Johnson v. State Farm Mut. Auto. Ins. Co., 03–16–00086–CV

• Citation: 520 S.W.3d 92
• Decision Date: 06 April 2017
• Docket Number: NO. 03–16–00086–CV,03–16–00086–CV
• Parties: Jerry C. JOHNSON and Jacob Johnson, Cross–Appellants, State Farm Fire and Casualty Company and State Farm Mutual Automobile Insurance Company, Appellants v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and State Farm Fire and Casualty Company, Cross–Appellees, Jerry C. Johnson and Jacob Johnson, Appellees
• Court: Court of Appeals of Texas

520 S.W.3d 92

Jerry C. JOHNSON and Jacob Johnson, Cross–Appellants,

State Farm Fire and Casualty Company and State Farm Mutual Automobile Insurance Company, Appellants

v.STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and State Farm Fire and Casualty Company, Cross–Appellees,Jerry C. Johnson and Jacob Johnson, Appellees

NO. 03–16–00086–CV

Court of Appeals of Texas, Austin.

Filed: April 6, 2017

Melinda Elder, Elliot Clark, Linda J. Burgess, Winstead PC, Austin, TX, for Appellees.

Randy G. Allen, Colorado Springs, CO, Margaret A. Poissant, Poissant Law Firm, Houston, TX, for Appellants.

Before Chief Justice Rose, Justices Goodwin and Bourland

OPINION

Melissa Goodwin, Justice

This appeal arises from a suit brought by Jerry C. Johnson seeking declarations construing the terms of two insurance policies following an automobile accident in which Jerry's son, Jacob, a minor at the time, was injured while Jerry was driving.¹ See Tex. Civ. Prac. & Rem. Code §§ 37.001 –.011. Jerry sued State Farm Mutual Automobile Insurance Company, which had issued Jerry an auto policy, and State Farm Fire and Casualty Company, which had issued Jerry an umbrella policy (jointly State Farm). Jerry also named Jacob as a defendant, as a party with a claim or interest that would be affected by the litigation.² Jacob admitted Jerry's claims and asserted a cross-claim for declaratory relief against State Farm. State Farm asserted counterclaims for declaratory relief against Jerry and Jacob. All parties filed motions for summary judgment. The trial court granted in part and denied in part the motions of Jerry and State Farm and denied Jacob's motion. All parties appeal the rulings adverse to them. For the reasons that follow we affirm in part and reverse and render in part the trial court's judgment.

FACTUAL AND PROCEDURAL BACKGROUND

In 2008, Jerry, Stephanie, and Jacob were traveling on Interstate 70 in Colorado in a rented car driven by Jerry. Jerry became confused about which exit to take and turned into the path of a semi-truck, resulting in a collision. Jacob, who was eleven years old at the time and asleep in the back seat, suffered serious bodily injuries, including severe traumatic brain injury

. Jacob lived with his parents at the time of the accident and remained in the home until May 29, 2015, when he permanently moved out of the residence. At the time of the accident, Jerry was insured by a Texas Personal Auto Policy (the auto policy) and a Personal Liability Umbrella Policy (the umbrella policy), both issued by State Farm. The auto policy contains a provision, the "family member exclusion," that excludes from liability coverage bodily injury to "any family member, except to the extent of the minimum limits of Liability Coverage required by Texas [Revised] Civil Statutes, Article 6701h, entitled ‘Texas Motor Vehicle Safety–Responsibility Act,’ " which at the time was $25,000.³ See Act of May 15, 2007, 80th Leg., R.S., ch. 1298, § 1, sec. 601.072(a)(1), Tex. Gen. Laws 4365, 4365 (expired Dec. 31, 2010).⁴ "Family member" is defined as "a person who is a resident of your household and related to you by blood, marriage, or adoption." The umbrella policy contains a similar provision, also referred to as a "family member exclusion," that excludes coverage for "bodily injury... to any insured," defined as "you and your relatives whose primary residence is your household."⁵ "Relative" is defined as "any person related to you by blood, adoption, or marriage." Jerry sought coverage for Jacob's injuries under both policies. State Farm contended that the family member exclusions in the policies excluded coverage except to the extent of the minimum limits of liability coverage required under the auto policy by the Texas Motor Vehicle Safety Responsibility Act and offered to pay $25,000. See id.

Jacob also made a claim for payment under the auto policy's underinsured motorist (UIM) coverage.⁶ The UIM provision affords coverage for bodily injury that a "covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle." "Covered person" as defined includes "[y]ou or any family member." "Uninsured motor vehicle" is defined to include an underinsured motor vehicle, which is further defined, in relevant part, as "one to which a liability bond or policy applies at the time of the accident but its limit of liability ... is not enough to pay the full amount the covered person is legally entitled to recover as damages ...." The UIM provision excludes from the definition of "uninsured motor vehicle" any vehicle "[o]wned by or furnished or available for the regular use of you or any family member." State Farm contended that UIM coverage is not available for damages sustained by a passenger who has already recovered the full amount of liability limits under the same policy and denied Jacob's claim.

Jerry filed suit seeking declarations that the family member exclusions in the policies are unconstitutional and/or contrary to public policy and invalid. In the alternative, he sought a declaration that to the extent the family exclusions are valid, they apply only so long a Jacob is a member of Jerry's household. State Farm filed a counterclaim seeking declarations that the family member exclusions are valid and enforceable to exclude coverage under the auto and umbrella policies for any amount over the statutory minimum of $25,000 and that the application of the family member exclusions occurs at the time of the accident. Jacob filed a cross-claim against State Farm seeking a declaration that he is entitled to UIM benefits.⁷

All parties filed motions for summary judgment. The trial court granted in part and denied in part the motions of Jerry and State Farm and denied Jacob's motion. The trial court entered a final judgment ordering that the family member exclusion in the auto policy is valid and enforceable, that the application of the family member exclusion in the auto policy occurs at the time of the accident, that coverage for Jacob's bodily injuries under the auto policy is limited to the statutory minimum, and that Jacob is not covered under the auto policy's UIM coverage. The court further ordered that the umbrella policy is valid and enforceable, that the application of the definition of "insured" in the umbrella policy occurs at the time a liability claim is made, that at the time the claim was made Jacob's primary residence was not in Jerry's household, that Jacob was not an "insured" under the umbrella policy at the time the claim was made, and that the umbrella policy does not exclude coverage for liability arising from Jacob's injuries.

State Farm filed a motion for new trial, arguing that the trial court erred in determining that the application of the definition of "insured" in the umbrella policy occurs at the time a liability claim is made rather than at the time of the accident. In the alternative, State Farm argued that, even if the definition of "insured" is applied at the time the claim is made, Jacob was still a resident of Jerry's household when the claim was made.⁸ Following a hearing, the trial court issued an order on State Farm's motion for new trial, an amended final judgment, and findings of fact and conclusions of law. In its amended final judgment, the trial court added to its determinations regarding the auto policy determinations that it excludes liability coverage for bodily injury to a family member, that Jacob was a family member whose bodily injuries are excluded from coverage, that the "retained limit"⁹ for the auto policy is the statutory minimum of $25,000, and that Jacob's damages are not covered under the UIM provision because UIM benefits are not available for damages of a passenger who has already recovered the full amount of the liability limits under the same policy.

The court modified its determinations concerning the umbrella policy, ordering that the application of the definition of "insured" occurs at the time the insured becomes "legally liable" for damages that exceed the "retained policy limit," that Jerry is legally liable for Jacob's damages that exceed $25,000,¹⁰ that Jacob was not a resident of Jerry's household or an "insured" at the time Jerry became legally liable, that Jerry is entitled to coverage under the umbrella policy for Jacob's damages that exceed $25,000, and that State Farm is obligated under the umbrella policy to pay damages that arise from the accident and exceed $25,000 up to the policy limit. This appeal and cross-appeal followed.

STANDARD OF REVIEW AND APPLICABLE LAW

We review a trial court's summary judgment de novo. Travelers Ins. Co. v. Joachim , 315 S.W.3d 860, 862 (Tex. 2010). To prevail on a traditional summary judgment motion, the movant must demonstrate that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c) ; Provident Life & Accident Ins. Co. v. Knott , 128 S.W.3d 211, 215–16 (Tex. 2003). When the movant satisfies this initial summary judgment burden, the burden shifts to the nonmovant to produce evidence raising an issue of fact. See Tex. R. Civ. P. 166a(c) ; Amedisys, Inc. v. Kingwood Home Health Care, LLC , 437 S.W.3d 507, 517 (Tex. 2014). When all parties move for summary judgment, each party bears the burden of establishing that it is entitled to judgment as a matter of law. City of Garland v. Dallas Morning News , 22 S.W.3d 351, 356 (Tex. 2000) ; Abbott v. Dallas Area Rapid Transit , 410 S.W.3d 876, 879 (Tex. App.–Austin 2013, no pet.). When the parties move for summary judgment on the same issues and the trial court grants one motion and denies the other, we consider the summary judgment evidence presented by all sides, determine all questions presented, and if we determine that the trial court erred, render the judgment the trial court should have rendered. Valence Operating Co. v. Dorsett , 164 S.W.3d 656, 661 (Tex. 2005) (citing FM Props. Operating Co. v. City of...