On
Appeal from the 416th Judicial District Court Collin County,
Texas Trial Court Cause No. 416-04980-2017
Before
Justices Whitehill, Schenck, and Rosenberg [1]
MEMORANDUM OPINION
BILL
WHITEHILL JUSTICE
Appellant
Curtis Davis sued his insurance carrier, appellee State Farm
Lloyds, Inc., for underinsured motorist (UIM) benefits. His
policy excluded UIM coverage if he settled his claim against
an underinsured driver without State Farm's written
consent, and State Farm won summary judgment based on
evidence that Davis did just that. Davis appealed, and the
pivotal questions before us are (i) was State Farm required
to prove it was prejudiced by Davis's settlement and, if
so, (ii) did State Farm conclusively prove prejudice? We
answer the first question yes and the second question no, and
we therefore reverse the summary judgment.
I.
Background
A.
Facts
We draw
the facts from the pleadings and the summary judgment
evidence as appropriate.
In
August 2013, Davis was in a two-vehicle traffic accident in
which he and Jose Manuel Vicencio-Hernandez were the drivers.
At that time, Davis was covered by a State Farm insurance
policy. Vicencio-Hernandez was underinsured, and Davis
notified State Farm that he anticipated presenting a UIM
benefits claim.
Davis's
policy did not provide UIM coverage if he "settles the
claim without [State Farm's] written consent."
In June
2014, State Farm sent Davis a letter saying among other
things that
• Davis's claim was transferred to State Farm's
Subrogation services and that State Farm would attempt to
recover its payments to Davis from whoever was responsible
for his loss.
• Davis should tell State Farm if he was represented by
an attorney so it could communicate with that lawyer.
• Davis should not sign any release or accept any
payments that might affect State Farm's interests in
recovering from responsible parties sums that State Farm paid
Davis for his losses.
Other
evidence showed that on or about January 13, 2016, another
insurance company sent to Bill Kennedy (apparently
Davis's lawyer) settlement checks totaling $30, 000 and a
release.
Although
the record does not show how State Farm learned of that
settlement, the next day, State Farm transmitted a letter to
"Nnk Legal Group" (apparently Kennedy's law
firm) that Davis's insurance policy required him to
secure State Farm's written consent to settle with any
potentially liable person.[2] The letter also said that failure to
obtain State Farm's consent might forfeit Davis's UIM
coverage.
Nevertheless,
Davis subsequently signed a release of his claim against
Vicencio-Hernandez. Davis testified in a deposition that he
never got permission from State Farm to settle his claim
against Vicencio-Hernandez and his insurer.
B.
...