The Texas Supreme Court has granted emergency relief staying depositions of an insurer’s corporate representative and adjuster in an underinsured motorist case in which the underinsured motorist’s liability has not been established.
In re State Farm Mutual Automobile Insurance Company and Gregory Alan Scott (No. 24-0658; stayed August 14, 2024) has virtually identical facts to 10 other petitions for writ of mandamus currently pending before SCOTX. In seven of the cases, the Dallas Court of Appeals denied mandamus relief, whereas in the other three the Fort Worth Court of Appeals did the same. In each case, plaintiffs filed a declaratory judgment action against State Farm for UIM coverage, as well as extracontractual claims for alleged Insurance Code violations. In each case, State Farm moved to sever and abate the extracontractual claims from the suit to establish the underinsured motorist’s liability. In each case, the trial court denied that motion. In each case, plaintiffs seek to depose State Farm’s corporate representative and adjuster with respect to the extracontractual claims. In each case, State Farm moved to quash the depositions, arguing that they violate the proportionality requirements of of Texas Rule of Civil Procedure 192.4. In each case, State Farm’s corporate representative stipulated that State Farm does not dispute that Plaintiffs’ policy was in effect at the time of the accident, that it covered Plaintiffs, and that it provided UIM benefits. In each case, State Farm sought emergency and mandamus relief from the court of appeals. In each case, the court of appeals denied relief. And in each case, State Farm sought that relief from SCOTX.
SCOTX has scheduled oral argument in the first of these cases, In re State Farm Mutual Automobile Insurance Company and Lindsey Nicole Dessart (No. 23-0755), on October 3. TCJL submitted an amicus curiae brief in this case, as did the Texas Association of Defense Counsel, American Property Casualty Insurance Association, and Farmers Texas Mutual County Insurance Company. We argued in our brief that the recurring pattern in these cases (refusal to sever and quash impermissible discovery) has resulted from abuses of the Court’s decision in Allstate v. Irwin, which permitted the adjudication of the underinsured motorist’s liability by way of a declaratory judgment action in the first place. At the time of that opinion, we expressed our concerns that it could lead to the very abuses we now see piling up at the Court in eleven identical mandamus petitions (and two other pending cases in the Waco and Houston [1st] Courts of Appeals).
Until SCOTX tells us how Irwin is supposed to work in concert with Brainard, we expect the pattern to go on repeating itself. We will get that answer, in all likelihood, sometime next spring. Between now and then, however, everybody is going to have to spend a lot of money going through the motions in trial and appellate courts, who will keep doing the same things in those parts of the state where this practice has gotten loose. The unfortunate fact is that those costs will do nothing but exacerbate what is already a grim situation for the cost of insuring a personal motor vehicle in Texas (not to mention a commercial one). One positive change that could put this genie back in the bottle would be to clarify that a plaintiff can only get attorney’s fees through a breach of contract claim against the insurer, not a UDJA action in which the insurer doesn’t dispute coverage. The pertinent question is the liability of the underinsured motorist (as well as whether the negligent motorist is actually underinsured). As things now stand, the cart (attorney’s fees) has run away from the horse (liability) altogether.
