Law School Case Brief
Trinity Universal Ins. Co. v. Bleeker - 966 S.W.2d 489 (Tex. 1998)
An insured can sue his insurer for negligently failing to settle a third party's claim against the insured. As a threshold matter, a settlement demand must propose to release the insured fully in exchange for a stated sum of money.
On July 14, 1990, Ronnie Dale Bleeker, was driving while drunk along the interstate when he struck a pickup truck. One person was killed and several others suffered serious or life-threatening injuries. Bleeker carried Southern County insurance for the minimum legal amount of $40,000 per accident. Trinity reinsured and handled claims for Southern County. In March 1991, the victims’ lawyer wrote to Trinity, demanding that Trinity pay the $40,000 policy limit; however, Trinity refused to pay without a full release for Bleeker. Thereafter, the lawyer obtained a trial court judgment of approximately $11.5 million. Bleeker then assigned any claim that he might have against Trinity to the claimants, and the claimants brought this action in Bleeker’s name.
Following a jury trial, the trial court rendered judgment against Trinity for breach of a common-law duty of good faith and fair dealing, and for negligently failing to settle under the Stowers doctrine. The trial court awarded actual damages of approximately $13 million, trebled under the Deceptive Trade Practices Act (DTPA), Tex. Bus. & Com. Code Ann., § 17.50(a)(3), to approximately $ 38.5 million, plus attorneys' fees of approximately $38.5 million. The court of appeals reversed and rendered judgment for Trinity on all claims except the $13 million Stowers award, which it affirmed, and one other claim which it found to be unconscionable. Trinity sought a review of the appellate court’s decision, arguing that the appellate court erred because it did not render judgment for Trinity on the Stowers claim.
Was the reinsurer Trinity liable for the $13 million Stowers claim?
The Court noted that under the doctrine established in G.A. Stowers Furniture Co. v. American Indemnity Co., an insured can sue his insurer for negligently failing to settle a third party’s claim against the insured. However, as a threshold matter, a settlement demand must propose to release the insured fully in exchange for a stated sum of money. In the case at bar, the Court held that the claimants’ lawyer did not offer a full release of his clients’ claims; thus, Trinity never had a Stowers duty to settle. Accordingly, the Court held that Trinity was not liable for the $13 million Stowers claim.
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