In re State Farm Mutual Automobile Insurance Company (No. 13-24-00162; February 26, 2025) from a dispute over underinsured motorist benefits. After suffering alleged injuries in a car accident, Plaintiff sued State Farm for declaratory relief and damages. Plaintiff settled her claims against the underinsured driver for policy limits of $30,000 and State Farm paid her $2,500 in personal injury protection benefits. In pretrial proceedings the parties disputed what arguments and evidence should be submitted to the jury. Plaintiff’s counsel agreed not to discuss insurance claim violations at trial. The jury found the underinsured motorist negligent and awarded $33,969 in damages. The charge did not include a question about attorney’s fees. After the jury was discharged, Plaintiff filed a motion for award of attorney’s fees under § 37.009, CPRC. State Farm objected, asserting that it was the prevailing party because it only owed $869 and Plaintiff had already rejected a settlement offer of $7,500. The Cameron County trial court ordered a new trial without explanation. State Farm sought mandamus relief, which the court of appeals granted, directing the trial court to vacate its new trial order. On remand, the trial court granted Plaintiff’s motion for new trial on the basis that it was the only way to consider Plaintiff’s attorney’s fees claim. As part of its reasoning, the trial court pointed to a Rule 11 agreement in which the parties apparently agreed to try Plaintiff’s attorney’s fee claim to the bench after the jury was sent home. State Farm once again petitioned for writ of mandamus.
In an opinion by Justice West, the court of appeals granted in part and denied in part. First, the court looked to the trial court’s new trial order and concluded that it sufficiently explained the court’s specific reasons for granting a new trial. State Farm then argued that a mistrial was the only appropriate remedy for “highly prejudicial and incurable errors.” The court didn’t find any of those and construed Plaintiff’s motion for mistrial as “the functional equivalent of a motion for new trial.” The court thus denied State Farm’s first issue. In its third issue, State Farm contended that the trial court had a “ministerial duty” to enter judgment in its favor based on the jury’s verdict because there was no irreconcilable conflict in the jury’s findings. The court concluded that State Farm’s argument was irrelevant because the trial court did not base its ruling on a conflict, and neither party argued to the contrary. Third issue goes to Plaintiff.
Taking State Farm’s second issue last, the court considered the merits of State Farm’s argument that the parties never had an enforceable Rule 11 agreement because they disagreed about trying the attorney’s fees to the bench and that, consequently, a new trial was the only way to fix it. Specifically, State Farm contended that the agreement lacked essential and material terms regarding “any reference to (i) attorney’s fees, (ii) bifurcation, and (iii) whether the trial court or the jury would determine the amount of attorney’s fees.” Pointing to State Farm’s counsel’s statements in open court, however, the court determined that counsel had in fact included reference to all three material terms. The agreement was thus effective and enforceable. Next, State Farm floated a waiver argument. Again, the court didn’t bite. Lastly, State Farm argued that the trial court erred in granting a new trial because there was another solution to the problem, i.e. Plaintiff could enforce the Rule 11 agreement and have the trial court decide the attorney’s fees. Here was the winning argument: a new trial on liability and damages was not necessary. The court decided to leave it up to the trial court as to whether to have a jury trial on attorney’s fees alone or just enforce the agreement and do it in a bench trial.
This is an interesting case for a number of reasons. In our view, it illuminates the continuing confusion over trying to resolve UIM cases by declaratory judgment in a two-part proceeding, the first to determine liability and damages, the second extracontractual claims. Here the attorney’s fee issue got hung up over an argument over what Plaintiff could tell the jury about State Farm’s claims handling practices. State Farm and Plaintiff’s counsel ultimately agreed on that but apparently had a misunderstanding on what would happen next. Perhaps at some point SCOTX will clear up how all this is supposed to work in any one of the many stayed UIM cases currently awaiting a decision.
