Employers Cas. Co. v. Dyess

• Decision Date: 07 November 1997
• Docket Number: No. 07-96-0365-CV,07-96-0365-CV
• Citation: 957 S.W.2d 884
• Parties: EMPLOYERS CASUALTY COMPANY, Appellant, v. Carl L. DYESS, Jr., Northbrook Property and Casualty Insurance Company and Northbrook Indemnity Company and Felipe Mendoza, Appellees.
• Court: Texas Court of Appeals

Page 884

957 S.W.2d 884

EMPLOYERS CASUALTY COMPANY, Appellant, v. Carl L. DYESS, Jr., Northbrook Property and Casualty Insurance Company and Northbrook Indemnity Company and Felipe Mendoza, Appellees.

No. 07-96-0365-CV.

Court of Appeals of Texas Amarillo.

Nov. 7, 1997.

Hughes, Watters & Askanase, Loren R. Smith, Houston, for appellant.

Daniel B. Nelson & Associates, Daniel B. Nelson, Thomas B. "Tody" DuPont, Houston, for appellees.

Before BOYD, C.J., and QUINN and REAVIS, JJ.

BOYD, Chief Justice.

In this case, we are asked to address the subrogation rights of a workers' compensation carrier as they might apply to the employer's uninsured motorist coverage. Appellant, Employers Casualty Co. (Employers), challenges the granting of summary judgment in favor of appellees Carl L. Dyess, Jr. (Dyess), Northbrook Property and Casualty Co., Northbrook Indemnity Co. (collectively referred to as Northbrook), and Felipe Mendoza (Mendoza) denying Employers' subrogation claims. For reasons we later discuss, we reverse the judgment of the trial court.

A proper discussion of the question before us requires us to discuss in some detail the factual and procedural history of the proceeding. In 1990, appellee Dyess was an employee of Winn-Lange Electric, Inc. Employers was the workers' compensation carrier for Winn-Lange. Winn-Lange's automobile insurance policy, which included uninsured motorist coverage, was with Northbrook. On August 14, 1990, Dyess was driving a truck belonging to Winn-Lange in the course of his employment when he was struck by a vehicle operated by Mendoza. Mendoza was uninsured. Dyess sought and obtained workers' compensation benefits totaling $107,385.40 from Employers.

Some time before August 1991, Dyess brought a negligence suit against Mendoza. Employers filed a plea in intervention in February 1992, asserting its subrogation rights under Tex.Rev.Civ. Stat. Ann. Art. 8307, § 6a (repealed by Acts of December 13, 1989, 71st Leg., 2nd C.S., ch. 1, § 16.01(10), 1989 Tex.Gen.Laws 1, 114, effective January 1, 1991). In its plea, Employers named Mendoza's employer, Toni Martin, as an additional defendant, asserting that Mendoza was acting in the course and scope of his employment at the time of the collision. Dyess then added Northbrook as a defendant seeking to recover under the uninsured motorist coverage of Winn-Lange's automobile insurance policy with Northbrook. On May 11, 1992, the trial court rendered a no-answer default judgment against Mendoza on the issue of liability. Employers then amended its plea in intervention asserting a right of subrogation for any recovery Dyess might obtain from Northbrook. Northbrook answered, asserting it was entitled to an offset for any workers' compensation payments made to Dyess and specially excepted to Employers' plea in intervention. Northbrook also brought cross-claims against Mendoza and Martin.

On February 12, 1993, Northbrook moved for summary judgment against Employers on the basis that Employers lacked any subrogation right against Northbrook. On March 1, 1993, Dyess filed his own motion for summary judgment against Employers, asserting the same grounds urged by Northbrook. Both motions relied on a provision of the insurance contract which provided that uninsured motorist coverage "shall not apply directly or indirectly to benefit [ ] any insurer or selfinsurer under any workers' compensation, disability benefits or similar law." The movants also relied on Bogart v. Twin City Fire Ins. Co., 473 F.2d 619 (5th Cir.1973), for the proposition that workers' compensation carrier's subrogation rights do not extend to uninsured motorist coverage. The trial court granted Northbrook's motion on March 30, 1993, and Dyess's motion the following September. The trial court also granted another motion for summary judgment by Dyess that Northbrook was not entitled to an offset for the payments made by Employers to Dyess.

After the trial court granted these motions, Dyess and Northbrook settled for $150,000, prompting Dyess's dismissal of his claims against Northbrook. Employers objected to the dismissal because the settlement agreement did not reflect its subrogation rights. The parties stipulated to the amount of workers' compensation benefits Employers had paid to Dyess and the action proceeded to trial on July 10, 1995. At the conclusion of the trial, the jury found Mendoza was solely responsible for the accident, but that he was not acting in the course and scope of his employment with Martin and found Dyess's damages were $400 for medical care. In its judgment, the trial court denied Employers' request for subrogation, and ordered that Dyess recover $400 from Mendoza but take nothing from Martin. It also taxed costs against Dyess and Employers.

In this appeal, Employers presents five points of asserted error. In its first three points, it claims the summary judgments were erroneous because they violate Employers' 1) statutory right of subrogation, 2) its contractual subrogation right, and 3) its equitable subrogation right. In its fourth point, Employers challenges the trial court's failure to award it recovery of the amount for which the jury found Mendoza liable to Dyess. In its fifth point, it assigns error to the trial court's refusal to charge the court costs to Mendoza.

STANDARD OF REVIEW

A summary judgment is only proper when a movant establishes there is no genuine issue of material fact and it is entitled to judgment as a matter of law. Randall's Food Markets, Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex.1995); Tex.R. Civ. P. 166a(c). In deciding whether there is a material fact issue precluding summary judgment, evidence favorable to the non-movant will be taken as true and every reasonable inference resolved in its favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985). Where, as here, the trial court's order granting summary judgment does not specify the ground or grounds relied upon, the judgment is to be affirmed if any of the theories advanced by the movant are meritorious. Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 625 (Tex.1996); State Farm Fire & Cas. Co. v. S.S. & G.W., 858 S.W.2d 374, 380 (Tex.1993); Carr v. Brasher, 776 S.W.2d 567, 569 (Tex.1989). Parenthetically, we have not failed to note the changes made in the summary judgment practice by the rather extensive amendments to the Rules of Civil Procedure effective September 1, 1997. However, not only was this appeal perfected prior to the effective date of those changes, with regard to the questions before us, the summary judgment requirements would be the same.

Subrogation has been defined as the right of one who has paid an obligation which another should have paid to be indemnified by the other. BLACK'S LAW DICTIONARY, 1427 (6th ed.1990). The legislature first provided for a workers' compensation carrier's subrogation rights in 1917. Act of March 28, 1917, 35th Leg., R.S., ch. 103, 1917 Tex. Gen. Laws 268, 285. As initially written, and in relevant part, the subrogation statute provided:

Where the injury for which compensation is payable under this law was caused under circumstances creating a legal liability in some person other than the subscriber to pay damages in respect thereof, the employee may at his option proceed either at law against that person to recover damages or against the association for compensation under this law, but not against both, and if he elects to proceed at law against the person other than the subscriber, then he shall not be entitled to compensation under this law. If compensation be claimed under this law by the injured employee or his legal beneficiaries, then the association shall be subrogated to the rights of the injured employee....

Id. Under this language, our courts held that an employee's action against a third party tortfeasor precluded subsequent recovery of workers' compensation benefits, but receipt of workers' compensation payments would not necessarily prevent the employee's subsequent action against the third party tortfeasor. Hart v. Traders & General Ins. Co., 144 Tex. 146, 189 S.W.2d 493, 494 (1945) (citing Employers' Indemnity Corp. v. Felter, 277 S.W. 376 (Tex.Com.App.1925)). The court subsequently held that an injured employee has standing to pursue a third-party claim after obtaining a compensation award whether or not the compensation carrier refuses to do so. Watson v. Glens Falls Ins. Co., 505 S.W.2d 793, 796 (Tex.1974).

In Campbell v. Sonford Chem. Co., 486 S.W.2d 932 (Tex.1972), the court noted a circumstance in which this statute would leave an injured employee with no remedy. This would occur when the employee sought compensation benefits, but the claim was denied more than two years after his cause of action accrued. In that event, the employee's claim against the third party would be barred by limitations. If the employee filed suit before the running of limitations, section 6a would preclude recovery of compensation benefits. Id. at 934. In 1973, and in apparent response to Campbell, the legislature amended the subrogation statute ¹ to provide that an employee's action against a third party would not preclude recovery of workers' compensation benefits. The statute in effect at the time of Dyess's injury provided:

If the injury for which compensation is payable under this law was caused under circumstances creating a legal liability in some person other than the subscriber to pay damages in respect thereof, the employee may proceed either at law against that person to recover damages or against the association for compensation under this law, and if he proceeds at law against the person other than the subscriber, then he shall not be held to have waived his rights to compensation under this law. [ ] If compensation be claimed under this law by the injured employee or his legal beneficiaries, then the association shall be subrogated to the rights of the injured employee, and may...