Brainard v. Trinity Universal Insurance Co.

Summary

The Supreme Court of Texas held that uninsured/underinsured motorist insurance covers prejudgment interest the underinsured motorist would owe the insured as compensatory damages. It adopted a declining-principal formula for applying settlement and personal injury protection credits and held that attorney's fees under Chapter 38 are unavailable unless the insurer fails to tender benefits within thirty days after judgment establishes the other motorist's liability and underinsured status. The court reversed in part, affirmed in part, and remanded for recalculation of prejudgment interest.

Holdings

1. UIM insurance covers prejudgment interest that the underinsured motorist would owe the insured on damages arising from the covered bodily injury or property damage.
2. Settlement and PIP credits must be applied under the declining-principal formula, with each credit applied as of the date received first to accrued prejudgment interest and then to principal.
3. An insured may recover attorney's fees under Chapter 38 only if the UIM 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 on tort damages.
2. How settlement and PIP credits must be applied when calculating prejudgment interest on UIM-covered damages.
3. Whether an insured may recover attorney's fees under Chapter 38 of the Texas Civil Practice and Remedies Code based on an earlier presentment of a UIM claim.

Disposition

reversed_and_remanded