in Re Geico Insurance Company

ACCEPTED
14-15-00746-CV
FOURTEENTH COURT OF APPEALS
HOUSTON, TEXAS
9/25/2015 3:28:36 PM
CHRISTOPHER PRINE
CLERK

NO. 14-15-00746-CV

__________________________________________________________________
FILED IN
14th COURT OF APPEALS
HOUSTON, TEXAS
IN THE COURT OF APPEALS 9/25/2015 3:28:36 PM
FOR THE FOURTEENTH JUDICIAL DISTRICT OF TEXAS A. PRINE
CHRISTOPHER
HOUSTON, TEXAS Clerk
__________________________________________________________________

IN RE GEICO INSURANCE COMPANY,
RELATOR
__________________________________________________________________

ORIGINAL PROCEEDING FROM CAUSE NO. 2013-50259-A
IN THE 152nd JUDICIAL DISTRICT COURT OF HARRIS COUNTY,
HOUSTON, TEXAS
THE HONORABLE ROBERT SCHAFFER PRESIDING
__________________________________________________________________

RELATOR’S LETTER BRIEF

Scott Benjamin Novak
SBN: 24051124
Phil C. Summers
SBN: 19506600
LORANCE & THOMPSON, P.C.
2900 North Loop West, Suite 500
Houston, Texas 77092
Telephone: 713/868-5560
Fax: 713/864-4671
sbn@lorancethompson.com
ATTORNEYS FOR RELATOR

RELATOR REQUESTS EMERGENCY RELIEF IN THE FORM OF A
STAY OF DISCOVERY AND PENDING DISPOSITIVE PROCEEDINGS

RELATOR REQUESTS ORAL ARGUMENT
 IDENTITY OF PARTIES AND COUNSEL

Pursuant to TEX. R. APP. P. 52.3 (a), the following is a list of all parties and the

names and addresses of all counsel:

1. Counsel for Relator: Relator

Scott Benjamin Novak GEICO Insurance Company
SBN: 24051124
Phil C. Summers
SBN: 19506600
Lorance & Thompson, P.C.
2900 North Loop West, Suite 500
Houston, Texas 77092
Telephone: 713/868-5560
Fax: 713/864-4671
sbn@lorancethompson.com

2. Respondent:

The Honorable Robert Schaffer
152nd Judicial District Court of Harris County, Texas
201 Caroline
Houston, Texas 77002
Telephone: 713/368-6040
Fax: 713/368-6801
Via court reporter’s email: nalani_callico@justex.net

3. Counsel for Real Parties in Interest: Real Parties in Interest:

Peter J. Clarke Linda Holman
SBN: 00797779
CLARK & ASSOCIATES, PLLC
6001 Savoy Drive, Suite 305
Houston, TX 77036
Telephone: 713/339-3988
pjclarkelaw@yahoo.com

ii
 TABLE OF CONTENTS

IDENTITY OF PARTIES AND COUNSEL ................................................... ii

INDEX OF AUTHORITIES............................................................................. iv

LETTER BRIEF ............................................................................................... 1

BRIEF RESTATEMENT OF RELEVANT PROCEDURAL HISTORY
AND STATEMENT OF POSITION WITH RESPECT TO ISSUES ............. 1

ARGUMENT AND AUTHORITIES ............................................................... 5

A. Was the judgment signed on September 10, 2014 a final
judgment under Lehmann v. Har-Con Corporation, 39 S.W.
3d 191 (Tex. 2001)? .......................................................................... 5

B. If the judgment signed on September 10, 2014 was a final
judgment under Lehmann v. Har-Con Corporation, did it
adjudicate Holman’s breach of contract claim against
GEICO? ............................................................................................. 8

CONCLUSION ................................................................................................. 10

CERTIFICATE OF COMPLIANCE ................................................................ 11

CERTIFICATE OF SERVICE ......................................................................... 12

APPENDIX ....................................................................................................... 13

iii
 INDEX OF AUTHORITIES

Cases

Chessher v. Southwestern Bell Tel. Co., 658 S.W.2d 563, 564(Tex. 1983)
(per curiam). ........................................................................................... 6

Continental Airlines, Inc. v. Kiefer,
920 S.W.2d 274, 276-277 (Tex. 1996) ................................................... 6

In RE: United Fire Lloyds,
327 S.W. 3rd. 250, 256 (Tex. App–San Antonio 2010, original
Proceeding .............................................................................................. 9

Jack B. Anglin Co., v. Tipps,
842 S.W.2d 266, 272 (Tex. 1992) .......................................................... 5

Lehmann v. Har-Con Corporation,
39 S.W.3rd 191, 195, 203 (Tex. 2001) .................................................... 4, 5

Liberty Nat. Fire Ins. Co. v. Akin,
927 S.W.2d 627, 629 (Tex. 1996). ......................................................... 9

Linn v. Arambould,
55 Tex. 611, 617-18 (1881) .................................................................... 5

Mafrige v. Ross,
866 S.W.2d 590 (Tex. 1993) .................................................................. 7

Republic Ins. Co. v. Stoker,
903 S.W.2d 338, 341 (Tex. 1995) .......................................................... 9

Stelter v. Langoria,
687 S. W. 2d 498, 499 (Tex. App.—Houston [14th Dist.] 1985, no writ) 4, 9

S. Main Bank v. Wittig,
909 S.W.2d 243, 244 (Tex. App.—Houston [14th Dist.] 1995, orig.
proceeding) ............................................................................................. 4, 9

iv
U.S. Fire Insurance Company vs. Mallard,
847 S.W. 2nd 668 (Tex. —App. Houston [1st District] 1993, original
proceeding............................................................................................... 9

Young v. Hodde,
682 S.W.2d 236 (Tex. 1984) (per curiam) ............................................. 6

Rules

Tex. R. Civ. P. 329b(d) ..................................................................................... 4, 9

Tex. R. Civ. P. 329b(e) ..................................................................................... 4, 9

v
TO THE HONORABLE COURT OF APPEALS:

As requested by this Court in its Order of September 17, 2015, Relator,

Government Employees Insurance Company (hereinafter “GEICO”), submits this,

its Letter Brief attendant to Relator’s Petition for Writ of Mandamus complaining

of the November 17, 2014 Order granting Linda Holman’s Motion to Lift the

abatement of her extra-contractual claims against GEICO (and the attendant July

10, 2015 Order denial of GEICO’s Motion to Reconsider same) by the Honorable

Robert Schaffer, Presiding Judge of the 152nd Judicial District Court of Harris

County, Texas.

I.

Brief Restatement of Relevant Procedural History and
Statement of Position with Respect to Issues

Relator, GEICO, was a Defendant in a lawsuit pending in the 152nd Judicial

District Court of Harris County, Texas, Cause No. 2013-50259, styled Linda

Holman vs. GEICO Insurance Company. GEICO insured Ms. Holman’s vehicle and

provided underinsured coverage. Linda Holman initially filed a claim against

GEICO related to a January 12, 2012 automobile accident with Crystal MacGrirr

(Cause No. 2013-50259) and attendant to Holman’s underinsured motorist policy.1

She alleged that GIECO was liable on contract and extra-contractual theories based

1
A copy of that Petition is attached to Relator’s Petition for Writ of Mandamus at TAB 3.
1
on GEICO’s alleged failure to settle her claims attendant to the collision with Ms.

MacGrirr. Hollman subsequently added Ms. MacGrirr as a negligence defendant.

On September 13, 2013, GEICO filed its Motion to Sever and Abate

Hollman’s extra-contractual claims from her other claims, which included her

negligence suit against Crystal MacGrirr and her breach of contract suit against

GEICO.2

On June 5, 2014, Judge Robert Schaffer signed an Order severing the extra-

contractual claims brought by Hollman against GEICO and abating discovery;

Hollman’s extra-contractual claims against GEICO were then incorporated into

Cause No. 2013-50259-A. Holman’s negligence and breach of contract claims

persisted under the original matter number - Cause No. 2013-50259. The Trial

Court’s Order of Severance and Abatement states as follows:

The Court, after due and proper notice to all parties, considered

Defendant Government Employees Insurance Company d/b/a

GEICO's Motion to Sever and Abate, and the Court, after reviewing

the pleadings and the evidence and hearing the arguments of counsel,

finds the Motion is well-founded and that the motion should be

GRANTED. It is, therefore,

2
GEICO’s Motion to Sever and Abate is attached to Relator’s Petition for Writ of Mandamus at
TAB 7. A copy is attached hereto as Exhibit A for the Court’s convenience.
2
 ORDERED, ADJUDGED, AND DECREED that Defendant's

Motion to Sever and Abate is hereby GRANTED, and that Plaintiffs'

extra-contractual allegations, which include:

(1) violations of the Texas Insurance Code

(2) violations of the Texas DTPA,

(3) breach of the duty of good faith and fair dealing, and

(4) claims for attorney fees.

as well as the prayer for relief for these claims, are hereby severed

from the original Cause No. 2013-50259; styled Linda Holman v.

GEICO and this Court hereby orders the clerk of the Court to assign

the severed action the separate Cause No. of 2013-50259-A

(hereinafter the "An case).

Defendant will pay for the cost of filing, and to copy the

following documents and include them in the new file:

1. Plaintiffs Original Petition;
2. Defendant's Original Answer; and
3. Defendant's Motion to Sever and Abate and Order

All other relief not expressly granted is hereby denied.3

3
The Trial Court’s Order of Severance and Abatement is attached to Relator’s Petition for Writ
of Mandamus at TAB 5. A copy is attached hereto as Exhibit B for the Court’s convenience.
3
 On September 10, 2014 the Trial Court entered a default judgment against

Crystal MacGrirr in Cause No. 2013-50259.4 It states that said “judgment finally

disposes of all parties and all claims and is appealable.” Hollman did not file

any pleadings extending the Trial Court’s plenary power, which therefore expired

on October 10, 2014.5

After GEICO filed its Petition for Writ of Mandamus, this Court requested

briefing on the following two issues: (a) whether the Judgment of September 10,

2014 was a Final Judgment under Lehmann v. Har-Con Corporation, 39

S.W.3d 191 (Tex. 2001) and, if so, (b) whether that judgment adjudicated

Holman’s breach of contract claim against GEICO. Upon review of the record

and the law, Relator answers in the affirmative as to both of these inquiries and

sets forth the reason for same infra.

4
A copy of the Default Judgment is attached to Relator’s Petition for Writ of Mandamus at TAB
9. A copy is attached hereto as Exhibit C for the Court’s convenience.
5
See TEX. R. CIV. P. 329b(d), (e); Stelter v. Langoria, 687 S.W.2d 498, 499 (Tex. App.—
Houston [14th Dist.] 1985, no writ); cf. S. Main Bank v. Wittig, 909 S.W.2d 243, 244 (Tex.
App.—Houston [14th Dist.] 1995, orig. proceeding).

4
 II.

Arguments and Authorities

A. Was the judgment signed on September 10, 2014 a final judgment under
Lehmann v. Har-Con Corporation, 39 S.W.3d 191 (Tex. 2001)?

A judgment is final for purposes of appeal if it disposes of all pending parties

and claims in the record, except as necessary to carry out the decree. See Jack B.

Anglin Co., v. Tipps, 842 S.W.2d 266, 272 (Tex. 1992); Linn v. Arambould, 55 Tex.

611, 617-18 (1881) (surveying several tests for determining when a judgment is

final). See generally 49 C.J.S. Judgments § 11 (1947); 46 AM. JUR. 2D Judgments §

200-206 (1994). Because the law does not require that a final judgment be in any

particular form, whether a judicial decree is a final judgment must be determined

from its language and the record in the case. Lehmann v. Har-Con Corp., 39 S.W.3d

191, 195 (Tex. 2001). Determination of finality based on these factors is crucial in

assessing the need for post-judgment actions. Id. (“Since timely perfecting appeal (as

well as filing certain post- judgment motions and requests) hangs on a party's making

this determination correctly, certainty is crucial.”).

As iterated by the Supreme Court in Lehman v. Har-Con Corporation, “a

judgment that finally disposes of all remaining parties and claims based on the record

in the case is final regardless of the language.” Id. at 200. As underscored by the

Court and, to avoid confusion, “every final judgment should plainly, explicitly, and

5
specifically dispose of each and every party to the cause, and of each and every

issue therein presented by the pleadings.” Id. at 197.

The language of the judgment – and the record – will control over any

uncertainty. Id. at 200. (“the language of an order or judgment can make it final,

even though it should have been interlocutory, if that language expressly disposes

of all claims and all parties. It is not enough, of course, that the order or judgment

merely use the word "final". The intent to finally dispose of the case must be

unequivocally expressed in the words of the order itself. But if that intent is clear

from the order, then the order is final and appealable, even though the record does

not provide an adequate basis for rendition of judgment.); Continental Airlines,

Inc. v. Kiefer, 920 S.W.2d 274, 276-277 (Tex. 1996).

As advised by the Court in Lehmann v. Har-Con, “A party who is uncertain

whether a judgment is final must err on the side of appealing or risk losing the

right to appeal.” For example, “if a defendant moves for summary judgment on

only one of four claims asserted by the plaintiff, but the trial court renders

judgment that the plaintiff take nothing on all claims asserted, the judgment is final

– erroneous, but final.” Id. at 200 (citing Young v. Hodde, 682 S.W.2d 236 (Tex.

1984) (per curiam); Chessher v. Southwestern Bell Tel. Co., 658 S.W.2d 563, 564

(Tex. 1983) (per curiam)).

6
 Unlike in Mafrige v. Ross, 866 S.W.2d 590 (Tex. 1993) and, subsequently,

Lehmann v. Har-Con, this Court need not tackle an ambiguous Default Judgment

or attempt to unravel “mother Hubbard” language. Rather, the subject Default

Judgment is crystal clear in its finality. While the judgment made the basis of

Lehman did not indicate its finality, the Default Judgment entered in Cause No. of

2013-50259 does.

Finality "must be resolved by a determination of the intention of the court as

gathered from the language of the decree and the record as a whole, aided on

occasion by the conduct of the parties." See Lehmann v. Har-Con at 203 (citing 5

RAY W. MCDONALD, TEXAS CIVIL PRACTICE § 27:4[a], at 7 (John S.

Covell, ed., 1992 ed.)).

In Cause No. 2013-50259, the subject Default Judgment explicitly states that

“[t]his judgment finally disposes of all parties and all claims and is appealable.”6

Neither the record nor the Judgment reflect any intent to retain any matter for further

adjudication. Under the rule articulated by Lehmann v. Har-Con, the Default

Judgment of September 10, 2014 was final as to all parties and claims then pending

under Cause No. 2013-50259. This holds true even though Holman’s Motion for

Default Judgment did not request adjudication of anything other than the

6
See the September 10, 2014 Default Judgment, attached to Relator’s Petition for Writ of
Mandamus at Tab 9, attached hereto as Exhibit C for the Court’s convenience
7
negligence claims against MacGrirr because the ensuing Default Judgment was

nevertheless explicit in its conclusiveness. See Lehmann v. Har-Con at 207.

B. If the judgment signed on September 10, 2014 was a final judgment
under Lehmann v. Har-Con Corporation, did it adjudicate Holman’s
breach of contract claim against GEICO

On September 13, 2013, GEICO moved to sever and abate the extra-

contractual claims brought by Hollman into their own, unique matter.7 By Order of

June 5, 2014, the Trial Court explicitly severed the extra-contractual claims from

Cause No. 2013-50259, ordering the clerk of the Court to assign the severed action

the separate Cause No. of 2013-50259-A.8

GEICO did not request that Holman’s breach of contract claim follow the

extra-contractual claims into the severed action and the Court did not so order.

Axiomatically, Cause Number Cause No. 2013-50259 continued to include not only

the negligence claims against Crystal MacGrirr, but also the breach of contract claim

against GEICO predicating the extra-contractual claims severed into Cause No.

2013-50259-A. Id. When the Trial Court issued its Default Judgment on September

10, 2014 granting Plaintiff’s Motion against MacGrirr, the Judgment of the Court

stated “[t]his judgment finally disposes of all parties and all claims and is

appealable.” See Exhibit B. This finally disposed of all claims and all parties then
7
A copy of GEICO’s Motion to Sever and Abate, attached to Relator’s Petition for Writ of
Mandamus at Tab 7, is attached hereto as Exhibit A for the Court’s convenience.
8
A copy of the Trial Court’s Order for Severance and Abatement, attached to Relator’s Petition
for Writ of Mandamus at Tab 5, is attached hereto as Exhibit B for the Court’s convenience.
8
extant under the original matter, Cause No. 2013-50259, including Holman’s breach

of contract claim against GEICO, which is discrete from the extra-contractual

claims.9

Because Holman never filed any motions or pleadings extending this Court’s

plenary power in Cause No. 2013-50259, it expired on October 10, 2014.10 All post-

judgment and appellate deadlines have, in turn, expired as to Holman’s breach of

contract claim against GEICO, further cementing the finality of the Default Judgment

as to same. After consideration of Lehmann v. Har-Con, the Trial Court’s Default

Judgment of September 10, 2014 and the record as a whole, it is clear that the

Default Judgment did, in fact, adjudicate Holman’s breach of contract claim

against GEICO to finality.

9
“A breach of an insurance contract claim is separate and distinct from bad faith, insurance code,
or DTP causes of action.” U.S. Fire Insurance Company vs. Mallard 847 S.W. 2nd 668 (Tex.–
App. Houston [1st District] 1993, original proceeding). In RE: United Fire Lloyds 327 S.W. 3rd.
250, 256 (Tex. App–San Antonio 2010, original proceeding) the court held that, “contractual
claims based on an insurance policy and bad faith claims are by their nature independent” Akin
927 S.W. 2nd at 629, but in most circumstances, an insured may not prevail on a bad faith claim
without first showing that the insurer breached the contract.” In most circumstances, an insured
may not prevail on a bad faith claim without first showing that the insurer breached the contract.
Liberty Nat. Fire Ins. Co. v. Akin, 927 S.W.2d 627, 629 (Tex. 1996). There are two exceptions to
this rule: (1) the insurer's failure to timely investigate the insured's claim; or (2) the insurer's
commission of "some act, so extreme, that would cause injury independent of the policy claim."
Republic Ins. Co. v. Stoker, 903 S.W.2d 338, 341 (Tex. 1995). Neither exception applies.
10
See TEX. R. CIV. P. 329b(d), (e); Stelter v. Langoria, 687 S.W.2d 498, 499 (Tex. App.—
Houston [14th Dist.] 1985, no writ); cf. S. Main Bank v. Wittig, 909 S.W.2d 243, 244 (Tex.
App.—Houston [14th Dist.] 1995, orig. proceeding).

9
 III.

Conclusion

In response to this Court’s inquiry as to the finality of the Trial Court’s

September 10, 2014 Default Judgment, Relator would state that the judicial decree

leaves little room for construal - it is plainly final, disposing of all parties and

claims under Cause No. 2013-50259 by its very terms. Based on the procedural

history of Cause No. 2013-50259, with an emphasis on the Trial Court’s Order of

Severance and Abatement, this final judgment necessarily includes Holman’s breach

of contract claim against GEICO, which remained tethered to that cause number.

Respectfully submitted,

LORANCE & THOMPSON, P.C.

/s/ Scott B. Novak
Scott B. Novak
SBN: 24051124
Phil C. Summers
SBN: 19506600
2900 North Loop West, Ste. 500
Houston, TX 77092
713/868-5560
713/864-4671 (fax)
sbn@lorancethompson.com
ATTORNEYS FOR RELATOR
GEICO INSURANCE COMPANY

10
 CERTIFICATE OF COMPLIANCE

Pursuant to Texas Rule of Appellate Procedure 9.4(i)(3), I hereby certify that
this brief contains 2,675 words (excluding the caption, table of contents, table of
authorities, signature, proof of service, certification, and certificate of compliance).
This is a computer-generated document created in Microsoft Word, using 14-point
typeface for all text, except for footnotes which are in 12-point typeface. In making
this certificate of compliance, I am relying on the word count provided by the
software used to prepare the document.

/s/ Scott B. Novak
Scott B. Novak

11
 CERTIFICATE OF SERVICE

This is to certify that a true copy of the foregoing has been sent by e-filing
on this 25th day of September, 2015, to the following:

Respondent:

The Honorable Robert Schaffer
152nd Judicial District Court of Harris County, Texas
201 Caroline
Houston, Texas 77002
Telephone: 713/368-6040
Fax: 713/368-6801
Via court reporter’s email: nalani_callico@justex.net

Counsel for Real Parties in Interest: Real Parties in Interest:

Peter J. Clarke Linda Holman
SBN: 00797779
CLARK & ASSOCIATES, PLLC
6001 Savoy Drive, Suite 305
Houston, TX 77036
Telephone: 713/339-3988
pjclarkelaw@yahoo.com

/s/ Scott B. Novak
Scott B. Novak

12
 NO. 14-15-00746-CV

__________________________________________________________________

IN THE COURT OF APPEALS
FOR THE FOURTEENTH JUDICIAL DISTRICT OF TEXAS
HOUSTON, TEXAS
__________________________________________________________________

IN RE GEICO INSURANCE COMPANY,
RELATOR
__________________________________________________________________

ORIGINAL PROCEEDING FROM CAUSE NO. 2013-50259-A
IN THE 152nd JUDICIAL DISTRICT COURT OF HARRIS COUNTY,
HOUSTON, TEXAS
THE HONORABLE ROBERT SCHAFFER PRESIDING
__________________________________________________________________

APPENDIX

LIST OF DOCUMENTS

Defendant’s Motion to Sever and Abate dated 09/13/13.................................. EX A

Order for Severance and Abatement dated 06/05/14 ........................................ EX B

Default Judgment dated 09/10/14 ..................................................................... EX C

13
EXHIBIT A
 Filed 13 September 13 P4:34
Chris Daniel - District Clerk
Harris County
ED101J017113747
By: adiliani a. solis

CAUSE NO. 2013-50259

LINDA HOLMAN § IN THE DISTRICT COURT OF
§
v. § HARRlSCOUNTY, TEXAS
§
GEICO INSURANCE COMPANY § 152ND JUDICIAL DISTRICT

DEFENDANT'S MOTION TO SEVER AND ABATE

TO THE HONORABLE JUDGE OF SAID COURT:

COME NOW Govenunent Employees Insurance Company, Defendant in the above

malter, and files this Motion to Sever and Abate, pwsuant to Rule 41 of the Texas Rules of Civil

Procedure. In support of this motion, Defendant respectfully shows unto the Court the

following:

I.
Elli!
This lawsuit arises from an automobile accident involving the Plaintiff, Linda Holman,

and a vehicle driven by Crystal MacGrirr. The Plaintiff claims Crystal MacGrirr was negligent,

and that she was an "uninsured motorisf' as that term is defined by law. The Plaintiff seeks

uninsured motorist ("UIM") benefits from Government Employees Insurance Company, the

company which inswed Plaintiffs' vehicle at the time of the accident.

Plaintiff alleges that she sustained injuries as a result of the accident. She seeks damages

for medical expenses in the past and in the futwe. Plaintiff seeks uninsured motorist benefits

from Defendant Government Employees Insurance Company.

Plaintiff alleges in her Original Petition that Defendant engaged in violations of the Texas

Insurance Code, violations of the Texas DTPA, breach of the duty of good faith and fair dealing.

For the reasons set forth below, Defendant is entitled to an Order severing and abating discovery

538580.1 PLD 0004750 9142 pes
on all of the "extra-contractual" claims until there is a legal determination as to the amount of

UM benefits, if any, which are owed to the Plaintiff.

II.
Legal Standard for Severance

Rule 41 of the Texas Rules of Civil Procedure provides that "[a]ny claim against a party

may be severed and proceeded with separately." In McGuire v. Commercial Union Insurance

Co. of NY., 431 S.W.2d 347, 351 (Tex. 1968), the Court held that the rule refers to a claim

"which is a severable part of a controversy which involves more than one cause of action." Id.

The objective of a severance is to do justice, avoid prejudice, and further convenience.

Guarantee Fed v. Horseshoe Operating, 793 S.W.2d 652, 658 (Tex.l990); In re Trinity

Universal Ins. Co., 64 S.W.3d 463, 465 (Tex. App.-Amarillo 2001, orig. proceeding). A claim

is properly severable if (1) the controversy involves more than one cause of action, (2) the

severed claim is one that would be the proper subject of a lawsuit if independently asserted, and

(3) the severed claim is not so interwoven with the remaining action that they involve the same

facts and issues. In re Trinity Universal Ins. Co.,64 S.W.3d at 465.

III.
Discussion

A. Severance is Required Because Plaintiff Has Not Established Entitlement to UM
Benefits

The policy in effect at the time of the accident provides in part:

PART C-UNINSUREDIUNDERINSUERD MOTORISTS COVERAGE

We will pay damages which a covered person is legally entitled to recover from
the owner or operator of an uninsured motor vehicle because of bodily injury
sustained by a covered person, or property damage, caused by an accident.

538580.1 PLD 0004750 9142 pcs
 It is well-settled Texas law that a Plaintiff is not "legally entitled to recover," and no duty

to pay VM/UIM benefits exist, until there is a judicial determination that the tortfeasor was

negligent and that Plaintiffs' damages exceed the insurer's applicable credit. Allstate Ins. Co. v.

Bonner, 51 S.W.3d 289 (Tex. 2001) (holding that because the jury determined that the Plaintiff's

damages were below the applicable credits, the VM carrier owed no duty to pay VM benefits and

because no duty to pay UM benefits ever arose, there could be no violation of Article 21.55);

Henson v. Southern Farm Bureau Cas. Ins. Co., 17 S.W.3d 652 (Tex. 2000) (there is no

obligation to pay VIM benefits until a jury establishes the tortfeasor's liability and determines

that damages exceed the underlying liability limits). OEICO's duty to pay benefits under the

contract is not triggered merely by the insured filing a suit to recover policy benefits. Henson,

17 S.W.3d at 654.

The Supreme Court recently affmned Henson in Brainard vs. Trinity Universal Ins. Co.,

216 S.W.3d 809 (Tex. 2006). In denying a claim for attorney's fees, the Supreme Court again

held there was "no contractual duty to pay benefits until the liability of the other motorist and the

amount of damages suffered by the insured are determined." Brainard, 216 S.W.3d at 815,

citing Henson, 17 S.W.3d at 653-654. The Court ruled in Brainard:

Neither requesting VIM benefits nor filing suit against the insurer triggers a
contractual duty to pay. Where there is no contractual duty to pay, there is no just
amount owed. Thus, under Chapter 38, a claim for VIM benefits is not presented
until the trial court signs a judgment establishing the negligence and underinsured
status of the other motorist.

Id at 818.

The Brainard opinion explains that unlike other insurance contracts, UM insurance

utilizes tort law to determine coverage. "The VIM contract is unique because, according to its

terms, benefits are conditioned upon the insured's legal entitlement to receive damages from a
S38SBO.l PLD 0004750 9142 pes
third party." Id. "Consequently, the insurer's contractual obligation to pay benefits does not

arise until liability and damages are determined." Id, citing Henson, 17 S.W.3d at 654.

Because there is no obligation to pay benefits before liability and damages are

determined, breach of contract and extra-contractual claims cannot accrue until a jury determines

that the Plaintiffs are "legally entitled to recover" UMIUIM benefits. See Wellisch v. United

Servs. Auto Ass 'n, 75 S.W.3d 53, 59 (Tex. App.-San Antonio 2002, pet. denied). The Wellisch

court, addressing an Article 21.55 claim, stated that it is "clear that an insurer is not obligated to

pay UIM benefits until the insured becomes legally entitled to those benefits." Id at 57. This is

because 21.55 is premised on the presumption that carriers have the right to dispute claims and

"nothing in Article 21.55 precludes an insurer from awaiting a judicial determination of an

insured's 'legal entitlement.'" Id. at 57. In short, there can be no "breach" of the UMIUIM

contract and no penalties of any kind can be assessed against the insurer until there is a judicial

determination that the third party was negligent and that the Plaintiffs' damages exceed the

insurer's applicable credits.

The court in In re Trinity Universal Ins. Co. also held that an insurer is entitled to

severance on all of the extra-contractual claims against it. 63 S.W.3d 463. The Trinity court

explained that no extra-contractual claims could accrue (including bad faith claims, Article

21.21, or Article 21.55 claims) until the jury determined that the Plaintiffs were "legally entitled

to recover" from the owner or operator of an uninsured/underinsured motor vehicle. 64 S.W.3d

467. The court concluded that the trial court abused its discretion in severing only some of the

extra-contractual claims. Id

Other Texas courts have held that when UM/UIM claims are combined with extra-

contractual claims (including allegations of bad faith and/or violations of the Texas Insurance
538580.1 PLO 0004150 9142 pes
Code Article 21.21 and/or Article 21.55), a severance is required to avoid undue prejudice to the

insurer in its defense of the coverage dispute. See In re Allstate Ins. Co, 2003 WL 21026877

(Tex. App.-Houston [1 ,t Dist.] 2003, orig. proceeding) (holding that it was an abuse of

discretion not to sever the common law bad faith and the Article 21.21 claims from the VIM

claim); Mid-Century Ins. Co. v. Lerner, 901 S.W.2d 749, 752-53 (Tex. App.-Houston [14th

Dist.] 1995, orig. proceeding) (holding that severance and abatement of extra-contractual claims

is required until all appeals are exhausted for the contractual claims); u.s. Fire Ins Co v. Millard,
847 S.W.2d 668 (Tex. App.-Houston [1 st Dist.] 1993, orig. proceeding) (holding that it was an

abuse of discretion not to sever the extra-contractual claims from the VIM claim); State Farm

Mut. Auto. Ins. Co. v. Wilborn, 835 S.W.2d 260, 261 (Tex. App,-Houston [14 th Dist.] 1992,

orig. proceeding) (holding that the bad faith and Insurance Code claims must be severed from the

VIM claim to avoid prejudice).

B. Discovery Must Be Abated on the Extra-Contractual Claims.

Along with severance, abatement of discovery on the extra-contractual claims is

necessary. Without abatement, Defendants would be unfairly prejudiced by having to conduct

discovery and prepare for trial on claims which are not ripe until the jury has determined whether

UM benefits are owed.

Texas law supports requests for abatement of discovery on the extra-contractual claims.

In United States Fire Insurance v. Millard, Plaintiff filed an action against his uninsured motorist

carrier seeking both uninsured motorist benefits and alleging extra-contractual claims for

violations of the DTPA and the Texas Insurance Code. Millard, 847 S.W.2d 668 (Tex. App.-

Houston [1" Dist.] 1993, rehearing denied). The insurer filed a motion to sever and abate the

extra-contractual claims pending resolution of the underlying claim, which the trial court denied.
538580.1 PLO 0004750 9142 pes
Id. The appellate court, in ordering the trial judge to sever and abate the extra-contractual claims

from the underlying action, specifically noted:

[A]batement of the bad faith claims must necessarily accompany severance of
those claims from the contract claim. Without abatement, the parties will be put
to the effort and expense of conducting discovery and preparing for trial on claims
that may be disposed of in a previous trial.

Millard, 847 S.W.2d at 673.

The majority of cases in Texas hold that when severance occurs, so does abatement. See

e.g. Northwestern Nat. Lloyds Ins. Co. v. Caldwell. 862 S.W.2d 44 (Tex. App.-Houston [14th

Dist.] 1993, orig. proceeding) (compelling the trial court to order abatement of all proceedings

on the bad faith cause of action until final disposition of the underinsured motorist claim); Texas

Farmers Insurance Company v. Stem, 927 S.W.2d 76 (Tex. App.-Waco 1996, orig. proceeding)

(holding that the insurer was prejudiced and therefore entitled to severance and abatement of

extra-contractual claims); Mid-Century Ins. Co. of Texas v. Lerner, 901 S.W.2d 749 (Tex.

App.-Houston [14 th Dist.] 1995, rehearing overruled) (holding that severance and abatement of

extra-contractual claims is required until all appeals are complete for the contractual claims).

As the above cases show, this Court must abate all discovery on the extra-contractual

claims until after the resolution of the UM claim.

IV.
Conclusion

Severance of Plaintiffs' extra-contractual claims should be granted because the claims are

premature until there has been a determination of whether UM benefits are owed by GEICO. In

conjunction with the severance, discovery on the extra-contractual claims must be abated as

required by the multiple Texas appellate court mlings on this issue.

538580.1 PLD 0004750 9142 pcs
 WHEREFORE, PREMISES CONSIDERED, Defendant prays its Motion for Severance

and Abatement be granted; that the UM/car wreck case alone proceed to trial and the extra·

contractual claims be severed; that all discovery not relevant to the UM case be abated until after

resolution of the UM case; and for such other and further relief to which Defendant may show

itselfjustly entitled.

Respectfully submitted,

LO(jfj THOMPSON

By: ~
Phillip C. Summers
TBN: 19506600
2900 North Loop West, Suite 500
Houston, TX 77092
713/868-5560
713/864-4671 (fax)
ATTORNEY FOR DEFENDANT,
GOVERNMENT EMPLOYEES
INSURANCE COMPANY

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing has been served on all
p~~ in accordance with Rules 21 and 21a of the Texas Rules of Civil Procedure, on this
d"y 0"","""", 2<113. ~ •

~R~---

538580.1 PLD 0004750 9142 pcs
 ·.~.".' .. "'.".'""
"""o~ HAIl.t;·····•..
,.
. •". ~ .. ~ ... .... ""'(/.o
' ' ' ".
.... ~ ti····
. ..

:.::sl C!o····
:0:
;" : .c::..
to

·~z:
.... ".

.. . ~ '"
~~\ . 5.""(:
••• ~'. / ·l
... 'J
'Y"" '.• • ......
'. ,/ '"
......
..' ."..c'
"'.~
.
A."7 .•
~l- .

. ··.Qtt~· ··
....." .
I, Chris Daniel, District Clerk of Harris
County, Texas certify that this is a true and
correct copy of the original record filed and or
recorded in my office, electronically or hard
copy, as it appears on this date.
Witness my official hand and seal of office
this September I 2Q15

Certified Document Number: 57302594 Total Pages: 7

Chris Daniel, DISTRICT CLERK
HARRIS COUNTY, TEXAS

In accordance with Texas Government Code 406.013 electronically transmitted authenticated
documents are valid. If there is a qnestion regarding the validity of this document and or seal
please e-mail support@hcdistrictclerk.com
 Filed 13 September 13 P4:34
Chris Daniel· District Clerk
Harris County
ED101J017713747
By: adiliani solis

CAUSE NO. 2013-50259

LINDA HOLMAN § IN THE DISTRICT COURT OF
§
V. § HARRIS COUNTY, T E XA S
§
GEICO INSURANCE COMPANY § 152ND JUDICIAL DISTRICT

ORDER FOR SEVERANCE AND ABATEMENT

The Court, after due and proper notice to all parties, considered Defendant Government

Employees Insurance Company d/b/a GEICO's Motion to Sever and Abate, and the Court, after

reviewing the pleadings and the evidence and hearing the arguments of counsel, finds the Motion

is well-founded and that the motion should be GRANTED. It is, therefore,

ORDERED, ADJUDGED, AND DECREED that Defendant's Motion to Sever and

Abate is hereby GRANTED, and that Plaintiffs' extra-contractual allegations, which include:

(1) violations ofthe Texas Insurance Code,

(2) violations of the Texas DTPA,

(3) breach ofthe duty of good faith and fair dealing, and

(4) claims for attorney fees.

as well as the prayer for relief for these claims, are hereby severed from the original Cause No..

2013-50259; styled Linda Holman v. C;EICa and this Court hereby orders the clerk of the Court

to assign the severed action the separate Cause No. of2013-50259·A (hereinafter the "A" case).
l• Defendant will pay for the cost of filing, and to copy the following documents and
:9
~
r:::
In

j
"I 538580.1 PLO 0004750 9142 pes
o
~8
 include them in the new file:

I. Pla,intiffs Original Petition;
2. Defendant's Original Answer; and
3. Defendant's Motion to Sever and Abate and Order

All other relief not expressly granted is hereby denied.

SIGNED THIS _ DAY OF - ' , 2013.

JUDGE PRESIDING

APPROVED AS TO FORM AND CONTENT:

LORANCE & TIIOMPSON

By: ~Ld
Phillip C. ummers
TEN: 19506600
2900 North Loop West, Suite 500
Houston, 'IX 77092
713/868-5560
713/864-4671 (fax)
ATTORNEY FOR DEFENDANT

N
"0
N

l,
on

~
f:!
on

j
J 538580.1 PLD 0004750 9J42PCS

~a
 ....... " .
•
.+·~. ··O'f, HAR/i'.·····....
o-.~ l"'iiS"... •,
•••••-•• 0 . ,

9:- t i ' " 'b .
.:.:10..
•
:
.(.)
~l
. ....
:-1:
.. . . ~'
.• 60i ~
~~,
",""",0'

.--.,
~ ' ;"to .. .
"---"
"""'I; •
.. ''''-'''!': .. Of ..

\. ~""'.... ....·~ •.l
•••• '<"6): # .
.....,. 0' * <:i ••
••·..~.i ••••,.· ..... ~ •••·•·..•
oft

I, Chris Daniel, District Clerk of Harris
County, Texas certify that this is a true and
correct copy of the original record filed and or
recorded in my office, electronically or hard
copy, as it appears on this date.
Witness my official hand and seal of office
this September I. 2015

Certified Document Number: 57302595 Total Pages: 2

Chris Daniel, DISTRICT CLERK
HARRIS COUNTY, TEXAS

In accordance with Texas Government Code 406.013 electronically transmitted authenticated
documents are valid. If there is a question regardiug the validity of this document and or seal
please e-mail support@hcdistrictclerk.com
EXHIBIT B
 Filed 13 September 13 P4:34
Chris Daniel - District Clerk
Harris County
ED101J017713747
By: adilian; solis

CAUSE NO. 2013-50259

LINDA HOLMAN § IN THE DISTRICT COURT OF
§
V. § HARRIS COUNTY, T E X A S
§
GEICO INSURANCE COMPANY § 152ND JUDICIAL DISTRICT

ORDER FOR SEVERANCE AND ABATEMENT

The Court, after due and proper notice to all parties, considered Defendant Goverrunent

Employees Insurance Company d/b/a GEICO's Motion to Sever and Abate, and the Court, after

reviewing the pleadings and the evidence and hearing the argwnents of counsel, finds the Motion

is well-founded and that the motion should be GRANTED. It is, therefore,

ORDERED, ADJUDGED, AND DECREED that Defendant's Motion to Sever and

Abate is hereby GRANTED, and that Plaintiffs' extra-contractual allegations, which include:

(I) violations of the Texas Insurance Code,

(2) violations of the Texas DTPA,

(3) breach of the duty of good faith and fair dealing, and

(4) claims for attorney fees.

as well as the prayer for relief for these claims, are hereby severed from the original Cause No.

2013-50259; styled Linda Holman v. GEICO and this Court hereby orders the clerk of the Court

N to assign the severed action the separate Cause No. of2013-50259-A (hereinafter the "An case).
"""'o
Defendant will pay for the cost of filing, and to copy the following documents and

538580.1 PLO 0004750 9(42 PeS

RECORDER'S MEMORANDUM
ThiS Lnslrument IS of poor quality
at the lime Ollmagmg
include them in the new file:

I. Plaintiffs Original Petition;
2. Defendant's Original Answer; and
3. Defendant's Motion to Sever and Abate and Order

All other relief not expressly granted is hereby denied.

SIGNEDTffiS DAY OF ..=..JU:=.;.N_O_5_20_\4---,,2013.

APPROVED AS TO FORM AND CONTENT:

LORANCE & THOMPSON

By: ~J,
Phillip C. ummers
1IC1AL ])JSTRICT
§
CRYSTAL MACGIRR ANl) §
GOVERNMENT EMPLOYEES §
lNSURNACE COMPANY §
Defendants. § OF HARRIS COUNTY, TEXAS

DEFAULT Jl.)J)GMENT

At the hearing on this cause, Plainti IT, Linda Holman, appeared and Dcfcndant, Crystal

Macgirr, although duly cited to appear by filing an answer herein, failed to file an answer within

the time ullowed by law and wholly defaulted.

The Court has considered the pleadings and official records on file in this cause and the

evidence and is of the opinion that judgment should be rendered for Plaintiff.

It is accordingly ADJUDGED that Linda Holman, Plaintitf, recover from Crystal

Macgh'l', Defendant, judgment for-

I. On the claim of Negligence, the court finds in favor of Plaintiff, Linda Holman,

against Defendant, Crystal Mcgirr, in the amount of$58, 103.49:

Plaintiffs award includes a finding of:

a. $7,455.49 for reasonable medical care and expenses in the past;
N
=6. $1,§QG,B9 I'm ,eas&ftabl e medical ea~G'!I!la ellfl6A!ltls:tl the R~
-
'0
c. $30,000.00 for physical pain and suffering in the past;

d. $10,000.00 for physical pain and suiTering in the future;

e. $7,500.00 for mcntulunguish in the past;

f. $1,000.00 for mental anguish in the future; and

RECORDER'S MEMORANDUM
ThIS instrumenl \5 of po~r quality
at the time of ImagIng
• •

g. $648,00 for lost wages in the past.

2. Plaintiff, Linda Holman, is entitled to pre-jUdgl~~:terest on the damages

awarded herein, measured from December 13,2014, at the rate of ~per annum.

3. Plaintiff, Linda Holman, is entitled to post-judgment interest on the total amount

of the judgment and any pre-judgment interest.awarded hereinabove, at the rate of ~, per
2'?0
annum fi'om the date this judgment is signed until paid.
,
4. Cost are hereby taxed against Defendant.

IT IS ORDERED that Plaintiff, Linda Holman, is entitled to enrorce this judgment

through abstract, execution and any other process necessary.

This judgment finally disposes of all parties and all claims and is appealable.

SIGNED on SEP, 10 ~9A~4.

~~
JUDGE PRESIDING

APPROVED AS TO FORM:

lsI Peter 1. Clarke
Peter J. Clarke
Texas Bar No. 00797779
Errol A. Jones
Texas Bar No. 24070019
6001 Savoy Drive
Suite 305
Houston, TX 77036
Tel. (713) 339-3988
Fax. (713) 339-4669
Attorneys for Plaintiff Linda Holman

2
 · " .

. S-'u"
..~~··. ·o~
".~=, ,"
..." i'J..,
: 0 .."
:
" ',...
, :..
.. ....., ..
~ ':':.. \
~ ~
••.. ".::i.
•••

'.
~
.
HAR/?:"·"·.••

.

'"
~ '"...
-'I.""
.." '",",,:'"
\

::
,.' ~.'
•
c:::.
0·' :
.~...,..
.
5 -<:
.~,
'"

\J"': ".
'........,,;to "#'
. ...
..A..,

,j *
•... : J'
~.ft· . .'
~
........ "
, .
I, Chris Daniel, District Clerk of Harris
County, Texas certify that this is a true and
correct copy of the original record filed and or
recorded in my office, electronically or hard
copy, as it appears on this date.
Witness my official hand and seal of office
this September 1 2015

Certified Document Number: 62294446 Total Pages: 2

Chris Daniel, DISTRICT CLERK
HARRIS COUNTY, TEXAS

In accordance with Texas Government Code 406.013 electronically transmitted authenticated
documents are valid, If there is a question regarding the validity of this document and or seal
please e-mail support@hcdistrictclerk.com