Suing For Underinsured Motorist Coverage

Fort Worth insurance law attorneys need to know how underinsured motorist claims are handled by the courts.
The Austin Court of Appeals issued an opinion in September, 2012, that deals with this issue. The style of the case is In re American National County Mutual Insurance Company. Here is some relevant information from the case.
The lawsuit underlying this case arises from an automobile accident that occurred in 2009, between Cole and another driver, Estelline Bullock. Cole sued Bullock and eventually settled her claims for the limits of Bullock’s insurance policy, $100,000. Cole then made a claim under the uninsured/underinsured provision (“UIM”) of her own policy with American National. After rejecting American National’s offer to settle her UIM claim for $5,000, Cole sued American National for breach of contract, alleging that American National failed to pay her covered UIM claim. Cole also brought extra-contractual claims for common-law bad faith and insurance code violations. American National filed a traditional motion for summary judgment and in the alternative, a motion for severance and abatement. Specifically, American National requested that the trial court sever Cole’s extra-contractual claims, place those claims into a separate cause, and abate that cause pending final resolution of Cole’s claim for breach of contract. The trial court denied the motions and this mandamus proceeding followed.
A severance divides a lawsuit into separate and independent causes, which then proceed to individual judgments. Severance is appropriate if: (1) the controversy involves more than one cause of action, (2) the severed claim is one that could be asserted independently in a separate lawsuit, and (3) the severed actions are not so interwoven with the other claims that they involve the same facts and issues. The controlling reasons for a severance are to do justice, avoid prejudice, and further convenience.
In the context of insurance coverage cases, it is well established that extra-contractual claims, such as bad faith claims, and contract claims related to insurance coverage are by their nature, independent claims that are subject to severance.
A trial court has broad discretion in determining whether to sever a lawsuit into separate suits.
Under rule 408 of the Texas Rules of Evidence, settlement offers are not admissible to prove liability for, or invalidity of, the claim or its amount, but may be admissible for another purpose. This exclusion of settlement offers promotes the settlement of claims and recognizes that “such evidence does not represent a party’s actual position, but is an amount he is willing to give or take to avoid the expense and annoyance of litigation. When an insurer has made an offer to settle a disputed contract claim, a conflict arises between the parties’ right to introduce the settlement offer in trying the bad faith claim and the insurer’s right to exclude the evidence in the defense of the contract claims. Admission of the settlement offer would deny the insurer the right to exclude evidence unfairly implicating that it has admitted liability on the contract claims. Accordingly, in this situation, the trial court can only reach one decision which adequately protects the parties’ rights and that is to order severance of the two types of claims.
In this case, Cole contended an abatement is not necessary in order to prevent the parties from incurring unnecessary litigation expenses. Cole argues that, unlike most cases involving abatement of extra-contractual claims, at least some of her extra-contractual claims against American National are not premised on a finding that American National wrongfully denied her claim. Instead, according to Cole, these claims are related to American National’s conduct in handling her claim and consequently, would not be rendered moot if she did not prevail on her contract claim. Upon reviewing Cole’s pleadings in this case, this appeals Court disagreed.
To prevail on her extra-contractual claims against American National, Cole must necessarily demonstrate that American National was contractually obligated to pay her UIM claim. To do this, Cole must first prove that the other driver negligently caused the accident and that her recoverable damages exceed the driver’s liability insurance. Under these circumstances, American National should not be required to put forth the effort and expense of conducting discovery, preparing for trial, and conducting voir dire on claims that would be rendered moot by a determination against Cole on her UIM contract claim. The Court concluded that the trial court abused its discretion in failing to abate Cole’s contract claim from her extra-contractual claims until her contract claim is resolved.
An experienced Insurance Law Attorney needs to be involved in these types of claims.