Holland v. Lovelace

352 S.W.3d 777, 2011 WL 3805519
CourtCourt of Appeals of Texas
DecidedDecember 17, 2011
Docket05-09-00993-CV
StatusPublished
Cited by30 cases

This text of 352 S.W.3d 777 (Holland v. Lovelace) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Holland v. Lovelace, 352 S.W.3d 777, 2011 WL 3805519 (Tex. Ct. App. 2011).

Opinion

OPINION

Opinion By

Justice LANG-MIERS.

Appellant Kim Holland, in her capacity as Receiver of Petrosurance Casualty Company (PCC), brought this suit for damages against three former PCC officers and PCC’s auditors and consultants. After a five-week jury trial, the trial court signed a judgment awarding Holland $30,000 in damages against appellees Charles Ray Lovelace, Robert Carlin Lee> and Richard Wayne Miller (together, the Officers). The trial court’s judgment also provided that Holland take nothing from appellee Murrell, Hall, McIntosh & Co., PLLP (MHM). For the following reasons, we affirm the trial court’s judgment in part and reverse in part and remand.

Background

PCC was an Oklahoma property and casualty insurer regulated by the Oklahoma Insurance Department (OID) and the Oklahoma Insurance Commission. PCC primarily wrote workers compensation insurance for the oil industry. The Officers controlled PCC, and also owned Petro General Agency (PGA), the managing general agency of PCC. MHM, an accounting firm, was PCC’s independent auditor during the time period relevant to this lawsuit.

Oklahoma law requires that every three years the OID designate an independent examiner to conduct an examination of an insurer. In July 2000, Tommy Thompson, a financial examiner for the OID, began PCC’s triennial examination. In a report dated March 15, 2001, Thompson stated that PCC was “impaired,” that is, its assets minus its liabilities were less than $5 million. As a result, the OID placed PCC under the supervision of Cindy Sikorski as of that date. Under supervision, the Officers continued to manage the company with certain restrictions. In April 2001, *782 the OID directed Thompson to reopen the PCC triennial examination to resolve a discrepancy regarding the amount of PCC’s reserves. Thompson’s final May 21, 2001, examination report again stated PCC was impaired but not insolvent.

In January 2002, Carroll Fisher, then the Insurance Commissioner for the State of Oklahoma, filed an application for con-servatorship of PCC with the Oklahoma Insurance Commission, alleging that PCC had not complied with the order of supervision; its surplus was less than $5 million; and PCC’s condition was “such as to render the continuance of its business hazardous” to the public or to policyholders. This application and subsequent proceedings culminated in a court order of liquidation dated March 14, 2002, under which a receiver displaced PCC’s management and took control of the company.

On March 1, 2004, Fisher brought this suit against the Officers, MHM, and others for damages in connection with the failure of PCC. Holland later became Insurance Commissioner and replaced Fisher as plaintiff. The case proceeded to a jury trial in which the evidence focused on the causes and extent of PCC’s insolvency and damages. After three days of deliberations, the jury found that the Officers breached their fiduciary duties to PCC, but did not find that MHM knowingly participated in the breach. The jury made findings to support a conclusion that Holland’s negligence claims were barred by limitations. The jury also found that the conduct of MHM, the Officers, Holland, the OID, and PricewaterhouseCoopers, LLP (a settling defendant), all contributed to PCC’s injuries. The jury awarded Holland $5 million for past damages and $5 million for future damages. But after the trial court made deductions for proportionate responsibility percentages and a settlement credit, and reduced the award by $4.2 million “for ERISA damages,” the trial court’s judgment awarded only $80,000 to Holland.

Issues

Holland appeals and the Officers cross-appeal. Holland brings five issues for our review: (1) the trial court erred by failing to grant her motion for new trial on the basis of jury misconduct, (2) the trial court erred by allowing appellees to designate the OID as a responsible third party, (3) the trial court erred by granting appellees eight peremptory challenges when no antagonism existed among them, (4) the trial court erred by failing to grant Holland’s motion for new trial because the damages awarded by the jury were manifestly too small and were not supported by the evidence, and (5) the trial court erred by ruling that a portion of Holland’s claims were preempted by the federal Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1461 (2010).

In their cross-appeal, the Officers allege that the trial court erroneously overruled their motions for directed verdict and for judgment notwithstanding the verdict. They present three issues: (1) Holland’s claims for breach of fiduciary duty are barred by limitations, (2) Holland failed to submit and obtain jury findings on her discovery rule defense, and (3) the Officers conclusively established that the discovery rule does not “save Plaintiffs breach of fiduciary duty claim against the Individual Defendants from the statute of limitations.”

With regard to MHM, Holland challenges only the trial court’s denial of her motion for new trial with regard to alleged jury misconduct and the trial court’s ruling on her objection to the allocation of peremptory strikes. Because both of these issues apply to all parties, we address those two issues, issues 1 and 3, first.

*783 JURY Misconduct

In her first issue Holland argues that the trial court abused its discretion when it denied her motion for new trial based on alleged jury misconduct. As evidence, Holland presented five affidavits, one deposition, and testimony from three jurors and one alternate juror. In response, ap-pellees argue that Holland overstates the evidence of misconduct, and that the trial court properly denied Holland’s motion for new trial because Holland did not demonstrate that the alleged misconduct caused her sufficient injury to warrant a new trial.

Applicable Law and Standard of Review

To obtain a new trial on the ground of jury misconduct, the movant must establish that the misconduct (1) occurred, (2) was material, and (B) probably caused injury. Tex.R. Civ. P. 827(a); Golden Eagle Archery, Inc. v. Jackson, 24 S.W.3d 362, 372 (Tex.2000). To show probable injury, there must be some indication in the record that the alleged misconduct most likely caused a juror to vote differently than he would have done otherwise on one or more issues vital to the judgment. Pharo v. Chambers Cnty., 922 S.W.2d 945, 950 (Tex.1996). There is no probable injury when the jury probably would have rendered the same verdict even if the misconduct had not occurred. Sharpless v. Sim, 209 S.W.3d 825, 828 (Tex.App.-Dallas 2006, pet. denied). If we conclude that there is no injury, we do not need to determine whether the alleged misconduct was material because the “absence of harm is fatal to the inquiry.” Id.

Additionally, whether misconduct occurred and caused injury is a question of fact for the trial court. Golden Eagle Archery, 24 S.W.3d at 372.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

James Jordan v. State
Court of Appeals of Texas, 2015
Jefferson County, Texas v. Ha Penny Nguyen
Court of Appeals of Texas, 2015
in Re the Estate of William H. McNutt
Court of Appeals of Texas, 2015
City of Justin, Texas v. Rimrock Enterprises, Inc.
466 S.W.3d 269 (Court of Appeals of Texas, 2015)
in Re: Zimmer, Inc.
451 S.W.3d 893 (Court of Appeals of Texas, 2014)
Samuel Crego v. Guillermo Lash & John Hoysick
Court of Appeals of Texas, 2014
Xinia Mayarith Ayala v. Jose L. Ayala
Court of Appeals of Texas, 2014

Cite This Page — Counsel Stack

Bluebook (online)
352 S.W.3d 777, 2011 WL 3805519, Counsel Stack Legal Research, https://law.counselstack.com/opinion/holland-v-lovelace-texapp-2011.