Liberty Mutual Insurance Company v. Rickie Sims, 12-14-00123-CV

Background

Rickie Sims was injured in an auto accident while driving a commercial vehicle covered under Chesapeake’s commercial auto policy; Chesapeake’s Business Auto Declarations initially listed UM/UIM limits of $1,000,000.
Liberty Mutual (Chesapeake’s commercial insurer) later produced an amendatory endorsement (2610A) and amended UM/UIM schedule showing UIM limits of $250,000, which Liberty said superseded the $1,000,000 figure.
Sims sued the at-fault driver (Knous), Liberty, and his own carrier (Farmers); Knous’s carrier paid its $100,000 policy limit, and the trial proceeded against Liberty on the UIM contractual claim only.
Liberty amended discovery to produce the 2610A endorsement and tendered $250,000 before trial; Sims moved to amend his petition five days before trial to assert the policy limit was $1,000,000 and added Insurance Code claims; the court allowed the amendment.
The trial court excluded Liberty’s amendatory endorsement and allowed the jury to hear evidence and argument that UIM limits were $1,000,000; the jury found UIM limits were $1,000,000 and awarded damages of $2,540,885.47.
On post-verdict motions Liberty produced the certified complete Chesapeake policy (including endorsement 2610A). The trial court entered judgment for $1,000,000 against Liberty; the court of appeals reversed and remanded for a new trial on damages only.

Issues

Issue	Plaintiff's Argument (Sims)	Defendant's Argument (Liberty)	Held
Whether Chesapeake’s UIM limits are $250,000 as a matter of law or a jury question	The endorsement’s effectiveness was disputed; discovery discrepancies created a fact issue for the jury	The amendatory endorsement unambiguously reduced limits to $250,000 and must be construed by the court as a matter of law	Court held the policy (including endorsement) is unambiguous; UIM limits are $250,000 as a matter of law (reversed)
Whether Liberty’s earlier discovery responses admitting $1,000,000 operate as a binding judicial admission	Sims relied on Liberty’s initial admissions and nonproduction to bind Liberty to $1,000,000	Liberty corrected its discovery by producing the endorsement and amended responses; the policy language controls coverage, not a mistaken discovery answer	Court held amended discovery and production put Sims on notice; the discovery discrepancy did not create a controlling fact issue and did not override the unambiguous policy language
Admissibility of evidence of UIM and other liability limits to the jury (insurance injection)	Sims argued he had to prove existence/amount of UIM coverage to establish his UIM claim before jury	Liberty argued limits are irrelevant to jury issues of liability and damages and their admission unfairly prejudiced the jury	Court held trial court abused discretion by allowing evidence and argument of the $1,000,000 limit; limits are immaterial to jury’s liability/damages determination and prejudicial
Whether the certified full policy attached to Liberty’s post-verdict JNOV was properly considered	Sims objected that presenting the certified policy post-verdict violated Rule 270 and/or was hearsay and thus untimely	Liberty had already placed the amendatory endorsement into the record pre-trial as Court’s Exhibit No. 1; the certified copy was timely for post-verdict court determination	Court held the endorsement had been before the court and the certified policy could be considered for the court’s legal construction post-verdict; Rule 270 did not bar consideration

Key Cases Cited

Utica Nat’l Ins. Co. of Tex. v. Am. Indem. Co., 141 S.W.3d 198 (Tex. 2004) (general contract/insurance interpretation principles)
Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819 (Tex. 1997) (contract interpretation governs insurance policies)
Brainard v. Trinity Universal Ins. Co., 216 S.W.3d 809 (Tex. 2006) (UIM insurer’s duty arises only after liability and underinsured status are established)
State Farm Fire & Cas. Co. v. Vaughan, 968 S.W.2d 931 (Tex. 1998) (when a contract is unambiguous it must be given a definite legal meaning)
Mesa Operating Co. v. Cal. Union Ins. Co., 986 S.W.2d 749 (Tex. App.—Dallas 1999) (endorsements supersede conflicting printed policy terms)
Boulet v. State, 189 S.W.3d 833 (Tex. App.—Houston [1st Dist.] 2006) (responses to requests for admission cannot resolve questions of law such as contract construction)