Yasuda Fire and Marine Ins. v. Criaco

• Decision Date: 07 June 2007
• Docket Number: No. 14-05-00851-CV.,14-05-00851-CV.
• Parties: YASUDA FIRE AND MARINE INSURANCE COMPANY OF AMERICA and Sompo Japan Insurance Co. of America, Appellants v. Miller CRIACO d/b/a Criaco & Corteguera, Appellee.
• Court: Texas Court of Appeals

225 S.W.3d 894

YASUDA FIRE AND MARINE INSURANCE COMPANY OF AMERICA and Sompo Japan Insurance Co. of America, Appellants v. Miller CRIACO d/b/a Criaco & Corteguera, Appellee.

No. 14-05-00851-CV.

Court of Appeals of Texas, Houston (14th Dist.).

June 7, 2007.

Steven James Anderson, Amy Elizabeth Stewart, J. Kevin Kindred, for appellants.

Adam P. Criaco, Peter Michael Kelly, Houston, for appellees.

Panel consists of Justices ANDERSON, EDELMAN, and FROST.

MAJORITY OPINION

KEM THOMPSON FROST, Justice.

Appellee is a law firm that represented a personal-injury claimant who sought to recover damages sustained in a two-car collision. After recovering on a claim against the driver of the other car, the law firm's client filed suit against an insurance company that provided underinsured-motorist coverage in favor of the client. To settle that case, the client and the insurance company first entered into a letter agreement under Texas Rule of Civil Procedure 11, followed by a settlement agreement and release. After the insurance company paid a large settlement to the law firm and its client, the law firm filed this suit against the insurance company asserting that the Rule 11 letter required the insurance company to pay the workers' compensation lien to a nonparty insurance adjuster and that the law firm was entitled to receive one-third of this amount as attorney's fees for its recovery of the workers' compensation lien. The trial court granted the law firm's motion for final summary judgment and denied the insurance company's cross-motion for summary judgment.

On appeal, the panel is divided on the issue of the court's jurisdiction to hear this case. Although the law firm was neither a party nor a third-party beneficiary entitled to enforce the Rule 11 letter or the settlement agreement, this inability to enforce these contracts did not deprive the trial court, and does not deprive this court, of jurisdiction. Under binding precedent, this matter goes to the merits of the law firm's claims rather than the jurisdiction of the trial court and this court to hear these claims. Because the issue is not truly a jurisdictional one and because the insurance company did not raise this issue in the trial court, this court cannot reverse on this basis. Nonetheless, the insurance company is correct in its assertion that the law firm's contract claims fail as a matter of law based on the terms of the settlement agreement and release. Accordingly, we reverse the trial court's judgment and render judgment that the law firm take nothing on its claims.

FACTUAL AND PROCEDURAL BACKGROUND

Charles Robinson was injured in a car accident while in the course and scope of his employment with Tri-Gas, Inc. Appellee Miller Criaco d/b/a Criaco & Corteguera ("Criaco") provided legal representation to Robinson under a contingency-fee agreement as to his claims regarding these personal injuries. After settling his claims against the driver of the other car for her insurance-policy limits, Robinson, represented by Criaco, filed suit against appellant Yasuda Fire & Marine Insurance Company of America and its successor company Sompo Japan Insurance Co. of America (collectively, "Sompo"), asserting claims based on the underinsured-motorist coverage ("UIM Coverage") provided by Sompo on vehicles driven by Tri-Gas, Inc.'s employees in the course and scope of employment. On appeal, it is undisputed that Sompo was the insurer both for the UIM coverage and for Tri-Gas's workers' compensation policy.¹ Sompo paid at least $81,414.19 based on Robinson's workers' compensation claim, and therefore, Sompo had a workers' compensation lien in this amount on Robinson's recovery from other sources, such as the UIM coverage provided by Sompo.

Counsel for Robinson and counsel for Sompo signed a Rule 11 letter in the lawsuit over UIM Coverage (hereinafter "Rule 11 Letter"). The body of this letter states in its entirety:

The following will serve as our Rule 11 Agreement regarding the resolution of the above-referenced case. Plaintiff will release any and all claims that exist against Defendants, which also includes the Defendants that have not yet been served or appeared in this matter. Defendants will tender the sum of $385,000.00 to this office and Defendants will repay and be responsible for payment of the outstanding workers [sic] compensation lien. All parties will bear their own expenses. If this is a correct understanding of our agreement, please sign below and return this letter to our office, so that we may notify the Court of our settlement and cancel the upcoming scheduling conference.

About a month later, Robinson signed a "Compromise Settlement Agreement and Release" (hereinafter "Settlement Agreement"), which states that the parties to the agreement are Robinson and Sompo.² The Settlement Agreement also states that it is a full settlement and discharge and a fully binding release of all of Robinson's claims against Sompo for UIM Coverage. In consideration of Sompo's payment of $385,000 to Robinson, Robinson completely released and forever discharged Sompo from any and all claims, including workers' compensation claims, rights, damages, costs, and expenses of any nature whatsoever that Robinson has in any way growing out of the occurrence made the basis of Robinson's suit. Robinson agreed to dismiss with prejudice his lawsuit against Sompo. Robinson also represented that there were no outstanding liens or that if there were any such liens, Robinson agreed to indemnify Sompo against these liens. However, the parties exempted from this representation and indemnification provision the outstanding workers' compensation lien (hereinafter "Lien"), which the parties agreed "will be the responsibility of [Sompo]."

Criaco subsequently filed this lawsuit, alleging in pertinent part, as follows:

• Criaco represented to Sompo that the Lien would be addressed and satisfied by Criaco's efforts.

• Under the Rule 11 Letter and the Settlement Agreement, Robinson and Sompo expressly agreed that the Lien being advanced by Cunningham Lindsey U.S., Inc. (the workers' compensation subrogation adjuster) would be paid by Sompo.

• Criaco contacted Cunningham Lindsey U.S., Inc. (hereinafter "Cunningham") to verify the Lien total, and Criaco verified in writing that it would receive a $27,000 attorney's fee for recovering the Lien.

• After settlement and after Criaco tried to secure payment of the Lien, Sompo contacted Cunningham and told it that Sompo would now handle the Lien. Sompo fired Cunningham.

• Sompo now asserts that any Lien has been waived.

• Sompo has breached it obligation under the Rule 11 Letter and the Settlement Agreement to pay the Lien.

• Criaco seeks enforcement of these contracts and an order that Sompo tender to Cunningham³ the full amount of the Lien.

• Criaco seeks its attorney's fees for this contract case under Chapter 38 of the Texas Civil Practice and Remedies Code.

Criaco filed a motion for summary judgment in which it sought specific performance of the provisions of the Rule 11 Letter and Settlement Agreement. Criaco asserted that these agreements are unambiguous and require Sompo to pay the full amount of the Lien to Cunningham. According to Criaco, after the Settlement Agreement was signed and the case dismissed, Sompo, rather than comply with this alleged contractual obligation, decided to fire Cunningham (the subrogation adjuster) and claim that the Lien was waived. Criaco has asserted that, before Sompo fired Cunningham, Criaco agreed to secure payment of the Lien for Cunningham and that Criaco effectively obtained this payment when the Rule 11 Letter and the Settlement Agreement were executed. According to Criaco, there was an agreement that Sompo would pay the $81,414.19 Lien and that Criaco would receive one-third of this amount as its statutory attorney's fee. Criaco asserted that the trial court, as a matter of law, should enforce the agreements and order Sompo to pay $81,414.19 to Cunningham or, alternatively, the court should order Sompo to pay one-third of this amount directly to Criaco.

Sompo filed a cross-motion seeking a final summary judgment in its favor. Sompo asserted that the Settlement Agreement supersedes the Rule 11 Letter and precludes Criaco's claims. Sompo also stated that, although Criaco has never specifically referred to section 417.003 of the Texas Labor Code, his claims are dependent on that statute. See TEX. LAB.CODE ANN. § 417.003 (Vernon 2006). However, Sompo claims that Criaco cannot recover under this statute because Sompo's interest was actively represented by an attorney in the UIM Coverage lawsuit in that Sompo was a defendant represented by counsel other than Criaco. See id § 417.003(a) ("An insurance carrier whose interest is not actively represented by an attorney in a third-party action shall pay a fee to an attorney representing the claimant . . .").

The trial court denied Sompo's motion and granted Criaco's motion, ordering Sompo to tender either $81,414.19 to Cunningham or $27,000 to Criaco, the latter amount being the sum the trial court stated reflects "the attorney's fees generated by the recovery of the workers' compensation lien." The trial court later made its judgment final and added an award of attorney's fees to Criaco for bringing this action. On appeal, Sompo asserts that (1) Chapter 417 of the Texas Labor Code does not support the award of attorney's fees to Criaco; and (2) the law firm's contract claims fail as a matter of law based on the terms of the Settlement Agreement.

Does the law firm's inability to enforce the Rule 11 Letter and the Settlement Agreement deprive the trial court and this court of jurisdiction?

In this suit, Criaco seeks to enforce the Rule 11 Letter and the Settlement Agreement. Under the unambiguous language of these contracts, Criaco is not a party to these contracts or a third-party beneficiary entitled to enforce these contracts. Although...