Terry v. Safeco Ins. Co. of Am.

• Decision Date: 07 March 2013
• Docket Number: Civil Action No. H–10–0340.
• Citation: 930 F.Supp.2d 702
• Parties: Jack TERRY and Eden Terry, Plaintiffs, v. SAFECO INSURANCE COMPANY OF AMERICA, Defendant.
• Court: U.S. District Court — Southern District of Texas

930 F.Supp.2d 702

Jack TERRY and Eden Terry, Plaintiffs,

v.SAFECO INSURANCE COMPANY OF AMERICA, Defendant.

Civil Action No. H–10–0340.

United States District Court,

S.D. Texas,

Houston Division.

March 7, 2013.

Joseph Denney Terry, L. Lee Thweatt, Terry Thweatt PC, Houston, TX, Matthew S. Finkelstein, Doyle Raizner LLP, Houston, TX, for Plaintiffs.

Steven Oneal Grubbs, John Mark Kressenberg, Sheehy Ware Pappas PC, Houston, TX, for Defendant.

MEMORANDUM AND OPINION

LEE H. ROSENTHAL, District Judge.

This is an uninsured-motorist insurance case. It arose from an accident between a car driver, Jack Terry, and an uninsured motorist. Jack Terry and his wife, Eden, were on the interstate when the car in front of theirs had a blowout. The driver lost control and hit the Terrys' vehicle. The Terrys were insured by Safeco Insurance Company of America. The other driver did not have automobile insurance. The Terrys filed a claim under their uninsured motorist (UM) coverage. Safeco accepted the claim in part and denied it in part. Safeco initially disputed liability on the basis that Jack Terry was partially responsible for the accident. It also challenged the reasonableness of the amount the Terrys sought for their medical expenses and for pain and suffering.

The Terrys filed suit, alleging that Safeco had breached the insurance contract, breached its common law duty of good faith and fair dealing, and violated the fair settlement practices and prompt-payment provisions of the Texas Insurance Code. This court severed the plaintiffs' extracontractual claims from their breach of contract claims until the plaintiffs established the UM liability and their resulting damages at trial. At the trial, the jury found that Jack Terry was not at fault for the accident. The jury awarded the Terrys some, but not all, of the damages they requested. Safeco has asserted that once the verdict is reduced to partial final judgmentand it pays the amount the jury awarded under the contract, it will not be liable for the additional damages the Terrys seek. Safeco moves for summary judgment on the Terrys' claims.

Based on the complaint; the motion, response, and reply; the record; and the relevant law, Safeco's motion for summary judgment is denied on the Terrys' claim under § 542.057 of the Texas Insurance Code and granted on the Terrys' claims for violations of other sections of the Texas Insurance Code and their claims for breach of contract and breach of the common law duty of good faith and fair dealing. The reasons are explained below. A status conference is scheduled for March 18, 2013 at 9:00 a.m. in Courtroom 11–B.

I. Background

On December 12, 2008, Jack Terry was driving down Interstate 10 with his wife in the passenger seat. Lasonya Nakia was driving in the lane to the right, slightly in front of the Terrys' vehicle. Nakia's car had a blowout. She lost control and crossed into the Terrys' lane. Nakia's car struck the side of the Terrys' car. This caused the Terrys' car to drive off the right side of the highway and roll over.

The Terrys were taken by ambulance to Memorial Hermann Hospital. Jack Terry was treated for cervical, lumbar, right shoulder, and right knee sprains and strains; headaches; and muscle spasms. He was later confirmed to have a protruding disc at L4–5. (Docket Entry No. 86, Ex. H). Eden Terry also received medical treatment. Her injuries included cervical radiculalgia; disc herniation and protrusions at C5–6 and C6–7; cervical, lumbar, and thoracic sprains, strains; hyperflexion/hyperextension; muscle spasms; and headaches. ( Id., Ex. I).

Another motorist, Anthony Rodriguez, witnessed the accident and provided a statement to the police. The Houston Police Department found Nakia at fault. She was cited for driving without automobile insurance and for failing to drive in a single lane. ( Id., Ex. A).

The Terrys' Safeco policy covered liability, property damage, person injury protection (PIP), and uninsured and underinsured motorist (UM/UIM) coverages. The PIP coverage was for $2,500 per person; the UM/UIM coverage was $50,000 per person for bodily injuries and $100,000 per accident. (Docket Entry No. 82, Ex. A–8 at 5).

The Terrys first contacted Safeco on December 15, 2008. (Docket Entry No. 82, Ex. A–3 at 1). Safeco representative Letesha Wheeler interviewed Jack Terry on December 17, 2008.¹ Terry stated that he was in the third of five lanes and that Nakia was “a couple of car lengths” ahead in the fourth of five lanes. One of her tires blew out and her car “fishtailed.” The front of Nakia's car hit the rear passenger door of the Terrys' car. (Docket Entry No. 86, Ex. B at 4). Jack Terry stated that when Nakia's car started to fishtail, he “tried to pull on the brake and move over,” but her car came into their lane and hit their car. ( Id. at 5).

Safeco sent the Terrys a letter dated December 19, 2008, providing them with an application for PIP benefits and a medical authorization form. Safeco requested that they return the completed forms with any medical bills from the accident. (Docket Entry No. 82, Ex. A–3 at 2). Safeco's records indicate that its representative spoke to Jack Terry by telephone that day. ( Id. at 3).

Safeco sent the Terrys a letter dated March 19, 2009, asking for information about the status of their injuries and treatment. (Docket Entry No. 82, Ex. A–3 at 8). Sometime later, Safeco was informed that the Terrys were represented by counsel. On April 7, 2009, Safeco sent a letter to the Terrys' attorney, seeking copies of the Terrys' medical bills and records. The letter also stated: “[i]t looks as though Lasonya Nakia was the tortfeasor in this accident. I will require a letter from Ms. Nakia or her auto carrier stating that she had no coverage at the time of the accident otherwise I do not see this as a Underinsured Motorist (UM) claim.” Safeco informed the Terrys' counsel that, if the Terrys intended to file a UM claim, they would need to provide certain documents. Safeco noted that it had not received a completed PIP application or medical authorization forms. ( Id. at 5–6).

Safeco's records indicate that it tried to call the Terrys' attorney on May 1, 2009, but he was out of the office. Safeco sent the attorney letters dated June 16 and July 17, 2009, asking him to contact Safeco and stating that it had not received responses to several previous letters. Safeco also asked the Terrys to provide information about their injuries and send any medical records and bills from the accident. ( Id. at 8–9). Alison Kendall, the Safeco PIP adjuster assigned to the Terrys' claims, sent their attorney an email on August 31, 2009 seeking an update on the PIP application and supporting documentation. ( Id. at 10). Safeco's records from that date state that it had not received the Terrys' medical records and that Safeco had tried, without success, to speak with their attorney by telephone. ( Id. at 11).

Safeco received a letter of representation dated September 2, 2009 from the Terrys' attorney. The letter included applications for PIP benefits, the Texas Peace Officer's crash report, and copies of the Terrys' medical records and bills. The letter stated that Jack Terry's medical bills were $6,548.50 and Eden Terry's bills were $10,037.75. It did not mention the Terrys' UM coverage. (Docket Entry No. 82, Ex. A–2).

Safeco paid the PIP policy limits on September 30, 2009. ( Id., Ex. A–1). Safeco also sent the Terrys' attorney a letter stating that those payments “exhausted” the PIP/Medical limits and that additional medical expenses would need to be sent to their health insurance carrier. ( Id., Ex. A–4). The Terrys' attorney responded with a demand letter dated November 20, 2009. The letter stated that the Terrys' injuries were caused when Nakia's car crashed into theirs and caused it to roll over, and that Nakia was entirely at fault:

According to the investigating officer, factors which [led] to the collision include a slick tire on Ms. Nakia's vehicle which resulted in a blow-out and Ms. Nakia's failure to drive in a single lane. Ms. Nakia received two citations, one for no insurance and the other for failure to drive in a single lane. My clients were not issued a citation nor were there any allegations of wrongdoing on their part. Weather was not a factor in the collision. It was also the investigating officer's opinion that both of my clients suffered possible injuries.

(Docket Entry No. 82, Ex. A–4 at 2–3). The letter also summarized the Terrys' injuries and medical treatment. The letter offered to settle Jack Terry's claim for $20,000 and Eden Terry's claim for $35,000.

Safeco declined the Terrys' settlement offer in a December 5, 2009 letter, in part because it found Jack Terry to be partially at fault for the accident:

Since Mr. Terry admittedly was behind Ms. Nakia and saw the left tire blow, there is no indication that Mr. Terry a 72 year old experienced driver attempted to brake knowing through his experience that at highway speed there was a good chance for the Ford Victoria to go out of control. There is no evidence that Mr. Terry moved ... [to] the left lane to avoid the Crown Victoria, and no evidence that Mr. Terry tried to avoid a dangerous situation, but only he drove straight on though, thus putting himself and Mrs. Terry into harms [sic] way.

We believe the failure to avoid this accident in the making puts at least 15% negligence on Mr. Terry.

(Docket Entry No. 82, Ex. A–5). Safeco disputed some of the medical billings because Medicaid had previously paid some bills, other bills were for non-treatment services like medical records and narrative reports, and the Terrys' attorney had failed to attach one of the bills to his demand letter. Safeco's letter also noted:

The odd thing is that Mr. Terry a 72 year old man braced behind the steering wheel and Mrs. Terry a 69 year old lady who was not braced had virtually the same exact injuries per the chiropractor. The...