In re Liberty Cnty. Mut. Ins. Co.

• Decision Date: 05 October 2017
• Docket Number: NO. 01-17-00363-CV,01-17-00363-CV
• Citation: 537 S.W.3d 214
• Parties: IN RE LIBERTY COUNTY MUTUAL INSURANCE COMPANY, Relator
• Court: Texas Court of Appeals

537 S.W.3d 214

IN RE LIBERTY COUNTY MUTUAL INSURANCE COMPANY, Relator

NO. 01-17-00363-CV

Court of Appeals of Texas, Houston (1st Dist.).

Opinion issued October 5, 2017

J. Mark Kressenberg, Travis Cade Armstrong, SHEEHY, WARE & PAPPAS, P.C., Houston, TX, for relator.

Ruth A. Kollman, Houston, TX, for real party in interest.

Panel consists of Chief Justice Radack and Justices Keyes and Bland.

Jane Bland, Justice

In this original proceeding, Liberty County Mutual Insurance Company seeks relief from the trial court's order compelling discovery related to severed and abated claims arising from uninsured/underinsured motorist insurance coverage.¹ We conditionally grant relief.

Background

The underlying suit arises out of a car accident that occurred in May 2014. Latrisha Morris was injured when her vehicle was struck by a vehicle driven by Amitbhali Momim.

Morris was insured under an automobile insurance policy underwritten by Liberty Mutual. The insurance policy provides for uninsured/underinsured motorist coverage. Under this provision, Liberty Mutual is obligated to "pay compensatory damages which [Morris] is legally entitled to recover from the owner or operator of an ‘uninsured motor vehicle’ because of ‘bodily injury:’ (1) sustained by an ‘insured;’ and (2) caused by an accident."

In May 2016, Morris sued Momim and Liberty Mutual, asserting that Momim's negligence caused the accident and that Momim was not insured for it. Against Liberty Mutual, Morris sought declaratory relief that Liberty was contractually liable under the insurance policy, and asserted both contractual and extra-contractual fraud and statutory claims against it based on its failure to pay policy benefits.

A. Severance and Abatement of Extra-Contractual Claims

Liberty Mutual moved to sever the contractual and extra-contractual claims against it into a separate action and to abate all activity related to these claims. See Brainard v. Trinity Universal Ins. Co. , 216 S.W.3d 809, 818 (Tex. 2007). The trial court granted the motion in part, and it severed and abated all pending causes of action against Liberty Mutual except for Morris's claims for breach of contract and declaratory judgment. Thus, the extra-contractual claims were severed and abated but the contractual claims continued to proceed in the underlying case.

B. Plaintiff's Discovery Requests

Morris subsequently served Liberty Mutual with interrogatories, requests for admissions, and requests for production. These requests sought discovery of Liberty Mutual's claims history, the basis for its alleged denial of Morris's claim for uninsured motorist coverage, prior similar lawsuits, and internal policies and procedures concerning uninsured motorist investigations. Examples from the interrogatories include requests that Liberty Mutual:

• "[S]tate the amount of all settlement offers made by [Liberty Mutual] in an effort to resolve Plaintiff's claim prior to suit being filed and the method you used and how you calculated this amount and/or Plaintiff's damages."

• "State the procedures relied upon and the criteria utilized by [Liberty Mutual] in its investigation of Plaintiff's claim to evaluate and place a dollar value on her claim."

• "Identify every person who participated to any degree in the investigation and adjusting of the claims, defenses, or issues involved in this case, describe the involvement of each person identified, list their qualifications, state the dates of each investigation, and whether it was reduced to writing and describe in detail the investigation and information gathering process that they utilized to assist you in your decision to deny or adjust payment of Plaintiff's claim."

• "Identify every person who has complained, within the past five (5) years in Texas, about any claim adjustment and/or denial based on any of the reasons that you contend support your adjustment and/or denial of Plaintiffs claim."

• Provide the following information for the last five years: (a) "the total number of written claims filed, including the original amount filed for by the insured and the classification by line of insurance of each individual written claim;" (b) "the total number of written claims denied," (c) "the total number of written claims settled, including the original amount filed for by the insured, the settled amount, and the classification of line of insurance of each individual settled claim;" (d) "the total number of written claims for which lawsuits were instituted against [Liberty Mutual], including the original amount filed for by the insured, the amount of final adjudication, the reason for the lawsuit, and the classification by line of insurance of each individual written claim;" and (e) "the total number of complaints, their classification by line of insurance, the nature of each complaint, the disposition of these complaints, and the time it took to process each complaint."

Liberty Mutual filed objections and responses to the requests, contending that the requested discovery was irrelevant to any current cause of action because a cause of action for uninsured motorist benefits does not arise until the underlying tort suit is resolved:

To the extent Plaintiff seeks to recover [uninsured motorist] benefits, there has been no legal determination that Defendant is under any contractual duty to pay benefits, and there presently exists no legally cognizable basis for Plaintiff to request information concerning any cause of action for Breach of Contract, Common Law Bad Faith, and/or violations of the Texas Insurance Code or Texas Deceptive Trade Practices Act, Breach of Fiduciary Duty, Fraud or recovery of attorney's fees because they are immaterial and irrelevant to the underlying tort lawsuit and thus not reasonably calculated to lead to the discovery of admissible evidence as to any viable claims or causes of action against this Defendant. See Brainard v. Trinity Universal Insurance Company , 216 S.W.3d 809, 818 (Tex. 2007).

Liberty Mutual's claims adjuster, Marianne Cagle, reviewed and verified the discovery responses. Morris requested Cagle's deposition. Consistent with its objections to the discovery requests, Liberty Mutual responded that there was no basis to depose Cagle until the issues of liability, damages, and coverage are resolved.

C. Liberty Mutual's Motion to Quash Deposition

Liberty Mutual moved to quash the deposition of Cagle as overbroad, harassing, and irrelevant to the issues of liability, damages, and coverage. Liberty Mutual stipulated that it had issued a policy of insurance to Morris, that the policy included uninsured motorist benefits, and that the underlying accident is a covered event. But Liberty Mutual asserted that "the only issues involved in this lawsuit is the liability of [Morris] and the alleged tort-feasor, Amitbhali Momim, that were both involved in the underlying motor vehicle accident and the amount of [Morris's] damages resulting from the underlying motor vehicle accident." Liberty Mutual contends that the deposition is sought regarding Cagle's role as a claims adjuster and necessarily seeks discovery as to the abated extra-contractual claims.

Morris responded that she seeks to depose Cagle "as the person who had information regarding Defendant's discovery responses, including [Morris's] declaratory judgment claim."

After conducting a hearing, the trial court denied Liberty Mutual's motion to quash and directed it to produce Cagle for deposition within sixty days.

Morris then amended her petition in the underlying case to remove all claims against Liberty Mutual except her claim for declaratory judgment. A determination has not been made as to Momim's negligence and/or liability for the underlying accident, the existence and amount of Morris's damages, or Momim's status as an underinsured motorist.

Standard of Review

Discovery matters are generally within the trial court's sound discretion, but "mandamus will issue to correct a discovery order if the order constitutes a clear abuse of discretion and there is no adequate remedy by appeal." In reColonial Pipeline Co. , 968 S.W.2d 938, 941 (Tex. 1998) ; see Walker v. Packer , 827 S.W.2d 833, 839 (Tex. 1992). A clear abuse of discretion occurs when the trial court's decision is so arbitrary and unreasonable that it amounts to clear error. See Walker, 827 S.W.2d at 839 (quoting Johnson v. Fourth Court of Appeals , 700 S.W.2d 916, 917 (Tex. 1985) ). Because a trial court has no discretion in determining what the law is, the trial court abuses its discretion if it clearly fails to analyze or apply the law correctly. See id. at 840. "To satisfy the clear abuse of discretion standard, the relator must show ‘that the trial court could reasonably have reached only one decision.’ " Liberty Nat'l Fire Ins. Co. v. Akin , 927 S.W.2d 627, 630 (Tex. 1996) (quoting Walker , 827 S.W.2d at 840 ). "In determining whether appeal is an adequate remedy, appellate courts consider whether the benefits outweigh the detriments of mandamus review." In re BP Prods. N. Am., Inc. , 244 S.W.3d 840, 845 (Tex. 2008).

Discussion

In seeking mandamus relief, Liberty Mutual contends that (1) discovery beyond the issues of liability and damages regarding the underlying accident is irrelevant because it is not liable until these issues have been determined; and (2) Cagle's assistance with answering interrogatories regarding Morris's policy is an insufficient basis to allow the deposition at this stage of the case. Liberty Mutual further asserts that it lacks an adequate remedy by appeal because it is being compelled to bear the burden of providing a deposition not relevant to any current claim. In response to the petition, Morris argues that (1) she is entitled to depose Cagle because "[t]he deposition of a witness who provides discovery responses is relevant" and (2) Liberty has an adequate remedy by appeal.

A. Scope of Discovery

A trial court must make an effort to impose reasonable limits on discovery. In re Am. Optical , 988 S.W.2d...