TYLER COURT OF APPEALS REVERSES UNDERINSURED-MOTORIST JUDGMENT IN EXCESS OF POLICY LIMITS

Last week, the Tyler Court of Appeals reversed a jury verdict that imposed greater contract liability on Liberty Mutual than the limits in its underinsured-motorist policy. The verdict in Liberty Mut. Ins. Co. v. Sims, No. 12-14-00123-CV, 2015 WL 7770166 (Tex. App.—Tyler Dec. 3, 2015), originated from an automobile accident that injured Rickie Sims while he was driving a commercial vehicle owned by an affiliate of Chesapeake Energy Corporation. Chesapeake had obtained uninsured/underinsured motorist (UM/UIM) coverage through Liberty Mutual Insurance Company. Sims sued the other driver, Liberty, and Sims’ personal automobile carrier, Farmers Texas County Mutual Insurance Company.

In Liberty’s initial discovery responses, it stated that the Chesapeake policy had UIM limits of $1,000,000.00. In later supplemental discovery responses, Liberty produced an amendatory endorsement and explained that its limits were actually $250,000. Five days before trial, the trial court granted Sims’ motion for leave to amend its petition to assert new violations based on the Texas Insurance Code and asserting that Chesapeake’s UIM limits were $1,000,000. The trial court also rejected Liberty’s request for a ruling that its limits were $250,000 as a matter of law and, dernied its motion to exclude any mention at trial of the higher, incorrect limits. The jury found Liberty liable for the incorrect $1,000,000 UIM limits.

The Tyler Court of Appeals reviewed the Liberty policy de novo to determine whether the policy’s provisions regarding the policy limits were ambiguous. The Court found that the policy contained an endorsement that unambiguously set UIM limits at $250,000 and clearly stated that these limits controlled over the main policy’s $1,000,000 limits. The Court rejected Sims’ argument that Liberty’s inconsistent discovery responses created a fact issue for the jury to resolve. The Court found that Liberty had properly supplemented its discovery responses to reflect the correct limits and, that they tendered the $250,000 limits to Sims before trial. The Court also reiterated the well-established principle that a party’s conduct cannot modify or expand coverage, stating that Liberty’s discovery responses could “not change the trial court’s obligation to review and make a legal determination of the policy’s terms and UIM limits.” The Court also found that the trial court improperly allowed Sims to discuss insurance at trial, especially because it allowed discussion of an incorrect amount of coverage. The Court reversed the judgment and remanded the case for a new trial on damages.