in Re American Casualty Company of Reading, Pennsylvania

• Court: Court of Appeals of Texas
• Decided: September 19, 2007
• Docket: 10-07-00252-CV
• Status: Published

Opinion

IN THE

TENTH COURT OF APPEALS

 

No. 10-07-00252-CV

In re American Casualty Company

of Reading, Pennsylvania

Original Proceeding

Opinion

            American Casualty Company of Reading, Pennsylvania seeks a writ of mandamus compelling Respondent, the Honorable Gene Knize, Judge of the 40th District Court of Ellis County, to set aside an order granting a motion by the real parties in interest to lift an abatement order and permit discovery in the underlying suit.  We will conditionally grant the relief requested.

Background

            Belinda Parker-Jett and her husband Tim filed suit in 2003 against American Casualty, a workers compensation insurance carrier, alleging that American Casualty had improperly delayed or denied payment of medical benefits and other expenses incurred for a work-related injury suffered by Parker-Jett.  They alleged claims for breach of contract, deceptive trade practices, unfair insurance practices, and breach of the duty of good faith and fair dealing.  They later requested an abatement of the suit pending resolution of administrative proceedings before the Texas Workers’ Compensation Commission[1] regarding American Casualty’s denial of reimbursement for mileage and prescription medications and its denial of coverage for psychological treatment.  Respondent granted this request in August 2004, ordering that the suit be abated “until such time as Plaintiff has fully and completely exhausted her administrative remedies.”

            The plaintiffs filed a motion to lift the abatement order in April 2007, stating that “all remedies have been exhausted.”  American Casualty filed a response opposing any lifting of the abatement order.  American Casualty advised Respondent that the plaintiffs were still pursuing an appeal in a Dallas County district court of an adverse administrative decision by the Division on their claim regarding coverage for psychological treatment, that the claim regarding reimbursement for prescription medications remained pending before the Division, and that plaintiffs’ counsel had agreed that they were not entitled to reimbursement for mileage.

            At a hearing on the motion to lift the abatement order, American Casualty reiterated these contentions, and the plaintiffs did not refute them.  Instead, plaintiffs’ counsel argued, “We’ve had this abated since 2004.  We believe we need to move forward on this case.  It’s been three years now, and there’s a good chance discoverable materials are not going to be available anymore.”  Over American Casualty’s objection, Respondent advised that he would lift the abatement order “as to any discovery.”  Respondent’s written order provides in pertinent part, “ORDERED that the abatement of this lawsuit is lifted with respect to the parties’ ability to conduct discovery only.  For all purposes other than discovery, the suit remains abated.”

Abuse of Discretion

            Mandamus relief is available only to correct a clear abuse of discretion when there is no adequate remedy by appeal.  In re Tex. Dep’t of Family & Protective Servs., 210 S.W.3d 609, 612 (Tex. 2006) (orig. proceeding); In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-36 (Tex. 2004) (orig. proceeding).

            The parties do not disagree that the principles enunciated in American Motorists Insurance Co. v. Fodge and similar cases govern the abatement procedures in this case.  63 S.W.3d 801 (Tex. 2001).  In that case, the Supreme Court held that a compensation claimant cannot prosecute a suit for benefits and damages resulting from a denial of benefits without a prior determination by the Division that she is entitled to those benefits.  See id. at 804-05.  This is because the Division has exclusive jurisdiction to determine a claimant’s entitlement to benefits.  Id. at 804; see also Tex. Mut. Ins. Co. v. Tex. Dep’t of Ins., 214 S.W.3d 613, 619 (Tex. App.—Austin 2006, no pet.); Tex. Mut. Ins. Co. v. Sonic Sys. Int’l, Inc., 214 S.W.3d 469, 480 (Tex. App.—Houston [14th Dist.] 2006, pet. denied); Roskey v. Continental Cas. Co., 190 S.W.3d 875, 880 (Tex. App.—Dallas 2006, pet. denied).

            When a plaintiff files suit related to claims lying within the exclusive jurisdiction of the Division which the Division has not yet finally resolved, “the court may abate proceedings to allow a reasonable opportunity for the jurisdictional problem to be cured.”  Am. Motorists Ins., 63 S.W.3d at 805; accord In re Tex. Mut. Ins. Co., 157 S.W.3d 75, 82-83 (Tex. App.—Austin 2004, orig. proceeding).  The Supreme Court later explained in more detail how this abatement procedure relates to the trial court’s jurisdiction in a case involving the Texas Motor Vehicle Board and claims arising under the exclusive jurisdiction of the Texas Motor Vehicle Commission Code.

McDavid must exhaust its administrative remedies before the trial court determines the damages arising from McDavid’s Code-based claims.  Until McDavid exhausts its administrative remedies to obtain final Board findings on the Code issues, the trial court lacks subject matter jurisdiction to try the alleged damages arising from McDavid’s Code-based claims.

Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 227 (Tex. 2002).

            Applying the Subaru analysis to the present case, “the trial court lacks subject matter jurisdiction” to try the plaintiffs’ claims until the plaintiffs have exhausted their administrative remedies with the Division.  Id.  It is undisputed that the plaintiffs have not yet exhausted their administrative remedies.  Therefore, because “the trial court lacks subject matter jurisdiction,” Respondent abused his discretion by lifting the abatement order to permit discovery.

Adequate Remedy

            American Casualty argues that it has no adequate remedy by appeal because Respondent has refused to fully abate claims for which the Division still has exclusive jurisdiction.  As we have explained, the trial court lacks subject matter jurisdiction over the claims of the real parties in interest.  Thus, we must decide whether American Casualty has an adequate remedy by appeal to challenge Respondent’s order permitting discovery in a case in which Respondent has not yet acquired (and may not ever acquire) subject matter jurisdiction.

            In Prudential Insurance, the Supreme Court explained that the determination of whether a litigant has an adequate remedy “resists categorization.”  148 S.W.3d at 136.

Mandamus review of significant rulings in exceptional cases may be essential to preserve important substantive and procedural rights from impairment or loss, allow the appellate courts to give needed and helpful direction to the law that would otherwise prove elusive in appeals from final judgments, and spare private parties and the public the time and money utterly wasted enduring eventual reversal of improperly conducted proceedings.  An appellate remedy is “adequate” when any benefits to mandamus review are outweighed by the detriments.  When the benefits outweigh the detriments, appellate courts must consider whether the appellate remedy is adequate.

            This determination is not an abstract or formulaic one; it is practical and prudential.  It resists categorization, as our own decisions demonstrate.  Although this Court has tried to give more concrete direction for determining the availability of mandamus review, rigid rules are necessarily inconsistent with the flexibility that is the remedy’s principal virtue.  

Id.

            Thus, in a case procedurally similar to this one, the Beaumont Court of Appeals granted mandamus relief from an order requiring defendants to submit to depositions even though the court had ordered the parties to arbitration in parallel litigation.  See In re Ghanem, 203 S.W.3d 896, 900 (Tex. App.—Beaumont 2006, orig. proceeding).

            This case is also procedurally similar to innumerable arbitration cases in which it has been held that a party has no adequate remedy by appeal when it is wrongfully denied the benefits of its agreement to arbitrate.  See, e.g., In re Dallas Peterbilt, Ltd., 196 S.W.3d 161, 163 (Tex. 2006) (per curiam) (orig. proceeding); Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 272-73 (Tex. 1992) (orig. proceeding).

            As a carrier in the workers’ compensation system, American Casualty has a statutory expectation that claims will be administratively determined by the Division before litigation may be pursued.  Absent mandamus relief, American Casualty will be deprived of the benefits of the workers’ compensation system.  Cf. Jack B. Anglin Co., 842 S.W.2d at 272-73 (“Absent mandamus relief, Anglin would be deprived of the benefits of the arbitration clause it contracted for, and the purpose of providing a rapid, inexpensive alternative to traditional litigation would be defeated.”).  Therefore, we hold that American Casualty has no adequate remedy by appeal.

Conclusion

We conditionally grant the requested writ of mandamus.  The writ will issue only if Respondent fails to advise this Court in writing within fourteen days after the date of this opinion that he has vacated the order he signed on August 3, 2007 lifting the abatement order so the parties could conduct discovery.

FELIPE REYNA

Justice

Before Chief Justice Gray,

Justice Vance, and

Justice Reyna

(Chief Justice Gray dissenting)

Writ conditionally granted

Opinion delivered and filed September 19, 2007

[OT06]

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[1]               Effective September 1, 2005, the Texas Workers' Compensation Commission was abolished and its rules and duties were transferred to the Texas Department of Insurance, Division of Workers’ Compensation.  See Act of May 29, 2005, 79th Leg., R.S., ch. 265, §§ 8.001(b), 8.004(a), 2005 Tex. Gen. Laws 469, 607-08.  Hereinafter, we refer to this agency (both in its present and former configurations) as “the Division.”

. App. 2005, order).

                                                                   TOM GRAY

                                                                   Chief Justice

Before Chief Justice Gray,

          Justice Vance, and

          Justice Reyna

(Justice Vance concurring with note)*

Affirmed

Opinion delivered and filed April 20, 2005

Do not publish

[CR25]

          * “(Justice Vance concurs with a note.  Under the Hawkins standard, we should consider the cumulative prejudicial effect of all improper arguments in determining the severity of the misconduct.  Hawkins v. State, 135 S.W.3d 72, 77 (Tex. Crim. App. 2004).  (“Prejudice is clearly the touchstone of the first factor” of the test.)  We should also consider whether the trial court’s instruction was adequate to cure the prejudice caused by the arguments that the trial court had found to be improper.)”