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Texas Supreme Court Weekly Update June 11, 2018

On Behalf of | Jun 11, 2018 | Texas Supreme Court Weekly Update

Last week the Supreme Court of Texas issued seven opinions and seven grants. Three opinions and one grant are of particular interest.

First, State Farm Lloyds v. Candelario Fuentes and Maria Fuentes, an insurance case dealing with a breach of a policy, comes from the Court of Appeals for the 14th District of Texas. In this case, the Fuenteses filed a claim after their home was damaged. State Farm paid the Fuenteses for their home’s exterior damage, but an adjuster concluded that the interior damage was not covered under the policy.

The Fuenteses sued State Farm for breach of contract, fraud, and Insurance Code violations demanding $392,000. The trial court concluded that both parties breached the contract, but that the Funteses breached first. Regardless, the trial court awarded the Fuenteses the amount owed under their insurance policy, mental anguish damages, statutory damages, and attorney’s fees. State Farm appealed, but the court of appeals held (1) that the trial court did not disregard the jury’s findings that the Fuenteses breached the policy first and (2) that the trial court did not err in excluding the excessive-demand defense.

The Supreme Court then took up both issues on appeal. In the first issue, the Court remanded the issue to the court of appeals in light of the recent USAA Texas Lloyds Co v. Menchaca ruling. On the second issue, the Court affirmed given that the appeals court concluded correctly that State Farm did not establish the trial court’s exclusion of evidence of the demand letter resulted in rendition of an improper judgment.

Second, the Court gave an opinion on Wausau Underwriters Insurance Company v. James Wedel and Michelle Wedel, a workers’ compensation insurance case. Here, James Wedel was injured while working for Western Refining. Wedel received workers’ compensation benefits from Wausau Underwriters, the insurance carrier for his employer, Cactus. It is agreed that the compensation policy at issue between Cactus and Wasau includes an endorsement waiving Wasau’s rights to seek reimbursement directly from Western in particular for benefits Wasau paid under Cactus’s policy.

Wasau intervened in Wedel ‘s lawsuit against Western asserting subrogation rights for medical expenses ad indemnity payments. Wasau initially non-suited its intervention to conduct settlement negotiations. When settlement negotiations began Wasau sought reimbursement from any settlement paid to Wedel. This resulted in Wedel re-joining Wasau and a third-party defendant. The trial court granted summary judgment to Wedel declaring that Wasau had waived its right to recover. The court of appeals affirmed.

Wasau appealed, arguing that the waiver in the compensation policy only waives its “subrogation right” against Western, which they argue is distinct from its reimbursement right against the employee. However, the court looked at more than twenty-years of case law, as well as various Texas Department of Insurance decisions relying on that case law, excluding recovery from proceeds paid to an injured employee. The Court held that a waiver of a carrier’s right to recover from a third party includes both a direct recovery from the party and an indirect recovery from proceeds a party pays to an injured employee. Thus, the waiver forecloses Wausau from recovering from Western directly and indirectly from the proceeds that Western pays Wedel.

Third, the Court gave an opinion on In re Mahindra, USA Inc., Relator, a wrongful death case. In this case, Venice Cooper was killed while operating a Mahindra tractor in Mississippi. M. Cooper’s son, Jason, filed a lawsuit in Texas individually, as administrator of the estate, and as next of friend of his daughter, while Jason’s brother, Christopher Cooper, joined the suit individually as a plaintiff. Mahindra then filed a motion to dismiss based on forum non conveniens. The trial court denied the motion. The court of appeal denied Mahindra’s mandamus relief.

In Texas, forum non conveniens exists as both common law and statutory provisions, TEX. CIV. PRAC. & REM. CODE § 71.051(e). Under Texas law, the statutory provision applies when (1) the plaintiff is a Texas resident or (2) the plaintiff if a derivative claimant of a Texas resident.

Mahindra argued that under Mississippi law a wrongful death claim is brought in as a representative capacity, making the Coopers derivative claimants per their role as the representatives of the estate. The Court held that although choice of law provisions may dictate substantive law, it does not govern procedure matter in the forum state.

The Court held that under § 71.051 Jason is not a “plaintiff” within the meaning of the statute with respect to the estate’s claims because the decedent was not a legal resident of Texas. However, the Court held that Jason and Christopher are not “derivative” plaintiffs under Texas law with respect to their own individual damages for wrongful death. In relevant part, the Court interpreted § 71.051(e) a being composed of two alternative exceptions – one for a Texas resident and one for a Texas-decedent. Thus, the Court held that the trial court did not abuse its discretion and denied the writ of mandamus.

Finally, the Court will hear oral arguments on JBS Carriers, Inc. v. Trinette L. Washington, et. al. out of Bexar County. This is a personal-injury negligence suit involving a tractor-trailer collision. At trial court, the jury found the trailer driver 50% negligent and JBS 30% negligent. On appeal, JBS argued that the evidence was legally and factually insufficient to support negligence on its part and the damages awarded to the deceased’s family. The deceased’s family argued on appeal that the trial court omitted awards for survivor damages and that the judgment contained mathematical errors. The lower court upheld the jury’s findings and agreed with the family’s contentions, remanding for consideration of the same.

The Court will review the lower court’s holding that the evidence is legally and factually sufficient to support the jury’s findings and the damages awards.


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