Summary
holding that without presuit notice, a defendant “is denied his right to limit his damage exposure through an offer of settlement as contemplated by sections 541.156–.159 of the Insurance Code”
Summary of this case from Dosekun v. State Farm LloydsOpinion
No. 04-05-00895-CV
Delivered and Filed: March 1, 2006.
This original proceeding arises out of Cause No. 2005-CVQ-001028-D1, styled Baby's Paradise, Inc. v. Maryland Casualty Co., Northern Ins. of New York, Zurich North America, Brush Country Claims, Ltd., and Jerry Behr, pending in the 49th Judicial District Court, Webb County, Texas, the Honorable Manuel Flores, presiding.
Petition for Writ of Mandamus Conditionally Granted.
Sitting: Catherine STONE, Justice, Karen ANGELINI, Justice, Phylis J. SPEEDLIN, Justice.
MEMORANDUM OPINION
This is an original mandamus proceeding. The relator, Jerry Behr, a defendant in the underlying proceeding, seeks mandamus relief from an order denying his plea in abatement pursuant to § 541.154 of the Texas Insurance Code. Tex. Ins. Code Ann. § 541.154 (Vernon Supp. 2005). Because we hold Behr is entitled to an abatement under § 541.154 as a matter of law, we conditionally grant the writ of mandamus, and order the trial court to vacate its order signed December 1, 2005, denying Behr's plea in abatement and enter an order abating all further proceedings in the underlying action until 60 days after the written notice required by § 541.154 has been provided to Behr.
Factual and Procedural Background
In the underlying lawsuit, Baby's Paradise, Inc., a retail apparel store in Laredo, Texas ("Baby's"), sued various defendants including Behr for breach of contract and violations of the Texas Insurance Code resulting from the denial of its insurance claim for a theft at the premises on August 13, 2003. The insurance claim was filed with Baby's insurance company, Maryland Casualty Company, for whom Behr worked as a claims adjuster. Baby's claim was denied in a letter dated February 5, 2004, and the company filed suit on July 20, 2005.
Behr timely filed a verified plea in abatement asserting that he had not received pre-suit notice of the claims against him as required by § 541.154 of the Texas Insurance Code. Tex. Ins. Code Ann. § 541.154. By written response, Baby's admitted that no pre-suit notice had been provided to Behr, but asserted that it was excused from the statutory notice requirement. Baby's maintained that it did not have Behr's address until shortly before suit was filed, and "it was not practical to give notice" under the statute "because the statute of limitations would be expiring soon and under such circumstances, the law does not require prior written notice." The trial court denied Behr's plea in abatement. Behr filed a petition seeking a writ of mandamus directing the trial court to withdraw its order and grant the abatement. The sole issue raised in this mandamus proceeding is whether the trial court abused its discretion in failing to abate the underlying suit in light of Baby's admitted failure to provide Behr with pre-suit notice of the claims against him under § 541.154.
Analysis
In considering a petition for mandamus, we adhere to the standard set forth in Walker v. Packer, 827 S.W.2d 833 (Tex. 1992). Mandamus is an extraordinary remedy available only when the trial court has clearly abused its discretion and the party has no adequate remedy by appeal. Id. at 839-44. A trial court has no discretion in determining what the law is or in applying the law to the facts. Therefore, a clear failure by the trial court to analyze or apply the law correctly will constitute an abuse of discretion, and may result in appellate reversal by extraordinary writ. Id. at 840.
Section 541.154(a) of the Texas Insurance Code provides that, "[a] person seeking damages in an action against another person under this subchapter must provide written notice to the other person not later than the 61st day before the date the action is filed." Tex. Ins. Code Ann. § 541.154 (a). The notice must advise the other person of "the specific complaint" and "the amount of actual damages and expenses, including attorney's fees reasonably incurred in asserting the claim against the other person." Tex. Ins. Code Ann. § 541.154(b). An exception to this requirement provides that, "notice is not required if giving notice is impracticable because the action: (1) must be filed to prevent the statute of limitations from expiring. . . ." Tex. Ins. Code Ann. § 541.154(c)(1). Finally, § 541.155 provides that a person who does not receive pre-suit notice may file a plea in abatement, and "[t]he court shall abate the action if, after a hearing, the court finds that the person is entitled to an abatement because the claimant did not provide the notice as required by Section 541.154." Tex. Ins. Code Ann. § 541.155(a), (b) (Vernon Supp. 2005).
We begin our analysis by noting that several facts necessary to our determination of this mandamus petition are undisputed the theft occurred on August 13, 2003; the insurance claim was denied on February 5, 2004; Baby's suit was filed on July 20, 2005; no pre-suit notice was provided to Behr; and Behr timely filed a verified plea in abatement. Furthermore, the only evidence before the trial court at the hearing on the plea in abatement was the parties' pleadings, which included Baby's response to the plea in abatement and the sworn affidavit of its attorney Daniel C. Andrews. In that affidavit, Mr. Andrews states that he was retained shortly before February 22, 2005, and that his client "did not have many documents concerning the claim but did have correspondence indicating that Jerry Behr had been involved in the investigation." Mr. Andrews further states that he attempted to locate Mr. Behr, but did not locate an address for him until July 2005, "less than 60 days before the statute of limitations would expire. Therefore, it was impractical to give Mr. Behr written notice of the claim."
Baby's argument that pre-suit notice was impractical, and therefore excused, is premised on its assertion that its cause of action accrued when there were "likely violations of [Chapter 541 of the Texas Insurance Code] which occurred in August or September of 2003." We disagree. A cause of action under the Texas Insurance Code for unfair claims settlement practices accrues on the date that the insurer denies coverage. Provident Life Accident Ins. Co. v. Knott, 128 S.W.3d 211, 221 (Tex. 2003). Here, the record conclusively establishes that Baby's claim was denied on February 5, 2004. Accordingly, at the time Mr. Behr was located in July 2005, Baby's had at least six months before limitations would expire on its suit. Therefore, as a matter of law, it was not "impractical" to give Behr the 60 days pre-suit notice required by the statute. See Tex. Ins. Code Ann. § 541.154(c)(1).
Because no pre-suit notice was provided, and the limitations exception to the notice requirement is inapplicable as a matter of law, we hold that abatement was mandated by statute and the trial court therefore abused its discretion in denying Behr's plea in abatement. We further hold that the trial court's denial of the abatement effectively deprives Behr of substantial rights with no adequate remedy on appeal. Specifically, without pre-suit notice, Behr is denied his right to limit his damage exposure through an offer of settlement, as contemplated by sections 541.156-.159 of the Insurance Code. Tex. Ins. Code Ann. §§ 541.156-.159 (Vernon Supp. 2005). Accordingly, we conditionally grant the writ of mandamus, and direct the trial court to vacate its December 1, 2005 order denying Behr's plea in abatement and enter an order abating all further proceedings in the underlying action until 60 days after the written notice required by § 541.154 has been provided to Behr. See Tex. Ins. Code Ann. § 541.155. The writ will issue only if the trial court fails to comply within ten days from the date of our opinion and order.