A federal magistrate judge in Austin recently recommended that an auto insurer’s motion for summary judgment on the number of occurrences, and thus the number of policy limits potentially owed, be postponed until the completion of the underlying lawsuits.  Clear Blue Ins. Co. v. Fernandez and F&I Enterprises, Inc., No. 1:22-CV-00038-RP, 2023 WL 222239 (W.D. Tex. Jan. 17, 2023) (slip op.)

The underlying loss arose while an employee of the insured trucking company was attempting to back a tractor-trailer into a driveway, a maneuver which requires the truck to block the road.  The gears jammed, preventing him from putting the truck in reverse and completing the maneuver, leaving the trailer blocking both sides of the highway.  While the employees were trying to free the gears, a driver on the highway crashed into the side of the trailer, killing the driver and injuring the other occupants of the van.  The trucking company employees began assisting the survivors of that crash, and a few minutes later, a second vehicle driven by Fernandez crashed into the truck, injuring Fernandez.

Fernandez and the family of the deceased driver in the first vehicle both sued the trucking company in two separate lawsuits.  Fernandez explicitly blamed the trucking company for not taking steps after the first crash to warn other drivers of the hazard.  The insurer filed this declaratory judgment action and moved for summary judgment, arguing the two collisions were a single accident because they arose from a single cause – the trucking company’s failure to back safely into the driveway so that the truck blocked all traffic in the road.

The magistrate judge’s opinion observed that under Texas law, the key question was whether there was a single proximate, uninterrupted and continuous cause which resulted in all of the injuries and damage.  If so, there would be one occurrence.  But if there were a pause and some intervening cause, including a resumption of negligent conduct by the insured, there would be multiple occurrences and thus multiple limits in play.  However, the magistrate concluded none of these questions were ripe because the underlying suits were still pending, there were no stipulations between the parties about the negligent conduct, and therefore deciding the number of occurrences and number of limits available would be a prohibited advisory opinion on indemnity, which may not be adjudicated until the underlying litigation is resolved by settlement or trial.

Editor’s Note:  While the magistrate’s opinion does not telegraph the likely ultimate answer on the merits, the practical effect of the court’s “decision not to decide” is likely to be much the same as an openly adverse decision.  And it is consistent with recent patterns in Texas courts, which have been trending toward results that keep the pressure on insurers to defend, continue defending, and to settle questionable claims.

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