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Click here for the full text of this decision FACTS:Michael Perez was a passenger in Alexandria Marie Garza’s automobile. The automobile was a rental car that either Brian or Jeanne Spacek lent to Garza. Before lending the automobile to Garza, the Spaceks had purchased an insurance policy from State Farm. After the accident, Perez made a claim against State Farm for benefits under the Spacek policy. After State Farm allegedly refused to pay benefits, Perez sued State Farm and others, asserting claims against State Farm for underinsured or uninsured motorist benefits under the Spacek policy and for violations of Texas Insurance Code Art. 21.55. Perez filed suit against Aaron Kleinert, who was the driver of the other vehicle in the collision, Garza and State Farm in the 24th District Court of Victoria County, Judge Stephen Williams presiding. State Farm initially took the position that Garza was an insured person under the Spacek policy. State Farm provided Garza with legal representation by retaining on her behalf the services of attorney Troy Gilreath of Walker, Keeling & Carroll. Gilreath filed Garza’s answer to the suit. Garza’s live pleading denied liability and asserted a cross-claim against Kleinert, in addition to setting forth special exceptions and affirmative defenses. For unknown reasons, the court stated, the relationship between State Farm and Garza subsequently soured and deteriorated into outright antagonism. State Farm complained that Garza was uncooperative in preparing her defense for trial. State Farm ultimately sued Garza in an action for declaratory judgment in the 377th District Court in Victoria County, again with Williams presiding. On April 6, 2004, Williams, acting as the presiding judge of the 377th District Court of Victoria County (not the 24th Court), entered a default judgment against Garza. In relevant part, the judgment stated that no coverage applied to Garza under the State Farm policy for the June 9, 2000, accident. The judgment further declared that State Farm had no duty to defend or indemnify Garza for the June 9, 2000, accident and the suit that Perez filed. Back in the 24th Court, where Perez’s claims against Kleinert, Garza and State Farm remained pending, Gilreath on April 20, 2004, filed a motion to withdraw as counsel for Garza. The motion specifically noted the default judgment awarded to State Farm by the 377th Court on April 6, 2004, and stated that, based on the default judgment, State Farm had terminated Gilreath’s services in representing Garza. On April 29, 2004, Williams granted the motion and entered an order withdrawing Gilreath and his firm as counsel for Garza. Perez’s personal injury case against Kleinert and Garza proceeded to trial in August 2004 in the 24th Court with Williams still presiding. Garza apparently never retained a new attorney in the matter and appeared neither in person nor through counsel at trial. Without being designated attorney of record for Garza or having her consent to legal representation, Isidro Castanon, another attorney representing State Farm, appeared on the first day of the personal injury trial and addressed the jury as Garza’s attorney. Castanon never informed the jury that he was actually counsel for State Farm and not Garza. Charles L. Hoedebeck, Perez’ counsel, objected to Castanon’s actions and false representations to the jury, the 13th Court of Appeals stated. The trial court overruled the objection without explanation and allowed Castanon to appear before the jury as counsel for Garza, even though he was actually the attorney for State Farm. Although Garza’s live pleading alleged a cross-claim against Kleinert for negligence per se, there is no indication in the record that Castanon ever pursued that claim at trial for her benefit. Instead, as “counsel” for Garza, Castanon changed Garza’s legal strategy by collaborating with opposing counsel for Kleinert. The 13th Court of Appeals’ opinion then describes what occurred: “Instead of following Garza’s pleadings and attempting to prove Kleinert’s negligence,” the court stated, “Castanon teamed up with Kleinert’s counsel. Together, they insisted that a malfunctioning traffic light owned and maintained by the City of Dallas was the sole proximate cause of the accident. Garza’s negligence per se allegation against Kleinert disappeared.” After the jury returned a finding of no liability in favor of Kleinert and Garza, Perez filed a motion for new trial in which he argued, among other things, that the trial court had committed reversible error by allowing Castanon to misrepresent his identity before the jury. HOLDING:Reversed and remanded. The court concluded that the trial court erred in allowing Castanon to conceal and deliberately misrepresent his identity before the jury, because Castanon is admittedly State Farm’s attorney. The court also found that the trial court erred by allowing Castanon to act before the jury in the capacity of Garza’s attorney, a capacity the trial court’s records conclusively establish Castanon did not have. Under Texas Rule of Civil Procedure 10, the court stated, any substituted attorney must be designated of record with notice to all other parties. No such designation or notice occurred in the case; thus, the court found that there was no basis for the trial court to recognize Castanon as Garza’s attorney. Even assuming that Castanon did have Garza’s consent to legal representation, there was also a fatal conflict of interest in this case that would have rendered the trial court’s ruling erroneous, the court held, because the primary duty of an insurance company is to its insured. Castanon’s “ploy” undermined the jury’s fact-finding ability, the court stated. The trial, the court held, was pervasively tainted by reversible error. OPINION:Garza, J.; Hinojosa, Rodriguez and Garza, J.J.

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