Opinion issued February 3, 2015
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-13-00091-CV
———————————
TESCO CORPORATION (US), Appellant
V.
STEADFAST INSURANCE COMPANY, Appellee
On Appeal from the 127th District Court
Harris County, Texas
Trial Court Case No. 2012-36774
MEMORANDUM OPINION ON REHEARING
Appellee, Steadfast Insurance Company (“Steadfast”), has filed a motion for
rehearing of our August 28, 2014 opinion and judgment. We grant the motion for
rehearing, withdraw our opinion and judgment of August 28, 2014, and issue this
opinion and a new judgment in their stead.
Appellant, Tesco Corporation (US) (“Tesco”), challenges the trial court’s
rendition of summary judgment in favor of Steadfast in Tesco’s declaratory-
judgment action 1 against Steadfast. In three issues, Tesco contends that the trial
court erred in denying it summary judgment and granting Steadfast summary
judgment.
We vacate the judgment of the trial court and dismiss the case for lack of
jurisdiction.
Background
In the underlying lawsuit,2 Von Phathong 3 sued Tesco in a United States
District Court in Colorado for negligence after he sustained personal injuries while
working on a Tesco drilling rig in Rifle, Colorado. Tesco was insured under
general commercial liability and commercial umbrella (excess) liability policies
(collectively, the “Policies”) issued by Steadfast, and Steadfast provided Tesco
with a defense in the underlying lawsuit. After a jury awarded Phathong
$1,500,000 in punitive damages against Tesco, Steadfast notified Tesco by letter
1
See TEX. CIV. PRAC. & REM. CODE ANN. § 37.001–.011 (Vernon 2008 & Supp.
2013).
2
Styled Von J. Phathong and Jennifer D. Phathong v. Tesco Corp. (US), No. 10-
CV-00780-MSK-MJW, 2012 WL 5187751, at *1 (D. Colo. Oct. 9, 2012).
3
Phathong is not a party to this appeal.
2
that the Policies did not afford coverage for the punitive damages award because
Colorado law “does not allow,” as a matter of public policy, “punitive damages to
be afforded coverage under a policy of insurance.”
Subsequently, Tesco filed the instant lawsuit, seeking a judgment declaring
that Texas law governs the scope of the Policies and Steadfast is “obligated”
thereunder “to pay for any punitive damages awarded against [Tesco]” in the
underlying lawsuit. Tesco then filed a motion for partial summary judgment,
asserting that Texas law applies to the construction of the Policies and to the issue
of whether punitive damages are covered by the Policies; the punitive damages
awarded against it are covered by liability policies; and Steadfast waived its right
to assert non-coverage by failing to timely issue a reservation of rights. In its
cross-motion for summary judgment and response to Tesco’s motion, Steadfast
argued that it is entitled to judgment as a matter of law because Colorado law
applies and prohibits insurance for punitive damages in this case. It further argued
that it “cannot waive or be estopped from the application of Colorado public
policy.”
After a hearing, the trial court granted Steadfast’s cross-motion for summary
judgment and denied Tesco’s motion for partial summary judgment. It entered a
judgment, declaring that “Colorado law applies in this case and that no coverage is
available for the punitive damage award assessed against [Tesco].” And it ordered
3
that Tesco “take nothing on its claims against [Steadfast] and that all [Tesco’s]
claims against [Steadfast] are hereby dismissed.”
On August 28, 2014, we issued an opinion and judgment reversing the trial
court’s judgment and remanding for further proceedings.
Mootness
In its “Motion for Rehearing and Motion to Vacate [this Court’s] Opinion
and Judgment,” Steadfast argues that this case is now moot “[d]ue to recent rulings
by the Tenth Circuit and the United States District Court of Colorado.” It asserts
that this Court “no longer has jurisdiction over this case, and did not have
jurisdiction when its opinion was issued.”
On May 6, 2014, the United States Court of Appeals for the Tenth Circuit
held that the United States District Court erred in granting judgment in the
underlying case in Phathong’s favor, and it remanded the case to the district court
to vacate the jury’s verdict and enter judgment for Tesco. On June 19, 2014, the
district court, in compliance with the Tenth Circuit’s mandate, vacated the jury’s
punitive damages award to Phathong and entered judgment in favor of Tesco.
Further, on July 25, 2014, Tesco and Phathong entered into a “Stipulation” in
which Tesco agreed to forego its efforts to collect the costs taxed against Phathong
and Phathong agreed to forego filing any further requests for relief, including
writs, petitions, motions, or appeals, thereby ending the litigation in the underlying
4
case. Neither party to the appeal notified this Court of these developments until
Steadfast filed its motion for rehearing on September 12, 2014.
Steadfast asserts that when the district court granted judgment in favor of
Tesco, “the punitive damage award ceased to exist and all potential avenues for
reversing that judgment were shut off by the stipulation on July 25, 2014.” Thus,
the issue presented in this appeal, and in the trial court below, i.e., whether
insurance coverage is available for the punitive damages awarded against Tesco in
the underlying suit, is now moot. And Steadfast argues that because the issue was
moot at the time that this Court issued our August 28, 2014 opinion, this Court was
without subject-matter jurisdiction to issue our opinion, and our opinion is
advisory.
The mootness doctrine implicates subject-matter jurisdiction. Trulock v.
City of Duncanville, 277 S.W.3d 920, 923 (Tex. App.—Dallas 2009, no pet.). An
appellate court is prohibited from deciding a moot controversy or rendering an
advisory opinion. See Nat’l Collegiate Athletic Ass’n v. Jones, 1 S.W.3d 83, 86
(Tex. 1999); City of Farmers Branch v. Ramos, 235 S.W.3d 462, 469 (Tex. App.—
Dallas 2007, no pet.) (noting court may only decide issues presenting “a live
controversy at the time of the decision”). If a controversy ceases to exist or the
parties lack a legally cognizable interest in the outcome at any stage, the case
becomes moot. Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 642 (Tex. 2005);
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William v. Lara, 52 S.W.3d 171, 184 (Tex. 2001) (noting “a controversy must exist
between the parties at every stage of the legal proceedings, including the appeal”).
A declaratory-judgment action does not give a court jurisdiction “to pass upon
hypothetical or contingent situations, or to determine questions not then essential
to the decision of an actual controversy, although such questions may in the future
require adjudication.” Bexar Metro. Water Dist. v. City of Bulverde, 234 S.W.3d
126, 130–31 (Tex. App.—Austin 2007, no pet.).
In Freedom Communications, Inc. v. Coronado, the defendant filed a
petition for review in the Texas Supreme Court and appended to its brief a copy of
an agreement filed in a United States District Court in another case. 372 S.W.3d
621, 623 (Tex. 2012). The agreement showed that the Texas trial court judge had
pleaded guilty to federal racketeering charges and admitted that he had accepted
cash for making rulings favorable to the plaintiffs, including denying the
defendant’s summary-judgment motion in the case before the supreme court. Id.
After determining that the trial court judge was disqualified and his summary-
judgment ruling was void, the supreme court held that the court of appeals lacked
jurisdiction over the appeal from that ruling. Id. at 624. And because the case
became moot before the appellate court’s opinion had issued, the supreme court
vacated the court of appeals’ judgment and opinion. Id. (citing Valley Baptist Med.
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Ctr. v. Gonzalez, 33 S.W.3d 821, 822 (Tex. 2000) (vacating judgment and opinion
of court of appeals as advisory because case became moot before opinion issued)).
Here, Steadfast has provided proof to this Court of the federal district court’s
order and the parties’ Stipulation, and it has requested that this Court take judicial
notice of the facts therein, which are relevant to this Court’s jurisdiction over the
appeal. See id. at 623; see also TEX. R. EVID. 201 (noting court may take judicial
notice at any stage of proceedings). The only issue in the appeal was whether
Steadfast was required to provide coverage for the punitive damages awarded
against Tesco. Because the federal district court’s June 19, 2014 judgment
vacating the jury’s punitive damages award rendered moot the issue of coverage
for those punitive damages, a controversy ceased to exist thereafter and this Court
lacked jurisdiction to issue its August 28, 2014 opinion and judgment. See
Coronado, 372 S.W.3d at 623–24.
Tesco argues that we “should preserve the opinion and judgment and deny
Steadfast’s Motion” because there exists “a live controversy on the issue of the
award of attorney’s fees [for Tesco] in the declaratory action, which still must be
decided on remand.”
“A case is not rendered moot simply because some of the issues become
moot during the appellate process.” In re Kellogg Brown & Root, Inc., 166 S.W.3d
732, 737 (Tex. 2005). To support its position, Tesco relies on Hallman, in which
7
the Texas Supreme Court reaffirmed that a dispute over attorneys’ fees in a
declaratory-judgment action remains a “live controversy,” even if the substance of
the case becomes moot during its pendency. 159 S.W.3d at 642. There, Hallman
had been sued for property damage, and her liability insurer, Allstate, provided her
with a defense under a reservation of rights. Id. at 641. However, Allstate
commenced a declaratory-judgment action against Hallman, contesting coverage of
the property-damage claim. Id. The trial court granted summary judgment for
Allstate and denied both parties their attorneys’ fees. Id. at 642. The Dallas Court
of Appeals reversed, holding that the claim was covered, and it remanded the
attorney’s fees issue to the trial court. Id. During oral argument in the Texas
Supreme Court, the parties announced that the underlying property-damage case
had concluded with a jury verdict in Hallman’s favor and Allstate had disclaimed
any intention of seeking to recoup from Hallman its costs of defending the
underlying case. Id. Regardless, both parties argued that a justiciable controversy
remained because Hallman had continued to seek attorney’s fees. Id. The supreme
court held that Hallman’s continuing claim for attorney’s fees kept the case from
becoming moot. Id. at 643 (“Hallman’s remaining interest in obtaining attorney’s
fees ‘breathes life’ into this appeal and prevents it from being moot.”).
Accordingly, the court proceeded to decide the merits of the coverage question
because of the “live” issue of attorney’s fees. Id. at 643–45.
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In further support of its argument, Tesco relies on Williamson Consolidated
I, Ltd. v. TIC Ins. Co., 230 S.W.3d 895 (Tex. App.—Houston [14th Dist.] 2007, no
pet.). In Williamson, the Fourteenth Court of Appeals held that the duty-to-defend
issue before it was not moot because the insured was “appealing the trial court’s
denial of its request for Chapter 37 attorney’s fees.” Id. at 901.
Here, although Tesco, in its petition, requested attorney’s fees in connection
with its declaratory-judgment action, it did not request attorney’s fees in its motion
for partial summary-judgment, the trial court’s summary judgment in the
declaratory-judgment action does not mention attorney’s fees, and Tesco did not
appeal any denial of attorney’s fees to this Court. In its brief on appeal, Tesco
asserted that it
moved for partial summary judgment leaving aside, for the time
being, the issue of an award of attorney[’]s fees under the
Declaratory Judgment Act. Upon reversal of the judgment in favor of
Steadfast, and the granting of judgment in favor of Tesco, it will be
necessary to remand this case to the Trial Court for a determination of
the amount of attorney[’]s fees to be awarded Tesco for the
prosecution of this declaratory action.
(Emphasis added.) Thus, there is not a live issue as to attorney’s fees in this case.
See Farmers Tex. Cnty. Mut. Ins. Co. v. Griffin, 868 S.W.2d 861, 870 (Tex.
App.—Dallas 1993, writ denied) (declining to consider or remand request for
attorney’s fees in declaratory-judgment action because defendant “did not present a
9
point of error attacking the trial court’s order denying . . . attorney’s fees”).
Rather, Tesco seeks to initiate an issue of attorney’s fees on remand.
Accordingly, we hold that this case has become moot. See Heckman v.
Williamson Cnty., 369 S.W.3d 137, 162 (Tex. 2012) (“If a case is or becomes
moot, the court must vacate any order or judgment previously issued and dismiss
the case for want of jurisdiction.”); Speer v. Presbyterian Children’s Home & Serv.
Agency, 847 S.W.2d 227, 228 (Tex. 1993) (vacating judgment of court of appeals
and trial court, and dismissing case as moot).
Conclusion
We vacate the judgment of the trial court and dismiss this case for want of
jurisdiction.
Terry Jennings
Justice
Panel consists of Justices Jennings and Higley. 4
4
The Honorable Jim Sharp, former Justice of this Court, was a member of the Panel
and present for argument when this case was submitted. Because his term expired
on December 31, 2014, he did not participate in the decision of the case. See TEX.
R. APP. P. 41.1(b).
10