Preview
316 Tex. 614 SOUTH WESTERN REPORTER, 3d SERIES
op.); Asset Protection & Sec. Servs. v. Ar- prosecute a common-law bad faith cause of
mijo, 570 S.W.3d 377, 385-86 (Tex. App— action against her insurer, including seek-
El Paso 2019, no pet.); ID/Guerra LP v. ing discovery reasonably calculated to lead
Tex. Workforce Comm’n, 317 S.W.3d 898, to the discovery of admissible evidence.
901-03 (Tex. App.—Austin 2010, no pet.). Petition denied.
We thus overrule Mother’s four issues.
VI. Conclusion 1. Mandamus <1,
Having overruled Mother's four issues, Mandamus is both an extraordinary
we affirm the trial court’s judgment termi- remedy and a discretionary one.
nating Mother’s parental rights. We dis-
2. Mandamus ¢4(4), 32
miss Father’s appeal for want of jurisdie-
tion. The Court of Appeals may grant man-
damus relief from a discovery order only
when (1) the trial court’s decision is so
arbitrary and unreasonable that it
amounts to a clear and prejudicial error of
law and (2) the relator has no adequate
remedy by appeal.
3. Appeal and Error ¢=3143
IN RE STATE FARM MUTUAL In determining whether the trial court
AUTOMOBILE INSURANCE abused its discretion, the Court of Appeals
COMPANY, Relator may not substitute its judgment for the
No. 02-20-00144-CV trial court’s determination of factual or
other discretionary matters.
Court of Appeals of Texas,
Fort Worth. 4, Appeal and Error €3135, 3185
Even when the law is unsettled, the
Delivered: November 19, 2020
Court of Appeals reviews a trial court’s
Background: Insured who had successful-
decisions on questions of law and applica-
ly prosecuted her direct action against her
tion-of-law-to-facts questions much less
insurer for underinsured motorists (UIM) deferentially that its determination of fac-
benefits in county court at law brought an tual or other discretionary matters.
action against her insurer in district court,
asserting common-law bad faith and statu- 5. Appeal and Error €=3141, 3170
tory extracontractual liability damages. A trial court abuses its discretion by
The 158rd District Court, Tarrant County, clearly failing to correctly analyze or apply
Susan Heygood-McOoy, J., granted in- the law.
sured’s motion to compel discovery related
to insurer’s alleged mishandling and mal- 6. Pretrial Procedure ¢=27.1
adjustment of her claim. Insurer petitioned Although the permissible scope of dis-
for mandamus relief. covery is generally broad, a discovery re-
Holdings: As a matter of apparent first quest must show a reasonable expectation
impression, the Court of Appeals, Birdwell, of obtaining information that will aid the
J., held that insured who had succeeded in dispute’s resolution. Tex. R. Civ. P.
her direct action for UIM benefits could 192.3(a), 192.4.
IN RE STATE FARM MUT. AUTO. INS. CO. Tex. 317
Cite as 614 $.W.3d 316 (TexApp.—Fort Worth 2020)
7. Mandamus €4(4), 32 11, Pretrial Procedure 32
Even when a trial court abuses its The only discovery permissible in a
discretion in making a discovery ruling, direct action for uninsured/underinsured
the Court of Appeals will not intervene by motorist (UM/UIM) benefits is that rea-
way of mandamus if the relator has an sonably calculated to lead to the discovery
adequate remedy by appeal. of evidence admissible in the underlying
8. Mandamus 4(4), 32 negligence cause of action; information
Appeal is an inadequate remedy for a concerning the insurer’s handling or ad-
trial court’s abuse of discretion in making justment of the claim is not generally dis-
a discovery ruling, for mandamus pur- coverable. Tex. Ths. Code Ann.
poses, when a discovery order compels §§ 1952.105 - 1952.108.
production beyond the rules of civil proce-
12. Insurance €3379
dure.
Pretrial Procedure 381
9, Insurance 2772
As a matter of apparent first impres-
To recover uninsured/underinsured
sion, injured insured who had successfully
motorist (UM/UIM) benefits under a stan-
prosecuted her direct action for underin-
dard automobile liability policy, an insured
sured motorists (UIM) benefits to a judg-
must show (1) that her policy ineluded
ment binding upon and payable by her
UM/UIM coverage, (2) that the uninsured
insurer could prosecute a common-law bad
or underinsured motorist negligently
faith cause of action against her insurer,
caused the motor vehicle accident that re-
including seeking information and docu-
sulted in the covered damages, (3) the
mentation reasonably calculated to lead to
amount of her covered damages, and (4)
the discovery of evidence admissible to
that the UM/UIM automobile liability cov-
demonstrate insurer’s alleged mishandling
erage is either non-existent or deficient for
and maladjustment of her UIM claim; in-
purposes of compensating her covered
surer’s timely payment of policy limits
damages. Tex. Ins. Code Ann.
judgment did not foreclose the acerual or
§§ 1952.105 - 1952.108. ripening of insured’s cause of action for
10. Insurance 2790, 2816 violation of insurer’s duty of good faith and
A claim for uninsured/underinsured fair dealing.
motorist (UM/UIM) benefits incorporates
the liability and damages elements of the 13. Insurance 3436, 3457, 3549(3)
negligence cause of action against the Only when the insured tortfeasor is
uninsured or underinsured motorist, and finally agreed or adjudicated liable to the
there is ordinarily no jury question as to injured third party can the latter sue the
whether the policy covers either the in- former’s automobile liability insurer direct-
sured or the vehicle in the event of a ly, and only then by asserting a contractu-
verdict of liability and damages sufficient al cause of action as a third-party benefi-
to invoke coverage; thus, the liability and ciary of the liability policy.
damages questions submitted in a direct
action against the insurer are identical to 14. Insurance €3549(3)
those that would be submitted in the negli- An injured party’s contractual third-
gence cause of action against the unin- party beneficiary cause of action against a
sured or underinsured motorist. Tex. Ins. tortfeasor’s automobile liability insurer ac-
Code Ann. $§ 1952.105 - 1952.108. crues with the entry of a final, binding
318 Tex. 614 SOUTH WESTERN REPORTER, 3d SERIES
judgment of liability and damages in the 21, Insurance €=3542
underlying negligence cause of action An injured insured possesses a negli-
against the insured tortfeasor.
gence cause of action against the unin-
15. Evidence >43(4) sured or underinsured motorist (UM/UIM)
A court of appeals may examine and which accrues or ripens at the time of the
take judicial notice of the original record in underlying motor vehicle accident; she
proceedings before the supreme court and does not possess a negligence cause of
the court of criminal appeals through a action against her insurer, and as a result,
search of their respective websites. she may only obtain a binding and enforce-
able judgment on her negligence cause of
16. Action 27(1)
action against the uninsured or underin-
The cause of action against an insurer
sured motorist, not her insurer.
for uninsured/underinsured motorist
(UM/UIM) benefits is ex contractu in na- 22, Action €27(1)
ture, not ex delicto.
Insurance €3541
17. Limitation of Actions €=43
The cause of action to be adjudicated
A cause of action generally accrues,
and the statute of limitations begins to between insured and insurer in a direct
run, when facts come into existence that action for uninsured or underinsured mo-
authorize a claimant to seek a judicial rem- torist (UM/UIM) benefits is contractual in
edy. nature.
18. Action 6, 13 23. Insurance 3350
Ripeness, like standing, is a threshold A Stowers cause of action arises when
issue that implicates subject matter juris- an insurer negligently fails to settle a
diction, and like standing, emphasizes the claim covered by an applicable policy with-
need for a concrete injury for a justiciable
in policy limits.
claim to be presented.
19. Action 6 24, Insurance 3350
Under the ripeness doctrine, the court To prove a Stowers claim, the insured
msiders whether, at the time a lawsuit is must establish that (1) the claim is within
filed, the facts are sufficiently developed so the scope of coverage, (2) a demand was
that an injury has occurred or is likely to made that was within policy limits, and (3)
occur, rather than being contingent or re- the demand was such that an ordinary,
mote. prudent insurer would have accepted it,
20. Constitutional Law <=2604 considering the likelihood and degree of
Courts €=24 the insured’s potential exposure to an ex-
An insurer and insured cannot simply cess judgment.
agree to allow the trial court to adjust the
25. Limitation of Actions ¢55(2)
claim for them to confer subject matter
jurisdiction; absent an aecrued or ripened A Stowers cause of action accrues
cause of action, any adjudication of a cov- when a judgment establishes the negli-
erage dispute between an insurer and in- gence of the insurer in failing to reason-
sured will result in an impermissible advi- ably settle a third-party liability claim
sory opinion. within policy limits.
IN RE STATE FARM MUT. AUTO. INS. CO. Tex. 319
Cite
as 614 S.W.3d 316 (Tex.App.—Fort Worth 2020)
26. Limitation of Actions ¢=46(6) 32. Courts 91(1)
The common-law duty of good faith It is not the function of a court of
and fair dealing is subject to actionable appeals to abrogate or modify established
breach when an insurer unreasonably de- precedent; that function lies solely with the
nies or delays payment of a uninsured or Supreme Court.
underinsured motorist (UM/UIM) claim
33. Courts ¢91(1)
and thereby forces the insured to file and
Generally, the doctrine of “stare deci-
successfully prosecute a direct action to
sis” dictates that once the Supreme Court
judgment.
announces a proposition of law, the deci-
27. Limitation of Actions ¢=46(6) sion is considered binding precedent.
An insured’s breach of contract cause See publication Words and Phrases
for other judicial constructions and
of action accrues when the insurer denies definitions.
the claim, thereby compelling a direct ac-
tion, 34. Courts 91(1)
Only the supreme court has the au-
28. Courts 89 thority to reevaluate, modify, or abrogate
Because the accrual or ripening of a judicially created doctrines.
cause of action is a question of law, the
Court of Appeals must look to the doctrine 35. Courts ©=91(1)
of stare decisis to resolve a conflict, if If a precedent of the supreme court
possible. has direct application in a case, yet ap-
pears to rest on reasons rejected in some
29. Courts 89 other line of decisions, the lower court
The doctrine of stare decisis governs should follow the case which directly con-
only the determination of questions of law trols, leaving to the supreme court the
and its observance does not depend upon prerogative of overruling its own decisions.
identity of parties.
30. Courts 90(1), 91(1) Original Proceeding, 158rd_ District
After a principle, rule or proposition Court of Tarrant County, Texas, Trial
of law has been squarely decided by the Court No, 153-306745-19, HON. SUSAN
Supreme Court, or the highest court of the H. MCCOY, Judge
state having jurisdiction of the particular
ATTORNEYS FOR RELATOR: MEL-
ease, the decision is aceepted as a binding
ISSA A. LORBER, ENOCK KEVER
precedent by the same court or other
PLLC, AUSTIN, TEXAS, ARMANDO
courts of lower rank when the very point is
DE DIEGO, THE LAW OFFICE OF AR-
again presented in a subsequent suit be-
MANDO DE DIEGO, P.C., DALLAS,
tween different parties.
TEXAS.
31. Courts 89 ATTORNEYS FOR REAL PARTY IN
As a general rule, the determination INTEREST: KIRK PITTARD, LANA P.
of a disputed issue of fact is not conclusive, BEVERLY, DURHAM, PITTARD &
under the doctrine of stare decisis, when SPALDING, LLP, DALLAS, TEXAS,
the same issue later arises in another case STEVEN C. LAIRD, SETH D. MCCLOS-
between persons who are strangers to the KEY, LAW OFFICES OF STEVEN C.
record in the first suit. LAIRD, PC.
320 Tex. 614 SOUTH WESTERN REPORTER, 3d SERIES
Before Sudderth, C.J.; Birdwell and coverage obtains a binding judgment
Bassel, JJ. against the insurer for benefits, the pay-
ment of which the insurer had no reason-
OPINION able basis to deny or delay. 725 S.W.2d
Opinion by Justice Birdwell 165, 166-67 (Tex. 1987). In so holding, the
Arnold court employed an accrual analysis
We address in this original proceeding a
that clearly contemplated a contractual ob-
facially unremarkable discovery dispute
ligation to pay a claim for UM benefits
which nevertheless has revealed an appar-
without the insured having to file and suc-
ent conflict in this state’s jurisprudence
cessfully prosecute a direct action to ob-
concerning when and the manner in which
tain a binding judgment for benefits
a cause of action for uninsured/underin-
against the insurer. See id.
sured motorist benefits accrues or ripens.
The conflict arises due to the unique incor- Moreover, in 1990, in Murray v. San
poration of the elements of a negligence Jacinto Agency, the supreme court modi-
cause of action against the uninsured or fied Arnold to hold that an insurer’s com-
underinsured motorist into the contractual mon law cause of action for an insurer's
terms of the UM/UIM coverage provided breach of its duty of good faith and fair
by the standard automobile liability policy. dealing accrues on the date the insurer
And the two lines of precedent with which denies the UM/UIM claim, not the date of
the district court grappled treat an insur- the final resolution of the underlying direct
er’s obligation to pay covered benefits as action. 800 S.W.2d 826, 828-29 (Tex. 1990).
determined by either (1) the contractwal Consistent with Arnold, the accrual analy-
handling and adjustment! of a claim by sis in Murray clearly contemplated a con-
the insurer, independent of and without tractual obligation to pay such a claim
resort to the filing and successful prosecu- without the insured having to file and suc-
tion of a lawsuit by the insured to a bind- cessfully prosecute a direct action to a
ing judgment against the insurer, or (2) binding judgment for benefits against the
the judicial handling and adjustment of a insurer. See id.
claim through the filing and successful The second line of precedent flows from
prosecution of a lawsuit by the insured to a a presentment analysis that generally fore-
judgment binding upon the insurer. closes the recovery of attorney’s fees in
The first line of precedent flows from direct actions for UM/UIM benefits. In
the recognition of the common law duty of 2006, in Brainard v. Trinity Universal
good faith and fair dealing in the UM/UIM Insurance, the supreme court held, with-
context. In 1987, in Arnold v. National out reference to either Arnold or Murray,
County Mutual Fire Insurance, the Su- that, because an insurer is under no con-
preme Court of Texas held that a common tractual duty to pay benefits under a stan-
law cause of action for an insurer’s breach dard automobile liability policy providing
of its duty of good faith and fair dealing UIM coverage unless and until the insured
accrues when the insured under a standard obtains a judgment for such benefits that
automobile liability policy providing UM the insurer is thereby bound to pay,
1, “Insurance claims adjustment or claims counts, Ins. Servs.); see Vail v. Tex. Farm
processing [means a]ny activities to supervise, Bureau Mut. Ins. Co., 754 $.W.2d 129, 132
handle, investigate, pay, settle, or adjust (Tex. 1988) (‘The business of insurance in-
claims or losses.” 34 Tex. Admin. Code cludes the investigation and adjustment of
§ 3.355(a)(8) (2019) (Comptroller of Pub. Ac- claims and losses.”).
IN RE STATE FARM MUT. AUTO. INS. CO. Tex. 321
Cite
as 614 S.W.3d 316 (Tex.App—Fort Worth 2020)
entment of the claim requires the rendition Having already paid a binding “policy
of such a judgment. 216 S.W.8d 809, 818- limits” judgment for UIM benefits to its
19 (Tex. 2006); see also State Farm Mut. insured, Real Party in Interest, Paula C.
Auto. Ins. v. Nickerson, 216 S.W.3d 823, Mentzer, at the conclusion of her direct
824 (Tex. 2006); State Farm Mut. Auto. action in the county court at law, Relator,
Ins. v. Norris, 216 S.W.3d 819, 822-23 State Farm Mutual Automobile Insurance
(Tex. 2006). In so holding, the presentment Company seeks mandamus relief from dis-
analysis in Brainard contemplated the in- covery propounded by Mentzer in support
sured filing and successfully prosecuting a of common law bad faith and statutory
direct action to a binding judgment against extracontractual liability causes of action
the insurer as a condition precedent to she brought subsequently and separately
contractual liability for UIM benefits.’ See in the district court on the grounds that
216 S.W.3d at 818-19. Brainard, as a matter of law, forecloses
The apparent conflict between Arnold, the accrual or ripening of any and all such
as modified by Murray, and Brainard, is causes of action arising from the handling
thereby unmistakable. Brainard contem- and adjustment of her claim for UIM ben-
plates the accrual of an obligation to pay a efits, and thereby renders such discovery
claim for UM/UIM benefits only after the both irrelevant and unlikely to lead to the
judicial handling and adjustment of a UM/ discovery of admissible evidence. Because
UIM claim by direct action, with the insur- Brainard did not expressly overrule either
er contesting coverage through the ex- Arnold or Murray and thereby foreclose
haustion of all appeals without any extra- the accrual or ripening of the common law
contractual liability exposure.’ Arnold, as bad faith cause of action asserted by Ment-
modified by Murray, contemplates the ac- zer due to State Farm’s alleged contractu-
erual of an obligation to pay UM/UIM al mishandling and maladjustment of her
benefits from the insurer’s contractual claim, we are bound by the doctrine of
handling and adjustment of the claim and stare decisis to hold that the district court
holds that forcing an insured to prosecute did not abuse its discretion by following
a direct action for benefits when the insur- the precedent of Arnold, as modified by
er’s liability is reasonably clear constitutes Murray, in entering an order compelling
a breach of its duty of good faith and fair such discovery, and we accordingly deny
dealing.’ the mandamus relief requested.®
2. Brainard also recognized a duty to pay with- adopt statutory “reasonably clear” standard
out resort to litigation if imposed by an agree- for common law bad faith cause of action);
ment between insurer and insured separate see also Boyte, 80 S.W.3d at 549 (recognizing
and distinct from the terms of the underlying “statutory standard is identical to the com-
policy. See 216 S.W.3d at 818-19. Since the mon-law bad faith standard”); Carter v. State
record in this proceeding reveals no such Farm Mut. Auto. Ins., 33 S.W.3d 369, 372
agreement, our analysis will address only the (Tex. App.—Fort Worth 2000, no pet.) (apply-
binding judgment requirement. ing “reasonably clear” standard in UM/UIM
context).
3. See Mid-Century Ins. Co. of Tex. v. Boyte, 80
S.W.3d 546, 548-49 (Tex. 2002) (holding that 5. We need not address the statutory extracon-
insurer has a right to appeal a judgment for tractual liability causes of action asserted by
UIM benefits without implicating any extra- Mentzer because all of her discovery requests
contractual liability). address State Farm's alleged mishandling and
maladjustment of her UIM claim, from which
4. See Universe Life Ins. v. Giles, 950 S.W.2d arise both her common law bad faith cause of
48, 55-56 (Tex. 1997) (modifying Arnold to action and her statutory extracontractual lia-
322 Tex. 614 SOUTH WESTERN REPORTER, 3d SERIES
IL. Factual and Procedural Background underlying motor vehicle accident involv-
On or about February 20, 2016, the car ing the vehicle driven by Rodriguez; (2)
in which Mentzer was riding as a front Mentzer was a “covered person” under the
seat passenger was involved in a motor policy at the time of the accident; (8) the
vehicle accident with a pickup truck driven policy limits for UM/UIM coverage pay-
by Robert Rodriguez. Mentzer suffered able by State Farm at the time of the
serious physical injuries as a result of the accident was $30,000; (4) the vehicle driven
accident. by Rodriguez was an “underinsured motor
On January 2, 2018, Mentzer filed a vehicle” as defined by the State Farm
direct action against State Farm in County policy at the time of the accident; (5) Rod-
Court at Law No. 2 of Tarrant County riguez was covered by a standard automo-
seeking a judgment for UIM benefits and bile liability policy at the time of the acci-
alleging the negligence of Rodriquez proxi- dent with policy limits of $50,055, which
mately caused her personal injuries in ex- had previously been tendered to Mentzer;
cess of his automobile liability coverage. and (6) the State Farm policy provided
Along with her original petition, Mentzer UIM coverage for past and future dam-
served written discovery in the form of ages at the time of the accident, including
requests for disclosure, requests for pro- (a) physical pain and suffering, (b) mental
duction, interrogatories, and requests for pain and suffering, (c) physical impair-
admissions. As part of her written discov- ment, (d) medical care expenses, and (e)
ery, Mentzer requested production of true lost wages. During the trial, on the record
and correct copies of her State Farm poli- and before the verdict, counsel for State
cy and the entirety of State Farm’s claim Farm further stipulated that Mentzer in-
file, as well as copies of all non-privileged curred past medical expenses in the
email messages, written communications, amount of $24,909.60 and past lost wages
records, or materials regarding Mentzer in in the amount of $6,631.20.
State Farm’s possession. Mentzer also
sought production of any and all policy and After the conclusion of the evidence on
procedure manuals for the training of January 16, 2019, the county court at law
State Farm adjusters in effect before the submitted a charge to the jury asking the
accident, and copies of any and all work following question: “What sum of money, if
papers or other documentation “used for any, paid now in cash, would fairly and
the purpose of estimating, calculating[,} or reasonably compensate Paula Mentzer for
formulating opinions regarding contingent her injuries, if any, that were proximately
liabilities” related to Mentzer’s direct ac- caused by the occurrence in question?”
tion. The jury shortly thereafter returned a
Beginning January 14, 2019, the county unanimous verdict for $157,550 in total
court at law conducted a trial of Mentzer’s damages, broken down for the following
direct. action for UIM benefits. Shortly elements submitted: $42,000 (past physical
before trial, the parties agreed to the fol- pain and suffering); $17,500 (future physi-
lowing evidentiary stipulations: (1) the eal pain and suffering); $27,300 (past men-
State Farm policy made the basis of Ment- tal anguish); $17,200 (future mental an-
zer’s direct action for UIM benefits was in guish); $34,650 (past physical impairment);
full force and effect at the time of the and $18,900 (future physical impairment).
bility cause of action. If her discovery re- mer, they are equally permissible in support
quests are permissible in support of the for- of the latter.
IN RE STATE FARM MUT. AUTO. INS. CO. Tex. 323
Cite
as 614 S.W.3d 316 (TexApp.—Fort Worth 2020)
When combined with the amounts stipu- tories asked for the specific reason State
lated for past medical expenses and past Farm did not offer Mentzer its full policy
lost wages, the total amount of damages limits prior to trial in the county court at
sustained by Mentzer as a result of the law and, if State Farm believed any of her
accident was $189,090.80. claims in that litigation were doubtful, why
On March 13, 2019, before entry of a it so believed. Finally, among others,
final judgment in the county court at law, Mentzer requested that State Farm admit
Mentzer filed a second lawsuit against or deny that it refused to offer the policy
State Farm in the 158rd District Court of limits applicable to the county court at law
Tarrant County asserting causes of action litigation “because regardless of the out-
for breach of the common law duty of good come of trial, [it] believed it would only
faith and fair dealing, breach of contract, have to pay the applicable policy limits.”
violations of Chapters 541 and 542 of the On May 3, 2019, State Farm filed a
Texas Insurance Code, and violations of general denial and demand for a jury trial
the Deceptive Trade Practices Act. On in the district court.
April 15, 2019, Mentzer served State Farm On May 30, 2019, based upon the stipu-
with her original petition by certified mail, lations of the parties and the verdict of the
including service of written discovery in jury, and crediting all prior payments
the form of requests for disclosure, re- made to Mentzer on behalf of Rodriguez,
quests for production, interrogatories, and the county court at law entered a final
requests for admissions. judgment against State Farm for policy
Although some of the written discovery limits of $30,000 plus post-judgment inter-
overlapped with the written discovery est and costs of court. State Farm ten-
served in the county court at law, most. dered payment of the judgment on June 6,
sought information and documentation 2019. Mentzer executed a Satisfaction and
specific to State Farm’s adjustment of Release of Judgment acknowledging pay-
Mentzer’s claim for UIM benefits. For ex- ment of the county court at law’s judgment
ample, Mentzer sought production of all on July 22, 2019, but expressly denied that
documents showing a valuation or basis for the payment in any way resolved the ex-
valuation sent to or from any adjuster or tracontractual liability claims asserted in
adjusters handling the file for State Farm the district court litigation.
in the county court at law litigation. She Meanwhile, on June 18, 2019, State
also sought the production of all docu- Farm filed a motion for protection in the
ments, electronic files, or reports generat- district court arguing that the written dis-
ed regarding her claim after her sworn covery served therein by Mentzer was
deposition in the county court at law litiga- “premature” and unduly burdensome and
tion. expensive. After recounting the factual and
Interrogatories specifically inquired into procedural background of Mentzer’s UIM
how and whether the claim that Rodriguez claim in the county court at law, including
was drinking alcohol at the time of the its payment of the final judgment, State
accident and had fled the scene of the Farm urged the district court to disallow
accident affected the valuation of Ment- or stay all discovery until State Farm had
zer’s UIM claim. Another interrogatory an opportunity to establish its payment of
asked specifically how Mentzer’s claim for the final judgment in the county court at
UIM benefits had been evaluated for dam- law as foreclosing, as a matter of law, the
ages by State Farm. Still other interroga- accrual or ripening of the common law bad
324 Tex. 614 SOUTH WESTERN REPORTER, 3d SERIES
faith and statutory extracontractual liabili- urging identical grounds for summary
ty causes of action asserted by Mentzer: judgment.
In the instant case, the benefits of
On March 24, 2020, the district court
allowing this discovery to go forward at
entered a scheduling order setting the
this time are nonexistent. As stated ear-
amended traditional motion for hearing on
lier, because State Farm timely paid the
April 23, 2020, with deadlines for respons-
judgment in the [county court at law],
es and objections by the parties.
State Farm has satisfied its obligations
to Mentzer, her breach of contract and On April 13, 2020, Mentzer timely filed a
extra-contractual causes of action will response to both State Farm’s amended
not accrue or become ripe, and having to traditional motion and its motion for pro-
respond to the written discovery re- tection, including a motion to compel, ar-
quests or conduct any additional discov- guing that, separate and distinct from its
ery will have been a waste of time and contractual duties, State Farm owed com-
resources. At the very least, the discov- mon law and statutory duties not to deny
ery should be stayed until State Farm or delay payment on Mentzer’s UIM claim
has had an opportunity to file and pres- when its liability was reasonably clear
ent its summary judgment motion to the without the necessity of either a trial or a
Court, as the discovery will not be nec- judgment in the county court at law, and
essary for the Court to decide the legal that State Farm breached those duties by
issue of whether payment of the delaying payment of policy limits previous-
Final Judgment in the [county court at. ly demanded by Mentzer on November 2,
law] will eliminate the need to litigate 2017, until after the entry of the final
the instant case. No prejudice will come judgment. More specifically, as evidence of
to Plaintiff since the written discovery this distinct duty, Mentzer quoted Section
ean be obtained at a later time if State 542.003(5) of the Texas Insurance Code,
Farm is denied the relief it will seek by which specifically defines an unfair claims
way of a motion for summary judgment. settlement practice to include “compelling
after the payment of the Final Judg- a policyholder to institute a suit to recover
ment. an amount due under a policy by offering
On July 1, 2019, State Farm filed a substantially less than the amount ulti-
traditional motion for summary judgment mately recovered in a suit brought by the
asserting that its timely payment of the policyholder.” Moreover, Mentzer distin-
final judgment entered in the county court guished Brainard on the basis that it did
at law barred the breach of contract and not expressly foreclose extracontractual li-
the extracontractual liability causes of ac- ability through payment of a judgment for
tion, both common law and statutory, al- UIM benefits, as urged by State Farm,
leged by Mentzer. More specifically, and and further argued that her extracontrac-
relying on Brainard and its progeny, State tual liability causes of action had both ac-
Farm argued that, until the entry of the crued and ripened before the rendition of
final judgment by the county court at law, the judgment so paid, citing state and
its liability for Mentzer’s UIM claim was federal authorities in support thereof, in-
not reasonably clear and that it had a cluding Arnold.
reasonable basis for delaying payment of
her claim until after the entry of the final On April 15, 2020, Mentzer filed a veri-
judgment. On January 28, 2020, State fied motion to continue the hearing on
Farm filed an amended traditional motion State Farm’s amended traditional motion
IN RE STATE FARM MUT. AUTO. INS. CO. Tex. 325
Cite as 614 $.W.3d 316 (Tex.App.—Fort Worth 2020)
for summary judgment because State On May 4, 2020, State Farm filed a
Farm had yet to respond to any of the reply in support of its motion for protec-
written discovery she sought under cover tion and in response to Mentzer’s motion
of its motion for protection and because to compel, arguing that, because its pay-
she needed to obtain such discovery in ment of the final judgment in the county
order to respond to State Farm’s amended court at law was an undisputed fact and its
traditional motion for summary judgment. amended traditional motion for summary
On April 16, 2020, Mentzer filed a virtually judgment demonstrated that, as a matter
identical amended response, but added a of law, its payment foreclosed the accrual
more specific citation to Arnold observing or ripening of any of Mentzer’s extracon-
it to have been “a UIM bad faith case tractual liability causes of action, the writ-
[holding] that the insured produced suffi- ten discovery she sought was irrelevant
cient summary judgment evidence to raise and a waste of time and resources.
material fact issues about whether the in- On May 8, 2020, the district court en-
surer lacked a reasonable basis for refus- tered an order compelling State Farm to
ing to pay the insured’s claim and that, respond to Mentzer’s written discovery re-
despite the insurer’s actual knowledge of quests. Although the order did not address
that fact, it forced the insured to a trial State Farm’s motion for protection, it ef-
before the insurer would pay the claim.” fectively denied the relief sought therein.
On April 16, 2020, Mentzer filed her
State Farm immediately sought manda-
First Amended Petition in the district
mus relief and an emergency stay pending
court, maintaining her causes of action for
resolution of the issues presented by its
breach of the common law duty of good
petition. We stayed the district court’s or-
faith and fair dealing and violations of the
der to permit our consideration of State
Texas Insurance Code, but withdrawing
Farm’s petition.
her cause of action for breach of contract.
Attached to the amended pleading, she
IL Standard of Review
included written discovery identical to that
served with her original petition. {1,2] Mandamus is both an extraordi-
nary remedy and a discretionary one. In re
On April 20, 2020, State Farm respond-
Garza, 544 S.W.3d 836, 840 (Tex. 2018)
ed to Mentzer’s motion for continuance by
(orig. proceeding). This court may grant
urging its denial because she failed to
mandamus relief from a discovery order
identify any discovery that would address
only when (1) the trial court’s decision is so
the legal issues presented by its amended
arbitrary and unreasonable that it
traditional motion. On the same date, State
amounts to a clear and prejudicial error of
Farm filed a reply in support of its amend-
law and (2) the relator has no adequate
ed traditional motion, arguing that the fed-
remedy by appeal. In re State Farm
eral authorities upon which Mentzer relied
Lloyds, No. 02-20-00163-CV, 2020 WL
antedated the decision in Brainard and
that to the extent any state authority re-
5242414, at *2 (Tex. App—Fort Worth
Sept. 3, 2020, orig. proceeding [mand.
lied upon them, they too were inapposite.
pending]) (mem. op.) (citing In re State
State Farm’s reply completely ignored
Farm Lloyds, 520 S.W.3d 595, 604 (Tex.
Mentzer’s reference to Arnold.
2017) (orig. proceeding).
On April 23, 2020, the district court en-
tered an order granting Mentzer’s motion [3-5] In determining whether the trial
for continuance. ourt abused its discretion, we may not
326 Tex. 614 SOUTH WESTERN REPORTER, 3d SERIES
substitute our judgment for the trial ILL. Scope of Discovery in Direct
court’s determination of factual or other Actions for UM/UIM
discretionary matters. Id. But because a Benefits
trial court has no discretion in determining
[9,10] UM/UIM coverage provides
what the law is or in applying the law,
policy benefits to the insured of all
even when the law is unsettled, we review
amounts that the insured is legally entitled
its decisions on questions of law and appli-
to recover as damages from owners or
cation-of-law-to-facts questions much less
operators of uninsured or underinsured
deferentially. Jd. A trial court abuses its
motor vehicles because of bodily injury or
discretion by clearly failing to correctly
property damage. See Tex. Ins. Code Ann.
analyze or apply the law. Id.
§§ 1952.105-.108. To recover UM/UIM
[6] The scope of discovery is generally benefits under a standard automobile lia-
within the trial court’s diseretion so long bility policy, an insured must show (1) that
as a discovery order does not exceed what. her policy included UM/UIM coverage, (2)
the rules of civil procedure permit. See that the uninsured or underinsured motor-
Tex. R. Civ. P. 192.4; State Farm Lloyds, ist negligently caused the motor vehicle
520 S.W.8d at 604; In re CSX Corp., 124 accident that resulted in the covered dam-
S.W.3d 149, 152 (Tex. 2003) (orig. proceed- ages, (8) the amount of her covered dam-
ing). To be discoverable, evidence must be ages, and (4) that the UM/UIM automobile
relevant and nonprivileged, but it need not liability coverage is either non-existent or
be admissible if it is reasonably calculated deficient for purposes of compensating her
to lead to the discovery of admissible evi- covered damages. See In re Liberty Cty.
dence. See Tex. R. Civ. P. 192.3(a); In re Mut. Ins., 587 S.W.3d 214, 220 (Tex.
Natl Lloyds Ins., 532 S.W.38d 794, 808 App.—Houston [1st Dist.] 2017, orig. pro-
(Tex. 2017) (orig. proceeding). Thus, al- ceeding), Because a claim for UM/UIM
though the permissible scope of discovery benefits uniquely incorporates the liability
is generally broad, a discovery request
Preview
316 Tex. 614 SOUTH WESTERN REPORTER, 3d SERIES op.); Asset Protection & Sec. Servs. v. Ar- prosecute a common-law bad faith cause of mijo, 570 S.W.3d 377, 385-86 (Tex. App— action against her insurer, including seek- El Paso 2019, no pet.); ID/Guerra LP v. ing discovery reasonably calculated to lead Tex. Workforce Comm’n, 317 S.W.3d 898, to the discovery of admissible evidence. 901-03 (Tex. App.—Austin 2010, no pet.). Petition denied. We thus overrule Mother’s four issues. VI. Conclusion 1. Mandamus <1, Having overruled Mother's four issues, Mandamus is both an extraordinary we affirm the trial court’s judgment termi- remedy and a discretionary one. nating Mother’s parental rights. We dis- 2. Mandamus ¢4(4), 32 miss Father’s appeal for want of jurisdie- tion. The Court of Appeals may grant man- damus relief from a discovery order only when (1) the trial court’s decision is so arbitrary and unreasonable that it amounts to a clear and prejudicial error of law and (2) the relator has no adequate remedy by appeal. 3. Appeal and Error ¢=3143 IN RE STATE FARM MUTUAL In determining whether the trial court AUTOMOBILE INSURANCE abused its discretion, the Court of Appeals COMPANY, Relator may not substitute its judgment for the No. 02-20-00144-CV trial court’s determination of factual or other discretionary matters. Court of Appeals of Texas, Fort Worth. 4, Appeal and Error €3135, 3185 Even when the law is unsettled, the Delivered: November 19, 2020 Court of Appeals reviews a trial court’s Background: Insured who had successful- decisions on questions of law and applica- ly prosecuted her direct action against her tion-of-law-to-facts questions much less insurer for underinsured motorists (UIM) deferentially that its determination of fac- benefits in county court at law brought an tual or other discretionary matters. action against her insurer in district court, asserting common-law bad faith and statu- 5. Appeal and Error €=3141, 3170 tory extracontractual liability damages. A trial court abuses its discretion by The 158rd District Court, Tarrant County, clearly failing to correctly analyze or apply Susan Heygood-McOoy, J., granted in- the law. sured’s motion to compel discovery related to insurer’s alleged mishandling and mal- 6. Pretrial Procedure ¢=27.1 adjustment of her claim. Insurer petitioned Although the permissible scope of dis- for mandamus relief. covery is generally broad, a discovery re- Holdings: As a matter of apparent first quest must show a reasonable expectation impression, the Court of Appeals, Birdwell, of obtaining information that will aid the J., held that insured who had succeeded in dispute’s resolution. Tex. R. Civ. P. her direct action for UIM benefits could 192.3(a), 192.4. IN RE STATE FARM MUT. AUTO. INS. CO. Tex. 317 Cite as 614 $.W.3d 316 (TexApp.—Fort Worth 2020) 7. Mandamus €4(4), 32 11, Pretrial Procedure 32 Even when a trial court abuses its The only discovery permissible in a discretion in making a discovery ruling, direct action for uninsured/underinsured the Court of Appeals will not intervene by motorist (UM/UIM) benefits is that rea- way of mandamus if the relator has an sonably calculated to lead to the discovery adequate remedy by appeal. of evidence admissible in the underlying 8. Mandamus 4(4), 32 negligence cause of action; information Appeal is an inadequate remedy for a concerning the insurer’s handling or ad- trial court’s abuse of discretion in making justment of the claim is not generally dis- a discovery ruling, for mandamus pur- coverable. Tex. Ths. Code Ann. poses, when a discovery order compels §§ 1952.105 - 1952.108. production beyond the rules of civil proce- 12. Insurance €3379 dure. Pretrial Procedure 381 9, Insurance 2772 As a matter of apparent first impres- To recover uninsured/underinsured sion, injured insured who had successfully motorist (UM/UIM) benefits under a stan- prosecuted her direct action for underin- dard automobile liability policy, an insured sured motorists (UIM) benefits to a judg- must show (1) that her policy ineluded ment binding upon and payable by her UM/UIM coverage, (2) that the uninsured insurer could prosecute a common-law bad or underinsured motorist negligently faith cause of action against her insurer, caused the motor vehicle accident that re- including seeking information and docu- sulted in the covered damages, (3) the mentation reasonably calculated to lead to amount of her covered damages, and (4) the discovery of evidence admissible to that the UM/UIM automobile liability cov- demonstrate insurer’s alleged mishandling erage is either non-existent or deficient for and maladjustment of her UIM claim; in- purposes of compensating her covered surer’s timely payment of policy limits damages. Tex. Ins. Code Ann. judgment did not foreclose the acerual or §§ 1952.105 - 1952.108. ripening of insured’s cause of action for 10. Insurance 2790, 2816 violation of insurer’s duty of good faith and A claim for uninsured/underinsured fair dealing. motorist (UM/UIM) benefits incorporates the liability and damages elements of the 13. Insurance 3436, 3457, 3549(3) negligence cause of action against the Only when the insured tortfeasor is uninsured or underinsured motorist, and finally agreed or adjudicated liable to the there is ordinarily no jury question as to injured third party can the latter sue the whether the policy covers either the in- former’s automobile liability insurer direct- sured or the vehicle in the event of a ly, and only then by asserting a contractu- verdict of liability and damages sufficient al cause of action as a third-party benefi- to invoke coverage; thus, the liability and ciary of the liability policy. damages questions submitted in a direct action against the insurer are identical to 14. Insurance €3549(3) those that would be submitted in the negli- An injured party’s contractual third- gence cause of action against the unin- party beneficiary cause of action against a sured or underinsured motorist. Tex. Ins. tortfeasor’s automobile liability insurer ac- Code Ann. $§ 1952.105 - 1952.108. crues with the entry of a final, binding 318 Tex. 614 SOUTH WESTERN REPORTER, 3d SERIES judgment of liability and damages in the 21, Insurance €=3542 underlying negligence cause of action An injured insured possesses a negli- against the insured tortfeasor. gence cause of action against the unin- 15. Evidence >43(4) sured or underinsured motorist (UM/UIM) A court of appeals may examine and which accrues or ripens at the time of the take judicial notice of the original record in underlying motor vehicle accident; she proceedings before the supreme court and does not possess a negligence cause of the court of criminal appeals through a action against her insurer, and as a result, search of their respective websites. she may only obtain a binding and enforce- able judgment on her negligence cause of 16. Action 27(1) action against the uninsured or underin- The cause of action against an insurer sured motorist, not her insurer. for uninsured/underinsured motorist (UM/UIM) benefits is ex contractu in na- 22, Action €27(1) ture, not ex delicto. Insurance €3541 17. Limitation of Actions €=43 The cause of action to be adjudicated A cause of action generally accrues, and the statute of limitations begins to between insured and insurer in a direct run, when facts come into existence that action for uninsured or underinsured mo- authorize a claimant to seek a judicial rem- torist (UM/UIM) benefits is contractual in edy. nature. 18. Action 6, 13 23. Insurance 3350 Ripeness, like standing, is a threshold A Stowers cause of action arises when issue that implicates subject matter juris- an insurer negligently fails to settle a diction, and like standing, emphasizes the claim covered by an applicable policy with- need for a concrete injury for a justiciable in policy limits. claim to be presented. 19. Action 6 24, Insurance 3350 Under the ripeness doctrine, the court To prove a Stowers claim, the insured msiders whether, at the time a lawsuit is must establish that (1) the claim is within filed, the facts are sufficiently developed so the scope of coverage, (2) a demand was that an injury has occurred or is likely to made that was within policy limits, and (3) occur, rather than being contingent or re- the demand was such that an ordinary, mote. prudent insurer would have accepted it, 20. Constitutional Law <=2604 considering the likelihood and degree of Courts €=24 the insured’s potential exposure to an ex- An insurer and insured cannot simply cess judgment. agree to allow the trial court to adjust the 25. Limitation of Actions ¢55(2) claim for them to confer subject matter jurisdiction; absent an aecrued or ripened A Stowers cause of action accrues cause of action, any adjudication of a cov- when a judgment establishes the negli- erage dispute between an insurer and in- gence of the insurer in failing to reason- sured will result in an impermissible advi- ably settle a third-party liability claim sory opinion. within policy limits. IN RE STATE FARM MUT. AUTO. INS. CO. Tex. 319 Cite as 614 S.W.3d 316 (Tex.App.—Fort Worth 2020) 26. Limitation of Actions ¢=46(6) 32. Courts 91(1) The common-law duty of good faith It is not the function of a court of and fair dealing is subject to actionable appeals to abrogate or modify established breach when an insurer unreasonably de- precedent; that function lies solely with the nies or delays payment of a uninsured or Supreme Court. underinsured motorist (UM/UIM) claim 33. Courts ¢91(1) and thereby forces the insured to file and Generally, the doctrine of “stare deci- successfully prosecute a direct action to sis” dictates that once the Supreme Court judgment. announces a proposition of law, the deci- 27. Limitation of Actions ¢=46(6) sion is considered binding precedent. An insured’s breach of contract cause See publication Words and Phrases for other judicial constructions and of action accrues when the insurer denies definitions. the claim, thereby compelling a direct ac- tion, 34. Courts 91(1) Only the supreme court has the au- 28. Courts 89 thority to reevaluate, modify, or abrogate Because the accrual or ripening of a judicially created doctrines. cause of action is a question of law, the Court of Appeals must look to the doctrine 35. Courts ©=91(1) of stare decisis to resolve a conflict, if If a precedent of the supreme court possible. has direct application in a case, yet ap- pears to rest on reasons rejected in some 29. Courts 89 other line of decisions, the lower court The doctrine of stare decisis governs should follow the case which directly con- only the determination of questions of law trols, leaving to the supreme court the and its observance does not depend upon prerogative of overruling its own decisions. identity of parties. 30. Courts 90(1), 91(1) Original Proceeding, 158rd_ District After a principle, rule or proposition Court of Tarrant County, Texas, Trial of law has been squarely decided by the Court No, 153-306745-19, HON. SUSAN Supreme Court, or the highest court of the H. MCCOY, Judge state having jurisdiction of the particular ATTORNEYS FOR RELATOR: MEL- ease, the decision is aceepted as a binding ISSA A. LORBER, ENOCK KEVER precedent by the same court or other PLLC, AUSTIN, TEXAS, ARMANDO courts of lower rank when the very point is DE DIEGO, THE LAW OFFICE OF AR- again presented in a subsequent suit be- MANDO DE DIEGO, P.C., DALLAS, tween different parties. TEXAS. 31. Courts 89 ATTORNEYS FOR REAL PARTY IN As a general rule, the determination INTEREST: KIRK PITTARD, LANA P. of a disputed issue of fact is not conclusive, BEVERLY, DURHAM, PITTARD & under the doctrine of stare decisis, when SPALDING, LLP, DALLAS, TEXAS, the same issue later arises in another case STEVEN C. LAIRD, SETH D. MCCLOS- between persons who are strangers to the KEY, LAW OFFICES OF STEVEN C. record in the first suit. LAIRD, PC. 320 Tex. 614 SOUTH WESTERN REPORTER, 3d SERIES Before Sudderth, C.J.; Birdwell and coverage obtains a binding judgment Bassel, JJ. against the insurer for benefits, the pay- ment of which the insurer had no reason- OPINION able basis to deny or delay. 725 S.W.2d Opinion by Justice Birdwell 165, 166-67 (Tex. 1987). In so holding, the Arnold court employed an accrual analysis We address in this original proceeding a that clearly contemplated a contractual ob- facially unremarkable discovery dispute ligation to pay a claim for UM benefits which nevertheless has revealed an appar- without the insured having to file and suc- ent conflict in this state’s jurisprudence cessfully prosecute a direct action to ob- concerning when and the manner in which tain a binding judgment for benefits a cause of action for uninsured/underin- against the insurer. See id. sured motorist benefits accrues or ripens. The conflict arises due to the unique incor- Moreover, in 1990, in Murray v. San poration of the elements of a negligence Jacinto Agency, the supreme court modi- cause of action against the uninsured or fied Arnold to hold that an insurer’s com- underinsured motorist into the contractual mon law cause of action for an insurer's terms of the UM/UIM coverage provided breach of its duty of good faith and fair by the standard automobile liability policy. dealing accrues on the date the insurer And the two lines of precedent with which denies the UM/UIM claim, not the date of the district court grappled treat an insur- the final resolution of the underlying direct er’s obligation to pay covered benefits as action. 800 S.W.2d 826, 828-29 (Tex. 1990). determined by either (1) the contractwal Consistent with Arnold, the accrual analy- handling and adjustment! of a claim by sis in Murray clearly contemplated a con- the insurer, independent of and without tractual obligation to pay such a claim resort to the filing and successful prosecu- without the insured having to file and suc- tion of a lawsuit by the insured to a bind- cessfully prosecute a direct action to a ing judgment against the insurer, or (2) binding judgment for benefits against the the judicial handling and adjustment of a insurer. See id. claim through the filing and successful The second line of precedent flows from prosecution of a lawsuit by the insured to a a presentment analysis that generally fore- judgment binding upon the insurer. closes the recovery of attorney’s fees in The first line of precedent flows from direct actions for UM/UIM benefits. In the recognition of the common law duty of 2006, in Brainard v. Trinity Universal good faith and fair dealing in the UM/UIM Insurance, the supreme court held, with- context. In 1987, in Arnold v. National out reference to either Arnold or Murray, County Mutual Fire Insurance, the Su- that, because an insurer is under no con- preme Court of Texas held that a common tractual duty to pay benefits under a stan- law cause of action for an insurer’s breach dard automobile liability policy providing of its duty of good faith and fair dealing UIM coverage unless and until the insured accrues when the insured under a standard obtains a judgment for such benefits that automobile liability policy providing UM the insurer is thereby bound to pay, 1, “Insurance claims adjustment or claims counts, Ins. Servs.); see Vail v. Tex. Farm processing [means a]ny activities to supervise, Bureau Mut. Ins. Co., 754 $.W.2d 129, 132 handle, investigate, pay, settle, or adjust (Tex. 1988) (‘The business of insurance in- claims or losses.” 34 Tex. Admin. Code cludes the investigation and adjustment of § 3.355(a)(8) (2019) (Comptroller of Pub. Ac- claims and losses.”). IN RE STATE FARM MUT. AUTO. INS. CO. Tex. 321 Cite as 614 S.W.3d 316 (Tex.App—Fort Worth 2020) entment of the claim requires the rendition Having already paid a binding “policy of such a judgment. 216 S.W.8d 809, 818- limits” judgment for UIM benefits to its 19 (Tex. 2006); see also State Farm Mut. insured, Real Party in Interest, Paula C. Auto. Ins. v. Nickerson, 216 S.W.3d 823, Mentzer, at the conclusion of her direct 824 (Tex. 2006); State Farm Mut. Auto. action in the county court at law, Relator, Ins. v. Norris, 216 S.W.3d 819, 822-23 State Farm Mutual Automobile Insurance (Tex. 2006). In so holding, the presentment Company seeks mandamus relief from dis- analysis in Brainard contemplated the in- covery propounded by Mentzer in support sured filing and successfully prosecuting a of common law bad faith and statutory direct action to a binding judgment against extracontractual liability causes of action the insurer as a condition precedent to she brought subsequently and separately contractual liability for UIM benefits.’ See in the district court on the grounds that 216 S.W.3d at 818-19. Brainard, as a matter of law, forecloses The apparent conflict between Arnold, the accrual or ripening of any and all such as modified by Murray, and Brainard, is causes of action arising from the handling thereby unmistakable. Brainard contem- and adjustment of her claim for UIM ben- plates the accrual of an obligation to pay a efits, and thereby renders such discovery claim for UM/UIM benefits only after the both irrelevant and unlikely to lead to the judicial handling and adjustment of a UM/ discovery of admissible evidence. Because UIM claim by direct action, with the insur- Brainard did not expressly overrule either er contesting coverage through the ex- Arnold or Murray and thereby foreclose haustion of all appeals without any extra- the accrual or ripening of the common law contractual liability exposure.’ Arnold, as bad faith cause of action asserted by Ment- modified by Murray, contemplates the ac- zer due to State Farm’s alleged contractu- erual of an obligation to pay UM/UIM al mishandling and maladjustment of her benefits from the insurer’s contractual claim, we are bound by the doctrine of handling and adjustment of the claim and stare decisis to hold that the district court holds that forcing an insured to prosecute did not abuse its discretion by following a direct action for benefits when the insur- the precedent of Arnold, as modified by er’s liability is reasonably clear constitutes Murray, in entering an order compelling a breach of its duty of good faith and fair such discovery, and we accordingly deny dealing.’ the mandamus relief requested.® 2. Brainard also recognized a duty to pay with- adopt statutory “reasonably clear” standard out resort to litigation if imposed by an agree- for common law bad faith cause of action); ment between insurer and insured separate see also Boyte, 80 S.W.3d at 549 (recognizing and distinct from the terms of the underlying “statutory standard is identical to the com- policy. See 216 S.W.3d at 818-19. Since the mon-law bad faith standard”); Carter v. State record in this proceeding reveals no such Farm Mut. Auto. Ins., 33 S.W.3d 369, 372 agreement, our analysis will address only the (Tex. App.—Fort Worth 2000, no pet.) (apply- binding judgment requirement. ing “reasonably clear” standard in UM/UIM context). 3. See Mid-Century Ins. Co. of Tex. v. Boyte, 80 S.W.3d 546, 548-49 (Tex. 2002) (holding that 5. We need not address the statutory extracon- insurer has a right to appeal a judgment for tractual liability causes of action asserted by UIM benefits without implicating any extra- Mentzer because all of her discovery requests contractual liability). address State Farm's alleged mishandling and maladjustment of her UIM claim, from which 4. See Universe Life Ins. v. Giles, 950 S.W.2d arise both her common law bad faith cause of 48, 55-56 (Tex. 1997) (modifying Arnold to action and her statutory extracontractual lia- 322 Tex. 614 SOUTH WESTERN REPORTER, 3d SERIES IL. Factual and Procedural Background underlying motor vehicle accident involv- On or about February 20, 2016, the car ing the vehicle driven by Rodriguez; (2) in which Mentzer was riding as a front Mentzer was a “covered person” under the seat passenger was involved in a motor policy at the time of the accident; (8) the vehicle accident with a pickup truck driven policy limits for UM/UIM coverage pay- by Robert Rodriguez. Mentzer suffered able by State Farm at the time of the serious physical injuries as a result of the accident was $30,000; (4) the vehicle driven accident. by Rodriguez was an “underinsured motor On January 2, 2018, Mentzer filed a vehicle” as defined by the State Farm direct action against State Farm in County policy at the time of the accident; (5) Rod- Court at Law No. 2 of Tarrant County riguez was covered by a standard automo- seeking a judgment for UIM benefits and bile liability policy at the time of the acci- alleging the negligence of Rodriquez proxi- dent with policy limits of $50,055, which mately caused her personal injuries in ex- had previously been tendered to Mentzer; cess of his automobile liability coverage. and (6) the State Farm policy provided Along with her original petition, Mentzer UIM coverage for past and future dam- served written discovery in the form of ages at the time of the accident, including requests for disclosure, requests for pro- (a) physical pain and suffering, (b) mental duction, interrogatories, and requests for pain and suffering, (c) physical impair- admissions. As part of her written discov- ment, (d) medical care expenses, and (e) ery, Mentzer requested production of true lost wages. During the trial, on the record and correct copies of her State Farm poli- and before the verdict, counsel for State cy and the entirety of State Farm’s claim Farm further stipulated that Mentzer in- file, as well as copies of all non-privileged curred past medical expenses in the email messages, written communications, amount of $24,909.60 and past lost wages records, or materials regarding Mentzer in in the amount of $6,631.20. State Farm’s possession. Mentzer also sought production of any and all policy and After the conclusion of the evidence on procedure manuals for the training of January 16, 2019, the county court at law State Farm adjusters in effect before the submitted a charge to the jury asking the accident, and copies of any and all work following question: “What sum of money, if papers or other documentation “used for any, paid now in cash, would fairly and the purpose of estimating, calculating[,} or reasonably compensate Paula Mentzer for formulating opinions regarding contingent her injuries, if any, that were proximately liabilities” related to Mentzer’s direct ac- caused by the occurrence in question?” tion. The jury shortly thereafter returned a Beginning January 14, 2019, the county unanimous verdict for $157,550 in total court at law conducted a trial of Mentzer’s damages, broken down for the following direct. action for UIM benefits. Shortly elements submitted: $42,000 (past physical before trial, the parties agreed to the fol- pain and suffering); $17,500 (future physi- lowing evidentiary stipulations: (1) the eal pain and suffering); $27,300 (past men- State Farm policy made the basis of Ment- tal anguish); $17,200 (future mental an- zer’s direct action for UIM benefits was in guish); $34,650 (past physical impairment); full force and effect at the time of the and $18,900 (future physical impairment). bility cause of action. If her discovery re- mer, they are equally permissible in support quests are permissible in support of the for- of the latter. IN RE STATE FARM MUT. AUTO. INS. CO. Tex. 323 Cite as 614 S.W.3d 316 (TexApp.—Fort Worth 2020) When combined with the amounts stipu- tories asked for the specific reason State lated for past medical expenses and past Farm did not offer Mentzer its full policy lost wages, the total amount of damages limits prior to trial in the county court at sustained by Mentzer as a result of the law and, if State Farm believed any of her accident was $189,090.80. claims in that litigation were doubtful, why On March 13, 2019, before entry of a it so believed. Finally, among others, final judgment in the county court at law, Mentzer requested that State Farm admit Mentzer filed a second lawsuit against or deny that it refused to offer the policy State Farm in the 158rd District Court of limits applicable to the county court at law Tarrant County asserting causes of action litigation “because regardless of the out- for breach of the common law duty of good come of trial, [it] believed it would only faith and fair dealing, breach of contract, have to pay the applicable policy limits.” violations of Chapters 541 and 542 of the On May 3, 2019, State Farm filed a Texas Insurance Code, and violations of general denial and demand for a jury trial the Deceptive Trade Practices Act. On in the district court. April 15, 2019, Mentzer served State Farm On May 30, 2019, based upon the stipu- with her original petition by certified mail, lations of the parties and the verdict of the including service of written discovery in jury, and crediting all prior payments the form of requests for disclosure, re- made to Mentzer on behalf of Rodriguez, quests for production, interrogatories, and the county court at law entered a final requests for admissions. judgment against State Farm for policy Although some of the written discovery limits of $30,000 plus post-judgment inter- overlapped with the written discovery est and costs of court. State Farm ten- served in the county court at law, most. dered payment of the judgment on June 6, sought information and documentation 2019. Mentzer executed a Satisfaction and specific to State Farm’s adjustment of Release of Judgment acknowledging pay- Mentzer’s claim for UIM benefits. For ex- ment of the county court at law’s judgment ample, Mentzer sought production of all on July 22, 2019, but expressly denied that documents showing a valuation or basis for the payment in any way resolved the ex- valuation sent to or from any adjuster or tracontractual liability claims asserted in adjusters handling the file for State Farm the district court litigation. in the county court at law litigation. She Meanwhile, on June 18, 2019, State also sought the production of all docu- Farm filed a motion for protection in the ments, electronic files, or reports generat- district court arguing that the written dis- ed regarding her claim after her sworn covery served therein by Mentzer was deposition in the county court at law litiga- “premature” and unduly burdensome and tion. expensive. After recounting the factual and Interrogatories specifically inquired into procedural background of Mentzer’s UIM how and whether the claim that Rodriguez claim in the county court at law, including was drinking alcohol at the time of the its payment of the final judgment, State accident and had fled the scene of the Farm urged the district court to disallow accident affected the valuation of Ment- or stay all discovery until State Farm had zer’s UIM claim. Another interrogatory an opportunity to establish its payment of asked specifically how Mentzer’s claim for the final judgment in the county court at UIM benefits had been evaluated for dam- law as foreclosing, as a matter of law, the ages by State Farm. Still other interroga- accrual or ripening of the common law bad 324 Tex. 614 SOUTH WESTERN REPORTER, 3d SERIES faith and statutory extracontractual liabili- urging identical grounds for summary ty causes of action asserted by Mentzer: judgment. In the instant case, the benefits of On March 24, 2020, the district court allowing this discovery to go forward at entered a scheduling order setting the this time are nonexistent. As stated ear- amended traditional motion for hearing on lier, because State Farm timely paid the April 23, 2020, with deadlines for respons- judgment in the [county court at law], es and objections by the parties. State Farm has satisfied its obligations to Mentzer, her breach of contract and On April 13, 2020, Mentzer timely filed a extra-contractual causes of action will response to both State Farm’s amended not accrue or become ripe, and having to traditional motion and its motion for pro- respond to the written discovery re- tection, including a motion to compel, ar- quests or conduct any additional discov- guing that, separate and distinct from its ery will have been a waste of time and contractual duties, State Farm owed com- resources. At the very least, the discov- mon law and statutory duties not to deny ery should be stayed until State Farm or delay payment on Mentzer’s UIM claim has had an opportunity to file and pres- when its liability was reasonably clear ent its summary judgment motion to the without the necessity of either a trial or a Court, as the discovery will not be nec- judgment in the county court at law, and essary for the Court to decide the legal that State Farm breached those duties by issue of whether payment of the delaying payment of policy limits previous- Final Judgment in the [county court at. ly demanded by Mentzer on November 2, law] will eliminate the need to litigate 2017, until after the entry of the final the instant case. No prejudice will come judgment. More specifically, as evidence of to Plaintiff since the written discovery this distinct duty, Mentzer quoted Section ean be obtained at a later time if State 542.003(5) of the Texas Insurance Code, Farm is denied the relief it will seek by which specifically defines an unfair claims way of a motion for summary judgment. settlement practice to include “compelling after the payment of the Final Judg- a policyholder to institute a suit to recover ment. an amount due under a policy by offering On July 1, 2019, State Farm filed a substantially less than the amount ulti- traditional motion for summary judgment mately recovered in a suit brought by the asserting that its timely payment of the policyholder.” Moreover, Mentzer distin- final judgment entered in the county court guished Brainard on the basis that it did at law barred the breach of contract and not expressly foreclose extracontractual li- the extracontractual liability causes of ac- ability through payment of a judgment for tion, both common law and statutory, al- UIM benefits, as urged by State Farm, leged by Mentzer. More specifically, and and further argued that her extracontrac- relying on Brainard and its progeny, State tual liability causes of action had both ac- Farm argued that, until the entry of the crued and ripened before the rendition of final judgment by the county court at law, the judgment so paid, citing state and its liability for Mentzer’s UIM claim was federal authorities in support thereof, in- not reasonably clear and that it had a cluding Arnold. reasonable basis for delaying payment of her claim until after the entry of the final On April 15, 2020, Mentzer filed a veri- judgment. On January 28, 2020, State fied motion to continue the hearing on Farm filed an amended traditional motion State Farm’s amended traditional motion IN RE STATE FARM MUT. AUTO. INS. CO. Tex. 325 Cite as 614 $.W.3d 316 (Tex.App.—Fort Worth 2020) for summary judgment because State On May 4, 2020, State Farm filed a Farm had yet to respond to any of the reply in support of its motion for protec- written discovery she sought under cover tion and in response to Mentzer’s motion of its motion for protection and because to compel, arguing that, because its pay- she needed to obtain such discovery in ment of the final judgment in the county order to respond to State Farm’s amended court at law was an undisputed fact and its traditional motion for summary judgment. amended traditional motion for summary On April 16, 2020, Mentzer filed a virtually judgment demonstrated that, as a matter identical amended response, but added a of law, its payment foreclosed the accrual more specific citation to Arnold observing or ripening of any of Mentzer’s extracon- it to have been “a UIM bad faith case tractual liability causes of action, the writ- [holding] that the insured produced suffi- ten discovery she sought was irrelevant cient summary judgment evidence to raise and a waste of time and resources. material fact issues about whether the in- On May 8, 2020, the district court en- surer lacked a reasonable basis for refus- tered an order compelling State Farm to ing to pay the insured’s claim and that, respond to Mentzer’s written discovery re- despite the insurer’s actual knowledge of quests. Although the order did not address that fact, it forced the insured to a trial State Farm’s motion for protection, it ef- before the insurer would pay the claim.” fectively denied the relief sought therein. On April 16, 2020, Mentzer filed her State Farm immediately sought manda- First Amended Petition in the district mus relief and an emergency stay pending court, maintaining her causes of action for resolution of the issues presented by its breach of the common law duty of good petition. We stayed the district court’s or- faith and fair dealing and violations of the der to permit our consideration of State Texas Insurance Code, but withdrawing Farm’s petition. her cause of action for breach of contract. Attached to the amended pleading, she IL Standard of Review included written discovery identical to that served with her original petition. {1,2] Mandamus is both an extraordi- nary remedy and a discretionary one. In re On April 20, 2020, State Farm respond- Garza, 544 S.W.3d 836, 840 (Tex. 2018) ed to Mentzer’s motion for continuance by (orig. proceeding). This court may grant urging its denial because she failed to mandamus relief from a discovery order identify any discovery that would address only when (1) the trial court’s decision is so the legal issues presented by its amended arbitrary and unreasonable that it traditional motion. On the same date, State amounts to a clear and prejudicial error of Farm filed a reply in support of its amend- law and (2) the relator has no adequate ed traditional motion, arguing that the fed- remedy by appeal. In re State Farm eral authorities upon which Mentzer relied Lloyds, No. 02-20-00163-CV, 2020 WL antedated the decision in Brainard and that to the extent any state authority re- 5242414, at *2 (Tex. App—Fort Worth Sept. 3, 2020, orig. proceeding [mand. lied upon them, they too were inapposite. pending]) (mem. op.) (citing In re State State Farm’s reply completely ignored Farm Lloyds, 520 S.W.3d 595, 604 (Tex. Mentzer’s reference to Arnold. 2017) (orig. proceeding). On April 23, 2020, the district court en- tered an order granting Mentzer’s motion [3-5] In determining whether the trial for continuance. ourt abused its discretion, we may not 326 Tex. 614 SOUTH WESTERN REPORTER, 3d SERIES substitute our judgment for the trial ILL. Scope of Discovery in Direct court’s determination of factual or other Actions for UM/UIM discretionary matters. Id. But because a Benefits trial court has no discretion in determining [9,10] UM/UIM coverage provides what the law is or in applying the law, policy benefits to the insured of all even when the law is unsettled, we review amounts that the insured is legally entitled its decisions on questions of law and appli- to recover as damages from owners or cation-of-law-to-facts questions much less operators of uninsured or underinsured deferentially. Jd. A trial court abuses its motor vehicles because of bodily injury or discretion by clearly failing to correctly property damage. See Tex. Ins. Code Ann. analyze or apply the law. Id. §§ 1952.105-.108. To recover UM/UIM [6] The scope of discovery is generally benefits under a standard automobile lia- within the trial court’s diseretion so long bility policy, an insured must show (1) that as a discovery order does not exceed what. her policy included UM/UIM coverage, (2) the rules of civil procedure permit. See that the uninsured or underinsured motor- Tex. R. Civ. P. 192.4; State Farm Lloyds, ist negligently caused the motor vehicle 520 S.W.8d at 604; In re CSX Corp., 124 accident that resulted in the covered dam- S.W.3d 149, 152 (Tex. 2003) (orig. proceed- ages, (8) the amount of her covered dam- ing). To be discoverable, evidence must be ages, and (4) that the UM/UIM automobile relevant and nonprivileged, but it need not liability coverage is either non-existent or be admissible if it is reasonably calculated deficient for purposes of compensating her to lead to the discovery of admissible evi- covered damages. See In re Liberty Cty. dence. See Tex. R. Civ. P. 192.3(a); In re Mut. Ins., 587 S.W.3d 214, 220 (Tex. Natl Lloyds Ins., 532 S.W.38d 794, 808 App.—Houston [1st Dist.] 2017, orig. pro- (Tex. 2017) (orig. proceeding). Thus, al- ceeding), Because a claim for UM/UIM though the permissible scope of discovery benefits uniquely incorporates the liability is generally broad, a discovery request