Brainard v. Trinity Universal Insurance Co.

Summary

The Texas Supreme Court held that uninsured/underinsured motorist insurance covers prejudgment interest the underinsured motorist would owe on tort damages. It adopted a declining-principal formula under which settlement and personal injury protection credits are applied based on the dates received. The Court further held that attorney’s fees under Chapter 38 are unavailable unless the insurer fails to tender benefits within thirty days after a judgment establishes the other motorist’s liability and underinsured status.

Holdings

1. UIM insurance covers prejudgment interest that the underinsured motorist would owe the insured on the underlying bodily-injury or property-damage claim.
2. Settlement and PIP credits must be applied under the declining-principal formula, according to the dates the payments were received; each credit is applied first to accrued prejudgment interest and then to principal, with interest thereafter accruing only on the remaining principal.
3. An insured may recover attorney's fees under Chapter 38 from a UIM insurer only if the insurer fails to tender UIM benefits within thirty days after the trial court signs a judgment establishing the other motorist's liability and underinsured status.

Questions Presented

1. Whether UIM insurance covers prejudgment interest that the underinsured motorist would owe the insured in tort liability.
2. How settlement and PIP credits must be applied in calculating prejudgment interest on a UIM claim.
3. When an insured may recover attorney's fees from a UIM insurer under Chapter 38 of the Texas Civil Practice and Remedies Code.

Disposition

reversed_and_remanded