Zurich Am. Ins. Co. v. Diaz

• Decision Date: 30 August 2018
• Docket Number: NO. 14-17-00295-CV,14-17-00295-CV
• Citation: 566 S.W.3d 297
• Parties: ZURICH AMERICAN INSURANCE CO., Appellant/Cross-Appellee v. Marta DIAZ, Appellee/Cross-Appellant v. Texas Department of Insurance – Division of Workers' Compensation and Commissioner Ryan Brannan, in His Official Capacity, Cross-Appellees
• Court: Texas Court of Appeals

566 S.W.3d 297

ZURICH AMERICAN INSURANCE CO., Appellant/Cross-Appellee

v.Marta DIAZ, Appellee/Cross-Appellant

v.Texas Department of Insurance – Division of Workers' Compensation and Commissioner Ryan Brannan, in His Official Capacity, Cross-Appellees

NO. 14-17-00295-CV

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

Opinions filed August 30, 2018

Rehearing Denied October 25, 2018

Rehearing En Banc Denied December 28, 2018

Tracy Christopher, Justice

We consider two overarching questions in this workers' compensation case. The first question is whether the trial court properly dismissed certain claims against an administrative agency and its commissioner for lack of jurisdiction. We conclude that the trial court made the correct ruling, and we affirm that portion of the trial court’s judgment.

The second, and more substantive, question is whether Marta Diaz can recover death benefits on behalf of her late husband, Encarnacion, who died several weeks after suffering an on-the-job injury. Marta pursued her claim through the administrative process, but her claim was denied because she filed it thirteen months after her husband’s death, and the insurance carrier objected that the claim was filed after a one-year statutory deadline. Marta sought judicial review of the administrative decision, and the trial court granted her relief after ruling on a set of cross-motions for summary judgment. The trial court held that the carrier untimely raised the statutory bar, or in the alternative, that Marta established good cause for filing her claim after the one-year deadline.

We conclude that the trial court erred by granting the summary judgment, and that neither Marta nor the carrier is entitled to judgment as a matter of law. Accordingly, we reverse that portion of the trial court’s judgment and remand for additional proceedings consistent with this opinion.

I. BACKGROUND

Encarnacion suffered a severe injury on April 16, 2010, when he was burned by hot oil while cleaning a fryer in the kitchen of a hotel. His employer promptly filed a first report of injury with Zurich American Insurance Company, its workers' compensation insurance carrier. Zurich notified the Division of Workers' Compensation and then paid compensation benefits to Encarnacion from April 17, 2010 to May 14, 2010.

Encarnacion died at his home on May 13, 2010. Zurich initially contested that Encarnacion’s death was work-related and did not pay death benefits to Marta, his surviving spouse. Marta filed her claim for death benefits on June 21, 2011, more than one year after Encarnacion’s death.

Zurich and Marta attended a benefit review conference ("BRC") in November 2011. Following the BRC, the Division issued a report stating that the parties had resolved one of their issues: they all agreed that Encarnacion had suffered a compensable injury that resulted in his death. The report further stated that the parties had two issues that were left unresolved.

Those issues were (1) "Is [Zurich]’s defense on compensability limited to the existence of injury resulting in death defense listed on the Notice of Denial of Compensability and Refusal to Pay Benefits (PLN-[11] ), that was filed with the Division on 06/02/10?"; and (2) "If [Zurich]’s defense is not limited to the existence of injury resulting in death defense listed on the Notice of Denial of Compensability and Refusal to Pay Benefits (PLN-[11] ), is [Zurich] relieved from liability under TEX LABOR CODE ANN Section § 409.007 because of [Marta]’s failure to timely file a claim for death benefits with the Division?"

The Division conducted a contested case hearing ("CCH") in November 2012 to decide the disputed issues remaining after the BRC. Following the CCH, the Division issued a decision and order (the "CCH Decision"). The Division’s hearing officer concluded that Marta was the proper legal beneficiary of Encarnacion, an issue which is undisputed in this appeal. The officer further concluded that (1) Zurich’s right to dispute compensability of Marta’s claim for death benefits was not limited to the basis identified in its June 2, 2010 notice; (2) Zurich was relieved of liability under section 409.007 of the Texas Workers' Compensation Act (the "Act") because Marta failed to file her claim within one year of Encarnacion’s death; and (3) Marta did not have good cause for failing to file her claim timely.

Marta appealed to the appeals panel, but because the appeals panel did not issue its own decision, the CCH Decision became the final decision of the appeals panel by operation of law.¹ Marta challenged that decision by filing a petition for judicial review in district court. She named as defendants Zurich, the Division, and the Division’s Commissioner, Rod Bordelon.² As to Zurich, Marta requested the court to determine that she was entitled to death benefits.³ As to the Division and the Commissioner, Marta sought declarations that the Division and the Commissioner had "committed ultra vires acts by failing to properly follow and enforce the Texas Workers' Compensation Act and [Division] rules."

Zurich answered and filed a plea to the jurisdiction seeking dismissal of all of Marta’s claims, including her declaratory judgment claims, to the extent they exceeded the scope of issues decided during the administrative proceedings. The Division and the Commissioner answered with a general denial and filed a Rule 91a motion to dismiss based on sovereign immunity. The trial court denied the Division’s and the Commissioner’s Rule 91a motion, but dismissed all claims against the Division and the Commissioner by sua sponte granting a plea to the jurisdiction in their favor. The court also granted Zurich’s plea to the jurisdiction as to Marta’s declaratory judgment claim against it.

Marta and Zurich filed cross-motions for summary judgment on the remaining issues, and the trial court signed a final judgment that:

(1) denied summary judgment for Marta on the issue of whether Marta’s one-year deadline to file a death benefits claim was tolled because Zurich did not file a report of death separate from the initial report of injury;

(2) granted summary judgment to Marta on the grounds that (a) Zurich did not properly and timely raise the one-year limitations defense and Zurich was limited to the compensability defense raised in its June 6, 2010 notice disputing compensability, and (b) Marta alternatively had good cause for filing her claim after the one-year deadline because Zurich failed to notify her and the Division of the compensable death under 28 Tex. Admin. Code § 132.17 ;

(3) set aside the CCH Decision;

(4) ordered Zurich to pay death and burial benefits for Encarnacion’s compensable work-related death, less attorney’s fees;

(5) ordered a lump-sum payment of attorney’s fees to Marta’s counsel;

(6) assessed court costs against Zurich; and

(7) awarded post-judgment interest on attorney’s fees, expenses, and court costs of five percent.

Both Zurich and Marta have appealed the judgment. Marta also challenges the trial court’s orders dismissing her claims against the Division and the Commissioner and granting Zurich’s plea to the jurisdiction.

II. JURISDICTIONAL ISSUES

We begin with Marta’s challenges to the trial court’s dismissal of her declaratory judgment claims against Zurich, the Division, and the Commissioner.

A. Standard of Review

Subject-matter jurisdiction is essential to the court’s authority to decide a case. Tex. Ass'n of Bus. v. Tex. Air Control Bd. , 852 S.W.2d 440, 443–44 (Tex. 1993). It is never presumed to exist. Id. The plaintiff bears the burden to allege facts affirmatively demonstrating the trial court’s subject matter jurisdiction. Id. at 446. We review the issue de novo. See State Dep't of Highways & Pub. Transp. v. Gonzalez , 82 S.W.3d 322, 327 (Tex. 2002) ; Mayhew v. Town of Sunnyvale , 964 S.W.2d 922, 928 (Tex. 1998).

B. Sovereign Immunity and the Uniform Declaratory Judgments Act

The doctrine of sovereign immunity "bars suit against the state and its entities" unless the state waives immunity. Tex. Adjutant Gen.’s Office v. Ngakoue , 408 S.W.3d 350, 353 (Tex. 2013) (quoting Prairie View A & M Univ. v. Chatha , 381 S.W.3d 500, 512 (Tex. 2012) ). The Uniform Declaratory Judgments Act (the "UDJA") does not provide a general waiver of sovereign immunity. City of El Paso v. Heinrich , 284 S.W.3d 366, 370 (Tex. 2009). Sovereign immunity bars UDJA actions against the state and its political subdivisions "unless the Legislature has waived immunity for the particular claims at issue." Tex. Dep't of Transp. v. Sefzik , 355 S.W.3d 618, 620 (Tex. 2011) ; see also Tijerina v. Tex. Prop. Cas. Ins. Guaranty Assoc. , No. 03-13-00300-CV, 2015 WL 869344, at *3 (Tex. App.—Austin Feb. 26, 2015, pet. denied) (mem. op.).⁴ The UDJA does not waive sovereign immunity from a lawsuit seeking a declaration of a claimant’s statutory or legal rights. Sefzik , 355 S.W.3d at 621.

However, the ultra vires exception to sovereign immunity permits private parties to bring claims against state officials in their official capacities for nondiscretionary acts unauthorized by law. Id. Such lawsuits are not "against the State" and therefore are not barred by sovereign immunity. Id. ; see also Heinrich , 284 S.W.3d at 373. To fall within the ultra vires exception, a plaintiff must allege and show that the official "acted without legal authority or failed to perform a purely ministerial act," rather than simply complain of an official’s exercise of discretion. Heinrich , 284 S.W.3d at 372.

C. "Redundant Relief" and the UDJA

When a claimant has invoked a statutory means of attacking an agency order, a trial court lacks jurisdiction over an additional purported claim under the UDJA that would merely determine the same issues and provide substantially the same relief as the available statutory remedies invoked. See, e.g. , Tex. Mun. Power Agency v. Pub. Util. Comm'n of Tex. , 253 S.W.3d 184, 199–200 (Tex. 2007) (citing BHP Petroleum v. Millard , 800 S.W.2d 838, 841...