Lemke Concrete Construction v. Employers Mutual Casualty Company, Union Mutual Insurance Company of Providence, Emcasco Insurance Company, Patterson, Lamberty, Stanford, Walls & Dwyer, P.C. and John R. Robinson

Citation: Not availableDocket: 05-95-01259-CV

Court: Court of Appeals of Texas; February 25, 1997; Texas; State Appellate Court

Original Court Document: View Document

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Lemke Concrete Construction appealed the trial court's grant of summary judgment in favor of Employers Mutual Casualty Company, Union Mutual Insurance Company of Providence, and Emcasco Insurance Company. The court affirmed the trial court's decision, ruling that there were no material questions of fact regarding Lemke's claims against the carriers. Lemke's claims included allegations of breach of contract, breach of the duty of good faith and fair dealing, negligence in failing to settle and defend against a wrongful discharge claim, violations of the Texas Deceptive Trade Practices Act and the Texas Insurance Code, and vicarious liability for the actions of certain defendants. 

The factual background reveals that Jesus Gonzalez, an employee of Lemke, filed a workers' compensation claim and subsequently threatened to sue Lemke for retaliatory discharge. The carriers acknowledged their representation of Lemke in the workers' compensation matter but stated they would not cover any judgment resulting from Gonzalez's wrongful termination claim. They defended against the workers' compensation claim and settled it without informing Lemke about the settlement, which did not include the retaliatory discharge claim. Lemke later incurred legal fees and settled the wrongful discharge suit for $7,500. The carriers denied coverage for this claim in a letter sent to Lemke.

Lemke initiated a lawsuit against the insurance carriers, claiming multiple legal violations including breach of contract, negligence, and violations of the Texas Insurance Code and DTPA. The basis of Lemke's allegations was the carriers' failure to defend him in a wrongful discharge suit and to inform him about the settlement of a workers' compensation claim. The carriers denied all allegations and moved for summary judgment, asserting that their policies only covered workers' compensation, thus negating any duty to Lemke regarding the wrongful discharge claims. They also argued that their obligation of good faith towards the claimant in the workers' compensation case precluded them from releasing other claims against Lemke. In support of their motion, the carriers submitted various legal documents and pleadings. Lemke countered that coverage existed, and the duty of good faith owed to Gonzalez did not eliminate their duty to him as an insured, while also arguing that the carriers did not address the vicarious liability claim against the settlement attorney. Lemke did not provide additional evidence but relied on previous petitions. The trial court ruled in favor of the carriers, granting summary judgment on all claims and severing the action against the attorney. On appeal, Lemke contended that the carriers did not meet the necessary proof for summary judgment, claiming that without evidence, all facts in his petition should be deemed true. The carriers countered that their motion did not rely on Lemke's lack of a cause of action but rather on evidence negating essential facts of Lemke's claims, asserting that he failed to demonstrate a genuine issue of material fact. Summary judgment standards dictate that the movant must show no material fact disputes exist, and all evidence must be viewed in favor of the non-movant. A summary judgment cannot be affirmed on grounds not presented in the initial motion.

The motion for summary judgment must clearly articulate the specific grounds for the request, as required by Tex. R. Civ. P. 166a(c). This specificity is essential to define the issues and adequately inform the opposing party. A defendant seeking summary judgment must address the plaintiff's claims as stated and demonstrate that the plaintiff cannot succeed on any theory presented. If a nonmovant introduces a new theory of recovery for the first time in response to the motion without amending their pleadings, that theory is not considered by the trial court. Summary judgment is appropriate when the plaintiff cannot prevail on any pleaded theory as a matter of law. The defendant must show there is no cause of action against them, shifting the burden to the plaintiff once the defendant meets this requirement. The plaintiff can counter the motion by asserting that the law does not support the defendant's position, even if material facts are undisputed. Notably, pleadings alone do not count as summary judgment evidence and do not determine the existence of factual issues. However, a court may grant summary judgment based solely on pleadings if the plaintiff’s allegations fail to establish a cause of action. In reviewing such cases, the court must accept all allegations as true and view them favorably towards the pleader. In the case discussed, Lemke's argument that the carriers did not provide evidence for their motion is incorrect, as the carriers did present evidence, including admissions and related pleadings, undermining Lemke's claims. Consequently, the uncontroverted facts in Lemke's petition are not automatically accepted as true. The review of the summary judgment motion follows the Nixon criteria established previously.

Summary judgment may be granted based solely on pleadings if the petition fails to establish a cause of action, as established in Texas case law. In such instances, no additional proof is required, and all factual allegations in the petition are accepted as true. However, Lemke's reliance on cases discussing summary judgments based on insufficient pleadings is inappropriate in a case where summary judgment was sought based on evidence. Lemke's claim was limited to liability based on coverage, while the carriers argued for summary judgment on the grounds of noncoverage, which Lemke did not address in its pleadings. Consequently, the noncoverage liability issue was not properly before the trial court.

The carriers successfully demonstrated that Lemke had no legal cause of action or negated the coverage element essential to Lemke's case. They provided evidence including admissions and relevant policies, shifting the burden to Lemke to present evidence creating a factual dispute regarding coverage or to challenge the carriers' legal argument. Lemke failed to do so, leading to the overruling of its first point of error.

Regarding the second point of error concerning breach of contract, Lemke did not provide sufficient factual discussion or legal authority to support its claim, resulting in a waiver of this point. Additionally, Lemke conceded during oral arguments that the wrongful discharge claim was not covered by the policies, further justifying the court's refusal to consider this point. The court upheld the summary judgment in favor of the carriers, overruling both points of error raised by Lemke.

Lemke contends that the trial court erred in granting summary judgment to the carriers, arguing that there were material questions regarding whether the carriers breached their duty of good faith and fair dealing. He asserts that an insured can pursue claims for negligence, unfair insurance practices, and breach of good faith even in the absence of coverage, as the policies do not exempt liability for unfair claims denial. Lemke claims this duty arises from a special trust relationship rather than the policies themselves. He insists that the carriers should have sought broader general releases in settlements and should have informed him of any settlement offers. Although Lemke acknowledges that the legal principles he cites were not in effect at the time of his claim, he maintains that the carriers failed to act in his best interests and were negligent in their handling of his claims.

The carriers counter that bad faith exists only when there is no reasonable basis to deny or delay payment, asserting that noncoverage provides a valid reason for denial. They argue that Lemke did not properly plead or present evidence for estoppel and that coverage cannot be established by estoppel. Relevant law indicates that an insurer must deal fairly and in good faith in claims processing, with a breach occurring when the denial lacks a reasonable basis. The assessment of reasonable basis for a denial is based on the facts known to the insurer at the time of the denial. Generally, if an insurer promptly denies a claim that is not covered, there is no basis for a bad faith claim. Additionally, waiver and estoppel cannot create coverage not specified in the policy.

Lemke asserts that a bad faith claim can be pursued independently of a policy claim, allowing recovery even for claims not covered by the insurance policy. While it is acknowledged that bad faith claims are independent, Lemke's assertion that he can recover for a bad faith denial related to an uncovered claim is incorrect. The insurance carriers appropriately denied coverage for Gonzalez's wrongful discharge claim against Lemke, rendering the bad faith claim invalid. Additionally, Lemke's argument for estoppel fails as the case pertains to risk coverage rather than forfeiture, and the doctrine of estoppel cannot extend the policy's terms. Consequently, the trial court rightly rejected Lemke's estoppel claim.

In addressing Lemke's fourth point of error regarding alleged negligence by the carriers, he argues that genuine issues of material fact exist regarding the carriers' failure to settle, obtain a release, defend him, and take necessary protective measures. Lemke also claims the carriers misrepresented their representation of him. The carriers counter that Lemke is not liable for workers' compensation benefits and thus not a proper party in related suits, asserting that their duty was to settle only the covered workers' compensation claim for Gonzalez, not to negotiate releases for uncovered claims. 

The legal context highlights the conflicting interests between the injured worker and employer, emphasizing that it was deemed unethical for insurers to allow employers to dictate claims handling. While plaintiffs can defeat summary judgment by presenting evidence creating factual disputes, Lemke failed to provide sufficient evidence regarding additional duties owed by the carriers. The letter from Robinson, which Lemke claims suggests representation, was not included in the summary judgment evidence, and pleadings alone do not constitute such evidence. Thus, Lemke did not meet his burden to establish a material factual issue, resulting in the trial court's summary judgment favoring the carriers.

Lemke's fourth point of error is overruled. In points five, six, and seven, Lemke contends that the trial court improperly granted summary judgment to the insurance carriers, arguing that material questions of fact exist regarding potential violations of the DTPA, the Texas Insurance Code, and vicarious liability concerning the actions of Robinson and his law firm. Lemke asserts that the carriers' summary judgment motion focused solely on noncoverage, neglecting these violations, thus rendering the judgment improper. However, the carriers maintain that all of Lemke's claims hinge on coverage issues.

Applicable legal principles indicate that a party cannot obtain relief without supportive pleadings (Cunningham v. Parkdale Bank). A judgment must align with these pleadings, and issues not explicitly presented to the trial court cannot be considered on appeal (Tex. R. Civ. P. 166a). Lemke's pleadings were limited to coverage claims; therefore, the summary judgment did not address the alleged violations or vicarious liability, as the trial court's ruling was based solely on the noncoverage argument. Lemke conceded the coverage issue during oral arguments. Consequently, points five, six, and seven are also overruled, affirming the trial court's decision to grant summary judgment in favor of Employers Mutual Casualty Company, Union Mutual Insurance Company of Providence, and Emcasco Insurance Company.