*1 trial. error three entitled to new Points of four are therefore overruled. trial court is affirmed. FARM
STATE LLOYDS INSURANCE
COMPANY, Appellant,
Adelfa MALDONADO and Curtis Robert, Appellees.
D.
No. 04-93-00046-CV. Texas, Appeals
Court
San Antonio.
Sept. 1996.
Rehearing Overruled Oct. *3 Dodson, White, Huseman, plus three Paul Pletcher & 355.70 times the interest Powers, Christi, Corpus Appellant. September 18, prior dating from pays until State Farm limit Constant, An- Anthony F. Law Offices $300,000. The court awarded Robert Constant, Christi, thony Corpus F. L.H. $6,156,355.92.2 Warburton, Jr., Perkins, Oden, Warburton, McNeill, Alice, Paisley, Appel- Adami & error, points State Farm raises twelve lees. complaining insufficiency of the evidence jury’s answers to the issues, damage charge, in the error damages. and error calculation of We OPINION ON APPELLEES’ AMENDED modify part, and affirm in and reverse and *4 FOR REHEAR- SECOND MOTION part. render EN ING BANC AND APPELLANT’S MOTION FOR REHEARING II. FACTS
CHAPA, Chief Justice. appeal, At times this relevant to Rob- panel opinion dated December applica- insured Farm. The ert was following opinion is withdrawn and the policy injury personal damages ble covers Appellees’ is substituted therefor. amended arising caused an offense out of Robert’s rehearing second motion for en banc is public a business as certified accountant. (to Appellees’ rehearing granted. motion for injury” injury arising “Personal includes out panel) Appellant’s denied as moot. coverage policy slander. The excludes for of rehearing, having motion for been considered injury arising motion, personal from slanderous en banc on the court’s own is denied. knowledge of statements made with their falsity personal injury “[f]or and which the I. BACKGROUND liability in a insured has assumed contract or Robert, Adelfa Maldonado sued Curtis Sr. agreement.” The policy prohibits Robert for defamation because of statements made settling any against him claim without accusing being by Robert of Maldonado permission. Farm’s indi- prostitute. previ- and a had thief Maldonado litigation to Robert at cated the outset ously bookkeeper. for worked Robert as a process, handling that it his defense and judgment in favor of The trial court rendered involved in that he should not become $2,000,000 $127,672.35 plus Maldonado for attorney, process. State Farm hired an Ro- prejudgment and Maldona- interest. Robert Leon, against land defend Robert Maldo- brought against present do then suit nado’s claims. It informed Robert also seeking recovery negligence for rights questions to some reservation due gross negligence, the Insur- violations of coverage, including whether Code, contract, about Robert breach of and breach of ance knowledge of made the statements with their good dealing. Af- faith and fair trial, falsity and whether the statements arose trial court ter rendered $1,536,- awarding judgment Maldonado from his business. Support Judg- apparently Motion for
1. The trial court calculated Maldona- randum of Plaintiffs’ ment). $300,000 (1) damages do’s as follows: $165,562.40 plus limits interest $465,562.40 (2) damages; equals in actual apparently 2. The trial court calculated Robert's $1,396,687.20; (3) damages equals actual trebled (1) damages as Robert sustained actual follows: $139,668.70 (10% attorneys' equals fees of law, 10% damages, as a in the amount of matter $139,668.72, ap- actually equals the court $1,865,562.40, but represents Maldonado's which $.02); (4) pears dropped him, $2,000,000 interest, to have the trebled plus equals damages plus attorneys’ $300,000; (2) actual fees the actu- minus the limits of $1,536,355.70 (the $5,596,687.20; (3) damages sum is damages equals Maldonado al trebled at- $1,536,355.90, $559,668.72; (4) actually torneys’ $.20 difference equals but the fees of 10% attorneys’ appears simple plus to be a error which actual fees mathematical trebled $6,156,355.92. equals contained in both the and Memo- Boyd asked what it would Attorney Leon testified at the trial of the break. Barrera Boyd responded case take to settle the case $300,000 very take from State Farm Robert was serious due to the nature of that it would $1,000,000 pocket. plus from Robert’s own the accusations he made about Maldonado (that Boyd at trial that he also informed prostitute) she was a thief and a asserted million published fact that he accusations State Farm that his demand for $1.3 these expire thirty days. highly respected and credible members of would On October community. Robert that Maldonado had Robert then made bad Leon informed policy limits attempting ease even worse to fabricate made a demand in excess of his that Maldonado had stolen from and advised Robert to seek the advice of story personal attorney. him. He manufactured a that had Maldonado stole hundred dollar bills Farm made a written On October been marked with the initials of Robert’s $50,000. regarded Boyd offer settle friend, conveniently still John Swain. joke respond. as a and refused to offer five possession had marked bills. Hand- 11, Boyd wrote to Leon ex- On November writing experts who examined the bills deter- tending million until his demand $1.3 mined that the initials were not written 15. Leon faxed this demand to November expert John Swain. One concluded he morning 12.3 State Farm on the of November *5 having could not rule out Robert as written 15, Leon, Robert, On November and Rob- the initials. Stone, attorney, personal Richard met ert’s Robert, opinion, against In Leon’s the case Boyd agreement with to work out an start, appeared which had bad from the be- protect personal Robert’s assets. Prior to 28,1991, hopeless on came October when the deadline, engaged the 5:00 the four in discus- parties depositions Judge Terry took the sions about how to structure the settlement. Judge Both Canales and wife. Canales meantime, In Leon with communicated and his wife testified that Robert had made Boyd’s telephone Farm via from office State the slanderous remarks about Maldonado. regarding accept whether State Farm would Judge Canales also testified that those re- the settlement offer. Once the deadline marks had influenced his decision not to con- Farm, acceptance by passed without State appointment posi- sider Maldonado for to the agreement pay Robert entered an Maldo- county appears tion of auditor. It from the $1,000,000 pocket nado from his own and to attorneys record that for both sides realized assign against his suit Farm to Maldo- State 28, 1991, at least October that if the case agreed nado. Maldonado to execute trial, went to Robert would lose and Maldo- against any personal of Robert’s assets ex- likely nado would be awarded cept policies. for insurance Robert and Mal- $300,000. excess of the limits of All of agreed that donado further Robert would be against $1,000,000 Robert’s causes of action any recovery State reimbursed from Farm, stem from Farm’s failure to settle the against split State and the would State two then, inquiry, any recovery evenly. suit with Maldonado. Our remaining A written parties agreement signed prior must focus on the conduct of the trial on No- 25, seeking writing settlement. vember and was modified in on May 1,1992. agreement The modified states 25,1991, Leon, September On assign that Robert does not his causes of Farm, provided strongly to Robert against action State Farm. Robert entered recommended that Farm settle with agreements per- advice of his these predicted Maldonado. Leon that Robert Stone, attorney, sonal his State lose at trial and that a would would assigned attorney, Leon. $300,000 policy award more than the limits. 2, attorney, Stephen November 15 deadline had On October After Barrera, Boyd, Boyd spoke passed, with Zeke Farm asked for an exten- specialist, dining deposition Farm claims sion of time to consider his offer. State morning aрpears the 12th. It from the record that the fax was received Leon until the promptly Leon forwarded it to State Farm. sent after business hours on the 11th and was not 810 offer, upheld. Transp., Inc. v. considering the but because be Southern States
Farm was (Tex.1989). State, 639, company, 774 640 of the structure of the it was neces- S.W.2d sary to recommendations to settle forward considering sufficiency In a factual Corpus local Christi office to point, all the we assess reverse regional office in office Austin the home challenged finding if for a new trial event, any Boyd Bloomington. refused great weight preponder is so 22, November extend the deadline. On manifestly as to be ance of the evidence $300,000 policy limits. Farm offered its Co., unjust. v. 715 Pool Ford Motor S.W.2d Boyd declined the offer. (Tex.1986); Bain, 629, 709 Cain gave Boyd a
On November (Tex.1986); King’s S.W.2d In re $1,000,000. parties pro- check for then Estate, 150 Tex. (1951). to trial before the court. Leon testi-
ceeded
fied that this was not a “full-blown” adver- trial; any opening sarial he did not make B. COVERAGE statement, witnesses, any cross-examine or one, point of error State Farm might offer evidence for fear that he rendering that the court erred contends jeopardize agreement with Maldo- for Maldonado because there is proof nado. Maldonado introduced that Rob- legally factually insufficient evidence to published ert had slanderous statements jury’s finding support the that State Farm damages in about her that caused her payments under Robert’s was liable to make $2,000,000. trial court ren- amount of policy. Maldonado was entitled to insurance plus for that amount inter- dered recovery under the sue State Farm for brought then est. Maldonado and Robert third-party beneficiary virtue of her as a present excess-judgment suit judgment against final See State Robert. *6 sought Maldonado Farm’s State Farm. Ollis, County v. Mut. Ins. Co. 768 $300,000 statutory policy plus penalties limits (Tex.1989); Am. Ins. Great liability pay promptly after had for failure to (Tex. Murray, 265-66 Co. v. 437 S.W.2d sought reasonably clear. Robert become 1969). statutory damages and from tort policy no Farm asserts that there is negligent and bad-faith failure settle (1) coverage statements because Robert’s attempt the defamation case. to settle prostitute a that Maldonado was a thief and court each of these The trial submitted CPA; out of his business as a did not arise jury jury. The theories of to the (2) with knowl- Robert made the statements and Robert on found favor of Maldonado (3) edge falsity; settlement of their Robert’s theory, though gross each it refused to find coverage; and with Maldonado forfeited his negligence exemplary damages. or to assess (4) not the Robert was address
result of an “actual trial.” We will
contention in turn.
each
III.
POINTS
SUFFICIENCY
arising
1.
out Robert’s busi-
Statements
A. STANDARDS OF REVIEW-
ness.
THE
SUFFICIENCY OF
EVIDENCE
injury
personal
covers
The
arising
in
caused
an offense
out of the
considering
In
a “no evidence” or
only
Robert’s business was as a
legal sufficiency point,
consider
sured’s business.
we
is evi
public
certified
aсcountant. There
favorable to the decision of the trier
evidence
calling
disregard
infer
dence in our record that
someone
fact and
all evidence and
prostitute
part of the busi
contrary.
City
thief or a
is not
to the
Davis
San
ences
This, however,
(Tex.1988);
Antonio,
is not
ness of a CPA.
(Tex.
Alviar,
that it cov
policy does not state
issue. The
Garza v.
1965).
necessary to or
only
that are
any
probative
If
evidence of
ers
actions
there is
It
customary in
insured’s business.
finding,
finding
will
force to
badly
hoped things
that
went
“arising
it
out of’ Maldonado
he
states that
covers actions
at
may
He
also have threatened her
the insured’s business.
for her.
place
employment.
This evidence
her new
is
that
there
evidence
ill
Maldonado and
shows Robert’s will toward
Maldonado
for Robert as a book-
worked
he knew at the
supports an inference that
keeper.
allegation that
was
The
Maldonado
they were
time made the statements that
he
directly
position
a thief was
related to her
as
sup-
of evidence
false. The mere existence
taking
bookkeeper.
accused her of
Robert
however,
porting
position,
Farm’s
is
money
safety deposit
from a
box to which she
to entitle
Farm to relief.
not sufficient
solely
position
had access
because of her
as
bookkeeper.
allegation
Robert’s
that Maldo-
review,
conducting legal sufficiency
When
appear
prostitute
nado was a
does not
only
court must consider
the evidence
any
employment
factual
in her
as
have
basis
disregard
jury’s finding and
favorable to the
But,
bookkeeper.
negate
this does not
Davis,
contrary evidence.
752 S.W.2d at
Also,
coverage
allegations
for the
of theft.
conducting
sufficiency
factual
re-
jury
“pros-
could have concluded that the
view,
must assess all the evidence and
we
allegation
titute”
also arose from Robert’s
only
challenged
trial
if
reverse for a new
business because the
evidence of
great weight
is so
and
relationship between Robert and Maldonado
preponderance of
as to mani-
be
employer
employee.
jury
was as
Pool,
unjust.
festly
813 Bonding & Ins. Co. v. mg that an actual trial occurred. See Pio- See Massachusetts Co., 396, 410, Exterminating Jefferson, 456 416 S.W.2d neer Cas. Co. S.W.2d Orkin (if (Tex.1967) the the insurer conducts (Tex.Civ.App. [14th Dist.] 412-13 400 — Houston n.r.e.) (actual defense, 1970, by material trial where it is bound the writ ref'd insured’s suit). sworn, in Robert had attorney for insured admit issues determined that witnesses coverage and State liability, ted and recites rendition not forfeited evidence); hearing Ins. Co. v. had not withdrawn its defensе. after Gulf Vela, (Tex.Civ.App.— by Farm to The cases cited n.r.e.) (actual Austin writ ref'd trial by the its contention that it is not bound plaintiff where evidence came from underlying judgment distinguishable are his doctor and court rendered present example, For from the case. plaintiff). favor of Co., Cluett v. Medical Protective legally conclude that the We denied), (Tex.App. the writ — Dallas factually jury's sufficient to qualified insured refused the defense offered implied finding that was an actual trial. there by agreed judg- the insurer and entered an plaintiff. inment favor of the The court held We have determined that insurer and insured were not jury’s supports implied findings on each privity coverage on the issue of and therefore coverage by disputed of the issues collaterally estopped the insurer was not Point of Farm. error one is overruled. challenging findings from of fact and conclu- C. MALDONADO’S DAMAGES agreed judgment sions of law entered on this issue. Id. at 826. Cluett is distin- two, point of error State Farm guishable in a from the ease number rendering asserts that the trial court erred in (1) respects: Robert did not refuse State judgment for Maldonado because she did not (2) defense; qualified Farm’s Maldonado’s any jury finding damages obtain and her damages were established an actual trial damages proved were not as a matter of law. (3) agreed judgment; rather than an above, party As noted Maldonado ais third prevented Farm has not been beneficiary policy by of the insurance virtue litigаting coverage coverage the issue of she obtained Robert. — subject jury question was the ten and also conclusively The record establishes Mal subject of our discussion above. judgment against donado’s Robert exceeds argues, limits. State Farm Similarly, the insured in Britt v. Cam- though, damages that it is not bound Co., bridge Mut. Fire Ins. awarded in this because of Rob (Tex.App. Antonio writ refd —San ert’s settlement with Maldonado. We dis n.r.e.), rejected qualified the insured’s de- agree. as stated in agreement fense and entered an with the underlying judgment are not related to plaintiff. agreement, to that Pursuant agreement agree her with Robert. That the formalities of a trial and insured waived ment was that she would not execute on his parties presented evidence before court $1,000,000. exchange payment assets judge. reporter presence of a without Further, agreement does not involve Id. at 478-79. The court held that the insur- damages. admission of Those resulting judgment er was not bound issues were reserved for trial. to conduct a rea- because the insured failed agreement plain- with the State Farm is not bound sonable defense and colluded *9 between Robert and Maldonado and is not tiff to defraud the insurer. Id. 483. Unlike Britt, $1,000,000 is, payment. It in Robert never refused liable for the how- the insured ever, Indeed, by by damage and find- the defense offered Farm. bound the State attorney ings represented in obtained the Farm-hired the which was State proceedings following throughout an actual trial аt which Robert was him these and attorney. by through an actual bench trial.6 While that defended his State Farm-hired at issue in Britt was the result of a bench trial. 6. State Farm states in its brief that the 814 factually to
attorney may not
the suit as
insufScient evidence
have defended
finding
negligent-
have,
jury’s
that
Farm
zealously
is no evi-
the
as he could
there
ly failed
settle Maldonado’s claims
prevented
doing so
that he was
from
dence
Specifically,
argues
Farm
Robert.
by Robert.
prevail on his Stow-
that Robert cannot
Carp.
Finally,
v.
cites Enserch
claim because
never offered
ers
Maldonado
(5th
Co.,
Morahan &
F.2d 1485
Shand
952
claim for
within the
to settle her
an amount
Underwriters,
Cir.1992), and U.S. Aviation
policy limits.
issue before us then is
Inc.,
Olympia Wings,
Inc. v.
not construe a situation above, opportunity to create jury determined As discussed accepted. tendered and policy limits could be was Maldonado’s claim Robert that fact, the out- was instructed from In Robert coverage under scope of Robert’s within the claim Farm would handle Further, set that State policy with Farm. his State and that he should become involved. finding supports a that the demand essence, was asked to trust State Robert a in this case amounted to demand made cutting possi- Farm was off Farm while State policy purposes limits for the of Rob- within Maldonado’s demand of settlement. bilities action. ert’s Stowers a to Robert until was not communicated record reflects that Maldonado’s $1.3 to Farm and month after it was made State directly communicated to million demand was of the deadline been of- an extension had Leon, Farm to representatives of State meantime, Farm mаde In the State fered. attorney Farm on Rob- hired State attempt negotiate to for a reason- no further The demand was made both ert’s behalf. policy within limits. State able settlement orally writing. and in While the record con- negotiation attempt Farm’s one at resulted that of the tains no indication the bifurcation $50,000 offer, attorney which Maldonado’s a writing, to we find demand was reduced joke. considered a nothing to a contention that a de- eventually made aware of Mal- Robert was policy mand within limits must be made him when Leon advised donado’s demand appli- writing before the Stowers doctrine is well in that he stood to suffer of the demand cable. The bifurcated nature should, policy there- excess of his limits and clearly communicated to all $1 involved— fore, him in personal attorney to assist hire a $300,000, from himself and million Robert protecting assets. This was the first time his limits, policy Accordingly, Farm. from State Farm had actual notice that State supports everyone that the record acting in perhaps not his best interest involved, Leon, including Farm and State negotiations to One while he left the them. understood the mechanics Maldona- behind Robert, day expired, the offer before is, do’s million demand. That $1.3 personal attor- advice of both Leon and his being policy offer of a limits settlement was ney, agreed pay million from his own to $1 pay made to Farm if Robert would $1 protect pocket in order to his assets. poсket. equally out of It million his own Leon, day, attorney, next Maldonado’s given clear that the demand was reasonable attorney personal met to dis- and Robert’s degree poten- the likelihood Robert’s possibilities. It uncontro- cuss settlement exposure tial to a in excess of well purpose meeting was verted that the of this policy Attorneys limits. on both sides Farm was in turn to settle the case. State agreed case that Maldonado’s claim willingness pay the of Robert’s advised in, very at the Robert would result portion in excess of his of the demand minimum, in excess of Farm a demand limits. This left State with potentially limits and that the claim could $300,000, coverage. limit of Robert’s judgment. result in a multi-million dollar discovery, repeated- Leon From the outset of million re- demand of $1.3 ly Farm of the risk involved informed State had mained on the table. and recommended that State the case authority offer million from Robert on $1 fact, Leon Farm settle with Maldonado. Therefore, only thing that that date. Farm that this case communicated being settled that prevented the case liability and that was the worst he had seen refusal to tender afternoon was State Farm’s stipulated. should be policy limits. being of the There is no evidence all the time advised
While lawsuit, representatives ever indicated high risk involved they attorneys with the case paid if million out involved was aware that Robert $1 seriously considering Maldonado’s of- limit- pocket, its would be were of his own fer, go through the $300,000. Yet, they needed to Farm did not but that ed approv- get channels to necessary him an hierarchial give offer and inform Robert of this *11 and it elements of Robert’s Stowers claim. Point of al. a situation is reasonable Such easily conveyed could have been when State error six is overruled. contacted with the information portion willing pay
that Robert was
of
legal
factu
We further note the
policy
limits. How-
the demand
excess
sufficiency
al
of the trial court’s award of
ever,
reflects that the demand was
the record
damages
negligence
on Robert’s
claim. The
explanation.
refused with no
against Rob
amount of the
levied
policy
beyond
con
ert
excess of
limits is
Only after the settlement deadline had
judgment in Maldonado’s case
tention. The
passed did
Farm demonstrate an inter-
against Robert was before the trial court as a
policy
settling
est in
limits and indicate
matter of record. As a result of State Farm
necessary
that additional time was
to obtain
claim,
failing to settle Maldonado’s
approval of the settlement from State Farm’s
him,
judgment against
incurred a
and was
Bloomington.
point,
home office in
At this
$2,000,-
legally obligated
pay
Maldonado
having
with the offer
been on the table for
policy
limits from
response
000.00. The deduction
almost six weeks with no
Farm,
proper
that amount was
as the cause of
declined
damages
policy
action is for
in excess
to extend the deadlinе.
limits and also
State Farm was con
because
present
presents
note that the
case
We
tractually
up
bound to cover Robert
to that
However,
unusual factual situation.
the su-
amount.
court,
reaching
preme
while not
the merits of
applicability of
in such a circum-
Stowers
policy
For the same reason we deduct the
stance, acknowledged that such a situation
$2,000,000.00 judgment
limits
from the
A.P.I.E.,
burden
the insurer.
AND FAIR DEALING
funding
portion of
de-
amenable to
limits,
mand in
as he was in
excess
point
eight,
of error
Farm asserts
to the insurer
the demand
rendering judgment
that the court erred in
falls within those limits.
there is no evidence or
for Robert because
jury’s
finding
negligent
Farm was
insufficient evidence
that State
settle,
knowingly
breached
failing
this case
duty
good
dealing. The
specific
of a
faith and fair
impliedly found the
elements
action,
jury was instructed that a breach of the
namely that Maldonado’s
Stowers
dealing
good faith and fair
is established
scope
claim
within the
of Robert’s cover- of
for the
policy “when there is no reasonable basis
age, that a demand was made within
limits,
is a failure
delay
payment
or when there
and that the demand was reasonable.
part
to determine
of the insurer
The evidence in the record and the reason-
basis for the
stemming
support whether there is
reasonable
able inferences
therefrom
delay.”
jury’s implied findings on each of the
*12
377,
Inc.,
380-81
Agency,
799 S.W.2d
supreme court articulated
General
The
1990, writ de-
Christi
(Tex.App.—Corpus
in relation
standard of care owed
insurers
Co.,
nied);
Ins.
791
in Arnold v. National
v.
first-party
to
claims
Caserotti
Co.,
165,
1990,
561,
(Tex.App.—Dallas
writ
County Mut. Fire Ins.
725 S.W.2d
566
S.W.2d
Co.,
(Tex.1987),
v. In
again
denied);
Aranda
Ins.
167
v. Transamerica
Chaffin
America, 748 S.W.2d
728,
(Tex.App.—Houston
surance Co. North
732
731 S.W.2d
of
(Tex.1988)
210, 218
Lyons
n.r.e.).
Millers Cas.
v.
1987,
Similarly,
d
writ ref
[14th Dist.]
(Tex.1993).
Co.,
597,
599
Ins.
866 S.W.2d
that an insured
one court has held
at least
cases,
its
first-party
the insurer breaches
duty
of the
not havе a claim for breach
does
dealing by
duty
good faith and fair
refus
handling
dealing in the
good faith and fair
“(1)
has
ing
pay a claim where
the insurer
to
Roofing
claim.
Co.
third-party
of a
Charter
delaying
denying
or
no reasonable basis
Co.,
903, 905-06
Ins.
v. Tri-State
(2) the insurer
payment of the claim or7
1992, writ
(Tex.App.—Houston [14th Dist.]
or should have known that there
knew
denied);
Ins. Co. v.
also Texas Farmers
see
delaying
denying or
no reasonable basis for
(re-
(Tex.1994)
Soriano,
317
Soriano, 881
payment of the claim.”
S.W.2d
duty
good faith and fair
fusing
hold that
to
317;
Transportation Ins. Co. v.
at
see also
third-party
dealing
handling of
extends to
(Tex.1994).
10, 17
Moriel, 879 S.W.2d
claims).
objec
“requires an
The first element
a third-
case at bar involves
of whether a reasonable
The
tive determination
claim; it
party
first-party
than a
claim rather
insurer under similar circumstances would
does not have a
appear that Robert
would
delayed or
the claimant’s bene
have
denied
duty
good faith and
of the
claim for breach
fits.” National Union Fire Ins. Co. v. Dom
(Tex.1994).
dealing
fair
in this context. See Charter
inguez, 873 S.W.2d
376
The
Co.,
balancing
need
Roofing
second element involves a
tract establishes bad faith.
879
Co., 866
Lyons
v. Millers Cos. Ins.
case
at 17-18.
S.W.2d
(Tex.1993):
reviewing court
The
S.W.2d 597
duty
good
dealing
The
faith and fair
relationship of the evi-
“the
must focus on
relationship
special
arises from the
between
faith find-
arguably supporting the bad
dence
Transport
insured and the insurer.
Ins.
faith.” Id. at 600.
ing to the elements of bad
(Tex.
Faircloth,
v.
898
279
Co.
S.W.2d
1995).
presented, viewed
The evidence
lacking,
special relationship
This
par-
prevailing
to the
light most favorable
though,
third-party
claimant and
between
permit
logical
Faircloth,
ty, must be such as to
insurer.
898
at 279-
S.W.2d
had no reason-
Thus,
inference
the insurer
80.
it has been held that an insurer
deny payment of the
delay
or
good
faith and fair
able basis
does not owe
claim,
have
and that
it knew or should
dealing
third-party
to a
claimant. P.G. Bell
for its
Guaranty
it
no reasonable basis
Fidelity and
known
had
Co. v. United States
Co.,
relate to the
The evidence must
(Tex.App.—Corpus
actions.
S.W.2d
1993, writ);
of no reasonable basis for denial
no
Bowman v.
tort issue
Christi
Charter
Thus,
upheld
jury's
will be
must
7. The court in Aranda held that a claimant
denying
prove
of a reasonable basis for
either
absence
evidence to establish
if there is sufficient
delaying payment
knew
or
and that the insurer
reasonable basis for
that State Farm had no
should have known there was not a reason-
or
delaying payment
Farm failed to
or that State
Aranda,
delay.
able bаsis for denial or
ba-
whether there was
reasonable
determine
pres-
at
instruction in the
delay.
sis for the
disjunctive.
stated the elements in the
ent case
claim,
just
investigated
expla-
delay
payment
of a
not
tion of theft.
It
coverage.
by hiring
handwriting
the contract issue of
nation of the theft
expert
analyze
placed
initials
ostensibly by
expert
bills
John Swain.
in National
Fire Ins.
As stated
Union
Co.
determined that the initials were
written
(Tex.1994),
Dominguez,
that a third cannot sue practices under arti- CODE unfair claims settlement F. VIOLATION OF INSURANCE Code, Insurance it also held cle 21.21 of the five, point Farm of error State prac- that claims for unfair claims settlement rendering in argues that the court erred brought by against its insur- tices an insured because there is for Maldonado governed by v. Texas Farm er are still Vail factually evidence to legally or insufficient Co., 129, 132 Bureau Mut. Ins. support jury’s finding that Farm State (Tex.1988). Watson, at 149. S.W.2d equitably knowingly promptly failed to specifically in held that an insured court Vail in pay the favor of Maldonado mаy sustain a cause of action under liability policy was to her under the when for “not Insurance Code its insurer reasonably argues under clear. State good in faith to effectuate attempting rights that Maldonado has no point fair, equitable prompt, settlements the Insurance against Robert’s insurer under liability has be- claims submitted which Code. failing to reasonably clear” and for come standing party A third does not have to Vail, process good a claim in faith. recovery from an insurer under article seek Thus, at we must examine S.W.2d Watson, 21.21. Allstate Ins. Co. v. sup- it to determine whether (Tex.1994). 145, 147 Insureds are jury’s ques- ports the affirmative answer unfair claims given a cause of action for tion three. practices against their insurers settlement the first special relationship Farm cannot be liable under of the between because deceptive prac- act or party A definition of “unfair or Id. at 149. suit a third the two. relationship. attempting to effectuate a settle- special tice” for not to the contract lacks this reasonably liability Thus, party upon ment unless its8 a third “has no basis basis clear. If Farm had reasonable expect or demand the benefit which denying delaying payment on the obligations imposed on in- for extra-contractual claim, liability could not have been regard to their then its under art. 21.21 with surers Similarly, asser- standing reasonably clear. has no insureds.” Id. Maldonado prac- liability policy. It defines unfair settlement jury states "whеn has 8. The instruction establishing reasonably “failing attempt good without to effectu- clear” faith become tice as liability fair, is in issue. In this equitable whose of a prompt, settlement ate a liability example, could refer either to Robert’s it liability respect to the insurer’s claim with liability Farm’s under to Maldonado or State reasonably clear.” has become Ins.Code Tex. 21.21, from which policy. 4 of article Section 21.21, 4(l)(a)(ii) (Vernon Supp.1996) § Ann., art. derives, jury makes clear the liability instruction added). (emphasis company the insurance at issue is that of Farm, process agreement” not a tion that failed to the Farm and was “settlement Thus, good purposes faith Farm’s condition. claim is based on State alleged agree- failure to settle with Maldonado. whether Farm consented to that duty Again, have had no coverage. would ment does not affect the issue of unless and until its settle with Maldonado Point of error three is overruled. reasonably liability clear. Thus, sufficiency this court’s review of the B.JURY ISSUE ON COLLUSION jury’s support the evidence to answer to four, point of error State Farm asserts indistinguishable question three is from our refusing that the trial court erred in to sub- analysis sufficiency above of the of the evi- inquiring agree- amit issue whether the of a breach of dence mént between Robert and Maldonado was dealing. good faith and fair For collusive or made bad faith. State Farm above, the reasons stated we hold that there wholly point, providing hаs failed to brief this implied finding is no evidence to argument authority sup- nor neither that State Farm’s had become rea- Tex.R.App. 74(f). port. Nothing See P. sonably Roofing clear. See Charter Co. v. Further, presented for our review. as dis- Co., 903, 906-07 Tri-State Ins. above, agreement cussed between Robert (Tex.App. Dist.] writ [14th — Houston binding and Maldonado was not on State (same denied) recovery defeats Farm; whether it was reached in faith is bad *15 duty good
for of of faith and fair breach present not material case. Point of dealing recovery alleged violation defeats error four is overruled. Code). Thus, Farm of the Insurance State is not liable to Robert under the Insurance Progressive County Mut. Ins. Code. See Co. C.INTEREST (Tex. Boman, 440-41 twelve, point of error State Farm as- writ) (no recovery App. no — Texarkana in serts that the trial court erred its award of liabili- under Insurance Code unless insurer’s complains interest. Farm first that the State clear). ty reasonably is Point of error seven 28, 1992, September judgment erroneously
is sustained. accruing awards Maldonado interest at 18% per pursuant annum to article 21.55 of the POINTS IY. MISCELLANEOUS sup- Insurance Code. Our record has been A.JURY ON AGENCY INSTRUCTION plemented judgment signed January with a 27,1993, which awards interest at the rate of three, point of error State Farm per agrees Farm 10% annum. State that the trial court erred instruct asserts complaint judgment this renders moot its ing jury questions that “whenever these regarding the rate of interest. Farm, ask about the conduct of State quеstion and his law includes Roland Leon judg- complains State Farm also that the argues firm.” State Farm that this instruc erroneously punitive ment interest on awards tion allowed the to conclude that Leon’s damages. have held that neither Because we agreement participation negotiating entitled to recover Robert nor Maldonado is constituted between Robert and Maldonado punitive damages, we need not address the Farm’s consent. need not deter We point. merits this mine the instruction was erroneous whether error, panel opinion In the dated any, December if because we hold judg- court proba this determined that reasonably not calculated to cause and erroneously post-judgment in- improper ment awarded bly did not cause rendition of an Tex.R.App. 81(b)(1). underlying judgment. P. As terest on the entire amount of the See above, $300,000 judgment than on agreement between rather discussed obligated pay.9 Farm did Robert and Maldonado did not bind State Farm was (actu- erroneously judgment against panel opinion recites that the State Farm 9. The fees). judgment plus attorneys' amount of Maldonado's al trebled Her $1,536,355.90. actually is This is the amount of of the the full amount accrues on court or est that complaint in the trial raise this not the trial error, judgment from the date if in this court. The assign it as error preserved presented court rendered any,10 properly pays both court; the trial until the date State we will not disturb this damages. actual and the post-judgment interest. interest court’s award ADDRESSED D. POINTS NOT dissenting opinion by Concurring and RICKOFF, J., joined GREEN disposition points of our Because DUNCAN, above, JJ. we need not address error discussed (sufficiency points of error nine the merits of Justice, RICKHOFF, concurring and (suffi- damages), evidence of ten of Robert’s dissenting. showing ciency intentional of the (double conduct), recovery Peeples in the of dam- David or eleven As noted Justice Maldonado). cause, previously issued this ages panel opinion between Robert excess-judgment issue salient
“[t]he
adjudi-
V. CONCLUSION
under Texas law
case is whether
Robert) may
(appellee
defamer
Curtis
cated
above,
judg-
For all the reasons stated
by recovering mil-
profit from his defamation
trial court is reversed insofar as
ment of the
(ap-
liability insurer
of dollars from his
lions
recovery against
it awards Robert
Farm).”
we concur with
pellant State
While
good
fair
Farm for
faith and
deal-
breach
judg-
majority’s
rendition of
reversal and
code;
ing
of the insurance
and for violations
insurance code
ment as to Robert’s
judgment is rendered that Robert take noth-
dealing
good
faith and fair
breach
statutory
ing on his contractual and
claims.
claims,
the re-
respectfully dissent from
we
as it
is affirmed insofar
and,
majority’s judgment
in-
mainder
recovery against
awards Robert
stead,
take-nothing
would render a
modified
negligence;
*16
Robert as to all
against both Maldonado and
damages of
that Robert
recover actual
agree that
Specifically, we cannot
claims.
(Maldonado’s
$1,700,000.00
from State
to
contractu-
Maldonado was entitled
recover
$2,000,000 judgment against Robert minus
(1)
policy because:
al
under the
$300,000),plus post-judg-
policy
limits of
was un-
evidence that Robert
there
no
per
ment
interest
the amount
10%
defamatory
falsity of his
state-
aware of the
judgment
annum from the date
was rendered
(2)
ments;
of an actual
there is no evidence
by
present
the trial court
case.
claim;
underlying
and
trial
defamation
it
judgment
The
is also reversed insofar as
(3)
damages.
there is no evidence
damages to
awards extra-contractual
Maldo-
addition,
majority’s con-
disagree with the
we
nado; judgment is rendered that Maldonado
to
was sufficient
clusion that
nothing
takes
on her extra-contractual claim.
jury’s finding that State Farm
support the
as it
judgment
is affirmed insofar
negligently
to settle Maldonado’s
failed
Maldonado;
damages to
awards contractual
(1) there is
against
because:
claims
Robert
actual
is modified to reflect
within
of a settlement demand
no evidence
damages awarded to Maldonado
(2)
limits;
policy
and
there is no evidence
$465,560.40($300,000policy limits
amount of
damages.
plus interest on the
well-regarded CPA who
by
had been a
judgment was rendered
Robert
until the date
case),
terminally ill with a disease
plus all inter-
became
trial court in the
$2,127,672 (ac-
compa-
any judgment” until the
against
amount of
was for
entire
Robert
interest).
prejudgment
damages рlus
ny paid
Id. at 238.
tual
or tendered its
limits.
underlying judgment
on the entire
This interest
Maryland
A similar clause was addressed
"part
[the
benefits
was held to be
Serv., Inc.,
Coatings and
Ins. Co. v. Head Indus.
though
obligated
pay,”
to
even
insurer] is
(Tex.App.
no
823 that his acting out-of-charaeter slan- ication publication of injury arising out of the by judgment were distorted perception and insured if done derous statements infers majority then The the medication. were knowledge that the statements with judg- perception in that this distortion determining to be false. realizing the from prevented Robert finding ment legally sufficient is inference falsity This falsity of his statements. knowledge did not have of the aforementioned statements, stacking in violation .majority infers that were, finding that support a does not dis- rule and perception that his statements unaware Robert was that Robert was from the evidence torted were false.2 of medication. excessive doses ingesting inference, majority on this first
Based Underlying Finding in Trial Court did not make b. further infers Robert then Judgment falsity. their knowledge of statements with the find- other evidence majority item of evidence The second knowledge of ing did not have that Robert support their conclusion upon to relies instant falsity in the of his statements legally sufficient show the evidence was finding regarding trial court’s case was the knowledge falsity was the trial absence of underlying suit. defamation that issue underlying defamation finding in the court’s however, evidence, should not nor the trial action. This the stacked inference Neither suit, Supreme light of the Texas howev- be considered court’s Farm Fire & decision State er, legally evidence. Court’s recent constitutes sufficient (1996). Gandy, 925 sepa- each item of evidence Cos. Co. will address We rately. with- Gandy, Supreme Texas Court dangers arising out dissent discussed Stacking of Inferences
a. plaintiffs and arrangements between as covenants not to defendants such stacking permissi- is not insured of inferences First, the Court Id. at 711-13. general- execute. a no evidence review. See ble under arrangements did not end Calvert, such noted that ly “No Evidence” and “Insufficient Error, actually prolonged it. litigation but Tex. L. Rev. Evidence” Points Hall, prolonged because (1960); Litigation is at 711-12. see also W. Wendell arrangements is such Ap- purpose the entire Revisiting Review in Civil Standards of against the insur- to recover 1134-35 to find means peals, 24 St. MARY’S L.J. (1993). clearly resulted from danger imper- er. Id. This The basis for this rule is the instant ease which arrangement establishing pil- vital fact missibility of litigation contemplated additional Schlumberger expressly upon ing inference inference. provided for a divi- Farm and Corp. & Gas Surveying v. Nortex Oil Well (Tex.1968). therefrom. proceeds recovered sion Corp., 435 S.W.2d may legiti- upon an inference “Facts expressed the Court . A second concern mately must be established direct rest arrange- types of Gandy regarding these *18 evidence, they facts in issue.” as if were the tendency litiga- the to distort ments is their Emanuel, 538, Sling v. 431 S.W.2d Texas Co. pro- Id. The settlement tion that follows. (Tex.1968) Ry. Belt v. (citing Fort Worth 541 protect for insured to a disincentive the vides (1914)); Jones, 345, 1130 106 Tex. 166 S.W. and, in underlying action position in the 260, Bullard, Tex. v. 154 see also Rounsаville shifting instances, complete in a results some (1955). 791, 794 In the instant Id. at 711-13. positions. a case, relegated to the role of that Leon was majority infers from The in his underlying trial at the passive med- observer ingesting doses of was excessive assertion, Having it is difficult made such dated demand letter 2. We note that Maldonado’s 11, 1991, struggle very comprehend to un- that "it is hard to Maldonado’s states us to November defamatory appropriately made imagine the comments that State Farm derstand the reason intentional, negligent or was not the Defendants coverage. questioned its my client.” and intent to harm without malice protect efforts to trary his absent client’s interest. suggestion in in Employers dicta Casu- mitigating Block, No alty evidence as to Robert’s Company illness v. presented
was upon (Tex.1988), nor was Robert called to and United States Aviation Un- testify, derwriters, as he did the instant Inc., that he Olympia Wings, Inc. v. (5th Cir.1990).” either never made such statements or he F.2d making does not recall such statements be- majority While the concedes the trial they Thus, cause were not true. the ar- finding binding, court’s rely was not it must rangement between Maldonado and Robert that in order to conclude the evi- distorted the rendered the defa- legally dence is sufficient to by creating mation action disincentive jury’s finding that Robert did not know his presentation possi- the best case statements were false at the time he made against ble to defend the claims. them.3 Given the considerations annоunced Finally, Gandy expressed Gandy, the Court in majority’s reliance is mis- types placed. concern that these arrangements Gandy only directly While address- permit parties positions admissibility es the appear take of the as evi- contrary damages, to their dence of equally natural interests for we are no convinced Supreme other reason than to the Texas obtain a Court would extend the rule to Thus, findings trial court the insurer. Id. at where the 712-13. parties fully trial was not collude in adversarial and a directed effort to take prevented insurer, the insurer was advantage presenting from and “the result is evidence to finding. counter such a parties worse than if There- had not settled.” fore, 714; we would hold that there was no Employers Id. at evi- see also Natl Ins. Co. dence that Dalros, (Tex. falsity Robert was unaware 1994 WL at 11 of his statements. 1994) App. (Rickhoff, Antonio Mar. — San J., dissenting) (discussing failure to treat in 2. ACTUAL TRIAL equal surers as litigants and unfairness in insurers). imposing greater burdens on majority also contends the evidence legally factually sufficient to Assuming majority is correct in their jury’s implied finding of an actual trial. footnote Gandy reference to that State Farm implied finding necessary This because preserve did not validity the issue as to the policy provided State Farm could be arrangement public policy under con- underlying judgment sued recover the if it siderations, this majority does not entitle the sup- was obtained after an actual trial. ignore Supreme the Texas Court’s unani- port conclusion, majority of its relies on Gandy mous decision in implica- and all of its the fact that ap- “Robert and Maldonado Gandy tions. The Court in repeatedly an- peared judge together before the district regarding nounced its concerns types these attorneys” with their pre- and “evidence was arrangements pernicious and their effect sented to court in regard on an underlying judgment, and these damages through deposition of four wit- ignored. statements cannot and should not be testimony nesses and live of two witnesses.” id. at Apart announcing See 711-13 applicable the test in determining validity majority syn- is correct in their brief arrangements, of such in Gandy opsis Court of the trial events. Maldonado’s attor- event, however, also held that “in no ney deposition testimony introduced the plaintiff defendant, Canales, Judge ren- county his wife and the audi- (Maldonado’s fully trial, dered without a adversarial supervisor) bind- tor regarding Rob- ing addition, on defendant’s insurer or admissible as ert’s statements. *19 damages
evidence of
in
against
CPA,
an action
employer,
former
a
testified that Mal-
by plaintiff
defendant’s insurer
as defen-
damaged by
donado could have been
at least
Furthermore,
assignee.”
dant’s
Id. at 714.
million. Maldonado also
$2
testified it would
expressly disapproved
the Court
compensate
“the con-
take at least
million to
her.
$2
majority's
3. Since the
upon by
majority
reliance on the stacked
dence relied
the
is the trial
imрermissible,
inference
finding.
is
the
other evi-
court’s
Group,
not, however,
Mfg.,
into
Inc. v.
Ins.
879 S.W.2d
synopsis
take
Alliance
This
does
894,
(Tex.App.
Dist.]
[14th
account what did not occur.
— Houston
denied)
(judgment following actual
writ
made,
objections
No
were
no cross-exami-
“prove up” or
contemplates more than
trial
undertaken, and
was
nation was
no defense
Co.,
suit”); Wright v. Allstate Ins.
“friendly
Indeed, Leon
he re-
presented.
testified
(Tex.Civ.App
379-80
. —Dal
present
at the trial
quested Robert not
be
n.r.e.) (actual
presup-
ref
trial
las
writ
'd
no
afraid
and took
action because he was
issues).
poses contest of
any
part
presence or
action on his
agreement
with
jeopardized
could have
3. EVIDENCE OF DAMAGES
fact,
presented
if
Maldonado.
In
Leon had
evidence,
might
the court
concluded
have
point
respect
Farm’s second
With
to State
competent
agree to
that Robert was not
error,
is
majority
holds “State Farm
or,
pay
large
such a
sum to Maldonado
at the
underly-
in
damages
recited
bound
least,
very
mitigated
that his illness
the re-
ing judgment,
judgment in this case is
which
damages.4
Eidinojf, 321
coverable
See
a consent
but was the result
not
at 371.
S.W.2d
Gandy,
actual trial.”
the Texas Su-
an
expressly held that “in no
preme Court
most
of this
determinative feature
however,
event,
plaintiff
a
is
“trial” was the trial court’s refusal to allow
defendant,
fully
without a
rendered
to intervene
the suit. As
trial,
in-
result,
attorney
expressly
binding on
State Farm’s
was
adversarial
defendant’s
permission
any
deniеd
to cross-examine
wit-
or admissible as
surer
Thus,
nesses.
Leon refused to cross-exam-
defendant’s insurer
in an action
ine,
prevent-
assignees.”
and State Farm’s
was
as
Id. at
plaintiff
defendant’s
doing
from
addition,
ed
so.
disapproved
717.
Court
Block,
at
it
wherein
dicta
Although
Supreme
the Texas
Court
held
the insurer
“barred
Gandy
expressly
pur-
did
hold
that for
agreed judgment
collaterally attacking the
poses
determining coverage
types
in these
by litigating
reasonableness of the dam-
fully
of cases an actual trial means a
adver-
ages
there was
recited therein.”
Since
trial,
implied
sarial
this can be
from the
presented on the issue of dam-
no evidence
concluded,
an
Court’s decision. As
Court
judgment,
ages
other than the
insurer’s
litigated
should be
on the
the Court held inadmissible as evi-
which
strength
plaintiffs
the in-
claims as
Gandy,
hold
we would
dence
assignee
than
generosi-
sured’s
rather
jury’s
legally
to be
insufficient
ty of the defendant
concessions.
insured’s
finding.
damage
Gandy, 925
at 719.
S.W.2d
Leon admitted
underlying judgment
in the instant
case did not
result from adversarial situa-
B.
ACTION
STOWERS
is supported
tion. This
absence of
LIM-
1. NO DEMAND WITHIN POLICY
cross-examination,
objections,
the absence
ITS
and the insured’s failure to
a defense
Therefore,
recites,
majority correctly
one of
mitigating
evidence.
we
As the
imposition
is
of a
prerequisites
conclude that there
no evidence
to the
would
within
jury’s finding
was an
under
demand
that there
to settle
Stowers5
trial,”
implicitly
limits. Texas Farmers
Ins. Co.
“actual
defined
(Tex.1994).
Soriano,
312, 314
Supreme
Gandy
to mean
the Texas
Court
majority
everyone
under-
fully
trial. See
Emscor The
contends
adversarial
also
Robert,
trial,
During
subsequent jury
per-
Co. v.
Indem.
5. G.A. Stowers Furniture
American
illness,
Co.,
haps
important
(Tex.
App.1929,
due to
could not
recall
Moreover, to accept regarding even were we raises the same concerns collusion majority’s that arise contention that Robert’s offer to distortion where personally pay plaintiff is used as million of the million as evidence $1 $1.3 assignee. underlying judg- settlement demand somehow converted or defendant’s $300,000, result from reduced the settlement demand to ment the instant case did not Stowers, trial, fully mitigating thereby triggering and no evi- under we adversarial Therefore, Peeples, original panel presented believe Justice dence was therein. Garcia, (Tex. Exchange 6. The does burden insurer not bear the of mak- 1994). Physicians ing setdement offers. Ins. American *21 (and majority) reliance the trial court as
compute instant case
erroneous.
CONCLUSION majority does a disservice to a well- Texas opinion
reasoned a unanimous Gandy
Supreme relegating the Court footnote. For the reasons ex-
decision to a above, judg-
pressed we would reverse the entirety trial
ment of the court in nothing.
award As Maldonado Maldonado, course, by “nothing” —we nothing she
mean more than the million $1 already at-peace
has received now
Robert.
In the Matter of the ESTATE OF McDANIEL, G.
William
Deceased.
No. 06-96-00034-CV. Texas, Appeals
Court of
Texarkana. Sept. 1996.
Submitted
Decided Oct.
Rehearing Nov. Overruled 1996..