Opinion ID: 30554
Heading Depth: 2
Heading Rank: 5

Heading: Texas Insurance Code Claim for Bad-Faith Coverage Denial

Text: 48 We next consider whether the district court erred in granting Mid-Continent's motion for summary judgment on the bad-faith claim denial issue. 49 Performance argues that the district court improperly granted summary judgment because Performance raised a fact issue as to whether Mid-Continent had a reasonable basis to delay or deny payment of the claims. Mid-Continent argues that summary judgment was proper because it correctly denied Performance's claims. The district court determined that Mid-Continent was entitled to summary judgment because Performance did not show Mid-Continent acted unreasonably and because Mid-Continent properly denied the claims. 50 The Texas Insurance Code prohibits bad-faith claim denial under Article 21.21. The prohibited conduct includes failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer's liability has become reasonably clear. Tex. Ins.Code Ann. art. 21.21, § 4(10)(a)(ii) (Vernon 1981 & Supp.2003). A cause of action exists under this statute when an insurer has no reasonable basis for denying or delaying payment of a claim or when the insurer fails to determine or delays in determining whether there is any reasonable basis for denial. Higginbotham v. State Farm Mut. Auto. Ins. Co., 103 F.3d 456, 459 (5th Cir.1997). In order to sustain such a claim, the insured must establish the absence of a reasonable basis for denying or delaying payment of the claim and that the insurer knew, or should have known, that there was no reasonable basis for denying or delaying payment of the claim. Id. But [a]s long as the insurer has a reasonable basis to deny or delay payment of a claim, even if that basis is eventually determined by the fact finder to be erroneous, the insurer is not liable for the tort of bad faith. Id. 51 Because we affirm summary judgment in favor of Mid-Continent on the merits of Performance's three claims, we affirm summary judgment in favor of Mid-Continent on this claim as well. Mid-Continent's denial of coverage was not only reasonable, it was ultimately correct. Further, Performance has not set forth any evidence suggesting bad faith or unreasonable delay. 52