Allstate Insurance Co. v. Watson

145 judgment We reverse the of that court and

remand the cause to the trial court to com

pute prejudgment interest, judg to render past

ment as to attorney’s “benefits due” and

fees, and to reform the provide

Amy declaratory ordering relief that Aetna

pay occur, expenses future in accor opinion.

dance with this COMPANY,

ALLSTATE INSURANCE

Petitioner, WATSON,

Kathleen Respondent. G.

No. D-2474.

Supreme Court of Texas.

Jan. 1994.

Concurring Opinion by Spector

Justice Nov.

Dissenting Opinion by Doggett

Justice Nov. schwig Rubber Co. v. current substantive federal law of F.Supp. benefit claims under ERISA. remain free to F.R.D. 688 (D.D.C.1991); Although bringing an ERISA action in federal reached a F.2d 318 S.Ct. 948 1990); Artcraft right Rhodes v. required & jurisdiction, to a some decisions have held [955-56], Fils, contrary (8th Cir.1982), many Elec. (N.D.Okl.1991); jury (N.D.Ala.1990). Bruch, Steeples v. Time Ins. Inc., apply Piggly Wiggly de novo review of denials of trial, see, Supply 103 L.Ed.2d result after Firestone Tire & state courts must 489 U.S. their own rules of F.Supp. ERISA; however, they e.g., Co., Vicinanzo See, e.g., Ala. Dist. In re 101, 112-14, exercising Vorpahl, courts have F.Supp. ^[80] court have McDonald apply (S.D.N.Y. Co., v. Brun litigants (1989), proce- con 695 109 lished under Texas rights. See Overcash v. Blue Cross & Blue Shield tance, cable to ERISA civil enforcement in the context of state enforcement of federal stantive (N.C.Ct.App.1989) [94 dure. While the affording N.C.App. Amy’sright it has been considered a liberty guarantee her that 602], right to trial (state 381 S.E.2d right. to trial the trial court did not err right by jury of fundamental by jury procedural right jury clearly action). trial ais 338-39 impor- estab- appli- sub- Be- Austin,

Bedford, Longley, respon- K. for Joe dent.

ON REHEARING MOTION FOR ENOCH, Justice. rehearing

Respondent’s for over- motion opinion ruled. withdraw Novem- We following ber substitute the and place. opinion in its legis- case is whether the issue a third lature has conferred claimant a direct insurer for unfair claim of the Texas under section of art. 21.21 hold that a third Insurance Code. We has no direct cause of action claimant therefore, we reverse and part part affirm in appeals. injured in a car acci- Kathleen Watson was on March 1989. The driver of dent un- Townley, an insured other car was M.D. liability policy issued der automobile Company. filed Watson Allstate Insurance against Townley alleg- on suit June Townley negligent and that his ing that was negligence proximate cause of the acci- was action, injuries. her the same dent and Allstate under Watson also sued alleged unfair claim settlement for faith to failing attempt her prompt effectuate reasonably become clear where unreasonably delaying denying and in alleged that payment of her claim. Watson 28 Tex.Ad- conduct violated Allstate’s (Board 18663) and Order min.Code Deceptive Texas Trade section 17.46 Act Protection Practices —Consumer (DTPA), her thereby rise to giving 16.1 In addi- action under claim under art. tion her DTPA, breach of alleged violations Powell, Parsley, H. Robert Julie Caruthers contract, breach of Worth, Austin, Liles, Paul Fort J. Michael declaratory judg- dealing, sought Francisco, CA, Glad, petitioner. E.B. San an intended third Watson was Loftin, beneficiary liability poli- Maxwell, Austin, the Allstate Stacy Philip K. B. IV, Weinberg, cy. M. Lynch, T. Steven John (Board Order and 28 Tex.Admin.Code Court

1. Watson claims vio- conduct also Allstate' Board lates Insurance Code art. 21.21-2 of Texas motion, On Allstate’s the trial court in an act or sev- declared Section Allstate, ered the struck Wat- this Article or in rules or pleadings son’s Allstate as to for failure to lawfully adopted by Board under this claim, granted state a Allstate’s motion competition Article to be unfair methods of summary judgment. ap- The court of or unfair peals judgment affirmed the of the trial any practice of or in business insurance court, 423, except as to Watson’s defined section 17.46 Business & claim under art. 21.21 the Texas Insurance Code, amended, Commerce as an unlaw- Code. 828 The court of deceptive ful trade maintain appeals reversed and remanded Watson’s against person persons an action or claim, holding art. 21.21 that as a engaging practices. or such acts party beneficiary third of an automobile lia- Id. We for art. 21.21 address each basis bility policy, bring an could action under art. liability separately. proceeding directly without first policy.2 named insured Id. A. Section 4 of art. 21.21 below, For the reasons we stated reverse the express purpose art. 21.21 is to The appeals concerning the court regulate practices in trade the business of Watson’s art. 21.21 claim. by- providing defining or for deter mination practices of “all such in this state

I. competi which constitute methods of unfair case, In this are expand we asked to tion or deceptive practices or acts or ” unfair our holding in Vail v. Texas Farm Bureau prohibiting practices. such Tex.Ins (Tex.1988) Mutual Ins. 754 S.W.2d 129 added). 21.21, (emphasis .Code Ann. and conclude that section 16 of art. 21.21 Section 4 practices of art. 21.21 those defines confers claimants a direct competition constitute unfair methods an insurer for unfair deceptive practices. or unfair or or Id. essence, claim settlement we §at 4. We note that unlike section 17.46 of asked to extend ato adverse to the DTPA, below, discussed section 4 of art. insured, the obligations same duties and in “includes, phrase does not use the surers owe to their insureds under Vail. defining is not prohibited limited to” when below, For the reasons stated we decline to 21.21, written, acts. As section is an do so. exclusive statutory deceptive list of unfair or To have a cause of action for practices acts or in the business of insura alleged unfair practices un list, nce.3 Within section 4 this does not 21.21, der art. practices such must define practices unfair claim settlement as an deceptive declared prac or acts or unfair unfair deceptive practice. act or Unfair tices in the business of insurance practices settlement are not actionable 16, by under art. virtue of art. adopted State Board of Insurance 21.21, section 4. deceptive or be defined unlawful practices in section 17.46 the DTPA. Tex. regulations adopted B. Rules and under 21.21, § Ins.Code Ann. 16. The full text of art. section 16 reads: (a) Any person adopted by who has sustained Board actual Order 18663 was damages as a engaging result another’s State Board of Insurance to art. appealed provides Watson has not this Court the 3. Section 17.46 of DTPA that the "includes, deceptive practices appeals term affirming decision acts or but is practices not limited to” acts or that sec summary judgment Thus, trial court’s on her remain- Following tion thereafter lists. presented claims. issue here directive, this Court held that section 17.46 is not appeals reversing is whether the court of erred in deceptive practices an exclusive list of acts or remanding summary judgment on Wat- Williams, Spradling under the DTPA. son’s art. 21.21 claim. (Tex. 1978). Ins., order, § 21.3 Bd. of 28 Tex.Admin.Code Through

21.21. State Watson claims (West added). 1992) (emphasis October is unfair claim she entitled to sue Allstate for Board Order 18663 does declare Because Board Order 18663 to be does not unfair claim settlement declare practice, prac- deceptive unfair or act or act to be tices are actionable Rather, like art. the Insur- 21.21 of alone. Tex. reference Board Order 18663 Code, regulation prohibits ance 21.21, § Ann. Ins.Code engaging in unfair or however, argues, elsewhere. relevant Board Board Order portion provides: of Board Order 18663 implicated.4 held in Vail that This Court (a) poli- Misrepresentation of insurance rely on insured could not cies, practic- competition, unfair unfair and deceptive because the of unfair or definition insurers, by agents es and other connected practices required that such acts be persons by 21.20 prohibited Article frequency as to indi committed with “such provisions Article 21.21 or other of the practice.” 754 general a cate business person engage No shall Insurance Code. Thus, precludes Wat any practice in this in trade that is a state Board son’s claims under Order misrepresentation policy, anof ef Board 41454 amended While Order was competition, that is unfair method or an of 19, August any 1992 to fre fective delete prac- deceptive that is or act or an unfair quency requirement, because of its effective provisions tice as defined date, apply does not amendment or as Insurance Code these any event, In 41454 was case. of sections and other 21.21-2, not art. adopted to art. the State Board Insurance authorized and, thus, form of a cannot the basis by the Code. 21.21, section 16. Tex.Ins. claim under art. 21.21, § Ann. Code (b) the im- Irrespective fact any 21.21-2, in proper practice is not defined trade which argues also that art. Watson regula- prohibits other section of these rules and unfair defines and claim settlement tions, in this person engage private shall state a practices, made available as any in through trade which is determined Board cause action Order an method of create pursuant by contrary, law to be unfair art. 21.21-2 does not To competition private action for violations of or an act cause of Scheffey, 828 insurance. statute. See Ins. Co. in the business of CNA pertinent part provides: provides in as fol- 6. Art. 21.21-2 4. Board Order 41454 lows: engage settle- No shall in unfair claim insurer prac- practices. Unfair claim settlement insurer, following Any if committing performing tices means performed with committed without cause and prac- general frequency such as indicate frequency the State as following: tice Act, provided in this Board of as (4) attempting in faith to effectuate practic- shall constitute fair, prompt, equitable settlements of es: liability has become in submitted (d) to effectuate attempting in reasonably clear. fair, equitable prompt, settlements Ins., (1982) State Board Order 41454 Bd. of in which has become claims submitted (now 21.203). 28 Tex.Admin.Code reasonably clear. 21.21-2, (Vernon 1981). 2 Code response to TexJns Ann. in All 5. Kathleen Watson’s affidavit 41454, was art. 21.21-2 Like Board Order summary judgment states state’s motion for any frequency in to eliminate amended 1991 settle claim in a reason that Allstate failed to her amendment, January requirement. effective The requires proof Board Order 41454 able manner. fact, case, and, 1, 1992, apply in to this does not delay payment the denial or of more than analysis Co., we conclude our because is irrelevant to Lloyds Chitsey Ins. v. National one claim. (Tex. private 641, 1987). 18663 does not create undisput that Board Order facts, party claimants favor of third action in show the ed a matter of do not 21.21-2. requisite for violations of art. frequency under Order 41454. Board 785, 1992, fact, (Tex.App. are defined section 17.46as unlaw- — Texarkana denied); writ Cantu v. Western Fire & Casu ful Unfair Co., alty 737, and, are not listed there- 1986), fore, 21.21, App. Corpus Christi writ n.r.e. are not actionable under — ref'd curiam, (Tex.1987). per Sig 723 S.W.2d 668 section 16 of the Insurance Code. nificantly, legislature specifically in 1985 II. rejected proposed amendment to art. sure, private that would To be section 16 is worded have created a providing “any per-

cause of action for unfair a cause of action to claim settlement However, as defined in art. 21.21-2. son.” H.J. assert her (1985). Leg., 69th for unfair Tex., R.S. And more Allstate recently, practices, legislature she must do so deleted a reasoning pro- opin- from H.B. of Vail. would have closely vided a ion art. 21.21-2 delivered followed after “claimant” County for unfair claim settlement decision Arnold v. National (Tex.1987). H.B. Leg., 72d Mutual Ins. 725 S.W.2d 165 R.S. (1991) (original February presented question version of bill Vail thus filed construc- construing art. 21.21 and Board tion of art. section 16 in the context of thereunder, promulgated relationship light insured-insurer and in we ignore legislature’s preexisting cannot duty common law refusal to cre- statutory dealing recognized private ate Arnold. cause of action for reaching today, In practices partic- unfair claim our decision we are for third ularly party imposed mindful of the duties on in- claimants such as Watson. See Trans- Vail, portation surers to their insureds. See Maksyn, Ins. Co. v. 580 S.W.2d 136; Arnold, (Tex.1979) S.W.2d at Baldwin, 725 S.W.2d at 167. and Smith v. (deletion (Tex.1980) predicated upon Vail is this Court’s ex- 611 S.W.2d pressed special relationship belief that a ex- pending in a legisla- bill discloses ists between an insured and the insurer. reject See tive intent proposal). We will Arnold, 725 167. Vail remains the 21.21, not construe art. permit, section 16 to alleged law as to claims for unfair claim indirectly, party a third claimant to sue practices brought by insureds insurer for unfair practices claim settlement against their insurers. through Board may Order 18663 where she directly not do so legislature where the Watson, however, is not an insured. Rath- specifically has refused to create such a er, she her asserts Allstate as cause of action for unfair claim settlement party a third to the contract between Allstate 21.21, section 16 and art. obligations imposed by and its insured. The 21.21-2. art. 21.21 of the Insurance Code and Vail are engrafted onto the contract between the in- C. Section 17.46 the DTPA surer and insured and are extra-contractual 21.21, Art. provides party section 16 A nature. third claimant has no any practice insured, cause of action for defined contract with the insurer or the has paid any section 17.46 of the DTPA premiums, legal unlawful not has no relation- practice. ship trade special relationship to the insurer or Ann. Tex.Ins.Code insurer, short, 16. “Unfair claim settlement trust with the and in has no practices” among is not expect the enumerated basis which to or demand the items obligations section 17.46 as an unlawful benefit of the extra-contractual imposed While section 17.46 on insurers under art. 21.21 with may complete decep- regard not be a Nothing list of unlawful to their insureds. in Vail purposes asserting tive trade suggests the extra-contractual obli- DTPA,7 expressly gations, under the rights, and remedies of art. that, party makes actionable those acts or section 16 extend to third claimants. Williams, Spreading 7. See of this have been aware legislature well construing point, to the More will not conflicting duties. We potential for would have us section 16 as Watson explicit absent case, art. 21.21 or construe give standing in this it to her construe as to com- legislature, so directive owe the duties insurers

we would undermine loyalties and obli- the insurer’s promise Arnold. In under Vail and to their insureds owed to the insured.8 gations construing 21.21 in we were conflicting potentially duties. faced with party as a third hold that We nothing inconsistent between There is claimant, section 16 of standing under lacks good faith and fair deal law common directly Allstate 21.21 to sue and a to its insured ing owed an insurer claim settlement sec duty imposed under Vail and prohib insurer as to its insured III. tion 16 on an iting conclusion, coming we also In to our party to third claimants we to extend Were incorrectly appeals note that in to their insurers owe the same duties standing to sue that Watson sureds, owing insurers would be faced beneficiary party 21.21 as a third under art. conflicting An insur duties. coextensive liability policy. 828 S.W.2d of the automobile duty to defend the to its insured a er owes County Mutual Dairyland In by a asserted the claims (Tex.1983), Childress, Recognizing concomitant party. third purposes of recover held that for this Court 21.21 to third coextensive duties an insurance con attorney’s fees under claimants, the in parties adverse to party judg tract, has party third who obtained sured, the duties necessarily compromises third an intended against an insured is fact, insurer owes to its insured. beneficiary insurance contract separate and permitting a logical result of contract. enforce the entitled to and is in favor of third of action give direct cause claim Dairyland does parties sue for un to claimants allows the extra- standing to to enforce ants sue though practices even sec obligations fair contractual Therefore, applica claim an Dairyland the insured has no is not tion 16. for troublesome, it is practice. As to this case. ble settle attempting to conceivable reversing appeals erred The court of of a third to the demands as to Watson’s judgment trial court’s claimant, may be liable to the judg- part reverse 21.21 claim. We See Texas settling quickly. too to appeals as Watson’s of the court ment Soriano, 844 Co. v. Farmers the remainder and affirm art. 21.21 claim 1993, Antonio (Tex.App. 808 — San appeals. the court of judgment of for actu (affirming judgment granted) writ damages against an insurer punitive GONZALEZ, C.J., al and PHILLIPS, CORNYN, for breach JJ., in favor of the insured HIGHTOWER, HECHT fair deal duty good faith and law common opinion. join in this attempted to settle ing where the insurer Justice, concurring. SPECTOR, by offer for its underinsured multiple claims 24, 1993 Nov. against the insured’s policy full limits ing the judgment, but not wishes). I in the Court’s a direct concur refusing provide to third-party claimants, hold that opinion. I would its for third dealing good fair duty faith and law rehearing, argues mon Watson On motion for has not 4(b), and Watson and Aranda under Arnold Watson has 18663 16, at 828 S.W.2d appealed that determination. standing Allstate under section to sue Moreover, is not an in- because 426. sured, faith and for breach of Arnold, construe we decline to supra, and dealing articulated in permit a America, 18663 so as 16 and Board 748 S.W.2d v. Insurance Co. Aranda contrary to the 135; (Tex. would be action which 754 S.W.2d See in- 21.3(b). recognized in favor of Ins., law duties common 28 Tex.Admin.Code State Bd. of related duties and the under Arnold did sureds appeals that Allstate below held claimant, Aranda. a com- a third not owe C.J., rehearing), may proceed directly against dissenting on claimant has attack on the most invited imminent once the claimant has established insurer possess effective consumers tool that Texas legal obligation pay insured has a they paid premiums to ensure that have damages to the See State Farm claimant. only subjected Ollis, abuse their oum be County Mut. Ins. Co. insurers. (Tex.1989); Great American Ins. Murray, decep- the unfair or Texans victimized 1969). Once Kathleen Watson has obtained a companies tive conduct of have insured, against or settlement statutory protection: been afforded any damages is entitled to she recover damagefd] Any person ... as a result of has result of she sustained as a Allstate’s in an act engaging another’s practices. unfair or unlawful acts or Tex.Ins. lawfully ... declared 16(a). Code ... adopted by to be ... unfair the Board deceptive practices in the busi- DOGGETT, Justice, dissenting. any practice ness of insurance or de- Nov. of the [DTPA] fined Section 17.46 as an unlawful explicit unequivocal pri- An statute against maintain an the [violator]. ruling again impose of this Court once deny restraint on a (Vernon 21.21, § Tex.Ins.Code Ann. remedy meaningful Texans for abusive Supp.1993). This has relied Court handling insurance claims After express language of this enactment to assure collision, suffering injuries in an automobile protection alleges Kathleen Watson she sustained S.W.2d 129. See Such injuries delay more Allstate’s resolv- as unfair are actionable her claim and lack of faith. The under art. 21.21 both because are so appeals decision of the court of assured Wat- by regulation of the State Board of protection son unfair claim settle- they can Insurance and because constitute a afforded breach of section 17.46 the Texas Business Texas Insurance Code. 828 (DTPA). and Commerce Code Today’s opinion removes that State Board of Insurance Order safeguard. important Because this law 4(a) act defined states that enforced, should I dissent. an unfair or Insurance Code to be practice prohibited If this statute had drafted differ act or is art. 21.21. 28 been 21.3(a) (West 1993). ently, § majority go not have had to One would Tex.Admin.Code gyrations again prescribed such in once assum such unfair is “not at- today’s tempting prompt, for in to effectuate itself a role. But games parties equitable harm fair and word do more than settlements claims sub- By in has challenging Kathleen Watson. the mitted which become reason- like 21.21-2, ably legitimacy of Vail v. Farm Bureau clear.” Texas Tex.Ins.Code 2(d). slightest not the Mutual Insurance 754 S.W.2d 129 Since there is indi- 1988) (finding statutory a cause of action for cation that Board 18663and the defini- 2(d) 21.21-2, § in unfair under Tex. tion contained article were (Vernon incorporation by Supp. be excluded Ann. Ins.Code 1993)), acknowledged implicitly adopting regressive simply this Court that reasoning rejected writings among previously unfair claims settlement Phillips, provisions under art. 21.21.1 id. at actionable of Justices Gonzalez and (Gonzalez, J., dissenting Phillips, at 134. quirement improper frequency of the at 28 Tex.Ad- conduct. 1. Board Order codified (West 1993), supports also a prerequisite 21.203 has been Vail at 134. That since min.Code practices under claim for unfair claim settlement deleted an amendment effective after the in- upon 21.21. rule relied art. however, This was not stant claim had been filed. it a because at that time included re- 21.- practices, are actionable under art. opportu- But the now blocks 21.2 nity by to enforce art. 21.21 Kathleen Watson wholly amazing argument that a

with the 21.21 a second basis for an Article affords 21.21-2, statute, not separate does itself unfair action for private for create a cause action 17.46 of the its reference to section practices. 876 S.W.2d at claims settlement “false, DTPA, misleading, or which defines already very 148. This rationale has been including, practices” repudiated this Court Vail. Aware to, not limited list of enumerated items. a private (Vernon a “that article 21.21-2 does not confer & 17.46 Ann. Tex.Bus. Com.Code action,” rejected in- prohibited cause of this Court acts is not Since the list “ Williams, exhaustive, Spradling argument surer’s that this ‘sealed (Tex.1978), recovery may be any private off cause action finding deception in the based practices under the DTPA claims settlement Id. of an unlisted act or occurrence Insurance Code.” Vail already that a determined This Court has wholly superfluous Article 21.21 would be to exercise finding that insurer’s failure solely regulations it limited to rules and were handling good faith of a claim consti provisions under other Code that enacted deceptive act was under tuted a sufficient separate private their own cause of offered has further held “sec There have incorporates action. would been reason 21.21 tion 16 article if determined to promulgate a claimant could unlisted that is [such] false, misleading deceptive.” Vail at be pro- already proceed separately under other added). (emphasis art. 21.21-2. We have al- visions ready “[t]he determined in Vail that fact that is conceding that 17.46 not After 21.21-2 confer a article itself does not DTPA of actionable viola- comprehensive list preclude incorpo- action cause of does concludes, tions, with- somehow in that article of definitions contained ration whatsoever, any authority out order promulgated by into practices claim ground an unfair 134. Board of Insurance.” Vail at the State complained of must be conduct provides plain Since its terms art. 17.46. 876 specifically enumerated every practice Representing the converse at unfair, Vail,4 holding imposes and art. this the Code decision elsewhere our wholly unjustified on section restriction proscribes unfair claim settlement 21.21-2 [separate] wrongly pro- to create a Today’s opinion "refusal asserts post-amend- controlling statutory private even for vision remains unavailable action" adopted pursuant today’s opinion. it was "ignorefd]” by ment claimants because completely and is art. 21.21. 876 art. 21.21-2 rather than at 149. majori- Like the balance reasoning writing, directly ty’s conflicts hardly first time that Allstate has This is ruling permitting use of defini- in Vail holding. contrary argument to our advanced 21.21-2 an action tions from art. longstanding the cause of contention that Its 21.21. provided by is section 16 of action bootstrap, majority pre- the seizes on 2.As a final solely practices set forth in to “acts and limited legislative rejection of a direct Vail rejected 17.46” was in Allstate Ins. [section] practices. 876 for unfair claim settlement 595, (Tex.App. Tyler Kelly, 680 S.W.2d — al- at Since such an action was 149. 1984, n.r.e.). writ ref'd ready provided 21.21 under the the Board of Insur- of State rules and Compare today’s that ”[u]nfair 4. conclusion ance, Legislature’s declining add to a more the and, listed practices are not claim hardly per- prohibition specific duplicative is but therefore, they under art. 21.- are not actionable As recent consideration of such to more suasive. 21,” earlier at with this Court’s 876 S.W.2d enactment, Legislature acted the an additional "Thus, plain reading section 16 of the statute: of knowledge of Vail. If dissatisfied with full incorporates unlisted article Legislature reading the of this Court’s false, misleading, or to be is determined opportunity The to rewrite it. an excellent (citation omitted). deceptive.” Vail at 135 away protection of to amend the refusal the shadow of Arnold n focus on the support va in 17.46 devoid of the statuto- either relationship.5 ry history. sured-insurer Such a conclu text highly peculiar of sion a new rule announces only the real difference between Vails analysis: opinion matter how an itself is type making is the of individual worded, of a decision this Court should claim; insureds, the former were while necessarily predicated on considered as is not. The the latter benefits of prior year ad decision from calendar well might have been limited to the “insured” matter, subject similar dressing any even “consumer” not. It or the question statutory a though involves of one guarantees right a “[ajny person,” development the other construction and added), § 2 (emphasis unequivo- which law.6 Vail 's sole reference common cally includes Kathleen The same Watson. sepa support completely of a Arnold was in supported by which statute the claim statutory recovery basis for rate unquestionably supports claim Vails any part 21.21 that not form of Kath does legislature Because the did not au- Watson. leen claim. 754 at 135.7 Watson’s discrimination, today’s opinion thorize reading inappli- But is this of Vail disparate invent some must basis for its wrong. plainly it is also cable to Ironically, of Kathleen treatment Watson. previous Our conclusion that Arnold one was majority support very opin- finds in the pursuant of two “determinations law energy which it ion to has devoted such processing of faith in insurer’s lack dismembering Vail, allegedly a decision — unfair or act” is an is “predicated upon expressed this court’s belief applicable claims as to those special relationship that a exists between argu- Any 754 S.W.2d at 135. insureds. and the insurer.” 876 solely ment that can be limited Vail (citing Arnold v. Mut. County National Fire absolutely finds claims of insureds no basis (Tex.1987)). 725 S.W.2d itself; represents rather that decision it newly deny rule to fabricated Kathleen Wat- There, thing. did no such Vail in rather son relief. easy interpretation, of statutory case basic wrote, read legislature By following unequivocal the Court what the of command not what we have wanted written as the what had the most recent been court Today has now done. learn for issue has precise we to address this reached the first time that Vail was somehow decided have conclusion that should Code, emphasized parties’ unequal 5. Arnold "the bar- ele 4(b) power gaining and the nature con- and the determina- of insurance Aranda; unscrupulous which would this court in tracts allow tions made Arnold and (3) incorporating advantage article to take of their misfortunes insureds’ bargaining Code and the Insurance section 17.46 of settlement or resolution Arnold, 725 DTPA. claims.” S.W.2d at 167. added). (emphasis at 136 754 S.W.2d (2) 4(b) Vail is based Ground Indeed, type Arnold drew a bold distinction prohibits conduct "deter- "Statutory between Causes of under arti- Action” mined law” to be an unfair act 21.21 and 21.21-2 Law cles and a “Common 21.3(b) (West Code Action,” Tex.Admin predicated upon Cause which is concluded that Arnold and Aranda Vail relationship” "special and in- between insured America, Co. North [v. Insurance Arnold, 725 S.W.2d at 167. surer. (Tex.1988)] 210 tion, constituted such a determina- giving the Vails an art. 21.21 thus abundantly makes this clear: 4(b). action based on S.W.2d at 135. (1) supported by ground proved hold that the a Watson’s We Vails stated and 4(a) includes section of Order cause of action for unfair claims 17.50(a)(4) prohibiting under section grounds: any regulations of the State on one of three alternative Board of Insurance. DTPA (1) (3) alleges ground by incorporating supra § 16 of the See Watson also article at 151. However, Code, 4(a) support of her of Vail in claim. Wat- Insurance of Board (2) adopt ground the claims and the definition of son's claim does only Arnold, 21.21-2, 2(d) citing support portion in of her in article Code; (2) by incorporating Insurance orti- claim. the third today. An insurer defend Transport reached In Faircloth, duty the to act in (Tex.App.—Beau- yet claims still fulfill equitable prompt, faith to effectuate fair requested), ap- the court mont writ in lia- submitted which settlements peals third-party claimant had held that a reasonably clear. Article bility has become standing under 21.21 to an insurer sue only we have demands conduct which on both listed and unlisted violations of based from long rightfully expected insurance com- DTPA, 17.46 of the and the unfair panies. “expand to There was no need here definition contained Vail,” 147; holding in all in 21.21-2. majority the to do was enforce a law In for a what rationalization protecting wrongdoing from individuals any in that lacks basis decision power large insurance considerable majority cause concludes declined an companies. Court “undermine of action under art. would request compre- to carve out of insurer’s imposed its insurer’s to types deception: hensive statute certain at 150. This Vail and Arnold.” 876 S.W.2d DTPA the There is no contention is based the erroneous as- exempts Code that sumption recognizing such a cause of relating for conduct to acknowledgment of inher- action constitutes handling of claims. ently conflicting “concomitant and coexten- Unfortunately cre- Vail at 132. parties. and third sive duties” insureds exception— just such an unwarranted ates goes so Id. even far as at 150. The deception here has not been limited “potential for conflict- speculate that such insurer; today’s opinion. permeates it ing provided a may have reason duties” GAMMAGE, J., joins this dissent. provide a legislature’s “refus[al] direct of action for third claimants.” But art. 21.21 reflects “refusal”; phrase “any its use directive, only a person” is not clear

certainly suggestion that thwarts majority’s imag-

legislature recognized the disingenuous to conflict. How divine

ined judicial guess- legislative intent from such Natural Charles SPENCER D/B/A plain to the give rather effect work than al., Store et Furniture wording enactment. Petitioners, in- Concluding requires prac- refrain from unfair settlement surer to COMPANY EAGLE STAR INSURANCE serving any way preclude its not in tices does AMERICA, Respondent. OF Indeed, engag- the interests of the insured. would No. C-9469. very much the interest appear Supreme Court of Texas. party. well the third While insured as acting be forced to will insurer 9, 1994. Feb. per- carefully its from the actions consider spectives of the insured and claim- both An

ant, compromised. to be no duties need to- simply may not act bad faith

insurer duty to de- fulfilling claimant in its

ward a

fend its insured.

Case Details

Case Name: Allstate Insurance Co. v. Watson

Court Name: Texas Supreme Court

Date Published: Jan 12, 1994

Citation: 876 S.W.2d 145

Docket Number: D-2474

Court Abbreviation: Tex.