COURT ORDERS SEVERANCE AND ABATEMENT OF EXTRA-CONTRACTUAL CLAIMS IN UNINSURED MOTORIST LAWSUIT WHERE NO OFFER OF SETTLEMENT WAS MADE

February 4, 2013

Last Wednesday, the Corpus Christi Court of Appeals conditionally granted writ of mandamus, ordering the trial court to vacate its order denying the insurer’s motion to sever and abate extra-contractual claims in an uninsured motorist case, even when no settlement offers had been made.  In In re Old American County Mutual Fire Insurance Company, No. 13-12-00700-CV (Tex.App. – Corpus Christi January 30, 2013), the insured vehicle was struck from the rear by an uninsured driver and the insured and her passengers claimed injuries and damages under their uninsured motorist coverage.  The insurer had made no settlement offers and after suit was filed alleging breach of contract and other extra-contractual claims, the insurer filed a motion to sever and abate the extra-contractual claims.  The trial court denied the insurer’s motion and the insurer filed a petition for writ of mandamus seeking to reverse the order.

 The Corpus Christi Court of Appeals reviewed Texas law applicable to severance and abatement and bifurcation of trials and then agreed with the insurer that “severance and abatement of extra-contractual claims is required in many instances in which an insured asserts a claim to uninsured or underinsured motorist benefits.” The court noted that the insured must first prove that they have the coverage, that the other  driver  negligently  caused  the  accident,  was  uninsured  and,  also  establish  the  amount  of  their damages.  And because the insurer should not be required to conduct discovery or prepare for trial on claims that could be rendered moot based on the outcome of the contract claim, the court concluded that “the facts and circumstances of the case require severance to prevent manifest injustice,” and ordered the trial court to vacate its order denying the motion to sever and abate the extra-contractual claims.