Certain Underwriters at Lloyds, London Subscribing to Policy F33055608-31, Policy F33055609-58, and Policy F33055610-078 v. Four J's Community Living Center, Inc.
4:11-cv-00713
S.D. Tex.Dec 2, 2011Background
- Lloyds insured Four J’s Community Living Center, Inc., owner Jenny Wagner resided at a home operated by Four J’s.
- Jenny Wagner suffered a severe burn in September 2008 at the Four J’s facility.
- Movant, Patti Wagner as Guardian of Jenny Wagner, filed an underlying state court lawsuit against Four J’s and others, which resulted in a jury verdict in Movant’s favor for $8,091,600.
- Lloyds filed this insurance-coverage declaratory judgment action to determine that the policy provides no coverage for the Wagner claim.
- Movant sought to intervene in the insurer’s coverage dispute; the underlying case had not yet reached a final judgment.
- Texas law limits direct actions against liability insurers; damages collection generally requires a final judgment against the insured.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Movant may intervene as of right | Movant has an interest in insurance proceeds | No protectable interest absent final judgment | Denied as to intervention right without prejudice |
| Whether Movant may permissively intervene | Common legal questions exist between actions | Discretionary with court; no final basis | Denied without prejudice; may refile if appropriate |
| Whether Movant has a protectable interest before a final judgment | Interest in policy proceeds accrued | Interest does not vest until insured is liable or judgment entered | No protectable interest pending final judgment |
| Whether Texas is a direct-action state affects intervention | Direct-action status supports intervenor’s claims | Texas is not a direct-action state; lien on proceeds required after judgment | Texas not direct-action; no immediate right to proceeds |
Key Cases Cited
- Ohio Cas. Ins. Co. v. Time Warner Entertainment Co., 244 S.W.3d 885 (Tex. App. – Dallas 2008) (not a direct action state; no direct action against insurer before judgment)
- Jones v. CGU Ins. Co., 78 S.W.3d 626 (Tex. App.–Austin 2002) (no pet; direct action limitations on claims against insurer)
- Ollis v. State Farm County Mut. Ins. Co. of Tex., 768 S.W.2d 722 (Tex. 1989) (injured party cannot enforce insurer directly until insured’s liability is established)
- Great Am. Ins. Co. v. Murray, 437 S.W.2d 264 (Tex. 1969) (illustrates third-party beneficiary status requires judgment for direct action)
- Angus Chem. Co. v. IMC Fertilizer, Inc., 939 S.W.2d 138 (Tex. 1997) (recognizes when third-party claims may arise under insurance context)