# In re State Farm Mut. Auto. Ins. Co.

Supreme Court of Texas, No. 23-0755

**In re State Farm Mut. Auto. Ins. Co., No. 23-0755 (Tex. Apr. 25, 2025). Holding: In the distinctive UIM context, a party may invoke a sever- or bifurcate-and-abate rule and is entitled to its application when the insurer has offered to settle the UIM claim, the insured has not obtained a judgment establishing UIM coverage, and the extracontractual claims seek damages that depend on the right to UIM benefits; and a trial court should grant the insurer's motion to quash a corporate-representative deposition during the coverage phase when the insurer has stipulated to matters within its personal knowledge, produced its nonprivileged documents, and submitted evidence supporting its proportionality complaints and lack of personal knowledge.**

Practice areas: insurance, civil procedure

## Key issues

- When an underinsured-motorist insured sues for a declaratory judgment on her entitlement to benefits and also asserts extracontractual Insurance Code claims, the trial court must abate the extracontractual claims and the related discovery until the insured obtains a judgment establishing UIM coverage.
- A UIM insurer with no personal knowledge of the crash that has stipulated to matters within its knowledge, produced its nonprivileged claim file and supported its proportionality objections with evidence is entitled to have a notice to depose its corporate representative quashed during the coverage phase.

## Factual History
Mara Lindsey alleges that Carlos Pantoja negligently rear-ended her vehicle while she was stopped at a red light, and she seeks, among other damages, $56,751.55 in past medical expenses and an estimated $263,691.15 in future medical expenses (Opinion, PDF p. 3). She accepted a settlement offer from Pantoja's insurer for his $50,000 policy limit and then submitted a claim to her own insurer, State Farm, under her underinsured motorist (UIM) policy, which has a $100,000 limit; State Farm offered $689.58 to settle the claim (Opinion, PDF p. 3). Lindsey sued State Farm under the Uniform Declaratory Judgments Act (UDJA) for declarations on Pantoja's liability, her covered damages, the applicability of her policy, and her entitlement to benefits, and she sued State Farm and its claims adjuster for Insurance Code violations, alleging that they failed to attempt a good-faith settlement of her UIM claim, among other statutory violations (Opinion, PDF p. 4).

## Procedural History
State Farm moved to segregate the extracontractual Insurance Code claims, through separate trials or severance, and to abate them until the UDJA claims were resolved; Lindsey agreed the claims should be tried separately but argued that *In re State Farm* (2021) requires a "bifurcated trial" conducted in two phases before the same jury (Opinion, PDF pp. 4-5). Lindsey also noticed a deposition of a State Farm corporate representative; State Farm produced 1,188 pages of documents, including all nonprivileged documents in its claim file, moved to quash the notice under Rule 192.4, and submitted an unsworn declaration from its claim specialist, Todd Dauper, who also stipulated that the policy was in force, that Lindsey is a covered person, that Pantoja is an underinsured motorist, and that the collision was an accident (Opinion, PDF pp. 5-6). The trial court denied the motions to quash, segregate, and abate, stating that "the case will proceed as outlined by the Texas Supreme Court in In re State Farm," and the Dallas Court of Appeals denied State Farm's mandamus petitions without substantive explanation (Opinion, PDF p. 6). State Farm filed its mandamus petition on September 15, 2023, and Lindsey responded on October 9, 2023; the Court requested briefs on the merits on December 15, 2023, and heard argument on October 3, 2024 (Docket; Opinion, PDF p. 1). The Court decided the case on April 25, 2025 (Opinion, PDF p. 29).

## Issues Presented
State Farm presents three issues: whether the trial court abused its discretion by refusing to abate the statutory claims until after trial on the declaratory-judgment claim; whether it abused its discretion by denying State Farm's motions to quash the depositions of a corporate representative and a claims adjuster under the proportionality requirements of Rule 192.4; and whether it abused its discretion by limiting State Farm's access to Lindsey's medical records (Brief on the Merits (State Farm Mutual Automobile Insurance Company, et al), PDF p. 11; Petition for Writ of Mandamus filed (State Farm Mutual Automobile Insurance Company, et al), PDF p. 10). The Court decided whether, in the first part of a bifurcated UIM proceeding, an insured may conduct discovery on her extracontractual claims and depose the insurer's corporate representative; it did not decide the claims-adjuster and medical-records issues, explained below (Opinion, PDF pp. 2-3 & n.1).

## Standard(s) of Review
Mandamus relief is an extraordinary remedy that issues only if the trial court clearly abused its discretion and the relator has no adequate remedy by appeal; a trial court has no discretion to determine what the law is, and the adequacy of an appellate remedy turns on balancing the benefits of mandamus review against the detriments (Opinion, PDF pp. 6-7).

## Legal Arguments
**Whether the trial court had to abate the extracontractual claims and quash the corporate-representative deposition while the UDJA claims are pending.**

**Relators (State Farm and its claims adjuster):** Abating Lindsey's extracontractual claims until after trial on her declaratory-judgment claim is necessary to avoid the expense of discovery on issues that may be mooted by the result of the car-crash case, as *In re State Farm* and the courts of appeals before and after it make clear; and a corporate-representative deposition must satisfy Rule 192.4's proportionality requirements, which this one cannot because State Farm produced all car-crash-related information in its possession and lacks personal knowledge (Brief on the Merits (State Farm Mutual Automobile Insurance Company, et al), PDF pp. 18-20). In reply, State Farm contended that Lindsey's reliance on *Liberty National v. Akin* is misplaced because the UIM contract is unique, since benefits are conditioned on the insured's legal entitlement to recover from a third party (Reply Brief (State Farm Mutual Automobile Insurance Company, et al), PDF pp. 8-9).

**Real Party in Interest (Lindsey):** *Akin* rejected a special rule requiring severance of bad-faith claims and Texas courts sever extracontractual claims only when the plaintiff also pleads breach of contract, which she has not done; *In re State Farm* and *In re USAA* call for a single bifurcated trial in which one jury decides the issues in phases; and the trial court correctly denied the motions to quash (Brief on the Merits (Mara Lindsey), PDF pp. 13-17, 29; Response to Petition for Writ of Mandamus Filed (Mara Lindsey), PDF pp. 9-11). She also argued that State Farm's position would make UIM disputes so costly and slow that insureds would be discouraged from pursuing them (Brief on the Merits (Mara Lindsey), PDF p. 12).

## Stated Reasons the Court Should Take the Case
State Farm argued that courts of appeals had long required abatement of extracontractual claims in UIM cases and that Lindsey's contrary argument conflicts with this Court's precedent (Petition for Writ of Mandamus filed (State Farm Mutual Automobile Insurance Company, et al), PDF pp. 16, 20). The Court said that multiple petitions for mandamus raising the same or a similar legal issue were pending and that its opinion would provide guidance and a more uniform, predictable rule for those and future cases (Opinion, PDF p. 21).

## Practice Area Tags
insurance, civil-procedure

## Procedural Posture/Vehicle
Original proceeding on a petition for writ of mandamus, filed after the Dallas Court of Appeals denied relief from the trial court's orders; argued October 3, 2024, and decided April 25, 2025, with a concurring opinion (Opinion, PDF pp. 1, 6, 29).

## Amicus Involvement
- [Texas Civil Justice League](https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=65e8b358-8479-4c4e-9cfe-49f07831d35d&coa=cossup&DT=BRIEFS&MediaID=396b615e-3a8f-46b6-a927-348061b0903e) filed an amicus curiae brief on October 10, 2023.
- [American Property Casualty Insurance Association](https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=6443357d-85d1-42b4-968f-4bc23670108e&coa=cossup&DT=BRIEFS&MediaID=4068990a-b01f-4b87-85c8-e8866c4a0868) filed an amicus curiae letter on October 23, 2023.
- [Texas Association of Defense Counsel](https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=49f22b50-605c-42d1-aa12-09f448abe267&coa=cossup&DT=BRIEFS&MediaID=0d03d9d8-f535-4e6c-b7f0-de6b4b23bc37) filed an amicus curiae letter on October 25, 2023.
- [Farmers Texas Mutual County Insurance Company](https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=02728ad1-147f-4819-aeb1-95246eede206&coa=cossup&DT=BRIEFS&MediaID=602a6d8c-eb34-493b-b7c3-f1dcf0bd5eb8) filed an amicus curiae brief on April 11, 2024.

## Holding
In the distinctive UIM context, a party may invoke a sever- or bifurcate-and-abate rule and is entitled to its application when the insurer has offered to settle the UIM claim, the insured has not obtained a judgment establishing UIM coverage, and the extracontractual claims seek damages that depend on the right to UIM benefits; and a trial court should grant the insurer's motion to quash a corporate-representative deposition during the coverage phase when the insurer has stipulated to matters within its personal knowledge, produced its nonprivileged documents, and submitted evidence supporting its proportionality complaints and lack of personal knowledge (Opinion, PDF pp. 28-29).

## Court's Reasoning
**UIM framework.** By statute, UIM coverage pays what the insured is "legally entitled to recover" from an underinsured motorist, and *Brainard* construed that phrase to mean the insurer has no contractual duty to pay until the insured obtains a judgment establishing the other motorist's liability and underinsured status, which the insured may obtain by suing the insurer directly (Opinion, PDF pp. 7-8). The Court reviewed its 2021 cases: *In re State Farm* required bifurcation when only extracontractual claims are brought, *USAA I* explained that a "bifurcated trial" has one jury deciding questions in phases while "bifurcated trials" are separate trials with separate juries, *Irwin* recognized the UDJA as a vehicle for the predicate judgment, and *USAA II* addressed quashing a corporate representative's deposition (Opinion, PDF pp. 10-12).

**Abatement.** The logic of the sever-and-abate rule applies equally when predicate UDJA claims are tried first, because extracontractual claims may be mooted by the car-crash trial and the insurer has a substantial right not to incur discovery and litigation costs on them (Opinion, PDF pp. 12-13). The Court rejected Lindsey's reading of *In re State Farm* as requiring one jury in two phases, because that opinion contemplated separate trials under Rule 174(b), and a single-jury process would defeat the rationale of saving the insurer the effort of discovery and voir dire on claims that may be moot (Opinion, PDF pp. 13-15). It also rejected the argument that the rule applies only to breach-of-contract claims, because a UDJA claim is the remedy for resolving the contractual dispute and courts have applied the rule to UDJA claims since *Irwin* (Opinion, PDF p. 16). *Akin* does not control because it involved a homeowner's policy where the policy alone dictates when benefits are owed, whereas a UIM insured is owed benefits only after obtaining the requisite judgment (Opinion, PDF pp. 17-18). The resulting delay is not unreasonable, and because the initial judgment in a bifurcated proceeding is interlocutory, a successful insured need not wait for appeals before proceeding (Opinion, PDF pp. 18-19). The Court left open whether independent damages or a UIM insurer's duty to settle before judgment could support extracontractual claims, because the question was not presented (Opinion, PDF p. 17 n.52).

**Adequacy of remedy.** Denial of a motion to abate is usually an incidental ruling not subject to mandamus, but here no appeal protects the insurer's right not to undergo costly extracontractual discovery that may prove unnecessary, and mandamus is also appropriate to give guidance because similar petitions were pending (Opinion, PDF pp. 20-21). The Court declined to revisit *Brainard*, because Lindsey had not asked in her briefing or at argument that it be overruled and her letter did not address the stare decisis considerations (Opinion, PDF pp. 8-9 n.21).

**Proportionality.** Discovery may not exceed the bounds of the claims at issue, so Lindsey may not discover the abated extracontractual claims under the guise of investigating a claim for benefits, and State Farm's stipulations narrowed the disputed UDJA issues to Pantoja's liability and the existence and amount of Lindsey's damages (Opinion, PDF pp. 22-23). Following the roadmap from *USAA II*, State Farm produced over a thousand pages from its nonprivileged claim file and Dauper verified that the production was the entire unprivileged file, that State Farm had neither witnessed the collision nor treated Lindsey, and that preparing a representative would cost about 18 employee-hours and approximately $4,000 in attorneys' fees (Opinion, PDF pp. 24-26). The Court concluded that much of the information sought would be cumulative of the documents produced and that, given State Farm's lack of personal knowledge, the likely benefit was outweighed by the burden, and that State Farm's evidence also answered Lindsey's complaint about the topic of its damages valuation, which is obtainable from its designated medical experts (Opinion, PDF pp. 26-28).

**Other issues.** The claims adjuster is a defendant only on the extracontractual claims, so that deposition, which concerns only those abated claims, falls with the abatement ruling, and Lindsey had withdrawn her objections to the medical-records request after *In re Liberty County Mutual*; the Court said it was confident that the trial court would give State Farm relief on those matters and that a writ would issue only if it did not (Opinion, PDF pp. 2-3 n.1).

**Concurrence (Justice Sullivan, joined by Chief Justice Blacklock, Justice Devine, and Justice Young).** He joined the opinion but saved for another day his many questions and concerns about *Brainard*, which he said is a recurring drain on judicial resources, noted that *Brainard* was cited only once in the parties' merits briefs and once in a later letter, and said he was prepared to join the parties in assuming that *Brainard* was correct for purposes of disposing of the case promptly (Sullivan, J., concurring, PDF pp. 1-3).

## Disposition
The Court conditionally granted the petition for writ of mandamus and ordered the trial court to vacate its orders denying State Farm's motions to abate the extracontractual claims and to quash the corporate-representative deposition notice and to grant those motions; the writ will issue only if the trial court fails to comply (Opinion, PDF p. 29).

## Vote Breakdown
Justice Devine delivered the opinion of the Court; Justice Sullivan filed a concurring opinion, joined by Chief Justice Blacklock and Justices Devine and Young (Opinion, PDF p. 1).


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Source: The SCOTX Report, https://scotxreport.com/cases/23-0755. AI-generated summary of the Court's opinion, orders and the parties' briefs, with pin cites to the page of each document; verify against the Court's own documents at search.txcourts.gov.