Progressive Co Mut Ins., 09-07-011 CV

Court of Appeals of Texas, Ninth District, BeaumontFeb 8, 2007
No. 09-07-011 CV (Tex. App. Feb. 8, 2007)

No. 09-07-011 CV

Opinion Delivered February 8, 2007.

Original Proceeding.




Calvin Block, Jr., and Judy Block made a claim for bodily injuries under the underinsured/uninsured motorist provision of a personal automobile insurance policy with Progressive County Mutual Insurance Company. Progressive offered to settle the claim for $3,045.00 in exchange for a full release. The Blocks rejected the offer and sued Progressive for breach of contract and breach of duty of good faith and fair dealing. After the trial court denied Progressive's motion to sever and abate the bad faith claim from the contract claim, Progressive petitioned this Court for a writ of mandamus to require the trial court to grant the motion to sever and abate. We conditionally grant relief.

A writ of mandamus will issue only if the trial court committed a clear abuse of discretion for which the relator has no adequate remedy at law. See Liberty Nat'l Fire Ins. Co. v. Akin, 927 S.W.2d 627, 629 (Tex. 1996). A clear abuse of discretion is shown if the trial court could reasonably have reached only one decision. Id. at 30. Issues of severance normally rest within the sound discretion of the trial court. Id. at 629. Likewise, abatement is typically an incidental ruling for which appeal provides an adequate remedy. Abor v. Black, 695 S.W.2d 564, 566-67 (Tex. 1985).

Nonetheless, when a policyholder asserts claims against the insurer for both breach of contract and for extra-contractual bad faith, and the insurance company has made a settlement offer on the disputed contract claim, severance and abatement are required to avoid undue prejudice to the insurer in its defense of the contract dispute. See Akin, 927 S.W.2d at 629; United States Fire Ins. Co. v. Millard, 847 S.W.2d 668, 673 (Tex.App.-Houston [1st Dist.] 1993, orig. proceeding); State Farm Mut. Automobile Ins. Co. v. Wilborn, 835 S.W.2d 260, 262 (Tex.App.-Houston [14th Dist.] 1992, orig. proceeding). Prejudice arises from the conflict between the insurer's need to introduce evidence of its settlement offer in defense of the bad faith claim and the insurer's right to exclude evidence of an offer to compromise in the trial of the contract claim. See Millard, 847 S.W.2d at 673; Tex. R. Evid. 408. Abatement of the bad faith claim necessarily accompanies severance because the scope of permissible discovery differs in the two types of claims and without abatement the parties will be put to the effort and expense of conducting discovery on claims that may be disposed of in a previous trial. Millard, 847 S.W.2d at 673.

Although the Supreme Court declined to grant relief in Akin because the mandamus record did not establish that insurance company offered to settle the claim, the Supreme Court recognized the necessity for a severance in cases where such an offer is made. Akin, 927 S.W.2d at 630. In this case, Progressive offered to settle the injury claim in exchange for a full and final release of all claims. Given the evident prejudice to Progressive, the trial court abused its discretion in denying the motion to sever and in failing to abate the case until final judgment on the contract litigation.

The petition for writ of mandamus is conditionally granted. We are confident that the trial court will vacate its order of October 23, 2006, enter an order that severs the contractual claims from the extra-contractual claims, and abate the suit on the extra-contractual claims until final judgment on the suit for breach of contract. Our writ will issue only if the trial court fails to do so.