      TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN


                                     NO. 03-03-00764-CV



                                   Bobby Webb, Appellant

                                               v.

          Texas Property and Casualty Insurance Guaranty Association, Appellee




     FROM THE DISTRICT COURT OF TRAVIS COUNTY, 261ST JUDICIAL DISTRICT
         NO. GN303708, HONORABLE DARLENE BYRNE, JUDGE PRESIDING



                           MEMORANDUM OPINION


              In 1998, while driving through Louisiana, appellant Bobby Webb was involved in an

accident caused by a vehicle driven by Leroy Shiloh. Shiloh was employed by and acting in the

course and scope of his employment with CX Transportation, a subdivision of TIC United

Corporation, which is a Texas resident. In March 1999, Webb sued Shiloh and CX Transportation

in a Louisiana district court, and TIC United appeared on behalf of CX Transportation, submitting

to the jurisdiction of the Louisiana court. While that suit was pending, TIC United filed for

bankruptcy in Texas. While TIC United’s bankruptcy proceeding was pending, Webb amended his

lawsuit to add as a defendant Reliance National Insurance Company, TIC United’s insurer, which

had home offices in Wisconsin and administrative offices in New York. Thereafter, Reliance

National was declared an impaired insurer by the Pennsylvania Department of Insurance.
               In September 2003, Webb filed this suit against appellee the Texas Property and

Casualty Insurance Guaranty Association (“the Association”), asserting a right to recover under the

Texas Property and Casualty Insurance Guaranty Act (“the Guaranty Act” or “the Act”). See Tex.

Ins. Code Ann. art. 21.28-C (West Supp. 2004-05). The Association filed a plea to the jurisdiction,

asserting that Webb lacked standing to sue the Association, basing its argument on the general rule

that an injured third-party lacks standing to sue an insurer until liability is established. See Owens

v. Allstate Ins. Co., 996 S.W.2d 207, 208 (Tex. App.—Dallas 1998, pet. denied). The Association

further argued that there was no justiciable controversy without a determination of Reliance

National’s legal obligation to pay damages and that without that determination, Webb was seeking

an improper advisory opinion. Webb countered that he need not show that he would be able to bring

a direct action against Reliance National because the language of the Guaranty Act provides for a

direct action against the Association and an action against TIC United would be a waste of time and

resources. The trial court granted the Association’s plea and dismissed the case. Webb appeals,

contending that he should be allowed to proceed directly against the Association without being

required first to obtain a judgment against TIC United, which is bankrupt and whose insurer is in

liquidation. Webb contends that the Association is obligated to pay his “covered claim” and that

requiring him to obtain a judgment against TIC United would thwart the purposes of the Guaranty

Act. We affirm the trial court’s order granting the plea to the jurisdiction.


                                       Standard of Review

               A plea to the jurisdiction seeks the dismissal of a cause of action without regard to

the merits of the claims. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000). In

                                                  2
reviewing the granting of a plea to the jurisdiction, we liberally construe the pleadings in favor of

jurisdiction and look to the plaintiff’s intent. Texas Ass’n of Bus. v. Texas Air Control Bd., 852

S.W.2d 440, 446 (Tex. 1993); City of San Angelo v. Smith, 69 S.W.3d 303, 305-06 (Tex.

App.—Austin 2002, pet. denied). To prevail on its plea to the jurisdiction, the defendant must show

that, assuming all factual allegations in the plaintiff’s pleadings are true, there is a jurisdictional

defect apparent on the face of the pleadings that would be impossible to cure. Smith, 69 S.W.3d at

305. In deciding a plea to the jurisdiction, the trial court should hear evidence as necessary to the

jurisdictional issues, but the plaintiff is not required to preview his case on the merits to establish

jurisdiction. Blue, 34 S.W.3d at 554-55.

               Subject-matter jurisdiction refers to the kind of controversies a court has authority

to hear, authority conferred by constitution, statutes, and the pleadings. CSR Ltd. v. Link, 925

S.W.2d 591, 594 (Tex. 1996). Subject-matter jurisdiction includes the issues of standing and

ripeness. Perry v. Del Rio, 66 S.W.3d 239, 249 (Tex. 2001) (ripeness); Blue, 34 S.W.3d at 553-54

(standing). Standing implicates the Texas Constitution’s open courts provision, which contemplates

court access only for litigants suffering an injury. Texas Ass’n of Bus., 852 S.W.2d at 444. “The

general test for standing in Texas requires that there ‘(a) shall be a real controversy between the

parties, which (b) will be actually determined by the judicial declaration sought.’” Id. at 446

(quoting Board of Water Engineers v. City of San Antonio, 283 S.W.2d 722, 724 (Tex. 1955)).

Ripeness is one aspect of justiciability. Perry, 66 S.W.3d at 249. In examining the ripeness of a

claim, we determine whether a dispute has matured to a point warranting a court decision, asking




                                                  3
whether the claim involves uncertain or contingent future events. Id. An opinion issued in an unripe

case is an improper advisory opinion because it addresses only hypothetical injuries and does not

remedy actual or imminent harm. See Texas Ass’n of Bus., 852 S.W.2d at 444. A claimant seeking

to establish ripeness need only show that the facts have developed sufficiently that injury is imminent

or likely. Waco Indep. Sch. Dist. v. Gibson, 22 S.W.3d 849, 852 (Tex. 2000).


                                             Discussion

               On appeal, Webb asserts that the Guaranty Act provides him, an injured third-party,

a direct cause of action against the Association. See Tex. Ins. Code Ann. art. 21.28-C. The

Association argues that Webb is barred from bringing this suit by both standing and ripeness

considerations. Neither party disputes that there has been no judicial determination of liability

against CX Transportation, TIC United, or any related entity. The record does not reflect whether

Reliance National made any kind of coverage decision before being declared impaired, and it does

not appear that Webb filed a claim with Reliance National’s receiver or that the receiver or any other

responsible party has made any coverage determination.

               Article 21.28-C is to be construed with article 21.28. See Berkel v. Texas Prop. &

Cas. Ins. Guar. Ass’n, 92 S.W.3d 584, 588 (Tex. App.—Austin 2002, pet. denied); Chandler v.

Jorge A. Gutierrez, P.C., 906 S.W.2d 195, 199 (Tex. App.—Austin 1995, writ denied). Under

article 21.28, which governs the liquidation, reorganization, and conservation of insolvent insurers,

a receiver stands in place of an insolvent insurer. Eagle Life Ins. Co. v. Hernandez, 743 S.W.2d 671,

671 (Tex. App.—El Paso 1987, writ denied); see Tex. Ins. Code Ann. art. 21.28 (West Supp. 2004-




                                                  4
05). If a liquidation, rehabilitation, or conservation order is entered, all parties with claims against

the insolvent insurer must submit their claims to the receiver within the time frame provided by the

court. Tex. Ins. Code Ann. art. 21.28, § 3(a). To sue a receiver for a rejected claim, a party must

provide proof that it timely filed its claim with the receiver. Chandler, 906 S.W.2d at 199.

                The Guaranty Act is intended to “provide a mechanism for the payment of covered

claims under certain insurance policies to avoid excessive delay in payment” and to “avoid financial

loss to claimants or policyholders because of the impairment of an insurer.” Tex. Ins. Code Ann.

art. 21.28-C, § 2; see Chandler, 906 S.W.2d at 199. The Guaranty Act is required to pay “covered

claims” against an insolvent insurer, Tex. Ins. Code Ann. art. 21.28-C, §§ 2, 8(a), and is to

“undertake to discharge the policy obligations” of an impaired insurer as far as those obligations are

covered by the Act, id., § 8(b), but the Association is not considered to be in the business of

insurance or to have assumed the impaired insurer’s liabilities. Id. Article 21.28 specifically

includes unliquidated or undetermined claims in its provisions for filing claims with a receiver. Id.

art. 21.28, § 3(d). The Guaranty Act, however, does not refer to unliquidated or undetermined claims

in its definition of a “covered claim.” Id. art. 21.28-C, § 5(8). A “covered claim” is “an unpaid

claim of an insured or third-party liability claimant that arises out of and is within the coverage.”

Id.

                Webb acknowledges that generally an injured third-party claimant cannot sue an

insurer directly until there has been a determination of the insured’s liability and, therefore, the

insurer’s obligation to pay the claim. See Moxon v. Ray, 81 S.W.2d 488, 489 (Tex. 1935); Jones v.

CGU Ins. Co., 78 S.W.3d 626, 629 (Tex. App.—Austin 2002, no pet.); Owens, 996 S.W.2d at 208.



                                                   5
He likens his situation to that of the claimant in Bailey v. Brodhead, however, and argues that under

Bailey’s logic, he should be allowed to proceed with a direct action against the Association without

first obtaining a judgment against TIC United. See 838 S.W.2d 922 (Tex. App.—Austin 1992, no

writ).

                In Bailey, an injured third-party claimant filed a claim with an insolvent insurer’s

receiver within the timetable set out by article 21.28. Id. at 924. The receiver rejected the claim, and

the claimant sued within the statutorily mandated timetable. Id. The receiver then asserted a

limitations defense, arguing that, although the claim and lawsuit were timely filed under article

21.28, the two-year statute of limitations had run as to the claimant’s claim against the insured. Id.

Because the claimant no longer had a viable claim against the insured, the receiver argued that it had

no obligation to pay the claim. Id. We held that because the statute allows for the filing of a claim

with a receiver and a claimant need not obtain a judgment against the insured to win a suit against

a receiver, it was not necessary to sue the insured, a “potentially useless act,” before suing on a claim

timely filed with and rejected by the receiver. Id. at 925. Instead, the timely filing of the claim with

the receiver tolled the running of limitations as to a claim against the insured and defeated the

receiver’s defense of limitations. Id.

                First, we note that the claims in Bailey were brought pursuant to article 21.28, not

under the Guaranty Act. Id. at 925. Second, Bailey sued the receiver, not the Association. Id. at

924. Finally, the suit was brought after the receiver made a liability and coverage determination and

rejected the claim. Id. Article 21.28 allows a claimant to bring an action against a receiver after the




                                                   6
rejection of a claim. Tex. Ins. Code Ann. art. 21.28, § 3(h). The Guaranty Act contains no such

provisions for an action against the Association.1 Thus, Bailey is distinguishable from this case.

               As we discussed in Berkel, the Guaranty Act was intended to provide funds “that a

receiver may draw upon to pay covered claims.” 92 S.W.3d at 588 (emphasis added). The

Association is charged with investigating, compromising, settling, and paying claims owed by an

impaired insurer as required by statute. Id. at 589. However, it is for a receiver to initially approve

or reject a claim filed against an insurer, and, if the claim is covered by a guaranty fund, refer the

claim to the appropriate guaranty association for processing. Id. at 590-91 & n.4 (citing Tex. Ins.

Code Ann. art. 21.28, § 3(h), (i)). The Association must pay “covered claims.” Id. at 591 (citing

Tex. Ins. Code Ann. art. 21.28-C, § 8(a)). In other words, a claimant must first file his claim with

the receiver, who determines whether the claim is covered. If the receiver rejects the claim, the

claimant may then proceed against the receiver in the receivership court. See Tex. Ins. Code Ann.

art. 21.28, § 3(h); Berkel, 92 S.W.3d at 590; Bailey, 838 S.W.2d at 925. If the receiver determines

the claim is covered by the fund created under the Act, he or she should then refer the claim to the

Association for payment. Tex. Ins. Code Ann. art. 21.28, § 3(i); Berkel, 92 S.W.3d at 588. The

receiver, not the Association, makes factual determinations as to what claims are covered. Berkel,

92 S.W.3d at 590 (receiver’s “determination is final and binding unless set aside in the manner

authorized by the statutes”).




       1
         The “actions” referred to in the Act relate to actions taken by the Association and allow
aggrieved insurers to appeal such actions to the Commissioner of Insurance; final actions or orders
by the commissioner are subject to judicial review in Travis County. See Tex. Ins. Code Ann. art.
21.28-C, §§ 9(f)(3), 10(f), (g) (West Supp. 2004-05).

                                                  7
               This Court has held that a suit brought against the Association by an injured third-

party should be dismissed where it is clear that the third-party could not maintain a claim against the

insurer. See Woods v. Texas Prop. & Cas. Ins. Guar. Assn’n, No. 03-01-00138-CV, 2001 Tex. App.

LEXIS 8067, at *6-7 (Austin Dec. 6, 2001, pet. denied) (not designated for publication); Rodriguez

v. Texas. Prop. & Cas. Ins. Guar. Ass’n, No. 03-98-00518-CV, 1999 Tex. App. LEXIS 6910, at *7-8

(Austin Sept. 10, 1999, no pet.) (not designated for publication). Woods and Rodriguez involved

similar factual situations—in both cases, the third-parties settled their disputes with the insureds,

signing releases that vitiated all claims against the insureds. 2001 Tex. App. LEXIS 8067, at *3-4;

1999 Tex. App. LEXIS 6910, at *4-5. In Woods, the Association intervened in the receivership

proceeding in order to assume its statutory duty to process covered claims in the impaired insurer’s

estate. 2001 Tex. App. LEXIS 8067, at *2. After Woods signed the release, the Association moved

for summary judgment arguing that Woods no longer had a viable claim against the insureds. Id.

at *2-3. In Rodriguez, the plaintiffs obtained an agreed judgment of liability on the part of the

insureds and then filed a claim in the receivership proceeding for the impaired insurer. 1999 Tex.

App. LEXIS 6910, at *3, 5-6. The receivership court rejected the claims, and the plaintiffs then sued

the Association, which moved for summary judgment on the grounds that by signing a release as part

of the agreed judgment, the plaintiffs gave up any claim they had against the insureds. Id. at *5-7.

We held that the releases of liability defeated any suits against the receivers or the Association

because the third-parties no longer had any viable claims against the insureds. 2001 Tex. App.

LEXIS 8067, at *6-7; 1999 Tex. App. LEXIS 6910, at *7-8.




                                                  8
                We recognize that the situation here is different—Webb has not released CX

Transportation or TIC United from liability.2 However, neither Woods nor Rodriguez is inconsistent

with our holding today and we believe that the logic underlying those cases carries some weight in

this case. The plaintiffs in Woods and Rodriguez could not succeed in their suits against the

receivers or the Association—the facts showed that their claims against the insureds had no merit

because the insureds were no longer liable to the plaintiffs. In other words, without liability by the

insureds, the Association, through the receivers, had no duty to the plaintiffs. Webb has not sought

to have the insureds’ liability determined by the receiver and, thus, has not established that his claims

are covered so as to trigger an Association duty.3 The statute does not allow a third-party to skip the

filing of a claim with the receiver and proceed with direct action against the Association without any

finding of liability having been made. See Tex. Ins. Code Ann. art. 21.28-C, § 8; Berkel, 92 S.W.3d

at 590. Therefore, Webb’s suit against the Association is premature and not justiciable.4


        2
          Both Woods and Rodriguez involved claims filed by injured third-parties in receivership
proceedings. Woods v. Texas Prop. & Cas. Ins. Guar. Assn’n, No. 03-01-00138-CV, 2001 Tex. App.
LEXIS 8067, at *2-3 (Austin Dec. 6, 2001, pet. denied) (not designated for publication); Rodriguez
v. Texas. Prop. & Cas. Ins. Guar. Ass’n, No. 03-98-00518-CV, 1999 Tex. App. LEXIS 6910, at *3-5
(Austin Sept. 10, 1999, no pet.) (not designated for publication).
        3
          Although Reliance National was not based in or declared impaired in Texas, nothing in the
statutes allows a direct suit against the Association in situations involving non-Texas insurers.
        4
           Webb asserts that he “will no doubt face a waiver claim if he makes any representation to
the bankruptcy court . . . that he will not seek to enforce a judgment against” TIC United. However,
case law provides that an injured third-party may agree not to enforce a judgment against an insured
and still proceed against the insurer, as long as the third-party does not release the insured from all
liability. Compare Horton v. State Dep’t of Ins. Receiver J. Robert Hunter, 905 S.W.2d 59, 62 (Tex.
App.—Austin 1995, no writ) (third-party settled with insured and signed covenant not to execute
judgment in exchange for assignment of insured’s rights to proceed against insurer and receiver; held
that agreement not to enforce does not vitiate all claims against insured and third-party may therefore
proceed against receiver), with Pool v. Durish, 848 S.W.2d 722, 723-24 (Tex. App.—Austin 1992,

                                                   9
                                              Conclusion

                Webb is correct that the Association is obligated to pay “covered claims” and that

such claims can include claims made by third-parties. However, as discussed above, the Association

does not make an independent determination of which claims are “covered.” We hold that a third-

party claimant against an impaired insurer may not pursue a direct claim against the Association until

it is shown that a determination has been made as to whether the claim is a “covered claim.”

Without such a determination, there is no justiciable dispute or controversy between Webb and the

Association. We therefore affirm the trial court’s granting of the Association’s plea to the

jurisdiction.




                                                __________________________________________

                                                David Puryear, Justice

Before Justices B. A. Smith, Puryear and Pemberton

Affirmed

Filed: June 8, 2005




writ denied) (third-party settled and executed “full, complete and final discharge and release” of
insured; held that due to release, third-party retained no claim against insured or, therefore, insurer).

                                                   10
