Opinion
Civil Action No. 3:00-CV-0628-L
December 4, 2001
ORDER
Before the court is Plaintiff's Motion for Summary Judgment, filed August 29, 2000. After careful consideration of the motion, response, reply, the summary judgment record, and applicable authority, the court grants Plaintiff's Motion for Summary Judgment.
I. Factual and Procedural Background
Plaintiff Nationwide Mutual Insurance Company ("Nationwide") brings this declaratory judgment action, seeking a determination that it has no further obligation to pay on or indemnify a judgment entered in favor of Defendant Judy Mae Chaney ("Chaney") against its insured, David Henry Haffley ("Haffley"), in a state court action in Gregg County, Texas. The following facts gave rise to the state court action, and are undisputed.
The judgment at issues arises out of a multi-vehicle accident that occurred on December 10, 1995, when Haffley, who was driving while intoxicated, rear-ended his vehicle into another vehicle that was stopped in eastbound traffic on Interstate Highway 20, near Kilgore, Gregg County, Texas. The impact of the collision caused the second vehicle to collide with the one directly in front of it, which was also at a complete stop. Chaney was a passenger seated in the rear of the vehicle that Haffley initially struck. The multi-vehicle accident resulted in five people sustaining personal injuries, including Chaney who suffered from, inter alia, a concussion, post concussion syndrome, headaches, facial and right ankle bruises, cervical sprain, lumbar sprain, muscle spasms, a chest contusion, rib fractures, acute right breast hematoma, and impaired vision.
At the time of the accident, Haffley and his wife, Mary Lou Haffley, were insured by Nationwide. Specifically, Nationwide issued Texas personal automobile policy number 78 42 A. 024864 to Haffley effective July 23, 1995, to January 23, 1996 (the "policy"). The policy provided $50,000 in bodily injury coverage for each person injured in an accident and total aggregate limit of $100,000 in bodily injury coverage for each accident (regardless of the number of persons injured). The policy was in full force and effect at the time of the automobile accident.
In June 1996, Chaney, through her attorney, offered to settle her personal injury claims against Haffley for $500,000 or the limits of the Haffley policy, whichever was less. Nationwide rejected this offer of settlement. By October 1996, Nationwide had settled the personal injury claims of all injured parties, except for Chaney, for a total sum of $68,000. As a result, $32,000 remained unpaid and available under the limits of liability on the policy for payment of any outstanding personal injury claims. On October 15, 1996, Nationwide offered to settle Chaney's claims for $15,000. Chaney, rejected this offer and advised Nationwide that she would not settle for any amount short of the remaining balance on Haffley's policy. Nationwide declined to settle.
Thereafter, Chaney brought suit against Haffley in Texas state court, seeking to recover monetary damages against him as a result of the accident. Nationwide defended Haffley in the underlying state lawsuit. The case proceeded to trial in January 2000, and a jury returned a verdict in favor of Chaney and against Haffley. On February 28, 2000, the state court issued judgment for Chaney in the amount of $748,751 for actual damages plus prejudgment interest in the amount of $212,587.05, and exemplary damages in the amount of $1,242,899, for a total judgment award of $2,204,237.05. The court further ordered that the judgment bear interest at a rate of ten percent (10%) from February 28, 2000, until paid. On April 10, 2000, Nationwide tendered checks to Chaney totaling $59,779.43, specifically, one in the amount of $32,000 and another in the amount of $27,779.43, representing the unexhausted portion of Haffley's policy and postjudgment interest on the entire judgment, respectively.
On February 9, 2000, prior to the entry of the final judgment, the Haffleys (Haffley and his wife) executed a release of any and all potential claims that they may have had against Nationwide with respect to the insurance company's handling of Chaney's claims against Haffley. Specifically, in exchange for $50,000, the Haffleys agreed to release Nationwide from any and all contractual and extra-contractual claims arising from, as a result of, or relating to the policy, Chaney's claims of personal injury against Haffley as a result of the accident, Nationwide's acts or omissions pertaining to the handling of Chaney's claims of personal injury as a result of the accident against Haffley, or the Chaney lawsuit. An addendum to the release was executed by the Haffleys on March 6, 2000, which provided, inter alia, additional consideration to Haffley of $25,000.
On March 22, 2000, Nationwide filed the instant lawsuit seeking a declaratory judgment that it has no further indemnity obligation or duty to pay under the Haffley policy (or otherwise) as a result of Chaney's injuries or as to the judgment entered in favor of Chaney. Chaney has filed counterclaims against Nationwide and third party claims against Mary Lou Haffley and the Estate of David Henry Haffley for declaratory judgment, conspiracy, tortious interference with prospective business relations, fraudulent transfer, and turnover, although there is no indication in the record that the Estate of David Haffley has ever been served with process. Nationwide now moves for summary judgment on its claim for declaratory judgment.
The court notes that Nationwide initially named David Henry Haffley and Judy Mae Chaney as Defendants in this lawsuit; however, at sometime between entry of the judgment in the state action and the filing of the instant action, Haffley died. Nationwide subsequently moved to amend its complaint, which the court granted after Nationwide had already filed its summary judgment motion. The amended complaint, however, does not assert any new claims or causes of action, or otherwise impact Nationwide's summary judgment motion.
II. Summary Judgment Standard
Summary judgment shall be rendered when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986); Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998). A dispute regarding a material fact is "genuine" if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the court is required to view all inferences drawn from the factual record in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986); Ragas, 136 F.3d at 458.
Once the moving party has made an initial showing that there is no evidence to support the nonmoving party's case, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Matsushita, 475 U.S. at 586. Mere conclusory allegations are not competent summary judgment evidence, and thus are insufficient to defeat a motion for summary judgment. Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996). Unsubstantiated assertions, improbable inferences, and unsupported speculation are not competent summary judgment evidence. See Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir.), cert. denied, 5 13 U.S. 87 1 (1994). The party opposing summary judgment is required to identify specific evidence in the record and to articulate the precise manner in which that evidence supports his claim. Ragas, 136 F.3d at 458. Rule 56 does not impose a duty on the court to "sift through the record in search of evidence" to support the nonmovant's opposition to the motion for summary judgment. Id., see also Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915-16 n. 7 (5th Cir.), cert. denied, 506 U.S. 832 (1992). "Only disputes over facts that might affect the outcome of the suit under the governing laws will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248. Disputed fact issues which are "irrelevant and unnecessary" will not be considered by a court in ruling on a summary judgment motion. Id. If the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to its case and on which it will bear the burden of proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23.
III. Analysis
Nationwide contends that it has no obligation to indemnify or pay on the judgment entered in the underlying litigation beyond payment of those sums that remained unpaid under the policy's limit of liability (that is, those sums which had not been exhausted by payments to the other injured parties), together with postjudgment interest. Nationwide contends that it has fully performed its obligations under Haffley's policy by tendering to Chaney checks in the amount of $32,000, the remaining sums available under the limits of the policy, and $27,779.43, postjudgment interest on the entire amount of judgment from February 28, 2000, until April 10, 2000, and that it is under no further obligation to pay on the judgment. The court agrees.
Under Texas law, an injured party who acquires a judgment against a tortfeasor may sue the tortfeasor's insurer directly to enforce the judgment up to the limits of the policy. See Roland v. Allstate Ins. Co., 370 F.2d 289, 291 (5th Cir. 1966); see also Whatley v. City of Dallas, 758 S.W.2d 301, 309-10 (Tex.App.-Dallas 1988, writ denied). Therefore, as a judgment creditor of Haffley and third party beneficiary of the insurance policy, Chaney is entitled to enforce payment of her judgment up to the limits of Haffley's policy, and Nationwide is obligated to pay that amount. It is undisputed that the limits of Haffley's policy provided $50,000 per person and $100,000 per accident. It is also undisputed that Nationwide settled with all victims of the accident, except Chaney, for a total amount of $68,000. The amount remaining on the policy after all other settlements was $32,000. Nationwide tendered a check to Chaney in the amount of $32,000, as well as a check in the amount of $27,779.43 for postjudgment interest. Chaney accepted those checks. As the limits of the policy have been fully exhausted, Nationwide has no further contractual obligations to indemnify or pay on the judgment entered against Haffley.
Chaney, however, contends that there exists genuine issues of material fact which preclude summary judgment. Specifically, Chaney contends that the release entered into between Nationwide and Haffley constitutes a fraudulent transfer as to a judgment creditor under Tex. Bus. Corn. Code Ann. Section 24.005 (West 2001) (the Texas Uniform Fraudulent Transfer Act) and is therefore voidable. Chaney also contends that genuine issues of material fact exists as to whether Nationwide violated the doctrine set forth in G.A. Stowers Furniture Co. v. American Indemnity Co., 15 S.W.2d 544 (Tex. Comm'n App. 1929, holding approved) (holding that insurer has duty to settle in good faith claims made within policy limits). Chaney's arguments, however, are based on the erroneous assumption that she is entitled to claims which belong exclusively to Haffley. In an attempt to recover the excess of judgment over Haffley's policy limits, Chaney desires to pursue negligence and bad faith claims directly against Nationwide based on its failure to settle her claims against Haffley within the policy limits prior to judgment. Chaney, however, cites to no Texas authority which holds that a judgment creditor of an insured has a direct cause of action against an insurer based on the insurer's alleged bad faith and negligence in refusing to settle a claim within the insured's policy limits. Indeed, Texas law is quite the contrary.
The purpose of the Stowers doctrine is to redress harm to an insured for damages caused by a judgment in excess of policy limits resulting from an insurer's negligent failure to accept an offer of settlement for an amount within the policy limits. Thus, any claim that an insurer negligently failed to settle an injured party's action against an insured belongs to the insured, see Samford v. Allstate Ins. Co., 529 S.W.2d 84, 87 (Tex.App.-Corpus Christi 1975, writ ref d n.r.e.), and the injured party has no standing to assert it absent an assignment of the claim. See Whatley v. City of Dallas, 758 S.W.2d 301, 307 (Tex.App.-Dallas 1988, writ denied). Here, the record is void of any evidence which shows that Haffley ever assigned, or intended to assign, any potential claims that he may have had against Nationwide to Chaney, or otherwise entered into an agreement with her prior to judgment that would entitle her to proceed directly against Nationwide to collect an amount in excess of the policy limits. Moreover, Chaney has not presented any evidence which demonstrates that Haffley intended to pursue any claims against Nationwide based on his dissatisfaction with the way it handled Chaney's claims. Chaney's argument that her prejudgment demands constituted an implied release of all claims against Haffley would only be relevant if she had a right to pursue a Stowers claim against Nationwide. As stated before, no such right is available to Chaney in this case.
Chaney has failed to raise a genuine issue of material fact as to Nationwide's contractual obligations under the insurance policy, or that it has extra-contractual obligations to indemnify the excess of the judgment. Nationwide is therefore entitled to judgment as a matter of law on its claim for declaratory relief.
IV. Other Matters
Nationwide objects to portions of Chaney's summary judgment evidence. Specifically, Nationwide objects to the affidavit of Ted Marules, Sr., whom Chaney presents as an expert in the implementation of full and final releases. The court did not rely on Mr. Marule's testimony in determining Nationwide's summary judgment motion. Accordingly, Nationwide's request to strike this portion of Chaney's summary judgment evidence is denied as moot.
Based on its written submissions, Nationwide appears to contend that judgment in its favor will necessarily defeat Chaney's counterclaims. The court sua sponte raises this issue to determine whether summary judgment is appropriate on Chaney's counterclaims and cross claims as set forth on page four of this order. The court therefore desires further briefing on this matter from all parties. Specifically, the court desires for Nationwide and Mary Lou Haffley to address whether granting summary judgment in Nationwide's favor would effectively defeat Chaney's counterclaims and cross claims, and for Chaney to explain why a grant of summary judgment in Nationwide's favor would not effectively defeat such claims. In other words, the court wants to know from all sides whether genuine issues of material fact exist regarding Chaney's counterclaims and cross claims. The parties' briefs must be filed by December 26, 2001, and shall be limited to ten (10) pages. V. Conclusion
For the reasons stated, Chaney has failed to raise a genuine issue of material fact as to whether Nationwide has fully performed its obligations under the insurance policy. Nationwide is therefore entitled to judgment as a matter of law on its claim for declaratory relief. Accordingly, Nationwide's Motion for Summary judgment is hereby granted. The court declares that Nationwide has fully satisfied its obligations under Haffley's automobile policy as to the judgment entered in favor of Defendant Judy Mae Chaney against its insured David Haffley in the case styled, Judy Chaney and Ray Chaney v. David Haffley, Cause Number 96-2 192-B, in the 124th Judicial District Court of Gregg County, Texas, and that it has no further duty to indemnify or pay Defendant Chaney on such judgment.