in Re: GEICO Advantage Insurance Company and Celia Stefl
05-16-01249-CV
| Tex. App. | Dec 1, 2016Background
- Marion Thorpe sued Geico Advantage and Celia Stefl for underinsured motorist (UIM) benefits and extracontractual/unfair-settlement damages arising from a car wreck with Constance Faz.
- Geico disputed the UIM liability and made a settlement offer on the disputed contract claim.
- Thorpe’s extracontractual claims depend on first establishing contractual liability for UIM benefits.
- The trial court denied Geico’s motion to sever and abate the extracontractual claims and instead ordered a bifurcated trial and allowed discovery on the extracontractual claims.
- Geico filed an original mandamus petition asking the appellate court to compel severance and abatement; the trial court’s orders remained in place pending this proceeding.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court abused its discretion by denying severance and abatement of extracontractual claims in a UIM case | Thorpe: claims can proceed; bifurcation is appropriate | Geico: extracontractual claims are unripe until contractual UIM liability is established; severance and abatement required, especially after settlement offer | Court: Abuse of discretion—trial court must sever and abate extracontractual claims and vacate orders for separate trials |
| Whether bifurcated trial adequately protects parties when insurer made a settlement offer on disputed contract claim | Thorpe: bifurcation suffices | Geico: bifurcation risks prejudice because settlement offer is evidence that should be protected by severance | Court: Bifurcation does not adequately protect interests where insurer made settlement offer; severance required |
Key Cases Cited
- Progressive Cty. Mut. Ins. Co. v. Boyd, 177 S.W.3d 919 (Tex. 2005) (insurer not contractually liable until insured proves coverage, liability, and damages)
- Brainard v. Trinity Universal Ins. Co., 216 S.W.3d 809 (Tex. 2006) (insured must establish contractual liability before pursuing extracontractual claims)
- Liberty Nat. Fire Ins. Co. v. Akin, 927 S.W.2d 627 (Tex. 1996) (severance may be necessary when insurer has made a settlement offer on contractual claim)
- U.S. Fire Ins. Co. v. Millard, 847 S.W.2d 668 (Tex. App.—Houston [1st Dist.] 1993) (mandamus appropriate when severance denial leaves no adequate appellate remedy)
- In re Am. Nat. County Mut. Ins. Co., 384 S.W.3d 429 (Tex. App.—Austin 2012) (only severance adequately protects parties from conflicts created by settlement-offer evidence)
- In re United Fire Lloyds, 327 S.W.3d 250 (Tex. App.—San Antonio 2010) (extracontractual claims unripe and severance/abatement required where underlying liability undecided)
- In re Allstate Cty. Mut. Ins. Co., 447 S.W.3d 497 (Tex. App.—Houston [1st Dist.] 2014) (same principle: must establish contract liability before extracontractual recovery)
Result: The Court conditionally granted mandamus, ordering the trial court to vacate its bifurcation order and to sever and abate Thorpe’s extracontractual and unfair-settlement claims from the UIM liability claims.