Israel Salinas and Hilda Salinas v. State Farm Lloyds and Truman Dale Crews ( 2019 )

NUMBER 13-18-00129-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI – EDINBURG
ISRAEL SALINAS AND
HILDA SALINAS, Appellants,
v.
STATE FARM LLOYDS AND
TRUMAN DALE CREWS, Appellees.
On appeal from the 92nd District Court
of Hidalgo County, Texas.
MEMORANDUM OPINION
Before Chief Justice Contreras and Justices Longoria and Perkes
Memorandum Opinion by Justice Longoria
Appellants Israel and Hilda Salinas sued appellee State Farm Lloyds (“State
Farm”) for breach of their insurance contract. Judgment was entered in favor of the
Salinases. After an ex parte hearing at which the Salinases were not present, the trial
court issued a modified final judgment that reduced the Salinases’ award to zero. By two
issues which we combine into one, the Salinases argue that the trial court erred in holding
an ex parte hearing. We affirm.
I. BACKGROUND
In April of 2012, the Salinases’ house was hit by a hailstorm. In June of 2014, the
Salinases filed suit against State Farm, alleging multiple causes of action, including
breach of contract and unconscionable conduct. More specifically, the Salinases
asserted that State Farm took advantage of their lack of knowledge in construction and
insurance claims processes, misrepresented losses covered under the policy, and failed
to promptly and reasonably investigate and pay the amount covered under the policy. On
September 16, 2014, State Farm offered the Salinases a settlement of $25,900. See
TEX. CIV. PRAC. & REM. CODE ANN. § 42.002 (West, Westlaw through 2017 1st C.S.); TEX.
R. CIV. P. 167.1. State Farm’s settlement offer expired without a response from the
Salinases.
The case proceeded to jury trial in June of 2017. The jury returned a verdict in
favor of the Salinases. The jury found that State Farm breached the insurance contract
it had with the Salinases and awarded the Salinases $10,500 for the breach of contract.
The jury also found that State Farm had engaged in unconscionable conduct under the
Texas Deceptive Trade Practices Act and awarded the Salinases $10,500 for the
unconscionable conduct. The final judgment, as signed by the trial court in September of
2017, ordered that the Salinases be awarded $10,500 for State Farm’s breach of contract,
$9,066.82 for prejudgment interest, $10,500 for necessary and reasonable attorney’s
fees, and $8,097.05 for “costs of court,” for a total of $38,163.87.
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On October 10, 2017, State Farm filed a motion to modify the final judgment,
arguing that application of Rule 167 required the court to enter a take-nothing judgment
for the Salinases. See TEX. R. CIV. P. 167.4 (setting forth conditions for when litigation
costs may be awarded to the offeror of a settlement offer). According to State Farm, its
settlement offer “triggered an offset that exceeds [the Salinases’] monetary recovery at
trial” because the final amount that the Salinases were awarded was less than eighty
percent of what State Farm originally offered to the Salinases as a settlement. See id.
The Salinases never filed a response to State Farm’s motion to modify.
The trial court originally set the motion to modify to be heard on November 14,
2017. However, the trial court was unavailable on that day and reset the hearing for
November 21, 2017. On that day, the judge’s father-in-law passed away so the hearing
was rescheduled for December 5, 2017. On that day, the hearing on the motion to modify
was held before an associate judge, who ultimately decided that the original judge would
be in a better position to rule on the matter. Both parties were present and were informed
that the motion to modify would likely be heard on submission. However, on December
6, 2017, the trial court informed the parties that the trial court was going to reset the motion
to modify hearing for December 11, 2017. The Salinases’ counsel informed the trial court
that he would be unavailable in person because he was being deposed in a federal case
that day for his role as a trustee for Texas Southmost College. The trial court informed
counsel for the Salinases that the trial court would hear the motion by telephone sometime
between 8:15 a.m. and 8:30 a.m. Counsel for the Salinases agreed to appear via
telephone for the hearing. Around 8:30 a.m. on December 11, 2017, the Salinases’
counsel called the court; he was informed the trial court had not arrived yet but that
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counsel would be called to participate in the hearing by 9:00 a.m. The Salinases’ counsel
did not receive a call from the trial court; instead, in the afternoon, State Farm’s counsel
called the Salinases’ counsel to tell him that the trial court heard the motion to modify
without him or the Salinases present.
The trial court signed a modified final judgment on December 11, 2017, which
reduced the Salinases’ award to zero and explained the trial court’s reasoning for the
modification as follows:
The “total damages” found by the jury on Plaintiffs’ breach of contract claim
total $10,500. The monetary damages awarded for Plaintiffs’ claim that
State Farm engaged in unconscionable conduct are for the same amount
($10,500). As these identical amounts are damages for the same injury,
pursuant to the one-satisfaction rule, Plaintiffs may recover damages under
either of the legal theories under which damages are sought, but not under
both. Thus, the amount of actual damages recoverable pursuant to the
jury’s verdict is $10,500. Because attorney’s fees are allowable under
Plaintiffs’ breach of contract theory, the Court finds that Plaintiffs should
recover under this theory rather than the “unconscionable conduct” theory.
The applicable Policy deductible for Plaintiff’s claims was $1,566.00, which
reduces Plaintiffs’ recoverable damages under breach of contract to
$8,934.00.
Plaintiffs’ attorney’s fees incurred prior to the October 4, 2014 expiration of
Defendant’s settlement offer were $3,150.00
...
Pursuant to Insurance Code Chapter 542, interest at a rate of 18% per
annum would be payable on the amount due Plaintiffs under their breach of
contract claim. Plaintiffs contend that such interest should be calculated
from September 19, 2012. Interest from that date until October 4, 2014
totals $3,285.45 (745 days at $4.41/day).
The amount of the judgment in Plaintiff’s favor as of October 4, 2017 is
therefore $15,354.45 ($8,934.00 in in [sic] recoverable damages, $3,135
[sic] in attorney’s fees, and $3,285.45 in interest). This is an amount
significantly less than 80 percent of State Farm’s Offer of Settlement.
Plaintiff’s monetary damages are therefore significantly less favorable than
State Farm’s Offer of Settlement pursuant to Texas Rule of Civil Procedure
167.4, and State Farm is entitled to an award of its litigation costs as a setoff
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to the jury’s verdict. Pursuant to Rule 167.4(f), Plaintiffs are not able to
recover attorney’s fees after the date the Offer of Settlement was rejected.
State Farm has shown litigation costs . . . totaling $31,254.35, which
completely offsets the monetary damages awarded to the Plaintiffs.
Accordingly, Plaintiffs take nothing against State Farm.
On January 5, 2018, the Salinases filed a motion to vacate the modified order. The
Salinases did not challenge the trial court’s application of the one-satisfaction rule or
calculation of the monetary damages; rather, the Salinases argued that the modified final
judgment should be vacated because it was granted as a result of an ex parte hearing,
and thus the Salinases were denied their due process rights to present their arguments
and objections at the hearing. The Salinases requested that the trial court reinstate the
final judgment entered in September of 2017. The trial court never ruled on the Salinases’
motion to vacate, and it was overruled as a matter of law. See Tex. R. Civ. P. 329b(c).
This appeal followed.
II. EX PARTE HEARING
In their sole issue, the Salinases argue that the trial court erred by issuing a
modified final judgment after holding an ex parte hearing.
A. Standard of Review and Applicable Law
“To reverse a judgment on the ground of judicial misconduct, we must find judicial
impropriety coupled with probable prejudice to the complaining party.” Pitt v. Bradford
Farms, 843 S.W.2d 705, 706 (Tex. App.—Corpus Christi 1992, no writ) (citing Silcott v.
Oglesby, 721 S.W.2d 290, 293 (Tex. 1986)); see Erskine v. Baker, 22 S.W.3d 537, 540
(Tex. App.—El Paso 2000, pet. denied) (reviewing a trial court’s ex parte hearing for
judicial misconduct); see also Nealy v. Nealy, No. 13-14-00689-CV, 2016 WL 4045240,
at *2 (Tex. App.—Corpus Christi July 28, 2016, pet. denied) (mem. op.). The Texas Code
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of Judicial Conduct provides that judges “shall not initiate, permit, or consider ex
parte communications or other communications made to the judge outside the presence
of the parties.” TEX. CODE JUD. CONDUCT, Canon 3B(8), (West, Westlaw through 2017 1st
C.S.). Ex parte communications include any communication that involves “fewer than all
parties who are legally entitled to be present during the discussion of any matter.”
Randolph v. Texaco Expl. & Prod., Inc., 319 S.W.3d 831, 836 (Tex. App.—El Paso 2010,
pet. denied).
B. Discussion
1. Error
The record clearly indicates that ex parte communications were conducted
between the trial court and State Farm’s counsel. The Salinases’ counsel was being
deposed in a federal case and informed the court of such; thus, the Salinases’ counsel
was unable to appear in person for the hearing on State Farm’s motion to modify the
judgment. The Salinases’ counsel and the trial court seemingly agreed to hear the motion
via telephone, but for unspecified reasons, the trial court never called the Salinases’
counsel. State Farm’s counsel informed the Salinases’ counsel after the fact that the trial
court held the hearing on the motion to modify without the Salinases’ counsel present.
The Salinases had a right to be at the hearing, but the trial court proceeded without them
and communicated only with State Farm at the hearing. We conclude that the trial court
held an improper ex parte hearing and that such conduct constituted error. See Erskine,
22 S.W.3d at 540; see also Nealy, 2016 WL 4045240, at *2.
2. Harm
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Having concluded that the trial court’s ex parte hearing was an error, we must
decide whether such error was harmful. See Erskine, 22 S.W.3d at 540; Pitt, 843 S.W.2d
at 706; see also TEX. R. APP. P. 44.1. If all ex parte hearings were per se harmful error,
the second prong of this test wouldn’t exist. See Erskine, 22 S.W.3d at 540. To determine
whether the ex parte hearing was harmful, we must examine “the record as a whole to
determine whether the trial court’s impropriety harmed” the Salinases. Id.
a. Applicable Law
We review a trial court’s application of the one-satisfaction rule de novo. See
Elness Swenson Graham Architects, Inc. v. RLJ II-C Austin Air, LP, 520 S.W.3d 145, 163
(Tex. App.—Austin 2017, pet. denied).
The one-satisfaction rule is ‘the longstanding proposition that a plaintiff
should not be compensated twice for the same injury.’ . . . The application
of the rule is not limited to tort claims, and whether the rule may be applied
depends not on the cause of action asserted but rather on the injury
sustained. Thus, if the plaintiff has suffered only one injury, even if based
on ‘overlapping and varied theories of liability,’ the plaintiff may recover only
once.
Id. at 162 (quoting Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 7 (Tex. 1991)).
“When a party tries a case on alternative theories of recovery and a jury returns
favorable findings on two or more theories, the party has a right to a judgment on the
theory entitling him to the greatest or most favorable relief.” Boyce Iron Works, Inc. v.
Sw. Bell Tel. Co., 747 S.W.2d 785, 787 (Tex. 1988); see Tony Gullo Motors I, L.P. v.
Chapa, 212 S.W.3d 299, 303 (Tex. 2006).
Under Rule 167, when the amount of the judgment is significantly less favorable
to the offeree than the rejected offer, the trial court must award litigation costs to the
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offeror. See TEX. R. CIV. P. 167.4. A judgment is “significantly less favorable” if it “would
be less than 80 percent of the offer.” Id.
b. Analysis
After examining the record, we find that the Salinases have failed to demonstrate
how the ex parte hearing harmed them. See Erskine, 22 S.W.3d at 540. The Salinases
contend that they were harmed by the ex parte hearing due to the trial court’s erroneous
application of the one-satisfaction rule; however, the Salinases fail to demonstrate that
the trial court’s application of the one-satisfaction rule was incorrect. The Salinases quote
a single case to argue that the trial court misapplied the one-satisfaction rule: “[w]e noted
that a plaintiff could pursue a cause of action in tort if the defendant’s conduct could have
resulted in liability even in the absence of a contract between the parties.” Crawford v.
Ace Sign, Inc., 917 S.W.2d 12, 13 (Tex. 1996). The Salinases do not expound on this
quote; they merely argue that this quote “would defeat the one injury rule.” But Crawford
is not about the one-satisfaction rule, and the Salinases never explain how or why they
should be able to recover under two alternative theories—breach of contract and
unconscionable conduct—for the same injury. See id.; see also Tony Gullo Motors, 212
S.W.3d at 303. In the present case, the Salinases did not incur multiple injuries that were
valued at $10,500 each; rather, the jury awarded the Salinases $10,500 under two
different theories of liability—breach of contract and unconscionable conduct—to
compensate them for a single injury: State Farm’s failure to pay out the money due under
the insurance contract. See Elness Swenson Graham Architects, 520 S.W.3d at 162
(concluding that the one-satisfaction rule can apply to both tort and breach-of-contract
claims).
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Applying the one-satisfaction rule would allow the Salinases to recover for breach
of contract or unconscionable conduct but not both; recovering for both breach of contract
and unconscionable conduct in this case would be allowing a double recovery, which is
exactly what the one-satisfaction rule is designed to prevent. See Stewart Title Guar.,
822 S.W.2d at 7; Elness Swenson Graham Architects, 520 S.W.3d at 162. The Salinases
can recover for breach of contract because that also allows the Salinases to recover the
greatest amount in that they can also recover attorney’s fees. See Tony Gullo Motors,
212 S.W.3d at 303. The Salinases’ actual damages, taking the $10,500 for breach of
contract and adding pre-judgment interest and attorney’s fees incurred before the
expiration of the settlement offer, total less than eighty percent of what State Farm offered
in its original settlement, meaning State Farm would be entitled to offset the Salinases’
award of damages with State Farm’s litigation costs—$31,254.35. See TEX. R. CIV. P.
167.4. Therefore, the Salinases have not demonstrated how the ex parte hearing actually
harmed them because they have not shown that the trial court’s analysis was incorrect in
any manner. See Erskine, 22 S.W.3d at 540.
In summary, the Salinases have not shown, on appeal or below, that their
presence at the hearing would have made any difference in the trial court’s application of
the one-satisfaction rule. Because we concluded that the trial court correctly applied the
one-satisfaction rule to offset the Salinases’ award with State Farm’s litigation costs, the
Salinases have not demonstrated that the ex parte hearing led to an improper judgment
that harmed them. See Erskine, 22 S.W.3d at 540; see also TEX. R. APP. P. 44.1; Nealy,
2016 WL 4045240, at *2. We overrule the Salinases’ sole issue.
III. CONCLUSION
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We affirm the trial court’s judgment.
NORA L. LONGORIA
Justice
Delivered and filed the
11th day of April, 2019.
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