In re State Farm Mut. Auto. Ins. Co.

• Court: Texas Court of Appeals
• Writing for the Court: JON WEST JUSTICE
• Docket Number: 13-24-00162-CV
• Decision Date: 06 November 2025
• Citation: In re State Farm Mut. Auto. Ins. Co., 13-24-00162-CV (Tex. App. Nov 06, 2025)
• Parties: IN RE STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

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IN RE STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

No. 13-24-00162-CV

Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg

November 6, 2025

ON PETITION FOR WRIT OF MANDAMUS

Before Chief Justice Tijerina and Justices Silva and West

MEMORANDUM OPINION ON REHEARING

JON WEST JUSTICE

By memorandum opinion previously issued, the Court granted in part and denied in part a petition for writ of mandamus filed by relator State Farm Mutual Automobile Insurance Company (State Farm). See In re State Farm Mut. Auto. Ins. No. 13-24-00162-CV, 2025 WL 630661, at *1 (Tex. App.-Corpus Christi-Edinburg Feb. 26, 2025, orig. proceeding) (mem. op.). State Farm subsequently filed a motion for en banc reconsideration of our decision. We construe this motion as requesting both rehearing and en banc reconsideration. See Tex. R. App. P. 49.1, 49.5, 52.9; Brookshire Bros., Inc. v. Smith, 176 S.W.3d 30, 39 (Tex. App.-Houston [1st Dist.] 2005, pet denied) (op. on reh'g). After due consideration of State Farm's arguments, we grant State Farm's motion for rehearing and dismiss as moot State Farm's motion for en banc reconsideration. We withdraw our previous memorandum opinion and issue this memorandum opinion in its stead.

State Farm contends that the trial court^[1] abused its discretion by granting a new trial. In the underlying proceeding, real party in interest Tita G. Teran submitted liability and damage issues regarding her underinsured motorist claim against State Farm to a jury, which found in Teran's favor. The jury was discharged and Teran later filed a motion requesting that the trial court award her attorney's fees. State Farm opposed Teran's motion and argued that she had waived the recovery of attorney's fees because she did not submit that issue to the jury. In short, Teran and State Farm disagreed regarding the content and effect of an agreement regarding bifurcation of the case and whether Teran's claim for attorney's fees would be submitted to the jury or the bench. See Tex. R. Civ. P. 11 . The trial court concluded that "[t]he only way to fairly address the concerns of both sides is for a new jury to hear the case." We conditionally grant the petition for writ of mandamus.

I. Background

Teran filed suit against State Farm for declaratory relief regarding the parties' rights and obligations under her automobile insurance policy. Teran alleged that she was involved in a motor vehicle accident with Olivia Lara Galvan, that Galvan was at fault and was underinsured, and that Teran suffered personal injuries and other damages from the collision. Teran thus sought declarations that under her insurance policy, she was a "covered person," Galvan was an "underinsured motorist," the collision was an "accident," and State Farm was "obligated to pay the full amount" of her underinsured motorist coverage, plus attorney's fees and costs, because she was "legally entitled to recover this amount" from Galvan because of Galvan's negligence.

Teran settled her claims against Galvan for Galvan's policy limits of $30,000, and State Farm paid Teran $2,500 in personal injury protection benefits. Her claims against State Farm were set for a jury trial. Prior to the trial, State Farm filed "Judicial Admissions" in which it stipulated, among other things, that it was entitled to a credit for $32,500 and that:

[T]he only provisions of the Policy with which [Teran] has not yet complied is: (1) she has not shown the specific amount of damages she is legally entitled to recover, if any, from [Galvan] as a result of the automobile accident on or about February 14, 2019, or (2) that [Galvan] was driving an "Uninsured Motor Vehicle" at the time of the accident, as that term is defined under "Uninsured/Underinsured Motorists Coverage" of policy number 171 9314-B19-53K.

In pretrial proceedings, the parties presented argument regarding the nature of the case and the extent to which testimony regarding insurance would be allowed. Teran's counsel contended that she should be allowed to argue that State Farm did not want to pay for her damages and that it was error to "mislead the jury about who the actual [defendant] in the case is." State Farm asserted, in contrast, that the trial court should exclude argument and evidence regarding the claims process and policy matters because the only relevant issues were whether Galvan was negligent and the amount of Teran's damages, if any. State Farm supported its argument by reference to the process in which underinsured motorist cases are severed or bifurcated such that an initial proceeding establishes the liability and underinsured status of the motorist, and a second proceeding addresses contractual and extracontractual claims. See, e.g., In re State Farm Mut. Auto. Ins., 629 S.W.3d 866, 870 (Tex. 2021) (orig. proceeding) (concluding that bifurcation rather than severance was the appropriate remedy where the plaintiff sought only extracontractual claims); see also In re Allstate Fire & Cas. Ins., No. 03-21-00515-C V, 2022 WL 120263, at *3 (Tex. App.-Austin Jan. 12, 2022, orig. proceeding) (mem. op.) (distinguishing State Farm and holding that "[s]everance and abatement is appropriate when . . . an insured seeks a determination as to entitlement to [underinsured motorist] benefits and also brings extracontractual claims against the insured"). State Farm's counsel discussed his experience trying other underinsured motorist cases, and stated that:

[W]hen we have had these trials, the issue for the jury to consider and the only things that the jury is going to get back in the jury charge are the negligence questions and then the damages questions, your Honor.

Now I know this is different because we have a [declaratory relief] action. [Teran's counsel] and I talked about having a bifurcated second part about the [attorney's] fees that have recently come up. But in terms of what the jury is going to see and hear evidence of is going to be negligence and injuries, if any, stemming from the accident.

(Emphasis added). Teran's counsel ultimately agreed that she would not be discussing insurance claim violations at trial but instead intended to show that State Farm denied that Galvan was negligent, Teran suffered severe injuries, and that Teran's medical bills were reasonable.

The case was submitted to a jury, which found that Galvan was negligent, Teran was not, and Teran should be awarded $33,369 for her injuries. The charge submitted to the jury did not include a question about attorney's fees. Following trial, the jury was discharged without objection.

After trial, Teran filed a "Motion for Award of Attorney's Fees and For Evidentiary Hearing." She requested the trial court to award her attorney's fees in connection with her lawsuit under § 37.009 of the Texas Civil Practice and Remedies Code, and she requested the trial court to hold a hearing to determine the amount of attorney's fees, if any, to be awarded. See Tex. Civ. Prac. & Rem. Code Ann. § 37.009 ("In any proceeding under this chapter, the court may award costs and reasonable and necessary attorney's fees as are equitable and just."); Sealy Emergency Room, L.L.C. v. Free Standing Emergency Room Managers of Am., L.L.C., 685 S.W.3d 816, 825-26 (Tex. 2024). State Farm filed a verified "Response to Plaintiff's Motion for Award of Attorney's Fees and for Evidentiary Hearing" asserting that it owed Teran only $869 after its credits were applied and that Teran had rejected its offer to settle her claims for $7,500. State Farm thus argued that it was effectively "the prevailing party," and an award of attorney's fees would be neither equitable nor just. State Farm further asserted that "[w]hile the parties agreed to bifurcate the issue, the jury was discharged before they could consider the reasonableness of fees"; thus, Teran waived her request for attorney's fees because the jury was the only appropriate factfinder for the amount of fees to be awarded.

On November 8, 2022, the trial court granted a new trial in the case without stating its reasons for doing so. State Farm assailed this order by filing a petition for writ of mandamus in this Court. We concluded that the new trial order was facially invalid, conditionally granted the petition for writ of mandamus, and directed the trial court to vacate its new trial order and conduct further proceedings consistent with our opinion. See In re State Farm Mut. Auto. Ins., No. 13-22-00589-CV, 2023 WL 418699, at *5 (Tex. App.-Corpus Christi-Edinburg Jan. 26, 2023, orig. proceeding) (mem. op.).

State Farm thereafter filed a "Motion for Entry of Judgment" requesting the trial court to enter judgment on the jury's verdict. In response, Teran filed a "Motion for Mistrial." Teran alleged that the parties entered a valid Rule 11 agreement when State Farm's counsel represented that: "[Teran's counsel] and I talked about having a bifurcated second part about the attorneys' fees that have recently come up. But in terms of what the jury is going to see and hear evidence of is going to be negligence and injuries, if any, stemming from the accident." Teran's counsel "agreed to this statement because it leaves attorneys' fees to be tried to the Court." In view of the disagreement regarding the meaning of this statement, Teran thus asserted that the trial court should "declare a mistrial and order a new trial."

State Farm thereafter filed a "Response to Plaintiff's Motion for Mistrial/New Trial" arguing that Teran lost at trial and waived her request for attorney's fees. State Farm argued that while it had agreed to bifurcate Teran's claim for attorney's fees, it never agreed to try the attorney's fee claim to the court rather than the jury.

On January 10, 2024, the trial court granted Teran's motion....