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No. 05-16-01125-CV

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Opinion by Justice Whitehill

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Court Opinion Summary (No. 05-16-01125-CV) — Opinion by Justice Whitehill

Factual and Procedural Background

Appellee Alvin Glenn Rhymes sued appellants United Automobile Insurance Services (UAIS) and Old American County Mutual Fire Insurance Company (Old American), asserting that he was injured in an automobile accident caused by Maria S. Hernandez, that Maria was insured under an Old American auto policy, that Rhymes obtained a default judgment against Maria for approximately $54,000, and that he was entitled to recover on the Old American policy. Old American underwrites personal auto insurance through managing general agents such as UAIS; UAIS handles claims arising under the policies it issues.

Francisco Hernandez procured the Old American policy through UAIS, which listed Maria Hernandez as an authorized driver and provided a bodily injury limit of $30,012 per person. Maria was served in the underlying personal-injury suit but did not answer; the trial court entered a default judgment in November 2012 for $53,073 plus costs. Maria and Francisco never notified UAIS or Old American of the suit, never forwarded suit papers, and did not request a defense. Rhymes' counsel communicated with UAIS and later sent a copy of the default judgment to UAIS more than six months after the judgment.

Procedurally, Rhymes asserted two claims: (1) a contract claim as a third-party beneficiary of the Old American policy and (2) a Stowers/Negligence claim for negligent failure to settle within policy limits. The parties filed cross-motions for summary judgment. The trial court granted summary judgment for Rhymes (granting Rhymes' partial summary judgment on coverage and entering final judgment awarding $30,012 against "Defendant") and denied appellants' summary judgment motion. Appellants timely appealed. The appellate court reversed and rendered judgment that Rhymes take nothing.

Legal Issues Presented

Whether the insured's (Maria's) failure to give appellants notice of suit and request a defense, combined with the default judgment against her, entitled appellants to summary judgment.
Whether the trial court erred by granting summary judgment against UAIS because UAIS is not the insurer on the policy in question.

The court accepted appellants' first issue and thus did not address the second issue.

Arguments of the Parties

Appellants' Arguments

Maria Hernandez never provided appellants (UAIS or Old American) with notice of the suit, nor did she request a defense as required by the policy's notice provisions.
The lack of pre-judgment notice, together with the default judgment against Maria, prejudiced appellants and defeats Rhymes' claim under the policy, entitling appellants to summary judgment.
As an alternative or additional point, appellants argued (per a note in the opinion) that Crocker stands for the proposition that a complete lack of notice absolves the insurer of the need to prove prejudice (the court did not reach this argument because it concluded the default judgment establishes prejudice as a matter of law).
Appellants additionally contended on appeal (as a second issue) that UAIS is not the insurer on the policy and thus summary judgment against UAIS was erroneous (the court did not reach this issue because it resolved appeal on the notice/prejudice ground).

Appellee (Rhymes) Arguments

Appellants failed to prove prejudice resulting from Maria's lack of notice; Rhymes relied on authorities he argued distinguished this case.
Rhymes asserted that appellants received actual notice from Rhymes' attorney (copies of the petition and confirmations of service), and that such third-party notice satisfied the notice requirement.
Rhymes pointed to claim-file materials showing appellants viewed coverage as "clear" and liability as "accepted," arguing these facts undermine a showing of prejudice.
Rhymes argued Old American failed to properly plead prejudice; the court found this pleading challenge was not preserved because Rhymes litigated prejudice on the merits in his summary-judgment response.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Durham v. Children's Med. Ctr. of Dallas, 488 S.W.3d 485 (Tex. App.—Dallas 2016, pet. denied)	Standard of review for summary judgment: review de novo.	The court invoked this case to state that summary-judgment review is de novo.
Dallas Cent. Appraisal Dist. v. Mission Aire IV, L.P., 279 S.W.3d 471 (Tex. App.—Dallas 2009, pet. denied)	Explains appellate options when both parties move for summary judgment (affirm, reverse and render, or reverse and remand).	Used to frame the appellate court's authority to review both parties' summary-judgment evidence and to render judgment for the other side if appropriate.
CU Lloyd's of Tex. v. Feldman, 977 S.W.2d 568 (Tex. 1998) (per curiam)	Caution that it can be inappropriate for an appellate court to render judgment on a motion for partial summary judgment in some procedural contexts.	The court noted the Feldman principle but explained it did not prevent review here because the trial court granted the partial summary judgment and both parties' motions addressed the same coverage issue.
Valence Operating Co. v. Dorsett, 164 S.W.3d 656 (Tex. 2005)	Appellate court can address motion for partial summary judgment when it addresses the same issues as the opposing party's motion.	Supported the court's decision to address Rhymes' partial summary-judgment motion because it covered the same coverage issue as appellants' motion.
Ohio Cas. Ins. Co. v. Time Warner Entm't Co., L.P., 244 S.W.3d 885 (Tex. App.—Dallas 2008, pet. denied)	General rule: an injured person cannot sue the tortfeasor's liability insurer directly until the tortfeasor's liability is determined by agreement or judgment.	The court cited this principle to explain why Rhymes, after obtaining judgment, could sue the insurer as a third-party beneficiary but would be subject to the policy's conditions precedent.
Martinez v. ACCC Ins. Co., 343 S.W.3d 924 (Tex. App.—Dallas 2011, no pet.)	After judgment, the injured person can sue the insurer as a third-party beneficiary and "steps into the shoes" of the insured and is bound by policy conditions.	The court used Martinez to explain that Rhymes stands in Maria's position with respect to policy conditions (including notice requirements).
John H. Carney & Assocs. v. Tex. Prop. & Cas. Ins. Guar. Ass'n, 354 S.W.3d 843 (Tex. App.—Austin 2011, pet. denied)	An assignee "stands in the shoes" of the assignor and acquires no greater rights than the assignor possessed.	Applied to explain that Rhymes' turnover order did not give him greater rights under the policy than Maria had.
Weaver v. Hartford Acc. & Indem. Co., 570 S.W.2d 367 (Tex. 1978)	Compliance with the notice-of-suit provision is a condition precedent to insurer liability (quoted in Harwell).	Quoted in support of the proposition that compliance with the policy's notice provision is a condition precedent.
Harwell v. State Farm Mut. Auto. Ins. Co., 896 S.W.2d 170 (Tex. 1995)	Holds (i) notice provision is a condition precedent; (ii) failure to notify does not relieve insurer unless insurer is prejudiced; and (iii) failure to notify of a default judgment until after it is final prejudices insurer as a matter of law.	The court relied on Harwell to state that failure to give pre-judgment notice combined with a default judgment can entitle insurer to summary judgment because prejudice is established as a matter of law.
National Union Fire Ins. Co. v. Crocker, 246 S.W.3d 603 (Tex. 2008)	Holds that mere awareness by an insurer does not impose a duty to defend; the insured must notify the insurer and request a defense to trigger the insurer's duties to defend and indemnify.	The court used Crocker for the principle that duties to defend/indemnify are not triggered until the insured notifies the insurer and requests a defense, and that notice by a third party does not satisfy this requirement.
Egly v. Farmers Ins. Exch., No. 03-17-00467-CV, 2018 WL 895043 (Tex. App.—Austin Feb. 15, 2018) (mem. op.)	Recent appellate authority concluding that an insured's failure to give notice, plus a default judgment, mandates summary judgment for insurer.	Cited as a sister-court decision consistent with the court's holding that lack of notice plus default judgment defeats coverage.
Hoel v. Old Am. Cty. Mut. Fire Ins. Co., No. 01-16-00610-CV, 2017 WL 3911020 (Tex. App.—Houston [1st Dist.] Sept. 7, 2017, pet. denied) (mem. op.)	Analogous facts: insured never requested a defense; insurer had actual knowledge but insured had not forwarded suit papers; default judgment establishes prejudice as a matter of law.	The court discussed Hoel at length as a closely similar case and adopted its reasoning that lack of insured notice and a default judgment entitle insurer to summary judgment.
Jenkins v. State & Cty. Mut. Fire Ins. Co., 287 S.W.3d 891 (Tex. App.—Fort Worth 2009, pet. denied)	Similar authority addressing lack of notice and default judgment prejudice.	Cited along with other cases as supporting the conclusion that lack of notice plus default judgment warrants summary judgment for insurer.
Hudson v. City of Houston, 392 S.W.3d 714 (Tex. App.—Houston [1st Dist.] 2011, pet. denied)	Analogous case involving ordinances rather than a private insurance policy, addressing notice and prejudice principles.	Cited as similar authority supporting the proposition that insured's failure to give required notice can be fatal to a coverage claim after a default judgment.
PAJ, Inc. v. Hanover Ins. Co., 243 S.W.3d 630 (Tex. 2008)	Late notice doctrine: if delay did not prejudice insurer, late notice does not defeat coverage; in PAJ the parties stipulated the insurer was not prejudiced.	The court distinguished PAJ because it involved late notice with a stipulation of no prejudice, whereas this case involved a complete lack of pre-judgment notice and a default judgment showing prejudice.
Prodigy Communications Corp. v. Agricultural Excess & Surplus Ins. Co., 288 S.W.3d 374 (Tex. 2009)	Claims-made policy notice: insurer must show prejudice from late notice to avoid coverage.	Distinguished by the court because Prodigy addressed late notice under a claims-made policy and here appellants proved prejudice via the default judgment.
Lennar Corp. v. Markel Am. Ins. Co., 413 S.W.3d 750 (Tex. 2013)	Consent-to-settle provision: retailer's breach does not excuse insurer unless insurer is prejudiced; jury here failed to find prejudice.	Distinguished because Lennar involved a jury finding of no prejudice, whereas appellants in this case conclusively proved prejudice by virtue of the default judgment.
Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492 (Tex. 1991)	Issues can be tried by consent on summary judgment; failure to preserve a procedural complaint when litigated on the merits.	Applied to hold that Rhymes did not preserve his pleading-based complaint about appellants' pleading of prejudice because he litigated the issue on the merits in his summary-judgment response.
Ontiveros v. Flores, 218 S.W.3d 70 (Tex. 2007) (per curiam)	Addresses appellate review of certain claims when not appealed; noted in context of not addressing Rhymes' Stowers/Negligence claim because he did not appeal the trial court's implicit denial.	Cited to explain why the court did not address Rhymes' Stowers/Negligence claim on appeal.

Court's Reasoning and Analysis

The court's analysis proceeded in several steps, stated in the opinion and applied to the summary-judgment record:

The court first established the legal framework: an injured person may sue an insurer as a third-party beneficiary only after the tortfeasor's liability is determined, but such a third party "steps into the shoes" of the insured and is bound by the policy's conditions precedent (citing Ohio Cas., Martinez). The court also noted that a turnover order transferring the insured's rights to the judgment creditor does not enlarge those rights (citing John H. Carney).
The court examined the policy's "Duties After an Accident or Loss" provisions, which require the insured to notify the insurer promptly of how, when, and where the accident occurred and to promptly send copies of any notices or legal papers. The policy states that if the insurer shows that the insured's failure to provide notice prejudices the insurer's defense, there is no liability coverage.
The court reviewed controlling precedent on notice and prejudice:
- Harwell: compliance with notice-of-suit provision is a condition precedent; insured's failure to notify does not relieve insurer unless insurer is prejudiced; failure to notify of a default judgment until after it is final prejudices insurer as a matter of law.
- Crocker: awareness alone does not trigger an insurer's duty to defend; the insured must notify and request a defense to trigger the insurer's duties to defend and indemnify.
The court compared the summary-judgment evidence to the policy and precedent: appellants conclusively established that Maria never notified them of the suit and never requested a defense, and Rhymes took a default judgment against Maria. The court found that these facts fit the Harwell/Crocker framework and warranted summary judgment for appellants because the default judgment established prejudice as a matter of law.
The court considered and rejected Rhymes' counterarguments:
- Rhymes argued appellants failed to prove prejudice and relied on cases (PAJ, Prodigy, Lennar) where late notice did not result in prejudice or parties stipulated lack of prejudice; the court distinguished those cases because they involved late notice or stipulations of no prejudice, whereas this case involved a complete lack of pre-judgment notice plus a default judgment.
- Rhymes contended that his attorney's sending of the petition and confirmation of service to appellants satisfied the notice requirement. The court rejected this argument, citing Crocker: duties are triggered by notice from the insured and a request for defense; third-party notice does not suffice.
- The court also found that claim-file indications that coverage was viewed as "clear" did not create a fact issue on prejudice because the default judgment deprived appellants of the ability to litigate liability without facing a new burden to set aside the default judgment.
- Rhymes' pleading argument (that Old American failed to plead prejudice) was not preserved because Rhymes litigated the prejudice issue on the merits rather than raising a timely pleading objection (citing Roark).
Based on the foregoing, the court concluded appellants had conclusively proved (a) the insured failed to give any notice of suit and (b) appellants were prejudiced by that failure. Therefore, the trial court erred in granting summary judgment for Rhymes and denying appellants' motion.

Holding and Implications

Holding: The court concluded that appellants proved entitlement to judgment as a matter of law because Maria never notified appellants of the suit and a default judgment against Maria established prejudice as a matter of law. The appellate court therefore reversed the trial court's judgment and rendered judgment for appellants.

Core Ruling: REVERSED and RENDERED — appellee Alvin Glenn Rhymes takes nothing on his claims against appellants United Automobile Insurance Services and Old American County Mutual Fire Insurance Company.

Direct consequences ordered by the court (as stated in the opinion):

The trial court's judgment is reversed and judgment is rendered that Rhymes take nothing from appellants.
Appellants United Automobile Insurance Services and Old American County Mutual Fire Insurance Company are ordered to recover their costs of appeal from Rhymes.
The District Clerk of Dallas County is directed to release appellants' joint deposit in lieu of a supersedeas bond to appellants. (Judgment entered May 4, 2018.)

Broader implications: The opinion relies on and applies existing Texas Supreme Court precedent (e.g., Harwell and Crocker) and recent appellate decisions to reaffirm that a complete lack of insured notice combined with a default judgment establishes prejudice as a matter of law, barring insurer liability. The opinion does not purport to set new law beyond applying those precedents; it reverses and renders based on the established rules as applied to the undisputed summary-judgment facts.

This summary is based exclusively on the content of the provided opinion. No information beyond the opinion text was added or inferred.

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UNITED AUTOMOBILE INSURANCE SERVICES AND OLD AMERICAN COUNTY MUTUAL FIRE INSURANCE COMPANY, Appellants v. ALVIN GLENN RHYMES, Appellee

Opinion by Justice Whitehill

On Appeal from the 95th Judicial District Court Dallas County, Texas
Trial Court Cause No. DC-15-07623

MEMORANDUM OPINION

Before Justices Lang, Brown, and Whitehill
Opinion by Justice Whitehill

Appellee Alvin Glenn Rhymes sued appellants United Automobile Insurance Services (UAIS) and Old American County Mutual Fire Insurance Company. Rhymes claimed that (i) he was injured in an auto accident with Maria S. Hernandez, (ii) Maria was insured under an Old American auto insurance policy, (iii) he obtained a default judgment against her for about $54,000, and (iv) he was entitled to recover on the Old American insurance policy. The parties filed cross-motions for summary judgment, and the trial court granted summary judgment for Rhymes.

Rhymes asserted his claims against both UAIS and Old American even though he acknowledged that UAIS is "a managing general agent" and "an authorized claim representative" for Old American.

The evidence established that Maria never gave notice of suit to or requested a defense from UAIS or Old American. The pivotal question in this case is whether that fact conclusively defeats Rhymes' claims. Because it does, we reverse and render judgment that Rhymes take nothing.

I. BACKGROUND A. Facts

We draw these facts from the summary judgment evidence:

Old American writes personal auto insurance in Texas through managing general agents like UAIS. UAIS handles any claims arising under Old American policies it issues.

Francisco Hernandez bought an Old American personal auto insurance policy through UAIS. The policy went into effect in May 2011 and listed Maria Hernandez as an authorized driver. The bodily injury policy limit was "30,012/person."

In June 2012, Rhymes sued Maria S. Hernandez in a Texas district court, alleging that he was injured in a June 2011 auto accident that she negligently caused. Maria was served with process but did not answer. In November 2012, the court signed a default judgment awarding Rhymes $53,073 in damages and $737.95 in court costs against Maria. Rhymes sent a copy of the default judgment to UAIS over six months later.

We note the middle initial because there was evidence that Maria S. Hernandez had a sister named Maria M. Hernandez. Unlike Maria S. Hernandez, Maria M. Hernandez did communicate with UAIS on two occasions. No one claims that the Maria S. Hernandez that Rhymes sued was not insured by the Old American policy at issue. Accordingly, we omit the middle initial in the remainder of this opinion.

Meanwhile, Rhymes' attorney was also communicating with UAIS about the accident and attempting to settle his personal injury claim against Maria. UAIS made several unsuccessful attempts to contact Francisco and Maria about the matter before the default judgment was signed. Maria and Francisco never contacted UAIS or Old American, never sent suit papers to them, and never asked them to defend Maria.

B. Procedural History

Rhymes sued appellants. His live pleading asserted two claims: One was a contract claim based on Rhymes' status as a third-party beneficiary of the Old American policy. The other was styled a "Stowers/Negligence" claim based on appellants' "negligent failure to settle" Rhymes' personal injury claim against Maria within policy limits.

Rhymes filed a motion for partial summary judgment "on the issue of coverage," and Appellants filed a summary judgment motion seeking a final take-nothing judgment.

Each side responded to the other's motion. Rhymes' response included evidence that he had obtained a turnover order in the underlying suit against Maria. The order required Maria to turn over to Rhymes all rights, title, and interest in the insurance policy.

After a hearing, the trial judge signed two orders. One denied appellants' motion. The other order (i) recited that the insurance policy covered Rhymes' damages and (ii) awarded Rhymes $30,012 against "Defendant." Although the second order did not mention Rhymes' "Stowers/Negligence" claim, it implicitly denied that claim by including language sufficient to make it a final judgment.

No one complains that the judgment doesn't specify which defendant is liable for the $30,012. Since we are reversing and rendering judgment against Rhymes, any error is a nonissue.

Appellants timely appealed.

II. ISSUES PRESENTED

Appellants raise two issues. Their first issue argues that the trial court erred by granting summary judgment for Rhymes instead of for appellants because the evidence established that (i) Maria never gave appellants notice that she had been sued and (ii) the default judgment prejudiced appellants. Their second issue argues that the trial court erred by granting summary judgment against appellant UAIS because UAIS is not the insurer on the insurance policy in question.

We agree with appellants' first issue and thus need not address the second.

III. STANDARD OF REVIEW

We review a summary judgment de novo. Durham v. Children's Med. Ctr. of Dallas, 488 S.W.3d 485, 489 (Tex. App.—Dallas 2016, pet. denied).

When both sides move for summary judgment, each bears the burden of establishing that it is entitled to judgment as a matter of law. If the trial court grants one motion and denies the other, a non-prevailing party may appeal both the granting of the prevailing party's motion and the denial of its own motion. We review the summary-judgment evidence presented by both parties and determine all questions presented. We may affirm the trial court's summary judgment, reverse and render judgment for the other side if appropriate, or reverse and remand if neither side met its summary judgment burden. Dallas Cent. Appraisal Dist. v. Mission Aire IV, L.P., 279 S.W.3d 471, 473-74 (Tex. App.—Dallas 2009, pet. denied).

If the trial court grants a motion for final summary judgment and denies a cross-motion for partial summary judgment, and the appellate court concludes that the summary judgment grant was erroneous, it can be inappropriate for the appellate court to consider and render judgment on the motion for partial summary judgment. See CU Lloyd's of Tex. v. Feldman, 977 S.W.2d 568, 569 (Tex. 1998) (per curiam). But here the trial court granted the partial summary judgment motion and rendered final judgment, so we cannot avoid reviewing Rhymes' motion. Moreover, the appellate court can address the motion for partial summary judgment if it addresses the same issues as the opposing party's summary judgment motion. See Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). Here, both sides' motions addressed the coverage issue.

IV. ANALYSIS

A. Issue One: Did the insured's failure to give appellants notice of suit, plus the default judgment against her, entitle appellants to summary judgment?

Appellants' first issue argues that Maria's complete failure to give appellants notice of Rhymes' suit, coupled with the default judgment against her, defeats Rhymes' claim under the policy. For the reasons that follow, we conclude that it does.

B. Applicable Law and Policy Provisions

Generally, an injured person cannot sue the tortfeasor's liability insurer directly until the tortfeasor's liability has been determined by agreement or judgment. See Ohio Cas. Ins. Co. v. Time Warner Entm't Co., L.P., 244 S.W.3d 885, 888 (Tex. App.—Dallas 2008, pet. denied). After judgment, the injured person can sue the insurer as a third-party beneficiary of the insurance policy. See Martinez v. ACCC Ins. Co., 343 S.W.3d 924, 929 (Tex. App.—Dallas 2011, no pet.). As a third-party beneficiary, Rhymes therefore "steps into the shoes" of Maria and is bound by the policy's conditions precedent. See id.

Rhymes also obtained Maria's rights in the policy through a turnover order, but he does not contend that this order increased his rights under the policy. Indeed, in his summary judgment response, he argued only that the turnover order gave him "the rights, duties, and obligations of the insured" under the policy. Thus, even under the turnover order Rhymes stands in Maria's shoes with respect to the insurance policy. Cf. John H. Carney & Assocs. v. Tex. Prop. & Cas. Ins. Guar. Ass'n, 354 S.W.3d 843, 850 (Tex. App.—Austin 2011, pet. denied) ("An assignee 'stands in the shoes' of the assignor but acquires no greater right than the assignee possessed.").

We next review Maria's duties under the policy. The policy contains these notice requirements within "PART E - DUTIES AFTER AN ACCIDENT OR LOSS":

A. We must be notified promptly of how, when and where the accident or loss happened. Notice should also include the names and addresses of any injured persons and of any witnesses. If we show that your failure to provide notice prejudices our defense, there is no liability coverage under the policy.

B. A person seeking any coverage must:

1. Cooperate with us in the investigation, settlement or defense of any claim or suit.

2. Promptly send us copies of any notices or legal papers received in connection with the accident or loss.

Thus, paragraph B.2 obligated Maria to promptly send Old American the notices and legal papers she received in connection with Rhymes' suit against her.

The Texas Supreme Court addressed the legal effect of an insured's failure to give its insurer notice as required by the policy in Harwell v. State Farm Mutual Automobile Insurance Co., 896 S.W.2d 170 (Tex. 1995). In that case, the court considered notice provisions virtually identical to those involved here and held that: (i) "[c]ompliance with the notice of suit provision is a 'condition precedent to the insurer's liability on the policy,'" id. at 173-74 (quoting Weaver v. Hartford Acc. & Indem. Co., 570 S.W.2d 367, 369 (Tex. 1978)), but (ii) "[t]he insured's failure to notify the insurer of a suit against her does not relieve the insurer from liability for the underlying judgment unless the lack of notice prejudices the insurer," id. at 174. Furthermore, "[t]he failure to notify an insurer of a default judgment against its insured until after the judgment has become final and nonappealable prejudices the insurer as a matter of law." Id. On Harwell's facts, the insurer was entitled to summary judgment because its insured failed to give notice of suit pre-judgment and the insurer was thus prejudiced as a matter of law. Id. at 175-76.

More recently, the supreme court again considered similar facts in National Union Fire Insurance Co. v. Crocker, 246 S.W.3d 603 (Tex. 2008). In that case, National Union's insured, Morris, never gave National Union notice of Crocker's personal injury suit against Morris. National Union knew about the lawsuit, however, and defended Morris's employer in the suit. After Crocker obtained a $1,000,000 default judgment against Morris, Crocker and National Union litigated National Union's liability on the policy in federal court. On certified questions from the Fifth Circuit, the Texas Supreme Court held, "National Union was obviously prejudiced in the sense that it was exposed to a $1 million judgment." Id. at 609. The court also connected (i) the insured's duty to give notice of suit to the insurer's duty to defend and (ii) the insurer's duty to defend to its duty to indemnify. See id. at 608, 609. The supreme court held that Morris's failure to give notice of suit meant National Union's duties to defend and indemnify were never triggered:

Mere awareness of a claim or suit does not impose a duty on the insurer to defend under the policy; there is no unilateral duty to act unless and until the additional insured first requests a defense—a threshold duty that the insured fulfills under the policy by notifying the insurer that the insured has been served with process and the insurer is expected to answer on its behalf. . . .

. . . National Union had no duty to notify Morris of coverage and no duty to defend Morris until Morris notified National Union that he had been served with process and expected National Union to answer on his behalf. . . . Absent a threshold duty to defend, there can be no liability to Morris, or to Crocker derivatively.

Id. at 608-09 (emphasis in original).

C. Application of the Law to the Facts

Appellants do not dispute that the policy would have covered Maria for this accident had she complied with the policy's notice requirements. The question is whether her failure to do so combined with the default judgment negates appellants' duty to indemnify and thus defeats Rhymes' claim.

At least three of our sister courts have considered facts like those in this case, and each has concluded that Weaver, Harwell, and Crocker mandate summary judgment for the insurer. See Egly v. Farmers Ins. Exch., No. 03-17-00467-CV, 2018 WL 895043 (Tex. App.—Austin Feb. 15, 2018, pet. filed) (mem. op.); Hoel v. Old Am. Cty. Mut. Fire Ins. Co., No. 01-16-00610-CV, 2017 WL 3911020 (Tex. App.—Houston [1st Dist.] Sept. 7, 2017, pet. denied) (mem. op.); Jenkins v. State & Cty. Mut. Fire Ins. Co., 287 S.W.3d 891 (Tex. App.—Fort Worth 2009, pet. denied); see also Hudson v. City of Houston, 392 S.W.3d 714 (Tex. App.—Houston [1st Dist.] 2011, pet. denied) (similar case involving ordinances rather than a private insurance policy).

We agree with the foregoing cases and discuss Hoel due to its similarity. Salinas was insured under an auto policy with the same notice provisions as in this case. Hoel was injured in an auto accident with Salinas and sued him. Hoel's attorney communicated with Salinas's insurer about the claim before and during the lawsuit, but Salinas himself never contacted the claims adjuster, forwarded the suit papers, or requested a defense. Hoel eventually took a default judgment against Salinas and sued the insurer and the claims handler. The insurer and claims handler won summary judgment, and the Houston First Court of Appeals affirmed. 2017 WL 3911020, at *1-2.

The appellate court first recited the rule that an insurer owes no duty to defend or indemnify if (i) the insured does not forward suit papers and request a defense in compliance with the policy and (ii) the insured's failure prejudices the insurer. Id. at *3. The court then discussed whether the insurer's actual knowledge of Hoel's suit negated the prejudice element. The court held that it did not because an insurer has no duty to defend or indemnify if the insured does not give notice of suit or request a defense. Id. at *4 (discussing Crocker and Hudson). Finally, the court held that the default judgment against Salinas conclusively established prejudice because it deprived the insurer of the ability to answer and defend Hoel's claims without first meeting a new burden of proof on new issues to set the default judgment aside. Id.; accord Hudson, 392 S.W.3d at 729; see also Egly, 2018 WL 895043, at *3; Jenkins, 287 S.W.3d at 899.

Here, appellants conclusively proved that Maria did not give them notice of suit or request a defense. They also conclusively proved that Rhymes took a default judgment against Maria. We agree with Hoel and the other cases cited above and hold that these facts entitled appellants to summary judgment.

Appellants also argue that Crocker stands for the premise that the insured's failure to give the insurer any notice of suit absolves the insurer of the need to prove prejudice. Because we agree with our sister courts that a default judgment shows prejudice as a matter of law, we need not address this argument. Likewise, we do not address what would happen had Maria given notice of the suit without requesting a defense as that question not before us. --------

D. Rhymes' Counterarguments

Rhymes argues principally that appellants failed to prove prejudice. He cites several cases in support, but they are all distinguishable. For example, he relies on PAJ, Inc. v. Hanover Insurance Co., 243 S.W.3d 630 (Tex. 2008). In that case, the insured under a comprehensive general liability policy sued its insurer for declarations that the insured was entitled to a defense and indemnity in a copyright suit. Unlike in this case, the insured gave the insurer notice of the suit, and the parties stipulated that (i) the insured did not give notice of suit as soon as practicable, as the policy required, and (ii) the insurer was not prejudiced. Consistent with Harwell, the supreme court held that the insured's failure to timely notify the insurer of a claim or suit does not defeat coverage if the delay did not prejudice the insurer. Id. at 636-37. Because the insurer stipulated it was not prejudiced, the court rendered judgment that the insurer could not deny coverage based on late notice. Id. at 637. PAJ is distinguishable because (i) PAJ involved late notice while this case involves a complete lack of notice and (ii) the parties in that case stipulated that there was no resulting prejudice.

Rhymes next relies on Prodigy Communications Corp. v. Agricultural Excess & Surplus Insurance Co., 288 S.W.3d 374 (Tex. 2009). There, the supreme court addressed a claims-made policy's provision requiring the insured to give the insurer notice of a claim "as soon as practicable." The supreme court held that the insurer had to show prejudice from late notice to avoid coverage based on this provision. Id. at 382-83. Because the insurer in Prodigy admitted it was not prejudiced, it could not avoid liability based on late notice. Id. at 382. Here, by contrast, appellants proved prejudice in the form of Rhymes' default judgment.

Finally, Rhymes cites Lennar Corp. v. Markel American Insurance Co., 413 S.W.3d 750 (Tex. 2013). In that case, Lennar settled some claims without its insurer Markel's consent, despite a consent-to-settle provision in the insurance policy. Id. at 753. Markel conceded that Lennar's breach did not excuse Markel from liability under the policy unless Markel was prejudiced. Id. at 754. The supreme court upheld the jury's failure to find that Markel was prejudiced. Id. at 755-57. In this case, by contrast, appellants conclusively proved prejudice in the form of Rhymes' default judgment. See, e.g., Hoel, 2017 WL 3911020, at *4-5.

Rhymes also argues that the notice of suit provision was actually satisfied here because his attorney sent appellants copies of the petition in the underlying suit and confirmation of service on Maria. Appellants reply that this fact is irrelevant. We agree with appellants.

Crocker makes clear that the insurer's duties are triggered when the insured gives notice and requests a defense. 246 S.W.3d at 608, 609. Notice given by a third party does not trigger the insurer's duty to defend and does not estop the insurer from asserting the insured's breach as a bar to liability. See id. at 608 ("Mere awareness of a claim or suit does not impose a duty on the insurer to defend under the policy . . . ."); see also id. (insurer does not have to "gratuitously subject[] itself to liability" before insured gives notice of suit); Hoel, 2017 WL 3911020, at *1, 3-5 (insured did not give notice of suit, even though injured party gave insurer several notices about suit).

Rhymes also argues that appellants were not prejudiced because their claim file relating to the accident showed that appellants viewed coverage as "clear" and liability as "accepted." Appellants reply that Rhymes is wrong because under Crocker Maria did not satisfy the policy's conditions precedent so as to trigger any duty to defend, and the default judgment establishes prejudice as a matter of law. Again we agree with appellants. The default judgment not only deprived appellants of the opportunity to litigate the claim's merits but also imposed "a new burden of proof on new issues" in order to set the default judgment aside. Hoel, 2017 WL 3911020, at *5. We conclude the claim file documents did not raise a genuine fact issue as to prejudice.

Finally, Rhymes argues that Old American failed to plead prejudice. But Rhymes did not raise a pleadings argument in his summary judgment response; rather, he argued the prejudice issue on the merits. Accordingly, Rhymes did not preserve his complaint about appellants' pleadings. See Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 495 (Tex. 1991) (issues can be tried by consent on summary judgment).

E. Conclusion

For the foregoing reasons, we hold that appellants conclusively proved that the insured failed to give them any notice of Rhymes' suit and that they were prejudiced thereby. The trial court erred by granting summary judgment for Rhymes and by denying appellants' summary judgment motion. Accordingly, we sustain appellants' first issue. We need not address their second issue because it presents only an additional basis for rendering judgment in favor of UAIS. And because Rhymes did not appeal the trial court's implicit denial of his "Stowers/Negligence" claim, we do not address it either. See Ontiveros v. Flores, 218 S.W.3d 70, 71 (Tex. 2007) (per curiam).

V. DISPOSITION

We reverse the trial court's judgment and render judgment that Rhymes take nothing from appellants.

/Bill Whitehill/

BILL WHITEHILL

JUSTICE 161125F.P05

JUDGMENT

On Appeal from the 95th Judicial District Court, Dallas County, Texas
Trial Court Cause No. DC-15-07623.
Opinion delivered by Justice Whitehill. Justices Lang and Brown participating.

In accordance with this Court's opinion of this date, the judgment of the trial court is REVERSED and judgment is RENDERED that appellee Alvin Glenn Rhymes take nothing on his claims against appellants United Automobile Insurance Services and Old American County Mutual Fire Insurance Company.

It is ORDERED that appellants United Automobile Insurance Services and Old American County Mutual Fire Insurance Company recover their costs of this appeal from appellee Alvin Glenn Rhymes.

The District Clerk of Dallas County is directed to release the full amount of appellants' joint deposit in lieu of supersedeas bond to appellants United Automobile Insurance Services and Old American County Mutual Fire Insurance Company. Judgment entered May 4, 2018.

United Auto. Ins. Servs. v. Rhymes