Allstate Ins. Co. v. Kelly

• Court: Texas Court of Appeals
• Writing for the Court: COLLEY
• Citation: Allstate Ins. Co. v. Kelly, 680 S.W.2d 595 (Tex. App. 1984)
• Decision Date: 31 October 1984
• Docket Number: No. 12-82-0057-CV,12-82-0057-CV
• Petition History: writ ref'd n.r.e.
• Parties: ALLSTATE INSURANCE COMPANY and Spencer Miller, Appellants, v. Sandra KELLY, Willie W. Alves, and Carroll B. Alves, Appellees.

Page 595

680 S.W.2d 595

ALLSTATE INSURANCE COMPANY and Spencer Miller, Appellants, v. Sandra KELLY, Willie W. Alves, and Carroll B. Alves, Appellees.

No. 12-82-0057-CV.

Court of Appeals of Texas Tyler.

Oct. 31, 1984.

Royal H. Brin, Jr., A.D. Bynum, Dallas, for appellants.

Jerry Calhoon, Richard E. Swift, Jr., Swift, Swift & Lawrence, Palestine, Russell H. McMains, Edwards & Perry, Corpus Christi, John O'Quinn, Houston, for appellees.

COLLEY, Justice.

This is an appeal from a judgment rendered in favor of the insured against the insurer in a Stowers Doctrine case. ¹

On April 21, 1978, in Anderson County, a collision occurred between a vehicle operated by Willie W. Alves and a vehicle operated by George Veevers in which Sandra Kelly was a rear-seat passenger. As a result of the collision, Kelly received serious injuries. A negligence action was filed on behalf of Kelly by Jerry Calhoon, a Palestine lawyer. This suit went to trial on April 2, 1979, and on April 20, 1979, judgment was rendered on a jury verdict in favor of Kelly against Willie W. Alves for $521,453.57. No appeal was perfected from the judgment, and it became final and nonappealable before June 27, 1979. At the time of the collision, Alves was an insured in an automobile liability insurance policy issued by Allstate with bodily injury liability limits of $50,000 per person and $100,000 per occurrence. It is undisputed that the liability policy contained provisions triggering the application of the rule in Stowers. On February 22, 1979, Allstate paid into the registry of the Anderson County District Court its policy limits of $50,000 by draft payable to the order of the District Clerk for the benefit of Sandra Kelly. On June 27, 1979, these funds were, on motion of Sandra Kelly and order of the trial court, disbursed by the Clerk to Kelly and her lawyer, Jerry Calhoon.

After receiving a demand letter, presumably under the Deceptive Trade Practices Act, from Alves' attorney, Dick Swift of Palestine, Allstate and Spencer Miller, its field adjuster, filed on November 9, 1979, a petition in this suit in the 241st Judicial District Court of Smith County for a declaratory judgment, naming Sandra Kelly, Carroll B. Alves and Willie W. Alves as defendants. The Smith County District Court sustained pleas of privilege filed in behalf of all of the defendants, and the cause was transferred to the Anderson County District Court. Each defendant filed counterclaims. Alves' counterclaim asserted a cause of action against Allstate and Miller alleging negligence in failing to settle Kelly's claim within the policy limits and by refusing to accept an offer of settlement made in writing by Jerry Calhoon, attorney for Sandra Kelly. Alves also sought exemplary damages and treble damages under TEX.INS.CODE ANN. art. 21.21 Section 16 (Vernon 1981) and the Deceptive Trade Practices Act, hereinafter referred to as DTPA. The case was tried to a jury, and based on the jury's answers, judgment was rendered in favor of Alves and Kelly against Allstate and Miller for $582,413.12, jointly and severally, and against Allstate for $800,000 in punitive damages and for $1,164,826.24 as treble damages.

Allstate presents fifteen points of error, claiming the trial court erred in awarding both punitive and treble damages; in admitting over objection opinion testimony as to the state of the law and as to the ultimate fact issues before the jury; in permitting a post-verdict trial amendment enlarging the amount of exemplary damages pleaded; in refusing to permit Allstate to call opposing trial counsel (Dick Swift) under the adverse party rule; in disregarding the answers to certain special issues; in trebling post-judgment interest on the personal injury judgment rendered against Alves in favor of Kelly as actual damages; and in permitting testimony over its objection as to the financial difficulties of Kelly. Allstate also asserts that the evidence adduced at trial reveals as a matter of law that neither Allstate nor Miller was guilty of negligence or gross negligence in failing to settle Kelly's claim within policy limits. Alternatively, Allstate asserts that the jury's findings of failure to settle were against the great weight of the evidence, and that there is no evidence to support the award of treble damages, or alternatively, the evidence is insufficient to support such award.

We reform the judgment by striking the award of exemplary damages, and as reformed, we affirm the judgment.

Because of the novelty and complexity of the issues presented for decision in this appeal, we deem it necessary at the outset to discuss in some detail the facts shown by this record. In this opinion we shall refer to Allstate Insurance Company as Allstate; to Spencer Miller, Allstate's field adjuster, as Miller; to Willie W. Alves and her husband, Carroll B. Alves, as Alves; and Sandra Kelly as Kelly.

Shortly after the collision on April 21, 1978, between the vehicle driven by Alves and the vehicle in which Kelly was a passenger, Jerry Calhoon was employed by Kelly and her husband, Joe Kelly, to bring an action for the personal injuries sustained by Kelly in that collision. On April 26, 1978, Calhoon, on behalf of Joe and Sandra Kelly, wrote the Alves advising them of his employment as Joe and Sandra Kelly's attorney and advised Alves to forward the letter to their liability insurance carrier if they had one. This letter was relayed to Miller who, shortly after the receipt of same, contacted the Alves. Since Mrs. Alves had also been injured in the collision, she turned over to her husband, Carroll B. Alves, the responsibility of attending to the matter. In September 1978 Charles Clark, a Tyler attorney employed by Allstate to defend Alves against Kelly's claim, took the oral depositions of Kelly and Alves. Prior to such time, Miller had received from Calhoon copies of bills for medical and hospital expenses incurred by Kelly for care and treatment of the injuries she sustained in the collision. Such bills were in excess of $13,000. In September 1978 additional medical reports by Doctors Leo W. Mack, a Tyler Ophthalmologist, and Randall J. Donaldson, a Tyler surgeon, who performed surgery on Kelly on April 22, 1978, were furnished to Miller by Calhoon. These medical reports showed that Kelly, as a result of her injuries, lost sight in her right eye and suffered a 50% loss of the field of vision in her left eye. The deposition testimony revealed that Alves turned left in front of the automobile driven by George Veevers at an intersection not controlled by a traffic sign or signal.

As early as July 31, 1978, Miller requested authority from his superior, Bob Moss, claims supervisor for Allstate, to offer the policy limits of $50,000 to settle Kelly's claim. In fact, Miller, in a request for authorization, advised Moss that Kelly's attorney "has filed suit ... states he will try for a judgment against [insured]." Miller attached to the request medical bills and doctor reports on Kelly. Both Miller and Clark testified that Allstate had sufficient information, both as to the liability of its insured in the collision, and as to the extent of the injuries sustained by Kelly to evaluate her claim as obviously being in an amount in excess of the policy limits of $50,000 well before the settlement offer was made by Kelly. After two requests were made by Miller to his superior for authority to offer policy limits to settle Kelly's claim, such authority was granted on November 9, 1978, by Dick Giles, Allstate's Texas Region Casualty Analyst. Miller testified that as early as July 1978 he had evaluated Kelly's claim, both as to liability and damages. He stated that he had concluded that the claim was unquestionably one far in excess of $50,000 and testified that he knew enough about the case to settle it within the fourteen-day time period of the settlement offer (hereinafter discussed) made by Kelly. On November 13, 1978, Calhoon, as authorized by his client Kelly, wrote Clark extending an offer to settle Kelly's claim for $50,000. That letter reads:

November 13, 1978

Mr. Charles H. Clark

Attorney At Law

Post Office Box 98

Tyler, Texas 75710

Re: Sandra Kelly

Vs.

Willie Weiss Alves

Dear Charles:

Please be advised that my client, Sandra Kelly, has authorized me to extend herewith an offer to settle her claim against Mrs. Alves for $50,000.00. She has authorized me to leave this offer open for two (2) weeks from the date you receive this letter, after which my instructions are to withdraw the offer, and complete trial preparations. Accordingly, if your client wishes to accept this offer, please advise me within this time.

Very truly yours,

Jerry L. Calhoon

JLC:gm

CERTIFIED MAIL, RETURN RECEIPT REQUESTED

cc: Mr. Spencer Miller

Route 4, Box 109A

Tyler, Texas 75703

CERTIFIED MAIL, RETURN RECEIPT REQUESTED

cc: Mrs. Sandra Kelly

The letter was received by both Clark and Miller as of November 15, 1978. On November 22, 1978, Miller and Moss went to Clark's office in Tyler where Miller called Calhoon to discuss the written offer. Miller testified that he talked to Calhoon and offered to pay the $50,000 if Calhoon would provide Allstate with a release of claims signed by Joe Kelly. Miller testified that Calhoon advised him that he did not represent Joe Kelly and could not secure a release from him. In effect, Miller testified that the settlement offer of Kelly was not accepted because Calhoon could not furnish a release signed by Joe Kelly, and that his supervisor Moss instructed him not to settle without the release from Joe Kelly. The record shows without dispute that neither Clark, Miller nor any other authorized representative of Allstate contacted the Alves to inform them of the settlement offer and of Allstate's rejection of the offer and the reasons for rejection until February, 1979.

Clark admitted on cross-examination that he was aware that Kelly's claim "was worth more than $50,000." He...