SAN ANTONIO COURT HOLDS DECLARATORY ACTION ON PUNITIVE DAMAGES IS MOOT

November 7, 2019

The San Antonio court of appeals recently refused to vacate a prior opinion denying punitive damages, but still held a declaratory action appeal was moot and vacated the trial court’s judgment (including punitive damages). In Zuniga v. Farmers Ins., No. 04-18-00899-CV, 2019 WL 4647717 (Tex. App.—San Antonio Sept. 25, 2019, no pet. h.), the San Antonio court of appeals held Zuniga’s appeal was moot due to the Supreme Court of Texas’s ruling that Zuniga take nothing on her gross-negligence claim, which was the only basis for punitive damages.

At the trial court, a jury returned a judgment in Zuniga’s favor, awarding Zuniga $93,244.91 in actual damages and $75,000.00 in punitive damages. Farmers’ insured appealed the finding that he was grossly negligent. The appellate court originally held there was enough evidence to support the gross-negligence claim. However, on June 11, 2019, the supreme court reversed and rendered judgment that Zuniga take nothing on her gross-negligence claim. In the interim, prior to the supreme court’s ruling, Farmers brought a declarative action seeking to establish their policy did not cover punitive damages, the San Antonio court of appeals agreed in a ruling in 2017. On remand, the trial court agreed Farmers’ insurance policy did not over punitive damages and Farmers had met its contractual duties to defend and indemnify their insured. Zuniga timely made this appeal.

Farmers moved to dismiss Zuniga’s appeal, due to the supreme court having recently issued their opinion eliminating Zuniga’s right to recover the punitive damages award for gross negligence. The San Antonio court of appeals agreed that the case should be dismissed as moot and granted Farmers’ motion to dismiss. The appellate court also vacated the trial court’s previous judgment, but notably let their opinion stand that the Farmers’ policy did not include punitive damages due to losing authority over that appeal in 2017. Meaning, there may be another trial in this case, but there is still appellate precedent that Farmers’ insurance policy does not cover punitive damages.