AUSTIN – The Texas Supreme Court recently found that inquiries into extracontractual matters in automobile collision lawsuits are improper before an insured has established their entitlement to underinsured motorist benefits.
The challenge was brought by State Farm in a case involving plaintiff Mara Lindsey’s claim for UIM benefits under her policy.
Court records show Lindsey sought a declaratory judgment that State Farm owes her UIM benefits under her policy and also alleged extra-contractual claims under Texas Insurance Code.
State Farm filed a motion to sever and abate the extracontractual claims until after trial on the declaratory-judgment claim, which the trial court denied.
Court records further show Lindsey sought to depose a State Farm corporate representative and claims adjuster. State Farm moved to quash the depositions but the trial court denied the motions.
On appeal, State Farm argued the trial court abused its discretion by refusing to abate Lindsey’s statutory claims until after trial on her declaratory-judgment claim.
The case drew the interest of the Texas Association of Defense Counsel, which argued in an amicus brief that allowing corporate representative depositions to commence prior to the determination of liability in UIM cases “will open the door to more costly litigation tasks that are routinely, and more appropriately, left to occur after liability of the other motorist is determined.
“Namely, should plaintiffs be able to engage in tasks such as deposing corporate representatives, then, they will undoubtedly expect to engage in written discovery, expect insurers to produce documents such as their internal policies and procedures, expect insurers to hire experts, and, in no time, expect a full-blown trial on the merits before the other motorist’s liability is ever established.”
In its April 25 ruling, the Texas Supreme Court reasoned along similar lines, holding that the trial court abused its discretion by denying State Farm’s motions to abate the extracontractual claims and to quash the noticed deposition while Lindsey’s declaratory-judgment car-crash claims are pending.
“Inquiry into extracontractual matters is improper before an insured has established her entitlement to UIM benefits,” wrote Justice Devine. “Because the outcome of the car-crash trial may moot those claims, an insurer has a substantial right to defer discovery and litigation costs in the interim.”
The high court granted State Farm’s petition.
State Farm is represented by the law firms of Enoch Kever and Walters, Balido & Crain. Attorneys Matthew Kita and Meghana Wadhwani represent Lindsey.
Case No. 23-0755