Clark Freight Lines, Inc. v. Liberty Insurance Corporation

• Court: Court of Appeals of Texas
• Decided: August 24, 2006
• Docket: 13-05-00256-CV
• Status: Published

Opinion

NUMBER 13-05-256-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

CLARK FREIGHT LINES, INC., Appellant,

v.

LIBERTY INSURANCE CORPORATION, Appellee.

On appeal from the 280th District Court of Harris County, Texas

MEMORANDUM OPINION

Before Justices Hinojosa, Rodriguez, and Garza

Memorandum Opinion by Justice Garza

Clark Freight Lines, Inc. appeals from the trial court's dismissal of its declaratory-judgment action against Liberty Insurance Corporation in an order granting Liberty's verified plea in abatement. We reverse and remand for the following reasons.

According to Liberty's plea in abatement, the action for declaratory judgment filed by Clark Freight involves a billing dispute regarding a workers' compensation insurance policy ("the Policy") that Liberty issued to Clark Freight pursuant to Arkansas statutes creating the Arkansas Workers' Compensation Insurance Plan ("the Plan"). ⁽¹⁾ According to Liberty, the trial court was required to dismiss Clark Freight's action because, before filing suit in Texas, Clark Freight failed to exhaust its administrative remedies with the Arkansas Insurance Department ("the Department").

In response, Clark Freight maintained that it had exhausted its administrative remedies in Arkansas before filing suit and offered as evidence a written complaint it had sent to Liberty, demanding that Liberty correct the billing discrepancy. Clark Freight also sent a copy of that letter to the Department. As a second exhibit, Clark Freight offered a letter to Clark Freight in which the Department stated that Clark Freight's complaint against Liberty involves a "determination of fact," which is to be "done by a court." The Department's response did not direct Clark Freight to any avenue of redress other than litigation.

In addition, Clark Freight's response to the plea also contended, in the alternative, that the administrative remedies identified by Liberty's plea in abatement are not mandatory but rather permissive provisions, thus allowing Clark Freight to forgo them prior to filing suit.

In its reply to Clark Freight's response, Liberty argued that the Department's letter did not establish that Clark Freight had exhausted its administrative remedies. According to Liberty, any dispute under the Plan must be reviewed first by the Plan Administrator, whose decision may be reviewed by a committee appointed by the President of the National Council on Compensation Insurance ("NCCI"). Any party affected by a decision of the NCCI Committee may seek a de novo review by the Arkansas Commissioner of Insurance, whose decision may, in turn, be appealed to the courts of the State of Arkansas.

After holding a hearing on Liberty's plea, the trial court found that Clark Freight has not exhausted its administrative remedies in Arkansas. We disagree. The parties agree that Arkansas law governs this case, and the Arkansas Supreme Court requires exhaustion of an available administrative remedy unless it would be futile to do so. See Hankins v. McElroy, 313 Ark. 394, 855 S.W.2d 310, 312 (Ark. 1993); Arkansas Motor Vehicle Comm'n v. Cantrell Marine, Inc., 305 Ark. 449, 808 S.W.2d 765, 766 (Ark. 1991). Although Liberty correctly points out that Clark Freight has not demonstrated its compliance with the above-referenced provisions, it is equally apparent from the Department's letter that litigation is the only recourse available to Clark Freight. We therefore reverse the order of the trial court and hold that it erred in concluding that this case cannot "go forward because of . . . failure to comply" with those provisions.

In remanding this cause for further proceedings, we note that Liberty has argued both to the trial court and to this Court that even if the administrative remedies were exhausted, this suit must nevertheless be dismissed because it can only be maintained in the state courts of Arkansas. Because the trial court's order does not reflect that it ruled on any forum issues, we express no opinion on the correctness of such arguments. See Tex. R. App. P. 33.1, 47.1.

The trial court's order is reversed and the cause is remanded for further proceedings consistent with this opinion.

________________________ DORI CONTRERAS GARZA,

JUSTICE

Memorandum Opinion delivered and

filed this the 24th day of August, 2006.

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