Defamation Cause of Action in Texas (Houston Court of Appeals 2015)

CAUSE OF ACTION FOR DEFAMATION
 
To prove a cause of action for defamation, a plaintiff must prove that (1) the defendant published a statement of fact about the plaintiff; (2) the statement was defamatory; (3) the statement was false; (4) the defendant acted negligently in publishing the false and defamatory statement; and (5) the plaintiff suffered damages as a result. See WFAA–TV, Inc. v. McLemore, 978 S.W.2d 568, 571 (Tex. 1998); Brown v. Swett & Crawford of Texas, Inc., 178 S.W.3d 373, 382 (Tex.
App.—Houston [1st Dist.] 2005, no pet.). Whether a communication is defamatory is a question of law. See Musser v. Smith Protective Servs., 723 S.W.2d 653, 654 (Tex. 1987).

For a statement to be actionable as defamation, it must refer to an ascertainable person. Robertson v. Sw. Bell Yellow Pages, Inc., 190 S.W.3d 899, 902 (Tex. App.— Dallas 2006, no pet.); Double Diamond, Inc. v. Van Tyne, 109 S.W.3d 848, 854 (Tex. App.—Dallas 2003, no pet.). The statement must “point to the plaintiff and to no one else.” Newspapers, Inc. v. Matthews, 339 S.W.2d 890, 894 (1960).

See Ledig v. Duke Energy Corp., 193 S.W.3d 167, 180 (Tex. App.—Houston [1st Dist.] 2006, no pet.) (noting person is referred to in defamatory statement if person is named in statement or if those who know person would understand that statement was referring to person).

Defamatory statements are conditionally or qualifiedly privileged and therefore not actionable when “made in good faith on any subject matter in which the author has an interest, or with reference to which he has a duty to perform to another person having a corresponding interest or duty.” TRT Dev. Co.-KC v. Meyers, 15 S.W.3d 281, 286 (Tex. App.—Corpus Christi 2000, no pet.) (quotation omitted).

A conditional or qualified privilege arises out of the circumstances in which the allegedly false statement is published in a lawful manner for a lawful purpose. See Minyard Food Stores, Inc. v. Goodman, 50 S.W.3d 131, 139–40 (Tex. App.—Fort Worth 2001), rev’d in part on other grounds, 80 S.W.3d 573 (Tex. 2002). This privilege applies to bona fide statements made in good faith under circumstances where the author believes that the public has an important interest in a particular subject matter requiring publication, or where the author believes that a person having a common interest in a particular subject matter is entitled to know the information. See Randall’s Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 646 (Tex. 1995).

However, proof that a statement was motivated by actual malice existing at the time of publication defeats the privilege. Id.; Marathon Oil Co. v. Salazar, 682 S.W.2d 624, 631 (Tex. App.—Houston [1st Dist.] 1984, writ ref’d n.r.e.). In the defamation context, a statement is made with actual malice when the statement is made with knowledge of its falsity or with reckless disregard as to its truth. See Hagler v. Proctor & Gamble Mfg. Co., 884 S.W.2d 771 (Tex. 1994). To invoke the privilege on summary judgment, an employer must conclusively establish that the allegedly defamatory statement was made with an absence of malice. See Jackson v. Cheatwood, 445 S.W.2d 513, 514 (Tex. 1969); Goodman v. Gallerano, 695 S.W.2d 286, 287–88 (Tex. App.—Dallas 1985, no writ). A defendant can negate actual malice by presenting evidence that shows it did not publish the alleged defamatory statement with actual knowledge of any falsity or with reckless disregard for the truth. Casso v. Brand, 776 S.W.2d 551, 559 (Tex. 1989).

SOURCE: HOUSTON COURT OF APPEALS - NO. 01-13-01065-CV - 3/17/2015  

Claim for Attorney's Fees treated as substantive and subject to choice of law

 
ATTORNEY’S FEE CLAIM A SUBSTANTIVE ISSUE – GOVERNED BY CONTRACTUAL CHOICE OF LAW

The recovery of attorneys' fees is a substantive, not a procedural, issue and will be governed by the law governing the substantive issues. Midwest Med. Supply Co. v. Wingert, 317 S.W.3d 530, 537 (Tex. App.-Dallas 2010, no pet.); Rapp Collins Worldwide, Inc. v. Mohr, 982 S.W.2d 478, 487-88 (Tex. App.-Dallas 1998, no pet.).

SOURCE: Dallas Court of Appeals 05-06-00966-CV – 5/10/11 (California law applies)

FAILURE TO FILE MOTION FOR JUDICIAL NOTICE OF OTHER STATE’S LAW LIKELY TO RESULT IN APPLICATION OF TEXAS LAW

Although the policies and procedures provide that the law of the state of Utah shall govern all other matters relating to or arising from the policies and procedures, neither party has argued either that contract law regarding the state of Utah should be applied or that Utah's law differs substantially from that of Texas. Accordingly, we will apply the contract-law principles of Texas. See Johnson v. Structured Asset Servs., LLC, 148 S.W.3d 711, 720 (Tex. App.-Dallas 2004, no pet.).

SOURCE: Dallas Court of Appeals 05-10-00776-CV – 5/5/11 

Texas Supreme Court: A slip-and-fall in a hospital lobby is not a health-care liability claim. -- Duh! - Comment on Ross v. St. Luke's Episcopal Hospital (May 1, 2015)

Comment on Ross v. St. Luke's Episcopal Hospital (Tex. 2015) 

JURISPRUDENCE, TEXAS STYLE 

The slippery slope on the med-mal front in Texas: 
Wet floor not medical malpractice after all  

Sadly, a truism such as this passes for exciting legal news in Texas, and beyond. It is an illustration of how abstruse the Texas Supreme Court's rulings have become to justify the high court's resolution of most appeals it agrees to hear in a manner to vindicate the interest of a narrow group of favored litigants, which includes big corporations and health care providers. 

The Texas Supreme Court's earlier ruling that a claim against a health care provider need not be a medical malpractice claim to qualify for dismissal as a medical malpractice claim -- thereby effectively granting immunity to doctors and hospitals for all sorts of other claims -- just went too far even for the practicing bar that is accustomed to take its "guidance" from the supreme court; is not allowed to criticize sitting justices; and would be bound by supreme nonsense articulated in precedent-setting opinions in any event, no matter how troubled they may be by it. 

The cognitive dissonance and sheer disbelief engendered by the supreme court's pronouncements in its relentless pursuit of judicial tort reform are, after all, an occupational hazard for litigators; -- something that comes with the territory. Texas trial lawyers' BS detectors have to be periodically re-calibrated to avoid overheating when coping with volleys of opinions from the high court that abrogate rights and remedies, deny ordinary people their day in court, and already put many of their peers out of business on both sides of the docket.   
  
The high court has now "corrected" one such supreme nonsense -- nonsense with grave consequences for the rights of injured people because lower courts have to enforce it -- by restricting the earlier ruling to the effect that a med-mal claim no longer needs to involve medical malpractice by announcing a laundry list of factors that may still justify treating a claim against a hospital or doctor as a med-mal claim, with attendant expert report requirement and other procedural hurdles, when the claimant is not a hospital visitor who slipped and got hurt in the facility's lobby. 

The latter was the fact scenario in the case in which the supremes have now elevated truism to a new genre of jurisprudence, following a string of legal news of the weird, and subdued griping and whispers of dissension on lawfirm blogs and web sites. Not to mention a law review article politely exposing how "Texas" had gone too far in the medical liability realm.  

Read opinion on Google Scholar by clicking on case style below

ROSS V. ST. LUKE'S EPISCOPAL HOSPITAL, Tex: Supreme Court 2015

and the Supreme Court ruling that caused the fracas: 

Texas West Oaks Hosp., L.P. v. Williams, 371 S.W.3d 171 (Tex. 2012)

and subsequent citing cases (progeny) 

Meanwhile, the Corpus Christi Court of Appeals had ruled that a hospital visitor injured by a sliding door with lateral guillotine functionality -- a plaintiff who like Ross in the supreme court case also was not a patient -- can't pursue a premises liability claim against the hospital because her personal injury claim is a health care liability claim and she did not file an expert report showing how the limb-chopping door violated the applicable standard of medical care. To add insult to injury, the maternity ward visitor struck by the malfunctioning door was told she will have to pay the hospital's attorney's fees. 

RELATED LEGAL NEWS ITEMS: 

Angela Morris. "Lawmaker: Employment Lawsuit Isn't Health Care Claim." TEXAS LAWYER, May 4, 2015, p. 12. 
John Counsel. "Dallas Judge: Doctor's Cow in Road Is Not Med Mal". TEXAS LAWYER, April 20, 2015, p. 8.
"How Is Hitting a Cow in the Road Med Mal? TEXAS LAWYER, Jan. 29, 2015. 

BLAWG POSTS: 
Bob Kraft. "Medical Malpractice Tort Reform Runs Wild in Texas." Feb. 24, 2015 (blog post). 

INTERIM CITATION: 
Ross v. St. Luke's Episcopal Hospital, 58 Tex. S.Ct. J. 766 (May 1, 2015)

Nature of title insurance and claim on policy when there is a problem with title to real property

WHAT IS A TITLE INSURANCE POLICY? 

“A title insurance policy is a contract of indemnity.” Chicago Title Ins. Co. v. McDaniel, 875 S.W.2d 310, 311 (Tex. 1994) (citing S. Title Guar. Co. v. Prendergast, 494 S.W.2d 154, 158 (Tex. 1973)). The issuance of a policy does not constitute a guarantee or representation as to the status of title.
McDaniel, 875 S.W.2d at 311. Instead, it obligates the title insurer to pay the loss or damage suffered by the insured as a result of the title defect. Id.

We analyze disputes over the interpretation of insurance contracts under the well-established principles of contract construction, attempting to determine the parties’ intent through the written language of the policy. See Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 126 (Tex. 2010). We examine the entire policy and seek to harmonize and give effect to all provisions so that none will be meaningless or inoperative. Id. If a contract for insurance has a clear and definite meaning, then it is not ambiguous as a matter of law, even if the parties interpret the policy differently. Id. at 133.

SOURCE: HOUSTON COURT OF APPEALS - NO. 01-14-00170-CV - 5/12/2015

CITED SUPREME COURT CASE

875 S.W.2d 310 (1994)

CHICAGO TITLE INSURANCE COMPANY
v.
Jerry E. McDANIEL and Christina W. McDaniel.

No. D-3648.

Supreme Court of Texas.

January 5, 1994. Rehearing Overruled June 8, 1994. PER CURIAM.

This cause involves claims against a title insurer based on the Texas Deceptive Trade Practices-Consumer Protection Act, TEX.BUS. & COM.CODE §§ 17.41-.63 (DTPA). The court of appeals held that "there are genuine issues of material fact under the DTPA," and therefore reversed the trial court's summary judgment in favor of the title insurer. 873 S.W.2d 712. Because we conclude that there is no genuine issue of fact concerning any misrepresentations by the title insurer, we reverse the judgment of the court of appeals.

Jerry and Christina McDaniel purchased a home from Couch Mortgage Company in September 1983. At the time of the closing, the McDaniels also purchased a title insurance policy to be issued by Chicago Title Insurance Company. The policy, which the McDaniels received several weeks later, provides in part that Chicago Title "for value does hereby guarantee to the Insured ... that as of the date hereof, the Insured has good and indefeasible title to the estate or interest in the land described or referred to in this policy."

In December 1988, the McDaniels received notice from the bankruptcy trustee of Couch Mortgage that their property was subject to a preexisting lien that had been properly filed and recorded in April 1983. The McDaniels abandoned the property in October 1989. Three months later, a federal bankruptcy court ruled that the McDaniels' purchase money lien on the property was superior to the preexisting lien.

The McDaniels brought this suit in late 1990, seeking damages under the DTPA based on Chicago Title's representations. In April 1991, Chicago Title secured the release of the preexisting lien.

Chicago Title asserts that it has discharged its obligations under the title insurance policy, and that it cannot be liable under the DTPA because it has made no representations regarding the status of the title to the McDaniels' property. We agree.

311*311 A title insurance policy is a contract of indemnity. Southern Title Guar. Co. v. Prendergast, 494 S.W.2d 154, 158 (Tex. 1973). In other words, the only duty imposed by a title insurance policy is the duty to indemnify the insured against losses caused by defects in title. See Martinka v. Commonwealth Land Title Ins. Co., 836 S.W.2d 773, 777 (Tex.App.—Houston [1st Dist.] 1992, writ denied); see also Stewart Title Guar. Co. v. Cheatham, 764 S.W.2d 315, 320-21 (Tex.App.—Texarkana 1988, writ denied). Thus, Chicago Title's issuance of a policy did not constitute a representation regarding the status of the property's title; rather, it constituted an agreement to indemnify the McDaniels against losses caused by any defects.

A title insurer may be held liable under the DTPA for an affirmative representation that is the producing cause of damages to the insured. First Title Co. v. Garrett, 860 S.W.2d 74 (Tex.1993).[1] In the present case, however, there is no allegation of any such affirmative representation. Nor is there any allegation that Chicago Title breached its duty under the contract, or that it may be liable to the McDaniels in any other respect apart from the DTPA. Accordingly, because there is no genuine issue of fact regarding the representations made in the title insurance policy, a majority of this Court grants Chicago Title's application for writ of error and, without hearing oral argument, reverses the judgment of the court of appeals and renders judgment for Chicago Title. Tex. R.App.P. 170.

[1] In First Title, the title commitment issued by the defendant title companies included an affirmative representation that there were no restrictive covenants of record. The record reflected that it was "customary and usual" for an insured to rely on a title commitment as an assessment of the state of title. 860 S.W.2d at 76 n. 2.

Immunity jurisprudence now even protects drunk drivers - Texas Supreme Court lets allegedly intoxicated driver of city vehicle off the hook on a pleading technicality; -- blames victim. Molina v Alvarado (Tex. 2015)

NEWEST ADDITION TO HECHT COURT'S IMMUNITY JURIS(MAL)PRUDENCE:   

DRUNK DRIVER IMMUNITY 

 
Here is yet another example of the Texas Supreme Court's penchant for creating and invoking immunity theories to deny plaintiffs their day in court against a party that caused injury, and thereby preventing a trial on the merits and recovery of damages from the tortfeasor proven to have committed the tort. There will be  no trial and no opportunity to hold the driver accountable. Molina v Alvarado (Tex. 2015). 
         
Attorney for collision victim should have sued the driver first, rather than the employer-city under the Tort Claims Act. Amending the petition later won't do.  
   
      - Gotcha! 

The El Paso Court of Appeals had denied the immunity argument of the city employee (who also invoked the Fifth to avoid self-incrimination), and had this to say: 

We seriously doubt that the Texas Legislature intended to extend immunity to city employees driving vehicles under the influence of alcohol. Whether the employee is actually acting within the scope of employment — in which case the employee is sued in his official capacity and serves merely as a jurisdictional stand-in for the agency — is a question of fact for the trial court to decide. As such, whether Molina was actually driving the City of McCamey vehicle within the scope of his employment or under the influence of alcohol are both questions of material fact that prevent a grant of summary judgment.

But the Supreme Court reversed, and granted the driver absolution. Defendant wins, as usual. Case closed. 
      

 OPINION OF THE SUPREME COURT

GRANTING IMMUNITY 

IN THE SUPREME COURT OF TEXAS 

 ════════════ NO. 14-0536 ════════════ 

JESUS RUBEN MOLINA, PETITIONER, v. ELIAS ALVARADO, RESPONDENT ═══════════════════════════════════════════ 

ON PETITION FOR REVIEW FROM THE COURT OF APPEALS 

FOR THE EIGHTH DISTRICT OF TEXAS 

═══════════════════════════════════════════ 

PER CURIAM 

463 S.W.3d 867 (2015)

Jesus Ruben MOLINA, Petitioner,
v.
Elias ALVARADO, Respondent.

No. 14-0536.

Supreme Court of Texas.

OPINION DELIVERED: May 8, 2015.

869Jon Mark Hogg, Jackson Walker L.L.P., San Angelo, for Jesus Ruben Molina.

Rahul Malhotra, The Malhotra Law Firm, Odessa, for Elias Alvarado.

Melinda D. Hamm, Terry W. Rhoads, Cotton Bledsoe Tighe & Dawson, P.C., Midland, for City of McCamey.

PER CURIAM

Governmental employee Jesus Molina contends the trial court incorrectly denied his summary-judgment motion under the Texas Tort Claims Act (TTCA)'s election-of-remedies provision. We agree that Molina was immune from suit. We reverse the court of appeals and render judgment for Molina.

* * *

Elias Alvarado sued the City of McCamey for negligence and negligence per se, claiming that Molina was driving a city vehicle under the influence of alcohol when he struck Alvarado's vehicle. Alvarado's original petition alleged generally that (1) Molina "was operating a City vehicle in the course and scope of his employment, agency, and/or governmental function" with the City of McCamey, and (2) the City, "through its employee, agent and/or servant [Molina], operated the vehicle in question in a negligent manner." The petition, however, did not describe Molina's employment duties or specifically allege that he was performing any particular task the City had lawfully assigned him. The City asserted immunity from suit, contending that nothing in the TTCA or any other statute waived the City's immunity.

After the trial court denied Alvarado's special exceptions requesting that the City state the factual and legal basis of its immunity defense, Alvarado filed a first amended petition naming Molina as an additional defendant. The amended petition alleged that Molina "was operating a City vehicle in the course and scope of his employment, agency and/or governmental function" with the City. Alvarado reasserted that the City "through its employee, agent and/or servant Molina, operated the vehicle in question in a negligent manner." But Alvarado added an alternative argument: "if it is found that Molina was not furthering the governmental affairs of [the City] on the occasion in question, Molina is liable in his individual capacity for operating the vehicle in question in a negligent manner."

Molina filed a general denial and requested summary judgment, seeking dismissal under subsection (a) of the TTCA's election-of-remedies provision. See TEX. CIV. PRAC. & REM. CODE § 101.106(a). Molina contended that Alvarado had previously made an irrevocable election to sue the City of McCamey and was thus barred from suing him, too. The trial court denied Molina's summary-judgment motion, and on interlocutory appeal, see id. § 51.014(a)(5), the court of appeals affirmed, holding that subsection (a) "is correctly read as barring suit against an employee only where that employee is being sued in his official capacity, i.e. only where the employee was acting within the scope of his employment." 441 S.W.3d 578, 587. The court of appeals concluded that the existence of material fact questions regarding whether Molina was "actually driving the City of McCamey vehicle within the scope of his employment or under the influence of alcohol ... prevent[ed] a grant of summary judgment." Id.

* * *

Our recent decision in Franka v. Velasquez, 332 S.W.3d 367 (Tex.2011), summarizes general Texas immunity law:

870Under Texas law, a suit against a government employee in his official capacity is a suit against his government employer with one exception: an action alleging that the employee acted ultra vires. With that exception, an employee sued in his official capacity has the same governmental immunity, derivatively, as his government employer. But public employees (like agents generally) have always been individually liable for their own torts, even when committed in the course of employment, and suit may be brought against a government employee in his individual capacity. Generally, however, public employees may assert official immunity from suit arising from the performance of their (1) discretionary duties in (2) good faith as long as they are (3) acting within the scope of their authority.

Id. at 382-83 (internal quotation marks and footnotes omitted).

In certain circumstances, the TTCA waives the immunity that would otherwise bar suit against a governmental unit and an employee sued in his official capacity. TEX. CIV. PRAC. & REM. CODE §§ 101.025 ("Sovereign immunity to suit is waived and abolished to the extent of liability created by this chapter."); 101.021 (listing circumstances under which a governmental unit is liable for property damage, personal injury, or death); 101.023 (limiting the permissible recovery amount). However, the TTCA's election-of-remedies provision, section 101.106, effectively conditions the immunity waiver on the plaintiff's forfeiture of any negligence claims against the employee in his individual capacity. See Tex. Adjutant Gen.'s Office v. Ngakoue (TAGO), 408 S.W.3d 350, 350 (Tex.2013) ("The statute encourages, and in effect mandates, plaintiffs to pursue lawsuits against governmental units rather than their employees when the suit is based on the employee's conduct within the scope of employment.").

Once the plaintiff elects to sue either the employee in his individual capacity or the governmental unit, subsection (a) or (b) will "immediately and forever" bar him from subsequently electing to sue the other regarding the same subject matter. TEX. CIV. PRAC. & REM. CODE § 101.106(a)-(b). Subsection (b) is triggered by "[t]he filing of a suit against any employee of a governmental unit" and bars a future suit "against the governmental unit." Id. Subsection (a) is triggered by "[t]he filing of a suit under this chapter against a governmental unit" and bars future suit "against any individual employee." Id. See also Alexander v. Walker, 435 S.W.3d 789, 791 (Tex.2014) (holding that a suit "against any individual employee" is a suit against the employee in his individual capacity, i.e. one that "seek[s] personal liability"). But in light of subsection (f), when the plaintiff has previously filed suit against a government official, the applicability of subsections (a) and (b) "turn[] on whether the suit is considered to be against the officers in their individual or official capacities." Alexander, 435 S.W.3d at 791.

Section 101.106(f) provides that if plaintiff's suit is "filed against an employee of a governmental unit based on conduct within the general scope of that employee's employment" and "could have been brought under this chapter against the governmental unit, the suit is considered to be against the employee in the employee's official capacity only." TEX. CIV. PRAC. & REM. CODE § 101.106(f). The TTCA defines the term "scope of employment" as "the performance for a governmental unit of the duties of an employee's office or 871*871 employment and includes being in or about the performance of a task lawfully assigned to an employee by competent authority." Id. § 101.001(5). A suit based on such conduct is not a suit against the employee; it is, "in all but name only, a suit against the governmental unit." TAGO, 408 S.W.3d at 357. Conversely, suits against an employee based on conduct outside the scope of employment are suits against an employee in his individual capacity and seek personal liability. Alexander, 435 S.W.3d at 791.

When the suit is considered to be one against the employee in his official capacity, "subsection (f) provides the TTCA plaintiff a window to amend his pleadings to substitute the governmental unit before the court dismisses the suit against the employee." TAGO,408 S.W.3d at 359. Once the defendant employee files a motion under subsection (f), the plaintiff must either "dispute that [the employee] acted in his official capacity" or "implicitly concede[] that he had sued [the employee] in his official capacity only." Id. at 360. The election-of-remedies provision therefore "force[s] a plaintiff to decide at the outset whether an employee acted independently ... or acted within the general scope of his or her employment." Mission Consol. Indep. Sch. Dist. v. Garcia, 253 S.W.3d 653, 657 (Tex.2008).

"Because the decision regarding whom to sue has irrevocable consequences, a plaintiff must proceed cautiously before filing suit and carefully consider whether to seek relief from the governmental unit or from the employee individually." Id. However, as we have previously noted, a plaintiff "may not be in the position of knowing whether the [employee] was acting within the scope of employment" when he files suit. TAGO, 408 S.W.3d at 359.

In today's case, Alvarado filed suit and initially named only the governmental unit itself, not its employee. This action "constitute[d] an irrevocable election ... and immediately and forever bar[red] any suit or recovery by [Molina] against any individual employee of the governmental unit regarding the same subject matter." TEX. CIV. PRAC. & REM. CODE § 101.106(a). In light of subsection (f), a suit brought against a governmental employee may or may not be a suit against the governmental unit. Nothing in section 101.106, however, suggests that a suit against a governmental unit is potentially a suit against the employee in his individual capacity. Because Molina has already sued the governmental unit, he has no need of the window to amend his pleadings in subsection (f), which exists to allow plaintiffs to substitute the governmental unit. TAGO, 408 S.W.3d at 359. Any questions of material fact that exist regarding whether Molina was acting in the scope of his employment are therefore irrelevant to Alvarado's ability to subsequently seek to impose personal liability on Molina.

If at the time Alvarado filed suit he possessed insufficient information to determine whether Molina was acting within the scope of his employment, the prudent choice would have been to sue Molina, and await a factual resolution of that question. See TEX. CIV. PRAC. & REM. CODE § 101.106(f); Alexander, 435 S.W.3d at 791. Because Alvarado did not do so, he essentially chose his defendant before being required to do so by the election-of-remedies provision. That choice is still an irrevocable election under section 101.106, and the TTCA bars him from later filing suit against Molina.

Accordingly, we grant Molina's petition for review and, without hearing oral argument, 872reverse the judgment of the court of appeals and render judgment for Molina. See TEX. R. APP. P. 59.1.

Governmental employee Jesus Molina contends the trial court incorrectly denied his summary-judgment motion under the Texas Tort Claims Act (TTCA)’s election-of-remedies provision. We agree that Molina was immune from suit.

We reverse the court of appeals and render judgment for Molina.

OPINION DELIVERED: May 8, 2015.

OPINION OF THE EL PASO COURT OF APPEALS

441 S.W.3d 578 (2014)

Jesus Ruben MOLINA, Appellant,
v.
Elias ALVARADO, Appellee.

441 S.W.3d 578 (2014) Before McCLURE, C.J., RIVERA, and RODRIGUEZ, JJ.
OPINION
YVONNE T. RODRIGUEZ, Justice.
Jesus Ruben Molina seeks interlocutory review under TEX.CIV.PRAC. & REM.CODE ANN. § 51.014(a)(5)(West Supp. 2013) of the trial court's denial of his motion for summary judgment. Appellant contends that suit against him is barred as a matter of law because Elias Alvarado's decision to first sue Appellant's employer, the City of McCamey, constituted the irrevocable election of a defendant under the Texas Tort Claims Act, TEX.CIV.PRAC. & REM.CODE ANN. § 101.106 (West 2011), thereby depriving the trial court of subject-matter jurisdiction to try any claims against Appellant that arise from the same nucleus of operative fact. We affirm.
FACTUAL BACKGROUND
Alvarado alleges that on October 23, 2010, Appellant negligently struck him while driving a City of McCamey vehicle under the influence of alcohol, thereby causing Alvarado injury. He further alleged that Appellant failed to stop and render aid after the accident. On July 23, 2012, Alvarado filed suit against the City of McCamey, alleging that it was vicariously liable for Appellant's tortious conduct as his employer. On October 10, 2012, Alvarado amended his petition to include Appellant as a defendant. On October 24, 2012, Appellant moved for summary judgment on the grounds that he was not a proper party to the suit under TEX.CIV. PRAC. & REM.CODE ANN. § 101.106(a). Separately, on December 3, 2012, the City of McCamey filed a plea to the jurisdiction and a motion to dismiss Appellant as a party under TEX.CIV.PRAC. & REM.CODE ANN. § 101.106(e), which requires a court to dismiss a government employee as a party to a suit upon motion where both a government entity and the entity's employee are 581*581 named as co-defendants.[1] Appellant also resisted discovery on the grounds that he was not a proper party to the suit, and he asserted his privilege against self-incrimination under the Fifth Amendment to the United States Constitution and Article 1, Section 10 of the Texas Constitution in response to certain questions. On April 2, 2013, the trial court denied Appellant's motion for summary judgment.
DISCUSSION
In his sole issue on appeal, Molina contends that Alvarado's decision to sue Molina's employing government agency before suing Molina himself constituted an irrevocable election of remedy under TEX.CIV. PRAC. & REM.CODE ANN. § 101.106(a). As such, under the provision's plain language Molina became immune by operation of law from any suit based on conduct arising from the traffic crash, including any ultra vires conduct, and the trial court committed error by denying summary judgment. Alvarado responds that Molina's reading of the statute would violate the canon against abrogation of common law remedies. He further argues that construing the immunity provision in isolation as opposed to interpreting that provision, the overarching immunity framework, and other Texas Tort Claims Act ("TTCA") provisions as one cohesive text would frustrate the central purposes underpinning the TTCA.
Although the appellate courts may not ordinarily entertain interlocutory challenges to denial of a motion for summary judgment, see William Marsh Rice Univ. v. Coleman, 291 S.W.3d 43, 45 (Tex.App.-Houston [14th Dist.] 2009, pet. dism'd), here, Appellant argues that the trial court incorrectly denied the motion for summary judgment because by virtue of the Texas Tort Claims Act's election-of-remedies provision, he is a government employee immune from suit. As such, this Court grants interlocutory review of the summary judgment denial pursuant to TEX.CIV. PRAC. & REM.CODE ANN. § 51.014(a)(5)(West Supp. 2013) (providing for interlocutory review of summary judgment motions "based on an assertion of immunity by an individual who is an officer or employee of the state or a political subdivision of the state").
A trial court may properly dispose of an issue by summary judgment under TEX. R.CIV.P. 166a when a movant establishes that there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Wright v. Ector County Indep. Sch. Dist., 867 S.W.2d 863, 866 (Tex.App.-El Paso 1993, no writ). In assessing a motion for summary judgment, "[e]vidence favorable to the nonmovant will be taken as true in deciding whether there is a disputed material fact issue[,]" and "[e]very reasonable inference must be indulged in favor of the nonmovant," with "any doubts resolved in its favor." Eslon Thermoplastics v. Dynamic Sys., Inc., 49 S.W.3d 891, 896 (Tex.App.-Austin 2001, pet. denied). Summary judgment dispositions are questions of law reviewed de novo on appeal. Id. Likewise, we review questions of statutory construction de novo. First Am. Title Ins. Co. v. Combs, 258 S.W.3d 627, 631 (Tex.2008).
When a movant seeks summary judgment on the basis of an affirmative defense such as immunity, the movant has the burden of establishing every element of that defense. Eslon Thermoplastics, 49 S.W.3d at 896. "A defendant is not entitled to judgment as a matter of law on an 582*582 affirmative defense if the plaintiff supplies evidence as to any material fact issue relevant to the defense upon which reasonable minds could differ." Id.; see also Santanna Natural Gas Corp. v. Hamon Operating Co., 954 S.W.2d 885, 890 (Tex.App.-Austin 1997, pet. denied). Thus, we determine whether Alvarado, the nonmovant, has presented any evidence that would prevent Appellant from "conclusively establish[ing] each element of [his] defense as a matter of law." Eslon Thermoplastics, 49 S.W.3d at 896.
Immunity under the Texas Tort Claims Act
Immunity from suit strips the courts of subject-matter jurisdiction to hear the underlying claim. City of Waco v. Lopez, 259 S.W.3d 147, 150 (Tex.2008). The State of Texas has absolute sovereign immunity against any suit to which it does not consent by statute or voluntary waiver. Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 224 (Tex.2004). The state, in turn, has granted its political subdivisions such as cities, counties, and school districts governmental immunity, which shields them and their agents from liability under the same conditions as the state itself. Harris County v. Sykes, 136 S.W.3d 635, 638 (Tex.2004). State employees who commit tortious acts within the scope of their employment may remain personally liable for those acts unless shielded by official immunity. Franka v. Velasquez, 332 S.W.3d 367, 382-83 (Tex. 2011). Employees who act outside the scope of their authority lose the benefits of official immunity and remain solely and personally liable in their individual capacities. Id. at 383
The Texas Tort Claims Act establishes a limited waiver of both sovereign and governmental immunity, allowing plaintiffs bringing suit against the state or its subdivisions to recover capped damages for certain tortious conduct identified by statute, including negligent acts of its agents committed within the scope of their employment. Mission Consol. Indep. Sch. Dist. v. Garcia, 253 S.W.3d 653, 655-56 (Tex. 2008); see also TEX.CIV.PRAC. & REM.CODE ANN. § 101.021 (West 2011) (providing for recovery against the state for actions of employee for "use of a motor-driven vehicle or motor-driven equipment" within the scope of his employment). The Texas Legislature supplemented this framework in 2003 by adding in Section 101.106(a), which bars a plaintiff from suing a state employer once the plaintiff has elected to sue the employer state agency first. TEX. CIV.PRAC. & REM.CODE ANN. § 101.106(a).
Appellant contends that Section 101.106(a) and the TTCA's 2003 amendments creating other subparts of the election-of-remedies provision add in a separate layer of immunity contingent not on a state employee's conduct, but rather on a plaintiff's prior selection of a defendant. In other words, for purposes of Section 101.106(a), a state employee is placed completely outside the trial court's jurisdiction once a plaintiff files suit against the government agency if both suits would involve the same subject matter. Alvarado responds that that construing Section 101.106(a) as forever barring both official and ultra vires capacity claims against government employees extinguishes a long-held common law right to proceed against an employee acting outside the scope of his authority. We review this question of statutory construction de novo. Combs, 258 S.W.3d at 631.
Statutory Construction of the Election-of-Remedies Provision
Our primary directive in constructing statutes is to further the Legislature's intent. Fleming Foods of Tex., Inc. 583*583 v. Rylander, 6 S.W.3d 278, 284 (Tex.1999). We begin our construction of Section 101.106(a) by looking to the plain language of the statute, recognizing that if it "is unambiguous, we adopt the interpretation supported by [the statute's] plain language unless such an interpretation would lead to absurd results." TGS-NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432, 439 (Tex.2011). However, the TTCA's entire immunity mechanism, including Section 101.106(a), should also be construed as one cohesive, meaningful whole and not merely interpreted piecemeal from cherry-picked provisions. Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 493 (Tex.2001). Likewise, the immunity mechanism "should be harmonized whenever possible" with the TTCA's other statutory provisions. Acker v. Tex. Water Comm'n, 790 S.W.2d 299, 301 (Tex.1990).
While fidelity to legislative intent is vital, adherence to the U.S. and Texas Constitutions is paramount, and thus in construing statutes "we are obligated to avoid constitutional problems if possible." Brooks v. Northglen Ass'n, 141 S.W.3d 158, 169 (Tex.2004); see also Proctor v. Andrews, 972 S.W.2d 729, 735 (Tex.1998) ("Statutes are given a construction consistent with constitutional requirements, when possible[.]") (internal quotations and citations omitted). When a statute purports to extinguish long-held common law remedies, we must construct statutes presuming that the Legislature did not intend to displace common law remedies so as to avoid constitutional problems under the Texas Constitution's Open Courts Provision, TEX. CONST. art. I, § 13.[2] Waffle House, Inc. v. Williams, 313 S.W.3d 796, 802 (Tex.2010); Cash Am. Int'l Inc. v. Bennett, 35 S.W.3d 12, 16 (Tex.2000); see also Ron Beal, The Art of Statutory Construction: Texas Style, 64 BAYLOR L.REV. 339, 411-14 (2012). We may only find that a statute supersedes the common law where the express terms create a "clear repugnance between the two causes of action." Waffle House, Inc., 313 S.W.3d at 802 (internal citations and quotation marks omitted); Cash Am. Int'l, Inc., 35 S.W.3d at 16; Holmans v. Transource Polymers, Inc., 914 S.W.2d 189, 192 (Tex.App.-Fort Worth 1995, writ denied). Statutes that are clearly repugnant to the common law will not be strictly construed. Smith v. Sewell, 858 S.W.2d 350, 354 (Tex.1993); cf. Satterfield v. Satterfield, 448 S.W.2d 456, 459 (Tex. 1969) ("[I]f a statute ... deprives a person of a common law right, the statute will be strictly construed in the sense that it will not be extended beyond its plain meaning or applied to cases not clearly within its purview.").
Section 101.106(a) does not stand alone but functions as part of an overall election-of-remedies 584*584 immunity scheme. See generally TEX.CIV.PRAC. & REM.CODE ANN. 101.106 et seq. We read Section 101.106(a) in context of the provisions of the scheme relevant to the pleading stage, which are as follows:
§ 101.106. ELECTION OF REMEDIES.
(a) The filing of a suit under this chapter against a governmental unit constitutes an irrevocable election by the plaintiff and immediately and forever bars any suit or recovery by the plaintiff against any individual employee of the governmental unit regarding the same subject matter. (b) The filing of a suit against any employee of a governmental unit constitutes an irrevocable election by the plaintiff and immediately and forever bars any suit or recovery by the plaintiff against the governmental unit regarding the same subject matter unless the governmental unit consents. . . . (e) If a suit is filed under this chapter against both a governmental unit and any of its employees, the employees shall immediately be dismissed on the filing of a motion by the governmental unit. (f) If a suit is filed against an employee of a governmental unit based on conduct within the general scope of that employee's employment and if it could have been brought under this chapter against the governmental unit, the suit is considered to be against the employee in the employee's official capacity only. On the employee's motion, the suit against the employee shall be dismissed unless the plaintiff files amended pleadings dismissing the employee and naming the governmental unit as defendant on or before the 30th day after the date the motion is filed. We begin our analysis with the plain text. As a threshold matter, we note that the plain language of Section 101.106(a) does not draw a distinction between official and ultra vires employee liability. Instead, it serves as a permanent grant of immunity to an employee once an employer is sued. A brief review of the TTCA's legislative history appears to confirm that in this instance, the Legislature intended the immunity provisions to function precisely as Appellant contends. Following the initial passage of the TTCA, some litigants sought to circumvent the damages cap by proceeding with suits directly against government employees, who could be reached through immunity gaps in the Act's legal architecture. Garcia, 253 S.W.3d at 656, citing Michael S. Hull et al., House Bill 4 and Proposition 12: An Analysis with Legislative History, Part Three: Detailed Analysis of the Medical Liability Reforms, 36 TEX.TECH L.REV. 169, 290-93 (2005). In response, the Texas Legislature passed the first version of TEX.CIV.PRAC. & REM.CODE ANN. § 101.106, Act of May 17, 1985, 69th Leg., R. S., ch. 959, § 1, 1985 TEX.GEN.LAWS 3242, 3305, which barred litigants from suing government employees once they had already sued the employing government entity for claims concerning the same subject matter. Garcia, 253 S.W.3d at 656. The Legislature's purpose in granting employees this immunity was "to insulate the functioning of government from the harassment of litigation, not to protect erring officials." Kassen v. Hatley, 887 S.W.2d 4, 8 (Tex.1994). In 2003, the Legislature amended Section 101.106 to further winnow down claims under the Texas Tort Claims Act by adding in an election-of-remedies provision requiring suit either against the governmental unit employer or the government employee in an individual capacity, but not both. Garcia, 253 585*585 S.W.3d at 656-57. In passing this provision, the Legislature intended "to force a plaintiff to decide at the outset whether an employee acted independently and is thus solely liable, or acted within the general scope of his or her employment such that the governmental unit is vicariously liable, thereby reducing the resources that the government and its employees must use in defending redundant litigation and alternative theories of recovery." Id. at 657.
Thus, when read in isolation, Section 101.106(a) appears to extinguish the common law right to pursue ultra vires claims against state employees once the state agency is selected as defendant. This creates a problem under the constitutional avoidance canon, since a statute that vitiates a long-held common law right hazards an Open Courts challenge. However, in an Open Courts challenge to the pre-2003 election-of-remedies provision, the Texas Supreme Court upheld the immunity mechanism as a whole, noting that a plaintiff could "still opt to pursue the full common law remedy against the responsible employee, foregoing or postponing any attempt to recover from the government." Thomas v. Oldham, 895 S.W.2d 352, 357-58 (Tex.1995). Bearing this in mind, we retreat back one level of abstraction and interpret Section 101.106(a) in light of the post-2003 immunity mechanism as a whole to determine whether the statute actually infringes on common law ultra vires recovery or whether Alvarado had an adequate alternative for recovery at the pleading stage.
Section 101.106(f) appears to provide a plaintiff with the opportunity to bring an ultra vires claim against the state employee directly. Indeed, the only textual difference between the statute and the common law is that the Texas Legislature has provided that a plaintiff must elect to collect damages from either one entity under common law or the other entity under a statutory waiver of sovereign immunity. Since the statute provided Alvarado with the opportunity to elect Molina as the sole responsible party, the Texas Supreme Court has directed us to presume that Appellee deliberately and consciously elected to pursue recovery from the governmental entity only.
Alvarado argues that such a presumption is unreasonable and that this reading of the statute results in a harsh outcome that forces election of a defendant before the start of discovery, when the precise relationship between an agency and an employee vis-à-vis the tortious conduct is unclear. In effect, Alvarado argues that he cannot fully affect his right for ultra vires recovery because he must venture into the minefield of litigation against a state employee completely uninformed. Although ultra vires claims are technically preserved under the statute's framework in Subsection (f), as a practical matter, we do question whether the choice provided to Alvarado would have been illusory from the start.
None of the election-of-remedies pleading provisions explicitly provide the trial court with an opportunity to rule on the scope of employment issue. Subsection (f) impliedly allows suit to continue against an individual state employee unless the state employee moves to dismiss and shows that (1) the defendant is a state government unit employee, (2) he is acting "within the general scope" of employment, and (3) the suit could have been brought against the agency itself. See Anderson v. Bessman, 365 S.W.3d 119, 124 (Tex.App.-Houston [1st Dist.] 2011, no pet.) (suit may continue unabated until defendant files motion to dismiss alleging action within scope of employment, at which point plaintiff has 30 days to implead the government agency and dismiss the employee). The 586*586 Fourteenth Court of Appeals has recognized that the limiting language of the last two conditions precedent for dismissal as articulated in Anderson is proof that Subsection (f) is constitutional under the Open Courts Provision. See Hintz v. Lally, 305 S.W.3d 761, 773 (Tex.App.-Houston [14th Dist.] 2009, pet. denied) ("The harsh result of which Hintz complains can be avoided by holding the governmental employee who seeks dismissal under section 101.106(f) to the burden of demonstrating that suit `could have been brought under this chapter against the governmental unit.'").
However, the decision in Hintz came before changes in the legal landscape altered the scope of the last two Anderson elements. In Franka, the Texas Supreme Court has held that all tort claims "could have been brought" against an agency for purposes of the TTCA, 332 S.W.3d at 375,[3] rendering the third prong of the Anderson test essentially meaningless for all but a small set of declaratory or injunctive claims or claims that may be brought against the state under separate, explicit waivers of sovereign immunity. See, e.g., Castro v. McNabb, 319 S.W.3d 721, 731-32 (Tex.App.-El Paso 2009, no pet.) (declaratory judgment action was not brought "under the Tort Claims Act" because the Declaratory Judgment Act provided a separate waiver of sovereign immunity under which claim was brought); see also Franka, 332 S.W.3d at 393 (Medina, J., dissenting) (noting that under the majority's reading, "the statute nonsensically requires the plaintiff" to dismiss an actionable claim against the employee and "bring a claim [against the government] over which the court lacks subject matter jurisdiction"). The Hintz Court explicitly rested its constitutional ruling on the assumption that "the governmental employee who seeks dismissal under section 101.106(f)" would be held "to the burden of demonstrating that suit `could have been brought under this chapter against the governmental unit.'" Hintz, 305 S.W.3d at 773. Whether the rationale behind Hintz holds in light of Franka is an open question.
Furthermore, under prong two of the Anderson analysis, scope of employment is defined by statute as "the performance for a governmental unit of the duties of an employee's office or employment[,] ... includ[ing] being in or about the performance of a task lawfully assigned to an employee by competent authority." TEX. CIV.PRAC. & REM.CODE ANN. § 101.001(5)(West Supp. 2013). Courts interpreting this language have implicitly found that scope of employment immunity under Section 101.106 et seq. is broader than the official immunity insulating state employees from liability. In other words, an employee's actions may be ultra vires and unprotected by official immunity at common law and yet still fall broadly "within the scope of his employment" as defined by statute, thus triggering immunity for the employee.
For example, in Lopez v. Serna, 414 S.W.3d 890, 896 (Tex.App.-San Antonio 2013, no pet.), an inmate brought suit against two correctional officers in their individual capacity for allegedly confiscating property in violation of prison regulations, thereby committing theft. The trial court dismissed the claim under TEX.CIV. PRAC. & REM.CODE ANN. § 101.106(f) because they were acting within their official 587*587 capacity at the time the property was confiscated. On appeal, inmate Lopez responded that the dismissal constituted error since "the officers acted outside the scope of their employment because they had no authority to commit theft." Id. at 894. However, the San Antonio Court of Appeals affirmed the dismissal, holding that "[a]n official acts within the scope of her authority if she is discharging the duties generally assigned to her[,]" id., citing Ballantyne v. Champion Builders, Inc., 144 S.W.3d 417, 424 (Tex.2004), and that "an employee's scope of authority extends to job duties to which the official has been assigned, even if the official errs in completing the task" to the point of constituting theft. Lopez, 414 S.W.3d at 894.
We note that although the San Antonio Court of Appeals characterized the dismissal as coming under Section 101.106(f), the officers had never actually moved to dismiss the claim under Section 101.106(f), and the court's decision in Lopez actually rested on the ground that the action was a frivolous inmate suit under TEX.CIV.PRAC. & REM.CODE ANN. § 14.003(b)(1). Lopez, 414 S.W.3d at 895. Nevertheless, the implications are clear in a case such as this one, where it is unknown whether a defendant may have committed a crime while performing a government duty. Under Section 101.106(f), this would then create a situation in which a defendant could implead the government agency, force his own dismissal, and leave a plaintiff to bring claims that are doomed to fail against the agency on the basis of sovereign immunity. See Franka, 332 S.W.3d at 393 (Medina, J., dissenting). We question whether such a broad interpretation of "scope of employment" in Section 101.001(5) essentially swallows up the ultra vires doctrine in practice.
As such, we cannot construe Subsection (a) as eliminating the common law ultra vires action where the alternative provision that supposedly protects that right — Subsection (f) — sits on constitutionally questionable ground. Such a construction would inevitably leave the immunity mechanism as a whole open to an Open Courts challenge. We also do not find a clear repugnance between Subsection (a) and the common law remedy against employees acting ultra vires. Instead, when read as part of the overall immunity mechanism, we believe that Subsection (a) is correctly read as barring suit against an employee only where that employee is being sued in his official capacity, i.e. only where the employee was actually acting within the scope of his employment. Indeed, the Legislature's purpose in passing the original immunity provisions was "to insulate the functioning of government from the harassment of litigation, not to protect erring officials." Kassen, 887 S.W.2d at 8. Even assuming a repugnance, we strictly construe a statute in derogation of the common law against abrogation in "cases not clearly within its purview." Smith, 858 S.W.2d at 354. We seriously doubt that the Texas Legislature intended to extend immunity to city employees driving vehicles under the influence of alcohol. Whether the employee is actually acting within the scope of employment — in which case the employee is sued in his official capacity and serves merely as a jurisdictional stand-in for the agency — is a question of fact for the trial court to decide. As such, whether Molina was actually driving the City of McCamey vehicle within the scope of his employment or under the influence of alcohol are both questions of material fact that prevent a grant of summary judgment.
Appellant's sole issue is overruled. We affirm the trial court's denial of summary judgment.
[1] There is no indication from the clerk's record that the trial court ever ruled on the City's motion to dismiss.
[2] Under the Texas Constitution's Open Courts Provision, a statute may be struck down as unconstitutional where a litigant has shown (1) "a cognizable common law cause of action that is being restricted[,]" and (2) "that the restriction is unreasonable or arbitrary when balanced against the purpose and basis of the statute." Sax v. Votteler, 648 S.W.2d 661, 666 (Tex. 1983). However, the appellate courts cannot consider an Open Courts challenge unless it is preserved for review in a reply brief at the summary judgment stage. See Southwestern Elec. Power Co. v. Grant, 73 S.W.3d 211, 222 (Tex.2002) ("The record reflects that Grant did not raise her open-courts challenge in her response to SWEPCO's summary-judgment motion. Accordingly, she did not preserve this argument."); see also S.V. v. R.V., 933 S.W.2d 1, 25 (Tex.1996); City of San Antonio v. Schautteet, 706 S.W.2d 103, 104 (Tex.1986) ("Even constitutional challenges not expressly presented to the trial court by written motion, answer or other response to a motion for summary judgment will not be considered on appeal as grounds for reversal.") (internal citation and quotation marks omitted). As such, we view statutory construction and constitutionality as two separate questions and address only statutory construction.
[3] See also Rodriguez v. Christus Spohn Health System Corp., 628 F.3d 731 (5th Cir.2010) (finding that compensatory claims against hospital based on the violation of certain statutory medical duties "sounded in tort" and were sufficient to trigger the immunity provisions of Section 101.106 as being "under the Texas Tort Claims Act").

Interpretation of insurance policies (contract construction) (Tex. 2015)

       

CONTRACT CONSTRUCTION - INSURANCE POLICY

    

An insurance policy is a contract, generally governed by the same rules of construction as all other contracts. Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 126 (Tex. 2010). When construing a contract, our primary concern is to ascertain the intentions of the parties as expressed in the document. Amedisys, Inc. v. Kingwood Home Health Care, LLC, 437 S.W.3d 507, 514 (Tex. 2014). We begin our analysis with the language of the contract because it is the best representation of what the parties mutually intended. Gilbert Tex. Constr., 327 S.W.3d at 126; see also Anglo-Dutch Petroleum Int’l, Inc. v. Greenberg Peden, P.C., 352 S.W.3d 445, 451 (Tex. 2011). Unless the policy dictates otherwise, we give words and phrases their ordinary and generally accepted meaning, reading them in context and in light of the rules of grammar and common usage. See Gilbert Tex. Constr., 327 S.W.3d at 126; Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 133 (Tex. 1994). We strive to give effect to all of the words and provisions so that none is rendered meaningless. See Gilbert Tex. Constr., 327 S.W.3d at 126; Forbau, 876 S.W.2d at 133. “No one phrase, sentence, or section [of a contract] should be isolated from its setting and considered apart from the other provisions.” Forbau, 876 S.W.2d at 134 (quoting Guardian Trust Co. v. Bauereisen, 121 S.W.2d 579, 583 (Tex. 1938)).

     

When construing an insurance policy, we are mindful of other courts’ interpretations of policy language that is identical or very similar to the policy language at issue. Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819, 824 (Tex. 1997). “Courts usually strive for uniformity in construing insurance provisions, especially where . . . the contract provisions at issue are identical across the jurisdictions.” Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. CBI Indus., Inc., 907 S.W.2d 517, 522 (Tex. 1995); see also Zurich Am. Ins. Co. v. Nokia, Inc., 268 S.W.3d 487, 496–97 (Tex. 2008) (“We have repeatedly stressed the importance of uniformity ‘when identical insurance provisions will necessarily be interpreted in various jurisdictions.’”) (quoting Cowan, 945 S.W.2d at 824).

   

RSUI and Lynd offer conflicting constructions of the Scheduled Limit of Liability endorsement. If only one party’s construction is reasonable, the policy is unambiguous and we will adopt that party’s construction. See Grain Dealers Mut. Ins. Co. v. McKee, 943 S.W.2d 455, 459 (Tex. 1997). But if both constructions present reasonable interpretations of the policy’s language, we must conclude that the policy is ambiguous. See id. at 458; Balandran v. Safeco Ins. Co. of Am., 972 S.W.2d 738, 741 (Tex. 1998). In that event, “we must resolve the uncertainty by adopting the construction that most favors the insured,” and because we are construing a limitation on  

coverage, we must do so “even if the construction urged by the insurer appears to be more reasonable or a more accurate reflection of the parties’ intent.” Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Hudson Energy Co., 811 S.W.2d 552, 555 (Tex. 1991). “This widely followed rule is an outgrowth of the general principle that uncertain contractual language is construed against the party selecting that language,” and is “justified by the special relationship between insurers and insureds arising from the parties’ unequal bargaining power.” Balandran, 972 S.W.2d at 741 n.1 (citing STEVEN PLITT, ET AL., 2 COUCH ON INSURANCE § 22.14 (3d ed. 1997); Arnold v. Nat’l Cnty. Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex. 1987)).

In contract law, the terms “ambiguous” and “ambiguity” have a more specific meaning than merely denoting a lack of clarity in language. Universal C.I.T. Credit Corp. v. Daniel, 243 S.W.2d 154, 157 (Tex. 1951). “An ambiguity does not arise simply because the parties offer conflicting interpretations.” Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex. 2003). Instead, “a contract is ambiguous only when the application of pertinent rules of interpretation to the face of the instrument leaves it genuinely uncertain which one of two or more meanings is the proper meaning.” Daniel, 243 S.W.2d at 157; see Balandran, 972 S.W.2d at 741. Thus, a contract is ambiguous only if, after applying the rules of construction, it remains “subject to two or more reasonable interpretations.” Balandran, 972 S.W.2d at 741. Our task in this case is to determine whether Lynd’s construction of the RSUI policy is reasonable. If it is, we must enforce that construction, even if RSUI’s construction is also reasonable. 

SOURCE: Texas Supreme Court – No. 13-0080 - 5/8/2015  

Conclusion

We hold that the Scheduled Limit of Liability endorsement at issue in this case is reasonably subject to both parties’ proposed constructions and that the endorsement is therefore ambiguous. Because our rules require us to construe an insurance policy’s ambiguous coverage limitation in favor of coverage for the insured, we affirm the court of appeals’ judgment adopting Lynd’s proposed construction. 

SOURCE: RSUI Indemnity Company v The Lynd Company, No. 13-0080 (Tex. May 8, 2015)

(Opinion by Boyd)(Hecht wrote a dissenting opinion)