Haralson v. State Farm Mutual Automobile Insurance Company, No. 3:2005cv02513 - Document 148 (N.D. Tex. 2008)
Court Description: Memorandum Opinion and Order denying 134 Motion for Summary Judgment filed by State Farm Mutual Automobile Insurance Company, granting 133 Motion for Summary Judgment filed by State Farm Mutual Automobile Insurance Company. (see order) (Ordered by Magistrate Judge Jeff Kaplan on 11/5/08) (klm)
Download PDF
<![CDATA[
IN THE LINITEDSTATESDISTRICTCOURT NORTHERNDISTRICTOF TEXAS DALLAS DIVISION FREDHARALSON.ET AL. Plaintiffs, r NO. 3-05-CV-25 3-BD VS. (ConsolidatedWith No. 3-06-CV-1075-BD) STATEFARM MUTUAL AUTOMOBILE INSURANCE COMPANY Defendant. MEMORANDUM OPINION AND ORDER Defendant State Farm Mutual Automobile InsuranceCompany ("State Farm") has filed separate motions for summaryjudgment with respectto the contract and extracontractualclaims of motorist ("UIM") Virginia Haralsonand Fred Haralsonin this civil action seekingunderinsured policy. For thereasons herein,defendant stated automobile benefitsundera standard Texaspersonal is entitled to summaryjudgment as to Virginia's claims, but not as to Fred'sclaims. I. seriousbodily injuries when the car he was On March 6,2005, Fred Haralsonsustained driving collided with a vehicle that ran a red light. (SeePlf. MSJ Resp.App. at 129). His wife, the Virginia, and daughter, Christina,were following behindin anothercar and witnessed collision. (Id. atL44,\4). Following the accident, Haralsons filed a third-partyliability claim againstthe the driver of the other car, CarmenAndrade-Silva,who had coveragein the amount of $20,048per personor $40,048per incident. (SeeJt. PTO at I I, fl l0). Fredaccepted per personpolicy limit the of $20,048 (Id. at 11, n n). Virginia and Christinajointly settledtheir claims againstAndrade. claims for UIM benefitsundertheir Silva for $ I8,000. (/d ). Fred and Virginia then filed separate Farmpersonal State policy,whichpays: automobile which a coveredpersonis legallyentitledto recoverfrom [D]amages the owner or operator of an uninsuredmotor vehicle becauseof bodily injury sustained a coveredperson . . caused an accident. by by . (Plf. MSJ Resp.App. at 187). It is undisputed that the StateFarm policy providesUIM coverage in the amount of $50,000per personor $100,000per accident,and that the Haralsonsare "covered persons" underthe policy. (SeeJt.PTO at l0-I l, fln 1,2 & 13). On April 4,2005, StateFarm tendereda $50,000check payableto "Robert Fred Haralson & Virginia Haralson,Individually and as Husbandand Wife &Law Offices of Van Shaw, Their Attorney." (Plf. MSJ Resp. App. at ll0). The next day, the Haralsons,through their attorney, rejected the check becauseit purported to settle the claims of both Fred and Virginia. (Id. at 103). pointedout that his clientsweremaking separate UIM claims, Van Shaw,counselfor the Haralsons, to eachseekingthe $50,000policy limits. (Id.). Inresponse this demand,StateFarm notified Shaw claim a that "Mrs. Haralson's claim, if any, would be considered derivativeclaim of Mr. Haralson's injury benefitsunderthe same$50,000per personlimit of coverage.The most we for underinsured can pay is $50,000which was previouslysentto you." (ld. at 101). On April 14, 2005, Shawtold State Farm that including Virginia as a payee on Fred's settlementdraft was "not proper or were making separate UIM claims. (Id. at 99). State and that the Haralsons acceptable," reiterated Farm adheredto its position that Virginia's claim was derivative of Fred's claim and, therefore, subject to the same $50,000 UIM limit. (Id. at 98). Unable to resolve this dispute through negotiation, the Haralsons filed separatelawsuits against State Farm in state district court. State into one action. On Farmtimely removedboth cases federalcourt,rwheretheywereconsolidated to ' Federalsubjectmatterjurisdiction is proper because Haralsonsand StateFarm are citizensofdifferent the statesand the amountin controversyexceeds $75,000,exclusiveof interestand costs. See28 U.S.C. $ 1332(aXl). January37,2006, five weeksafter Fred filed his lawsuit, StateFarm reissued $50,000settlement a draft payableto "Robert Fred Haralson&Law Offices of Van Shaw,His Attorney." (Id. at 198). Fred refused to acceptthe check without explanation. (Seeid. at 196-97). After the partiesconducted discoveryandthe court deniedsummaryj udgment,the underlying UIM claim proceededto trial on the issuesof liability and damages. Prior to trial, StateFarm stipulatedthat the underinsured driver, Andrade-Silva,was liable for the accidentand that Fred incurred medical expenses excessof $100,000. (SeeJt. PTO at ll, flfl 8-9). A jury found that in Virginia sustaineda "bodily injury" as a result of witnessing the automobile accident and awarded her $25,000in compensatory damages, $15,000for loss of consortium,and $1,000 for loss of householdservices. In an order dated July 8, 2008, the court set aside the damagesfor loss of upheld the $25,000compensatory consortiumand loss of householdservices, damageaward,but offset the amount of compensatorydamagesby $20,000--thecoverage availableto Virginia under liability policy. SeeHarqlson v. StateFarm Mut Auto. Ins. Co., 564 F.Supp.2d616, the tortfeasor's 626-27 (N.D. Tex. 2008). Over the next 60 days,StateFarm tenderedVirginia a seriesof checks determinedby the court, togetherwith of totaling $7,809.66in satisfaction the $5,000in damages prejudgmentinterest,postjudgmentinterest,and court costs. (SeeDef. MSJ-I App. at l-3, 18-19; Def. MSJ Supp.App. at 34). It is not clear whetherVirginia, who disputesthe $20,000offset and StateFarm'sinterestcalculations, negotiated of the checks.(Def. MSJ Supp.App. at 34, 38has any 3e). State Farm now moves for summary judgment with respect to the Haralsons' claims for breachof contractand violations of the TexasInsurance Code. The issueshave beenfullv briefed by the parties and this matter is ripe for determination. u. Summaryjudgment is proper when there is no genuine issueas to any material fact and the movant is entitledto judgment as a matterof law. Feo. R. Clv. P. 56(c); CelotexCorp. v. Catrett, 477 U.S. 317,322, 106 S.Ct.2548,2552,91L.Ed.zd 265 (1986).The substantive determines law which factsarematerial.SeeAnderson Liberty Lobby,Inc., 477 U.5.242,247, 106S.Ct.2505, v. judgment movant doesnot havethe 2509-10,91L.8d.2d202 (1986). Where,ashere,the summary burden of proof at trial, the movant must point to the absence a genuine fact issue. SeeDuffu v. of LeadingEdgeProducts, lnc.,44F.3d308,312(sthCir. 1995).Theburdenthenshiftstothenonjudgment is not proper. SeeDuckettv. City of CedarPark,950 F.2d movant to show that summary 272,276 (5thCir. 1992).Thepartiesmaysatisfutheirrespectiveburdensbytenderingdepositions, affidavits,and other competentevidence.SeeTopalianv. Ehrman,954 F.2d II25, | 13I (5th Cir.), cert. denied,ll3 S.Ct. 82 (1992). All evidencemust be viewed in the light most favorableto the party opposingthe motion. SeeRosadov. Deters,5 F.3d 119,722(5th Cir. 1993). ru. In their most recent pleadings,the Haralsons assertclaims for breach of contract and violations of the Texas InsuranceCode. (SeeF. HaralsonThird Am. Comp. at 3, \\ a.l-a.2; Y . HaralsonSec.Am. Compl. at2-3,nn 4.1-4.2). Underthe StateFarmpolicy: If we notiff you that we will pay your claim, or part ofyour claim, we must pay within 5 businessdays after we notiff you. (Def. MSJ-II App. at 8, fl 2.G.1) (emphasis original). Section541.003of the Texas Insurance in Code provides: A person may not engagein this state in a trade practice that is defined in this chapter as or determinedunder this chapter to be an unfair method of competition or an unfair or deceptiveact or practice in the business insurance. of practices Tnx. INs. Coop At tN. $ 541.003 (Vernon 2008). One of the unfair or deceptiveinsurance prohibited by the statuteis "failing to attemptin good faith to effectuatea prompt, fair, and equitable liability hasbecomereasonably clear." Id. of to settlement a claim with respect which the insurer's $ 541.060(aX2)(A). Another provision of the Texas InsuranceCode subjectsan insurer to statutory damagesif it fails to pay a claim within 60 days of receiving all required information from the insured. See id. $ 542.058(a). According to the Haralsons,StateFarm breachedthe insurance contractand violated statelaw by failing to pay eachof them the $50,000UIM policy limits in a timely manner. A. State Farm maintains that Vireinia Haralson is not entitled to recover on her contract and extracontractualclaims becauseshe was paid in full within 60 days after the court establishedthe amount of her bodily injury damages.Under Texaslaw, a "UIM insurer is under no contractualduty status the to paybenefitsuntil the insuredobtainsajudgmentestablishing liability andunderinsured of the other motorist." Brainard v. Trinity (JniversalIns. Co., 216 S.W.3d 809, 8l 8 (Tex. 2006). until July 8, 2008,when the court upheldthe were not established In this case,liability and damages jury's finding that Virginia sustaineda "bodily injury" as a result of witnessing the automobile damageaward by $20,000-accidentinvolving her husband,but offset the $25,000compensatory the amount of coverageavailable to Virginia under the tortfeasor's liability policy. On August 7, 2008, StateFarm tendereda checkto Virginia and her attorneyin the amountof $6,409.87,which allowed by the court, $695.21in prejudgmentinterest,$9.66 in represents $5,000 in damages the postjudgment interest, and $705.00in taxablecourt costs.(SeeDef. MSJ-I App. at 1-3).2As a result 2 The record shows that State Farm would have tendered payment earlier, but Virginia's attorney was on vacation and did not return to the office until August 4,2008. (SeeDef. MSJ-I App. at 4-9)' of furtherdiscussions between attorneys, the StateFarmissued two additionalchecks--one for on $1,310.00 August18,2008andonefor $89.79 September 2008--to on 8, coverdisputed cost (See at l8-19; Def.MSJ Supp. itemsandprejudgment interest. id. App. at 34). AlthoughVirginia continues dispute interest to State Farm's calculations, acknowledges she beingpaid$7,809.66 on herUIM claim. (SeeDef. Mot. for Leave File Supp.App. 5). at to In an attempt to create a fact issue for trial, Virginia asks the court to revisit its decision allowing StateFarm a full $20,000offset againstthe $25,000in compensatory found by damages thejury.3 According to Virginia, one-halfof the proceeds underthe tortfeasor's liability policy were available to her minor daughter,Christina, to whom Virginia owed a fiduciary duty. Virginia therefore believes that the court should have offset the $25,000 compensatory damageaward by $ 10,000, which would require StateFarm to pay $ 15,000 in damagesand interestthereon. (SeePlf. its MSJ Resp. at20-23). Even ifthe court was inclined to reconsider decision,Virginia still hasnot adducedany evidenceshowing how much, if any,of the settlementwith Andrade-Silvawent to Christina.aWithout suchevidence,there is no way to apportionthe offset. Moreover, StateFarm was entitled to rely on the court's determinationof damages,even if erroneous,in calculating prejudgmentinterest. 3 To the extentVirginia attempts raisenew theoriesof liability for the first time in her summaryjudgment to her response, such as StateFarm'sfailure to investigate bystanderclaim (seePlf. MSJ Resp.at l7), the court declines to consider those arguments. See Cutrera v. Bd. of Supervisors of Louisiana State Univ., 429 F .3d I 08, I I 3 (5th Cir. to 2005) ("A claim which is not raised in the complaint but, rather, is raisedonly in response a motion for summary j u d g m e n t i s n o t p r o p e r l y b e f o r e t h e c o u r t .D)q v i s v . L l / a l - M a r t S t o r e s , . f r c . , N o . 3 - 0 5 - C V - 1 8 0 5 - L , 2 0 L 8 3 6 8 6 0 " ; W 07 * l2 (N.D. Tex. Mar. 19,2007) (rejectingattemptto raisenew theory of liability in response motion for summary to at judgment). 4 Although Virginia allegesthat 50Yo the settlement (see proceeds were "set aside"for her minor daughter, of with Andrade-Silvasupportsthat claim. (See agreement Plf. MSJ Resp.Sec.App. at 2,n7), nothing in the settlement id.,Exh. A). Instead,the settlementagreementindicatesthat Virginia, individually and as next friend of her daughter, jointly settledthe two liability claims for the aggregate sum of $18,000. (1d.,Exh. A at 2). State Farm properly deductedthe $20,000offset allowed by the court from the $25,000 compensatory damageaward before calculatingprejudgmentinterest. SeePringle v. Moon,158 S.W.3d 607,61I (Tex. App.--Fort Worth 2005,nowrit) (creditor offset shouldbe appliedfrom the total damages awardedbeforeprejudgment interestis calculated); Mullins v. TestAmerica, Inc.,Na. 3-02-CV-0106-K, 2008 WL 4526182at*3 (N.D. Tex. Oct. 8, 2008) (same). The uncontroverted summary judgment evidence establishesthat State Farm tendered all sums due and payable to Virginia--including prejudgmentinterest,postjudgment interest,and court costs--within60 daysof the court'sdecisionmodiffing the damage award. On thesefacts,therecanbe no liability for breach of contractor violations of the TexasInsurance Code. SeeWellischv. UnitedServices Automobile (insurer Ass'n,75S.W.3d53,57(Tex.App.-- SanAntonio2002,writdenied) may wait for ajudicial determinationof an insured'slegal entitlementto benefitsbeforemaking paymentwithout breaching the insurancecontract or violating the Texas InsuranceCode). B. to The court reaches differentconclusionwith respect the claimsof FredHaralson.Unlike a Virginia's claim for bodily injuries sustained a resultof witnessingthe automobileaccident,State as Farm neverdisputedthat Fred sustained bodily injuries in excess the $50,000UIM policy limit. of Nor is there any dispute that Fred was legally entitled to recover those damagesfrom the owner or 8-9). Yet StateFarm waited until operatorof an underinsuredmotor vehicle. (SeeJt. PTO at 11,']J issuea settlement January37,2006--morethan l0 monthsafterthe accident--to draft to Fredandhis attorneyfor the $50,000policy limits. Prior to that time, StateFarm insistedon including Virginia as a payeeon the check,despiterepeated lettersfrom opposingcounselnotiffing the adjusterthat Fred and Virginia were making separate claims for UIM benefits. (SeePlf. MSJ Resp.App. at 98, 99, 101, 103). At leasttwo Texascourtshave held that including the spouseof a settlingparty as a payee on a settlement draft raises a fact issue as to whether the parties intended to settle the spouse's separate claim. See,e.g.Frenchv, Henson,No.05-06-01036-CV,2008 WL 2266119 at * I (Tex.App.--Dallas, Jun.4,2008,nopet.);Harris v. Balderas, S.W.3d71,78 (Tex.App.--San 27 Antonio 2000, writ denied). If Fred is able to convince a jury that State Farm improperly conditioned the payment of his UIM claim on the releaseof Virginia's claim for bodily injury damages,State Farm may be liable for breach of contract and delay damagesunder the Texas Insurance Code. SeeKeelingv.StateFarm Lloyds,No.3-01-CV-1285-8D,2002 WL 31230804 at *4 (N.D.Tex. Sept.30,2002). StateFarm also seekssummaryjudgment on the ground that Fred has failed to adduceany evidence of actual damages. However, under Texas law, the failure to prove actual damages stemming from a breach of contract does not defeat recovery on a contract theory. SeeFisher v. llrestinghouse Credit Corp., 760 S.W.2d 802, 808 (Tex. App.--Dallas 1988,no writ). Instead,the court may award nominal damagesupon proof that the contract was breached. Id. Fred may also recover statutory damages,in the form of interest on the amount of his claim at the rate of l8%oper annum, and reasonableattorney'sfees,if StateFarm delayedpaymentof the claim for more than 60 judgment (a) days. SeeTsx. INs.ConB Arw. $$ 542.058 & 542.060(a).For thesereasons, summary is not proper. CONCLUSION Defendant's motion for summaryjudgment as to the claims asserted Virginia Haralson by judgment filed with prejudiceby separate [Doc. #133] is granted. Thoseclaims will be dismissed judgment as to the claims asserted Fred Haralson[Doc. today.Defendant's motion for summary by #1341isdenied.Thoseclaimswill proceed trial on December 2008. to 15, SO ORDERED. DATED: November 2008. 5. JUDGE STATES N,IAGISTRATE
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
