Opinion filed November 26, 2014




                                    In The


        Eleventh Court of Appeals
                                  __________

                              No. 11-12-00339-CV
                                  __________

                       ALFRED ELWESS, Appellant
                                      V.
 FARM BUREAU COUNTY MUTUAL INSURANCE COMPANY
    OF TEXAS AND TEXAS FARM BUREAU MUTUAL
          INSURANCE COMPANY, Appellees


                     On Appeal from the 35th District Court
                              Brown County, Texas
                        Trial Court Cause No. CV1007222


                     MEMORANDUM OPINION
      This is an appeal from a summary judgment order entered in favor of
Appellees, Farm Bureau County Mutual Insurance Company of Texas and Texas
Farm Bureau Mutual Insurance Company. We reverse and remand.
      Alfred Elwess, Appellant, was employed by Glendell P. “Pete” Gipson and
was driving a truck in the course and scope of his employment when he was
broadsided by a vehicle being driven by Carlos Molina. The collision caused the
truck to overturn, and it landed on its side. Appellant hung from his seatbelt until
he was able to free himself. He suffered a torn rotator cuff.
      Several insurance policies are involved in the dispute between the parties to
this appeal. It does not appear that Molina personally had an automobile insurance
policy. However, the vehicle that he was driving was owned by Khoun Rattana,
and Rattana had an insurance policy with Affirmative Insurance Company (AIC).
Appellant settled with AIC for the liability policy limit of $25,000. Appellant also
settled with Northland Insurance Company, Southern County Mutual Insurance
Company for $70,000 under the Uninsured/Underinsured Motorist Protection
coverage of a policy held by Appellant’s employer and for $2,505 under the
Personal Injury Protection coverage of the same policy.         Appellant had two
insurance     policies    with     Appellees,     each     of   which      provided
Uninsured/Underinsured Motorist coverage.
      Appellant filed suit against Appellees and sought to recover under his
underinsured motorist (UIM) coverage provided for in his policies. Appellees filed
a motion for summary judgment in which they sought judgment on all claims that
Appellant alleged against them.      Appellees based their motion for summary
judgment on traditional summary judgment grounds, and alternatively, they sought
summary judgment on their declaratory judgment actions.
      Appellees alleged that they were entitled to a traditional summary judgment
on two grounds. In their first ground, they argued that the policies did not provide
UIM coverage to Appellant under the circumstances because Appellant failed to
obtain permission to settle his claim against Molina as required under the policy
and, thus, materially breached the contract. Appellees asserted in their second
                                          2
ground that the policies did not provide UIM coverage because Appellant’s
damages were payable under workers’ compensation and, therefore, that coverage
was excluded by a provision in the policies. In the alternative, Appellees sought
summary judgment on their declaratory judgment actions and argued, in three
separate grounds, that they were entitled to a credit or offset toward any judgment
that Appellant might obtain against them. They took the position that the credit or
offset should be in the amount of the maximum amount of liability limits available
to Molina ($25,000), in the amount of the limit available for UIM coverage under
the employer’s insurance policy ($75,005), and in the amount of the limit available
for Personal Injury Protection coverage under the employer’s insurance policy
($2,505). The trial court granted Appellees’ motion and entered a take-nothing
judgment against Appellant.
      Appellant presents five issues for our review.         In his first two issues,
Appellant challenges the sufficiency of the evidence to support the trial court’s
conclusion that Appellant’s failure to obtain permission to settle was a material
breach and that the loss was covered by other remedies under the law such as
workers’ compensation or disability benefits. Appellant argues in his third issue
that the trial court erred if it granted Appellees’ request for a credit or offset when
it granted Appellees’ motion for summary judgment. In his fourth issue, Appellant
contends that the trial court erred when it found, as a matter of law, that credits
created by the underinsured motorist provision of the applicable “other insurance
clause” were sufficient to overcome a potential jury verdict in his favor. And, in
his fifth issue, Appellant asserts that the trial court erred when it found that the
other insurance clause applied to create a credit against any jury award in this
matter.
      We review a trial court’s grant of summary judgment de novo. Valence
Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). When reviewing a
                                          3
summary judgment, the appellate court takes as true evidence favorable to the
nonmovant.    Id.   A trial court must grant a traditional motion for summary
judgment if the moving party establishes that no genuine issue of material fact
exists and that the movant is entitled to judgment as a matter of law. TEX. R.
CIV. P. 166a(c); Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex. 1991); City
of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). The
nonmovant is not required to file a response to defeat the movant’s summary
judgment motion; however, once the movant establishes a right to judgment as a
matter of law, the nonmovant must come forward with evidence or law that
precludes summary judgment. Clear Creek, 589 S.W.2d at 678–79.
      Appellant argues in his first issue that there was insufficient evidence to
show that his failure to obtain permission to settle was a material breach. The
policies issued by Appellees contained an exclusion of coverage for a person that
settled a claim without Appellees’ written consent. Appellant admitted that he did
not obtain permission to settle, but he did not concede that any breach was
material.
      In Hernandez v. Gulf Group Lloyds, the Supreme Court of Texas held that
“an insurer may escape liability on the basis of a settlement-without-consent
exclusion only when the insurer is actually prejudiced by the insured’s settlement
with the tortfeasor.” 875 S.W.2d 691, 692 (Tex. 1994). There may be instances
when an insured’s settlement without the insurer’s consent prevents the insurer
from receiving the anticipated benefit from the insurance contract; specifically, the
settlement may extinguish a valuable subrogation right. Id. at 693. Appellees
contended in their motion for summary judgment that Appellant’s settlement with
Molina prejudiced Appellees’ subrogation rights because the police report
completed in relation to the accident indicated that Molina was covered by an
additional insurance policy other than the policy under which Appellant settled.
                                         4
The police report listed a policy held by Rattana with Old American County
Mutual Fire.    Except for the name of the insured, the name of the insurer, and the
policy number, the police report did not contain any other information regarding
the policy. Appellant argues that this limited information did not conclusively
show that Appellees were prejudiced by the settlement. We agree. Appellees
attached no other evidence to their motion for summary judgment regarding the
potential coverage by Old American.          Without competent summary judgment
evidence to show that the policy actually existed, that the policy was in effect at
the time of the accident, and that the policy provided coverage under the
circumstances, Appellees failed to conclusively establish that they were actually
prejudiced by Appellant’s settlement with Molina for $25,000. Because Appellees
did not establish that they were actually prejudiced, they failed to show that
Appellant’s breach of the contract was material. Therefore, Appellees failed to
establish that they were entitled to judgment as a matter of law on this ground. We
sustain Appellant’s first issue.
      In his second issue, Appellant argues that there was insufficient evidence to
show that the loss was covered by other remedies under the law, such as workers’
compensation or disability benefits.    Appellees contended in their motion for
summary judgment that coverage was excluded by the following provision in their
policies:
            In order to avoid insurance benefits payments in excess of
      actual damages sustained, subject only to the limits set out in the
      Declarations and other applicable provisions of this coverage, we will
      pay all covered damages not paid or payable under any workers’
      compensation law, disability benefits law, any similar law, auto
      medical expense coverage or Personal Injury Protection Coverage.

Specifically, Appellees alleged that the policies did not provide UIM coverage
because Appellant’s damages were payable by workers’ compensation.

                                         5
      In Mid-Century Insurance Co. of Texas v. Kidd, the Supreme Court of Texas
discussed several cases in which it had previously analyzed whether provisions,
such as the one at issue here, were valid and enforceable. 997 S.W.2d 265, 267–70
(Tex. 1999). In its discussion, the court stated that “offsets in the UM/UIM section
of the policy are ineffective to the extent that they prevent recovery of actual
damages or reduce UM protection below the minimum limits required by the UM
statute.” Id. at 270. There is no dispute that Appellant’s employer did not have
workers’ compensation coverage. Appellees argued in their motion for summary
judgment that, despite the fact that Appellant’s employer failed to provide such
protection to its employees, Appellant’s damages were payable under workers’
compensation law. Appellees did not, however, cite to any case or statute to
support their proposition, nor did they attach summary judgment evidence to show
that Appellant’s damages were payable under workers’ compensation law.
Appellees also did not address this issue in their brief to this court. In addition, the
Texas Labor Code provides that “an employer may elect to obtain workers’
compensation insurance coverage.” TEX. LAB. CODE ANN. § 406.002(a) (West
2006) (emphasis added). Thus, an employer is not generally required to have
workers’ compensation coverage in Texas.
      Here, Appellant could not have recovered under workers’ compensation
coverage because his employer did not have such coverage. Because Appellant
could not and did not recover under workers’ compensation, applying the provision
at issue would prevent Appellant from recovering actual damages. Therefore,
Appellees were not entitled to summary judgment on this ground. We sustain
Appellant’s second issue.
      Having sustained Appellant’s first and second issues, we have addressed the
dispositive issues in this appeal because we have determined that it was improper
for the trial court to grant summary judgment on the only two grounds on which
                                           6
the trial court could have granted summary judgment and entered a take-nothing
judgment. Appellees third, fourth, and fifth grounds for summary judgment were
all based on the proposition that they were entitled to a credit or offset toward any
judgment entered in favor of Appellant if the trial court did not grant summary
judgment on one of its first two grounds. Because the trial court granted summary
judgment and entered a take-nothing judgment against Appellant, it did not reach
the third, fourth, and fifth grounds of Appellees’ motion. As such, we decline to
address those three grounds in our review and, thus, do not reach Appellant’s third,
fourth, and fifth issues as to those grounds. See TEX. R. APP. P. 47.1; see also
Baker Hughes, Inc. v. Keco R. & D., Inc., 12 S.W.3d 1, 5 (Tex. 1999) (“[T]he
appellate court must review all of the summary judgment grounds on which the
trial court actually ruled, whether granted or denied, and which are dispositive of
the appeal, and may consider any grounds on which the trial court did not rule.”)
(emphasis added) (citing Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 625–
26 (Tex. 1996)). Furthermore, we find it premature to hold as a matter of law that
Appellees are entitled to a credit or offset toward any judgment in favor of
Appellant when there have been no sustainable findings of liability or damages in
this case.
      We reverse the judgment of the trial court and remand the cause for further
proceedings not inconsistent with this opinion.




                                                    JIM R. WRIGHT
                                                    CHIEF JUSTICE
November 26, 2014
Panel consists of: Wright, C.J.,
Willson, J., and Bailey, J.

                                         7
