                                  NO. 07-03-0170-CV

                            IN THE COURT OF APPEALS

                      FOR THE SEVENTH DISTRICT OF TEXAS

                                    AT AMARILLO

                                       PANEL D

                                    MARCH 1, 2004

                         ______________________________


            TRINITY UNIVERSAL INSURANCE COMPANY, APPELLANT

                                           V.

                       LILITH BRAINARD, ET AL., APPELLEES


                       _________________________________

               FROM THE 31ST DISTRICT COURT OF GRAY COUNTY;

              NO. 31,677; HONORABLE STEVEN R. EMMERT, JUDGE

                        _______________________________


Before QUINN and REAVIS and CAMPBELL, JJ.


                                       OPINION

      Presenting a sole issue, Trinity Universal Insurance Company challenges the award

of attorney’s fees to Lilith Brainard, Sally Brainard Wicker, E. Swasey Brainard, II, Amy

Brainard, Berklee Brainard Clements, Sena Brainard and the Estate of Edward H. Brainard,

II, following a jury trial seeking recovery upon Trinity’s underinsured motorist (UIM)
contract. By a sole cross issue, the Brainards contend the trial court erred in failing to

award prejudgment interest on the $1,010,000 damages found by the jury as to the

underinsured’s conduct before offsetting prior settlements and PIP benefits. Because

neither party presents any issues challenging the sufficiency of the evidence, we will review

only such history necessary to address the two questions of law presented. Based upon

the rationale expressed herein, we reverse and render in part and affirm in part.


       Trinity issued an automobile liability policy to Brainard Cattle Company, E.S.F.

Brainard, et al., for a policy period commencing August 26, 1998 through August 26, 1999.

Among other provisions, the policy included an uninsured/underinsured motorists (UIM)

insurance endorsement. On July 1, 1999, Edward H. Brainard, II, an insured under the

policy, sustained fatal injuries in a head on collision with a motorized work over rig owned

and operated by an employee of Premier. After the Brainards commenced their wrongful

death action on January 19, 2000, against Premier and its employee, they discovered that

the limits of liability insurance for Premier did not exceed one million dollars. This

information prompted the Brainards to make a written claim for UIM benefits. Trinity

acknowledged receipt of the claim and requested supporting information.


       By their third amended petition the Brainards joined Trinity and, in addition to claims

under articles 21.21 and 21.55 of the Texas Insurance Code Annotated (Vernon Supp. &

Pamph. Supp. 2004), claims for common law breach of duty of good faith/unfair settlement

practices, and claims under the Deceptive Trade Practices-Consumer Protection Act, Tex.


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Bus. & Com. Code Ann., §§ 17.41 - 17.885 (Vernon 2002 & Supp. 2004), (DTPA), the

Brainards alleged:

      C      Plaintiffs are covered parties under this policy and have performed all
             conditions precedent to receiving benefits under the policy; and

      C      Defendant Trinity is in breach of contract for failing to pay benefits. Its
             obligation to pay UIM benefits is not conditioned upon a judgment
             fixing such damages. The Defendant has an obligation to pay when
             its investigation reveals that there is no question as to liability and that
             damages exceed the policy limits of the responsible party. Defendant
             Trinity has information which makes it incumbent upon them to pay
             benefits, as there is no question of liability on the part of the other
             Defendants and that the damages far exceed the One Million dollars
             of insurance possessed by the other Defendants. This obligation
             became all the more apparent when the original Defendants delivered
             their policy limits on November 20, 2000.

 The coverage provision of the UIM endorsement in the policy provides:

      We will pay damages which an insured is legally entitled to recover from the
      owner or operator of an uninsured motor vehicle because of bodily injury
      sustained by an Insured, or property damage caused by an accident. The
      owner’s or operator’s liability for these damages must arise out of the
      ownership, maintenance or use of the uninsured motor vehicle.

       Any judgment for damages arising out of a suit brought without our written
       consent is not binding on us. If we and you do not agree as to whether or not
       a vehicle is actually uninsured, the burden of proof as to that issue shall be
       on us.

Without admitting liability, the insurance carrier for Premier paid its policy limits of

$1,000,000 to the Brainards in settlement and by order dated January 5, 2001, the trial

court dismissed with prejudice the claims against Premier and its employee, but did not

dismiss the claims against Trinity.




                                              3
       By order of June 11, 2001, among other things, the trial court denied Trinity’s first

motion for severance. However, on November 29, 2001, following our decision in In Re

Trinity Universal Ins. Co., 64 S.W.3d 463 (Tex.App.--Amarillo 2001, orig. proceeding), the

trial court granted Trinity’s second motion for severance and/or plea in abatement in its

entirety, effectively severing all extra-contractual claims, including Brainards’ claims for

breach of duty of good faith and fair dealing, violations of articles 21.21 and 21.55 of the

Insurance Code and violations of the DTPA.


        Following a four day jury trial, a wrongful death charge was submitted to the jury.

By its verdict, the jury awarded the surviving wife of the deceased $500,000 and each of

the five children $100,000 and the estate $10,000 for funeral expenses, making the total

award for actual damages $1,010,000. Also, the jury awarded reasonable attorney’s fees

to the Brainards in the amount of $100,000. Following motions for new trial and other post-

judgment motions by both parties and after allowing an offset of $1,005,000, the trial court

signed its judgment that the Brainards recover from Trinity the sum of $5,000 in damages

and $100,000 in attorney’s fees, but denied their request for prejudgment interest.


       Two questions of law are presented for our determination, to-wit: (1) whether in an

action on the UIM policy, an award of attorney’s fees is authorized under section 38.001

of the Texas Civil Practices and Remedies Code Annotated (Vernon 1997); and (2) whether

the Brainards were entitled to an award of prejudgment interest on the $1,010,000 in




                                             4
damages found by the jury as to the underinsured’s conduct before offsetting prior

settlements and PIP benefits.


                                     Attorney’s Fees


       By its sole issue, Trinity contends the trial court erred in awarding the Brainards

$100,000 in attorney’s fees in conjunction with the prosecution of the UIM claim because

there had been no determination of the operator’s liability (and damages incurred by the

Brainards) prior to the rendition of the judgment at issue.1 We agree.


       The Supreme Court has consistently held that attorney’s fees may not be awarded

“unless permitted by statute or by contract between the parties,” and the availability of

attorney’s fees under a statute is a question of law. Holland v. Wal-Mart Stores, Inc., 1

S.W.3d 91, 94 (Tex. 1999). In their prayer and without referencing any statutory authority

or contractual provision as support or authority, the Brainards sought an award of attorney’s

fees. However, from the remarks of the trial court during the charge conference upon

Trinity’s objection to the inclusion of the attorney’s fees question and from the Brainards’

contention on appeal, section 38.001(8) of the Civil Practice and Remedies Code was the

basis of the attorney’s fees based on a claim on an oral or written contract. Although the



       1
       At trial, Trinity objected to the admission of any evidence regarding attorney’s fees.
Also, at the charge conference, Trinity objected to “the charge on the grounds that
attorney’s fees is not a proper measure of damages in this type of case. Therefore,
question number 9 should not be submitted to the jury.” Trinity’s objection was overruled
and the question was submitted.

                                             5
interpretation of insurance contracts is governed by the same rules as interpretation of

other contracts, in addition to the written provisions of the contract, the Brainards alleged

as their breach of contract claim that Trinity had “an obligation to pay when its investigation

[revealed] that there [was] no question as to liability and that damages [exceeded] the

policy limits of the responsible party.” See Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d

819, 823 (Tex. 1997).


       Restated, Trinity agreed to pay damages that the Brainards “were legally entitled to

recover from” Premier or its operator because of bodily injuries sustained by Edward

Brainard. The phrase “legally entitled to recover” is not defined in the UIM provision, but

it has been determined to mean that the Brainards “must be able to show fault on the part

of the uninsured motorist and the extent of the resulting damages.” See Franco v. Allstate

Insurance Company, 505 S.W.2d 789, 792 (Tex. 1974). From the statement in their brief

that the suit’s “primary focus is to quantify damages which the Brainards could have

recovered from Premier and its driver,” the Brainards recognize that the “extent of the

resulting damages” is controlling.2       In this context, this provision is not a condition

precedent relating to the formation of the contract as discussed in Dillon v. Lintz, 582

S.W.2d 394, 395 (Tex. 1979), but instead relates to the performance under the contract.

Where, as here, a promise to pay is made subject to a condition precedent, no breach

occurs until the condition occurs. See id.; see also Paris Milling Company v. Wooldridge,



       2
           See brief for appellee/cross appellant on their direct appeal point at page 11.

                                                6
473 S.W.2d 224, 227 (Tex.Civ.App.--Amarillo 1971, no writ); Insurance Corp. of America

v. Webster, 906 S.W.2d 77, 81 (Tex.App.--Houston [1st Dist.] 1995, writ denied). By our

prior opinion in In Re Trinity, 64 S.W.3d at 467, we held that the Brainards’ claim for UIM

benefits was contractual in nature and unlike personal injury protection coverage, the

provisions of the UIM endorsement condition payment of benefits upon a determination of

liability of the UIM motorist and damages.


       The question of an award of attorney’s fees in a UIM action has received mixed

analysis by five other courts of appeals. In Sprague v. State Farm Mut. Auto. Ins. Co., 880

S.W.2d 415, 416-17 (Tex.App.--Houston [14th Dist.] 1993, writ denied), and Sikes v.

Zuloaga, 830 S.W.2d 752, 754 (Tex.App.--Austin 1992, no writ), the courts held that

attorney’s fees were not recoverable before determination of the fault of the underinsured

motorist and the amount of damages. However, in Allstate Ins. Co. v. Lincoln, 976 S.W.2d

873, 875-76 (Tex.App.--Waco 1998, no pet.), Whitehead v. State Farm Mut. Auto. Ins., 952

S.W.2d 79, 89 (Tex.App.--Texarkana 1997), rev’d on other grounds, 988 S.W.2d 744 (Tex.

1999), and Novosad v. Mid-Century Ins. Co., 881 S.W.2d 546, 552 (Tex.App.--San Antonio

1994, no writ), the courts took the contrary position and allowed attorney’s fees. Based

upon this record and the absence of a jury finding of breach of contract as alleged by the

Brainards, we conclude the decisions in Sprague and Sikes present the proper disposition

of the question of attorney’s fees. Trinity’s sole issue is sustained.




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                                 Prejudgment Interest


      By their cross-issue, the Brainards contend the trial court erred in failing to award

prejudgment interest on the $1,010,000 damages3 as to the underinsured’s conduct before

offsetting prior settlements and PIP benefits and entering judgment against Trinity. They

contend:


      The real issue in this appeal is whether interest on the award against the
      underinsured, Premier, is recoverable from the UIM carrier when such
      damages are within the UIM policy limits. The Brainards contend that the
      Supreme Court’s precedent and the Texas Statutes require such recovery.


We disagree. Throughout our analysis we must take into consideration the fact that the

jury was instructed to find the actual damages without including interest.


      Article 5.06-1 of the Insurance Code (Vernon Supp. 2004), entitled “Uninsured or

Underinsured Motorist Coverage” applies to the Trinity UIM endorsement. Paragraph (5)

provides:


       The underinsured motorist coverage shall provide for payment to the insured
      of all sums which he shall be legally entitled to recover as damages from
      owners or operators of underinsured motor vehicles because of bodily injury
      or property damage in an amount up to the limit specified in the policy,
      reduced by the amount recovered or recoverable from the insurer of the
      underinsured motor vehicle.


      3
        The jury awarded Lilith Brainard $100,000 for pecuniary loss, $200,000 for loss of
companionship and society and $200,000 for mental anguish and awarded each of the five
children $50,000 for loss of companionship and society, and $50,000 for mental anguish.


                                            8
(Emphasis added). In addition, provision D to the UIM endorsement entitled “Limit of

Insurance” provides in part as follows:


       Subject to this maximum, our limit of liability will be the lesser of:


       1. The difference between the amount of a covered insured’s damages for
       bodily injury or property damage and the amount paid or payable to that
       covered insured for such damages, by or on behalf of persons or
       organizations who may be legally responsible; and


       2. The applicable limit of liability for this coverage.


       In Stracener v. United Serv. Auto. Ass’n, 777 S.W.2d 378 (Tex. 1989), expressly

recognizing misinterpretation of the statute by some courts of appeals, as material here,

the Court held:


       [w]e also hold that the set off provided for in an article 5.06-1(5) is to be
       subtracted from the amount of actual damages incurred as a result of the
       negligence of the underinsured motorist rather than from the limits specified
       in the underinsured motorist insurance policy.


(Emphasis added). Id. at 380. The action of the trial court in applying the credit of prior

settlement and PIP payment to the amounts of actual damages found by the jury without

awarding any interest was consistent with the construction of article 5.06-1(c) by the Court

as well as the express limitation of Trinity’s liability contained in the contract. Moreover,

in clear and precise terms, Trinity agreed to pay damages because of “bodily injury or




                                               9
property damage,” but did not agree to pay interest on the damages or the amount of a

judgment if obtained against the underinsured operator, less the offset.


       As material to this appeal following the severance of the Brainards’ claims based on

violations of the DTPA and articles 21.21 and 21.55 of the Insurance Code, their action

against Trinity was not an action for wrongful death or personal injury and property damage

tort claim; rather, it constituted a claim for breach of contract. See Franco, 505 S.W.2d at

792-93 (holding that an action on a UIM contract is not a wrongful death action and is ex

contractu rather than ex delicto). By prayer in their pre-severance pleading the Brainards

sought prejudgment interest; however, they did not identify any statute or contractual

provision supporting an award of prejudgment interest. Similar to Henson v. Southern

Farm Bureau Cas. Ins., 17 S.W.3d 652, 653 (Tex. 2000), the relationship between the

Brainards and Premier was that of injured party and tortfeasor, while the relationship

between the Brainards and Trinity is that of contracting parties. Accordingly, section

304.102 of the Texas Finance Code, which authorizes prejudgment interest in wrongful

death, personal injury, and property damage cases has no application as to Trinity. See

Tex. Fin. Code Ann. § 304.101 (Vernon Supp. 2004); see also Johnson & Higgins of Tx.

v. Kenneco Energy, 962 S.W.2d 507, 529-30 (Tex. 1998) (holding that section 304.101,

formerly Tex. Rev. Civ. Stat. Ann. art. 5069-1.05, § 6(a), allowing statutory prejudgment

interest applies only to wrongful death, personal injury, and property damage cases).




                                            10
       Moreover, as above noted, the claims against Trinity in the trial court were grounded

in contract, not tort. Although the Brainards recognize that the real issue is the amount

Trinity is obligated to pay under its contract, they suggest that statutes awarding interest

in tort cases apply in this suit on contract. However, on appeal, parties are restricted to the

theory on which the case was tried. See Davis v. Campbell, 572 S.W.2d 660, 662 (Tex.

1978); see also Dittoe v. Jones, 220 S.W.2d 315, 319 (Tex.Civ.App.–Fort Worth 1949, writ

ref’d n.r.e.). Accordingly, we may not consider the Brainards’ appellate theory regarding

prejudgment interest based on interest applicable to tort claims per sections 304.101 and

304.102 of the Finance Code as grounds to reverse the judgment of the trial court.


       We have not overlooked the Brainards’ references to Cavnar v. Quality Control

Parking, Inc., 696 S.W.2d 549 (Tex. 1985), Horizon/CMS Healthcare Corporation v. Auld,

34 S.W.3d 887 (Tex. 2000), and Johnson & Higgins, 962 S.W.2d at 507; however, we do

not consider these cases controlling because they do not present questions involving a suit

on contract for UIM coverage. Further, although Allstate Indem. Co. v. Collier, 983 S.W.2d

342 (Tex.App.--Waco 1998, pet. dism’d by agr.), references Stracener, 777 S.W.2d at 378,

it does not address that portion of Stracener in which the court discusses subtraction of

prior settlement from the amount of actual damages. Similarly, Menix v. Allstate Indem.

Co., 83 S.W.3d 877 (Tex.App.--Eastland 2002, pet. denied), does not reference Stracener

nor discuss a provision such as the one in Trinity’s UIM endorsement entitled “Limit of

Insurance.” Brainards’ cross-issue is overruled.




                                              11
      Accordingly, that portion of the trial court’s judgment awarding the Brainards

attorney’s fees in the amount of $100,000 is reversed and judgment is hereby rendered that

no attorney’s fees are awarded; in all other respects the judgment is affirmed.



                                                Don H. Reavis
                                                  Justice




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