Garcia v. American Physicians Ins. Exchange
| Citation | 812 S.W.2d 25 |
| Decision Date | 10 April 1991 |
| Docket Number | No. 04-88-00150-CV,04-88-00150-CV |
| Parties | Ramon A. GARCIA, M.D., Appellant/Appellee, v. AMERICAN PHYSICIANS INSURANCE EXCHANGE, and American Physicians Service Group, Inc., Appellants/Appellees. |
| Court | Court of Appeals of Texas |
Charles A. Nicholson, Pat Maloney, Sr., Law Offices of Pat Maloney, P.C., San Antonio, Ronald D. Krist, David A. Slaughter, Krist, Gunn, Weller, Neumann & Morrison, Houston, for Ramon A. Garcia, M.D.
Fred Shannon, Shannon & Weidenbach, Inc., San Antonio, Jay A. Thompson, Barry Bishop, J. Sam Winters, Clark, Thomas, Winters & Newton, Austin, for American Physicians Ins. Exch.
George H. Spencer, Clemens & Spencer, San Antonio, for third party defendants, James Williams and Kenneth Patterson.
Before REEVES, C.J., and PEEPLES and CARR, JJ.
This is an appeal from a judgment rendered in favor of the insured against the insurer in a Stowers 1 doctrine case. Based on the jury's findings, the insured elected to have judgment entered in accordance with the Texas Insurance Code.
Dr. Ramon A. Garcia was defendant in a medical malpractice suit styled Cardenas v. Garcia. Following an adverse judgment in that suit, he sued his malpractice carriers, American Physicians Insurance Group (APIE), American Physicians Service Group, Inc. (APSG) and Insurance Corporation of America (ICA) for their failure to properly settle, defend and provide him coverage. He alleged that the defendants' negligence, bad faith, deceptive trade practices and Insurance Code violations caused a judgment against him in the malpractice case in excess of his policy limits.
ICA made a $2,000,000.00 payment prior to trial of the present suit and was released. Judgment was entered against APIE and APSG for $1,331,574.00. Dr. Garcia, APIE and APSG 2 have appealed.
Dr. Garcia was insured by ICA and APIE during the period he treated Cardenas, plaintiff in the malpractice suit. 3 His treatment of Cardenas began in September of 1980 and continued through January 18, 1983. Dr. Garcia was covered in 1980 by an ICA policy with a $100,000.00 limit of liability. In 1981 and 1982 he was covered by two separate ICA policies with limits of $500,000.00. His coverage by APIE began on January 8, 1983. The policy limit was $500,000.00 per occurrence. Cardenas filed the malpractice action in 1984. In March of 1984, ICA and APIE agreed to share equally the costs of defending the suit and to divide the costs of any settlement or verdict in proportion to the amounts of their coverage. Ross Crossland was hired as the lead attorney in Dr. Garcia's defense and was paid by the two carriers. Dr. Garcia's personal attorney, Clem Lyons, also assisted in his defense. James Williams and Kenneth Patterson were hired by APIE to monitor the litigation on its behalf. 4
Trial of Cardenas v. Garcia began on July 29, 1985. However, on July 24, 1985, APIE notified Dr. Garcia and the various attorneys involved that it would not provide coverage because the plaintiff's pleadings then on file did not allege any acts of negligence that occurred during the APIE policy period. The letter stated that APIE was advising Lyons and ICA to continue to provide Dr. Garcia with coverage and a defense. APIE continued to pay half the costs of defending the suit until August 13, 1985.
On July 29, 1985, Cardenas filed a Sixth Amended Original Petition to allege acts of negligence occurring in 1983 during APIE's coverage. APIE was given the opportunity to re-enter the lawsuit but declined to do so. See American Physicians Ins. Exch. v. Cardenas, 717 S.W.2d 707, 708 (Tex.App.--San Antonio 1986, writ ref'd n.r.e.). On the same day Dr. Garcia, Cardenas and their attorneys entered into an "Assignment of Interest in Cause of Action and Agreement Designating Assets Subject to Execution," (the "Non-Execution Agreement") whereby Cardenas agreed to look only to the proceeds of the insurance policies for satisfaction of any judgment that might be entered and to indemnify Dr. Garcia for any amount of judgment rendered in excess of the amounts actually collected from ICA and APIE. In return, Dr. Garcia assigned to Cardenas and his attorneys all of his claims and causes of action against the carriers arising out of the handling of Cardenas' claims against him.
Trial of Cardenas v. Garcia was to the court which found that Dr. Garcia had committed acts of negligence within the period of time he was insured by APIE and ICA. Judgment was rendered against Dr. Garcia on August 30, 1985 in the amount of $2,235,483.30, plus costs of court and pre- and post-judgment interest.
The suit now on appeal was filed by Dr. Garcia against ICA, APIE and APSG on August 8, 1985. He alleged they (1) were negligent in mishandling his defense in Cardenas v. Garcia; (2) breached the insurance contracts by abandoning his defense and failing to investigate, negotiate and settle the suit; (3) engaged in false, misleading and deceptive acts in violation of the Deceptive Trade Practices Act; (4) engaged in unfair and deceptive acts or practices in violation of the Insurance Code; and (5) breached a fiduciary duty and the covenant of good faith and fair dealing. APIE sought indemnity and contribution from ICA.
Two agreements were entered prior to the trial of the second case. In the first, dated May 1, 1986, ICA paid $2,000,000.00 to Cardenas, Dr. Garcia and their attorneys for a full release and settlement of all claims against it arising out of the occurrences alleged in both lawsuits (the "Release"). In the second agreement, entitled "Partial Settlement Agreement" and dated May 5, 1987, APIE and APSG paid Dr. Garcia and his attorneys $500,000.00 in exchange for their agreement to a six-month continuance and for a release of any judgment against them in excess of $2.5 million.
On November 9, 1987, the case went to trial. The jury returned a verdict favorable to Dr. Garcia on each of his theories of recovery. The jury found (1) APIE was negligent in its attempts, if any, to settle Dr. Garcia's case prior to September 30, 1985, (2) APIE failed to provide coverage to Dr. Garcia after Cardenas' Sixth Amended Original Petition was filed, and (3) APIE failed to defend Dr. Garcia at the trial of the Cardenas case. The jury further found that each of these acts was (1) negligent, (2) a heedless and reckless disregard of Dr. Garcia's rights, (3) an unfair practice in the business of insurance, (4) an unconscionable action or course of action, (5) the proximate cause of damage to Dr. Garcia and (6) done knowingly. The jury found that the failures to defend and to provide coverage were "false, misleading or deceptive acts or practices."
Regarding ICA, the jury found that its failure to settle the Cardenas case prior to September 30, 1985 constituted negligence, a heedless and reckless disregard of Dr. Garcia's rights, an unfair practice in the business of insurance, a failure knowingly done, an unconscionable action or course of action, and that these were proximate causes of damage to Dr. Garcia.
The jury also found that Cardenas' sixth amended petition alleged separate and distinct acts of negligence committed by Dr. Garcia during APIE's period of coverage, and that 16 percent of the damages found by the court in Cardenas v. Garcia were proximately caused by those acts and omissions. It also found that ICA caused 84 percent of Dr. Garcia's damages in Garcia v. APIE, while APIE caused 16 percent of those damages.
Finally, the jury found that Dr. Garcia had sustained damages of $2,235,000.00, that $250,000.00 in exemplary damages and $250,000.00 in "additional" damages should be assessed against APIE, and that Dr. Garcia should be awarded attorney's fees of $820,500.00.
Dr. Garcia elected to have judgment entered on the jury findings that APIE and APSG had violated the Insurance Code. The trial court entered judgment against APIE and APSG, jointly and severally, in the amount of $1,331,574.00 plus post-judgment interest at the rate of ten percent per annum.
Dr. Garcia's only point of error is that the trial court erroneously calculated his damages. He would calculate them as follows:
5. The Insurance Code no longer provides for trebling of actual damages. Instead, if the trier of fact finds that the defendant knowingly committed the acts complained of, the court is required to award, in addition to the actual damages, two times that amount. TEX.INS.CODE ANN. art. 21.21 § 16(b)(1) (Vernon Supp.1990). The amendment was effective April 4, 1985, and thus was in effect when this suit was tried. The result is the same, however, whether the actual damages are trebled or whether actual damages plus two times the actual damages are awarded.
$2,235,000.00 " actual damages as found by jury
k 552,452.10 " interest on Cardenas v. Garcia
judgment to signing of present
judgment
- 500,000.00 " amount paid by APIE in Partial
Settlement Agreement
------------------------
$2,287,452.10 " amount to be trebled 5
5. The Insurance Code no longer provides for trebling of actual damages
Instead, if the trier of fact finds that the defendant knowingly committed
the acts complained of, the court is required to award, in addition to the
actual damages, two times that amount. TEX.INS.CODE ANN. art. 21.21 §
16(b)(1) (Vernon Supp.1990). The amendment was effective April 4, 1985, and
thus was in effect when this suit was tried. The result is the same, however
whether the actual damages are trebled or whether actual damages plus two
times the actual damages are awarded.
x 3
------------------------
$6,862,356.30 " damages
k 820,500.00 "
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