State Farm Fire and Cas. Co. v. Price

• Citation: 845 S.W.2d 427
• Decision Date: 31 December 1992
• Docket Number: No. 07-91-0245-CV,07-91-0245-CV
• Parties: STATE FARM FIRE AND CASUALTY COMPANY, Appellant, v. Larry and Emalu PRICE, Appellee.
• Court: Court of Appeals of Texas

Page 427

845 S.W.2d 427

STATE FARM FIRE AND CASUALTY COMPANY, Appellant, v. Larry and Emalu PRICE, Appellee.

No. 07-91-0245-CV.

Court of Appeals of Texas,

Amarillo.

Dec. 31, 1992.

Rehearing Denied Jan. 25, 1993.

Underwood Wilson Berry Stein & Johnson, PC, Kelly Utsinger and Kevin Parker, Amarillo, for appellant.

Hamker & Walton, PC, Ed Walton, Amarillo, for appellee.

Before REYNOLDS, C.J., and BOYD and POFF, JJ.

REYNOLDS, Chief Justice.

Advancing perceived procedural and evidentiary errors and the unconstitutionality of a provision of the Texas Insurance Code, State Farm Fire and Casualty Company seeks a reversal of the trial court's judgment decreeing its monetary liability to Larry and Emalu Price under its homeowners insurance policy issued to them. Based upon the rationale to be expressed below, we will overrule State Farm's nine points of error and affirm the judgment.

The Prices purchased a homeowners protection policy of insurance from State Farm insuring, under Coverage A, damage to or loss of their home located in Amarillo. Excluded from the "Perils Insured Against" was, among other things:

k. Loss under Coverage A caused by settling, cracking, bulging, shrinkage, or expansion of foundations, walls, floors, ceilings, roof structures, walks, drives, curbs, fences, retaining walls or swimming pools.

However, as the policy provided:

The foregoing Exclusion[ ] ... k shall not apply to Accidental discharge, leakage or overflow of water or steam from within a plumbing, heating or air conditioning system or a domestic appliance (including necessary tearing out and replacing any part of the building covered).

While the policy was in force, the Prices' home experienced settling and cracking damage, and they made a claim under the policy.

Danny Baca made an initial plumber's inspection. Afterwards, Don Eudaly, a claims adjuster for State Farm, communicated to the Prices his belief that the claim was a covered loss under the policy because Baca determined the damage was caused by a plumbing leak under the house.

At State Farm's request, further inspections were made by Kenneth Bitting, an engineer from Dallas. Based upon Bitting's investigation and stress analysis, State Farm determined the home had settled naturally over a period of years, and the loss was not covered. State Farm subsequently denied the claim.

Alleging a breach of contract, the Prices filed suit against State Farm on 12 July 1989. The following day, the Prices' attorney sent a demand letter notifying State Farm of claims for actual and punitive damages and attorneys' fees under the Deceptive Trade Practices--Consumer Protection Act (DTPA) ¹ and the Texas Insurance Code. ² On 21 August 1989, more than thirty days after the demand letter was received by State Farm, the Prices amended their petition to include allegations of breach of contract, violations of the DTPA and article 21.21, promissory estoppel, fraud, and breach of the duty of good faith and fair dealing.

On 28 March 1991, ³ State Farm was notified the matter was set for trial on April 15. State Farm filed a motion for continuance on the ground that additional time was needed to complete discovery and prepare for trial. The motion was granted and the trial was re-set, without a stated objection, for May 6.

State Farm first propounded written interrogatories and requests for production to the Prices on April 5. At State Farm's request, the court, by its April 15 order, shortened the response time for the Prices to May 3. On that day, pursuant to the court's order, State Farm received the responses. In the interim, on April 26, State Farm moved the court to abate the Prices' suit and strike their pleadings, because they failed to give pre-filing notice of their suit as required by law.

Pre-trial matters were heard by the court on May 3. At that time, the court denied State Farm's plea in abatement and motion to strike the Prices' pleadings, its motion to exclude the testimony and evidence of expert witnesses designated in the Prices' response to the interrogatories, and its request to enter and inspect the property.

On the day set for trial, May 6, the thirty-ninth day after the first setting of the cause for an April 15 trial, the jury was empaneled, but before voir dire examination or an announcement of ready, State Farm requested a second continuance because the trial court failed to provide forty-five days notice of the trial setting required by rule 245 of the Texas Rules of Civil Procedure. The trial court denied the motion and proceeded to trial.

After hearing the evidence and being charged, the jury found in response to the numbered questions which are material to this appeal, that, as summarized:

(1) the damages to the Prices' home were proximately caused by accidental discharge, leakage or overflow of water or steam from within a plumbing, heating or air conditioner system or a domestic appliance;

(2) State Farm agreed to cover the Prices' loss due to such damage, (3) but failed to comply with that agreement, (4) to their damage in specified particulars in the total sum of $102,500;

(5k) State Farm knowingly did not attempt in good faith to negotiate a fair settlement of the claim where liability was reasonably clear, (5l ) compelling the Prices to bring this suit to recover the amount due under the policy; (5m) knowingly denied the claim when there was no reasonable basis to do so, which State Farm knew, and (5n) should have known; (5o) State Farm knowingly attempted to conceal the true nature and cause of the problems with the home; and (5q) knowingly refused to pay the claim; each of which was a producing cause of damages;

(6) State Farm's conduct was an unfair or deceptive practice in the business of insurance;

(8) State Farm breached its duty of good faith and fair dealing owed to the Prices, (9) which was a proximate cause of damages to them;

(10) Compensation for State Farm's acts which were found to be the proximate or producing cause of the damages, was $90,000 as the cost of repairs, $8,500 for additional living expenses, and $2,000 each to Larry and Emalu Price for mental anguish; and

(11A) "40 percent" of the Prices' recovery was a reasonable recovery for attorney's fees, and (11B) $40,800 was a reasonable attorney's fee for preparation and trial of the cause, with additional amounts totaling $16,000 for the appellate process.

The Prices moved for judgment on the jury's verdict; State Farm moved for a judgment notwithstanding the verdict. The judgment rendered by the court decreed that the Prices recover from State Farm $90,000 for repairs, $8,500 for additional living expenses, $4,000 for mental anguish, $123,000 in attorneys' fees, and $205,000 as twice the actual damages.

Utilizing a nine-point attack, State Farm contends the trial court erred in proceeding to trial and in its award of judgment to the Prices. This obtains, State Farm submits, because the trial court erred in (1-2) failing to provide forty-five days notice of the trial setting as required by rule 245, supra, (3) failing to grant a new trial due to the lack of statutory notice of claims made under the DTPA, (4) awarding treble damages despite the lack of statutory notice of claims made under the DTPA, (5) allowing the testimony and evidence of expert witnesses whose identities and information were not properly supplemented thirty days prior to trial, (6) the manner of the submission of the charge to the jury, (7) awarding judgment on jury findings which were not supported by legally or factually sufficient evidence, (8) allowing Burl Peterson to testify concerning his inspection of the premises made on the fourth day of trial, and (9) assessing punitive damages under article 21.21 because the statute is unconstitutional. We will address these contentions seriatim.

State Farm premises its first- and second-point contentions on the notice requirement provided in rule 245, supra, which, as pertinent to the contentions, provides that:

The court may set contested cases on written request of any party, or on the court's own motion, with reasonable notice of not less than forty-five days to the parties of a first setting for trial, or by agreement of the parties; provided, however, that when a case previously has been set for trial, the Court may reset said contested case to a later date on any reasonable notice to the parties or by agreement of the parties. (Emphasis added.)

State Farm submits that the notice requirement is mandatory, and the failure to provide it with forty-five days notice of trial is a denial of due process and reversible error.

Although State Farm now relies upon the rule to charge the trial court with error in failing to provide it with forty-five days notice of trial, it did not invoke the rule in response to the first setting of the cause for trial; instead, State Farm moved for, and was granted, a continuance on the ground of a need for more time to conduct discovery and prepare for trial, although State Farm did include a statement that the Prices failed to follow local rules in requesting a trial setting. Upon granting the continuance, the court reset the cause for trial on May 6. State Farm did not voice any objection to the setting; rather, it proceeded to prepare for trial and, on the day of trial, interposed the rule 245 notice requirement for a first setting to seek a continuance from the second setting of the cause for trial.

By the clear language of rule 245, the forty-five day notice applies only to the first setting of the trial. By failing to timely and specifically object to the first setting on the basis of insufficiency of notice under rule 245, State Farm failed to preserve any error for our review. Tex.R.App.P. 52(a). The first two points of error are overruled.

The gist of State Farm's third- and fourth-point contentions is that the Prices failed to give statutory notice of their claims under the DTPA and the Insurance...