Garcia v. American Physicians Insurance Exchange

OPINION

CARR, Justice.

This is an appeal from a judgment rendered in favor of the insured against the insurer in a Stowers1 doctrine case. Based on the jury’s findings, the insured elected to have judgment entered in accordance with the Texas Insurance Code.

Dr. Ramon A. Garcia was defendant in a medical malpractice suit styled Cardenas v. Garcia. Following an adverse judgment in that suit, he sued his malpractice carriers, American Physicians Insurance Group (APIE), American Physicians Service Group, Inc. (APSG) and Insurance Corporation of America (ICA) for their failure to properly settle, defend and provide him coverage. He alleged that the defendants’ negligence, bad faith, deceptive trade practices and Insurance Code violations caused a judgment against him in the malpractice case in excess of his policy limits.

ICA made a $2,000,000.00 payment prior to trial of the present suit and was released. Judgment was entered against APIE and APSG for $1,331,574.00. Dr. Garcia, APIE and APSG2 have appealed.

Dr. Garcia was insured by ICA and APIE during the period he treated Cardenas, plaintiff in the malpractice suit.3 His treatment of Cardenas began in September of 1980 and continued through January 18, 1983. Dr. Garcia was covered in 1980 by an ICA policy with a $100,000.00 limit of liability. In 1981 and 1982 he was covered by two separate ICA policies with limits of $500,000.00. His coverage by APIE began on January 8, 1983. The policy limit was $500,000.00 per occurrence. Cardenas filed the malpractice action in 1984. In March of 1984, ICA and APIE agreed to share equally the costs of defending the suit and to divide the costs of any settlement or verdict in proportion to the amounts of their coverage. Ross Crossland was hired as the lead attorney in Dr. Garcia’s defense and was paid by the two carriers. Dr. Garcia’s personal attorney, Clem Lyons, also assisted in his defense. James Williams and Kenneth Patterson were *28hired by APIE to monitor the litigation on its behalf.4

Trial of Cardenas v. Garcia began on July 29, 1985. However, on July 24, 1985, APIE notified Dr. Garcia and the various attorneys involved that it would not provide coverage because the plaintiff’s pleadings then on file did not allege any acts of negligence that occurred during the APIE policy period. The letter stated that APIE was advising Lyons and ICA to continue to provide Dr. Garcia with coverage and a defense. APIE continued to pay half the costs of defending the suit until August 13, 1985.

On July 29, 1985, Cardenas filed a Sixth Amended Original Petition to allege acts of negligence occurring in 1983 during APIE’s coverage. APIE was given the opportunity to re-enter the lawsuit but declined to do so. See American Physicians Ins. Exch. v. Cardenas, 717 S.W.2d 707, 708 (Tex.App.—San Antonio 1986, writ ref’d n.r.e.). On the same day Dr. Garcia, Cardenas and their attorneys entered into an “Assignment of Interest in Cause of Action and Agreement Designating Assets Subject to Execution,” (the “Non-Execution Agreement”) whereby Cardenas agreed to look only to the proceeds of the insurance policies for satisfaction of any judgment that might be entered and to indemnify Dr. Garcia for any amount of judgment rendered in excess of the amounts actually collected from ICA and APIE. In return, Dr. Garcia assigned to Cardenas and his attorneys all of his claims and causes of action against the carriers arising out of the handling of Cardenas’ claims against him.

Trial of Cardenas v. Garcia was to the court which found that Dr. Garcia had committed acts of negligence within the period of time he was insured by APIE and ICA. Judgment was rendered against Dr. Garcia on August 30, 1985 in the amount of $2,235,483.30, plus costs of court and pre- and post-judgment interest.

The suit now on appeal was filed by Dr. Garcia against ICA, APIE and APSG on August 8, 1985. He alleged they (1) were negligent in mishandling his defense in Cardenas v. Garcia; (2) breached the insurance contracts by abandoning his defense and failing to investigate, negotiate and settle the suit; (3) engaged in false, misleading and deceptive acts in violation of the Deceptive Trade Practices Act; (4) engaged in unfair and deceptive acts or practices in violation of the Insurance Code; and (5) breached a fiduciary duty and the covenant of good faith and fair dealing. APIE sought indemnity and con-, tribution from ICA.

Two agreements were entered prior to the trial of the second case. In the first, dated May 1, 1986, ICA paid $2,000,000.00 to Cardenas, Dr. Garcia and their attorneys for a full release and settlement of all claims against it arising out of the occurrences alleged in both lawsuits (the “Release”). In the second agreement, entitled “Partial Settlement Agreement” and dated May 5, 1987, APIE and APSG paid Dr. Garcia and his attorneys $500,000.00 in exchange for their agreement to a six-month continuance and for a release of any judgment against them in excess of $2.5 million.

On November 9, 1987, the case went to trial. The jury returned a verdict favorable to Dr. Garcia on each of his theories of recovery. The jury found (1) APIE was negligent in its attempts, if any, to settle Dr. Garcia’s case prior to September 30, 1985, (2) APIE failed to provide coverage to Dr. Garcia after Cardenas’ Sixth Amended Original Petition was filed, and (3) APIE failed to defend Dr. Garcia at the trial of the Cardenas case. The jury further found that each of these acts was (1) negligent, (2) a heedless and reckless disregard of Dr. Garcia’s rights, (3) an unfair practice in the business of insurance, (4) an unconscionable action or course of action, (5) the proximate cause of damage to Dr. Garcia, *29and (6) done knowingly. The jury found that the failures to defend and to provide coverage were “false, misleading or deceptive acts or practices."

Regarding ICA, the jury found that its failure to settle the Cardenas case prior to September 30, 1985 constituted negligence, a heedless and reckless disregard of Dr. Garcia’s rights, an unfair practice in the business of insurance, a failure knowingly done, an unconscionable action or course of action, and that these were proximate causes of damage to Dr. Garcia.

The jury also found that Cardenas’ sixth amended petition alleged separate and distinct acts of negligence committed by Dr. Garcia during APIE’s period of coverage, and that 16 percent of the damages found by the court in Cardenas v. Garcia were proximately caused by those acts and omissions. It also found that ICA caused 84 percent of Dr. Garcia’s damages in Garcia v. APIE, while APIE caused 16 percent of those damages.

Finally, the jury found that Dr. Garcia had sustained damages of $2,235,000.00, that $250,000.00 in exemplary damages and $250,000.00 in “additional” damages should be assessed against APIE, and that Dr. Garcia should be awarded attorney’s fees of $820,500.00.

Dr. Garcia elected to have judgment entered on the jury findings that APIE and APSG had violated the Insurance Code. The trial court entered judgment against APIE and APSG, jointly and severally, in the amount of $1,331,574.00 plus post-judgment interest at the rate of ten percent per annum.

Dr. Garcia’s only point of error is that the trial court erroneously calculated his damages. He would calculate them as follows:

$2,235,000.00 - actual damages as found by jury

+ 552,452.10 - interest on Cardenas v. Garcia judgment to signing of present judgment

- 500,000.00 - amount paid by APIE in Partial Settlement Agreement

$2,287,452.10 - amount to be trebled5

X 3

$6,862,356.30 - damages

+ 820,500.00 - attorney’s fees awarded by jury

$7,682,856.30 Dr. Garcia’s damages

APIE contends that Dr. Garcia is not entitled to any amount because (1) the underlying judgment has already been paid in full, by way of ICA’s payment of $2,000,-000.00 for release in both cases and APIE’s payment of $500,000.00 for the partial settlement agreement in the second suit, (2) the two carriers are not jointly and severally liable and APIE has paid more than its proportionate share, and (3) to pay more than $500,000 would violate the Partial Settlement Agreement. APIE has filed a total of 11 cross-points.

CORRECT MEASURE OF DAMAGES IN GARCIA V. APIE

APIE argues that the actual damages in Garda v. APIE could only be the amount of the excess of the Cardenas v. Garcia judgment over the applicable policy limits. Allstate Ins. Co. v. Kelly, 680 S.W.2d 595, 606 (Tex.App. — Tyler 1984, *30writ ref’d n.r.e.). The amount of the -Cardenas v. Garcia judgment was $2,235,-483.30. It is undisputed that the applicable policy limits in Cardenas v. Garcia were $1,100,000.00 for ICA and $500,000.00 for APIE, totalling $1,600,000.00. The amount of actual damages found by the jury in Garcia v. APIE is $2,235,000.00, the approximate amount asked for by Dr. Garcia’s attorney.

In Kelly, the court held:

$2,235,483.30 - Amount of final judg snt in Cardenas v. Garcia

-1,600,000.00 - Applicable policy limil of APIE and ICA

In this case no actual damage issue was required to be submitted because the actual damages sustained by the Alves under each cause of action asserted herein were fixed as a matter of law in the amount of the excess judgment rendered against her in favor of Kelly over the applicable policy limits in Allstate’s policy.

680 S.W.2d at 606. Applying Kelly to the facts of our case we find that the correct measure of damages is:

$ 635,483.30 - Measure of damages in Garcia v. APIE

The actual damages sustained by Dr. Garcia in Garcia v. APIE were established as a matter of law in the amount of the excess judgment rendered against him in Cardenas v. Garcia over the applicable policy limits. Kelly, 680 S.W.2d at 606. The only issue in the second suit was causation, which was established against APIE.

WHETHER THE JUDGMENT HAS BEEN PAID

One of the primary points of contention in this appeal is whether APIE’s liability on the Garcia v. APIE judgment has been discharged. APIE points out that it and ICA have already paid Dr. Garcia $2,500,-000.00 by way of the Release and the Partial Settlement Agreement. It argues that this $2,500,000.00 is more than the judgment in Cardenas v. Garcia.

APIE’s argument is based on the assumption that a post-judgment offer of the amount of judgment in the first suit will discharge an insurer of liability under the Insurance Code.

A belated attempt to offer policy limits will not always absolve a carrier of its prior negligence in refusing to settle. Such a policy could encourage the insurer

to gamble with the insured’s money in the hope of saving some of its own. When it becomes apparent that the gamble has failed and that the case will be tried, the insurer could avoid liability for the excess simply by offering its policy limits in judgment. Such is not the law.

Howard v. State Farm Mut. Auto. Liab. Ins. Co., 70 Wis.2d 985, 236 N.W.2d 643, 648 (1975). Nor is it the law that an insurance company may sit back and allow an excess judgment to be taken against its insured and then offer to pay the excess judgment and thereby escape liability for statutory damages under article 21.21. When the tort alleged is failure to settle, the insurance company’s breach occurs at the time of the rejection of a reasonable settlement offer. Critz v. Farmers Ins. Group, 230 Cal.App.2d 788, 41 Cal.Rptr. 401, 406 (1964). When the allegation is failure to defend, the tort is complete at least by the time of the signing of the adverse judgment against its insured. In any case, liability under article 21.21 has attached by the the signing of the judgment in the first suit, and an offer to pay that judgment will not absolve the insurer of article 21.21 liability.

PARTIAL SETTLEMENT AGREEMENT

There is no question that Dr. Garcia received $500,000.00 from APIE in the Partial Settlement Agreement; the only dispute is the nature of those funds. Dr. Garcia refers to it as a payment for a continuance. This is true only in part. *31The Partial Settlement Agreement plainly provides that the $500,000.00 is also to release APIE from any judgment against it in Garcia v. APIE in excess of $2.5 million. We quote from the agreement:

The Partial Settlement Agreement between us will contain a release by your clients and you of any part of the judgment which may be rendered herein against APIE and/or APSG in excess of the sum of 2.5 million dollars. The $500,-000.00 payment will be a credit against any such judgment, so that the only additional payment of APIE and/or APSG will be up to but not exceeding $2,000,-000.00. For example, if the judgment is against APIE and/or APSG for $3,000,-000.00, APIE/APSG will receive credit thereon for $500,000.00, and be released for the payment of the additional sum of $2,000,000.00. If the judgment is for $1,000,000.00, APIE/APSG will be released for the payment of $500,000.00. If APIE and APSG are successful in the case, so that no judgment is rendered against them, you and your clients will nevertheless retain the $500,000.00.
******
The $500,000.00 consideration above referred to is paid by APIE and APSG partly in order to effectuate a continuance of this cause from its current trial setting of May 4, 1987....

The Partial Settlement Agreement clearly discharges APIE from a part of the damages Dr. Garcia now seeks on appeal to the extent that it provides a maximum liability against APIE of $2,000,000.00. However, the $500,000.00 paid by APIE is not a full discharge of its liability.

ICA’S RELEASE

After judgment was entered in Cardenas v. Garcia, and before trial in Garcia v. APIE, ICA, in consideration of its payment of $2,000,000.00, was released by Cardenas in Cardenas v. Garcia and by Garcia in Garcia v. APIE. Cardenas v. Garcia was a malpractice suit against Dr. Garcia. ICA was not a party to that suit or subject to execution on that judgment. Garcia v. APIE is a suit in contract for the policy limits and in tort for Stowers damages. The Release is a release of liability in both contract and tort. The language states that ICA is released “from all liability for actions arising in tort or contract and for any possible causes of action of any character ... in connection with occurrence [sic] made the basis of ...” Cardenas v. Garcia and Garcia v. APIE. Therefore, the $2,000,000.00 payment was for a release in the second suit only, the only suit in which ICA was a party and subject to liability.

JOINT AND SEVERAL LIABILITY

Dr. Garcia argues that APIE is not entitled to an 84 percent reduction in the damages found by the jury. He argues that APIE and ICA are jointly and severally liable because it is a Stowers suit which is based on negligence, rather than a contract action. See Stowers, 15 S.W.2d at 547.

APIE, on the other hand, argues that its and ICA’s obligations are several based on their independent contractual responsibilities. In other words, APIE was responsible only for damages caused by acts of negligence of its insured occurring on or after the effective date of its policy; it had no such liability during the period of ICA’s coverage. It cites Traders & Gen. Ins. Co. v. Hicks Rubber Co., 140 Tex. 586, 169 S.W.2d 142, 147 (1943), but its reliance on that case is misplaced. Hicks is a contract action brought by the insured against its insurers based on their failure to pay a judgment taken against it. The issue in this appeal is the injury done to Dr. Garcia by the actions and inactions of his insurers, not the injury done to Cardenas by Dr. Garcia. In the latter case it would have been appropriate to apportion payment to Cardenas based on the amounts of coverage provided by APIE and ICA. The present case does not involve that injury. It is rather a statutory cause of action based on APIE’s failure to defend, negotiate and settle, and the jury’s findings that that failure constituted violations of article 21.21. The failure to defend, negotiate and settle by Dr. Garcia’s insurance companies constituted an indivisible injury to him that cannot be apportioned on a pro rata basis. *32APIE’s liability is joint and several. Therefore, the jury’s finding that APIE is responsible for only 16 percent of Dr. Garcia’s damages is immaterial, and the trial court erred in reducing the damages due him.

In addition, Dr. Garcia elected to have his damages calculated under the jury findings that APIE had violated article 21.21 of the Insurance Code. There is no statutory right to contribution or indemnity from other defendants for violations of article 21.21. Stewart Title Guar. Co. v. Sterling, 772 S.W.2d 242, 248 (Tex.App.—Houston [14th Dist.] 1989, writ granted). Therefore, APIE is not entitled to a credit for the $2,000,000.00 payment made by ICA.

EFFECT OF THE NON-EXECUTION AGREEMENT

APIE argues that there was no possibility of an excess judgment against Dr. Garcia because of the Non-Execution Agreement which provides that Cardenas will execute only against the proceeds of the insurance policies and not against Dr. Garcia’s other assets. APIE contends that Dr. Garcia “could not be held responsible” for any excess judgment in Cardenas v. Garcia, and APIE is not therefore required to indemnify him.

APIE cites Whatley v. City of Dallas, 758 S.W.2d 301, 310 (Tex.App.—Dallas 1988, writ denied), which held that a covenant not to enforce a judgment against an insured individually will prevent recovery against an insurer in excess of policy limits. That case, however, is distinguishable. There were no findings in Whatley, as there are here, that the insurer acted negligently or in bad faith. Whatley did not decide whether an insurer is liable for damages in excess of policy limits for which the insured is not personally liable when the insurer has acted negligently or in bad faith. Id. at n. 6.

APIE also cites several out-of-state cases holding that a nonexecution agreement relieves the insured of an obligation to pay an excess judgment, and likewise relieves the insurer of an obligation to pay. See, e.g., Freeman v. Schmidt Real Estate & Ins. Inc., 755 F.2d 135 (8th Cir.1985) (applying Iowa law); Bendall v. White, 511 F.Supp. 793 (N.D.Ala.1981); Childress v. State Farm Mut. Auto. Ins. Co., 97 Ill.App.2d 112, 239 N.E.2d 492 (1968); Stubblefield v. St. Paul Fire & Marine Ins. Co., 267 Or. 397, 517 P.2d 262 (1973).

These cases are decided on two theories. First, the nonexecution agreements made the insureds not legally obligated to pay damages in excess of policy limits, therefore, the “legally obligated to pay” language in the insurance policies shields the insurers from liability. Second, because the non-execution agreement protects the insureds from any liability to judgment creditors, the insureds have suffered no damage compensable by the insurers.

We do not agree either that the insured is no longer “legally obligated to pay” or that he has suffered no damage. A covenant not to execute is iperely a, contract and not a release. Young Men’s Christian Ass’n of Metro. Fort Worth v. Commercial Standard Ins. Co., 552 S.W.2d 497, 505 (Tex.Civ.App.—Fort Worth 1977), writ ref'd n.r.e., per curiam, 563 S.W.2d 246 (Tex.1978); First Nat’l Indem. Co. v. Mercado, 511 S.W.2d 354, 358 (Tex.Civ.App.—Austin 1974). Therefore, the underlying tort liability remains and a breach of contract action lies if the injured party seeks to collect the judgment in violation of the contract. The tortfeasor is still “legally obligated” to the injured party, and the insurer is still bound by its contractual promise to pay. The insured’s claim against the insurer for breach of contract is not extinguished by the covenant. Globe Indem. Co. v. Blomfield, 115 Ariz. 5, 562 P.2d 1372, 1375 (Ariz.App.1977); Critz, 41 Cal.Rptr. at 410; Whittlesea v. Farmer, 86 Nev. 347, 469 P.2d 57, 58 (1970).

Likewise, the covenant does not “blot out” the personal judgment. Critz, 41 Cal.Rptr. at 410; Bishop v. Crowther, 101 Ill.App.3d 933, 57 Ill.Dec. 341, 344, 428 N.E.2d 1021, 1024 (1981). In this state the personal judgment could affect Dr. Garcia’s credit and cloud his title to real estate. *33Hernandez v. Great Am. Ins. Co., 464 S.W.2d 91, 94 (Tex.1971). The judgment in Cardenas v. Garcia established the damages in this case. Kelly, 680 S.W.2d at 606. The covenant not to execute did not eliminate those damages. So it cannot reasonably be asserted that a covenant which does not release the judgment but merely limits execution to specific assets negates all damages the judgment debtor may suffer. We hold that the Non-Execution Agreement does not affect APIE’s liability to Dr. Garcia.

APIE also argues that the Non-Execution Agreement violated the provision of the insurance policy prohibiting assignability by the insured. It argues that by assigning his interest in the policy to Cardenas, Dr. Garcia violated the policy’s “no action” clause which reads as follows:

No action shall lie against the Exchange unless, as a condition precedent thereto there shall have been full compliance with all of the terms of this policy, nor until the amount of the insured’s obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant and the Exchange.

The Non-Execution Agreement was entered after APIE had already breached the policy by refusing to provide the doctor with coverage. An insurance company may not insist on compliance with the no action clause after it has been given the opportunity to defend the suit or to agree to a settlement and refuses to do either. Gulf Ins. Co. v. Parker Products, Inc., 498 S.W.2d 676, 679 (Tex.1973). We hold that the same reasoning applies to the policy’s assignability prohibition.

APIE also maintains that the assignment violates public policy. It complains that when “the assignment is made prior to the alleged wrongful acts of the insurer, there still existed an obligation on the part of the insurer to defend its insured[,]” and that “[t]his obligation is a personalized relationship based on confidence and trust....” We wonder what became of this “personalized obligation based on confidence and trust” when APIE was refusing to defend its insured in the face of a pleading clearly alleging acts by the insured during the period of coverage. Obviously the assignment was not made prior to the insurer’s wrongful acts. Although the Non-Execution Agreement was entered on the same day the sixth amended petition was filed, there is nothing in the record to indicate which came first, the petition or the Non-Execution Agreement. It is clear, however, that APIE was given an opportunity to re-enter the suit, which it refused. Once an insured has been left alone to defend himself it is reasonable that he covenant against his own liability and hold the costs of his defense to a minimum if he can. Young Men's Christian Ass’n of Metro. Fort Worth, 552 S.W.2d at 504; First Nat’l Indem. Co. v. Mercado, 511 S.W.2d at 358. Such agreements have been upheld by the courts, and we hold that they are not violative of public policy so long as no collusion has been shown.

FAILURE TO SETTLE

APIE argues that the trial court erred in entering judgment against it based on its failure to settle. APIE insists that there can be no violation of the duty to settle without evidence that the injured party would have settled within the insured’s policy limits. It further complains that it was never given the opportunity to settle separately from ICA prior to the trial of Cardenas v. Garcia. It offers no authority to support these arguments other than its allegation that an element of a Stowers cause of action is that an injured party would settle within the policy limits of the insurer.

There is ample evidence that Cardenas attempted to settle with Dr. Garcia’s counsel even prior to the time APIE withdrew. Further, the settlement offers were within the policy limits. On July 15, 1985, Cardenas’ attorney wrote to Mr. Crossland, the attorney provided by APIE and ICA, offering to settle for $600,000.00, the amount represented to him to constitute the avail*34able insurance coverage.6 This letter was soon followed by a letter from Mr. Lyons, Dr. Garcia’s personal counsel, imploring Crossland to accept the offer. The offer was not replied to, and on the 24th APIE denied coverage and withdrew from the suit.

Then, after plaintiffs sixth amended petition was filed alleging negligence on the part of Dr. Garcia within the term of APIE’s coverage, Cardenas again offered to settle for what he believed to be the limits of coverage, and again Lyons urged Crossland to settle. Again, the result was the same; no settlement was reached. APIE, either alone or in conjunction with ICA, made no attempt to settle or to negotiate with Cardenas.

Even if no such offers had been made, it is not the law that an insurer’s only duty is to respond to an unconditional offer to settle all claims against the insured within the limits of the policy. The insurer has the duty to investigate, prepare for the defense of the lawsuit, try the case and make reasonable attempts to settle. Ranger County Mut. Ins. Co. v. Guin, 723 5.W.2d 656, 659 (Tex.1987). The duty of an insurer to settle also implies the duty to negotiate. Chancey v. New Amsterdam Cos. Co., 336 S.W.2d 763, 765 (Tex.Civ.App.—Amarillo 1960, writ ref’d n.r.e.). If an insurer refuses an offer of settlement when it appears that an ordinary prudent person in the insured’s situation would have settled, the insurer may be held liable for damages. Guin, 723 S.W.2d at 659; Stowers, 15 S.W.2d at 547.

APIE argues that it had no duty to settle prior to the sixth amended petition because plaintiffs had before then failed to allege negligence on the part of Dr. Garcia within the period of APIE’s coverage. Following the filing of the sixth amended petition, APIE claims it had no duty to settle because of the Non-Execution Agreement executed on the same day. APIE argues that with that agreement Dr. Garcia was no longer exposed to the possibility of an excess judgment and that it therefore no longer had the duty to settle within policy limits.

We have already held that the Non-Execution Agreement did not affect APIE’s liability to Dr. Garcia. Nor did it affect the duty to settle. Nor are we prepared to hold that APIE had no duty to make any attempt to settle for the year and four months it provided coverage to Dr. Garcia prior to its withdrawal on the eve of trial. As the supreme court said in Guin, the insurer’s duty to its insured extends to the full range of the agency relationship, including investigation, preparation for defense of the lawsuit, trial of the case and reasonable attempts to settle. 723 S.W.2d at 659. A belated attempt to offer policy limits will not always absolve a carrier of prior negligence in refusing to settle. Such a policy could encourage the insurer

to gamble with the insured’s money in the hope of saving some of its own. When it becomes apparent that the gám-ble has failed and that the case will be tried, the insurer could avoid liability for the excess simply by offering its policy limits in judgment. Such is not the law.

Howard, 236 N.W.2d at 648. See also Critz, 41 Cal.Rptr. at 406.

DTPA AND INSURANCE CODE VIOLATIONS

APIE argues that it did not engage in a deceptive or unfair act or practice in the defense or settlement of Cardenas v. Garcia or with respect to its coverage under its policy. It also contends that there is no evidence or insufficient evidence to support jury findings with regard to its failures to settle, to defend or to provide coverage.

In considering a no evidence point, we consider only the evidence favorable to the decision of the trier of fact. Davis v. City of San Antonio, 752 S.W.2d 518, 522 (Tex.1988); Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965). An insufficient evidence point requires that we assess all the evidence and reverse for a new trial only if *35the challenged finding is so against the great weight and preponderance of the evidence as to be manifestly unjust. In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951).

TEX.INS.CODE ANN. art. 21.21, § 16 (Vernon Supp.1990) makes actionable any violation of TEX.BUS. & COM.CODE ANN. § 17.46 (Vernon 1987) including any practice whether listed under 17.46(a) or not, that is determined to be false, misleading or deceptive. Vail v. Texas Farm Bureau Mut. Ins. Co., 754 S.W.2d 129, 135 (Tex.1988). The jury found that APIE failed to defend and to provide coverage and that these failures were false, misleading or deceptive acts and practices. The evidence showed that APIE failed to negotiate or to attempt to reach a settlement with Cardenas during the time it provided coverage to Dr. Garcia. It also showed that following the filing of the sixth amended petition, APIE was given the opportunity to re-enter the case and provide coverage and a defense to Dr. Garcia, but it refused to do so. The jury’s answers to the DTPA and Insurance Code questions are supported by sufficient evidence. Further, under the reasoning in Vail, these findings constitute a determination that APIE violated section 17.46(a) of the DTPA. Vail, 754 S.W.2d at 135. A violation of section 17.46 is a violation of article 21.21 section 16(a) of the Insurance Code. Chitsey v. National Lloyds Ins. Co., 738 S.W.2d 641, 642 (Tex.1987).

EXCLUSION OF EVIDENCE

APIE asserts the trial court erred in excluding two categories of evidence. First, it argues that the trial court erroneously excluded the Release and Partial Settlement Agreement. It argues that their exclusion deprived it of its defense of payment of the underlying judgment.

Under Kelly, the amount of damages is not a jury question; it is established by the judgment in the underlying cause. The amount of damages in Garcia v. APIE should not even have been submitted to the jury. It was therefore immaterial whether the jury was aware that the $2,000,000.00 had been paid to Cardenas, Dr. Garcia and their attorneys.

Second, APIE argues that the court erred in excluding evidence (1) of its efforts in the Cardenas v. Garcia appeal on behalf of Dr. Garcia and (2) that Dr. Garcia voluntarily dismissed that appeal. APIE complains that Dr. Garcia breached his duty to cooperate.

We have previously held that by its rejection of its right to participate in the trial following the filing of Cardenas’ sixth amended petition, APIE waived the right to challenge the judgment by appeal or writ of error. American Physicians Ins. Exch. v. Cardenas, 717 S.W.2d at 709. We also held that APIE had a duty to re-enter the case upon the filing of the sixth amended petition. Id. Having breached its duty to defend Dr. Garcia, it cannot insist on its insured’s performance of policy provisions that require appeal from the judgment rendered. American Fidelity & Cos. Co. v. Williams, 34 S.W.2d 396, 404 (Tex.Civ.App.-Amarillo 1930, writ ref’d). There was no error in the exclusion of this evidence.

APSG

APIE argues that the court erred in rendering judgment against APSG given the absence in the record of a basis for such recovery. APIE is a reciprocal insurance exchange organized under Chapter 19 of the Insurance Code. The affairs of a reciprocal exchange, on behalf of its subscribers, are required to be performed and maintained by a duly appointed attomey-in-fact. TEX.INS.CODE ANN. art. 19.02 (Vernon 1981). APS Facilities Management, Inc. is the attomey-in-fact of APIE. APIE is managed by APS Facilities Management which is a wholly owned subsidiary of APSG. APIE complains that no issues were submitted concerning APSG.

Dr. Garcia pleaded that the policy he purchased was issued by APIE and APSG, that APIE acted as APSG’s agent, and that both injured him by their actions or inaction. It was undisputed that APSG is the *36management arm of APIE. It was also undisputed that the adjustors and employees who handled the claim against Dr. Garcia were employees of APSG and were operating within the course and scope of their employment with the service group. The policy shows it was issued by “American Physicians Service Corporation” as at-tomey-in-fact for APIE.

The matter of APIE’s authority to act as APSG’s agent and thereby bind APSG by its actions was a component element of Dr. Garcia’s theory of recovery. Rodriguez v. Higginbotham-Bailey-Logan Co., 172 S.W.2d 991, 993 (Tex.Civ.App.—San Antonio 1943, writ ref’d). By failing to request a jury question regarding APIE’s agency it waived a jury determination of that element, and the trial court was free to find that APIE either was or was not APSG’s agent. Id.; TEX.R.CIV.P. 279. Based upon the court’s entry of a joint and several judgment against APIE and APSG, however, the court impliedly found that the agency relationship existed. Yorfino v. Ferguson, 552 S.W.2d 563, 564 (Tex.Civ.App.—El Paso 1977, no writ); TEX. R.CIV.P. 279. The deemed finding is supported by the evidence.

PUNITIVE DAMAGES

APIE asserts that the award of punitive damages against it is violative of the excessive fines provisions of the United States and Texas Constitutions, U.S. CONST, amend. VIII, TEX. CONST, art. I, § 13, and the due process clause of the United States Constitution. U.S. CONST, amend. V and XIV. Specifically, it challenges the award of multiple damages provided by article 21.21 of the Insurance Code.

APIE made no objection to the question which asked the jury to determine the amount of Dr. Garcia’s damages. It also failed to raise its constitutional objection to the part of the jury charge that inquired whether APIE knowingly committed the acts complained of. An affirmative finding on the “knowingly” issue requires the trial court to award, in addition to the actual damages found, two times that amount. TEX.INS.CODE ANN. art. 21.21 § 16(b)(1) (Vernon Supp.1991). APIE has therefore waived any complaint that doubling the damages is unconstitutional. TEX.R.CIV.P. 272, 274.

CALCULATION OF DAMAGES

Dr. Garcia’s damages are properly calculated as follows:

$ 635,483.30 Measure of damages as a matter of law: Amount of excess judgment over applicable policy limits. Kelly, 680 S.W.2d at 606.

+ 146,774.73 - 10% interest on Cardenas v. Garcia excess judgment from August 30, 1985 to signing of present judgment on December 21, 1987.

$ 782,258.03 - Total actual damages.

+ 1,564,516.06 - Double actual damages. Ins.Code 21.21.

$2,346,774.09

+ 820,500.00 - Attorney’s fees awarded.

$3,167,274.09

Because these damages of $3,167,274.09 are in excess of $2,500,000.00, APIE’s payment of $500,000 in the Partial Settlement Agreement applies as a credit against the judgment so that an additional payment by APIE in the amount of $2,000,000.00 releases it from the part of the judgment in excess of that amount. The judgment of the trial court is modified that Dr. Garcia recover from APIE and APSG damages in the amount of $2,000,000.00. As modified, the judgment is affirmed.

. G.A. Stowers Furniture Co. v. American Indem. Co., 15 S.W.2d 544 (Tex.Comm’n App.1929, holding approved).

. APIE is a reciprocal insurance exchange and APSG is its statutory attorney. See TEX.INS. CODE ANN. arts. 19.01-19.13 (Vernon 1981 and Vernon Supp.1990). "APIE” will be used in this opinion to refer to both APIE and APSG except when the context requires otherwise.

.Actually, the plaintiff in that suit was Aramin-ta Cardenas, the wife of Gustavo Cardenas, Dr. Garcia’s patient. She sued in her individual capacity and as guardian of her husband’s estate. For convenience, we will use "Cardenas” to represent both Gustavo Cardenas and Ara-minta Cardenas.

. APIE filed a third party action against Williams and Patterson seeking indemnity and contribution. An instructed verdict was entered in their behalf. They have filed a brief urging that we cannot reverse the instructed verdict because of APIE’s failure to bring forward a point of error challenging it. Gulf Consol. Inti, Inc. v. Murphy, 658 S.W.2d 565, 566 (Tex. 1983). The point is well taken.

. The Insurance Code no longer provides for trebling of actual damages. Instead, if the trier of fact finds that the defendant knowingly committed the acts complained of, the court is required to award, in addition to the actual damages, two times that amount. TEX.INS.CODE ANN. art. 21.21 § 16(b)(1) (Vernon Supp.1990). The amendment was effective April 4, 1985, and thus was in effect when this suit was tried. The result is the same, however, whether the actual damages are trebled or whether actual damages plus two times the actual damages are awarded.

. Cardenas’ attorney had been told that the limits on the ICA policy were $100,000.00 and the limits on the APIE policy were $500,000.00.