California Insurance Guarantee Association, Oklahoma Property and Casualty Insurance Guaranty Association, and Texas Property and Casualty Insurance Guaranty Association v. Hill Brothers Transportation, Inc.
03-15-00314-CV
Tex. App.Sep 8, 2015Background
- Hill Brothers purchased a workers’ compensation policy from Legion (9/1/01–9/1/02) that included a $250,000 per‑claim deductible and deductible endorsements for multiple states.
- On April 1, 2002 Legion was placed in rehabilitation; Hill Brothers stopped paying premiums and Legion issued a cancellation effective June 2, 2002.
- Legion became insolvent; state guaranty associations (CIGA, OPCIGA, TPCIGA — “Guaranty Associations”) paid covered claims within the Policy’s deductibles and then sued Hill Brothers on March 31, 2009 for reimbursement under the Policy.
- Hill Brothers moved for summary judgment asserting the breach‑of‑contract claim was barred by the four‑year statute of limitations and, alternatively, that the Guaranty Associations lacked authority to bring Legion’s contract claim. The trial court granted summary judgment on limitations and denied dismissal on standing; Hill Brothers appeals/defends that judgment on appeal.
- Appellee’s principal position: the Guaranty Associations stand in Legion’s shoes and therefore must abide by Legion’s limitations period; Legion’s breach accrued no later than June 2, 2002, so a 2009 suit is time‑barred.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When did the breach‑of‑contract claim accrue for limitations? | GAs: limitations began when GAs acquired standing or when they paid covered claims (post‑insolvency dates). | Hill: accrual is tied to Legion’s breach (April 1, 2002 nonpayment of premiums or June 2, 2002 termination), so limitations ran earlier. | Court: accrual occurred upon Legion’s breach/termination; GA suit filed well after 4 years and is barred. |
| Does acquisition of statutory standing by the GAs delay accrual or toll limitations? | GAs: no accrual while GAs lacked statutory authority; limitations shouldn’t run before their rights were triggered. | Hill: standing to enforce Legion’s claim is irrelevant to when Legion’s claim accrued; GAs inherit both rights and burdens (including limitations). | Court: acquisition of standing does not change accrual; even using GA trigger dates, claim remained untimely. |
| Do separate deductible endorsements create separate causes of action for each payment (allowing later accruals)? | GAs: deductible endorsements are continuing obligations; accrual for damages occurs when GAs fully performed (final payments), so recent payments fall within 4 years. | Hill: endorsements are part of the single Policy; Legion terminated the Policy, and accrual for damages on a continuing contract occurs when the injured party elects to terminate. | Court: endorsements are not independent; Legion’s termination (June 2, 2002) started limitations; separate actions per payment are improper. |
| Alternatively, may summary judgment be affirmed because GAs lack statutory authority to sue on Legion’s contract claim? | GAs: statutes allow them to enforce duties and obligations of insolvent insurer (stand in insurer’s shoes for covered claims). | Hill: statutes allow claims administration/defense but do not authorize suing as assignee of insurer’s contract claims; that is liquidator’s role. | Court (appellee argument): trial court’s limitations ruling should be affirmed; alternatively, GAs are not proper parties to bring Legion’s breach‑of‑contract claim and liquidator/proof‑of‑claim procedures apply. |
Key Cases Cited
- Via Net v. TIG Ins., 211 S.W.3d 310 (Tex. 2006) (breach‑of‑contract claim accrues when contract is breached)
- Stine v. Stewart, 80 S.W.3d 586 (Tex. 2002) (accrual principles for contract claims)
- F.D. Stella Prods. Co. v. Scott, 875 S.W.2d 462 (Tex. App.—Austin 1994) (for continuing contracts, damages claim accrues when injured party elects to terminate)
- Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623 (Tex. 1996) (appellate courts may affirm summary judgment on any ground preserved and necessary for final disposition)
- Gen. Reinsurance Corp. v. Am. Bankers Ins. Co., 996 A.2d 26 (Pa. Commw. Ct. 2009) (statutes deem guaranty association the insurer for claims administration but do not generally authorize asserting insurer’s estate causes of action)