Harwell v. State Farm Mutual Automobile Insurance Co.

OPINION DAY, Justice. Valerie Harwell, as Administratrix of the Estate of Tammy D. Hubbard, Deceased; Eric L. Leatherman, and Eric Christopher Leatherman (appellants) appeal from summary judgment for State Farm Mutual Automobile Insurance Company (State Farm). We affirm. The summary judgment evidence shows the following: — 496 — 1. December 5, 1986. Eric Christopher Leatherman (Christopher) was involved in an automobile accident with Tammy D. Hubbard, which resulted in Hubbard’s death. Tammy was the daughter of Lula Hubbard, who was the insured under State Farm’s automobile liability insurance policy (the policy). 2. December 2, 1988. Christopher and Eric L. Leatherman filed their Plaintiffs Original Petition against “Tammy D. Hubbard, Deceased” in Cause No. 348-117259-88 in the 348th District Court of Tarrant County. The petition recites that Hubbard could be served with process “by serving the Temporary Administrator or Administrator of the Estate of TAMMY HUBBARD, Deceased, Fort Worth, Tar-rant County, Texas.” The petition does not name the administrator of Hubbard’s estate, nor does it give any further address information. The Leathermans were represented by John M. Groce. 3. December 2, 1988. Groce filed an Application for Temporary Administrator for the Estate of Tammy D. Hubbard, Deceased, in Probate Court No. 2 in Tar-rant County. The probate court entered an order appointing Valerie Harwell temporary administrator of Hubbard’s estate. 4. January 9, 1989. Harwell received service of citation of the suit on behalf of Hubbard’s estate. Harwell was not qualified as administrator for Hubbard’s estate, however, because she had neither posted the required $13,000 bond nor received her letters of temporary administration. Har-well did not send a copy of the Leather-mans’ petition to State Farm. 5. July 20, 1989. Groce sent a letter to State Farm, advising State Farm that he represented the Leathermans and that a lawsuit had been filed against Tammy D. Hubbard, Deceased. Groce included a copy of the petition, the police report of the accident, and a letter from the 348th District Court coordinator. Groce advised State Farm to file an answer by August 23, 1989 in order to avoid a default judgment for the Leathermans. The letter contains no information that Harwell had accepted service for Hubbard, or that she had been appointed temporary administrator of Hubbard’s estate. The only indication of Harwell’s capacity is the notation at the bottom of the letter: “cc: Ms. Valerie Harwell, Temporary Administrator.” 6. September 11, 1989. Groce had a telephone conversation with C. Victor Anderson, Jr., State Farm’s attorney, about the Leathermans’ suit. Groce advised Anderson that Groce was going to make Harwell’s temporary administration of Hubbard’s estate permanent, amend the Leathermans’ petition, obtain new service on Harwell, and proceed with the case to judgment. Anderson responded that the statute of limitations had run, that Groce could not proceed, and that State Farm “was not going to spend any money for representation of Ms. Harwell or furnish her with a defense.” 7. November 22, 1989. Harwell qualified as administrator of Hubbard’s estate. 8. March 15, 1990. The Leathermans filed their First Amended Petition against “Tammy D. Hubbard, Deceased.” Neither Harwell nor Hubbard’s estate is named as a party in the amended petition. The petition does recite that Hubbard’s estate may be served through Valerie Harwell, the estate’s permanent administrator. 9. March 20, 1990. Harwell filed a Waiver of Citation, in which she alleged that she was the defendant in Cause No. 348-117259-88 and waived service of process. Harwell also filed an answer on behalf of Hubbard’s estate. Harwell did not send copies of the Leathermans’ amended petition to State Farm, nor did she ask State Farm to defend her or Hubbard’s estate in the suit. 10. May 29, 1991. The trial court issued a notice setting Cause No. 348-117259-88 for trial the week of August 5, 1991. Harwell did not forward a copy of this notice to State Farm. 11. August 8, 1991. Cause No. 348-117259-88 was tried to the court. Harwell appeared at trial but offered no evidence or argument in defense of Hubbard’s estate. — 497 — 12. September 20, 1991. The trial court rendered judgment against “Tammy D. Hubbard, Deceased.” Harwell failed to send a copy of this judgment to State Farm. 13. October 21, 1991. Groce sent a second letter to State Farm, in which he enclosed a copy of the judgment and sought enforcement of same against the policy. On October 21, thirty-one days had passed since the judgment was signed, and the trial court had lost its plenary power. See TEX.R.CIV.P. 306a, 329b. 14. November 12, 1991. State Farm filed a petition for declaratory judgment, asking the trial court to declare that it had no obligation under the policy to pay the judgment. 15. June 18, 1992. State Farm moved for summary judgment on its declaratory judgment action. Grounds alleged in the motion for summary judgment were that State Farm had no obligation to pay the judgment because: (1) neither Lula Hubbard nor Valerie Harwell promptly complied with the policy’s notice of suit provision, thus prejudicing State Farm’s defense of the lawsuit; and (2) the judgment was invalid because it was rendered against the wrong party, and a necessary party to the suit was never named as a defendant. 16. August 6, 1992. The trial court granted summary judgment for State Farm. In a summary judgment case, the issue on appeal is whether the movant met its burden for summary judgment by establishing that there exists no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 678 (Tex.1979); TEX.R.CIV.P. 166a. The burden of proof is on the movant, and all doubts as to the existence of a genuine issue as to a material fact are resolved against it. Great Am. Reserve Ins. Co. v. San Antonio PL Sup. Co., 391 S.W.2d 41, 47 (Tex.1965). Therefore, we must view the evidence in the light most favorable to the nonmovants. See id. In deciding whether there is a material fact issue precluding summary judgment, all conflicts in the evidence will be disregarded, and the evidence favorable to the nonmov-ants will be accepted as true. Montgomery v. Kennedy, 669 S.W.2d 309, 311 (Tex.1984); Farley v. Prudential Ins. Co., 480 S.W.2d 176, 178 (Tex.1972). Every reasonable inference from the evidence must be indulged in favor of the nonmovants and any doubts resolved in their favor. Montgomery, 669 S.W.2d at 311. Evidence that favors the movant’s position will not be considered unless it is uneontroverted. Great Am., 391 S.W.2d at 47. In them first point of error, appellants complain the trial court improperly granted summary judgment for State Farm because, among other things: (1) a genuine fact issue exists about whether State Farm was prejudiced by violation of the notice of suit provision; (2) State Farm did not raise its alleged prejudice as a ground for summary judgment; and (3) State Farm waived any policy violations or is otherwise estopped to raise same because it violated the insurance policy by refusing to defend Harwell. We have previously noted that State Farm moved for summary judgment, in part because Harwell’s violation of the notice of suit provision prejudiced State Farm’s defense. Accordingly, appellants’ argument to the contrary is without merit. We also find State Farm was prejudiced, as a matter of law, by Harwell’s failure to comply with the notice of suit provision in the policy. The policy provided, in pertinent part: PART E — DUTIES AFTER AN ACCIDENT OR LOSS GENERAL DUTIES We must -be notified promptly of how, when and where the accident or loss happened. Notice should also include the names and addresses of any injured persons and of any witnesses. If we show that your failure to provide notice prejudices our defense, there is no liability coverage under the policy. A person seeking any coverage must: 1. Cooperate with us in the investigation, settlement or defense of any claim or suit. — 498 — 2. Promptly send us copies of any notices or legal papers received in connection with the accident or loss. A person who sues for performance of a contractual obligation must prove that all contractual obligations prerequisite to performance have been satisfied. Ratcliff v. National County Mutual Fire Ins. Co., 735 S.W.2d 955, 957 (Tex.App.—Dallas 1987, writ dism’d w.o.j.). This rule applies to insurance contracts. Dairyland County Mutual Ins. Co. v. Roman, 498 S.W.2d 154, 157 (Tex.1973); Ratcliff 735 S.W.2d at 957. Failure to notify an insurer of suit against its insured as required by the policy precludes suit against the insurer if the insurer is prejudiced by the lack of notice. Roman, 498 S.W.2d at 157 n. 2; Ratcliff 735 S.W.2d at 957. The “DUTIES AFTER ACCIDENT OR LOSS” provision in this case contains two notice requirements. First, the insured must give the insurer notice of the accident or loss itself. Second, the insured must promptly send the insurer copies of any notices or legal papers received in connection with the accident or loss. The purpose of the first notice requirement is to enable the insurer to promptly investigate the circumstances while the matter is fresh in the minds of the witnesses. Weaver v. Hartford Acc. & Indem. Co., 570 S.W.2d 367, 369 (Tex.1978). The second notice requirement has different purposes: (1) to advise the insurer that an insured has been served with process and that the insurer is expected to timely file an answer; and (2) to enable the insurer to control the litigation and interpose a defense. Id. The summary judgment evidence conclusively shows that Harwell failed to comply with either of the two notice requirements. She never contacted State Farm in any way regarding Hubbard’s accident with the Leathermans or regarding the Leathermans’ suit itself. State Farm contends Harwell’s complete failure to give notice prejudiced State Farm’s defense of the suit and relieves State Farm from liability under the policy. Appellants, on the other hand, contend State Farm was not prejudiced by Harwell’s failure to comply with the policy’s notice of suit provision because Groce notified State Farm of the suit. As we have previously mentioned, Groce provided State Farm, through Anderson, a copy of the Leather-mans’ original petition and advised State Farm to answer the suit in order to avoid a default judgment. Whatever “notice” this information may have afforded State Farm, it in no way lessened the prejudice State Farm suffered as a result of Harwell’s failure to comply with the policy. At the time Groce forwarded the suit papers to State Farm (July 20, 1989), Harwell was not named in the suit in any capacity and had not been properly served. Indeed, since Harwell had not yet qualified as administrator of Hubbard’s estate, she could not receive service on the estate’s behalf. In September 1989 Groce notified Anderson that Groce was going to amend the Leathermans’ petition, have Harwell qualified as administrator of Hubbard’s estate and re-served, and proceed with the case to judgment. These assertions imposed no duty on State Farm to take any action. No duty is imposed on an insurer to take action in a suit until its insured is served and sends the suit papers to the insurer. Weaver, 570 S.W.2d at 369; Members Ins. Co. v. Branscum, 803 S.W.2d 462, 466-67 (Tex.App.—Dallas 1991, no writ). Moreover, an insurer gratuitously subjects itself to liability when it enters an appearance and tenders a defense for an insured who fails to comply with policy conditions and who has never been served with process. Weaver, 570 S.W.2d at 370. Appellants acknowledge that no duty to defend is imposed on an insurer until its insured is served and sends the suit papers to the insurer. They contend State Farm had notice of service on Harwell, however, because Groce forwarded a copy of the Leathermans’ original petition — with a copy of the citation — to State Farm. The record contains no evidence that the citation was attached to the copy of the petition State Farm received, and Groce’s July 20, 1989 letter does not mention the citation. More important is the fact that any service on Harwell before she qualified as administrator of Hubbard’s estate was invalid. — 499 — Thus, Anderson’s advice to Groce that State Farm would not provide a defense, before Harwell even qualified as the “insured” or received service, was not wrongful. Rather, it was a legitimate response stemming from the fact that State Farm had no duty to act. Even though State Farm knew the Leathermans had filed their suit as early as July 20, 1989, actual knowledge of a claim does not equate to actual knowledge of service of the suit on the insured. Branscum, 803 S.W.2d at 464. The insurer has no duty to track back and forth to the courthouse to see when and if the insured may be served with process. Weaver, 570 S.W.2d at 369. On November 22, 1989, Harwell finally qualified as administrator of Hubbard’s estate and was authorized to accept service of the Leathermans’ petition on the estate’s behalf. Thereafter, the Leathermans amended their petition, Harwell waived service of citation, filed an answer, and appeared at trial. Neither Harwell nor Groce gave State Farm notice of any of these developments. In fact, State Farm received no further information about the suit until Groce forwarded a copy of the judgment thirty-one days after it was signed and after the trial court’s plenary power had expired. State Farm’s duty to defend against the Leathermans’ suit never arose because Har-well never forwarded a copy of the service return to State Farm or requested a defense in any way. State Farm was prejudiced, as a matter of law, by Harwell’s failure to comply with the policy’s notice of suit provision because State Farm had no knowledge of the valid service on Harwell, or of any further proceedings in the suit, until after the judgment was final and the time for filing a motion for new trial or perfecting an appeal had passed. See Branscum, 803 S.W.2d at 363-64. Appellants’ argument that State Farm is estopped to deny liability based on Harwell’s breach of the policy must fail for the same reasons. When Anderson advised Groce that State Farm would provide no defense in the Leathermans’ suit, State Farm had no duty to defend because Harwell had not been properly served, and State Farm had no notice of service. A party cannot be estopped because of its refusal to perform a duty before that duty arises. Moreover, Harwell never asked State Farm to defend the suit. The only communication about this issue came from the Leath-ermans’ attorney, counsel for Harwell’s opponent. We question whether Groce could properly act as agent for both the Leather-mans and Harwell. In addition, Harwell did not represent Hubbard’s estate at the time of Groce’s and Anderson’s conversation; in fact, Hubbard’s estate had no representative at all until several months later. Thus, irrespective of whether Groce’s actions on Harwell’s behalf were proper, Harwell had no connection with Hubbard’s estate — and was therefore not the insured- — until well after Groce’s last pretrial contact with Anderson. Accordingly, any information Groce may have relayed to Harwell as a result of the September 11, 1991 conversation has no bearing whatsoever on this case. Appellants mistakenly rely on Allstate Ins. Co. v. Pare, 688 S.W.2d 680 (Tex.App.—Beaumont 1985, writ ref'd n.r.e.) (per curiam), which is distinguishable from their situation. In that case, although Allstate knew a suit had been filed against its insured (Ernest Pare), there was no evidence Pare had forwarded any documents connected with the lawsuit to Allstate. Allstate challenged the sufficiency of the evidence to show it was not prejudiced by this failure to give notice. Id. at 682. Allstate’s claims representative testified that the insured “cooperated fully” and “pro-vid[ed] any information necessary” under the policy. Id. at 684. In addition, up until the time judgment was rendered against Pare, his Allstate representative repeatedly assured him everything in connection with the suit had been settled. Id. at 682. The Pare court concluded this evidence supported the jury’s finding that Allstate was not prejudiced by Pare’s failure to comply with the notice of suit provision. Id. We hold State Farm has no liability to Harwell or to Hubbard’s estate under the policy because HarweE breached the policy by failing to comply with its notice of suit provision, thereby prejudicing State Farm’s — 500 — defense of this ease.1 Therefore, the trial court properly granted summary judgment for State Farm. We overrule appellants’ first point of error. In light of our holding with regard to this point of error, we deem it unnecessary to consider appellants’ remaining points. The trial court’s judgment is affirmed. Footnotes [1] We do not reach the question of whether the judgment against "Tammy D. Hubbard, Deceased” is valid, since we find State Farm is not liable for that judgment.