HomeOwners Policy And Judgment

Fort Worth insurance lawyers will be interested in this opinion from their own backyard. It is a Fort Worth Court of Appeals opinion issued in 2015, styled, Texas Farmers Insurance Company and Farmers Insurance Exchange v. Frank Kurosky and Pamela Rust.
Kurosky lives at 4325 Fossil Drive. He also owns a home at 4333 Fossil Drive, which he rents to his daughter, Rust. Kurosky has homeowners insurance on his home at 4325 Fossil Drive with Texas Farmers on which he is listed as the sole insured. Texas Farmers also issued an insurance policy for 4333 Fossil Drive that names both Rust and Kurosky as the insureds. Kurosky also has a personal umbrella policy with Farmers Exchange.
In June 2008, Rust was injured while riding a lawnmower in her backyard. She sued Texas Farmers in the 153rd District Court for medical benefits under both Fossil Drive insurance policies. Rust later added a negligence cause of action against Kurosky in her second amended petition, filed October 23, 2009. On November 25, 2009, Texas Farmers sent a reservation-of-rights letter to Kurosky to 4325 Fossil Drive, Fort Worth, Texas, as his address was listed on the policy. Kurosky claimed never to have received the letter because his address is in Haltom City. It is undisputed that he was represented by the attorney whom Texas Farmers retained and paid.
In March 2010, Rust and Kurosky entered into an agreed final judgment against Kurosky for $300,000. The judgment states that it may not be enforced against Kurosky until Rust attempted to collect from his insurance. Texas Farmers claims that it had no prior knowledge of the agreed judgment and that it did not consent to an agreed judgment.
This case had multiple motions for summary judgment filed.
Looking at the policy language:
1. Violations of the policy provisions Under article VII, entitled “Conditions,” the umbrella policy contained the following provisions:
1. Duties After Occurrence, Claim or Suit. … .
c. the insured must cooperate with us in the investigation, defense[,] and settlement of a claim or suit.
… . 4. Suit Against Us. No action shall be brought against us:
a. unless you and any involved insureds have complied with the policy provisions; and b. until an insured’s obligation has been determined by trial and final judgment or by agreement signed by us.

By Kurosky’s own admission, he cooperated with Farmers Exchange until Farmers Exchange filed the declaratory judgment action. He then “decided to negotiate [his] own deal with Pamela Rust.” He averred, “Until Farmers filed suit against me, I had fully cooperated with them in my defense.” Rust repeats the admission in her motion for summary judgment, noting that Kurosky “cooperated with Farmers until it sued him.”
On appeal, Rust asserts that Kurosky cooperated with Farmers Exchange because he “cooperated with the defense attorney representing him,” implying that the attorney was a stand-in for the insurance company. Rust makes the same argument regarding the policy language that an agreement be signed by the insurance company: that Kurosky’s attorney was the agent of Farmers Exchange. However, there is no evidence that Kurosky’s attorney was the agent of Farmers Exchange.
This Court also noted that the record is completely devoid of evidence that there was any sort of trial from which the final judgment resulted.
Rust does not explain what she believes to be the difference between a “trial” as required by the umbrella policy and case law requiring an “actual trial” or “fully adversarial trial.” As the insurer, Farmers Exchange was entitled to challenge the reasonableness of any settlement to which it was to be bound.
Kurosky’s testimony that he “negotiated his own deal” establishes that he breached the insurance policy by agreeing that a judgment be taken against him without the consent of Farmers Exchange. Further, there is no evidence that the judgment was agreed to and signed by Farmers Exchange or that it recited an obligation determined by trial. Rust failed to show that the insured complied with the conditions precedent and terms of the policy.
Kurosky settled the underlying lawsuit without giving Farmers Exchange the opportunity to participate or agree to the judgment, and Rust now attempts to bind Farmers Exchange to that judgment. Under these facts, Farmers Exchange was prejudiced by Kurosky’s breach of the policy conditions as a matter of law.