Prudential Prop. & Cas. v. Dow Chevrolet

• Court: Texas Court of Appeals
• Writing for the Court: Before Cornelius
• Citation: Prudential Prop. & Cas. v. Dow Chevrolet, 10 S.W.3d 97 (Tex. App. 1999)
• Decision Date: 21 October 1999
• Docket Number: INC,No. 06-98-00129-CV,CHEVROLET-OLD,06-98-00129-CV
• Petition History: pet. dism'd
• Parties: (Tex.App.-Texarkana 1999) PRUDENTIAL PROPERTY AND CASUALTY COMPANY, AS SUBROGEE OF BRAXTON JONES AND LINDA DAY JONES, Appellant v. DOW, Appellee Date Submitted:

Page 97

10 S.W.3d 97 (Tex.App.-Texarkana 1999)

PRUDENTIAL PROPERTY AND CASUALTY COMPANY, AS SUBROGEE OF BRAXTON JONES AND LINDA DAY JONES, Appellant v. DOW CHEVROLET-OLDS, INC., Appellee

No. 06-98-00129-CV

In The Court of Appeals Sixth Appellate District of Texas at Texarkana

Date Submitted:October 21, 1999

Date Decided:December 21, 1999

On Appeal from the 114th Judicial District Court Wood County, Texas Trial Court No. 97-071

[Copyrighted Material Omitted] Before Cornelius, C.J., Grant and Ross, JJ.Opinion by Justice Ross

O P I N I O N

Prudential Property and Casualty Company, as subrogee of Braxton Jones and wife, Linda Jones, appeals from a sanction order dismissing with prejudice its subrogation suit against Dow Chevrolet-Olds, Inc. Prudential's insureds, the Joneses, reside in Scottsdale, Arizona, and refused to appear in Texas to have their depositions taken. The district court ordered them to appear in Wood County, Texas, to be deposed and warned Prudential that if the Joneses did not appear, its cause of action would be dismissed. When the Joneses failed to appear as ordered, the court granted Dow's motion to dismiss the case.

Prudential contends that the Joneses should be considered witnesses for the purpose of determining the time and place for depositions, that the trial court may not dismiss an insurance company's subrogation suit for alleged discovery violations by the insureds, and finally, that the trial court abused its discretion in failing to consider a lesser discovery sanction and in dismissing Prudential's suit.

The record shows that Dow serviced the Joneses' automobile in June and July of 1995, and that on August 8, 1995, that vehicle caught fire in the garage of their home, damaging not only the car, but their garage and a portion of their home as well. Prudential was the Joneses' insurance carrier and compensated them for this loss. On February 20, 1997, Prudential filed suit against Dow, claiming that Dow's work on the automobile was the cause of the fire. The suit was filed in Wood County and was brought in the names of the Joneses only. There was no indication from the style or the content of the petition that Prudential was bringing this suit as subrogee of the Joneses.¹ However, after Dow insisted on taking the Joneses' depositions in the county where the suit was brought, Prudential revealed that this action was a subrogation matter and that it was the only real party in interest. Prudential contended that since the Joneses were merely fact witnesses, and since they now live in Arizona, they are not required to give their depositions in Texas.² The trial court disagreed and granted Dow's motion to compel the Joneses to appear in Texas to be deposed. The court warned Prudential that if the Joneses did not appear as ordered, the case would be dismissed. The Joneses refused to appear in Texas. Prudential offered to pay Dow's expenses associated with taking the depositions in Arizona, but Dow declined their offer. The trial court then dismissed Prudential's case with prejudice.

In a subrogation action, it is well established that there is only one cause of action for the insured's injuries, and that cause of action belongs to the insured. See Guillot v. Hix, 838 S.W.2d 230, 232 (Tex. 1992) (dealing with subrogation in the context of workers' compensation). However, simply because the claim belongs to the insured does not mean that the insurer must wait for the insured to assert this claim in order for the insurer to recover. See Franks v. Sematech, Inc., 936 S.W.2d 959, 960 (Tex. 1997) (dealing with subrogation in the context of workers' compensation). The insurer can assert its subrogation claim independently of the insured, even though that claim is considered derivative of the insured's claim. See Guillot, 838 S.W.2d at 232, 235. When an insurer asserts this type of claim without the insured, the insurance carrier may sue in its own name or in the insured's name. See Franks, 936 S.W.2d at 960; Camden Fire Ins. Ass'n v. Eckel, 14 S.W.2d 1020, 1021-22 (Tex. Comm'n App. 1929, judgm't adopted); Jaskolski v. Jahn, 410 S.W.2d 858, 859 (Tex. Civ. App.Waco 1966, no writ); Fort Worth & Denver Ry. Co. v. Ferguson, 261 S.W.2d 874, 880 (Tex. Civ. App.Fort Worth 1953, writ dism'd).

The instant suit was originally filed by Prudential in the name of the insured, without disclosing the insurance carrier's involvement in the suit. While this may be misleading, Prudential was clearly within its rights, under the laws of subrogation, to file suit in this manner. This type of filing is not only allowed, it is considered by some as necessary to ensure that the insurance carrier is able to recover its contributions to the insured from a third party tort-feasor, regardless of whether the insured chooses to pursue the claim. See Hartford Cas. Ins. Co. v. Albertsons Grocery Stores, 931 S.W.2d 729, 734 (Tex. App.Fort Worth 1996, no writ).

Dow contends that, for a variety of reasons, the Joneses should be considered real parties in interest, rather than mere witnesses, to this suit. First, they argue that since Dow is asserting the affirmative defense of contributory negligence, the Joneses are necessary parties to this suit. However, a subrogee is subject to any and all defenses that could have been asserted against the subrogor. Guillot, 838 S.W.2d at 232. Since the Joneses are subject to the defense of contributory negligence, so is Prudential. Dow cites no authority in support of its position that the assertion of this defense in a subrogation suit makes the subrogor a necessary party.

Second, Dow asserts that the Joneses are parties because they "prosecuted" this suit by answering interrogatories sent to them as party plaintiffs. Former Texas Rules of Civil Procedure 168 and 169 do limit the use of requests for admissions and interrogatories to parties only. TEX. R. CIV. P. 168, 169 (Vernon 1998) (now TEX. R. CIV. P. 197.1, 198). However, this does not mean that any person who unwittingly makes a general appearance by responding to a discovery request automatically becomes a party to the suit. In re Estate of Ayala, 986 S.W.2d 724, 726 (Tex. App.Corpus Christi 1999, no pet.). The long-standing rule in Texas is that "to constitute a general appearance where the party has filed no written pleading, the party must seek a specific adjudication by the court on some question other than that of the court's jurisdiction." Cleaver v. George Staton Co., 908 S.W.2d 468, 470 (Tex. App.Tyler 1995, writ denied), citing Liberty Enters., Inc. v. Moore Transp. Co., 690 S.W.2d 570 (Tex. 1985). In this case, Prudential filed a written pleading in the Joneses' name. Thereafter, Dow served on counsel for Prudential interrogatories for the Joneses, which they answered and verified. It is clear that voluntarily answering interrogatories, with nothing more, does not constitute a general appearance and thus does not automatically make the Joneses a party to this suit.

Finally, Dow argues that the Joneses must be considered parties to this suit, since Prudential brought this claim in the Joneses' name to harass Dow. Dow claims that Prudential brought this suit in the names of the Joneses alone, without obtaining their consent, seeking damages it was not entitled to receive, in a conscious effort to deceive Dow. Dow claims that in the interest of fairness, Prudential's unclean hands make it imperative that the Joneses be considered a real party in interest to this suit. However, requiring the Joneses to become parties to this subrogation action is not the appropriate remedy for Prudential's alleged deceptive behavior.

According to Rule 13, a trial court is given the right to impose appropriate sanctions on a party who asserts a groundless claim or who brings a claim in bad faith. TEX. R. CIV. P. 13.³ However, these sanctions were not sought by Dow, and they were not imposed on Prudential by the trial court. It is true that Prudential brought a DTPA claim, sought punitive damages, and asked for attorney's fees, none of which it is entitled to receive as a subrogee. See American Centennial Ins. Co. v. Canal Ins. Co., 843 S.W.2d 480, 485 (Tex. 1992) (Hecht, J., concurring, joined by four justices), citing Phipps v. Fuqua, 32 S.W.2d 660, 663 (Tex. Civ. App.Amarillo 1930, writ ref'd) (discussing that subrogation is for indemnity and nothing more); Trimble v. Itz, 898 S.W.2d 370, 371-72 (Tex. App.San Antonio), writ denied per curiam, 906 S.W.2d 481 (Tex. 1995) (discussing why an insurer cannot assert a DTPA claim in a subrogation matter). The trial court could find some of Prudential's claims groundless and broughtin bad faith, and it could impose those sanctions that the court deems appropriate. See TEX. R. CIV. P. 13; Transport Indem. Co. v. Orgain, Bell & Tucker, 846 S.W.2d 878, 882-83 (Tex. App.Beaumont), writ denied per curiam, 856 S.W.2d 410 (Tex. 1993) (appellants made admission that they did not qualify as a consumer, yet still maintained a DTPA claim for over a year and a half; the court stated that this was evidence of bad faith, harassment, and possibly malice). However, forcing the Joneses to become parties to this subrogation suit is not an appropriate means of correcting any Rule 13 violations that Prudential may have committed. Prudential's contention that the Joneses should be considered witnesses for the purpose of determining the time and place for depositions is sustained.

Prudential also contends that the trial court may not dismiss an insurance company's subrogation suit for alleged discovery violations by the insureds. In Texas, there is a split of authority regarding this question. One school of thought in this area has held that when the insured's cause of action is dismissed, the insurer's cause of action is also defeated. See Smith v. Babcock & Wilcox Constr. Co., 915 S.W.2d 22, 26-27 (Tex. App.Austin 1994), rev'd on other grounds, 913 S.W.2d 467 (Tex. 1995); Phennel v. Roach, 789 S.W.2d...