| | | | | | | | | | Handling Claims Involving Multiple Tort Feasors and Dealing with Multiple Policies By Charles Dunn________________________________________________________ I. Multiple Tort Feasors When there are multiple tort feasors in an automobile accident, the "other insurance" provision of the policy comes into effect. Most policies state as follows: If there is other applicability liability insurance we will pay only our share of the loss, our share is the proportion that our limit of liability bears to the total of all applicable limits. However, any liability policy we provide to a covered person for the maintenance or use of a vehicle you do not own shall be excess over any other applicable liability insurance Under the Texas Supreme Court's decision in Traders & General Ins. Co. v. Hicks Rubber Co., the legal effect of the "other insurance" provision is to create several, but not joint, liability among the insurers on a "pro rata" amount. Accordingly, an insurer is not liable for an amount in excess of its proportionate burden. See Hicks Rubber Co., 169 S.W.2d 142,147 (Tex. 1943). The Texas Supreme Court later explained in Snyder v. Allstate that where the covered auto is "owned automobile" under one policy, but not owned automobile under another policy, both containing an "other insurance" clause, the policy under which the vehicle was owned provides primary coverage, while the other policy is excess. See Snyder, 485 S.W.2d 769 (Tex. 1972). However, in Hardware Dealers Mutual Insurance Company v. Farmers Exchange, the Court held that when coverage purports to be excess under both policies, the "excess" coverage clause is disregarded, and liability is several between the insurers on a pro rata basis. See Hardware Dealers Mut. Ins. Co. v. Farmers Ins. Exchange, 444 S.W.2d 583 (Tex. 1969). | | | | | | | | | |
| | | | | | | | | | II. Stacking In Strancener v. United Serv. Auto Ass'n, the Texas Supreme Court held that under article 5.06—1 of the Texas Insurance Code, a negligent motorist is underinsured whenever the available proceeds of his liability insurance are insufficient to compensate the injured party's actual damages. See Strancener v. United Serv Auto Ass'n, 111 S.W.2d 378 (Tex. 1989). The holding resolved certain ambiguities in the statutory language that had led many lower courts to hold that a motorist was not underinsured if his liability limits were equal to or exceed the injured party's UM/UIM coverage limits. In those instances in which the negligent motorist is covered by two or more liability policies, the limits of those policies may be aggregated or "stacked" to determine whether the motorist is underinsured. Offset. The injured party is not required to exhaust the negligent motorist's liability limits before making a UM/UIM claim. But, article 5.06—1 and the policy allow the UM/UIM carrier to offset amounts that are "recovered from the insurer of the underinsured motor vehicle." See TEX. INS. CODE art 5.06—l(2)(b), (5); Stracener, 111 S.W. 2d at 380. Consequently, if the insured settles with the negligent motorist, the UM/UIM carrier is allowed to offset not just the amount paid by the negligent motorist's insurer, but the full amount of the policy limits available to pay the injured party's claim against the motorist. See Olivas v. State Farm Mut Auto. Ins. Co., 850 S.W.2d 564 (Tex. App.—El Paso 1993, writ denied); Leal v. Northwestern Nat'l County Mut. Ins. Co., 846 S. W.2d 576 (Tex. App.—Austin, 1993, no writ). If the injured party is legally entitled to recover less than the liability limits available to pay the motorist's claim, then the motorists is not "underinsured." Significantly, in those instances in which UM/UIM carrier settles the insured's claim for benefits, and the insured subsequently obtains a judgment against the negligent motorist, the motorist is not entitled to an offset or credit against the judgment for the amount of the UM/UIM benefits paid. | | | | | | | | | |
| | | | | | | | | | III. Responsible Third Party HB 4 significantly changed and broadened the definition of an RTP. No longer must the trial court be able to exercise personal jurisdiction over the RTP. Similarly, there no longer is an exclusion for employers under the workers compensation bar or for bankrupt parties. Under the amended statute, an RTP can be "any person who is alleged to have caused or contributed to causing in any way the harm for which recovery of damages is sought, whether by negligent act or omission, by any defective or unreasonably dangerous product, by other conduct or activity that violates an applicable legal standard, or by any combination of these." Second, HB 4 made clear that an RTP need only be designated and not "joined as a party. The defendant simply files a motion for leave to designate an RTP, which the court should grant unless the plaintiff objects and demonstrates why the person cannot qualify as an RTP. Third, HB 4 extends the time in which a defendant may designate an RTP. Under the old law, a defendant generally had 30 days after filing its answer to join the RTP. Under the new law, the defendant may designate the RTP any time prior to 60 days before trial, and even closer to the trial date on a showing of good cause. The plaintiff then has 60 days after the designation to name the RTP as a defendant, regardless of whether a limitation has otherwise expired. Some commentators have expressed concern that this provisions may engender collusive suits designed to revive suits that otherwise would be barred limitations. For example, a plaintiff could timely sue a defendant with minimal exposure and then agree to dismiss his claims against that defendant in return for the defendant's naming as an RTP the target party against whom limitations have run. Plaintiff could then amend to name the target a defendant; thereby reviving claims that otherwise would be barred. Similarly, since limitations do not extinguish a plaintiffs claim on the merits, but merely bar the remedy, a judgment based on limitations might not insulate a defendant from subsequent suits if designated as an RTP and then sued (a second time) by the plaintiff. | | | | | | | | | |
| | | | | | | | | | HB 4 allows for the designation of "John Doe" and "Jane Doe" RTP's in cases involving criminal acts by unknown assailants. The defendant must show a "reasonable probability" that the assailant has committed a criminal act which caused all or part of the plaintiffs injury or damages in order to invoke this provision of the statute. Note, however, that the defendant must seek to designate the "John Doe" RTP within 60 days of filing its answer. HB 4 provides that an RTP designation does not of itself impose any liability upon the RTP, nor may any finding from the trial subsequently be used to create liability based on collateral estoppel, resjudicata, or the like. A plaintiff may file a "no evidence" motion to strike an RTP designation, in which event the burden will be on the defendant to produce evidence showing that the RTP is or may be responsible for the plaintiffs injury or damages. The standard for granting the motion to strike will be that of a "no-evidence" summary judgment motion. | | | | | | | | | |
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