In Farmers Tex. Cty. Mut. Ins. Co. v. Zuniga, No. 04-16-00773-CV, 2017 WL 5471887 (Tex. App.—San Antonio Nov. 15, 2017, reh’g en banc denied), the court considered whether punitive damages awarded to Jennifer Zuniga for the gross negligence of Farmer’s insured, Christopher Medina, were covered under an automobile insurance policy covering damages for bodily injury.
Employing a two-step analysis, the court considered (1) whether the plain language of the policy covered exemplary damages, and (2) whether Texas public policy allows or prohibits coverage under the specific circumstances of the lawsuit. Id. at *2-4. The court noted, however, if the plain, unambiguous language of the policy does not cover punitive damages, it need not reach the question of public policy. Id. at 7 (citing Fairfield Ins. Co. v. Stephens Martin Paving, LP, 246 S.W.3d 653, 655 (Tex. 2008)).
- Plain Language of the Policy is Unambiguous
The insuring agreement provided, “We will pay damages for bodily injury.” Id. at *2. Given the absence of definitions in the policy for “damages,” “bodily injury,” and “damages for bodily injury,” the court referred to the BLACK’S LAW DICTIONARY (10th ed. 2014) and the SHORTER OXFORD ENGLISH DICTIONARY 599 (6th ed. 2007) for definitions of the plain language in the policy. Id. at *4. Combining the definitions of the policy language with the dictionary definitions of “damages,” “bodily injury,” and “damages for bodily injury,” the court concluded the unambiguous policy language agreeing to pay for damages for bodily injury was susceptible to only one reasonable interpretation: “a promise to pay a sum of money as compensation for the bodily injuries sustained by an injured person.” Id. at *5.
- Plain Language Does Not “Effectively” Include Punitive Damages
Zuniga argued the analysis in Manriquez v. Mid-Century Ins. Co. of Tex., 779 S.W.2d 482, 483 (Tex. App.—El Paso 1989, writ denied), disapproved in part on other grounds by Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819 (Tex. 1997), should apply to find the policy covers the award of punitive damages. Zuniga, supra, at *6. Looking at the Manriquez court opinion, the Zuniga court declined to follow the cases cited therein which found coverage under policies providing for “the payment of ‘all sums which the insured shall become legally obligated to pay as damages because of . . . bodily injury,’ and also noted that the courts deciding those cases “emphasize the words ‘all sums’ as being the important inclusive considerations.’” Id. (quoting Manriquez, 779 S.W.2d at 484 (citations omitted)).
As sought by Zuniga, the Manriquez court effectively added “all sums” in construing the policy before it to provide coverage for punitive damages, but the Zuniga court firmly stated, “that we cannot do…[W]e will not add words to the Policy that the parties did not include.” Id. (citations omitted).
- Public Policy Question Not Reached
The court’s analysis did not reach Farmer’s argument in the alternative that public policy barred coverage of punitive damages based on its finding that the Policy did not cover punitive damages. Id. The trial court’s summary judgment was reversed in favor of the insurer.
On March 14th, the Court denied Zuniga’s motion for rehearing
- Dissenting Opinion in Denial of Rehearing En Banc
The dissent disagreed entirely with the majority’s conclusion that there was only one reasonable interpretation of the policy’s language based on the plain meaning of the policy provision. Citing Nassar v. Liberty Mut. Fire Ins. Co., 508 S.W.3d 254, 257-258 (Tex. 2017) (per curiam), the dissent concluded that the insured’s construction must be adopted “regardless of whether the policy is ultimately ambiguous or unambiguous.”
The dissent further disagreed with the distinction based on the absence of the “all sums” language in the Zuniga policy which was relied upon by the El Paso court in Manriquez in holding the policy covered punitive damages. The dissent asserted the addition of “all sums” to the Zuniga policy language would not alter the meaning which was not otherwise limited or qualified; it would not make the insured’s interpretation unreasonable. The dissent rationalized the phrase “’for bodily injury or property damage’ could be reasonably construed as limiting the types of claims that trigger coverage, rather than the types of damages covered.”
Thus, identifying multiple reasonable interpretations, the dissent posited that Zuniga’s interpretation was also reasonable and should have been adopted in the determination of coverage under the policy.
In addition to disagreeing with the court’s decision, the dissent contended en banc rehearing was justified because (1) many Texas residents have an auto insurance policy substantially similar to the Zuniga policy, (2) because the Zuniga decision conflicts with the Manriquez decision and courts in other states, and (3) the court’s construction of “for bodily injury” as a limitation on “damages” creates uncertainty about the construction of the form policy language.
Dissenting Opinion:
- Concurring Opinion in Denial of Rehearing En Banc
Chief Justice Marion concurred, citing the Texas Supreme Court Chief Justice Nathan Hecht’s questioning of the decision in Manriquez v. Mid-Century Ins. Co. of Tex., 779 S.W.2d 482 (Tex. App.—El Paso 1989, Concurring Opinion 04-16-00773-CV – 2 – writ denied), disapproved of on other grounds by Trinity Universal Ins. Co. v. Cowan, 652 S.W.2d 819 (Tex. 1997), on which Zuniga and the dissent relied. She also noted the dissent’s reliance on the legal standard applicable when a policy is ambiguous (which ignored the Zuniga court’s finding the language was unambiguous) and the focus on a single word—“damages”—considering it apart from the other provisions, as proscribed by the Texas Supreme Court in Nassar, 508 S.W.3d at 258 (“[N]o one phrase, sentence, or section [of a contract] should be isolated from its setting and considered apart from the other provisions.” Id. (quoting Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 134 (Tex. 1994))).
Chief Justice Marion agreed with the Fourth Court of Appeals following the guidance provided in Chief Justice’s Hecht’s concurring opinion in Fairfield Ins. Co. v. Stephens Martin Paving, LP, 246 S.W.3d 653, 683 (Tex. 2008), which noted that arguments that automobile policies provide coverage for punitive damages for bodily injuries have been “uniformly rejected in the context of uninsured and underinsured motorist coverage.”
She also agreed with the Fairfield Texas Supreme Court’s majority opinion which referenced the distinction drawn between “damages for bodily injury” and “punitive damages” by the Kentucky Supreme Court in Ky. Cent. Ins. Co. v. Schneider, 15 S.W.3d 373 (Ky. 2000), concluding that the “definitional distinction and … definition of “damages for bodily injury” would not “create further disputes about the scope of coverage” as the dissenting opinion suggests but would simply not extend “damages for bodily injury” coverage to punitive damages.”
Concurring opinion:
