Merit Drilling Co. v. Honish, 13-85-116-CV

• Decision Date: 30 June 1986
• Docket Number: No. 13-85-116-CV,13-85-116-CV
• Citation: 715 S.W.2d 87
• Parties: MERIT DRILLING COMPANY, Appellant, v. Gary X. HONISH, et ux., Appellees.
• Court: Texas Court of Appeals

Page 87

715 S.W.2d 87

MERIT DRILLING COMPANY, Appellant, v. Gary X. HONISH, et ux., Appellees.

No. 13-85-116-CV.

Court of Appeals of Texas,

Corpus Christi.

June 30, 1986.

Rehearing Denied Aug. 29, 1986.

Douglas W. Poole, McLeod, Alexander, Powel & Apffel, P.C., Galveston, for appellant.

Ernest H. Cannon, Ernest Cannon & Associates, Russell H. McMains, Edwards, McMains & Constant, Corpus Christi, for appellee.

Before NYE, C.J., and KENNEDY and DORSEY, JJ.

OPINION

NYE, Chief Justice.

Appellees Gary and Melinda Honish brought suit for personal injuries sustained as a result of an oilfield accident which occurred in August 1982. A wellhead on which Gary Honish was welding fell against his back, injuring his spinal cord. A jury returned a verdict of one million dollars for Melinda Honish and five million dollars for Gary Honish. From a judgment on that verdict, plus $80,524.64 in stipulated medical expenses, Merit appeals.

Exxon Company, U.S.A., originally named as a defendant, settled with Mr. and Mrs. Honish for six million dollars on April 8, 1983. Ten days later, the Honishes filed their Third Amended Original Petition, adding Merit Drilling Company as defendant in the negligence action. Appellees filed their Fourth Amended Original Petition on Thursday, November 29, 1984, adding the allegation that appellant Merit had breached its express and implied warranty of performing its work in "a good and workmanlike and safe manner" and with proper equipment. Appellees also added a gross negligence allegation against appellant Merit. Prior to trial on the following Monday, December 3, 1984, appellant moved the trial court to strike the warranty cause of action, on the basis of surprise and lack of warranty as a matter of law, and the gross negligence allegation. The trial court refused to strike the appellees' pleading on breach of warranty but struck the allegation of gross negligence.

Appellant's first two points of error address the trial court's failure to grant the six million dollar credit to appellant for the amount paid by Exxon in settlement with the appellees. It is appellant's position under these two points of error that, according to TEX.REV.CIV.STAT.ANN. art. 2212a, § 2(d), ¹ they were entitled to take a dollar-for-dollar credit on the judgment against the amount which the appellees had received in the settlement with Exxon. Essentially, appellant's complaint is that it was entitled, as a statutory right, to contribution against the settling defendant, Exxon. Absent such credit, the Honishes would have received twelve million dollars where the jury found damages to be six million dollars.

This is a negligence case which was controlled by article 2212a. Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 429 (Tex.1984). The initial question posed by these points of error as set forth in the appellees' brief concerns the current status of the "one recovery rule" in Texas. See Bradshaw v. Baylor University, 126 Tex. 99, 84 S.W.2d 703 (1935). Appellees argue, and we agree, that one need not look any further than Duncan v. Cessna Aircraft Co., 665 S.W.2d 414 (Tex.1984), to determine that what little efficacy was left to the doctrine is to be found only in its statutory embodiment in article 2212a. In Duncan the Supreme Court abolished the common law doctrine of limiting the plaintiff to one recovery by adopting a pure percentage-of-causation scheme of recovery by a plaintiff against joint defendants. Id. at 432. However, Duncan did not deal with or address the contributory scheme established by article 2212a, § 2(d).

Article 2212a, § 2(d), provides a modified settlement credit rule, as opposed to the proportionate reduction doctrine. The decision to include or exclude a settling tortfeasor in the judgment must be made prior to submission to the jury. The effects of this type of an election can be seen in McAllen Kentucky Fried Chicken No. 1, Inc. v. Leal, 627 S.W.2d 480 (Tex.App.--Corpus Christi 1981, writ ref'd n.r.e.). In that case, the Leals sued Garcia, Sanchez, and Kentucky Fried Chicken. Before the trial started, the Leals settled with Garcia and Sanchez and non-suited them. Kentucky Fried Chicken filed a cross-action against Garcia and Sanchez, seeking contribution and indemnity. Special issues were submitted to the jury to determine the percentage of negligence of each of the party defendants. The jury found 90% of the negligence attributable to Kentucky Fried Chicken and 10% attributable to Garcia. Kentucky Fried Chicken contended on appeal that the trial court erred in allowing a credit of $25,000.00 against the judgment. This credit represented the settlement between the Leals and Garcia. On appeal, this Court noted the necessity of making a conscious election prior to jury submission when we stated at 485:

At that point of a trial, a non-settling defendant is faced with a strategic option, either to take his credit or submit the negligence of the settling defendant to the jury for a percentage determination. Here, the appellant chose the latter, and the jury found the settling appellee Garcia 10% negligent, but that said negligence was not the proximate cause of the occurrence in question. It is clear that when the negligence of the settling defendant was submitted to the jury, appellant, having made its election, is limited to a claim for proportionate reduction of the damages under Subdivision (e) of § 2, Article 2212a.

Appellant in this case was faced with exactly the same type of election. Appellant chose, however, not to submit the negligence of Exxon to the jury. Instead, it chose to stand on its subsection (d) right of credit. Having made this election, Merit was entitled to receive a credit in the amount of Exxon's settlement.

Since the facts of this case squarely fall under the auspices of article 2212a, § 2(d), we hold that it was error for the trial court to have refused to credit appellant with the amount of Exxon's settlement. Appellant's first and second points of error are sustained.

Appellees claim that appellant waived credit by failing to plead it, move for judgment, object to the judgment, or move for new trial However, the plain language of the statute entitles the nonsettling defendant (Merit, in this case) to deduct the amount of settlement from the jury verdict as to its negligence. The statute requires no action by the trial court. It is the defendant who "is entitled to deduct" its share of the settlement amount. See Cypress Creek Utility Service Co. v. Muller, 640 S.W.2d 860, 864 (Tex.1982). Furthermore, appellant made the trial court well aware throughout the trial that it was not planning to plead, prove, or submit issues concerning the negligence of Exxon, even though it was obvious that appellant based its defense on the theory that Honish and Exxon, and not Merit, were responsible for the injury to appellee Gary Honish. Appellant clearly stated on the record that it was requesting credit for the Exxon settlement at least during the following times: 1) during its motion to strike appellees' amended pleading before trial; 2) on the introduction of the settlement agreement as Court Exhibit 1 for the purpose of proving its entitlement to credit; and 3) during appellant's objections to the charge of the court. ² The judgment of the trial court against appellant should have reflected the credit taken by appellant.

Appellant complains that the trial court abused its discretion in refusing to strike appellees' cause of action for breach of warranty, added only two working days before trial. Within seven days of trial, the decision to grant or deny an amendment is discretionary with the trial court, and that decision will not be disturbed unless the opposite party clearly shows an abuse of discretion. Hancock Fabrics, Inc. v. Martin, 596 S.W.2d 186, 189 (Tex.Civ.App.--Houston [14th Dist.] 1980, writ ref'd n.r.e.); Plata v. Guzman, 571 S.W.2d 408, 411 (Tex.Civ.App.--Corpus Christi 1978, writ ref'd n.r.e.); see TEX.R.CIV.P. 63.

Counsel for appellant objected to the amendment and claimed surprise. He argued that the warranty cause of action was inappropriate as a matter of law and that it was added merely to turn this into a "mixed-theory" case, thereby allowing appellees to avoid appellant's election of credit for the Exxon settlement under TEX.REV.CIV.STAT.ANN. art. 2212a, § 2(d). He argued further that he did not have adequate time to research and prepare for his decision whether or not to elect to take credit against Exxon. He stated that he did not have time to research the appellant's insurance coverage for a breach of warranty claim. Appellees' attorney did not respond to the claim of surprise, but directed his argument solely to the applicability of warranty to the facts of this case.

A trial court abuses its discretion by failing to apply the appropriate law to uncontroverted facts. Amoco Production Co. v. Hardy, 628 S.W.2d 813, 816 (Tex.App.--Corpus Christi 1981, writ dism'd); see Camp v. Shannon, 162 Tex. 515, 348 S.W.2d 517, 519 (1961). Alternatively, a party complaining that the trial court abused its discretion must show that the action complained of was arbitrary and unreasonable. Landry v. Travelers Insurance Co., 458 S.W.2d 649, 651 (Tex.1970).

Appellees originally filed their suit on November 9, 1982, over two years before the date of trial. Exxon settled out of the action, and Merit was added, some nineteen months before trial. The amended pleading setting up a new cause of action does not appear to be based on any new facts learned by appellees. Where the new matter appears to have been known by the parties seeking to file the amendment, the amendment should be denied. Valdez v. Lyman-Roberts Hospital, Inc., 638 S.W.2d 111, 117 (Tex.App.--Corpus Christi 1982, writ ref'd n.r.e.). We hold that the trial court abused its discretion in allowing the amendment only two working days before trial, where the amendment was apparently not based on...