Orvid Powell and Derrick Reese v. Jo Ann Howard as Special Deputy Receiver for National County Mutual Fire Insurance Company ( 1993 )

Powell v. Autry IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,

AT AUSTIN











NO. 3-92-513-CV







ORVID POWELL AND DERRICK REESE,

APPELLANTS

vs.





JO ANN HOWARD, AS SPECIAL DEPUTY RECEIVER FOR NATIONAL COUNTY MUTUAL FIRE INSURANCE COMPANY,

APPELLEE

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 201ST JUDICIAL DISTRICT

NO. 91-3007, HONORABLE PAUL R. DAVIS, JR., JUDGE PRESIDING

Appellants, Orvid Powell and Derrick Reese (collectively, "Plaintiffs"), filed suit against appellee, Jo Ann Howard, as Special Deputy Receiver for National County Mutual Fire Insurance Company ("the Receiver") to recover damages for personal injuries they sustained in an automobile collision. The trial court rendered judgment awarding Plaintiffs damages based on the jury's verdict and awarding postjudgment interest and court costs; the trial court refused, however, to award Plaintiffs prejudgment interest. In two points of error, Plaintiffs complain of the trial court's failure to award such interest. We will affirm the trial court's judgment.

FACTUAL AND PROCEDURAL BACKGROUND

On June 20, 1987, Powell was driving a vehicle, with Reese as a passenger, that was involved in a collision with a vehicle driven by Rick Linton Whiteley. Whiteley's vehicle was insured by National County. National County was placed into receivership by the Texas Board of Insurance sometime after the collision occurred. Accordingly, Plaintiffs filed a claim with the Receiver, as required by the Texas Insurance Code. See Tex. Ins. Code Ann. art. 21.28, § 3 (West Supp. 1993). The Receiver rejected this claim, and Plaintiffs filed the underlying suit.

At trial, the Receiver stipulated as to liability, and the case was tried to the jury on the issue of damages. Based on the jury's verdict, the trial court rendered judgment that Powell recover $10,951 and that Reese recover $3,640 from the Receiver as "covered claims" as defined under the Property and Casualty Insurance Guaranty Act, Tex. Ins. Code Ann. art. 21.28-C (West Supp. 1993), which creates a "guaranty fund" to cover certain claims against financially impaired insurers. In addition, the trial court awarded Plaintiffs postjudgment interest and assessed court costs against the Receiver. The trial court, however, refused to award prejudgment interest as requested by Plaintiffs in their petition. Pursuant to Rule 40(a)(4) of the Texas Rules of Appellate Procedure, Plaintiffs filed a "Notice of Limitation of Appeal" designating the issue of prejudgment interest as the only issue on appeal. No statement of facts was tendered to this Court.

DISCUSSION

In two points of error, Plaintiffs complain that the trial court erred in refusing to award prejudgment interest on their claims. Plaintiffs claim they are entitled to prejudgment interest pursuant to the "judgment-interest statute," article 5069-1.05 of the Texas Revised Civil Statutes, which provides in part:

Judgments in wrongful death, personal injury, and property damage cases must include prejudgment interest. . . . [P]rejudgment interest accrues on the amount of the judgment during the period beginning on the 180th day after the date the defendant receives written notice of a claim or on the day suit is filed, whichever occurs first, and ending on the day preceding the date judgment is rendered.

Tex. Rev. Civ. Stat. Ann. art. 5069-1.05, § 6(a) (West Supp. 1993). If this provision applies, Plaintiffs are entitled to prejudgment interest, because their suit was for personal injury and the trial court rendered judgment in their favor.

National County had been placed into receivership sometime after the collision but before Plaintiffs filed their lawsuit. Therefore, Plaintiffs appropriately filed their claims against the receivership estate. The Receiver contends that Plaintiffs' recovery of prejudgment interest, seemingly required by the judgment-interest statute, is precluded by a conflicting statutory provision contained in the portion of the Insurance Code regulating the liquidation, rehabilitation, reorganization, and conservation of insurers. See Tex. Ins. Code Ann. art. 21.28 (West 1981 & Supp. 1993). Section 8(d) of article 21.28 of the Insurance Code provides that "[i]nterest shall not accrue on any claim subsequent to the date of the commencement of delinquency proceedings." Plaintiffs contend that section 8(d) should not prevent their recovery of prejudgment interest because their claim is not against the receivership estate pursuant to article 21.28, but rather is against the "guaranty fund" pursuant to article 21.28-C. Plaintiffs contend that prejudgment interest is not excluded as a covered claim under section 5(8) of article 21.28-C and, therefore, they are entitled to recover such interest.

We are not persuaded by this distinction between article 21.28 and article 21.28-C. The only logical interpretation of article 21.28-C is that a party entitled to recover on a "covered claim" from the guaranty fund must first have a valid claim against the receivership estate. In other words, if a party is precluded from asserting a claim against the receivership estate, such party is not entitled to recover, based on that claim, from the guaranty fund.

Consistent with the foregoing analysis, this Court has previously addressed the application of section 8(d) in the context of a claim for prejudgment interest brought against the guaranty fund, holding that this provision "prohibit[s] a Receiver from paying prejudgment interest that otherwise would accrue after inception of the delinquency proceeding and before the entry of the court's judgment." Brodhead v. Dodgin, 824 S.W.2d 616, 621 (Tex. App.--Austin 1991, writ denied) (quoting Durish v. Dancer, 819 S.W.2d 258, 263 (Tex. App.--Austin 1991, writ denied)). Plaintiffs attempt to distinguish our holding in Brodhead by asserting that that case was "commenced . . . before the mandatory payment of prejudgment interest was added to the Judgment Interest Statute." That distinction is not controlling. Our holding in Brodhead indicates that section 8(d) of article 21.28 precludes the recovery of prejudgment interest on a claim brought against the guaranty fund under article 21.28-C. The fact that such interest could be granted on a permissive rather than a mandatory basis is not material to the basis of our decision in Brodhead. Accordingly, we adhere to our prior holding.

Plaintiffs also suggest that we should construe section 8(d) not to prohibit the award of prejudgment interest. It appears to us, however, that such an interpretation would render the statute meaningless. We have previously held that section 8(d) does not prevent an award of postjudgment interest. Durish, 819 S.W.2d at 263. If we were to interpret section 8(d) as not preventing any award of prejudgment interest, we would in essence interpret the statute as not prohibiting the award of any interest, even though the statute clearly states that "interest shall not accrue." This interpretation would produce an absurd result, which is to be avoided in construing statutes. Sharp v. House of Lloyd, Inc., 815 S.W.2d 245, 249 (Tex. 1991). Accordingly, we reject Plaintiffs' interpretation of section 8(d) and conclude that, in the context of the present case, section 8(d) precludes Plaintiffs' recovery of prejudgment interest on their claims "subsequent to the date of the commencement of delinquency proceedings."

We now address whether Plaintiffs are entitled to prejudgment interest prior to the date of the commencement of delinquency proceedings. Section 8(d) of article 21.28 does not expressly preclude such recovery. Although it would appear that section 5(8) of article 21.28-C may preclude the recovery of such interest, we do not address that issue. ⁽¹⁾ Rather, we will assume for purposes of the following discussion that, pursuant to the judgment-interest statute referenced above, Plaintiffs could be entitled to prejudgment interest for the period of time before the delinquency proceedings commenced. As stated above, that statute provides for the accrual of prejudgment interest "beginning on the 180th day after the date the defendant receives written notice of a claim or on the day suit is filed, whichever occurs first, and ending on the day preceding the date judgment is rendered." Tex. Rev. Civ. Stat. Ann. art. 5069-1.05, § 6(a) (West Supp. 1993). Thus, if the defendant received written notice of the claim more than 180 days before the commencement of the deficiency proceedings, Plaintiffs could be entitled to prejudgment interest from that date until the date deficiency proceedings commenced. Plaintiffs, however, have not provided this Court with a statement of facts from the trial, and the record before this Court contains no indication of when such written notice might have been sent. In the absence of a statement of facts, we must presume that sufficient evidence was introduced to support the trial court's conclusion that Plaintiffs were not entitled to recover prejudgment interest. See Murray v. Devco, Ltd., 731 S.W.2d 555, 557 (Tex. 1987); Durish, 819 S.W.2d at 261. Accordingly, we overrule Plaintiffs' points of error.

CONCLUSION

We affirm the trial court's judgment.

J. Woodfin Jones, Justice

Before Chief Justice Carroll, Justices Aboussie and Jones

Affirmed

Filed: September 15, 1993

Do Not Publish

1.   Section 5(8) provides in part: "``Covered claim' shall not include supplementary payment obligations, including . . . interest . . . incurred prior to the determination that an insurer is an impaired insurer under this Act." Tex. Ins. Code Ann. art. 21.28-C, § 5(8) (West Supp. 1993) (emphasis added).