PERSONAL INJURY NEWSLETTER -RECENT TEXAS SUPREME COURT DECISIONS OF NOTE

The Texas Supreme Court has been active in recent months in the areas of insurance and personal injury, rendering several significant case decisions, including:

GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church,
197 S.W.3d 305 (Tex. 2006)
4 justice plurality with 5 concurrences: extrinsic evidence that precludes duty to indemnify cannot be used to preclude duty to defend, at least where also relevant to merits of underlying claim.

Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co.,
236 S.W.3d 765 (Tex. 2007)
Primary carrier that pays more than its proportionate share has no right of reimbursement against co-insurer.

Excess Underwriters at Lloyd’s v. Frank’s Casing Crew & Rental Tools, Inc.,
246 S.W.3d 42 (Tex. 2008)
5 – 3 decision: absent insured’s agreement, no implied right of reimbursement for excess carrier that pays to settle uncovered claim.

PAJ, Inc. v. Hanover Ins. Co.,
243 S.W.3d 630 (Tex. 2008)
5 – 4 decision: where insurance company cannot show prejudice, it cannot avoid coverage due to lack of timely notice of claim (4-6 mos.) (occurrence CGL policy).

Fairfield Ins. Co. v. Stephens Martin Paving, LP,
246 S.W.3d 653 (Tex. 2008)
Texas public policy does not preclude employer’s liability policy from covering exemplary damages in gross negligence death claims.
[(But, see American Int’l Specialty Lines Ins. Co. v. Res-Care Inc.,
___ F.3d ___ (5th Cir. 2008)
Punitive damages may not be covered in extreme circumstances.]

Prodigy Communs. Corp. v. Agric. Excess & Surplus Ins. Co.,
2008 Tex. LEXIS 4 (Tex. Jan. 11, 2008)
Does PAJ apply to all liability claims? Or just bodily injury or property damage claims?

Financial Industries v. XL Specialty Insurance,
Certified question from 5th Circuit accepted same day regarding claims made policy.

Nat’l Union Fire Ins. Co. v. Crocker,
246 S.W.3d 603 (Tex. 2008)
Liability insurer has no duty to defend additional insured that does not request defense, even if insurer is aware of the claim through another insured.

Lamar Homes, Inc. v. Mid-Continent Cas. Co.,
242 S.W.3d 1 (Tex. 2007)
5 – 4 decision: claim of defective construction triggers duty to defend under CGL policy, and prompt payment statute applies to duty to defend, so 18% per annum penalty applies to defendant/insured’s attorneys’ fees.

Evanston Ins. Co. v. Atofina Petroleum,
256 S.W.3d 660 (Tex. 2008)
Liability insurer that wrongfully denies coverage is precluded from challenging reasonableness of settlement, but prompt payment statute inapplicable to claim for settlement costs.

Unauthorized Practice of Law Committee v. American Home Assurance Co.,
51 Tex. Sup. Ct. J. 590 (Mar. 28, 2008)
Liability insurer may use staff attorneys to defend insureds if there is no conflict of interest.

Fortis Benefits v. Cantu,
234 S.W.3d 642 (Tex. 2007)
Contractual subrogation trumps equitable “made whole” doctrine.

Texas Mutual Insurance Co. v. Ledbetter,
251 S.W.3d 31 (Tex. 2008)
Beneficiaries cannot avoid comp lien by having settlement paid to estate.

General Electric Co. v. Mortiz,
51 Tex. Sup. Ct. J. 1030 (June 13, 2008)
5-4 decision: landowners have no duty to warn employees of independent contractors of open and obvious defects about which the employees already know (in this case, absence of handrails on ramp to loading dock).

OneBeacon Ins. Co. v. Don’s Building Supply, Inc.,
51 Tex. Sup. Ct. J. 1367 (Aug. 29, 2008)
Unanimous decision: liability insurer’s duty to defend is triggered based upon when injury occurs, not when damage manifests itself.

Ulico Cas. Co. v. Allied Pilots Assn.,
51 Tex. Sup. Ct. J. 1320 (Aug. 29, 2008)
Where no coverage exists, liability insurer does not create coverage by defending insured; but if insurer’s actions prejudice insured, damages resulting may be recovered under estoppel theory.

Zurich American Ins. Co. v. Nokia,
51 Tex. Sup. Ct. J. 1340 (Aug. 29, 2008)
Allegation of biological effect due to cell phone exposure is sufficient claim of bodily injury and damage (even without claim of impairment and where relief sought was headset, not damages) so as to trigger liability insurer’s duty to defend.

Reliance Steel and Aluminum Co. v. Sevcik,
51 Tex. Sup. Ct. J. 1437 (Sept. 26, 2008)
Admission of evidence of defendant’s gross sales in auto accident case held to be reversible error.

Adams v. YMCA of San Antonio,
51 Tex. Sup. Ct. J. 1443 (Sept. 26, 2008)
Jury can award future mental anguish damages without awarding damages for past mental anguish.

Please contact Strasburger & Price, LLP if you have any questions about the foregoing cases or any personal injury, insurance, or other legal matters.