
    Christopher AUZENNE, Appellant v. GREAT LAKES REINSURANCE, PLC, Appellee
    NO. 14-15-00159-CV
    Court of Appeals of Texas, Houston (14th Dist.).
    Opinion filed May 10, 2016
    Rehearing En Banc Overruled June 14, 2016
    
      Sylvester Anderson, Houston, TX, for appellant.
    Leslie D. Pickett, Houston, TX, for ap-pellee.
    Panel consists of Justices McCally, Wise, and Jamison.
   OPINION

Ken Wise, Justice

Appellant Christopher Auzenne sued ap-pellee Great Lakes Reinsurance, PLC for injuries he sustained while on the premises of its insured, Snowflake Donuts. The trial court granted Great Lakes’ motion to dismiss, ruling that Auzenne lacked standing to sue Great Lakes directly without first obtaining a judgment or settlement determining Snowflake Donuts’ liability. We affirm.

BACKGROUND

Auzenne alleges the following facts in his petition: Auzenne went to Snowflake Donuts on March 8, 2014. He slipped on a large amount of water in the restroom and fell. He was taken to the emergency room to be treated for low back pain and muscle spasms. Because of continuing pain and complications, he has had to seek further medical treatment, incurring over $4,500 in medical expenses. Snowflake Donuts was insured under a commercial policy with Great Lakes at the relevant time. Auz-enne alleges that Snowflake Donuts’ policy includes a “medical payments clause” requiring Great Lakes to pay medical expenses of anyone who is injured on the property regardless of fault. Auzenne sent medical bills and records to Great Lakes asking to be reimbursed under the insurance policy, but Great Lakes has not paid Auzenne any money.

On December 8, 2014, Auzenne sued Great Lakes for breach of contract and violations of the Texas Insurance Code. Auzenne has not brought a suit against or entered into a settlement agreement with Snowflake Donuts. Great Lakes filed simultaneously a motion to dismiss the lawsuit under Texas Rule of Civil Procedure 91a and its original answer. Great Lakes argued, inter alia, that Auzenne lacks standing to bring this suit. Auzenne filed a response to Great Lakes’ motion to dismiss on February 2, 2015, arguing that' as a third-party beneficiary he has standing to sue without first getting a determination of Snowflake Donuts’liability: '

After an oral hearing on February 17, 2015, the trial court signed an order granting Great Lakes’ motion to dismiss Auz-enne’s claims for lack of standing and awarding $1,000 in attorney’s fees.

ANALYSIS OF AUZENNE’S ISSUE

On appeal, Auzenne argues that the trial court erred in granting the motion to dismiss because a third-party beneficiary is not required to obtain a judgment establishing the insured’s liability before bringing an action directly against the insurer to recover no-fault medical expenses insurance benefits. In response, Great Lakes contends that dismissal was' proper because Auzenne’s claims are precluded by Texas’s no-direct-action rule and because he failed to establish his third-party beneficiary status.

Standard of Review

Texas Civil Procedure Rule 91a allows a party to move to dismiss a cause of action on the ground that it has no basis in law or in fact. Tex.R. Civ. P. 91a.l. As specified in the rule: “A cause of action has no basis in law if the allegations, taken as true, together with inferences reasonably drawn from them, do not entitle the claimant to the relief sought. A cause of action has no basis in fact if no reasonable person could believe the facts pleaded.” Id.

Determinations of whether a cause of action has any basis in law and in fact are both legal questions which we review de novo, based on the allegations of the live petition and any attachments thereto. Weizhong Zheng v. Vacation Network, Inc., 468 S.W.3d 180, 183 (Tex.App.—Houston [14th Dist.] 2015, pet. denied). In conducting our review, we must construe the pleadings liberally in favor of the plaintiff, look to the pleader’s intent, and accept as true the factual allegations in the pleadings to determine if the cause of action has a basis in law or fact. Id. at 183-84. We apply the fair-notice pleading standard to determine whether the allegations of the petition are sufficient to allege a cause of action. Id.; Wooley v. Schaffer, 447 S.W.3d 71, 76 (Tex.App.—Houston [14th Dist.] 2014, pet. denied). Applying these standards, we turn to Auzenne’s issue on appeal.

Analysis

The no-direct-action rule pertains to standing because there is no justiciable controversy until the liability of the insured has been established. See Farmers Ins. Exch. v. Rodriguez, 366 S.W.3d 216, 223 (Tex.App.—Houston [14th Dist.] 2012, pet. denied). But the need for a determination of liability before- bringing a direct action against an insurer, while often referred to as a standing issue, is more appropriately characterized and analyzed as ripeness. See United Fire Lloyds v. Tippin ex rel. Tippin, 396 S.W.3d 733, 736-36 (Tex.App.—Houston [14th Dist.] 2013, no pet.). In fact, this court has characterized the issue in direct-action cases such as this in terms of ripeness rather than standing. See id.; see also Rodriguez, 366 S.W.3d at 222-23.

Much like standing, ripeness implicates subject-matter jurisdiction and emphasizes the need for a concrete injury for a justiciable claim to be presented. Patterson v. Planned Parenthood of Houston, 971 S.W.2d 439, 442 (Tex.1998), Standing focuses on who may bring an action, while ripeness examines when that action may be brought. Id. In evaluating ripeness, we consider whether, when the lawsuit was filed, the facts were sufficiently developed so that an injury has occurred or is likely to occur, rather than being contingent or remote. Robinson v. Parker, 353 S.W.3d 753, 755 (Tex.2011). “A case is not ripe when its resolution depends on contingent or hypothetical facts, or upon events that have not yet come to pass.” Patterson, 971 S.W.2d at 443 (emphasis added). Though a claim need not be ripe at the time of filing, the party must demonstrate a reasonable likelihood that the claim will soon ripen. Robinson, 353 S.W.3d at 755. If the party has not demonstrated that the case is likely to soon ripen, it must be dismissed. Id.

In Texas, an injured party generally has no direct claim against the tortfeasor’s insurer until the insured tort-feasor is determined liable to the tort claimant. Angus Chem. Co. v. IMC Fertilizer, Inc., 939 S.W.2d 138, 138 (Tex.1997) (per curiam); State Farm Cty. Mut. Ins. Co. of Tex. v. Ollis, 768 S.W.2d 722, 723 (Tex.1989) (per curiam); Great Am. Ins. Co. v. Murray, 437 S.W.2d 264, 265 (Tex.1969). Moreover, an injured party does not have a ripe breach-of-contract claim against an insurer until that final determination of the insured’s liability has been secured. Tippin, 396 S.W.3d at 736. Regardless of the nature of the relief sought, a suit brought directly against an insurer before liability has been determined is subject to dismissal. See In re Essex, 450 S.W.3d 524, 526-28 (Tex.2014) (per curiam) (reversing the denial of a Rule 91a motion to dismiss where claim was precluded by the no-direct-action rule).

It is undisputed that when the trial court granted Great Lakes’ motion to dismiss Auzenne’s claims, Snowflake Donuts’ obligation to pay damages to Auz-enne had not been established by final judgment or agreement. In fact, Auzenne has not even sued Snowflake Donuts. Auzenne’s claims against Great Lakes were not ripe when the trial court dismissed, and Auzenne did not demonstrate any likelihood that they would soon ripen. See Tippin, 396 S.W.3d at 735-36; see also Farias v. Allstate Ins. Co., 13-10-00071-CV, 2011 WL 2175220, at *4 (Tex.App.—Corpus Christi 2011, pet. denied) (mem. op.).

Auzenne tries to distinguish the no-direct-action cases by arguing that claims under a medical payments coverage clause should be treated differently. However, Texas has consistently refused to make exceptions based on the types of claims brought or the status of the parties bringing them. In re Essex, 450 S.W.3d at 527 (stating that the policy reasons for the no-direct-action rule apply regardless of whether the plaintiff is seeking declaratory relief or money damages from the insurer); Ohio Cas. Ins. Co. v. Time Warner Entm’t Co., L.P., 244 S.W.3d 885, 888-89 (Tex.App.—Dallas 2008, pet. denied) (holding that an additional insured under a policy could not sue the insurer for policy proceeds before the insured’s liability to the entity was determined by'judgment or settlement); Rumley v. Allstate Indem. Co., 924 S.W.2d 448, 450 (Tex.App.—Beaumont 1996, no writ) (holding that a named insured acting as a third-party claimant did not have standing to assert extra-contractual and statutory claims against the insurer for denying and delaying payment of her claim). There is no authority indicating that the medical payments coverage clause negates the applicability of the general rule that has been applied consistently in our jurisprudence.

Additionally, Auzenne asserts that the trial court erred in not taking as true his alleged third-party beneficiary status. Even taking as true the allegation that Snowflake Donuts’ policy includes a clause obligating Great Lakes to pay medical expenses to any party who sustains an injury on the premises regardless of fault, Auzenne has not overcome the bar to direct actions against the insurer. Courts presume that parties contract only for their own benefit, and benefits to third parties are merely incidental unless the parties entered into the contract directly for the third party’s benefit. Stine v. Stewart, 80 S.W.3d 586, 589 (Tex.2002). Here, the policy is not in the record, and there is nothing to show the policy names Auzenne or that Auzenne was contemplated when Snowflake Donuts and Great Lakes entered into the insurance contract so that Auzenne could bring a claim directly against Great Lakes. See MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 651 (Tex.1999) (stating that it is not enough that a third party benefits incidentally by the performance of a contract, that the contracting parties must have negotiated the provision with the third party expressly in mind, and that “[a] court will not create a third-party beneficiary contract by implication”). Cf. Farias, 2011 WL 2175220, at *3-4 (finding that the plaintiff was not a third-party beneficiary when the policy and medical payments coverage clause did not specifically name plaintiff or indicate he was contemplated when the contract was formed). Like with other insurance provisions, medical payments coverage clauses have béen interpreted to neither confer third-party beneficiary status nor allow strangers to the contract to enforce the contract through direct claims. See Farias, 2011 WL 2175220, at *3-4. Auzenne’s allegation concerning the medical payments coverage clause does not overcome the strong presumption against conferring third-party beneficiary status. See id.

Furthermore, even if we assume Auz-enne is a third-party beneficiary to the contract, Auzenne’s “rights” under such contract must have ripened into enforceable rights. See Sun Oil Co. v. Emp’rs Cas. Co., 550 S.W.2d 348, 349 (Tex.Civ.App.—Dallas 1977, no writ) (“The right of a third-party beneficiary to enforce a contract is a question of substantive law, and even if the policy were deemed to inure to the benefit of an injured third-party, that would not automatically entitle appellant to enforce its provisions at this time.”) (citations omitted); Ollis, 768 S.W.2d at 723 (“[An injured third party] cannot enforce the policy directly against the insurer until it has been established, by judgment or agreement, that the insured has a legal obligation to pay damages to the injured party.”). Until Snowflake Donuts’ obligation to Auzenne is established by final judgment or settlement, Auzenne has no ripe claim to bring against the insurers as a third-party beneficiary. See Tippin, 396 S.W.3d at 736; Farias, 2011 WL 2175220, at *4.

CONCLUSION

Because Auzenne’s pleading does not present claims with any basis in law or fact, we overrule his issue and affirm the trial court’s order granting Great Lakes’ motion to dismiss. See Weizhong, 468 S.W.3d at 186-87.

Jamison, J., dissenting.

Martha Hill Jamison, Justice,

dissenting

At issue in this case as a matter of first impression is whether the prohibition on direct actions by an injured third party against an insurer applies to claims brought under a “medical payments” provision in an insurance policy requiring the insurer to pay medical expenses of anyone injured on the subject property regardless of fault. Because we have insufficient guidance on this issue, I would conclude that a dismissal under Rule 91a is inappropriate under these circumstances and remand the case to the trial court for further proceedings.

Rule 91a provides a mechanism for the quick dismissal of causes of action that have no basis in law or fact, as judged solely by the sufficiency of the pleadings raising the cause of action and any properly attached pleading exhibits. Tex.R. Civ. P. 91a.1, 91a.6; In re Sheshtawy, 478 S.W.3d 82, 88 (Tex.App.—Houston [14th Dist.] 2016, no pet.) (Jamison, J., dissenting). It is a harsh remedy that should be strictly construed. Id. (citing Gaskill v. VHS San Antonio Partners, LLC, 456 S.W.3d 234, 238 (Tex.App.-San Antonio 2014, pet. denied)). A cause of action has no basis in law—the part of the rule on which the majority relies—if the allegations, taken as time, together with inferences reasonably drawn from them, do not entitle the claimant to the relief sought. See Tex.R. Civ. P. 91a.1; see also Sheshtawy, 478 S.W.3d at 88.

The majority holds that appellant Christopher Auzenne must obtain a liability finding “by final judgment or settlement” against the property owner, Snowflake Donuts, even though, as pleaded, Auzenne is not required to establish liability to be entitled to recoup medical expenses under the insurance policy. The majority relies on a number of cases, none of which involve a medical payments provision in an insurance policy. See, e.g., In re Essex Ins. Co., 450 S.W.3d 524, 526-27 (Tex.2014) (holding, in suit against both the tortfeasor and its insurer, no direct action rule applies to declaratory judgment claims); Ohio Cas. Ins. Co. v. Time Warner Entm’t Co., 244 S.W.3d 885, 888-89 (Tex.App.—Dallas 2008, pet. denied) (holding that additional insured under insurance policy could not sue insurer until negligence claims against other insured were resolved); Rumley v. Allstate Indemn. Co., 924 S.W.2d 448, 450 (Tex.App.—Beaumont 1996, no writ) (holding insurer did not owe duty of good faith and fair dealing to plaintiff even though she was a named insured on policy when her claim was based upon her husband’s tort liability). In re Essex and Time Warner acknowledge the general rule “that an injured party cannot sue the tortfeasor’s insurer directly until the tortfeasor’s liability has been finally determined by agreement or judgment.” In re Essex, 450 S.W.3d at 525 (emphasis added); see also Time Warner, 244 S.W.3d at 888. And the analysis in Rumley is based upon the underlying tort liability of an insured party. 924 S.W.2d at 450. Here, Snowflake Donut’s liability is not at issue. These cases are not applicable.

Because this case involves a matter of first impression, I would seek guidance from other jurisdictions. In Donald v. Liberty Mutual Insurance Company, the Seventh Circuit held under Indiana law that an injured party can sue an insurance company directly under a medical payments provision in an insurance policy. 18 F.3d 474, 481 (7th Cir.1994). In reaching this conclusion, the court acknowledged that under Indiana law, similar to Texas law, an injured party could not sue a tort-feasor’s insurance company directly before obtaining a judgment against the insured. Id. at 480. But the court reasoned that “[t]he concept of direct action against an insurer applies when an injured party seeks to sue the insurer directly to recover sums for which the insured would otherwise be liable in tort” Id. (emphasis added). Because the plaintiffs ability to recover medical payment benefits was not contingént on the liability of the insured, the court noted, “Indiana’s position on direct action is irrelevant to whether [the plaintiff could] sue [the insurer] directly to recover the medical payment benefits.” Id.

The court concluded that the plaintiffs right to sue the insurer “rest[ed] not on whether Indiana ha[d] authorized direct actions against a tortfeasor’s insurer, but rather on whether [the plaintiff was] a third party beneficiary of the contract providing for medical payment benefits.” Id. at 481. As noted by the court, “The weight of authority suggests that medical payments provisions regarding injured third parties are third party beneficiary contracts.” Id. Because the plaintiff was a third party beneficiary who was eligible for the medical payment benefits, he was entitled to sue the insurer directly in contract, as opposed to bringing a lawsuit to recover damages for the insured’s negligence. Id.; see also Holmes v. Fed. Ins. Co., 353 Ill.App.3d 1062, 289 Ill.Dec. 750, 820 N.E.2d 526, 530 (2004).

Other jurisdictions have reached the same conclusion. See, e.g., Harper v. Wausau Ins. Co., 56 Cal.App.4th 1079, 66 Cal.Rptr.2d 64, 69 (1997) (“[A] number of other authorities have concluded medical payments provisions of the-type presently before us provide exceptions'to the general rule barring actions against the insurer for liability ... because the[se] provisions provide direct obligations on the part of the insurer to the intended beneficiaries.”); Holmes, 289 Ill.Dec. 750, 820 N.E.2d at 530 (“Because fault is not an issue with respect to medical expenses benefits, there is no danger thát the liability of the insured and the liability of the insurer would become intermingled.”); Alexander v. W.F. Shuck Petroleum Co., No. HHBCV085010050, 2009 WL 2783587, at *7 (Conn.Super.Ct. Aug. 3, 2009) (“[O]n balance, the view articulated by a majority of the jurisdictions that an injured party can bring a direct action against an insurer under the medical payments clause of the insured’s policy is more persuasive [than the alternative view].”). Because the in surer?s liability is not dependent on the liability of the insured under a medical payments provision, I would conclude, in accordance with the weight of authority, that Auzenne’s claim for medical payment benefits under the insurance policy is not barred by the direct action rule.

Pointing out that the insurance policy is not in the record, the majority cites cases that -do not deal with motions to dismiss under Rule 91a to conclude that Auzenne has not “overcome the strong presumption against conferring third-party beneficiary status.” See MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 651 (Tex.1999) (concluding, in appeal brought after bench trial, based on interpretation of contract, that plaintiff had not established third-party beneficiary status); Farias v. Allstate Ins. Co., No. 13-10-00071-CV, 2011 WL 2175220, at *3 (Tex.App.—Corpus Christi June 2, 2011, pet. denied) (mem.op.) (concluding trial court did not err in granting summary judgment because language of insurance policy did not indicate plaintiffs were contemplated as third-party beneficiaries when contract was executed). Merely because there is a presumption against third-party beneficiary status does not mean as a matter of law that the presumption can never be rebutted. Whether Auzenne ultimately will be able to rebut the presumption is not an issue to be decided at this juncture. Here, Auzenne was required only to plead causes of action that have a basis in law or fact. See Tex.R. Civ, P. 91a.1, 91a.6. He pleaded that there was a medical payments clause in the subject insurance policy that “obligated Defendant to pay medical expenses of persons who sustain injuries at Snowflake Donuts regardless of fault.” Auz-enne was not required to present the insurance policy at this early stage of the litigation, before discovery had been conducted, as might be required for him to oppose a motion for summary judgment or plea to the jurisdiction and would be-required if the cause proceeded to trial.

Taking the allegations in Auzenne’s live petition as true—that Auzenne was injured at Snowflake Donuts and the insurance policy contains a medical payments provision that obligates the insurer to “pay medical expenses of persons who sustain injuries at Snowflake Donuts regardless of fault,” I would conclude .that Auzenne did not fail to state a cause of action with a basis in law or fact. See Wooley v. Schaffer, 447 S.W.3d 71, 76 (Tex.App.—Houston [14th Dist.] 2014, pet. denied) (“In conducting our review, ... we must construe the pleadings liberally in favor of the plaintiff, look to the pleader’s- intent, and accept as true the factual allegations in the pleadings to determine if the cause of action has a basis in law or fact.”). I would reverse the trial court’s order dismissing his causes of action and awarding attorney’s fees and remand the case. 
      
      . Auzenne urges us to look to a Seventh Circuit case interpreting and applying Indiana law allowing a direct action without a prior liability determination. See Donald v. Liberty Mut. Ins. Co., 18 F.3d 474 (7th Cir.1994). In Donald, the federal court held that a plaintiff injured on an insured's premises was a third-party beneficiary under the insured’s commercial insurance policy and had the right to enforce thé no-fault medical payment provision of the commercial insurance policy. Id. at 481. The court interpreted Indiana's direct-action prohibition to apply to tort claims but not breach-of-contract claims. Id. at 479. Texas makes no such distinction.
     
      
      . While Rüle 91a requires courts to take all factual allegations in the pleadings as true, legal conclusions need not be taken as true. Wooley, 447 S.W.3d at 75; City of Austin v. Liberty Mut. Ins., 431 S.W.3d 817, 826 (Tex.App.—Austin 2014, no pet.). Auzenne's assertion that he has third-party beneficiary status is a legal conclusion the court is not required to take as true when evaluating his pleading.
     
      
      . See also Prince v. Louisville Mun. Sch. Dist., 741 So.2d 207, 212-13 (Miss.1999); Hunt v. First Ins. Co. of Hawaii, Ltd., 922 P.2d 976, 981-82 (Haw.Ct.App.1996); Desmond v. Am. Ins. Co., 786 S.W.2d 144, 147 (Mo.App.1990).
     