John H. Carney & Associates v. Texas Property & Casualty Insurance Guaranty Ass'n
354 S.W.3d 843
Tex. App.2011Background
- Association pays covered claims of insolvent insurers and maintains a guaranty fund from solvent insurers' assessments
- Carney sued the Association to recover damages Carney had been awarded against Texas Select Lloyds, an insolvent insurer
- Carney claimed its judgment was a covered claim under former article 21.28-C, §5(8) due to assignment of Lincoln's first-party claim
- Assignment secured Carney's 40% contingency in Lincoln's mold-claim recovery, but Texas Select policy itself was not assigned
- Trial court granted summary judgment for the Association; Carney appealed alleging assignment gave insured-like standing
- Court held Carney is neither an insured nor a third-party claimant, and assignees are not covered by the Guaranty Act; Judgment affirmed
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether assignees can recover as covered claims | Carney stands in Lincoln's shoes via assignment | Act limits to insureds and third-party claimants | No; assignees are not covered |
| Whether the assignment preserves a covered claim despite attorney's-fees exclusion | Assignment creates a first-party claim under policy | Fees are not covered claims under the Act | Not covered due to insured/claimant status requirement |
| Whether the Guaranty Act should be read to broaden assignee rights | Legislature intended to expand coverage to assignees | Legislation does not expressly include assignees | Legislation implies limitation to insureds/claimants; assignees excluded |
| Whether statutory construction supports limiting remedy to insureds | Assignee rights should be recognized under plain language | Text and context show limited scope | Yes; legislature intended limited remedy |
| Relation to broader guaranty schemes and caselaw consistency | Texas model-act analogies support assignee coverage | Texas Act differs; assignees excluded | Consistent with statutory intent to exclude assignees |
Key Cases Cited
- State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d 696 (Tex. 1996) (assignment of rights; general rule of transfer of choses in action)
- Vinson & Elkins v. Moran, 946 S.W.2d 381 (Tex.App.-Houston 1997) (assignment of interests in claims; who may sue)
- Camden Fire Ins. Ass'n v. Eckel, 14 S.W.2d 1020 (Tex.Com.App.1929) (insurer can sue in insured's name after assignment)
- Renger Mem'l Hosp. v. Texas, 674 S.W.2d 828 (Tex.App.-Austin 1994) (authority on assignment of cause of action; public policy)
- Unisys Corp. v. Texas Life, Accident, Health & Hosp. Serv. Ins. Guar. Ass'n, 943 S.W.2d 133 (Tex.App.-Austin 1997) (comparative view on scope of guaranty-association remedies)
- Texas Prop. & Cas. Ins. Guar. Assoc. v. Workers' Comp. Comm'n, 2001 WL 194084 (Tex.App.-Austin 2001) ( workers' compensation comparative statutory context)