UIM claim in Texas

2018UIM claims are not straight-forward insurer-insured first-party claims because UIM "benefits are conditioned upon the insured's legal entitlement to receive damages from a third party." See Brainard , 216 S.W.3d at 818 ; see also United Fire Lloyds , 327 S.W.3d at 256 (holding bifurcation is appropriate alternative to severance "because a UIM claim that involves a dispute as to whether there is a covered loss is distinguishable from a homeowners' insurance claim where the existence of a covered loss is not disputed").

2018UIM claims are not straight-forward insurer-insured first-party claims because UIM "benefits are conditioned upon the insured's legal entitlement to receive damages from a third party." See Brainard , 216 S.W.3d at 818 ; see also United Fire Lloyds , 327 S.W.3d at 256 (holding bifurcation is appropriate alternative to severance "because a UIM claim that involves a dispute as to whether there is a covered loss is distinguishable from a homeowners' insurance claim where the existence of a covered loss is not disputed").

2009Co, 989 S.W.2d 837, 839-40 (Tex.App.--Amarillo 1999), aff’d , 17 S.W.3d 652 (Tex. 2000), we denied an award of prejudgment interest because the condition precedent provision in the contract for payment of the UIM claim remained to be determined when the UIM claim was presented.

2009Co, 989 S.W.2d 837, 839-40 (Tex.App.--Amarillo 1999), aff’d , 17 S.W.3d 652 (Tex. 2000), we denied an award of prejudgment interest because the condition precedent provision in the contract for payment of the UIM claim remained to be determined when the UIM claim was presented.

2018UIM claims are not straight-forward insurer-insured first-party claims because UIM "benefits are conditioned upon the insured's legal entitlement to receive damages from a third party." See Brainard , 216 S.W.3d at 818 ; see also United Fire Lloyds , 327 S.W.3d at 256 (holding bifurcation is appropriate alternative to severance "because a UIM claim that involves a dispute as to whether there is a covered loss is distinguishable from a homeowners' insurance claim where the existence of a covered loss is not disputed").

2018UIM claims are not straight-forward insurer-insured first-party claims because UIM "benefits are conditioned upon the insured's legal entitlement to receive damages from a third party." See Brainard , 216 S.W.3d at 818 ; see also United Fire Lloyds , 327 S.W.3d at 256 (holding bifurcation is appropriate alternative to severance "because a UIM claim that involves a dispute as to whether there is a covered loss is distinguishable from a homeowners' insurance claim where the existence of a covered loss is not disputed").

2015F'ire Ins. c:o. v. Millard. 847 S.W.2d 668, 675 (Tex.App.-HouBton [Isl This court's determination that bifurcation is an Dist.] 1993, orig. proceeding); Jn re 7"/·inifJ' Llniversal ins. appropriate alternative to severance is not applicable to Co., 64 S. W.3d 463 . 468 (Tex.App.-Amarillo 2001, orig. the present case because a UIM claim that involves a proceeding [mand. denied]). dispute as to whether there is a covered loss is distinguishable frorn a ho1neowners' insurance claiin Finally, we address Garcia's contention that United Fire where the existence of a covered Joss is not disputed. wai

2015F'ire Ins. c:o. v. Millard. 847 S.W.2d 668, 675 (Tex.App.-HouBton [Isl This court's determination that bifurcation is an Dist.] 1993, orig. proceeding); Jn re 7"/·inifJ' Llniversal ins. appropriate alternative to severance is not applicable to Co., 64 S. W.3d 463 . 468 (Tex.App.-Amarillo 2001, orig. the present case because a UIM claim that involves a proceeding [mand. denied]). dispute as to whether there is a covered loss is distinguishable frorn a ho1neowners' insurance claiin Finally, we address Garcia's contention that United Fire where the existence of a covered Joss is not disputed. wai

2021Co., 384 S.W.3d at 438 (explaining that insured’s extracontractual claims could be rendered moot upon determination that insurer was not contractually obligated to pay UIM claim).

2015See 384 S.W.3d at 439 ; see also In re United Fire Lloyds, 327 S.W.3d at 257 (granting mandamus relief and ordering trial court to sever and abate extra-contractual claims from UIM claim).

2012See also In re Miller, 202 S.W.3d at 926 (rejecting argument that insurance code must be construed to allow insured to pursue bad faith claims before adjudicating UIM claim and explaining “[N]o matter how liberally we might construe an insurance code provision, a contract underlies any cause of action involving insurance.

2012See also In re Miller, 202 S.W.3d at 926 (rejecting argument that insurance code must be construed to allow insured to pursue bad faith claims before adjudicating UIM claim and explaining “[N]o matter how liberally we might construe an insurance code provision, a contract underlies any cause of action involving insurance.

2015F'ire Ins. c:o. v. Millard. 847 S.W.2d 668, 675 (Tex.App.-HouBton [Isl This court's determination that bifurcation is an Dist.] 1993, orig. proceeding); Jn re 7"/·inifJ' Llniversal ins. appropriate alternative to severance is not applicable to Co., 64 S. W.3d 463 . 468 (Tex.App.-Amarillo 2001, orig. the present case because a UIM claim that involves a proceeding [mand. denied]). dispute as to whether there is a covered loss is distinguishable frorn a ho1neowners' insurance claiin Finally, we address Garcia's contention that United Fire where the existence of a covered Joss is not disputed. wai

2015F'ire Ins. c:o. v. Millard. 847 S.W.2d 668, 675 (Tex.App.-HouBton [Isl This court's determination that bifurcation is an Dist.] 1993, orig. proceeding); Jn re 7"/·inifJ' Llniversal ins. appropriate alternative to severance is not applicable to Co., 64 S. W.3d 463 . 468 (Tex.App.-Amarillo 2001, orig. the present case because a UIM claim that involves a proceeding [mand. denied]). dispute as to whether there is a covered loss is distinguishable frorn a ho1neowners' insurance claiin Finally, we address Garcia's contention that United Fire where the existence of a covered Joss is not disputed. wai

2015Co., 439 S.W.3d 422 , 425–26 (Tex. App.—Houston [1st Dist.] 2014, orig. proceeding) (granting mandamus relief and ordering trial court to abate and sever extra-contractual claims in situation where there was “no evidence in the record” that insurer offered to settle UIM claim and collecting cases in which courts have considered issues of severance and abatement in context of UIM claim).

2015Co., 439 S.W.3d 422, 425-26 (Tex.App.-Houston [1st Dist.] 2014, orig. proceeding) (granting mandamus relief and ordering trial court to abate and sever extra-contractual claims in situation where there was “no evidence in the record” that insurer offered to settle UIM claim and collecting cases in which courts have considered issues of severance and abatement in context of UIM claim).

2021Id.

2019To hold that a UM/UIM claim is not “reasonably clear” until the conclusion of the legal proceeding “would effectively eliminate the [bad faith] cause of action, with no indication that such a result was intended.” Id.; see also Arnold, 725 S.W.2d at 167 (noting unequal bargaining power in the insurance context allows “unscrupulous insurers to take advantage of their insureds’ misfortunes in bargaining for -8- 04-18-00729-CV settlement and resolution of claims” and bad faith cause of action is necessary to prevent insurers, who have “exclusive control over the evaluation, processing, and [payme

2015See In re Allstate, 447 S.W.3d at 498 (granting mandamus relief and ordering trial court to abate and sever extra-contractual claims in situation where insurer did not make offer to settle UIM claim); In re Progressive Cnty.

2015See In re Allstate, 447 S.W.3d at 498 (granting mandamus relief and ordering trial court to abate and sever extra-contractual claims in situation where insurer did not make offer to settle UIM claim); In re Progressive Cnty.

2012See Boyd, 177 S.W.3d at 922 (holding that there can be no liability under article 21.55, now chapter 542 of the insurance code, if insurance claim is not covered by policy); see also Weir, 622 F.Supp.2d at 486 (concluding that if there is no contractual duty to pay UIM claim then insured’s bad faith claim for denial or postponing payment fails).

2012See Boyd, 177 S.W.3d at 922 (holding that there can be no liability under article 21.55, now chapter 542 of the insurance code, if insurance claim is not covered by policy); see also Weir, 622 F. Supp. at 486 (concluding that if there is no contractual duty to pay UIM claim then insured’s bad faith claim for denial or postponing payment fails).

2010Co., 209 S.W.3d 742, 746-47 (Tex.App.-Tyler 2006, orig. proceeding) (concluding it was an abuse of discretion to bifurcate instead of severing the UIM claim from the bad faith claims).

2010Co., 209 S.W.3d 742, 746-47 (Tex.App.-Tyler 2006, orig. proceeding) (concluding it was an abuse of discretion to bifurcate instead of severing the UIM claim from the bad faith claims).

2010See 273 S.W.3d at 373-75 .

2010See 273 S.W.3d at 373-75 .

2006See, e.g., In re Republic Lloyds, 104 S.W.3d 354, 358 (Tex.App.Houston [14th Dist.] 2003, orig. proceeding) (“Thus, pursuant to Akin , a severance is required when the insurer has made a settlement offer on the entire breach of contract claim.”). 4 We reject any contention that Akin mandates severance in all bad faith cases as a matter of course.

2006See, e.g., In re Republic Lloyds, 104 S.W.3d 354, 358 (Tex.App.Houston [14th Dist.] 2003, orig. proceeding) (“Thus, pursuant to Akin , a severance is required when the insurer has made a settlement offer on the entire breach of contract claim.”). 4 We reject any contention that Akin mandates severance in all bad faith cases as a matter of course.

2015III Thus, we held that a UIM claim does not earn prejudgment interest until the insur- Calculation of Prejudgment Interest er breaches the contract by withholding The parties do not challenge the calcula- benefits after the insured has obtained a tion of actual damages; they agree that judgment establishing the liability and un- the trial court properly deducted Brai- derinsured status of the other motorist. nard’s $1,000,000 settlement and $5,000 Id. at 654 .

2015III Thus, we held that a UIM claim does not earn prejudgment interest until the insur- Calculation of Prejudgment Interest er breaches the contract by withholding The parties do not challenge the calcula- benefits after the insured has obtained a tion of actual damages; they agree that judgment establishing the liability and un- the trial court properly deducted Brai- derinsured status of the other motorist. nard’s $1,000,000 settlement and $5,000 Id. at 654 .

2021In Weir, the federal district court relied on Brainard to hold that the UIM insurer could not be “guilty of not performing a proper investigation of [Weir’s] UIM claim because it is the trial of the UIM claim, at which it will be determined who was at fault and the amount of damages, that constitutes the investigation.” Id.

2021In Weir, the federal district court relied on Brainard to hold that the UIM insurer could not be “guilty of not performing a proper investigation of [Weir’s] UIM claim because it is the trial of the UIM claim, at which it will be determined who was at fault and the amount of damages, that constitutes the investigation.” Id.

2015In response to the rnotion for a claim is not so interwoven with the remaining action that bifurcated h·ial, United Fire asserted that a UIM claim is they involve the satne facts and issues. 6..,u.ar. red. .\[n1. differe11t fron1 other types of contractual insurance clai1ns Bank v. 1-Jorseshoe ()perating (~o., 793 S.W.2d 652 , 658 because there is no contractual duty to pay benefits until (Tex. 1990).

2015In response to the rnotion for a claim is not so interwoven with the remaining action that bifurcated h·ial, United Fire asserted that a UIM claim is they involve the satne facts and issues. 6..,u.ar. red. .\[n1. differe11t fron1 other types of contractual insurance clai1ns Bank v. 1-Jorseshoe ()perating (~o., 793 S.W.2d 652 , 658 because there is no contractual duty to pay benefits until (Tex. 1990).

2020If State Farm’s position were adopted, an insured such as Hamburger could never successfully assert a bad faith claim against his insurer for failing to attempt a fair settlement of a UIM claim: pre- judgment, liability would not be clear under Giles, [ 950 S.W.2d at 55 ,] and post-judgment, such an action would be barred under Boyte.

2020If State Farm’s position were adopted, an insured such as Hamburger could never successfully assert a bad faith claim against his insurer for failing to attempt a fair settlement of a UIM claim: pre- judgment, liability would not be clear under Giles, [ 950 S.W.2d at 55 ,] and post-judgment, such an action would be barred under Boyte.

2020See id. (observing that the UDJA was not specifically at issue in Brainard and concluding that “an insured may use the UDJA to establish the prerequisites to recovery in a UM/UIM claim”); Jordan, 503 S.W.3d at 453 (“[N]othing in Brainard precludes the use of a declaratory judgment when establishing prerequisites to recovery in a UIM benefits case.”).

2019Despite the Jordan Court’s recognition that a declaratory judgment action is an appropriate vehicle to establish the elements of a UIM claim, that court held “the recovery of attorney[’s] fees is governed by Chapter 38 of the [Code,]” which requires a matured breach of contract claim. 503 S.W.3d at 457 .

2019See Millard, 847 S.W.2d at 672 ; see also Akin, 927 S.W.2d at 629 .

2019See Millard, 847 S.W.2d at 672 ; see also Akin, 927 S.W.2d at 629 .

2015See Foremost, 966 Guide to the Texas Rules of Evidence S.W.2d at 772; Black, 956 S.W.2d at 75 ; § 411.1 (3d ed.2002); see also Thornhill v. Millard, 856 S.W.2d at 767 .

2012See Foremost, 966 S.W.2d at 772 ; Black, 956 S.W.2d at 75 ; Millard, 856 S.W.2d at 767 .

2025A. The Distinctive Nature of UIM Litigation To provide context to the parties’ dispute, we begin with a brief discussion of the UIM framework and how our precedent has developed around “the distinctive nature of UIM litigation.” 14 By statute: [UIM] coverage must provide for payment to the insured of all amounts that the insured is legally entitled to recover as damages from owners or operators of underinsured motor vehicles because of bodily injury or property damage, not to exceed the limit specified in the insurance policy, and reduced by the amount recovered or recoverable from the insurer

2025A. The Distinctive Nature of UIM Litigation To provide context to the parties’ dispute, we begin with a brief discussion of the UIM framework and how our precedent has developed around “the distinctive nature of UIM litigation.” 14 By statute: [UIM] coverage must provide for payment to the insured of all amounts that the insured is legally entitled to recover as damages from owners or operators of underinsured motor vehicles because of bodily injury or property damage, not to exceed the limit specified in the insurance policy, and reduced by the amount recovered or recoverable from the insurer

2025A. The Distinctive Nature of UIM Litigation To provide context to the parties’ dispute, we begin with a brief discussion of the UIM framework and how our precedent has developed around “the distinctive nature of UIM litigation.” 14 By statute: [UIM] coverage must provide for payment to the insured of all amounts that the insured is legally entitled to recover as damages from owners or operators of underinsured motor vehicles because of bodily injury or property damage, not to exceed the limit specified in the insurance policy, and reduced by the amount recovered or recoverable from the insurer

2025A. The Distinctive Nature of UIM Litigation To provide context to the parties’ dispute, we begin with a brief discussion of the UIM framework and how our precedent has developed around “the distinctive nature of UIM litigation.” 14 By statute: [UIM] coverage must provide for payment to the insured of all amounts that the insured is legally entitled to recover as damages from owners or operators of underinsured motor vehicles because of bodily injury or property damage, not to exceed the limit specified in the insurance policy, and reduced by the amount recovered or recoverable from the insurer

2021See Camarena v. Tex. Emp’t Comm’n, 754 S.W.2d 149, 151 (Tex. 1988) (“District courts, under our Constitution, do not give advice or decide cases upon speculative, hypothetical or contingent situations.”) (quoting Coalson v. City Council of Victoria, 610 S.W.2d 744, 747 (Tex. 1980)).