Watch the full video at https://rumble.com/v1rzphc-no-need-for-fiduciary-relationship-between-agent-and-insured.html and at https://youtu.be/upNV1bmfWcM
In the fall In Re United Financial Casualty Company, Relator, No. 14-22-00502-CV the The Court of Appeals of Texas, Fourteenth District (Nov. 3, 2022) ordered the issuance of a writ of mandate if the trial court refuses to follow its instructions to strike out untimely additional contract claims against the insurer.
United Financial Casualty Company (“United Financial”) filed a petition for summary judgment asking the Court of Appeals to compel the Honorable Lauren Reeder, Presiding Judge of the 234th District Court of Harris County, to vacate the trial court’s order on June 6, 2022. denying United Financial’s motion to to reduce real party in interest Elizabeth Echeverria’s (“Echeverria”) tort claims in an uninsured/underinsured motorist coverage lawsuit.
Echeverria was involved in a motor vehicle accident as a passenger in a vehicle driven by Uber driver Samir Tachbaroute (“Tachbaroute”). Carlos Lanausse-Ramos (“Lanausse-Ramos”) allegedly rear-ended Tachbaroute’s vehicle. Echeverria claims she suffered physical injuries as a result of this accident.
At the time of the accident, United Financial insured Tachbaroute under a commercial auto insurance policy with uninsured/underinsured (“UM/UIM”) coverage. Echeverria claimed uninsured bodily injury under this policy. Before Echeverria and United Financial settled the claim, Echeverria filed suit against United Financial.
In the lawsuit, Echeverria seeks declaratory relief to establish entitlement to UIM motorist benefits and for alleged violations of Insurance Code Chapters 541 and 542; breach of the duty of good faith and fair dealing; violation of the Texas Deceptive Trade Practices-Consumer Protection Act (“DTPA”); and fraud.
Although Echeverria has yet to receive a legal ruling that Lanausse-Ramos is responsible for the accident and is underinsured, Echeverria sued United Financial for the alleged violations.
The trial court denied the motion to strike Echeverria’s noncontractual claim.
In this original proceeding, United Financial contends that the trial court abused its discretion in denying United Financial’s motion to dismiss Echeverria’s tort claim. The Court of Appeals requested that Echeverria file an answer to the writ petition; but no response was filed.
MANDAMUS STANDARD OF REVIEW
Ordinarily, to be entitled to a writ of certiorari, the insurer(s) must show that the trial court clearly abused its discretion and that the insurer lacks an adequate remedy on appeal. Most such applications are denied due to the high standard of proving abuse of discretion. But if a court abuses its discretion if it acts arbitrarily, unreasonably or without regard to guiding principles of law. The trial court’s failure to properly analyze or apply the law constitutes an abuse of discretion.
The relator must also demonstrate that it does not have an adequate remedy at law, such as relief through an appeal. The Court of Appeals determines the appropriateness of an appeal right by balancing the advantages of mandamus review against the disadvantages. Mandamus relief is appropriate when a trial court abuses its discretion in denying a motion to sever extracontractual claims in a UIM case.
TERMINATION OF EXTRA AGREEMENT REQUIREMENTS
Abatement of Echeverria’s non-contractual claim is required pending resolution of the declaratory judgment and breach of contract claim. An insured’s claim for breach of an insurance contract is separate and independent from claims that the insurer breached its non-contractual common law and statutory obligations.
UIM claims and bad faith claims have been recognized as separate and distinct claims, each of which can constitute a complete lawsuit in its own right. A UIM insurer has no contractual obligation to pay benefits until the other driver’s liability and the extent of the insured’s damages have been determined. To recover benefits under a UIM policy, a policyholder must show:
- the insured has UIM coverage;
- the other driver negligently caused the accident that resulted in the covered injuries;
- the amount of the insured’s damages; and
- the other driver’s insurance coverage is deficient.
An insured must first establish that the insurer is liable under the contract before the insured can recover non-contractual claims against an insurer for failure to pay or settle a UIM insurance claim. Texas insurance law generally conditions recovery for bad faith and extracontractual claims for recovery for breach of the insurance contract itself.
ABUSE OF DISCRETION
Echeverria argued that United Financial, under the policy, was obligated to pay Echeverria UIM benefits for bodily injury caused by Lanausse-Ramos and Tachbaroute. Echeverria further alleged that, although she advised that she was seeking UIM benefits under the policy, United Financial failed to provide coverage. Nevertheless, United Financial has no contractual obligation to pay Echeverria UIM benefits until Echeverria determines Lanausse-Ramos’ liability and underinsured status.
The introduction of information regarding Echeverria’s non-contractual claim during the trial of Echeverria’s breach of contract claim would be manifestly unfair. Requiring United Financial to litigate the noncontractual claims with the breach of contract claim would not do justice, avoid prejudice, or further convenience. Therefore, the Court of Appeals concluded that the district court abused its discretion by failing to sever Echeverria’s noncontractual claims from her breach of contract claim.
NO APPELLATE REMEDY APPLICABLE
United Financial will lose the important right to have Echeverria’s non-contractual claims litigated with her breach of contract claim. An appellate court may consider whether mandamus will preserve important substantive and procedural rights from impairment or loss in determining whether the relative has adequate remedies on appeal.
When a bifurcated trial is denied under these circumstances, the insurer lacks an adequate right of appeal for the time and money completely wasted enduring a possible reversal of improperly conducted proceedings.
The Court of Appeals concluded that the trial court abused its discretion in denying United Financial’s motion to dismiss Echeverria’s tort claim and that United Financial lacks an adequate remedy on appeal. Accordingly, the Court of Appeals finds that United Financial is entitled to the relief sought and orders the trial court to vacate its June 6, 2022 order denying United Financial’s motion to dismiss Echeverria’s non-contractual claims and granting United Financial’s motion to dismiss extra-contractual claims.
When a person brings a tort action against a person who allegedly rear-ended the car in which she was riding and claims underinsured motorist benefits before proving that the defendant was underinsured, it was plainly unfair to allege bad faith when she could not prove that the other driver was underinsured. underinsured. Claims of bad faith do not belong in a lawsuit seeking damages from a third party.
(c) 2022 Barry Zalma & ClaimSchool, Inc.
Barry Zalma, Esq., CFE, now limits his practice to serving as an insurance consultant specializing in insurance coverage, insurance claims management, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims attorney and more than 54 years in the insurance industry. He can be reached at http://www.zalma.com and firstname.lastname@example.org. Subscribe and receive videos limited to Excellence in Claims Handling subscribers at locals.com https://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.
Write to Mr. Zalma at email@example.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published on https://zalma.substack.com. Go to the Zalma On Insurance podcast at https://anchor.fm/barry-zalma; Follow Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos on Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to Insurance Claims Library – https://zalma.com/blog/insurance-claims-library