Woodrow Nelson & Sons, Inc. v. Ivy Bradley, as Administrator of the Estate of Rob Bradley, and Ed Wright Cattle Company, Inc., Darwin Manning, and Darwin Manning Cattle Company, Inc.

Opinion

NO. 07-07-0147-CV

IN THE COURT OF APPEALS

FOR THE SEVENTH DISTRICT OF TEXAS

AT AMARILLO

PANEL A

APRIL 30, 2008

______________________________

WOODROW NELSON & SON, INC., APPELLANT

V.

ED WRIGHT CATTLE COMPANY, INC., DARWIN MANNING

AND DARWIN MANNING CATTLE COMPANY, INC., APPELLEES

_________________________________

FROM THE 242ND DISTRICT COURT OF CASTRO COUNTY;

NO. B8355-0502; HONORABLE ED SELF, JUDGE

_______________________________

Before CAMPBELL and HANCOCK and PIRTLE, JJ.

MEMORANDUM OPINION

          Appellant, Woodrow Nelson & Son, Inc. (Nelson), appeals from the trial court’s granting of a summary judgment in favor of appellees, Ed Wright Cattle Co., Inc. (Wright) and Darwin Manning and Darwin Manning Cattle Co., Inc. (Manning). We will affirm the trial court’s judgment.

 

 

Factual and Procedural Background

          In January 2005, Nelson sold 280 head of cattle in two lots. The cattle in each lot were sold to Rob Bradley. The first lot was delivered on January 14, 2005, at which time Bradley delivered his check to Nelson in the amount of $114,421.30. The second lot of cattle was delivered to Bradley by Nelson on January 22, 2005, and again, Bradley delivered his check to Nelson in the amount of $115,464.43. At no time did Bradley represent to Nelson that he, Bradley, was acting on behalf of anyone other than himself. There is no dispute that the amount of either check is incorrect. Bradley subsequently passed away on January 23, 2005, before either check was deposited in the Nelson’s bank account. When the checks were presented for payment both were refused as there were insufficient funds in Bradley’s account to pay the checks. Ultimately, Nelson filed a suit to collect the amount of the checks. It is undisputed that Bradley or his estate was paid for the cattle.

          Originally Nelson sued the estate of Robert Bradley and Ed Wright, individually, but subsequently took a non-suit against both. Nelson claims that the defendants are obligated to pay for the amount of the checks Bradley issued it under the theory that Bradley was the agent of Wright and Manning. After an adequate time for discovery, Wright and Manning filed both traditional and no evidence motions for summary judgment. See Tex. R. Civ. P. 166a(c) and 166a(i). At or near the same time, Nelson filed its motion for traditional summary judgment.

          On August 11, 2006, the trial court granted the motions for summary judgment filed by Wright and Manning, both the traditional and no evidence motions. The order of the trial court recites that, because of its ruling on Wright and Manning’s motions for summary judgment, it did not reach the merits of Nelson’s motion for summary judgment. It is from this ruling that Nelson appeals. By one issue, Nelson claims that the trial court erred in determining there was no agency relationship existing between Bradley and Wright and Bradley and Manning because the summary judgment evidence raised a fact issue regarding agency.

Standard of Review

          In reviewing a trial court’s decision to grant a traditional motion for summary judgment we review the judgment of the trial court de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). In conducting this review we will take as true all evidence favorable to the nonmovant, and indulge every reasonable inference and resolve any doubts in the nonmovant’s favor. Id. To sustain the granting of a traditional summary judgment motion, we must find that the movant has met its burden of establishing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997).

           In a no evidence motion for summary judgment, the movant must set forth the elements of the adverse party’s claim for which it is alleged there is no evidence. See Tex. R. Civ. P. 166a(i), Western Invs., Inc. v. Urena, 162 S.W.3d 547, 550 (Tex. 2005). The burden then shifts to nonmovant to show that there is more than a scintilla of probative evidence to raise a genuine issue of material fact on the disputed issue. Forbes Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167, 172 (Tex. 2003). Less than a scintilla of evidence exists when the evidence is so weak as to create only a surmise or suspicion of the fact to be proved. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003). To raise a genuine issue of material fact, however, the evidence must exceed mere suspicion, for evidence so slight is to do nothing more than make any inference a guess, and as such, equate to no evidence. Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 601 (Tex. 2004). Conversely, more than a scintilla of evidence exists if it would allow reasonable and fair-minded people to differ in their conclusions. King Ranch, 118 S.W.3d at 751. Our examination of the record is performed in the light most favorable to the nonmovant. Forbes, 124 S.W.3d at 172.

Analysis

          All parties to this appeal agree that the decisive issue raised in the no evidence motions for summary judgment is the question of agency. Was Bradley acting as an agent for either Wright or Manning? If the latter, then the next question is was Manning acting as an agent for Wright? Regarding agency, Texas law does not presume agency, and the party alleging an agency relationship has the burden of proving the issue. IRA Resources, Inc. v. Griego, 221 S.W.3d 592, 597 (Tex. 2007). Agency is a consensual relationship and there must be a meeting of the minds to establish this relationship, although consent may be implied by words or conduct of the parties. See Carr v. Hunt, 651 S.W.2d 875, 879 (Tex.Civ.App.–Dallas 1983, writ ref’d n.r.e.). It is the right of the principal to control the details of accomplishing the assigned task that primarily distinguishes the agent from the independent contractor. First Nat’l Acceptance Co. v. Bishop, 187 S.W.3d 710, 714 (Tex.App.–Corpus Christi 2006, no pet.). It is this right of control that is the supreme test for the existence of an agency relationship. Id. Texas has adopted Section 14 K of the Restatement (Second) of Agency (1957). Rufenacht v. Iowa Beef Processors, Inc., 492 F. Supp. 877, 881 (N. D. Tex. 1980) (citing American Employers Ins. Co. v. Kilgore, 412 S.W.2d 67,69 (Tex.Civ.App.–Amarillo 1967, writ ref’d n.r.e.)). The comments portion of Section 14 K gives guidance about how to view the factors surrounding an allegation that one party has acted as an agent for another. The factors to be analyzed are that the party: 1) is to receive a fixed price for the property, irrespective of the price paid by him; 2) acts in his own name and receives the title to the property which he thereafter is to transfer, and 3) has an independent business in buying and selling similar property. Id.

          According to Nelson, the following evidence was introduced as summary judgment evidence and raised more than a scintilla of evidence regarding the existence of an agency relationship as to both Wright and Manning vis-a-vis Bradley.

Over the years, Bradley sold in excess of $30 million in cattle for Wright.

Eighty-five percent of Bradley’s business was with Wright Co.

                     Bradley was paid by commission.

Wright gave permission to brokers to purchase cattle on a deal by deal basis.

Wright described the type of cattle desired by breed and weight characteristics.

At the time of purchase, Wright took actual possession of the cattle. (The cattle were loaded on to trucks arranged by Wright.)

 

A review of the total record reveals that each of the factors that Nelson allegedly raises the issue of agency raises only a surmise or suspicion of agency and, even when viewed in the light most favorable to the nonmovant, is just as easily explained in the terms of an independent contractor. There is no evidence in this record that would indicate that any of these actions would not be taken by Bradley or any broker acting as an independent contractor. By way of example, Ed Wright’s affidavit points out that the breed and weight characteristics are given to him by his customers and are not an attempt by his company to do anything except meet the requirements of his customers. Likewise, the act of arranging for shipment of the cattle at time of delivery is reflective of the fact that Wright does not hold cattle because his business is to fill orders for feedlots and other finishers. Therefore, he ships the cattle immediately. Nelson opines that this means Bradley never takes possession of the cattle, which according to Nelson’s analysis, is indicative of the fact that he was operating as an agent. However, the analysis offered by Nelson is equally operative in the situation of an independent contractor as it is with an agent. The summary judgment evidence indicated that Wright already had the cattle sold to a feedyard. Further, Nelson knew that Bradley was acting as a broker only and would resell the cattle and that such an arrangement was standard in the industry. Nelson alleges that Bradley was paid on commission and that is definitely indicative of an agency type of relationship. The summary judgment evidence indicates that Manning and Bradley may have, at times, split commissions; however, on the occasion in question, there was no proof of splitting of commissions. Indeed, the evidence indicated that a check for a specific purchase price for each lot of cattle was issued by Wright to Bradley, or his estate, as opposed to a commission check. In the final analysis, indulging all inferences in favor of Nelson still results in summary judgment evidence that is no more indicative of an agency relationship than that of an independent contractor relationship. Accordingly, we can say that this evidence does no more than raise a surmise or suspicion. A surmise or suspicion equates to no evidence. Ford Motor Co., 135 S.W.3d at 601. Because Nelson has failed to produce any evidence on the essential issue of agency between Bradley and Wright or Bradley and Manning, the trial court was correct in granting Wright and Manning’s no evidence motions for summary judgment. Forbes Inc., 124 S.W.3d at 172.

          When a nonmovant fails to produce more than a scintilla of evidence under the burden of a no evidence motion for summary judgment there is no need to further analyze the sufficiency of movant’s proof on the traditional motion for summary judgment. Ford Motor Co., 135 S.W.3d at 600. Because of our holding above we need not address the additional issue of whether Manning was an agent of Wright.

Conclusion

          Having overruled Nelson’s issue regarding whether an agency relationship existed between the parties, we affirm the trial court’s judgment.

                                                                           Mackey K. Hancock

                                                                                    Justice

in-top:0in;margin-right:.75in; margin-bottom:0in;margin-left:58.5pt;margin-bottom:.0001pt;text-align:center; line-height:normal;tab-stops:4.5in'>   Appellant

v.

 

LESTER PAYNE, INDIVIDUALLY AND DBA PONDEROSA PROPERTIES; KCCC PROPERTIES, INC. DBA PONDEROSA PROPERTIES; CLAY D. “BEAU” BOMAR, INDIVIDUALLY AND DBA SADDLE UP MANAGEMENT COMPANY; SHAWNDA MASEY, INDIVIDUALLY AND DBA SADDLE UP MANAGEMENT COMPANY; RONALD WHISENANT, INDIVIDUALLY AND DBA RON’S MAINT; JARRED PIERSON AND DIANA VENICE PIERSON, 

 

                                                                                    Appellees

___________________________

 

FROM THE 237TH DISTRICT COURT OF LUBBOCK COUNTY;

 

NO. 2007-541,744; HONORABLE PAULA LANEHART, PRESIDING

__________________________

 

Memorandum Opinion

__________________________

 

Before QUINN, C.J., and HANCOCK and PIRTLE, J.J.

            This appeal involves the dismissal of the subrogation claims of the City of Lubbock’s workers’ compensation carrier against the owner and manager of an apartment complex.  Jarred Pierson, a Lubbock police officer, was injured on the job while chasing a suspect at the apartment complex, when he fell over a cable that had been placed there by the Ponderosa Apartments (Ponderosa) to prevent cars from entering into a particular area. Pierson filed suit against Ponderosa to recover for his injuries. At the same time, he received workers’ compensation benefits from the City of Lubbock (the City), which intervened in his lawsuit against Ponderosa. One day before trial, Pierson non-suited his lawsuit with prejudice. Ponderosa then also obtained a dismissal with prejudice of the City’s claims.  However, the City contends it is entitled to continue to pursue the lawsuit against Ponderosa to the extent that it has made compensation benefits to Pierson. We agree and reverse the order of dismissal.

            If an injured employee claims a workers’ compensation benefit, the insurance  carrier is subrogated to the rights of the injured employee and may enforce the liability of a third party in the name of the injured employee.  Tex. Lab. Code Ann. §417.001(b) (Vernon 2005). The purpose of the statute is to prevent over-compensation to the employee and to reduce the financial burden of insurance to the employer and the public. Erivas v. State Farm Mut. Auto. Ins. Co., 141 S.W.3d 671, 676 (Tex. App.–El Paso 2004, no pet.); Granite State Ins. Co. v. Firebaugh, 558 S.W.2d 550, 551 (Tex. Civ. App.–Eastland 1977, writ ref’d n.r.e.), (citing Capitol Aggregates, Inc. v. Great Am. Ins. Co., 408 S.W.2d 922 (Tex. 1966)).  It has been held that there is only one cause of action for the insured’s injuries that belongs to the insured. Guillot v. Hix, 838 S.W.2d 230, 232 (Tex. 1992); Prudential Prop. & Cas. Co. v. Dow Chevrolet-Olds., Inc., 10 S.W.3d 97, 100 (Tex. App.–Texarkana 1999, pet. dism’d by agr.). However, even though the subrogee’s claim is derivative, the insurer may assert it independently. Franks v. Sematech, Inc., 936 S.W.2d 959, 960 (Tex. 1997) (stating that a carrier asserts a claim belonging to the employee whether it sues in its own name or the employee’s name and whether it seeks only the amount of benefits paid to the employee or more).   

            There is a split of authority as to the fate of the insurance carrier when the lawsuit of the employee against a third party is dismissed.  Some courts hold that when an employee’s cause of action is defeated, that of the carrier is defeated as well.  See Smith v. Babcock & Wilcox Constr. Co., 915 S.W.2d 22, 27 (Tex. App.–Austin 1994), rev’d, 913 S.W.2d 467 (Tex. 1995) (dismissing insurance carrier’s cause of action when the employee’s cause of action was dismissed for want of prosecution); Phennel v. Roach, 789 S.W.2d 612, 615 (Tex. App.–Dallas 1990, writ denied) (when the employee’s pleadings were struck as a sanction, the claim of the insurance carrier was also defeated); Houston v. Twin City Fire Ins. Co., 578 S.W.2d 806, 808 (Tex. Civ. App. –Houston [1st Dist.] 1979, writ ref’d n.r.e.) (failing to comply with the notice requirement for an employee’s claim against the City resulted in the insurer’s subrogation suit suffering the same fate).

            Other authority holds that once compensation benefits have been paid, the right of the insurance carrier overrides that of the employee. Hartford Cas. Ins. Co. v. Albertsons Grocery Stores, 931 S.W.2d 729, 734 (Tex. App.–Fort Worth 1996, no writ); Tex. Council Risk Mgmt. Fund v. Caswell, No. 03-06-00480-CV, 2007 Tex. App. Lexis 3858, at *5 (Tex. App.–Austin May 18, 2007, no pet.) (mem. op.); see also Herrera v. Wembley Inv. Co., 12 S.W.3d 83, 89 (Tex. App.–Dallas 1998), rev’d on other grounds, 11 S.W.3d 924 (Tex. 1999) (stating that dismissal of an insured’s part of a cause of action does not necessarily dismiss the insurer’s part); In re Romero, 956 S.W.2d 659, 662 (Tex. App.–San Antonio 1997, orig. proceeding) (dismissing the insured’s claim did not dismiss the insurer’s claim); MacArangal v. Andrews, 838 S.W.2d 632, 635-36 (Tex. App.–Dallas 1992, no writ) (dismissing case for want of prosecution did not affect the intervening insurer because the dismissal did not specifically mention it).  In its opposition to these authorities, Ponderosa relies on the rule that the insurance carrier is subject to the same defenses which may defeat a cause of action as the injured party.  See Guillot v. Hix, 838 S.W.2d at 232.  However, Pierson’s dismissal did not involve any defense asserted by Ponderosa but was a voluntary action on Pierson’s part. 

 In agreeing with those courts’ holdings that a dismissal of the employee’s claims does not necessarily require dismissal of the carrier’s claims, we note the purpose of the statute as already discussed and the rule that a party may not dismiss his lawsuit to the prejudice of another party.  Tex. R. Civ. P. 163; Employers Cas. Co. v. Henager, 852 S.W.2d 655, 660 (Tex. App.–Dallas 1993, writ denied).  We are also mindful of the right of the insurer to bring a lawsuit in its own name.  See Tex. Mut. Ins. Co. v. Ledbetter, 251 S.W.3d 31, 36 (Tex. 2008) (stating that when a subrogee’s interest has been adequately represented and then suddenly abandoned by someone else, it can intervene even after judgment or on appeal, so long as there is neither unnecessary delay nor prejudice to the existing parties), and the prior recognition by this court that the injured party’s cause of action is subject to the carrier’s right of reimbursement. Employers Cas. Co. v. Dyess, 957 S.W.2d 884, 886 (Tex. App.–Amarillo 1997, pet. denied); see also Prudential Prop. & Cas. Co., v. Dow Chevrolet-Olds., Inc., 10 S.W.3d at 104 (noting that the trial court could dismiss the claims that the insurer, Prudential, asserted on behalf of the insureds, for which Prudential was not entitled to recover as a subrogee, but the trial court erred in dismissing Prudential’s subrogation claims for the failure of the insureds to appear at their depositions).[1]

But most importantly, to hold otherwise would be to ignore several long established rules of subrogation.  These rules become pertinent when, as here, the subrogee (i.e. the City of Lubbock) made payment, and the tortfeasor (i.e. Ponderosa) knew of the subrogee’s claim before compromising the claim with the subrogor (i.e. Pierson). 

Payment from a subrogee effectuates a transfer of interest in the cause of action to the subrogee. See Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co., 236 S.W.3d 765, 774 (Tex. 2007) (stating that under either type of subrogation (contractual or equitable) the insurer stands in the shoes of the insured obtaining only those rights held by the insured against a third party, subject to any defenses held by the third party against the insured); see also International Ins. Co. v. Medical-Professional Bldg., 405 S.W.2d 867, 869 (Tex. Civ. App.–Corpus Christi 1966, writ ref’d n.r.e.) (involving an insurance relationship and stating that the fact of payment of the loss operates as an equitable transfer of the claim).  When that occurs, the subrogee assumes the status as the “real party in interest” while the subrogor’s interest becomes nominal. In re CVA Gen. Contrs., Inc., 267 B.R. 773, 781-82 (Bankr. W.D. Tex. 2001).  Next, if (1) the subrogor enters into a settlement with and gives a release to the wrongdoer after such payment, (2) while the tortfeasor knows of the subrogee’s rights of subrogation, and (3) the subrogee is not party to the settlement, then settlement does not bar the subrogee from enforcing its subrogation right. International Ins. Co. v. Medical-Professional Bldg., 405 S.W.2d at 869.  In other words, once the subrogee’s rights become fixed via payment, a change in the subrogor’s ability to pursue a cause of action does not affect the subrogee’s ability.  Rushing v. International Aviation Underwriters Inc., 604 S.W.2d 239, 241-42 (Tex. Civ. App.–Dallas 1980, writ ref’d n.r.e.); In re CVA Gen. Contrs., Inc., 267 B.R. at 782.  So, it does not matter that Pierson may have compromised whatever remaining claim he had against Ponderosa and dismissed his portion of the suit with prejudice. The City had compensated Pierson to some extent before then and, therefore, owned at least a part of the cause of action.  Pierson also knew of the City’s status as a subrogee before the non-suit.  Consequently, the actions of Pierson, whether or not induced by Ponderosa, did not, and do not, bar the City from continuing its recovery efforts against the purported tortfeasor.  

            Accordingly, we reverse the trial court’s order dismissing the City’s claims, and remand for further proceedings.

           

                                                                                    Brian Quinn

                                                                                    Chief Justice   

           

           

                

---

[1]Ponderosa argues that the City did not preserve error by failing to present any post-judgment motion seeking to modify the dismissal of Pierson’s claims. However, that argument is met by the analysis that Pierson dismissed only those claims for which the insurance carrier was not entitled to recover as subrogee.