Yorkshire Ins. Co. v. Seger
| Decision Date | 19 July 2013 |
| Docket Number | No. 07–12–00090–CV.,07–12–00090–CV. |
| Citation | 407 S.W.3d 435 |
| Parties | YORKSHIRE INSURANCE CO., LTD., and Ocean Marine Insurance Co., Ltd., Appellants v. Roy SEGER, individually and as Substitute Administrator of the Estate of Randall Jay Seger, Deceased, and Don Hoskins, Independent Executor of the Estate of Shirley Faye Hoskins, Deceased, Appellees. |
| Court | Texas Court of Appeals |
OPINION TEXT STARTS HERE
Charles R. “Skip” Watson Jr., Danny Needham, Amarillo, Mike A. Hatchell, Austin, David J. Plavnicky, Houston, Donald M. Hunt, Lubbock, for Appellants.
Robert L. Templeton, John Smithee, David M. Russell, Amarillo, for Appellees.
Before QUINN, C.J. and CAMPBELL and HANCOCK, JJ.
Appellants, Yorkshire Insurance Co., Ltd., and Ocean Marine Insurance Co., Ltd. (collectively, “Insurers”), appeal a judgment entered against them awarding appellees, Roy Seger, individually and as substitute administrator of the estate of Randall Jay Seger, and Don Hoskins, independent executor of the estate of Shirley Faye Hoskins (collectively, “the Segers”), $35,848,273.50 each as well as post-judgment interest at an annual rate of five percent. By seven issues, Insurers appeal. We will reverse the trial court's judgment and render judgment that the Segers take nothing by their claims.
The procedural history of the lawsuit between the Segers and Insurers is extensive. Due to our resolution of the matters presented on appeal, we will constrain our discussion of the history of this litigation to those facts that are pertinent to the present appeal.
The incident giving rise to this action was the death of Randall Jay Seger. Randall did drilling work for two related companies, Diatom Drilling Co., L.P. (Diatom), and Employer's Contractor Services, Inc. (ECS). ECS was a corporation established by Diatom's general partner, Cynthia Gillman, to provide oil field workers to Diatom and other drilling contractors. On July 13, 1992, while employed by ECS but providing services to Diatom, Randall was killed when a Diatom rig he was working on collapsed. Diatom, who was insured by a Lloyd's of London-type comprehensive general liability (CGL) insurance policy at the time of the accident, notified the subscribing insurers (collectively, “the CGL insurers”) of the accident. Insurers were members of this group.
In June of 1993, Randall's parents,1 filed suit against Diatom, its partners, and ECS alleging negligence and gross negligence. The CGL insurers were not specifically notified of the suit at the time that it was filed. The suit sat virtually dormant until 1998. In 1998, Diatom demanded that the CGL insurers provide a defense to the Segers' suit. The CGL insurers refused to provide a defense, contending that Randall's death was not a covered occurrence and that Diatom failed to provide timely notice of suit.
After the CGL insurers refused to provide Diatom a defense, the Segers offered to settle their suit against Diatom for $500,000, the policy limits of the CGL policy. Diatom made demand on the CGL insurers to settle the claim based on this offer. The CGL insurers notified Diatom that two of the insurers had become insolvent and, therefore, the demand exceeded the available policy limits of the CGL policy. Based on this additional information, the Segers offered to settle the suit for $368,190, the policy limits available from the solvent CGL insurers. The Segers subsequently lowered their settlement offer to $250,000. The CGL insurers refused each of these settlement demands.
Prior to trial in Seger v. Diatom (“the underlying proceeding”), the Segers non-suited all of the named defendants except for Diatom, and Diatom's counsel withdrew from representation. On March 27, 2001, the underlying proceeding was held. Gillman was subpoenaed to attend and did attend as a witness. While the trial court indicated in its judgment that Gillman appeared as the pro se representative of Diatom, Gillman did not identify herself as being present at the proceeding in a representative capacity. Likewise, the record reflects that Gillman's participation in the proceeding was consistent with that of a witness rather than a party. Gillman's limited “representation” of Diatom is evidenced by the fact that Diatom was not represented by counsel, did not announce ready when the proceeding was called, presented no opening or closing argument, offered no evidence, and failed to cross-examine any of the Segers' witnesses. Gillman testified and, at the conclusion of her testimony, was excused. As a result of this proceeding, the trial court entered judgment against Diatom awarding Roy Seger and Shirley Faye Hoskins $7,500,000 each, plus pre- and post-judgment interest (“the underlying judgment”).
Following entry of the underlying judgment, Gillman contacted Diatom's CGL insurers to inquire what they intended to do about the judgment. When Gillman received no response to her inquiry, she assigned Diatom's rights against the CGL insurers to the Segers. The assignment reserved Diatom's right to recover its attorney's fees incurred in defense of the underlying suit, but otherwise assigned all of Diatom's rights against the CGL insurers to the Segers. Following the assignment, the Segers filed a Stowers2 action against the CGL insurers seeking damages based on the insurers' wrongful refusal to defend Diatom and negligent failure to settle the Segers' claim when demand was made within policy limits.
Prior to trial on the Stowers action, the Segers settled their assigned claims against all of the remaining solvent CGL insurers, except Yorkshire and Ocean Marine, and the settling insurers were dismissed from the suit. After resolving certain issues by pretrial summary judgment, including finding that the parties in the underlying proceeding were in a “fully adversarial relationship” and that the proceeding was a “trial,” the only issues that remained to be determined at the Stowers trial were the determination of Insurers' negligence, causation, and damages. During the trial, the trial court directed the verdict as to damages based on the underlying judgment. The issues of negligence and causation were submitted to a jury. The jury returned a verdict in favor of the Segers.
Insurers appealed the trial court's judgment. This Court reviewed the six issues presented by Insurers. See Yorkshire Ins. Co. v. Seger, 279 S.W.3d 755 (Tex.App.-Amarillo 2007, pet. denied) (hereinafter, “Seger I ”). We affirmed the trial court's denial of Insurers' motions to recuse and disqualify counsel, and the trial court's grant of summary judgment on the issue of whether the Segers made a sufficient demand within the CGL policy limits. Id. at 775. However, in all other respects, we reversed the judgment and remanded the case for a new trial. Id.
After the case was remanded, the trial court called the case for trial on October 3, 2011. The case was submitted to a jury. Based on the jury's findings, the trial court entered a judgment that recites that the Segers' claims were covered by the CGL insurance policy, and that the underlying judgment was the result of a fully adversarial trial and, therefore, establishes the Segers' damages as a matter of law. The judgment awards Roy Seger and Don Hoskins 3 each $35,848,273.50, which, the judgment indicates, is the current amount of the underlying judgment. Insurers filed motions to disregard jury findings and for judgment n.o.v. The trial court overruled both motions. Insurers then moved for new trial, which was apparently overruled by operation of law. Insurers timely filed notice of appeal.
By their appeal, Insurers present seven issues. Insurers contend, by their first issue, that the evidence is legally and factually insufficient to establish that Diatom was damaged by Insurers. By their second issue, Insurers contend that the assignment by which the Segers obtained their present Stowers claims is invalid as against public policy. Insurers contend, by their third issue, that there is no evidence that Insurers breached the applicable standard of care or that any negligence by Insurers proximately caused Diatom injury. By their fourth issue, Insurers contend that a policy provision excluded Randall's claims from coverage as a matter of law. Insurers' fifth issue contends that any violations of the Insurance Code they committed are immaterial and do not allow the policy to be rewritten. By their sixth issue, Insurers alternatively contend that harmful evidentiary errors require remand. Finally, by their seventh issue, Insurers contend that the trial court improperly calculated post-judgment interest. Because we will sustain Insurers' first issue, which is dispositive, we will not address Insurers' second through seventh issues. SeeTex.R.App. P. 47.1.
By their first issue, Insurers contend that the evidence is legally and factually insufficient to establish that Diatom was damaged by Insurers and, even if damage is proven, there is insufficient evidence of the extent of said damage. This is so, according to Insurers, because the only evidence of damages offered by the Segers was the underlying judgment, but that judgment was not the result of a fully adversarial trial. See State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d 696, 714 (Tex.1996). The Segers respond, citing Evanston Ins. Co. v. ATOFINA Petrochemicals, Inc., 256 S.W.3d 660 (Tex.2008), for the proposition that the Gandy requirement that the underlying judgment be the result of a fully adversarial trial is inapplicable when an insurer wrongfully fails to provide a defense of the insured or wrongfully denies coverage. Id. at 671–72, 674. However, even if we determine that Gandy's fully adversarial trial requirement applies, the Segers contend that the underlying judgment in this case was the result of a fully adversarial trial.
When a party challenges the legal sufficiency of the evidence supporting a verdict, we consider the evidence in...
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