Houston, Texas (July 27, 2021) - In a recent mandamus opinion, the Texas Supreme Court resolved a split in opinion among the Texas Courts of Appeals as to when a corporate representative deposition of an uninsured motorist (UIM) insurance carrier is appropriate. In re USAA Gen. Indem. Co., No. 20-0281, 2021 WL 2483767 (Tex. June 18, 2021) (orig. proceeding). Previously, the Corpus Christi and San Antonio Courts of Appeals permitted such depositions, but both Houston Courts of Appeals held them impermissible. The Texas Supreme Court concluded that discovery rules do not categorically prohibit the deposition of a UIM carrier's corporate representative. Such depositions, while permissible, must be limited in scope to issues in dispute and may not go into matters that are privileged or outside of that narrow scope.
The plaintiff in the underlying suit, Frank Wearden, was injured in an auto accident and sued his insurer, USAA General Indemnity (USAA) for breach of contract and for a declaratory judgment seeking benefits under his policy's uninsured/underinsured motorist benefits. During the course of litigation, Wearden served USAA with a notice of deposition of its corporate representative, listing a number of topics to be covered during the deposition. USAA filed a motion to quash the deposition, arguing, in part, depositions of corporate representatives of insurers are improper because: (1) the carrier's employees lack personal knowledge of relevant facts; (2) the information sought is available from more convenient, less burdensome, and less expensive sources; and (3) the burden or expense of the deposition outweighs the likely benefit. The trial court denied USAA's motion to quash, and it appealed. Id. at *1. The Corpus Christi Court of Appeals denied USAA's petition for writ of mandamus, and it filed this mandamus petition with the Texas Supreme Court.
Relief was granted, in part, allowing the deposition to go forward, but with certain limitations. The court held that in instances where a carrier contests an insured's recovery by placing another motorist's liability and/or the amount of an insured's damages, discovery rules do not categorically prohibit the deposition of a corporate representative by an insured. Id. at *19. Carriers may still establish that proportionality concerns may foreclose a deposition. However, in cases where they do not, the depositions may proceed so long as the topics addressed are limited to the issues in dispute and do not intrude into matters that are privileged or beyond the scope of the disputed issues. Id.
The court reasoned that USAA was in an unusual position in that it was arguing that the plaintiff in the case should not be entitled to depose the only party that is a defendant in the suit. USAA argued that its representative had a lack of personal knowledge. However, the court found that "USAA's insistence that a lack of personal knowledge equates to a lack of relevant knowledge rings hollow." Id. at *11. During oral arguments, the justices pointedly questioned USAA's attorneys as to how USAA could make internal decisions regarding liability and damages without possessing some form of relevant knowledge, regardless of the source.
This holding is important for all carriers conducting business in the Lone Star State, as it is now clear that plaintiffs are entitled to corporate representative depositions in UIM cases. Defense counsel should be prepared to make proportionality arguments where appropriate, as well as file appropriate objections to deposition topics that go outside the narrow scope permitted by this opinion and Texas discovery rules.
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