497 S.W.3d 35
Tex. App.2016Background
- Christopher Auzenne slipped on water in Snowflake Donuts’ restroom on March 8, 2014, sustaining injuries and incurring about $4,500 in medical expenses.
- Snowflake Donuts had a commercial insurance policy with Great Lakes that allegedly included a medical-payments clause obligating the insurer to pay medical expenses regardless of fault.
- Auzenne sent medical bills to Great Lakes; the insurer did not pay. He sued Great Lakes directly for breach of contract and Texas Insurance Code violations without suing Snowflake Donuts or obtaining any judgment or settlement establishing Snowflake Donuts’ liability.
- Great Lakes moved to dismiss under Texas Rule of Civil Procedure 91a, arguing lack of standing / ripeness under Texas’s no-direct-action rule; the trial court granted the motion and awarded attorney’s fees to Great Lakes.
- On appeal, Auzenne argued he was a third-party beneficiary entitled to enforce the policy’s medical-payments provision without first securing a liability determination against the insured.
- The majority affirmed dismissal, holding the claims were not ripe under the no-direct-action rule and that alleged third-party beneficiary status (and the required contract) was not shown in the pleadings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an injured third party can sue the tortfeasor’s insurer directly for medical-payments benefits before insured liability is established | Auzenne: medical-payments clause creates a direct contractual right; no prior liability determination is required | Great Lakes: Texas’s no-direct-action rule (ripeness) bars direct suits until insured liability is determined | Held: Dismissal affirmed — claim not ripe under the no-direct-action rule; insured’s liability must be established first |
| Whether the medical-payments clause creates third-party beneficiary status allowing direct enforcement | Auzenne: clause makes him an intended third-party beneficiary entitled to enforce the policy | Great Lakes: plaintiff failed to plead or produce the policy or show he was contemplated by the contracting parties; presumption disfavors third-party beneficiaries | Held: Even assuming the clause exists, plaintiff failed to rebut presumption; third-party beneficiary rights would still be unripe absent insured liability |
| Whether Rule 91a dismissal was proper on pleadings alone | Auzenne: pleadings sufficiently alleged a medical-payments provision and entitlement to relief | Great Lakes: legal deficiencies (no ripe claim; no established beneficiary) justify dismissal under Rule 91a | Held: Rule 91a dismissal proper because allegations, taken as true, did not entitle plaintiff to relief in law or fact |
| Whether any Texas exception applies to medical-payments claims | Auzenne: medical-payments provisions should be treated differently; many jurisdictions allow direct actions on such clauses | Great Lakes: Texas law applies uniformly; no recognized exception for medical-payments provisions | Held: Majority rejects an exception; Texas precedent requires liability determination first; dissent would allow further proceedings |
Key Cases Cited
- Weizhong Zheng v. Vacation Network, Inc., 468 S.W.3d 180 (Tex. App.—Houston [14th Dist.] 2015) (standard of review and Rule 91a pleading principles)
- United Fire Lloyds v. Tippin ex rel. Tippin, 396 S.W.3d 733 (Tex. App.—Houston [14th Dist.] 2013) (no-direct-action rule; breach-of-contract claims unripe until insured liability established)
- In re Essex Ins. Co., 450 S.W.3d 524 (Tex. 2014) (direct-action rule bars pre-liability suits against insurer)
- Farmers Ins. Exch. v. Rodriguez, 366 S.W.3d 216 (Tex. App.—Houston [14th Dist.] 2012) (no justiciable controversy until insured liability is established)
- Angus Chem. Co. v. IMC Fertilizer, Inc., 939 S.W.2d 138 (Tex. 1997) (general rule that injured party cannot sue tortfeasor’s insurer directly)
- Patterson v. Planned Parenthood of Houston, 971 S.W.2d 439 (Tex. 1998) (distinction between standing and ripeness; ripeness requires concrete injury)
- Stine v. Stewart, 80 S.W.3d 586 (Tex. 2002) (presumption that contracts are for parties’ own benefit; third-party beneficiary rules)
- MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647 (Tex. 1999) (court will not create third-party beneficiary contract by implication)