Council of Co-Owners of Saida II Towers Condominium Ass'n v. Texas Catastrophe Property Ins. Ass'n
| Decision Date | 29 May 1985 |
| Docket Number | No. 13970,CO-OWNERS,13970 |
| Parties | COUNCIL OFOF SAIDA II TOWERS CONDOMINIUM ASSOCIATION, et al., Appellants, v. TEXAS CATASTROPHE PROPERTY INSURANCE ASSOCIATION, et al., Appellees. |
| Court | Texas Court of Appeals |
Guy C. Fisher, Austin, for appellant.
David C. Duggins, Clark, Thomas, Winters & Shapiro, Austin, for Texas Catastrophe Property Ins. Ass'n.
Jim Mattox, Atty. Gen., Margaret S. McGloin, Asst. Atty. Gen., Austin, for State Bd. of Ins.
ON MOTION FOR REHEARING
Our previous opinion is withdrawn and the following is substituted.
In four separate suits, numerous property owners sued the Texas Catastrophe Property Insurance Association in a district court of Travis County, Texas, alleging causes of action on property-insurance contracts written by the association. 1 The association appeared in each case by answer containing a general denial and a plea that the district court lacked subject-matter jurisdiction of the causes of action pleaded by the property owners. After hearing, the district court sustained the association's plea to the jurisdiction, dismissing the four suits. The suits were, by agreement, consolidated for purposes of the present appeal. We will hold the trial court had jurisdiction of the pleaded causes of action; and, consequently, that it erred in dismissing the suits. We will therefore reverse the judgments below and remand the causes for trial.
The general purpose of the Act is to effectuate the writing of windstorm, hail, and fire insurance in certain portions of the State where property owners would otherwise, as a practical matter, be unable to secure such insurance, owing to the location of their property in areas prone to such hazards and a resulting reluctance in insurers to contract with them for insurance protection (§ 1). In its substantive parts, the Act creates a legal entity named the "Texas Catastrophe Property Insurance Association," a defendant below. The members of the association constitute a "pool" to which "all property insurers authorized to transact property insurance in the State" shall belong, except as they are excused by other provisions of law (§ 4). The association is empowered by the Act to write contracts of insurance in its own name and may appear before the State Board of Insurance in regard to such material matters as premium rates, risk classifications, rules, rating plans, and changes therein (§§ 5(a), 8). The profits and losses on the association's insurance contracts are apportioned pro-rata among the members of the pool according to a prescribed formula (§ 5(c)). Members of the pool may themselves voluntarily write similar insurance in the hazard-prone areas and thereby reduce their participation in the writings of the association (Id.). The business of the association is governed by a board of directors, selected by the members, under a plan formulated by the board to provide more particularly for the assessment and recoupment of losses (§ 5(b)). The Act empowers the State Board of Insurance to "issue any orders which it considers necessary to carry out the purposes of this Act," including rate orders and orders establishing the forms of policies issuable by the association in evidence of the terms of its contracts with property owners to whom the insurance protection is sold (§ 5A(a)).
The theme of the statute is that the association shall conduct its business as any ordinary insurer having the power to enter into insurance contracts in the State at premium rates and on policy forms established by the State Board of Insurance. We conclude, in consequence, that the association is empowered, like any insurer under the common law, to deny coverage on an owner's claim. Even though that power is not expressly given the association by the terms of the Act, it is clearly implied. (It is alleged by the plaintiffs that the association denied coverage under its contracts with the plaintiffs, in breach thereof, entitling them to compensatory damages for the breach.)
Section 9 of the Act is entitled "Appeals." It is primarily from the terms of this section that one may arguably be permitted an inference that the Legislature intended that the State Board of Insurance would adjudicate an insured's claim on an insurance contract written by the association, even though the Act is absolutely silent as to such essential matters as: (1) the criteria or standards by which the Board's adjudication shall be made; (2) the factual determinations upon which any legal criteria or standards shall depend; and (3) any remedy awardable by the Board if it be determined that the association is liable on or for breach of its insurance contract.
The association's theory that the district court was without jurisdiction over the plaintiffs' causes of action is this: in any suit brought under authority of § 9 of the Act, the State Board of Insurance must be named a defendant, for that is the express requirement of article 1.04(f) of the Insurance Code; and the suit must be brought within 30 days of the date the Board's decision in the case becomes final and appealable, for that is the express requirement of § 19(b) of the Administrative Procedure and Texas Register Act, 3 applicable to contested cases adjudicated by the Board. We observe here that the theory rests upon a disputed premise--that the causes of action pleaded by the plaintiffs were, by the Act, committed to the State Board of Insurance for adjudication in the first instance.
In the present case, the plaintiffs sued the association in a district court of Travis County within 30 days of the Board's final decision. They alleged that the association had wrongfully refused to pay the owners' claims for property losses resulting from a hurricane, which losses they alleged were compensable under the insurance contracts. Their petition also averred that the plaintiffs requested "a trial de novo review of a decision of the State Board of Insurance," which decision had validated the association's denial of the plaintiffs' claims. The plaintiffs' original petition did not, however, designate the Board as a defendant nor did they request issuance and service of citation upon the Board. The record reflects that the plaintiffs, by their first amended original petition, eventually did join the Board as a defendant, but this pleading was filed after the 30-day period stated in APTRA § 19(b).
From the foregoing circumstances the association contends that the district court's potential jurisdiction under § 9 of the Act was never invoked, until too late, by a pleading filed in compliance with the conditions imposed by the other two statutes. 4 The association's theory thus reduces to a contention that these various statutory conditions constituted "jurisdictional" elements of the statutory cause of action authorized by § 9 of the Act. But we regard this issue as incidental, 5 for we
will hold that the State Board of Insurance had no jurisdiction to adjudicate the plaintiffs' common-law causes of action on their insurance contracts with the association; that any action of the Board purporting to adjudicate those claims in a way legally binding upon the parties was void; and that the provisions of § 9 of the Act (and therefore the two other statutes referred to above) were not applicable at all to such common-law causes of action.
We start with the constitutional rule that one may not unreasonably be denied access to the courts for adjudication of his common-law cause of action. Tex. Const.Ann. art. I, § 13 (1984); Lebohm v. City of Galveston, 154 Tex. 192, 275 S.W.2d 951, 954 (1955). That constitutional provision prohibits the Legislature's arbitrary withdrawal of all legal...
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