2018 WL 3469257

SEE TX R RAP RULE 47.2 FOR DESIGNATION AND SIGNING OF OPINIONS.
Court of Appeals of Texas, Eastland.
RANDY DURHAM, Appellant
V.
HALLMARK COUNTY MUTUAL INSURANCE COMPANY, Appellee
No. 11-16-00183-CV
|
Opinion filed July 19, 2018
On Appeal from the 358th District Court
Ector County, Texas
Trial Court Cause No. D-137,194-A
Panel consists of: Willson, J., Bailey, J., and Wright, S.C.J.2

MEMORANDUM OPINION
JIM R. WRIGHT SENIOR CHIEF JUSTICE
*1 This is an appeal from a judgment in which the trial court granted Appellee’s combined motion to dismiss for lack of jurisdiction and motion for summary judgment. We affirm.

Appellant originally sued Bobby Burl Straley; L&L Trucking; and Larry Eilers, individually and d/b/a L&L Trucking, after Appellant was injured in a vehicle accident. It was alleged that Straley was the driver of the truck that was involved in the accident; that L&L Trucking owned the truck; and that Eilers, individually and d/b/a L&L Trucking, was the owner of the trucking company. In his first amended petition, Appellant added Hallmark County Mutual Insurance Company, the company that insured “Larry Eilers DBA L&L Trucking Co.,” as a party to the suit. Appellant sought a declaratory judgment that Appellee owed its insured a duty to defend. Appellant also sought a declaratory judgment that the incident was “covered by the policy [written by Appellee] and not subject to any exclusions.”

Appellee filed an answer in which it denied that Appellant was an insured or third-party beneficiary under the policy or was a judgment creditor of the insured. Appellee then filed a single motion denominated as “Motion for Summary Judgment and Motion to Dismiss for Lack of Jurisdiction.” This motion rested on several grounds: first, that Appellant was not a named or additional insured; second, that Appellant was not an intended third-party beneficiary; and third, that Texas is not a “direct action” state and, therefore, that Appellant could not sue Appellee until he procured a judgment against the Appellee’s insured. The trial court granted both parts of the motion for summary judgment and the plea to the jurisdiction; it severed and dismissed Appellee from the primary suit, and Appellant’s claims against Appellee became final and appealable.

Whether a court has subject-matter jurisdiction is a question of law and is reviewed de novo. Tex. Nat. Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 855 (Tex. 2002). We note that a review of a plea to the jurisdiction challenging the existence of jurisdictional facts mirrors that of a motion for summary judgment. Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 228 (Tex. 2002).

In his first issue, Appellant contends that the trial court erred when it granted summary judgment in favor of Appellee, because there existed a question of material fact as to whether Appellee had a duty to defend its insured. Appellant’s first issue requires that this court first decide a preliminary issue: whether the trial court could issue a declaratory judgment regarding Appellee’s duty to defend before the insured was found liable as a result of the accident.

Appellee argues that Appellant cannot sue it unless Appellant first obtains a judgment that reflects the tortfeasor’s liability. We agree. Texas is not a direct action state; rather, “the general rule … is that an injured party cannot sue the tortfeasor’s insurer directly until the tortfeasor’s liability has been finally determined by agreement or judgment.” Angus Chem. Co. v. IMC Fertilizer, Inc., 939 S.W.2d 138, 138 (Tex. 1997) (citing Great Am. Ins. Co. v. Murray, 437 S.W.2d 264, 265 (Tex. 1969)). With limited exceptions, not applicable here, this rule applies equally in instances where a plaintiff seeks a declaratory judgment and where a plaintiff seeks money damages. See In re Essex Ins. Co., 450 S.W.3d 524, 526 (Tex. 2014).

*2 Appellant argues that the Texas Supreme Court has recognized a third-party claimant’s ability to participate in a declaratory judgment action. See Farmers Tex. Cty. Mut. Ins. Co. v. Griffin, 955 S.W.2d 81, 84 (Tex. 1997) (explaining that an insurer must “either accept coverage or make a good faith effort to resolve coverage before adjudication of the plaintiff’s claim” and stating that “the plaintiff may wish to participate in that litigation”); see also State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d 696, 714 (Tex. 1996) (“A plaintiff who thinks a defendant should be covered by insurance may be willing to … assist in obtaining an adjudication of the insurer’s responsibility.”).

In Griffin, an automobile insurer brought a declaratory judgment suit in which it asked the trial court to determine that it had no duty to defend or indemnify its insured. 955 S.W.2d at 82. The insured had invoked the insurer’s duty to defend him. Id. The court held that, under the facts in that case, the insurer’s duty to indemnify was properly justiciable by declaratory judgment, even before the trial court rendered a judgment in the underlying suit. Id. at 83–84.

However, in 2014, the Texas Supreme Court declined to extend its holding in Griffin to those instances in which a plaintiff in the underlying lawsuit seeks to ensure that the insureds’ coverage dispute is resolved prior to the adjudication of the insureds’ negligence. Essex, 450 S.W.3d at 527. In Essex, the plaintiff in the underlying lawsuit sued Essex’s insured for personal injuries, then added a declaratory judgment claim against Essex in which that plaintiff sought a declaration that the insurer must indemnify its insured. Id. at 525. The plaintiff argued that he “merely [sought] a declaration that the … policy cover[ed] the [insured’s] liability to [the plaintiff], as opposed to a money judgment” and, therefore, that the declaratory judgment constituted an exception to the “no direct action” rule. Id. at 526. The court explained that allowing the plaintiff to pursue claims simultaneously against the insured—for liability—and the insurer—for coverage of that liability—would “prejudice” both parties because it would create a conflict of interest for the insurer and would require the admission of evidence of liability insurance in violation of Rule 411 of the Texas Rules of Evidence. Id. at 526–27. Therefore, the policy of the “no direct action” rule applied. Id.

We find no facts in the procedural history of, or allegations in, this case that distinguish it from Essex. Because a third-party claimant’s claims regarding an insurer’s coverage are not ripe for adjudication until a judgment is obtained establishing the insured’s liability, the trial court did not err when it granted Appellee’s motion for summary judgment.1 See id. We overrule Appellant’s first issue.

In his second issue, Appellant argues that the trial court erred in dismissing the case for want of jurisdiction because he is an intended third-party beneficiary as to the issue of duty to defend. In other words, Appellant argues that he had standing, as a third-party beneficiary, to bring the declaratory judgment suit.

*3 The “no direct action” rule pertains to standing because there is no justiciable controversy until the liability of the insured has been established. See Farmers Ins. Exch. v. Rodriguez, 366 S.W.3d 216, 223 (Tex. App.—Houston [14th Dist.] 2012, pet. denied). “But the need for a determination of liability before bringing a direct action against an insurer, while often referred to as a standing issue, is more appropriately characterized and analyzed as ripeness.” Auzenne v. Great Lakes Reinsurance, PLC, 497 S.W.3d 35, 37–38 (Tex. App.—Houston [14th Dist.] 2016, no pet.). We refer to our holding that Appellant’s declaratory judgment was not ripe until the insured was finally determined to be liable to Appellee. Furthermore, if Appellee owed a duty to defend, that particular duty was owed to its insured, not to Appellant, a nonparty to the insurance contract. In any event, under the “no direct action” rule, a plaintiff in an underlying lawsuit cannot maintain a lawsuit against an alleged tortfeasor’s insurer until that party has been found to be liable for damages that resulted from the activity sued upon. See Essex, 450 S.W.3d at 527. Accordingly, we overrule Appellant’s second issue.

We affirm the judgment of the trial court.

All Citations
Not Reported in S.W. Rptr., 2018 WL 3469257

Footnotes

2
Jim R. Wright, Senior Chief Justice (Retired), Court of Appeals, 11th District of Texas at Eastland, sitting by assignment.

1
Appellant argues that the trial court’s judgment, which granted both the motion to dismiss for lack of jurisdiction and the motion for summary judgment, was erroneous because it was “paradoxical.” However, matters concerning subject-matter jurisdiction, such as ripeness and standing, may be raised by a plea to the jurisdiction, as well as by other procedural vehicles such as a motion for summary judgment. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 553–54 (Tex. 2000).

2018 WL 3318955

United States District Court, W.D. Oklahoma.
Paul D. HARNESS, Plaintiff,
v.
TWG TRANSPORTATION, INC.; Kevin R. Saxton; and Carolina Casualty Insurance Company, Defendants.
Case No. CIV-18-462-D
|
Signed 07/05/2018
Attorneys and Law Firms
Christopher L. Brinkley, Tye H. Smith, Carr & Carr, Oklahoma City, OK, for Plaintiff.
Derrick T. DeWitt, Nelson Terry Morton DeWitt & Paruolo, Edmond, OK, J. Derek Cowan, Abowitz Timberlake Dahnke and Gisinger PC, Oklahoma City, OK, for Defendants.

ORDER
TIMOTHY D. DEGIUSTI, UNITED STATES DISTRICT JUDGE
*1 Defendant Carolina Casualty Insurance Company (CCIC) moves to dismiss all claims made against it in Plaintiff Paul D. Harness’s complaint for failure to state a claim upon which relief may be granted [Doc. No. 2]. Plaintiff has filed his response in opposition [Doc. No. 8] and CCIC has replied [Doc. No. 9]. The matter is fully briefed and at issue.

Background
This action stems from a motor vehicle accident which took place on March 7, 2016, in Oklahoma City, Oklahoma. Compl. [Doc. No. 2-4] ¶ 17. On that day, a truck-trailer operated by Defendant Kevin R. Saxton within the course of his employment with Defendant TWG Transportation, Inc. (TWG) collided with Plaintiff’s vehicle. Id. ¶¶ 18, 23. Plaintiff alleges that Defendant Saxton negligently caused the accident and, by extension, Plaintiff’s injuries resulting from the accident. Id. Additionally, Plaintiff states a claim against TWG for direct negligence, negligence per se, negligent entrustment, and negligent hiring, training, screening, and supervision of Defendant Saxton. Id. ¶¶ 27, 28. Finally, Plaintiff named CCIC a defendant due to its status as TWG’s liability insurance carrier. Id. ¶ 40.

Plaintiff alleges that under the Oklahoma Motor Carrier Act of 1995 (MCA), Okla. Stat. tit. 47, § 230.21 et seq., he may bring a direct action against CCIC for his injuries and damages. The MCA makes it unlawful for any motor carrier to operate or furnish service within Oklahoma without first having obtained a license from the Oklahoma Corporation Commission (OCC). Id. § 230.28. Additionally, prior to granting a license, a carrier must have an approved insurance policy or bond. Id. § 230.30. CCIC contends that since TWG never registered its insurance policy with the OCC, § 230.30 cannot be triggered here and CCIC cannot have an action brought directly against it.

Standard of Decision
Rule 8(a)(2) of the Federal Rules of Civil Procedure states that a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009). The pleading must have sufficient factual matter that, when accepted as true, states “a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim to relief is plausible on its face when the plaintiff pleads facts that allow the court to reasonably infer that the defendant is liable for the alleged misconduct. Iqbal, 556 U.S. at 678. To survive a motion to dismiss, a pleading does not need detailed factual allegations, but must be more than a formulaic recitation of the elements of a cause of action or mere labels and conclusions. Twombly, 550 U.S. at 555. Courts must accept all well-pleaded allegations of the complaint, and must construe them in the light most favorable to the non-moving party. Thomas v. Kaven, 765 F.3d 1183, 1190 (10th Cir. 2014). Consideration of a Rule 12(b)(6) motion is limited to the complaint alone. Jacobsen v. Deseret Book Co., 287 F.3d 936, 941 (10th Cir. 2002).

Discussion
*2 As a general rule, in Oklahoma a plaintiff may not bring a direct action against a defendant’s insurer. Daigle v. Hamilton, 782 P.2d 1379, 1381 (Okla. 1989). An exception to this rule is that an injured party may sue a motor carrier and its liability insurer when certain statutorily identified conditions are satisfied, or, as relevant here, “under a statute requiring the carrier to file a liability insurance policy or bond with the Oklahoma Corporation Commission.” Id. (citing Enders v. Longmire, 67 P.2d 12, 14 (Okla. 1937) ). In Daigle, the Oklahoma Supreme Court established the rule that a plaintiff could maintain a joint, direct action against the carrier and the insurer by virtue of the carrier’s obligation to maintain insurance under § 230.30. See Simpson v. Litt, No. CIV-17-339-R, 2017 WL 2271484, at *3 (W.D. Okla. May 23, 2017) (quoting Daigle, 782 P.2d at 1381).

However, in Fierro v. Lincoln General Insurance Co., 217 P.3d 158 (Okla. Civ. App. 2009), the Oklahoma Court of Civil Appeals carved out an exception to this rule and found that the MCA does not permit a direct action against an interstate motor carrier’s liability insurer when the insurer is properly registered in its home state. Id. at 160-61 (quoting Daigle, 782 P.2d at 1380). The court observed that the reasons for prohibiting a direct action against a defendant’s insurer “besides statutory directive, include policy, prohibition by judicial decision, lack of privity between the injured plaintiff and the insurer, misjoinder of the tort action and the action on the contract, and the enforcement of the ‘no action’ clause in the policy.” Id. (quoting Daigle, 782 P.2d at 1380). Post-Fierro, cases in the Western District of Oklahoma have held that insurance companies for interstate carriers who have not filed proof of insurance in Oklahoma may not be named as joint defendants. See, e.g., Hankla v. Lee, No. CIV-17-641-D, 2018 WL 563181 (W.D. Okla., Jan. 25, 2018); White v. Lewis, No. CIV-13-862-C, 2014 WL 7272464 (W.D. Okla., Dec. 18, 2014); Beebe v. Flores, No. CIV-11-1381-HE, 2012 WL 137780 (W.D. Okla., Jan. 28, 2012). A direct action against an insurer may be proper “if the Oklahoma Corporation Commission has issued [its insured] a motor carrier license.” See Simpson, 2017 WL 2271484, at *3.

Here, Plaintiff makes the bare assertion that “pursuant to § 230.30 and Oklahoma law, CCIC is a properly named party and a direct and joined action can be maintained against said insurance company for the injuries and damages suffered by Plaintiff Harness.” Compl. ¶ 40. However, Plaintiff states no facts sufficient to make CCIC a defendant under § 230.30, namely that TWG registered its insurance with the OCC. This situation is identical to Hankla, where the plaintiffs merely pled that the motor carrier’s liability insurer was a proper defendant solely due to the MCA. Hankla, 2018 WL 563181, at *2. This Court held in Hankla that, per Fierro, insurance companies for interstate carriers who have not filed proof of insurance with the OCC may not be named as joint defendants per the MCA. Id. Thus, here too CCIC may not be named a joint defendant because Plaintiff does not allege that TWG registered its insurance with the OCC.

Plaintiff claims in his response that because Oklahoma participates in Unified Carrier Registration, a direct action may be brought against CCIC under § 230.30 if TWG is registered under Unified Carrier Registration.1 Pl.’s Resp. Br. at 7. Plaintiff asserts that this allows a motor carrier to register annually with only one state and that such single-state registration satisfies the registration requirements in all participating states. Id. (citing Mid-Con Freight Sys., Inc., 545 U.S. at 443). Thus, Plaintiff contends, if TWG is so registered then it is effectively registered with the OCC and a direct action may be brought against CCIC under § 230.30. Id.

*3 The District Court for the Eastern District of Oklahoma, however, rejected this contention in Mason v. Dunn, No. CIV–14–282–KEW, 2016 WL 1178058 (E.D. Okla., Mar. 23, 2016). Mason held that out-of-state registration does not satisfy the requirement that the motor carrier’s liability policy be filed with the OCC before the insurer may be subject to direct action. Id. at *2-3. See also Simpson, 2017 WL 2271484, at *3 (because interstate carriers do not need to register in Oklahoma and § 230.30 applies only to motor carriers required to obtain a license from the OCC, interstate carriers who have registered proof of insurance in their home state pursuant to Unified Carrier Registration are not subject to § 230.30). The Court agrees with the decisions in Mason and Simpson. Even if TWG is registered under Unified Carrier Registration, CCIC still may not be named as a defendant because TWG is not subject to § 230.30 and did not file its insurance policy with the OCC.

Finally, Plaintiff claims in his response that failure to treat Unified Carrier Registration by TWG Transportation as registration with the OCC would “result in disparate treatment of Oklahoma citizens injured within the state of Oklahoma when compared to an Oklahoma registered motor carrier.” Pl.’s Resp. Br. at 7. This treatment, Plaintiff claims, is a violation of the Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution and Section 44 of Article IX of the Oklahoma Constitution, which requires domestic and foreign corporations to be treated the same in Oklahoma. Id. This is not accurate, however, as both Oklahoma and non-Oklahoma carriers receive the same treatment, in that both are required to maintain insurance and register it in their respective home states.

Further, contrary to Plaintiff’s claims, Oklahoma citizens have substantively the same remedy whether they are injured by in-state or out-of-state carriers. Intrastate carriers are required to register with the OCC and thus, under Daigle and § 230.30, direct actions may be brought against their insurers for damages. As to interstate carriers, § 230.30 allows plaintiffs to maintain an action “on the policy or bond” after judgment is entered against the motor carrier, and at that time the insurer may be a proper party to the action to the extent of the coverage of the policy. See Okla. Stat. tit. 47, § 230.30(a); Enders, 67 P.2d at 15. Although they cannot bring a direct action against an insurer initially in light of Fierro, plaintiffs may nonetheless recover the same damages from the carrier’s insurance policy after they win a judgment against a carrier, or they may bring direct action against the insurer if the insurer does not pay pursuant to the carrier’s policy after judgment. Fierro, 217 P.3d at 160. The only differences are procedural; therefore, bringing an action against the insurer after winning judgment rather than in an initial direct action against the insurer does not deprive Oklahomans their full substantive remedy in any way, as they are still able to secure their full recovery.

Based on the foregoing, the Court finds that CCIC’s Motion to Dismiss should be granted. Where dismissal is granted for failure to state a claim, the Court should grant leave to amend freely “if it appears at all possible that the plaintiff can correct the defect.” Triplett v. LeFlore Cty., 712 F.2d 444, 446 (10th Cir. 1983). Leave to amend is not automatic and may be properly denied where an amendment would be futile. Anderson v. Suiters, 499 F.3d 1228, 1238 (10th Cir. 2004). Although amendment may indeed be futile here, the Court is unwilling to state that, at this stage of the proceedings, Plaintiff is unable to state a claim upon which relief may be granted. Accordingly, dismissal is without prejudice to Plaintiff’s right to file an amended complaint.

Conclusion
*4 Defendant’s Motion to Dismiss [Doc. No. 2] is GRANTED. Plaintiff’s action against CCIC is dismissed without prejudice to Plaintiff’s right to amend his complaint. Plaintiff may file any amended complaint within twenty (20) days of this Order.

IT IS SO ORDERED this 5th day of July, 2018.

All Citations
Slip Copy, 2018 WL 3318955

Footnotes

1
The Unified Carrier Registration System evolved from, replaced, and serves effectively the same purpose as the now-defunct Single State Registration System. See 49 U.S.C. § 13908(a). The systems’ goal was to allow a trucking company to fill out one set of forms in one state (the base state), and by doing so to register its federal permit in every participating state through which its trucks will travel. Mid-Con Freight Sys., Inc. v. Mich. Pub. Serv. Comm’n, 545 U.S. 440, 443 (2005).