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GEICO Choice Insurance Co. v. Stern

Court of Appeals of Texas, First District

August 15, 2019

GEICO CHOICE INSURANCE COMPANY, Appellant
v.
JEFFREY STERN D/B/A STERN LAW GROUP, Appellee

          On Appeal from the 127th District Court Harris County, Texas Trial Court Case No. 2016-41336A

          Panel consists of Chief Justice Radack and Justices Goodman and Countiss.

          MEMORANDUM OPINION

          JULIE COUNTISS, JUSTICE

         Appellant, GEICO Choice Insurance Company ("GEICO"), challenges the trial court's rendition of summary judgment in favor of appellee, Jeffrey Stern, doing business as Stern Law Group ("SLG"), on SLG's claims against GEICO for wrongful payment of assigned interest and conversion. In its sole issue, GEICO contends that the trial court erred in denying its motion for partial summary judgment and granting SLG summary judgment.

         We reverse and render.

         Background

         In its amended petition, SLG alleges that Delmi Maldonado was injured by a person insured by GEICO. SLG was hired to represent Maldonado in a personal-injury action against GEICO's insured.[1] Maldonado and SLG entered into a contingent-fee agreement for Maldonado's legal representation in which Maldonado assigned to SLG a "present, undivided ownership interest" of thirty-three and one-third percent "of any recovery made on Maldonado's behalf." SLG sent GEICO a letter of representation, notifying GEICO that SLG "had a fee interest in Maldonado's claim[s]."

         SLG further alleges that, in addition to other damages, it was retained by Maldonado to recover damages for past medical expenses that she incurred because of her injury. SLG alleges that Maldonado's assignment of interest to it in their contingent-fee agreement "included all proceeds recovered on Maldonado's behalf, including the past medical expenses."

         SLG alleges that GEICO, through a company called ClaimTECH and "without the permission of Maldonado or SLG," settled Maldonado's outstanding hospital medical bill of $12, 795.50 for $7, 677.30. Because this amount was paid from insurance policy benefits on behalf of Maldonado to settle her past medical expenses, SLG alleges that it "was entitled to a fee interest in the payment." Accordingly, SLG asserts that it is owed $2, 559.10 and GEICO has refused to make such a payment.

         SLG brought claims against GEICO for wrongful payment of an assigned interest and conversion. Specifically, SLG alleges that despite having knowledge of SLG's claimed interest in Maldonado's claims against GEICO's insured, GEICO did not "protect" SLG's "interest in any payments made as [a] part of the [past medical expenses] claim." By paying Maldonado's outstanding medical bill directly to the hospital, GEICO denied SLG its "ability to be compensated for that portion of their work." SLG further alleges that "[o]nce funds were paid toward the claims of SLG's client[], SLG's contingen[t-]fee interest became a present property interest." Accordingly, GEICO "exercised dominion and control of[, and thus converting, SLG's] property . . . by paying the funds directly" to the hospital. SLG seeks recovery for its contingent-fee interest on the amount GEICO paid to the hospital in settlement of Maldonado's outstanding medical bill.

         GEICO filed a motion for partial summary judgment, arguing that it had the "right to act on its own behalf and on behalf of its insured to make sure [the] hospital lien" related to Maldonado's outstanding medical bill was "satisfied." It further asserted that it owes no duty to SLG and that it was "legally privileged and/or justified to negotiate and resolve the hospital lien" related to Maldonado's outstanding medical bill. And Maldonado incurred no damages as a result of GEICO's satisfaction of the lien. "GEICO obtained a release from the hospital which absolved [Maldonado] of any obligation to pay any amount of the hospital lien or of any other related expenses." Regardless, it argued that any damages incurred would be "too speculative to maintain an action."

         GEICO attached to its partial summary-judgment motion SLG's first amended petition, a letter it received from SLG notifying GEICO of SLG's representation of and assignment of interest in the claims of Maldonado against GEICO's insured, correspondence regarding settlement negotiations with SLG for Maldonado's claims-including a letter from GEICO to SLG with a settlement offer regarding "all claims arising out of the Bodily Injury claimed by" Maldonado and noting that "the hospital lien" related to Maldonado's outstanding medical bill "ha[d] already been paid, and as such has been offset from th[e] offer," and a settlement agreement and release between ClaimTECH, on behalf of GEICO, and the hospital for a settlement of Maldonado's outstanding medical bill in the amount of $12, 795.50 for $7, 677.30. GEICO also attached an "AUTHORIZATION AND ASSIGNMENT" executed by Maldonado in connection with her treatment for her injuries at the hospital. The assignment provided, in relevant part:

ITEM 3 - IRREVOCABLE ASSIGNMENT
I irrevocably assign and transfer to the Hospital all rights, title and interest in any benefits payable and all causes of action against all Insurance companies, benefit plans, and/or persons or entities responsible ("Responsible Parties") for the payment of benefits, services, or products provided by the Hospital, and I hereby appoint the Hospital as my attorney in fact, with the power of substitution to sue or otherwise obtain payment of benefits from the Responsible Parties. This irrevocable assignment and transfer shall ...

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