SABINAS CLAIMS SERVICE & MAYFLOWER INSURANCE COMPANY, INC., Appellant v. INTERSTATE FIRE & CASUALTY COMPANY, and NATIONAL COUNTY MUTUAL FIRE INSURANCE COMPANY, Appellee s

REVERSED AND REMANDED AND OPINION FILED DECEMBER 28, 1989.
 
 
S
In The
Court of Appeals
Fifth District of Texas at Dallas
............................
No. 05-88-01079-CV
............................
SABINAS CLAIMS SERVICE & MAYFLOWER
INSURANCE COMPANY, INC., Appellant
v.
INTERSTATE FIRE & CASUALTY COMPANY, and
NATIONAL COUNTY MUTUAL FIRE INSURANCE COMPANY, Appellee
s
 
 
.................................................................
On Appeal from 134th Civil District Court
Dallas County, Texas
Trial Court Cause No. 86-5541-G
.................................................................
OPINION ON MOTIONS FOR REHEARING
Before Justices Whitham, Lagarde and Kinkeade
Opinion By Justice Kinkeade
This Court's opinion originally issued on July 26, 1989, is withdrawn. The following is now the opinion of this Court.
Sabinas Claims Service and Mayflower Insurance Company, Inc. appeal a judgment in favor of Interstate Fire and Casualty Company and National County Mutual Fire Insurance Company. Mayflower and Sabinas contend that the trial court erred in 1) instructing a verdict against them and 2) failing to grant them a credit in the amount of a joint tortfeasor's settlement. We sustain the first point of error, reverse the trial court's judgment, and remand the case to the trial court for a new trial.
FACTS
National issued an autombile insurance policy to A-Z Wrecker Service with a liability limit of $500,000. Interstate provided excess insurance coverage to A-Z Wrecker with a liability limit of $1 million. A-Z Wrecker employed Kirk Andrew Lacy, who, while driving an A-Z Wrecker vehicle, collided with Bill Bullen. Bullen sued Lacy and A-Z Wrecker for injuries he sustained in the collision. The automobile insurance policy issued by National provided coverage for Lacy as an additional insured. However, Lacy never notified any insurance company or agent that Bullen had served him.
A-Z Wrecker purchased its automobile insurance policy through National's agent, Mayflower. Under the terms of its agency agreement with National, Mayflower handled claims and lawsuits filed against insureds to whom Mayflower had sold National insurance policies. Mayflower had contracted with Sabinas, which had agreed to adjust claims for insureds who had purchased National policies through Mayflower. These agreements were in effect at the time of Lacy's collision.
After being served, representatives of A-Z Wrecker contacted Sabinas and provided it with a copy of the petition. Sabinas hired attorney Charles M. Bradshaw to provide a defense in the lawsuit. Bradshaw filed a timely answer on behalf of A-Z Wrecker, but did not file an answer on behalf of Lacy. Almost two years after the lawsuit had been filed, the trial court entered a default judgment against Lacy in the amount of $8.5 million. The defendants in the Bullen lawsuit did not appeal the entry of the default judgment, and Bullen made demand upon National and Interstate, as Lacy's insurers, for payment of the judgment amount. National and Interstate settled with Bullen for the amount of $1,493,800. As part of Bullen's settlement agreement with National and Interstate, he assigned them his rights against Mayflower and Sabinas.
        Interstate then sued National, Mayflower, and Sabinas, claiming that they had been negligent in failing to provide Lacy with a defense, and in failing to settle the Bullen lawsuit within the primary carrier's (National's) policy limit of $500,000. National and Interstate settled with the attorney, Bradshaw, for $500,000. Interstate settled with National prior to trial and National was realigned as a plaintiff. After all parties had presented their evidence and closed, the trial court instructed a verdict that judgment in the amount of $1.5 million be entered in favor of National and Interstate.
THE INSTRUCTED VERDICT
In their first point of error, Mayflower and Sabinas maintain that the instructed verdict was improper because fact questions exist as to their negligence and the comparative negligence of National and Interstate. In reviewing an instructed or directed verdict, this Court must examine the evidence to determine whether any fact issue exists upon which a judgment in favor of the nonmovant may be predicated. A directed verdict can only be justified if no other verdict could have been rendered. In this analysis, all fact issues must be resolved in favor of the nonmovant and against the movant. Henderson v. Travelers Ins. Co., 544 S.W.2d 649, 650 (Tex. 1976); Stegman v. Chavers, 704 S.W.2d 793, 794-5 (Tex. App.--Dallas 1985, no writ).
1. The Negligence of Mayflower and Sabinas
Mayflower and Sabinas contend that a fact question exists as to their alleged negligence. They stipulated at trial that Lacy had been entitled to a defense in the Bullen lawsuit, and that no answer had been filed on behalf of Lacy. They further stipulated that a copy of Bullen's petition, which named Lacy as a defendant, had been forwarded to Sabinas for handling. However, Mayflower and Sabinas argue that Bradshaw, the attorney handling the case, had not necessarily known that Lacy had been served with a citation and a copy of the petition. They contend that a mere recitation of service in the papers of a lawsuit does not prove service. They further contend that Bradshaw may have thought that Lacy had not been served and thus was not actually a party to the lawsuit, and that Bradshaw may have purposely failed to file an answer on behalf of Lacy as part of his defense stragegy. However, G. P. Hardy, one of the plaintiffs' lawyers in the Bullen lawsuit, testified that the case file affirmatively showed that Lacy had been served. Mayflower's and Sabinas' contention is, therefore, without merit.
A court may find negligence as a matter of law. Castro v. Hernandez - Davila, 694 S.W.2d 575, 578 (Tex. App.--Corpus Christi 1985, no writ). The record shows that, because of their relationships with National and each other, Mayflower and Sabinas had a duty to ensure that an answer was filed on behalf of Lacy. The record also shows that they failed to perform that duty, causing the rendition of the $8.5 million default judgment. National and Interstate settled the default judgment with Bullen for approximately $1.5 million, the limit of their combined liabilities under the terms of the insurance policies that they had issued to A-Z Wrecker. We uphold the trial court's determination that Mayflower and Sabinas were negligent as a matter of law.
2. The Comparative Negligence of National and Interstate
Mayflower and Sabinas claim that, even if they were negligent, a fact question exists as to the comparative negligence of National and Interstate because they failed to ensure that an answer was filed on behalf of Lacy. They contend that National, as the primary insurer, certainly had a duty to defend Lacy, and that Interstate, as the excess carrier, may have had a duty to defend when National failed to do so. Mayflower and Sabinas also contend that a fact question exists as to National's negligence for failing to settle the Bullen lawsuit within a reasonable time. They claim that the trial court erred in failing to submit to the jury the questions of the comparative negligence of National and Interstate.
The record shows that the insurance policy issued by National imposed upon National a contractual duty to defend Lacy as an additional insured. Several witnesses testified at trial that National had a duty to defend Lacy, and that it failed to provide that defense. They further testified that National had a duty to settle the Bullen lawsuit within a reasonable time, and that it failed to do so. Fact questions exist as to National's negligence in performing its duties under the insurance policy. The trial court should have submitted negligence and comparative negligence questions to the jury regarding National.
Interstate carried excess insurance for A-Z Wrecker. An excess insurance carrier may have the same duty to defend an insured as the primary carrier. St. Paul Ins. Co. v. Rahn, 641 S.W.2d 276, 280-82 (Tex. App.--Corpus Christi 1982, no writ). Although none of the parties offered into evidence the insurance policy issued by Interstate, Bradshaw testified that all of the insurance companies involved had a duty to defend Lacy. Witnesses for Interstate testified that it had no duty to defend. Because of the conflict in the testimony, a fact question exists as to Interstate's duty to defend. For purposes of evaluating the propriety of a directed verdict, this fact question must be resolved in favor of Mayflower and Sabinas. Henderson, 544 S.W.2d at 650. Assuming Interstate had a duty to defend, a fact question exists as to its liability as a joint tortfeasor.
        Interstate contends that it is an assignee of Lacy's rights and claims, and, as a matter of law, is entitled to recovery against Mayflower and Sabinas up to the amount that it paid Lacy. It further contends that, even without an assignment, it is subrogated as to Lacy's claims against Mayflower and Sabinas. An insurer who pays a claim becomes subrogated as to the insured's claim against another insurer. Liberty Mutual Ins. Co. v. General Ins. Corp., 517 S.W.2d 791, 798 (Tex. Civ. App.--Tyler 1975, writ ref'd n.r.e.). However, if Interstate is determined to be a joint tortfeasor, it cannot seek recovery against Mayflower and Sabinas based on its assignment or subrogation rights. International Proteins Corporation v. Ralston-Purina, 744 S.W.2d 932, 933 (Tex. 1988); Beech Aircraft Corporation v. Jinkins, 739 S.W.2d 19, 22 (Tex. 1987). The trial court should have submitted negligence and comparative negligence questions to the jury regarding Interstate. Tex. Civ. Prac. & Rem. Code Ann. § 33.001 et seq.; see also Pruitt, 752 S.W.2d at 600-01.
        We sustain the first point of error as to National and Interstate. We reverse the trial court's judgment and remand the case for a new trial. Because of our disposition of the first point of error, we do not reach the second point of error.
 
 
 
                                                          
                                                          ED KINKEADE
                                                          JUSTICE
 
 
 
 
DO NOT PUBLISH
TEX. R. APP. P. 90.
 
881079.U05
 
 
File Date[12-28-89]
File Name[881079]