DALLAS COURT OF APPEALS DISCUSSES ADMINISTRATIVE TOOL AVAILABLE TO INSURERS TO RECOVER FROM UNINSURED MOTORISTS

Two weeks ago, in an appeal from a jury verdict in favor of an insurance company against an uninsured motorist, the Dallas Court of Appeals discussed a tool that insurers can use in seeking reimbursement for claims paid: the threat of driver's license revocation under the Texas Transportation Code.  In Eoff v. Central Mut. Ins. Co., No. 05-14-00035-CV, 2015 WL 1568374 (Tex. App.--Dallas Apr. 7, 2015), David Eoff allegedly caused an automobile accident involving Charles Cabaniss, an insured of Central Mutual Insurance Company.  After Central Mutual paid Cabaniss for damages related to the accident, Central sought reimbursement from Eoff, who was not listed as an insured under his own policy.  Eoff agreed to pay Central Mutual $8,969 through installment payments, but defaulted on some of his payments.  Central Mutual sued Eoff for breach of contract, and a jury ruled in Central's favor.

The Court of Appeals first addressed Eoff's contention that the trial court did not have jurisdiction over the case because Central Mutual had failed to exhaust its administrative remedies with the Texas Department of Public Safety.  The relevance of the DPS in this case began when Eoff and Central Mutual agreed to sign Form-19, a document issued by the DPS that allows drivers to prevent revocation of their driver's license by showing they have settled a dispute related to an automobile accident.  The form in this case was an "Installment Agreement" that obligated Eoff to make monthly payments to Central Mutual, and this agreement was the contract that Central Mutual claimed that Eoff breached when he stopped making payments. Throughout the litigation, Eoff argued his executed of Form-19 was not a contractual agreement, but merely an administrative mechanism to maintain his license, and that Central Mutual was therefore required to pursue revocation through the DPS before it sued Eoff in district court.

In addressing Eoff's argument, the Court discussed Texas Transportation Code Section 601.151.-.153, which provide for suspension of a license and registration if a driver not covered by liability insurance is involved in an accident resulting in bodily injury or death or in damage of at least $1,000 to a person's property.  A license-holder may prevent suspension, however, by the timely filing of Form SR-19 with the DPS, described in the regulations as an installment agreement or other similar agreement between the parties.  If the license-holder defaults on the agreement, the other party may then file a notice of default through Form SR-73, which will result in suspension of the license.

The Court of Appeals rejected Eoff's argument claiming Central Mutual had to exhaust its administrative remedies with DPS before filing suit and obtaining a judgment because other provisions of the Code expressly allowed for judicial remedies after a driver’s default. Specifically, the Code allows a party that obtains a judgment to send the DPS Form SR-42 (a transcript of civil proceedings) and Form SR-62 (notice of unsatisfied judgment). The Court concluded the trial court had proper jurisdiction and that Form-19 was a binding contract that obligated Eoff to pay Central Mutual $8,069.25 through monthly installments.  The Court also found the trial court erred by entering judgment of this entire amount, holding Eoff was only liable for past-due amounts of $1,200 because the installment agreement did not contain an acceleration clause and Eoff had done nothing to repudiate the entire contract.

This case provides helpful instructions on how insurers may use the Transportation Code to encourage payment from at-fault motorists, but also stresses the importance of including every desired term in installment agreements like Form SR-19, such as acceleration clauses or security agreements to ensure full payment from the uninsured motorist.