National Union Fire Insurance Co. v. Dominguez

ability hearings re- to conduct trial courts’ reporters with

quiring presence of court time.

less available announces cannot be

The rule the Court Appellate among the Rules of Proce-

found

dure, the “at or one reads before the unless perfecting appeal” lan- prescribed for

time 53(a) long

guage of Rule to mean before. course, by opinion is Rulemaking not wise It it is even authorized. the extent permit and comment the consideration bench, public ordinarily bar and process. rules

informs our revision Rule-

making partic- results in achieve desirable

ular cases is even less advisable. on, party aggrieved

From now “the

ruling steps ... must take the to ensure

proper Ante 371. This review.” rule delay help cost

cannot but worsen the

litigation. The court of followed 50(e), I affirm its

Rule would I

Accordingly, respectfully dissent.

NATIONAL FIRE INSURANCE UNION PA., PITTSBURGH, OF

COMPANY DOMINGUEZ, L.

No. D-0040.

Supreme of Texas.

Jan.

Rehearing Overruled Gibson, Cooper, R. Stephen Brent

J. Frazier, Jr., Northrup, R. T. Michael Charles Dallas, for petitioner-appellant-relator. Adams, Odessa, Zinn, Larry stooping, maintaining Ruff An- posi- San and certain fixed tonio, respondent-appellee-respondent. periods for tions for of time. February Dominguez called in Justice,

GONZALEZ, complaining to work of a swollen toe and a delivered the Court, opinion PHILLIPS, employer sore back. His him of the instructed which doctor, Justice, HIGHTOWER, HECHT, and he Chief received treatment and CORNYN, chiropractor. SPECTOR, chiropractor The sent the ENOCH and Justices, company join. diagnosis problem his of the as “sciatic neuritis associated with subluxation compensation This workers’ case concerns 5,” Dominguez L-4 and and was afforded allegation by compen- the worker that the company’s disability policy, benefits from the duty good sation carrier breached its which covered non-work related conditions. fair dealing. Dominguez, Justo L. months, Dominguez Over next several filed a claim with the Industri- signed a number of forms that included a “repetitious, al Accident Board for traumatic representation was not work injury to body his back and as a whole.” The related. $6,559.48. appealed Board awarded him He chiropractor Dominguez soon referred trial, to the district court. Before Domin- specialist began to a back regular treat- guez and the insurance carrier settled the disability, Petty- ment. After five months $28,000.00, agreed suit for and an judgment Ray encouraged Dominguez to see another signed by Dominguez was the trial court. doctor. That doctor filed present against action Nation- degenerative joint disease in lumbar Company al Union Fire Insurance for breach Dominguez He area. recommended that re- duty good faith and fair turn to work opinion because of his owed workers’ carriers to activity might therapeutic. trial, their After insureds. $322,988.36 Petty-Ray disability court rendered a pay- terminated the ments, compensatory put favor as Dominguez and ex- on leave without emplary damages pay. Dominguez Sep- the carrier’s returned to work on 4, 1985, although tember his back was still appeals causing him pain. compa- affirmed the In December the past $75,- ny anguish Dominguez mental the amount of terminated the stated rea- 000.00, damages but reversed the for future son he missed work informing without anguish exemplary supervisor. damages. his Following S.W.2d 66. January hired an Lyons Casualty v. Millers Com- Insurance 1986. He had missed attend his pany, hold we grandmother’s funeral, and had been unable that there is no evidence that National Union get through notify his supervisor. It breached its faith and fair deal- his view that he been fired because ing to the insured. We thus reverse the of his problems. back Rather than seek judgment of the court of and render however, Petty-Ray, redress from Domin- nothing.1 take occupational sent notice of an disease to January 27, the Industrial Accident Board on company worked for a Petty-Ray, per- known the time as geophysical formed work. For the last seven National Union received notice of the claim years job employment, February day involved on next driving ground truck adjusting which vibrated the investigating hired service part seismographic analysis. job began inquire His National Union into the upon repair called him to the truck on occa- preliminarily complet- claim. The claim was sion and bending, some of his duties involved ed March the date National case, disposition 1. Because of agreement oür we do underlying settlement claim precluded address National Union's contention that faith claim. medical ser- probability of need future response was due to be filed with Union’s vices, date, questions; such National Union filed other Board.2 On indefinite, uncertain, controverting disputed, are issues notice that injury as incapable being exactly established failure to based on the on-the-job injury, the failure to and and determined. days. the within agree- following the stricken from The was investigator continued National Union’s ment: The is not investigate the claim. record agree Parties that for and in The further entirely items of informa- clear when various sums, of the aforementioned consideration light, doctor who had but the tion came hereby Plaintiff herein RE- the initially Dominguez diagnosed his back seen LEASE, REMISE, QUITCLAIM and stemming degenerative condi- pain as from a and FOREVER DISCHARGE Defendant However, given physician tion. second herein, respective Employer their named Dominguez’ was that condition servants, assigns, represen- successors and Petty-Ray, From National work related. tatives, employees and officers and/or had never Union learned controversies, claims, all or causes of from related, and in reported the as work claims, known whether or action all April late as unknown, injuries, damages, or Ray’s Petty group health submitted forms matter, including regard- any matter other representation express made an carrier and handling ing adjustment or of the the injury was work related. that his time above described suit and in hearing, The conducted a Board filing Industrial Acci- of claim before the $6,559.48 lump- August as a of 1986 awarded through the Board Plaintiff date dent payment, plus medical benefits. sum lifetime signing Judgment. of this morning parties appealed. Both On judgment Finally, agreed provides: claim, the trial of the workers’ FINDS the above Settle- THE COURT Dominguez for with National Union settled Agreement to all ment to be true as its $28,000. attorneys The for National Union recitations, full, fair, to be com- proposed prepared a consent cause; .... plete settlement out one of struck complete judgment is final and is paragraphs and the trial court rendered This Plaintiff, anyone or right agreement as modified as bar Plaintiff, claiming ever under the court. in again to a claim or cause of action assert question provides The settlement the accident any manner connected "with part: based, for worker’s upon which the suit compromise and final and settle- full benefit, past and all alleged or ment this suit and all claims future medical services.... al- might which now or later have been filed, leged pleadings in Plaintiffs herein day between The same settlement reference, incorporated which are parties approved and the was accident, injuries and with the rendered, Dominguez connection suit for filed a was suit,.... incapacity involved claim in to handle his At good faith with agree this suit involves The Parties claim, mishandling Domin- acci- the suit for questions occurrence of an testimo- only present dent, liability pay guez was the witness to the Defendant to person. asked about state- ny in When under the benefits of kind Workers’ liability agreed in the Act, the extent of Plaintiffs ment Compensation disputed, compensation was injuries resulting incapacities and the under workers’ 12, 1993, 18a, (re- days. period Act of § is now 60 2. Under article Tex.Rev.Civ.Stat. R.S., § 1991), Leg., required ch. pealed within 20 73rd Tex.Gen.Laws a carrier was (to be codified at Tex.Lab. days Code notice to either 409.021(c)). controverting § That or file a statement claim. uncertain, incapable being able ascertained basis for of which the certainty, agreed he that was a truth- carrier knew should known. have As we ful Lyons Co., statement. Casualty observed in v. Millers 866 S.W.2d 597 courts have had jury, to a case submitted difficulty applying a traditional “no evidence” concluded National Union breached the proof. review of these elements of The diffi- with Dom- culty has centered around the rule of no inguez, $75,000 causing past him a court consider anguish $50,000 for future mental an- finding, the evidence dis- guish. further determined that regarding all evidence and inferences to the consciously indifferent to Alviar, contrary. 821, v. Garza 395 S.W.2d Dominguez’ rights and welfare and found (Tex.1965). 823 $175,000 damages in exemplary should judg- assessed. The court rendered legal A sufficiency of review a bad principal ment on the verdict in the amount requires faith claim that the evidence relied $322,988. of the insured as of evidence bad faith appeals The court of reversed the award of permit logical “must be such as to the infer punitive damages because a lack of evi- ence that insurer the had no reasonable basis dence of National Union’s conscious indiffer- delay deny claim, to payment or ence. It also reversed the award of future that it knew or should have known had no anguish damages a no evidence Lyons, reasonable for basis its actions.” 866 However, point. appeals reject- the court of S.W.2d at 600. Unless the evidence furnish ed National argument Union’s the es some reasonable basis for the conclusion agreement signed by parties settling the the by reasonable minds as to the existence of precluded worker’s claim scintilla, the vital it is no more than good claim for duty breach of the faith and legal equivalent the of no evidence. Kindred dealing. fair Con/Chem, Inc., 61, v. 650 S.W.2d 62-63 (Tex.1983). duty of a workers’ Lyons, As we carrier to handle held claims in evidence insurance coverage go alone does not to the issue of established Aranda the Aranda, America, v. standard articulated in Company Insurance North absence of a (Tex.1988). reasonable for 748 210 A basis denial of the S.W.2d claimant claim. A legal analysis alleges duty sufficiency requires a breach of this the must review- establish (1) ing give weight only to to absence of a reasonable evidence basis for denying delaying payment or insured benefits (2) reject policy, contrary. all evidence carrier knew Howev- or er, only an appellate should after have known that there court has deter- was not a potential basis claim mined what denying reasonable basis an insurance com- pany may delaying payment have had for denying of the claim. claim Id. at 213. can the court a meaningful conduct review of test, The first element of the Aranda ab- whether the insured has evidence sence of a for denying reasonable basis that the insurer lacked a reasonable basis for claim, requires objective an determination of denying delaying the claim. The court whether a reasonable insurer under similar apply legal the traditional rules of delayed circumstances would have or denied review, sufficiency giving weight only to evi- Aranda, the claimant’s benefits. in support dence “The element, at 213. The second that the carrier relate must to the tort issue of no known, knew or is attempt should have delay reasonable pay- basis denial or right reject balance of an insurer to just ment of a contract issue invalid claim the carrier to Lyons, of coverage.” 866 S.W.2d investigate compensable claims. Id. The claimant proving has the burden of Domin offered negative proposition, the absence of a reason- to establish bad faith was a letter sent

377 attorney, stating The law is well-established that deter by a related.3 mining point, “no evidence” of cover- is some evidence While that letter only the and infer “must consider an absence of age, it is not evidence of tending support finding, ences claim. reasonable favorably support most of the find viewed that casts presented no evidence disregard contrary ing, and evidence and on the on National Union’s reliance doubt Stores, v. E-Z Mart inferences.” Havner con- professionals who medical Inc., (Tex.1992); 825 458 S.W.2d disease, or Dom- degenerative dition (Tex. Alviar, Garza S.W.2d inguez’ on insurance forms own statements 1965); Canode, Cartwright v. 106 Tex. was not work related. We condition there no evidence of a (1914). conclude that is If more than a 171 S.W. exists, scintilla such evidence therefore reverse We law, a matter chal sufficient of the court of and render go merely lenges weight to be accord nothing. take Stafford, the evidence. ed Stafford (Tex.1987); King’s In re Es (1951). tate, 660, Although 244 S.W.2d 661 GAMMAGE, JJ„ DOGGETT and jurors empowered qualitatively are to evalu dissenting. credibility weight of ate the some evi Today’s opinion compa- and the insurance that no and conclude it constitutes dence ny’s investigation, which forms evidence, precludes the Texas Constitution much in com- this bad faith share performing Court from that task. See this perfunctory mon—both are and both mislead through merely rep- V, 6; omission. This decision § art. v. San Anto Choate Tex.Const. of a predetermined resents result search Co., 69, 44 Ry. A.P. 91 Tex. S.W. nio & rationale.1 (1898). 69 understanding Important of this de- to “tradition,” Dismissing law as mere this identity L. parties. is cision the asserts, majority citation to without Pecos, Dominguez is a truck driver from Texas, authority, only not years that this Court has for more than six earned who special of operating type an hour authority $5.00 determina-- but the to make employer, Petty-Ray industrial truck company to tions as the “basis insurance Geophysical.2 Insur- National Union Fire 873 have had for a claim....” large company. is a insurance ance national new, Empowered at this S.W.2d jury County A in Reeves found that authority, majority pro- self-bestowed faith, judge insurer had acted bad from the ceeds reexamine evidence judgment, entered and the of company perspective of the insurance rather Paso, part, sitting in El relevant unani- Constitution, than, required by the Texas mously Rejecting 793 affirmed. S.W.2d light in the most favorable to verdict. this, adjusts majority longstanding improper factfinding; it is This constitutes insurer the con- Texas law to benefit the factual, legal, sufficiency. not of the truck driver. siderable detriment position. supported Dominguez' argues Dominguez’ testimony sor would have 3. The dissent supervisor supervisor contrary, he his immediate testified in his that injury told To the faith, Dominguez was work related is evidence of bad deposition said explain yet not how this information work related. way to Union. could ever have made its. refused to allow inter- contemporaneous majority's writ- similar Dominguez, presence of even in the view with Co., ing Lyons 866 Millers Cas. Ins. S.W.2d v. attorney. Assuming that National support no for to- offers more 597 rely Petty-Ray's contain- should not records day’s than the converse. representations ing Dominguez' condi- related, tion was not work interviews operator, ran 2. As a vibreosis employees, and fellow Dominguez' supervisor should have interviewed exploring immediately, truck that vibrates while maintained a there is supervi- gas. nothing oil and that indicates the in the record Today’s opinion only evidence of faith. maintains that constitutes bad Common Thomas, Lloyd’s a claim bad faith was wealth Ins. Co. 1992) (evi Dominguez’s sent doctor to letter (T ex.App.—Dallas S.W.2d attorney, simply categorizes and it this as inadequacy investigation dence of of insurer’s solely coverage, is declared some evidence to constitute no evidence whatsoever dealing), judgment and fair faith set only part But this letter is faith. pursuant agr., aside to settl’t 843 S.W.2d 486 to the on this issue. (Tex.1993). Dominguez’s insurer denied workers Contrary majority, compensation claim the basis certainly only 377 & this is not the n. reported thirty was neither within failing handling mat- the insurer’s on-the-job days reported injury. nor as an investigator completely misrepre- ter. Its from This decision resulted the recommenda post-injury sented the claimant’s health care. investigator, apparently tion of an never report, example, falsely Her indicates Dominguez’s managing supervis interviewed both that not seek immediate County or.3 See State Farm Mut. Ins. Co. Moran, medical treatment Dr. Zea and (Tex.App.— denied) (failure physical impairment. doctor found no Corpus Christi writ Particularly damaging Dominguez to events interview witness related cover was the age is some evidence of breach of conclusion that he once saw dealing). apparent disagreement job-related, who concluded the disputed resolution issue actually when treatment had been received material writes that occasions, many four-page in a detailed “National Union learned that summary findings. Ironically, written reported work never as relat majority fails note that doctor whose judicial at ed....” 376. This rely upon did National Union saw finding simply disregards of fact Domin Dominguez only Additionally, the in- once. guez’s testimony that he had advised his vestigator inaccurately reported after supervisor immediately inju almost that the claiming injury, Dominguez employed as Indeed, ry was work-related. this same su body had, repairman a when he pervisor suggested first totally injury.5 been unable to work since his Although claiming a doctor. light Taken in the most favorable to the say work-related, supervi did not it was this judgment, report the inaccuracies this re- prompt sor later confirmed he had been garding crucial elements ad- ly injury, thereby advised about the com investigator’s dition to the failure to consult pletely eliminating at least one insur supervisor constitute evidence grounds proper er’s two for denial.4 A no majority summarily faith. The declares acknowledge evidence review would that be of this as “no evidence” without even bother- rightfully cause have believed ing to discuss it. Dominguez’s testimony, Court must Today’s opinion suggests contrary report “Dom- treat Rejecting inguez presented erroneous. no casts the worker’s claim evidence that conducting proper investiga without ever doubt on National Union’s reliance on the certainly tion of the for the [doctors] denial the condition as a Apparently, (Tex.App. 3. no contact was made the insur- writ de- —Beaumont supervisor year nied) (evidence er with the until a after the initial investigation that insurer’s deposition. when he was contacted predetermined tailored to reach outcome is some faith and failing grounds excuses this on dealing). that would not have altered National Union’s decision that the was not work related. 5.Apparently investigator the insurance confused investigation faulty perhaps that is Yet so job at which with merely coverage worked subterfuge shows Valley job Cadillac a lack of and fair See Motor State before Simmons, injury. Co. v. Farm. Fire & Cas. he never after held disease, existing precedent Dominguez’ own rules articulated or on degenerative really at work is govern, his condi- whether what’s insurance forms that statements review, at unwritten special related.” 873 S.W.2d standard tion was not work some legal suffi- that insurers grounded overriding irrelevant in a in an fear 377. But this is law, our this review claims. ciency inquiry. actually compelled Under be could supports narrowly focused what must opposes it. Further- judgment, not what diagnose

more, least one did not degenerative, but rather

the condition as

work-related; and there professional’s

insurer’s consideration inexcusably defec- opinions was

findings and

tive. testimony that Domin- indicated Additional CURRY, Texas rel. Tim ex STATE be- not understand the difference Attorney, District Tarrant Criminal disability

tween and workers’ Texas, County, Relator, forms; he sim- preparing when his insurance disability ply accepted the forms offered paycheck. employer get in order WALKER, Judge, Jeff The Honorable worker, ended This whose formal education Court, Tarrant 96th Judicial District by the grade, after ninth was described County, Respondent. Texas, person of intelli- judge as a “limited” Lee,

gence. Compare Dresser 1993 WL No. 94-0198. (Tex.1993) J., (Doggett, dissent- 433292 *6 Supreme Texas. ing). There is no doubt some March justify the bad faith was Rehearing Overruled insurer de- finding. The basis which the slipshod to controvert claim was cided investigator who ei-

report prepared thoroughly case or

ther not review the her em- manipulated the facts to serve

ployer. majority today continues its evaluating

practice wearing when blinders companies helpful

facts to insurance violating the constitutional mandate

while legal, this Court is limited to sufficiency.

not factual Kerr, again, Boyles

Once (Tex.1993) J., (Doggett, dis- con- reh’g), “excessive

senting on motion every opinion insur-

cern the effect of become companies

ance seems have overriding” concern of this

predominant and (Gonzalez, Compare also

majority. id. at 603

J., reh’g). concurring on motion for Given to assume

the determination jury, powers the duties itself attorney, litigant or a anyone judge, an —a

legal pressed, scholar —will hard case,

given operative stan- to understand the funda- appellate review—whether

dard of

Case Details

Case Name: National Union Fire Insurance Co. v. Dominguez

Court Name: Texas Supreme Court

Date Published: May 11, 1994

Citation: 873 S.W.2d 373

Docket Number: D-0040

Court Abbreviation: Tex.