author: JOHN CAYCE, Chief Justice.

text:
    Helen PRINGLE, Independent Executrix of the Estate of Brantley Pringle, Deceased, Appellant, v. Toby MOON, Appellee.
    No. 2-04-012-CV.
    Court of Appeals of Texas, Fort Worth.
    Feb. 10, 2005.

      Wright & Greenhill, P.C., Brantley Ross Pringle Jr., Austin, for Appellant.
    Dan Stroup, P.C., Dan Stroup, Long-view, for Appellee.
    Panel A: CAYCE, C.J.; DAUPHINOT and GARDNER, JJ.
   OPINION

JOHN CAYCE, Chief Justice.

In this personal injury case, Helen Prin-gle, as independent executrix of the estate of Brantley Pringle, appeals from a judgment for Toby Moon. In two issues, Helen contends that the trial court erred in applying the wrong prejudgment interest rate and in calculating prejudgment interest on the damages found by the jury rather than on the judgment amount. We will reverse the part of the judgment relating to prejudgment interest and remand to the trial court to recalculate prejudgment interest in accordance with this opinion.

On July 18, 2000, Brantley was driving in Parker County when he came upon a construction zone where Moon was working with tree removal equipment. Brant-ley’s car struck a piece of equipment, which pushed Moon into another piece of equipment and caused him to sustain injuries. Because Moon sustained his injuries in the course and scope of his employment, he sought and received workers’ compensation insurance benefits totaling $39,430.69 from Texas Mutual Insurance Company (Texas Mutual). Brantley filed suit against Moon, and Moon counterclaimed.

Before trial, Texas Mutual asserted a right to recovery of benefits paid to Moon. Brantley’s liability insurance carrier, GEI-CO, then entered into an agreement with Texas Mutual whereby, in exchange for GEICO’s cash payment, Texas Mutual assigned to GEICO Texas Mutual’s right to recovery of the statutory workers’ compensation lien in the amount of $39,430.69. GEICO then assigned to Brantley the sub-rogation recovery interest Texas Mutual had previously assigned to GEICO.

The ease was tried to a jury in Parker County in June 2003. At the conclusion of the evidence, the jury returned a verdict finding Brantley negligent and liable to Moon for $44,243.06. The trial court rendered judgment on the verdict on July 7, 2003. Thereafter, Brantley filed a motion to modify the judgment because it did not reflect the amount of his workers’ compensation lien. On August 20, 2003, the trial court granted Brantley’s motion and vacated the July 7 judgment.

Brantley died suddenly on September 2, 2003. Helen, as independent executrix of Brantley’s estate, was substituted as a party on October 24, 2003.

The trial court rendered a final judgment on October 30, 2003, allowing the credit for Brantley’s workers’ compensation lien and calculating prejudgment interest at the rate of ten percent per annum on the entire amount of damages found by the jury. Helen filed a motion to modify both the interest rate and the interest calculation in the judgment, which was overruled by operation of law. This appeal followed.

In her first issue, Helen contends that the trial court erred in applying the wrong prejudgment interest rate to the damages award. Helen argues that the correct prejudgment interest rate was the greater of five percent or the prime interest rate in effect when the final judgment was signed. Moon contends that the final judgment was signed July 7, 2003, that the October 30 judgment was merely a judgment nunc pro tunc, and that the trial court properly determined that the applicable interest rate is ten percent.

The prejudgment interest rate is controlled by statute. See Tex. Fin.Code Ann. §§ 304.003, 304.103 (Vernon Supp.2004-05). Because statutory construction is a question of law, we review the trial court’s decision de novo. Tex. Dep’t of Transp. v. Needham, 82 S.W.3d 314, 318 (Tex.2002); Town of Flower Mound v. Stafford Estates, L.P., 71 S.W.3d 18, 26 (Tex.App.Fort Worth 2002, no pet.). Under a de novo standard of review, the reviewing court exercises its own judgment and redetermines each legal issue. Subaru of Am., Inc. v. David McDavid Nissan Inc., 84 S.W.3d 212, 222 (Tex.2002); Quick v. City of Austin, 7 S.W.3d 109, 116 (Tex.1998).

A judgment in a personal injury case earns prejudgment interest. Tex. Fin. Code Ann. § 304.102 (Vernon Supp.2004-05). The prejudgment interest rate is equal to the postjudgment rate applicable at the time of judgment. Id. § 804.103. During the regular 2003 legislative session, the legislature passed House Bills 4 and 2415, both of which contained nearly identical amendments to the finance code that effectively reduced the postjudgment interest rate from ten to five percent. Both bills provided that the new interest rate would apply in a case in which a final judgment was “signed or subject to appeal on or after the effective date of this Act.” Tex. H.B. 2415, § 2(a), 78th Leg., R.S., 2003 Tex. Gen. Laws 2096, 2097; Tex. H.B. 4, § 6.04, 78th Leg., R.S., 2003 Tex. Gen. Laws 847, 862. Because House Bill 4 went into effect on September 1, 2003, H.B. 4, § 23.02, 2003 Tex. Gen. Laws 847, 898, its prejudgment interest rate applies in any case in which a final judgment was signed or subject to appeal on or after September 1, 2003. Burke v. Union Pac. Res. Co., 138 S.W.3d 46, 74 (Tex.App.-Texarkana 2004, no pet.); see also Columbia Med. Ctr. of Las Colinas v. Bush, 122 S.W.3d 835, 865 (Tex.App.-Fort Worth 2003, no pet.) (holding that judgment is “subject to appeal” when it fully and finally disposes of all parties and is therefore capable of being appealed).

The final judgment in this case was signed October 30, 2003. Moon’s argument that the October 30 judgment was nunc pro tunc and therefore related back to the July 7 judgment is not supported by the record. The trial court expressly vacated the July 7 judgment in its order granting Pringle’s motion to modify and at a later hearing twice acknowledged setting aside that judgment.

A judgment that has been vacated has no legal effect. Shelby Operating Co. v. City of Waskom, 964 S.W.2d 75, 80 (Tex.App.-Texarkana 1997, pet. denied). When a judgment has been rendered and later set aside or vacated, the matter stands precisely as if there had been no judgment. Ferguson v. Naylor, 860 S.W.2d 123, 127 (Tex.App.-Amarillo 1993, writ denied); Sawyer v. Donley County Hosp. Dist., 513 S.W.2d 106, 109 (Tex.Civ.App.-Amarillo 1974, no writ). Therefore, despite the trial court’s statement of its intention that the October 30 judgment would relate back to the July 7 judgment, the October 30 judgment could not relate back because the July 7 judgment no longer existed.

Because the final judgment in this case was signed and became subject to appeal after September 1, 2003, the trial court erred in applying a prejudgment interest rate of ten percent instead of five percent. We sustain Helen’s first issue.

In her second issue, Helen contends that the trial court improperly calculated prejudgment interest on the entire amount of damages found by the jury rather than the amount awarded to Moon after the credit for Brantley’s workers’ compensation hen. Helen argues that the trial court should have deducted the amount of Brantley’s workers’ compensation lien from the total damages before calculating prejudgment interest. Moon contends that the trial court correctly calculated prejudgment interest on the full amount of damages found by the jury.

Because the calculation of prejudgment interest is a question of law, Travelers Ins. Co. v. Wilson, 28 S.W.3d 42, 47 (Tex.App.-Texarkana 2000, no pet.); Morgan v. Ebby Holliday Real Estate, Inc., 873 S.W.2d 385, 391 (Tex.App.-Fort Worth 1993, no writ); Strickland v. Coleman, 824 S.W.2d 188, 192-93 (Tex.App.-Houston [1 Dist.] 1991, no writ), we will review the issue de novo, Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex.1998), cert. denied, 526 U.S. 1144, 119 S.Ct. 2018, 143 L.Ed.2d 1030 (1999); Town of Flower Mound, 71 S.W.3d at 26.

Prejudgment interest is compensation allowed by law as “additional damages for lost use of money due as damages during the lapse of time between the accrual of the claim and the date of judgment.” Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 528 (Tex.1998). Prejudgment interest is calculated on the judgment amount, not the amount of damages awarded by the jury. C & H Nationwide, Inc. v. Thompson, 810 S.W.2d 259, 275 (Tex.App.-Houston [1st Dist.] 1991), aff'd in part and rev’d in part on other grounds, 903 S.W.2d 315 (Tex.1994); Owens-Corning Fiberglas Corp. v. Schmidt, 935 S.W.2d 520, 524 (Tex.App.-Beaumont 1996, writ denied). Any credits or offsets due a defendant should be deducted from the total damages awarded before — not after — prejudgment interest is calculated. Roberts v. Grande, 868 S.W.2d 956, 960 (Tex.App.-Houston [14th Dist.] 1994, no writ); Berry Prop. Mgt., Inc. v. Bliskey, 850 S.W.2d 644, 671 (Tex.App.-Corpus Christi 1993, writ dism’d by agr.); Sisters of Charity of Incarnate Word v. Dunsmoor, 832 S.W.2d 112, 118 (Tex.App.-Austin 1992, writ denied).

The trial court erred in fading to deduct the amount of Brantley’s workers’ compensation credit before it calculated prejudgment interest. Prejudgment interest should have been calculated on the sum of $4,812.37, which is the amount of the damages award less the offsetting credit for the workers’ compensation lien. We sustain Helen’s second issue.

Having sustained both of Helen’s issues, we reverse the part of the judgment awarding prejudgment interest and remand to the trial court to recalculate prejudgment interest in accordance with this opinion.

      . The legislation provided, in pertinent part:
      "The postjudgment interest rate is: (1) the prime rate as published by the Federal Reserve Bank of New York on the date of computation; (2) five percent a year if the prime rate as published by the Federal Reserve Bank of New York as described by Subdivision (1) is less that five percent; or (3) 15 percent a year if the prime rate as published by the Federal Reserve Bank of New York described by Subdivision (1) is more than 15 percent.” Act of June 20, 2003, 78th Leg., R.S., ch. 676, § 1, 2003 Tex. Gen. Laws 2096, 2097; Act of June 2, 2003, 78th Leg., R.S., art. 6, § 6.01, 2003 Tex. Gen. Laws 847, 862 (both codified at Tex. Fin.Code Ann. § 304.003(c)).

      . We note that the five percent prejudgment interest rate actually went into effect on June 20, 2003 by virtue of House Bill 2415. See Tex. H.B. 2415, § 2(b), 78th Leg., R.S., Tex. Gen. Laws 2096, 2097 (providing that House Bill 2415 took effect immediately if it received a two-thirds vote of all the members elected to each house, which it did on June 20, 2003); Tesfa v. Stewart, 135 S.W.3d 272, 279 (Tex.App.-Fort Worth 2004, pet. denied) (noting that amendments to finance code interest rate were effective on both June 20 and September 1, 2003). Because Pringle did not raise this argument below, however, we cannot reverse the trial court on this ground. See Banda v. Garcia, 955 S.W.2d 270, 272 (Tex.1997); Rogers v. Stell, 835 S.W.2d 100, 101 (Tex.1992).

      .At a hearing on October 6, 2003 the court made the following statements:
      [THE COURT]: The parties are incorrect, in that Mr. Pringle is deceased, was killed in a car wreck following the actual date of the jury verdict, and following the date I set aside the original final judgment. [Emphasis supplied.]

      [THE COURT]: The Court’s response to that is I signed a judgment in this case before the death of Mr. Pringle even though I did set it aside. [Emphasis supplied.]

      . The case Moon cites to support his position, Brandon v. American Sterilizer Co., 880 S.W.2d 488 (Tex.App.-Austin 1994, no writ), is inapposite because it does not address the issue before us. The prejudgment issues in American Sterilizer involved the award of prejudgment interest for the time between the return of the verdict and the rendering of the judgment and the right of a workers’ compensation lien assignee to receive credit for the full amount of the lien. See id. at 494-95.


source: Caselaw Access Project

author: LEE ANN DAUPHINOT, Justice.

license: Public Domain

text:
    James Franklin LEE, Appellant, v. Jane Clarius LEE, Appellee.
    No. 2-03-359-CV.
    Court of Appeals of Texas, Fort Worth.
    Feb. 10, 2005.
    McClure Duffee & Eitzen LLP, Clint Westhoff, Dallas, for Appellant.
    Harris Cook, L.L.P., Chris Harris and David Lee Cook, Arlington, for Appellee.
    Panel A: CAYCE, C.J.; DAUPHINOT and GARDNER, JJ.
   OPINION

LEE ANN DAUPHINOT, Justice.

The issue before this court is whether a mediated settlement agreement requires mediation. We hold that it does.

Appellee Jane Clarius Lee retained an attorney, and, on May 15, 2003, filed a petition for divorce from her husband, Appellant James Franklin Lee (“Jim”). On June 1, 2003, Jane and Jim met in Jane’s home to discuss settling the case. No one else was present at this meeting. They negotiated an agreement. The first page of the agreement was prepared by Jane’s attorney. Jim typed the remaining pages. The agreement, entitled “Binding Settlement Agreement,” contains the following language on the first page: “ PURSUANT TO SECTION 6.602 OF THE TEXAS FAMILY CODE, THIS AGREEMENT IN [SIC] NOT SUBJECT TO REVOCATION.” Jim and Jane both signed the agreement. Jim was not represented by an attorney at the time he signed the agreement. Before the rendition of divorce and the property division, Jim revoked or attempted to revoke his consent to the agreement, but the trial court found that the signed agreement between the parties “is ... not subject to revocation.” Similarly, on November 13, 2003, the trial court entered the following conclusion of law: “The Agreement meets the requirements of Texas Family Code section 6.602(b) and is therefore not subject to revocation.”

In Jim’s first issue, he questions whether the written agreement can be a mediated settlement agreement when there was no mediator. Section 6.602(b) and (c) provide:

(b) A mediated settlement agreement is binding on the parties if the agreement:
(1) provides, in a prominently displayed statement that is in boldfaced type or capital letters or underlined, that the agreement is not subject to revocation;
(2) is signed by each party to the agreement; and
(3) is signed by the party’s attorney, if any, who is present at the time the agreement is signed.
(c) If a mediated settlement agreement meets the requirements of this section, a party is entitled to judgment on the mediated settlement agreement notwithstanding Rule 11, Texas Rules of Civil Procedure, or another rule of law.

As Jane points out, neither mediated settlement agreement nor mediated is defined in section 6.602. As this court has already held when construing another part of this statute,

In construing a statute, our objective is to determine and give effect to the legis-
lature’s intent. When terms are not defined in a statute, we apply their ordinary meaning. We also presume that the legislature intended a just and reasonable result in enacting a statute. A court will not construe a statute in a manner that will lead to a foolish or absurd result when another alternative is available.

The first definition for mediation in Webster’s Third New International Dictionary is “intervention between conflicting parties or viewpoints to promote reconciliation, settlement, compromise, or understanding.” Similarly, mediation is defined in Black’s Law Dictionary as “[a] method of nonbinding dispute resolution involving a neutral third party who tries to help the disputing parties reach a mutually agreeable solution.”

Jane argues that the purpose of a neutral third party’s presence is to facilitate communication and that when a neutral third party’s presence is not necessary to facilitate communication, the parties can agree to reconcile their differences, voluntarily invoke section 6.602, and reach a mediated settlement agreement without a mediator.

Given that section 7.006(a) of the Texas Family Code, which has been in force for many years, already allows divorcing parties to enter into written agreements without requiring mediation concerning the division of the community assets and liabilities as well as spousal maintenance, we decline to carve a common-law exception into section 6.602(b) that allows an unmediated settlement agreement to morph into a mediated settlement agreement based on mere form. We hold that a mediated settlement agreement necessarily requires mediation and a mediator.

Because there was no third party present at the settlement conference between Jim and Jane, there was no mediated settlement agreement. Instead, the couple’s agreement is simply an agreement under section 7.006(a). Such agreements may be revised or repudiated before the divorce is rendered unless the agreement is binding under another rule of law. The trial court abused its discretion in preventing Jim from revoking his consent to the settlement on the basis that the agreement was a binding mediated settlement agreement. We therefore sustain Jim’s first issue. Because of our disposition of this issue, we do not reach Jim’s second issue challenging the legal sufficiency of the evidence to support the trial court’s finding that he and Jane intended their agreement to comply with section 6.602(b) and that they voluntarily agreed to invoke section 6.602(b).

We affirm the divorce but remand this case to the trial court for trial on all remaining issues.

      . Tex. Fam.Code Ann. § 6.602 (Vernon Supp.2004-05).

      . Boyd v. Boyd, 67 S.W.3d 398, 403 (Tex.App.-Fort Worth 2002, no pet.).

      . Webster's Third New International Dictionary 1402 (1981).

      . Black’s Law Dictionary 1003 (8th ed.2004).

      . Tex. Fam.Code Ann. § 7.006(a) (Vernon 1998).

      . See Albertson's, Inc. v. Ellis, 131 S.W.3d 245, 249 n. 4 (Tex.App.-Fort Worth 2004, pet. denied) ("That which looks like a duck, walks like a duck, and quacks like a duck, will be treated as a duck even though some would insist upon calling it a chicken.” (quoting Tidelands Marine Serv. v. Patterson, 719 F.2d 126, 128 n. 3 (5th Cir.1983))).

      . Tex Fam.Code Ann. § 7.006(a).

      . Id.


text:
    G.L. HARRIS, Appellant and Appellee, v. AMERICAN PROTECTION INSURANCE COMPANY, Appellee and Appellant.
    No. 2-03-228-CV.
    Court of Appeals of Texas, Fort Worth.
    Feb. 10, 2005.

      Hill Gilstrap, P.C., Frank Gilstrap, Colleen McCoy, Arlington, for G.L. Harris.
    Eggleston & Chambers, L.L.P., Craig A. Eggleston, Wesley W. Chambers, Dallas, for American Protection Insurance Company.
    PANEL A: CAYCE, C.J.; DAUPHINOT and GARDNER, JJ.
   OPINION

JOHN CAYCE, Chief Justice.

Introduction

This case arises from two insurance claims for successive casualty losses to the roof of a shopping mall. In six issues, appellant G.L. Harris asserts that the trial court erred by rendering a take nothing judgment against him because he proved his hail damage breach of contract and articles 21.55 and 21.21 claims as a matter of law, the trial court erred by refusing to submit his requested jury question on breach of contract, and the jury’s failure to find that American violated article 21.21 and its finding that Harris’s negligence caused his damages were against the great weight and preponderance of the evidence. In a sole issue on cross-appeal, American asserts that the trial court erred in granting a directed verdict against it on its fraud counterclaim. We will affirm.

Background Facts

On May 5, 1995, a severe hail storm damaged the roof of a vacant building known as Westridge Mall. At the time, the shopping mall was covered by two insurance policies, one issued by appellee American Protection Insurance Company (“American”) and the other by Aetna Life & Casualty (“Aetna”). Each policy effectively covered fifty percent of the loss and named Southwest Portfolio (“Southwest”) as the insured. On September 6, 1995, roofing contractor Gary Boyd discovered the hail damage during a warranty-related roof inspection. Southwest made a claim for the hail damage under the Aetna policy on October 6, 1995. Because it was unaware of the American policy, Aetna agreed to cover one hundred percent of the loss and settled the claim for $712,612.50. In accordance with the settlement agreement, Aetna paid Southwest $268,445 for the actual cash value of the loss (“ACV”) and retained $444,167.50 as the replacement cost holdback, which would be paid out as repair costs were incurred.

Meanwhile, the insurance broker who had sold both insurance policies to Southwest notified American of the claim. American sent a written claim acknowledgment to the broker and Aetna and assigned the file to American adjuster Dana McDade. McDade contacted Aetna’s adjuster, who asked American to reimburse Aetna for half of the ACV it had paid to Southwest. American complied after McDade inspected the roof, reviewed documentation relied upon by Aetna’s adjuster, and talked with Aetna’s adjuster, construction consultants, and Southwest representatives. Southwest representative Jeff Landel told McDade that the claim had already been settled with Aetna, and advised him to “stay out of it” and not do “anything that muddies up the stream” on the pending sale of the property to Harris. Landel also expressly declined to make a claim with American and instructed McDade to resolve American’s liability for the claim directly with Aetna.

After Southwest received the ACV payment and before any repairs were made to the roof, Southwest sold the building to Harris. The purchase and sale agreement assigned to Harris “any assignable rights to the insurance claim paid or payable as a result of the hail damage to the roof of the Project occurring on or about May 5, 1995.” Pursuant to this agreement, Harris was credited at closing with $268,445, the amount of the ACV payment.

The settled claim assigned to Harris was based on an approved proposal from Boyd, the roofing contractor who discovered the damage. Boyd proposed perforating the existing roof and installing a new recovery board and rubber roof. Instead of hiring Boyd to do the repairs, Harris entered into a contract with Mike Wright under which Wright agreed to perforate the existing roof and install a recovery board and modified bitumen roof, ostensibly for $690,000. Wright replaced the roof without installing the promised recovery board.

Harris represented to Aetna that he had incurred $690,000 in replacement costs, and Aetna released payments to cover those costs, minus the prior ACV payment and the $25,000 policy deductible. Aetna, in turn, asked American to reimburse it for half of the replacement costs. American did not immediately reimburse Aetna for these costs because it recognized it was in uncharted legal territory. American questioned its liability for the replacement costs because Aetna had paid the money to Harris rather than American’s named insured, Southwest, and American had never authorized Southwest’s assignment of the policy benefits to Harris. Despite its misgivings, American ultimately reimbursed Aetna for half of the replacement costs.

In total, Harris received $680,260 for the hail damage claim, and American reimbursed Aetna for half of that amount. Further, although Harris represented to Aetna that he had paid Wright $690,000 to replace the roof, he had actually paid only $375,000.

On February 12, 1997, private adjuster Steve Mayor filed a supplemental proof of loss with Aetna on behalf of Harris, claiming a loss of over $1.8 million allegedly caused by Wright’s faulty roof replacement. Aetna rejected the claim and forwarded the statement of loss to American on March 10, 1997. American contacted Mayor and asked for a copy of his scope of loss, but did nothing further when Mayor failed to provide the requested information.

Procedural History

Harris filed suit against Aetna on March 19, 1997. After Aetna filed a plea in abatement claiming that American was a necessary party, Harris amended his petition to add American as a defendant. Harris alleged that American had breached its insurance contract by failing to pay policy benefits and that it had violated article 21.55 and section 4(10) of article 21.21 of the insurance code. See Tex. Ins. Code Ann. art. 21.55, art. 21.21, § 4(10) (Vernon Supp.2004-05). American filed a counterclaim against Harris for fraud after Wright’s deposition testimony brought Harris’s repair cost misrepresentation to light. Aetna settled with Harris before trial.

The suit between Harris and American was tried before a jury. The trial court disposed of the fraud counterclaim by granting a directed verdict against American on that issue. The jury returned a verdict finding that American had not violated article 21.21 and that Harris’s negligence had caused his damages. The trial court then entered a take nothing judgment against Harris.

Breach of Contract

In his second and third issues, Harris contends that the trial court erred in rendering a take nothing judgment against him because he proved as a matter of law that American owed him $175,000 for his hail damage claim under the terms of its policy. American argues that Harris failed to preserve this issue for appeal, or, alternatively, that American has discharged its liability and Harris has been fully compensated for the hail damage claim.

Harris preserved this issue for appeal by moving for an instructed verdict on his article 21.55 claim at the close of evidence. See T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 220-21 (Tex.1992) (holding that party may preserve complaint that liability was established as a matter of law by filing motion for instructed verdict). Harris’s article 21.55 claim was based on American’s alleged mishandling of both the hail damage and supplemental claims. An article 21.55 claim combines an insurer’s contractual and statutory liability into one cause of action. Lusk v. Puryear, 896 S.W.2d 377, 380 (Tex.App.-Amarillo 1995, no writ). To recover the statutory penalties available under article 21.55, an insured must first prove that the insurer is hable for the underlying claim. Mid-Century Ins. Co. of Tex. v. Barclay, 880 S.W.2d 807, 811 (Tex.App.-Austin 1994, writ denied). Therefore, Harris’s claim that American was contractually obligated to pay him half of the hail damage claim was subsumed within the hail damage portion of his article 21.55 claim and preserved by his motion for an instructed verdict on that claim.

Turning to the merits of the issue, Harris contends that he proved as a matter of law that American owes him $175,000 for the hail damage claim. American did not dispute below that it was liable for half of the hail damage claim, and American witness Ed Cass agreed that $175,000 accurately reflected the true amount of that liability. American argues, however, that it more than satisfied its liability for the hail damage claim by paying Aetna $340,130 because Aetna became subrogat-ed to Harris’s right to recover fifty percent of his loss from American when Aetna paid one hundred percent of the hail damage claim. American also argues that if Harris receives any additional benefits for the hail damage claim, they will constitute an impermissible double recovery. We agree.

When two insurers have contracted to pay a loss and each insurer’s policy contains a pro rata clause, each insurer is liable to the insured only for its proportion of the loss. Employers Cas. v. Transp. Ins. Co., 444 S.W.2d 606, 608 (Tex.1969); United States Fire Ins. Co. v. Stricklin, 556 S.W.2d 575, 578 (Tex.Civ.App.-Dallas 1977), writ ref'd n.r.e., 565 S.W.2d 43 (Tex.1978) (per curiam). In that situation, the pro rata clause implements the principle of indemnity and eliminates the potential for a double recovery that would otherwise exist. State Farm Fire & Cas. Co. v. Griffin, 888 S.W.2d 150, 156 (Tex.App.-Houston [1st Dist.] 1994, no writ). Further, if an insurer overpays its share of a loss, the correct manner of adjusting for that overpayment is for the insurer to assert a contractual or equitable right of subrogation. Employers Cas. Co., 444 S.W.2d at 610; Gen. Agents Ins. Co. of Am., Inc. v. Home Ins. Co. of Ill., 21 S.W.3d 419, 424 (Tex.App.-San Antonio 2000, no pet.). Whether the overpayment was voluntary is immaterial for purposes of the subrogation claim. See Employers Cas. Co., 444 S.W.2d at 610; Gen. Agents Ins. Co. of Am., Inc. 21 S.W.3d at 424.

Subrogation is the principle under which an insurer that has paid a loss under an insurance policy is entitled to all the rights and remedies belonging to the insured against a third party with respect to any loss covered by the policy. Black’s Law Dictionary 1467 (8th ed.2004). Application of the doctrine is said to be “the purest of equities,” and Texas courts are particularly hospitable to it. Interfirst Bank Dallas, N.A. v. U.S. Fidelity & Guar. Co., 774 S.W.2d 391, 397 (Tex.App.-Dallas 1989, writ denied). Equitable sub-rogation is not dependent upon contract, but arises by operation of law or by implication in equity to prevent injustice. Id.

In this case, the Aetna policy contains a contractual subrogation provision that provides, in pertinent part, “[I]f any person or organization to or for whom we make payment under this policy had rights to recover damages from another, those rights are transferred to us to the extent of our payment.” Thus, when Aet-na paid the entire hail damage claim to Harris, it became equitably and contractually subrogated to Harris’s right to recover fifty percent of the loss from American. Therefore, American discharged its liability to Harris by paying its half of the hail damage claim to Aetna. Moreover, Harris is not entitled to receive any additional money for the hail damage claim because the loss was fully compensated by Aetna. See Hochheim Prairie Farm Mut. Ins. Ass’n v. Campion, 581 S.W.2d 254, 257 (Tex.Civ.App.-Corpus Christi 1979, writ ref'd n.r.e.) (holding that insureds would be unjustly enriched if they were allowed to recover for the portion of a loss that had already been compensated by a third party).

Harris also contends that the trial court erred by failing to include his breach of contract questions in the jury charge. To resolve this issue, we must examine the record to determine if there is any probative evidence to support the elements of Harris’s hail damage breach of contract claim. See Am. Home Assurance Co. v. Brandt, 778 S.W.2d 141, 144 (Tex.App.-Texarkana 1989, writ denied). If there was some evidence to support it, the trial court should have submitted a breach of contract question on the hail damage claim. Moore v. Lillebo, 722 S.W.2d 683, 686-87 (Tex.1986).

The elements of a breach of contract claim are (1) the existence of a valid contract, (2) performance or tendered performance by the plaintiff, (3) breach of the contract by the defendant, and (4) damages to the plaintiff resulting from that breach. Adams v. H & H Meat Prods., Inc., 41 S.W.3d 762, 771 (Tex.App.-Corpus Christi 2001, no pet.); Frost Nat’l Bank v. Burge, 29 S.W.3d 580, 593 (Tex.App.-Houston [14th Dist.] 2000, no pet.). Considering only the evidence and the inferences tending to support Harris’s breach of contract claim and disregarding all evidence and inferences to the contrary, see Moore, 722 S.W.2d at 687, we hold that Harris failed to produce evidence to support the submission of his breach of contract questions regarding the hail damage claim to the jury. Although there is some evidence that American was contractually hable for half of the hail damage claim, there is no evidence that American breached that obligation or that Harris suffered any damages. To the contrary, Harris received more than he was entitled to under either insurance policy. Because there is no evidence to support Harris’s requested breach of contract questions regarding the hail damage claim, the trial court did not err in refusing to submit them. S.W. Bell Tel. Co. v. Thomas, 554 S.W.2d 672, 674 (Tex.1977). Accordingly, we overrule Harris’s second and third issues.

Article 21.55

In his fourth issue, Harris contends that the trial court erred in denying his motion for a directed verdict because he proved his article 21.55 claim with respect to the hail damage as a matter of law.

Article 21.55 of the insurance code is intended to ensure prompt payment of insurance claims. Mid-Century Ins. Co., 880 S.W.2d at 812. It specifies particular time periods during which an insurer must act on claims, Bekins Moving & Storage Co. v. Williams, 947 S.W.2d 568, 581 (Tex.App.-Texarkana 1997, no pet.), and “requires the prompt payment or resolution of claims according to a defined timetable,” DeLeon v. Lloyd’s London Certain Underwriters, 259 F.3d 344, 354 (5th Cir.2001). An insurer will not be held liable for violating article 21.55 unless it is found liable for the underlying insurance claim. Mid-Century Ins. Co., 880 S.W.2d at 811; see also Cater v. United Svcs. Auto. Ass’n, 27 S.W.3d 81, 84 (Tex.App.-San Antonio 2000, pet. denied) (holding that an insurance company’s good faith defense does not relieve the insurer from liability for damages for late payment, as long as the insurer is finally found liable for the claim). Because Harris failed to prove that American was liable to him for the hah damage claim, we hold that the trial court did not err in denying Harris’s motion for a directed verdict on his article 21.55 claim. We overrule Harris’s fourth issue.

Article 21.21

In his fifth issue, Harris contends that the trial court erred in not granting his motion for a directed verdict because he proved his article 21.21 claim as a matter of law. Specifically, he argues that the evidence conclusively establishes that American violated article 21.21 by failing to confirm or deny its coverage of the hail damage and supplemental claims within a reasonable time and failing to attempt in good faith to effectuate prompt, fair, and equitable settlements of those claims. Alternatively, he argues that the jury’s failure to make such findings is against the great weight and preponderance of the evidence.

If an appellant is attacking the legal sufficiency of an adverse answer to an issue on which he had the burden of proof, the appellant must overcome two hurdles. Victoria Bank & Trust Co. v. Brady, 811 S.W.2d 931, 940 (Tex.1991). First, the record must be examined for evidence that supports the finding, while ignoring all evidence to the contrary. Second, if there is no evidence to support the finding, then the entire record must be examined to see if the contrary proposition is established as a matter of law. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex.2001); Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex.1989). The issue should be sustained only if the contrary position is conclusively established. Dow Chem. Co., 46 S.W.3d at 241-42.

In reviewing an issue asserting that an answer is “against the great weight and preponderance” of the evidence, we must consider and weigh all of the evidence, both the evidence that tends to prove the existence of a vital fact as well as evidence that tends to disprove its existence. Ames v. Ames, 776 S.W.2d 154, 158-59 (Tex.1989), cert. denied, 494 U.S. 1080, 110 S.Ct. 1809, 108 L.Ed.2d 939 (1990); Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986). If a finding is so contrary to the great weight and preponderance of the evidence that it is manifestly unjust, the issue should be sustained, regardless of whether there is some evidence to support it. Kissinger v. Turner, 727 S.W.2d 750, 752 (Tex.App.-Fort Worth 1987, writ ref'd n.r.e.); Watson v. Prewitt, 159 Tex. 305, 320 S.W.2d 815, 816 (1959).

Article 21.21 of the insurance code prohibits insurers from, among other unfair settlement practices, failing to affirm or deny coverage of a claim to a policy holder within a reasonable time and failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which an insurer’s liability has become reasonably clear. Tex. Ins.Code Ann. art. 21.21, § 4(10) (Vernon Supp.2004-05). We employ an objective standard.to determine whether a reasonable insurer under- similar circumstances would have delayed or denied payment of the claim. Aranda v. Ins. Co. of N. Am., 748 S.W.2d 210, 213 (Tex.1988); Vandeventer v. All Am. Life & Cas. Co., 101 S.W.3d 703, 722 (Tex.App.Fort Worth 2003, no pet.). An insurer will be liable if the insurer knew or should have known that it was reasonably clear that the claim was covered. Universe Life Ins. Co. v. Giles, 950 S.W.2d at 56; Vandeventer, 101 S.W.3d at 722. Evidence that merely shows a bona fide dispute about the insurer’s liability on the contract does not rise to the level of bad faith. Provident Am. Ins. Co. v. Castaneda, 988 S.W.2d 189, 193 (Tex.1998); Covington v. Travelers Indem. Co. of R.I./Conn., 122 S.W.3d 330, 333 (Tex.App.-Fort Worth 2003, no pet.).

Harris argues that American’s failure to independently adjust the hail damage and supplemental claims constituted both a failure to confirm or deny coverage and a failure to effectuate prompt and reasonable settlements of those claims. We disagree.

With respect to the hail damage claim, the record shows that neither Southwest nor Harris made a claim for hail damage under -the American policy. In fact, Southwest deliberately settled the hail damage claim exclusively with Aetna, expressly declined to make a claim with American, and instructed American to settle its liability directly with Aetna. American appropriately confirmed its coverage of the hail damage claim to Aetna, rather than the insured, because Aetna asked American to pay for its share of the claim and was entitled to receive payment from American through its subrogation rights. The record simply does not support Harris’s contention that American violated article 21.21 by failing to confirm or deny coverage of the hail damage claim.

The record similarly fails to support Harris’s claim that American failed to effectuate a prompt, reasonable settlement of the hail damage claim. The record clearly shows that soon after receiving notice of the hail damage, American adjuster McDade contacted Aetna, inspected the roof, reviewed documentation relied upon by Aetna’s adjuster, and talked with Aet-na’s adjuster and construction consultants and Southwest’s representatives. American promptly acknowledged its liability and reimbursed Aetna for half of the ACV. It undertook additional fact gathering when Aetna requested reimbursement for the replacement cost and subsequently settled the remainder of the hail damage claim with Aetna. Because the insured instructed American to settle its liability with Aetna and because Aetna was entitled to receive the benefits payable under the American policy for the hail damage claim, we hold that American’s actions vis a vis Aetna satisfied its duty to effectuate a prompt and reasonable settlement of the hail damage claim.

Turning to the supplemental claim, Harris complains that American’s inaction following its initial review of the proof of loss and unmet request for a copy of the scope of loss violated article 21.21. An insurer has a duty to confirm or deny coverage of a claim to a policy holder only. See Tex. Ins.Code Ann. art. 21.21, § 4(10)(v)(A). Southwest was the named insured on the American policy. When Harris purchased the building from Southwest, he received an assignment of the benefits paid or payable as a result of the hail damage claim. The supplemental claim is separate from the hail damage claim because it is based on the loss caused by Wright’s faulty roof replacement rather than the hail storm. The purchase and sale agreement does not purport to assign to Harris the right to receive benefits under Southwest’s insurance policies for future claims.

Moreover, the purchase and sale agreement carefully qualifies the rights being assigned to Harris as “those that are assignable without consent of third parties.” This language cannot be given meaning without looking outside the agreement to the insurance policy under which Harris claimed coverage. The American policy states that “the rights to benefits herein contained are not assignable without American’s written consent.” Examining the record for evidence of American’s consent, we instead find a letter in which American expressly withheld its approval of the proposed assignment of the hail damage claim. Because Harris failed to prove that he was an American policyholder, he did not establish that American had a duty to him to confirm or deny its liability for the supplemental claim.

Harris also failed to show that American failed to attempt in good faith to effectuate a prompt, fair, and equitable settlement of the supplemental claim. The evidence does not establish that American lacked a reasonable basis for denying or delaying payment of the supplemental claim. An insurer does not have an obligation to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim unless its liability for that claim has become reasonably certain. Id. § 4(10). The record contains ample evidence that American’s liability for the supplemental claim never became reasonably certain. As discussed above, American had good reason to doubt that Southwest’s assignment to Harris of the benefits paid or payable for the hail damage claim imposed liability on American for the supplemental claim. In addition, the American policy contained “faulty-workmanship” and “60-day vacancy” exclusions that cast further doubt upon American’s liability. And the American policy appears to have expired before the supplemental claim was made. Because Harris did not show that a reasonable insurer would have paid the supplemental claim under these facts, he did not establish that American lacked a reasonable basis for delaying or denying payment of the supplemental claim.

Moreover, even if American did violate article 21.21, Harris did not plead or prove any damages that are recoverable under that statute. A plaintiff who prevails on an article 21.21 claim may recover the greatest amount of actual damages alleged and factually established to have been caused by the unfair or decepfive practice. Provident Am. Ins. Co. v. Castaneda, 988 S.W.2d 189, 199 (Tex.1998). Harris sought $175,000 for American’s handling of the hail damage claim and $733,613 for its handling of the supplemental claim. Harris’s request for damages related to the hail damage claim is baseless because he has already recovered more than the amount of his loss from the hail damage. The supplemental claim damages merely represent the alleged cost of replacing the roof a second time. Harris did not prove that American’s handling of the supplemental claim caused the roof damage that necessitates such repairs; therefore, he did not establish article 21.21 damages. See id.

Because Harris did not prove his article 21.21 claim as a matter of law, we hold that the trial court did not abuse its discretion in refusing to grant a directed verdict on that claim. See Dow Chem. Co., 46 S.W.3d at 241-42. Further, having reviewed all the evidence, we conclude that evidence supporting the finding that American did not violate article 21.21 by failing to confirm or deny coverage or attempt in good faith to effectuate a prompt, fair, and equitable settlement of the hail damage and supplemental claims is not so weak or the evidence to the contrary so overwhelming as to require that the jury’s verdict on the article 21.21 claim be set aside. See Kissinger, 727 S.W.2d at 752; Watson, 320 S.W.2d at 816. Accordingly, we overrule Harris’s fifth issue.

Jury’s Negligence Finding

In his sixth and final issue, Harris contends that the jury’s finding of his negligence is against the great weight and preponderance of the evidence. The jury found that Harris’s negligence was the proximate cause of the “damage, if any, in question.” Neither the negligence question nor any other questions the jury was required to answer contained a damages instruction.

At trial, the jury heard evidence of two types of damage: damage caused by the hail storm and damage caused by Wright’s botched repair job. The jury learned that the hail-damaged roof had been replaced and that Harris received insurance proceeds to cover the cost of the replacement roof. From this, a rational trier of fact could have concluded that Harris did not have any outstanding damage from the hail storm.

The evidence showed that the roofs current condition was attributable to Wright’s repair job. Expert testimony established that the replacement roof was failing, at least in part because Wright failed to install a recovery board. The repair bid from Boyd, upon which the hail damage claim settlement was based, called for the installation of a recovery board. Insurer testimony established that although Aetna inspected the roof for completion before issuing its final replacement cost payment, either Harris or the lienholder, not the insurer, was responsible for making sure the repairs were done correctly. Moreover, Harris admitted that he paid Wright approximately $815,000 less than the amount he represented to Aetna. Although there was testimony that the cost of installing a recovery board would not have significantly impacted the cost of repairing the roof, the jury could have reasonably inferred that a $375,000 roof was inferior in quality to a $690,000 roof. Therefore, we hold that the jury’s finding that Harris’s negligence caused “the damages in question” is not against the great weight and preponderance of the evidence.

In any event, the negligence finding had no bearing on the verdict. A jury finding that Harris’s negligence did not cause the damages would not affect his recovery because the jury failed to assign any proportion of the liability for damages to American, and we have already held that the jury’s findings in favor of American are not against the great weight and preponderance of the evidence.

Fraud Counterclaim

Finally, we turn to American’s sole issue on appeal, that the trial court erred in granting a directed verdict against American on its counterclaim for fraud. American contends that its fraud claim was filed within the applicable statute of limitations and is not barred by the holding in Ernst & Young v. Pacific Mutual Life Insurance Co., 51 S.W.3d 573 (Tex.2001).

A directed verdict is proper only under limited circumstances: (1) when the evidence conclusively establishes the right of a movant to judgment or negates the right of an opponent; or (2) when the evidence is insufficient to raise a material fact issue. See Prudential Ins. Co. v. Fin. Review Svcs., Inc., 29 S.W.3d 74, 77 (Tex.2000); Ray v. McFarland, 97 S.W.3d 728, 730 (Tex.App.-Fort Worth 2003, no pet.); see also Tex.R. Civ. P. 268. In reviewing a directed verdict, we must review the evidence in the light most favorable to the party against whom the verdict was rendered. Szczepanik v. First S. Trust Co., 883 S.W.2d 648, 649 (Tex.1994). When reviewing a directed verdict on a legal issue, we consider all the evidence presented at trial, viewing it in the losing party’s favor “as much as the record allows.” S.V. v. R.V., 933 S.W.2d 1, 8 (Tex.1996).

A party moving for directed verdict on the ground that the claim asserted is barred by limitations must conclusively prove when the cause of action accrued and the applicable statute of limitations. KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex.1999). When the discovery rule applies and has been raised by the nonmovant, as in this case, the movant must negate the discovery rule by proving as a matter of law that there is no genuine issue of fact about when the plaintiff discovered or should have discovered the nature of the injury. Tex.R. Civ. P. 166a(c); Burns v. Thomas, 786 S.W.2d 266, 267 (Tex.1990); Prostok v. Browning, 112 S.W.3d 876, 897 (Tex.App.-Dallas 2003, pet. granted).

The statute of limitations for fraud is four years. Tex. Civ. Prac. & Rem.Code Ann. § 16.004(a)(4). Unlike other causes of action, limitations do not begin to accrue on fraud claims until the plaintiff discovers, or in the exercise of reasonable care and diligence should have discovered, the fraud. Quinn v. Press, 135 Tex. 60, 140 S.W.2d 438, 440 (1940); Computer Assocs. Int’l, Inc. v. Altai, Inc., 918 S.W.2d 453, 455-56 (Tex.1996). Because American filed its counterclaim for fraud on November 12, 2001, it is barred by the statute of limitations only if Harris proved that American discovered or should have discovered the fraud before November 11, 1997.

Considering the evidence in the light most favorable to American, the record shows that Harris represented the cost of roof repairs as $690,000 to Aetna on February 22, April 1, and June 24, 1996. When American paid Aetna its half of the replacement cost, it relied on the payment requests that Harris gave Aetna and did not have any direct involvement with Harris. After Harris filed suit against American in August 1997, American requested “all bills, invoices, bids, proposals, receipts, statements or cancelled checks reflecting any charges, expenses, costs, fees, expenditures, payments or other disbursements you claim to have incurred or which reflect the damages which form the basis of this lawsuit.” As of August 18, 1998, approximately nine months after the date Harris contends American should have discovered the fraud, Harris continued to withhold documents reflecting the true cost of the roof repairs. This fact raises a serious doubt about American’s ability to discover the fraud before the date in question. American ultimately discovered the fraud July 17, 2000, when Mike Wright gave deposition testimony that he contracted with Harris to repair the roof for $375,000. Because American filed its fraud claim within four years of learning that Harris had misrepresented the cost of the roof repairs and Harris did not conclusively prove that American should have discovered Harris’s misrepresentations before November 11, 1997, we hold that Harris did not meet his burden of showing that Amer-lean’s fraud claim is barred by the statute of limitations.

Although the trial court granted the directed verdict against American on statute of limitations grounds, we turn to Harris’s argument that American’s fraud claim is barred by the holding in Ernst & Young because we must affirm the directed verdict, even though the trial court’s rationale was erroneous, if the directed verdict can be supported on another basis. Cano v. N. Tex. Nephrology Assocs., P.A., 99 S.W.3d 330, 339 (Tex.App.-Fort Worth 2003, no pet.).

In Ernst & Young, the supreme court set forth the following test for a fraudfeasor’s liability to third parties: One who makes a fraudulent misrepresentation is subject to liability to the persons or class of persons whom he intends or has reason to expect to act or to refrain from action in reliance upon the misrepresentation, for pecuniary loss suffered by them through their justifiable reliance in the type of transaction in which he intends or has reason to expect their conduct to be influenced. 51 S.W.3d at 578. Even an obvious risk that a misrepresentation might be repeated to a third party is not enough to satisfy the reason-to-expect standard; rather, the alleged fraudfeasor must “have information that would lead a reasonable [person] to conclude that there is an especial likelihood that it will reach those persons and will influence their conduct.” Id. at 580. Further, mere foreseeability will not meet the reason-to-expect standard; instead, the claimant’s reliance must be “especially likely” and justifiable, and the transaction sued upon must be the type the defendant contemplated. Id.

Harris will not be held liable to American unless American is an entity that he intended or had reason to expect to pay the hail damage claim. At the time he made the misrepresentations, Harris did not know about the American insurance policy. Therefore, he did not have information that would lead a reasonable person to conclude that there was an especial likelihood that his misrepresentations would reach any insurer other than Aetna. To the contrary, Harris had every reason to believe that Aetna was the sole insurer liable for the hail damage claim. The budding’s previous owner filed the hail damage claim with Aetna and purposely withheld information about American’s liability from Harris. Aetna gave Harris documentation verifying that it was paying one hundred percent of the claim and Harris did, in fact, receive the hail damage claim benefits from Aetna. Because the record contains no evidence that Harris could foresee that American’s, or any other insurer’s besides Aetna’s, reliance on his misrepresentation was especially likely, we overrule American’s sole issue. Having overruled all of Harris’s and American’s issues, we affirm the trial court’s judgment.

      . The Aetna policy was pro rata, and the American policy expressly covered fifty percent of the property loss.

      . This amount included both roof and skylight damage.

      . The 21.55 claim was not submitted to the jury because the court conditionally granted Harris’s motion for a directed verdict on that issue. The court indicated that it would grant the motion if the jury found Harris’s insurance claims to be valid, which it did not.

      .The actual amount of American’s liability for the hail damage claim was reached by adding fifty percent of the ACV and fifty percent of the true replacement cost, minus the deductible and ACV, as shown below:
      $268,000 (ACV) x .5 = $134,000
      $375,000 (cost of repairs) — 25,000 (deductible)
      - 268,000 (ACV) = $82,000
      $82,000 x .5 = $41,000
      $134,000 + 41,000 = $175,000.

      . Because the hail damage claim was indisputably covered by the American policy, we sustain that part of Harris's first issue. -

      . Aetna was unaware of the American policy when it agreed to cover one hundred percent of the hail damage loss.

      . Harris submitted the following breach of contract questions:
      1) Did Defendant American Protection Insurance Company breach its insurance policy in its efforts adjusting, or failing to adjust, Mr. Harrises] insurance claims?
      21 Was such breach of its insurance policy a producing cause of damages to Mr. Harris and, if so, find the amount of such damages.

      . The pertinent sections of article 21.55 require an insurer to acknowledge receipt of a claim in writing, commence an investigation, request “items, statements and forms from the insured” fifteen days after the insurer receives notice of a claim, and pay a claim within sixty days of receiving the requested "items, statements and forms.” Tex. Ins.Code Ann. art. 21.55, §§ 2, 3(f) (Vernon Supp.2004-05).

      . This statutory standard is identical to the common law bad faith standard. Mid-Century Ins. Co. of Tex. v. Boyte, 80 S.W.3d 546, 549 (Tex.2002); Giles, 950 S.W.2d 48, 55 (Tex.1997).

      . Because Harris did not prove that the supplemental claim was covered by the American policy, we overrule that part of his first issue.

      . Section C, Paragraph 4 of the policy provided as follows: “This policy does not insure against loss or damage caused by or resulting from: faulty workmanship, material, construction or design ... or work being performed upon property and directly attributable thereto; except ensuing loss from a peril not otherwise excluded by this policy.”

      . Section D, Paragraph 27 of the policy provided as follows: "This company shall not be liable for loss occurring while a described building ... is vacant or unoccupied beyond a period of sixty consecutive days unless existing fire protection, watch and alarm services are maintained and written notice is given to the company prior to the sixtieth consecutive day of cessation, vacancy or unoccupancy.”

      .The expiration date on the American policy in the record is August 5, 1996. The supplemental claim was made the following February.

      . Questions 2, 5, 7, and 11 instructed the jury to consider "the following element of damages and no other": "reasonable and necessary costs to repair the roof and skylights from damages arising from the May 5, 1995 hailstorm"; however, the jury's answers to corresponding liability questions precluded it from answering those questions. Although Question 12 asked the jury to find "the reasonable and necessary cost(s) of repairing the roof and skylights .... for damage, if any, arising from the May 5, 1995 hailstorm,” it failed to connect that measure of damages with the negligence question.

      . In Ernst & Young, an investor alleged that an accounting firm knowingly or recklessly materially misrepresented the financial health of a bank and intended investors to rely on the misrepresentation, and that the investor actually and justifiably relied on the misrepresentation when it bought notes from a bank with which the audited bank was about to merge. The supreme court held that the accounting firm established as a matter of law that it had no reason to expect the investor’s reliance on the audit report in the transaction at issue. Ernst & Young, L.L.P., 51 S.W.3d at 582.


text:
    Angela PETRUS-BRADSHAW, Appellant, v. John Frank DULEMBA, M.D., Appellee.
    No. 2-04-083-CV.
    Court of Appeals of Texas, Fort Worth.
    Feb. 10, 2005.

      Linda F. Jenkins, Dallas, for appellant.
    Owen & Fazio, P.C., John R. Owen, Dallas, for appellee.
    PANEL A: CAYCE, C.J.; HOLMAN and WALKER, JJ.
   OPINION

JOHN CAYCE, Chief Justice.

Angela Petrus-Bradshaw appeals from the trial court’s order dismissing her medical malpractice suit against John Frank Dulemba, M.D. for failure to file an adequate expert report pursuant to section 13.01 of former article 4590i, the Medical Liability and Insurance Improvement Act. In three points, Petrus-Bradshaw contends that the trial court improperly dismissed her suit because her original expert report was adequate and she timely filed an amended expert report, and that the trial court improperly awarded Dr. Dulem-ba costs against her because no evidence was submitted to support the award. Because we hold that Petrus-Bradshaw’s original expert report was adequate, we will reverse the trial court’s dismissal order and remand the case for further proceedings.

On February 12, 2003, Petrus-Bradshaw sued Dr. Dulemba for alleged medical negligence in his care and treatment of her, including the performance of a hysterectomy. On August 5, 2003, Petrus-Bradshaw filed the report of Dave E. David, M.D. pursuant to former article 4590i, section 13.01. Dr. Dulemba moved to dismiss Petrus-Bradshaw’s claims, contending that she had not complied with the requirements of former section 13.01(r)(6). Dr. Dulemba asserted that Dr. David’s report failed to identify what the standard of care was for Dr. Dulemba’s care and treatment of Petrus-Bradshaw or to establish breach or any causal relationship between the alleged negligence and Petrus-Bradshaw’s injuries. After a hearing, the trial court “reluctantly” granted Dr. Dulemba’s motion and dismissed Petrus-Bradshaw’s claims with prejudice. This appeal followed.

In her third point, Petrus-Bradshaw complains that the trial court erred in determining that Dr. David’s August 2003 expert report was inadequate. The issue for the trial court in reviewing Dr. David’s report was whether it represented a good faith effort to comply with the statutory definition of an expert report in former section 13.01(r)(6). See Am. Transitional Care Ctrs. v. Palacios, 46 S.W.3d 873, 878 (Tex.2001); Horsley-Layman v. Angeles, 90 S.W.3d 926, 929 (Tex.App.-Fort Worth 2002, pet. denied). That definition requires a fair summary of Dr. David’s opinions about the applicable standard of care, the manner in which the care failed to meet that standard, and the causal relationship between that failure and the claimed injury. Palacios, 46 S.W.3d at 878; Horsley-Layman, 90 S.W.3d at 929-30.

Under former subsections 13.01(l) and (r)(6), the expert report must represent only a good faith effort to provide a fair summary of the expert’s opinions on each of the statutory elements. See Palacios, 46 S.W.3d at 878; Horsley-Layman, 90 S.W.3d at 930. In setting out the expert’s opinions on each of those elements, the report must provide enough information to fulfill two purposes: (1) it must inform the defendant of the specific conduct the plaintiff has called into question; and (2) it must provide a basis for the trial court to conclude that the claims have merit. See Bowie Mem’l Hosp. v. Wright, 79 S.W.3d 48, 52 (Tex.2002); Palacios, 46 S.W.3d at 879; Horsley-Layman, 90 S.W.3d at 930. Identifying the standard of care is critical; whether a defendant breached his or her duty to a patient cannot be determined absent specific information about what the defendant should have done differently. Palacios, 46 S.W.3d at 880; Russ v. Titus Hosp. Dist., 128 S.W.3d 332, 344 (Tex.App.-Texarkana 2004, pet. denied).

Further, although a report need not marshal all of the plaintiffs proof, one that merely states the expert’s conclusions about the standard of care, breach, and causation does not fulfill these two purposes. See Palacios, 46 S.W.3d at 878-79; Horsley-Layman, 90 S.W.3d at 930. Rather, the expert must explain the basis of his statements to link his conclusions to the facts. Bowie Mem’l Hosp., 79 S.W.3d at 52. Only information contained within the four corners of the expert report itself is relevant to whether the expert report is adequate. Palacios, 46 S.W.3d at 878.

A trial court’s dismissal of a cause of action under former article 4590i, section 13.01 is treated as a sanction and is reviewed under an abuse of discretion standard. See id. at 877; Horsley-Layman, 90 S.W.3d at 928. An abuse of discretion occurs when a trial court acts in an arbitrary or unreasonable manner or when it acts without reference to any guiding principles. Garcia v. Martinez, 988 S.W.2d 219, 222 (Tex.1999); Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex.1985), cert. denied, 476 U.S. 1159, 106 S.Ct. 2279, 90 L.Ed.2d 721 (1986). Merely because a trial court may decide a matter within its discretion in a different manner than an appellate court would in a similar circumstance does not demonstrate that an abuse of discretion has occurred. Downer, 701 S.W.2d at 241-42.

In this case, Dr. David’s detailed August 2003 report includes the following statements:

Ms. Bradshaw was 24 years old on February 14, 2001 at which time she underwent a laparoscopic assisted vaginal hysterectomy along with bilatral salpingo-oophorectomy, appendectomy and lysis adhesions for pelvic pain, dysmennor-rhea, severe adhesions and endometrios-is. At the time of the surgery she was found to have adhesions from the adnexal areas to the pelvic sidewalls, as well as peri-appendiceal adhesions. There were also a large number of adhesions seen in the culdesac and endometriosis was supposedly seen on the bladder. The pathology report on the submitted structures, however, showed total benignity except for a slight reactive process of the ovaries. It should be noted that no endometriosis was found. At the time of the surgery the left ureter was lacerated and this laceration went undetected. On February 16, 2001 she was discharged from the hospital. On February 20th, her pain worsened ... and she was taken to the Emergency Room via ambulance.... Dr. Dulemba was paged but did not perform an examination on the patient. The following day she was examined by a general surgeon ... and ... a CT scan was performed and a lacerated ureter was found, for which she was taken to the operating room. On that day she underwent placement of a ureteral stent.
In light of the aforementioned information, it is my medical opinion ... that Dr. John Frank Dulemba deviated from (and fell below) the standard of care in his care and treatment of Angela Bradshaw by:
• Performing a hysterectomy on such a young woman unnecessarily, as she indeed had no endometriosis whatsoever, and pelvic pain should first be worked up and treated in a non-surgical fashion.
• Performing a more major surgery than a simple lysis of adhesions. A hysterectomy was not necessary in order to rid this patient of her pain, as there was no uterine pathology present and there was no evidence that that was the source of her pain.
• Even if a hysterectomy were to have been necessary and endometriosis and adhesions were suspected, then the procedure should have been performed abdominally, rather than vaginally. Performing such surgeries by the laparoscopic/vaginal route is a tragedy waiting to happen, as a good part of the procedure is performed blindly.
It is further my medical opinion, that, to a reasonable degree of medical certainty, these deviations were a direct and proximate cause of the lacerated ureter experienced by Ms. Bradshaw and the morbidity and sequalae which followed the mishap. This morbidity included the needed for additional surgery.

Dr. David’s report clearly represents a good faith effort to provide a fair summary of his opinions on each of the elements identified in former section 13.01(r)(6). Both the trial court and Dr. Dulemba are able to determine the following from the report:

• Dr. David believes that the standard of care requires that pelvic pain such as Petrus-Bradshaw was suffering should first be “worked up” and treated without surgery.
• Dr. David believes that the standard of care requires that a complete hysterectomy should not be performed on a twenty-four-year-old woman with pelvic pain who has no endometreosis and no evidence of uterine pathology; instead, a less drastic surgery such as a simple lysis of adhesions should be performed.
• Even if a hysterectomy is required, Dr. David believes that the standard of care requires that the procedure should be performed abdominally rather than vaginally because a hysterectomy performed by the laparoscopic/vaginal route is done “blindly” and is a “tragedy waiting to happen.”
• Dr. David believes that Dr. Dulemba’s performance of a complete laparoscopic-assisted vaginal hysterectomy on Pe-trus-Bradshaw fell below the standard of care, in light of her youth, her lack of endometreosis or uterine pathology, and the risk of “tragedy” involved.
• Dr. David believes that Dr. Dulemba’s performance of the hysterectomy by the surgical method used was a direct and proximate cause of Petrus-Bradshaw’s lacerated ureter, the resulting “morbidity and sequalae,” and the need for additional surgery.

This is ample information to inform Dr. Dulemba of the specific conduct that Pe-trus-Bradshaw has called into question and to provide the trial court a basis to conclude that Petrus-Bradshaw’s claims have merit. See Palacios, 46 S.W.3d at 879. The report contains specific information about what Dr. David believes Dr. Dulemba should have done differently, and Dr. David links his conclusions to the facts. See Bowie Mem’l Hosp., 79 S.W.3d at 52; Palacios, 46 S.W.3d at 880.

Former section 13.01(l) authorizes a trial court to grant a challenge to the adequacy of a timely filed expert report “only if it appears to the court, after hearing, that the report does not represent a good faith effort to comply with the definition of an expert report in [former section 13.01(r)(6)].” Accordingly, we hold that the trial court had no discretion but to conclude that Dr. David’s report represented a good faith effort to provide a fair summary of the standard of care applicable to Dr. Dulemba, how that standard was breached, and the causal relationship between the breach and Petrus-Bradshaw’s injuries, as former section 13.01(r)(6) requires. See Russ, 128 S.W.3d at 344. Consequently, the trial court abused its discretion by dismissing the case. We sustain Petrus-Bradshaw’s third issue.

In her second point, Petrus-Bradshaw contends that the trial court erred by ordering her to pay Dr. Dulemba’s costs and expenses. Former article 4590i, section 13.01(e) provides that, if the plaintiff in a medical negligence case fails to timely file an expert report, the court shall, upon the defendant’s motion, enter an order assessing the defendant’s reasonable attorney’s fees and court costs as sanctions against the plaintiff. Because we have held that Dr. David’s August 2003 expert report is sufficient to meet the requirements of an expert report under former article 4590i, section 13.01(r)(6), we further hold that the trial court erred by awarding Dr. Dulemba costs as sanctions against Petrus-Brad-shaw. We sustain Petrus-Bradshaw’s second point.

Having sustained Petrus-Bradshaw’s second and third points, we reverse the trial court’s order dismissing with prejudice Petrus-Bradshaw’s claims against Dr. Dulemba and remand the case to the trial court for further proceedings. See Tex.R.App. P. 43.2(d).

      . Act of May 5, 1995, 74th Leg., R.S., ch. 140, § 1, 1995 Tex. Gen. Laws 985-87 (recodified 2003) (current version at Tex Civ. Prac. & Rem.Code Ann. § 74.351 (Vernon Supp.2004-05)).

      . Dr. David's report was actually dated July 28, 2003, but because of the filing date, we refer to it as the August 2003 report.

      . Act of May 5, 1995, 74th Leg., R.S., ch. 140, § 1, sec. 13.01(r)(6), 1995 Tex. Gen. Laws 985, 987 (recodified 2003) (current version at Tex Civ. Prac. & Rem.Code Ann. § 74.351(r)(6) (Vernon Supp.2004-05)).

      . Act of May 5, 1995, 74th Leg., R.S., ch. 140, § 1, sec. 13.01(b), (l), 1995 Tex. Gen. Laws 985, 986-87 (recodified 2003) (current version at Tex Civ. Prac. & Rem.Code Ann. § 74.351(b), (l)).

      . Act of May 5, 1995, 74th Leg., R.S., ch. 140, § 1, sec. 13.01(l), (r)(6), 1995 Tex. Gen. Laws 985, 987 (recodified 2003) (current version at Tex Civ. Prac. & Rem.Code Ann. § 74.351(l), (f)(6)).

      . The timeliness of Dr. David’s August 2003 report is not an issue in this appeal.

      . Act of May 5, 1995, 74th Leg., R.S., ch. 140, § 1, sec. 13.01(l), 1995 Tex. Gen. Laws 985, 987 (emphasis supplied) (recodified 2003) (current version at Tex. Civ. Prac. & Rem.Code Ann. § 74.351(l) (Vernon Supp.2004-05)).

      .In light of this holding, we need not address Petrus-Bradshaw's first issue, in which she contends that the trial court also should have considered her amended report filed on the date of the hearing.

      . Act of May 5, 1995, 74th Leg., R.S., ch. 140, § 1, sec. 13.01(e), 1995 Tex. Gen. Laws 985, 986 (recodified 2003) (current version at Tex. Civ. Prac. & Rem.Code Ann. § 74.351(b) (Vernon Supp.2004-05)).