Opinion
No. 05-04-00663-CV
Opinion Filed April 19, 2005.
On Appeal from the 44th Judicial District Court, Dallas County, Texas, Trial Court Cause No. 03-2622.
Affirm.
Before Justices WRIGHT, FITZGERALD, and LANG-MIERS.
MEMORANDUM OPINION
Jordan Matthew and Milton Jackson appeal the take-nothing summary judgment granted in favor of Old American County Mutual Fire Insurance Co. In three points of error, appellants contend the trial court erred by granting summary judgment on their claims for (1) breach of contract, (2) unfair settlement practices, and (3) breach of the duty to settle. We overrule appellants' points of error and affirm the trial court's judgment.
Russell Cheek was driving Jackson's pickup truck when he rear-ended a car driven by Barry Hopwood in which Matthew was a passenger. On October 28, 2002, Matthew obtained a default judgment for $1,656,000 against Jackson for injuries she received in the accident. Jackson subsequently assigned the majority of his rights under his insurance policy with appellee to Matthew. Jackson and Matthew then sued appellee for breach of contract, unfair settlement practices, and breach of the duty to settle. Appellee filed a motion for summary judgment claiming, in part, it was entitled to judgment as a matter of law on each of appellants' claims because appellee was never notified of the underlying suit and was prejudiced by the lack of notice. Appellants responded, arguing appellee could not rely on the policy terms requiring notification of suit because appellee (1) failed to give Jackson notice of third party claims and settlement, (2) told Jackson that Matthew's claim had been resolved, (3) failed to investigate and accept Matthew's settlement offer, and (4) hid its identity. After considering the summary judgment evidence, the trial court granted appellee's motion for summary judgment. This appeal followed.
Appellee's motion also contained alternative grounds for partial summary judgment. The trial court specifically granted a final summary judgment and entered a take-nothing judgment. Thus, we consider only the grounds for a final summary judgment and not the alternative grounds.
We review traditional summary judgments using well-known standards. Tex. R. Civ. P. 166a(c); Black v. Victoria Lloyds Ins. Co., 797 S.W.2d 20, 23 (Tex. 1990). To prevail on summary judgment, a defendant as movant must either disprove at least one element of each of the plaintiff's theories of recovery or plead and conclusively establish each essential element of an affirmative defense, thereby rebutting the plaintiff's cause of action. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). A matter is conclusively established if ordinary minds could not differ as to the conclusion to be drawn from the evidence. Triton Oil Gas Corp. v. Marine Contractors Supply, Inc., 644 S.W.2d 443, 446 (Tex. 1982). Once the movant establishes its right to summary judgment, the burden then shifts to the nonmonvant to raise a fact issue precluding judgment. Clear Creek Basin Auth., 589 S.W.2d at 678.
Failure to comply with an insurance policy notice provision by not providing notice of suit until after a default judgment is final, when the insurer does not otherwise have actual notice of the suit, prejudices the insurer as a matter of law and relieves the insurer of liability under the policy. Liberty Mut. Ins. Co. v. Cruz, 883 S.W.2d 164, 165 (Tex. 1993). Actual knowledge of a claim does not equate to actual knowledge of service of suit. Members Ins. Co. v. Branscum, 803 S.W.2d 462, 466 (Tex.App.-Dallas 1991, no pet.). It is the service of citation upon the insured which imposes on the insured the duty to answer to prevent a default judgment. Id. at 466-67. No duty is imposed on an insurer until its insured is served and sends the suit papers to the insurer. Id. at 467. This action by the insured triggers the insurer's obligation to tender a defense and answer the suit. Id.
The summary judgment evidence shows that Jackson had been very ill around the time the lawsuit was filed. Because of his illness, he did not remember being served with the petition, and he did not forward any suit papers to appellee. Michael Roque, the insurance adjuster evaluating the claim, testified that he corresponded with Joseph Malley, Matthew's first attorney. Roque later received a letter from that attorney stating he no longer represented Matthew. Roque was never advised that Matthew had retained new counsel, was never advised of any intent to file a lawsuit, and did not receive any correspondence from Matthew or her attorney about a lawsuit. Nor did Jackson ever notify Roque verbally or in writing that Jackson had been served with suit papers. Roque did not receive notice of the default judgment until thirty days after the entry of the judgment. This evidence conclusively shows that Jackson failed to provide notice of suit to appellee until after the default judgment was final, and that appellee did not otherwise have actual notice of the suit. Under these circumstances, appellee was prejudiced as a matter of law, relieving it of liability under the policy. See Liberty Mut., 883 S.W.2d at 165. Thus, we conclude the trial court properly granted appellee's motion for summary judgment.
In reaching this conclusion, we necessarily reject appellants' contentions that appellee could not rely on the notice provision of the insurance policy because appellee (1) failed to give Jackson notice of third party claims and settlement, (2) told Jackson that Matthew's claim had been resolved, (3) failed to investigate and accept Matthew's settlement offer, and (4) hid its identity. We will address each of appellants' contentions in turn, assuming, without deciding, that the complained-of actions would preclude appellee from relying on the notice provision.
Appellants first argue that appellee cannot rely on the notice provision of its insurance policy with Jackson because it did not notify Jackson that it had settled any third party claims. In particular, appellants contend appellee settled Hopwood's property claim and failed to notify them. However, the summary judgment record does not contain evidence of a settlement. Rather, it shows only that appellee sent Hopwood some property damage payments, a portion of which were returned. Thus, appellants' first contention lacks merit. Appellants next argue appellee cannot rely on the notice provision of its policy with Jackson because employees at "Best Rate told him the third party claims were being handled and not to be concerned." According to appellants, this testimony creates a "fact issue as to whether Jackson gave proper notice to Old American through Best Rate." We disagree. The deposition testimony relied on by appellants indicates that Jackson told someone at "Best Rate" about telephone calls he was receiving from unidentified persons, and Jackson was told to refer the callers to the insurance company. Contrary to appellants' assertion, the testimony does not in any way show that Jackson notified appellee when he received suit papers from appellants. Appellants also maintain that appellee cannot rely on the notice provision because it did not investigate and accept Matthew's settlement offer. However, the letter appellants rely on to show a settlement offer does not contain an offer for settlement; it merely informs appellee that Matthew has been unable to contact the adjuster, is no longer represented by counsel, and requests appellee to have someone contact her to "discuss the accident." Attached to the facsimile letter are "ongoing" medical expenses Matthew attributed to the accident. At her deposition, Matthew testified she had not made a settlement offer or demand upon appellee because the claim, her injuries, and the amount of medical expenses were still being evaluated. Because no settlement demand was made by Matthew, appellee cannot be precluded from relying on the notice provisions of the policy for failing to accept Matthew's settlement offer. Finally, appellants contend appellee is precluded from relying on the notice provision because appellee hid its identity from appellants. During his deposition, however, Jackson admitted he knew Roque was assigned as the adjuster for Jackson's claim and Jackson knew how to contact Roque. Thus, Jackson, the insured, knew how to contact appellee. Moreover, the summary judgment evidence also shows that Matthew's first attorney corresponded with Roque. Therefore, appellants' argument that appellee hid its identity from them lacks merit. After reviewing the summary judgment evidence under the appropriate standard, we cannot conclude that appellants met their burden as nonmovant to create a fact issue precluding judgment. We overrule appellants' points of error.
Accordingly, we affirm the trial court's judgment.