In re Allstate Cnty. Mut. Ins. Co.

SHERRY RADACK

Writ granted in part.

Ronald J. Restrepo, Nicole S. Bakare, N. Kimberly Hoesl, Doyle, Restrepo, Harvin & Robbins, L.L.P., Houston, TX, for Appellant. David L. Miller, Diane F. Burgess, Miller, Scamardi & Carrabba, P.C., Houston, TX, for Appellee.

SHERRY RADACK, Chief Justice.

Relator, Allstate County Mutual Insurance Company, seeks a writ of mandamus compelling the trial court to (1) vacate its December 10, 2013 order denying Allstate's motion to sever and abate extra-contractual and bad faith claims asserted against it and (2) enter an order severing and abating those extra-contractual and bad faith claims until the breach of contract claim brought by the real parties in interest, Raymond Briers, Jr. and Stacy Briers (collectively, Briers), individually and as representatives of the estate of Grant Briers, has been resolved. We partially grant relief.

Because the Briers' settlement claims would be negated by a determination that they lacked coverage under the insurance contract, requiring Allstate to prepare for and litigate the settlement claims, which may have not yet accrued and may be rendered moot by the breach of contract claim, would not do justice, avoid prejudice, or further convenience. See In re Progressive Cnty. Mut. Ins. Co., 439 S.W.3d at 426–28; In re Old Am. Cnty. Mut. Fire Ins. Co., 2013 WL 398866, at *4; In re State Farm Mut. Auto. Ins. Co., 395 S.W.3d at 237–39; In re Am. Nat'l Cnty. Mut. Ins. Co., 384 S.W.3d at 437–39; In re United Fire Lloyds, 327 S.W.3d at 256; Millard, 847 S.W.2d at 673. Further, allowing the Briers to conduct broad discovery into Allstate's claims handling history regarding unrelated accidents and then allowing the introduction of such information at the trial of the Briers' breach of contract claim would be manifestly unjust. See In re Progressive Cnty. Mut. Ins. Co., 439 S.W.3d at 426–27; In re Old Am. Cnty. Mut. Fire Ins. Co., 2013 WL 398866, at *4. Finally, severance of the Briers' settlement claims from the breach of contract claim would not prejudice the parties' rights. Accordingly, we conclude that severance of the settlement claims was required. See Boyd, 177 S.W.3d at 922; Womack, 291 S.W.2d at 683; In re Progressive Cnty. Mut. Ins. Co., 439 S.W.3d at 426–28; In re Old Am. Cnty. Mut. Fire Ins. Co., 2013 WL 398866, at *4; In re State Farm Mut. Auto. Ins. Co., 395 S.W.3d at 237–39; In re Am. Nat'l Cnty. Mut. Ins. Co., 384 S.W.3d at 437–39; In re United Fire Lloyds, 327 S.W.3d at 256; Millard, 847 S.W.2d at 673.

The Briers alleged the misrepresentation claims as alternatives to their breach of contract claim. Unlike the settlement claims, the misrepresentation claims do not allege that Allstate failed to act in good faith to comply with duties imposed by the insurance contract, but instead allege that the Briers are entitled to damages even if they are not covered by the insurance contract. In these claims, the Briers alleged that Allstate, Insurance Network of Texas, Eddie Croix Insurance Agency, Inc., and Randy Croix made material misrepresentations and misstatements of law related to the insurance policy issued by Allstate to T & R Pipeline that the Briers relied on to their detriment. See Tex. Bus. & Comm.Code Ann. § 17.46(b)(5), (b)(12) (West 2011); Tex. Ins.Code Ann. §§ 541.061, 541.151 (West 2009); Celtic Life Ins. Co. v. Coats, 885 S.W.2d 96, 97–100 (Tex.1994); Brown & Brown of Tex., Inc. v. Omni Metals, Inc., 317 S.W.3d 361, 381 (Tex.App.-Houston [1st Dist.] 2010, pet. denied).

The Briers sued Insurance Network of Texas, Eddie Croix Insurance Agency, Inc., and Randy Croix as agents of Allstate and allege that the insurance policy at issue was sold by Randy Croix, as an agent for Allstate. Therefore, if Allstate is liable for the allegations in the misrepresentation claims, the liability would be based on Randy Croix's actions as Allstate's agent. See, e.g., Coats, 885 S.W.2d at 98 (“An insurance company is generally liable for any misconduct by an agent that is within the actual or apparent scope of the agent's authority.”); Omni Metals, Inc., 317 S.W.3d at 377–78, 381. In its motion requesting severance, Allstate sought severance of the misrepresentation claims alleged against Allstate from the Briers' breach of contract claim. But the record before the Court reflects neither that the other defendants filed a similar motion nor that Allstate sought severance of the Briers' claims asserted against it from the claims asserted against the other defendants. As a result, the Briers' misrepresentation claims against Allstate involve the same facts and issues as, and are interwoven with, the misrepresentation claims against Insurance Network of Texas, Eddie Croix Insurance Agency, Inc., and Randy Croix, which claims would remain pending in the underlying lawsuit regardless of any severance of these claims against Allstate. See Guar. Fed. Sav. Bank, 793 S.W.2d at 658.

Further, the misrepresentation claims are not bad faith claims, are not dependent upon a determination that Allstate has a contractual duty to pay underinsured motorist benefits to the Briers, and will not be rendered moot if Allstate prevails on the breach of contract claim. See Tex. Bus. & Comm.Code Ann. § 17.46(b)(5), (b)(12); Tex. Ins.Code Ann. § 541.061(3), (4), (5). The misrepresentation claims, like promissory estoppel claims, are asserted as alternative causes of action to the breach of contract claim, alleging that Allstate, Insurance Network of Texas, Eddie Croix Insurance Agency, Inc., and Randy Croix are liable for the Briers' damages even if the Briers are not covered by the insurance policy. Compare Tex. Bus. & Comm.Code Ann. § 17.46(b)(5), (b)(12); Tex. Ins.Code Ann. §§ 541.061(3), (4), (5), 541.151, with Miller v. Raytheon Aircraft Co., 229 S.W.3d 358, 378–79 (Tex.App.-Houston [1st Dist.] 2007, no pet.) (stating elements of promissory estoppel claim). Therefore, unlike the Briers' settlement claims, requiring Allstate to litigate the misrepresentation claims at the same time as the breach of contract claim would promote convenience and judicial economy.

Finally, Allstate has not offered evidence to demonstrate how it will be prejudiced if it has to prepare for and litigate the misrepresentation claims in conjunction with the breach of contract claim. See Allstate Ins. Co. v. Hunter, 865 S.W.2d 189, 194 (Tex.App.-Corpus Christi 1993, orig. proceeding).

Accordingly, we conclude that the trial court acted within its discretion when it denied Allstate's motion to sever insofar as Allstate requested severance of the misrepresentation claims from the breach of contract claim. See Duenez, 237 S.W.3d at 693; Morgan, 675 S.W.2d at 734; Womack, 291 S.W.2d at 683.

If the Briers' settlement claims are tried with the breach of contract claim, the trial court and the parties will be required to conduct discovery, prepare for trial, and conduct voir dire on claims that may have not yet accrued and that could be rendered moot by the portion of the trial relating to breach of contract for underinsured motorist benefits. See In re Progressive Cnty. Mut. Ins. Co., 439 S.W.3d at 427–28; In re Old Am. Cnty. Mut. Fire Ins. Co., 2013 WL 398866, at *4; In re Am. Nat'l Cnty. Mut. Ins. Co., 384 S.W.3d at 439; Millard, 847 S.W.2d at 675–76. Accordingly, we conclude that Allstate has no adequate remedy by appeal. See In re Progressive Cnty. Mut. Ins. Co., 439 S.W.3d at 427–28; In re Old Am. Cnty. Mut. Fire Ins. Co., 2013 WL 398866, at *4; In re State Farm Mut. Auto. Ins. Co., 395 S.W.3d at 239; In re Am. Nat'l Cnty. Mut. Ins. Co., 384 S.W.3d at 439; In re United Fire Lloyds, 327 S.W.3d at 256; Millard, 847 S.W.2d at 675–76.

Based on our review of the record, we conclude that the Briers' settlement claims are severable from the breach of contract claim, the facts and circumstances of the case require a severance to prevent manifest injustice, and the legal rights of the parties will not be prejudiced thereby. See Womack, 291 S.W.2d at 683. The trial court, therefore, abused its discretion in refusing to sever the Briers' settlement claims from the breach of contract claim and abate the settlement claims pending the determination of Allstate's liability for the breach of contract claim. See In re Am. Nat'l Cnty. Mut. Ins. Co., 384 S.W.3d at 439; In re Reynolds, 369 S.W.3d 638, 650–55 (Tex.App.-Tyler 2012, orig. proceeding); In re United Fire Lloyds, 327 S.W.3d at 257; see also In re Old Am. Cnty. Mut. Fire Ins. Co., 2013 WL 398866, at *4–5.

We further conclude, however, that the facts and circumstances of the case do not require severance of the Briers' misrepresentation claims from their breach of contract claim and that the trial court properly exercised its discretion in determining that the misrepresentation claims should be tried with the breach of contract claim.

Accordingly, we conditionally grant Allstate's petition for writ of mandamus in part and order the trial court to (1) vacate the portion of the December 10, 2013 order that denies severance and abatement of the “Bad Faith,” “Unfair Settlement Practices,” and “Failure to Promptly Pay Claims” causes of action, (2) grant Allstate's motion to sever as to those causes of action, and (3) abate those causes of action until the Briers' breach of contract claim is resolved.

Nevertheless, because the trial court did not abuse its discretion when it determined that the “Misrepresentation of the Insurance Policy” claim and the “Violations of the DTPA” claim should remain pending with the breach of contract claim, we deny Allstate's petition for writ of mandamus insofar as it requests an order compelling the trial court to sever and abate the Briers' “Misrepresentation of the Insurance Policy” and “Violations of the DTPA” causes of action.

We are confident that the trial court will promptly comply, and our writ will issue only if it does not. -------- Notes: