TCJL has filed an amicus curiae brief in a case that raises knotty issues regarding a Collin County court at law’s pre-trial rulings in the underinsured motorist context. Tjhe Texas Supreme Court has already granted an emergency stay pending consideration of the insurance carrier’s petition for a writ of mandamus.
In re State Farm Mutual Automobile Insurance Company and Lindsey Nicole Dessart (No. 23-0755) arose from a dispute between State Farm and its policyholder over entitlement to underinsured motorist (UIM) benefits under the policy. Policyholder was injured in a collision with a third-party and was paid $50,000 in policy benefits under the third-party’s policy. She then sued State Farm, seeking a declaratory judgment on UIM coverage under the policy and extra-contractual claims against State Farm and its adjuster under the Texas Insurance Code. State Farm moved to abate discovery on the extra-contractual claims until a determination of policyholder’s entitlement to UIM benefits and to sever those claims for a second trial if policyholder prevails on the UIM claim. Policyholder objected that bifurcation for a separate trial is improper. The trial court agreed and denied State Farm’s motion. Policyholder then sought to depose a State Farm corporate representative and the adjuster. State Farm moved to quash for failure to meet the proportionality requirements of Rule 192.4, TRCP. The trial court likewise denied the motion to quash and issued an order compelling both depositions. And to complete the trifecta, the trial court granted policyholder’s motion to quash State Farm’s request for her medical records through depositions on written questions and limited discovery to medical services provided only on the date of the collision.
State Farm sought emergency relief and mandamus. The Dallas Court of Appeals denied both. In its petition for writ of mandamus in SCOTX, State Farm argues that the trial court abused its discretion on all three counts. First, the trial court ruling on the bifurcation issue violates SCOTX’s decision in In re State Farm Mutual Automobile Insurance Co., 629 S.W.3d 866 (Tex. 2021)(orig. proceeding) recognizing that an insurer has “a substantial right not to undergo the expense of … conducting discovery on issues that ultimately may be unnecessary because of the result of the underlying tort case.” 629 S.W.3d at 876. The trial court’s refusal to sever and abate thus deprived State Farm of that right and left it with no adequate remedy on appeal.
Second, by compelling the depositions of a corporate representative and the adjuster, the trial court ordered discovery that violates Rule 192.4(a)’s proportionality requirements limiting discovery that is: (1) “unreasonably cumulative or duplicative”; (2) “obtainable by some other source that is more convenient, less burdensome, or less expensive”; or (3) “the burden of expense of the proposed discovery outweighs its likely benefits.” In this case, State Farm stipulated that the policy contained UIM benefits and the accident was a covered occurrence, thus limiting the issues at trial to the third-party motorist’s liability and policyholder’s damages. Neither the corporate representative nor the adjuster had any relevant information or knowledge about that, so the trial court should have quashed their depositions. Third, the trial court ruling denying State Farm’s discovery request for policyholder’s pre- and post-accident medical records effectively deprive it of its defense of policyholder’s claims for past and future medical expenses (which exceed $200,000, well in excess of the $100,000 policy limit under her policy’s UIM coverage).
TCJL’s brief asks SCOTX to grant State Farm’s petition and to provide additional guidance to trial courts and UIM litigants about with regard to how SCOTX’s decision in Allstate Ins. Co. v. Irwin, 627 S.W.3d 263 (Tex. 2021) is supposed to work. As you recall, this 5-4 decision opened the door to the use of a Chapter 38, CPRC, declaratory judgment action in UIM cases to determine the insurer’s liability under the policy and the insured’s damages before moving on to any breach of contract or extracontractual claims. In this case the trial court’s orders will result in one jury hearing all claims more or at less at once. As we state in our brief:
But what happens when the trial court refuses to follow the script and, as it did here, orders discovery to proceed on the insured’s extracontractual claims before the insurer’s liability under the policy and the insured’s damages have been legally adjudicated, as Brainard presumably still requires? Here the trial court compounded the error by refusing to quash the depositions of the insurer’s corporate representative and claims adjuster, which have nothing to do with the UDJA case, and further by limiting the insurer’s discovery of the insured’s medical records from either before or after the date of the collision, which have everything to do with the UDJA case. The upshot of this maneuvering, in our view, is to bulldoze the jury with allegations of how badly the insurer treats its insureds, obscuring the underlying issue of whether the insurer is liable under the policy to begin with, and, if so, for how much. Put another way, reptile theory comes to UIM litigation. This state of affairs cannot be what the Court had in mind when it decided Irwin.
