Uninsured Motorist Protection And Declaratory Judgment

Uninsured motorist protection (UIM) historically has been its on little niche of the law that was not purely tort law or purely contract law.

Creative attorneys have recently been having success seeking UIM claims by way of a Declaratory Judgment Action.  The most recent case is from the Corpus Christi Court of Appeals and is styled, Allstate Fire and Casualty Insurance Company and Allstate Insurance Company v. Jesus Inclan.

Inclan sued Reynaldo Sanchez, the uninsured driver, and Allstate for injuries Inclan sustained in a car wreck with Sanchez.  There were offers made and eventually Inclan sought declaratory relief and attorney fees under the Uniform Declaratory Judgments Act (UDJA) pursuant to the Texas Civil Practices & Remedies Code, Section 37.001 – .011.

Inclan was awarded substantial relief at trial plus attorney fees.

Lawsuits to recover UIM benefits can be procedurally unique in that they often require a suit within a suit.  An insured is only entitled to recover UM/UIM benefits once he or she has established (1) the liability and underinsured status of the other motorist, and (2) that the insured’s damages exceed the policy limits of the underinsured motorist’s policy.   Thus, an insurer’s contractual duty to pay UIM benefits is generally only triggered once the insured obtains a judgment against the uninsured.

Section 37.004(a) of the UDJA provides that a person “whose rights, status, or legal relations are affected by a statute . . . may have determined any question of construction or validity arising under the . . . statute . . . and obtain a declaration of rights,status, or other legal relations thereunder.”  The UDJA is to be liberally construed and applied.

Allstate argues that the UDJA is not a valid basis for recovering UIM benefits.  Allstate argues this case is not about seeking construction or or validity of the policy, rather, the real question is to determine the amount of tort damages Inclan is entitled to due to the negligence of Sanchez.

This Court disagreed with Allstate.

Allstate argued that attorney’s fees are not recoverable in UIM claims unless a breach of contract has been established.  Section 37.009 of the UDJA allows the court to award attorney fees that are equitable and just and that is exactly what this Court did.