Appeals court upholds summary judgment for Old American County Mutual Fire Insurance, Statewide Claims Service

By Angela Underwood | Sep 25, 2017

HOUSTON – The 1st District Court of Appeals has affirmed a ruling in favor of two insurance companies in a dispute filed by an allegedly injured motorist.

HOUSTON – The 1st District Court of Appeals has affirmed a ruling in favor of two insurance companies in a dispute filed by an allegedly injured motorist.

Justice Michael Massengale signed off on a Sept. 7 ruling that denied appellant Melanie Hoel her action for a take-nothing summary judgment against Old American County Mutual Fire Insurance Co. and Amwins Speciality Auto Inc., doing business as Statewide Claims Service, even though the driver did not comply correctly after the car accident.

According to the memorandum opinion, Hoel and her adolescent children were in a car accident with Manuel Martinez Salinas, who had documents showing he was ultimately insured by Old American. As next friend for her children and under her name, Hoel sought $39,443.15 for alleged damages and breach of contract, but Salinas did not answer the suit. The order states the trial court entered a default judgment in Hoel's favor and then she filed a suit against Old American and Statewide. The defendants moved for traditional summary judgment on three points:

"(1)They were prejudiced by Salinas’s failure to comply with the notice and cooperation provisions of his insurance policy; (2) under the policy, an actual trial, rather than a default judgment, is necessary for them to be liable; and (3) Statewide was not named as an insurer under Salinas’s policy,” according to the opinion.

Hoel countered the insurance companies were not prejudiced by Salinas not notifying them of the default judgment or lawsuit. With evidence that “demonstrated settlement negotiations that took place between Statewide and Hoel prior to her filing suit against Salinas,” according to the order, Hoel also had a letter from the Statewide “which indicated that it was denying coverage to Salinas because he had failed to notify it of the lawsuit.”

Ruling in favor of Statewide, the trial court denied Hoel's argument and did not specify why. In the appeal analysis, the panel of judges, including Justices Sherry Radack and Evelyn Keyes, cited Provident Life and Accident Ins. Co. v. Knott (2003) and decided that “because the trial court’s order in this case does not specify the grounds for its summary judgment, we must affirm the summary judgment if any of the theories presented to the trial court and preserved for appellate review are meritorious.”

Relying on specific policy language, Statewide pointed out that though Salinas did not do his due diligence in contacting it, then "there is no liability coverage under the policy,” according to the ruling. The appeals court agreed. 

“By failing to comply with the notice provisions and to request a defense, the insured deprived the insurer of its ability to answer to defend against a plaintiff's claims, to conduct discovery and to fully litigate the merits of the claims," according to the opinion.

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