Osbaldo Hurtado Avalos and Antonio Hurtado as Assignees of Karla Flores Guevara v. Loya Insurance Company

• Court: Court of Appeals of Texas
• Decided: July 20, 2017
• Docket: 04-17-00070-CV
• Status: Published

Opinion

ACCEPTED 04-17-00070-CV FOURTH COURT OF APPEALS SAN ANTONIO, TEXAS 7/20/2017 10:56 AM

NO. 04-17-00070-CV FILED Fourth Court of Appeals ***** San Antonio, TX IN THE Accepted: FOURTH COURT OF APPEALS SAN ANTONIO, TEXAS 3:43 pm, Jul 20, 2017

***** OSBALDO HURTADO AVALOS AND ANTONIO HURTADO, AS ASSIGNEES OF KARLA FLORES GUEVARA, Appellants

V.

LOYA INSURANCE COMPANY, Appellee

*****

APPEALED FROM THE 111TH JUDICIAL DISTRICT COURT OF WEBB COUNTY, TEXAS

***** BRIEF OF APPELLANTS *****

THE GREEN LAW FIRM, P.C. 34 S. Coria Brownsville, Texas 78520 Telephone : (956) 542-7000 Facsimile : (956) 542-7026 jorge@thegreenlawfirmpc.com letygarza@thegreenlawfirmpc.com

BY: /s/ Jorge A. Green JORGE A. GREEN State Bar No. 24038023 LETICIA GARZA State Bar No. 24092405

APPELLANTS REQUEST ORAL ARGUMENT IDENTITY OF PARTIES AND COUNSEL In accordance with Texas Rule of Appellate Procedure 38.1(a), Appellant presents the following list of all parties to the trial court’s order appealed from and the names and addresses of all trial and appellate counsel:

Names Counsel Party Osbaldo Hurtado JORGE A. GREEN Appellants Avalos and Antonio State Bar No. 24038023 Hurtado as Assignees LETICIA GARZA of Karla Flores State Bar No. 24092405 Guevara THE GREEN LAW FIRM, P.C. 34 S. Coria St. Brownsville, TX 78520 (956) 542-7000 Telephone (956) 542-7026 Fax jorge@thegreenlawfirmpc.com letygarza@thegreenlawfirmpc.com Loya Insuance JOHN R. LYDE Appellee Company State Bar No. 12712700 VIDAURRI, LYDE, RODRIGUEZ & HAYNES, LLP 202 N. 10 th Avenue Edinburg, Texas 78541 (956) 381-6602 Telephone (956) 381-0725 Fax rlyde@vlrhlaw.com

i TABLE OF CONTENTS

IDENTITY OF PARTIES AND COUNSEL i TABLE OF CONTENTS ii TABLE OF AUTHORITIES iv STATEMENT OF THE CASE 1 STATEMENT OF ORAL ARGUMENT 3 ISSUE PRESENTED 4 STATEMENT OF FACTS 6 SUMMARY OF ARGUMENT 12 ARGUMENT 14

I. THIS COURT SHOULD REVERSE THE TRIAL COURT’S RULING BECAUSE APPELLEE HAD A DUTY TO DEFEND MS. FLORES GUEVARA ...................................................................................................14

A. The Eight Corners Rule Requires That An Insurance Company Defend Its Insured When A Lawsuit’s Pleadings Fall Within The Coverage Provided In Its Insurance Contract ....................................14

B. The Pleadings Of The Lawsuit Against Ms. Flores Guevara Fell Within The Coverage Provided By Appellee to Ms. Flores Guevara.17

C. The Texas Supreme Court Has Never Expressly Recognized An Exception To The Eight Corners Rule................................................18

II. THIS COURT SHOULD REVERSE THE TRIAL COURT’S DECISION ON APPELLEE’S TRADITIONAL MOTION FOR SUMMARY JUDGMENT ON DECLARATORY JUDGMENT BECAUSE APPELLEE’S REQUEST WAS NO LONGER RIPE .................................20

A. Declaratory Actions Are Moot If One Of The Parties Has Already Chosen Its Course Of Conduct............................................................20

ii B. Therefore, Appellee’s Request For A Declaratory Action, After It Had Already Committed To Its Conduct, Renders A Declaratory Action Moot....................................................................................................22

III. THE TRIAL COURT ERRED IN GRANTING APPELLEE’S NO EVIDENCE MOTION FOR SUMMARY JUDGMENT.............................22

A. A No-Evidence Motion for Summary Judgment Must Not Be Conclusory...........................................................................................22

B. Appellee’s No-Evidence Motion For Summary Judgment Is Conclusory...........................................................................................24

C. Whether Or Not Ms. Flores Guevara Was Driving Is Irrelevant and Barred By Res Judicata.......................................................................25

D. Adequate Time for Discovery Had Not Passed..................................27

III. PRAYER........................................................................................................31

iii TABLE OF AUTHORITIES

Amouri v. Southwest Toyota, Inc., 20 S.W.3d 165, 168 (Tex.App.-Texakana 200, pet. denied)...............14,23,25

Argonaut Sw. Ins. Co. v. Maupin, 500 S.W.2d 633, 635 (Tex.1973)..................................................................16

Barr v. Resolution Trust Corp., 837 S.W.2d 627, 628 (Tex.1992)..................................................................26

Benson v. Wanda Pet. Co., 468 S.W.361, 363 (Tex.1971).......................................................................27

Boerjan v Rodriguez, 436 S.W.3d 307, 310 (Tex..2014).................................................................23

Brewer & Pritchard, P.C. v. Johnson, 167 S.W.3d 460, 468 (Tex.App.-Houston [14th Dist.] 2005, pet. denied)....28

Brown v. Brown, 145 S.W.3d 745, 754 (Tex. App.—Dallas 2004, pet. denied)......................22

Canutillo Indep. School Dist. v. National Union Fire Ins. Co, 99 F.3d 695,701(5th Cir 1996)......................................................................16

City of San Antonio v. Cortes, 468 S.W.3d 580, 586 (Tex.App.-San Antonio 2015, pet. denied)................26

Cook v. Admiral Ins. Co., 438 F. App'x 313 (5th Cir. 2011)..................................................................15

Cmty. Initiatives, Inc. v. Chase Bank, 153 S.W.3d 270 (Tex. App.—El Paso 2004)................................................28

Eagle Props., Ltd. v. Scharbauer, 807 S.W.2d 714, 721 (Tex.1990)..................................................................26

iv Fort Brown Villas III Condo. Ass’n v. Gillenwater, 285 S.W.3d 879. 882 (Tex.2009)..................................................................27

Gehan Homes, Ltd. v. Emplrs Mut. Cas. Co., 146 S.W.3d 833 (Tex. App.—Dallas 2004).............................................15,16

Gore Design Completions, Ltd. v. Hartford Fire Ins. Co., 538 F.3d 365 (5th Cir. 2008).........................................................................16

Guide One Elite Ins. v. Fielder Rd. Baptist Church, 197 S.W. 3d 305, 310 (Tex. 2006)......................................................15,19,20

Gulf Chemical & Metallurgical Corp. v. Associated Metals and Minerals Corp., 1 F.3d 365, 367 (5th Cir. 1993)......................................................................19

Hamlett v. Holcomb, 69 S.W.3d 816, 819 (Tex.App.-Corpus Christi 2002, no pet.)......................25

Heyden Newport Chem. Corp. v. S. Gen. Ins. Co., 387 S.W.2d 22, 24 (Tex.1965)............................................................14,16,20

Holloway v. Tex. Elec. Util. Constr., Ltd., 282 S.W.3d 207 (Tex. App.—Tyler 2009)....................................................23

J.E.M. v. Fidelity & Cas. Co., 928 S.W.2d 668, 671 (Tex. App.-Houston [1st Dist.] 1996, no writ).......20,21

KCM Fin. LLC v. Bradshaw, 457 S.W.3d 70, 79 (Tex.2015)......................................................................23

King v. Dallas Fire Ins. Co., 85 S.W. 3d 185, 187 (Tex. 2002).............................................................15,16

Lincoln General Ins. Co. v. Aisha Learning Center, 468 F. 3d 857,858(5th Cir. 2006)..................................................................15

Martinez v. City of San Antonio, 40 S.W.3d 57, 591-92 (Tex.App.-San Antonio 2001, pet. denied)..............29

v McClure v. Atterbury, 20 S.W.3d 722, 729 (Tex. App.-- Amarillo 1999, no pet.)...........................28

McMahan v. Greenwood, 108 S.W.3d 467, 498 (Tex.App.-Houston [14 th Dist.] 2003, pet. denied)......................................................................................................28,29

Michael v. Dyke, 41 S.W.3d 746, 751-52 (Tex.App.-Corpus Christi 2001, no pet.)...........23,25

Miller v. Elliot, 94 S.W.3d 38, 42 (Tex. App.—Tyler 2008)..................................................22

Moorehouse v. Chase Manhattan Bank, 76 S.W.3d 608, 612 (Tex.App.-San Antonio 2002, no pet.).........................27

National Union Fire Ins., Co. v. Merch. Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex. 1997)............................................................14,15

Northfield Ins. Co. v. Loving Home Care, Inc., 363 F. 3d 523, 531 (5th Cir. 2004).................................................................18

Ortiz v. Collins, 203 S.W.3d 414, 425 (Tex.App.-Houston [14th Dist.] 2006, pet. denied)....23

Quinney Elec., Inc. v. Kondos Entm’t Inc., 988 S.W.2d 212, 213 (Tex.1999)..................................................................26

Restaurant Teams Int'l., Inc. v. MG Securities Corp., 95 S.W.3d 336, 339 (Tex. App.-- Dallas 2002, no pet.)................................28

Rowan Cos. v. Griffin, 876 F.2d 26, 28 (5th Cir.1989).......................................................................21

Scott-Burr Stores Corp. v. Wilcox, 194 F.2d 989, 900 (5th Cir. 1952)..................................................................21

State & Cty. Mut. Fire Ins. v. Miller, 52 S.W.3d 693, 696 (Tex.2001)....................................................................26 vi Sysco Food Servs. v. Trapnell, 890 S.W.2d 796, 801 (Tex.1994).............................................................26,27

TemPay, Inc. v. TNT Concrete & Constru., Inc., 37 S.W.3d 517, 522-23 (Tex.App.-Austin 2001), pet. denied).....................28

Timpte Indus. v. Gish, 286 S.W.3d 306, 310 (Tex.2009).............................................................23,24

Tex. R. Civ. P. 166a(i).............................................................................................23

Tex. R. Civ. P. 166c.......................................................................................23,24,25

Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819 (Tex. 1997).........................................................................16

Weaver v. Highlands Ins., 4 S.W.3d, 829 n.2 (Tex.App.-Corpus Christi 2002, no pet.)....................23,25

Zurich Am. Ins. Co. v. Nokia, Inc., 268 S.W.3d 487, 491 (Tex. 2008)............................................................14,15

vii STATEMENT OF THE CASE This appeal stems from an order by the 111th District Court in Webb County

granting Appellee’s, Loya Insurance Company, Traditional and No-Evidence

Motions for Summary Judgment. (C.R. at 280) Appellants (the Hurtados) as

assignees of Karla Flores Guevara sued Defendant/ Appellee in that case, arguing

that Fred Loya breached its contract with appellee and violated various statutory

and common law duties by not providing a defense in an earlier suit. (C.R. at 33).

In the underlying case, Appellants/Plaintiffs were injured as a result of a

motor vehicle collision. (C.R. at 32). The Hurtados sued Karla Flores Guevara, the

listed driver of the other vehicle on the police report. (C.R. at 32). Ms. Flores

Guevara was an insured of Loya Insurance Company. Defendant/Appellee Loya

Insurance Company initially assigned counsel to defend her in that lawsuit (C.R. at

32). Just prior to her deposition, Ms. Flores Guevara told that lawyer, an employee

of Loya Insurance Company that she had not been the driver of the vehicle

involved in the incident with the Hurtados. (C.R. at 134) After Loya was told by

its employee (Ms. Flores Guevara’s original counsel) that his client claimed to

have defrauded Loya, Loya denied the existence of coverage and stopped

defending Ms. Flores Guevara (C.R. at 32). Loya’s denial was based on Ms.

Flores Guevara’s claim that her husband, an excluded driver, had been the driver of

1 the vehicle involved in the wreck with the Hurtados. (C.R. at 211) Subsequently, a

judgment was granted in favor of the Hurtados, and the Hurtados accepted an

assignment of Ms. Flores Guevara’s claims against Loya Insurance Company.

(C.R. at 174-177)

On May 17, 2016, as assignees of Karla Flores Guevara’s claims, the

Hurtados sued Appellee/Defendant Loya Insurance Company, alleging, inter alia,

that Defendant Loya Insurance Company breached their duty to defend her when it

pulled coverage and instructed her attorney withdraw from her representation.

(C.R. at 16-22)

Appellee/Defendant Loya Insurance Company counter-sued Karla Flores

Guevara, alleging she breached her contract for insurance, fraud, and seeking a

judicial declaration that Defendant Loya Insurance Company did not owe Karla

Flores Guevara a duty to defend her in the original lawsuit. (C.R. at 32-35). After

repeatedly refusing to respond appropriately to written discovery, and after a single

deposition of a non-party, Ms. Flores Guevara, Defendant/Appellee Loya

Insurance Company filed a No-Evidence and Traditional Motion for Summary

Judgment, asking the trial court to declare that Loya did not owe a duty to defend

Karla Flores Guevara. (C.R. at123-129) The Trial Court granted Defendant’s

Traditional and No-Evidence Motions for Summary Judgment in a single order.

(C.R. at 280)

2 STATEMENT OF ORAL ARGUMENT

Appellants hereby request oral argument due to the complex nature of the

procedural background of this case.

3 ISSUES PRESENTED

Appellants sued Appellee for damages resulting from the failure to defend

its insured who was a covered person for claims covered by her policy. This

appeal addresses both substantive and procedural issues. The issues, discussed in

greater detail below, relate to whether an insurance carrier, after receiving attorney-

client privileged information from an employee, should be allowed to abandon an

insured on a case involving covered claims against a covered person, and whether,

after not liking the result of the case they abandoned, will be allowed to retry the

case in subsequent proceedings.

Did the trial court err in granting Appellee’s Traditional Motion for

Summary Judgment when assignor, a covered person under an insurance policy

issued by Appellee, owed Assignor a duty to defend because, under “The Eight

Corners Rule,” the claims against her fell within the policy coverage that Appellee

was contractually obligated to provide?

Did the trial court err in granting Appellee’s Traditional Motion for

Summary Judgment on Declaratory Judgment when Appellee’s Request was no

longer ripe?

Did the trial court err in granting Appellee’s No-Evidence Motion for

Summary Judgment when Appellee’s motion was conclusory?

4 Did the trial court err in granting Appellee’s No-Evidence Motion for

Summary Judgment when the alleged failure to produce evidence is related to

whether or not Ms. Flores Guevara was driving the vehicle involved in the wreck,

an issue barred by res judicata given that the original trial court entered a judgment

in the original lawsuit finding Assignor negligent?

Did the trial court err in granting Appellee’s No-Evidence Motion for

Summary Judgment when an adequate time for discovery had not passed because

of Appellee’s repeated refusal to respond appropriately to written discovery and

proceed with depositions of fact witnesses subject to their control?

5 STATEMENT OF FACTS

On or about March 18, 2013, Appellants suffered injuries when they were

involved in a car wreck. (C.R. at 18) At the time of said accident, Ms. Flores

Guevara was insured by Appellee Loya Insurance Company.(C.R. at 18,183) The

police report prepared by the investigating officer identified Ms. Flores Guevara as

the driver of the vehicle that struck the vehicle in which the Appellants were riding

and did not list any passengers. (C.R. at 208-209)

On October 30, 2014, Appellants filed suit against Ms. Flores Guevara.(C.R.

at 179-181) That suit against Ms. Flores Guevara was given cause number

2014CVT002421 in the 49th Judicial District of Web County, Texas. (C.R. at 179-

181) The lawsuit alleged that Ms. Flores Guevara was operating her vehicle

negligently and that her negligence caused Appellants’ injuries.(C.R. at 179-181)

On November 26, 2014, an answer was filed on behalf of Ms. Flores Guevara by

Francisco Martinez, staff counsel for Appellee Loya Insurance Company. (9 App.

at 106)

On December 23, 2014, Ms. Flores Guevara answered discovery.(C.R. at

185-206) In response to Appellants request for disclosure, Ms. Flores Guevara did

not identify any potential parties or persons who could be designated as

responsible third parties.(C.R. at 185-190) Ms. Flores Guevara did not list her

6 husband as a person with knowledge of relevant facts.(C.R. at 185-190) Ms.

Flores Guevara also provided responses to Appellants interrogatories. (C.R. at 191-

196) In doing so, Ms. Flores Guevara identified herself as the driver of the vehicle

involved in the collision with Appellants. (C.R. at 193)

On July 16, 2015, Appellant Osbaldo Hurtado was deposed by Mr.

Martinez.(C.R. at 223-273) Under oath, he identified Ms. Flores Guevara as the

driver of the vehicle involved in the wreck serving as the basis of Cause Number

2014CVT002421.(C.R. at 259,260) Ms. Flores Guevara’s deposition was

scheduled to take place on the same day, but Mr. Martinez, staff counsel for

Appellee, refused to present Ms. Flores Guevara because he claimed that if asked,

Ms. Flores Guevara would testify that her deceased husband, Rodolfo Flores, had

been the driver of the vehicle involved in the collision with Appellants, a position

that would have conflicted with her previous sworn statements. (C.R. at 260-261)

On November 4, 2015, although no claim had ever been made against

Rodolfo Flores, and in spite of the fact that all of the sworn testimony indicated

that Ms. Flores Guevara was the driver of the vehicle involved in the collision,

Appellee sent Appellants’ counsel a letter advising that coverage had been denied.

(C.R. at 211)

On December 28, 2015, Appellee’s staff counsel withdrew from the

7 representation of Ms. Flores Guevara even though the lawsuit against her was

clearly covered by the Loya Insurance policy in question. (4 App. at 92)

Appellee’s staff counsel was not replaced by any other lawyer even though

Appellee never took the position that Ms. Flores Guevara was not covered under

the policy.

On April 12, 2016, the 49th Judicial District of Webb County, Texas entered

a final judgment in cause number 2014CVT002421, the original lawsuit against

Ms. Flores Guevara.(C.R. at 174-177) The court determined that Ms. Flores

Guevara operated her vehicle negligently and that her negligence had proximately

caused Appellant’s injuries. (C.R. at 174) A judgment was rendered against Ms.

Flores Guevara in the amount of two hundred thousand dollars for each Appellant,

plus taxable court costs and pre-judgment and post-judgment interest. (C.R. at 174-

177)

On May 17, 2016, Appellants, as assignees of Ms. Flores Guevara, sued

Appellant Loya Insurance Company for Negligence, Breach of Contract for

Insurance, Bad Faith/ Breach of Duty of Good Faith and Fair Dealing and

Violations of the DTPA because Appellee’s staff counsel withdrew from the

representation of Ms. Flores Guevara even though the claims against her were

clearly covered by the Loya Insurance Policy that was in question.(C.R. at 16-22)

8 On June 17, 2016, Appellee filed its Original Answer and Request for Jury

Trial. (C.R. at 23-26) On July 12, 2016, Appellee produced to Appellants’ counsel

Appellee’s Responses to Defendant’s Request for Disclosure.(12 App. at 175-180)

In its responses, Defendant identified, as people with knowledge of relevant facts,

people wholly unrelated to the case at bar.(12 App. at 175-180)

On August 25, 2016, Appellants’ counsel emailed Appellee’s counsel and

asked that he supplement his responses to Requests for Disclosures to include

persons at Fred Loya with knowledge of the denial of coverage.(7 App. at 102)

Appellants’ counsel also asked for dates to conduct the depositions of Judy Liberto

and Francisco Martinez, two of Appellee’s employees that were involved in the

denial of Assignor’s coverage. (7 App. at 102)

On November 15, 2016, Appellants filed their Motion to Compel and

Motion for Sanctions asking the trial court to compel Appellee to produce the

names of those people with knowledge of relevant facts in the case at bar and order

a date certain by which Appellee must present Appellee’s employees with

knowledge of relevant facts for oral depositions. (C.R. at 59-65)

On November 30, 2016, the trial court ordered Appellee to present for

depositions, within the discovery deadline of January 20, 2017, those

representatives within their control.(2 App. at 22)

9 On January 5, 2017, Appellee filed its Motion for Traditional and No-

Evidence Summary Judgment. (C.R. at 13-129)

On January 20, 2017, Appellants filed their Motion for Continuance asking

the trial court to continue the cause from its trial date of February 20, 2017 to allow

the parties to engage in additional and necessary discovery, including the

depositions of four of Appellee’s employees who had first hand knowledge

regarding the circumstances surrounding the denial of Assignor’s claim as well as

the information regarding the denial of the claim. (C.R. at 141-143)

On January 23, 2017, the trial court signed an order ordering that by

February 2, 2017, Appellee provide potential dates for the depositions of two

individuals identified as being currently employed by Appellee, despite having

previously ordered Appellee to present these employees within the discovery

deadline of January 20, 2017. (C.R. at 146-147) Appellee never presented its

employees for depositions.

On January 26, 2017, Appellants filed their motion for Summary Judgment

and Response in Opposition to Appellee’s Traditional and No-Evidence Motion for

Summary Judgment. (C.R. at 153-211)

On February 2, 2017, the trial court heard Appellee’s Motions for Summary

Judgment and Appellants’ Motion for Continuance and took the Motions for

10 Summary Judgment under advisement and denied Appellants’ Motion for

Continuance stating that enough time for discovery had passed. (2 App.70-71)

On February 2, 2017, the trial court signed an order granting Appellee’s

Traditional and No-Evidence Motion for Summary Judgment. (C.R. at 280)

On February 2, 2017, Appellants filed their Notice of Appeal and this

proceeding followed. (C.R. at 285)

11 SUMMARY OF ARGUMENT

The dispute before the trial court was whether Appellee Loya Insurance

Company had a duty to defend Ms. Flores Guevara in the original lawsuit that was

filed against her by Appellants where they alleged that Ms. Flores Guevara’s

negligence caused their injuries and other damages.

Under the “eight corners rule,” Appellee had a duty to defend Ms. Flores

Guevara in the initial lawsuit against her. It is undisputed that Ms. Flores Guevara

was a covered person under the terms of the insurance policy issued to her by

Appellee. Appellee contracted to provide Ms. Flores Guevara with a defense in

negligence lawsuits against her. Appellants sued Ms. Flores Guevara for

negligence. Appellee denied coverage and did not defend Ms. Flores Guevara

throughout the lawsuit. Ms. Flores Guevara sustained damages as a result of

Appellee’s breach of the duty to defend her.

Appellee’s Traditional Motion for Summary Judgment as to Declaratory

Judgment was improper. Appellee’s request for Declaratory Judgment was no

longer ripe and without merit. The question of duty was not, at this point of the

litigation, a hypothetical question that the parties were asking a court to determine

before they committed to a certain course of conduct—be it breaching the contract

12 or complying with the contract. Appellee had already chosen to breach the contract

in the original lawsuit by not providing Ms. Flores Guevara with a defense. The

subsequent judgment entered in the original lawsuit against Ms. Flores Guevara

had rendered Appellee’s request moot, and appellee had no right to declaratory

judgment even if it had filed the request at the appropriate time.

The trial court erred in granting Appellee’s No-Evidence Motion for

Summary Judgment because No-Evidence Motions must not be conclusory.

Motions for Summary Judgment cannot generally allege that there is no evidence

to support the nonmovant’s claims. Appellee’s No-Evidence Motion for Summary

Judgment was conclusory because it did not state that there was no evidence to

support one or more specific elements of Appellants’ claims.

The trial court erred in granting Appellee’s No-Evidence Motions for

Summary Judgment because No-Evidence Motions for Summary Judgment cannot

be filed until after the nonmovant has had “an adequate time for discovery”. At the

time that Appellee filed its motion, substantial discovery, in the form of

depositions of Appellee’s employees and appropriate responses to written

discovery were still pending.

13 ARGUMENT

I. THIS COURT SHOULD REVERSE THE TRIAL COURT’S RULING BECAUSE APPELLEE HAD A DUTY TO DEFEND MS. FLORES GUEVARA

A. THE EIGHT CORNERS RULE REQUIRES THAT AN INSURANCE COMPANY DEFEND ITS INSURED WHEN A LAWSUIT’S PLEADINGS FALL WITHIN THE COVERAGE PROVIDED IN ITS INSURANCE CONTRACT

An insurer's duty to defend is determined by the “eight corners” rule,

looking to the factual allegations contained in the petition and the terms of the

policy. National Union Fire Ins., Co. v. Merch. Fast Motor Lines, Inc., 939 S.W.2d

139, 141 (Tex. 1997). Under the eight corners rule, an insurance company has an

absolute duty to defend its insured when a lawsuit’s pleadings “match-up”/“fall

within” the coverage provided in its insurance contract.

The eight-corners rule provides that Texas courts may look only to the

pleadings and the insurance policy to determine whether a duty to defend exists. Id.

The allegations in the pleadings are considered in light of the policy provisions

without regard to their truth or falsity. Argonaut Sw. Ins. Co. v. Maupin, 500

S.W.2d 633, 635 (Tex.1973); Heyden Newport Chem. Corp. v. S. Gen. Ins. Co.,

387 S.W.2d 22, 24 (Tex.1965). Even if the allegations are groundless, false or

fraudulent, the insurer is obligated to defend. Zurich Am. Ins. Co. v. Nokia, Inc.,

14 268 S.W.3d 487, 491 (Tex. 2008)(emphasis added). The Eight Corners Rule is not

controlled by “what the parties know or believe to be the true facts” Gehan 148

S.W.3d at 838. “A plaintiff’s factual allegations that potentially support a covered

claim is all that is needed to invoke the insurer’s duty to defend.” Guide One Elite

Ins. v. Fielder Rd. Baptist Church, 197 S.W.3d 305, 310 (Tex. 2006). Facts outside

the pleadings, even those easily ascertained, are not ordinarily material to the

determination of whether the duty to defend exists, and allegations against the

insured are liberally construed in favor of coverage. See Nat’l Union, 939 S.W.2d

at 141.

An insurance liability policy is typically composed of two obligations: a

duty to defend and a duty to indemnify. The duty to defend is broader, than the

duty to indemnity. Cook v. Admiral Ins. Co, 438 F. App’x 313 (5 th Cir.2011).,

citing Lincoln General Ins. Co. v. Aisha Learning Center, 468 F. 3d 857,858(5th

Cir. 2006).

Allegations against the insured are liberally construed in favor of

coverage. Nat’l Union Fire Ins. Co. v. Merchants FastMotor Lines, Inc., 939

S.W.2d 139, 141 (Tex. 1997) (emphasis added).

“We resolve all doubts regarding the duty to defend in favor of that duty.”

King v. Dallas Fire Ins. Co., 85 S.W. 3d 185, 187 (Tex. 2002). The rule is simple:

15 “When in doubt, defend.” Gore, 538 F. 3d at 369.

The insurer must defend as long as the complaint alleges at least one claim

within the policy’s language or coverage. Canutillo Indep. School Dist. v. National

Union Fire Ins. Co, 99 F.3d 695,701(5th Cir. 1996); Gehan, 146 S.W. 3d at 838.

Under the “Eight Corners” or “Complaint Allegation Rule”, an insurer’s

duty to defend is determined by the third-party plaintiff’s pleadings, considered in

light of the policy provisions, without regard to the truth or falsity of those

allegations. Argonaut Sw. Ins. Co. v. Maupin, 500 S.W.2d 633, 635 (Tex. 1973);

Heyden Newport Chem. Corp. v. S. Gen. Ins. Co., 387 S.W.2d 22, 24 (Tex.1965).

The rule takes its name from the fact that only two documents are ordinarily

relevant to the determination of the duty to defend: the policy and the pleadings of

the third-party claimant. King v. Dallas Fire Ins. Co., 85 S.W. 3d 185, 187, 45 Tex.

Sup. Ct. J. 1224 (Tex.2002). Facts outside the pleadings, even those easily

ascertained, are ordinarily not material to the determination.

A plaintiff’s factual allegations that potentially support a covered claim is all

that is needed to invoke the insurer’s duty to defend, Heyden Newport Chemical

Corp., 387 S.W.2d at 26. Whereas, the facts actually established in the underlying

suit control the duty to indemnify. Trinity Universal Ins. Co., 945 S.W.2d at 821.

16 B. THE PLEADINGS OF THE LAWSUIT AGAINST MS. FLORES GUEVARA FELL WITHIN THE COVERAGE PROVIDED BY APPELLEE TO MS. FLORES GUEVARA

Appellants sued Ms. Flores Guevara, and only Ms. Flores Guevara for

negligence. (3 App. 79-81) Ms. Flores Guevara paid money to Appellee in

exchange for Appellee’s promise to defend her in any lawsuits alleging she was

negligent. (4 App. at 92)

The eight-corners rule required that Defendant Loya Insurance compare only

the allegations in the suit against Ms. Flores Guevara with the provisions of Ms.

Flores Guevara’s insurance policy to determine if the allegations fit within the

policy coverage. Although no claim had ever been made against Ms. Flores

Guevara’s husband, the excluded driver, and in spite of the fact that all sworn

testimony as well as the copy of the police report indicated that assignor was the

driver of the vehicle involved in the collision, Appellee sent Appellants’ counsel a

letter advising that coverage had been denied. (3 App. at 79-81, 5 App. at 94-95, 10

App. at 110)

As Texas law clearly states, if any allegation in the complaint is even

potentially covered by the policy, then the insurer has a duty to defend its insured.

Appellants’ complaint against Ms. Flores Guevara, clearly fell within the

provisions of the insurance policy and Appellee owed Ms. Flores Guevara a duty to

17 defend. At the time Loya Insurance Company denied Ms. Flores Guevara the

benefit of her policy, the only information they had was a privileged hearsay

statement that suggested that an excluded driver was behind the wheel at the time

of the loss. There was no legal basis for the denial. Accordingly, this Court

should reverse the trial court’s finding.

C. THE TEXAS SUPREME COURT HAS NEVER EXPRESSLY RECOGNIZED AN EXCEPTION TO THE EIGHT CORNERS RULE

The Fifth Circuit has observed that if it were to recognize an exception to the

eight corners rule, it would likely only do so “when coverage is potentially

implicated and when the extrinsic evidence goes solely to a fundamental issue of

coverage which does not overlap with the merits of or engage the truth or falsity of

any facts alleged in the underlying case.” Northfield Ins. Co. v. Loving Home Care,

Inc., 363 F. 3d 523, 531 (5th Cir. 2004). (emphasis in original).

Here, Appellee argues that it owed no coverage or duty to defend Ms. Flores

Guevara because Ms Flores Guevara’s husband, an excluded driver under the

policy, was driving the car at the time of the wreck. However, Appellants only

sued Ms. Flores Guevara and the pleadings do not make any mention or reference

to Ms. Flores Guevara’s husband. (3 App. at 79-81) Any evidence related to Ms.

Flores Guevara’s husband driving the vehicle is extrinsic evidence that is relevant

18 both to coverage and the merits and thus does not fit the exception. Further, the

Fifth Circuit Court of Appeals has rejected similar use of overlapping facts. See

Gulf Chemical & Metallurgical Corp. v. Associated Metals and Minerals Corp., 1

F.3d 365, 367 (5 th Cir. 1993).

In Gulf Chemical one of the plaintiffs in the underlying toxic-tort action

alleged that Gulf was strictly liable because it had sold or shipped molyoxide. Id.

The petition in the lawsuit did not specifically state when Gulf had shipped

molyoxide. Id. However, the petition did allege that the plaintiffs had suffered

injures from exposure to the molyoxide between 1946 and 1990. Id. at 368.

Extrinsic evidence would have established that Gulf had not actually shipped any

molyoxide until January 20, 1986. Id. This would have been three days after the

expiration of the insurance policy that was in question. Id. at 368, 370. Although

the fact at issue concerned both the merits and coverage, the Fifth Circuit, applying

Texas law, rejected the use of extrinsic evidence under these circumstances. Id. at

371.

When the extrinsic evidence directly contradicts the Plaintiffs’ allegations,

the Texas Supreme Court rejects the use of the evidence as an exception to the

eight corners rule because it poses a significant risk of undermining the insured’s

ability to defend itself in the underlying litigation. Guide One Elite Ins. Co. v.

19 Fielder Rd. Baptist Church, 197 S.W.3d 305. Here, the evidence regarding who

was driving the vehicle is extrinsic evidence that would contradict the Hurtado’s

allegations against Ms. Flores Guevara.

Finally, if Appellee “knew” that the allegations in Plaintiffs’s Original

Petition to be untrue, its duty was to establish such facts in defense of its insured,

rather than as an adversary in a declaratory judgment action. Heyden Newport

Chemical Corp. v. S. Gen. Ins. Co., 387 S.W.2d at 25. In this case, Loya used its

insured’s effort to defend against liability, whether true or false, as a sword instead

of a shield. Application of the eight corners rule here conforms with the parties’

contract, and the circumstances of this case present no basis for an exception to the

eight corners rule. Based on the underlying issues, Appellants ask this Court to

reverse the trial court’s ruling and remand this case for further proceedings.

II. THIS COURT SHOULD REVERSE THE TRIAL COURT’S DECISION ON APPELLEE’S TRADITIONAL MOTION FOR SUMMARY JUDGMENT ON DECLARATORY JUDGMENT BECAUSE APPELLEE’S REQUEST WAS NO LONGER RIPE

A. DECLARATORY ACTIONS ARE MOOT IF ONE OF THE PARTIES HAS ALREADY CHOSEN ITS COURSE OF CONDUCT

The purpose of a declaratory judgment is to obtain a clarification of one’s

rights. J.E.M. v. Fidelity & Cas. Co., 928 S.W.2d 668, 671 (Tex. App.-Houston [1 st

20 Dist.] 1996, no writ). They are preventative in nature and are intended for

determining the rights of parties when a controversy has arisen, even before any

wrong has actually been committed. Id.

A declaratory judgment action is “intended to provide a means of settling a

controversy before it ripens into a violation of the civil or criminal law, or breach

of a contractual duty.” Rowan Cos. v. Griffin, 876 F.2d 26, 28 (5 th Cir.1989).

(citing Scott-Burr Stores Corp. v. Wilcox, 194 F.2d 989, 900 (5 th Cir. 1952));

J.E.M. v. Fidelity & Cas. Co., 928 S.W.2d 668, 672 (Tex. App.-Houston [1 st Dist.]

1996, no writ) (holding a declaratory action “is intended as a means for

determining the rights of parties when a controversy has arisen, even before any

wrong has actually been committed.”)

Chapter 12 of the Civil Practice & Remedies Code allows parties to a

contract to ask a court to declare each party’s obligations under the contract before

the question is ripe—in other words, before the question is actually a dispute

between parties before the court. A declaratory action is an exception to the

prohibition against advisory opinions because it allows courts to issue opinions on

matters not actually before the court.

However, the question as to whether Defendant Loya Insurance had a duty

to defend was no longer hypothetical. It was the central question before the trial

21 court. In the context of contract actions, a declaratory action must be brought

before a party either breaches or complies with the contract.

B. THEREFORE, APPELLEE’S REQUEST FOR A DECLARATORY ACTION, AFTER IT HAD ALREADY C O M M ITTED TO ITS CO N D U C T, M A K ES TH E DECLARATORY ACTION MOOT

Appellee chose to pull Ms. Flores Guevara’s coverage and to not defend her

in the original lawsuit against her. Appellee should have asked for declaratory

relief in the original lawsuit, before abandoning their insured. Because the question

before the trial court was whether or not Appellee owed Ms. Flores Guevara a duty

to defend her in the original lawsuit and not the one that this appeal stems from, a

declaratory action was moot and therefore must have been denied.

III. THE TRIAL COURT ERRED IN GRANTING APPELLEE’S NO EVIDENCE MOTION FOR SUMMARY JUDGMENT

A. A NO-EVIDENCE MOTION FOR SUMMARY JUDGMENT MUST NOT BE CONCLUSORY

A no-evidence summary judgment motion may be granted only if the

Plaintiff fails to bring forth any probative evidence that raises a genuine issue of

material fact as to an essential element of the Plaintiff’s claim. Brown v. Brown,

145 S.W.3d 745, 754 (Tex. App.—Dallas 2004, pet. denied) (at Tab D); Miller v.

Elliot, 94 S.W.3d 38, 42 (Tex. App.—Tyler 2008) (at Tab E).

22 The motion must state that there is no evidence to support one or more specific

elements of a claim or defense on which the nonmovant has the burden of proof at

trial. TRCP 166a(i); KCM Fin. LLC v. Bradshaw, 457 S.W.3d 70, 79 (Tex.2015).;

Boerjan v Rodriguez, 436 S.W.3d 307, 310 (Tex..2014).; Timpte Indus. v. Gish, 286

S.W.3d 306, 310 (Tex.2009). The motion cannot be conclusory or generally allege

that there is no evidence to support the nonmovant’s claim or defense. Timpte Indus.,

286 S.W.3d at 310; Holloway, 282 S.W.3d at 213; Ortiz v. Collins, 203 S.W.3d 414,

425 (Tex.App.-Houston [14th Dist.] 2006, pet. denied).

The purpose of this specificity requirement is to provide the other parties with

fair notice (i.e., provide adequate information for opposing the motion and define the

issue). Timpte Indus., 286 S.W.3d at 311. When a no-evidence motion for summary

judgment does not challenge specific elements, it should be treated as a traditional

motion for summary judgment under TRCP 166c, which imposes the burden of proof

on the movant, not as a motion under TRCP 166a(i), which imposes the burden on

the nonmovant. See Michael v. Dyke, 41 S.W.3d 746, 751-52 (Tex.App.-Corpus

Christi 2001, no pet.).; Amouri v. Southwest Toyota, Inc., 20 S.W.3d 165, 168

(Tex.App.-Texakana 200, pet. denied).; Weaver v. Highlands Ins., 4 S.W.3d, 829 n.2

(Tex.App.-Corpus Christi 2002, no pet.). (when motion was ambiguous about

23 whether it was no-evidence or traditional motion, court presumed it was filed as

traditional motion under TRCP 166(c).

B. APPELLEE’S NO-EVIDENCE MOTION FOR SUMMARY JUDGMENT IS CONCLUSORY

Appellee’s No-Evidence Motion for Summary Judgment generally alleges that

there is no evidence to support Appellant’s claim of negligence against Appellee

because there is no evidence of duty. (C.R. at 128) Appellee’s motion is devoid of

any specific allegation relating to any of the other causes of action alleged by

appellants. Instead, Loya Insurance company summarily alleged in its motion that,

“Similarly, since there was no coverage for the underlying accident, and no duty to

defend, there was not breach of contract, bad faith, breach of duty of good faith and

fair dealing, or a violation of the DTPA.”

Loya’s laundry list of causes of action lumped together by the word “similarly”

does not begin to meet the specificity requirement designed to give appellants the fair

notice required by the Rules. See Timpte at 311. The duties for each of the lumped

together cause of action are wildly different than the negligence duty and are not

similar at all.

Appellee’s Motion states, “Plaintiff’s allege that Defendant was negligent,

however, Plaintiff’s have provided no evidence to support their claim of negligence

24 against Defendant. Ms. Flores Guevara’s husband was an excluded driver under her

policy and since he was driving when the March 18, 2013 accident occurred, Loya

owed no coverage or duty to defend Ms. Flores Guevara. Therefore, there was no

negligence on the part of Defendant Loya.” (C.R. at 128)

Because defendant’s motion for summary judgment does not meet the

specificity requirements, and failed to give appellants fair notice, Appellee’s No-

Evidence Motion for Summary Judgment should have been treated by the trial court

as a traditional motion for summary judgment under TRCP 166a(c), imposing the

burden of proof on Appellee rather than on Appellants. See Michael v. Dyke, 41

S.W.3d 746, 751-52 (Tex.App.-Corpus Christi 2001, no pet.); Amouri v. Southwest

Toyota, Inc., 20 S.W.3d 165, 168 (Tex.App.-Texarkana 2000, pet. denied); Weaver v.

Highlands Ins., 4 S.W.3d 826, 829 n.2 (Tex.App.-Houston [1st Dist.] 1999, no pet.);

see also Hamlett v. Holcomb, 69 S.W.3d 816, 819 (Tex.App.-Corpus Christi 2002, no

pet.) (when motion was ambiguous about whether it was no-evidence or traditional

motion, court presumed it was filed as traditional motion under TRCP 166a(c).

C. WHETHER OR NOT ASSIGNOR WAS DRIVING IS IRRELEVANT AND BARRED BY RES JUDICATA

Within the general doctrine of res judicata, there are two principal categories:

(1) claim preclusion (also known as res judicata and (2) issue preclusion (also known

25 as collateral estoppel). Barr v. Resolution Trust Corp., 837 S.W.2d 627, 628

(Tex.1992). Collateral estoppel or issue preclusion, prevents a party from re-litigating

a particular fact issue that the party already litigated and lost in an earlier suit. State &

Cty. Mut. Fire Ins. v. Miller, 52 S.W.3d 693, 696 (Tex.2001).; Quinney Elec., Inc. v.

Kondos Entm’t Inc., 988 S.W.2d 212, 213 (Tex.1999).; Barr v. Resolution Trust

Corp., 837 S.W.2d 627, 628 (Tex. 1992).; City of San Antonio v. Cortes, 468 S.W.3d

580, 586 (Tex.App.-San Antonio 2015, pet. denied). To invoke collateral estoppel, a

party must establish (1) the same facts sought to be litigated in the second suit were

fully litigated in the first suit, (2) those facts were essential to the judgment in the first

suit, and (3) the parties were cast as adversaries in the first suit. Sysco Food Servs. v.

Trapnell, 890 S.W.2d 796, 801 (Tex.1994).; Eagle Props., Ltd. v. Scharbauer, 807

S.W.2d 714, 721 (Tex.1990).

Here, the issue of whether or not Assignor was driving has been fully and

fairly litigated in the original lawsuit. Appellants attached, as Exhibit B of their

Motion for Summary Judgment and Response in Opposition to Appellee’s

Traditional and No-Evidence Motion for Summary Judgment, a copy of the Final

Judgment that was signed and entered in the 49th Judicial District of Webb County,

Texas in Cause Number 2014CVT00241 which found Ms. Flores Guevara negligent

and that her negligence proximately caused Appellants injuries. While Appellee may

26 attempt to argue that it was not a party in the original lawsuit, collateral estoppel bars

a party from re-litigating an issue resolved in an earlier suit against that same party or

someone in privity with that party, Benson v. Wanda Pet. Co., 468 S.W.361, 363

(Tex.1971).; Sysco Food 890 S.W.2d at 802-03. When Ms. Flores Guevara purchased

her insurance policy from Appellee, Appellee contracted to defend Ms Flores.

Guevara in negligence lawsuits against her. Because Appellee was in privity with Ms.

Flores Guevara and Ms. Flores Guevara was a party to the original lawsuit, collateral

estoppel bars Appellee from re-litigating the issue of whether or not Ms. Flores

Guevara was the driver of the vehicle. Therefore, the trial court erred in granting

appellee’s summary judgment for failure to produce evidence that Ms. Flores

Guevara was in fact driving the car at the time of the accident on March 18, 2013,

when that issue had been previously decided and is irrelevant to the issues presented

by this case.

D. ADEQUATE TIME FOR DISCOVERY HAD NOT PASSED

A no-evidence motion for summary judgment cannot be filed until after the

nonmovant has had “adequate time for discovery.” TRCP 166a(i); Fort Brown Villas

III Condo. Ass’n v. Gillenwater, 285 S.W.3d 879. 882 (Tex.2009).; Moorehouse v.

Chase Manhattan Bank, 76 S.W.3d 608, 612 (Tex.App.-San Antonio 2002, no pet.).

Although a trial court has broad discretion to deny a request for continuance, a no -

27 evidence summary judgment can be reversed on the ground that the nonmovant did

not have adequate time for discovery. See Brewer & Pritchard, P.C. v. Johnson, 167

S.W.3d 460, 468 (Tex.App.-Houston [14th Dist.] 2005, pet. denied).; TemPay, Inc. v.

TNT Concrete & Constru., Inc., 37 S.W.3d 517, 522-23 (Tex.App.-Austin 2001), pet.

denied).

Whether a nonmovant has had an adequate time is determined on a case by

case basis. See McClure v. Atterbury, 20 S.W.3d 722, 729 (Tex. App.-- Amarillo

1999, no pet.). Courts examine the following factors when determining whether an

adequate time for discovery has passed: (1) the nature of the case; (2) the nature of

the evidence necessary to controvert the no-evidence motion; (3) the length of time

the case has been active; (4) the length of time the no evidence motion has been on

file; and (5) the amount of discovery already conducted. See Restaurant Teams Int'l.,

Inc. v. MG Securities Corp., 95 S.W.3d 336, 339 (Tex. App.-- Dallas 2002, no pet.).

The following are examples of when time for discovery has been considered

adequate: 1.) Three-year old case in which discovery had been pursued for a year and

a half and the most important witness had been deposed. Community Initiatives, 153

S.W.3d at 278-79.; 2.)Twenty-eight-month-old case in which the plaintiff had one

year to develop its case outside of a bankruptcy stay and had already received a

continuance. McMahan v. Greenwood, 108 S.W.3d 467, 498 (Tex.App.-Houston

28 [14th Dist.] 2003, pet. Denied). and 3.) Five year old case in which the plaintiff did not

comply with the scheduling order it requested. Martinez v. City of San Antonio, 40

S.W.3d 57, 591-92 (Tex.App.-San Antonio 2001, pet. denied).

Here, at the time of Appellee’s No-Evidence Motion for Summary Judgment,

this case had only been active for eight months. Further, no continuance had been

requested by either party. Pursuant to the Pre-Trial Guideline Order, the discovery

deadline was January 20, 2017.

The No-Evidence motion for summary Judgment was filed on January5, 2017,

prior to the end of the discovery period. At the time of the filing, discovery in this

matter was substantially incomplete. Specifically, Appellee had failed to present for

depositions those employees which were within its control that had knowledge of the

denial of Assignor’s coverage, despite the fact that Appellee had been twice ordered

by the trial court to present them. Further, Appellee conveniently gave Appellants’s

counsel temporary available dates for these depositions for mid/late February or

March.

The short amount of time along with Appellee’s continued obstruction of

evidence was insufficient to allow for all of the needed depositions. Appellants’

ongoing discovery efforts since the filing of this action show they did not sit idly

29 while valuable discovery time had elapsed. Appellee simply failed to comply with the

multiple court orders ordering it to present its employees for deposition.

Therefore, Appellee’s No-Evidence Motion for Summary Judgment should be

reversed on the ground that Appellant did not have adequate time for discovery.

30 PRAYER

Appellants pray that this Court, REVERSE the trial court’s granting of

Appellee’s Traditional Motion for Summary Judgment and REMAND to the trial

court for further proceedings. Appellants further pray that this Court REVERSE the

trial court’s granting of Appellee’s No-Evidence Motion for Summary Judgment and

REMAND to the trial court for further proceedings.

Respectfully submitted,

THE GREEN LAW FIRM, P.C. 34 S. Coria Brownsville, Texas 78520 Telephone : (956) 542-7000 Facsimile : (956) 542-7026 jorge@thegreenlawfirmpc.com letygarza@thegreenlawfirmpc.com

BY: /s/ Jorge A. Green JORGE A. GREEN State Bar No. 24038023 LETICIA GARZA State Bar No. 24092405

ATTORNEYS FOR APPELLANTS

31 CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing Brief of Appellee was served by electronic service on this 20th day of July, 2017, upon the following counsel of record:

John R. Lyde VIDAURRI, LYDE, RODRIGUEZ & HAYNES, LLP 202 N. 10 th Avenue Edinburg, Texas 78541 (956) 381-6602 Telephone (956) 381-0725 Fax rlyde@vlrhlaw.com

BY: /s/ Jorge A. Green JORGE A. GREEN

CERTIFICATE OF COMPLIANCE

Pursuant to Rule 9.4(i)(3), undersigned counsel hereby certifies that, using

WORD PERFECT Count Feature, the foregoing brief was 6,016 words.

32 NO. 04-17-00070-CV

OSBALDO HURTADO AVALOS AND ANTONIO HURTADO, AS ASSIGNEES OF KARLA FLORES GUEVARA,

Appellants,

LOYA INSURANCE COMPANY,

Appellee __________________________________________________________________

APPELLANTS’ APPENDIX ______________________________________________________________________________

LIST OF DOCUMENTS

1. The trial court’s order granting Defendant Loya Insurance Company’s Traditional and No-Evidence Motion for Summary Judgment dated February 2, 2017.

2. Reporter’s Record Volumes 1-4 in Trial Court Cause No. 2016-CVT- 001431-D2.

3. Plaintiffs’ Original Petition in Trial Court Cause No. 2014CVT002421 dated October 30, 2014.

4. Ms. Guevara’s Declaration Page of her Texas Insurance Policy Issued by Appellee Loya Insurance Company.

5. Copy of Texas Peace Officer’s Crash Report for the car wreck that occurred on March 18, 2013 between Osbaldo Hurtado, Antonio Hurtado and Ms. Guevara.

6. Signed Final Judgment entered in Cause No. 2014CVT002421 dated April 11, 2016. 7. E-mail correspondence, dated August 25, 2016, between Appellants’ attorney and Appellee’s attorney requesting that Appellee supplement its responses to Requests for Disclosures and dates to conduct the depositions of Judy Liberto and Francisco Martinez.

8. E-mail correspondence, dated January 31, 2017, between Appellants’ attorney’s staff and Appellee’s attorney requesting that Appellee supplement its responses to Requests for Disclosures and include a copy of the insurance policy.

9. Defendant’s Original Answer in Trial Court Cause No. 2014CVT002421 dated November 26, 2014.

10. Appellee Loya Insurance Company’s letter to Appellants’ counsel withdrawing Ms. Flores Guevara’s representation of counsel in Trial Court Cause No. 2014CVT002421.

11. Appellee Loya Insurance Company’s Discovery Responses in Trial Court Cause No. 2014CVT002421.

12. Appellee Loya Insurance Company’s Responses to Appellants’ Requests for Disclosure in Trial Court Cause No. 2016-CVT-001431-D2.

Respectfully submitted, THE GREEN LAW FIRM, P.C. 34 S. Coria Brownsville, Texas 78520 Telephone : (956) 542-7000 Facsimile : (956) 542-7026 jorge@thegreenlawfirmpc.com letygarza@thegreenlawfirmpc.com BY: /s/ Jorge A. Green JORGE A. GREEN State Bar No. 24038023 LETICIA GARZA State Bar No. 24092405

ATTORNEYS FOR APPELLANTS TAB 1 TAB 2 1

1 REPORTER'S RECORD VOLUME 1 OF 4 VOLUMES 2 TRIAL COURT CAUSE NO. 2016-CVT-001431-D2 APPEAL NO. 04-17-00070-CV 3 OSBALDO HURTADO AVALOS ) IN THE DISTRICT COURT 4 AND ANTONIO HURTADO AS ) ASSIGNEES OF KARLA FLORES ) 5 GUEVARA, ) PLAINTIFFS, ) 6 ) WEBB COUNTY, TEXAS ) 7 VS. ) ) 8 LOYA INSURANCE COMPANY, ) DEFENDANT. ) 111TH JUDICIAL DISTRICT 9

13 ******************************* 14 MASTER INDEX ******************************* 15

23 VICENTE MENDOZA, TEXAS CSR #6918 OFFICIAL COURT REPORTER - 111TH DISTRICT COURT 24 1110 VICTORIA STREET, Suite 301 LAREDO, TEXAS 78040 25 OFFICE (956) 523-4229 FAX (956) 523-5088 2

1 A P P E A R A N C E S

2 FOR THE PLAINTIFFS:

3 SBOT NO. 24092405 Leticia "Lety" Garza 4 SBOT NO. 24038023 Jorge A. Green 5 The Green Law Firm, P.C. 34 S. Coria 6 Brownsville, Texas 78520 (956) 542-7000 PHONE 7 (956) 542-7026 FAX

8 FOR THE DEFENDANT:

9 SBOT NO. 12712700 John R. Lyde 10 Vidaurri, Lyde, Rodriguez & Haynes, LLP 202 N. 10th Avenue 11 Edinburg, Texas 78541 (956) 381-6602 PHONE 12 (956) 381-0725 FAX

25 3

1 CHRONOLOGICAL INDEX

2 VOLUME 1 OF 4 - Master Index

3 VOLUME 2 OF 4 NOVEMBER 30, 2016 PAGE 4 Style of the Case ------------------- 1 5 Appearances ------------------------- 2 Chronological Index ----------------- 3 6 Proceedings Started ----------------- 4 Proceedings Concluded --------------- 13 7 Court Reporter's Certificate -------- 14

8 VOLUME 3 OF 4 JANUARY 19, 2017 PAGE 9 Style of the Case ------------------- 1 10 Appearances ------------------------- 2 Chronological Index ----------------- 3 11 Proceedings Started ----------------- 4 Proceedings Concluded --------------- 14 12 Court Reporter's Certificate -------- 15

13 VOLUME 4 OF 4 FEBRUARY 2, 2017 PAGE 14 Style of the Case ------------------- 1 15 Appearances ------------------------- 2 Chronological Index ----------------- 3 16 Proceedings Started ----------------- 4 Proceedings Concluded --------------- 27 17 Court Reporter's Certificate -------- 28

18 *-*-*-*-*-*-* 19

25 4

1 THE STATE OF TEXAS )

2 COUNTY OF WEBB )

4 I, Vicente Mendoza, Official Court Reporter for the 111th District Court, Webb County, 5 State of Texas, do hereby certify that the above and foregoing contains a true and correct transcription 6 of all portions of evidence and other proceedings requested in writing by counsel for the parties to be 7 included in this volume of the Reporter's Record, in the above-styled and numbered cause, all of which 8 occurred in open court or in chambers and were reported by me. 9 I further certify that the Reporter's 10 Record of the proceedings truly and correctly reflects the exhibits, if any, admitted by the 11 respective parties.

12 I further certify that the total cost for the preparation of this Reporter's Record is 13 $446.50 and was paid/will be paid by The Green Law Firm, P.C. by Leticia Garza. 14

15 WITNESS MY OFFICIAL HAND this the 9th day of February, 2017. 16

22 _________________________________ Vicente Mendoza, Texas CSR #6918 23 Expiration Date: 12/31/2018 Official Court Reporter - 111th District Court 24 1110 Victoria Street, Suite 301 Laredo, Texas 78040 25 Office (956) 523-4229 Fax (956)523-5088 1

1 REPORTER'S RECORD VOLUME 2 OF 4 VOLUMES 2 TRIAL COURT CAUSE NO. 2016-CVT-001431-D2 APPEAL NO. 04-17-00070-CV 3 OSBALDO HURTADO AVALOS ) IN THE DISTRICT COURT 4 AND ANTONIO HURTADO AS ) ASSIGNEES OF KARLA FLORES ) 5 GUEVARA, ) PLAINTIFFS, ) 6 ) WEBB COUNTY, TEXAS ) 7 VS. ) ) 8 LOYA INSURANCE COMPANY, ) DEFENDANT. ) 111TH JUDICIAL DISTRICT 9

10 ******************************* 11 November 30, 2016 ******************************* 12

13 On the 30th day of November 2016, the

14 following proceedings came on to be heard in the

15 above-entitled and numbered cause before the Honorable

16 MONICA Z. NOTZON, Judge presiding, held in Laredo, Webb

17 County, Texas:

18 Proceedings reported by Computerized

19 Stenotype Machine; Reporter's Record produced by

20 Computer-Assisted Transcription.

23 VICENTE MENDOZA, TEXAS CSR #6918 OFFICIAL COURT REPORTER - 111TH DISTRICT COURT 24 1110 VICTORIA STREET, Suite 301 LAREDO, TEXAS 78040 25 OFFICE (956) 523-4229 FAX (956) 523-5088 2

3 SBOT NO. 24092405 Leticia "Lety" Garza 4 The Green Law Firm, P.C. 34 S. Coria 5 Brownsville, Texas 78520 (956) 542-7000 PHONE 6 (956) 542-7026 FAX

7 FOR THE DEFENDANT:

8 SBOT NO. 12712700 John R. Lyde 9 Vidaurri, Lyde, Rodriguez & Haynes, LLP 202 N. 10th Avenue 10 Edinburg, Texas 78541 (956) 381-6602 PHONE 11 (956) 381-0725 FAX

2 NOVEMBER 30, 2016 PAGE

3 Style of the Case ------------------- 1

4 Appearances ------------------------- 2

5 Chronological Index ----------------- 3

6 Proceedings Started ----------------- 4

7 Proceedings Concluded --------------- 13

8 Court Reporter's Certificate -------- 14

9 *-*-*-*-*-*-* 10

1 PROCEEDINGS

2 WHEREUPON the following proceedings

3 were had in Open Court, before Court, to-wit:

4 THE BAILIFF: All rise. Please come

5 to order. The 111th District Court is now in

6 session. The Honorable Judge Monica Notzon

7 presiding. (November 30, 2016 - Time: 9:07 a.m.)

8 THE COURT: Good morning everyone.

9 Please be seated.

10 (Whereupon other matters on the

11 Court's docket were heard before the

12 Court)

13 THE COURT: Avalos and Hurtado versus

14 Loya Insurance, 2016-CVT-001431-D2.

15 MR. LYDE: Rick Lyde, Your Honor, on

16 behalf of Loya.

17 MS. GARZA: Lety Garza here for Jorge

18 Green on behalf of the Assignees.

19 THE COURT: All right. Good morning.

20 MR. LYDE: Good morning, Your Honor.

21 THE COURT: All right. What's going

22 on, Counsel?

23 MR. LYDE: We have two motions this

24 morning, Your Honor. One is our motion for leave to

25 designate responsible third party; and, the second is 5

1 their motion to compel.

2 MS. GARZA: On the first one we did

3 file an objection to the motion for leave, Your

4 Honor.

5 MR. LYDE: Yes. That's right.

6 THE COURT: All right. Let's take the

7 motion for leave first.

8 MR. LYDE: Very good, Your Honor.

9 Your Honor, this case originally involves an

10 automobile accident that occurred back in March

11 of 2013. The responsible third party that we are

12 requesting to be allowed to designate is a Ms.

13 Guevara. Back at that time she was a Loya automobile

14 policy insured. Okay? But, her policy had the

15 exclusion that her husband was excluded as an

16 insured. Okay?

17 So, what happens is that back in March

18 of 2013, the Guevara vehicle has an automobile

19 accident with the Hurtados, who are the Plaintiffs in

20 this case. Okay? Originally, Ms. Guevara tells Loya,

21 oh, I was driving, which means of course there's

22 potential insurance. So, the claim is made by the

23 Hurtados against Ms. Guevara, a lawsuit is filed,

24 discovery is done, and the case is proceeding. But,

25 right before Ms. Guevara is set to be deposed she 6

1 tells her attorney at that time, she says, okay, I've

2 got to confess I wasn't driving. It was my husband.

3 Okay?

4 And what happened was that he entered

5 into this scheme after the accident with the Hurtados

6 to say that he [sic] was driving so that there be

7 insurance coverage, because otherwise --

8 THE COURT: To say is that she was

9 driving?

10 MR. LYDE: To say that she was

11 driving. Correct. She shows up at the scene. She

12 agrees to go along with that. All right? And that's

13 the way the police report reads, that she's the

14 driver, and we have that down cold, Your Honor, by

15 the way.

16 First of all, we have a recorded

17 statement from Ms. Guevara that says all of that.

18 Then in September I took her deposition, and we got

19 all of that, that her husband agreed to this with the

20 Hurtados, that she originally said she was driving.

21 It's all in the deposition. And in fact, Your Honor,

22 if the Court will look at our motion for leave, we've

23 attached copies of the depo pages. So, all of that

24 is proven up. Okay? Anyway, as soon as Loya hears

25 that, they withdraw the Defense for Ms. Guevara in 7

1 the case, as far as the Hurtados are concerned, and

2 they deny coverage.

3 Then the Hurtado's go on to take

4 summary judgment against Ms. Guevara in the

5 underlying case, each for $200,000, and they

6 convinced her, after they take these summary

7 judgments, to assign any rights that she may have

8 against Loya for wrongful denial of coverage.

9 So, that's what this case is. It is,

10 basically, that the Hurtado's are trying to use Ms.

11 Guevara's alleged claims against Loya for this

12 wrongful denial of coverage to get their money.

13 That's what is going on.

14 THE COURT: Okay. So, tell me about

15 your motion for leave.

16 MR. LYDE: We, basically, put

17 everything that I've just told the Court in our

18 motion, okay? Again, we're trying to designate Ms.

19 Guevara as the responsible third party.

20 The other side has raised three

21 objections, and one of those objections -- quite

22 honestly I don't understand -- but, they're saying

23 that she's not, Ms. Guevara, that she can't be

24 individually liable in this case. First of all I

25 disagree with that completely based on the facts. 8

1 THE COURT: Well, if she wasn't

2 driving, how is she a responsible third party?

3 MR. LYDE: Because of a the collusion

4 and the fraud that went into trying to generate the

5 excess coverage.

6 THE COURT: Hum. All right. Okay.

7 MR. LYDE: Okay. So, anyway, the

8 stuff about her being individually responsible, I

9 don't know where they are coming from with that.

10 Under Section 33 we have to show that the potential

11 responsible third party caused or contributed to

12 cause the damages being claimed.

13 THE COURT: All right.

14 MR. LYDE: That's what we have to

15 show. Obviously, we've pled enough facts to indicate

16 that in here.

17 THE COURT: Well, you did plead enough

18 facts, but I don't know if it's indicative of the

19 responsible third party motion or I don't know if it

20 supports that motion; but, let me hear you on your

21 objections, Counsel?

22 MS. GARZA: Okay. Your Honor, in that

23 first lawsuit -- our position is that that first

24 lawsuit has been completely disposed of by a court

25 and we've taken a judgment. And so, the idea that 9

1 our clients colluded to defraud or anything, that is

2 not related to this in any way, shape, or form.

3 In the first lawsuit what we had was

4 the 8-corners doctrine basically saying that there

5 was a complaint against Ms. Guevara, and her husband

6 was never addressed to in that complaint, and we had

7 an insurance policy that clearly covered that

8 complaint. They withdrew their representation of Ms.

9 Guevara in that first lawsuit when the policy was

10 clearly attached to the complaint.

11 THE COURT: But it sounds like they

12 have good grounds.

13 MS. GARZA: Except for the fact that

14 we also have signed discovery responses from her that

15 are verified where she stated that she was the driver

16 of the vehicle.

17 THE COURT: Okay. But you have a

18 client that's obviously lied, at least once, to both

19 of you.

20 MS. GARZA: It's our position that the

21 lawsuit that we are here for today is completely

22 independent from the damages sustained in that car

23 accident. We are here because of the fact that they

24 did not apply the 8 corners doctrine and withdrew

25 coverage from that. 10

1 THE COURT: All right. So, what are

2 your objections to the motion for leave to designate

3 Ms. Guevara as a responsible third party?

4 MS. GARZA: Our objection is

5 that she's not a responsible third party because --

6 well one, we've said that they didn't plead enough

7 facts, but that the facts that, hum -- anything that

8 she said or did in response to that first accident is

9 completely unrelated. That's been disposed of by a

10 court. We have a signed judgment that already

11 addressed that.

12 THE COURT: So, if the accident has

13 been resolved, in other words, there's a judgment,

14 what is the lawsuit that's pending now here?

15 MS. GARZA: It is for, Your Honor,

16 negligence -- if you give me one second (reviewing

17 cell phone) I can --

18 MR. LYDE: Again, they have been

19 assigned, the Hurtados, they have been assigned the

20 potential claims of Ms. Guevara.

21 THE COURT: But is it for denial of

22 coverage?

23 MR. LYDE: Yes. Yes. They've got

24 negligence, breach of contract, DTPA.

25 THE COURT: Then your motion is 11

1 different. I thought we were still in the original

2 accident.

3 MR. LYDE: I'm so sorry, Judge. I

4 should have made myself clear.

5 MS. GARZA: No, Your Honor. That

6 accident has been disposed of. In fact, we have a

7 signed final judgment on that first accident, which

8 is why we continue to say that she is not a

9 responsible third party in this situation.

10 THE COURT: All right. But, that

11 changes the nature of the motion then. All right.

12 So, what are your legal objections then?

13 MS. GARZA: (Reviewing cell phone)

14 That they didn't plead enough facts to state that she

15 is a responsible third party, that she is not

16 independently liable for this accident; but, if we

17 tell the jury to apportion responsibility to her,

18 it's wholly unrelated because that was related to the

19 first accident.

20 THE COURT: I'm granting it, Counsel.

21 MR. LYDE: Thank you, Your Honor.

22 THE COURT: I need your order.

23 MR. LYDE: Your Honor, we will have

24 that for the Court this afternoon.

25 THE COURT: Oh, I'm looking at it 12

1 right here.

2 MR. LYDE: Oh, thank goodness.

3 THE COURT: All right. What else do

4 we have?

5 MR. LYDE: We have their motion to

6 compel to compel against us, Your Honor.

7 MS. GARZA: And I've looked through

8 our file, and it seems like Mr. Lyde's office has

9 produced already some responses to the requests for

10 disclosure. The issues that we were having was that

11 he produce the names that were related to the first

12 accident and not the name of the insurance adjuster

13 or any other employees or agents of defendant.

14 I think at this point he already has

15 that. The only thing that we would respectfully ask

16 the Court is to order Mr. Lyde to produce them for

17 deposition within 30-45 days because we have a

18 February trial date coming up.

19 MR. LYDE: Your Honor, we have no

20 problem with producing them before the discovery

21 deadline; and, just so that the Court is aware, there

22 are only two that are still with the company. The

23 ex-employees, obviously, I don't have any -- one of

24 them retired -- I don't have any control over them,

25 but I'll be happy to contact them if I can; but, I 13

1 cannot make a representation about those folks. My

2 two, of course, I will produce before the discovery

3 deadline if they want to take them.

4 THE COURT: That's ordered then.

5 Okay.

6 MR. LYDE: Thank you, Your Honor.

7 MS. GARZA: Thank you, Your Honor.

8 May I be excused?

9 THE COURT: Yes.

14 *-*-*-*-*-*-*-*-*-*

15 PROCEEDINGS CONCLUDED

16 *-*-*-*-*-*-*-*-*-*

25 14

4 I, Vicente Mendoza, Official Court Reporter for the 111th District Court, Webb County, 5 State of Texas, do hereby certify that the above and foregoing contains a true and correct transcription 6 of all portions of evidence and other proceedings requested in writing by counsel for the parties to be 7 included in this volume of the Reporter's Record, in the above-styled and numbered cause, all of which 8 occurred in open court or in chambers and were reported by me. 9 I further certify that the Reporter's 10 Record of the proceedings truly and correctly reflects the exhibits, if any, admitted by the 11 respective parties.

12 I further certify that the total cost for the preparation of this Reporter's Record is $See 13 Original printed transcript, Volume 1 and was paid/will be paid by The Green Law Firm, P.C. by 14 Leticia Garza.

15 WITNESS MY OFFICIAL HAND this the 9th 16 day of February, 2017.

22 _________________________________ Vicente Mendoza, Texas CSR #6918 23 Expiration Date: 12/31/2018 Official Court Reporter - 111th District Court 24 1110 Victoria Street, Suite 301 Laredo, Texas 78040 25 Office (956) 523-4229 Fax (956)523-5088 1

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1 REPORTER'S RECORD VOLUME 3 OF 4 VOLUMES 2 TRIAL COURT CAUSE NO. 2016-CVT-001431-D2 APPEAL NO. 04-17-00070-CV 3 OSBALDO HURTADO AVALOS ) IN THE DISTRICT COURT 4 AND ANTONIO HURTADO AS ) ASSIGNEES OF KARLA FLORES ) 5 GUEVARA, ) PLAINTIFFS, ) 6 ) WEBB COUNTY, TEXAS ) 7 VS. ) ) 8 LOYA INSURANCE COMPANY, ) DEFENDANT. ) 111TH JUDICIAL DISTRICT 9

10 ******************************* 11 January 19, 2017 ******************************* 12

13 On the 19th day of January 2017, the

23 VICENTE MENDOZA, TEXAS CSR #6918 OFFICIAL COURT REPORTER - 111TH DISTRICT COURT 24 1110 VICTORIA STREET, Suite 301 LAREDO, TEXAS 78040 25 OFFICE (956) 523-4229 FAX (956) 523-5088 2

3 SBOT NO. 24038023 Jorge A. Green 4 The Green Law Firm, P.C. 34 S. Coria 5 Brownsville, Texas 78520 (956) 542-7000 PHONE 6 (956) 542-7026 FAX

8 SBOT NO. 12712700 John R. Lyde 9 Vidaurri, Lyde, Rodriguez & Haynes, LLP 202 N. 10th Avenue 10 Edinburg, Texas 78541 (956) 381-6602 PHONE 11 (956) 381-0725 FAX

2 JANUARY 19, 2017 PAGE

7 Proceedings Concluded --------------- 14

8 Court Reporter's Certificate -------- 15

7 presiding. (January 19, 2017 - Time: 9:07 a.m.)

11 Court's docket were heard)

12 THE COURT: Avalos and Hurtado versus

13 Loya Insurance, 2016-CVT-001431-D2.

14 MR. LYDE: We've got a motion to

15 compel, Your Honor.

16 THE COURT: How long are you

17 anticipating?

18 MR. LYDE: Not more than 15 minutes.

19 THE COURT: Let me just get through my

20 docket, and I'll recall you.

21 MR. LYDE: Is that accurate?

22 MR. GREEN: That's accurate.

23 THE COURT: All right. I'll recall.

24 (Whereupon other matters on the

25 Court's docket were heard) 5

1 (Case recalled)

2 THE COURT: On Avalos and Hurtado

3 versus Loya Insurance, 2016-CVT-001431-D2, I have the

4 lawyers standing by.

5 (Whereupon other matters on the

6 Court's docket were heard)

7 (Case recalled)

8 THE COURT: Avalos and Hurtado versus

9 Loya Insurance, 2016-CVT-001431-D2. All right.

10 Motion to compel, Counsel?

11 MR. LYDE: Yes, Your Honor. We're

12 asking that two different things be compelled. One

13 is that we get some discovery responses that we

14 haven't received yet; and, the second thing that

15 we're asking, is that the Plaintiffs be presented for

16 deposition before the discovery deadline.

17 I think the discovery deadline is

18 tomorrow; but, we're asking that they be presented

19 for depos. I think that for the Court to understand

20 the importance of the motion to compel that the Court

21 needs to know a little bit of background about the

22 case. For the Court to know, this actually, this

23 case, it actually involved an earlier case. Okay?

24 It's a completely separate earlier case. And the

25 earlier case involved an automobile accident in March 6

1 of 2013; and, the Hurtados, the Plaintiffs in this

2 case, they sued a Ms. Guevara in that separate case.

3 THE COURT: Oh, I think I remember.

4 This is the case where one client lied about the

5 other client driving or something like that?

6 MR. LYDE: Yeah. What happens is that

7 the case goes along, the lawyers are providing a

8 defense for Ms. Guevara; and, right before she is

9 deposed she tells her counsel, there is something

10 that you need to know. I wasn't the one driving the

11 car. It was my husband.

12 He was an excluded driver, and we got

13 together with the Hurtados at the scene and said,

14 well, we are going to say that I was driving so that

15 there is coverage. Okay.

16 So, with regards to Ms. Guevara, just

17 so that the Court knows, we've got a recorded

18 statement from her. We've, additionally, taken her

19 deposition in this cause, and she testified exactly

20 to what I've just told the Court.

21 THE COURT: So, who do you need to

22 depose?

23 MR. LYDE: I want to depose the

24 Plaintiffs. Okay? But, before I get to that let me

25 talk about the discovery that we have. 7

1 MR. GREEN: Well, if I may just point

2 out to Your Honor is that she is a plaintiff. So,

3 Ms. Guevara is a Fred Loya insured. We took an

4 assignment from Ms. Guevara in this case, this

5 defendant, and he's taken the Plaintiff's deposition.

6 THE COURT: But not the Hurtados?

7 MR. LYDE: Exactly.

8 MR. GREEN: And the reason that he has

9 not taken the Hurtados' deposition is because -- this

10 case is about whether or not Fred Loya Insurance owed

11 Ms. Guevara any coverage. So, it's not as simple as

12 Mr. Lyde has sort of made it out to be; and, I think

13 that there may have been some confusion because I

14 think that the Court even recently had designated Ms.

15 Guevara as responsible third party, which I think

16 that it results sort of from the confusion of -- the

17 suggestion that the other case is somehow still

18 relevant in this case. But, Ms. Guevara --

19 THE COURT: Counsel, do you have

20 control over the Hurtados?

21 MR. GREEN: I do, Your Honor. But,

22 the Hurtados have been deposed. So, Francisco

23 Martinez, the lawyer --

24 THE COURT: They have been deposed?

25 MR. LYDE: Yes. But, not on this 8

1 case, and not both in the other case. In the other

2 case one was deposed.

3 THE COURT: I see.

4 MR. LYDE: Neither has been deposed in

5 our case about conversations there at the scene, you

6 know, who agreed to what, you know, all that kind of

7 good stuff.

8 So, the discovery, putting aside the

9 fact that there are at least six items for both

10 Plaintiffs that said -- they said that they would

11 supplement, and we never received that, putting aside

12 that issue; they objected to things like give us

13 criminal backgrounds. What about other lawsuits?

14 Tell us about your educational

15 history, all of those things; and, in addition, as

16 far as interrogatories, we had asked them about,

17 well, we want to know if there are any conversations

18 that you've had with Loya. We want to know if there

19 are any admissions against interest that you are

20 going to be claiming against us. We want to know

21 what conversations you've had with Ms. Guevara.

22 THE COURT: So, do you want to go

23 through the discovery one by one, because it sounds

24 like matters I'd likely compel.

25 MR. GREEN: Well, and I think that 9

1 what is important to remember, again Judge, is that

2 my clients are assignees. So, it's Ms. Guevara's

3 claim against Fred Loya that we had taken an

4 assignment of.

5 THE COURT: I'm going to compel the

6 depos of the Hurtados; and, I am also going to compel

7 the discovery if that's what I see. So, you can

8 confer on it; or, you can supplement within a certain

9 amount of time; or, we can start going down one by

10 one.

11 MR. LYDE: Judge, what I would prefer,

12 if the Court would, if the trial setting is going to

13 be good, then I need those depos in at least the next

14 two weeks, and I need the discovery responses before

15 that if the trial date is going to be good.

16 THE COURT: What's the trial date?

17 MR. LYDE: The 20th of February.

18 THE COURT: Have you been to mediation

19 on this case?

20 MR. LYDE: No, ma'am. We have not

21 been to mediation.

22 THE COURT: I'd like to compel their

23 depos then within the next two weeks, as well as any

24 discovery supplementation before you come back on the

25 compel. 10

1 I can hold the compel in abeyance to

2 see if you can get it done in two weeks; but, I am

3 going to order at least a half day mediation between

4 the parties.

5 MR. GREEN: That first case, it was

6 reduced to a judgment. So, the car accident case is

7 done. These people were in a car accident. This

8 case is about whether or not Fred Loya owed Karla

9 Guevara coverage.

10 THE COURT: Right. I understand, but

11 that's my ruling.

12 MR. GREEN: I understand. They've

13 been asked a bunch of questions. Who was driving the

14 car? All of this, was asked a million times in the

15 first deposition. So, it would be abusive for Mr.

16 Lyde to come back and ask the same questions over

17 again. If these people are going to be deposed

18 again, Your Honor, can we limit it to questions that

19 were not asked in the initial deposition?

20 THE COURT: Counsel, I'm going to give

21 him leeway. He's a lawyer on this case, and it's a

22 new case. So, he has a right to depose them, but

23 watch your questions, Mr. Lyde.

24 MR. LYDE: I will, Your Honor. And if

25 we could have the discovery responses supplemented, 11

1 particularly about conversations and documents

2 between the Guevaras and Mr. Flores, her husband.

3 I mean, those are the things that

4 we're looking for. So, if we can have that

5 supplemented within a week and then get the depos of

6 the Plaintiffs within two weeks -- Your Honor, just

7 the discovery responses might allow us to go to

8 mediation. Okay?

9 THE COURT: Then why are we taking the

10 depos?

11 MR. LYDE: Well, I mean, if we know

12 what they are going to be contending as far as

13 conversations that they had with Loya and documents

14 that they got from Loya and the conversations that

15 they had with Ms. Guevara and her husband, and the

16 documents they got from her; to be honest, I pretty

17 well know, you know, but I still want to depose these

18 people. But, it still might be enough for us to go

19 to mediation, but I have to know at least that

20 information.

21 MR. GREEN: I think an important

22 question, Judge, is: What does he think he gets by

23 proving -- and it didn't happen that way.

24 There's a lot of motivation for her to

25 be saying this. Okay? When she was supposed to sit 12

1 for her deposition, okay, at that point we were

2 outside the statute of limitations; and, at the time

3 that she was claiming that her husband was driving

4 the car, her husband had died.

5 So, we were outside the statute of

6 limitations and could no longer sue her husband. At

7 that point, the police report, my client's sworn

8 testimony, her sworn testimony in interrogatory

9 responses, those all indicate that she was driving

10 the car.

11 THE COURT: All right. Supplement

12 within a week and depos within two weeks. If you

13 need my intervention, let me know.

14 MR. LYDE: Thank you, Your Honor.

15 Your Honor, I'll work up an appropriate order and get

16 it to Mr. Green and get it to the Court.

17 MR. GREEN: And, Your Honor, so that

18 we don't have to come back on other things, Your

19 Honor, this goes both ways? Mr. Lyde, because he has

20 treated this like a car accident case the whole time,

21 he hasn't given me dates for the deposition of Fred

22 Loya's staff counsel at the time, which was Francisco

23 Martinez and the insurance adjusters that denied this

24 lady coverage. And I'm going to need it. We are

25 going to do all of those things. 13

1 I'm going to need those depositions as

2 well. So, can the Court order that within the same

3 timeframe that we can work on dates for those people

4 as well?

5 THE COURT: All right.

6 MR. LYDE: I can provide him dates

7 during this time period but only for people that I

8 have control over. Okay?

9 THE COURT: All right.

10 MR. LYDE: Now, getting those done

11 within that time period, I can't say that; but, I can

12 certainly give him dates.

13 THE COURT: All right. Two weeks.

14 MR. LYDE: Very good then.

15 COURT COORDINATOR: As far as the jury

16 trial, it was moved to the 21st. I sent a notice

17 after the holidays.

18 MR. LYDE: I misspoke, Your Honor. We

19 did get that notice, Your Honor.

20 THE COURT: Okay. All right. But,

21 let me know if you need a continuance.

22 MR. LYDE: Okay, Your Honor. We will.

23 Thank you Your Honor.

24 THE COURT: All right, Counsel. Have

25 a good day. 14

1 MR. GREEN: Thank you, Your Honor.

2 (Whereupon other matters were had

3 before the Court)

7 *-*-*-*-*-*-*-*-*-*

8 PROCEEDINGS CONCLUDED

9 *-*-*-*-*-*-*-*-*-*

25 15

4 I, Vicente Mendoza, Official Court Reporter for the 111th District Court, Webb County, 5 State of Texas, do hereby certify that the above and foregoing contains a true and correct transcription 6 of all portions of evidence and other proceedings requested in writing by counsel for the parties to be 7 included in this volume of the Reporter's Record, in the above-styled and numbered cause, all of which 8 occurred in open court or in chambers and were reported by me. 9 I further certify that the Reporter's 10 Record of the proceedings truly and correctly reflects the exhibits, if any, admitted by the 11 respective parties.

12 I further certify that the total cost for the preparation of this Reporter's Record is $See 13 Original printed transcript, Volume 1 and was paid/will be paid by The Green Law Firm, P.C. by 14 Leticia Garza.

15 WITNESS MY OFFICIAL HAND this the 9th 16 day of February, 2017.

22 _________________________________ Vicente Mendoza, Texas CSR #6918 23 Expiration Date: 12/31/2018 Official Court Reporter - 111th District Court 24 1110 Victoria Street, Suite 301 Laredo, Texas 78040 25 Office (956) 523-4229 Fax (956)523-5088 1

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1 REPORTER'S RECORD VOLUME 4 OF 4 VOLUMES 2 TRIAL COURT CAUSE NO. 2016-CVT-001431-D2 APPEAL NO. 04-17-00070-CV 3 OSBALDO HURTADO AVALOS ) IN THE DISTRICT COURT 4 AND ANTONIO HURTADO AS ) ASSIGNEES OF KARLA FLORES ) 5 GUEVARA, ) PLAINTIFFS, ) 6 ) WEBB COUNTY, TEXAS ) 7 VS. ) ) 8 LOYA INSURANCE COMPANY, ) DEFENDANT. ) 111TH JUDICIAL DISTRICT 9

10 ******************************* 11 February 2, 2017 ******************************* 12

13 On the 2nd day of February 2017, the

23 VICENTE MENDOZA, TEXAS CSR #6918 OFFICIAL COURT REPORTER - 111TH DISTRICT COURT 24 1110 VICTORIA STREET, Suite 301 LAREDO, TEXAS 78040 25 OFFICE (956) 523-4229 FAX (956) 523-5088 2

3 SBOT NO. 24038023 Jorge A. Green 4 The Green Law Firm, P.C. 34 S. Coria 5 Brownsville, Texas 78520 (956) 542-7000 PHONE 6 (956) 542-7026 FAX

8 SBOT NO. 12712700 John R. Lyde 9 Vidaurri, Lyde, Rodriguez & Haynes, LLP 202 N. 10th Avenue 10 Edinburg, Texas 78541 (956) 381-6602 PHONE 11 (956) 381-0725 FAX

2 FEBRUARY 2, 2017 PAGE

7 Proceedings Concluded --------------- 27

8 Court Reporter's Certificate -------- 28

7 presiding. (February 2, 2017 - Time: 9:04 a.m.)

8 THE COURT: Good morning. You may be

9 seated.

14 Loya Insurance company, Cause Number 2016-CVT-001431.

15 MR. LYDE: Good morning, Your Honor.

16 THE COURT: How much time do you need

17 on your motion?

18 MR. LYDE: I would anticipate that we

19 can do it within 30 minutes, maybe 20; but, I would

20 say 30 just to be safe.

21 THE COURT: All right. Let me just go

22 through my docket, and I'll get back with you all.

23 MR. LYDE: Yes, ma'am.

24 MR. GREEN: Thank you, Your Honor.

25 (Whereupon other matters were heard 5

1 before the Court)

2 (Case recalled)

3 THE COURT: Avalos and Hurtado versus

4 Loya Insurance company, Cause Number 2016-CVT-001431.

5 MR. LYDE: Good morning, Your Honor.

6 MR. GREEN: Good morning, Your Honor.

7 THE COURT: Let me see if I can get

8 copies of everything that was set. All right. I'm

9 looking at a motion for continuance. What else is

10 set?

11 MR. LYDE: Our motion for summary

12 judgment; and, in that regard, we've also filed

13 objections to some of opposing counsel's summary

14 judgment evidence and the pre-trial.

15 THE COURT: All right. Let's take up

16 the motion for summary judgment; and, depending on

17 how I rule, then we'll take up the continuance.

18 MR. LYDE: Now, first of all I'd like

19 to take up the objections if it's okay with the

20 Court?

21 THE COURT: Yes. Go ahead.

22 MR. LYDE: The first objection that

23 we'd like to make is to a deposition of one of the

24 Plaintiffs that was filed in the underlying

25 proceeding, a completely different proceeding. 6

1 We got it yesterday at 5:02. Okay?

2 So, the first reason that we are objecting to it is

3 because it was not timely filed. That's number one.

4 The second reason that we're objecting to it is

5 because it doesn't fall within any of the exceptions

6 to the hearsay rule.

7 It's being offered on their behalf.

8 It's not being offered against a party opponent.

9 It's not any kind of admission against interest; and,

10 under Rule 206, the underlying proceeding did not

11 involve the same parties. Loya was not part of that

12 particular lawsuit.

13 So, that depo is a complete hearsay

14 document. Of course the way that they could have

15 gotten around it is that they could have filed an

16 affidavit from the client. They decided not to do

17 that. They waited until yesterday after 5:00 o'clock

18 and sent us this depo that was taken, of their own

19 client, in the underlying suit; and, we would object

20 to that, Judge.

21 THE COURT: All right. Response

22 Counsel?

23 MR. GREEN: Your Honor, the rule, it

24 doesn't require that all of the evidence be filed

25 within the seven days. 7

1 It just requires that a response be

2 filed seven days prior to the hearing. We filed our

3 response on time and, we filed supplemental responses

4 as we received Mr. Lyde's objections to our evidence.

5 The deposition testimony that I filed,

6 Your Honor, goes directly to what Mr. Lyde claims is

7 the issue in this case; which are, who was driving

8 the car at the time of the incident that certainly

9 made the basis of the underlying suit.

10 I've brought for the Court a copy of

11 what I've filed, which is my client's testimony in

12 that case, which was taken under oath, that it was

13 not a man that was driving but a woman, which

14 contradicts the position taken by Loya in this case,

15 Your Honor.

16 THE COURT: Typically -- I mean, there

17 isn't anything to keep you from filing the deposition

18 as part of something in support of your response to

19 the motion for summary judgment; but, I will sustain

20 the objection.

21 MR. LYDE: Thank you, Your Honor. Our

22 other two objections are to documents that they filed

23 in their initial response. One is the police report.

24 It wasn't attempted to be of the underlying case. It

25 wasn't attempted to be proven up in any way. 8

1 It's not a certified copy. It's not

2 proven up as a business record. It's simply a

3 hearsay document. So, we would object to that one.

4 THE COURT: All right.

5 MR. LYDE: The second thing is that

6 they are attempting to use the discovery responses of

7 Mrs. Guevara in the underlying case. And, we'd point

8 out several things to the Court about that. Number

9 one, she's not a party to this case, except to the

10 extent that she assigned them her rights, which means

11 actually that she's the active Plaintiff in this

12 case.

13 And so, you can't use your own

14 discovery responses as evidence in the case. I can

15 use them. They can't. And, on top of that, they

16 weren't verified in any way, shape, or form. They

17 were not signed off by Ms. Guevara in any way, shape,

18 or form. And, on top of that, even the copies that

19 they provided weren't copies out of a lawsuit or

20 anything like that. It has not been proven up in any

21 way. It's simply documents that they've attached

22 with no prove-up as is required for summary judgment

23 evidence.

24 THE COURT: All right. Counsel?

25 MR. GREEN: Your Honor, it's an 9

1 interrogatory that asks, again, the fundamental

2 question: Who was driving the car at the time of the

3 collision? And her answer at that time was: I was

4 driving.

5 THE COURT: Why don't you just get her

6 to fill out an affidavit in support of the responses?

7 MR. GREEN: Because as Mr. Lyde

8 pointed out, she's no longer a party to this case.

9 So, we've made efforts to get ahold of her since the

10 time that she gave her deposition to Mr. Lyde, but

11 those efforts have not been successful.

12 So, her only involvement in this case,

13 which is what we were talking about the last time,

14 now that Mr. Lyde -- she's not a party to the case.

15 But, the entire confusion that we were having the

16 last time, whether there was the effort being made to

17 subject my clients to discovery about -- the

18 discussion being who is the proper party to the case.

19 So, here we've got her interrogatory

20 responses that go to what Mr. Lyde -- frankly, Judge,

21 this is not relevant, and I'm going to show you in

22 the motion for summary judgment why it's not

23 relevant; but, Mr. Lyde wants the Court to accept

24 that the fact question as to who was driving the car

25 has been resolved in his favor. 10

1 The position that we are taking is

2 that there is abundant evidence that there is a

3 genuine issue of material fact as it relates to that

4 issue.

5 THE COURT: The objections are

6 sustained, Counsel.

7 MR. LYDE: Thank you, Your Honor. As

8 far as the actual motion for summary judgment, the

9 underlying facts, as indicated by our motion for

10 summary judgment, are as follows:

11 This case concerns an automobile

12 accident that originally occurred back in March 2013.

13 The Hurtado's were in one car --

14 THE COURT: I remember. This is the

15 case where the drivers agreed to state that her

16 husband wasn't driving but that it was her that was

17 driving, that he was not a covered party or insured.

18 Something like that.

19 MR. LYDE: Basically, what happened

20 is -- and, again, this is proven by both the recorded

21 statement and the depo and the depo excerpts that we

22 have.

23 MR. GREEN: And that's what Loya wants

24 the Court to believe, Judge. And, I'm going to show

25 the Court later on in my responses, it doesn't matter 11

1 what the Court believes in that regards.

2 MR. LYDE: All right. Then, if it

3 doesn't matter, let me tell the Court exactly what

4 she testified to when we took her deposition back in

5 September or October. Okay? She said, yes. I

6 originally claimed that. The reason was my husband

7 was in the car driving when it happened. He's an

8 excluded driver. He got out. He talked to Hurtados.

9 He explained that he was an excluded driver. There

10 was no insurance. I showed up at the scene. We all

11 got together --

12 THE COURT: Well, she wasn't even in

13 the car?

14 MR. LYDE: She wasn't even in the car.

15 And, by the way, she said: I was up in the

16 apartment -- and the apartment is less than a block

17 away -- with my ex-mother-in-law and her sister. We

18 talked to them and they verified this. Okay?

19 You know, the Plaintiffs can contend

20 all they want to, but this is what she testified to

21 and this is the testimony that we gave the Court

22 before this MSJ. Anyway, they come up with this

23 agreement that we're going to claim that Mrs. Guevara

24 was driving so that there will be insurance coverage.

25 In fact, that's what they tell the 12

1 police officer. Okay? The suit doesn't settle. A

2 lawsuit is filed against Ms. Guevara. Her depo is

3 getting ready to be taken. I mean, it's my

4 understanding they were in the room getting ready to

5 give it. She tells her attorney. Hey, there's

6 something you need to know.

7 So, they step outside. She says, you

8 need to know that I wasn't really the one driving,

9 and we said that so that we have insurance. Okay?

10 She's not subsequently deposed. The attorney refuses

11 to tender her. What happens is Loya --

12 THE COURT: Is there an offer made? I

13 mean, so the original accident -- were the injuries

14 extreme that it didn't settle?

15 MR. LYDE: Well, I don't think so;

16 but, there is a summary judgment rendered in that

17 case, and I'll get to that.

18 THE COURT: Okay.

19 MR. GREEN: And that's what happened

20 is that her lawyer came and said --

21 MR. LYDE: I'm giving this

22 presentation. I'd like to --

23 (Simultaneous talking, inaudible

24 responses heard)

25 MR. LYDE: I'm giving this 13

1 presentation.

2 MR. GREEN: And that is what happened

3 is that her lawyer came back and said. So, she tells

4 this to her lawyer who is employed by Fred Loya,

5 right?

6 THE COURT: Okay.

7 MR. GREEN: And he goes back to Fred

8 Loya and rats his client out for committing insurance

9 fraud to his employer, Fred Loya. That's what

10 happened.

11 THE COURT: All right. You may

12 continue.

13 MR. LYDE: Okay. Anyway, Loya sends

14 out an adjuster to Mrs. Guevara, and they take a

15 recorded statement, which has been produced to

16 opposing counsel, and it was used during her

17 deposition also, in which she freely admits that she

18 and her husband and the Hurtados did this,

19 essentially everything that I've just told the Court.

20 Loya, subsequently, has her defense

21 withdrawn and withdraws coverage. Both. Okay? Mr.

22 Green then takes a summary judgment. This is after

23 the withdrawal, summary judgment against Ms. Guevara,

24 I think it's for $200,000 a piece against his client;

25 and, he convinces Ms. Guevara to assign any cause of 14

1 action that she has against Loya for her right for

2 defense to them in exchange for this $400,000

3 judgment.

4 So, they're basically bringing suit on

5 behalf of Ms. Guevara because the allegation is being

6 made, hey, Loya breached its duty to provide a

7 defense and breached its duty to provide coverage for

8 this accident. That's basically the lawsuit that

9 we're here about, not the underlying suit where they

10 took an MSJ.

11 THE COURT: You really want to take

12 this to trial?

13 MR. GREEN: Absolutely.

14 MR. LYDE: Okay. So, we have filed --

15 MR. GREEN: I am going to be entitled

16 for summary judgment, and I'm going to show this to

17 the Court.

18 THE COURT: Not from what I'm hearing,

19 but I'll hear you out.

20 MR. LYDE: And so, we have included

21 Ms. Guevara as a responsible third party. In

22 addition, we've filed a counterclaim against the

23 Hurtados based collusion and everything else, a dec.

24 (declaratory) action based upon fraud, breach of the

25 contract, all of that kind of things. 15

1 Today we have a two-prong MSJ. We

2 have traditional MSJ on our dec. action that there

3 was no breach of any duty for defense or for coverage

4 as they are claiming; and, that's based upon the

5 deposition of Ms. Guevara.

6 We also have a no evidence MSJ as to

7 their cause of action being brought against Loya.

8 So, it's two-prong, traditional based upon dec.

9 action and no evidence based upon their claims

10 against us.

11 THE COURT: Give me copies of all of

12 the motions.

13 THE CLERK: Yes, Your Honor.

14 THE COURT: All right.

15 MR. LYDE: Basically, opposing

16 counsel, in their response, they brought up three

17 issues. The first one deals with the traditional

18 motion for summary judgment based on the dec. action.

19 The second one deals solely with the no evidence

20 summary judgment based upon the claims that they are

21 making against us; and, the third one deals with

22 both. The argument that they are making against the

23 traditional motion for summary judgment as to the

24 dec. action is that not enough time has passed for

25 discovery. Okay? 16

1 They're making that solely against

2 that particular cause of action. This case is set for

3 trial on the 21st. The docket control order was

4 entered in August of last year. It was signed off by

5 all parties to my knowledge. Okay? And I think it

6 constituted a Rule 11.

7 THE COURT: Okay.

8 MR. LYDE: And I'll represent to the

9 Court that we are the ones that have been pushing

10 discovery in the case. Okay? We're the ones that

11 took the depo of Ms. Guevara, and I really hoped that

12 after this depo was taken that this case would go

13 away. It did not. But that's okay.

14 Now, with regards to that argument

15 that there has not been enough time, I do not think

16 it's fair for them to say we haven't had a chance to

17 do all of the discovery, when there haven't even been

18 requests for production, interrogatories, or requests

19 for admissions about it.

20 I don't think it's fair for them to

21 make that argument that we haven't had a chance when

22 those things haven't happened. So, that's our

23 response with regards to the there hasn't been enough

24 time.

25 THE COURT: Let me see the docket 17

1 sheet.

2 MR. LYDE: As to the traditional

3 summary judgment based upon the dec. action, what

4 they are essentially attempting to argue is that Loya

5 has somehow waived their right to file a dec. action

6 based upon no coverage and no right to defend.

7 We -- again, I think that that

8 argument, Your Honor, has no basis; and, that's not

9 only upon the case law, but also Section 37 of the

10 Texas Civil Practice & Remedies Code, which

11 specifically sets out when dec. actions can be filed.

12 An insurance policy is a contract, and

13 under 37.004, it plainly says, a contract may be

14 construed either before or after there has been a

15 breach.

16 So, by Section 37 alone we're entitled

17 to file a dec. action; and, in addition in that

18 regard, we would cite the Court to the Texas Supreme

19 Court case of Bonham State Bank versus Beadle which

20 is found at 907 S.W.2d 465. It has some great

21 language that I'll be happy to read to the Court

22 about when a dec. action is appropriate, talking

23 about whether there's a justiciable controversy,

24 which there is in this case, obviously; a genuine

25 conflict of tangible interest, which there obviously 18

1 is.

2 I mean, this is exactly what we have

3 here. So, I think that the argument that, well, the

4 dec. action has somehow been waived, that is not a

5 good argument either.

6 The argument that they are making as

7 to both the traditional MSJ and the no evidence MSJ,

8 it has to do with the right to defend; and, I really

9 think it might be better, as far as the presentation

10 to the Court, if they give their argument on that and

11 then I respond, because I do have some things that

12 I'd like to say about that.

13 MR. GREEN: I think that's a good

14 idea, Judge.

15 THE COURT: All right. Counsel?

16 MR. GREEN: For the Court to grant

17 their summary judgment, you're going to have to rule

18 on the affirmative on four different issues, Judge.

19 The first are -- the first issue is: Are the facts

20 resolved in favor of Fred Loya? And we've talked

21 about that at length, and I'll address it more

22 specifically here in a second. The second is: If

23 the facts are resolved, did Fred Loya owe their

24 insured at the time the duty to defend her.

25 So, we're going to go through the case 19

1 law. At that point you'd have to answer in the

2 affirmative to grant their summary judgment that they

3 owed no duty. I mean, you are also going to have to

4 decide whether there is a justiciable --

5 THE COURT: I mean, why would they owe

6 a duty?

7 MR. GREEN: Why would they owe duty?

8 THE COURT: Right. Why would they owe

9 a duty to defend an excluded driver?

10 MR. GREEN: She wasn't an excluded

11 driver, Your Honor. Why do you believe that?

12 THE COURT: Well, isn't that her sworn

13 testimony?

14 MR. LYDE: It is, Your Honor.

15 MR. GREEN: There is sworn testimony

16 to the contrary.

17 THE COURT: Where is that?

18 MR. GREEN: Res judicata.

19 THE COURT: Counsel, where? I other

20 words, did you respond to their motion for summary

21 judgment and give me some sort of controverting

22 evidence to the fact that she was driving? Because

23 he has evidence that she wasn't driving. He has her

24 sworn testimony in a deposition.

25 Apparently, he has evidence that she 20

1 was with her in-laws a block away. So, I have

2 evidence that she wasn't driving. Their motion for

3 summary judgment on your claim looks valid to me,

4 unless you give me something else.

5 MR. GREEN: Okay. It's irrelevant as

6 to who was driving the car. I'm going to explain

7 this to you.

8 THE COURT: All right.

9 MR. GREEN: I recognize that you

10 believe that she was not the driver of the car, even

11 though there is sworn evidence to the contrary.

12 THE COURT: I'm asking you to show me

13 where is the sworn testimony or the evidence that she

14 was driving?

15 MR. GREEN: I handed it to you a

16 second ago in my client's deposition that was taken

17 in the underlying --

18 THE COURT: All right, but I've

19 sustained the objections because that's not part of

20 the summary judgment evidence.

21 MR. GREEN: Right. So, it had been my

22 position that there was a genuine issue of material

23 fact with regards to who was driving the car. Except

24 there isn't because who was driving the car was the

25 subject of an earlier lawsuit. Okay? 21

1 Res judicata, Judge, is the concept,

2 the doctrine which creates the situation by which

3 courts cannot try facts twice. Okay? There are two

4 parts of res judicata. One is collateral estoppel;

5 and, the second is issue preclusion. Collateral

6 estoppel is: You can't go try the same case in a

7 different court a second time, which is why we have

8 friendly suits.

9 Your Honor, you see these friendly

10 suits, I'm sure, every single day where they parade

11 the parents and the children in front of the Court to

12 ask them: Are you sure? Are you not hurt?

13 THE COURT: But what does that have to

14 do with this case?

15 MR. GREEN: Because that's the

16 protection that is provided to an insurance company

17 because they can't bring a separate lawsuit.

18 THE COURT: But you're asking me to

19 find that Loya Insurance had a duty to defend an

20 excluded driver?

21 MR. GREEN: That's the law, Judge.

22 THE COURT: How is that the law?

23 MR. GREEN: So, res judicata makes it

24 such that this issue: Who was driving the car? That

25 cannot be tried again. 22

1 It was tried once. It cannot be tried

2 again. The issue of who was driving the car and

3 whether or not she was negligent was tried in Osvaldo

4 Hurtado Avalos versus Karla Lizette Guevara.

5 That issue, Judge, has been decided

6 and issued preclusion. Res judicata prevents the

7 Court from taking this issue up again. It would be

8 like if the minor in the friendly suit shows up when

9 they turn 18 to file a suit against the insurance

10 company. The insurance company would come into court

11 and say, this issue --

12 THE COURT: Counsel, the evidence that

13 I have and that I've been hearing, the entire time,

14 has been that the Hurtados and these other people,

15 the Guevaras, that they lied in order to get

16 insurance coverage. That is the evidence. That is

17 clear before the Court. That is clear before the

18 Court. That is clear.

19 MR. GREEN: I respectfully disagree,

20 Judge; but, even if it is a clear, there is a

21 doctrine in the State of Texas called the eight

22 corners rule. Okay? The eight corners rule stands

23 for the proposition that an insurance company, in

24 determining whether or not there is coverage and

25 whether or not there's a duty to defend, it looks at 23

1 two documents and only two documents; the pleadings

2 and the insurance policy.

3 Insurance companies are supposed to

4 compare those two documents; and, if there is a

5 covered claim within that document, insurance

6 companies are to provide coverage. I've got the

7 Supreme Court case of Guideone Elite Insurance

8 Company, which stands for the proposition that there

9 is no exception to the eight corners doctrine.

10 There is no argument. What is

11 undisputed in this case is that in the underlying

12 case our petition stated that Karla Flores, the

13 insured, was the driver and was negligent in causing

14 the wreck.

15 THE COURT: All right.

16 MR. GREEN: Okay? And that there was

17 a denial of coverage, even though her insurance

18 policy made her a covered person.

19 There is a case, Your Honor, it's

20 Corinth Investors Holdings versus Evanston Insurance

21 Company that says, when an insurance company is

22 analyzing whether or not there is a duty to defend,

23 all doubts regarding the duty to defend are resolved

24 in favor of the insured, and the pleadings are

25 construed liberally. 24

1 So, any doubts are construed in favor

2 of the insured. And, here is what is important,

3 Judge, okay, because he's saying there was no duty to

4 defend because there's fraud. Okay? This court,

5 okay, when interpreting the eight corners doctrine,

6 it says, under no circumstances may a court consider

7 extrinsic evidence that contradicts the pleadings.

8 That means, the pleadings and the

9 insurance policy are the two documents, those eight

10 corners, that dictate whether or not there is

11 insurance coverage. It is undisputable that she was

12 a covered person and that had she been the driver of

13 the car --

14 THE COURT: But she was not the

15 driver, Counsel. You're asking me to help you

16 perpetuate a fraud. That's what you're asking this

17 Court to do. What I don't understand is that the

18 undisputed facts in this case showed that the

19 Hurtados and Guevaras lied about Ms. Guevara being

20 the driver in the car.

21 She admits, under oath, I was not the

22 driver of the car. I wasn't even in the car. I came

23 up with this plot, with the Hurtados, so that I could

24 get insurance coverage.

25 So, you are basically asking this 25

1 Court to ignore every rule of justice and help your

2 client's perpetuate a fraud.

3 MR. GREEN: I'm asking you to right a

4 wrong. Insurance companies have a duty. It it were

5 true that she was not driving --

6 THE COURT: Counsel, the only people

7 that are doing something wrong in this case are the

8 Hurtados and the Guevaras that came up with this

9 scheme.

10 MR. GREEN: I respectfully disagree.

11 Your Honor, I respectfully disagree. I have a client

12 to represent. My client has sworn to the exact

13 opposite.

14 THE COURT: Show me where your client

15 swore to the exact opposite, because I've just read

16 Mrs. Guevara's deposition taken in September where

17 she says, under oath, I lied. I was not driving.

18 Show me where? Because in response to the summary

19 judgment that was filed by Loya Insurance, I don't

20 see any.

21 MR. GREEN: Let me ask you this: Had

22 she not been driving, if the facts were exactly --

23 THE COURT: She was not driving.

24 MR. GREEN: But let's assume for

25 purposes of this hearing, and although I disagree 26

1 with --

2 THE COURT: Give me evidence that she

3 was driving.

4 MR. GREEN: I have my client's sworn

5 testimony to the contrary.

6 THE COURT: There is no evidence that

7 you've given to me in response to the summary

8 judgment.

9 MR. GREEN: I'm assuming, for purposes

10 of this hearing, that she wasn't driving. Okay?

11 Let's say I, in representing Osvaldo Hurtado Avalos,

12 sued her, okay, and there was no evidence that she

13 was driving; but, I sued her anyway. Would Fred Loya

14 have to answer that lawsuit?

15 THE COURT: All right, Counsel, I've

16 heard enough. Anything else from you?

17 MR. LYDE: No, Your Honor.

18 THE COURT: All right. I'll take

19 everything under advisement and I'll give you my

20 ruling by tomorrow.

21 MR. LYDE: Okay. We have the -- very

22 good, Your Honor. Thank you. May I be excused?

23 THE COURT: I'll do it by tomorrow

24 morning.

25 MR. LYDE: Thank you, Your Honor. 27

1 MR. GREEN: Do you want to take up the

2 motion for continuance in light of the fact that you

3 may not grant the summary judgment?

4 THE COURT: Counsel, I mean, as far as

5 your continuance goes, that's denied. This case has

6 been on file since May. You've had plenty of time to

7 conduct discovery. This case apparently goes even

8 further back because of that other pre-existing case.

9 So, continuance is denied. It stays on for trial,

10 assuming I don't dispose of it.

11 MR. LYDE: Thank you, Your Honor.

12 THE COURT: All right. Thank you,

13 Counsel.

14 (Whereupon other matters were heard

15 before the Court)

17 *-*-*-*-*-*-*-*-*-*

18 PROCEEDINGS CONCLUDED

19 *-*-*-*-*-*-*-*-*-*

25 28

4 I, Vicente Mendoza, Official Court Reporter for the 111th District Court, Webb County, 5 State of Texas, do hereby certify that the above and foregoing contains a true and correct transcription 6 of all portions of evidence and other proceedings requested in writing by counsel for the parties to be 7 included in this volume of the Reporter's Record, in the above-styled and numbered cause, all of which 8 occurred in open court or in chambers and were reported by me. 9 I further certify that the Reporter's 10 Record of the proceedings truly and correctly reflects the exhibits, if any, admitted by the 11 respective parties.

12 I further certify that the total cost for the preparation of this Reporter's Record is $See 13 Original printed transcript, Volume 1 and was paid/will be paid by The Green Law Firm, P.C. by 14 Leticia Garza.

15 WITNESS MY OFFICIAL HAND this the 9th day of February, 2017. 16

22 _________________________________ Vicente Mendoza, Texas CSR #6918 23 Expiration Date: 12/31/2018 Official Court Reporter - 111th District Court 24 1110 Victoria Street, Suite 301 Laredo, Texas 78040 25 Office (956) 523-4229 Fax (956)523-5088 1

# admitted [1] - 28:10 basis [2] - 7:9, 17:8 23:5 4 advisement [1] - Beadle [1] - 17:19 claimed [1] - 11:6 #6918 [2] - 1:23, 28:22 4 [3] - 1:1, 3:4 26:19 behalf [2] - 6:7, 14:5 claiming [1] - 15:4 465 [1] - 17:20 affidavit [2] - 6:16, 9:6 believes [1] - 11:1 claims [3] - 7:6, 15:9, $ ago [1] - 20:16 better [1] - 18:9 15:20 5 agreed [1] - 10:15 block [2] - 11:16, 20:1 clear [4] - 22:17, $200,000 [1] - 13:24 agreement [1] - 11:23 Bonham [1] - 17:19 22:18, 22:20 $400,000 [1] - 14:2 523-4229 [2] - 1:25, ahead [1] - 5:21 breach [3] - 14:24, CLERK [1] - 15:13 28:25 ahold [1] - 9:9 15:3, 17:15 client [7] - 6:16, 6:19, 0 523-5088 [1] - 1:25 allegation [1] - 14:5 breached [2] - 14:6, 13:8, 13:24, 25:11, 542-7000 [1] - 2:5 alone [1] - 17:16 14:7 25:12, 25:14 04-17-00070-CV [1] - 542-7026 [1] - 2:6 analyzing [1] - 23:22 bring [1] - 21:17 client's [4] - 7:11, 1:2 5:00 [1] - 6:17 AND [1] - 1:4 bringing [1] - 14:4 20:16, 25:2, 26:4 5:02 [1] - 6:1 answer [3] - 9:3, 19:1, brought [3] - 7:10, clients [1] - 9:17 1 26:14 15:7, 15:16 Code [1] - 17:10

1 [2] - 3:3, 28:13 7 anticipate [1] - 4:18 Brownsville [1] - 2:5 collateral [2] - 21:4, ANTONIO [1] - 1:4 business [1] - 8:2 21:5 10th [1] - 2:9 78040 [2] - 1:24, 28:24 collision [1] - 9:3 anyway [2] - 11:22, 11 [1] - 16:6 78520 [1] - 2:5 1110 [2] - 1:24, 28:24 26:13 C collusion [1] - 14:23 78541 [1] - 2:10 Anyway [1] - 13:13 committing [1] - 13:8 111th [3] - 4:5, 28:4, cannot [3] - 21:3, companies [3] - 23:3, apartment [2] - 11:16 28:23 9 21:25, 22:1 23:6, 25:4 APPEAL [1] - 1:2 111TH [2] - 1:8, 1:23 car [17] - 7:8, 9:2, COMPANY [1] - 1:8 Appearances [1] - 3:3 12/31/2018 [1] - 28:23 907 [1] - 17:20 9:24, 10:13, 11:7, Company [2] - 23:8, appropriate [1] - 12712700 [1] - 2:8 956 [7] - 1:25, 2:5, 2:6, 11:13, 11:14, 20:6, 23:21 17:22 18 [1] - 22:9 2:10, 2:11, 28:25 20:10, 20:23, 20:24, company [7] - 4:14, argue [1] - 17:4 956)523-5088 [1] - 21:24, 22:2, 24:13, 5:4, 21:16, 22:10, argument [9] - 15:22, 2 28:25 16:14, 16:21, 17:8, 24:20, 24:22 22:23, 23:21 9:04 [1] - 4:7 Case [2] - 3:3, 5:2 compare [1] - 23:4 18:3, 18:5, 18:6, 2 [4] - 1:11, 3:2, 3:3, 9th [1] - 28:15 case [33] - 7:7, 7:12, 18:10, 23:10 complete [1] - 6:13 4:7 7:14, 7:24, 8:7, 8:9, AS [1] - 1:4 completely [1] - 5:25 20 [1] - 4:19 A 8:12, 8:14, 9:8, 9:12, assign [1] - 13:25 Computer [1] - 1:20 2013 [1] - 10:12 9:14, 9:18, 10:11, assigned [1] - 8:10 Computer-Assisted 2016-CVT-001431 [2] a.m. [1] - 4:7 10:15, 12:17, 16:2, ASSIGNEES [1] - 1:4 [1] - 1:20 - 4:14, 5:4 above-entitled [1] - 16:10, 16:12, 17:9, Assisted [1] - 1:20 Computerized [1] - 2016-CVT-001431-D 1:15 17:19, 17:24, 18:25, assume [1] - 25:24 1:18 2 [1] - 1:2 above-styled [1] - 21:6, 21:14, 23:7, assuming [2] - 26:9, concept [1] - 21:1 2017 [5] - 1:11, 1:13, 28:7 23:11, 23:12, 23:19, 27:10 concerns [1] - 10:11 3:2, 4:7, 28:15 absolutely [1] - 14:13 24:18, 25:7, 27:5, attached [1] - 8:21 CONCLUDED [1] - 202 [1] - 2:9 abundant [1] - 10:2 27:7, 27:8 attempted [2] - 7:24, 27:18 206 [1] - 6:10 accept [1] - 9:23 CAUSE [1] - 1:2 7:25 Concluded [1] - 3:5 21st [1] - 16:3 accident [3] - 10:12, causing [1] - 23:13 attempting [2] - 8:6, conduct [1] - 27:7 24038023 [1] - 2:3 12:13, 14:8 certainly [1] - 7:8 17:4 conflict [1] - 17:25 27 [1] - 3:5 action [13] - 14:1, Certificate [1] - 3:5 attorney [2] - 12:5, confusion [1] - 9:15 28 [1] - 3:5 14:24, 15:2, 15:7, certified [1] - 8:1 12:10 consider [1] - 24:6 2nd [1] - 1:13 15:9, 15:18, 15:24, certify [3] - 28:5, 28:9, August [1] - 16:4 constituted [1] - 16:6 16:2, 17:3, 17:5, 28:12 automobile [1] - 10:11 construed [3] - 17:14, 3 17:17, 17:22, 18:4 Avalos [4] - 4:13, 5:3, chambers [1] - 28:8 23:25, 24:1 actions [1] - 17:11 chance [2] - 16:16, 22:4, 26:11 contains [1] - 28:5 3 [1] - 3:4 active [1] - 8:11 16:21 AVALOS [1] - 1:3 contend [1] - 11:19 30 [2] - 4:19, 4:20 actual [1] - 10:8 children [1] - 21:11 Avenue [1] - 2:9 continuance [5] - 5:9, 301 [2] - 1:24, 28:24 addition [2] - 14:22, CHRONOLOGICAL 5:17, 27:2, 27:5, 34 [1] - 2:4 17:17 [1] - 3:1 37 [2] - 17:9, 17:16 address [1] - 18:21 B Chronological [1] - 27:9 continue [1] - 13:12 37.004 [1] - 17:13 adjuster [1] - 13:14 3:4 BAILIFF [1] - 4:4 contract [3] - 14:25, 381-0725 [1] - 2:11 admission [1] - 6:9 circumstances [1] - Bank [1] - 17:19 17:12, 17:13 381-6602 [1] - 2:10 admissions [1] - 24:6 based [9] - 14:23, contradicts [2] - 7:14, 16:19 cite [1] - 17:18 14:24, 15:4, 15:8, 24:7 admits [2] - 13:17, Civil [1] - 17:10 15:9, 15:18, 15:20, contrary [3] - 19:16, 24:21 claim [3] - 11:23, 20:3, 17:3, 17:6 20:11, 26:5 2 control [1] - 16:3 24:4, 24:6, 28:8 1:8, 1:23 19:23, 19:25, 20:2, Firm [2] - 2:4, 28:13 controversy [1] - Court's [1] - 4:11 District [3] - 4:5, 28:4, 20:11, 20:13, 20:20, first [6] - 5:18, 5:22, 17:23 courts [1] - 21:3 28:23 22:12, 22:16, 24:7, 6:2, 15:17, 18:19 controverting [1] - coverage [11] - 11:24, docket [4] - 4:11, 26:2, 26:6, 26:12, Flores [1] - 23:12 19:21 13:21, 14:7, 15:3, 4:22, 16:3, 16:25 28:6 FLORES [1] - 1:4 convinces [1] - 13:25 17:6, 22:16, 22:24, doctrine [4] - 21:2, ex [1] - 11:17 following [2] - 1:14, copies [4] - 5:8, 8:18, 23:6, 23:17, 24:11, 22:21, 23:9, 24:5 ex-mother-in-law [1] - 4:2 8:19, 15:11 24:24 document [3] - 6:14, 11:17 follows [1] - 10:10 copy [2] - 7:10, 8:1 covered [4] - 10:17, 8:3, 23:5 exact [2] - 25:12, FOR [2] - 2:2, 2:7 Coria [1] - 2:4 23:5, 23:18, 24:12 documents [6] - 7:22, 25:15 foregoing [1] - 28:5 Corinth [1] - 23:20 creates [1] - 21:2 8:21, 23:1, 23:4, exactly [3] - 11:3, form [2] - 8:16, 8:18 corners [5] - 22:22, CSR [2] - 1:23, 28:22 24:9 18:2, 25:22 four [1] - 18:18 23:9, 24:5, 24:10 doubts [2] - 23:23, Except [1] - 20:23 frankly [1] - 9:20 correct [1] - 28:5 D 24:1 except [1] - 8:9 fraud [5] - 13:9, 14:24, correctly [1] - 28:10 driver [11] - 11:8, 11:9, exception [1] - 23:9 24:4, 24:16, 25:2 cost [1] - 28:12 Date [1] - 28:23 19:9, 19:11, 20:10, exceptions [1] - 6:5 Fred [6] - 13:4, 13:7, Counsel [8] - 6:22, days [2] - 6:25, 7:2 21:20, 23:13, 24:12, excerpts [1] - 10:21 13:9, 18:20, 18:23, 10:6, 19:19, 24:15, deals [3] - 15:17, 24:15, 24:20, 24:22 exchange [1] - 14:2 26:13 25:6, 26:15, 27:4, 15:19, 15:21 drivers [1] - 10:15 excluded [5] - 11:8, freely [1] - 13:17 27:13 dec. [11] - 14:23, driving [26] - 7:7, 7:13, 11:9, 19:9, 19:10, friendly [3] - 21:8, counsel [6] - 8:24, 15:2, 15:8, 15:18, 9:2, 9:4, 9:24, 10:16, 21:20 21:9, 22:8 13:16, 15:16, 18:15, 15:24, 17:3, 17:5, 10:17, 11:7, 11:24, excused [1] - 26:22 front [1] - 21:11 22:12, 28:6 17:11, 17:17, 17:22, 12:8, 19:22, 19:23, exhibits [1] - 28:10 fundamental [1] - 9:1 counsel's [1] - 5:13 18:4 20:2, 20:6, 20:14, existing [1] - 27:8 decide [1] - 19:4 20:23, 20:24, 21:24, counterclaim [1] - decided [2] - 6:16, 22:2, 25:5, 25:17, Expiration [1] - 28:23 G 14:22 explain [1] - 20:6 COUNTY [2] - 1:6, 22:5 25:22, 25:23, 26:3, explained [1] - 11:9 Garza [1] - 28:14 28:2 declaratory [1] - 14:24 26:10, 26:13 extent [1] - 8:10 genuine [3] - 10:3, County [2] - 1:17, 28:4 defend [9] - 17:6, during [1] - 13:16 extreme [1] - 12:14 17:24, 20:22 course [1] - 6:14 18:8, 18:24, 19:9, duty [14] - 14:6, 14:7, extrinsic [1] - 24:7 given [1] - 26:7 Court [35] - 3:5, 4:3, 21:19, 22:25, 23:22, 15:3, 18:24, 19:3, grant [3] - 18:16, 19:2, 23:23, 24:4 19:6, 19:7, 19:9, 4:5, 4:12, 5:1, 5:20, DEFENDANT [2] - 1:8, 21:19, 22:25, 23:22, F 27:3 7:10, 8:8, 9:23, great [1] - 17:20 10:24, 10:25, 11:1, 2:7 23:23, 24:3, 25:4 fact [6] - 9:24, 10:3, GREEN [33] - 4:24, 11:3, 11:21, 13:19, defense [4] - 13:20, 11:25, 19:22, 20:23, 5:6, 6:23, 8:25, 9:7, 14:17, 16:9, 17:18, 14:2, 14:7, 15:3 E 27:2 10:23, 12:19, 13:2, 17:19, 17:21, 18:10, denial [1] - 23:17 facts [6] - 10:9, 18:19, 13:7, 14:13, 14:15, 18:16, 21:11, 22:7, denied [2] - 27:5, 27:9 Edinburg [1] - 2:10 18:23, 21:3, 24:18, 18:13, 18:16, 19:7, 22:17, 22:18, 23:7, depo [7] - 6:13, 6:18, effort [1] - 9:16 25:22 19:10, 19:15, 19:18, 24:17, 25:1, 27:15, 10:21, 12:2, 16:11, efforts [2] - 9:9, 9:11 fair [2] - 16:16, 16:20 20:5, 20:9, 20:15, 28:4, 28:4, 28:23 16:12 eight [5] - 22:21, fall [1] - 6:5 20:21, 21:15, 21:21, COURT [55] - 1:2, 1:3, deposed [1] - 12:10 22:22, 23:9, 24:5, far [3] - 10:8, 18:9, 21:23, 22:19, 23:16, 1:23, 4:8, 4:13, 4:16, deposition [10] - 5:23, 24:9 27:4 25:3, 25:10, 25:21, 4:21, 5:3, 5:7, 5:15, 7:5, 7:17, 9:10, 11:4, either [2] - 17:14, 18:5 favor [4] - 9:25, 18:20, 25:24, 26:4, 26:9, 5:21, 6:21, 7:16, 8:4, 13:17, 15:5, 19:24, Elite [1] - 23:7 23:24, 24:1 27:1 8:24, 9:5, 10:5, 20:16, 25:16 employed [1] - 13:4 FAX [3] - 1:25, 2:6, Green [4] - 2:3, 2:4, 10:14, 11:12, 12:12, determining [1] - employer [1] - 13:9 2:11 13:22, 28:13 12:18, 13:6, 13:11, 22:24 entered [1] - 16:4 Fax [1] - 28:25 Guevara [13] - 8:7, 14:11, 14:18, 15:11, dictate [1] - 24:10 entire [2] - 9:15, 22:13 February [4] - 1:11, 8:17, 11:23, 12:2, 15:14, 16:7, 16:25, different [3] - 5:25, entitled [3] - 1:15, 1:13, 4:7, 28:15 13:14, 13:23, 13:25, 18:15, 19:5, 19:8, 18:18, 21:7 14:15, 17:16 FEBRUARY [1] - 3:2 14:5, 14:21, 15:5, 19:12, 19:17, 19:19, directly [1] - 7:6 essentially [2] - 13:19, file [4] - 17:5, 17:17, 16:11, 22:4, 24:19 20:8, 20:12, 20:18, disagree [4] - 22:19, 17:4 22:9, 27:6 GUEVARA [1] - 1:5 21:13, 21:18, 21:22, 25:10, 25:11, 25:25 estoppel [2] - 21:4, filed [16] - 5:12, 5:24, Guevara's [1] - 25:16 22:12, 23:15, 24:14, discovery [7] - 8:6, 21:6 6:3, 6:15, 6:24, 7:2, Guevaras [3] - 22:15, 25:6, 25:14, 25:23, 8:14, 9:17, 15:25, Evanston [1] - 23:20 7:3, 7:5, 7:11, 7:22, 24:19, 25:8 26:2, 26:6, 26:15, 16:10, 16:17, 27:7 evidence [24] - 5:14, 12:2, 14:14, 14:22, Guideone [1] - 23:7 26:18, 26:23, 27:4, discussion [1] - 9:18 6:24, 7:4, 8:14, 8:23, 17:11, 25:19 27:12 dispose [1] - 27:10 10:2, 15:6, 15:9, filing [1] - 7:17 court [5] - 21:7, 22:10, DISTRICT [3] - 1:3, 15:19, 18:7, 19:22, fill [1] - 9:6 3 22:10, 22:16, 22:23, keep [1] - 7:17 material [2] - 10:3, Notzon [1] - 4:6 H 23:2, 23:3, 23:5, kind [2] - 6:9, 14:25 20:22 NOTZON [1] - 1:16 HAND [1] - 28:15 23:17, 23:21, 24:9, knowledge [1] - 16:5 matter [2] - 10:25, number [2] - 6:3, 8:8 handed [1] - 20:15 24:11, 24:24, 25:4 11:3 Number [2] - 4:14, 5:4 happy [1] - 17:21 INSURANCE [1] - 1:8 L matters [3] - 4:10, numbered [2] - 1:15, Haynes [1] - 2:9 Insurance [6] - 4:14, 4:25, 27:14 28:7 hear [1] - 14:19 5:4, 21:19, 23:7, language [1] - 17:21 mean [7] - 7:16, 12:3, heard [6] - 1:14, 4:11, 23:20, 25:19 LAREDO [1] - 1:24 12:13, 18:2, 19:3, O 4:25, 12:24, 26:16, insured [5] - 10:17, Laredo [2] - 1:16, 19:5, 27:4 27:14 18:24, 23:13, 23:24, 28:24 means [2] - 8:10, 24:8 o'clock [1] - 6:17 hearing [5] - 7:2, 24:2 last [3] - 9:13, 9:16, Mendoza [2] - 28:4, oath [3] - 7:12, 24:21, 14:18, 22:13, 25:25, interest [2] - 6:9, 16:4 28:22 25:17 26:10 17:25 law [5] - 11:17, 17:9, MENDOZA [1] - 1:23 object [2] - 6:19, 8:3 hearsay [3] - 6:6, interpreting [1] - 24:5 19:1, 21:21, 21:22 might [1] - 18:9 objecting [2] - 6:2, 6:4 6:13, 8:3 interrogatories [1] - Law [2] - 2:4, 28:13 minor [1] - 22:8 objection [2] - 5:22, held [1] - 1:16 16:18 laws [1] - 20:1 minutes [1] - 4:19 7:20 help [2] - 24:15, 25:1 interrogatory [2] - 9:1, lawsuit [7] - 6:12, MONICA [1] - 1:16 objections [6] - 5:13, hereby [1] - 28:5 9:19 8:19, 12:2, 14:8, Monica [1] - 4:6 5:19, 7:4, 7:22, 10:5, Holdings [1] - 23:20 Investors [1] - 23:20 20:25, 21:17, 26:14 morning [5] - 4:8, 20:19 Honor [21] - 4:15, involve [1] - 6:11 lawyer [3] - 12:20, 4:15, 5:5, 5:6, 26:24 obviously [2] - 17:24, 4:24, 5:5, 5:6, 6:23, involvement [1] - 9:12 13:3, 13:4 mother [1] - 11:17 17:25 7:6, 7:15, 7:21, 8:25, irrelevant [1] - 20:5 length [1] - 18:21 motion [13] - 4:17, 5:9, occurred [2] - 10:12, 10:7, 15:13, 17:8, issue [11] - 7:7, 10:3, less [1] - 11:16 5:11, 5:16, 7:19, 28:8 19:11, 19:14, 21:9, 10:4, 18:19, 20:22, Leticia [1] - 28:14 9:22, 10:8, 10:9, October [1] - 11:5 23:19, 25:11, 26:17, 21:5, 21:24, 22:2, liberally [1] - 23:25 15:18, 15:23, 19:20, OF [4] - 1:1, 1:4, 28:1, 26:22, 26:25, 27:11 22:5, 22:7, 22:11 lied [3] - 22:15, 24:19, 20:2, 27:2 28:2 Honorable [2] - 1:15, issued [1] - 22:6 25:17 motions [1] - 15:12 offer [1] - 12:12 4:6 issues [2] - 15:17, light [1] - 27:2 MR [60] - 4:15, 4:18, offered [2] - 6:7, 6:8 hoped [1] - 16:11 18:18 Lizette [1] - 22:4 4:23, 4:24, 5:5, 5:6, OFFICE [1] - 1:25 hurt [1] - 21:12 LLP [1] - 2:9 5:11, 5:18, 5:22, Office [1] - 28:25 Hurtado [4] - 4:13, J looking [1] - 5:9 6:23, 7:21, 8:5, 8:25, officer [1] - 12:1 5:3, 22:4, 26:11 looks [2] - 20:3, 22:25 9:7, 10:7, 10:19, Official [2] - 28:4, HURTADO [2] - 1:3, John [1] - 2:8 LOYA [1] - 1:8 10:23, 11:2, 11:14, 28:23 1:4 Jorge [1] - 2:3 Loya [20] - 4:14, 5:4, 12:15, 12:19, 12:21, OFFICIAL [2] - 1:23, Hurtado's [1] - 10:13 Judge [12] - 1:16, 4:6, 6:11, 7:14, 10:23, 12:25, 13:2, 13:7, 28:15 Hurtados [7] - 11:8, 6:20, 9:20, 10:24, 12:11, 13:4, 13:8, 13:13, 14:13, 14:14, once [1] - 22:1 13:18, 14:23, 22:14, 18:14, 18:18, 21:1, 13:9, 13:13, 13:20, 14:15, 14:20, 15:15, one [11] - 5:23, 6:3, 24:19, 24:23, 25:8 21:21, 22:5, 22:20, 14:1, 14:6, 15:7, 16:8, 17:2, 18:13, 7:23, 8:3, 8:9, 10:13, husband [3] - 10:16, 24:3 17:4, 18:20, 18:23, 18:16, 19:7, 19:10, 12:8, 15:17, 15:19, 11:6, 13:18 judgment [25] - 5:12, 21:19, 25:19, 26:13 19:14, 19:15, 19:18, 15:21, 21:4 5:14, 5:16, 7:19, Lyde [8] - 2:8, 2:9, 7:6, 20:5, 20:9, 20:15, ones [2] - 16:9, 16:10 8:22, 9:22, 10:8, 20:21, 21:15, 21:21, I 10:10, 12:16, 13:22, 9:7, 9:10, 9:14, 9:20, open [1] - 28:8 9:23 21:23, 22:19, 23:16, Open [1] - 4:3 idea [1] - 18:14 13:23, 14:3, 14:16, LYDE [27] - 4:15, 4:18, 25:3, 25:10, 25:21, opponent [1] - 6:8 ignore [1] - 25:1 15:18, 15:20, 15:23, 4:23, 5:5, 5:11, 5:18, 25:24, 26:4, 26:9, opposing [3] - 5:13, important [1] - 24:2 17:3, 18:17, 19:2, 5:22, 7:21, 8:5, 10:7, 26:17, 26:21, 26:25, 13:16, 15:15 IN [1] - 1:3 19:21, 20:3, 20:20, 10:19, 11:2, 11:14, 27:1, 27:11 opposite [2] - 25:13, in-laws [1] - 20:1 25:19, 26:8, 27:3 12:15, 12:21, 12:25, MSJ [7] - 11:22, 14:10, 25:15 inaudible [1] - 12:23 judicata [5] - 19:18, 13:13, 14:14, 14:20, 15:1, 15:2, 15:6, order [3] - 4:5, 16:3, incident [1] - 7:8 21:1, 21:4, 21:23, 15:15, 16:8, 17:2, 18:7 22:15 included [2] - 14:20, 22:6 19:14, 26:17, 26:21, MY [1] - 28:15 original [1] - 12:13 28:7 JUDICIAL [1] - 1:8 26:25, 27:11 Original [1] - 28:13 INDEX [1] - 3:1 justice [1] - 25:1 7:4 N originally [2] - 10:12, Index [1] - 3:4 justiciable [2] - 17:23, 11:6 19:4 need [3] - 4:16, 12:6, indicated [1] - 10:9 M 12:8 OSBALDO [1] - 1:3 initial [1] - 7:23 Osvaldo [2] - 22:3, injuries [1] - 12:13 K ma'am [1] - 4:23 negligent [2] - 22:3, 26:11 Machine [1] - 1:19 23:13 insurance [19] - 11:10, outside [1] - 12:7 KARLA [1] - 1:4 man [1] - 7:13 NO [4] - 1:2, 1:2, 2:3, 11:24, 12:9, 13:8, owe [4] - 18:23, 19:5, Karla [2] - 22:4, 23:12 March [1] - 10:12 2:8 17:12, 21:16, 22:9, 19:7, 19:8 4 owed [1] - 19:3 4:7 Remedies [1] - 17:10 21:5, 21:7 12:1, 14:4, 14:9, own [2] - 6:18, 8:13 prevents [1] - 22:6 remember [1] - 10:14 Section [2] - 17:9, 22:8, 22:9 printed [1] - 28:13 rendered [1] - 12:16 17:16 Suite [2] - 1:24, 28:24 P proceeding [3] - 5:25, report [1] - 7:23 see [4] - 5:7, 16:25, suits [2] - 21:8, 21:10 6:10 reported [2] - 1:18, 21:9, 25:20 summary [24] - 5:11, P.C. 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24:11 undisputed [2] - 23:11, 24:18 unless [1] - 20:4 up [16] - 5:15, 5:17, 5:19, 7:25, 8:2, 8:20, 8:22, 11:10, 11:15, 11:22, 15:16, 22:7, 22:8, 24:23, 25:8, 27:1 TAB 3 Filed 10/30/2014 1:36:42 PM Esther Degollado District Clerk Webb District 2014CVT002421D1 CAUSE NO. _________________________

OSBALDO HURTADO AVALOS § IN THE DISTRICT COURT AND ANTONIO HURTADO § § § VS. § _____ JUDICIAL DISTRICT § § KARLA LIZETTE FLORES GUEVARA § WEBB COUNTY, TEXAS

PLAINTIFFS’ ORIGINAL PETITION AND REQUEST FOR DISCLOSURE

TO THE HONORABLE JUDGE OF SAID COURT:

NOW COMES Osbaldo Hurtado Avalos and Antonio Hurtado hereinafter referred

to as Plaintiffs, complaining of and about Karla Lizette Flores Guevara, hereinafter referred

to as Defendant, and will show unto the Court the following:

A. Discovery Control Plan

1. Plaintiffs intend to conduct discovery under Level 2 of the Texas Rule of Civil

Procedure 190.

B. Parties and Service

2. Plaintiffs Osbaldo Hurtado Avalos and Antonio Hurtado are individuals residing

in Laredo, Webb County, Texas.

3. Defendant, Karla Lizette Flores Guevara, an individual, may be served with process

1717 Cedar, Laredo, Texas 78040. Service of said defendant as described above can be

effected by civil process server.

C. Venue

4. Venue is proper in Webb County, Texas because all or a substantial part of the

events or omissions serving as the basis of this litigation occurred in Webb County, Texas. D. Facts

5. On or about March 18, 2013, Plaintiffs suffered injuries when the vehicle they were

driving was struck by the vehicle operated by Karla Lizette Flores Guevara.

E. Count One - Negligence

7. At or immediately preceding the time of the subject collision, Karla Lizette Flores

Guevara was operating her vehicle negligently. Karla Lizette Flores Guevara had a duty

to exercise ordinary care and operate her vehicle reasonably and prudently. Karla Lizette

Flores Guevara breached that duty in one or more of the following ways:

a. Failing to make a proper turn;

b. Failing to maintain a proper lookout;

c. Failing to timely apply her brakes;

d. Failing to turn her vehicle in order to avoid the collision; and

e. Driver inattention.

8. Karla Lizette Flores Guevara’s negligence proximately caused Plaintiffs’ injuries

and other damages.

F. Damages

9. Plaintiffs seek monetary relief over $100,000, but nor more than $200,000.

G. Conditions Precedent

10. All conditions precedent have been performed or have occurred.

H. Request for Disclosure

11. Under Texas Rule of Civil Procedure 194, Plaintiffs request defendant disclose

within 50 days of the service of this request, the information or material described in Rule

Page -2- 194.2 (a) through (l).

I. PRAYER

12. WHEREFORE PREMISES CONSIDERED, Plaintiffs Osbaldo Hurtado Avalos and

Antonio Hurtado respectfully pray that defendant be cited to appear and answer herein,

and that Plaintiffs have judgment against defendant for the following:

a. Physical pain in the past and future;

b. Mental anguish in the past and future;

c. Physical impairment in the past and future;

d. Medical expenses in the past and future;

e. Lost earning capacity in the past and future;;

g. Costs of suit;

h. Pre-judgment and post-judgment interest; and

i. All other relief, in law and in equity, to which Plaintiff may be

entitled.

THE GREEN LAW FIRM P.C. 34 S. Coria Brownsville, Texas 78520 Telephone : (956) 542-7000 Facsimile : (956) 542-7026

BY: /S/ JORGE A. GREEN State Bar No. 24038023

ATTORNEY FOR PLAINTIFFS

Page -3- PLAINTIFFS’ FIRST SET OF DISCOVERY REQUESTS TO DEFENDANT

Interrogatory #1: Describe how the collision occurred, including: (1) what you contend caused or contributed to the collision, (2) how it happened, (3) the road and weather conditions, and (4) the traffic conditions.

Answer:

Interrogatory #2: Please state the purpose of your trip at the time of the collision, including where you had been, where you were going, and the time at which you were supposed to arrive at your destination.

Interrogatory #3: Who was driving the car at the time of the collision?

Interrogatory #4: Have you ever been sued or filed a lawsuit before? If so, please state (1) what the suit was about, (2) the county and state in which it was filed, (3) the style of the case, and (4) the disposition of the case, if resolved.

Interrogatory #5: Describe any previous car wrecks in which you have been involved. For each, please state (1) where the wreck happened, (2) who you believe was at fault, (3) whether a lawsuit was filed and (4) where you sought medical treatment for any injuries you sustained.

Interrogatory #6: Were you using a cell phone in any matter, including making or receiving a call, writing or reading a text message, or writing or reading an email, at the time of the collision?

Page -4- Interrogatory #7: If you have been convicted of a felony or crime of moral turpitude in the last ten years, state the charge, the date and place of arrest, and county of conviction.

Interrogatory #8: Do you disagree with anything in the investigating officer’s police report, including the additional narrative? If so, please state with what parts you disagree, why you disagree with them and why you did not change ask to amend the report.

Interrogatory #9: At what speed do you believe the vehicles involved were traveling immediately prior to the collision made the basis of this lawsuit?

Interrogatory #10: Describe in detail any and all conversations you had immediately following the collision until the time you left the scene. In your answer, please include: (1) with whom you spoke, (2) what the conversation was about, and (3) for about how long you spoke with each person.

Interrogatory #11: Do you intend to argue Plaintiff’s injuries were not caused by the wreck? If so, state the basis for your belief, including facts supporting such contention.

Interrogatory #12: Describe the severity of the impact between the vehicles and the resulting visible damage to the vehicles.

Interrogatory #13: When did you first become aware of Plaintiffs’ vehicle. Please state in both time (seconds or minutes) and distance (in feet). Page -5- Answer:

FIRST SET OF REQUESTS FOR PRODUCTION TO DEFENDANT

Request #1: All photographs by Defendant or Defendant’s agent that relate to Plaintiffs’ cause of action, including photographs of Plaintiffs, the vehicles involved in the collision, including Plaintiffs’ and Defendant’s vehicles, and/or the scene of the collision.

Response:

Request #2: A copy of any property damage estimates, of both Plaintiff, Defendant, or any other vehicle involved, in Defendant’s or Defendant’s agent’s possession.

Request #3: All oral, taped or recorded statements made by any witnesses, including Plaintiff and Defendant, to the subject collision which are in the possession, constructive possession, custody or control of the defendant, Defendant’s attorney or anyone acting on Defendant’s behalf.

Request #4: Please produce all documents that Defendant has, including all deposition testimony and trial transcripts, from any other lawsuits regarding personal injury in which Defendant, either in your personal capacity or on behalf of a minor or incompetent plaintiff, has been involved.

Request #5: If and/or when an expert is retained by Defendant, please produce a copy of the expert’s file, including: (1) all correspondence, including fee arrangements, between the expert and Defendant and/or Defendant’s agents, including Defendant’s attorney, (2) all materials and documents reviewed by the expert in preparing his or her report, (3) any slide-show, power point presentation, or other demonstrative evidence the expert will use at trial, and Page -6- (4) a list of all the cases in which the expert has testified in the last 4 years.

Request #6: Please provide a copy of any and all statutes, regulations, ordinances, or written rules or customs that Defendant intends to introduce at trial.

Request #7: Please provide copies of any and all communications between Defendant’s attorney and Defendant’s insurance carrier.

Request #8: Please execute the attached authorization for the release of Defendant’s cellular phone records.

Request #9: Please provide a copy of your driver’s license in effect at the time of the collision.

Request #10: Please provide copies of any and all medical records for treatment you have received following previous car wrecks.

Request #11: Please provide a copy of all documents related to previous lawsuits in which you have been involved; specifically, please include (1) any and all petitions or complaints, (2) deposition transcripts of your testimony, and (3) your discovery responses.

Page -7- Plaintiffs’ Requests for Admissions to Defendant

1. Admit you are familiar with the area in which the subject collision occurred.

2. Admit that you believe Plaintiffs could not have done anything differently to avoid the collision.

3. Admit that you have previously received treatment from a chiropractor.

4. Admit that you have previously had an MRI performed on yourself.

5. Admit you have suffered pain because of a car wreck in which you were previously involved.

6. Admit that you caused the car wreck that is made the basis of this lawsuit.

7. Admit that you know of no other witnesses to the car crash.

8. Admit that an immediate family member (spouse, siblings, parents, and children) has been injured in a car wreck before.

Page -8- 9. Admit that you should always wait until traffic is clear when turning left on an unprotected (without an arrow) green light.

Page -9- VERIFICATION

THE STATE OF TEXAS § § COUNTY OF ____________________ §

BEFORE ME, the undersigned authority, a notary public, on this day personally appeared KARLA LIZETTE FLORES GUEVARA who being by me duly sworn on his oath, deposed and said that she is duly qualified and authorized in all respects to make this Affidavit; that she has read the above and foregoing answers to interrogatories; and every statement contained in the answers is within her knowledge, and is true and correct.

____________________________________ KARLA LIZETTE FLORES GUEVARA

SUBSCRIBED AND SWORN TO BEFORE ME by the said KARLA LIZETTE FLORES GUEVARA, on this the ______ day of ________________________, 2014, to certify which witness my hand and official seal.

____________________________________ Notary Public, State of Texas

____________________________ Printed/typed name of Notary

My Commission Expires:

______________________

Page -10- AUTHORIZATION FOR WIRELESS COMMUNICATION DEVICE RECORDS

TO:_________________________________ (Service Provider)

__________________________________ (Address of Service Provider)

__________________________________

RE: KARLA LIZETTE FLORES GUEVARA

ACCOUNT NO._____________________

TELEPHONE NO.____________________ (if different from account number)

TIME PERIOD OF RECORDS REQUESTED: March 18, 2013 - April 18, 2013

This is to authorize and direct the above named company who has issued, sold, rented, or leased any form of cellular, pager or other wireless communication device(s) and/or provided services to me, KARLA LIZETTE FLORES GUEVARA to furnish the law firm of The Green Law Firm, P.C., or any of its representatives, any and all billing and usage records related to the above account during the period indicated. Such records include, but are not limited to: detailed billing information, detailed call logs and/or calls placed and received (and the time of day or night and durations of the same), or any other information pertaining to the usage of my account during the time period referenced above. I hereby waive any privilege I have to said information.

Signed the _________ day of _________________________, 2014.

______________________________________ KARLA LIZETTE FLORES GUEVARA

Records should be provided to:

THE GREEN LAW FIRM, P.C. c/o Jorge A. Green, Esq. 34 S. Coria Street Brownsville, Texas 78520 Telephone : (956) 542-7000 Facsimile : (956) 542-7026

Page -11- Filed CIVIL CASE INFORMATION SHEET 10/30/2014 1:36:42 PM Esther Degollado CAUSE NUMBER (FOR CLERK USE ONLY): _______________________________ COURT (FOR CLERK USE ONLY): ______________________ District Clerk Webb District STYLED OSBALDO HURTADO AVALOS & ANTONIO HURTADO VS. KARLA LIZETTE FLORES GUEVARA 2014CVT002421D1 (e.g., John Smith v. All American Insurance Co; In re Mary Ann Jones; In the Matter of the Estate of George Jackson)

A civil case information sheet must be completed and submitted when an original petition or application is filed to initiate a new civil, family law, probate, or mental health case or when a post-judgment petition for modification or motion for enforcement is filed in a family law case. The information should be the best available at the time of filing. This sheet, approved by the Texas Judicial Council, is intended to collect information that will be used for statistical purposes only. It neither replaces nor supplements the filings or service of pleading or other documents as required by law or rule. The sheet does not constitute a discovery request, response, or supplementation, and it is not admissible at trial. 1. Contact information for person completing case information sheet: Names of parties in case: Person or entity completing sheet is:

Name: Email: Plaintiff(s)/Petitioner(s): X Attorney for Plaintiff/Petitioner Pro Se Plaintiff/Petitioner Jorge Green Jorge@thegreenlawfirmpc.com Title IV-D Agency Osbaldo Hurtado Avalos & Antonio Other: Address: Telephone: Hurtado 34 S. Coria St. 956-542-7000 Additional Parties in Child Support Case: City/State/Zip: Fax: Defendant(s)/Respondent(s): Custodial Parent: Brownsville, Texas 78520 956-542-7026 Karla Lizette Flores Guevara Non-Custodial Parent: Signature: State Bar No: 24038023 Jorge Green Presumed Father: _____________________________ [Attach additional page as necessary to list all parties] 2. Indicate case type, or identify the most important issue in the case (select only 1): Civil Family Law Post-judgment Actions Contract Injury or Damage Real Property Marriage Relationship (non-Title IV-D) Debt/Contract Assault/Battery Eminent Domain/ Annulment Enforcement Consumer/DTPA Construction Condemnation Declare Marriage Void Modification—Custody Debt/Contract Defamation Partition Divorce Modification—Other Fraud/Misrepresentation Malpractice Quiet Title With Children Title IV-D Other Debt/Contract: Accounting Trespass to Try Title No Children Enforcement/Modification Legal Other Property: Paternity Foreclosure Medical Reciprocals (UIFSA) Home Equity—Expedited Other Professional Support Order Other Foreclosure Liability: Franchise Insurance X Motor Vehicle Accident Premises Related to Criminal Matters Other Family Law Parent-Child Relationship Landlord/Tenant Product Liability Expunction Enforce Foreign Adoption/Adoption with Non-Competition Asbestos/Silica Judgment Nisi Judgment Termination Partnership Other Product Liability Non-Disclosure Habeas Corpus Child Protection Other Contract: List Product: Seizure/Forfeiture Name Change Child Support Writ of Habeas Corpus— Protective Order Custody or Visitation Other Injury or Damage: Pre-indictment Removal of Disabilities Gestational Parenting Other: of Minority Grandparent Access Other: Paternity/Parentage Employment Other Civil Termination of Parental Discrimination Administrative Appeal Lawyer Discipline Rights Retaliation Antitrust/Unfair Perpetuate Testimony Other Parent-Child: Termination Competition Securities/Stock Workers’ Compensation Code Violations Tortious Interference Other Employment: Foreign Judgment Other: Intellectual Property

Tax Probate & Mental Health Tax Appraisal Probate/Wills/Intestate Administration Guardianship—Adult Tax Delinquency Dependent Administration Guardianship—Minor Other Tax Independent Administration Mental Health Other Estate Proceedings Other:

3. Indicate procedure or remedy, if applicable (may select more than 1): Appeal from Municipal or Justice Court Declaratory Judgment Prejudgment Remedy Arbitration-related Garnishment Protective Order Attachment Interpleader Receiver Bill of Review License Sequestration Certiorari Mandamus Temporary Restraining Order/Injunction Class Action Post-judgment Turnover TAB 4 TAB 5 TAB 6 TAB 7 From: Jorge Green To: Paola Lucio Subject: FW: Hurtado v. Fred Loya Date: Thursday, February 02, 2017 1:14:53 PM

We need to save this to the file

From: Jorge Green Sent: Thursday, August 25, 2016 5:06 PM To: 'rlyde@vlrhlaw.com' Subject: Hurtado v. Fred Loya

Hello Rick. Your office answered the disclosures on this case like a standard auto case. Please supplement the disclosures to include the persons at Fred Loya with knowledge of facts relevant to the denial of coverage. I’d like to the depositions of Judy Liberto and Francisco Martinez. Please give me some dates and advise whether Judy Liberto is still and employee of Fred Loya.

Jorge Green Board Certified-Personal Injury Trial Law Texas Board of Legal Specialization

The Green Law Firm, P.C. 34 S. Coria Brownsville, Texas 78520 Telephone: (956) 542-7000 Facsimile: (956) 542-7026 www.thegreenlawfirmpc.com

TAB 8 From: Paola Lucio To: "Rick Lyde" Cc: "mperez@vlrhlaw.com" Subject: 13-023 Osbaldo Hurtado Avalos & Antonio Hurtado As Assignees of Karla Flores vs. Loya Insurance Company Date: Tuesday, January 31, 2017 9:40:21 AM Attachments: image001.png image002.png image003.png

Mr. Lyde Good Morning, as per your correspondence please be advised that our clients will be available for Depositions on Thursday February 2 at 11am. Mr. Osbaldo Hurtado will require an interpreter. Please send out the notices.

Also please be advised that Mr. Green requested for your Disclosures to be amended and include a complete copy of the policy.

Please let me know if you have any questions Thanks and have a great day.

Respectfully,

Paola Lucio The Green Law Firm PC 34 S. Coria St Brownsville, TX 78520 T: (956) 542-7000 F: (956)542-7026 plucio@thegreenlawfirmpc.com

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