USAA Texas Lloyds Company v. Menchaca, 545 S.W.3d 479 (Tex. 2018)

Quinn’s Part Five

The opinion of the Court is that the trial judge’s disregard at the question was obscure, incomprehensible, and vague. He said he never wanted to submit, as counsel knew, and asked counsel of both sides whether they saw conflict between how the jury answered Question-1 and how it answered Question-2 and Question-3. Both sides stated that they did not see a conflict. 

Quinn’s Comment: Why would both sides fail to explicitly disagree? Obviously, both sides thought they could win in the trial court, in the court of appeals, or both. Was this really acting in the client’s best interest? The answer to that question would depend on one this: what was the outstanding settlement number? Whether legal history could be established in favor of policyholders in general or in favor of insurance companies is immaterial? [This point may be especially true, given the size of the maximum damage award.]

The majority regarded the trial judge’s disregard of Question-1 and the answer thereto as a fatal error, but there were no objections to the judge’s disregard. As a general rule, no objection or other preservation of error, no reversal. 

This opinion contains a lengthy disquisition on the trial court and appellate court procedural rules and cases when it comes to conflicting jury answers. In passing, the opinion noted that standard procedural rules warranted a decision on behalf of Menchaca, the policyholder. But, said the court, this was a special situation. In the end, therefore, the Court fell on its own sword, took responsibility for the messy legal situation, and remanded the case.

Thus, here is what the Court ended up with: 

“Having concluded that the trial court and the court of appeals erred in disregarding the jury’s answer to Question 1, we are left with findings that support a judgment in Menchaca’s favor based on statutory violations but that also contain fatal conflict. We could render judgment for Menchaca based on the jury’s verdict because USAA failed to preserve that conflict [as appealable error]. In the interest of justice, however, we could also ‘remand the case to the trial court even if a rendition of judgment is otherwise appropriate. Such a remand is particularly appropriate when it appears that one or more parties ‘proceeded under the wrong legal theory,’ especially when the applicable law has. . . evolved between the time of trial and the disposition of the appeal.’ In light of the parties’ obvious and understandable confusion over our relevant precedent and the effect of that confusion on their arguments in this case, as well as our clarification of the requirements to preserve error based on conflicting jury answers, we conclude that remand is necessary here in the interest of justice.” (Citations omitted. Emphasis added.)

Quinn Comment. I have suggested in another part that the use of the word “term” in Q-1 might be a problem. Think about this: The more one reads and ponders the Menchaca case, the worse the jury questions look. Would it not have been better if the trial judge had looked at the questions proposed and simply said “No. Not these.” And the started over again.

Quinn’s Comment. The flourishing life of insurer bad faith controversy has been an intense one, thorough relatively short. The excitement that surrounded common law bad faith has diminished and attention has moved to the relevant parts of TIC, though common law insurer bad faith causes of action still exist. Now the Court has explicitly embraced limits on what policyholders can do with the concept of insurer bad faith in litigation and how extensive damages will usually be.  

Quinn Comment. This case and its several opinions will end up being parts of law school courses for generations to come. There are several reasons for this. One of them is that this case has something like a “legislative look” to it. This case is not and does not appear to be simply about the dispute before it. The court explicitly sets forth a set of rules which it ordains to structure all relevant future judicial decision making and all argumentation regarding statutory insurance bad faith. This ordination will affect all sorts of relevant arguments given in courts, but it will reach much further than that. Pleadings and coverage opinions will be in general restructured. Discovery will take on new inquiries. College and vocational courses regarding claims handling will be restructured. The fundamental themes of the law may or may not be affected. Legal rhetoric, broadly conceived, certainly has. 

I suspect that many who love the common law conception of judicial decision making have been made nervous. For people with that profoundly constatutionalistic view of separation of powers, this type of decision will be upsetting. According to their view, courts should decide individual cases, and legislatures set the general substantive rules.

Michael Sean Quinn, Ph.D., J.D., C.P.C.U, Etc
2112 Hartford Rd.
Austin, Texas 78703
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