Komatsu v. United States Fire Ins. Co.

Komatsu v. United States Fire Ins. Co.

Opinion

 [*604]  OPINION ON REHEARING

Upon consideration of appellant's motion for rehearing we find that our opinion of March 13, 1991, in this cause erroneously failed to register the dissent without opinion of Chief Justice Weaver. We withdraw our original opinion, deny appellant's motion and substitute the following as our opinion.

Komatsu appeals from a summary judgment granted to the appellee insurance companies, herein "Fire," and the denial of his motion for summary judgment. In this case of first impression the issue before this court is whether the ninety-day [**2]  minimum notice requirement of section 16.071 of the Texas Civil Practice and Remedies Code applies to a "claims-made" malpractice insurance policy. We hold that it does not apply and we affirm.

In 1984, First State Bank of Celina filed suit against Komatsu and his attorney, Murad, as guarantors on various loans seeking recovery of $ 90,010 plus interest. On February 28, 1985, Komatsu filed a cross-claim against his attorney, Murad, alleging that Murad had fraudulently induced Komatsu to become a guarantor on the loans. Murad and Komatsu settled Komatsu's cross-claim by an agreed judgment against Murad for $ 1,155,042.91. The agreed judgment recited that Murad's professional negligence had proximately caused Komatsu's damages. At the same time the agreed judgment was entered, Murad assigned his rights under Fire's "claims-made" malpractice insurance policy to Komatsu. Komatsu instituted this suit seeking payment of the agreed malpractice judgment from Fire.

Murad's policy with Fire expired on February 28, 1985, the day that Komatsu filed his cross-claim against Murad. The policy provided coverage for claims made against Murad during the policy period and reported to the company  [**3]   during the policy period. Neither party disputes the fact that Murad did not notify Fire of Komatsu's cross-claim until March 5, 1985, five days after the policy had expired. As the assignee of Murad's rights under the policy, Komatsu filed the instant suit against Fire to collect the agreed judgment he had obtained against Murad. Komatsu moved for partial summary judgment contending that the provision of the policy providing coverage only for claims that were reported to Fire during the term of the policy was unenforceable under section 16.071 of the Texas Civil Practice and Remedies Code. Fire moved for summary judgment, contending that section 16.071 was not applicable to a claims-made policy and that no coverage ever existed under the policy since Murad had failed to notify Fire of the claim prior to the expiration of the policy period. The trial court denied Komatsu's motion and granted summary judgment for Fire.

TEX. CIV. PRAC. & REM. CODE ANN. sec. 16.071 (Vernon 1986) provides, in pertinent part, as follows:

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