Insurance Network of Texas v. Kloesel
Decision Date | 03 April 2008 |
Docket Number | No. 13-05-680-CV.,13-05-680-CV. |
Citation | 266 S.W.3d 456 |
Parties | INSURANCE NETWORK OF TEXAS, Appellant, v. Harvey & Diana KLOESEL, et al., Appellees. |
Court | Texas Court of Appeals |
Daniel W. Burrows, David W. Holman, Houston, Max E. Roesch, Giddings, for appellant.
Jane S. Brown, Beaumont, Lennon C Wright, Law Office of Lennon C. Wright, Houston, Macklin K. Johnson, Hallettsville, for appellees.
Before Justices YAÑEZ, RODRIGUEZ, and GARZA.
Harvey and Diana Kloesel, individually and d/b/a Kloesels' Steakhouse, Inc. ("the Kloesels"), sued appellant, Insurance Network of Texas ("INT"), for breach of contract, negligence, and violations of the Texas Insurance Code and the Texas Deceptive Trade Practices Act ("DTPA"). A jury found that INT acted negligently and violated the DTPA, causing the Kloesels' damages. INT subsequently appealed the trial court's amended final judgment and the Kloesels cross-appealed. We affirm the trial court's judgment as written.
Harvey and Diana Kloesel are married. They have owned and operated Kloesels' Steakhouse in Moulton, Texas since 1970. INT is an independent insurance agency. In 1993, the Kloesels wanted a different insurance company to safeguard their restaurant. The Kloesels approached Gary Nitsche, an insurance agent with INT, to discuss having INT procure insurance for their restaurant.1 When INT first procured a policy for the Kloesels, it obtained the policy from Providence Washington Insurance Company ("Providence"), an admitted carrier, for the 1993-1994 policy year. The Providence policy covered communicable disease claims. During that policy year, the Kloesels expressed their intent to add a horse-and-carriage operation to their restaurant. As a result, Providence opted not to renew the Kloesels' policy, which was set to expire in October 1994. INT notified the Kloesels of the need to change carriers and subsequently procured for them a general liability policy from Burlington Insurance Company ("Burlington"), a surplus lines carrier, for the 1994-1995 policy year. The Burlington policy covered claims arising from the horse-and-carriage operation, which began in November 1994, but excluded communicable disease claims. The Kloesels paid the premiums for this policy and renewed it for the 1995-1996, 1996-1997, and 1997-1998 policy years.
During the 1997-1998 policy year, over ninety customers contracted Hepatitis A at the Kloesels' restaurant; the Texas Department of Health concluded that this likely resulted from a food handler being infected with Hepatitis A. The Kloesels filed claims under the Burlington policy, but Burlington denied the claims based on the communicable disease exclusion. Two separate lawsuits were then filed against the Kloesels by the Simpsons and the Lairds—customers who had contracted Hepatitis A. Burlington defended the Kloesels in these two lawsuits under a reservation of rights. On December 13, 1999, the Simpsons obtained a judgment in their favor (the "Simpson judgment") worth $242,625. Eight months later, on August 31, 2000, the Lairds obtained a judgment in their favor (the "Laird judgment") worth $323,441. INT declined to cover the Kloesels for the amounts owed under the Simpson and Laird judgments.
During the eight-month period between the Simpson and Laird judgments, the Kloesels and the Simpsons entered into an agreement entitled "Assignment and Covenant not to Execute." Under the agreement, the Kloesels assigned to the Simpsons all negligence and statutory causes of action the Kloesels had, or would have, against INT; the assignment allowed the Simpsons to bring suit against INT in either their own name or the Kloesels' name. The Simpsons, in return, agreed not to collect from the Kloesels any portion of the amount owed under the Simpson judgment. Burlington later filed a declaratory judgment action in federal court, leading a district court for the Southern District of Texas to conclude, on March 27, 2001, that "Burlington [was] not required to indemnify [the Kloesels] for any damages recovered against [the Kloesels] based on [their] patrons contracting Hepatitis A, since the Burlington policy contains an enforceable `communicable disease' exclusion."
On March 11, 2005, after lengthy legal wrangling, the Kloesels brought suit against INT through their fifth amended petition.2 The Kloesels' suit proceeded to trial, where they obtained a favorable jury verdict that concluded the following: (1) INT committed negligence that proximately caused the Kloesels' damages; (2) the Kloesels did not commit negligence that proximately caused their damages; (3) INT was "100%" responsible for the Kloesels' damages; (4) INT knowingly made misrepresentations relating to the Kloesels' insurance policy, thus causing their damages; (5) INT knowingly engaged in an unconscionable action or course of action that was the producing cause of damages to the Kloesels; (6) an award of $929,180.82 could reasonably compensate the Kloesels for their damages; and (7) the Kloesels' reasonable attorney's fees are $150,000 for preparation and trial, $50,000 for an appeal to this Court, and $25,000 for an appeal to the Texas Supreme Court.
The trial court entered a final judgment on August 1, 2005, awarding the Kloesels (1) $929,180.82 for damages, "together with prejudgment interest thereon at the annual rate of 6.0% from April 15, 2005 through the date the judgment is signed"; (2) an award of attorney's fees in accordance with the returned jury charge; and (3) $4,574.97 for court costs. INT filed motions for new trial and judgment notwithstanding the verdict ("JNOV"). Though the motions were denied, the trial court—after considering arguments raised in INT's motions—denied recovery on the DTPA and insurance code allegations. As a result, the court eliminated the award of attorney's fees in its amended final judgment.
The trial court's "Amended Final Judgment" differed from the "Final Judgment" in that the amended judgment did not afford the Kloesels an award of attorney's fees. The trial court, in the amended judgment, provided the following explanation for the change:
[T]he Court entered Judgment based upon the Jury's verdict and the Defendants filed a Motion for New Trial and Motion for Judgment N.O.V., which, after considering the response thereto and hearing argument of Counsel, the Court granted in part by denying recovery on the DTPA and Insurance Code allegations and affirming the remainder of the recovery. The Judgment previously entered by the court on August 1, 2005 is hereby amended....3
We believe a question exists as to what exactly the trial court was "denying." We see two possibilities: (1) the trial court denied the jury's findings that INT knowingly made misrepresentations and engaged in unconscionable action, and denied the award of attorney's fees as a result of this decision; or (2) the trial court did not deny the aforementioned findings, but determined independently of those findings that awarding attorney's fees under the DTPA was improper and should be denied. The trial record allows for both possibilities, given that INT's motions asserted that (1) the jury's DTPA finding was not supported under the law, and (2) the Kloesels' attorney erred by failing to segregate fees attributable to the Kloesels' DTPA claim, which INT asserted was required because the Kloesels' DTPA claim was joined with another claim for which attorney's fees were not recoverable.
Neither findings of fact nor conclusions of law accompany the amended judgment. When an appellate court seeks to interpret a vague judgment, the judgment, like other written instruments, is to be "construed as a whole toward the end of harmonizing and giving effect to all the court has written."4 The entire content of the judgment and the record should be considered.5 In the instant case, the amended judgment states that the trial court is "denying recovery on the DTPA and Insurance Code allegations." The lack of any reference to attorney's fees and the use of the term allegations causes us to believe that the trial court rejected the Kloesels' DTPA causes of action, thus prompting the court's decision to deny the award of attorney's fees. Because the record further permits such a belief, we consider this to be the course of action taken by the trial court. We will thus focus solely on the jury's negligence finding— not the misrepresentation and unconscionable conduct findings—in assessing whether the jury's award of damages should be upheld.
INT's appeal and the Kloesels' cross-appeal arose from the trial court's amended judgment. In ten issues, INT raises arguments relating to (1) the Kloesels and Simpsons' assignment and covenant not to execute (issues two, three, four, and nine); (2) the jury's negligence finding against INT (issues one, five, six, and eight); (3) the jury's finding that the Kloesels were not contributorily negligent (issue ten); and (4) the trial court's jury charge (issue seven). The Kloesels, in their cross-appeal, assert that the trial court erred by not properly awarding prejudgment interest and by failing to award attorney's fees.
In the issues relating to the assignment, INT contends that the Kloesels did not have standing in the trial court, and that the trial court therefore lacked subject matter jurisdiction to hear this case.6 Because subject matter jurisdiction is a threshold issue affecting the power of this Court to reach the merits of INT's appeal,7 we first address INT's assignment arguments, as well as related arguments concerning the covenant not to execute. These arguments cannot adequately be addressed, however, without first explaining our interpretation of the Kloesels' assignment, covenant not to...
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