Appeals court allows trial against Acceptance to proceed in Orange

Steve Korris Mar. 27, 2008, 5:25am

Acceptance Indemnity Insurance Company tried to argue that property damage checks counted as settlement offers, but the Ninth District appellate court in Beaumont knocked the insurer down.

The appellate judges decided March 13 to let Orange County District Judge Patrick Clark bring Acceptance to trial twice over one dispute.
Clark plans one trial on contract claims of Acceptance policyholder Joe Ware and another trial on claims outside the contract.

An unsigned Ninth District opinion held that, "it appears reasonable for the trial court to have concluded that a trial on the policyholder's contractual claims would not necessarily dispose of the policyholder's delayed payment claims."

The judges wrote, "Acceptance attempts to characterize its payments on this record as 'offers of settlement,' but makes no showing that its payments were anything other than payments of amounts that it recognized were owed under its policy."

Ware insured two buildings under a commercial lines policy with Acceptance. He submitted property damage claims on both buildings and received checks.

He asked for supplemental payments. Acceptance sent readjusters who approved more checks on both properties.

On one property, Acceptance paid the policy limit.

On the other property, Ware again asked for more. Acceptance denied his claim.

Ware sued, claiming breach of contract. He also claimed breach of the duty of good faith and fair dealing, deceptive trade practices and insurance code violations.

Clark bifurcated the suit, granting separate trials on the contract claim and the others.

Acceptance attorneys didn't mind going to trial twice, but they preferred a different setup. They moved to sever the claims into two distinct suits.

They also moved to abate discovery on claims outside the contract.
Clark denied both motions.

Acceptance petitioned the Ninth District for a writ of mandamus against Clark, arguing that Ware settled all disputes when he accepted checks and signed proofs of loss.

Ware answered that the checks paid claims he didn't dispute and that the checks weren't settlement offers.

The Ninth District judges agreed with Ware.

They held that, "�an insurer may be unfairly prejudiced by having to defend the contract claim at the same time and before the same jury that would consider evidence that the insurer offered to settle the entire dispute."

They wrote, "When the insurer merely pays the portion of the claim it does not dispute, severance is not necessarily required."

With respect to the property on which the insurer paid policy limits, they wrote, "the policyholder's claims appear to be extra-contractual."

They wrote, "Under these facts, it was appropriate for the trial court to consider whether a trial on the contractual claims would likely resolve the policyholder's claim for delayed payment or the other extra-contractual claims."

They also upheld Clark in denying Acceptance's motion to abate discovery on claims outside the contract.

"While the trial court's refusal to stay the discovery in the extra-contractual claim could result in procedural inefficiencies," they wrote, "that result is not certain nor does the result necessarily require mandamus review."

Gilbert Adams, Catherine Adams and Dax Faubus represent Ware.

George Jackson and Megan Knudsen represent Acceptance.

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