Subsequent Injury Fund, State of Texas v. Service Lloyds Ins. Co.

• Decision Date: 22 January 1998
• Docket Number: No. 01-96-00431-CV,01-96-00431-CV
• Citation: 961 S.W.2d 673
• Parties: THE SUBSEQUENT INJURY FUND, STATE OF TEXAS, Appellant, v. SERVICE LLOYDS INSURANCE COMPANY and Darrell Tompkins, Appellees. (1st Dist.)
• Court: Texas Court of Appeals

Page 673

961 S.W.2d 673

THE SUBSEQUENT INJURY FUND, STATE OF TEXAS, Appellant, v. SERVICE LLOYDS INSURANCE COMPANY and Darrell Tompkins, Appellees.

No. 01-96-00431-CV.

Court of Appeals of Texas Houston (1st Dist.).

Jan. 22, 1998.

Harry Deckard, Joseph A. Pitner, Austin, for Appellant.

Dean G. Pappas, Evelyn T. Ailts, Houston, for Appellees.

Before SCHNEIDER, C.J., and HEDGES and O'CONNOR, JJ.

OPINION ON SECOND MOTION FOR REHEARING

HEDGES, Justice.

We grant the second motion for rehearing of the Subsequent Injury Fund, grant appellant's motion to correct the opinion, withdraw our opinions dated April 24, 1997 and August 29, 1997, and substitute the following opinion in its place.

Appellant, the Subsequent Injury Fund (SIF), appeals a summary judgment rendered in favor of appellee, Service Lloyds Insurance Company (Lloyds), dismissing its equitable bill of review because the legal remedy of writ of error was available. SIF contends that a writ of error was not available as a means to attack the judgment, leaving a bill of review as its only option. We reverse the judgment of the trial court and remand this cause to the trial court for further proceedings consistent with this opinion.

COMPENSATION SCHEME

The SIF is a statutorily created fund ¹ designed to compensate workers for income benefits not required to be paid by an insurance carrier. ² In 1993, the legislature amended the Texas Workers' Compensation Act to provide that an insurance carrier could be reimbursed by the SIF for any benefit overpayments it made. TEX. LAB.CODE ANN. § 410.205(c) (Vernon 1996). ³ The SIF is funded by death benefits paid into it by insurance carriers when a compensable death occurs and there is no legal beneficiary. TEX. LAB.CODE ANN. § 403.007(a) (Vernon 1996).

The legislature has established a four-tier system for disposition of claims by the Texas Workers' Compensation Commission (TWCC) under the Texas Workers' Compensation Act. See TEX. LAB.CODE ANN. §§ 410.021-410.308 (Vernon 1996). Each step is a prerequisite to the succeeding one. See TEX. LAB.CODE ANN. § 410.024, 410.169, 410.205 (Vernon 1996). The process begins with an informal resolution of claims through a non-adversarial "benefit review conference" conducted by a "benefit review officer." TEX. LAB.CODE ANN. §§ 410.021-.034 (Vernon 1996). The benefit review officer has the authority to order or decline to order benefits. TEX. LAB.CODE ANN. §§ 410.032 (Vernon 1996). If the officer orders payments of benefits, an insurance carrier must begin making payments at that time. TEX. LAB.CODE ANN. § 410.032 (Vernon 1996). From the benefit review conference, the parties may proceed, by agreement, to arbitration from the benefit review conference. TEX. LAB.CODE ANN. § 410.104 (Vernon 1996). If there is no agreement to arbitrate, a party may seek relief at a contested case hearing. TEX. LAB.CODE ANN. §§ 410.151-410.169 (Vernon 1996). At the third tier of the disposition process, a party may seek review by an administrative appeals panel. TEX. LAB.CODE ANN. §§ 410.201-410.208 (Vernon 1996). Finally, an aggrieved party may seek judicial review of the appeals panel decision. TEX. LAB.CODE ANN. §§ 410.251-410.308 (Vernon 1996). If a court of last resort reverses or modifies an appeals panel award, then the insurance carrier may seek reimbursement from the SIF. TEX. LAB.CODE ANN. § 410.205(c) (Vernon 1996).

FACTS

In this case, Darrell Tompkins ⁴ sought and was awarded workers' compensation benefits by the TWCC. Lloyds, who was obligated to pay the benefits as the insurance carrier for Tompkins's employer, paid the benefits and appealed the TWCC's award to the district court (trial court). On October 3, 1994, the trial court rendered judgment for Lloyds after Tompkins did not answer Lloyds' discovery requests. In the judgment, the trial court ordered SIF to reimburse Lloyds any benefits that it had paid pursuant to the TWCC's decision. On January 26, 1995, Lloyds applied for reimbursement from the SIF and presented the trial

                court's judgment to the TWCC. 5  On March 14, 1995, SIF filed a bill of review assailing the trial court's judgment in the underlying workers' compensation case.  Lloyds filed a motion for summary judgment seeking to dismiss the bill of review as an improper remedy.  The trial court agreed, reasoning that because SIF learned of the judgment against it within six months of the judgment, it could have brought a writ of error proceeding
                

PROPER REMEDY

In its sole point of error, SIF contends that the trial court erred in granting summary judgment for Lloyds on the basis that SIF should have attacked the judgment by writ of error instead of by bill of review. SIF contends that it could not have brought a writ of error complaining about defective service because it was not a party to the underlying suit. Therefore, SIF concludes, its only option in attacking the trial court's judgment ordering reimbursement was by bill of review.

Standard of Review

Summary judgment is proper only when a movant establishes that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Randall's Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex.1995). In reviewing the summary judgment, we must indulge every reasonable inference in favor of the nonmovant and resolve any doubts in its favor. Wornick Co. v. Casas, 856 S.W.2d 732, 733 (Tex.1993). In reviewing the granting of a motion for summary judgment, this Court will take all evidence favorable to the nonmovant as true. Thompson v. Vinson & Elkins, 859 S.W.2d 617, 619 (Tex.App.--Houston [1st Dist.] 1993, writ denied). A defendant is entitled to summary judgment if the evidence disproves as a matter of law at least one element of each of the plaintiff's causes of action. Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex.1991). When the trial court's order explicitly states the ground relied on for the summary judgment ruling, the summary judgment can be affirmed only if the theory relied on by the trial court is meritorious; otherwise, the case must be remanded. State Farm Fire & Casualty Co. v. S.S., 858 S.W.2d 374, 380 (Tex.1993). The issues to be reviewed by an appellate court must have been actually presented to and considered by the trial court. Id.

Analysis

To set aside a final judgment, a bill of review petitioner must plead and prove (1) a meritorious defense to the cause of action; (2) that it was prevented from making by the fraud, accident, or wrongful act of its opponent; (3) unmixed with any fault or negligence of its own. Transworld Fin. Servs. Corp. v. Briscoe, 722 S.W.2d 407, 408 (Tex.1987); Alexander v. Hagedorn, 148 Tex. 565, 226 S.W.2d 996, 998 (1950); Hill v. Steinberger, 827 S.W.2d 58, 61 (Tex.App.--Houston [1st Dist.] 1992, no writ). The petitioner must also show that it has exercised due diligence to avail itself of all adequate legal remedies against a former judgment and that at the time it files the bill of review, there remains no adequate legal remedy. Tice v. City of Pasadena, 767 S.W.2d 700, 702 (Tex.1989); Hill, 827 S.W.2d at 61.

In its motion for summary judgment, Lloyds attacked the third bill of review requirement. It asserted that even though SIF was aware of Tompkins's suit at its inception and knew about the final judgment as early as January 26, 1995 (approximately three and a half months after the judgment), it did not pursue a writ of error before filing an equitable bill of review. Lloyds contended that writ of error was an available remedy that SIF was required to pursue in attacking the judgment on the basis of defective or lack of service. Therefore, Lloyds asserted that SIF's own negligence in not pursuing a writ of error barred SIF's entitlement to equitable relief. We must decide, therefore, whether SIF had an adequate remedy by way of writ of error.

A writ of error may be brought (1) within six months from the signing of the judgment; (2) by a party to the lawsuit; (3) who did not participate in the trial on the merits; and (4) where there is error apparent on the face of the record. Withem v. Underwood, 922 S.W.2d 956, 957 (Tex.1996); Stubbs v. Stubbs, 685 S.W.2d 643, 644 (Tex.1985); Hesser v. Hesser, 842 S.W.2d 759, 765 (Tex.App.--Houston [1st Dist.] 1992, writ denied). Appeal by writ of error is usually available only to parties of record. Gunn v. Cavanaugh, 391 S.W.2d 723, 724 (Tex.1965); Mercure Co. v. Rowland, 715 S.W.2d 677, 680 (Tex.App.--Houston [1st Dist.] 1986, writ ref'd n.r.e.). As an exception to this general rule, it is available (1) to a party whose privity of estate, title, or interest appears from the record of the cause in the court below or (2) to a person who is a party under the doctrine of virtual representation. Gunn, 391 S.W.2d at 725; California & Hawaiian Sugar Co. v. Bunge Corp., 593 S.W.2d 739, 740 (Tex.Civ.App.--Houston [1st Dist.] 1979, writ ref'd n.r.e.).

Privity is generally defined as a mutual or successive relationship to the same rights in property. Amstadt v. United States Brass Corp., 919 S.W.2d 644, 653 (Tex.1996); Benson v. Wanda Petroleum Co., 468 S.W.2d 361, 363 (Tex.1971); Kirby Lumber Corp. v. Southern Lumber Co., 145 Tex. 151, 196 S.W.2d 387, 388 (1946). All persons are privy to a judgment whose succession to the rights of property therein adjudicated are derived through or under one or the other of the parties to the action and which accrued after the commencement of the action. Amstadt, 919 S.W.2d at 653; Benson, 468 S.W.2d at 363; Kirby Lumber Corp., 196 S.W.2d at 388. A privy is one so connected in law with a party to the judgment as to have such an identity of interests that the party to the judgment represented the same legal right. Benson, 468 S.W.2d at 363; Finger v. Southern Refrig. Servs. Inc., 881 S.W.2d 890, 895 (Tex.App.--Houston [1st Dist.] 1994, writ denied); see Amstadt, 919 S.W.2d at 653. This definition includes (1) those who control an action...