Scott K. Field, Justice.
In four issues, California Insurance Guarantee Association (CIGA), Oklahoma Property and Casualty Insurance Guaranty Association (OPCIGA), and Texas Property and Casualty Insurance Guaranty Association (TPCIGA) (collectively, the Guaranty Associations) appeal the trial court's grant of final summary judgment in favor of Hill Brothers Transportation, Inc. In a single "cross-point," Hill Brothers contends that the Guaranty Associations lack standing to pursue their claims. Because we conclude that CIGA lacks standing, that TPCIGA and OPCIGA have standing, and that TPCIGA's and OPCIGA's claims are not barred by limitations, we will vacate and dismiss for want of jurisdiction in part and reverse and remand in part.
Hill Brothers purchased a workers' compensation and employers' liability insurance policy from Legion Insurance Company with a policy period from September 1, 2001, to September 1, 2002 (the Policy). The Policy required Hill Brothers to pay monthly premiums to Legion and included a $250,000 per claim deductible. The Policy also included deductible endorsements providing that Legion would pay workers' compensation benefits, including amounts subject to the deductible, on Hill Brothers' behalf and that Hill Brothers would reimburse Legion up to the deductible amount.
Hill Brothers also entered into a deductible reimbursement arrangement with Mutual Indemnity (Bermuda) Ltd. Under this arrangement, Mutual Indemnity would pay the deductible amounts due under the Policy directly to Legion on Hill Brothers' behalf, and Hill Brothers would reimburse Mutual Indemnity.
In April 2002, Legion was placed in rehabilitation pursuant to an order from a Pennsylvania court. Hill Brothers stopped paying the required premiums to Legion, and in May 2002, Legion sent Hill Brothers a notice that Legion was cancelling the Policy effective June 6, 2002. In October 2002, Legion was designated as an impaired insurer by the Texas Commissioner of Insurance, and in July 2003, a Pennsylvania court declared Legion insolvent and ordered that Legion be liquidated.
Legion's impairment and insolvency led to the involvement of the Guaranty Associations. The Guaranty Associations are entities created and governed by the laws of their respective states and consist of insurers operating within those states. These associations assess contributions from solvent member insurers and maintain a guaranty fund that assumes insolvent insurers' obligations with respect to statutorily defined claims. See, e.g., Latter v. Autry, 853 S.W.2d 836, 837 (Tex.App.-Austin 1993, no writ); see also Tex. Ins. Code art. 21.28-C, § 6 ("[TPCIGA] is a nonprofit, unincorporated legal entity composed of all member insurers, who must be members of the association as a condition of their authority to transact insurance in this state.").
From the inception of the Policy until 2005, Legion, and later Legion in Liquidation, invoiced Mutual Indemnity for deductible payments made by Legion, Legion in Liquidation, and the Guaranty Associations. However, in October 2005, Mutual Indemnity informed Legion in Liquidation that it no longer had sufficient funds to pay additional claims. Beginning in December 2005, Legion in Liquidation sent Hill Brothers a series of letters informing Hill Brothers of its obligations and including invoices for unpaid deductibles. Mutual Indemnity eventually made an additional payment to Legion in Liquidation, but although this payment fully reimbursed Legion in Liquidation for the amounts Legion had paid on Hill Brothers' behalf, deductible amounts remained due to the Guaranty Associations.
On March 13, 2009, the Guaranty Associations sent a letter to Hill Brothers demanding that Hill Brothers reimburse the Guaranty Associations within 30 days for the amounts they had paid on behalf of Hill Brothers under the policy. Hill Brothers did not reimburse the Guaranty Associations for the outstanding deductible amounts, and on March 31, 2009, the Guaranty Associations filed their original petition in this case.
The Guaranty Associations filed a motion for summary judgment, which the trial court denied.
In its "cross-point," Hill Brothers contends that the Guaranty Associations lack standing to sue Hill Brothers for allegedly breaching the Policy. "Standing is a constitutional prerequisite to suit." Heckman v. Williamson Cty., 369 S.W.3d 137, 150 (Tex.2012). "The standing inquiry focuses on the question of who may bring an action." Vernco Constr., Inc. v. Nelson, 460 S.W.3d 145, 149 (Tex.2015) (per curiam) (internal quotation marks omitted). "Courts lack subject-matter jurisdiction to adjudicate disputes initiated by parties lacking standing," and "[w]hether a court has subject-matter jurisdiction is a question of law." Id. "Subject matter jurisdiction is an issue that may be raised for the first time on appeal; it may not be waived by the parties." Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 445 (Tex.1993). Because standing is jurisdictional, we will address it before turning to the merits of this appeal. See Halliburton Co. v. KBR, Inc., 446 S.W.3d 551, 557 (Tex.App.-Houston [1st Dist.] 2014, no pet.) ("Because it is a threshold matter, we consider the jurisdictional issues first before discussing the merits of the appeal.").
"A plaintiff establishes standing to maintain a breach-of-contract action by demonstrating that it has an enforceable interest as a party to the contract, as an assignee of a party, or as a third party beneficiary." Republic Petroleum LLC v. Dynamic Offshore Res. NS LLC, 474 S.W.3d 424, 430 (Tex.App.-Houston [1st Dist.] 2015, pet. denied); see Hamilton v. Washington, No. 03-11-00594-CV, 2014 WL 7458988, at *9 (Tex.App.-Austin Dec. 23, 2014, no pet.) (mem.op.) ("Under the general law of contracts, only parties to a contract have the right to complain of a breach of the agreement."). The Guaranty Associations do not allege that they were parties to the Policy. Instead, they argue that their enabling statutes grant them the right to step into the shoes of an insolvent insurer, including the right to sue an insured for breach of the contract between the insured and the insurer.
Therefore, we must determine whether the Guaranty Associations have established that the enabling statute of each association grants the association standing to sue Hill Brothers for breach of the Policy. See Heckman, 369 S.W.3d at 150 ("The burden is on the plaintiff to affirmatively demonstrate the trial court's jurisdiction."); Jasek v. Texas Dep't of Family & Protective Servs., 348 S.W.3d 523, 528 (Tex.App.-Austin 2011, no pet.) ("When standing to bring a particular type of lawsuit has been conferred by statute, we use that statutory framework to analyze whether the petition has been filed by a proper party. The party seeking relief must allege and establish standing within the parameters of the statutory language.") (citation omitted). We must dismiss the claims of any association lacking standing. See Heckman, 369 S.W.3d at 150 ("Thus, if a plaintiff lacks standing to assert one of his claims, the court lacks jurisdiction over that claim and must dismiss it.").
Our primary objective in construing statutes is to give effect to the Legislature's intent. Galbraith Eng'g Consultants, Inc. v. Pochucha, 290 S.W.3d 863, 867 (Tex.2009). The plain meaning of the text is the best expression of legislative intent unless a different meaning is supplied by legislative definition or is apparent from the context, or unless the plain meaning would lead to absurd or nonsensical results that the Legislature could not have intended. City of Rockwall
The Guaranty Associations argue that the following provision in the Texas Property and Casualty Insurance Guaranty Act (Texas Guaranty Act) grants TPCIGA standing to sue Hill Brothers for breach of the Policy:
Tex. Ins. Code art. 21.28-C § 8(b) (emphasis added). We agree. Under the Policy, Hill Brothers had a duty to pay a $250,000 per claim deductible. When TPCIGA stepped into the shoes of the insolvent Legion to pay workers' compensation claims on Hill Brothers' behalf, it also obtained the statutory right to enforce the deductible endorsements against Hill Brothers.
Moreover, the Texas Guaranty Act expressly provides that TPCIGA has the same causes of action against an insured that the impaired insurer would have had:
Id. § 11(a) (emphasis added). In this case, that would have included the right to sue Hill Brothers for reimbursement of the deductibles. Because Legion would have had a cause of action against Hill Brothers for reimbursement of the deductible amounts it paid on Hill Brothers' behalf, TPCIGA likewise has a cause of action under section 11(a) to recover the deductible amounts from Hill Brothers.
Accordingly, we conclude that TPCIGA has standing to bring this suit, and we overrule Hill Brothers' cross-point with respect to TPCIGA.
The Oklahoma Property and Casualty Insurance Guaranty Association Act (Oklahoma Guaranty Act) includes the following provisions:
Okla. Stat. tit. 36, § 2007(A)(2), (8).
We conclude that these provisions grant OPCIGA standing to exercise the rights Legion would have had if it had not become insolvent, including bringing a breach-of-contract claim against Hill Brothers to recover the deductibles. See Oklahoma ex rel. Doak v. Staffing Concepts Int'l, Inc., No. CIV-12-409-C, 2014 WL 296643, at *2 (W.D.Okla. Jan. 24, 2014) (citing Okla. Stat. tit. 36, § 2007 and noting that "the guaranty associations may independently seek to recover deductible reimbursements from [the insured]"); Wyoming Med. Ctr., Inc. v. Wyoming Ins. Guar. Ass'n, 225 P.3d 1061 (Wyo.2010) (interpreting similar statutory language and affirming summary judgment in favor of state guaranty association in suit to recover deductibles from insolvent insurer's insured). Hill Brothers has not cited any Oklahoma statute or case law to the contrary. Accordingly, we overrule Hill Brothers' cross-point with respect to OPCIGA.
The Guaranty Associations cite two authorities for the proposition that CIGA has standing to sue Hill Brothers for breach of the Policy. First, they quote the first sentence of the following provision:
Cal. Ins. Code § 1063.2(b) (emphasis added). Although the first sentence of this provision grants to CIGA the rights Legion would have had if it had not become insolvent, we conclude that the second sentence, italicized above and not quoted by CIGA, clarifies that CIGA may not sue an insured such as Hill Brothers except as explicitly provided by statute. The Guaranty Associations have not cited any other provision in the statute that would allow CIGA to sue Hill Brothers to recover the deductibles, and we are not aware of any.
Because we have determined that the authorities cited by the Guaranty Associations do not support CIGA's standing and because we are not aware of any statute or case law granting CIGA standing to bring a breach-of-contract claim against Hill Brothers, we conclude that the Guaranty Associations have failed to establish that CIGA has standing in this suit. Accordingly, we sustain Hill Brothers' cross-point with respect to CIGA and will dismiss CIGA's claims with prejudice. See Heckman, 369 S.W.3d at 150 ("[I]f a plaintiff lacks standing to assert one of his claims, the court lacks jurisdiction over that claim and must dismiss it."); Jasek, 348 S.W.3d at 528 ("The party seeking relief must allege and establish standing within the parameters of the statutory language.").
Having determined that TPCIGA and OPCIGA have standing, we must now consider whether the trial court erred in concluding that their claims are barred by limitations.
"Generally a cause of action accrues when facts come into existence [that] authorize a claimant to seek a judicial
Hill Brothers argues that the Guaranty Associations' causes of action, if any, accrued when Hill Brothers allegedly breached the Policy by ceasing to pay premiums. According to Hill Brothers, because it ceased paying premiums in 2002 and the Guaranty Associations did not file suit until 2009, all of the Guaranty Associations' claims are barred by limitations. Hill Brothers further argues that even if limitations did not begin to run until the Guaranty Associations made their initial payments of a covered claim under the Policy, the Guaranty Associations' claims are still barred because they made those initial claims in 2003.
The Guaranty Associations, in contrast, argue that their causes of action accrued when they demanded that Hill Brothers reimburse them for the deductibles and Hill Brothers breached the Policy by failing to comply. The Guaranty Associations also argue that, in any event, they made some payments on Hill Brothers' behalf within the limitations period and that claims for reimbursement for these payments, at least, are not barred by limitations.
We agree with the Guaranty Associations that the statute of limitations did not begin to run when Hill Brothers ceased paying premiums. Although Legion cancelled the policy because of Hill Brothers' nonpayment, this cancellation did not negate either side's ongoing obligations concerning workers' compensation claims arising during the policy period. Just as Legion, and later the Guaranty Associations acting in its stead, were obligated to pay claims on Hill Brothers' behalf even after the end of the policy period, so too Hill Brothers remained obligated to reimburse Legion for the amounts paid within the deductible limits.
We also agree with the Guaranty Associations that the statute of limitations was not triggered until demand was made and refused. The Policy provides that Legion would pay the deductible amount for Hill Brothers but that Hill Brothers must reimburse Legion within 30 days after it sent Hill Brothers notice that payment was due. Because the Policy required Legion to make demand before receiving payment, Legion could not have sued Hill Brothers for nonpayment of the deductibles before making demand. Therefore, the Guaranty Associations' claims against Hill Brothers for nonpayment accrued after they made demand for reimbursement and Hill Brothers failed to pay within 30 days. See Hardin v. Lella, No. 03-14-00607-CV, 2015 WL 6830598, at *2 (Tex.App.-Austin Nov. 4, 2015, no pet.) (mem.op.) ("[I]f a
Although the Policy does not specify when Legion was required to make demand for deductible reimbursements, Legion, and later the Guaranty Associations, were required to make demand within a reasonable time, which is ordinarily within the limitations period. See Jackson v. Carlson, No. 03-08-00429-CV, 2009 WL 638848, at *3 (Tex.App.-Austin Mar. 12, 2009, no pet.) (mem.op.) ("[I]n the absence of mitigating circumstances, a time coincident with the running of the Statute will be deemed reasonable, and if the demand is not made within that period the action will be barred.") (internal quotation marks omitted); Stevens v. State Farm Fire & Cas. Co., 929 S.W.2d 665, 671 (Tex. App.-Texarkana 1996, writ denied) ("[I]n the absence of mitigating circumstances, the law will ordinarily consider a reasonable time as being coincident with the running of the statute, and an action will be barred if a demand is not made within that period.").
The Guaranty Associations made demand in March 2009, within four years of the time when Mutual Indemnity ceased to make deductible reimbursements on Hill Brothers' behalf. Because the Guaranty Associations made demand within the limitations period, we conclude that they made demand within a reasonable time. The statute of limitations began to run 30 days after the Guaranty Associations made demand, and the Guaranty Associations filed suit within the limitations period. The trial court, therefore, erred in ruling that the Guaranty Associations' claims were barred by limitations. Accordingly, we sustain the Guaranty Associations' issues to the extent they contend that the trial court erred by granting summary judgment against TPCIGA and OPCIGA.
We vacate the trial court's final summary judgment to the extent that it grants summary judgment against CIGA, and we dismiss CIGA's claims with prejudice for lack of jurisdiction. We also reverse the remainder of the trial court's judgment and remand the case to the trial court for further proceedings consistent with this opinion.
