Summary
The Supreme Court of Texas held that an insurer's liability on an insurance claim is a prerequisite to recovering penalties and attorney's fees under Texas Insurance Code article 21.55, section 6. Because Allstate's prior personal injury protection payments exceeded the uninsured motorist damages awarded to Bonner, the policy's nonduplication-of-benefits provision meant Allstate was not liable for the uninsured motorist claim. The court reversed the award of attorney's fees and costs and rendered judgment that Bonner take nothing.
Topics
Practice areas
Questions Presented
- Whether Texas Insurance Code article 21.55, section 6 requires an insurer to pay attorney's fees and penalties for failing timely to acknowledge an uninsured motorist claim when the insurer is not liable for the claim under the policy because previously paid personal injury protection benefits exceed the insured's uninsured motorist damages.
Holdings
- An insurer's liability for the claim under the insurance policy is a prerequisite to imposing the penalties and attorney's-fee remedy under article 21.55, section 6. Because Allstate's prior PIP payment exceeded Bonner's UM damages, the policy's nonduplication-of-benefits provision meant Allstate was not liable for the UM claim, and Bonner could not recover attorney's fees or costs despite Allstate's untimely acknowledgment.
Key quotations
“We hold that section 6 makes the insurer's liability on the claim a prerequisite for imposing penalties.” (51 S.W.3d 290)
“By proving that it had already paid Bonner more than her UM damages, Allstate did not simply gain the right to offset one valid claim against another. Instead, Allstate completely defeated Bonner's UM claim, and under the policy terms was not liable to her.” (51 S.W.3d 292)
Factual background
Bonner was injured in an October 1997 accident caused by an uninsured motorist and received $1,619 in personal injury protection benefits from Allstate. She later submitted an uninsured motorist claim, which Allstate acknowledged after the fifteen-day statutory deadline and ultimately denied. A jury found $1,000 in chiropractic damages but no damages for pain and suffering or impairment; because the policy's nonduplication-of-benefits provision made the prior PIP payment greater than the UM damages, the trial court rendered a take-nothing judgment.
Procedural history
Bonner sued Allstate for uninsured motorist benefits after Allstate denied her claim. The trial court rendered a take-nothing judgment because Bonner's $1,000 uninsured motorist damages were less than the $1,619 in personal injury protection benefits Allstate had already paid, and it denied attorney's fees. The court of appeals affirmed the take-nothing judgment as to benefits but reversed the denial of attorney's fees and assessed costs against Allstate. The Supreme Court of Texas reversed the fee-and-costs portion and rendered judgment that Bonner take nothing.