Hanson v. Republic Ins. Co.

• Citation: 5 S.W.3d 324
• Parties: <!--5 S.W.3d 324 (Tex.App.-Houston 1999) JON A. HANSON, DANNY HANSON, and PROMISE RENEE HANSON a/n/f DANNY HANSON, Appellants v. REPUBLIC INSURANCE COMPANY, Appellee NO. 01-98-00042-CV In The
• Decision Date: 14 October 1999
• Court: Court of Appeals of Texas

Page 324

5 S.W.3d 324 (Tex.App.-Houston [1st Dist.] 1999)

JON A. HANSON, DANNY HANSON, and PROMISE

RENEE HANSON a/n/f DANNY HANSON, Appellants v REPUBLIC INSURANCE COMPANY, Appellee

NO. 01-98-00042-CV

In The

Court of Appeals For the First District of Texas

October 14, 1999

On Appeal from the 269th District Court Harris County, Texas Trial Court Cause No. 93-43367

Panel consists of Justices Cohen, Hedges, and Taft.

O P I N I O N

TIM TAFT, Justice.

This is an appeal from a declaratory judgment in an automobile insurance coverage case. The trial court rendered summary judgment in favor of the appellee, Republic Insurance Company. Appellants, Jon A. Hanson, and his children, Danny Hanson and Promise Rene Hanson,¹ claim the trial court misapplied the family member exclusion and the uninsured/underinsured-motorist offset clause of the Standard Texas Personal Auto Policy. The trial court construed these provisions in determining that Republic had no duty to indemnify Mr. Hanson for a $7,754,364 judgment entered after Promise Rene sued Mr. Hanson, on Danny's behalf, seeking damages for injuries Danny sustained in an automobile collision. The Hansons also challenge the summary judgment on the grounds that the trial court misapplied a credit for liability benefits received from a third party and erred by allowing Republic to assert its policy defenses. We affirm.

Factual Background

Republic insured two Hanson family vehicles under a single, standard-form Texas Personal Auto Policy issued to Mr. Hanson as named insured. The declared limit of liability of the policy for liability coverage was $100,000. The declared limit of liability for uninsured/underinsured motorist coverage was also $100,000. The Personal Injury Protection coverage under the policy had a limit of $2,500.

Danny was seriously injured in a three-car collision in 1991. He was 15 years old. Danny was in the rear seat of Mr. Hanson's 1989 Chevrolet Camaro, one of two vehicles insured under the Republic policy. Mr. Hanson was driving. As Mr. Hanson was executing a left-hand turn, he collided with an oncoming vehicle driven by Clifton Corson. This collision resulted in a second collision between Mr. Hanson's Camaro and a third vehicle. All three drivers carried the liability insurance required by the Safety Responsibility Act then in effect, former TEX. REV. CIV. STAT. ANN. art. 6701h 1(10) (Vernon 1993).² Police at the accident scene ticketed Mr. Hanson for failure to yield the right-of-way. Danny's injuries from the accident were massive and permanently disabling.

Soon after the accident, the insurance carrier for the Corson vehicle tendered $25,000 to the Hansons. This was the total of liability coverage afforded by the Corson policy.

Procedural Background

Within a year of the accident, Republic filed an interpleader action in the 215th District Court of Harris County, to deposit $100,000 into the court's registry as the full amount of its uninsured/underinsured limits. Republic paid $2,500 to the Hansons under the personal injury protection (PIP) provisions of the policy.

In February 1993, Promise Rene sued her father on Danny's behalf in Cause No. 93-05655, Promise Rene Hanson a/n/f Danny Hanson v. Johnney Allen Hanson, in the 133rd District Court of Harris County ("the underlying personal-injury action"), claiming that Mr. Hanson's negligence caused Danny's injuries. Republic provided legal counsel to defend Mr. Hanson in that lawsuit. In issuing a demand to Republic for the full limits of the policy for that lawsuit, Mr. Hanson claimed the policy limits exceeded the $100,000 Republic had previously deposited in the registry of the 125th District Court as the full amount of its limits under the uninsured/underinsured provisions of the policy.

In August 1993, Republic filed this action for declaratory relief in this case to determine its duties under the policy. Republic relied on an offset clause in the uninsured/underinsured coverage provisions of the policy to argue that it had exhausted its policy limits by tendering the $100,000 into the registry of the 215th District Court for Danny's benefit, and by tendering $2,500 to Danny under the PIP policy provisions. In addition, Republic maintained no more than the statutory minimum of $20,000 was available for liability coverage because of the policy's family-member exclusion. Republic moved for summary judgment, or partial summary judgment, early in the case, but was denied this initial request.

In March 1995, Mr. Hanson countersued Republic in this case by asserting counterclaims for breach of contract and several extra-contractual claims.³ Early in 1996, the trial court abated and later severed Mr. Hanson's extra-contractual claims pending resolution of issues on the contract. The extra-contractual claims remain severed pending this appeal.

The underlying personal-injury action resulted in a negligence verdict against Mr. Hanson. The judgment signed in that case on November 22, 1996 awarded Danny $7,754,364 in actual damages plus interest against his father.

Early in 1997, Republic again sought summary judgment in this case on the grounds it had no duty to indemnify Mr. Hanson for the $7,754,364 judgment in the underlying personal-injury action. Republic argued once more that it had exhausted its policy limits by having deposited the $100,000 in uninsured/underinsured benefits into the registry of the 215th District Court. Republic claimed this tender triggered the offset clause of the uninsured/underinsured motorist provision of the policy. Republic also claimed the family-member exclusion barred any recovery under the liability coverage of the policy beyond the $20,000 required by article 6701h 1(10) of the former Motor Vehicle Safety Act.

In responding to the motion, Mr. Hanson claimed Republic was estopped to dispute coverage, because it had breached its duty to settle the underlying personal-injury action, and challenged whether the family-member exclusion and the offset applied. In moving for summary judgment, Mr. Hanson advanced the same arguments, and asked to be awarded judgment "in the available policy amount of $20,000," and $150,000 in attorney's fees. Danny's and Promise Rene's joint motion for summary judgment raised similar arguments.

The trial court rendered summary judgment in Republic's favor, which all three Hanson family members challenge in this appeal. They also claim the trial court erred by denying their motions for summary judgment.

Standards of Review

The issues before us arise in the context of several legal standards: those governing summary judgments, the interpretation of insurance contracts, and additional considerations applicable to statutorily mandated insurance coverage.

A.Summary Judgment

Well-settled principles govern review of summary judgments in insurance coverage cases. State Farm Fire & Cas. v. Vaughn, 968 S.W.2d 931, 933 (Tex. 1998); Sears, Roebuck & Co. v. Commercial Union Ins. Corp., 982 S.W.2d 151, 153 (Tex. App.-Houston [1st Dist.] 1998, no pet.). When a motion for summary judgment raises multiple grounds, we may affirm if any ground is meritorious. Cincinnati Life v. Cates, 927 S.W.2d 623, 625 (Tex. 1996). Further, when both parties move for summary judgment and the trial court grants one motion and denies the other, we may determine all questions presented, including the propriety of overruling the losing party's motion. Jones v. Strauss, 745 S.W.2d 898, 900 (Tex. 1988); State Farm Mut. Auto Ins. Co. v. Brown, 984 S.W.2d 695, 697 (Tex. App.-Houston [1st Dist.] 1998, pet. denied).

B.Interpretation of Insurance Contracts

Insurance contracts are subject to the same rules of construction as ordinary contracts. Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819, 823 (Tex. 1997); Brown, 984 S.W.2d at 698. Accordingly, when a policy permits only one interpretation, we will construe it as a matter of law and enforce it as written. Sears, Roebuck, 982 S.W.2d at 154; Upshaw v. Trinity Cos., 842 S.W.2d 631, 633 (Tex. 1992). We construe the policy against the insurer and in favor of the insured only when policy terms permit more than one interpretation and are thus ambiguous. Vaughn, 968 S.W.2d at 933; Upshaw, 842 S.W.2d at 633. We need not apply the contra-insurer rule here, as the Hansons contend. As in our recent opinion in Brown, both parties dispute only the effect of certain policy provisions, and not their meaning. See Brown, 984 S.W.2d at 698.

C.Statutorily Mandated Insurance Coverage

We are further mindful that the insurance coverage at issue is statutorily mandated. Article 5.06(1) of the Insurance Code requires the Texas Department of Insurance (TDI) to adopt a policy form and endorsements for each type of motor vehicle insurance governed by articles 5.01 through 5.12 of the Insurance Code. TEX. INS. CODE ANN. art. 5.06(1)-(2) (Vernon Supp. 1999); Brown, 984 S.W.2d at 699. Texas courts must interpret TDI-approved policy provisions as written, but provisions that conflict with express statutory requirements or purposes are invalid. Mid-Century Ins. Co. v. Kidd, No. 98-0800, 42 Tex. Sup. Ct. J. 1007, 1011 (July 1, 1999).

Analysis

The Hansons' challenges include arguments that the trial court violated statutory mandates for automobile insurance, and thus contravened public policy, in adopting Republic's interpretations of the policy. We begin our analysis by addressing these mandates.

Statutorily Mandated Coverage - Automobile Insurance

The former Motor Vehicle Safety Act, now the Transportation Code, and the Insurance Code regulate automobile insurance coverage in Texas. The Motor Vehicle Safety Act, now the Transportation Code, mandates automobile insurance that Texas drivers must carry, while the Insurance Code mandates the coverage that Texas automobile insurers must provide in policies offered to Texas drivers, but which they may decline.

Texas drivers must carry liability insurance coverage in the minimum...