Guaranty County Mut. Ins. Co. v. Kline
| Decision Date | 31 December 1992 |
| Docket Number | No. D-2683,D-2683 |
| Citation | 845 S.W.2d 810 |
| Parties | GUARANTY COUNTY MUTUAL INSURANCE COMPANY, Petitioner, v. Arthur L. KLINE, Respondent. |
| Court | Texas Supreme Court |
Kenneth R. Chambers, Beaumont, for petitioner.
Blair A. Bisbey, Laraine Elsbeth Hutzell, Jasper, for respondent.
ON APPLICATION FOR WRIT OF ERROR TO THE COURT OF APPEALS FOR
THE NINTH DISTRICT OF TEXAS
This suit arose out of an automobile collision between Arthur Kline and Arthur Fletcher. At the time of the accident Kline carried uninsured/underinsured motorist coverage with Guaranty County Mutual Insurance Company in limits of $20,000 per person and $40,000 per accident. Kline sued Fletcher for damages and eventually settled that suit for Fletcher's automobile liability policy limits of $20,000. As part of the settlement, Kline released Fletcher from any further liability. It is undisputed that Kline's insurer, Guaranty County Mutual Insurance Company, did not consent to the settlement.
In August 1990, Kline sued Guaranty for underinsured motorist benefits under his policy. In response, Guaranty asserted the policy's "settlement without consent" clause, claiming that Kline's settlement with Fletcher discharged Guaranty of all liability under the terms of the policy.
At trial the jury found that Kline had sustained $40,000 in damages, and further found that he was 25% contributorily negligent. After deducting 25% from the damages awarded, starting from an adjusted figure of $30,000, the trial court subtracted the $20,000 Kline had recovered from Fletcher, and rendered judgment for Kline in the amount of $10,000, plus attorney's fees of $5,000. The court of appeals affirmed the trial court's judgment and held that the "settlement without consent" exclusion in the insurance contract was invalid. Because we hold that the "settlement without consent" clause is valid, we reverse the court of appeals judgment and render judgment in favor of Guaranty County Mutual Insurance Company.
The insurance contract between Kline and Guaranty contained a standard "settlement without consent" clause that stated:
We do not provide Uninsured/Underinsured Motorist coverage for any person: ... if that person or legal representative settles the claim without our consent.
Texas courts have uniformly upheld the validity of such an exclusion in the standard Texas Personal Auto Policy. See e.g. Ford v. State Farm Mut. Auto. Ins. Co., 550 S.W.2d 663, 665 (Tex.1977); Dairyland County Mut. Ins. Co. v. Roman, 498 S.W.2d 154, 159 (Tex.1973); Huttleston v. Beacon Nat'l Ins. Co., 822 S.W.2d 741 (Tex.App.--Fort Worth 1992, writ denied); McClelland v. United Servs. Auto. Ass'n, 525 S.W.2d 271 (Tex.Civ.App.--Beaumont 1975, writ ref'd). To deny the validity of this...
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