Tex. Farm Bureau Mut. Ins. Co. v. Minchew

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TEXAS FARM BUREAU MUTUAL INSURANCE COMPANY, Appellant v. MEREDITH MINCHEW, Appellee

No. 01-21-00330-CV

Court of Appeals of Texas, First District

May 11, 2023

On Appeal from the 333rd District Court Harris County, Texas Trial Court Case No. 2019-32212

Panel consists of Justices Kelly, Farris, and Radack. ^[5]

MEMORANDUM OPINION

April L. Farris Justice

This is an appeal from a final declaratory judgment concerning the interpretation of an automobile insurance policy and an order awarding attorney's fees and costs to appellee Meredith Minchew. In two issues, appellant Texas Farm Bureau Mutual Insurance Company argues that the trial court erred by (1) interpreting the policy to declare that a clause in the policy providing reduced coverage does not apply; and (2) awarding attorney's fees and costs to Minchew as the prevailing party. We reverse and render in part and reverse and remand in part.

Background

On July 3, 2018, Minchew and her then-boyfriend, Brian Kaiser, were involved in a single-car accident when Kaiser allegedly drove his car off the road and into a ditch. Minchew was riding in the passenger seat, and she was transported to the hospital after allegedly suffering bodily injury.^[1] In a separate proceeding, which has been abated pending resolution of this case, Minchew sued Kaiser to recover damages for her injuries. Kaiser is not a party to this declaratory judgment action.

At the time of the accident, Minchew and Kaiser were named insureds under a shared automobile insurance policy. Relevant here the policy provided liability coverage in the amount of $300,000 per person "for bodily injury . . . for which any covered person becomes legally responsible because of an auto accident." However, the policy limited this amount of coverage to the statutory minimum amount of $30,000 per person per accident if the bodily injury was to a named insured:

[Texas Farm Bureau] do[es] not provide Liability Coverage for you or any family member for bodily injury to you or any family member, except to the extent of the minimum limits of Liability Coverage required by . . . [the] Texas Motor Vehicle Safety-Responsibility Act.^[2]

See Tex. Transp. Code §§ 601.051 601.072(a-1)(1) (providing minimum amounts of motor vehicle liability insurance coverage required by drivers operating motor vehicles in state). The policy defined "you" to include "the named insured shown in the Declarations[.]" The declarations page, in turn, listed Minchew and Kaiser as "Named Insured."

Although the record is not clear, a claim was apparently filed under the policy requesting coverage for Minchew's bodily injuries. In a letter to Minchew, Texas Farm Bureau relied on the coverage-reducing clause quoted above in offering to settle her claims for $30,000. The letter stated that because Minchew was "listed and named" on the policy declarations page as a named insured, she met the definition of "you," and the clause therefore applied to limit coverage for her bodily injury claim to the statutory minimum. Minchew rejected the offer.

Minchew filed the underlying declaratory judgment action against Texas Farm Bureau seeking a declaration that the clause did not apply to limit coverage for her bodily injury claim.^[3] Texas Farm Bureau filed a counter-petition for a declaratory judgment seeking declarations that Minchew was a named insured under the policy and that the clause applied to limit coverage for her claim.^[4]

The parties tried their case to the bench on an agreed stipulation of facts. The parties agreed to the following relevant facts:

• On July 3, 2018, "Minchew was a passenger involved in a single-car accident in a car driven by her then-boyfriend Brian Kaiser";

• At the time of the accident, Minchew and Kaiser shared an insurance policy issued by Texas Farm Bureau covering the car involved in the accident;

• The policy provided liability coverage up to $300,000 per person and $500,000 per accident;

• The policy defined "you" to include "the named insured shown in the Declarations"; and

• "Both Minchew and Kaiser were named insureds on the Policy," and they both "meet the definition of 'you.'"

The stipulation concluded that "[t]he only remaining issue[] to be decided is the interpretation of the Policy."

The parties relied on numerous exhibits, all of which were admitted without objection. The only evidence relevant to our interpretation of the clause in the insurance policy, however, is the insurance policy itself. The parties called no witnesses.

The trial consisted solely of the parties' closing arguments. Both parties primarily relied on two opinions from our sister courts of appeals to support their opposing interpretations of the disputed clause. Minchew argued that she is not considered a "named insured" under the policy; rather, she is considered a claimant under the policy because she is the injured party. Because Kaiser sought coverage for his action in allegedly causing Minchew's injury, "the named insured" in the coverage-reducing clause referred only to him. She argued that Texas Farm Bureau's interpretation allows it to "pick and choose" either insured to plug in for each "you" in the clause and reduce coverage accordingly, rendering the clause ambiguous.

Texas Farm Bureau, on the other hand, argued that the language in the policy did not support Minchew's interpretation. It argued that the first "you" in the clause-limiting "Liability Coverage for you . . . for bodily injury to you"-referred to Kaiser because he was the named insured whose liability coverage was at issue, and the second "you" referred to Minchew because she asserted the bodily injury claim and met the definition of "you."

The court entered a final declaratory judgment in favor of Minchew. The judgment declared that the policy listed both Minchew and Kaiser as named insureds, it provided liability coverage of $300,000 per person for bodily injury, and the coverage-reducing clause did not reduce coverage to the statutory minimum amount of $30,000. The judgment also determined that Minchew was the prevailing party, and it stated that a subsequent order concerning attorney's fees and court costs would follow.

The parties subsequently filed an agreed motion for attorney's fees. The parties agreed that, "[s]hould the Court exercise its discretion and award attorneys' fees to Plaintiff [Minchew] (the prevailing party)," the reasonable and necessary amount of her attorney's fees would be $5,000 through trial and $7,500 "[i]f the matter is appealed." The trial court granted the agreed motion and awarded Minchew $5,000 in attorney's fees through trial, $7,500 in attorney's fees because Texas Farm Bureau had filed a notice of appeal, and costs. This appeal followed.

Declaratory Judgment

In its first issue, Texas Farm Bureau challenges the trial court's declaration that the policy's coverage-reducing clause does not apply to limit coverage for Minchew's bodily injury claim to the statutory minimum amount of $30,000. Texas Farm Bureau argues that Minchew met the definition of "you" in the clause, and therefore the clause applies to reduce coverage for her claim.

A. Standard of Review

The Uniform Declaratory Judgments Act ("UDJA") authorizes Texas courts "to declare rights, status, and other legal relations whether or not further relief is or could be claimed." Tex. Civ. Prac. & Rem. Code § 37.003(a); see Allstate Ins. Co. v. Irwin, 627 S.W.3d 263, 269 (Tex. 2021) (stating that declaratory judgment is appropriate when real controversy exists between parties, and entire controversy may be determined by judicial declaration).

The UDJA's stated "purpose is to settle and to afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations; and it is to be liberally construed and administered." Tex. Civ. Prac. & Rem. Code § 37.002(b). The Act is "intended to provide an effective remedy for settling disputes before substantial damages accrue," and it "is often preventative in nature." Irwin, 627 S.W.3d at 269; see also Bonham State Bank v. Beadle, 907 S.W.2d 465, 468 (Tex. 1995) ("A trial court has discretion to enter a declaratory judgment so long as it will serve a useful purpose or will terminate the controversy between the parties."). Any "person interested" under a written contract "may have determined any question of construction or validity" arising under the contract and "obtain a declaration of rights, status, or other legal relations thereunder." Tex. Civ. Prac. & Rem. Code § 37.004(a); see Irwin, 627 S.W.3d at 269.

We review declaratory judgments under the same standards used to review other judgments, looking to the procedure used to resolve the issue at trial to determine the appropriate standard of appellate review. Unocal Pipeline Co. v. BP Pipelines (Alaska) Inc., 512 S.W.3d 492, 499-500 (Tex. App.-Houston [1st Dist.] 2016, pet. denied) (op. on reh'g); see also Tex. Civ. Prac. & Rem. Code § 37.010. The parties tried the case on agreed stipulated facts, and we may therefore treat this case as one involving an agreed statement of facts under Rule of Civil Procedure 263. See Tex. R. Civ. P. 263; Lacis v. Lacis, 355 S.W.3d 727, 732 (Tex. App.- Houston [1st Dist.] 2011, pet. dism'd w.o.j.); accord Patton v. Porterfield, 411 S.W.3d 147, 153 (Tex. App.-Dallas 2013, pet. denied). Rule 263 provides:

Parties may submit matters in controversy to the court upon an agreed statement of facts filed with the clerk, upon which judgment shall be rendered as in other cases; and such agreed statement signed and certified by the court to be correct and the judgment rendered thereon shall constitute the record of the cause.

Tex. R. Civ. P. 263.

A case tried on agreed facts is similar to a special...