In re State Farm Lloyds Hurricane Litig.
Decision Date | 22 October 2012 |
Docket Number | No. 12–0156.,12–0156. |
Citation | 387 S.W.3d 130 |
Parties | In re STATE FARM LLOYDS HURRICANE LITIGATION. |
Court | Judicial Panel on Multidistrict Litigation |
ON REVIEW BY THE MULTIDISTRICT LITIGATION PANEL
Chief Justice McCLURE delivered the unanimous opinion of the MDL Panel.
We consider today whether a non-hurricane windstorm case may be joined as a tag-along to a previously created pre-trial Hurricane Ike MDL court. On April 25, 2012, we granted State Farm's request for transfer involving 266 cases pending in sixteen counties arising from Hurricane Ike in 2008. In re State Farm Lloyds Hurricane Ike Litigation, MDL No. 12–0156. In the opinion that issued May 21, we held that the cases were related because they arose from one event and the plaintiffs sought common discovery on the ground that State Farm has a "general business practice" of adjusting claims in a way that is unfairly designed to tilt the process in its favor and against the policy holder. Id. at 1. We also explained that when multiple cases with common issues are pending in different counties, "litigants who are unhappy with an early ruling may be tempted to present the issue again in a second court." Id. at 5. We further noted that "when the issues are expanded to a defendant's business practices generally, over a period of years, there are likely to be repeated efforts to seek broader discovery rulings from other courts." Id.
THE IRVINGS' CLAIMS
Mark and Leticia Irving live in League City, Texas and claim that their home was damaged during heavy storms which passed through the area on August 23 and 24, 2010. According to their expert's report, winds gusted to 40 miles per hour causing roof shingle uplift. The Irvings contend that in summarily denying the claim as mere wear and tear, State Farm failed to disclose that an adjustor's inspection of the roof revealed unsealed shingles. It also failed to disclose that in 2010—after Hurricane Ike—the company decided to withhold payment for unsealed shingles. The underlying lawsuit was filed in Galveston County on July 5, 2011.
HURRICANE IKE AND NON–IKE CLAIMS
The Irvings learned through discovery that different policies and procedures were applied to Ike and non-Ike claims. Ike claims were handled by the catastrophe office—the "CAT Operation"—while the Irvings' claims were processed by the "Texas Zone". The Texas Zone is run almost exclusively by State Farm adjustors and employees while the CAT operation uses State Farm employees and independent personnel. The plaintiffs here seek to depose Marvin Cummings, a State Farm Catastrophe Manager, to explore two points: (1) that State Farm's nearly identical homeowners' policies provided coverage in the past for unsealed shingles; and (2) that State Farm specifically claims to have paid for resealed shingles in the past, including on Hurricane Ike claims. In pleadings filed in support of their motion to remand, they argued that Mr. Cummings was responsible for overseeing the Hurricane Ike operation in Texas and was instrumental in State Farm's multiple changes in position regarding unsealed shingles: "While the policies at issue may be the same, State Farm's interpretation of whether shingles unsealed by wind were considered a covered loss pursuant to the policy changed significantly from Dolly, to Ike, and post-Ike."
NOTICE OF TAG–ALONG
On April 30, 2012, this Panel appointed the Honorable Mike Miller, Judge of the 11th District Court of Harris County, as the MDL judge of the Hurricane Ike litigation. The next day, the Irvings filed in Galveston County a motion to compel numerous corporate representative depositions related to resealed shingles. One day later, they served a fourth request for production. The discovery sought, "[a]ll instructions memoranda and/or other communication sent to Adjusters, Adjusting Firms or State Farm Lloyds Claims Handling Staff regarding unadhered, unsealed or lifted shingles."
State Farm gave notice of transfer in eighteen cases as "tag-alongs", contending they were related to the other MDL cases due to the plaintiffs' most recent discovery efforts. The Irvings countered with a motion to remand, asserting that this was a non-hurricane windstorm case. Judge Miller denied remand with regard to fourteen Hurricane Dolly cases but remanded four-including the Irvings'—because they did not arise from a hurricane.
WHERE THE TRIAL COURT DREW THE LINE
The Motion to Remand was heard by Judge Miller on June 25, 2012. The positions of the parties are best understood by their precise arguments to Judge Miller:
Those lawsuits that arose from "hurricanes" were swept into the MDL court. Those suits involving lesser winds were remanded.
THE ARGUMENTS
The Rules of Judicial Administration authorize us "to transfer ‘related’ cases from different trial courts to a single pretrial judge if transfer will (1) serve the convenience of the parties and witnesses and (2) promote the just and efficient conduct of the litigation." In re Ad Valorem Tax Litigation, 216 S.W.3d 83, 84 (Tex. M.D.L. Panel 2006) ; TEX.R. JUD. ADMIN. 13.3. Rule 13.2(g) defines a tag-along case as a case related to cases in an MDL transfer order but not itself the subject of an initial MDL motion or order. There is no requirement that the cases be congruent, but they must involve one or more common questions of fact. TEX. GOV'T CODE § 74.162 (Vernon 2005) ; TEX.R. JUD. ADMIN. 13.2(f); In re Hurricane Rita Evacuation Bus Fire, 216 S.W.3d 70, 72 (Tex. M.D.L. Panel 2006). State Farm points to the following common questions of fact:
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