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In recent months, the Courts of Appeals have been active in addressing various issues related to uninsured/underinsured motorist coverage. The results are mixed in both reinforcing some positions, and leading to greater divisions in others.

In Burling v. Employers Mutual Casualty Company, 2005 WL 100887 (Tex. App. – Dallas, January 19, 2005) the Dallas Court of Appeals upheld Employers Mutual’s motion for summary judgment denying coverage to an individual employee who made a claim on his employer’s commercial auto policy. Burling, an employee of Turnkey Construction Company, Inc, while working, traveled to a Turnkey Construction site and immediately after exiting the corporate vehicle, was run over by another vehicle in the parking lot. Burling suffered severe injuries and experienced multiple debridements, surgery and skin grafting. He made a claim under Turnkey’s policy. Employers denied Burling’s claim because he was not listed as a designated person on the policy. Burling sued Employers and both parties moved for summary judgment. The trial court granted Employers’ motion for final summary judgment and denied Burling’s motion for a partial summary judgment.

The sole issue on appeal was Burling’s argument that the UM/UIM coverage was ambiguous as to who it covers because Turnkey was the only named insured and a corporation cannot be injured in an automobile accident.

In finding the policy was unambiguous, the court looked to the plain language of the policy as well as the Texas Supreme Court’s opinion in Grain Dealers Mutual Insurance Company v. McKee, 943 S.W.2d 455, 458 (Tex. 1997), noting that the section entitled “Who is an Insured” contains a list of qualifying categories. The first category includes “you and any designated person and any family member of either.” The policy defines “designated person” as “an individual named in the schedule. By such designation, that person has the same coverage as you.” Burling at 2. The court noted that Burling’s name did not appear anywhere in the policy.

Relying upon Grain Dealers, holding that identical policy langueage was not ambiguous, the court held that because Turnkey could have named Burling as a designated person in the policy and failed to do so, Burling had no coverage.

The next day, the Dallas Court of Appeals issued its opinion in Ostrander v. Progres-sive County Mutual Insurance Company, 2005 WL 110352, (Tex. App. – Dallas, January 20, 2005), again addressing policy definitions and coverage. Uphold-ing the trial court’s grant of summary judgment in favor of Progressive, the court held Mr. Ostrander did not have coverage under the policy in question.

Ostrander was injured in a one-vehicle accident while riding as a passenger in a car driven by Omeed Golgoun. Golgoun was insured by Progressive under a personal auto policy that provided both liability and UM/UIM coverage. Progressive denied Ostrander’s claim for UM/UIM benefits and Ostrander sued.

Progressive moved for summary judgment asserting that, under the express language of the policy, Golgoun’s vehicle did not fall within the definition of an uninsured motor vehicle. Progressive further asserted that since there was no breach of contract, Ostrander could not prevail on his extra contractual claims. Conversely, Ostrander contended that the policy language was ambiguous and that Progressive’s interpretation of the language failed to give meaning to each portion of the policy, violated Texas law in public policy, and had no statutory basis.

The policy specifically excluded from the definition of an uninsured motor vehicle “any vehicle or equipment … owned by or furnished or available for the regular use of you or any family member” Ostrander at 2. Relying on a prior opinion, the Dallas Court of Appeals noted that it had previously concluded the exact language unambiguously excluded a vehicle owned by the policyholder and was in compliance with the statutory requirements for UM/UIM coverage.

However, perhaps a more interesting issue was Ostrander’s contention that the trial court erred in granting summary judgment on his breach of fiduciary duty claims. Ostrander alleged Progressive owed him a fiduciary duty once it began to adjust the UM/UIM claim. Ostrander contended that Progressive breached the duty to him when the same person handled both his UM/UIM claim and liability claim, allowing the information required to be produced in connection with the UM/UIM claim to be used by Progressive against Ostrander in the liability claim. The court rejected this argument.

The court noted there is no general fiduciary duty between an insurer and its insured. Ostrander at 2 (citing E.R. Dupuis Concrete Company v. Pennsylvania Mut. Life Ins. Co., 137 S.W.3d 311, 318 (Tex. App.-Beaumont 2004, no pet.); and Wayne Duttleston, Inc. v. Highland Insurance Company, 110 S.W.3d 85, 96 (Tex. App.-Houston [1st Dist.] 2003, pet. denied). The court then noted that Ostrander’s claim was even more remote in that Ostrander had failed to cite a single case in which a Texas court found a fiduciary duty existed between an insurer and a third-party claimant. “To the contrary, this Court has concluded, as a matter of law, that an insurance company did not owe a fiduciary duty in its handling of claims brought by a third party.” Caserotti v. State Farm Insurance Company, 791 S.W.2d 561, 565 (Tex. App.-Dallas, 1990, writ denied). “Moreover, insurers do not owe third party claimants the same duty of good faith and fair dealing they owed their insured.” Ostrander at 2. Thus, the court affirmed the trial court’s summary judgment.

This holding raises, without deciding, the issue of whether a carrier owes a third party who makes a UM/UIM claim any fiduciary duties. On the other hand, it appears that at least a Dallas Court of Appeals has affirmatively held that no issues are presented simply because a single adjuster handles both liability and UIM claims on a single policy accident.

Finally, on January 31, 2005, the Amarillo Court of Appeals issued its opinion in Golleher v. Allstate Property and Casualty Insurance Company, 2005 WL 221225 (Tex. App. – Amarillo, January 31, 2005) regarding UM/UIM benefits.

On December 11, 1996, James Golleher was a passenger in a vehicle driven by Scott Davis. A collision occurred between Davis’ vehicle and a vehicle driven by Norma McBee. As a result of the accident, McBee died and Davis and Golleher sustained injuries. At the time of the accident, McBee had liability insurance coverage with policy limits of $100,000 per person and $300,000 per accident. Davis had insurance with Allstate Property and Casualty, which included uninsured/underinsured motorist benefits. Davis and Golleher sued McBee’s Executor. Golleher and McBee’s liability insurer settled Golleher’s claim against McBee and Golleher dismissed his suit with prejudice. Golleher did not obtain Allstate’s consent before settling his claim or dismissing the lawsuit. Golleher then sued Allstate for UIM benefits.

Allstate filed a motion for summary judgment asserting it was not liable to Golleher as a matter of law based on two contractual provisions: 1) Allstate’s liability for damages was limited to those damages which a covered person was legally entitled to recover from the owner or operator of a [uninsured/underinsured] motor vehicle, and 2) coverage was not provided if “[the covered] person or the legal representative settles the claim without our written consent.” Allstate urged that Golleher materially breached the terms of the contract when he did not obtain Allstate’s consent to settle his claim. Allstate claimed the breach was material because the settlement prejudiced Allstate’s subrogation rights against McBee’s solvent estate. Allstate further asserted that Golleher’s dismissal with prejudice precluded Golleher from establishing that he was legally entitled to recover from McBee.

Though there were numerous proposed issues the court ultimately ruled in Allstate’s favor. On appeal, Golleher raised three issues: 1) that Allstate did not establish, as a matter of law, that it had been actually prejudiced by Golleher’s settlement of his claims against McBee; 2) that he raised a genuine issue of material fact regarding whether Allstate had been actually prejudiced by his settlement; and 3) whether the court erred in granting summary judgment without first setting other specific dates or deadlines by which Golleher was required to file evidence controverting Allstate’s motion for summary judgment.

Directly addressing the failure to obtain consent to settle issue, the court noted that Golleher did not present a general issue challenging the summary judgment, nor did he present an issue challenging Allstate’s summary judgment motion on the grounds that Golleher was precluded from showing that he was legally entitled to recover from McBee. The court noted “when the trial court does not specify grounds for its granted summary judgment, an appellant must challenge all grounds urged in the motion for summary judgment to avoid waiving the right to challenge those grounds. If summary judgment may have been granted, properly or improperly, on a ground not challenged, the summary judgment must be affirmed.” The court went on to hold that “because Golleher does not challenge the second ground on which Allstate sought summary judgment, the summary judgment must be affirmed. Having thus determined that we must affirm the summary judgment, we need not and do not consider Golleher’s first and second issues, which challenge the first ground of Allstate’s motion for summary judgment.” The court thus upheld the summary judgment on the grounds that Golleher could not show he was legally entitled to recover from McBee because of his dismissal with prejudice of her estate in the underlying matter. While this case seems to imply that a dismissal with prejudice against the underlying driver bars recovery under UM/UIM coverage, it likely should not be read that broadly. Rather, given the appropriate factual scenario, such an argument may be sufficient to sustain the court’s granting a summary judgment.

Finally, the Texas Supreme Court should clarify whether or not attorney’s fees and prejudgment interest are recoverable in an Uninsured/Underinsured Motorist context. On April 14, 2005, the Texas Supreme Court will hear oral argument on three cases involving the recovery of attorney’s fees under Chapter 38.001 of the Texas Civil Practices and Remedies Code in an uninsured/underinsured motorist situation. The court will hear argument in State Farm Mut. Auto. Ins. Co. v. Nickerson, 130 S.W.3d 487(Tex. App. – Texarkana 2004, pet. granted), which deals with whether a policyholder can collect attorney’s fees under the Civil Practices and Remedies Code when the insurer tendered the just amount owed within 15 days of the verdict. Brainard, et al. v. Trinity Univ. Ins., 153 S.W.3d 508 (Tex. App. – Amarillo 2004, pet. granted) and Norris v. State Farm Mut. Auto Ins. Co., 2004 WL 811722 (Tex.App.—Waco 2004, pet. granted) both deal with the recovery of attorney’s fees under Ch. 38 of the Civil Practices & Remedies Code as well as the recovery of prejudgment interest for which the tortfeasor would have been liable. We may soon have both of these questions answered definitively.

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