In Re: Starr Indemnity & Liability Company v. the State of Texas

CourtCourt of Appeals of Texas
DecidedAugust 15, 2024
Docket12-24-00191-CV
StatusPublished

This text of In Re: Starr Indemnity & Liability Company v. the State of Texas (In Re: Starr Indemnity & Liability Company v. the State of Texas) 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
In Re: Starr Indemnity & Liability Company v. the State of Texas, (Tex. Ct. App. 2024).

Opinion

NO. 12-24-00191-CV

IN THE COURT OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT

TYLER, TEXAS

IN RE: §

STARR INDEMNITY & LIABILITY COMPANY, § ORIGINAL PROCEEDING

RELATOR §

MEMORANDUM OPINION

Relator, Starr Indemnity & Liability Company, filed this original proceeding in which it challenges Respondent’s decision to quash nonparty subpoenas. 1 We deny the writ.

BACKGROUND

This case arises out of a separate personal-injury lawsuit (the Hernandez Lawsuit) filed by Tomas Hernandez against, among other parties, Real Party in Interest Mewbourne Oil Company (Mewbourne). Hernandez alleged that he suffered bodily injuries while working for his employer, Real Party in Interest Greene’s Energy Group (Greene’s), on an oil and gas well owned and operated by Mewbourne. Pursuant to the Master Services Agreement between itself and Greene’s, Mewbourne demanded a defense and indemnity from Greene’s and “additional insured” coverage from Greene’s insurer. Relator herein, the commercial general liability insurer for Greene’s, acknowledged that it had a duty to defend Mewbourne as an additional insured under Greene’s policy. Relator

1 Respondent is the Honorable Kerry L. Russell, Judge of the 7th District Court in Smith County, Texas. appointed an attorney, Ian Beliveaux of the firm of Donato, Brown & Pool, P.C., as defense counsel, under a reservation of rights. Mewbourne, believing that the reservation of rights created a conflict of interest that necessitated the appointment of independent counsel, hired Thomas Paterson of Susman Godfrey L.P. Starr purported to permit Mewbourne to retain Paterson, but agreed to pay Paterson only its lower “panel counsel” rates, and required certain releases (to which Mewbourne refused to agree) for such payment. During the pendency of the Hernandez Lawsuit, Mewbourne retained two additional law firms (Walters, Balido & Crain LLP and Ahmad, Zaitsanos & Mensing, PLLC) and incurred total defense costs of $4,066,106.81. The Hernandez Lawsuit ultimately settled, and Relator paid the settlement amount on behalf of both Greene’s and Mewbourne. Following Relator’s refusal to reimburse Mewbourne for its defense costs, Mewbourne filed suit in Smith County for breach of contract against Greene’s, alleging failure to pay defense costs under the Master Services Agreement, and Relator, alleging failure to pay defense costs under the insurance policy, as well as violations of the Texas Insurance Code. Mewbourne moved for partial summary judgment on liability, alleging that Relator violated its insurance policy as a matter of law by failing to pay for independent counsel for Mewbourne. Respondent granted summary judgment on liability in favor of Mewbourne, finding, “[Relator] breached the Starr CGL Policy by failing to pay Mewbourne’s defense costs with respect to the Hernandez lawsuit in an amount to be proven at a later date,” and further that Relator violated Chapter 542 of the Texas Insurance Code by failing to pay Mewbourne’s defense costs. Respondent additionally ruled, “Mewbourne is entitled to recover its attorney’s fees incurred in prosecuting this action against Starr in an amount to be proven at a later date.” Relator does not contest Respondent’s summary judgment ruling in this proceeding. Subsequently, Relator served notices of deposition by written question and subpoenas duces tecum to Susman Godfrey L.P., Walters, Balido & Crain LLP, and Ahmad, Zaitsanos & Mensing, PLLC, the three law firms Mewbourne hired to represent it in the Hernandez Lawsuit (the Law Firms). The subpoenas required that each firm produce its “complete defense file, including all correspondence, written evaluations, pleadings, discovery, document production, expert materials, depositions, and invoices” for the Hernandez Lawsuit. Mewbourne moved to quash the subpoenas, arguing that (1) the firms’ defense files are privileged and protected from disclosure by attorney-client privilege and the work-product doctrine; (2) the defense files lack

2 probative value because Texas law prohibits a breaching insurer from contesting the reasonableness or necessity of the insured’s defense costs; and (3) the subpoenas were unnecessarily duplicative and burdensome because Mewbourne already produced the documents Relator needed to evaluate the reasonableness and necessity of the defense costs. Relator, in response to Mewbourne’s motion to quash, moved to compel production of the requested documents. Respondent subsequently granted Mewbourne’s motion, quashed the subpoenas, denied Relator’s motion to compel, and generally prohibited Relator from seeking production of documents from the Law Firms. Respondent also denied Relator’s subsequent motion to reconsider. However, neither of Respondent’s orders stated a basis for the rulings. Subsequently, Relator filed this petition for writ of mandamus with this Court.2

AVAILABILITY OF MANDAMUS RELIEF Mandamus is an extraordinary remedy. In re Sw. Bell Tel. Co., L.P., 235 S.W.3d 619, 623 (Tex. 2007) (orig. proceeding). Generally, a writ of mandamus will issue only when the relator has no adequate remedy by appeal and the trial court committed a clear abuse of discretion. In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005) (orig. proceeding). The relator has the burden of establishing these prerequisites, and this burden is a heavy one. In re Fitzgerald, 429 S.W.3d 886, 891 (Tex. App.—Tyler 2014, orig. proceeding.); see In re EPIC Holdings, Inc., 985 S.W.2d 41, 56 (Tex.1998) (orig. proceeding). A trial court abuses its discretion when it acts in an unreasonable or arbitrary manner or, stated differently, when it acts without reference to guiding rules and principles. See In re Colonial Pipeline Co., 968 S.W.2d 938, 941 (Tex. 1998) (orig. proceeding). When a trial court fails “to analyze or apply the law correctly,” it has clearly abused its discretion. Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) (orig. proceeding). “The trial court has no discretion in determining the law or applying the law to the facts.” In re Sherwin-Williams Co., 668 S.W.3d 368, 370 (Tex. 2023) (orig. proceeding). A party may demonstrate the court erred in “determining what the law is or applying the law to the facts, even when the law is unsettled.” In re K & L Auto Crushers, LLC, 627 S.W.3d 239, 247 (Tex. 2021) (orig. proceeding).

2 On May 31, 2024, Mewbourne moved for partial summary judgment on the issue of whether Relator may directly challenge the reasonableness and necessity of Mewbourne’s defense costs. Respondent’s review of this motion is stayed pending this Court’s resolution of this mandamus petition.

3 However, when considering a writ of mandamus, “we focus on the result reached by the trial court rather than its reasons.” In re Tyndell, No. 06-15-00086-CV, 2016 WL 269168, at *3 (Tex. App.—Texarkana Jan. 22, 2016, orig. proceeding) (mem. op.); In re Stevens, 971 S.W.2d 757, 760 (Tex. App.—Beaumont 1998, orig. proceeding). If the trial court expresses an incorrect legal reason for its ruling, we will nevertheless uphold the order on any other grounds supported by the record. Luxenberg v. Marshall, 835 S.W.2d 136, 141–42 (Tex. App.—Dallas 1992, orig. proceeding).

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In Re: Starr Indemnity & Liability Company v. the State of Texas, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-starr-indemnity-liability-company-v-the-state-of-texas-texapp-2024.