Last Thursday, in In re Allstate County Mut. Ins. Co., --- S.W.3d ---, 2011 WL 5005352 (Tex.App. – Houston [14th Dist.] Oct. 20, 2011), the court of appeals in Houston conditionally granted Allstate’s petition for mandamus directing the trial court to sever extra-contractual claims from contractual claims for underinsured-motorist (UIM) benefits and abate the extra-contractual claims until the contractual claims are resolved.  Charlotte Juneau sued Allstate for UIM benefits due to an automobile accident and also alleged a breach-of-contract claim, along with extra-contractual claims for bad faith under the insurance code and deceptive trade practices act.  Allstate offered to settle the claim, but the offer was not accepted.  Allstate filed a motion to sever the contractual claims and abate the extra-contractual claims. The trial court denied Allstate’s motion. 

Allstate complained that the trial court abused its discretion in refusing to sever the extra-contractual claims from the claim for UIM benefits when a settlement offer had been made and in refusing to abate the extra-contractual claims until the underlying contractual claims are resolved.  In cases in which contractual and extra-contractual claims are being pursued simultaneously, the court stated it “repeatedly has held that extra-contractual claims must be severed and abated when the insurer has made a settlement offer on the contract claim.”  Accordingly, the court concluded the trial court abused its discretion in not severing and abating the extra-contractual claims.  

In a concurring and dissenting opinion, Justice McCally concurred in the majority’s determination that the petition should be conditionally granted and the trial court directed to vacate its order denying Allstate’s motion to sever but dissented from the majority’s conclusion that mandamus should also conditionally issue directing the trial court to vacate its order denying Allstate’s motion to abate.

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