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Trinity Universal Insurance Co. v. Cowan8/16/1995
Appellee Nicole Cowan took a default judgement in a personal injury lawsuit against Gregory Gage in the amount of $250,000 in actual and punitive damages. Gage was covered by a Texas homeowners insurance policy issued by Trinity Lloyd's Insurance Company; therefore, Cowan sued Trinity Universal Insurance Company and Trinity Lloyd's Insurance Company ("Trinity") in the instant cause. Cowan obtained a partial summary judgement on March 30, 1994, in which the trial court found insurance coverage but did not adjudicate damages. On May 9, 1994, the trial court rendered final judgement for Cowan in the amount of $373,225, representing the amount of the underlying judgment, accrued interest, and attorney's fees. Trinity challenges the trial court's judgement in four points of error. We will affirm the judgement of the trial court.
BACKGROUND
In January 1992, Trinity issued a homeowners insurance policy to the parents of Gregory Gage, under which Gage was an additional insured. The cause of action giving rise to the underlying suit developed while Gage was employed as a photo lab clerk at H.E.B. Photo Place. A roll of film containing pictures of Cowan was delivered to H.E.B. for developing. Some of the pictures were provocative, and Gage made extra prints of several of the photographs and took them home. He later showed the pictures to a few of his friends and left the pictures with one friend with instructions to throw them away when he was through with them. It is undisputed that Gage never intended to injure Cowan in any way. However, the friend Gage entrusted with the pictures disregarded his instructions and showed the pictures to an individual who turned out to be Cowan's friend. Cowan thereby learned of Gage's actions.
Cowan filed the underlying lawsuit against Gage and H.E.B., alleging negligence and gross negligence, among other claims. Gage notified Trinity of the lawsuit and requested a defense and indemnity. Although Trinity initially provided Gage with a defense under a reservation of rights, upon investigation of Cowan's claims Trinity concluded that her damages were not covered by the insurance policy and denied Gage coverage and any further defense. Gage subsequently agreed to assign any and all claims he had against Trinity to Cowan in exchange for a covenant not to execute against any of his assets except for the homeowners insurance policy, and the case proceeded to trial on May 17, 1993. Gage failed to appear, and Cowan put on evidence before the trial court. After hearing the evidence, the trial court found that Gage's negligence and gross negligence proximately caused Cowan's injuries and rendered a $250,000 judgement against him.
Cowan then filed the instant suit against Trinity. She asserted a direct claim against Trinity as judgement creditor of its insured, and she also alleged as assignee of Gage that Trinity had committed various common law and statutory bad faith insurance practices that caused damage to Gage. The parties filed cross-motions for summary judgment. Cowan moved for partial summary judgement solely on the issue of insurance coverage, and Trinity moved for summary judgement on the issue of insurance coverage as well as bad faith. After a hearing, the trial court granted Cowan's motion for partial summary judgement and denied Trinity's motion, leaving many issues for resolution at trial, including damages, Trinity's liability under various bad faith causes of action, and attorney's fees.
On the eve of trial, Cowan and Trinity settled the case. The Compromise and Settlement Agreement essentially provided that Trinity would agree to a judgement in the amount of the $250,000 underlying judgment, postjudgment interest, and $1
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