Mt. Hawley Insurance Company v. Howard Ragland, D/B/A Lightning Laydown

f:docs\cv0-079 IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS, AT AUSTIN NO. 3-90-079-CV MT. HAWLEY INSURANCE COMPANY, APPELLANT vs. HOWARD RAGLAND, d/b/a LIGHTNING LAYDOWN, APPELLEE FROM THE DISTRICT COURT OF TRAVIS COUNTY, 201ST JUDICIAL DISTRICT NO. 441,865, HONORABLE MARY PEARL WILLIAMS, JUDGE PRESIDING Mt. Hawley Insurance Company ("Mt. Hawley") appeals a judgment rendered against it in an action for breach of contract, fraud, breach of a duty of good faith and fair dealing, and violations of the Texas Insurance Code and the Deceptive Trade Practices Act. The suit arises out of Mt. Hawley's refusal to defend or indemnify its insured, appellee Howard Ragland, d/b/a Lightning Laydown ("Ragland"). When Mt. Hawley did not provide the court with proof of its financial responsibility as unauthorized insurer defendants are directed to do under the Texas Insurance Code, the trial court struck Mt. Hawley's answer and rendered an interlocutory default judgment. See Tex. Ins. Code Ann. art. 1.36, § 11 (Supp. 1991). A jury was selected to determine damages. Based on the jury verdict, the trial court rendered judgment in favor of Ragland for actual damages, exemplary damages, interest, and attorney's fees. In seventeen points of error, Mt. Hawley complains, among other things, that the trial court erred in requiring it to comply with the statutory financial responsibility requirement, in striking its pleadings, in awarding actual and exemplary damages, in awarding attorney's fees based on a percentage of recovery, and in allowing opposing counsel to make certain arguments to the jury. We will affirm the judgment of the trial court. BACKGROUND Mt. Hawley insured Ragland's business, an oilfield service business named Lightning Laydown, under a comprehensive general liability policy with limits of $300,000. General Accident Insurance Company of America ("General Accident") also insured Ragland under an automobile liability insurance policy. On March 11, 1985, a trailer rig being towed behind a vehicle operated by one of Ragland's employees broke loose, crossed the center line of the highway, and crashed into a car, killing the driver, Jose Trevino, and injuring the passenger, his wife. Mrs. Trevino and others ("the Trevinos") filed suit in Travis County against Howard Ragland, Lightning Laydown, and others, seeking damages of $65 million. The Trevinos alleged that the accident was caused in part by the negligence of Howard Ragland's employees in improperly hitching the trailer ball to the towing vehicle and by inadequately welding the ball. General Accident defended Ragland without reservation of rights. Ragland notified Mt. Hawley of the suit and requested that Mt. Hawley furnish a defense. Mt. Hawley refused to defend and denied coverage, relying on a policy exclusion for bodily injury arising out of the ownership, maintenance, operation, use, loading or unloading of an automobile owned or operated by an insured. It also based its denial on the ground that the claim was outside the hazards the policy covered, described as oil lease work by contractors. Mt. Hawley also refused later demands that it defend Ragland and settle with the plaintiffs. Shortly before trial on the Trevino claim, the plaintiffs settled with Ragland. In a Mary Carter agreement among the plaintiffs and Ragland, Lightning Laydown, and its employees, these defendants agreed to pay the Trevinos $300,000, minus one-half of the Trevinos' actual recovery from International Bank of Commerce, another defendant. The jury found Lightning Laydown, International Bank of Commerce, and other defendants guilty of negligence proximately causing the collision, attributing seventy percent of the fault to Lightning Laydown. (1) Based on the verdict, the court signed a judgment March 10, 1988, awarding the Trevinos $110,300 to be paid by the sole remaining negligent defendant, the International Bank of Commerce. Ragland assigned General Accident all proceeds from his claim against Mt. Hawley, up to General Accident's costs in defending the Trevino case and in pursuing the claim against Mt. Hawley. In May 1988, Ragland filed this action against Mt. Hawley for refusing to defend and indemnify him in the Trevino case. He asserted multiple causes of action, including breach of contract and breach of the duty of good faith and fair dealing. Mt. Hawley answered by general denial. On November 14, 1989, Ragland filed a motion to strike Mt. Hawley's answer because of its failure to comply with the statutory requirement that unauthorized insurers show financial responsibility. See Tex. Ins. Code Ann. art. 1.36, § 11(a) (Supp. 1991). On November 30, after notice and hearing, the trial court ordered Mt. Hawley to post a $2,000,000 bond by 5:00 p.m. the next day. The court also struck Mt. Hawley's answer until the bond was filed, but restrained Ragland from taking a default judgment until the deadline had passed. Mt. Hawley failed to post bond. On December 4, the court rendered an interlocutory default judgment with a writ of inquiry under which Mt. Hawley was deemed to have admitted all allegations in the third amended petition except the amount of damages. The case was tried to a jury which returned a verdict of $4,000,000 in exemplary damages and found that Ragland was entitled to an attorney's fee of one-third of his recovery. The trial court awarded Ragland $440,747.70 in actual damages (the $300,000 Trevino settlement plus $140,747.70 costs for defending the Trevino case, both stipulated amounts); $4,000,000 in exemplary damages; legal fees of $1,480,249.23 (one-third of $4,440,747.70); and interest. THE FINANCIAL RESPONSIBILITY REQUIREMENT In its first point of error, Mt. Hawley complains of the trial court's requiring it to post a bond, striking its pleadings, and rendering a default judgment when it failed to comply. Mt. Hawley argues that the court erred because the financial responsibility requirement does not apply to it under these circumstances. Article 1.36, § 11 provides, in relevant part: Sec. 11 (a) Before an unauthorized person or insurer files or has filed any pleading in any court action, suit, or proceeding . . . instituted against that person or insurer through service of process, notice, order, demand, or pleading under Section 7 or 8 of this article, that person or insurer must either: (1) deposit with the clerk of the court in which the action, suit, or proceeding is pending cash or securities or a bond with good and sufficient sureties to be approved by the court in an amount to be determined by the court sufficient to secure the payment of any final judgment that may be rendered in that court proceeding; . . . . Tex. Ins. Code Ann. art. 1.36, § 11 (Supp. 1991) (emphasis added). The Texas statute is drawn from the Uniform Unauthorized Insurers Process Act, parts of which have been adopted in at least forty states. See Retail Union Health & Welfare Fund v. Seabrum, 20 Ga. 695, 242 S.E.2d 18, 20 (1978); see also 18 Couch on Insurance § 73:216 (2d ed. 1983). Mt. Hawley cites no Texas case construing this provision and only a handful of foreign cases. We are guided by the general principle that statutes relating to insurance should be liberally construed in favor of the public. Johnson v. Prudential Ins. Co. 519 S.W.2d 111, 113 (Tex. 1975); Mutual Life Ins. Co. v. Daddy$ Money, Inc., 646 S.W.2d 255, 257 (Tex. App. 1982, writ ref'd n.r.e.). The purpose of § 11 is to protect Texas residents, domestic corporations, and foreign corporations lawfully doing business in Texas from the practices of unsupervised and unregulated foreign insurers. Specifically, § 11 is designed to insure that foreign insurance companies demonstrate their ability to satisfy any judgments Texas plaintiffs are able to obtain against them. See Seabrum 242 S.E.2d at 20; Dean Constr. Co. v. Agricultural Ins. Co., 249 N.Y.S.2d 247, 249 (1964). Mt. Hawley contends that the financial responsibility requirement does not apply because (1) Mt. Hawley is a "surplus lines" insurer, while § 11 applies only to "unauthorized" insurers, and (2) Mt. Hawley was served with process under § 3, but § 11 applies only to an insurer sued under § 7 or § 8. We reject both arguments. Assuming Mt. Hawley has correctly characterized itself as a surplus lines insurer, it is also an unauthorized insurer. Mt. Hawley does not deny that it is an unauthorized insurance carrier within the meaning of the Texas statute and, indeed, concedes the fact on appeal. (2) The statute itself resolves any uncertainty. It defines surplus lines insurers as a subset of the universe of unauthorized insurers: "'Surplus lines insurer' means an unauthorized insurer in which insurance coverage is placed or may be placed under this Article." Tex. Ins. Code Ann. art. 1.14-2, § 2(b) (1981); see also 28 Tex. Admin. Code § 15.10 (1991). We hold, therefore, that the reference in § 11 to "unauthorized" insurers does not absolve surplus lines insurers from the financial responsibility requirement. Mt. Hawley also argues that the financial responsibility requirement, § 11, does not apply because it was served with process not under § 7 but, instead, under § 3. (3) Mt. Hawley not argues, in the alternative, that as a surplus line insurer, it cannot be served under § 7.1 (4) We disagree with both contentions. First, §§ 3 and 7 are complementary, rather than alternative, provisions. Section 7 provides a means for obtaining personal jurisdiction over an unauthorized insurer by authorizing substituted service on the insurance commissioner. One subsection states that "[p]rocedures and fees for service of process are governed by § 3 of this article." Tex Ins. Code Ann. art. 1.36, § 7(e) (Supp. 1991). Section 3 prescribes the procedure for serving process on the commissioner, that is, the manner of accomplishing substituted service. See C.W. Bollinger Ins. Co. v. Fish, 699 S.W.2d 645, 648 (Tex. App. 1985, no writ) (construing the previous statute). Mt. Hawley makes an alternative argument that it cannot be served under § 7 because that section applies to unauthorized insurers "doing acts of insurance business" as provided by Article 1.14-1, § 2, while as a surplus line insurer, it is regulated under Article 1.14-2. See Tex. Ins. Code Ann. art. 1.36, § 7 (Supp. 1991). We reject Mt. Hawley's argument because the article also provides: "A surplus line insurer may be sued . . . under the same procedure provided for unauthorized insurers in Sections 3, 7, and 8 of this article." Tex. Ins. Code Ann. art. 1.36, § 12(a) (Supp. 1991). (5) In addition, Mt. Hawley's argument, even if correct, relies upon its factual contention that Ragland's policy was a lawful surplus lines transaction. The trial court found otherwise. Mt. Hawley does not direct us to support for its contrary position and the record contains no statement of facts from the hearing on the motion for partial summary judgment. Finally, Mt. Hawley claims that, even if it were subject to the statutory requirement, the court erred by striking its answer. It argues that it should have had notice that the provision applied before its pleadings were stricken. Mt. Hawley had constructive notice of its responsibilities under the Texas Insurance Code; it was charged by law with awareness of all statutory requirements before placing its first insurance policy in Texas. See Tex. Ins. Code Ann. art. 21.42 (1981). "It is well settled that the familiar principle applied in the construction of contracts -- that statutes bearing on the subject matter of the contract become a part of the contract just as though they had been copied therein -- applies to the construction of insurance contracts." Harkins v. Indiana Lumbermen's Mut. Ins. Co., 234 S.W.2d 430, 431 (Tex. Civ. App. 1950, no writ). The statute is unambiguous: the bond is mandatory. The insurer must file the required bond before filing any pleading. In this case, Mt. Hawley filed its answer more than 17 months before Ragland brought to the court's attention that Mt. Hawley had not filed a bond. Ragland filed his motion twenty days before the court struck Mt. Hawley's answer. The statute does not require that the court give a party any time certain for filing a bond. Presumably, the bond must be filed before answer date or the unauthorized insurer risks default judgment. Because the statute does not mandate what action the trial court should take when an insurer fails to file a bond, the court has wide discretion in responding to a failure to file. The record also does not reflect that Mt. Hawley requested more time than it was actually given. Courts in other states agree that when the unauthorized insurer fails to post bond, the court may strike the insurer's pleadings. See Akron Co. v. Fidelity Gen. Ins. Co., 250 F.Supp. 201 (N.D. Ohio 1964) (construing the Ohio statute drawn from the Uniform Unauthorized Insurers Process Act). Seabrum, the case upon which Mt. Hawley relies for the position that striking the insurer's answer is improper, is distinguishable. In Seabrum, the insurer unsuccessfully challenged the constitutionality of the bond requirement and tendered the bond once it learned of the insured's motion to strike its pleadings. Seabrum, 242 S.E.2d at 19. In the present case, Mt. Hawley never tendered a bond. We overrule Mt. Hawley's first point of error. FAILURE TO BRING FORWARD A STATEMENT OF FACTS In its second through fifth points of error, Mt. Hawley charges that the trial court committed numerous errors at the November bond hearing. Specifically, Mt. Hawley argues that Ragland waived his right to require the bond by his delay; that the court erred in setting the bond at $2,000,000 and in not allowing a postponement; and that the bond and default judgment denied it due process of law. All of these contentions involve issues of fact, but Mt. Hawley has failed to bring forward a record of the November 30 hearing. The appellant has the burden to see that a sufficient record is presented to show error requiring reversal. Tex. R. App. P. Ann. 50(d) (Pamph. 1991); Balla v. Northeast Lincoln Mercury, 717 S.W.2d 183, 185 (Tex. App. 1986, no writ). In the absence of a statement of facts, we must presume the evidence supports the finding. Guthrie v. Nat'l Homes Corp., 394 S.W.2d 494, 495 (Tex. 1965); Adams v. Sadler, 696 S.W.2d 690, 691 (Tex. App. 1985, writ ref'd n.r.e.). Mt. Hawley's second through fifth points of error are overruled. DAMAGES Mt. Hawley attacks the damages award in its sixth through eleventh points of error. Specifically, Mt. Hawley complains that the trial court erred in rendering judgment against it for actual and exemplary damages because no actual damages were found, and because there was either no evidence or insufficient evidence of any actual damages. In addition, Mt. Hawley urges that the court erred in awarding exemplary damages because there is no finding of actual damages in a cause of action for which exemplary damages are available. Finally, appellant argues that the court erred in excluding evidence that Ragland's automobile liability insurance carrier paid all obligations he incurred. When Mt. Hawley failed to post the required bond, the court entered an interlocutory default judgment deeming Mt. Hawley to have admitted all allegations in plaintiff's third amended original petition except for the amount of damages. The following allegations were deemed admitted: 1. Mt. Hawley issued a comprehensive general liability policy to Ragland covering the Trevinos' claims. 2. Mt. Hawley failed to properly investigate the claims. 3. Mt. Hawley wrongfully refused to defend and indemnify Ragland against the Trevinos' claims. 4. Mt. Hawley denied coverage without a reasonable basis when it should have known that there was no reasonable basis for denying coverage. 5. Mt. Hawley did not attempt in good faith to effectuate a prompt, fair and equitable settlement of the Trevinos' claims against Ragland. 6. Mt. Hawley was negligent and acted with malice. 7. Mt. Hawley's actions and/or omissions constituted gross negligence and were done with reckless and heedless disregard for Ragland's rights. 8. Mt. Hawley failed to give due consideration to its insured's financial interest. 9. Mt. Hawley fraudulently induced Ragland to purchase an insurance policy by wrongfully concealing material facts regarding its coverages and its status as an "unauthorized insurer." 10. Mt. Hawley engaged in conduct prohibited by the Texas Insurance Code, by representing that the policy provided Ragland characteristics and benefits which it did not have, by advertising protection it did not intend to afford, by misrepresenting the applicable policy coverages to induce Ragland to forfeit the policy, and by making untrue, deceptive and misleading statements with respect to the policy. 11. Mt. Hawley engaged in unlawful practices under the Insurance Code by knowingly misrepresenting pertinent facts and/or policy provisions relating to coverage, failing to adopt and implement reasonable procedures for prompt investigation of claims, not attempting in good faith to effectuate prompt and equitable settlement of claims submitted in which liability has become reasonably clear, refusing to pay claims without conducting a reasonable investigation based upon all available information, failing to provide promptly a reasonable explanation of the basis for denial of the claim, and failing to exercise good faith in the investigation and processing of the Trevinos' claims. 12. Mt. Hawley failed to make disclosures as required by the rules and regulations of the Texas State Board of Insurance. 13. Mt. Hawley engaged in unconscionable conduct. The interlocutory ruling adjudged Mt. Hawley legally indebted to Ragland under theories of breach of contract, breach of a duty of good faith and fair dealing, fraud, and violations of the Texas Insurance Code and the Texas Deceptive Trade Practices Act. See Tex. Ins. Code Ann. art. 21.21 (Supp. 1991); Tex. Bus. & Com. Code Ann. § 17.41 et seq. (1987). Thus, when the case went to the jury by writ of inquiry, the jury's only task was to assess damages. Tex. R. Civ. P. Ann. 243 (1976). This task was further limited because Mt. Hawley had stipulated that the Ragland-Trevino settlement was $300,000, that the legal fees and expenses for the Trevino defense were $140,747.70, and that both sums were reasonable. The jury awarded Mt. Hawley four million dollars ($4,000,000) in exemplary damages and one-third (33-1/3%) of that sum as attorney's fees. Mt. Hawley does not complain of the size of the exemplary damage award or seek remittitur. Instead, Mt. Hawley argues that Ragland suffered no loss -- General Accident defended him in the underlying suit and paid for his $300,000 settlement and his legal fees. The default judgment and stipulations notwithstanding, Ragland could not recover, Mt. Hawley contends, because he suffered no loss and thus could show no actual damages. Mt. Hawley is correct that, as a general rule, the trier of fact must find and award actual or compensatory damages before it may award punitive damages. Bellefonte Underwriters Ins. Co. v. Brown, 704 S.W.2d 742, 745 (Tex. 1986); see Annot., Sufficiency of Showing of Actual Damages to Support Award of Punitive Damages -- Modern Cases, 40 A.L.R. 4th 25 (1985). We reject Mt. Hawley's no-loss argument for two reasons: first, the argument is insupportable under the combined weight of the default judgment and the stipulations and second, the trial court's proper application of the collateral source rule undercuts the argument. A. The Default Judgment and the Stipulations A default judgment treats all matters properly alleged in the petition, except unliquidated damages, as admitted. Stoner v. Thompson, 578 S.W.2d 679, 684 (Tex. 1979); Nixon v. Nixon, 348 S.W.2d 434, 437 (Tex. Civ. App. 1961, writ ref'd n.r.e). The default establishes liability and proximate cause for the cause of action alleged. Morgan v. Compugraphic Corp., 675 S.W.2d 729, 731 (Tex. 1984). Pursuant to Rule 243, the complaining party must come forward at the damages hearing with competent evidence to establish that the event actually caused the alleged injuries and to show the amount of the damages to which the party is entitled. Morgan, 675 S.W.2d at 732-33; see also First Nat'l Bank v. Shockley, 663 S.W.2d 685, 688 (Tex. App. 1983, no writ). The record in the trial court contains evidence that Mt. Hawley refused to defend Ragland in the action in which the Trevinos sued Ragland, along with other defendants, for $50 million in punitive damages and $15 million in actual damages. The jury in the underlying suit found Lightning Laydown to be seventy percent responsible for the Trevinos' injuries. It assessed damages at $2,206,000, so in the absence of his settlement, Ragland would have been liable for about $1.6 million. The default judgment established Mt. Hawley's liability for refusing, in bad faith, to defend Ragland or settle the Trevino suit. See Fleming Mfg. Co. v. Capitol Brick, Inc., 734 S.W.2d 405, 409 (Tex. App. 1987, writ ref'd n.r.e.). Where liability is established, an insured is entitled to recover as actual damages the costs of the defense and settlement -- minus any properly claimed offsets, none of which are in issue here. See Texas United Ins. Co. v. Burt Ford Enterprises, Inc., 703 S.W.2d 828, 835 (Tex. App. 1986, no writ). The only question remaining for the jury is whether the amount of actual damages suffered was reasonable. See Employers Casualty Co. v. Block, 744 S.W.2d 940, 942-43 (Tex. 1988). Under these circumstances, the trial court properly awarded actual damages without submitting a jury issue on that point; indeed, it would have been inappropriate to submit such a question. See Block, 744 S.W.2d at 944; see also Texas Emp. Ins. Ass'n v. Miller, 596 S.W.2d 621, 625 (Tex. Civ. App. 1980, no writ) (uncontroverted issues need not be submitted to the jury by the trial court); City of Wichita Falls v. Ramos, 596 S.W.2d 654, 658 (Tex. Civ. App. 1980, writ ref'd n.r.e.); Tex. R. Civ. P. Ann. 278, 279 (Supp. 1990). B. The Collateral Source Rule In support of its no-loss argument, Mt. Hawley argues that the trial court erred in using the collateral source rule to exclude from evidence General Accident's payment of claims in the underlying suit. Mt. Hawley argues that Ragland seeks a duplicate recovery, citing several foreign cases for the proposition that an insured is not harmed by an insurer's refusal to defend if another insurer provides the defense. We have been unable to find any Texas authority supporting the position that the collateral source rule should not be applied under these facts. The collateral source rule is an exception to the general principle forbidding more than one recovery for the same loss. Brown v. American Transfer & Storage Co., 601 S.W.2d 931, 934-36 (Tex.), cert. denied, 449 U.S. 1015 (1980). "The theory behind the collateral source rule is that a wrongdoer should not have the benefit of insurance independently procured by the injured party, and to which the wrongdoer was not in privy." Brown, 601 S.W.2d at 934. In Brown, the supreme court concluded that the collateral source rule applied, because the defendant had not made any contribution to the procurement of the separate insurance policy, and was not in privity, because the plaintiff paid for it. Brown, 601 S.W.2d at 935-36. Similarly, in the present cause, Ragland independently bought insurance from General Accident. Mt. Hawley was not privy to that contract. Thus, under Brown, Mt. Hawley should not benefit from Ragland's procurement of other insurance. We hold that the trial court did not err by excluding evidence that General Accident paid the claims against Ragland in the Trevino matter. Mt. Hawley further argues that the trial court erred in awarding actual damages because Ragland's proper recourse was to pursue a subrogation claim for the pro rata part of the settlement and defense costs that General Accident was obliged to pay. We need not address the merits of this argument. The cause was prosecuted as a subrogation action and, even if the actual damages in the present case should have been limited to a pro rata recovery, Mt. Hawley failed to preserve error as required by Tex. R. App. P. Ann. 52(a) (Pamph. 1991). In the trial court, Mt. Hawley never contested the amount of the actual damages award by pleading an offset, by requesting a remittitur, or by taking any other step. Mt. Hawley did not complain of excessive damages in a motion for new trial as required by Tex. R. Civ. P. Ann. 324 (b)(4) (Supp. 1991). A point of error not preserved is not before the appellate court for review. Lemons v. EMW Mfg. Co., 747 S.W.2d 372, 373 (Tex. 1988). Further, none of Mt. Hawley's seventeen points of error claim that the actual or exemplary damage awards were excessive or should be reduced. An appellate court is not authorized to reverse a trial court's judgment in the absence of properly assigned error. State Bd. of Ins. v. Westland Film Indus., 705 S.W.2d 695, 696 (Tex. 1986). C. The Relationship Between Exemplary and Actual Damages Mt. Hawley argues that the court erred in rendering judgment against it because there is no finding establishing any actual damages relating to a cause of action for which exemplary damages were recoverable. Mt. Hawley urges that in an action for both breach of contract and a resulting tort, tort damages independent of the breach of contract damages must be recovered before exemplary damages may be awarded. See Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex. 1986); Lone Star Steel Co. v. Scott, 759 S.W.2d 144, 156 (Tex. App. 1988, writ denied). Mt. Hawley argues that the actual damages here -- the sum of the settlement and defense costs -- are damages for breach of contract and, therefore, will not support an award of exemplary damages. We disagree. A common law duty of good faith and fair dealing may arise as a result of a special relationship between parties governed or created by a contract. Crim Truck & Tractor Co. v. Navistar Int'l Transp. Corp., 34 Tex. Sup. Ct. J. 647, 648 (June 12, 1991); Arnold v. Nat'l County Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex. 1987). Breach of a duty of good faith and fair dealing is compensable in tort and entitles the wronged party to recover all actual damages proximately caused by the breach. Chitsey v. Nat'l Lloyds Ins. Co., 738 S.W.2d 641, 643 (Tex. 1987). In addition, exemplary damages are recoverable under the same principles allowing recovery of those damages in other tort actions. Arnold, 725 S.W.2d at 168. Ragland's relationship with Mt. Hawley is a special relationship, entitling him to recover for breach of a duty of good faith and fair dealing. The special nature of the relationship created by an insurance contract imposes a duty, independent of that created by the terms of the contract, on the insurance company to treat its insured fairly and in good faith. Arnold, 725 S.W.2d at 167. The default judgment established that Mt. Hawley handled this claim with malice, gross negligence, and reckless and heedless disregard of Ragland's rights. Based on that judgment, the trial court did not err in awarding the actual tort damages that it did. Those damages furnish a sufficient basis for the award of exemplary damages. See Fleming Mfg. Co., 734 S.W.2d at 409. Equally unpersuasive is Mt. Hawley's argument that, because the tort damages equaled the amount Ragland would have received for breach of contract, the actual damages do not support exemplary damages. The damages here could have been recovered under either theory -- breach of contract or breach of a duty of good faith and fair dealing. In a similar case, the supreme court held, "in this case, under either theory, breach of contract or tort, the recovery is the same." Chitsey, 738 S.W.2d at 644. Chitsey suggests that the damages will not be conclusively presumed to be breach-of-contract damages simply because the same amount would be recovered under either theory. See also American Nat'l Petroleum Co. v. Transcontinental Gas Pipe Line Corp., 798 S.W.2d 274, 278 (Tex. 1990); Vail v. Texas Farm Bureau Mut. Ins. Co., 754 S.W.2d 129, 136 (Tex. 1988). The cases Mt. Hawley relies on are inapposite. Neither Jim Walter Homes nor Lone Star Steel involved a contract giving rise to a duty of good faith and fair dealing; neither was a bad faith insurance case. See Jim Walter Homes, 711 S.W.2d at 618; Lone Star Steel, 759 S.W.2d at 156. Under the default judgment, Mt. Hawley was deemed to have admitted breaching its duty of good faith and fair dealing; therefore, the actual damages resulting from its conduct support an award for exemplary damages. The trial court properly awarded exemplary damages. Mt. Hawley's sixth through eleventh points of error are overruled. ATTORNEY'S FEES In its twelfth through fourteenth points of error, Mt. Hawley attacks the award of a one-third fee to Ragland's attorneys. See Tex. Civ. Prac. & Rem. Code Ann. § 38.001 (1986). It argues that the court erred in submitting a jury question asking the jury to determine Ragland's reasonable and necessary attorney's fees as a percentage of his total recovery. It also complains that there is no evidence or insufficient evidence from which the jury could conclude that reasonable and necessary legal fees amounted to one-third of the recovery. First, the court did not err in submitting the question as it did; it need not pose the question in terms of dollars and cents. In similar cases, appellate courts have approved submissions of attorney's fees that inquired what percentage of the recovery should be awarded: We do not find it crucial . . . that the jury know how much money counsel for appellees would receive, although the jury could have calculated in dollars the amount in controversy and what an award of 33 1/3 percent attorney's fees would represent . . . . Whether the fee awarded was proved reasonable is the relevant question . . . . Liberty Mut. Ins. Co. v. Allen, 669 S.W.2d 750, 755 (Tex. App. 1983, writ ref'd n.r.e.); see also March v. Thiery, 729 S.W.2d 889, 897 (Tex. App. 1987, no writ); Hochheim Prairie Farm Mut. Ins. v. Burnett, 698 S.W.2d 271, 278 (Tex. App. 1985, no writ); Texas Farmers Ins. Co. v. Hernandez, 649 S.W.2d 121, 124 (Tex. App. 1983, writ ref'd n.r.e.). Second, sufficient evidence supports the award of attorney's fees. An Austin attorney testified that suits against insurance companies for bad faith are customarily handled on a contingent fee basis. He also testified that in Travis County a reasonable contingent fee would range from one-third to 40%. His testimony is sufficient to support the award. See Burnett, 698 S.W.2d at 278; Hernandez, 649 S.W.2d at 125. Third, contrary to Mt. Hawley's argument, a plaintiff is not required to show that an attorney's fee is "necessary," but only that is "reasonable." Tex. Civ. Prac. & Rem. Code Ann. § 38.001 (1986). The statute also provides that the reasonableness of the fee is presumed where it is shown that it is usual and customary. See Tex. Civ. Prac. & Rem. Code Ann. § 38.003 (1986). In the present cause, there was unrebutted testimony that a one-third contingent fee was usual, customary, and reasonable. That evidence is sufficient to support the award. Burnett, 698 S.W.2d at 278; Allen, 669 S.W.2d at 755. We overrule Mt. Hawley's twelfth through fourteenth points of error. JURY ARGUMENT In its fifteenth point of error, Mt. Hawley argues that the trial court erred in overruling its objection to Ragland's jury argument because it was unsupported by and outside the record. Specifically, it claims that the jury argument improperly referred to Mt. Hawley's "profits," "profit ratio," and "a fair rate of return," even though the record contained no such evidence. Gary Bonham, Mt. Hawley's Vice President of Claims, testified that gross premiums for insurance written in the State of Texas in 1988 were $8,586,582 and that direct losses paid in the state were $494,991. During jury argument, Ragland's counsel referred to those figures and said: Now if you subtract those, which I did during the lunch hour, this is how much money these people took in, less what they paid out in Texas in 1988, just one year. What I am saying is when you come down to the punitive damage award, exemplary damage award, right here in answer to No. 1, let's just take these people's profits away from them in Texas for one year, 1988. That will get the message across to them. That figure right here is what I suggest. Mt. Hawley objected that these figures did not represent profits. The court overruled the objection, instructing the jury to rely on its own memory of the testimony about the figures. Ragland then told the jury that if it figured "the profit ratio on these figures here, it would be something like 90% or 95%." Mt. Hawley objected that there was no evidence of a 90% or 95% profit ratio and that Ragland's counsel made this up out of whole cloth. The trial court overruled the objection. Finally, Ragland urged the jury to "figure out what you think a fair rate of return [is] for an insurance company that does business in a legal manner in the state and then apply that to these figures" as another way of calculating exemplary damages. Again, Mt. Hawley objected that there was no evidence of a reasonable rate of return for insurance companies in Texas. The jury awarded sizeable damages, but far less than Ragland suggested. To reverse a judgment because of improper argument of counsel, two elements must appear: (1) the argument must have been improper; (2) such as to satisfy the reviewing court that it was reasonably calculated to cause and probably did cause the rendition of an improper judgment. Houston Lighting & Power Co. v. Fisher, 559 S.W.2d 682, 684 (Tex. Civ. App. 1978, writ ref'd n.r.e.); see also Standard Fire Ins. Co. v. Reese, 584 S.W.2d 835, 839 (Tex. 1979). We hold that Ragland's jury argument was proper. Evidence about Mt. Hawley's gross premiums and direct losses for 1988 were introduced without objection. In addition, the same witness testified, without objection, to the company's low overhead, mentioning that four claims examiners handled all the nationwide claims of Mt. Hawley and two other insurance companies, that Mt. Hawley employed no investigators, and that Mt. Hawley conducted its Texas business through a Louisiana firm of underwriters. Counsel is afforded considerable latitude in making jury argument, and is "entitled to draw inferences from the evidence presented, whether reasonable or not." Fisher, 559 S.W.2d at 684; see also 3 McDonald, Texas Civil Practice, § 13.052, at 389 (1983). We can distinguish the present cause from those cited by Mt. Hawley. Here, Ragland's attorney drew inferences from the evidence presented. World Wide Tire Co. v. Brown, 644 S.W.2d 144, 146 (Tex. App. 1982, writ ref'd n.r.e.), involved an improper argument urging the jury to put itself in the shoes of the plaintiff. Southland Corp. v. Burnett, 790 S.W.2d 828, 830 (Tex. App. 1990, no writ), involved speculative evidence admitted over proper relevancy objections. Even if the argument was improper, we hold that it did not cause rendition of an improper judgment. Mt. Hawley's fifteenth point of error is overruled. In its remaining points of error, Mt. Hawley asks this Court, in the event of remand, to consider the trial court's action in granting Ragland's motion for partial summary judgment. As this cause is not being remanded, we need not address these points of error. We overrule all of Mt. Hawley's points of error. The judgment of the trial court is affirmed. Marilyn Aboussie, Justice [Before Chief Justice Carroll, Justices Aboussie and Jones] Affirmed Filed: August 21, 1991 [Publish] [Do Not Publish] 1. 1 The judgment was affirmed on appeal to this Court. Trevino v. Lightning Laydown, Inc., 782 S.W.2d 946 (Tex. App. 1990, writ denied). Ragland's personal attorney testified that Lightning Laydown, Inc. was really a sole proprietorship of Ragland, but there is no explanation in the record for why Lightning Laydown, Inc. was identified as a Texas corporation and a separate defendant in the Trevino case and was identified in the judgment as a separate defendant appearing through its corporate representative. 2. We note without relying thereon that, before striking the pleadings and rendering default judgment, the trial court had granted a partial summary judgment declaring that Mt. Hawley was an unauthorized insurer and that Ragland's policy was in violation of the statutory requirements for surplus lines insurers. Further, Mt. Hawley's Vice President of Claims, Gary Bonham, testified by deposition that, as a surplus lines carrier, Mt. Hawley is an unauthorized insurer. 3. Section 8 of Article 1.36 concerns service through the secretary of state. No one suggests that this section was invoked; therefore, we do not discuss it further. 4. The enabling legislation's stated purpose is "to clarify and consolidate procedure for effecting service of process on companies doing business in Texas, whether licensed or not . . . ." 1987 Tex. Gen. Laws, ch. 46, § 2, at 79. 5. 5 Formerly art. 1.14-2, § 11. 1967 Tex. Gen. Laws, ch. 185, § 11 at 412 [Tex. Ins. Code Ann. art. 1.14-2, § 11, since repealed]; see also Lloyd's of London v. Walker, 716 S.W.2d 99, 103 (Tex. App. 1986, writ ref'd n.r.e.).