Texas Windstorm Insurance Association v. Stephen Pruski ( 2024 )

Supreme Court of Texas
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No. 23-0447
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Texas Windstorm Insurance Association,
Petitioner,
v.
Stephen Pruski,
Respondent
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On Petition for Review from the
Court of Appeals for the Thirteenth District of Texas
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Argued February 21, 2024
JUSTICE LEHRMANN delivered the opinion of the Court.
Texas Insurance Code Section 2210.575(e) provides that a suit
against the Texas Windstorm Insurance Association shall be presided
over by a district judge appointed by the Judicial Panel on Multidistrict
Litigation. The issue presented is whether this statute deprives a
district court of subject matter jurisdiction over such a suit when the
presiding judge is not appointed by the panel. The court of appeals held
that it does and vacated the district court’s judgment. We disagree and
hold that the panel-appointment requirement, while mandatory, is not
jurisdictional. Thus, although the presiding judge in this case was not
appointed by the MDL panel as the statute requires, the district court
nevertheless had subject matter jurisdiction over the suit. We reverse
the court of appeals’ judgment and remand to that court for further
proceedings.
I. Background
Texas Windstorm Insurance Association (TWIA) is a
quasi-governmental body that serves as an “insurer of last resort,”
offering windstorm and hail insurance to residential and commercial
property owners in the coastal region of Texas who cannot get this
coverage in the regular market due to the risk of catastrophic
hurricanes. 1 TWIA’s organization, operations, and all related matters
are governed by Chapter 2210 of the Texas Insurance Code.
In 2011, after TWIA received over 100,000 claims totaling more
than $2.9 billion following Hurricanes Ike and Dolly, the Legislature
significantly amended Chapter 2210 to, among other things, modify the
process by which suits could be brought against TWIA. Relevant here,
the Legislature added Section 2210.575, which provides in pertinent
part:
[T]he claimant may bring an action against [TWIA] in a
district court in the county in which the loss that is the
subject of the coverage denial occurred. An action brought
under this subsection shall be presided over by a judge
1 TWIA Overview, TEXAS WINDSTORM INSURANCE ASSOCIATION,
https://www.twia.org/about-us/overview/#:~:text=HISTORY%20AND%20PUR
POSE,insurance%20in%20the%20private%20market (last visited May 9,
2024).
2
appointed by the judicial panel on multidistrict litigation
designated under Section 74.161 (Judicial Panel on
Multidistrict Litigation), Government Code. A judge
appointed under this section must be an active
judge . . . who is a resident of the county in which the loss
that is the basis of the disputed denied coverage occurred
or of a first tier coastal county or a second tier coastal
county adjacent to the county in which that loss occurred.
TEX. INS. CODE § 2210.575(e) (emphasis added). 2
TWIA insured Stephen Pruski’s beachfront condominium in Port
Aransas against hail and windstorm damage. Pruski filed two claims
with TWIA after Hurricane Harvey and a subsequent storm, and TWIA
partially accepted and partially denied coverage for both claims. Pruski,
proceeding pro se, served TWIA with a notice of intent to sue, see id.
§ 2210.575(a), and subsequently filed suit in Nueces County District
Court, seeking damages for TWIA’s alleged improper denial of coverage.
The case was assigned to the Honorable Sandra Watts of the 117th
District Court of Nueces County without appointment by the Judicial
Panel on Multidistrict Litigation. Pruski learned of the statutory
provision requiring a panel appointment and emailed the court clerk to
inquire about it. The clerk responded that a judge would be
“electronically assigned,” and Pruski took no further action on the issue
at that time. Pruski then filed a motion for summary judgment that did
not mention the panel-appointment requirement. But at the hearing on
2 Chapter 2210 also limits the issues that may be brought in such a
proceeding to (1) whether TWIA’s denial of coverage was proper and (2) the
amount of damages to which the claimant is entitled. TEX. INS. CODE
§ 2210.576(a).
3
the motion, which was the first hearing in the case, Pruski referenced
that requirement. The trial court denied the motion.
Pruski subsequently moved to recuse Judge Watts under Texas
Rule of Civil Procedure 18b, 3 claiming she was biased and unqualified
because, among other reasons, she had not been appointed by the MDL
panel. Judge Watts declined to recuse and referred Pruski’s motion to
the regional administrative judge, who denied it. TWIA then filed a
motion for summary judgment, arguing that the damages for which
Pruski sought recovery were not covered by his policy as a matter of law.
The district court granted the motion and rendered a final, take-nothing
judgment for TWIA. Pruski appealed, arguing in part that Judge Watts
was not qualified to render judgment because she had not been
appointed by the MDL panel.
The court of appeals reversed, holding that a trial judge who is
not appointed by the MDL panel is “without authority to render
judgment” in a suit under Chapter 2210. 667 S.W.3d 460, 467 (Tex.
App.—Corpus Christi–Edinburg 2023). Accordingly, the court held that
the district court’s judgment was void and remanded with instructions
to vacate the judgment. Id.We granted TWIA’s petition for review.
II. Discussion
Under Section 2210.575(e), an action brought against TWIA
concerning denied coverage “shall be presided over by a judge appointed
3 Rule 18b enumerates various grounds on which a judge must
disqualify or recuse. TEX. R. CIV. P. 18b.
4
by the [MDL] panel.” The issue is whether that requirement is
jurisdictional, such that a district court lacks the power to hear the case
if the judge was not so appointed, rendering any resulting judgment
void. See Engelman Irrigation Dist. v. Shields Bros., 514 S.W.3d 746,
750 (Tex. 2017) (“A judgment rendered without subject-matter
jurisdiction is void and subject to collateral attack.”).
A. Subject Matter Jurisdiction
A statute can be, and often is, mandatory without being
jurisdictional. See S.C. v. M.B., 650 S.W.3d 428, 443 (Tex. 2022) (citing
Albertson’s, Inc. v. Sinclair, 984 S.W.2d 958, 961 (Tex. 1999)). We
recently reiterated that classifying a statutory provision as
jurisdictional requires “clear legislative intent to that effect.” Id. at 436
(quoting Crosstex Energy Servs., L.P. v. Pro Plus, Inc., 430 S.W.3d 384,
391 (Tex. 2014)). In other words, “[a]bsent a compelling showing to the
contrary, we presume that remedies remain intact and that the
jurisdiction of a district court—our state’s sole court of general
jurisdiction—remains undisturbed.” Id. This precedent is consistent
with the modern jurisprudential trend of “reduc[ing] the vulnerability
of final judgments to attack on the ground that the tribunal lacked
subject matter jurisdiction.” Dubai Petroleum Co. v. Kazi, 12 S.W.3d 71,
76 (Tex. 2000) (citation omitted). 4
4 Before Dubai Petroleum, our case law largely characterized the failure
to comply with statutory provisions governing statutory causes of action as
jurisdictional in nature, such that those provisions “must be complied with in
all respects or the action is not maintainable.” Mingus v. Wadley, 285 S.W.
1084, 1087 (Tex. 1926). In Dubai Petroleum, we overruled Mingus “to the
5
As we confirmed in Crosstex, we employ statutory-interpretation
principles in evaluating whether a statutory requirement is
jurisdictional, considering (1) most importantly, the statute’s plain
meaning; (2) the presence or absence of specific consequences for
noncompliance; (3) the purpose of the statute; and (4) the consequences
that result from each possible interpretation. 430 S.W.3d at 392. These
principles lead us to conclude that Section 2210.575(e)’s requirement
that the presiding judge be appointed by the MDL panel is not
jurisdictional.
The statute provides that “[a]n action brought under this
subsection shall be presided over by a judge appointed by the [MDL]
panel.” TEX. INS. CODE § 2210.575(e). The court of appeals emphasized
the statute’s use of “shall” and its corresponding imposition of a
mandatory duty. 667 S.W.3d at 464. However, as we explained in S.C.,
“the commonly used verb ‘shall’ does not clearly convey exclusive
jurisdiction.” 650 S.W.3d at 443. If it did, every venue statute would be
classified as jurisdictional. See, e.g., TEX. CIV. PRAC. & REM. CODE
§ 15.002 (“Except as otherwise provided . . . all lawsuits shall be brought
[in the proper county].” (emphasis added)). The Legislature often uses
unequivocal language to make certain statutory requirements
jurisdictional, but it chose not to do so here. See TEX. GOV’T CODE
§ 311.034 (providing direction on construing statutes with respect to
waiver of sovereign immunity and stating that “[s]tatutory prerequisites
extent that it characterized the plaintiff’s failure to establish a statutory
prerequisite as jurisdictional.” 12 S.W.3d at 75.
6
to a suit, including the provision of notice, are jurisdictional
requirements in all suits against a governmental entity”).
Relatedly, Section 2210.575 contains no consequences for failure
to obtain an MDL-appointed judge. “[W]hen a statute does not require
dismissal for failure to comply, this weighs in favor of a finding that it
is not jurisdictional.” Tex. Mut. Ins. Co. v. Chicas, 593 S.W.3d 284, 289
(Tex. 2019). Indeed, in Crosstex, we held that a statutory requirement
that a certificate of merit be filed with the plaintiff’s original petition in
certain suits is not jurisdictional despite the fact that the statute
mandates dismissal for failure to comply. 430 S.W.3d at 392. Here, not
only does Section 2210.575 say nothing about dismissal, but as the court
of appeals noted, it provides no guidance on the necessary procedure to
obtain an MDL-panel appointment in TWIA suits in the first instance.
See 667 S.W.3d at 466 (noting that “nothing in § 2210.575 requires
Pruski to have explicitly requested that the MDL Panel appoint a judge
to initiate the statute’s assignment requirement”). We doubt the
Legislature nevertheless intended such a draconian consequence for the
failure to do so.
Chapter 2210’s express purpose, along with the implications of
deeming the MDL-panel appointment to be a jurisdictional requirement,
further militates against such a construction. The Legislature made
express findings that “the provision of adequate windstorm and hail
insurance is necessary to the economic welfare of this state” and that
TWIA “is intended to serve as a residual insurer of last resort for
windstorm and hail insurance in the seacoast territory.” TEX. INS. CODE
7
§ 2210.001. 5 The 2011 amendments serve this purpose by streamlining
the claims process and limiting TWIA’s liability exposure. E.g., id.
§ 2210.014(a) (“A person may not bring a private action against [TWIA],
including a claim against an agent or representative of [TWIA], under
Chapter 541 [bad faith] or 542 [prompt payment of claims].”). If Section
2210.575(e) deprives a district court of jurisdiction over a suit against
TWIA unless the judge is appointed by the MDL panel, a great number
of judgments will be exposed to collateral attack. 6 This will spur more
litigation against TWIA and, in turn, expose it to additional costs and
potential liability for claims that have already been long resolved.
Again, absent a “compelling showing” that the Legislature intended this
result, we will not read jurisdictional consequences into a statutory
requirement. S.C., 650 S.W.3d at 436.
Finally, amicus counsel appointed by this Court to defend the
court of appeals’ judgment 7 argues that the judgment is nevertheless
void because, under Section 2210.575(e), Judge Watts was “statutorily
disqualified” from serving in this case. We disagree. It is true that a
5 The Legislature did not provide an express purpose for its specific
addition of Section 2210.575. However, we construe statutory language in
context, not in a vacuum. TGS-NOPEC Geophysical Co. v. Combs, 340 S.W.3d
432, 439 (Tex. 2011) (“We further consider statutes as a whole rather than
their isolated provisions.”).
6 Amicus curiae, United Policyholders, submitted a brief
“[c]onservatively” estimating that, based on a Lexis search of Texas district
court cases involving TWIA and MDL-panel transfers of such cases, more than
3,600 judgments would be open to collateral attack. We do not opine on the
accuracy of that estimate, though it appears undisputed that the number is
significant.
7 The Court thanks amicus counsel for his service in this case.
8
“disqualified judge has no power to act in the case” and that a judge’s
disqualification is thus a nonwaivable jurisdictional issue. Freedom
Commc’ns, Inc. v. Coronado, 372 S.W.3d 621, 624 (Tex. 2012) (citing
Postal Mut. Indem. Co. v. Ellis, 169 S.W.2d 482, 484 (Tex. 1943)).
However, we cannot agree that the fact that Judge Watts was not
appointed by the MDL Panel “disqualified” her from sitting in the case.
To the extent that Section 2210.575(e) places substantive limitations on
a judge’s qualifications to preside over a TWIA suit—that the judge be
“an active judge” and “a resident of the county in which the loss that is
the basis of the disputed denied coverage occurred or of a first tier
coastal county or a second tier coastal county adjacent to the county in
which that loss occurred”—there is no dispute that Judge Watts met
those qualifications. 8 Certainly, the statutory procedure for assigning a
judge in a suit against TWIA was not followed. But again, failure to
comply with a statute, while it may render a judgment erroneous and
voidable, does not necessarily render the judgment void. Mapco, Inc. v.
Forrest, 795 S.W.2d 700, 703 (Tex. 1990) (“A judgment is void only when
it is apparent that the court rendering the judgment had no jurisdiction
of the parties, no jurisdiction of the subject matter, no jurisdiction to
enter the judgment, or no capacity to act as a court.”).
As a court of general jurisdiction, a district court “presumably
ha[s] subject matter jurisdiction unless a contrary showing is made.”
Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 220
8 We need not decide whether a judge who does not meet those
qualifications would deprive the court of subject matter jurisdiction over a suit
against TWIA.
9
(Tex. 2002). 9 For the reasons discussed, no contrary showing was made
here.
In sum, nothing in Section 2210.575(e) or Chapter 2210 more
generally demonstrates clear legislative intent to deprive a district court
of jurisdiction over a suit against TWIA unless the judge is appointed by
the MDL panel. Accordingly, the court of appeals erred in holding that
Section 2210.575(e) is jurisdictional and that the district court was
“without authority” to render judgment in this suit.
B. Disposition
Our holding that the district court had subject matter jurisdiction
does not mean TWIA is entitled to reinstatement of the court’s
judgment. TWIA does not dispute that Section 2210.575(e) is
“mandatory,” nor does it dispute that Judge Watts was not appointed by
the MDL panel as the statute requires. In the court of appeals, TWIA
argued that Pruski waived any complaint that Judge Watts was not
appointed by the MDL panel by (1) failing to petition the panel for
appointment of a different judge and (2) failing to raise the complaint to
Judge Watts until after he filed a motion for summary judgment
requesting that she adjudicate the merits of his claims. See Crosstex,
9 The court of appeals erroneously started with the opposite
presumption—given the statute’s mandatory language, the court looked for,
and failed to find, an indication that the statute does not restrict a trial court’s
authority. 667 S.W.3d at 464–65. Indeed, the court expressly stated that the
presumption that courts of general jurisdiction have subject matter
jurisdiction absent a showing to the contrary “does not apply to actions
grounded in statute rather than the common law.” Id. at 465 (citation omitted).
That statement directly conflicts with our holding in Dubai Petroleum. See 12
S.W.3d at 75.
10
430 S.W.3d at 391 (noting that a party may waive a nonjurisdictional
statutory requirement by failing to timely object and that, under some
circumstances, “substantial invocation of the litigation process may
amount to waiver”). Pruski responded that he brought the
panel-appointment requirement to the district clerk’s attention before
Judge Watts was assigned and raised the matter at the
summary-judgment hearing prior to any ruling.
The court of appeals held that “[b]ecause nothing in [the statute]
requires Pruski to have explicitly requested that the MDL Panel appoint
a judge to initiate the statute’s assignment requirement, we reject
TWIA’s contention that Pruski’s failure to timely file a request for
appointment constituted a waiver of his complaint.” 667 S.W.3d at
466–67. Without specifically addressing TWIA’s second waiver
argument, the court of appeals then concluded that “the presiding judge
was without authority to render judgment in this cause.” Id. at 467.
In this Court, TWIA raises only the issue of whether a district
court’s judgment in a TWIA suit is void if the judge was not appointed
by the MDL panel. Though it passingly refers to the lack of a panel
appointment as a “waived issue,” TWIA does not ask us to reinstate the
judgment on the ground that Pruski waived his complaint by waiting to
raise it with Judge Watts until after he filed a motion for summary
judgment. 10 Nevertheless, the court of appeals’ disposition of this aspect
10 TWIA states in the Summary of Argument sections of its petition and
brief that the court of appeals, by erroneously holding that the judgment is
void, “excused a waived issue on appeal.” However, TWIA presents no
argument and cites no authority in support of its classification of the issue as
11
of TWIA’s waiver argument appears to have been influenced by its
erroneous holding that the district court lacked subject matter
jurisdiction. Pruski, for his part, raises additional issues the court of
appeals did not reach in light of its jurisdictional holding. We conclude
that the best course is to remand the case to the court of appeals to
address those issues, along with TWIA’s remaining waiver argument, in
the first instance.
III. Conclusion
Texas Insurance Code Section 2210.575(e) requires that the trial
judge presiding over a suit against TWIA be appointed by the MDL
panel. While this requirement is mandatory, it is not jurisdictional.
Therefore, in this case, the district court did not lack subject matter
jurisdiction simply because Judge Watts was not so appointed. We
reverse the court of appeals’ judgment and remand the case to that court
for further proceedings.
Debra H. Lehrmann
Justice
OPINION DELIVERED: May 10, 2024
waived. See TEX. R. APP. P. 55.2(i) (“The brief must contain a clear and concise
argument for the contentions made, with appropriate citations to authorities
and to the record.”).
12