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Farmers Texas County Mutual Insurance Co. v. Zuniga

Court of Appeals of Texas, Fourth District, San Antonio

September 13, 2017

FARMERS TEXAS COUNTY MUTUAL INSURANCE COMPANY, Appellant
v.
Jennifer L. ZUNIGA and Janet Northrup as Trustee for the Bankruptcy Estate of Christopher J. Medina, Appellees

         From the 73rd Judicial District Court, Bexar County, Texas Trial Court No. 2014-CI-11445 Honorable Cathleen M. Stryker, Judge Presiding

          Sitting: Sandee Bryan Marion, Chief Justice Karen Angelini, Justice Patricia O. Alvarez, Justice

          OPINION

          PATRICIA O. ALVAREZ, JUSTICE

         This appeal presents the novel issue of whether an automobile insurance policy which covers "damages for bodily injury" requires Farmers Texas County Mutual Insurance Company to pay punitive damages awarded in a lawsuit against its insured. The trial court granted summary judgment in favor of the appellees concluding the policy required Farmers to pay the punitive damages. Farmers appeals asserting the trial court erred in its interpretation of the policy. Farmers also appeals an order entered by a Harris County district court granting a motion to transfer venue of the underlying cause to Bexar County. We affirm the order transferring venue but reverse the order granting summary judgment.

         Background

         Jennifer Zuniga sued Christopher Medina for negligence and gross negligence to recover damages she sustained when the vehicle Medina was driving struck Zuniga from behind as she was walking. A jury awarded Zuniga $93,244.91 in actual damages and, finding the harm to Zuniga resulted from gross negligence, also awarded Zuniga $75,000 in punitive damages. The trial court signed a judgment based on the jury's verdict on March 3, 2014.[1]

         The vehicle Medina was driving was insured by Farmers, and Medina was a "covered person" as that term is used in the insurance policy. On May 30, 2014, Farmers filed a petition for declaratory relief against Medina and Zuniga in Harris County seeking a declaration that the punitive damages were not covered by the policy or, alternatively, if the punitive damages are covered by the policy, Texas public policy prohibits coverage for the punitive damages.

         On June 30, 2014, Zuniga filed a motion to transfer venue of the cause from Harris County to Bexar County. One of the grounds on which Zuniga sought to transfer venue was for the convenience of the parties under section 15.002(b) of the Texas Civil Practice and Remedies Code. The Harris County court signed an order on March 7, 2016, granting the motion and transferring the case to Bexar County.[2]

         On July 22, 2014, Zuniga filed an original petition in Bexar County seeking to recover the punitive damages from Farmers. In addition, Zuniga was assigned all of Medina's rights against Farmers as a result of a turnover order, and she asserted additional claims against Farmers based on that assignment. On April 14, 2016, Zuniga filed a motion to consolidate her lawsuit, which was pending in the 73rd Judicial District Court of Bexar County, with the case transferred from Harris County, which was pending in the 166th Judicial District Court of Bexar County. The trial court granted the motion, and the cases were consolidated.

         On April 27, 2016, Farmers filed a first amended motion for summary judgment. On June 30, 2016, the trial court signed an order denying Farmers's motion. Although Farmers initially filed a motion seeking the trial court's permission to file an interlocutory appeal of its order, the parties entered into a Rule 11 agreement to cancel the hearing on Farmers's motion conditioned upon the plaintiffs filing a motion for summary judgment within a week.

         On August 2, 2016, Zuniga and Janet Northrup, the trustee for Medina's bankruptcy estate, filed a motion for summary judgment seeking a declaration that the punitive damages awarded to Zuniga were covered by the Farmers policy. Farmers filed a response to the motion. After a hearing, the trial court signed an order granting the motion "insofar that it seeks a determination that the punitive damages … are covered under the automobile policy in question" and severing all other claims into a separate cause. Farmers appeals.

         Venue

         In its second issue, Farmers challenges the order transferring venue of its lawsuit from Harris County to Bexar County. As previously noted, however, Zuniga asserted convenience of the parties as one of the grounds for transferring venue. Section 15.002(c) of the Texas Civil Practice and Remedies Code provides that a decision to transfer venue for the convenience of the parties is not grounds for appeal and is not reversible error. Tex. Civ. Prac. & Rem. Code Ann. § 15.002(c) (West 2017). Accordingly, we do not further address Farmers's second issue.

         Did the Policy Cover Punitive Damages?

         In its first issue, Farmers contends the trial court erred in concluding the policy covered punitive damages. Farmers asserts either the policy did not provide such coverage or Texas public policy prohibits such coverage.

         "Determining whether exemplary damages for gross negligence are insurable requires a two-step analysis." Fairfield Ins. Co. v. Stephens Martin Paving, LP, 246 S.W.3d 653, 655 (Tex. 2008). "First, we decide whether the plain language of the policy covers the exemplary damages sought in the underlying suit against the insured." Id. "Second, if we conclude that the policy provides coverage, we determine whether the public policy of Texas allows or prohibits coverage in the circumstances of the underlying suit." Id. ...


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