EXPIRATION OF LIMITATIONS PERIOD FOR NEGLIGENCE CLAIM DOES NOT RENDER OTHER DRIVER “UNINSURED” FOR UM/UIM PURPOSES

A driver involved in an auto accident whose suit against the other driver was unsuccessful due to the expiration of the statute of limitations was not entitled to treat the other driver as “uninsured” for purposes of a claim under his own policy, the Eastland Court of Appeals held Thursday.  In State Farm Mutual Auto. Ins. Co. v. Bowen, No. 11-11-00082-CV, 2013 WL 1087796 (Tex. App.—Eastland March 14, 2013), the plaintiff had sued the other driver in Texas, but that case was dismissed for want of jurisdiction over the defendant driver and the estate of the late owner of the defendant driver’s vehicle.  The plaintiff sued again in New Mexico, but the second case was dismissed because the statute of limitations had run.  In a separate suit against his own insurance company, the driver and his insurer agreed as to the negligence of the other driver and the amount of the total coverage available in a suit against the other driver, and tried the matter on damages alone.

After trial, the jury answered the single question on damages with a number far beneath than the aggregate insurance covering the other driver.  Thus, if the statute of limitations had not run in the New Mexico lawsuit, the plaintiff’s recovery plainly would not have exceeded the amount of coverage available, and the plaintiff would have been fully compensated.  Nevertheless, the trial court entered judgment on the UIM claim for the total amount of damages, without accounting for the other driver’s available coverage.

The central issue on appeal was the meaning of “denies coverage” in the UIM portion of the operative policy.  The court concluded that the failure of the plaintiff to recover because of the statute of limitations did not constitute a denial of coverage by the other driver’s insurer.  The court therefore reversed the judgment of the trial court and rendered judgment in favor of State Farm.