“When a contract contains an ambiguity, the granting of a motion for summary judgment is improper because the interpretation of the instrument becomes a fact issue.”).[3] Therefore, without hearing argument, we reverse the court of appeals judgment and remand to the trial court
PROGRESSIVE COUNTY MUTUAL INSURANCE COMPANY v. REGAN KELLEY; from BrazosCounty; 10th district (10-06-00263-CV, ___ SW3d ___, 12-12-07)Pursuant to Texas Rule of Appellate Procedure 59.1, after granting the petition for review and withouthearing oral argument, the Court reverses the court of appeals' judgment and remands the case to thetrial court. Per Curiam Opinion
Showing posts with label insurance cases. Show all posts
Showing posts with label insurance cases. Show all posts
Saturday, March 28, 2009
Texas Supreme Court Answers Another Certified Insurance Law Question from the Fifth Circuit
Q: Must an insurer show prejudice to deny payment on a claims-made policy, when the denial is based upon the insured's breach of the policy's prompt-notice provision, but the notice is nevertheless given within the policy's coverage period? XL Specialty Ins. Co. v. Fin. Indus. Corp., 259 F. App’x 675, 678 (5th Cir. 2007), certified question accepted, 51 Tex. Sup. Ct. J. 298 (Jan. 14, 2008).
A: Insurer must show prejudice to deny payment on a claims-made policy, when the denial is based upon the insured's breach of the policy's prompt-notice provision, but the notice is given within the policy's coverage period.
Financial Industries Corp. v. XL Specialty Ins. Co.,
No. 07-1059 (Tex. Mar. 27, 2009) (Jefferson) (cert. question from the 5th Circuit) (effect of insured's failure to give insurer prompt notice of claim, prejudice criterion, insurance policy construction)
FINANCIAL INDUSTRIES CORPORATION v. XL SPECIALTY INSURANCE COMPANY
The Court answers the question certified by the United States Court of Appeals for the Fifth Circuit. Chief Justice Jefferson delivered the opinion of the Court.
Decided contemporaneously:
Prodigy Communications Corp. v. Agricultural Excess & Surplus Insurance,
No. 06-0598 (Tex. Mar. 27, 2009) (Jefferson) (insurance law, effect of noncompliance with prompt notice requirement as condition precedent for coverage of claim, prejudice factor) (Supreme Court concludes that "“notice as soon as practicable” was not an essential part of the bargained-for exchange under the claims-made policy at issue here." Following its earlier decision in PAJ, the Court holds that, "in the absence of prejudice to the insurer, the insured’s alleged failure to comply with the provision does not defeat coverage."
PRODIGY COMMUNICATIONS CORP. v. AGRICULTURAL EXCESS & SURPLUS INSURANCECOMPANY, N/K/A GREAT AMERICAN E & S INSURANCE COMPANY AND GREAT AMERICANINSURANCE COMPANY; from Dallas County; 5th district (05-05-00442-CV, 195 SW3d 764, 05-30-06) The Court reverses the court of appeals' judgment, renders judgment in part, and remands the case tothe trial court. Chief Justice Jefferson delivered the opinion of the Court, in which Justice O'Neill, Justice Wainwright,Justice Brister, Justice Medina, and Justice Green joined.
Justice Wainwright delivered a concurring opinion.
Justice Johnson delivered a dissenting opinion, in which Justice Hecht and Justice Willett joined.
Links: 2009 Texas Supreme Court Insurance Law Decisions 2008 Insurance Law Rulings by the Tex. Sup. Ct.
A: Insurer must show prejudice to deny payment on a claims-made policy, when the denial is based upon the insured's breach of the policy's prompt-notice provision, but the notice is given within the policy's coverage period.
Financial Industries Corp. v. XL Specialty Ins. Co.,
No. 07-1059 (Tex. Mar. 27, 2009) (Jefferson) (cert. question from the 5th Circuit) (effect of insured's failure to give insurer prompt notice of claim, prejudice criterion, insurance policy construction)
FINANCIAL INDUSTRIES CORPORATION v. XL SPECIALTY INSURANCE COMPANY
The Court answers the question certified by the United States Court of Appeals for the Fifth Circuit. Chief Justice Jefferson delivered the opinion of the Court.
Decided contemporaneously:
Prodigy Communications Corp. v. Agricultural Excess & Surplus Insurance,
No. 06-0598 (Tex. Mar. 27, 2009) (Jefferson) (insurance law, effect of noncompliance with prompt notice requirement as condition precedent for coverage of claim, prejudice factor) (Supreme Court concludes that "“notice as soon as practicable” was not an essential part of the bargained-for exchange under the claims-made policy at issue here." Following its earlier decision in PAJ, the Court holds that, "in the absence of prejudice to the insurer, the insured’s alleged failure to comply with the provision does not defeat coverage."
PRODIGY COMMUNICATIONS CORP. v. AGRICULTURAL EXCESS & SURPLUS INSURANCECOMPANY, N/K/A GREAT AMERICAN E & S INSURANCE COMPANY AND GREAT AMERICANINSURANCE COMPANY; from Dallas County; 5th district (05-05-00442-CV, 195 SW3d 764, 05-30-06) The Court reverses the court of appeals' judgment, renders judgment in part, and remands the case tothe trial court. Chief Justice Jefferson delivered the opinion of the Court, in which Justice O'Neill, Justice Wainwright,Justice Brister, Justice Medina, and Justice Green joined.
Justice Wainwright delivered a concurring opinion.
Justice Johnson delivered a dissenting opinion, in which Justice Hecht and Justice Willett joined.
Links: 2009 Texas Supreme Court Insurance Law Decisions 2008 Insurance Law Rulings by the Tex. Sup. Ct.
Monday, September 1, 2008
High Court answers another set of certified [insurance law] questions
TEXAS SUPREME COURT ANSWERS CERTIFIED QUESTIONS FROM FIFTH CIRCUIT REGARDING COVERAGE AND DUTY TO DEFEND
Don's Building Supply, Inc. v. Onebeacon Ins. Co.,
No. 07-0639 (Tex. Aug. 29, 2008)(Willett) (cert. questions)
(insurance coverage dispute, duty to defend)
DON'S BUILDING SUPPLY, INC. v. ONEBEACON INSURANCE COMPANY, AS ASSIGNEE OF POTOMAC INSURANCE COMPANY OF ILLINOISThe Court answers the questions certified by the United States Court of Appeals for the Fifth Circuit.
Justice Willett delivered the opinion of the Court.
The Fifth Circuit asks generally when property damage “occurs” under Texas law for purposes of an occurrence-based commercial general liability insurance policy, a question this Court has never answered. More specifically, is an insurer’s duty to defend triggered where damage is alleged to have occurred during the policy period but was inherently undiscoverable until after the policy expired? As to this policy, which focuses on when damage comes to pass, not when damage comes to light, we answer “yes”—the insurer’s duty is triggered under Texas law; the key date is when injury happens, not when someone happens upon it.
Don's Building Supply, Inc. v. Onebeacon Ins. Co.,
No. 07-0639 (Tex. Aug. 29, 2008)(Willett) (cert. questions)
(insurance coverage dispute, duty to defend)
DON'S BUILDING SUPPLY, INC. v. ONEBEACON INSURANCE COMPANY, AS ASSIGNEE OF POTOMAC INSURANCE COMPANY OF ILLINOISThe Court answers the questions certified by the United States Court of Appeals for the Fifth Circuit.
Justice Willett delivered the opinion of the Court.
The Fifth Circuit asks generally when property damage “occurs” under Texas law for purposes of an occurrence-based commercial general liability insurance policy, a question this Court has never answered. More specifically, is an insurer’s duty to defend triggered where damage is alleged to have occurred during the policy period but was inherently undiscoverable until after the policy expired? As to this policy, which focuses on when damage comes to pass, not when damage comes to light, we answer “yes”—the insurer’s duty is triggered under Texas law; the key date is when injury happens, not when someone happens upon it.
Friday, February 29, 2008
Duty to Defend: Tx. Supreme Court rules for builder in dispute over coverage under CGL policy
Grimes Construction, Inc. v. Great American Lloyds Ins. Co., No. 06‑0332 (Tex. Feb. 29, 2008)(per curiam) (insurance coverage dispute, duty to defend, indemnify)
Case style: GRIMES CONSTRUCTION, INC. v. GREAT AMERICAN LLOYDS INSURANCE COMPANY;
Court of Appeals below: No. 02‑04‑00335‑CV, 188 S.W.3d 805 (Tex.App.- Fort Worth [2nd Dist.], March 9, 2006)
Pursuant to Texas Rule of Appellate Procedure 59.1, after granting the petition for review and without hearing oral argument, the Court reverses the court of appeals' judgment and remands the case to the trial court.
PER CURIAM OPINION
This declaratory judgment action concerns the duty to defend and indemnify under a commercial general liability (CGL) policy. The appeal presents issues similar to those decided in Lamar Homes, Inc. v. Mid-Continent Casualty Co., 242 S.W.3d 1 (Tex. 2007).
The CGL’s insuring agreement provides coverage for “property damage” caused by an “occurrence.” Property damage is defined as “physical injury to tangible property,” and an occurrence is defined as an “accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Id. at 6. In Lamar Homes, we were asked whether an insurer under a CGL policy had a duty to defend its insured, a homebuilder, against allegations that the builder’s defective workmanship caused physical damage to parts of the home. Id. at 4. We concluded that allegations of unintended construction defects might constitute an “accident” or “occurrence” under the CGL policy and that allegations of damage to or loss of use of the home itself might also constitute “property damage” sufficient to trigger the duty to defend under the policy. Id.
The trial court here rendered summary judgment for the insurer, concluding that the homebuilder’s CGL policy did not protect the builder from property damage claims involving its own work. The court of appeals affirmed, concluding among other things, that defective work was a contract claim outside the scope of the CGL’s insuring agreement. 188 S.W.3d 805, 812-15. We rejected similar arguments in Lamar Homes, concluding that labels of tort or contract could not override the language of the insuring agreement. 242 S.W.3d at 13. Because the court of appeals’ decision here conflicts with our analysis in Lamar Homes, we reverse its judgment and, without hearing oral argument, we remand the case to the trial court for further proceedings consistent with this opinion. Tex. R. App. P. 59.1.
Opinion delivered: February 29, 2008
Case style: GRIMES CONSTRUCTION, INC. v. GREAT AMERICAN LLOYDS INSURANCE COMPANY;
Court of Appeals below: No. 02‑04‑00335‑CV, 188 S.W.3d 805 (Tex.App.- Fort Worth [2nd Dist.], March 9, 2006)
Pursuant to Texas Rule of Appellate Procedure 59.1, after granting the petition for review and without hearing oral argument, the Court reverses the court of appeals' judgment and remands the case to the trial court.
PER CURIAM OPINION
This declaratory judgment action concerns the duty to defend and indemnify under a commercial general liability (CGL) policy. The appeal presents issues similar to those decided in Lamar Homes, Inc. v. Mid-Continent Casualty Co., 242 S.W.3d 1 (Tex. 2007).
The CGL’s insuring agreement provides coverage for “property damage” caused by an “occurrence.” Property damage is defined as “physical injury to tangible property,” and an occurrence is defined as an “accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Id. at 6. In Lamar Homes, we were asked whether an insurer under a CGL policy had a duty to defend its insured, a homebuilder, against allegations that the builder’s defective workmanship caused physical damage to parts of the home. Id. at 4. We concluded that allegations of unintended construction defects might constitute an “accident” or “occurrence” under the CGL policy and that allegations of damage to or loss of use of the home itself might also constitute “property damage” sufficient to trigger the duty to defend under the policy. Id.
The trial court here rendered summary judgment for the insurer, concluding that the homebuilder’s CGL policy did not protect the builder from property damage claims involving its own work. The court of appeals affirmed, concluding among other things, that defective work was a contract claim outside the scope of the CGL’s insuring agreement. 188 S.W.3d 805, 812-15. We rejected similar arguments in Lamar Homes, concluding that labels of tort or contract could not override the language of the insuring agreement. 242 S.W.3d at 13. Because the court of appeals’ decision here conflicts with our analysis in Lamar Homes, we reverse its judgment and, without hearing oral argument, we remand the case to the trial court for further proceedings consistent with this opinion. Tex. R. App. P. 59.1.
Opinion delivered: February 29, 2008
Sunday, January 13, 2008
Willett, lone dissenter, extolls virtues of uniformity and urges colleagues to join national "mainstream" in construing aviation insurance policy
On motion for rehearing, Justice Don Willett argues that the Court should not apply one enforcement rule to aviation contracts and a different enforcement rule to all other contracts. Interestingly, in the context of government contracts, the Court does not enforce contracts at all, but instead requires trial courts to shut the courthouse door in the name of sovereign immunity unless forced by the Legislature to keep it open under certain circumstances or for certain categories of defendants.
AIG Aviation v. Holt Helicopters, Inc. No. 06-0484 (Tex. Jan. 11, 2008)(Dissenting opinion on reh'g by Justice Willett)
AIG AVIATION (TEXAS), INC. AND NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PENNSYLVANIA v. HOLT HELICOPTERS, INC.; from Uvalde County; 4th district (04-05-00291-CV, 198 S.W.3d 276, 04/26/06)
Dissenting opinion by Justice Willett on Motion for Rehearing of Petition
Justice Willett, dissenting from the denial of the motion for rehearing of the petition.
This Court has held—recently and repeatedly—that insurance contracts should be enforced according to their express terms:
$ Healthcare insurance contracts—we enforce them as written.[1]
$ Homeowners insurance contracts—we enforce them as written.[2]
$ Commercial general liability insurance contracts—we enforce them as written.[3]
Not so with aviation insurance contracts. In Puckett v. U.S. Fire Insurance Co., we engrafted a causal-connection requirement into the policy, requiring the insurer to show that the insured’s breach actually caused the damage or accident.[4] The Court held that while the policy unequivocally suspended coverage if there was no valid airworthiness certificate, public policy nonetheless trumped the contract’s express terms and barred the insurer from denying coverage if the insured’s violation of the aircraft-inspection requirement did not contribute to the crash.[5] In short, Puckett granted an unbargained-for expansion of coverage in the face of a bargained-for exclusion from coverage.
Puckett’s judicial rewriting of the parties’ contract clashes head-on with our “modest, text-based approach” to interpreting contract language.[6] As we have stressed, Texas courts must stick to what policies say, not what we wish they said.[7] I agree with Chief Justice Pope’s spirited dissent in Puckett: “Courts are not in the business of writing insurance contracts. Our duty is to apply unambiguous contracts as they are written.”[8] We should either (1) overrule Puckett, (2) distinguish it,[9] or (3) explain forthrightly why we insist on applying a hazy, public policy-based interpretive standard to aviation insurance contracts (an area where public safety concerns should urge hard-and-fast enforcement of safety-related provisions).[10]
Puckett’s nontextual approach is starkly at odds with our insurance decisions generally, and with most American jurisdictions’ aviation-insurance decisions specifically.[11] The Court should join the mainstream, not grant aviation contracts their own interpretive jet stream. Because “we should strive for uniformity” in giving effect to unequivocal contract terms,[12] we should not apply one enforcement rule to aviation contracts and a different enforcement rule to all other contracts.
I would decide the case, and because the Court declines to do so, I respectfully dissent.
___________________________________
Don R. Willett
Justice
OPINION DELIVERED: January 11, 2008
[1] Fortis Benefits v. Cantu, 234 S.W.3d 642, 649 (Tex. 2007).
[2] Fiess v. State Farm Lloyds, 202 S.W.3d 744, 746 (Tex. 2006).
[3] Lamar Homes, Inc. v. Mid-Continent Cas. Co., ___ S.W.3d ___, ___ (Tex. 2007).
[4] 678 S.W.2d 936, 938 (Tex. 1984).
[5] Id.
[6] Fortis Benefits, 234 S.W.3d at 649.
[7] Fiess, 202 S.W.3d at 753 ("[I]n construing insurance policies where the language is plain and unambiguous, courts must enforce the contract as made by the parties, and cannot make a new contract for them, nor change that which they have made under the guise of construction." (internal quotations omitted) (quoting E. Tex. Fire Ins. Co. v. Kempner, 27 S.W. 122, 122 (Tex. 1894))); Nat'l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995) ("The primary concern of a court in construing a written contract is to ascertain the true intent of the parties as expressed in the instrument."); R & P Enters. v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 518 (Tex. 1980).
[8] 678 S.W. 2d at 940 (Pope, C.J., dissenting).
[9] Justice Duncan’s dissent in the court of appeals distinguished Puckett persuasively, pointing out how the policy exclusion in the instant case (requiring a minimum level of pilot experience) represented the “basis of the bargain,” while the missing airworthiness certificate in Puckett was deemed (inaccurately, in my view) a mere “technicality.” 198 S.W.3d 276, 288 (Duncan, J., dissenting).
[10] The anti-technicality statute—which forgives an insured’s breach or violation of the insurance policy unless it “contributed to cause the destruction of the property”—is facially inapplicable because it applies only to fire and personal property insurance, not to aviation insurance. Tex. Ins. Code § 862.054.
[11] See generally Noralyn O. Harlow, Annotation, Aviation Insurance: Causal Link Between Breach of Policy Provisions and Accident as Requisite to Avoid Insurer’s Liability, 48 A.L.R. 4th 778, 783 (1986) (“Most courts have agreed with the general rule that a causal link between the breach and the accident need not be proved where policy requirements relating to pilots are violated.”).
[12] Fiess, 202 S.W.3d at 752.
AIG Aviation v. Holt Helicopters, Inc. No. 06-0484 (Tex. Jan. 11, 2008)(Dissenting opinion on reh'g by Justice Willett)
AIG AVIATION (TEXAS), INC. AND NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PENNSYLVANIA v. HOLT HELICOPTERS, INC.; from Uvalde County; 4th district (04-05-00291-CV, 198 S.W.3d 276, 04/26/06)
Dissenting opinion by Justice Willett on Motion for Rehearing of Petition
Justice Willett, dissenting from the denial of the motion for rehearing of the petition.
This Court has held—recently and repeatedly—that insurance contracts should be enforced according to their express terms:
$ Healthcare insurance contracts—we enforce them as written.[1]
$ Homeowners insurance contracts—we enforce them as written.[2]
$ Commercial general liability insurance contracts—we enforce them as written.[3]
Not so with aviation insurance contracts. In Puckett v. U.S. Fire Insurance Co., we engrafted a causal-connection requirement into the policy, requiring the insurer to show that the insured’s breach actually caused the damage or accident.[4] The Court held that while the policy unequivocally suspended coverage if there was no valid airworthiness certificate, public policy nonetheless trumped the contract’s express terms and barred the insurer from denying coverage if the insured’s violation of the aircraft-inspection requirement did not contribute to the crash.[5] In short, Puckett granted an unbargained-for expansion of coverage in the face of a bargained-for exclusion from coverage.
Puckett’s judicial rewriting of the parties’ contract clashes head-on with our “modest, text-based approach” to interpreting contract language.[6] As we have stressed, Texas courts must stick to what policies say, not what we wish they said.[7] I agree with Chief Justice Pope’s spirited dissent in Puckett: “Courts are not in the business of writing insurance contracts. Our duty is to apply unambiguous contracts as they are written.”[8] We should either (1) overrule Puckett, (2) distinguish it,[9] or (3) explain forthrightly why we insist on applying a hazy, public policy-based interpretive standard to aviation insurance contracts (an area where public safety concerns should urge hard-and-fast enforcement of safety-related provisions).[10]
Puckett’s nontextual approach is starkly at odds with our insurance decisions generally, and with most American jurisdictions’ aviation-insurance decisions specifically.[11] The Court should join the mainstream, not grant aviation contracts their own interpretive jet stream. Because “we should strive for uniformity” in giving effect to unequivocal contract terms,[12] we should not apply one enforcement rule to aviation contracts and a different enforcement rule to all other contracts.
I would decide the case, and because the Court declines to do so, I respectfully dissent.
___________________________________
Don R. Willett
Justice
OPINION DELIVERED: January 11, 2008
[1] Fortis Benefits v. Cantu, 234 S.W.3d 642, 649 (Tex. 2007).
[2] Fiess v. State Farm Lloyds, 202 S.W.3d 744, 746 (Tex. 2006).
[3] Lamar Homes, Inc. v. Mid-Continent Cas. Co., ___ S.W.3d ___, ___ (Tex. 2007).
[4] 678 S.W.2d 936, 938 (Tex. 1984).
[5] Id.
[6] Fortis Benefits, 234 S.W.3d at 649.
[7] Fiess, 202 S.W.3d at 753 ("[I]n construing insurance policies where the language is plain and unambiguous, courts must enforce the contract as made by the parties, and cannot make a new contract for them, nor change that which they have made under the guise of construction." (internal quotations omitted) (quoting E. Tex. Fire Ins. Co. v. Kempner, 27 S.W. 122, 122 (Tex. 1894))); Nat'l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995) ("The primary concern of a court in construing a written contract is to ascertain the true intent of the parties as expressed in the instrument."); R & P Enters. v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 518 (Tex. 1980).
[8] 678 S.W. 2d at 940 (Pope, C.J., dissenting).
[9] Justice Duncan’s dissent in the court of appeals distinguished Puckett persuasively, pointing out how the policy exclusion in the instant case (requiring a minimum level of pilot experience) represented the “basis of the bargain,” while the missing airworthiness certificate in Puckett was deemed (inaccurately, in my view) a mere “technicality.” 198 S.W.3d 276, 288 (Duncan, J., dissenting).
[10] The anti-technicality statute—which forgives an insured’s breach or violation of the insurance policy unless it “contributed to cause the destruction of the property”—is facially inapplicable because it applies only to fire and personal property insurance, not to aviation insurance. Tex. Ins. Code § 862.054.
[11] See generally Noralyn O. Harlow, Annotation, Aviation Insurance: Causal Link Between Breach of Policy Provisions and Accident as Requisite to Avoid Insurer’s Liability, 48 A.L.R. 4th 778, 783 (1986) (“Most courts have agreed with the general rule that a causal link between the breach and the accident need not be proved where policy requirements relating to pilots are violated.”).
[12] Fiess, 202 S.W.3d at 752.
Sunday, June 17, 2007
In Re Allstate County Mutual Ins. Co. (Tex. Jun. 14, 2007)(per curiam)
Texas Supreme Court Grants Mandamus Relief to Rein In Discovery
In Re Allstate County Mutual Ins. Co., No. 06-0878 (Tex. Jun. 15, 2007)(per curiam)(mandamus limiting discovery granted)
Full case style: In Re Allstate County Mutual Insurance Company and David Gonzalez
Appellate court and opinion below: Thirteenth Court of Appeals, No. 13-06-00458-CV, ___ S.W.3d ___, (Tex.App.-Corpus Christi, Sep. 28, 2006)
Disposition: Stay order issued October 30, 2006, lifted; Pursuant to Texas Rule of Appellate Procedure 52.8(c), without hearing oral argument, the Court conditionally grants the petition for writ of mandamus.
Find terms: Discovery limitations, scope of discovery, reasonable requests, objection to discovery requests, relevance, irrelevant, overbroad, narrowly tailored, fishing expedition
Related case: In re Graco Children’s Products, No. 05-0479, (Tex. Oct 27, 2006)(per curiam)
PER CURIAM OPINION
Discovery is a tool to make the trial process more focused, not a weapon to make it more expensive. Thus trial courts “must make an effort to impose reasonable discovery limits.” In re CSX Corp., 124 S.W.3d 149, 152 (Tex. 2003) (per curiam) (quotations omitted). In this suit alleging an insurer reneged on a $13,500 settlement offer, the trial court refused to impose any limit on the plaintiffs’ 213 discovery requests. As much of this discovery has no relation or relevance to the scope of the parties’ dispute, we grant mandamus relief. See In re Graco Children’s Prods., Inc., 210 S.W.3d 598, 600 (Tex. 2006) (per curiam) (“[An] order that compels overly broad discovery well outside the bounds of proper discovery is an abuse of discretion for which mandamus is the proper remedy.”) (quotations omitted).
Following a car accident, two plaintiffs (Jorge Karim and Teresita Manllo) brought a single suit against the other driver (Sang Cho), her carrier (Allstate County Mutual Insurance Company), and the latter’s adjuster (David Gonzalez). The plaintiffs sent the insurer and its adjuster a total of 89 requests for production, 59 interrogatories, and 65 requests for admission, including requests for:
$ transcripts of all testimony ever given by any Allstate agent on the topic of insurance;
$ every court order finding Allstate wrongfully adjusted the value of a damaged vehicle;
$ personnel files of every Allstate employee a Texas court has determined wrongfully assessed the value of a damaged vehicle; and
$ legal instruments documenting Allstate’s status as a corporation and its net worth.
Allstate and Gonzalez objected to the discovery and moved for summary judgment on the ground that the plaintiffs had no direct action against a third party’s insurer. See Allstate Ins. Co. v. Watson, 876 S.W.2d 145, 149 (Tex. 1994) (prohibiting unfair settlement claims by third parties); State Farm County Mut. Ins. Co. v. Ollis, 768 S.W.2d 722, 723 (Tex. 1989) (per curiam) (prohibiting direct actions against a third party’s insurer “until it has been established, by judgment or agreement, that the insured has a legal obligation to pay damages to the injured party”). The trial court denied the summary judgment, rejected the objections, and ordered the defendants to respond to all the requests. The Thirteenth Court of Appeals denied mandamus relief without explanation. In re Allstate County Mut. Ins. Co., __ S.W.3d __ (Tex. App.–Corpus Christi 2006).
The plaintiffs make no effort to justify their hundreds of requests. Nor can they, given what this Court has said repeatedly in similar cases. In In re CSX Corp., we held that “discovery orders requiring document production from an unreasonably long time period or from distant and unrelated locales are impermissibly overbroad.” 124 S.W.3d at 149. In K Mart Corp. v. Sanderson, we held overbroad a request for every criminal act that occurred on the defendant’s premises for the last seven years. 937 S.W.2d 429, 431 (Tex. 1996) (per curiam). In Dillard Department Stores, Inc. v. Hall, we held overbroad a request for every false imprisonment case in the last five years throughout twenty states. 909 S.W.2d 491, 491-92 (Tex. 1995) (per curiam). And in Texaco, Inc. v. Sanderson, we held overbroad a request for all documents ever written by the defendant’s safety director about safety. 898 S.W.2d 813, 815 (Tex. 1995) (per curiam). Like all those requests, the plaintiffs’ requests here are overbroad as to time, location, and scope, and could easily have been more narrowly tailored to the dispute at hand. See CSX, 124 S.W.3d at 153 (“A central consideration in determining overbreadth is whether the request could have been more narrowly tailored to avoid including tenuous information . . . .”).
More important, the plaintiffs’ requests and the trial court’s order reflect a misunderstanding about relevance. American jurisprudence goes to some length to avoid the spurious inference that defendants are either guilty or liable if they have been found guilty or liable of anything before. See, e.g., Tex. R. Evid. 404 (barring proof of other crimes, wrongs, or acts “in order to show action in conformity therewith”). While such evidence might be discoverable in some cases (e.g., to prove motive or intent, see id.), it is hard to see why reneging on some other settlement offer makes it more or less probable that the insurer reneged on this one. Tex. R. Civ. P. 192.3; Tex. R. Evid. 401.
The plaintiffs argue the defendants failed to preserve their objections by failing to provide details regarding why the discovery here was burdensome. But Allstate objected to the plaintiffs’ requests as irrelevant (and thus by necessity overbroad). Overbroad requests for irrelevant information are improper whether they are burdensome or not, so the defendants were not required to detail what they might encompass. See In re CSX Corp., 124 S.W.3d at 153; In re Union Pac. Res. Co., 22 S.W.3d 338, 341 (Tex. 1999).
The plaintiffs also argue the defendants waived their objections by obscuring them amidst numerous unfounded objections. See Tex. R. Civ. P. 193.2(e). Allstate objected to every one of the plaintiffs’ requests on the ground that it owed no discovery to a party with no standing to bring a direct action against it. Even if this objection was unfounded (an issue we do not reach), it did not obscure Allstate’s objections regarding relevance and overbreadth.
“Reasonable” discovery necessarily requires some sense of proportion. With today’s technology, it is the work of a moment to reissue every discovery request one has ever sent to an insurer before. But by definition such a request is not “reasonably tailored.” See In re Graco Children’s Prods., 210 S.W.3d 598, 601 (Tex. 2006) (per curiam); CSX, 124 S.W.3d at 152. Given the limited scope of the plaintiffs’ claims and the amount at issue, the trial court erred by compelling discovery of everything the plaintiffs could imagine asking in any unfair insurance practice case.
Accordingly, without hearing oral argument, we conditionally grant the writ of mandamus and direct the trial court to vacate its discovery order and reconsider the scope of permissible discovery in light of this opinion. See Tex. R. App. P. 52.8(c). The writ will issue only if the trial court fails to comply.
OPINION DELIVERED: June 15, 2007
In Re Allstate County Mutual Ins. Co., No. 06-0878 (Tex. Jun. 15, 2007)(per curiam)(mandamus limiting discovery granted)
Full case style: In Re Allstate County Mutual Insurance Company and David Gonzalez
Appellate court and opinion below: Thirteenth Court of Appeals, No. 13-06-00458-CV, ___ S.W.3d ___, (Tex.App.-Corpus Christi, Sep. 28, 2006)
Disposition: Stay order issued October 30, 2006, lifted; Pursuant to Texas Rule of Appellate Procedure 52.8(c), without hearing oral argument, the Court conditionally grants the petition for writ of mandamus.
Find terms: Discovery limitations, scope of discovery, reasonable requests, objection to discovery requests, relevance, irrelevant, overbroad, narrowly tailored, fishing expedition
Related case: In re Graco Children’s Products, No. 05-0479, (Tex. Oct 27, 2006)(per curiam)
PER CURIAM OPINION
Discovery is a tool to make the trial process more focused, not a weapon to make it more expensive. Thus trial courts “must make an effort to impose reasonable discovery limits.” In re CSX Corp., 124 S.W.3d 149, 152 (Tex. 2003) (per curiam) (quotations omitted). In this suit alleging an insurer reneged on a $13,500 settlement offer, the trial court refused to impose any limit on the plaintiffs’ 213 discovery requests. As much of this discovery has no relation or relevance to the scope of the parties’ dispute, we grant mandamus relief. See In re Graco Children’s Prods., Inc., 210 S.W.3d 598, 600 (Tex. 2006) (per curiam) (“[An] order that compels overly broad discovery well outside the bounds of proper discovery is an abuse of discretion for which mandamus is the proper remedy.”) (quotations omitted).
Following a car accident, two plaintiffs (Jorge Karim and Teresita Manllo) brought a single suit against the other driver (Sang Cho), her carrier (Allstate County Mutual Insurance Company), and the latter’s adjuster (David Gonzalez). The plaintiffs sent the insurer and its adjuster a total of 89 requests for production, 59 interrogatories, and 65 requests for admission, including requests for:
$ transcripts of all testimony ever given by any Allstate agent on the topic of insurance;
$ every court order finding Allstate wrongfully adjusted the value of a damaged vehicle;
$ personnel files of every Allstate employee a Texas court has determined wrongfully assessed the value of a damaged vehicle; and
$ legal instruments documenting Allstate’s status as a corporation and its net worth.
Allstate and Gonzalez objected to the discovery and moved for summary judgment on the ground that the plaintiffs had no direct action against a third party’s insurer. See Allstate Ins. Co. v. Watson, 876 S.W.2d 145, 149 (Tex. 1994) (prohibiting unfair settlement claims by third parties); State Farm County Mut. Ins. Co. v. Ollis, 768 S.W.2d 722, 723 (Tex. 1989) (per curiam) (prohibiting direct actions against a third party’s insurer “until it has been established, by judgment or agreement, that the insured has a legal obligation to pay damages to the injured party”). The trial court denied the summary judgment, rejected the objections, and ordered the defendants to respond to all the requests. The Thirteenth Court of Appeals denied mandamus relief without explanation. In re Allstate County Mut. Ins. Co., __ S.W.3d __ (Tex. App.–Corpus Christi 2006).
The plaintiffs make no effort to justify their hundreds of requests. Nor can they, given what this Court has said repeatedly in similar cases. In In re CSX Corp., we held that “discovery orders requiring document production from an unreasonably long time period or from distant and unrelated locales are impermissibly overbroad.” 124 S.W.3d at 149. In K Mart Corp. v. Sanderson, we held overbroad a request for every criminal act that occurred on the defendant’s premises for the last seven years. 937 S.W.2d 429, 431 (Tex. 1996) (per curiam). In Dillard Department Stores, Inc. v. Hall, we held overbroad a request for every false imprisonment case in the last five years throughout twenty states. 909 S.W.2d 491, 491-92 (Tex. 1995) (per curiam). And in Texaco, Inc. v. Sanderson, we held overbroad a request for all documents ever written by the defendant’s safety director about safety. 898 S.W.2d 813, 815 (Tex. 1995) (per curiam). Like all those requests, the plaintiffs’ requests here are overbroad as to time, location, and scope, and could easily have been more narrowly tailored to the dispute at hand. See CSX, 124 S.W.3d at 153 (“A central consideration in determining overbreadth is whether the request could have been more narrowly tailored to avoid including tenuous information . . . .”).
More important, the plaintiffs’ requests and the trial court’s order reflect a misunderstanding about relevance. American jurisprudence goes to some length to avoid the spurious inference that defendants are either guilty or liable if they have been found guilty or liable of anything before. See, e.g., Tex. R. Evid. 404 (barring proof of other crimes, wrongs, or acts “in order to show action in conformity therewith”). While such evidence might be discoverable in some cases (e.g., to prove motive or intent, see id.), it is hard to see why reneging on some other settlement offer makes it more or less probable that the insurer reneged on this one. Tex. R. Civ. P. 192.3; Tex. R. Evid. 401.
The plaintiffs argue the defendants failed to preserve their objections by failing to provide details regarding why the discovery here was burdensome. But Allstate objected to the plaintiffs’ requests as irrelevant (and thus by necessity overbroad). Overbroad requests for irrelevant information are improper whether they are burdensome or not, so the defendants were not required to detail what they might encompass. See In re CSX Corp., 124 S.W.3d at 153; In re Union Pac. Res. Co., 22 S.W.3d 338, 341 (Tex. 1999).
The plaintiffs also argue the defendants waived their objections by obscuring them amidst numerous unfounded objections. See Tex. R. Civ. P. 193.2(e). Allstate objected to every one of the plaintiffs’ requests on the ground that it owed no discovery to a party with no standing to bring a direct action against it. Even if this objection was unfounded (an issue we do not reach), it did not obscure Allstate’s objections regarding relevance and overbreadth.
“Reasonable” discovery necessarily requires some sense of proportion. With today’s technology, it is the work of a moment to reissue every discovery request one has ever sent to an insurer before. But by definition such a request is not “reasonably tailored.” See In re Graco Children’s Prods., 210 S.W.3d 598, 601 (Tex. 2006) (per curiam); CSX, 124 S.W.3d at 152. Given the limited scope of the plaintiffs’ claims and the amount at issue, the trial court erred by compelling discovery of everything the plaintiffs could imagine asking in any unfair insurance practice case.
Accordingly, without hearing oral argument, we conditionally grant the writ of mandamus and direct the trial court to vacate its discovery order and reconsider the scope of permissible discovery in light of this opinion. See Tex. R. App. P. 52.8(c). The writ will issue only if the trial court fails to comply.
OPINION DELIVERED: June 15, 2007
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