*Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be

published and is not precedent except under the limited circumstances set forth in 5TH CIR. R.

47.5.4.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

 

No. 01-11317

 

RSR CORP.; QUEXCO INC; QUEMETCO, INC.;

QUEMETCO METALS LIMITED, INC.,

Plaintiffs-Counter ClaimantsAppellants,

versus

GREAT NORTHERN INSURANCE CO.,

CHUBB & SON, INC.,

Defendants-Counter DefendantsAppellees.

 

Appeal from the United States District Court for

the Northern District of Texas

(USDC No. 3:99-CV-961)

_______________________________________________________

September 11, 2002

Before REAVLEY, BARKSDALE and CLEMENT, Circuit Judges.

PER CURIAM:*

RSR Corp., the insured, appeals the dismissal of its claims against Great Northern
2

Insurance Co., its insurer, and Chubb & Son, an insurance broker. We affirm the judgment of the

district court for the following reasons:

1. RSR contests the district court’s Rule 12(b)(6) dismissal of its claim against its

insurer under Texas Insurance Code. RSR has failed to identify the “unfair

settlement practice” that is prohibited by Article 21.21 § 4, or the Texas Supreme

Court’s interpretation of that statute, in which Great Northern engaged. See

Rocor Int’l, Inc. v. Nat’l Union Fire Ins. Co., 77 S.W.3d 235, 262 (Tex. 2002). 

The district court did not err by dismissing RSR’s Article 21.21 claim.

2. RSR complains of the district court’s order of summary judgment on its breach of

contract claim because Great Northern initially sought reimbursement for the

settlement amount, failed to investigate the claim, and settled over RSR’s

objections. The insurance policy at issue contained a clause allowing the insurer to

settle any claim or dispute it “deem[ed] expedient.” Although Great Northern did

not have the right to conduct RSR’s defense once it disputed coverage, it did not

lose the right to settle the case within policy limits for a reasonable amount. See

Dear v. Scottsdale Ins. Co., 947 S.W.2d 908, 913-914 (Tex. App.--Dallas 1997,

writ denied) (“This [‘deems expedient’] language unambiguously vests [the

insurer] with an absolute right to settle third-party claims in its own discretion and

without [the insured’s] consent... .”). 

3. RSR contends the district court erred by granting summary judgment on its

allegation that Great Northern negligently settled the claims against it. In a thirdparty insurance case, an insurer must accept a reasonable settlement offer from the
3

claimant within or at policy limits if a prudent insurer would accept the offer in the

same circumstances. See G.A. Stowers Furniture Co. v. Am. Indem. Co., 15

S.W.2d 544 (Tex. Comm’n App. 1929, holding approved). An insurer’s liability in

negligence must be founded upon a breach of the duty articulated in Stowers. See

Ford v. Cimarron Ins. Co., 230 F.3d 828, 832 (5th Cir. 2000). Great Northern

settled the claims against RSR within policy limits for a reasonable amount, and

thus the district court did not err in finding that Great Northern did not breach its

Stowers duty as a matter of law.

4. Finally, RSR has failed to establish that it has been damaged by Great Northern’s

settlement of the claims. There is no evidence that Great Northern settled for an

excessive amount, regardless of the effect of the settlement on the availability of

funds to satisfy future claims arising from the same circumstances. The

reasonableness of a settlement turns on whether a reasonably prudent insurer

would have settled the claim considering solely the merits of the claim and the

potential liability of the insured. Texas Farmers Ins. Co. v. Soriano, 881 S.W.2d

312, 316 (Tex. 1994). The case settled within policy limits and Great Northern

has paid RSR for all of the defense expenses it incurred. As damages are a prima

facie element of each of RSR’s claims, summary judgment was proper on this

ground alone.

The judgment of the district court is AFFIRMED.