in Re American National County Mutual Insurance Company
2012 Tex. App. LEXIS 8228
| Tex. App. | 2012Background
- Relator American National seeks mandamus to compel severance and abatement of Cole's extra-contractual claims from her breach of contract claim.
- Cole sued after settling with the other driver for $100,000 and pursued UIM benefits from American National.
- American National offered to settle Cole's entire UIM claim; Cole then sued for breach of contract and for bad faith and insurance-code violations.
- Trial court denied severance and abatement; mandamus relief was sought to correct that ruling.
- Texas standards require mandamus where there is a clear abuse of discretion and no adequate appellate remedy, and severance/abatement may be required to avoid prejudice and unnecessary proceedings.
- Court held that severance and abatement were required, and issued a conditional writ directing the trial court to sever and abate pending resolution of the contract claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court abused its discretion by denying severance. | Cole argues severance is required because extra-contractual claims are independent from contract claims and would prejudice the insurer if tried together. | American National argues severance is not mandatory and the court may deny severance if not necessary to avoid prejudice. | Abuse found; severance required to protect rights and avoid prejudice. |
| Whether abatement of extra-contractual claims was required when a settlement offer on the contract claim was made. | Cole contends abatement is not universally required; some claims may not be mooted by contract resolution. | American National contends abatement is necessary to avoid unnecessary discovery and trial on claims that may be moot. | Abatement required under these circumstances to avoid waste and potential mootness of extra-contractual claims. |
| Whether the writ should compel severance and abatement given UIM-specific considerations. | Cole asserts that UIM issues are contractual and should be tried with related claims when possible. | American National argues special considerations in UIM cases support severance/abatement to avoid irreconcilable evidentiary conflicts. | Yes; severance and abatement mandated to protect substantive rights and prevent prejudice. |
Key Cases Cited
- Liberty National Fire Ins. Co. v. Akin, 927 S.W.2d 627 (Tex. 1996) (severance may be necessary; expert discussion on settlement offers and prejudice)
- In re Allstate Ins. Co., 232 S.W.3d 340 (Tex. App.--Tyler 2007) (extra-contractual claims severable from contract claims in insurance cases)
- Millard, United States Fire Ins. Co. v., 847 S.W.2d 668 (Tex. App.--Houston 1993) (severance/abatement considerations when settlement offers exist)
- Wilborn v. State Farm Mut. Auto. Ins. Co., 835 S.W.2d 260 (Tex. App.--Houston [14th Dist.] 1992) (conflicts between settlement offers and evidence in bad faith trials; need for severance)
- Brainard v. Trinity Universal Ins. Co., 216 S.W.3d 809 (Tex. 2006) (UIM benefits conditioned on insured's legal entitlement; informs abatement rationale)
- In re United Fire Lloyds, 327 S.W.3d 250 (Tex. App.--San Antonio 2010) (abatement appropriate when contract outcome could render extra-contractual claims moot)
- In re Republic Lloyds, 104 S.W.3d 354 (Tex. App.--Houston [14th Dist.] 2003) (severance required in certain insurer settlement contexts)