Ranger Insurance Company v. John Ward

CourtCourt of Appeals of Texas
DecidedMay 29, 2003
Docket06-02-00097-CV
StatusPublished

This text of Ranger Insurance Company v. John Ward (Ranger Insurance Company v. John Ward) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ranger Insurance Company v. John Ward, (Tex. Ct. App. 2003).

Opinion



In The

Court of Appeals

Sixth Appellate District of Texas at Texarkana



______________________________


No. 06-02-00097-CV
______________________________


RANGER INSURANCE COMPANY, Appellant


V.


JOHN WARD, ET AL., Appellees





On Appeal from the 102nd Judicial District Court
Red River County, Texas
Trial Court No. 203-CV-8-98-A





Before Morriss, C.J., Ross and Carter, JJ.
Opinion by Chief Justice Morriss


O P I N I O N


Ranger Insurance Company ("Ranger") appeals the trial court's judgment regarding the enforceability of a purported release between Ranger and its insured ("the Release"). Appellees, John Ward, et al., are injured third-party landowners ("Landowners"). On competing motions for summary judgment, the trial court determined the policy in effect at the time of the loss in 1991 remained in effect despite the insurer's and insured's attempt to retroactively cancel the policy in 1996.

FACTUAL AND PROCEDURAL HISTORY

On March 19, 1991, Ranger issued policy number IAU03278 to Thompson Flying Services, Inc., owned by Jesse Thompson. This policy brought Thompson Flying Services into compliance with financial responsibility laws governing the commercial application of herbicides and pesticides. See Tex. Agric. Code Ann. § 76.111. (1) On June 26, 1991, operating under this liability policy, Thompson Flying Services applied a potent herbicide by aerial application to the Smith Trust Ranch in Franklin County. The herbicide drifted across the county line onto a large portion of 3,400 acres of land in Red River County owned by Landowners, destroying a growing cotton crop and preventing Landowners from planting a crop the following season. On April 29, 1992, Landowners sent letters to Thompson and Ranger, notifying them of the results of the investigation by the Texas Department of Agriculture (the "Department"). On May 5, 1992, Ranger sent Thompson a reservation of rights letter. In May 1992, Landowners filed suit against Jesse Thompson, Thompson Flying Services, Inc., and certain other defendants in cause number 118-CV-5-92 in the 102nd Judicial District Court of Bowie County, Texas.

On January 19, 1996, Thompson and Ranger entered into the Release, under which agreement Ranger paid Thompson $100,000.00 in exchange for his retroactively releasing Ranger from its obligations under the policy as of the date of issuance. Neither party notified the Department of the Release, as required by the Texas Agriculture Code.

In a letter dated March 1, 1996, counsel for Landowners wrote to Ranger in an attempt to settle for policy limits plus court costs, alerting Ranger to the amount of damage to the Landowners' crops and referring to Ranger's duty under Stowers. (2) The letter also asserted that the Release is void. In  response  to  this  letter,  Ranger's  counsel,  Bruce  C.  Gaible,  wrote  to  Landowners'  attorney on March 22, 1996, relaying Ranger's "confusion" as to why Landowners made reference to the policy since Ranger and Thompson had agreed to cancel it retroactively.

In 1996 Thompson filed for bankruptcy in cause number 96-60464 in the Eastern District of Texas, incident to which he assigned to Landowners all rights and claims he might have against Ranger. In June 1998, Landowners recovered a post-answer default judgment in the Thompson litigation in the amount of $2,394,479.51 with prejudgment interest of $1,576,688.00 and postjudgment interest of ten percent per annum. Landowners then filed an action against Ranger, Thompson's insurer.

On May 12, 1999, Ranger sought summary judgment declaring that (1) the Release was effective to bar any claim for coverage under the policy, (2) Texas law allowed insurer and insured to mutually cancel an insurance policy in spite of policy and statutory provisions, (3) Landowners had  no  direct  cause  of  action  against  the  insurer,  and  (4)  the  Stowers  doctrine  did  not  apply. On March 17, 2000, Landowners filed a motion for partial summary judgment seeking a declaratory judgment that the Release was void or voidable on two grounds and seeking attorney's fees. First, Landowners argued the parties to the Release failed to fulfill a condition precedent to enforceability of the Release by not giving the requisite notice of cancellation to the Department. Second, Landowners argued the Release was void as against public policy since the liability insurance was required by law, all parties had notice of the loss, and the statute clearly designated the class of persons protected and the type of harm against which it was designed to protect.

The trial court granted summary judgment in favor of Landowners on both grounds. On June 14, 2002, the parties entered into an agreed order of severance and abatement, and a final order was entered. On July, 1, 2002, Ranger filed its notice of appeal. On appeal, Ranger contends the trial court erred in granting summary judgment in favor of Landowners on both grounds.

Though we find the failure to give the statutory notice would not, alone, keep the policy in full force-but, as specified by statute, would have the effect of limiting insurer's liability to the policy's face amount-we affirm because we find the attempted retroactive release of a liability insurance policy, after a known claim had arisen, is void based on public policy.

ANALYSIS

Standard and Scope of Review

We review a summary judgment de novo and affirm only if the summary judgment record establishes the movant's right to summary judgment as a matter of law. Gibbs v. Gen. Motors Corp., 450 S.W.2d 827, 828 (Tex. 1970). When both parties move for summary judgment, each party bears the burden of establishing it is entitled to judgment as a matter of law. See Guynes v. Galveston County, 861 S.W.2d 861, 862 (Tex. 1993); Am. States Ins. Co. v. Arnold, 930 S.W.2d 196, 200 (Tex. App.-Dallas 1996, writ denied). When both sides file motions for summary judgment and the trial court grants one motion and denies the other, we consider all the evidence accompanying both motions to determine whether the trial court should have granted either motion and, on finding error, we render the judgment the trial court should have rendered. See Jones v. Strauss, 745 S.W.2d 898, 900 (Tex. 1988); Am. States Ins. Co., 930 S.W.2d at 200. If neither movant is entitled to summary judgment, we must remand the case to the trial court. See Howard v. INA County Mut. Ins. Co., 933 S.W.2d 212, 217 (Tex. App.-Dallas 1996, writ denied).

Whether a release is enforceable or void is a question of law which we review de novo.

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