KeyCite Red Flag – Severe Negative Treatment
Unpublished/noncitable
2018 WL 3450523
Unpublished Disposition
(This disposition by unpublished memorandum decision is referenced in the North Eastern Reporter.)
Court of Appeals of Indiana.
J.B. Hunt Transport, Inc., and Terry L. Brown, Jr., Appellants-Defendants,
v.
The Guardianship of Kristen Zak, Appellee-Plaintiff.
Court of Appeals Case No. 45A03-1710-CT-2429
|
July 18, 2018
Appeal from the Lake Superior Court
The Honorable Diane Kavadias Schneider, Judge
Trial Court Cause No. 45D11-0610-CT-190
Attorneys and Law Firms
ATTORNEYS FOR APPELLANTS, Bruce D. Jones, Keith A. Gaston, Cruser Mitchell Novitz Sanchez Gaston & Zimet, LP, Indianapolis, Indiana
ATTORNEYS FOR APPELLEE, Timothy S. Schafer, Timothy S. Schafer II, Todd S. Schafer, Schafer & Schafer, LLP, Merrillville, Indiana, Gregory W. Brown, Brown & Brown, P.C., Merrillville, Indiana

MEMORANDUM DECISION
Friedlander, Senior Judge.
*1 [1] J.B. Hunt Transport, Inc. and Terry L. Brown, Jr. (collectively, “the Appellants”) appeal the trial court’s order awarding the Guardianship of Kristen Zak (“the Guardianship”) $4,810,000 in prejudgment interest. We affirm.

[2] On January 17, 2006, Zak was seriously injured when the car in which she was a passenger struck a semi tractor-trailer that had been wrecked approximately one hour earlier by Brown, a driver employed by Hunt. J.B. Hunt Transp., Inc. v. Guardianship of Zak, 58 N.E.3d 956 (Ind. Ct. App. 2016), trans. denied. On October 26, 2006, the Guardianship filed a complaint against the Appellants, alleging that they were negligent and that their negligence caused Zak’s injuries. Id. The matter proceeded to a jury trial, after which the jury returned a verdict in favor of the Guardianship and awarded the Guardianship $32,500,000 in damages.1 Id. We subsequently affirmed the jury’s verdict. Id. The matter returned to the trial court, after which the trial court awarded the Guardianship $4,810,000 in prejudgment interest.

[3] On appeal, the Appellants contend that the trial court abused its discretion in awarding the Guardianship prejudgment interest. Specifically, the Appellants argue that the trial court abused its discretion because (1) the Guardianship failed to satisfy the requirements of the Tort Prejudgment Interest Statute (“TPIS”) and (2) the Guardianship’s request for prejudgment interest was untimely.

[4] Prejudgment interest represents an element of complete compensation. Johnson v. Eldridge, 799 N.E.2d 29 (Ind. Ct. App. 2003), trans. denied. As such, it “is not simply an award of interest on a judgment, but rather is recoverable as additional damages to accomplish full compensation.” Id. at 32 (internal quotation omitted). The TPIS “permits a trial court to award prejudgment interest to the party that prevails at trial, so long as that party has made a timely offer of settlement according to terms specified in the statute.” Id.
We evaluate the award of prejudgment interest under an abuse of discretion standard. The decision to award prejudgment interest rests on a factual determination, and this court may only consider the evidence most favorable to the judgment. An abuse of discretion occurs when the trial court’s decision is clearly against the logic and effect of the facts and circumstances before the court, or if the court has misinterpreted the law.
Id. at 33 (internal citations omitted).

[5] The TPIS provides that a party is not entitled to prejudgment interest if:
(1) within one (1) year after a claim is filed in the court, or any longer period determined by the court to be necessary upon a showing of good cause, the party who filed the claim fails to make a written offer of settlement to the party or parties against whom the claim is filed;
(2) the terms of the offer fail to provide for payment of the settlement offer within sixty (60) days after the offer is accepted; or
*2 (3) the amount of the offer exceeds one and one-third (11//3) of the amount of the judgment awarded.
Ind. Code § 34-51-4-6 (1998) (emphasis added). “If the court awards prejudgment interest, the court shall determine the period during which prejudgment interest accrues. However, the period may not exceed forty-eight (48) months.” Ind. Code § 34-51-4-8(a) (1998). Prejudgment interest begins to accrue on the latest of either (1) fifteen months after the cause of action accrued or (2) six months after the claim is filed in the court. Id.

1. Whether the Guardianship Satisfied the Requirements of the TPIS
[6] The Appellants argue that the trial court abused its discretion in awarding prejudgment interest to the Guardianship because the Guardianship failed to satisfy the requirements of the TPIS.

A. Settlement Offer
[7] The Appellants claim that the Guardianship should not have been awarded prejudgment interest because it failed to establish that there was good cause for its failure to make a settlement offer within one year of initiating suit. The record reveals that the Guardianship’s delay can, at least in part, be attributed to the actions of the Appellants. The Appellants withheld certain critical documents relating to the Appellants’ fault during the discovery phase.2 In fact, the Appellants did not provide the Guardianship with some of these critical documents until being ordered to do so by the trial court. Prior to receiving these documents, the Guardianship lacked the ability to accurately assess the merits of its case.3 The record further reveals that the Guardianship made a settlement offer six days after receiving the last of the critical documents. The trial court, being in the best position to gauge the importance of the critical documents to the case, found that the Guardianship made its settlement offer within a reasonable time after receiving the last of the documents. The Indiana Supreme Court has held:
[t]he TPIS is not intended to serve as a trap for the unwary. It is designed to put the adverse party on notice of a claim and provide them with an opportunity to engage in meaningful settlement and if they do not do so, they run the risk of incurring the additional obligation of prejudgment interest.
Wisner v. Laney, 984 N.E.2d 1201, 1212 (Ind. 2012). The trial court acted within its discretion in determining that the Guardianship established that there was good cause for its delay in tendering its settlement offer.

B. The Sixty-Day Settlement Requirement
[8] The Appellants also claim that the Guardianship “violated the TPIS by failing to allow [them] 60 days to pay the demand.”4 Appellants’ Br. p. 17. In Cahoon v. Cummings, 734 N.E.2d 535, 547 (Ind. 2000), the Indiana Supreme Court held that “[t]he whole point of [Indiana Code section 34-51-4-6] is to address the cost of delay in payment” and “an offer to settle ‘now’ is an offer to settle by payment within sixty days.” In Wisner, the Indiana Supreme Court held that an “offer to solve this matter at this time” was sufficient to satisfy Indiana Code section 34-51-4-6 as “[t]he key is to include the time-limiting language in the offer.” 984 N.E.2d at 1211. The settlement offer at issue in this case was sent to the Appellants on January 25, 2011. It indicated that the offer would “stay open only until the pre-trial conference set for February 3, 2011.” Appellants’ App. Vol. 3, p. 138. Consistent with the Indiana Supreme Court’s decisions in Cahoon and Wisner, we conclude that because the settlement offer included time-limiting language, the trial court acted within its discretion in determining that the offer satisfied Indiana Code section 34-51-4-6.

2. Whether the Guardianship’s Request for Prejudgment Interest was Untimely
*3 [9] The Appellants also argue that trial court abused its discretion in awarding prejudgment interest because the Guardianship failed to make a timely request. In support, the Appellants cite to case law from jurisdictions outside Indiana and point to the fact that the Guardianship did not make a request for prejudgment interest until ten months after the final judgment was entered. The Appellants’ reliance on the opinions of courts from jurisdictions other than Indiana is misplaced, however, as these opinions are not binding upon this court. Further, the Indiana Supreme Court has held that “the comprehensive nature of the TPIS” clearly indicates “that the legislature intended the statute to be the exclusive source governing the award of prejudgment interest in cases falling within its ambit” and, as a result, the TPIS “abrogates and supplants” the common law prejudgment interest rules. Kosarko v. Padula, 979 N.E.2d 144, 149, 147-48 (Ind. 2012). While the TPIS sets forth the requirements to ensure that a party qualifies for prejudgment interest, it does not contain the requirement that a request for prejudgment interest be filed prior to judgment being entered.

[10] Further, even though a delay of ten months before making the request for prejudgment interest might be unreasonable in some cases, it does not seem unreasonable in this case. Review of the record indicates that the Appellants were not harmed as result of the Guardianship’s delay. Although the trial court had entered its judgment, the litigation was ongoing as the Appellants appealed the jury’s verdict and the trial court made it clear that it would not rule on any additional motions or requests filed by the parties until after the Appellants’ appeal was resolved. As such, given that the relevant statutory authority does not provide a time limit for filing a request for prejudgment interest together with the facts and circumstances of this case, we cannot say that the trial court abused its discretion in awarding prejudgment interest to the Guardianship.

[11] Judgment affirmed.

Pyle, J., and Barnes, Sr. J., concur.
All Citations
Slip Copy, 2018 WL 3450523 (Table)

Footnotes

1
Approximately $19,500,000 of the award was allocated to the Appellants.

2
These documents included the Safety Event Review completed in connection to the initial accident, J.B. Hunt’s Driver’s Manual which outlined the steps that should have been taken if a driver was involved in an accident, the accident kit prepared in connection to the accident, and three event logs relating to the accident.

3
This seems especially true given that both Zak and the driver of the vehicle in which she was a passenger suffered significant head injuries in the crash and neither has any memory of the crash.

4
We note that while the Appellants seem to argue that the statute indicates that the Guardianship should have granted them at least sixty days to accept and satisfy the tendered settlement offer, Indiana Code section 34-51-4-6 actually provides that the tendered settlement offer must make it clear that such acceptance and payment must be made within sixty days.

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).