Gulf Group Lloyds v. Hernandez
| Decision Date | 26 February 1993 |
| Docket Number | No. 04-92-00518-CV,04-92-00518-CV |
| Citation | 876 S.W.2d 162 |
| Parties | GULF GROUP LLOYDS, Appellant, v. Ruben HERNANDEZ & Anita Hernandez, Appellees. |
| Court | Texas Court of Appeals |
Mary Mishtal, Davidson & Troilo, P.C., San Antonio, for appellant.
Phil Hardberger, Hardberger & Rodriguez, Inc., Larry Zinn, San Antonio, for appellees.
Before REEVES, C.J., and CHAPA and RICKHOFF, JJ.
This is an appeal from a judgment rendered in favor of appellees, Ruben and Anita Hernandez, against appellant, Gulf Group Lloyds ("Gulf Group"), for recovery of underinsured motorist benefits. Because appellees' settlement with an underinsured motorist without Gulf Group's consent violated the "settlement without consent" exclusion in their insurance contract, we reverse the judgment of the trial court and render judgment that appellees take nothing.
The case was tried to the court on stipulated facts, which show that the daughter of appellees, Elizabeth Hernandez, was killed on November 21, 1987, when the car in which she was a passenger flipped over; the driver of the car was Charles McCullough, Jr. The parties stipulated that McCullough's negligence was the sole proximate cause of Elizabeth's injuries and that appellees suffered damages in excess of $125,000.
At the time of the accident, McCullough was an insured of State Farm Mutual Automobile Insurance Company ("State Farm"). The liability policy limit of the State Farm policy was $25,000. Elizabeth was covered by her parent's insurance policy with Gulf Group. That policy included uninsured/underinsured motorist coverage in the amount of $100,000.
Appellees settled with McCullough on January 6, 1988, for the policy limit of the State Farm policy--$25,000. The facts stipulated appellees did not get the consent of Gulf Group before settling the case with McCullough and releasing him from liability.
On March 30, 1990, appellees presented a claim through their lawyer to Gulf Group for payment of the underinsured motorist benefits. However, Gulf Group denied coverage based upon the failure of the appellees to get consent before settling with McCullough.
At trial, the court found for appellees on the theory of breach of contract and awarded them the amount of the underinsured policy, or $100,000, plus pre-judgment interest, post-judgment interest, and attorney's fees.
The insurance contract between appellees and Gulf Group contained a "settlement without consent" clause that stated:
This insurance does not apply:
a) to bodily injury or property damage with respect to the insured, his legal representative or any person entitled to payment under this insurance shall, without written consent of the company, make...
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Hernandez v. Gulf Group Lloyds
...that the insureds had violated their insurance contract by settling with the underinsured motorist without the insurer's consent. 876 S.W.2d 162. We hold that an insurer may escape liability on the basis of a settlement-without-consent exclusion only when the insurer is actually prejudiced ......