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Allstate Insurance Co. v. Irwin

Court of Appeals of Texas, Fourth District, San Antonio

August 21, 2019

ALLSTATE INSURANCE COMPANY, Appellant
v.
Daniel Wes IRWIN, Appellee

          From the 224th Judicial District Court, Bexar County, Texas Trial Court No. 2017CI03490 Honorable John D. Gabriel, Jr., Judge Presiding.

          Sitting: Sandee Bryan Marion, Chief Justice Luz Elena D. Chapa, Justice Beth Watkins, Justice.

          OPINION

          Beth Watkins, Justice.

         After a car wreck with an underinsured motorist (UIM), appellee Daniel Wes Irwin sued appellant Allstate Insurance Company ("Allstate") seeking a declaration that he was entitled to recover damages resulting from the wreck under his UIM benefits policy. On appeal, Allstate argues the trial court abused its discretion in awarding Irwin declaratory relief and attorney's fees. We affirm the trial court's judgment.

         Background

         After a car wreck with Brenda Alonso, Irwin settled with Alonso for her $30, 000 policy limits. Then he sent a demand letter to his own UIM insurer, Allstate, seeking to settle for his $50, 000 UIM policy limits for the remaining damages Alonso's policy did not cover. At the time of the demand, Irwin's medical bills alone exceeded the amount he recovered from Alonso. Allstate offered to settle for $500. Irwin sued Allstate seeking a declaration that he was entitled to recover his remaining damages under his UIM policy. He also sought attorney's fees under the Uniform Declaratory Judgments Act ("UDJA").

         The sole issue presented to the jury was whether Irwin was legally entitled to recover his excess damages. The parties stipulated to coverage under the UIM policy and the $30, 000 offset from Irwin's settlement with Alonso. The jury returned a verdict in Irwin's favor, awarding him $498, 968.36 in damages resulting from the wreck with Alonso. The trial court signed a judgment awarding Irwin Allstate's policy limit of $50, 000 plus $2, 002.28 in court costs. The trial court also awarded Irwin $45, 540 in attorney's fees. Allstate appealed.

         Analysis

         On appeal, Allstate claims the trial court abused its discretion in awarding Irwin declaratory relief and attorney's fees under the UDJA. It claims the UDJA is not the proper procedural vehicle for pursuing claims for UIM coverage, and because declaratory relief was inappropriate, Irwin cannot recover his attorney's fees under the UDJA.

         Irwin's UIM Claim under the UDJA

         Relying on Brainard v. Trinity Universal Insurance Co., Allstate argues that an insured must file suit and establish the amount he is legally entitled to recover from the other motorist to trigger an insurer's contractual duty to pay UIM benefits. It contends that only after the contractual duty to pay is established may an insured pursue a breach of contract claim against the insurer to recover UIM benefits. According to Allstate, an insured cannot file a claim for declaratory relief to obtain the judgment required by Brainard.

         Irwin counters that the UDJA is appropriate for pursuing his UIM claim for coverage. According to Irwin, the UDJA must be liberally administered and recovery is permitted under the UDJA because he seeks a declaration of the validity of his right to recover. He distinguishes Brainard, which arose under Chapter 38 of the Texas Civil Practice and Remedies Code ("the Code") governing the recovery of attorney's fees for breach of contract, because he never asserted a breach of contract claim. Irwin further argues that nothing in Brainard precludes the use of the UDJA to recover UIM benefits.

         Applicable Law

         To protect responsible motorists from financial loss when they are involved in car wrecks with uninsured or underinsured motorists (UM/UIM), Texas law requires automobile insurers to include UM/UIM coverage in their policies unless their insureds reject that coverage in writing. Tex. Ins. Code Ann. § 1952.101(b); Ortiz v. State Fin. Mut. Auto Ins. Co.,955 S.W.2d 353, 356- 57 (Tex. App.-San Antonio 1997, writ denied). UM/UIM coverage provides payment to the insured for all amounts the insured is "legally entitled to recover" as damages from the UM/UIM. Tex. Ins. Code Ann. ยง 1952.106. Recovery ...


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