Republic Ins. Co. v. Stoker

Republic Ins. Co. v. Stoker

Opinion

 [*339]  This case presents the question whether an insurer breaches its duty of good faith and fair dealing to its insured if it denies a claim for an invalid reason when there was at the time a valid reason for denial. The trial court granted summary judgment against the insureds on their policy claim holding that there was no coverage, but rendered judgment on the jury verdict for the insureds on their extra-contractual claims. The court of appeals affirmed, concluding that a finding of no liability [**2]  on the policy action does not, as a matter of law, defeat an insured's extra-contractual claim. 867 S.W.2d 74. The court rested its decision on Viles v. Security Nat'l Ins. Co., 788 S.W.2d 566 (Tex. 1990). Because the court of appeals misapprehends Viles, we reverse the judgment of the court of appeals and render judgment that the Stokers take nothing.

This case arises out of a multiple car accident in which the Stokers' automobile struck the rear end of another vehicle. It is undisputed that an unidentified pickup truck dropped a load of furniture on the highway, causing a chain reaction collision. Also, it is undisputed that this truck was not struck by any of the vehicles involved in the collision. The Stokers had no collision insurance and, therefore, submitted a claim to recover under their uninsured/underinsured vehicle coverage with Republic.

Republic hired Southwest to investigate the Stokers' claim. Southwest recommended that the uninsured motorist claim be denied because it concluded that Mrs. Stoker, who was the driver, was more than fifty percent at fault in causing the accident. A Republic senior claims examiner confirmed Southwest's decision. Mrs. Stoker [**3]  acknowledged at the trial of her bad faith claim that fault is an issue in recovering under the uninsured motorist coverage.

The Stokers' policy provided uninsured motorist coverage for damages caused by an unidentified hit and run vehicle only if the vehicle hit the insureds' car. The language of the policy is in accord with the requirements of the Insurance Code regarding uninsured motorist coverage. TEX. INS. CODE art. 5.06-1(2)(d) (in order to recover under uninsured motorist coverage "actual physical contact must have occurred."). Republic initially did not rely on the lack of physical contact with the pickup as a reason for denying the Stokers' claim.

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