Opinion
No. 04-06-00413-CV
Delivered and Filed: August 2, 2006.
Appeal from Original Mandamus Proceeding.
This proceeding arises out of Cause No. 2005CVQ001028 D1, styled Baby's Paradise, Inc. v. Maryland Casualty Company, Northern Insurance of New York, Zurich North America, Brush County 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: Alma L. LÓPEZ, Chief Justice, Catherine STONE, Justice, Phylis J. SPEEDLIN, Justice.
MEMORANDUM OPINION
Maryland Casualty Company seeks mandamus relief from the trial court's order denying its motion for severance and abatement. Maryland Casualty contends that the trial court abused its discretion by failing to sever the extra-contractual claims from the contractual claims asserted against it as an insurer which has made an offer to settle. Because the trial court abused its discretion in denying the severance and abatement, we conditionally grant Maryland Casualty's petition.
Background
Baby's Paradise, Inc. sued Maryland Casualty and other defendants after Maryland Casualty denied a claim relating to a loss by theft. Baby's Paradise asserted both contractual and extra-contractual claims.
In a letter dated September 30, 2005, Maryland Casualty submitted a written settlement offer for $20,000.00. By letter dated October 12, 2005, Baby's Paradise rejected the settlement offer. On November 28, 2005, Maryland Casualty and the other defendants filed a motion for severance and abatement, requesting that the extra-contractual claims be severed from the contractual claims and abated until the contractual claims were resolved. The trial court signed an order denying the motion on December 1, 2005.
The letter stated that the settlement offer was for $20,000.00; however, it further stated, "Of this amount, $18,500 is being offered on the disputed claims and $2,500 as attorneys [sic] fees."
On December 8, 2005, Jerry Behr, another defendant, filed a petition for writ of mandamus in this court seeking mandamus relief from another order entered by the trial court on the same day. See In re Jerry Behr, No. 04-05-00895-CV, 2006 WL 468001 (Tex.App.-San Antonio Mar. 1, 2006, orig. proceeding). Behr requested relief from the trial court's order denying his plea in abatement based on Baby Paradise's failure to provide Behr with pre-suit notice of the claims against him as required by section 541.154 of the Texas Insurance Code. Id., at *1. On March 1, 2006, this court conditionally granted the writ of mandamus and directed the trial court to enter an order abating all further proceedings in the underlying cause until sixty days after the pre-suit notice was provided to Behr by Baby's Paradise. Id., at *2. On March 12, 2006, the trial court entered the order granting the plea as directed.
Baby's Paradise subsequently provided the requisite notice and, in May of 2006, filed a notice of expiration of abatement and an amended notice to take Maryland Casualty's deposition. On June 16, 2006, Maryland Casualty filed a motion to quash the deposition, and on June 22, 2006, Maryland Casualty filed the petition for writ of mandamus pending before this court.
Discussion
Mandamus relief is available if the trial court abuses its discretion, either in resolving factual issues or in determining legal principles, when there is no adequate remedy by appeal. Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex. 1992). As a general rule, a plea in abatement is an incidental ruling that is not subject to mandamus review. Abor v. Black, 695 S.W.2d 564, 567 (Tex. 1985). When a plaintiff has filed a breach of contract claim as well as extra-contractual claims against an insurer, and a settlement offer has been made, severance and abatement are required, and a trial court abuses its discretion in denying a motion to sever and abate. See, e.g., Liberty Nat'l Fire Ins. Co. v. Akin, 927 S.W.2d 627, 629 (Tex. 1996); In re Trinity Univ. Ins. Co., 64 S.W.3d 463, 468 (Tex.App.-Amarillo 2001, orig. proceeding [mand. denied]); Texas Farmers Ins. Co. v. Stem, 927 S.W.2d 76, 80-81 (Tex.App.-Waco 1996, orig. proceeding); Mid-Century Ins. Co. of Tex. v. Lerner, 901 S.W.2d 749, 752 (Tex.App.-Houston [14th Dist.] 1995, orig. proceeding); United States Fire Ins. Co. v. Millard, 847 S.W.2d 668, 673 (Tex.App.-Houston [1st Dist.] 1993, orig. proceeding); see also Balderama v. Western Cas. Life Ins. Co., 794 S.W.2d 84, 90 (Tex.App.-San Antonio 1990) (noting essential issues to be resolved in breach of contract action against insurer are different from those to be resolved in bad faith and DTPA causes of action), rev'd on other grounds, 825 S.W.2d 432 (Tex. 1991); but see Allstate Ins. Co. v. Evins, 894 S.W.2d 847, 849-50 (Tex.App.-Corpus Christi 1995, orig. proceeding) (holding severance not required because jury can be given limiting instruction on proper use of evidence of settlement offer). In such a case, the insurer does not have an adequate remedy by appeal because if the extra-contractual claims are tried with the breach of contract claim: (1) the settlement offer, which normally would not be admissible in connection with the contractual claim, would need to be admitted in defending the extra-contractual claims; and (2) the court, as well as the parties, would be put to the expense and effort of preparing and trying extra-contractual claims that may be disposed of in the resolution of the breach of contract claim. See Millard, 847 S.W.2d at 673; State Farm Mut. Auto. Ins. Co. v. Wilborn, 835 S.W.2d 260, 262 (Tex.App.-Houston [14th Dist.] 1992, orig. proceeding).
In its response, Baby's Paradise asserts that the law regarding the required severance is not applicable in this case because the offer was made after the suit was filed and was an offer to settle the entire case not just the contractual claims. Neither of these distinctions is convincing as other courts have applied the law requiring severance in suits in which the offer to settle was made after the suit was filed and was an offer to settle the entire case. See In re Allstate Texas Lloyd's, No. 14-05-00762-CV, 2005 WL 2277134, at *3 (Tex.App.-Houston [14th Dist.] Sept. 2, 2005, orig. proceeding) (rejecting post-suit timing of offer as reason for denying motion to sever); Northwestern Nat'l Lloyds Ins. Co. v. Caldwell, 862 S.W.2d 44, 45, 46 (Tex.App.-Houston [14th Dist.] 1993, orig. proceeding) (granting mandamus relief where trial court denied severance in case where offer to settle entire suit was made after suit was filed); Millard, 847 S.W.2d at 671 (same).
Accordingly, the trial court abused its discretion in denying the motion to sever and abate.
Conclusion
The petition for writ of mandamus is conditionally granted. We anticipate that, in accordance with our opinion, Judge Flores will withdraw his order of December 1, 2005, denying the relator's motion for severance and abatement, and enter an order granting the motion. The writ will only issue upon certification to this court that he has not done so within ten days from the date of this opinion.