Members Ins. Co. v. Branscum, 05-90-00556-CV
| Decision Date | 16 January 1991 |
| Docket Number | No. 05-90-00556-CV,05-90-00556-CV |
| Parties | MEMBERS INSURANCE COMPANY, Appellant, v. Clifford BRANSCUM, Appellee. |
| Court | Texas Court of Appeals |
Michael G. Lee, Roy L. Stacy, Dallas, for appellant.
Melvin H. Wolovits, William T. Mitchell, III, Dallas, for appellee.
Before STEWART, BAKER and WHITTINGTON, JJ.
Clifford Branscum brought this suit as a third-party beneficiary on an automobile liability insurance policy issued by Members Insurance Company. The parties tried the case to the court on an agreed statement of facts. The trial court rendered judgment for Branscum for Members' policy limits. In three points of error, Members contends the trial court erred in: (1) denying it summary judgment since Members showed as a matter of law that its insured's failure to comply with the policy provisions prejudiced Members; (2) granting Branscum judgment since the agreed statement of facts showed as a matter of law that the insured's failure to cooperate and forward the suit papers prejudiced Members; and (3) requiring Members to prove "substantial" prejudice and holding Members to a standard of ordinary care. We hold that Members established as a matter of law that its insured's failure to cooperate and to forward suit papers to Members prejudiced Members. We reverse the trial court's judgment and render judgment that Branscum take nothing from Members.
Branscum had an automobile accident with the permissive driver of a car owned by the named insured under Members' automobile liability policy. Branscum hired attorneys to represent him in his personal injury claim. Members hired an independent adjuster to investigate the claim. Settlement negotiations failed. Branscum's attorney told the adjuster that Branscum would file suit.
Branscum filed suit. Branscum served the insured the same day. Branscum's lawyer told the adjuster that Branscum had filed suit. The adjuster sent a letter to the insured requesting that she notify him of service and to immediately send the suit papers to him.
Neither Members nor the adjuster attempted any more communication with the insured. Nor did the adjuster and Branscum's lawyer discuss the suit. Neither Members nor the adjuster tried to determine the court or county where Branscum filed suit, the number of the suit, or whether Branscum served the insured.
The insured did not advise the adjuster or Members that Branscum served her. Nor did she forward the suit papers to either the adjuster or Members. The insured did not file an answer. Branscum got a default judgment. About three and a half months later, the adjuster called Branscum's attorney about the claim's status. He learned for the first time that Branscum had served the insured and had obtained a default judgment. Branscum's attorney then sent the adjuster a copy of the default judgment. Branscum made demand on Members for payment of the policy limits in partial satisfaction of the default judgment. Members refused the demand.
The policy Members issued to the insured contained the following:
Part E--Duties after an accident or loss.
We must be notified promptly of how, when and where the accident or loss happened. Notice should also include the names and addresses of any insured persons and of any witnesses. If we show that your failure to provide notice prejudices our defense, there is no liability coverage under the policy.
A person seeking any coverage must:
1. Cooperate with us in the investigation, settlement or defense of any claim or suit.
2. Promptly send us copies of any notices or legal papers received in connection with the accident or loss.
Branscum filed this suit against Members as a third-party beneficiary of Members' policy. Members filed a motion for summary judgment. The motion asserted that the insured's failure to comply with the policy provisions requiring cooperation and transmittal of any legal papers resulted in the default judgment. Members asserted that its insured's breach prejudiced Members in the defense of the claim.
The trial court granted Members a partial summary judgment, holding Members had shown as a matter of law: (1) that the insured did not cooperate with Members in the investigation, settlement, or defense of the original lawsuit; and (2) that the insured did not send to Members copies of any notices or legal papers received in the underlying lawsuit. The court refused to grant Members summary judgment on the entire claim. The court left for further proceedings the fact issue of whether the insured's failure prejudiced Members.
Branscum then moved for summary judgment, contending that its insured's failure to cooperate and forward suit papers did not prejudice Members. Branscum argued that: (1) his attorney had told Members' adjuster that Branscum had filed suit; (2) Members made no effort to find out anything else about the suit; and (3) Members' own neglect prejudiced its defense of the claim. Branscum asserted that as a matter of law Members could not show prejudice by its insured's failure to cooperate and forward the suit papers. The court denied Branscum's motion.
Members and Branscum then filed an agreed statement of facts. The trial court entered judgment for Branscum for Members' policy limits. Following entry of judgment, the trial court made findings of fact which were essentially the same as the agreed statement of facts. The court also found that Members did not prove by a preponderance of the evidence that the failure of the insured to forward the petition and citation substantially prejudiced Members since Members received actual notice of suit in time to have protected its interest by the exercise of ordinary care. The trial court concluded that Members was liable to Branscum to the extent of Members' policy limits.
In its first point of error, Members contends the trial court erred by denying Members a summary judgment. Members contends it showed as a matter of law that the failure of its insured to comply with policy provisions resulted in prejudice to Members. Members recognizes that appellate courts may not review the propriety of an order overruling a motion for summary judgment. See Wright v. Wright, 154 Tex. 138, 274 S.W.2d 670, 674 (1955). However, Members argues that we should apply the exception to the general rule established by the Texas Supreme Court in Tobin v. Garcia. 1 Members contends the exception applies because the trial was not in the conventional manner but upon an agreed statement of facts after the presentation of motions for summary judgment.
Tobin holds that when both parties file motions for summary judgment and the court grants one and denies the other, on review the court of appeals should determine all questions presented. If the appellate court finds reversible error, the court should render the judgment the trial court should have entered. See Tobin, 316 S.W.2d at 400. In this case, although both parties filed motions for summary judgment, the trial court granted Members only a partial summary judgment and denied Branscum's motion. Therefore, the orders were interlocutory. The trial court had not yet entered a final and appealable judgment. We decline the invitation to extend the Tobin rationale to this case. See Ackermann v. Vordenbaum, 403 S.W.2d 362, 365 (Tex.1966). We overrule Members' first point of error.
In its second point of error, Members contends the trial court erred by granting Branscum judgment since the agreed facts showed as a matter of law that its insured's failure to cooperate and to forward suit papers prejudiced Members. Members points out that the trial court found as a matter of law that Members showed that the insured had not cooperated with Members. Nor did she send Members copies of the suit papers. Members contends that if it showed that the insured's failure to cooperate and forward the suit papers prejudiced Members' defense, then no coverage is available to Branscum under the policy. Members argues it showed prejudice because the insured's breach of the policy provisions denied Members an opportunity to contest Branscum's claims. Members consequently suffered the rendition of a default judgment. Members further argues that had it known of the default judgment within thirty days of entry, it would have had an opportunity to try to set it aside. Members contends it showed prejudice within the policy provisions as a matter of law.
Branscum responds that when the Texas Legislature enacted the Compulsory Automobile Liability Insurance Act in 1981, 2 its intention was to void all policy defenses, including the failure of an insured to cooperate or forward suit papers. Branscum also argues that the agreed facts show Members had actual notice of the pending lawsuit on two occasions. Branscum concludes that since Members took no action to determine the facts necessary to timely file an answer, Members cannot show the necessary prejudice.
We have rejected the argument that the Legislature abolished policy defenses to claims against insurers by the Texas Compulsory Automobile Insurance Act. See Ratcliff v. National County Mut. Fire Ins. Co., 735 S.W.2d 955, 957 (Tex.App.--Dallas 1987, no writ).
The crux of prejudice to Members is whether Members had notice of the suit against its insured and, if so, the effect of that notice. The agreed facts reflect that Branscum's attorney told Members' adjuster that he intended to file suit. He then told the adjuster that Branscum had filed suit. The insured did not cooperate with Members and did not forward the suit papers to Members or the adjuster. Members did not learn of the entry of the default judgment until after the time it could file a motion for new trial or take an appeal from the judgment.
Members asserts that ...
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