Undoubtedly fearing that thousands of judgments in TWIA cases could be subject to collateral attack, the Texas Supreme Court has held that the Insurance Code provision that requires the MDL panel to appoint a qualified judge to hear lawsuits against the insurer of last resort, is not jurisdictional.
Texas Windstorm Insurance Association v. Stephen Pruski (No. 23-0447; May 10, 2024) arose from a Corpus Christi Court of Appeals decision that voided a trial court judgment in favor of TWIA because the trial judge was not appointed by the MDL panel, as required by § 2210.575(e), Insurance Code [Pruski v. Tex. Windstorm Ins. Ass’n, 667 S.W.3d 460 (Tex. App.—Corpus Christi 2023, pet. filed)]. The statute provides that “[A]n action brought under [Subsection (e)] shall be presided over by a judge appointed by the judicial panel on multidistrict litigation designated under Section 74.161, Government Code.” The court of appeals held that this language was mandatory, exclusive, and unwaivable and ordered the trial court to vacate its ruling.
In an opinion by Justice Lehrmann, SCOTX reversed and remanded to the court of appeals. Taking note of “the modern jurisprudential trend of ‘reduc[ing] the vulnerability of final judgments to attack on the ground that the tribunal lacked subject matter jurisdiction” [citing Dubai Petroleum Co. v. Kazi, 12 S.W.3d 71, 76 (Tex. 2000)], the Court examined the plain language of the statute and determined that, though the statute provides that the MDL court “shall” appoint the judge, the statute does “not clearly convey exclusive jurisdiction.” If it had meant to do so, it would have included specific consequences for noncompliance. Additionally, the statute provides “no guidance on the necessary procedure to obtain an MDL-panel appointment in TWIA suits in the first instance” and does not require a plaintiff to ask for one. Consequently, the Court reasoned, “[w]e doubt the Legislature nevertheless intended such a draconian consequence for the failure to do so.”
Perhaps more importantly from a practical standpoint, the Court expressed concern about the very substantial number of TWIA judgments (an amicus writer did a Lexis search and found 3,600) that would be subject to collateral attack if the court of appeals’ decision became law. This result, the Court reasoned, would undermine the core purposes of the TWIA statute: to streamline the claims process and limit TWIA’s liability exposure. Undoing potentially thousands of settled judgments would rather “spur more litigation against TWIA and, in turn, expose it to additional costs and potential liability for claims that have already been long resolved. Again, absent a ‘compelling showing’ that the Legislature intended this result, we will not read jurisdictional consequences into a statutory requirement” (citation omitted). Finally, the Court pointed out the judge disqualified by the court of appeals in this case met the statute’srequired qualifications for an MDL-appointed judge, i.e. “an active judge” who is a “resident of the county in which the loss that is the basis of the disputed denied coverage occurred or of a first tier coastal county or a second tier coastal county adjacent to the county in which that loss occurred.” In other words, if the procedure (which, again, the statute does not specify) had been followed, the same judge might have been appointed anyway. The Court remanded the case to the court of appeals for a determination of whether Plaintiff waived his jurisdictional complaint by failing to request an MDL-appointed judge.
We first reported on this case last November. The day following our initial report, plaintiffs in another case argued that, based on the Pruski decision, the Beaumont Court of Appeals should reverse and remand for assignment to a judge appointed by the MDL panel. The court turned down this invitation, noting that “[o]pinions from our sister courts ‘are not binding on this Court (citations omitted) Therefore, we decline to follow Pruski to the extent that Pruski could be interpreted to require appointment of a judge by an MDL panel under the circumstances that resulted in this appeal.”
Clearly, the court of appeals’ decision would have had potentially catastrophic effects on pretty much every claim filed against TWIA in the last 12 years. It is illuminating that the MDL Panel itself has never appointed a judge in a TWIA case because no one has ever asked for it. Since plaintiffs pick the venue anyway, it’s hard to see whose interest would have been served by wiping out thousands of judgments, many of which undoubtedly favored plaintiffs. Can you imagine the hue and cry that would have occurred if TWIA had sought to void the ones it lost?
