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Cantu v. State Farm Mutual Automobile Insurance Co.

United States District Court, S.D. Texas, Houston Division

June 7, 2017

ELEAZAR CANTU, JR., Plaintiff,


          Lee H. Rosenthal Chief United States District Judge.

         The plaintiff, Eleazar Cantu, Jr., was injured when he fell off a truck driven by an uninsured motorist. Mr. Cantu sued the driver, two other uninsured individuals, and State Farm, Mr. Cantu's uninsured motorist insurer, in state court. After receiving a default judgment for $65, 095.12 against the three individual defendants, Mr. Cantu demanded that State Farm pay $30, 000, the policy limit. State Farm declined to pay, and Mr. Cantu sued. State Farm timely removed on the basis of diversity jurisdiction. (Docket Entry No. 1).

         State Farm has moved for partial summary judgment, arguing that it is not responsible for paying the default judgment in the uninsured-motorist lawsuit because it did not consent to be bound by that judgment. (Docket Entry No. 16). Mr. Cantu responded and cross-moved for partial summary judgment, arguing that State Farm's knowledge of and participation in that lawsuit indicated its consent to be bound by the default judgment. (Docket Entry No. 17).

         Based on the pleadings; the motions, responses, and replies; the record; and the applicable law, the court grants State Farm's motion for partial summary judgment and denies Mr. Cantu's cross-motion. The reasons for these rulings are explained below.

         I. The Legal Issue Presented and the Summary Judgment Standard

         Under Texas law, an insurer's obligation to pay under an uninsured-motorist policy does not arise until there is a judicial determination that an uninsured tortfeasor was negligent and caused the policyholder's damages, up to the policy limits. See Brainard v. Trinity Universal Ins. Co., 216 S.W.3d 809 (Tex. 2006). Because the alleged tortfeasor's negligence and the plaintiff's damages are by definition uncontested when a default judgment issues, the default does not bind an insurer that does not otherwise consent to be bound by the proceedings. See, e.g., U.S. Fire Ins. v. Millard, 847 S.W.2d 668 (Tex. App.-Houston [1st Dist.] 1993, no writ).

         State Farm argues that it did not consent to be bound by the default judgment awarded to Mr. Cantu and that negligence and damages have yet to be judicially determined under Mr. Cantu's uninsured-motorist policy. (Docket Entry No. 16). The issue is whether, as Mr. Cantu claims, State Farm's participation in the uninsured-motorist lawsuit indicated its consent to be bound by the default judgment issued in that case. (Docket Entry No. 17).

         “Summary judgment is required when ‘the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'” Trent v. Wade, 776 F.3d 368, 376 (5th Cir. 2015) (quoting Fed.R.Civ.P. 56(a)). “A genuine dispute of material fact exists when the ‘evidence is such that a reasonable jury could return a verdict for the nonmoving party.'” Nola Spice Designs, LLC v. Haydel Enters., Inc., 783 F.3d 527, 536 (5th Cir. 2015) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). “The moving party ‘bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.'” Id. (quoting E.E.O.C. v. LHC Grp., Inc., 773 F.3d 688, 694 (5th Cir. 2014)); see also Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

         “Where the non-movant bears the burden of proof at trial, the movant may merely point to the absence of evidence and thereby shift to the non-movant the burden of demonstrating by competent summary judgment proof that there is an issue of material fact warranting trial.” Nola Spice, 783 F.3d at 536 (internal quotation marks and citation omitted); see also Celotex, 477 U.S. at 325. Although the party moving for summary judgment must demonstrate the absence of a genuine dispute of material fact, the movant does not need to negate the elements of the nonmovant's case. Pioneer Expl., L.L.C. v. Steadfast Ins. Co., 767 F.3d 503, 511 (5th Cir. 2014). “A fact is ‘material' if its resolution in favor of one party might affect the outcome of the lawsuit under governing law.” Sossamon v. Lone Star State of Texas, 560 F.3d 316, 326 (5th Cir. 2009) (citation omitted). “If the moving party fails to meet [its] initial burden, the motion [for summary judgment] must be denied, regardless of the nonmovant's response.” United States v. $92, 203.00 in U.S. Currency, 537 F.3d 504, 507 (5th Cir. 2008) (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc)).

         When the parties cross-move for summary judgment, the court must review “each motion independently, viewing the evidence and inferences in the light most favorable to the nonmoving party.” Mid-Continent Cas. Co. v. Bay Rock Operating Co., 614 F.3d 105, 110 (5th Cir. 2010) (alteration omitted) (citation omitted). When the moving party has met its Rule 56(a) burden, the nonmoving party cannot survive a summary judgment motion by resting on the mere allegations of its pleadings. The nonmovant must identify specific evidence in the record and explain how that evidence supports that party's claim. Baranowski v. Hart, 486 F.3d 112, 119 (5th Cir. 2007). “This burden will not be satisfied by ‘some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.'” Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir. 2005) (quoting Little, 37 F.3d at 1075). In deciding a summary judgment motion, the court draws all reasonable inferences in the light most favorable to the nonmoving party. Connors v. Graves, 538 F.3d 373, 376 (5th Cir. 2008). Nevertheless, “[i]f a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact as required by Rule 56(c), the court may: . . . consider the fact undisputed for purposes of the motion.” Fed.R.Civ.P. 56(e)(2).

         II. Analysis

         A. State Farm Did Not Consent to Be Bound

         In Texas, default judgments are not binding without the insurer's consent if the uninsured-motorist policy requires consent. See, e.g., State Farm Mut. Auto. Ins. Co. v. Azima, 896 S.W.2d 177, 178 (Tex. 1995); Millard, 847 S.W.2d at 674; Gov't Employees Ins. Co. (GEICO) v. Lichte, 792 S.W.2d 546, 548 (Tex. App.-El Paso 1990, writ denied); Criterion Ins. Co. v. Brown, 469 S.W.2d 484, 484-85 (Tex. Civ. App.-Austin 1971, writ ref'd n.r.e.). Consent clauses “protect the carrier from liability arising from default judgments against an uninsured motorist or from insubstantial defense of the uninsured motorist.” Azima, 896 S.W.2d at 178 (citing Allstate Ins. Co. v. Hunt, 469 S.W.2d 151, 153 (Tex. 1971)).

         The State Farm policy stated that “[a]ny judgment for damages arising out of a suit brought without our consent is not binding on us. . . .” (Docket Entry No. 16 at 4). State Farm did not give written consent, but that is not required. (Docket Entry No. 19 at 2). Mr. Cantu instead asserts that State Farm's consent to the lawsuit was apparent from its participation in the suit against the alleged tortfeasors, including naming the three individuals as defendants, deposing the ...

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