in Re Allstate Fire and Casualty Insurance Company

ACCEPTED

FIRST COURT OF APPEALS

HOUSTON, TEXAS

1/2/2015 4:28:10 PM

CHRISTOPHER PRINE

CLERK

01-15-00003-CV

NO. ___________________

FILED IN

1st COURT OF APPEALS

IN THE COURT OF APPEALS HOUSTON, TEXAS

FOR THE FIRST JUDICIAL DISTRICT OF TEXAS

1/2/2015 4:28:10 PM

AT HOUSTON CHRISTOPHER A. PRINE

Clerk

IN RE ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY

Original Proceeding from 434th Judicial District

Of Fort Bend County, Texas

Trial Court Cause No. 14-DCV-215228

RELATOR ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY’S

PETITION FOR WRIT OF MANDAMUS

Ronald J. Restrepo

Texas State Bar No. 16791300

rrestrepo@drhrlaw.com

Sarah J. Allen

Texas State Bar No. 24064810

sallen@drhrlaw.com

Alexandra Ledyard

Texas State Bar No. 24087903

aledyard@drhrlaw.com

440 Louisiana Street, Suite 2300

Houston, Texas 77002

DOYLE, RESTREPO, HARVIN & ROBBINS, L.L.P.

(713) 228-5100 (telephone)

(713) 228-6138 (facsimile)

Attorneys for Relator Allstate

Fire and Casualty Insurance

Company

ORAL ARGUMENT REQUESTED

IDENTITY OF PARTIES AND COUNSEL

Pursuant to Texas Rule of Appellate Procedure 52.3(a), the following is a

complete list of all parties, and the names and addresses of all trial and appellate

counsel:

Relator:

Allstate Fire and Casualty Insurance Company

Trial Counsel for Relator:

John M. Causey

State Bar No.0419100

Hope & Causey

100 I-45 North, Ste. 600

Conroe, Texas 77301

(936) 441-4673 (telephone)

(936) 441-4674 (telecopier)

Appellate Counsel for Relator:

Ronald J. Restrepo

Sarah J. Allen

Alexandra Ledyard

DOYLE, RESTREPO, HARVIN & ROBBINS, L.L.P.

440 Louisiana, Suite 2300

Houston, Texas 77002

(713) 228-5100 (telephone)

(713) 228-6138 (facsimile)

i

Respondents: *

The Honorable Judge James H. Shoemake

Judge of the 434th Judicial District of Fort Bend County, Texas

301 Jackson Street

Richmond, Texas 77469

(281) 633-7653 (telephone)

The Honorable Judge John Hawkins

Associate Judge of the 434th Judicial District of Fort Bend County, Texas

301 Jackson Street

Richmond, Texas 77469

(281) 341-4457 (telephone)

Real Parties in Interest:

Charlene T. Howard and William D. Howard

Trial Counsel for Real Party in Interest:

Mario Martinez

Law Offices of Mario A. Martinez

23123 Cinco Ranch Blvd., # 208

Katy, TX 77494

(281) 665-7924 (telephone)

(281) 665-7929 (telecopier)

*

Relator includes both Judge James H. Shoemake and Judge John Hawkins as Respondents

because both signed the Order at issue in this mandamus proceeding. (See MR 44–45.)

ii

TABLE OF CONTENTS

IDENTITY OF PARTIES AND COUNSEL ...........................................................................i

TABLE OF CONTENTS ................................................................................................ iii

INDEX OF AUTHORITIES...............................................................................................v

STATEMENT OF THE CASE ........................................................................................ vii

STATEMENT OF JURISDICTION ................................................................................. viii

ISSUE PRESENTED.......................................................................................................ix

STATEMENT OF FACTS.................................................................................................1

ARGUMENT .................................................................................................................2

I. Standard of Review ............................................................................... 2

II. Mandamus relief is warranted in this case. ........................................... 2

A. The trial court abused its discretion when it refused to

abate discovery on Plaintiffs’ extra-contractual and bad

faith claims because these claims do not accrue, and

would therefore be moot, unless and until Plaintiffs

first succeed on their breach of contract claim. .......................... 3

1. Because Plaintiffs have not obtained a judgment

establishing the liability and underinsured status

of Mr. Carr, the other driver, Allstate has no

contractual duty to pay UIM benefits. .............................. 3

2. Allowing discovery on Plaintiffs’ extra-

contractual claims before a determination on

Plaintiffs’ breach-of-contract claims is an abuse

of discretion. ..................................................................... 5

B. Allstate has no clear and adequate remedy by appeal

because it will lose substantial rights by being required

to conduct discovery on claims that may be rendered

moot...........................................................................................10

iii

PRAYER .....................................................................................................................11

CERTIFICATES OF COMPLIANCE.................................................................................13

CERTIFICATE OF SERVICE ..........................................................................................14

APPENDIX

October 23, 2014 Order Allowing Discovery on Plaintiffs’

Extra-Contractual Claims ........................................................................Tab A

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

2010, orig. proceeding). .............................................................. Tab B

In re Progressive County Mut. Ins. Co., 439 S.W.3d 422

(Tex. App.—Houston [1st Dist.] 2014, no pet.). ......................... Tab C

In re Allstate County Mut. Ins. Co., No. 01-14-00068-CV,

2014 WL 5285850 (Tex. App.—Houston [1st Dist.]

Oct. 16, 2014, no pet. h.) . ..........................................................Tab D

iv

INDEX OF AUTHORITIES

Cases Page(s)

Brainard v. Trinity Universal Ins. Co.,

216 S.W.3d 809 (Tex. 2006). ......................................................................3–4

Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s London,

327 S.W.3d 118 (Tex. 2010). .......................................................................... 4

Henson v. State Farm Bureau Cas. Ins. Co.,

17 S.W.3d 652 (Tex. 2000). ............................................................................ 3

In re Allstate County Mut. Ins. Co.,

No. 01-14-00068-cv, 2014 WL 5285850

(Tex. App.—Houston [1st Dist.] Oct. 16, 2014, no pet. h.) . ............ 4, 9–10, 11

In re Am. Nat’l County Mut. Ins. Co.,

384 S.W.3d 429 (Tex. App.—Austin 2012, orig. proceeding). ....................11

In re Progressive County Mut. Ins. Co.,

439 S.W.3d 422 (Tex. App.—Houston [1st Dist.] 2014, no pet.) ..... 4–7, 9–11

In re Prudential Ins. Co. of Am.,

148 S.W.3d 124 (Tex. 2004) (orig. proceeding). ..................................2–3, 11

In re United Fire Lloyds,

327 S.W.3d 250 (Tex. App.—San Antonio 2010,

orig. proceeding). ................................................................... viii, 2, 7–8, 9, 11

Progressive County Mut. Ins. Co. v. Boyd,

177 S.W.3d 919 (Tex. 2005). .......................................................................... 5

U.S. Fire Ins. Co. v. Millard,

847 S.W.2d 668 (Tex. App.—Houston [1st Dist.] 1993, no writ). ................. 3

Weir v. Twin City Fire Ins. Co.,

622 F. Supp. 2d 483 (S.D. Tex. 2009).........................................................5–6

v

Womack v. Berry,

291 S.W.2d 677 (Tex. 1956). .......................................................................... 7

Statutes Page(s)

TEX. GOV’T CODE § 22.221.................................................................................... viii

Rules Page(s)

TEX. R. APP. P. 52. ................................................................................................. viii

vi

STATEMENT OF THE CASE

Nature of the This original proceeding arises from a lawsuit filed by

underlying case: Real Parties in Interest Charlene T. Howard and

William D. Howard (“Plaintiffs”) against Relator

Allstate Fire and Casualty Insurance Company

(“Allstate”), among others. (MR 1–14). Plaintiffs seek

the recovery of underinsured motorist benefits under an

automobile policy issued by Allstate to Plaintiffs, as

well as damages for Allstate’s asserted bad faith and

statutory violations related to the handling of Plaintiffs’

claims. (MR 3–6).

Respondents: The Honorable John Hawkins, Associate Judge of the

434th Judicial District of Fort Bend County, Texas, and

The Honorable James Shoemake, Judge of the 434th

Judicial District of Fort Bend County, Texas

Respondents’ actions Plaintiffs filed suit in the underlying case alleging that

from which relief Allstate breached the underinsured motorist provisions

sought: of its policy to Plaintiffs when Allstate denied full

payment of their claim and, in doing so, committed bad

faith and violated various statutory provisions. (MR 7–

10). Allstate moved to sever and abate the bad faith and

extra-contractual claims until the preliminary issue of

coverage is resolved. (MR 22–31). The trial court

granted Allstate’s motion except that it allowed

discovery on Plaintiffs’ extra-contractual claims to

continue. (MR 44–46).

Order at issue: The trial court’s October 23, 2014 order allowing

discovery on Plaintiffs’ extra-contractual and bad faith

claims (MR 44–46; see also App. at Tab A).

vii

STATEMENT OF JURISDICTION

This Court possesses jurisdiction to grant mandamus relief from the trial

court’s order allowing discovery on Plaintiffs’ bad faith and extra-contractual claims

before the preliminary issue of coverage is resolved because it constitutes a clear

abuse of discretion that impacts Allstate’s right to avoid the cost and expense of

preparing to defend claims that may be rendered moot for which no adequate remedy

exists by ordinary appeal. See TEX. GOV’T CODE § 22.221; TEX. R. APP. P. 52; In re

Progressive County Mut. Ins. Co., 439 S.W.3d 422, 427 (Tex. App.—Houston [1st

Dist.] 2014, no pet.) (holding that insurer had no adequate remedy by appeal where

trial court’s order allowing discovery on extra-contractual claims in an uninsured

motorist lawsuit would cause insurer to “lose substantial rights by being required to

prepare for claims that may be rendered moot and never even accrue”); In re United

Fire Lloyds, 327 S.W.3d 250, 256 (Tex. App.—San Antonio 2010, orig. proceeding)

(holding that insurer did not have adequate remedy by appeal where it would “lose

substantial rights by being required to prepare for claims that may be rendered moot

and may have not even yet accrued”).

viii

ISSUES PRESENTED

1. Whether the trial court’s refusal to abate discovery on Plaintiffs’ bad

faith and extra-contractual claims until the preliminary issue of coverage is resolved

is an abuse of discretion that warrants mandamus relief because Plaintiffs’ extra-

contractual and bad faith claims do not accrue, and would therefore be moot, unless

and until Plaintiffs first succeed on their breach of contract claim.

2. Whether Allstate has an adequate remedy by ordinary appeal where

Allstate will lose substantial rights by being required to conduct discovery on claims

that may be rendered moot.

ix

STATEMENT OF FACTS

On or about August 11, 2011, Real Parties in Interest Charlene T. Howard and

William D. Howard (“Plaintiffs”) were involved in an automobile accident with

another vehicle driven by James Alexander Carr. 1 As a result of that accident,

Plaintiffs submitted claims to Allstate Fire and Casualty Insurance Company

(“Allstate”) for underinsured motorist (“UIM”) coverage. 2 After evaluating the

claims, Allstate made an offer to settle the Plaintiffs’ claims, 3 however, the Plaintiffs

did not accept. 4

On or about June 5, 2014, Plaintiffs filed suit in the underlying case seeking

a declaration of coverage and the recovery of UIM benefits under an automobile

policy issued by Allstate to Plaintiffs (the “Policy”), as well as damages for

Allstate’s asserted bad faith and statutory violations related to the offering of those

benefits. 5 On August 11, 1014, Allstate filed a motion to sever and abate the

Plaintiffs’ extra-contractual and bad faith claims pending trial on the contractual

claim (the “Motion”).6 Plaintiffs responded to the Motion on October 5, 2014, 7 and

1

MR 3, ¶ 11.

2

Id. at ¶ 14.

3

See MR 22–23, Ex. 1.

4

See id., Ex. 2–3; see also MR 5.

5

MR 1–14.

6

MR 22–31.

7

MR 35–39.

1

the trial court signed an order on October 23, 2014 conditionally granting the Motion

save and except discovery. 8

ARGUMENT

I. Standard of Review

Mandamus will issue to correct a clear abuse of discretion for which the

relator has no adequate remedy at law. In re Prudential Ins. Co. of Am., 148 S.W.3d

124, 135–36 (Tex. 2004, orig. proceeding). A trial court has no discretion in

determining what the law is or in applying the law to the facts, and a clear failure by

the trial court to analyze or apply the law correctly constitutes an abuse of discretion.

In re United Fire Lloyds, 327 S.W.3d 250, 253 (Tex. App.—San Antonio 2010, orig.

proceeding). Mandamus relief is justified when parties stand to lose substantial

rights. Id. Mandamus relief is also appropriate to “spare private parties and the

public the time and money utterly wasted enduring eventual reversal of improperly

conducted proceedings.” In re Prudential Ins. Co. of Am., 148 S.W.3d at 136.

II. Mandamus relief is warranted in this case.

Mandamus relief is warranted in this case because the record establishes that

(A) the trial court abused its discretion when it refused to abate discovery on

Plaintiffs’ extra-contractual and bad faith claims until the preliminary issue of

8

MR 44–46.

2

coverage is resolved, and (B) Allstate has no clear and adequate remedy at law. See

id. at 135–36.

A. The trial court abused its discretion when it refused to abate

discovery on Plaintiffs’ extra-contractual and bad faith claims

because these claims do not accrue, and would therefore be moot,

unless and until Plaintiffs first succeed on their breach of contract

claim.

1. Because Plaintiffs have not obtained a judgment establishing

the liability and underinsured status of Mr. Carr, the other

driver, Allstate has no contractual duty to pay UIM benefits.

Underinsured motorist claims and bad faith claims are by their very nature

independent, and Texas courts have recognized them as “separate and distinct causes

of action which might each constitute a complete lawsuit within itself.” See U.S.

Fire Ins. Co. v. Millard, 847 S.W.2d 668, 672 (Tex. App.—Houston [1st Dist.] 1993,

orig. proceeding). In the context of underinsured motorist claims, “the [UIM]

insurer is under no contractual duty to pay benefits until the insured obtains a

judgment establishing the liability and underinsured status of the other motorist.”

Brainard v. Trinity Universal Ins. Co., 216 S.W.3d 809, 818 (Tex. 2006) (citing

Henson v. State Farm Bureau Cas. Ins. Co., 17 S.W.3d 652, 653–54 (Tex. 2000)).

In Brainard, the Texas Supreme Court explained the unique nature of a UIM case as

follows:

The UIM contract is unique because, according to its

terms, benefits are conditioned upon the insured’s legal

entitlement to receive damages from a third party. Unlike

many first-party insurance contracts, in which the policy

3

alone dictates coverage, UIM insurance utilizes tort law to

determine coverage. Consequently, the insurer’s

contractual obligation to pay benefits does not arise until

liability and damages are determined.

Brainard, 216 S.W.3d at 818. As a result, Plaintiffs must succeed on their breach of

contract claim before any extra-contractual claims could even accrue.

To succeed on their breach of contract claim, Plaintiffs must first establish

that UIM coverage for their injuries existed at the time of the accident. See Gilbert

Tex. Constr., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 124 (Tex.

2010) (“Initially, the insured has the burden of establishing coverage under the terms

of the policy.”); In re Allstate County Mut. Ins. Co., No. 01-14-00068-CV, 2014 WL

5285850, at *4 (Tex. App.—Houston [1st Dist.] Oct. 16, 2014, no pet. h.) (providing

that in order “[t]o prevail on these [extra-contractual] claims, the [plaintiffs] must

first establish that Allstate is liable under the insurance contract”).

If they meet this initial burden, Plaintiffs must then establish that the other

driver, Mr. Carr, negligently caused the accident and was underinsured. In re

Progressive County Mut. Ins. Co., 439 S.W.3d 422, 427 (Tex. App.—Houston [1st

Dist.] 2014, no pet.). “Neither requesting UIM benefits nor filing suit against the

insurer triggers a contractual duty to pay.” Id. Accordingly, unless and until

Plaintiffs obtain a judgment not only establishing that the Policy provided UIM

coverage, but also establishing the liability and underinsured status of Mr. Carr,

Allstate has no contractual obligation to pay UIM benefits to Plaintiffs.

4

2. Allowing discovery on Plaintiffs’ extra-contractual claims

before a determination on Plaintiffs’ breach of contract

claims is an abuse of discretion.

Absent proof of a valid contract claim, Allstate should not be required to

provide discovery related to Plaintiffs’ extra-contractual and bad faith claims

because it is irrelevant, overly broad, and prejudicial. See In Progressive, 439

S.W.3d at 427 (finding severance and abatement of extra-contractual claims was

necessary to avoid prejudice because document requests relating to extra-contractual

claim were irrelevant to breach of contract claim and far broader than car accident

claim that must first be resolved). As already stated, in order to prevail on their

extra-contractual and bad faith claims, Plaintiffs must first demonstrate that Allstate

was contractually obligated to pay their UIM claim. See Progressive County Mut.

Ins. Co. v. Boyd, 177 S.W.3d 919, 922 (Tex. 2005) (recognizing bad faith claims are

generally negated by a lack of coverage under the insurance policy). Thus, unless

Plaintiffs can establish that Allstate breached the Policy by denying full payment of

Plaintiffs’ UIM claims, Allstate cannot be liable on Plaintiffs’ extra-contractual and

bad faith claims based on that denial, and all the time, effort, money, and judicial

resources spent conducting discovery on those claims will have been for naught. See

Weir v. Twin City Fire Ins. Co., 622 F. Supp. 2d 483, 486 (S.D. Tex. 2009) (Harmon,

J.) (“If there is no contractual duty to pay, [the insurer] cannot be in ‘bad faith,’ under

common law or statute, for not paying. [The insurer] cannot be guilty of not

5

performing a proper investigation of his UIM claim because it is the trial of the UIM

claim, at which it will be determined who was at fault and the amount of damages,

that constitutes the investigation.”). It is for this reason that several courts of appeals,

including recent opinions from this Court, require the severance and abatement of

extra-contractual claims, including discovery on such claims, in UIM coverage cases

like this one.

In a recent opinion, this Court specifically addressed the prejudice involved

in allowing discovery on extra-contractual claims to continue prior to a

determination on an uninsured motorist breach of contract claim. See In re

Progressive County Mut. Ins. Co., 439 S.W.3d 422 (Tex. App.—Houston [1st Dist.]

2014, no pet.); see also App. at Tab C. In Progressive, an insured filed suit for

uninsured motorist benefits under her insurance policy, as well as damages for bad

faith and statutory violations related to the denial of those benefits. Id. at 422. The

insured served the carrier with a number of discovery requests, including all

documents related to lawsuits and claims against the carrier regarding the denial of

uninsured/underinsured motorist claims for over ten years. Id. at 427.

In response to the insurer’s motion to sever the breach of contract claim from

the extra-contractual claims, the trial court judge signed an order abating the motion

to sever, allowing discovery to move forward on all claims, and deferring the other

issues covered by the motion until the pretrial hearing. Id. at 424. In concluding

6

that severance and abatement of the extra-contractual claims was required in order

to avoid prejudice on behalf of the insurer, this Court held that the aforementioned

discovery requests sought documents “irrelevant to the breach-of-contract claim, and

the introduction of Progressive’s claims handling history in unrelated accidents at

the trial of [Plaintiff’s] breach-of-contract claim would be manifestly unjust.” Id. at

427. (citing Womack v. Berry, 291 S.W.2d 677, 682–83 (Tex. 1956)). The Court

went on:

The trial court’s abatement of any decision on severance

until the eve of trial requires the parties to engage in

discovery on the extra-contractual claims and prepare

for a trial on these claims, even though extra-contractual

liability could only accrue if Progressive is found liable

on the contract. Accordingly, the trial court’s decision to

postpone severance, unless writ is granted, will require

Progressive to expend resources answering discovery that

is far broader than the car accident claim that must be

resolved.

Id. at 427 (emphases added). Similarly, the trial court’s order—made the subject of

this mandamus—allowing discovery on Plaintiffs’ extra-contractual claims to go

forward subjects Allstate to irrelevant, overly broad, and prejudicial discovery.

Other recent opinions confirm that the trial court’s refusal to abate discovery

on Plaintiffs’ extra-contractual claims is an abuse of discretion. In In re United Fire

Lloyds, the insured filed suit for UIM benefits under his employer’s insurance policy

as well as damages for bad faith and statutory violations related to the denial of those

benefits. 327 S.W.3d 250, 252 (Tex. App.—San Antonio 2010, orig. proceeding);

7

see also App. at Tab B. After the insurer moved to sever and abate the extra-

contractual and bad faith claims, the insured filed a motion to bifurcate these claims

as an alternative to severance and abatement, arguing, like Plaintiffs argue here,9 that

“a severance would be judicially wasteful” and “prejudice him.” Id. at 253. In

reviewing the trial court’s decision to bifurcate, the San Antonio Court of Appeals

discussed the unique nature of a UIM claim in that a UIM insurer “has no contractual

duty to pay benefits until the insured obtains a judgment establishing the liability

and underinsured status of the other motorist.” Id. at 255. “As a result,” the court

continued, “a determination of [the insured’s] UIM claim may negate his bad faith

claims.” Id. at 256. Thus, the court held, the trial court had abused its discretion

when it refused to sever and abate the insured’s extra-contractual and bad faith

claims because an insurer should not be required to prepare to litigate claims that

could be rendered moot by a determination on the UIM claim:

[W]e are constrained by the clear holding in Brainard, and

hold that [the insurer] is under no contractual duty to pay

UIM benefits until [the insured] establishes the liability

and underinsured status of the other motorist. Therefore,

[the insurer] should not be required to put forth the

effort and expense of conducting discovery, preparing

for trial, and conducting voir dire on bad faith claims that

could be rendered moot by the portion of the trial relating

to UIM benefits. To require such would not do justice,

avoid prejudice, and further convenience. Under these

circumstances, we conclude the trial court abused its

9

See MR 38.

8

discretion in bifurcating the case instead of severing and

abating the UIM claim from the bad faith claims.

Id. (internal citations omitted) (emphases added).

Similarly, this Court reached the same result in In re Allstate County Mutual

Ins. Co., No. 01-14-00068-CV, 2014 WL 5285850 (Tex. App.—Houston [1st Dist.]

Oct. 16, 2014, no pet. h.); see also App. at Tab D. In that case, the insureds filed

suit for UIM benefits under their insurance policy, as well as damages for bad faith

and statutory violations related to the denial of those benefits. Id. at *2. The insurer

moved to sever and abate the extra-contractual and bad faith claims from the

underlying coverage claim. In reviewing the trial court’s denial of the insurer’s

motion, the Court held that the severance of the settlement claims was mandatory.

Id. at *3. In doing so, the Court explained that the plaintiffs’ settlement claims

would be negated by a determination that they lacked

coverage under the insurance contract, requiring Allstate

to prepare for and litigate the . . . claims, which may have

not yet accrued and may be rendered moot by the breach

of contract claim, would not do justice, avoid prejudice, or

further convenience.

Id. at *5 (citing In re Progressive County Mut. Ins. Co., 439 S.W.3d at 426–28). The

Court went on to provide that “allowing the [insureds] to conduct broad discovery

into Allstate’s claims handling history regarding unrelated accidents and then

allowing the introduction of such information at the trial of the [their] breach of

9

contract claim would be manifestly unjust.” Id. at *5 (citing In re Progressive

County Mut. Ins. Co., 439 S.W.3d at 426–27) (emphasis added).

As in Progressive, Allstate, and United Fire, the trial court’s order denying

abatement of discovery on extra-contractual claims is an abuse of discretion because

it does “not do justice, avoid prejudice, or further convenience.” See In re Allstate

County Mut. Ins. Co., 2014 WL 5285850, at *5. Here, Allstate made an offer of

settlement on Plaintiffs’ claims for UIM benefits, which was not accepted.10 Thus,

consistent with Brainard and its progeny, unless and until Plaintiffs obtain a

judgment establishing UIM coverage, as well as the liability and underinsured status

of Mr. Carr, Allstate has no contractual obligation to pay UIM benefits. Without an

existing obligation to pay, Allstate should not be required to put forth the effort and

expense of conducting discovery on Plaintiffs’ bad faith and extra-contractual claims

because these claims have not yet accrued and could be rendered moot by the failure

of Plaintiffs’ breach of contract claim. Allowing Plaintiffs to conduct discovery on

their bad faith and extra-contractual claims will require Allstate “to expend resources

answering discovery that is far broader than the car accident claim that must be

resolved.” See In re Progressive County Mut. Ins. Co., 439 S.W.3d at 427. Thus,

the trial court’s refusal to abate discovery on these claims was an abuse of discretion

10

See MR 22–23, Ex. 1–3; see also MR 5.

10

warranting mandamus relief. See In re Allstate County Mut. Ins. Co., 2014 WL

5285850, at *5; In re Prudential Ins. Co. of Am., 148 S.W.3d at 135–36.

B. Allstate has no clear and adequate remedy by appeal because it will

lose substantial rights by being required to conduct discovery on

claims that may be rendered moot.

Allstate has a substantial right not to be required to put forth the expense of

conducting discovery on bad faith and extra-contractual claims that do not accrue,

and would therefore be moot, unless and until Plaintiffs first succeed on their breach

of contract claim. See, e.g., In re Progressive County Mut. Ins. Co., 439 S.W.3d at

428 (citing In re United Fire Lloyds, 327 S.W.3d at 256). If discovery on Plaintiffs’

extra-contractual claims is permitted to advance, Allstate will be required to conduct

discovery “on claims that may have not yet accrued and that could be rendered moot

by . . . the trial relating to breach of contract for underinsured motorist benefits.” See

In re Allstate County Mut. Ins. Co., 2014 WL 5285850, at *6 (citing In re

Progressive, 439 S.W.3d at 427–28); see also In re Am. Nat’l County Mut. Ins. Co.,

384 S.W.3d 429, 439 (Tex. App.—Austin 2012, orig. proceeding) (holding that

insurer did not have adequate remedy by appeal where it would “lose substantial

rights . . . by being required to prepare and try claims that may be rendered moot”).

Accordingly, the Court should conclude that Allstate has no adequate remedy by

appeal, and mandamus relief is warranted. Id. (citing In re Progressive County Mut.

Ins. Co., 439 S.W.3d at 427–28).

11

PRAYER

WHEREFORE, PREMISES CONSIDERED, Relator Allstate Fire and

Casualty Insurance Company respectfully prays that this Court direct the trial court

to amend its October 23, 2014 order to abate discovery on Plaintiffs’ extra-

contractual and bad faith claims until there has been a full and final resolution of

Plaintiffs’ breach of contract claims. Allstate also prays and for such other and

further relief to which Allstate may be entitled.

Respectfully submitted,

DOYLE, RESTREPO, HARVIN & ROBBINS, L.L.P.

By: ________________________________

Ronald J. Restrepo

Texas State Bar No. 16791300

rrestrepo@drhrlaw.com

Sarah J. Allen

Texas State Bar No. 24064810

sallen@drhrlaw.com

Alexandra Ledyard

Texas State Bar No. 24087903

aledyard@drhrlaw.com

440 Louisiana Street, Suite 2300

Houston, Texas 77002

(713) 228-5100 (telephone)

(713) 228-6138 (facsimile)

Attorneys for Relator Allstate

Fire and Casualty Insurance Company

12

CERTIFICATION

I hereby certify that I have reviewed Relator Allstate Fire and Casualty

Insurance Company’s Petition for Writ of Mandamus and conclude that every

factual statement in this petition is supported by competent evidence included in the

appendix or record.

____________________________________

Sarah J. Allen

CERTIFICATE OF COMPLIANCE

Relying on the word count function in the word processing software used to

produce this document, I hereby certify that this petition (excluding the caption,

identity of parties and counsel, table of contents, index of authorities, statement of

the case, statement of jurisdiction, statement of issues presented, signature,

certificate of service, certification, certification of compliance, and appendix)

contains 2,815 words. See TEX. R. APP. P. 9.4(i).

____________________________________

Sarah J. Allen

13

CERTIFICATE OF SERVICE

As required by Texas Rule of Appellate Procedure 6.3 and 9.5(b), (d), (e),

I certify that I have served this document and the corresponding mandamus record

by electronic service or certified mail, return receipt requested, on all parties as listed

below on January 2, 2015 as follows:

The Honorable Judge James H. Shoemake

434th Judicial District of Fort Bend County, Texas

301 Jackson Street

Richmond, Texas 77469

The Honorable Judge John Hawkins

434th Judicial District of Fort Bend County, Texas

301 Jackson Street

Richmond, Texas 77469

Mario Martinez

Law Offices of Mario A. Martinez

23123 Cinco Ranch Blvd., # 208

Katy, Texas 77494

Attorney for the Real Parties in Interest

Charlene Howard and William Howard

John M. Causey

Hope & Causey

100 I-45 North, Ste. 600

Conroe, Texas 77301

Trial Counsel for Relator

Allstate Fire and Casualty Insurance Company

____________________________________

Sarah J. Allen

14

TAB A

·' 1'-DCV-215228

OTDN

; Olher Dlspotitlon/Non-Fiml

. 32699'8

FILED

AUG 1 l .2Q1~ ri

I~I I~llllllllHllllll~llll~ NO. 14-0CV-215228

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Cte~ Olllrlct Co'-Jrt. Fer1°'1rnd Ct., TX

CHARLENE T. HOW ARD AND § IN THE DISTRICT COURT OF

WILLIAM D. HOWARD §

§

VS. § FORT BEND COUNTY, TEXAS

§

ALLSTATE FIRE & CASUALTY §

INSURANCE COMPANY AND LISA § 434TH JUDICIAL DISTRICT

GRAVES

ORDER GRANTING DEFENDANTS'

MOTION TO SEVER AND ABATE

On this day came on for consideration Defendants' Motion to Sever and Abate. The Court,

having considered the motion, the prevailing case law, and the response thereto, is of the opinion that

said motion is meritorious. The Court, therefore

ORDERS that all of the Plaintiff.~ · claims for extra-contractual violations, including those of

the Texas Deceptive Trade Practices /\ct, violations of the fnsurance Code, violntions of Chapter 37

& 38 of the Texas Civil Practice and Remedies Code, gross neglect and breach of the duty of good

faith and fair dealing, arc hereby severed from the above captioned lawsuit and shall be re-designated

as CAUSE NO. f'f:pc\J 2J£'.)m~i1 ii¥ Q1 S??B,· IN THE DISTRICT COURT OF FORT ·

BEND COUNTY, TEX A S 434TJ/ JUDICIAL DfTRJCT;

AC~o

is further ORDERED that !he"'following documents shall be placed in CAUSE NO.

[l

,t.\ ~r;r:::v- ~s2-z. <j -A

• ' :Wi e a: SL8; IN Tl/E DISTRICT COURT OF FORT BEND COUNTY, TE x

AS 434TH JUDICIAL DISTRICT:

/. Pluilltiff"'s Original Petition a11d Jury De111u11d; and

2. Defendants' Original Answer u11d Jury Demand.. \ SZZ ~!-A

'-/- DOI.,Z.

lt is further ORDERED that the CA USE NO. ( ~ ,· 14 ~9'1' ~IE8; TN THE

ROUTEOTOCOUR~CT 2 0 2014iw

RT'S TOD. CLERK ,,..,.d

OCT 2 3 2014 ''\J

··· -- · --·-- +- ~ · ~-- . . . . . ._.. _.

,

.•

DISTRICT COURT OF FORT BEND COUNTY, TEXAS 434TH JUDICIAL DISTRICT, is

~ °"~'°" e1».1

hereby abated for all aspects~mtil the underlying contract claim in Cause No. 14-DCV-215228 is

resolved.

The cost for the severance of 14-DCV-215228; IN THE DISTRICT COURT OF FORT

BEND COUNTY, TEXAS 434Tll JUDICIAL DISTRICT: will be borne by Defendants.

All other relief not expressly granted herein is denied.

SIGNED and ENTERED this z._6~dayof ~;2014.

~

~-z:,~'1'

JUDGE PRESIDING

... ~...- ~-.-· ....·--.(·--· -.....-i-- -·----·· ... ' ·-·· ---·-·--

APPROVED AND ENTRY REQUESTED:

HOPE & CAUSEY, P.C.

c'John cif <Ycrusep

John M. Causey

State Bar No. 04019 100

P. 0 . Box 3188

Conroe, Texas 77305-3188

Phone: (936) 441-4673

Fax: (936) 441-46 74

E-Mail: john@hope-causey.com

ATTORNEYS FOR DEFENDANTS

', Annie RPoecr.a Elliott, District Clerk of For! Ben"

Coun~. Texas, do t-.areby certify that tli::

lcreJcll'~ is 11 true, correct and full copv of the

;.1~· 1Jrr;ent ~~n set out as appears of re<.Jrd m

b1e ~i;J Coo~i:ll!i CouJt. Texas

TJ11s lay of W- 20 l

TAB B

In re United Fire Lloyds, 327 S.W.3d 250 (2010)

Nature and Extent of Discretionary Power

327 S.W.3d 250 Mandamus

Court of Appeals of Texas, Matters of discretion

San Antonio. A trial court has no discretion in determining

what the law is or applying the law to the facts,

In re UNITED FIRE LLOYDS. and a clear failure by the trial court to analyze or

apply the law correctly will constitute an abuse

No. 04–10–00094–CV. | July 14, 2010.

of discretion for mandamus purposes.

Synopsis

Cases that cite this headnote

Background: Employee who had been involved in

motor vehicle accident with other motorist filed suit

against employer's automobile insurer, asserting claim for [3] Mandamus

underinsured motorist (UIM) benefits, as well as bad faith Matters of discretion

claims. Insurer filed motion to sever and abate UIM claim To satisfy the clear abuse of discretion standard

from bad faith claims. Employee filed motion for a bifurcated for issuance of a writ of mandamus, the relator

trial. The 49th Judicial District Court, Webb County, Jose must show that the trial court could reasonably

A. Lopez, J., denied insurer's motion and granted employee's have reached only one decision.

motion. Insurer filed petition for writ of mandamus.

Cases that cite this headnote

Holdings: The Court of Appeals, Rebecca Simmons, J., held [4] Mandamus

that: Remedy at Law

Appellate court will not issue a writ of

[1] trial court was required to sever and abate UIM claim from mandamus if there is a clear and adequate

bad faith claims, and remedy at law.

[2] insurer had no adequate remedy by appeal with respect to Cases that cite this headnote

trial court's abuse of discretion in denying its motion to sever

and abate. [5] Mandamus

Nature and existence of rights to be

protected or enforced

Writ conditionally granted.

Since mandamus is intended as an extraordinary

remedy, such interference is justified only when

parties stand to lose their substantial rights.

West Headnotes (14)

Cases that cite this headnote

[1] Mandamus

Remedy at Law [6] Action

Severance of actions

Mandamus

Nature of acts to be commanded Action

Nature and subject matter of actions in

Mandamus will issue only to correct a clear

general

abuse of discretion for which the relator has no

adequate remedy at law. Trial court was required to sever and abate

claim for underinsured motorist (UIM) benefits

1 Cases that cite this headnote brought by employee involved in motor vehicle

accident with other motorist against employer's

automobile insurer from employee's bad faith

[2] Appeal and Error

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 1

In re United Fire Lloyds, 327 S.W.3d 250 (2010)

claims against insurer, as insurer was under

no contractual duty to pay UIM benefits [10] Insurance

until employee established the liability and Prerequisites for Claim of Breach or Bad

underinsured status of the other motorist, and, Faith

thus, insurer should not be required to put forth Insurance

the effort and expense of conducting discovery, Bad faith in general

preparing for a trial, and conducting voir dire on Contractual claims based on an insurance policy

bad faith claims that could be rendered moot by and bad faith claims against an insurer are

the portion of the trial relating to UIM benefits, by their nature independent, but, in most

in that to require such would not do justice, avoid circumstances, an insured may not prevail on a

prejudice, and further convenience. bad faith claim without first showing that the

insurer breached the contract.

6 Cases that cite this headnote

2 Cases that cite this headnote

[7] Action

Severance of actions [11] Insurance

Trial Necessity of Tort Liability

Separate Trials in Same Cause In a case in which underinsured motorist

Severance and bifurcation are distinct trial (UIM) benefits are sought from an automobile

procedures; a “severance” divides the lawsuit insurer, the UIM insurer is obligated to

into two or more separate and independent pay damages which the insured is legally

causes, but the “bifurcation” of a trial leaves the entitled to recover from the underinsured

lawsuit intact but enables the court to hear and motorist. V.A.T.S. Insurance Code, art. 5.06–

determine one or more issues without trying all 1(5) (Repealed).

controverted issues at the same time.

2 Cases that cite this headnote

3 Cases that cite this headnote

[12] Insurance

[8] Action Necessity of Tort Liability

Severance of actions Insurance

Claims are properly severable if: (1) the Underinsurance; exhausted coverage

controversy involves more than one cause of Insurance

action, (2) the severed claim is one that would be Determination of Tort Liability; Actions

the proper subject of a lawsuit if independently and Settlements

asserted, and (3) the severed claim is not so

An underinsured motorist (UIM) insurer is

interwoven with the remaining action that they

under no contractual duty to pay benefits until

involve the same facts and issues.

the insured obtains a judgment establishing

Cases that cite this headnote the liability and underinsured status of the

other motorist; neither requesting UIM benefits

nor filing suit against the insurer triggers a

[9] Action contractual duty to pay.

Severance of actions

The controlling reasons for a severance of claims 2 Cases that cite this headnote

are to do justice, avoid prejudice, and further

convenience. [13] Insurance

Uninsured or Underinsured Motorist

2 Cases that cite this headnote

Coverage

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 2

In re United Fire Lloyds, 327 S.W.3d 250 (2010)

Insurance

Necessity of Tort Liability

OPINION

Insurance

Claims and Settlement Practices Opinion by: REBECCA SIMMONS, Justice.

For an insured to recover for underinsured

On February 8, 2010, relator United Fire Lloyds filed a

motorist (UIM) benefits under an automobile

petition for writ of mandamus, seeking to compel the trial

insurance policy, he must prove not only that

court to (1) vacate the October 7, 2009 Order Granting

the purported underinsured motorist negligently

Plaintiff's Motion for a Bifurcated Trial, (2) vacate the

caused the accident that resulted in the covered

October 13, 2009 Order Denying Defendant United Fire

damages, but also that all applicable policy

Lloyd's Motion to Sever and Abate Plaintiff's Extra–

provisions have been satisfied.

Contractual Claims, and (3) grant United Fire's Motion to

1 Cases that cite this headnote Sever and Abate Plaintiff's Extra–Contractual Claims. We

conditionally grant mandamus relief.

[14] Mandamus

Modification or vacation of judgment or

order BACKGROUND

Employer's automobile insurer, against which The underlying suit arose from a motor vehicle accident

employee had brought claim for underinsured involving Juan Garcia and Ramon Valverde. Garcia filed

motorist (UIM) benefits as well as bad faith suit against United Fire for underinsured motorist (“UIM”)

claims, had no adequate remedy by appeal with benefits under his employer's insurance policy. The original

respect to trial court's abuse of discretion in petition only alleged a claim for UIM benefits, but

denying its motion to sever and abate UIM claim subsequently filed petitions added extra-contractual (bad

from bad faith claims, and, thus, mandamus

faith) claims. The Fourth *253 Amended Petition 2 alleged

relief was appropriate, as if mandamus was not

the following bad faith claims in violation of the Texas

granted, insurer stood to lose substantial rights

Insurance Code: (1) failing to commence an investigation of

by being required to prepare for claims that might

Garcia's claim and failing to request from the claimant all

be rendered moot and might have not even yet

items, statements, and forms in order to properly evaluate

accrued.

Garcia's claim in violation of section 542.055; and (2)

3 Cases that cite this headnote engaging in unfair settlement practices in violation of section

541.060. 3

United Fire contends it made a settlement offer in the amount

1 of $100,000 during mediation. However, no settlement

*252 Original Mandamus Proceeding.

agreement was ever reached. Later, United Fire filed a motion

Attorneys and Law Firms to sever and abate Garcia's UIM claim from the bad faith

claims. As the basis for the motion, United Fire asserted

Clay E. Coalson, Donnell, Abernethy & Kieschnick, a severance was necessary because the introduction of the

Corpus Christi, TX, Jose L. Gamez, Donnell, Abernethy & settlement offer, the policy limits, and the facts concerning

Kieschnick, Edinburg, TX, for Appellant. United Fire's handling of the claim, as they relate to the

bad faith claims, would prejudice United Fire in the trial

Ronald A. Ramos, Nadine Nieto, Law Offices of Ronald

of the UIM claim, and would confuse, complicate, and

A. Ramos, P.C., Adam Poncio, Poncio Law Offices, P.C.,

considerably lengthen the trial. Garcia then filed a motion

San Antonio, TX, Bryan W. Jones, Texas Mutual Insurance

for a bifurcated trial as an alternative to the severance and

Company, Austin, TX, for Appellee.

abatement. As authority for his motion, Garcia relied on

Sitting: KAREN ANGELINI, Justice, REBECCA this court's opinion in In re Travelers Lloyds of Tex. Ins.

SIMMONS, Justice, MARIALYN BARNARD, Justice. Co., in which we concluded the trial court did not abuse

its discretion in bifurcating over severing the contractual

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 3

In re United Fire Lloyds, 327 S.W.3d 250 (2010)

claims from the bad faith claims. See 273 S.W.3d 368, 373– controverted issues at the same time. Id. Claims are properly

75 (Tex.App.-San Antonio 2008, orig. proceeding). Garcia severable if (1) the controversy involves more than one cause

contended a severance would be judicially wasteful, would of action, (2) the severed claim is one that would be the

unduly prejudice him, and the disposition of the trial on the proper subject of a lawsuit if independently asserted, and (3)

UIM claim would not eliminate the trial on the bad faith the severed claim is not so interwoven with the remaining

claims. In response to the motion for a bifurcated trial, United action that they involve the same facts and issues. Guar. Fed.

Fire asserted that a UIM claim is different from other types of Sav. Bank v. Horseshoe Operating Co., 793 S.W.2d 652, 658

contractual insurance claims because there is no contractual (Tex.1990). “The controlling reasons for a severance are to

duty to pay benefits until the insured obtains a judgment do justice, avoid prejudice, and further convenience.” Id.

establishing liability and the underinsured status of the other

motorist. Therefore, United Fire claimed no bad faith claims [10] Contractual claims based on an insurance policy and

had yet accrued, and the trial on the UIM claim would control bad faith claims are by their nature independent. Akin, 927

the outcome of the bad faith claims. After a hearing, the trial S.W.2d at 629. “But, in most circumstances, an insured may

court granted Garcia's motion for a bifurcated trial and denied not prevail on a bad faith claim without first showing that the

United Fire Lloyd's motion to sever and abate. This petition insurer breached the contract.” Id. In Akin, the Texas Supreme

for writ of mandamus ensued. Court concluded that a severance may be necessary in some

bad faith cases. Id. at 630. For instance, when evidence is

admissible only with regard to the bad faith claim and would

prejudice the insurer to such an extent that a fair trial on the

ANALYSIS

contract claim would become unlikely. Id.

I. Standard of Review

[1] [2] [3] [4] [5] [6] Mandamus will issue onlyFollowing Akin, numerous intermediate courts of appeals

to correct a clear abuse of discretion for which the relator have considered whether it is an abuse of discretion for

has no adequate remedy at law. In re Prudential Ins. Co. a trial court to refuse to order a severance of contractual

of Am., 148 S.W.3d 124, 135 (Tex.2004) (orig. proceeding); claims from bad faith claims when a settlement offer has

Walker v. Packer, 827 S.W.2d 833, 839–40 (Tex.1992) (orig. been made. See, e.g., In re Miller, 202 S.W.3d 922, 925–

proceeding). “A trial court has no ‘discretion’ in determining 26 (Tex.App.-Tyler 2006, orig. proceeding [mand. denied] );

what the law is or applying the law to the facts,” and “a clear In re Allstate Tex. Lloyds, No. 14–05–00762–CV, 2005 WL

failure by the trial court to analyze or apply the law correctly 2277134, at * 4 (Tex.App.-Houston [14th Dist] Sept. 2, 2005,

will constitute an abuse of discretion” *254 Walker, 827 orig. proceeding) (mem. op.); In re Allstate Indem. Co., 05–

S.W.2d at 840. “To satisfy the clear abuse of discretion 03–01496–CV, 2003 WL 22456345, at *1 (Tex.App.-Dallas

standard, the relator must show ‘that the trial court could Oct. 30, 2003, orig. proceeding) (mem. op.); In re Trinity

reasonably have reached only one decision.’ ” Liberty Nat'l Universal Ins. Co., 64 S.W.3d 463, 468 (Tex.App.-Amarillo

Fire Ins. Co. v. Akin, 927 S.W.2d 627, 630 (Tex.1996) 2001, orig. proceeding [mand. denied] ). Eventually, parties

(quoting Walker, 827 S.W.2d at 840). However, this court began seeking bifurcation of the contractual claims from the

will not issue a writ of mandamus if there is a clear and bad faith claims as an alternative to severance. See In re

adequate remedy at law. See Walker, 827 S.W.2d at 840. Travelers, 273 S.W.3d at 373–75; In re Allstate Tex. Lloyds,

Since mandamus is intended as an extraordinary remedy, such 202 S.W.3d 895, 900 (Tex.App.-Corpus Christi 2006, orig.

interference is justified only when parties stand to lose their proceeding [mand. denied] ) (concluding plaintiffs failed

substantial rights. Id. at 842. to meet their burden that they would be prejudiced by

the bifurcation of contractual claims under a homeowner's

insurance policy and bad faith claims instead of severing and

II. Severance or Bifurcation? abating the claims). But we are only aware of a few cases

[7] [8] [9] Severance and bifurcation are distinct trial in the context of a UIM claim that have considered whether

procedures. Hall v. City of Austin, 450 S.W.2d 836, 837–38 severance and abatement is necessary over bifurcation. See

(Tex.1970). A severance divides the lawsuit into two or more In re Allstate Prop. and Cas. Ins. Co., No. 02–07–00141–

separate and independent causes. Id. However, the bifurcation CV, 2007 WL 1574964, at *1 (Tex.App.-Fort Worth May

of a trial leaves the lawsuit intact but enables the court to 30, 2007, orig. proceeding) (mem. op.) (holding it was an

hear and determine one or more issues without trying all abuse of discretion to bifurcate *255 instead of severing

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 4

In re United Fire Lloyds, 327 S.W.3d 250 (2010)

and abating the UIM claim from the bad faith claims); In severing and abating because it is disputed whether there is

re Allstate County Mut. Ins. Co., 209 S.W.3d 742, 746–47 a covered loss. United Fire argues it should not be required

(Tex.App.-Tyler 2006, orig. proceeding) (concluding it was to prepare for a trial on bad faith claims when it has no

an abuse of discretion to bifurcate instead of severing the UIM contractual duty to pay the UIM claim until Garcia obtains

claim from the bad faith claims). However, these cases fail to a judgment establishing the underinsured motorist's liability

discuss the necessity of severance and abatement rather than and underinsured status.

bifurcation in the context of a UIM claim.

Garcia responds that it is not disputed that he has a covered

[11] [12] In a UIM case, “[t]he UIM insurer is obligated loss and the bad faith claims will not be mooted by a trial

to pay damages which the insured is ‘legally entitled to on the UIM claim; therefore, this court should hold the

recover’ from the underinsured motorist.” Brainard v. Trinity trial court did not abuse its discretion in bifurcating the

Universal Ins. Co., 216 S.W.3d 809, 818 (Tex.2006) (citing trial rather than severing and abating. 5 Garcia relies *256

TEX. INS.CODE art. 5.06–1(5)). In Brainard, the Texas primarily on In re Travelers to support his argument. See

Supreme Court expounded on the uniqueness of a UIM case 273 S.W.3d at 373–75. However, we do not find In re

as follows: Travelers controlling because it was not a UIM case. Id. In

re Travelers involved a suit filed by homeowners against

The UIM contract is unique because,

their homeowners' insurance carrier for breach of contract

according to its terms, benefits are

and bad faith for mishandling their claim. Id. at 370. This

conditioned upon the insured's legal

court concluded that “[b]ecause the trial of the [plaintiffs']

entitlement to receive damages from

extra-contractual claims is unaffected by the outcome of

a third party. Unlike many first-

their contractual claim, a single bifurcated trial preceded by

party insurance contracts, in which the

unified discovery and pretrial proceedings promotes judicial

policy alone dictates coverage, UIM

economy better than severance and abatement.” Id. at 374.

insurance utilizes tort law to determine

As a result, this court determined the trial court did not abuse

coverage. Consequently, the insurer's

its discretion in bifurcating the case because “[u]nder these

contractual obligation to pay benefits

circumstances, the primary justification for abatement of the

does not arise until liability and

extra-contractual claims—avoiding the effort and expense of

damages are determined.

conducting discovery on claims that may be rendered moot

See Brainard, 216 S.W.3d at 818 (citing Henson v. S. Farm in a previous trial—is non-existent because the disposition

of the contractual claim will not moot the extra-contractual

Bureau Cas. Ins. Co., 17 S.W.3d 652, 654 (Tex.2000)). 4

claims.” Id.

Therefore, “the UIM insurer is under no contractual duty to

pay benefits until the insured obtains a judgment establishing

This court's determination that bifurcation is an appropriate

the liability and underinsured status of the other motorist....

alternative to severance is not applicable to the present case

Neither requesting UIM benefits nor filing suit against the

because a UIM claim that involves a dispute as to whether

insurer triggers a contractual duty to pay.” Id.

there is a covered loss is distinguishable from a homeowners'

insurance claim where the existence of a covered loss is not

[13] Therefore, in order for Garcia to recover under his

disputed. Unlike the situation presented in In re Travelers,

UIM claim, he must prove not only that the purported

United Fire disputes whether Garcia has a covered loss. As

underinsured motorist negligently caused the accident that

a result, a determination of Garcia's UIM claim may negate

resulted in the covered damages, but also that all applicable

his bad faith claims. See Progressive County Mut. Ins. Co. v.

policy provisions have been satisfied. See Allstate Ins. Co.

Boyd, 177 S.W.3d 919, 922 (Tex.2005) (recognizing bad faith

v. Bonner, 51 S.W.3d 289, 291–92 (Tex.2001); Wellisch v.

claims are generally negated by a lack of coverage under the

United Servs. Auto. Ass'n, 75 S.W.3d 53, 57 (Tex.App.-San

insurance policy); Akin, 927 S.W.2d at 630–31 (recognizing

Antonio 2002, pet. denied) (holding that because an insurer is

that judgment for the insurer on the coverage claim prohibits

not obligated to pay UIM benefits until the insured becomes

recovery premised only on the bad faith denial of a claim,

legally entitled to those benefits, an insurer has the right to

but does not necessarily bar all claims for bad faith); In re

withhold payment of UIM benefits until the insured's legal

Miller, 202 S.W.3d at 925 (concluding that bad faith claims

entitlement is established). As a result, United Fire contends

are negated by a lack of coverage under the insurance policy).

the trial court abused its discretion in bifurcating rather than

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 5

In re United Fire Lloyds, 327 S.W.3d 250 (2010)

order. Typically in a mandamus situation, a party preserves

its complaint by requesting an order and the trial court

As a result of the foregoing, we are constrained by the clear

either grants or *257 does not grant the request to enter

holding in Brainard, and hold that United Fire is under no

an order. See Axelson, Inc. v. McIlhany, 798 S.W.2d 550,

contractual duty to pay UIM benefits until Garcia establishes

556 (Tex.1990). It is unclear what Garcia contends United

the liability and underinsured status of the other motorist.

Fire waived since United Fire's complaint is that the trial

See Brainard, 216 S.W.3d at 818. Therefore, United Fire

court improperly granted a bifurcated trial over severing and

should not be required to put forth the effort and expense of

abating the UIM claim from the bad faith claims. United Fire

conducting discovery, preparing for a trial, and conducting

does not appear to complain about the form or contents of

voir dire on bad faith claims that could be rendered moot

the bifurcation order. Therefore, we do not find United Fire

by the portion of the trial relating to UIM benefits. To

waived any complaints.

require such would not do justice, avoid prejudice, and further

convenience. See Guar. Fed. Sav. Bank, 793 S.W.2d at 658.

Under these circumstances, we conclude the trial court abused

its discretion in bifurcating the case instead of severing and CONCLUSION

abating the UIM claim from the bad faith claims.

We conclude the trial court abused its discretion in granting

[14] We further conclude United Fire does not have an Juan Garcia's motion for a bifurcated trial and denying

adequate remedy by appeal because if mandamus is not United Fire's motion to sever and abate. Accordingly,

granted it stands to lose substantial rights by being required we conditionally grant the writ of mandamus. The trial

to prepare for claims that may be rendered moot and may court is ordered to (1) vacate the October 7, 2009 Order

have not even yet accrued. See U.S. Fire Ins. Co. v. Millard, Granting Plaintiff's Motion for a Bifurcated Trial, (2) vacate

847 S.W.2d 668, 675 (Tex.App.-Houston [1st Dist.] 1993, the October 13, 2009 Order Denying Defendant United

orig. proceeding); In re Trinity Universal Ins. Co., 64 S.W.3d Fire Lloyd's Motion to Sever and Abate Plaintiff's Extra–

463, 468 (Tex.App.-Amarillo 2001, orig. proceeding [mand. Contractual Claims, and (3) grant United Fire's Motion to

denied] ). Sever and Abate Plaintiff's Extra–Contractual Claims. The

writ will issue only if the trial court fails to comply within

Finally, we address Garcia's contention that United Fire fourteen days.

waived any complaint as to the wording or form of the

Footnotes

1 This proceeding arises out of Cause No. 2008–CVE000521–D1, Juan Garcia, Plaintiff, Texas Mutual Insurance Co., As Subrogee

of Juan Garcia, Intervenor v. United Fire Lloyds, pending in the 49th Judicial District Court, Webb County, Texas, the Honorable

Jose A. Lopez presiding.

2 The live petition is the Fifth Amended Petition. However, it was filed after the trial court granted the motion to bifurcate. In considering

whether the trial court abused its discretion in denying United Fire's motion to sever and abate, we limit our review to the record that

was before the trial court at the time the “decision was made.” In re Bristol–Myers Squibb Co., 975 S.W.2d 601, 605 (Tex.1998).

3 Specifically, Garcia contends United Fire engaged in unfair settlement practices by: (1) failing to attempt in good faith to effectuate

a prompt, fair, and equitable settlement of Garcia's claim after liability had become reasonably clear, (2) refusing, failing or

unreasonably delaying a settlement offer on the basis that other coverage may be available, and (3) delaying or refusing settlement

of a claim solely because there is other insurance of a different kind available to satisfy part of the loss.

4 We acknowledge Brainard involved a different issue than the case at hand: a determination as to when presentment of a contract

claim was made in order to determine whether a party was entitled to attorney's fees in accordance with Chapter 38 of the Texas

Civil Practice and Remedies Code. Id.

5 We note that in Garcia's Sur–Reply he provides, “The truth of the matter is the primary claims will be decided and then, if warranted,

extra-contracial [sic] claims will be determined in the bifurcated portion of the trial.” However, later Garcia again contends that the

extra-contractual claims will not be rendered moot by judgment in the first phase of the trial due to bifurcation.

End of Document © 2014 Thomson Reuters. No claim to original U.S. Government Works.

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 6

TAB C

In re Progressive County Mut. Ins. Co., 439 S.W.3d 422 (2014)

Cases that cite this headnote

439 S.W.3d 422

Court of Appeals of Texas,

Houston (1st Dist.). [3] Mandamus

Matters of discretion

In re PROGRESSIVE COUNTY MUTUAL Because a trial court has no discretion in

INSURANCE COMPANY, Relator. determining what the law is, the trial court

abuses its discretion, thus supporting claim for

No. 01–14–00199–CV. | June 12, 2014. mandamus relief, if it clearly fails to analyze or

apply the law correctly.

Synopsis

Background: Insured brought action against uninsured Cases that cite this headnote

motorist (UM) carrier to recover for breach of contract, breach

of the duty of good faith and fair dealing, and statutory

violations. The 215th District Court, Harris County, Elaine H. [4] Mandamus

Palmer, J., denied carrier's motion to sever and abate extra- Remedy by Appeal or Writ of Error

contractual claims. Carrier petitioned for writ of mandamus. In determining whether appeal is an adequate

remedy, Court of Appeals considers whether the

benefits outweigh the detriments of mandamus

review.

[Holding:] The Court of Appeals, Harvey Brown, J., held that

severance of extra-contractual claims from breach of contract Cases that cite this headnote

claim was required.

[5] Action

Writ conditionally granted. Severance of actions

The trial court has broad discretion in

the severance of causes of action. Vernon's

West Headnotes (9) Ann.Texas Rules Civ.Proc., Rule 41.

Cases that cite this headnote

[1] Mandamus

Remedy by Appeal or Writ of Error [6] Action

Mandamus Severance of actions

Matters of discretion The trial court has a duty to order severance

Court of Appeals may issue a writ of mandamus of causes of action when all of the facts and

to correct a trial court's clear abuse of discretion circumstances of the case unquestionably require

or violation of duty imposed by law when no a separate trial to prevent manifest injustice,

adequate remedy by appeal exists. there is no fact or circumstance supporting or

tending to support a contrary conclusion, and the

Cases that cite this headnote legal rights of the parties will not be prejudiced

thereby. Vernon's Ann.Texas Rules Civ.Proc.,

[2] Mandamus Rule 41.

Matters of discretion

1 Cases that cite this headnote

A clear abuse of discretion occurs supporting

mandamus relief when the trial court's decision

is so arbitrary and unreasonable that it amounts [7] Action

to clear error. Severance of actions

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 1

In re Progressive County Mut. Ins. Co., 439 S.W.3d 422 (2014)

Claims are properly severable if: (1) the

controversy involves more than one cause of Attorneys and Law Firms

action; (2) the severed claim is one that would be

*424 Mark R. Lapidus, Megan L. Knudsen, Lapidus

the proper subject of a lawsuit if independently

Knudsen, PC, Houston, TX, for Relator.

asserted; and (3) the severed claim is not so

interwoven with the remaining action that it Timothy R. Hightower, Alexandra Muthcler, Houston, TX,

involves the same facts and issues. Vernon's for Real Party in Interest.

Ann.Texas Rules Civ.Proc., Rule 41.

Panel consists of Justices KEYES, BLAND and BROWN.

Cases that cite this headnote

OPINION

[8] Action

Severance of actions HARVEY BROWN, Justice.

Severance of insured's extra-contractual claims

Relator, Progressive County Mutual Insurance Company

from breach of contract claim was required in

seeks a writ of mandamus compelling the trial court to

order to avoid prejudice and prevent manifest

(1) vacate its order denying Progressive's motion to sever

injustice to uninsured motorist (UM) carrier

extra-contractual claims asserted against it and (2) enter an

from need to expend resources answering

order abating those extra-contractual claims until the breach-

discovery far broader than the car accident

of-contract claim brought by Alma Guia, the real party in

claim; documents related to lawsuits and claims

interest, has been resolved. We conditionally grant the writ.

against carrier regarding the denial of UM and

underinsured motorist (UIM) claims for over

ten years were irrelevant to contract claim, and

introducing carrier's claims handling history in Background

unrelated accidents at trial of breach-of-contract

Following an automobile collision with an uninsured

claim would be manifestly unjust. Vernon's

Ann.Texas Rules Civ.Proc., Rule 41. motorist's vehicle, Guia sued her insurer, Progressive. 1

While investigation into the claim was ongoing, Guia sued

1 Cases that cite this headnote Progressive for breach of the uninsured motorist provisions in

her policy, violations of Chapter 542 of the Texas Insurance

[9] Mandamus Code, violations of the Deceptive Trade Practices–Consumer

Modification or vacation of judgment or Protection Act, and breach of the duty of good faith and fair

order dealing. Guia served Progressive with a number of discovery

requests, some of which would not be relevant to the breach-

Mandamus

of-contract claim. Progressive filed a motion to sever the

Proceedings in civil actions in general

breach of contract claim for uninsured motorist coverage from

Appeal was not adequate remedy for trial court's the extra-contractual claims. The trial court judge signed an

improper refusal to sever and abate insured's order abating the motion to sever, allowing discovery to move

extra-contractual claims from breach of contract forward on all claims, and deferring the other issues covered

claim against uninsured motorist (UM) carrier, by the motion until the pretrial hearing. Progressive filed a

and, thus, writ of mandamus would be granted if writ seeking to compel severance and abatement.

trial court failed to comply. Vernon's Ann.Texas

Rules Civ.Proc., Rule 41.

1 Cases that cite this headnote Standard of Review

[1] [2] [3] [4] We may issue a writ of mandamus to

correct a trial court's clear abuse of discretion or violation

of duty imposed by law when no adequate remedy by

appeal exists. See Walker v. Packer, 827 S.W.2d 833, 839

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 2

In re Progressive County Mut. Ins. Co., 439 S.W.3d 422 (2014)

(Tex.1992) (orig. proceeding). A clear abuse of discretion In Liberty National Fire Insurance Co. v. Akin, the Texas

occurs when the trial court's decision is so arbitrary and Supreme Court considered whether severance was required

unreasonable that it amounts to clear error. See id. (quoting in a case involving breach of contract and extra-contractual

Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, claims against an insurer under a homeowner's policy. 927

917 (Tex.1985)). Because a trial court has no discretion S.W.2d 627 (Tex.1996). In refusing to grant mandamus relief,

in determining what the law is, the trial court abuses its the Court rejected “an inflexible rule that would deny the

discretion if it clearly fails to analyze or apply the law trial court all discretion and ... require severance in every

correctly. See id. at 840. “In determining whether appeal case [involving bad-faith insurance claims], regardless of the

is an adequate remedy, [we] consider whether the benefits likelihood of prejudice.” Id. at 630. Ultimately, the Court

outweigh the detriments of mandamus review.” In re BP concluded that the contractual and extra-contractual claims

Prods. N. Am., Inc., 244 S.W.3d 840, 845 (Tex.2008) (orig. in that case were interwoven, with most evidence admissible

proceeding). on both claims, and that any prejudicial effect could be

ameliorated by appropriate limiting instructions. See id. The

[5] [6] The trial court has “broad” discretion in the Court went on to

severance of causes of action. Morgan v. Compugraphic

Corp., 675 S.W.2d 729, 734 (Tex.1984); Black v. Smith, 956 Several Texas appellate courts have

S.W.2d 72, 75 (Tex.App.-Houston [14th Dist.] 1997, orig. found severance may nevertheless

proceeding). However, that discretion is not unlimited. See be necessary in some bad faith

U.S. Fire Ins. Co. v. Millard, 847 S.W.2d 668, 671 (Tex.App.- cases. A trial court will undoubtedly

Houston [1st Dist.] 1993, orig. proceeding). The trial court confront instances in which evidence

has a duty to order severance when *425 “all of the facts and admissible only on the bad faith claim

circumstances of the case unquestionably require a separate would prejudice the insurer to such an

trial to prevent manifest injustice, and there is no fact or extent that a fair trial on the contract

circumstance supporting or tending to support a contrary claim would become unlikely. One

conclusion, and the legal rights of the parties will not be example would be when the insurer

prejudiced thereby.” Womack v. Berry, 156 Tex. 44, 291 has made a settlement offer on the

S.W.2d 677, 682–83 (Tex.1956) (orig. proceeding). disputed contract claim. As we have

noted, some courts have concluded

that the insurer would be unfairly

prejudiced by having to defend the

Severance of Contractual and contract claim at the same time and

Extra–Contractual Claims before the same jury that would

consider evidence that the insurer had

[7] Texas Rule of Civil Procedure 41 governs severance of

offered to settle the entire dispute.

claims. See TEX.R. CIV. P. 41. The rule provides, in part,

While we concur with these decisions,

that “[a]ctions which have been improperly joined may be

we hasten to add that evidence of this

severed ... on such terms as are just. Any claim against a

sort simply does not exist in this case.

party may be severed and proceeded with separately.” Id. The

In the absence of a settlement offer

predominant reasons for a severance are to do justice, avoid

on the entire contract claim, or other

prejudice, and promote convenience. F.F.P. Op. Partners,

compelling circumstances, severance

L.P. v. Duenez, 237 S.W.3d 680, 693 (Tex.2007). Claims are

is not required.

properly severable if: (1) the controversy involves more than

one cause of action; (2) the severed claim is one that would be Id. (internal citations omitted); see also In re Miller, 202

the proper subject of a lawsuit if independently asserted; and S.W.3d 922, 925–26 (Tex.App.-Tyler 2006, orig. proceeding

(3) the severed claim is not so interwoven with the remaining [mand. denied] ); In re Trinity Universal Ins. Co., 64 S.W.3d

action that it involves the same facts and issues. Guar. Fed. 463, 468 (Tex.App.-Amarillo 2001, orig. proceeding [mand.

Sav. Bank v. Horseshoe Operating Co., 793 S.W.2d 652, 658 denied] ). Thus, in Liberty National, the Court opined a

(Tex.1990). Only the third element is in dispute here. settlement offer by an insurer may create a situation where

severance of an insured's contract claim is required. 927

S.W.2d at 630 (Tex.1996).

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 3

In re Progressive County Mut. Ins. Co., 439 S.W.3d 422 (2014)

the liability and underinsured status

There is no evidence in the record that Progressive made a of the other motorist. Therefore, [the

settlement offer to *426 Guia. However, Liberty National insurer] should not be required to

does not limit severance to cases where such an offer has been put forth the effort and expense of

made, instead holding that “other compelling circumstances” conducting discovery, preparing for

may also require severance. Id. In the case before us, a trial, and conducting voir dire

Progressive argues that “other compelling circumstances” on bad faith claims that could be

should include the effort and cost associated with conducting rendered moot by the portion of

discovery on extra-contractual claims that have not yet the trial relating to [underinsured

accrued because the insured's breach-of-contract claim has motorist] benefits. To require such

not yet been decided. would not do justice, avoid prejudice,

and further convenience. Under

Several courts of appeals have considered the issues of these circumstances, we conclude

severance and abatement in the context of uninsured motorist the trial court abused its discretion

or underinsured motorist insurance coverage; these courts in bifurcating the case instead of

have concluded that, when uninsured motorist claims are severing and abating the [underinsured

involved, severance of the extra-contractual claims was motorist] claim from the bad faith

required. See In re Am. Nat'l Cnty. Mut. Ins. Co., 384 S.W.3d claims.

429 (Tex.App.-Austin 2012, orig. proceeding) (concluding

trial court abused discretion by denying insurer's motion for In re United Fire Lloyds, 327 S.W.3d at 256. 2

severance and abatement of extra-contractual claims where

settlement offer was made on underinsured motorist claim); *427 [8] In this case, to prevail on her extra-contractual

In re Reynolds, 369 S.W.3d 638, 650–55 (Tex.App.-Tyler claims against Progressive, Guia must demonstrate that

2012, orig. proceeding) (holding severance of underinsured Progressive was contractually obligated to pay her uninsured

motorist claim was required to prevent prejudice); In re motorist claim. To do this, Guia must first prove that she had

United Fire Lloyds, 327 S.W.3d 250, 257 (Tex.App.-San uninsured motorist coverage, that the other driver negligently

Antonio 2010, orig. proceeding) (finding abuse of discretion caused the accident and was uninsured, and the amount of her

in granting motion for bifurcation of trial rather than damages. See In re Reynolds, 369 S.W.3d at 652. It appears

severance and abatement of extra-contractual claims); see that the first issue is not in dispute. Therefore, Guia's breach-

also In re Old Am. Cnty. Mut. Fire Ins. Co., No. 13– of-contract claim will essentially involve the issues in a

12–00700–CV, 2013 WL 398866 (Tex.App.-Corpus Christi typical car wreck: the comparative negligence of Guia and the

January 30, 2013, orig. proceeding) (mem. op.) (holding other driver and Guia's damages. The bad faith claim here is

that severance and abatement of extra-contractual claims more complicated. In her most recent petition, she alleges that

is required in many instances when insured asserts claim Progressive breached their duty of good faith and fair dealing,

to uninsured or underinsured motorist benefits); In re violated the insurance code by failing to timely pay the

Farmers Tex. Cnty. Mut. Ins. Co., No. 07–11–00396–CV, claim, and further alleges Progressive's conduct was knowing

2011 WL 4916303, (Tex.App.-Amarillo Oct. 17, 2011, and intentional in violation of the Deceptive Trade Practices

orig. proceeding) (mem. op.) (denying mandamus because Act. In discovery, Guia seeks production of all documents

complaint was not preserved, but agreeing that abatement of related to lawsuits and claims against Progressive regarding

extra-contractual claims is required in most instances when the denial of uninsured/underinsured motorist claims for over

an insured asserts claim to uninsured motorist benefits). ten years. Examples of these requests include:

The San Antonio Court of Appeals explained its Request 3. Produce all documents of any type as to claims

determination that mandamus relief was proper to compel asserted against Progressive during period from January

severance and abatement of an underinsured motorist claim 1, 2001, up to and including present day as a result of

from related bad faith claims as follows: nonpayment of uninsured/underinsured motorist claims in

Texas regardless of whether a lawsuit was filed and/or

[The insurer] is under no contractual liability was denied.

duty to pay [underinsured motorist]

benefits until [the insured] establishes

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 4

In re Progressive County Mut. Ins. Co., 439 S.W.3d 422 (2014)

Walker, 827 S.W.2d at 839. The Corpus Christi Court of

Request 4. Produce all documents of any type as to

Appeals in In re United Fire Lloyds concluded the insurer

all lawsuits filed against Progressive during period from

did not have an adequate remedy by appeal because, if a

January 1, 2001, up to and including present day, as a result

writ of mandamus were not granted, the insurer stood to lose

of nonpayment of uninsured/underinsured motorist claims

substantial rights by being required to prepare for claims that

in Texas regardless of whether liability was denied.

might be rendered moot and never even accrue. In re Fire

... Lloyds, 327 S.W.3d at 256 (citing U.S. Fire Ins. Co., 847

S.W.2d at 675; In re Trinity Universal Ins. Co., 64 S.W.3d

Request 16. A copy of each and every policy, manual, at 468).

protocol, instruction booklet or similar writing concerning

procedures for the investigation and handling of uninsured/ The Corpus Christi Court of Appeals agreed. See In re Old

underinsured motorist claim which was in effect at the time Am. Cnty. Mut. Fire Ins. Co., 2013 WL 398866. Likewise,

Plaintiff made her claims in this case, and for the seven other appellate courts have also found these claims do not

years preceding Progressive's denial of Plaintiff's claim. have an adequate remedy by appeal. See In re Am. Nat'l Cnty.

Mut. Ins. Co., 384 S.W.3d 429, 439; In re Reynolds, 369

These requested documents are irrelevant to the breach-of-

S.W.3d at 658; In re United Fire Lloyds, 327 S.W.3d at 256.

contract claim, and the introduction of Progressive's claims

handling history in unrelated accidents at the trial of Guia's

breach-of-contract claim would be manifestly unjust. See

Womack v. Berry, 291 S.W.2d at 682–83 (Tex.1956) (orig. Conclusion

proceeding).

Based on our review of the record, we conclude that Guia's

extra-contractual claims against Progressive are severable,

The trial court's abatement of any decision on severance until

the facts and circumstances of the case require a severance to

the eve of trial requires the parties to engage in discovery

prevent manifest injustice, and the legal rights of the parties

on the extra-contractual claims and prepare for a trial on

will not be prejudiced thereby. See Womack, 291 S.W.2d

these claims, even though extra-contractual liability could

at 683. The trial court, therefore, abused its discretion in

only accrue if Progressive is found liable on the contract. See

refusing to sever and abate the uninsured motorist claims

In re United Fire Lloyds, 327 S.W.3d at 256. Accordingly,

from the bad faith claims pending the determination of

the trial court's decision to postpone severance, unless writ

Progressive's liability for the uninsured motorist damages

is granted, will require Progressive to expend resources

under the policy. See In re Am. Nat'l Cnty. Mut. Ins. Co., 384

answering discovery that is far broader than the car accident

S.W.3d 429; In re Reynolds, 369 S.W.3d at 650–55; In re

claim that must be resolved.

United Fire Lloyds, 327 S.W.3d at 257; see also In re Old Am.

Cnty. Mut. Fire Ins. Co., 2013 WL 398866; In re Farmers

Consistent with In re Reynolds and In re United Fire Lloyds,

Tex. Cnty. Mut. Ins. Co., 2011 WL 4916303.

we conclude that severance of insured's extra-contractual

claims is required in this instance to avoid prejudice.

We conditionally grant Progressive's writ of mandamus and

order the trial court to vacate the February 11, 2014 Order,

grant Progressive County Mutual Insurance Company's

Adequate Remedy by Appeal Motion to Sever, and abate the extra-contractual claims. We

are confident that the trial court will promptly comply, and

[9] A writ of mandamus will issue only if there is no

our writ will issue only if it does not.

adequate remedy available by direct appeal. See *428

Footnotes

1 The underlying case is Alma Guia v. Jessica Nicole Estes, Relinda Estes, Progressive Insurance Company and Progressive County

Mutual Insurance Company; No. 2012–57535, in the 215th District Court of Harris County, Texas, the Honorable Elaine H. Palmer

presiding.

2 The court relied on the Texas Supreme Court's reasoning in Brainard v. Trinity Universal Insurance Co., 216 S.W.3d 809 (Tex.2006),

but acknowledged that Brainard concerned timing of presentment of contract claim to determine whether party was entitled to

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 5

In re Progressive County Mut. Ins. Co., 439 S.W.3d 422 (2014)

attorney's fees under Chapter 38 of Texas Civil Practice and Remedies Code, rather than severance and abatement in the context

of uninsured motorist claim. See In re United Fire Lloyds, 327 S.W.3d 250, 257 (Tex.App.-San Antonio 2010, orig. proceeding)

(discussing Brainard, 216 S.W.3d at 818).

End of Document © 2014 Thomson Reuters. No claim to original U.S. Government Works.

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 6

TAB D

In re Allstate County Mut. Ins. Co., --- S.W.3d ---- (2014)

2014 WL 5285850

involves the same facts and issues. Vernon's

Ann.Texas Rules Civ.Proc., Rule 41.

2014 WL 5285850

Only the Westlaw citation is currently available. Cases that cite this headnote

NOTICE: THIS OPINION HAS NOT BEEN

RELEASED FOR PUBLICATION IN THE [2] Action

PERMANENT LAW REPORTS. UNTIL RELEASED, Severance of Actions

IT IS SUBJECT TO REVISION OR WITHDRAWAL. Controlling reasons to allow a severance

are to avoid prejudice, do justice, and

Court of Appeals of Texas,

promote convenience. Vernon's Ann.Texas

Houston (1st Dist.).

Rules Civ.Proc., Rule 41.

In re ALLSTATE COUNTY MUTUAL

Cases that cite this headnote

INSURANCE COMPANY, Relator.

No. 01–14–00068–CV. | Oct. 16, 2014. [3] Action

Severance of Actions

Synopsis

Trial court has a duty to order severance when

Background: Insured brought action against underinsured

all of the facts and circumstances of the case

motorist (UIM) carrier to recover for breach of contract,

unquestionably require a separate trial to prevent

breach of duty of good faith in settlement, and

manifest injustice, and there is no fact or

misrepresentation of insurance policy. The 240th District

circumstance supporting or tending to support a

Court, Fort Bend County, Pedro Ruiz, J., denied carrier's

contrary conclusion, and the legal rights of the

motion to sever and abate extra-contractual claims. Carrier

parties will not be prejudiced thereby. Vernon's

petitioned for writ of mandamus.

Ann.Texas Rules Civ.Proc., Rule 41.

Cases that cite this headnote

Holdings: The Court of Appeals, Sherry Radack, C.J., held

that: [4] Insurance

Settlement Duties; Bad Faith

[1] severance of settlement claims was required, but

An insurer generally cannot be liable for failing

to settle or investigate a claim that it has no

[2] severance of misrepresentation claims was not required.

contractual duty to pay.

Cases that cite this headnote

Writ granted in part.

[5] Insurance

Uninsured or Underinsured Motorist

West Headnotes (8)

Coverage

Insurance

[1] Action Necessity of Tort Liability

Severance of Actions Insurance

Claims are properly severable if: (1) the Underinsurance; Exhausted Coverage

controversy involves more than one cause of In the context of underinsured motorist

action; (2) the severed claim is one that would be coverage, an insurer is under no contractual

the proper subject of a lawsuit if independently duty to pay underinsured motorist benefits

asserted; and (3) the severed claim is not so until the insured proves that the insured

interwoven with the remaining action that it has underinsured motorist coverage, that the

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 1

In re Allstate County Mut. Ins. Co., --- S.W.3d ---- (2014)

2014 WL 5285850

underinsured motorist negligently caused the promote convenience and judicial economy.

accident that resulted in the covered damages, Vernon's Ann.Texas Rules Civ.Proc., Rule 41.

the amount of the insured's damages, and that

the underinsured motorist's insurance coverage is Cases that cite this headnote

deficient.

Cases that cite this headnote

Attorneys and Law Firms

[6] Insurance

Ronald J. Restrepo, Nicole S. Bakare, N. Kimberly Hoesl,

Duty to Settle or Pay

Doyle, Restrepo, Harvin & Robbins, L.L.P., Houston, TX, for

Insurance Appellant.

Investigations and Inspections

An insured generally must first establish that the David L. Miller, Diane F. Burgess, Miller, Scamardi &

insurer is liable on the contract before the insured Carrabba, P.C., Houston, TX, for Appellee.

can recover on extra-contractual causes of action

Panel consists of Chief Justice RADACK and Justices

against an insurer for failing to promptly pay,

JENNINGS and KEYES.

failing to settle, or failing to investigate an

underinsured motorist insurance claim.

OPINION

Cases that cite this headnote

SHERRY RADACK, Chief Justice.

[7] Action *1 Relator, Allstate County Mutual Insurance Company,

Severance of Actions seeks a writ of mandamus compelling the trial court to (1)

Severance of insured's settlement claims from vacate its December 10, 2013 order denying Allstate's motion

breach of contract claim was required in order to sever and abate extra-contractual and bad faith claims

to avoid prejudice and prevent manifest injustice asserted against it and (2) enter an order severing and abating

to underinsured motorist (UIM) carrier from those extra-contractual and bad faith claims until the breach

need to expend resources answering discovery of contract claim brought by the real parties in interest,

far broader than car accident claim; allowing Raymond Briers, Jr. and Stacy Briers (collectively, Briers),

insureds to conduct broad discovery into carrier's individually and as representatives of the estate of Grant

claims handling history regarding unrelated Briers, has been resolved. 1 We partially grant relief.

accidents and then allowing introduction of such

information at trial of breach of contract claim

would be manifestly unjust. Vernon's Ann.Texas

Rules Civ.Proc., Rule 41. Background

Cases that cite this headnote The Briers' minor son, Grant, was riding in a vehicle driven

and owned by DaYonajja Williams when the vehicle was

involved in a single-vehicle automobile collision. Grant died

[8] Action as a result of the automobile accident. Following Grant's

Severance of Actions death, the Briers filed a claim for underinsured motorist

Trial court acted within its discretion when it benefits with Allstate, pursuant to a business auto policy

denied underinsured motorist (UIM) carrier's issued by Allstate to Raymond Briers Jr.'s employer, T &

motion to sever insureds' misrepresentation R Pipeline Services, Inc. Allstate denied the Briers' claim,

claims from breach of contract claim; stating that neither Raymond nor Grant was an “insured”

misrepresentation claims were asserted as under the policy and therefore they were not covered for an

alternative causes of action to the breach of underinsured motorist claim.

contract claim, and, therefore, requiring carrier

to litigate the claims at the same time would

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 2

In re Allstate County Mut. Ins. Co., --- S.W.3d ---- (2014)

2014 WL 5285850

The Briers then filed suit against Allstate, seeking a to clear error. See id. (quoting Johnson v. Fourth Court of

declaratory judgment stating that the Briers were covered by Appeals, 700 S.W.2d 916, 917 (Tex.1985)). Because a trial

the policy and alleging, in a paragraph styled “Breach of court has no discretion in determining what the law is, the trial

Contract,” that Allstate breached the underinsured motorist court abuses its discretion if it clearly fails to analyze or apply

provisions of the insurance contract. The Briers also asserted the law correctly. See id. at 840. “To satisfy the clear abuse of

the following extra-contractual causes of action: (1) that discretion standard, the relator must show ‘that the trial court

Allstate acted in bad faith by failing to settle or make a good could reasonably have reached only one decision.’”Liberty

faith attempt to settle the claim, which the Briers styled as Nat'l Fire Ins. Co. v. Akin, 927 S.W.2d 627, 630 (Tex.1996)

“Bad Faith”; (2) that Allstate engaged in unfair settlement (orig. proceeding) (quoting Walker, 827 S.W.2d at 840).

practices by failing to make a good faith settlement offer,

in violation of Texas Insurance Code section 541.060(a) “In determining whether appeal is an adequate remedy, [we]

(2), styled as “Unfair Settlement Practices”; and (3) that consider whether the benefits outweigh the detriments of

Allstate failed to properly investigate, evaluate, and pay mandamus review.”In re BP Prods. N. Am., Inc., 244 S.W.3d

the Briers' claim, in violation of Texas Insurance Code 840, 845 (Tex.2008) (orig. proceeding). We also consider

section 541.060(a)(7), styled as “Failure to Promptly Pay “whether mandamus will spare litigants and the public ‘the

Claims” (collectively, “settlement claims”). time and money utterly wasted enduring eventual reversal

of improperly conducted proceedings.’”In re Team Rocket,

The Briers further alleged, in the event the trial court L.P., 256 S.W.3d 257, 262 (Tex.2008) (orig. proceeding)

determined that they were not covered by the underinsured (quoting In re Prudential Ins. Co. of Am., 148 S.W.3d 124,

motorist provisions in the policy, the following alternative 136 (Tex.2004) (orig. proceeding)).

causes of action: (1) that Allstate, Insurance Network of

Texas, Eddie Croix Insurance Agency, Inc., and Randy Croix

made material misrepresentations of fact and of law and failed

Severance of Extra–Contractual and Bad Faith Claims

to disclose a matter required to be disclosed, in violation of

Texas Insurance Code section 541.061(3), (4), and (5), which [1] [2] Texas Rule of Civil Procedure 41 governs severance

they styled as “Misrepresentation of the Insurance Policy”; of claims. SeeTEX.R. CIV. P. 41. The rule provides, in

and (2) that Allstate, Insurance Network of Texas, Eddie part, that “[a]ny claim against a party may be severed and

Croix Insurance Agency, Inc., and Randy Croix violated the proceeded with separately.”Id. Claims are properly severable

Deceptive Trade Practices Act by representing that the Briers if: (1) the controversy involves more than one cause of action;

were covered under the policy, when they were not, styled as (2) the severed claim is one that would be the proper subject

“Violations of the DTPA” (collectively, “misrepresentation of a lawsuit if independently asserted; and (3) the severed

claims”). claim is not so interwoven with the remaining action that it

involves the same facts and issues. Guar. Fed. Sav. Bank v.

*2 Allstate filed a motion to sever the extra-contractual Horseshoe Operating Co., 793 S.W.2d 652, 658 (Tex.1990).

claims from the breach of contract claim and abate those The controlling reasons to allow a severance are to avoid

claims until the preliminary issue of coverage could be prejudice, do justice, and promote convenience. F.F.P. Op.

decided. The trial court denied the motion. Allstate filed this Partners, L.P. v. Duenez, 237 S.W.3d 680, 693 (Tex.2007).

petition for a writ of mandamus, seeking to compel severance

and abatement. [3] The trial court has “broad” discretion in the severance

of causes of action. Morgan v. Compugraphic Corp., 675

S.W.2d 729, 734 (Tex.1984); Black v. Smith, 956 S.W.2d 72,

Standard of Review 75 (Tex.App.-Houston [14th Dist.] 1997, orig. proceeding).

However, that discretion is not unlimited. See U.S. Fire Ins.

We may issue a writ of mandamus to correct a trial court's Co. v. Millard, 847 S.W.2d 668, 671 (Tex.App.-Houston [1st

clear abuse of discretion or violation of a duty imposed by Dist.] 1993, orig. proceeding). The trial court has a duty to

law when no adequate remedy by appeal exists. See Walker v. order severance when “all of the facts and circumstances of

Packer, 827 S.W.2d 833, 839 (Tex.1992) (orig. proceeding). the case unquestionably require a separate trial to prevent

A clear abuse of discretion occurs when the trial court's manifest injustice, and there is no fact or circumstance

decision is so arbitrary and unreasonable that it amounts supporting or tending to support a contrary conclusion, and

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 3

In re Allstate County Mut. Ins. Co., --- S.W.3d ---- (2014)

2014 WL 5285850

the legal rights of the parties will not be prejudiced thereby Because the settlement claims asserted solely against Allstate

....” Womack v. Berry, 156 Tex. 44, 291 S.W.2d 677, 683 differ from the misrepresentation claims asserted against

(1956) (orig. proceeding). Allstate, Insurance Network of Texas, Eddie Croix Insurance

Agency, Inc., and Randy Croix, we will consider the

*3 In the context of insurance cases, a “breach of an settlement claims separately from the misrepresentation

insurance contract claim is separate and distinct from bad claims.

faith, Insurance Code or DTPA causes of action. Uninsured

motorist claims and bad faith claims have been recognized

as separate and distinct causes of action which might Severance of the Settlement Claims Is Mandatory

each constitute a complete lawsuit within itself.”Millard, In their settlement claims, the Briers allege that Allstate acted

847 S.W.2d at 672 (internal citations omitted); see Akin, in bad faith by failing to settle their contractual claim, that

927 S.W.2d at 629; In re Am. Nat'l Cnty. Mut. Ins. Allstate failed to make a good faith settlement offer, and that

Co., 384 S.W.3d 429, 433 (Tex.App.-Austin 2012, orig. Allstate failed to properly investigate their contractual claim.

proceeding); In re United Fire Lloyds, 327 S.W.3d 250,

254 (Tex.App.-San Antonio 2010, orig. proceeding). “But, *4 [4] [5] [6] An insurer generally cannot be liable for

in most circumstances, an insured may not prevail on a bad failing to settle or investigate a claim that it has no contractual

faith claim without first showing that the insurer breached duty to pay. See Progressive Cnty. Mut. Ins. Co. v. Boyd, 177

the contract.” Akin, 927 S.W.2d at 629; see also In re S.W.3d 919, 922 (Tex.2005); Akin, 927 S.W.2d at 629 (“But,

Progressive Cnty. Mut. Ins. Co., 439 S.W.3d 422, 426– in most circumstances, an insured may not prevail on a bad

27 (Tex.App.-Houston [1st Dist.] 2014, orig. proceeding) faith claim without first showing that the insurer breached

(stating that “extra-contractual liability could only accrue if the contract.”); In re Old Am. Cnty. Mut. Fire Ins. Co., 2013

[insurer] is found liable on the contract”); In re Old Am. WL 398866, at *4; In re State Farm Mut. Auto. Ins. Co.,

Cnty. Mut. Fire Ins. Co., No. 13–12–00700–CV, 2013 WL 395 S.W.3d at 237–38; In re Am. Nat'l Cnty. Mut. Ins. Co.,

398866, at *4 (Tex.App.-Corpus Christi Jan. 30, 2013, orig. 384 S.W.3d at 437–38; In re United Fire Lloyds, 327 S.W.3d

proceeding) (“[T]o prevail on their extra-contractual claims at 256; In re Miller, 202 S.W.3d 922, 925 (Tex.App.-Tyler

against Old American, plaintiffs must first demonstrate that 2006, orig. proceeding); Millard, 847 S.W.2d at 673. In the

Old American was contractually obligated to pay their context of underinsured motorist coverage, an insurer is under

uninsured motorist claim.”); In re State Farm Mut. Auto. Ins. no contractual duty to pay underinsured motorist benefits

Co., 395 S.W.3d 229, 238 (Tex.App.-El Paso 2012, orig. until the insured proves that the insured has underinsured

proceeding) (quoting Smith v. Allstate Ins., No. H–03–0651, motorist coverage, that the underinsured motorist negligently

2007 WL 677992, at *5 (S.D.Tex. Feb. 27, 2007)) (“Texas caused the accident that resulted in the covered damages, the

insurance law generally conditions recovery for bad faith amount of the insured's damages, and that the underinsured

and extracontractual claims on a recovery for breach of the motorist's insurance coverage is deficient. See Brainard v.

insurance contract itself”). And, in insurance cases involving Trinity Universal Ins. Co., 216 S.W.3d 809, 818 (Tex.2006);

bad faith claims, the Texas Supreme Court has recognized In re Old Am. Cnty. Mut. Fire Ins. Co., 2013 WL 398866,

that severance may be necessary if the “insurer has made a at *4; In re United Fire Lloyds, 327 S.W.3d at 255. Thus,

settlement offer on the disputed contract claim” or if there are an insured generally must first establish that the insurer is

“other compelling circumstances.” Akin, 927 S.W.2d at 630. liable on the contract before the insured can recover on extra-

contractual causes of action against an insurer for failing

There is no evidence in the record that Allstate made a to promptly pay, failing to settle, or failing to investigate

settlement offer to the Briers. Nevertheless, Allstate argues an underinsured motorist insurance claim. See Akin, 927

that there are “other compelling circumstances” requiring S.W.2d at 629; In re Progressive Cnty. Mut. Ins. Co., 439

severance of the extra-contractual claims in this case, namely, S.W.3d at 426–27; In re Old Am. Cnty. Mut. Fire Ins. Co.,

the time, effort, costs, and judicial resources associated with 2013 WL 398866, at *4; In re State Farm Mut. Auto. Ins.

litigating and preparing for trial on extra-contractual claims Co., 395 S.W.3d at 238 (quoting Smith, 2007 WL 677992,

that have not yet accrued because the Briers have not yet at *5); see also In re Am. Nat'lCnty. Mut. Ins. Co., 384

established a contractual right to recovery on the breach of S.W.3d at 437–38 (holding that “any duty by an insurer to its

contract claim. insured, common-law or statutory, necessarily arises from the

contractual relationship between the parties,” and that insurer

has no duty to settle claim that it is not contractually obligated

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 4

In re Allstate County Mut. Ins. Co., --- S.W.3d ---- (2014)

2014 WL 5285850

to pay, insurer cannot be liable on bad faith claims arising 398866, at *4; In re State Farm Mut. Auto. Ins. Co., 395

from failure to investigate claim that it has no duty to pay, and S.W.3d at 237–39; In re Am. Nat'l Cnty. Mut. Ins. Co., 384

insurer cannot be liable for insurance code violations related S.W.3d at 437–39; In re United Fire Lloyds, 327 S.W.3d at

to delays in making offer on claims it has no duty to pay). 256; Millard, 847 S.W.2d at 673. Further, allowing the Briers

As a result, “Texas case law establishes that severance and to conduct broad discovery into Allstate's claims handling

abatement of extra-contractual claims is required in many history regarding unrelated accidents and then allowing the

instances in which an insured asserts a claim to uninsured or introduction of such information at the trial of the Briers'

underinsured motorist benefits.”In re Old Am. Cnty. Mut. Fire breach of contract claim would be manifestly unjust. 3 See In

Ins. Co., 2013 WL 398866, at *4; see also In re Progressive re Progressive Cnty. Mut. Ins. Co., 439 S.W.3d at 426–27;

Cnty. Mut. Ins. Co., 439 S.W.3d at 426–28; In re Am. Nat'l In re Old Am. Cnty. Mut. Fire Ins. Co., 2013 WL 398866,

Cnty. Mut. Ins. Co., 384 S.W.3d at 438–39; In re United Fire at *4. Finally, severance of the Briers' settlement claims

Lloyds, 327 S.W.3d at 255–56. from the breach of contract claim would not prejudice the

parties' rights. Accordingly, we conclude that severance of the

[7] In this case, the Briers allege that Allstate failed to settle settlement claims was required. See Boyd, 177 S.W.3d at 922;

their claim, failed to make a good faith settlement offer to Womack, 291 S.W.2d at 683; In re Progressive Cnty. Mut.

them, and failed to properly investigate, evaluate, and pay Ins. Co., 439 S.W.3d at 426–28; In re Old Am. Cnty. Mut. Fire

their claim. To prevail on these claims, the Briers must first Ins. Co., 2013 WL 398866, at *4; In re State Farm Mut. Auto.

establish that Allstate is liable under the insurance contract 2 Ins. Co., 395 S.W.3d at 237–39; In re Am. Nat'l Cnty. Mut.

by proving: (1) they were covered by the insurance policy Ins. Co., 384 S.W.3d at 437–39; In re United Fire Lloyds, 327

Allstate issued to T & R Pipeline; (2) Williams negligently S.W.3d at 256; Millard, 847 S.W.2d at 673.

caused the automobile collision that resulted in Grant's death;

(3) the amount of their damages; and (4) Williams was either

uninsured or underinsured. See In re Old Am. Cnty. Mut. Fire Severance of the Misrepresentation Claims Is Not

Ins. Co., 2013 WL 398866, at *4; In re State Farm Mut. Auto. Mandatory

Ins. Co., 395 S.W.3d at 237–38. There is no evidence in the [8] The Briers alleged the misrepresentation claims as

record showing that the Briers have established that Allstate alternatives to their breach of contract claim. Unlike the

is liable under the insurance contract. As a result, the Briers' settlement claims, the misrepresentation claims do not allege

settlement claims would be negated by a determination in the that Allstate failed to act in good faith to comply with

breach of contract claim that Allstate is not liable. See Boyd, duties imposed by the insurance contract, but instead allege

177 S.W.3d at 922; In re Progressive Cnty. Mut. Ins. Co., that the Briers are entitled to damages even if they are

439 S.W.3d at 426–27 (stating that “extra-contractual liability not covered by the insurance contract. In these claims, the

could only accrue if [insurer] is found liable on the contract”); Briers alleged that Allstate, Insurance Network of Texas,

In re Old Am. Cnty. Mut. Fire Ins. Co., 2013 WL 398866, Eddie Croix Insurance Agency, Inc., and Randy Croix made

at *4 (“[T]o prevail on their extra-contractual claims against material misrepresentations and misstatements of law related

Old American, plaintiffs must first demonstrate that Old to the insurance policy issued by Allstate to T & R Pipeline

American was contractually obligated to pay their uninsured that the Briers relied on to their detriment. SeeTEX. BUS.

motorist claim.”); In re State Farm Mut. Auto. Ins. Co., 395 & COMM.CODE ANN. § 17.46(b)(5), (b)(12) (West 2011);

S.W.3d at 239; In re Am. Nat'l Cnty. Mut. Ins. Co., 384 TEX. INS.CODE ANN. §§ 541.061, 541.151 (West 2009);

S.W.3d at 438; In re United Fire Lloyds, 327 S.W.3d at 256; Celtic Life Ins. Co. v. Coats, 885 S.W.2d 96, 97–100

Millard, 847 S.W.2d at 675. (Tex.1994); Brown & Brown of Tex., Inc. v. Omni Metals,

Inc., 317 S.W.3d 361, 381 (Tex.App.-Houston [1st Dist.]

*5 Because the Briers' settlement claims would be negated 2010, pet. denied).

by a determination that they lacked coverage under the

insurance contract, requiring Allstate to prepare for and The Briers sued Insurance Network of Texas, Eddie Croix

litigate the settlement claims, which may have not yet accrued Insurance Agency, Inc., and Randy Croix as agents of Allstate

and may be rendered moot by the breach of contract claim, and allege that the insurance policy at issue was sold by

would not do justice, avoid prejudice, or further convenience. Randy Croix, as an agent for Allstate. Therefore, if Allstate is

See In re Progressive Cnty. Mut. Ins. Co., 439 S.W.3d at liable for the allegations in the misrepresentation claims, the

426–28; In re Old Am. Cnty. Mut. Fire Ins. Co., 2013 WL liability would be based on Randy Croix's actions as Allstate's

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 5

In re Allstate County Mut. Ins. Co., --- S.W.3d ---- (2014)

2014 WL 5285850

agent. See, e.g., Coats, 885 S.W.2d at 98 (“An insurance Accordingly, we conclude that the trial court acted within its

company is generally liable for any misconduct by an agent discretion when it denied Allstate's motion to sever insofar as

that is within the actual or apparent scope of the agent's Allstate requested severance of the misrepresentation claims

authority.”); Omni Metals, Inc., 317 S.W.3d at 377–78, 381. from the breach of contract claim. See Duenez, 237 S.W.3d

In its motion requesting severance, Allstate sought severance at 693; Morgan, 675 S.W.2d at 734; Womack, 291 S.W.2d at

of the misrepresentation claims alleged against Allstate from 683.

the Briers' breach of contract claim. But the record before the

Court reflects neither that the other defendants filed a similar

motion nor that Allstate sought severance of the Briers' claims

Adequate Remedy by Appeal

asserted against it from the claims asserted against the other

defendants. As a result, the Briers' misrepresentation claims If the Briers' settlement claims are tried with the breach of

against Allstate involve the same facts and issues as, and contract claim, the trial court and the parties will be required

are interwoven with, the misrepresentation claims against to conduct discovery, prepare for trial, and conduct voir dire

Insurance Network of Texas, Eddie Croix Insurance Agency, on claims that may have not yet accrued and that could be

Inc., and Randy Croix, which claims would remain pending rendered moot by the portion of the trial relating to breach

in the underlying lawsuit regardless of any severance of of contract for underinsured motorist benefits. See In re

these claims against Allstate. See Guar. Fed. Sav. Bank, 793 Progressive Cnty. Mut. Ins. Co., 439 S.W.3d at 427–28; In

S.W.2d at 658. re Old Am. Cnty. Mut. Fire Ins. Co., 2013 WL 398866, at

*4; In re Am. Nat'l Cnty. Mut. Ins. Co., 384 S.W.3d at 439;

*6 Further, the misrepresentation claims are not bad Millard, 847 S.W.2d at 675–76. Accordingly, we conclude

faith claims, are not dependent upon a determination that Allstate has no adequate remedy by appeal. See In re

that Allstate has a contractual duty to pay underinsured Progressive Cnty. Mut. Ins. Co., 439 S.W.3d at 427–28; In re

motorist benefits to the Briers, and will not be rendered Old Am. Cnty. Mut. Fire Ins. Co., 2013 WL 398866, at *4;

moot if Allstate prevails on the breach of contract claim. In re State Farm Mut. Auto. Ins. Co., 395 S.W.3d at 239; In

SeeTEX. BUS. & COMM.CODE ANN. § 17.46(b)(5), (b) re Am. Nat'l Cnty. Mut. Ins. Co., 384 S.W.3d at 439; In re

(12); TEX. INS.CODE ANN. § 541.061(3), (4), (5). The United Fire Lloyds, 327 S.W.3d at 256; Millard, 847 S.W.2d

misrepresentation claims, like promissory estoppel claims, at 675–76.

are asserted as alternative causes of action to the breach

of contract claim, alleging that Allstate, Insurance Network

of Texas, Eddie Croix Insurance Agency, Inc., and Randy

Croix are liable for the Briers' damages even if the Briers Conclusion

are not covered by the insurance policy. CompareTEX. Based on our review of the record, we conclude that the

BUS. & COMM.CODE ANN. § 17.46(b)(5), (b)(12); TEX. Briers' settlement claims are severable from the breach of

INS.CODE ANN. §§ 541.061(3), (4), (5), 541.151, with contract claim, the facts and circumstances of the case require

Miller v. Raytheon Aircraft Co., 229 S.W.3d 358, 378– a severance to prevent manifest injustice, and the legal rights

79 (Tex.App.-Houston [1st Dist.] 2007, no pet.)(stating of the parties will not be prejudiced thereby. See Womack,

elements of promissory estoppel claim). Therefore, unlike 291 S.W.2d at 683. The trial court, therefore, abused its

the Briers' settlement claims, requiring Allstate to litigate discretion in refusing to sever the Briers' settlement claims

the misrepresentation claims at the same time as the breach from the breach of contract claim and abate the settlement

of contract claim would promote convenience and judicial claims pending the determination of Allstate's liability for

economy. the breach of contract claim. See In re Am. Nat'l Cnty. Mut.

Ins. Co., 384 S.W.3d at 439; In re Reynolds, 369 S.W.3d

Finally, Allstate has not offered evidence to demonstrate how 638, 650–55 (Tex.App.-Tyler 2012, orig. proceeding); In re

it will be prejudiced if it has to prepare for and litigate the United Fire Lloyds, 327 S.W.3d at 257; see also In re Old Am.

misrepresentation claims in conjunction with the breach of Cnty. Mut. Fire Ins. Co., 2013 WL 398866, at *4–5.

contract claim. See Allstate Ins. Co. v. Hunter, 865 S.W.2d

189, 194 (Tex.App.-Corpus Christi 1993, orig. proceeding). *7 We further conclude, however, that the facts and

circumstances of the case do not require severance of the

Briers' misrepresentation claims from their breach of contract

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 6

In re Allstate County Mut. Ins. Co., --- S.W.3d ---- (2014)

2014 WL 5285850

Nevertheless, because the trial court did not abuse its

claim and that the trial court properly exercised its discretion

discretion when it determined that the “Misrepresentation of

in determining that the misrepresentation claims should be

the Insurance Policy” claim and the “Violations of the DTPA”

tried with the breach of contract claim.

claim should remain pending with the breach of contract

claim, we deny Allstate's petition for writ of mandamus

Accordingly, we conditionally grant Allstate's petition for

insofar as it requests an order compelling the trial court

writ of mandamus in part and order the trial court to (1)

to sever and abate the Briers' “Misrepresentation of the

vacate the portion of the December 10, 2013 order that

Insurance Policy” and “Violations of the DTPA” causes of

denies severance and abatement of the “Bad Faith,” “Unfair

action.

Settlement Practices,” and “Failure to Promptly Pay Claims”

causes of action, (2) grant Allstate's motion to sever as to

We are confident that the trial court will promptly comply,

those causes of action, and (3) abate those causes of action

and our writ will issue only if it does not.

until the Briers' breach of contract claim is resolved.

Footnotes

1 The underlying case is Raymond Briers, Jr. and Stacy Briers, Individually, and as Representatives of the Estate of Grant Briers,

Deceased v. Allstate County Mutual Insurance Company, Insurance Network of Texas, Ed die Croix Insurance Agency, Inc., and

Randy S. Croix, cause number 12–DCV–198995, pending in the 240th District Court of Fort Bend County, Texas, the Hon. Pedro

Ruiz presiding.

2 The Supreme Court has “left open the possibility that an insurer's denial of a claim it was not obliged to pay might nevertheless be in

bad faith if its conduct was extreme and produced damages unrelated to and independent of the policy claim.”Progressive Cnty. Mut.

Ins. Co. v. Boyd, 177 S.W.3d 919, 922 (Tex.2005). The Briers have not, however, alleged that Allstate engaged in any “extreme”

conduct that “produced damages unrelated to and independent of the policy claim.”Id.; see In re Am. Nat'l Cnty. Mut. Ins. Co., 384

S.W.3d 429, 438 (Tex.App.-Austin 2012, orig. proceeding). The Briers allege only that Allstate improperly denied their claim and

failed to fairly investigate their claim. See Boyd, 177 S.W.3d at 922; In re Am. Nat'l Cnty. Mut. Ins. Co., 384 S.W.3d at 438.

3 In discovery, the Briers seek production of all documents related to lawsuits and claims against Allstate regarding the denial of claims

under business automobile policies. Examples of these requests include:

Request No. 33: Please produce all documents, communications or other tangible items evidencing the denial of any claim or

attempt to deny a claim by ALLSTATE under any Business Automobile policy, from 2000—present, for a claim asserted by

one insured based on another insured's status.

Request No. 42: Please produce your claims denial journal and any related documents for the past 10 years, relating to the denial

of any claim asserted pursuant to an ALLSTATE Business Automobile policy in Texas.

End of Document © 2014 Thomson Reuters. No claim to original U.S. Government Works.

© 2014 Thomson Reuters. No claim to original U.S. Government Works. 7