Alfred Elwess v. Texas Farm Bureau Mutual Insurance Company and Farm Bureau County Mutual Insurance Company of Texas
538 S.W.3d 776
| Tex. App. | 2017Background
- Alfred Elwess, while driving his employer’s truck, was injured in a collision caused by Carlos Molina; total stipulated damages = $77,505.
- Molina had no personal liability policy; the vehicle owner’s insurer (AIC) paid its $25,000 liability limit to Elwess.
- Elwess recovered $70,000 under Northland’s UIM coverage and $2,505 in PIP from Northland.
- Elwess held two Farm Bureau policies, each providing $50,000 UM/UIM limits; Farm Bureau denied additional UIM payment under an “other insurance” clause that makes coverage excess for vehicles not owned by the insured.
- Parties stipulated facts; trial court granted judgment for Farm Bureau that Elwess was not entitled to additional recovery; Elwess appealed arguing the clause is invalid under Texas law and conflicts with Tex. Ins. Code §1952.106.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Farm Bureau’s "other insurance" clause is invalid under Texas precedent (Ranzau/Stracener) | Elwess: clause is invalid when it operates to deny the insured recovery of damages from an underinsured motorist; Ranzau and Stracener reject clauses that prevent recovery of actual damages | Farm Bureau: clause is enforceable as applied here because Elwess’s recoveries already exceed his actual damages, so clause does not prevent recovery of actual damages | Court: clause is enforceable on these facts — Ranzau/Stracener only invalidate clauses that would prevent recovery of actual damages; not applicable here |
| Whether §1952.106 prohibits Farm Bureau from offsetting recoveries already received from other insurers (i.e., whether Molina’s underinsured status must be measured before considering payments from other UIM policies) | Elwess: statute requires payment of amounts the insured is legally entitled to recover from the underinsured tortfeasor, reduced only by amounts recovered or recoverable from the tortfeasor’s insurer — Farm Bureau cannot treat other UIM recoveries (from Northland) as reducing Molina’s underinsured status | Farm Bureau: §1952.106 permits reduction of insurer liability by amounts recovered from other insurance; policies limit recovery to insured’s actual damages, so no windfall where insured is already made whole | Court: §1952.106’s purpose is to compensate actual damages; it does not entitle insured to recover in excess of actual loss or to a windfall; Farm Bureau’s application is consistent with statute and policy language |
Key Cases Cited
- American Liberty Ins. Co. v. Ranzau, 481 S.W.2d 793 (Tex. 1972) (invalidated other-insurance application that would deny insured recovery of actual damages under UM coverage)
- Stracener v. United Servs. Auto. Ass’n, 777 S.W.2d 378 (Tex. 1989) (held negligent party is underinsured when available liability proceeds are insufficient to compensate actual damages)
- Mid–Century Ins. Co. of Tex. v. Kidd, 997 S.W.2d 265 (Tex. 1999) (policy provisions inconsistent with statutory requirements or purposes are invalid)
- Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154 (Tex. 2003) (general rule that insurance policies are interpreted under contract-construction principles)