IN RE USAA GENERAL INDEMNITY COMPANY, RELATOR
No. 20-0075
IN THE SUPREME COURT OF TEXAS
May 7, 2021
ON PETITION FOR WRIT OF MANDAMUS
The salient question presented in this case is whether the motorist who injured the plaintiff was underinsured. The answer is simple: she was not.
The trial court‘s post-verdict dismissal of the at-fault motorist does not set aside the jury‘s verdict establishing her liability and the amount of the damages she caused for purposes of determining whether she was underinsured. Nor does it remove from consideration her agreement to pay the plaintiff an amount that exceeds the jury‘s verdict. Fundamentally, the plaintiff‘s own insurer has no underinsured-motorist liability in this case because the liable motorist and her insurance carrier fully compensated the plaintiff for his injuries, as determined by the jury that heard his case against her. The plaintiff‘s receipt of payment for the damages found by the jury from the at-fault motorist and his agreement to dismiss with prejudice his claim against that motorist precludes his claim against his own carrier for underinsured-motorist coverage.
In rejecting this basic tenet, the Court ignores that USAA is one of three parties to this single action. Likewise, its focus on the plaintiff‘s dismissal and the timing of the plaintiff‘s insurer‘s consent to be bound by the verdict neglects both the verdict‘s force and effect and the binding nature of the plaintiff‘s dismissal. As a party to the lawsuit, the plaintiff‘s insurer may seek judgment on the jury‘s verdict. Absent any question of the verdict‘s infirmity, the trial court‘s decision to disregard it in favor of another trial warrants mandamus relief. Because the Court declines to grant relief, I respectfully dissent.
I
Sue Ann Baldor rear-ended Adam Reising in a car accident. Reising sued Baldor. Because Baldor‘s insurance coverage initially was limited to $30,000, and Reising alleged more than $30,000 in damages, Reising also sued his own insurer, USAA General Indemnity Company, seeking coverage under his underinsured-motorist policy for any covered amount that Baldor did not pay.
Reising‘s underinsured-motorist coverage applies when the coverage of the motorist-defendant “is not enough to pay the full amount the covered person is entitled to recover as damages.” The policy further provides that the coverage is for
Baldor moved to bifurcate the trial and abate the case against USAA, аnd the trial court granted her motion. Reising and Baldor proceeded to trial. The jury found Baldor 100% responsible for the accident and awarded Reising $160,000 in damages.
Neither Reising nor Baldor challenged the verdict by, for example, moving for a new trial or to set the verdict aside. Instead, Reising and Baldor agreed to settle their suit for $161,114.79. They then moved in the trial court to dismiss Reising‘s claim against Baldor with prejudice. At a hearing on the motion and settlement, USAA moved for judgment on the verdict, which, it argued, is dispositive of its liability given Baldor‘s payment. The trial court refused to act on USAA‘s motion. The trial court then granted Reising‘s motion to dismiss his claim against Baldor with prejudice.
After the trial court dismissed Baldor from the suit with prejudice, USAA wrote to Reising that it would be bound by the verdict. USAA again moved for judgment on the verdict. Without explanation, the court refused and scheduled a second trial, in which Reising contends that he may retry his claim against Baldor and submit her liability and his damages to another jury, solely for the purpose оf determining USAA‘s liability for underinsured-motorist coverage.
II
For over a century, we have consistently held that a judge has a ministerial duty to enter judgment on a verdict.1 Under
A trial court has “considerable discretion” to set aside a verdict and grant a new trial, for example, in cases of a conflicting verdict or juror misconduct.4 However, a trial court must stаte its reasons—failing to do so is an abuse of discretion that warrants mandamus relief.5
The trial court in this case did not state a reason to justify its disregard of the jury‘s verdict, and on this record, no justification exists. When Reising dismissed Baldor from this suit, it did not dissolve
Reising‘s dismissal with prejudice of his claim against Baldor does not dispense with USAA‘s right to seek judgment on the jury‘s verdict. “Any party may prepare and submit a proposed judgment to the court for signature.”6 Abated or not, bifurcated or not, USAA is a party to the case. If USAA‘s proposed judgment conformed to the verdict, and the trial court had no reason to set the verdict aside, then the trial court had no option but to enter judgment.
A
USAA‘s proposed judgment conformed to the verdict. Underinsured-motorist coverage compensates the insured for damages that he does not recover from the negligent driver or her insurance company.7 Under Reising‘s policy, Reising may recover from USAA only the amount that he is “legally entitled” to recover from Baldor, less any payments Baldor made to satisfy her obligation. The jury awarded Reising $160,000. Baldor‘s insurer thereafter paid Reising $161,114.79. USAA‘s obligation to Reising, reduced by Baldor‘s payment, is zero.
Reising is not “legally entitled” to recover any more from Baldor. Reising‘s argument against simple arithmetic is that his agreement to dismiss Baldor effectively voids the verdict and leaves undetermined the amоunt he is “legally entitled” to recover from her. By agreeing to dismiss his claim against Baldor with prejudice, however, Reising is no longer “legally entitled” to pursue Baldor for any amount. He has released his claim against her after receiving an amount that exceeded the damages the jury awarded to him.8
To the extent that a judgment must fix the amount to which an insured is “legally entitled,”9 the trial court must render that judgment in this case based on the jury‘s findings and the applicable law. The jury‘s verdict coupled with Reising‘s dismissal оf his claim against Baldor with prejudice in exchange for an amount greater than the jury‘s verdict satisfies the requirement without need for further factfinding. In an attempt to avoid this rule, Reising and Baldor “asked the court not to enter a judgment.” Their request, however, does not transmute the trial court‘s dismissal with prejudice of Reising‘s claim against Baldor into anything other than a binding
By the same token, their agreement does not bind USAA. It left the question of underinsured coverage to be determined, not the damages for which Baldor was rеsponsible. “The order entered at the conclusion of a separate trial is often interlocutory, because no final and appealable judgment can properly be rendered until all of the controlling issues have been tried and decided.”11 In this case, the jury has decided the controlling fact issue. The verdict establishing Baldor‘s liability and damages cannot conflict with a later verdict deciding those same issues.
The verdict against Baldor and her insurer‘s payment of an amount exceeding the verdict to resolve Reising‘s claim against her admits but one conclusion: USAA has no liability to Reising for underinsured-motorist coverage. No further fact-finding is required, and the trial court should have entered judgment for USAA.
B
The law places a premium upon finality and conserving judicial resources. “[E]xtraordinary relief can be warranted when a trial court subjects taxpayers, defendants, and all of the state‘s district courts to meaningless proceedings and trials.”12 For that reason, we have concluded that a trial court abuses its discretion in granting a motion for new trial when the record does not support the trial court‘s reasons for granting it or when the trial court states no reason.13 In this case, no party sought to set aside the verdict; one party—USAA—sought judgment on it. The trial court‘s refusal to enter judgment, combined with an ensuing wasteful second jury trial to decide the same issues a jury in this case has decided, warrants mandamus relief.
III
The Court declines to grant relief for two reasons: (1) collateral estoppel does not attach in the absence of final judgment; and (2) USAA‘s consent to the verdict does not bind Reising. We agree that collateral-estoppel principles are out of place in a bifurcated trial, which does not create separate actions. It is precisely because this case is a single action that USAA is entitled to judgment on the verdict. The second reason fails because the verdict, subsequent settlement, and dismissal with prejudice bind Reising. USAA‘s contractual shield of consent cannot be used as a sword against it to countermand that verdict and settlement.
A
USAA‘s brief characterizes the preclusive effect of the verdict against Baldor as “collateral estoppel.” As the Court correctly observes, however, collateral estoppel requires a valid and final judgment.14 Collateral estoppel is the correct doctrine for
The Court is adamant that the trial court did not order a bifurcated trial, despite the trial court‘s order, which expressly states that Reising‘s cаuse of action against USAA is “hereby abated and bifurcated.”18 The Court improperly constrains bifurcated trials to those that involve a single jury.19 Even so, in this case, no more than a single jury was necessary. The hallmark of bifurcation is that the second phase of the trial is dependent on resolution of the first. USAA‘s liability is dependent on Baldor‘s liability. USAA remained a party entitled to seek judgment on the verdict.20 Only severed actions result in independently appealable judgments—judgments that dispose of all claims and all parties.21
The jury‘s verdict resolved the parties’ factual dispute about the amount of damages Baldor owed Reising for the collision that she caused. Reising identifies no other fact issue to be resolved in a new trial other than Baldor‘s liability and damages. To do so again, when Baldor‘s interests are no longer adversarial to Reising‘s, risks a skewed outcome like the kind we refused to countenance in State Farm Fire & Casualty Co. v. Gandy, 925 S.W.2d 696, 705 (Tex. 1996). The tortfeasor in Gandy assigned his claims against his insurer to the plaintiff in exchange for her agreement not to collect her judgment against him.23 We likened the disincentives that occur when the tortfeasor is no longer aligned with the party responsible for paying the damages for her conduct to the
As a matter of public policy, this Court favors settlements, but we do not favor partial settlements that promote rather than discourage further litigation. And we do not favor settlement arrangements that skew the trial process, mislead the jury, promote unethical collusion among nominal adversaries, and create the likelihood that a less culpable defendant will be hit with the full judgment. The bottom line is that our public policy favoring fair trials outweighs our public policy favoring partial settlements.25
As in Gandy, the concern is not, as the Court states, that Baldor has an economic incentive to assist Reising in the second trial. It is instead that Baldor has no incentive to resist Reising‘s efforts to establish her liability and damages because she is no longer legally responsible for them. Put differently, thоugh Baldor has no financial interest in Reising‘s recovery against USAA, she also is not anything more than a “nominal” adversary in what will (again) be a determination of her liability for the car accident and the damages she caused. As we forewarned in Gandy: “It is one thing to say that a defendant‘s liability must be determined as if he had not settled with the plaintiff; it is quite another thing to do it.”26 In reality, “[o]nce the parties have changed positions, their views are altered, and it is very difficult to determine what might have been.”27
Our Rules of Civil Prоcedure provide that a trial court may bifurcate a case for convenience or to avoid prejudice.28 Here, the trial court did so to avoid injecting potentially prejudicial insurance issues into the negligence suit against Baldor.29 Whether done for convenience or to avoid prejudice, a separate trial on issues leaves the lawsuit intact, separating the case into two or more parts that are tried separately.30
The Court‘s analysis рresumes either that Reising‘s dismissal bars the trial court from entering judgment on the verdict or that the earlier phase is a legal fiction that evaporated when some of the parties agreed to settle. There is no “earlier” action. There is only a separate verdict in a bifurcated case, which, in turn, incorporates into one final judgment. In a case in which exemplary damages are bifurcated from actual damages, for example, the actual damages verdict informs whether to proceed to the trial on the remaining issue of exemplary damages. Because actual damages are necessary to award exemplary damages, the second phase may not be necessary.31 The same is true in this case.
In sum, USAA‘s agreement to split the triаl into phases does not compel it to participate in a second trial that the first has rendered unnecessary.
B
While re-litigation happens in underinsured-motorist cases, it comes about when the insurer declines to be bound by the findings made against the motorist. In contrast to those cases, the Court in this case holds that the verdict is unenforceable against the very party who sought that verdict to support his claims against two defendants, choosing to settle with only one. None of our precеdent leads to such a result; Gandy instructs differently.32
The Court further holds that “[a] party‘s pre-judgment agreed dismissal has the same effect on a verdict against that party as a new trial order—it makes the verdict unenforceable.”33 That may be true for the parties who have agreed to dismiss the claims between them. It is not true for the remaining parties to the case.
Under Rule 162, a plaintiff has the absolute right to take a nonsuit or dismissal without prejudice “[a]t any time before the plaintiff has introduced all of his evidence other than rebuttal evidence.”34 However, this case proceeded well past Rule 162‘s point of no return. As we recognized in O‘Brien v. Stanzel, late-in-the-game nonsuits do not prevent judgments vis-à-vis other parties to the suit:
One should not be permitted to take a nonsuit so that he can have another day and another try after he has announced ready, picked a jury, and heard and seen all of the witnesses unfold all of the contentions of a three-sided controversy that has proceedеd to the point that all parties have closed after a trial that lasted a week. Under such circumstances, one may not prevent a final judgment on the merits by moving for a nonsuit.35
Because the Court holds that the dismissal rendered the verdict a nullity for Reising‘s claims against USAA, it thеn analyzes whether USAA‘s consent resurrects it. In doing so, it improperly uses a clause intended to protect USAA37 from the vagaries of a sham trial38 as a bludgeon against USAA‘s invocation of a verdict that was not a sham.
The Court writes that “the insurer can no more bind its insured to the verdict than could the motorist against whom it was rendered.”39 It is not USAA who binds Reising; it was Reising who bound himself. He fully participated in the trial and in the settlement agreement, which bars him from re-adjudicating Baldor‘s liability for the damages the jury awarded. If Reising did not want to be bound by the verdict, he could have moved for a new trial or for judgment notwithstanding the verdict. Instead, he agreed to dismiss his claim with prejudice after he received payment of an amount exceeding the verdict “by or on behalf of” the party he claims is underinsured. If Baldor‘s insurer had paid less than the jury‘s verdict to settle, USAA would have two choices: either move for a judgment on the verdict and pay Reising the difference between the verdict and the amount he recovered from Baldor, or roll the dice and try the case again. Under the former scenario, USAA is required to pay Reising because Reising would not have recovered “all amounts that [he] is legally entitled to recover as damages from [Baldor].”40 Under the latter, USAA has declined to be bound by a judgment from a suit brought without its written consent.41 The choice is USAA‘s, not Reising‘s, because Reising has asserted claims against both defendants based on the same operative facts.
The Court suggests that USAA seeks to improperly rely on Reising‘s settlement by cоnsenting to the judgment with the benefit of hindsight.42 That is the very purpose of the consent provision: it allows the insurer to determine with the benefit of hindsight whether the potentially underinsured motorist adequately defended the suit before agreeing to be bound by a finding of liability and damages against that motorist. The consent provision protects USAA from default judgments and the lackadaisical efforts of a judgment-proof defendant. USAA used the consent provision here precisely as designed.
* * *
Because the jury‘s verdict establishеd that Baldor is liable to Reising for $160,000 in damages, Baldor paid more
OPINION DELIVERED: May 7, 2021
Jane N. Bland
Justice