in Re: Home State County Mutual Insurance Company

                                                NO. 12-07-00062-CV

IN THE COURT OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT

TYLER, TEXAS

§         

IN RE: HOME STATE COUNTY

MUTUAL INSURANCE COMPANY,        §                      ORIGINAL PROCEEDING

RELATOR

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MEMORANDUM OPINION

            Home State filed a petition for writ of mandamus challenging the trial court’s order granting the motion of real party in interest, George Horn Jr., to sever his Stowers¹ claim from his other claims against Home State.  We conditionally grant the petition.²

Background

            Horn was severely injured in a single vehicle automobile accident.  Horn was the passenger.  The driver was killed.  Prior to filing suit with regard to the automobile accident, Horn’s attorney sent a letter dated June 10, 1999 to Home State, the driver’s insurance provider, in which he offered to settle Horn’s claim for policy limits.  He also promised to fully release the insured from all liability and satisfy the hospital lien(s), provided the settlement check was received in his office on or before 5:00 p.m. on June 25, 1999. The letter further stated that Horn’s hospital bills as of the date of the letter totaled $213,971.55.

            Home State sent a settlement check to Horn’s attorney, which he refused to accept claiming that it was not received by the deadline set forth in the June 10 letter.  Horn subsequently caused an administrator to be appointed for the driver’s estate, sued the administrator, and ultimately recovered a judgment for $10,231,844.06.

            Two years later, Horn, as assignee of the administrator of the driver’s estate, sued Home State for negligent failure to settle a Stowers claim.  Horn also pleaded that Home State was liable to him for breach of contract, breach of its duty of good faith and fair dealing, violating Texas Insurance Code, articles 21.21 and 21.55,³ violating the Texas Deceptive Trade Practices Act, and for attorney’s fees.⁴ The administrator later joined in the suit.

            After the hearing on his previously filed motion for summary judgment was continued, Horn filed another motion for summary judgment pertaining to his Stowers cause of action.⁵ While Horn’s later filed summary judgment was pending, he filed a motion to sever the Stowers cause of action in the event the trial court granted summary judgment on it. On December 8, 2006, the trial court granted Horn’s motion for summary judgment on his Stowers claim and his motion to sever the Stowers cause of action.  Thereafter, Home State filed a petition for writ of mandamus complaining of the trial court’s order granting the motion to sever.

Jurisdiction

            Initially, we must determine whether we have jurisdiction to consider the issue Home State raises in this proceeding.  In Horn’s supplemental response to Home State’s petition, he argues that the dispute is moot because, after Home State filed its petition, Horn nonsuited all of his pending claims in the original cause except his Article 21.55 cause of action and his claim for attorney’s fees.  Horn also filed a motion to dismiss, in which he contends that the dispute is moot because the trial court has lost plenary power over the severed cause.

            The “judicial power does not embrace the giving of advisory opinions.”  Gen. Land Office v. OXY U.S.A., Inc., 789 S.W.2d 569, 570 (Tex. 1990).  The “mootness doctrine” dictates that courts decide only those issues that present a “live” controversy at the time of the decision, thereby avoiding the rendering of advisory opinions.  Camarena v. Tex. Employment Comm’n, 754 S.W.2d 149, 151 (Tex. 1988). Thus, a case becomes moot, and we must dismiss it, if no case or controversy exists between the parties.  In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005).

            Horn’s nonsuit of the claims pending in the initial action has no effect on our jurisdiction.  Although a trial court can render a proceeding moot by withdrawing the order at issue, the order of severance in this case is still in effect. By its order, the trial court severed the underlying proceedings into two causes:  the original cause for the remaining insurance code claim and the claim for attorney’s fees and the new cause for the Stowers action.  Therefore, a live controversy still exists between the parties.

            Further, the trial court’s loss of plenary power affects the trial court’s jurisdiction, but not the appellate court’s jurisdiction. At the time the trial court ordered the severance, it had jurisdiction over the case.  If the trial court, by its order, abused its discretion, and there is not an otherwise adequate remedy by appeal, we have the power to issue mandamus relief.  See In re General Metal Fabricating Corp., No. 01-06-00879-CV, 2006 WL 3316877, at *3 (Tex. App.–Houston [1st Dist.] Nov. 16, 2006, orig. proceeding) (mem. op.) (conditionally granting writ of mandamus regarding improper severance and failure to abate more than thirty days after the severance order); In re Harris County Hosp. Dist. Auxiliary, Inc., 127 S.W.3d 155, 159 (Tex. App.–Houston [1st Dist.] 2003, orig. proceeding) (conditionally granting writ of mandamus regarding improper granting of motion to reinstate where trial court had lost plenary jurisdiction); Clark v. Bula, No. 05-01-00887-CV, 2002 WL 1371195, at *3 (Tex. App.–Dallas Jun. 16, 2002, orig. proceeding) (not designated for publication) (conditionally granting writ of mandamus regarding improper sanctions order where the trial court had lost plenary jurisdiction).  Therefore, we hold that we have jurisdiction to determine if mandamus should issue.

Availability of Mandamus

            Mandamus will issue to correct a clear abuse of discretion where there is no adequate remedy by appeal.  In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005); Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex. 1992).  To determine whether the trial court clearly abused its discretion, the reviewing court must consider whether the challenged ruling or order was one compelled by the facts and circumstances or was arbitrary, unreasonable, or reached without reference to any guiding rules or principles.  In re Huag, 175 S.W.3d 449, 451 (Tex. App.–Houston [14th Dist.] 2005, orig. proceeding).  A clear failure by the trial court to analyze or apply the law correctly will constitute an abuse of discretion.  Walker, 827 S.W.2d at 840.

            The trial court has no discretion in determining what the law is or applying the law to the facts.  In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135 (Tex. 2004).  An appellate remedy is “adequate” when any benefits to mandamus review are outweighed by the detriments.  Id. at 136.  This determination depends heavily on the circumstances presented and is better guided by general principles than by simple rules.  Id. at 137.  The relator has the burden of showing that the trial court abused its discretion and that appeal is an inadequate remedy.  See In re E. Tex. Med. Ctr. Athens, 154 S.W.3d 933, 935 (Tex. App.–Tyler 2005, orig. proceeding).

Abuse of Discretion

            In considering whether the trial court abused its discretion in granting Horn’s motion to sever, our review is limited to the record as it existed before the trial court at the time of the decision. See In re Bristol-Meyers Squibb Co., 975 S.W.2d 601, 605 (Tex.1998).⁶ A trial court properly exercises its discretion in severing claims when (1) the lawsuit involves more than one cause of action, (2) the severed claim could be asserted in a separate lawsuit, and (3) the severed claim is not so interwoven with the other claims that they involve the same facts and issues.  Liberty Nat’l Fire Ins. Co. v. Akin, 927 S.W.2d 627, 629 (Tex. 1996).

            In the instant case, whether the lawsuit involves more than one cause of action and whether the severed claim could be asserted in a separate lawsuit are not disputed.  However, the nucleus of operative facts underlying Horn’s Stowers claim is the same as underlies his claims in the original cause. Specifically, in his third amended petition, Horn alleges with regard to his claims for breach of contract, breach of the duty of good faith and fair dealing, violation of the Texas Insurance Code, articles 21.21 and 21.55, and violation of the Texas Deceptive Trade Practices Act that Home State is liable to him for acts or omissions related to its handling of his time demand settlement offer.  Thus, the central issue is whether Home State’s manner of handling Horn’s settlement offer was appropriate.  As such, we conclude that Horn’s Stowers claim is so interwoven with the other claims that they each involve the same facts and issues. Therefore, the trial court did not properly exercise its discretion in severing Horn’s Stowers claim.

            Even if we limited our consideration to the claims remaining after the trial court granted Horn’s motion for nonsuit, the trial court’s severance order amounts to an abuse of discretion because the remaining claims involve facts and issues too interwoven to permit severance.  Horn’s claim for attorney’s fees requires a breach of contract, and the only claim for breach of contract related to Home State’s alleged improper or unfair settlement practices.  Finally, Texas Insurance Code, article 21.55 relates to the processing and settlement of claims.  As such, by maintaining his article 21.55 claim, the nucleus of facts underlying Horn’s lawsuit remained grounded in allegations that Home State engaged in unfair settlement practices.  Therefore, we hold that the trial court abused its discretion in severing Horn’s Stowers claim.

Adequate Remedy at Law

            Having determined that the granting of the motion to sever was an abuse of discretion, we next consider whether Home State has an adequate remedy at law. Mandamus is not to be used as a substitute for an ordinary appeal.  In re Barrett, 149 S.W.3d 275, 280 (Tex. App.–Tyler 2004, orig. proceeding).  But mandamus review can be used to “spare private parties and the public the time and money utterly wasted enduring eventual reversal of improperly conducted proceedings.”  In re Prudential, 148 S.W.3d at 136. In addressing whether there is an adequate remedy by appeal, the word “adequate” has no comprehensive definition; it is simply a reference to the careful balance of jurisprudential considerations that determine when appellate courts will use original mandamus proceedings to review the actions of lower courts.  Id.  These considerations implicate both public and private interests.  Id.  An appellate remedy is “adequate” when the benefits of mandamus review are outweighed by the detriments.  Id.  Conversely, when the benefits outweigh the detriments, appellate courts must consider whether the appellate remedy is adequate.  Id.  Among other factors, we consider the procedural dynamics of the case in determining whether the appellate remedy is adequate.  Id.

            Here, if we allowed the improper severance to stand, Home State would be required to defend the case on two fronts.⁷  Further, should Home State’s appeal be successful, it would be required to defend a separate trial related to its Stowers claim.  “Appeal may be adequate for a particular party, but it is no remedy at all for the irreversible waste of judicial and public resources that would be required here if mandamus does not issue.”  Id. (quoting In re Masonite Corp., 997 S.W.2d 194, 198 (Tex. 1999)).  Thus, we hold that Home State does not have an adequate remedy at law.

Conclusion

            Having concluded that the trial court abused its discretion by granting Horn’s motion to sever and that Home State does not have an adequate remedy at law, we conditionally grant mandamus relief.  We trust that the trial court will promptly vacate its order of December 8, 2006 granting Horn’s motion to sever the Stowers claim and issue an order denying Horn’s motion to sever.  The writ will issue only if the trial court fails to comply with this court’s opinion and order within ten days. Our stay of April 5, 2007 is lifted to the extent necessary to allow the trial court to (1) vacate its order of December 8, 2006 granting Horn’s motion to sever the Stowers claim, (2) issue an order denying Horn’s motion to sever the Stowers claim, and (3) reconsolidate the two causes into one cause. The stay shall remain in effect for all other purposes. The trial court shall furnish this court, within the time for compliance with this court’s opinion and order, a certified copy of its order evidencing such compliance.  Horn’s motion to dismiss is overruled.

                                                                                                    BRIAN HOYLE   

                                                                                                               Justice

Opinion delivered May 16, 2007.

Panel consisted of Worthen, C.J., Griffith, J., and Hoyle, J.

(PUBLISH)

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¹ G.A. Stowers Furniture Co. v. American Indem. Co., 15 S.W.2d 544, 547 (Tex. Comm’n App. 1929, holding approved).

² The respondent is the Honorable Charles R. Mitchell, Judge of the 273rd Judicial District Court of Sabine County, Texas.

³ Articles 21.21 and 21.55 were repealed and recodified effective April 1, 2005.  See Act of May 10, 2001, 77th Leg., R.S., ch. 290, § 1, 2001 Tex. Gen. Laws 548, 548-51 (repealed and recodified 2003) (current version at Tex. Ins. Code Ann. §§ 541.001–.454 (Vernon Pamph. Supp.2005)); Act of May 27, 1991, 72nd leg., R.S., ch. 242, § 11.3, 1991 Tex. Gen. Laws 939, 1043-45 (repealed and recodified 2003) (current version at Tex. Ins. Code Ann. §§ 542.051–.061 (Vernon Pamph. Supp. 2005)).  However, the former articles 21.21 and 21.55 are applicable to ths case.  Therefore, in our discussion, we will refer to these articles as previously codified.

⁴ See Tex. Civ. Prac. & Rem. Code Ann. § 38.001 (Vernon 1997).

⁵ Based on our review of Horn’s motion for summary judgment, and despite Horn’s contentions to the contrary, we conclude that the motion applied only to his Stowers claim.

⁶ Horn nonsuited several claims still pending in the original cause number, but only after the trial court had severed the Stowers claim and Home State had filed its petition for writ of mandamus. Since our review is limited to the record as it existed before the trial court at the time of the decision, Horn’s subsequent nonsuit of his claims is of no consequence to our decision.

⁷ Home State has filed an appeal of the trial court’s order granting Horn’s motion for summary judgment pertaining to Home State’s Stowers claim.