Opinion ID: 2432517
Heading Depth: 2
Heading Rank: 4

Heading: Duty from Special Relationship

Text: Faircloth contends that Transport owed her a duty comparable to the commonlaw duty an insurance company owes its insured. See Arnold v. National County Mut. Fire Ins. Co., 725 S.W.2d 165 (Tex.1987). Alternatively, she asserts that Jones established a confidential relationship with Faircloth by her attitude and representations. Faircloth obtained findings that Transport did not act in good faith and that the defendants breached a fiduciary duty owed her. Both theories depend on whether a special relationship arose between Transport and Faircloth. This Court has held that an insurer owes an insured a duty of good faith and fair dealing because of the special relationship arising out of the insurance contract. Aranda v. Insurance Co. of N. Am., 748 S.W.2d 210, 212 (Tex.1988). However, the Court has not squarely ruled on whether an insurer's duty of good faith and fair dealing extends to a third-party claimant. See Allstate Ins. Co. v. Watson, 876 S.W.2d 145, 150 (Tex.1994) (holding that an insurer owes no duty of good faith to third-party claimants under the Insurance Code, without reaching the question of a possible common-law duty). Identifying a source of such a duty is problematic. As this Court stated in Watson: A third party claimant has no contract with the insurer or the insured, has not paid any premiums, has no legal relationship with the insurer, and in short, has no basis upon which to expect or demand the benefit of ... extra-contractual obligations imposed on insurers. Id. at 149. An insured's interests are adverse to third-party claimants. Id. In this case, Faircloth's interests were adverse to Allied Van Lines, and Transport's duty of good faith and fair dealing ran to Allied, its insured. Transport owed a duty to its insured to defend the claim, and if warranted by the facts, to settle the claim consistent with the insured's best interests. American Physicians Ins. Exchange v. Garcia, 876 S.W.2d 842, 846-47 (Tex.1994) (noting the insurer's duty to settle); American Centennial Ins. Co. v. Canal Ins. Co., 843 S.W.2d 480, 482 (Tex.1992) (identifying an insurer's duties to investigate claims, defend at trial, and negotiate settlement); Ranger County Mut. Ins. Co. v. Guin, 723 S.W.2d 656, 658 (Tex.1987) (stating the insurer's duty to put the insured's interests on par with its own). For policy reasons, we do not require insurance companies to perform duties for third-party claimants that are coextensive and conflicting with the duties they owe their insureds. Watson, 876 S.W.2d at 150. Owing such duties to third parties would necessarily compromise the duties the insurer owes to its insured. Id. In the case before us, no compelling facts suggest a special relationship existed to warrant imposing on Transport a duty of good faith and fair dealing owed to the third-party claimant, Faircloth. There was likewise no special relationship between Transport and Faircloth to justify imposing a fiduciary duty on Transport. A fiduciary or confidential relationship may arise from circumstances of the particular case, but it must exist prior to, and apart from, the agreement made the basis of the suit. Consolidated Gas & Equip. Co. v. Thompson, 405 S.W.2d 333, 336-37 (Tex. 1966). Faircloth had no dealings with Transport except as a claimant against Transport's insured. Faircloth, Caldwell, or Askins had no reason to place a high degree of trust in Transport. Therefore, no special relationship arose before or during the settlement negotiations which could give rise to fiduciary duties. There was no relationship at all except for the settlement agreement made the basis of the present suit.