Western Cas. and Sur. Co. v. Preis

• Decision Date: 30 May 1985
• Docket Number: No. 13-84-188-CV,13-84-188-CV
• Citation: 695 S.W.2d 579
• Parties: The WESTERN CASUALTY AND SURETY COMPANY, Appellant, v. J.R. PREIS, d/b/a Coastal Bend Sales, Appellee.
• Court: Texas Court of Appeals

Page 579

695 S.W.2d 579

The WESTERN CASUALTY AND SURETY COMPANY, Appellant, v. J.R. PREIS, d/b/a Coastal Bend Sales, Appellee.

No. 13-84-188-CV.

Court of Appeals of Texas,

Corpus Christi.

May 30, 1985.

Rehearing Denied June 28, 1985.

Gary Norton, Corpus Christi, for appellant.

Charles R. Cunningham, Corpus Christi, for appellee.

Before BISSETT, ¹ UTTER and KENNEDY, JJ.

OPINION

BISSETT, Justice.

This is an appeal from a judgment rendered in a cause of action involving a Comprehensive General Liability Insurance Policy sold by appellant to appellee. Trial was to the court. Judgment was rendered that appellee (plaintiff in the trial court) recover from appellant (defendant in the trial court) the sum of $124,548.05, plus attorney's fees. At issue in this appeal are appellant's obligations to appellee under the supplemental payment provision contained in the insurance policy appellant issued to appellee.

Appellee sued appellant upon an insurance policy, which appellant issued to appellee for a policy period from October 1, 1974, to October 1, 1975. The insurance policy's limit of liability for bodily injury was $100,000.00. On January 13, 1975, during the policy period, Jesse Perez, who was a tenant in one of appellee's apartments, died of a carbon monoxide suffocation allegedly caused by a defective wall heater and its venting system. His wife and their children, in a separate and distinct cause of action, obtained a judgment against appellee and a third party (the Dover Corporation), jointly and severally, in the amount of $950,000.00. On appeal of this judgment, our Court, on August 30, 1979, ordered that a remittitur be filed. ² A remittitur of $350,000.00 was made and the judgment, as reformed, was affirmed by our Court. ³ This action will henceforth be referred to as the "Perez Case," and the judgment rendered therein will be referred to as the "Perez Judgment."

The joint and several judgment against appellee and the Dover Corporation after remittitur was $600,000. Judgment was rendered on February 6, 1978, and bore interest at the rate of 9% per annum. Appellant did not pay any portion on its policy limits or on the accrued interest on appellee's portion of the judgment until October 21, 1980, when it paid $114,523.19. Acccording to a letter dated this same date, the payment represented "payment of the policy limits of Western Casualty & Surety Company, together with interest from [the] date of judgment[.]" On November 4, 1980, appellant made an additional payment of $9,273.61. This additional amount was to supplement the first amount and was to offset a "miscalculation of the interest amount due[.]" On January 15, 1981, Liberty Mutual Insurance Company, the insurance carrier for the Dover Corporation, hereinafter called "Liberty Mutual," in connection with the Dover Corporation's liability on the judgment, after allowing credit for appellant's payments, paid $500,000, the portion remaining on the judgment, plus interest, and thereafter sought contribution against appellee. Liberty Mutual then obtained a promissory note (secured by a deed of trust) from appellee in the principal amount of $257,000.00, payable as therein provided. The insurance policy in question contained the following provision:

The Western will pay, in addition to the applicable limit of liability:

(a) all expenses incurred by The Western, all costs taxed against the insured in any suit defended by the Western and all interest on the entire amount of any judgment therein which accrues after entry of the judgment and before The Western has paid or tendered or deposited in court that part of the judgment which does not exceed the limit of the Western's liability thereon;

That provision furnished the basis on which appellee's contractual action, hereinafter mentioned, was grounded.

Suit was initially filed by appellee against appellant on January 4, 1980. It was docketed as No. 80-45-B. This was a tort action. Appellee alleged that appellant refused to timely tender the insurance coverage ($100,000) under the aforesaid insurance policy, and that its refusal was negligence which resulted in damage to appellee. In appellee's Second Amended Original Petition, which was filed on April 15, 1983 (his trial petition), two separate causes of action were plead. They were: 1) that when appellant paid the $100,000 limit of liability plus $23,796.81 interest on the Perez Judgment, appellant was in breach of contract as a result of its failing to pay additional interest which had accrued on the entire amount of the Perez Judgment attributable to Preis separately, or $300,000 (hereinafter called the "contractual claim"); and 2) that in the prior case filed by Sylvia Perez and her children against the Dover Corporation and appellee, appellant was negligent by its failing to settle the Perez claims against appellee, before the voir dire examination of the jury, for the $100,000 limit of liability provided for in appellee's insurance policy with appellant. (hereinafter called the "negligence claim.")

On April 25, 1983, both causes of action went to trial before a jury. It was subsequently agreed by the parties that only the issues raised in the negligence action would be submitted to the jury for determination, and that the issues raised in the contractual action would be submitted to the court for decision. The jury, by its verdict, found that appellant "was not negligent" in the negligence action and judgment was duly rendered on the verdict. A new trial was subsequently granted on the negligence claim.

After the jury's verdict on May 4, 1983, appellee, on May 24, 1983, filed a motion for severance of the contractual action from the case and for rendition for judgment on the contractual claim. The claim was then severed by the trial court from the remainder of the case and was given a new docket number (no. 80-45- 1/2-B). Trial in this claim was to the court. Final judgment in the contractual action was signed on February 24, 1984. It decreed, in part:

It is therefore ORDERED, ADJUDGED and DECREED that the Plaintiff J.R. Preis, d/b/a/ Coastal Bend Sales, do have and recover of the Defendant The Western Casualty and Surety Company in this severed contractual cause of action the sum of One Hundred Twenty-Four Thousand Five Hundred Forty-Eight Dollars and Five Cents ($124,548.05) with post-judgment interest thereon at the rate of ten percent (10%) per annum until paid, together with one-half ( 1/2) of all costs expended in Cause No. 80-45-B before this cause was severed therefrom and all costs which accrue in this cause subsequent to the date this severance order is signed in this Court and that Plaintiff have his execution.

The trial court made the following findings of fact:

1. When Jesse Perez died in Plaintiff J.R. Preis's apartment on January 13, 1975, which death was caused by improper venting in the apartment in violation of the City Building Code and other negligent acts (see record in Cause No. 75-3640-D, styled 'Sylvia Perez, etc. v. Dover Corporation, et al,' all of which was introduced into evidence in this cause), the Plaintiff J.R. Preis, d/b/a Coastal Bend Sales, was covered by a liability insurance policy CGA 787757 issued by Defendant The Western Casualty and Surety Company to J.R. Preis, d/b/a/ Coastal Bend Sales, with limits of $100,000 per claim.

2. The said policy contained the following Supplementary Payments provision:

SUPPLEMENTARY PAYMENTS

The Western will pay, in addition to the applicable limit of liability:

(a) all expenses incurred by the Western, all costs taxed against the INSURED in any suit defended by The Western and all interest on the entire amount of any judgment therein which accrued after entry of the judgment and before The Western has paid or tendered or deposited in court that part of the judgment which does not exceed the limit of The Western's liability thereon.

3. The Trial Court in Perez rendered a joint and several judgment against Dover Corporation and J.R. Preis, individually and d/b/a Coastal Bend Sales, on February 6, 1978, in the amount of $950,000.

4. The Perez Trial Court judgment was later reduced to $600,000 by the Corpus Christi Court of Appeals, payable jointly and severally by Dover Corporation and J.R. Preis, individually and d/b/a Coastal Bend Sales.

5. The $600,000 joint and several judgment by its terms drew interest in the rate of nine percent (9%) per annum from and after February 6, 1978 until paid.

6. J.R. Preis was liable for the payment of one-half ( 1/2) of the judgment ($300,000) plus post-judgment interest thereon at the rate of nine percent (9%) per annum from and after February 6, 1978 until paid.

7. The Western Casualty and Surety Company's policy issued to J.R. Preis was in effect on January 13, 1975 and the limits of the coverage as to the Perez accident was $100,000.

8. Western Casualty did not make any payments on the Perez judgment and interest accumulated thereon until October 21, 1980 at which time it paid $114,523.29 toward its obligation under the insurance contract.

9. As of October 21, 1980 (inclusive), Western Casualty and Surety Company was obligated under its insurance contract with J.R. Preis to pay its policy limits of $100,000 plus all the interest accrued on $300,000 beginning February 7, 1978 until October 21, 1980 inclusive ($73,025.31) for a total obligation due on October 21, 1980 in the amount of $173,025.31.

10. On October 21, 1980, Western Casualty paid $114,523.29 which was applied first to the then accumulated interest on the $300,000 judgment from February 7, 1978 to October 21, 1980 inclusive, in the amount of $73,025.31. The balance of the October 21, 1980 payment in the amount of $41,497.98 was credited toward the reduction of the basic $100,000 policy limits, there remained a balance due to be paid on the policy limits of $58,502.02 (i.e., $173,025.31 minus $114,523.29 equals $58,502.02).

11. After the above credits...