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In Re Trinity Universal: Severance of Article 21.55 Claims
12.06.01

The Amarillo Court of Appeals recently issued an opinion which permits severance of claims under Article 21.55, as well as extracontractual claims under Article 21.21 and the DTPA, in a UM/UIM case. Trinity Universal was sued on an underinsured motorist claim arising out of a fatal automobile accident. The claims included breach of contract, breach of a duty of good faith and fair dealing, violations of Article 21.21 of the Texas Insurance Code and violation of Article 21.55 of the Texas Insurance Code. The court initially denied Trinity's motion for severance and abatement.

Trinity filed a second motion for severance and abatement, which the trial court partially granted. The trial court severed the good faith/unfair settlement practices and Article 21.21 claims, but denied severance of the Article 21.55 claims. In a mandamus proceeding, the question presented to the court was whether the trial court abused its discretion in failing to grant the motion for severance of the claims under Article 21.55.

Trinity contended that it should not be required to undergo the expense of discovery related to the extracontractual claims when there was a substantial possibility the damages awarded in the contract claim would not exceed the limit of the tortfeasor's policy and thus would not trigger the underinsured motorist endorsement, precluding the necessity to litigate the extracontractual claims.

The Court of Appeals granted the mandamus and ordered the Article 21.55 claims severed based on the provisions of the underinsured motorist endorsement, and the case law specifically related to conditions precedent to uninsured/underinsured motorist coverage. Citing Allstate v. Bonner, the court relied upon the fact that the claimant must prove not only the uninsured driver negligently caused the accident that resulted in the covered damage, but also that all applicable policy provisions were satisfied. 51 S.W.3d 289 (Tex. 2001).

Because the contractual claim for UIM benefits and the statutory claim for penalty under Article 21.55 involve more than one cause of action, the severed claim is one that would be a proper subject of a lawsuit if independently asserted. The Article 21.55 claim is not so interwoven with the tort action and contract action that it involves the same facts and issues; thus, the claim for damages under Article 21.55 was severable.

At least in the context of uninsured and underinsured motorist claims, this case provides a strong argument that any claims related to Article 21.55 should be severed and abated along with any other extracontractual allegations.