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Farmers Group, Inc. v. Geter

Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg

October 10, 2019


          On appeal from the 172nd District Court of Jefferson County, Texas.

          Before Chief Justice Contreras and Justices Benavides and Perkes



         This appeal concerns a class action brought by appellee Sandra Geter, on behalf of herself and all others similarly situated (Geter or the Geter class), against appellants Farmers Group, Inc., Farmers Underwriters Association, Fire Underwriters Association, Farmers Insurance Exchange, and Fire Insurance Exchange (collectively Farmers). The Geter class claimed that Farmers improperly refused to renew their HO-B homeowners insurance policies. The trial court granted partial summary judgment in favor of the class and conducted a trial on attorney's fees. It later rendered judgment requiring Farmers to offer retroactively renewed HO-B policies to all class members, and it awarded the class over $3 million in attorney's fees and court costs.

         On appeal, Farmers argues that the trial court: (1) erred by ordering Farmers to offer renewed HO-B policies to all class members; (2) lacked subject matter jurisdiction to order a particular premium rate for those renewed policies; (3) lacked subject matter jurisdiction to compel Farmers to renew the policies; (4) erred in granting specific performance; (5) erred in awarding injunctive relief; (6) erred in granting a motion to show cause filed by the class; and (7) erred in awarding attorney's fees and costs. Appellants Gerald Hooks Jr., Lesly K. Nolen, and Joseph C. Blanks, P.C. (Blanks) argue that the trial court erred by striking their pleas in intervention seeking attorney's fees.

         We affirm in part, reverse in part, and remand for further proceedings.[1]

         I. Background

         In Texas, homeowner's insurance policies must be written on forms approved by the Texas Department of Insurance (TDI). Tex. Ins. Code Ann. § 2301.006(a). A policy based on Texas Policy Form HO-B generally provides coverage against all risks to a dwelling, whereas a policy based on Texas Policy Form HO-A typically covers only named perils to a dwelling. Tex. Dep't of Ins., Texas Homeowners Policies 1 (2018), Both HO-A and HO-B policies cover only named perils to dwelling contents. Id.

         Geter alleged that she attempted to renew her Farmers HO-B policy in 2001. However, on January 4, 2002, Farmers mailed a "Policyholder Notice of Non-Renewal" to Geter stating in part: "Because of substantial losses which we have incurred for the homeowners and dwelling lines of insurance in Texas, we regrettably must inform you that we will no longer offer property insurance coverage in the state of Texas under the policy form you currently have." Farmers instead offered an HO-A policy to Geter.[2]

         Geter filed suit later in 2002 alleging that Farmers was required to renew the HOB policy pursuant to the terms of that policy, which included in relevant part:

6. Refusal to Renew.
a. We may not refuse to renew this policy because of claims for losses resulting from natural causes.
b. We may not refuse to renew this policy solely because you are an elected official.
c. We may refuse to renew this policy if you have filed three or more claims under the policy in any three year period that do not result from natural causes.
If you have filed two claims in a period of less than three years, we may notify you in writing, that if you file a third claim during the three year period, we may refuse to renew this policy by providing you proper notice of our refusal to renew as provided in d. below. If we do not notify you after the second claim, we may not refuse to renew this policy because of Iosses.
A claim does not include a claim that is filed but is not paid or payable under the policy.
d. If we refuse to renew this policy, we must deliver to you, or mail to you at your mailing address shown on the declarations page and any mortgagee named in the declarations page, written notice of our refusal to renew not later than the 30th day before the date in which this policy expires. Proof of mailing will be sufficient proof of notice. If we fail to give you proper notice of our decision not to renew, you may require us to renew the policy.

(Emphasis added.) Geter alleged that there were 433, 618 similar Farmers HO-B policies in force in Texas, and she sought class certification for all persons who received notice, as she did, that their policies would not be renewed. Geter sought declaratory relief and an injunction requiring Farmers to renew the HO-B policy. The trial court certified the class under Texas Rule of Civil Procedure 42.[3]

         Farmers moved for summary judgment in October 2010, arguing that its non-renewal of the HO-B policies did not violate Texas insurance law or the terms of the policies (Farmers' first summary judgment motion). The Geter class responded and filed its own motion for partial summary judgment on all issues except attorney's fees (Geter's first summary judgment motion). Geter's motion requested a declaration that: (1) all class members are "entitled to specific performance of their right to renew the HO-B policies"; (2) the term of the renewed policy "shall be one year beginning the date the nonrenewal of their last HO-B policy became effective"; (3) the premium to be charged for the renewed policy "shall be determined by [TDI]"; and (4) Farmers must advise class members on how to accept renewal in a form and manner to be approved by the court.

         By order dated November 23, 2010, the trial court denied Farmers' first summary judgment motion and granted Geter's first summary judgment motion. The order stated that each class member is "entitled to renewal" of the HO-B policy and that the term of the renewed policies "shall be one year beginning the date the nonrenewal of their last HO-B policy became effective." The order additionally commanded Farmers to "submit a plan for determining the premium to be charged" for the renewed policies, and it permitted the class to object to Farmers' plan and to offer an alternative plan.

         Subsequently, Farmers filed a "Motion for Partial Summary Judgment as to Rating Issues and Remedies" (Farmers' second summary judgment motion) in which it argued in part: (1) the trial court lacks jurisdiction to order a particular premium rate for the renewed HO-B policies; (2) Farmers cannot lawfully issue a policy for a term that has expired; and (3) Geter has not demonstrated the elements required to obtain injunctive relief or specific performance. Geter also filed a second motion for partial summary judgment on the issue of setting the premium for the renewed policies. She argued that the trial court had jurisdiction to set the premium rate as "supplemental relief" under the Uniform Declaratory Judgments Act (UDJA). Geter further noted that, though Farmers charged a premium of $2, 181 for the HO-B policy in effect from 2001 to 2002, it demanded a $5, 410 premium for the HO-A replacement policy effective the following year, even though the latter policy provided less coverage. She asked the trial court to rule that the premium for the retroactively renewed HO-B policies-which Farmers was required to offer under the November 23, 2010 order-would be the same as the premium Farmers charged for the HO-A replacement policies.[4] The Geter class also filed a "Motion to Show Cause" requesting the same relief.

         On June 21, 2011, the trial court signed an order granting Geter's second summary judgment motion, granting Geter's motion to show cause, and denying Farmers' second summary judgment motion. The order set forth the premium rate for the HO-B renewal policies precisely as requested by Geter in her motions.

         A trial on attorney's fees only was held over several days in November 2016. The jury found that $812, 332.50 was a reasonable fee for necessary services provided by class counsel in the trial court, and it assessed additional conditional amounts for representation on appeal. Pursuant to a motion filed by the class, the trial court stated in findings attached to its final judgment, dated December 14, 2017, that the amounts determined by the jury were a "base lodestar, as that term is used in the Texas Supreme Court," and it found that the class was entitled to a "multiplier [of] 3.75 times the base lodestar . . . especially because of the risk and nature of contingent fee work, the length of time commitment required, the result obtained and the substantial and protracted costs incurred." See Tex. R. Civ. P. 42(i)(1) ("In awarding attorney fees [in a class action], the court must first determine a lodestar figure by multiplying the number of hours reasonably worked times a reasonable hourly rate. The attorney fees award must be in the range of 25% to 400% of the lodestar figure."). Accordingly, the trial court awarded the class $3, 046, 246.88 in trial attorney's fees, along with conditional appellate fees, and $486, 789.97 in costs. Farmers then perfected this appeal.

         In a separate proceeding initiated in 2002, the State of Texas, TDI, and the Commissioner of Insurance (collectively the State) filed suit in the 261st District Court of Travis County alleging that Farmers violated the Deceptive Trade Practices Act (DTPA). The Travis County suit alleged, among other things, that Farmers charged higher premiums for HO-A policies than it did for HO-B policies; however, the suit did not seek a declaration that the HO-B policies were wrongfully non-renewed. Eventually, Farmers and the State proposed a settlement agreement under which the members of a settlement class, including Hooks and Nolen, would release their claims against Farmers. Hooks and Nolen, represented by Blanks, intervened in the Travis County proceeding in order to prevent the release of any claims for declaratory relief regarding non-renewal of the HO-B policies-i.e., the claims raised in the Geter class action. See Lubin v. Farmers Gp., Inc., No. 03-03-00374-CV, 2009 WL 3682602, at *9 (Tex. App.-Austin Nov. 6, 2009, no pet.) (mem. op. on remand). Farmers eventually entered into a settlement agreement with the State which contained a release that-in accordance with Blanks's demand- "carved out" the declaratory relief requested in the Geter class action.[5] According to Farmers, the settlement agreement called for it to compensate affected policyholders "in a package valued at over $100 million." The Travis County district court approved the settlement agreement and rendered final judgment in February 2016.

         In June 2016, Hooks and Nolen intervened in this class action seeking to recoup their attorney's fees. Their plea in intervention argued that the carve-out they obtained in the Travis County judgment "benefits all Geter class members" because it prevented the release of the declaratory relief sought in the class action. Farmers moved to strike the intervention, and the trial court granted the motion.[6] Blanks then filed its own plea in intervention making the same assertions as Hooks and Nolen; again, the trial court struck the intervention pursuant to Farmers' motion. Hooks, Nolen, and Blanks appealed the rulings.

         II. Discussion

         A. Standard of Review

         We review summary judgments de novo. Neely v. Wilson, 418 S.W.3d 52, 59 (Tex. 2013). A movant for traditional summary judgment has the burden to establish that no genuine issue of a material fact exists and that it is entitled to judgment as a matter of law. Tex.R.Civ.P. 166a(c); Amedisys, Inc. v. Kingwood Home Health Care, LLC, 437 S.W.3d 507, 511 (Tex. 2014). A fact issue exists if there is more than a scintilla of probative evidence to support each element of the plaintiff's claim. Neely, 418 S.W.3d at 59. We review the summary judgment evidence in the light most favorable to the non-movant, indulging every reasonable inference and resolving any doubts against the motion. Buck v. Palmer, 381 S.W.3d 525, 527 (Tex. 2012) (per curiam); City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005).

         When both parties move for summary judgment and the trial court grants one motion and denies the other, we review all the summary judgment evidence, determine all issues presented, and render the judgment the trial court should have rendered. Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013).

         B. Declaratory Relief

         By its first issue[7] on appeal, Farmers contends that the trial court erred by rendering summary judgment declaring that it was required to offer retroactive renewed HO-B policies to all class members. In particular, Farmers argues that it was not required to renew under the plain language of the policy or under the insurance code. By its third issue, Farmers argues that the trial court lacked subject matter jurisdiction to compel renewal of the HO-B policies.

         1. Applicable Law

         In general, the goal of contract interpretation is to ascertain the parties' true intent as expressed by the plain language they used. Great Am. Ins. Co. v. Primo, 512 S.W.3d 890, 892-93 (Tex. 2017); see Gilbert Tex. Const., L.P. v. Underwriters at Lloyd's London, 327 S.W.3d 118, 126 (Tex. 2010) (explaining that "we look at the language of the policy because we presume parties intend what the words of their contract say"). But the contract at issue here is a standard policy form prescribed by TDI, and so "the intent of the parties is not what counts because they did not write the contract." Greene v. Farmers Ins. Exch., 446 S.W.3d 761, 766 (Tex. 2014) (citing Fiess v. State Farm Lloyds, 202 S.W.3d 744, 746 (Tex. 2006)). "Rather, the policy language is interpreted according to the ordinary, everyday meaning of its words to the general public." Id. (citing Fiess, 202 S.W.3d at 746). We construe policy language so that no provision is rendered meaningless, and we may not insert language or provisions the parties did not use. Primo, 512 S.W.3d at 892-93 (citing Nat'l Union Fire Ins. Co. v. Crocker, 246 S.W.3d 603, 606 (Tex. 2008)). We assign terms their ordinary and generally accepted meaning unless the contract directs otherwise. Id. at 893. If the language lends itself to a clear and definite legal meaning, the contract is not ambiguous and it will be construed as a matter of law. Id. (citing Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex. 2003)).

         2. Summary Judgment ...

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