In re Farmers Tex. Cnty. Mut. Ins. Co.

IN RE FARMERS TEXAS COUNTY MUTUAL INSURANCE COMPANY

No. 13-21-00083-CV

Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg

August 31, 2021

On Petition for Writ of Mandamus.

Before Chief Justice Contreras and Justices Longoria and Tijerina

MEMORANDUM OPINION

JAIME TIJERINA, JUSTICE ^[1]

Real party in interest Carlota Lozano brought the underlying case^[2] against her automobile insurer, relator Farmers Texas County Mutual Insurance Company (Farmers), asserting claims based on statutory violations of the Texas Insurance Code. She alleged that her lawsuit was "derived from, but not caused by" her claim for uninsured/underinsured motorist (UIM) benefits with Farmers "that was summarily rejected without an adequate and/or a reasonable evaluation as required by the Texas Insurance Code."^[3] By four issues Farmers contends that the trial court abused its discretion by denying Farmers's plea to the jurisdiction and alternatively, motion to abate, on the basis that Lozano has not yet obtained a judgment establishing the liability and underinsured status of the other motorist. We conditionally grant mandamus relief.

I. Background

The underlying lawsuit arose from a motor vehicle accident that occurred on or about January 12, 2017, involving Lozano and the underinsured driver of another vehicle. The other driver is not a party to the lawsuit or this original proceeding. In Lozano's "Fourth Amended Original Petition and Written Discovery to [Farmers]," filed solely against Farmers, Lozano alleged, in relevant part:

6. This action is derived from, but not caused by [Lozano's] filed claim for UIM benefits under a UIM insurance policy [Lozano] entered into with [Farmers] that was given short shrift, without an adequate and/or a reasonable evaluation as required by the Texas Insurance Code. [Lozano] was injured in a motor vehicle collision on or about January 12, 2017. She incurred "Escobedo"^[4] medical expenses in excess of $51, 000.00, with future medical expenses estimated over $87, 000.00. In addition to the medical expenses, [Lozano] sustained significant physical and mental injuries that she continues to suffer from to the day of this filing.

7. The third-party tortfeasor had no liability insurance to cover the damages sustained by [Lozano] resulting from the January 12, 2017 subject collision. [Lozano] formally notified [Farmers] on or about January 26, 2017 that the third-party tortfeasor was uninsured at the time of the subject collision and that she was making a claim under her own uninsured policy with [Farmers].^[5]

9. On August 11, 2017, [Lozano] sent a package of all documents necessary to evaluate [Lozano's] claims to [Farmers]. On September 13, 2017, Kyla Rippey, an adjuster employed by and on behalf of [Farmers], sent a letter offering [Lozano] a settlement that totaled less than the medical expenses [Lozano] had incurred up to that point. In other words, Kyla Rippey, on behalf of [Farmers] offered an amount that didn't even cover [Lozano's] incurred medical expenses, let alone anything for the documented future medical expenses [Lozano] was, within reasonable medical probability, anticipated to incur, or past and future physical pain and suffering and mental anguish. In that letter, Kyla Rippey failed to explain the facts or basis for the decision made after her "evaluation" of [Lozano's] uninsured claim. Kyla Rippey's dismissive, superficial and/or cursory response to [Lozano's] uninsured claim violated several sections of the Texas Insurance Code, and proximately caused [Lozano] to sustain new and independent compensable injuries and damages.

V. TEXAS INSURANCE CODE CLAIMS AGAINST DEFENDANT

10. [Lozano] is not seeking any of the proceeds of the uninsured insurance policy entered into with [Farmers] for [Farmers's] Texas Insurance Code violations. To be clear, the facts giving rise to [Lozano's] statutory claims and damages in this case are not derived from the January 12, 2017 collision itself, but rather the adjuster's actions and violations of [TEX. INS. CODE ANN.] § 541.061 et seq., which resulted in new and independent injuries and damages to [Lozano], including these specific violations:

11. VIOLATION OF § 541.060(a)(2): Kyla Rippey is required by the Texas Insurance Code § 541.060(a)(2) "to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer's liability has become reasonably clear." The liability of [Farmers] under the uninsured policy is reasonably clear given the liability facts in this case. What is also clear is that the final decision made by Kyla Rippey on behalf of [Farmers] was not a good faith attempt to effectuate a prompt, fair and equitable settlement of [Lozano's] claims given the amount of [Lozano's] "specials."

12. VIOLATION OF § 541.060(a)(3): Furthermore, the letter authored by Kyla Rippey violated § 541.060(a)(3) because she did not provide "a reasonable explanation of the basis in the policy, in relation to the facts or applicable law" for the decision she made. In fact, Kyla Rippey's letter containing the response to the 541 demand^[6] contained an extremely vague explanation that 'We've evaluated your client's claim based on the information presented' . . . and offered an amount that was less than the medical expenses incurred without any kind of explanation as to why such an offer was made. This is a violation of [TEX. INS. CODE ANN.] § 541.060(a)(3).

13. VIOLATION OF § 541.060(a)(7): Furthermore, the letter authored by Kyla Rippey violated §541.060 (a)(7) because she refused ". . . to pay on a claim without conducting a reasonable investigation with respect to the claim." Nothing in Kyla Rippey's letter containing the response to [Lozano's] 541 settlement demand mentioned what, if anything, was done to investigate [Lozano's] claim. This is a violation of [TEX. INS. CODE ANN.] § 541.060(a)(7).

14. The foregoing violations were committed knowingly by and on behalf of [Farmers]. When [Lozano] was advised of [Farmers's] Texas Insurance Code violations, in effect failing to adhere to [Farmers's] statutory obligations to [Lozano] after [Lozano] honored her duties under the parties' insurance contract, she became visibly and physically angry, upset[, ] and indignant. The foregoing violations were a producing cause of [Lozano's] new and independent injuries and damages.

15. RESPONDEAT SUPERIOR-At the time of the incident, Kyla Rippey was in the scope and course of [her] employment with and furthering the business of [Farmers]. Therefore, based on the doctrine of Respondeat Superior, [Farmers] is liable for the insurance code violations of its employee, Kyla Rippey.

Lozano sought actual damages under Texas Insurance Code §§ 541.151 and 541.152, including past and future medical expenses, pain, suffering and medical anguish, and further sought court costs, attorney's fees, and treble damages. See TEX. INS. CODE ANN. § 541.151 (authorizing a private cause of action for damages); id. § 541.152 (allowing a person who prevails in an action to obtain "the amount of actual damages, plus court costs and reasonable and necessary attorney's fees," "an order enjoining the act or failure to act complained of," or "any other relief the court determines is proper").

On April 24, 2020, Farmers filed a "Plea to the Jurisdiction, or in the Alternative, Motion to Abate." Farmers alleged that it was under no duty to pay until Lozano obtained a judgment establishing the liability and underinsured status of the other motorist. Farmers argued that the trial court lacked subject matter jurisdiction because Lozano had not met the prerequisites to establish UM/UIM coverage. Farmers asserted that Lozano lacked standing and her bad faith claims were not ripe, and thus the trial court should dismiss the claim for lack of subject matter jurisdiction, or alternatively, abate the lawsuit until Lozano obtained a judgment establishing the liability of the tortfeasor and the amount of her damages, "which is a prerequisite to making extracontractual claims."

On July 10, 2020, Lozano filed a "Response to [Farmers's] Plea to the Jurisdiction, or in the Alternative Motion to [Abate]." She alleged she was not raising contractual claims, which would require that her legal entitlement to UIM benefits be established by judicial ruling but was instead asserting extra-contractual tort claims, which did not require such a judgment.

On August 26, 2020, the trial court denied Farmers's plea and motion to abate. This original proceeding ensued. By four issues, Farmers contends: (1) an insured like Lozano does not have ripe bad-faith claims against her carrier for failure to investigate or promptly pay her UIM claim when she has not yet established legal entitlement to UIM benefits nor has she alleged an independent injury; (2) an insured does not have standing to bring extra-contractual claims based on alleged insurance code violations on the handling of a UIM claim before the UIM claim is legally "presented" to her carrier; (3) the trial court abused its discretion by denying Farmers's "Plea to the Jurisdiction, or in the Alternative Motion to Abate" Lozano's extra-contractual claims, allowing discovery on unripe extra-contractual claims, prejudicing Farmers in the underlying vehicular negligence case; and (4) Farmers lacks an adequate remedy by appeal.

This Court granted temporary relief, stayed the underlying proceedings, and requested that Lozano, or any others whose interest would be directly affected by the relief sought file a response to the petition for writ of mandamus. See TEX. R. APP. P. 52.2, 52.4. Lozano filed a response to the petition for writ of mandamus, and further filed a "Motion to Strike or Disregard Portions of Relator's...