COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
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MARGARITA LEYVA, No. 08-09-00166-CV
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Appellant, Appeal from
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v. 109th District Court
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ACE AMERICAN INSURANCE of Andrews County, Texas
COMPANY, §
(TC # 17,693)
Appellee. §
OPINION
Margarita Leyva appeals from a summary judgment granted in favor of Ace American
Insurance Company. We affirm in part and reverse and remand in part.
FACTUAL SUMMARY
Leyva’s petition alleges that she was employed by Snelling Professional Staffing in May
2006 and was assigned to work for The Scott Fetzer Company d/b/a Kirby Company. Leyva suffered
an on-the-job injury to her wrist when she slipped and fell at Fetzer. She sued Fetzer alleging it
failed to provide a safe workplace and she sought her medical expenses among other types of
damages. Additionally, she sued the workers’ compensation insurance carrier, Ace American
Insurance Company, complaining that it failed to “provide information for the claim as required by
the Texas Workers’ Compensation Act1 and Rules.” She further alleged that “[t]hese violations of
the insurance code amount to statutory bad faith.” Leyva also sought a declaration that Ace
American had waived its subrogation interest by failing to provide information as to the amount of
1
T EX .L AB .C O D E A N N . §§ 401.001-408.222 (Vernon 2006 & Vernon Supp. 2009).
its lien when timely requested. Ace American filed special exceptions, affirmative defenses, and an
answer. It also filed a motion for summary judgment on the ground that there is no statutory bad
faith cause of action for failing to provide information about the claim. The trial court granted the
motion for summary judgment and entered a take-nothing judgment in favor of Ace American.
STANDARD OF REVIEW
The standard of review for traditional summary judgment under TEX .R.CIV .P. 166a(c) is well
established. Nixon v. Mr. Property Management Company, Inc., 690 S.W.2d 546, 548 (Tex. 1985).
The moving party carries the burden of showing there is no genuine issue of material fact and it is
entitled to judgment as a matter of law. Diversicare General Partner, Inc. v. Rubio, 185 S.W.3d
842, 846 (Tex. 2005); Browning v. Prostok, 165 S.W.3d 336, 344 (Tex. 2005). Evidence favorable
to the non-movant will be taken as true in deciding whether there is a disputed issue of material fact.
Fort Worth Osteopathic Hospital, Inc. v. Reese, 148 S.W.3d 94, 99 (Tex. 2004). All reasonable
inferences, including any doubts, must be resolved in favor of the non-movant. Id. A defendant is
entitled to summary judgment if the evidence disproves as a matter of law at least one element of
each of the plaintiff’s causes of action or if it conclusively establishes all elements of an affirmative
defense. D. Houston, Inc. v. Love, 92 S.W.3d 450, 454 (Tex. 2002); Randall’s Food Markets, Inc.
v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995). Once the defendant establishes a right to summary
judgment as a matter of law, the burden shifts to the plaintiff to present evidence raising a genuine
issue of material fact. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 678-79
(Tex. 1979); Scown v. Neie, 225 S.W.3d 303, 307 (Tex.App.--El Paso 2006, pet. denied).
STATUTORY BAD FAITH
In Point of Error One, Leyva contends that the trial court erred by granting summary
judgment because it constitutes a general demurrer which is prohibited by Texas law. Citing Texas
Department of Corrections v. Herring, 513 S.W.2d 6 (Tex. 1974), Leyva argues that Ace American
should have first obtained a ruling on its special exceptions and she should have been given an
opportunity to amend her pleadings before the trial court granted the motion for summary judgment.
In Herring, the Texas Supreme Court held that special exception, not summary judgment,
is the proper procedure to utilize when the plaintiff has failed to state a cause of action. Id. at 10.
The trial court may dismiss a case when special exceptions are sustained, the plaintiff is given an
opportunity to amend, and the plaintiff still fails to state cause of action. Id. But the court
recognized that a party may plead himself out of court by stating facts which affirmatively negate
her cause of action. Id. at 9. In such a case, it is proper to grant the defendant’s motion for
summary judgment. Id. Likewise, if the facts alleged by the plaintiff establish the absence of a
cause of action or an insuperable barrier to a right of recovery, summary judgment may be granted
without allowing the plaintiff to amend her petition. See Swilley v. Hughes, 488 S.W.2d 64, 67 (Tex.
1972).
Ace American moved for summary judgment on the ground that there is no statutory bad
faith cause of action for failing to provide information related to the claim. Leyva alleged that Ace
American had failed to provide information regarding the claim as required by the Texas Workers’
Compensation Act and “these violations” of the Insurance Code amounted to statutory bad faith, but
she did not identify the particular sections of either the Workers’ Compensation Act or the Insurance
Code upon which she relied. It is not clear from the face of the petition what information Ace
American allegedly failed to provide, but Ace American maintains that the information sought by
Leyva would establish the amount of its workers’ compensation lien. We will first examine Chapter
417 of the Labor Code which governs third-party liability in workers’ compensation cases to
determine whether it provides any basis for Leyva’s statutory bad faith claim.
Under Section 417.001, an employee may seek damages from a third party who is or becomes
liable to pay damages for an injury or death that is compensable under the Act and the employee may
also pursue a claim for workers’ compensation benefits. TEX .LAB.CODE ANN . § 417.001(a)(Vernon
2006). A workers’ compensation carrier is subrogated to the rights of the injured employee for any
benefits paid by the carrier. TEX . LAB.CODE ANN . § 417.001(b). The carrier’s subrogation interest
is limited to the amount of total benefits paid or assumed by the carrier to the employee, less the
amount by which the court reduces the judgment based on the percentage of responsibility
attributable to the employer. TEX .LAB.CODE ANN . § 417.001(b). This right creates a lien in favor
of the carrier in the amount it has paid to an employee out of the first money recovered from the
third-party tortfeasor. See TEX.LAB.CODE ANN . § 417.002; Texas Workers’ Compensation Insurance
Fund v. Alcorta, 989 S.W.2d 849, 851 (Tex.App.--San Antonio 1999, no pet.). The purpose of the
subrogation statute is to prevent overcompensation to the employee and to reduce the burden of
insurance to the employer and to the public. Erivas v. State Farm Mutual Automobile Insurance
Company, 141 S.W.3d 671, 676 (Tex.App.--El Paso 2004, no pet.); see Capitol Aggregates, Inc. v.
Great American Insurance Company, 408 S.W.2d 922, 924 (Tex. 1966)(stating purpose of the
predecessor statute to Section 417.001). We have found nothing in Chapter 417 which imposes a
duty on Ace American to provide information about the claim in connection with its subrogation
interest. Further, we find no basis in Chapter 417 for a statutory bad faith cause of action for failure
to provide such information.
Leyva’s petition also complains that Ace American’s failure to provide information violated
provisions of the Insurance Code. Chapter 541 of the Insurance Code addresses deceptive, unfair,
and prohibited practices. TEX .INS.CODE ANN . §§ 541.001-541.454 (Vernon 2009 & Vernon Supp.
2009). A person is prohibited from engaging in a trade practice that is defined in Chapter 541 or
determined to be an unfair method of competition or an unfair or deceptive act or practice in the
business of insurance. TEX .INS.CODE ANN . § 541.003. Section 541.151 authorizes a person to bring
a private cause of action for damages caused by another person engaging in an act or practice (1)
defined by Subchapter B2 to be an unfair method of competition or an unfair or deceptive act or
practice in the business of insurance, or (2) specifically enumerated in Section 17.46(b) of the
Business and Commerce Code as an unlawful practice if the person bringing the action shows that
the person relied on the act or practice to the person’s detriment. TEX .INS.CODE ANN . § 541.151(1),
(2).
Section 541.060 provides that it is an unfair method of competition or an unfair or deceptive
act or practice in the business of insurance to engage in any of nine categories of unfair settlement
practices defined by the statute. TEX .INS.CODE ANN . § 541.060. The nine categories include (1)
misrepresenting to a claimant a material fact or policy provision relating to coverage at issue; (2)
failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim where
the insurer’s liability has become reasonably clear; (3) failing to promptly provide to a policyholder
a reasonable explanation of the basis in the policy for the insurer’s denial of a claim or offer of
compromise settlement; (4) failing within a reasonable time to affirm or deny coverage of a claim
or submit a reservation of rights letter; (5) refusing, failing, or unreasonably delaying a settlement
offer under applicable first-party coverage on the basis that other coverage may be available or that
third parties are responsible except as provided in the policy; (6) undertaking to enforce a full and
final release of a claim from a policyholder when only a partial payment has been made unless the
payment is a compromise settlement of a doubtful or disputed claim; (7) refusing to pay a claim
2
Subchapter B defines unfair methods of competition and unfair or deceptive acts or practices. T EX .I N S .C O DE
A N N . §§ 541.051-.061.
without conducting a reasonable investigation; (8) with respect to a Texas personal automobile
insurance policy, delaying or refusing settlement of a claim solely because there is other insurance
of a different kind available to satisfy all or part of the loss; and (9) requiring a claimant as a
condition of settling a claim to produce the claimant’s federal income tax returns for examination
or investigation except in certain circumstances. TEX .INS.CODE ANN . § 541.060. None of these
sections imposes a duty on Ace American to “provide information for the claim.” Thus, Leyva’s
claim for statutory bad faith does not fall within any of these categories.
Section 541.061 provides that it is an unfair method of competition or an unfair or deceptive
act or practice in the business of insurance to misrepresent an insurance policy by (1) making an
untrue statement of material fact; (2) failing to state a material fact necessary to make other
statements made not misleading, (3) making a statement in a manner that would mislead a reasonably
prudent person to a false conclusion of a material fact; (4) making a material misrepresentation of
law; or (5) failing to disclose a matter required by law to be disclosed, including failing to make a
disclosure in accordance with another provision of the Insurance Code. TEX .INS.CODE ANN . §
541.061. Section 541.061 is inapplicable because Leyva’s bad faith claim is not based on
misrepresentation of an insurance policy.
Ace American established that neither the Workers’ Compensation Act or the Insurance Code
recognizes a statutory bad faith cause of action for a carrier’s failure to provide information
regarding its subrogation interest. Leyva cannot cure the defect in her petition by amendment.
Consequently, the trial court did not err by granting summary judgment on the sole ground raised
in the summary judgment motion. Point of Error One is overruled.
SUMMARY JUDGMENT
GRANTED MORE RELIEF THAN REQUESTED
In Point of Error Two, Leyva argues that the trial court erred by granting final summary
judgment on her cause of action seeking a declaration because Ace did not move for summary
judgment on that claim. Prior to granting Ace American’s summary judgment motion, the trial court
severed Leyva’s claim against Ace American from her claim against Fetzer. The trial court’s
summary judgment purports to be a final judgment. It grants Ace American’s motion for “final
summary judgment” and orders that Leyva take nothing from Ace American. A clause stating that
the plaintiff takes nothing against the defendant is the functional equivalent of a Mother Hubbard
clause. Bandera Electric Cooperative, Inc. v. Gilchrist, 946 S.W.2d 336, 336 n.1 (Tex. 1997)(per
curiam). Additionally, the judgment recites that all relief not expressly granted is denied. Thus, the
trial court’s judgment effectively granted a take-nothing judgment with respect to Leyva’s request
for a declaration.
A summary judgment motion must state the specific grounds on which relief is sought.
TEX .R.CIV .P. 166a(c). Further, the motion for summary judgment must “stand or fall on the grounds
expressly presented in the motion.” McConnell v. Southside Independent School District, 858
S.W.2d 337, 341 (Tex. 1993). If summary judgment on one claim is proper, but the summary
judgment order grants more relief than the movant requests, we must reverse the summary judgment
in part and remand the claims not addressed in the summary judgment motion. See Bandera Electric
Cooperative, 946 S.W.2d at 336; Postive Feed, Inc. v. Guthmann, 4 S.W.3d 879, 881 (Tex.App.--
Houston [1st Dist.] 1999, no pet.).
Ace American’s summary judgment motion did not address Leyva’s claim seeking a
declaration that Ace American had waived its subrogation interest by failing to provide information
as to the amount of their lien when timely requested. The trial court erred by granting more relief
than the summary judgment motion requested. We therefore sustain Point of Error Two, reverse that
portion of the summary judgment granting judgment on this claim, and remand for further
proceedings. We affirm the summary judgment granted in favor of Ace American on Leyva’s
statutory bad faith action.
August 31, 2010
ANN CRAWFORD McCLURE, Justice
Before Chew, C.J., McClure, and Rivera, JJ.