Uninsured Due To Lack Of Cooperation?

For Dallas attorneys handling uninsured motorist cases, this 1974, Houston Court of Appeals [14th Dist.] needs to be read. The style of the case is, Milton v. Preferred Risk Insurance Company. Here is some of the relevant information.
On January 18, 1969, Milton, was a passenger in a car driven by Iris Simonis and owned by Helen Bastin. This vehicle was involved in a collision with a car driven by Cathy Ann Lewis. The Lewis car was covered by an automobile liability policy issued by Allstate Insurance Company. The Bastin vehicle was covered by a policy issued by Preferred and Miss Milton had insurance on her personal automobile issued by American Economy Insurance Company. Both of the policies contain uninsured motorist protection (UM).
On March 2, 1970, Mrs. Simonis and the injured passengers in the car, other than Janice Sue Milton, filed suit against James L. Lewis, the owner of the Lewis vehicle. That suit was settled by a compromise agreement with Allstate in May of 1972. On July 14, 1970, Milton acting through an attorney different from the one representing her on appeal, filed suit against James Lamar Lewis, ‘individually and as next friend of CATHY ANN LEWIS, a minor.’ At this point Milton was under the misconception that Cathy Lewis was the daughter, rather than the wife, of Mr. Lewis. Service was not attempted on Mr. Lewis until October 6, 1970, and it was returned unexecuted. Service on Mr. Lewis was finally executed on April 15, 1971. On January 27, 1972, the petition was amended so as to properly name Cathy Lewis as defendant . Milton also named Preferred as defendant in this pleading, seeking recovery under the UM clause of the policy issued by it. On May 17, 1972, American Economy was named as a defendant in another amendment. Cathy Lewis was served on March 14, 1972, and default judgment was entered against her on April 10, 1972.
The evidence supports the conclusion that Milton did not have reason to suspect that Cathy Lewis was an UM until January of 1972. Apparently, she had attained the UM status as a result of Allstate’s denial of coverage because of non-cooperation. On January 13 her attorney notified Preferred of the possibility that she might have a claim under the UM provisions of the policy. On January 31 American Economy was similarly notified. Suit papers were forwarded to Preferred, by means of service of the amended petition, on March 23, 1972, and American Economy was similarly served on April 3, 1972.
The case was tried before a jury, and a take-nothing judgment was entered against the Milton in accordance with the jury’s verdict. In answer to special issues, the jury found the following: Milton failed to forward suit papers to Preferred or American Economy immediately after she realized she had a claim under the UM coverage.
The judgment in favor of the defendants was based upon the finding. Milton contends in this appeal that as a matter of law suit papers were timely forwarded to the insurance companies, as required by the policies. She also contends that any delay was reasonable under the circumstances.
It should be noted that in Texas, contrary to most other states, the insurer has no right as a matter of law to defend the UM, should the insured fail to join it. This could conceivably result in two suits–the first to establish the liability of the UM, and the second to collect UM benefits from the insurer.
Initially the company can protect itself from default judgments against the UM and from insubstantial defense of the UM by withholding its consent to the suit between its insured motorist and the UM.
It therefore follows that the requirement that the insured forward suit papers to the insurer, only when there exists a reason to believe the defendant is an UM, is not as onerous to the insurer as it would be in jurisdictions where the insurer is bound by the decision in the action against the UM.
The express terms of the policy provide for ‘immediate’ forwarding of suit papers. Of course, the parties could not have meant ‘instantaneously,’ so it can only be inferred that it was intended that suit papers be forwarded with as much dispatch as is reasonably possible. This sometimes presents a fact question to be determined by the trier of fact.
In the present case, the evidence is sufficient to support the jury’s finding that Milton failed to forward suit papers to the insurance companies immediately upon realizing she had an UM claim. Notice was given in January of the possibility of the existence of UM status. At this same time the insurance companies should have been furnished copies of all suit papers, in order to allow them to begin investigations to protect their interests.