Court of Appeals of Texas, Beaumont.

NORTH RIVER INSURANCE COMPANY, Appellant,

v.

Patricia Vickers ELLIS, Appellee.

No. 09-94-004 CV.

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Submitted Feb. 23, 1995.

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Decided June 15, 1995.

Before WALKER, C.J., and BURGESS and STOVER, JJ.

OPINION

WALKER, Chief Justice.

*1 This appeal comes to us from the 172nd Judicial District Court in and for Jefferson County, Texas. The case involves a dispute as to the interpretation of a compromise settlement agreement to a workers’ compensation claim filed by Patricia Vickers Ellis, appellee, against North River Insurance Company, appellant. The judgment of the trial court, following jury finding, favored appellee with the court ordering North River Insurance Company to pay all medical treatment and expenses reasonably related to Ellis’ original injury, and that such treatment be by a doctor of mutual agreement after the date of April 10, 1988.

Factually, appellee was manager of the Dollar General Store in Beaumont, Texas, in 1984, when she suffered an on-the-job injury. Appellee filed a workers’ compensation claim against North River as a result of her injury. Ms. Ellis was represented by an attorney throughout her claim, including her efforts to reach a settlement with North River. A settlement of that claim was finally reached on April 4, 1985. This settlement agreement was memorialized in a Compromise Settlement Agreement (CSA). This CSA contained a clause addressing future medical expenses which Ms. Ellis might incur. The provision provides that, “North River Insurance Company will pay for all future hospital and medical expenses, if any, resulting from said injury except medical incurred after 04/10/88 to a doctor of mutual agreement.” (Underlined portion handwritten, remainder of quote on Industrial Accident Board approved pre-printed form).

The CSA was signed by a company representative of North River Insurance Company, Ms. Ellis, and her attorney, although Ellis’ attorney signed at a subsequent time. There is no evidence that any of the parties to the CSA disagreed with this future medical provision at the time of signing. The dispute, resulting in this appeal, arose after April 10, 1988, when appellee submitted additional medical bills and demanded that such bills be paid. Appellant, believing its obligation to pay medical bills had terminated on April 10, 1988, declined to pay these bills.

Early in the litigation appellant moved the trial court to disqualify Ellis’ attorney for reason that it was likely that her attorney would be called upon to testify regarding the interpretation of the CSA future medicals clause. After hearing, the trial court ruled that Ellis’ attorney was disqualified from representing her. On November 5, 1991, Ellis filed her Motion to Substitute Counsel and on November 6, 1991, the trial court signed an Order substituting legal counsel for appellee Ellis. Interestingly, the trial court signed another Order on November 6, 1991, ruling that the future medicals clause of the CSA was ambiguous. This ruling was apparently made without North River having had opportunity to bring forth evidence as to the meaning of the future medicals clause. Further, the trial court’s Orders of November 6, 1991, were not received by North River’s counsel until April 27, 1992. It appears to this Appellate Court that the trial court’s determination that the future medicals clause of the CSA was ambiguous, was made without benefit of North River’s evidence. We hold that the trial court erred in its ruling and determination that the CSA was ambiguous without allowing appellant opportunity to present evidence. Such error was subsequently corrected by the trial court at the conclusion of all trial evidence when the Court stated: “Okay. I’ll stand by my original ruling and find that it is ambiguous.”

*2 The question of whether a contract is ambiguous is a question of law for the Court. City of Pinehurst v. Spooner Addition Water Company, 432 S.W.2d 515, 518 (Tex. 1968); Derr Construction Company v. City of Houston, 846 S.W.2d 854 (Tex. App.–Houston [14th Dist.] 1992, no writ); Phillips Natural Gas Co. v. Cardiff, 823 S.W.2d 314 (Tex. App.–Houston [1st Dist.] 1991, writ denied). Contractual ambiguity is a legal question which is reviewable by an appellate court in light of circumstances present when the parties entered into the contract. Stephanz v. Laird, 846 S.W.2d 895, 899 (Tex. App.–Houston [[[1st Dist.] 1993, writ denied), citing Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983). Appellate courts are not bound by trial court determination on the issue of contract ambiguity. Security Savings Association v. Clifton, 755 S.W.2d 925 (Tex. App.–Dallas 1988, no writ), citing R & P Enterprises v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 518 (Tex. 1980). Where an appellate court determines a contractual provision to be unambiguous, such court is not bound by a jury’s answers as to what the parties intended. Inter-City Properties, Inc. v. Gibbs, 560 S.W.2d 503, 505 (Tex. Civ. App.– Houston [14th Dist.] 1977, writ ref’d n.r.e.). Thus, we are free to apply applicable rules of contract interpretation in reaching our own determination as to the issue of ambiguity of the future medicals clause which forms the basis of this dispute.

Where a written contract is so worded as to give certain or definite legal meaning or interpretation, such contract is not ambiguous. Dal-Mac Construction Company v. Victor Lissiak, Jr., Inc., 524 S.W.2d 554, 556 (Tex. Civ. App.–Waco 1975, no writ). In determining whether a contract or contract term is ambiguous, it is a cardinal principle of construction to ascertain the intention of the parties as expressed in the instrument. Coker v. Coker, 650 S.W.2d at 393; Sun Oil Company v. Madeley, 626 S.W.2d 726, 727-728 (Tex. 1981); United States Steel Corp. v. Whitley, 636 S.W.2d 465, 469 (Tex. App.–Corpus Christi 1982, writ ref’d n.r.e.). Normally, the contractual instrument alone will be deemed to express the intention of the parties for it is the objective, not subjective, intent which controls. Sun Oil, 626 S.W.2d at 731; Derr Construction, 846 S.W.2d at 861. Where the objective meaning of a contract is unambiguous, a party’s construction is immaterial. Sun Oil, 626 S.W.2d at 732.

Appellant brings two points of error to this Court. Point of error one contends that the trial court erred in ruling the future medicals clause of the compromise settlement agreement ambiguous. Point of error two contends trial court error in rendering judgment on the verdict because there was no evidence adduced at trial supporting the jury’s answer to special issue No. 1.

The trial court submitted only one question to the jury which inquired: “Did Patricia Ellis and North River Insurance Co. agree that after April 10, 1988, the Insurance Company was obligated to pay for her medical treatment by a doctor of mutual agreement?” To this inquiry, the jury responded, “Yes.”

*3 We concur and affirm the trial court’s holding that the language contained in the future medicals clause of the CSA “is ambiguous.” The ambiguity is patently clear and obvious and is readily captured by the question: Does the insurance company’s obligation to pay medical expenses incurred by Patricia Ellis terminate on April 10, 1988, or, does such medical compensation continue after April 10, 1988, with care to be provided Ms. Ellis by a doctor mutually agreed upon by the parties? The ambiguous language used in the CSA was the chosen language of North River Insurance Company, by and through its authorized representative, Mr. Joe Brown. Mr. Brown testified at trial via deposition. Mr. Brown had no independent recollection of the hearing before the Industrial Accident Board, where the CSA originated. According to all the testimony presented at the trial below, only Patricia Ellis testified as to intent and understanding of the agreement at the time she signed same. Ms. Ellis testified in part as follows:

Q. Would you briefly explain to the jury what brought about and how you settled this. Did you have occasion to talk to a lawyer prior to, say, even going in to sign this agreement?

A. No.

Q. Did you have a lawyer?

A. Yes.

Q. Had there been any negotiations between you lawyer and North River Insurance Company and/or their adjusters?

A. Yes, they had — Mr. Nettles had called me a couple of times where they had offered me agreements, but I didn’t like any of them.

Q. You wouldn’t accept?

A. No.

Q. Did there come a time where you were called to come in and you actually examined what has been marked Plaintiff’s Exhibit 1?

A. Yes, sir.

Q. Briefly explain how you did that, what brought that about?

A. Sally from the office called me to come in, that they had a contract. I went in, I read it, I liked it and I signed it.

Q. Okay. And when you — you said you read it and you liked it. Did you read all of it?

A. Yes, I did.

Q. And did you have occasion to read the clause that is in issue here, and that is for your future medical?

A. Yes, sir.

Q. What did that clause mean to you when you signed this document?

A. It meant that for the first three years that I got to see the doctor that I wanted to. After that three years, then we both had to agree upon a doctor.

Appellant positions that we cannot consider Ms. Ellis’ testimony for same was based upon her “subjective beliefs” as opposed to an “objective” interpretation of the ambiguous language. We disagree with appellant’s posturing of appellee’s testimony. When a contract contains an ambiguity, its interpretation becomes a question of fact on the intention of the parties to it. Reilly v. Rangers Management, Inc., 727 S.W.2d 527, 529 (Tex. 1987); Coker v. Coker, 650 S.W.2d at 393-394.

In Staff Industries, Inc. v. Hallmark Contracting, Inc., 846 S.W.2d 542, 546 (Tex. App.–Corpus Christi 1993, no writ), the Court determined:

*4 The intention of the parties is to be ascertained to the extent possible from the language of the contract itself, construed in connection with the circumstances surrounding the execution of the contract. Sun Oil Co. (Del.) v. Madeley, 626 S.W.2d 726, 731 (Tex. 1981); Richard Gill Co. v. Jackson’s Landing Owners’ Association, 758 S.W.2d 921, 925 (Tex. App.–Corpus Christi 1988, writ denied). These surrounding circumstances include what the particular industry considered to be the norm or reasonable and prudent at the time. KMI Continental Offshore Production Co. v. ACF Petroleum Co., 746 S.W.2d 238, 241 (Tex. App.–Houston [1st Dist.] 1987, writ denied). In addition, the conduct of the parties which indicates the construction they themselves placed on the contract may be considered in determining the parties’ true intent with regard to an ambiguous provision. Consolidated Engineering Co. v. Southern Steel Co., 699 S.W.2d 188, 192-93 (Tex. 1985); Richard Gill Co., 758 S.W.2d at 925.

The thrust of appellant’s argument and position in this appeal is that in reviewing the evidence this Court must rely upon only the objective testimony of the witnesses. Appellant contends that its three witnesses presented the only objective testimony addressing the meaning of the language contained in the future medicals clause of the CSA. Witnesses called by appellant were Mr. Joe Brown, employee of North River Insurance Company, Carlie Phillips Ombudsman with the Texas Workers’ Compensation Commission, and Reba Hutson, Disability Determination Officer for B-1 unit for the Beaumont Field Office of the Texas Workers’ Compensation Commission.

Mr. Brown testified that the phrase “to a doctor of mutual agreement” would normally be placed at the end of a sentence in the future medicals provisions of a CSA. Mr. Brown testified that based upon his training, experience, and knowledge of the customary language, terminology and wording of CSAs, the language “to a doctor of mutual agreement” did not extend the period of time for which Ms. Ellis was entitled to receive compensation beyond April 10, 1988. According to appellant, Mr. Brown objectively interpreted the future medicals clause in Ms. Ellis’ CSA to mean that the Insurance Company would pay for medical up to April 10, 1988, provided the bill was from a doctor upon which she and the Insurance Company both agreed.

Carlie Phillips testified that based upon her experience in the industry, and handling CSAs for the Industrial Accident Board and the Texas Workers’ Compensation Commission, she is in a better position than the average person to interpret the terminology, dealings, and customs of settling claims at the Industrial Accident Board. Ms. Phillips interpreted the future medicals provision of the CSA to mean that the insurance carrier agreed to pay Ms. Ellis’ future medical expenses until April 10, 1988, so long as Ms. Ellis was seeing a doctor of mutual agreement.

Reba Hutson testified that she was familiar with the course of dealings between insurance companies and claimants regarding settlements and that one of her present duties is to approve CSAs. Hutson testified, in her opinion, that the future medicals provision of Ms. Ellis’ CSA provides that Ms. Ellis was to recover future hospital and medical expenses resulting from her on-the-job injury through April 10, 1988, so long as she saw a mutually-agreed-upon doctor. Hutson testified that her opinion was based upon what that language would mean to a reasonably intelligent person, who was familiar with the customs and terms and usage of the Industrial Accident Board.

*5 Appellant contends that had the trial court properly considered the overwhelming, if not conclusive, evidence relating to the “usage” of future medicals clause language by the Workers’ Compensation Claims Settlement professionals, it could not have concluded the clause ambiguous. Appellant’s position, as this Court understands same, is that the language used in the future medicals clause of Ms. Ellis’ CSA is so commonplace in the industry of Workers’ compensation claim settlements that such language, in and of itself, speaks with special meaning. Appellant states as a general rule, that parties are presumed to contract with reference to the usage or custom prevailing in a particular trade or business to which the contract relates, citing Hellenic Investment, Inc. v. Kroger Company, 766 S.W.2d 861, 866 (Tex. App.–Houston [[[1st Dist.] 1989, no writ).

Appellant cites several authorities regarding usage or custom prevailing in a particular trade or business to which a contract relates.¹ We certainly adhere to these cited authorities where same are applicable to true usage and custom matters. We do not view these authorities as properly addressing the ambiguity existing in our present case. Appellant would have this Court hold that the language contained in the future medicals clause of Ms. Ellis’ CSA is of such common use and custom within the workers’ compensation insurance industry, that such language defies any other interpretation than that placed upon same by appellant. This is simply not the case for appellant chose to use language in the future medicals clause which rises not to the plateau of static understanding but rather, language which causes reasonable minds to differ as to true intent and meaning. We cannot simply attribute this confusion as mere subjectivity on the part of appellee.

We agree with appellant that the term, “to a doctor of mutual agreement,” is a term of common use and understanding within the workers’ compensation insurance industry. We do not agree that the use of such term automatically limits the duration of medical coverage. Appellant chose to add to the pre-printed CSA form, “medical incurred after 04/10/88 to a doctor of mutual agreement.” To say that this language is of common usage and understanding in the workers’ compensation insurance industry overreaches those legal concepts attributable the word “usage” as used and applied in contract law.

Appellant contends that there is no evidence to support the jury’s answer to special issue (question) No. 1. It is appellant’s position that no evidence was presented at trial that Ms. Ellis and North River Insurance Company “agreed” to her future medical benefits. In reviewing appellant’s “no evidence” point of error, we consider only the evidence and reasonable inferences that tend to support the finding of the jury and disregard all evidence and inferences to the contrary. Davis v. City of San Antonio, 752 S.W.2d 518, 522 (Tex. 1988); Alm v. Aluminum Co. of America, 717 S.W.2d 588, 593 (Tex. 1986), cert. denied, 498 U.S. 847, 112 L.Ed.2d 102, 111 S.Ct. 135 (1990); King v. Bauer, 688 S.W.2d 845, 846 (Tex. 1988). In effect, a no evidence review entails “discarding all adverse evidence, and giving credit to all evidence favorable to the verdict.” See Benoit v. Wilson, 150 Tex. 273, 281, 239 S.W.2d 792, 796 (1951).

*6 A no-evidence point of error must be sustained when the record discloses evidence of a vital fact is completely absent, the Court is barred by rules of law or evidence from giving weight to the only evidence offered to prove a vital fact, the evidence offered to prove a vital fact is no more than a mere scintilla of evidence, or the evidence establishes conclusively the opposite of a vital fact. Juliette Fowler Homes, Inc. v. Welch Associates, Inc., 793 S.W.2d 660, 666, n. 9 (Tex. 1990); Otis Elevator Co. v. Joseph, 749 S.W.2d 920, 923 (Tex. App.–Houston [1st Dist.] 1988, no writ); Commonwealth Lloyd’s Insurance Co. v. Thomas, 678 S.W.2d 278, 288 (Tex. App.–Fort Worth 1984, writ ref’d n.r.e.); Robert W. Calvert, “No Evidence” and “Insufficient Evidence” Points of Error, 38 Tex. L. Rev. 361, 364-68. Where there is any evidence of probative force to support the finding, the point must be overruled and the finding upheld. In re King’s Estate, 150 Tex. 662, 664, 244 S.W.2d 660, 661 (1951).

In reviewing the record before us, appellee called, by way of deposition, witness Tony Korioth, a lawyer. Attached to Mr. Korioth’s deposition is a biography regarding Mr. Korioth’s background. Mr. Korioth attended St. Edwards University and the University of Texas Law School receiving his license to practice in 1960. From 1957 until 1961, Mr. Korioth served as a member of the Texas House of Representatives. From 1967 until 1971, Mr. Korioth was a member of the Texas Industrial Accident Board. He served as general counsel in the State Senate Committee on Unemployment and Workers’ Compensation Laws, drafting much of the legislation to conform to the National Commission on State Workers’ Compensation Recommendations. Mr. Korioth authored “A Guide to Texas Workers’ Compensation,” “Digest of Workers’ Compensation Laws” and co-authored the “Texas Workers’ Compensation Desk Book” and has been an Instructor at the Advanced Civil Trial Course presented by the State Bar of Texas. In summary, Mr. Korioth testified as follows:

Q. Is the instrument a contract between North River Insurance and Patricia Vickers?

A. Yes.

Q. Are there any special terms used in the paragraph that is customarily used in the workers’ compensation insurance business that could mean one thing to the insurance company and something else to the employee, Patricia Vickers?

A. Yes.

Q. If you have answered 8(d) yes, — which you just answered — explain what terms would mean one thing to the insurance company and something else to the worker, Patricia Vickers?

A. The language to Patricia Vickers could be easily interpreted that any medical incurred after 4-10-88 would have to be to a doctor mutually agreed upon. To an insurance carrier, I am sure that they have interpreted this to mean that they would pay future medical expenses only through 4-10-88 and only to a doctor mutually agreed upon.

Mr. Jimmy Nettles, attorney, who previously represented Ms. Ellis in her claim for workers’ compensation, testified on behalf of appellee. Although Mr. Nettles filed this Original Declaratory Judgment action, Mr. Nettles admittedly became disqualified from continuing his representation of appellee due to his becoming a witness in this case. Mr. Nettles testified that he had no independent recollection of matters surrounding appellee’s execution of the CSA. Mr. Nettles testified as a fact witness as opposed to an expert witness. During Mr. Nettles’ testimony, he was not allowed to interpret and give opinion as to the future medicals clause. In an effort to impeach Mr. Nettles’ testimony, appellant offered and had admitted defendant’s Exhibit 1 which was a Plaintiff’s Original Petition filed on behalf of Patricia Vickers by Mr. Nettles on October 3, 1986. In that lawsuit, Mr. Nettles pled:

*7 That on or about the 30th day of July, 1984 Plaintiff sustained a general injury while working in the scope and course of her employment for the Dollar General Corporation, Local No. 826 in Jefferson County, Texas. Plaintiff duly gave notice of injury, and filed her claim for compensation purposes, and by virtue of a compromise settlement agreement duly approved by the Texas Industrial Accident Board on the 16th day of April, 1985 Plaintiff compromised and settled her claim wherein she retained her rights for all future hospital and medical expenses resulting from the injury through the 10th day of April 1988.

The October 3, 1986, lawsuit filed on behalf of Patricia Vickers was for the purpose of requiring North River Insurance Company to pay to Ms. Vickers the cost of a waterbed prescribed by Dr. John T. Taylor as necessary to the treatment of Ms. Vicker’s injuries.

In response to the pleading contained in the 1991 lawsuit, Mr. Nettles testified as follows:

Q. Now, at the bottom of paragraph 2, you pled here, “She retained” — “she” referring to Ms. Ellis — says “plaintiff compromised and settled her claim wherein she retained her rights for all future hospital and medical expenses resulting from the injury through the 10th day of April, 1988.”

Do you read that?

A. Yes, sir.

Q. In any way in that pleading were you seeking anything, anything dealing with future medical, other than right there for that prescription? Were you dealing anywhere out here beyond April of ’88, to you knowledge?

A. Oh, no. No.

Q. It was during this three-year period that you filed that; is that correct?

A. Yes, sir.

Q. All right. So, would you explain why you put that — in any way did you put that in the pleading to mean that’s all she was entitled to was through April 10, 1988?

A. No, no. That’s not all she was entitled to. She was entitled to all of her–

MR. BRIDGER: Excuse me, Your Honor, I object. We’ve talked about this before. We would object to his expert opinion on what the meaning of this document is for the reasons that we previously brought to the Court.

THE COURT: Okay.

MR. LANDREY: I’m sorry, Your Honor, it was non-responsive and I withdraw it. If the question elicited that I’m not aware of it.

THE COURT: All right.

Q. Now, at the time you filed that particular lawsuit there, it was for a prescription — isn’t that correct — for a bed?

A. Yes, sir.

Q. Did it have anything to do with future medical — right or wrong — under this agreement, in that particular case?

A. It would have future medical — Now, let me clarify something right here. You asked me during that time frame. I’m assuming this was filed — I don’t know that this was filed in that ’85, ’86, ’87 time frame because we don’t have anything telling us the date, but it included medical, but the waterbed was medical that occurred after that date.

Q. All right. Now, there is an exhibit attached to that pleading that you attached. Would you tell me what date that is on that letter from you to the insurance carrier?

*8 A. September 17, 1986.

Q. And just briefly, isn’t that saying that “on behalf of my client Patricia, we’re again submitting to you a of a waterbed prescription”?

A. Yes, sir. Right.

Q. Does that help you to tie down Dr. John Taylor’s prescription date at September 8th, ’86?

A. Right. I would feel comfortable that I filed the lawsuit in ’86.

Q. All right. But certainly the prescription was in before April 10, 1988; isn’t that right?

A. Oh, sure. Yes, sir. Yes, sir. Definitely.

Q. So, as a lawyer to a lawyer, was there any need for you to plead about something out here beyond April 10, 1988? Was that even involved in that case?

A. No, not really.

Q. Okay. Now, did Ms. Ellis help you draw those pleadings; did she come in and tell you how to plead it?

A. No. No, sir.

Q. Did you in any way mean by those pleadings that she didn’t have the right to medical beyond 4-10-88?

A. No.

Appellant, in its brief, tells this Court, “Ms. Ellis and her attorney had reviewed and rejected multiple settlement offers before she, with approval of her attorney, finally chose to settle her claim with North River on April 4, 1985.” Obviously, the settlement of appellee’s workers’ compensation claim was vigorously disputed and ultimately compromised through language offered by North River. Based upon the insurance carrier’s language, as written in the future medicals clause of the CSA, Ms. Ellis, approximately two years subsequent to North River’s contended date of termination for medical coverage, submitted to North River, additional medical bills for payment. This is certainly probative evidence of Ms. Ellis’ understanding of this ambiguous agreement.

We affirm the trial court’s determination that the future medicals clause of the CSA was ambiguous. We agree that this determination and ruling by the trial court was properly decided as a matter of law, thus, prompting a question for factual consideration.

We overrule both points of error and affirm the judgment of the trial court.

AFFIRMED.

	Footnotes
1		Toren v. Braneff, Inc., 893 F.2d 763 (5th Cir. 1990), quoting Coker v. Coker, 650 S.W.2d at 393; Gruss v. Cummins, 329 S.W.2d 496, 501 (Tex. Civ. App.–El Paso 1959, writ ref’d n.r.e.); Burdette v. Cook Industries, Inc., 544 S.W.2d 495, 497 (Tex. Civ. App.– Corpus Christi 1976, writ dism’d w.o.j.); Restatement (2d) of Contracts § 220 cmt. d (1979).