{"id":1006,"date":"2012-11-14T14:20:10","date_gmt":"2012-11-14T21:20:10","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=1006"},"modified":"2012-11-14T14:20:10","modified_gmt":"2012-11-14T21:20:10","slug":"texas-intermediate-appellate-holds-that-trial-court-abused-its-discretion-in-refusing-to-sever-bad-faith-claims","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/texas-intermediate-appellate-holds-that-trial-court-abused-its-discretion-in-refusing-to-sever-bad-faith-claims\/","title":{"rendered":"Texas Intermediate Appellate holds that Trial Court Abused its Discretion in Refusing to Sever Bad Faith Claims"},"content":{"rendered":"

Ruth S. Kochenderfer and Theodore N. Nemeroff – October 19, 2012<\/p>\n

In In re Texas Farm Bureau Underwriters, 374 S.W.3d 651 (Tex. Ct. App. 2012), an intermediate Texas appellate court conditionally granted an insurer\u2019s writ of mandamus and held that a trial court abused its discretion by denying the insurer\u2019s motion to sever a policyholder\u2019s extracontractual claims from the contract claims.\u00a0 The court also held that the trial court abused its discretion when it failed to abate discovery on the extracontractual claims.<\/p>\n

The ex-wife and children of a man shot and killed by the policyholder filed suit against the policyholder.\u00a0 The insurer declined to defend.\u00a0 The policyholder paid for his defense and a jury found he was not liable for the death.\u00a0\u00a0 The policyholder then sued his insurer for reimbursement of his defense costs and for an alleged breach of the insurer\u2019s duty of good faith and fair dealing.<\/p>\n

The parties filed competing summary judgment motions on the liability issues.\u00a0 The insurer also filed a motion to sever the extracontractual claims, arguing that evidence of the insurer\u2019s offer to settle the breach of contract claim would likely be relevant to the bad faith claim but prejudicial on the issue of damages.\u00a0 The insurer also argued that discovery on the extracontractual claims should be abated pending resolution of the damages question.\u00a0 The trial court found that coverage existed and granted the policyholder\u2019s summary judgment motion.\u00a0 The trial court also\u00a0 denied the insurer\u2019s motion to sever and abate.\u00a0 The insurer filed a writ of mandamus with the intermediate appellate court.<\/p>\n

Turning first to the issue of severance, the appellate court concluded that severance was necessary \u201cto prevent manifest injustice\u201d because the insurer \u201cwould be unfairly prejudiced by the admission of its settlement offer in the trial of the breach of contract claim, and [the policyholder] would be unfairly prejudiced by the exclusion of the settlement offer in the trial of the extracontractual claims.\u201d<\/p>\n

The court next addressed whether to abate discovery on the extracontractual claims.\u00a0 The court stated that because a policyholder may not prevail on his contractual claims, courts have abated discovery on extracontractual claims until after there is a decision on the contract claims so to avoid unnecessary costs.\u00a0 Because the trial court had already held that coverage existed, the policyholder argued that discovery related to the extracontractual claims would take place and thus the parties would not incur unnecessary costs.\u00a0 The appellate court explained, however, that cost is not the only consideration.\u00a0 The court reasoned that the policyholder was likely to seek information that \u201cis relevant and discoverable on the extracontractual claims, but is privileged and protected from discovery when focusing only on the breach of contract claim.\u201d\u00a0 Because the policyholder was not entitled to this information when litigating the breach of contract claim, the court held that the trial court abused its discretion by not abating discovery on the extracontractual claims.<\/p>\n

This decision reaffirms that an insurer has a right to sever discovery and trial of a policyholder\u2019s extracontractual claims from breach of contract claims.\u00a0 It also reaffirms an insurer\u2019s right to limit the scope of discovery related to breach of contract claims.<\/p>\n

via Texas intermediate appellate holds that trial court abused its discretion in refusing to sever bad faith claims – Lexology<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Ruth S. Kochenderfer and Theodore N. Nemeroff – October 19, 2012 In In re Texas Farm Bureau Underwriters, 374 S.W.3d 651 (Tex. Ct. App. 2012), an intermediate Texas appellate court conditionally granted an insurer\u2019s writ of mandamus and held that a trial court abused its discretion by denying the insurer\u2019s motion to sever a policyholder\u2019s… Continue reading Texas Intermediate Appellate holds that Trial Court Abused its Discretion in Refusing to Sever Bad Faith Claims<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[3],"tags":[140,22],"class_list":["post-1006","post","type-post","status-publish","format-standard","hentry","category-insurance-claims","tag-bad-faith","tag-insurance","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nTexas Intermediate Appellate holds that Trial Court Abused its Discretion in Refusing to Sever Bad Faith Claims - Advise & Consult, Inc.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/texas-intermediate-appellate-holds-that-trial-court-abused-its-discretion-in-refusing-to-sever-bad-faith-claims\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Texas Intermediate Appellate holds that Trial Court Abused its Discretion in Refusing to Sever Bad Faith Claims - Advise & Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"Ruth S. Kochenderfer and Theodore N. Nemeroff – October 19, 2012 In In re Texas Farm Bureau Underwriters, 374 S.W.3d 651 (Tex. Ct. 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