In Re Covington Specialty Insurance Company and Jose Rochin v. the State of Texas

In The

Court of Appeals

Ninth District of Texas at Beaumont

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NO. 09-25-00507-CV
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IN RE COVINGTON SPECIALTY INSURANCE COMPANY
AND JOSE ROCHIN

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Original Proceeding
260th District Court of Orange County, Texas
Trial Cause No. 220192-C
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OPINION

Relators, Covington Specialty Insurance Company and Jose Rochin,

petitioned for a writ of mandamus to compel the trial court to vacate its Order

denying Relators’ Motion for Bifurcated Trial and allow the trial on the claim for

policy benefits and compensatory damages to proceed before trial of

extracontractual claims and damages. We conditionally grant mandamus relief.

Background

Real Party in Interest, Orange Gospel Assembly, sued Covington alleging it

breached an insurance contract by failing to pay the full amount owed for building

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and personal property damage following Hurricane Laura. According to Orange

Gospel’s live pleading in the trial court, Covington and its adjuster, Rochin, engaged

in false and misleading acts or practices, made misrepresentations, engaged in unfair

claim settlement practices, breached the duty of good faith and fair dealing, and

failed to handle and pay the claim according to statutory deadlines. As damages,

Orange Gospel seeks “the amount of the claim” plus interest, attorneys fees, mental

anguish, treble damages and exemplary damages.

In their live pleading, Covington and Rochin generally deny Orange Gospel’s

allegations, assert various policy exclusions and limitations, and specifically deny

that all conditions precedent to recovery have occurred or been performed or waived,

including the provision of proper supporting information and a sworn proof of loss.

Covington and Rochin filed a Motion for Bifurcated Trial requesting that the

case be tried in two phases; in the first phase, the trier of fact would find the amount

of benefits, if any, owed under the terms of the insurance policy, and in the second

phase, if necessary, the trier of fact would decide whether and to what extent

Covington and Rochin are liable for any extracontractual claims. According to

Covington’s and Rochin’s motion and related pleadings in the trial court, Covington

and Rochin intend to respond to the bad faith allegations by introducing evidence of

their efforts to settle Orange Gospel’s claim, and without bifurcation, such evidence

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would prejudice their defense against Orange Gospel’s contractual claim that

benefits are due and owing under the insurance policy.

Orange Gospel filed a response and related pleadings arguing that Covington

and Rochin have not identified any settlement offers which would be admissible in

defense of the extracontractual claims, which Orange Gospel insists are not premised

on an inadequate settlement offer, and that Covington and Rochin are simply

attempting to delay the trial.

On December 15, 2025, the trial court marked Relators’ proposed Order on

Defendants’ Motion for Bifurcated Trial “UNSIGNED AS MOTION TO

BIFURCATE DENIED.”

On December 17, 2025, Relators filed their petition for a writ of mandamus

and a motion for temporary relief. Orange Gospel filed a response to the mandamus

petition. Trial is set for January 12, 2026.

Mandamus Standard

We may issue a writ of mandamus to remedy a clear abuse of discretion by

the trial court when the relator lacks an adequate remedy by appeal. See In re

Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-36 (Tex. 2004) (orig. proceeding);

Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex. 1992) (orig. proceeding). “A trial

court clearly abuses its discretion if it reaches a decision so arbitrary and

unreasonable as to amount to a clear and prejudicial error of law.” Walker, 827

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S.W.2d at 839 (internal quotations omitted). A trial court also abuses its discretion

if it fails to correctly analyze or apply the law, because a trial court has no discretion

in determining what the law is or in applying the law to the facts. See In re

Prudential, 148 S.W.3d at 135; Walker, 827 S.W.2d at 840. We determine the

adequacy of an appellate remedy by balancing the benefits of mandamus review

against the detriments, considering whether extending mandamus relief will preserve

important substantive and procedural rights from impairment or loss. In re Team

Rocket, L.P., 256 S.W.3d 257, 262 (Tex. 2008) (orig. proceeding).

Analysis

“An insured’s claim for breach of an insurance contract is ‘distinct’ and

‘independent’ from claims that the insurer violated its extra-contractual common-

law and statutory duties.” USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479, 489

(Tex. 2018) (quoting Liberty Nat’l Fire Ins. Co. v. Akin, 927 S.W.2d 627, 629 (Tex.

1996) (orig. proceeding); Twin City Fire Ins. Co. v. Davis, 904 S.W.2d 663, 666

(Tex. 1995)). Because an insurer’s statutory violation entitles an insured to recover

only those actual damages that are caused by the violation, an insured cannot recover

policy benefits as actual damages for an insurer’s statutory violation if the insured

has no right to those benefits under the policy. Menchaca, 545 S.W.3d at 495. But

“if an insurer’s statutory violation causes an injury independent of the insured’s right

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to recover policy benefits, the insured may recover damages for that injury even if

the policy does not entitle the insured to receive benefits.” Id. at 499.

An insurer may be unfairly prejudiced by having to defend the contract claims

at the same time and before the same jury that would consider evidence that the

insurer had offered to settle the entire dispute. Akin, 927 S.W.2d at 630. For instance,

admitting evidence of a settlement offer in recognition of the proof requirements on

a bad faith claim works to the detriment of the defendant’s right to exclude such

information from the trial of a breach of contract claim. In re Allstate Ins. Co., 232

S.W.3d 340, 343 (Tex. App.—Tyler 2007, orig. proceeding). In such a circumstance

the trial court must either grant a defendant’s motion for separate trials or sever the

two causes of action and abate the extracontractual claims. State Farm Mut. Auto

Ins. Co. v. Wilborn, 835 S.W.2d 260, 262 (Tex. App.—Houston [14th Dist.] 1992,

orig. proceeding).

Orange Gospel argues cases where the appellate court ordered severance and

abatement, as opposed to a bifurcated trial, do not support Relators’ request for

mandamus relief. We disagree. We acknowledge bifurcation, separate trials,

severance and abatement are separate remedies addressing separate concerns. In

some instances, the fact that the contractual and extracontractual claims must be tried

separately to avoid prejudice at trial, combined with a showing that the insurer will

be unfairly burdened or prejudiced by discovery related to the extracontractual

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claims, requires that the bad faith claims be severed and abated pending resolution

of the contractual claims. See In re Tex. Farm Bureau Underwriters, 374 S.W.3d

651, 657 (Tex. App.—Tyler 2012, orig. proceeding); In re Allstate Cnty. Mut. Ins.

Co., 209 S.W.3d 742, 746 (Tex. App.—Tyler 2006, orig. proceeding). In other cases,

severance and abatement is not required because there has been no showing that the

insurer will be unfairly burdened or prejudiced during discovery, and bifurcation

alone is adequate to prevent unfair prejudice at trial. See In re Acceptance Ind. Ins.

Co., No. 09-08-033-CV, 2008 WL 659438, at *2 (Tex. App.—Beaumont Mar. 13,

2008, orig. proceeding) (trial court did not abuse its discretion by bifurcating the trial

and denying request to abate discovery on the extracontractual claims, where the

trial on the policyholder’s contractual claims would not necessarily dispose of the

delayed payment claims). These cases demonstrate that granting bifurcated or

separate trials is appropriate when necessary to avoid prejudice at trial whereas

granting severance and abatement is required only when necessary to avoid

prejudice both during discovery and at trial. Regardless of the remedy applied,

contractual and extracontractual claims must be tried separately if trying them

together would result in prejudice. See In re State Farm Mut. Auto. Ins. Co., 629

S.W.3d 866, 876 (Tex. 2021) (orig. proceeding) (relying on sever-and-abate case

law in holding that two trial courts abused their discretion by denying an insurer’s

motions to bifurcate the trial in each case). We need not decide whether severance

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and abatement is required in this case, because the only remedy requested is

bifurcation, but the body of case law regarding severance and abatement informs our

decision.

Orange Gospel seeks to distinguish In re State Farm and other case law

involving uninsured/underinsured motorist claims from this hurricane damage case,

because UM/UIM cases are “unique.” See In re State Farm, 629 S.W.3d at 876.

What makes such claims unique is that “UIM insurance utilizes tort law to determine

coverage.” Brainard v. Trinity Universal Ins. Co., 216 S.W.3d 809, 818 (Tex. 2006).

In other words, in order for UM/UIM plaintiffs to show they are entitled to benefits,

they must establish a third party’s legal responsibility and damages (which often

include intangible elements such as physical pain, mental anguish and impairment)

exceeding the third party’s insurance coverage, if any. But this unique aspect of a

UM/UIM claim does not alter the rationales of judicial economy and avoidance of

prejudice which underlie bifurcation of trials involving contractual and

extracontractual claims.

Although the plaintiffs in In re State Farm did not bring any contractual

claims for UM/UIM benefits, the Texas Supreme Court nevertheless held they were

required to establish that they were entitled to policy benefits before proceeding with

their bad faith claims, reasoning that absent independent injury, an insured’s

entitlement to benefits is a prerequisite to an insurer’s extracontractual liability. See

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In re State Farm, 629 S.W.3d at 870. Despite the opinion’s recognition of the unique

nature of UM/UIM claims, it remains clear that regardless of the type of insurance

involved, a plaintiff without independent injury must establish entitlement to policy

benefits in order to recover bad faith damages. Id. at 873 (“The dual pathway

outlined in Menchaca emerges from a line of cases that includes UIM cases and does

not distinguish between varieties of insurance policies.”) (citing Menchaca, 545

S.W.3d at 500). Menchaca’s prerequisite that an insured be entitled to benefits under

the policy provides the foundation for the first of “at least two reasons” the Court

observed in In re State Farm that bifurcation “makes sense[:]” bifurcation may

preserve judicial resources by rendering the second phase of the trial unnecessary if

the plaintiff fails to show entitlement to policy benefits in the first phase. Id. at 876.

The second reason bifurcation “makes sense” is that “evidence of the insurer’s

settlement offer may be admissible in one phase of the trial but inadmissible in the

other.” Id.

Here, both reasons for bifurcation apply. Because Orange Gospel does not

allege independent injury, it must first show it is entitled to benefits under the

insurance contract before it may recover extracontractual damages, and the second

phase of the trial may be avoided if it does not. Judicial resources may be preserved

by restricting the inquiry to how much property damage was sustained in the

hurricane, rather than what the insurer did or did not do in handling the claim. That

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said, we recognize trial courts have broad discretion in considering matters of

judicial economy, and we are not to be understood as indicating mandamus would

be appropriate in this case solely on those grounds. No such discretion exists,

however, when one party will be prejudiced by the denial of bifurcation and the other

party would not be prejudiced by granting bifurcation. See In re Ethyl Corp., 975

S.W.2d 606, 610 (Tex. 1998) (orig. proceeding) (“The trial court has no discretion

to deny separate trials when an injustice will result[.]”). The mandamus record

demonstrates that Relators wish to use certain evidence to defend against the bad

faith claim which would be detrimental to their defense of the insurance claim.

Relators should not have to choose which claim to defend. Because the trial court’s

ruling would require them to make that choice, because either choice would

prejudice Relators’ ability to defend itself against one claim or the other, and because

Orange Gospel has not shown it would be prejudiced by bifurcation, we conclude

the trial court abused its discretion in denying Relators’ motion to bifurcate the trial.

Mandamus is an appropriate remedy for the improper denial of a motion to

bifurcate where the insurer lacks an adequate remedy by appeal due to “the ‘time

and money utterly wasted enduring eventual reversal of improperly conducted

proceedings.’” Id. at 878 (granting conditional mandamus and directing the trial

courts to bifurcate the trials of the Insurance Code claims) (citing In re Prudential,

148 S.W.3d at 136).

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Conclusion

We conclude that the trial court abused its discretion, and that Relators lack

an adequate remedy by appeal. Accordingly, we conditionally grant a writ of

mandamus. We are confident that the trial court will vacate its December 15, 2025,

denial and grant the Motion for Bifurcated Trial. The writ shall issue only in the

event the trial court fails to comply. Relators’ motion for temporary relief is denied

as moot.

PETITION CONDITIONALLY GRANTED.

PER CURIAM

Submitted on December 29, 2025
Opinion Delivered January 6, 2026

Before Golemon, C.J., Wright and Chambers, JJ.

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