Trinity Universal Ins. Co. v. Brainard

• Decision Date: 01 March 2004
• Docket Number: No. 07-03-0170-CV.,07-03-0170-CV.
• Citation: 153 S.W.3d 508
• Parties: TRINITY UNIVERSAL INSURANCE COMPANY, Appellant, v. Lilith BRAINARD, et al., Appellees.
• Court: Texas Court of Appeals

153 S.W.3d 508

TRINITY UNIVERSAL INSURANCE COMPANY, Appellant, v. Lilith BRAINARD, et al., Appellees.

No. 07-03-0170-CV.

Court of Appeals of Texas, Amarillo.

March 1, 2004.

Order and Opinion Overruling Rehearing April 26, 2004.

Gregory R. Ave, Kimberly A. Wilson, Touchstone, Bernays, Johnston, Beall & Smith & Stollenwerck, L.L.P., Dallas, for Appellant.

Bryan W. Scott, Houston, for Appellee.

Before QUINN and DON H. REAVIS and CAMPBELL, JJ.

OPINION

DON H. REAVIS, Justice.

Presenting a sole issue, Trinity Universal Insurance Company challenges the award of attorney's fees to Lilith Brainard, Sally Brainard Wicker, E. Swasey Brainard, II, Amy Brainard, Berklee Brainard Clements, Sena Brainard and the Estate of Edward H. Brainard, II, following a jury trial seeking recovery upon Trinity's underinsured motorist (UIM) contract. By a sole cross issue, the Brainards contend the trial court erred in failing to award prejudgment interest on the $1,010,000 damages found by the jury as to the underinsured's conduct before offsetting prior settlements and PIP benefits. Because neither party presents any issues challenging the sufficiency of the evidence, we will review only such history necessary to address the two questions of law presented. Based upon the rationale expressed herein, we reverse and render in part and affirm in part.

Trinity issued an automobile liability policy to Brainard Cattle Company, E.S.F. Brainard, et al., for a policy period commencing August 26, 1998 through August 26, 1999. Among other provisions, the policy included an uninsured/underinsured motorists (UIM) insurance endorsement. On July 1, 1999, Edward H. Brainard, II, an insured under the policy, sustained fatal injuries in a head on collision with a motorized work over rig owned and operated by an employee of Premier. After the Brainards commenced their wrongful death action on January 19, 2000, against Premier and its employee, they discovered that the limits of liability insurance for Premier did not exceed one million dollars. This information prompted the Brainards to make a written claim for UIM benefits. Trinity acknowledged receipt of the claim and requested supporting information.

By their third amended petition the Brainards joined Trinity and, in addition to claims under articles 21.21 and 21.55 of the Texas Insurance Code Annotated (Vernon Supp. & Pamph. Supp.2004), claims for common law breach of duty of good faith/unfair settlement practices, and claims under the Deceptive Trade Practices-Consumer Protection Act, Tex. Bus. & Com.Code Ann., §§ 17.41 — 17.885 (Vernon 2002 & Supp.2004), (DTPA), the Brainards alleged:

• Plaintiffs are covered parties under this policy and have performed all conditions precedent to receiving benefits under the policy; and

• Defendant Trinity is in breach of contract for failing to pay benefits. Its obligation to pay UIM benefits is not conditioned upon a judgment fixing such damages. The Defendant has an obligation to pay when its investigation reveals that there is no question as to liability and that damages exceed the policy limits of the responsible party. Defendant Trinity has information which makes it incumbent upon them to pay benefits, as there is no question of liability on the part of the other Defendants and that the damages far exceed the One Million dollars of insurance possessed by the other Defendants. This obligation became all the more apparent when the original Defendants delivered their policy limits on November 20, 2000.

The coverage provision of the UIM endorsement in the policy provides:

We will pay damages which an insured is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by an Insured, or property damage caused by an accident. The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the uninsured motor vehicle.

Any judgment for damages arising out of a suit brought without our written consent is not binding on us. If we and you do not agree as to whether or not a vehicle is actually uninsured, the burden of proof as to that issue shall be on us.

Without admitting liability, the insurance carrier for Premier paid its policy limits of $1,000,000 to the Brainards in settlement and by order dated January 5, 2001, the trial court dismissed with prejudice the claims against Premier and its employee, but did not dismiss the claims against Trinity.

By order of June 11, 2001, among other things, the trial court denied Trinity's first motion for severance. However, on November 29, 2001, following our decision in In Re Trinity Universal Ins. Co., 64 S.W.3d 463 (Tex.App.-Amarillo 2001, orig. proceeding), the trial court granted Trinity's second motion for severance and/or plea in abatement in its entirety, effectively severing all extra-contractual claims, including Brainards' claims for breach of duty of good faith and fair dealing, violations of articles 21.21 and 21.55 of the Insurance Code and violations of the DTPA.

Following a four day jury trial, a wrongful death charge was submitted to the jury. By its verdict, the jury awarded the surviving wife of the deceased $500,000 and each of the five children $100,000 and the estate $10,000 for funeral expenses, making the total award for actual damages $1,010,000. Also, the jury awarded reasonable attorney's fees to the Brainards in the amount of $100,000. Following motions for new trial and other post-judgment motions by both parties and after allowing an offset of $1,005,000, the trial court signed its judgment that the Brainards recover from Trinity the sum of $5,000 in damages and $100,000 in attorney's fees, but denied their request for prejudgment interest.

Two questions of law are presented for our determination, to-wit: (1) whether in an action on the UIM policy, an award of attorney's fees is authorized under section 38.001 of the Texas Civil Practices and Remedies Code Annotated (Vernon 1997); and (2) whether the Brainards were entitled to an award of prejudgment interest on the $1,010,000 in damages found by the jury as to the underinsured's conduct before offsetting prior settlements and PIP benefits.

Attorney's Fees

By its sole issue, Trinity contends the trial court erred in awarding the Brainards $100,000 in attorney's fees in conjunction with the prosecution of the UIM claim because there had been no determination of the operator's liability (and damages incurred by the Brainards) prior to the rendition of the judgment at issue.¹ We agree.

The Supreme Court has consistently held that attorney's fees may not be awarded "unless permitted by statute or by contract between the parties," and the availability of attorney's fees under a statute is a question of law. Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 94 (Tex.1999). In their prayer and without referencing any statutory authority or contractual provision as support or authority, the Brainards sought an award of attorney's fees. However, from the remarks of the trial court during the charge conference upon Trinity's objection to the inclusion of the attorney's fees question and from the Brainards' contention on appeal, section 38.001(8) of the Civil Practice and Remedies Code was the basis of the attorney's fees based on a claim on an oral or written contract. Although the interpretation of insurance contracts is governed by the same rules as interpretation of other contracts, in addition to the written provisions of the contract, the Brainards alleged as their breach of contract claim that Trinity had "an obligation to pay when its investigation [revealed] that there [was] no question as to liability and that damages [exceeded] the policy limits of the responsible party." See Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819, 823 (Tex.1997).

Restated, Trinity agreed to pay damages that the Brainards "were legally entitled to recover from" Premier or its operator because of bodily injuries sustained by Edward Brainard. The phrase "legally entitled to recover" is not defined in the UIM provision, but it has been determined to mean that the Brainards "must be able to show fault on the part of the uninsured motorist and the extent of the resulting damages." See Franco v. Allstate Insurance Company, 505 S.W.2d 789, 792 (Tex.1974). From the statement in their brief that the suit's "primary focus is to quantify damages which the Brainards could have recovered from Premier and its driver," the Brainards recognize that the "extent of the resulting damages" is controlling.² In this context, this provision is not a condition precedent relating to the formation of the contract as discussed in Dillon v. Lintz, 582 S.W.2d 394, 395 (Tex.1979), but instead relates to the performance under the contract. Where, as here, a promise to pay is made subject to a condition precedent, no breach occurs until the condition occurs. See id.; see also Paris Milling Company v. Wooldridge, 473 S.W.2d 224, 227 (Tex.Civ.App.-Amarillo 1971, no writ); Insurance Corp. of America v. Webster, 906 S.W.2d 77, 81 (Tex.App.-Houston [1st Dist.] 1995, writ denied). By our prior opinion in In Re Trinity, 64 S.W.3d at 467, we held that the Brainards' claim for UIM benefits was contractual in nature and unlike personal injury protection coverage, the provisions of the UIM endorsement condition payment of benefits upon a determination of liability of the UIM motorist and damages.

The question of an award of attorney's fees in a UIM action has received mixed analysis by five other courts of appeals. In Sprague v. State Farm Mut. Auto. Ins. Co., 880 S.W.2d 415, 416-17 (Tex.App.-Houston [14th Dist.] 1993, writ denied), and Sikes v. Zuloaga, 830 S.W.2d 752, 754 (Tex.App.-Austin 1992, no writ), the courts held that attorney's fees were not recoverable before determination of the fault of the underinsured motorist and the amount of damages. However, in Allstate Ins. Co....