Argonaut Ins. Co. v. Allstate Ins. Co.

• Decision Date: 16 December 1993
• Docket Number: No. 13-92-195-CV,13-92-195-CV
• Citation: 869 S.W.2d 537
• Parties: ARGONAUT INSURANCE COMPANY, Appellant, v. ALLSTATE INSURANCE COMPANY, Appellee.
• Court: Texas Court of Appeals

Page 537

869 S.W.2d 537

ARGONAUT INSURANCE COMPANY, Appellant, v. ALLSTATE INSURANCE COMPANY, Appellee.

No. 13-92-195-CV.

Court of Appeals of Texas,

Corpus Christi.

Dec. 16, 1993.

Rehearing Overruled Jan. 13, 1994.

Brian G. Janis, Sanchez, Whittington & Janis, Brownsville, for appellant.

J. Arnold Aguilar, Willette & James, Brownsville, for appellee.

Before GILBERTO HINOJOSA, NYE, ¹ and DORSEY, JJ.

OPINION

GILBERTO HINOJOSA, Justice.

Appellant, Argonaut Insurance Company ("Argonaut"), challenges the trial court's granting of a summary judgment in favor of appellee, Allstate Insurance Company ("Allstate"). Argonaut, an excess insurance carrier, sued Allstate, the primary insurance carrier, under the theories of breach of contract and subrogation, to recover the policy limits of Allstate's primary coverage. We reverse and remand.

The dispute in question arose out of a final agreed judgment entered into by Argonaut and Allstate in a separate lawsuit. The separate lawsuit involved an auto accident that occurred between Maria Sandoval and Scott Franko. Franko was an employee of Electric Utility Construction, Inc. (EUCI), at the time of the accident.

Sandoval, her husband, and her minor child brought suit against Franko and EUCI for damages arising out of the auto collision. Initially, Paul O'Leary, on behalf of Argonaut, represented the defendants in the Sandoval suit. Roy Dale, on behalf of Allstate, subsequently took over the defense, with O'Leary remaining as co-counsel.

With Argonaut's consent, O'Leary negotiated, structured, and finalized a settlement agreement between the Sandovals, Franko, and EUCI. Dale played no part in the negotiations or the structuring of the settlement agreement. He attested that at all times he was preparing to go to trial. Dale's only participation in the settlement agreement was the placement of his signature, as attorney for Scott Franko, at the end of the final agreed judgment.

Dale attested that he signed the final agreed judgment only after he became aware that Argonaut had already satisfied the judgment. He asserted that a failure to sign the final agreed judgment when Argonaut had already satisfied the debt would have breached his ethical obligations to Franko, his client.

The final agreed judgment obligated EUCI and Franko to pay $80,000 to the Sandovals, to purchase an annuity for the Sandoval child in the amount of $920.78 per month for life, and stated that the attorney ad litem would receive $8,000. Because the $80,000 had already been paid and the annuity had already been purchased by Argonaut, the trial court ordered that the judgment was fully satisfied and discharged.

After the final agreed judgment was signed, Argonaut demanded that Allstate reimburse it for the policy limits of its primary coverage, which originally was calculated to be $50,000, but later determined to be $100,000. Argonaut sued Allstate when the latter refused to pay any amount at all.

Argonaut pleaded that Allstate's assertion in a letter that it was the primary insurance carrier, combined with Dale's signature on the final agreed judgment, entitled Argonaut to reimbursement and contribution of $100,000. Argonaut's breach of contract theory was that Dale's signature on the agreed judgment constituted a binding agreement pursuant to TEX.R.CIV.P. 11, giving rise to a claim for breach of contract. Both Allstate and Argonaut filed motions for summary judgment involving several issues, including breach of contract, breach of a settlement agreement, contribution, subrogation, and unjust enrichment. Ultimately, the trial court granted Allstate's motion for summary judgment and denied Argonaut's motion for summary judgment.

Summary judgment is proper if "there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law on the issues expressly set out in the motion or in an answer or any other response." TEX.R.CIV.P. 166a(c). When reviewing a motion for summary judgment, 1) the movant for summary judgment has the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law, 2) the evidence favorable to the non-movant will be taken as true, and 3) every reasonable inference will be indulged in favor of the non-movant and any doubts resolved in its favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985). When opposing parties file motions for summary judgment and the trial court grants one but denies the other, the reviewing court should consider questions presented to the trial court in both summary judgment motions. Jones v. Strauss, 745 S.W.2d 898, 900 (Tex.1988).

We now turn to the issue of whether Allstate's refusal to pay amounted to a breach of contract or breach of settlement. An agreed judgment is to be construed in the nature of a contract. Barrientes v. Board of Trustees, Harlandale Indep. School Dist., 764 S.W.2d 28, 29 (Tex.App.--San Antonio 1989, writ denied). The elements of a contract, whether express or implied, are identical. University Nat'l Bank v. Ernst & Whinney, 773 S.W.2d 707, 710 (Tex.App.--San Antonio 1989, no writ). The determination of whether there was a meeting of the minds on each element of contract formation is based on objective standards of what the parties said and did and not on their alleged subjective states of mind. Adams v. Petrade Int'l, Inc., 754 S.W.2d 696, 717 (Tex.App.--Houston [1st Dist.] 1988, writ denied).

We reject Argonaut's argument that the final agreed judgment constituted a binding contract or obligation between Argonaut and Allstate. Argonaut repeatedly asserts that such an obligation is "common practice" between insurers, but offers no evidence or authority whatsoever to support such a proposition. In response to Allstate's assertion that, even if the agreed judgment constituted a contract, it contains no terms delineating payment obligations, Argonaut rejected the necessity of such terms and stated that insurance companies, "pursuant to separate contractual provisions, make payments to fulfill the requirements of the respective judgments for which they are responsible." However, Argonaut never brought forth such a separate contractual provision. Accordingly, absolutely no evidence was offered to show that Allstate intended to reimburse Argonaut in any amount whatsoever. No words to such effect were contained in the final agreed judgment. Roy Dale, attorney for Allstate, did not participate in the negotiation or structuring of the settlement. No evidence was offered to prove that Allstate and Argonaut had ever considered the written agreed judgment as a contract for reimbursement.

The final agreed judgment constituted a binding contract and obligation between the parties in the underlying suit, and not between the insurance carriers. Dale clearly placed his signature on the final agreed judgment in his capacity as Franko's attorney, and not Allstate's attorney. Although the reality may be that Allstate paid Dale's salary, the fact remains that Dale was representing Franko and EUCI, the insureds, and not Allstate, the insurance company. We hold as a matter of law that Allstate breached no contract or settlement agreement with Argonaut because no contract or settlement agreement between Allstate and Argonaut existed.

We now turn to the question of whether Argonaut was entitled to reimbursement based on a theory of unjust enrichment. A party may recover under the theory of unjust enrichment when one person has obtained a benefit from another by fraud, duress, or the taking of an undue advantage. Heldenfels Bros. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex.1992).

Allstate has undoubtedly benefitted from Argonaut's satisfaction of the final agreed judgment. However, Argonaut has failed to illustrate in what way Allstate obtained that benefit by fraud, duress, or the taking of an undue advantage. Argonaut is another insurance company, just like Allstate, and was perfectly capable of either supplementing the agreed judgment with terms of reimbursement, or drawing a secondary contract for reimbursement. Argonaut offered no proof of fraud or duress. We hold as a matter of law that Argonaut was not entitled to recover from Allstate under the theory of unjust enrichment.

The final issues to address are whether Allstate was liable to Argonaut under the theories of contribution and subrogation. In its response to Allstate's motion for summary judgment, Argonaut withdrew any claims for tortious contribution which it may have made. Accordingly, the applicability of contribution to the facts of this case will not be addressed.

Argonaut, however, did not waive its subrogation claim. It asserted in its answer to Allstate's motion for summary judgment that Allstate was not entitled to summary judgment as a matter of law because, under the doctrine of subrogation, Argonaut was entitled to reimbursement of policy limits in the amount of $100,000. Subrogation may be contractual (conventional) or equitable. Liberty Mut. Ins. Co. v. General Ins. Corp., 517 S.W.2d 791, 797 (Tex.Civ.App.--Tyler 1974, writ ref'd n.r.e.).

Subrogation is the substitution of one person in the place of another, whether as creditor or as the possessor of some lawful claim, so that he who is substituted succeeds to the rights of the other in relation to the debt or claim.... By subrogation, a court of equity, for the purpose of doing exact justice between parties in a given transaction, places one of them, to whom a legal right does not belong, in the position of a party to whom the right does belong. McBroom-Bennett Plumbing, Inc. v. Villa France, Inc., 515 S.W.2d 32, 36 (Tex.Civ.App.--Dallas 1974, writ ref'd n.r.e.).

"The courts of Texas have always been peculiarly hospitable to the right of subrogation and have been in the forefront of upholding it." McBroom-Bennett Plumbing, Inc., 515 S.W.2d at 36; see also Yonack v. Interstate...