Opinion ID: 2099901
Heading Depth: 3
Heading Rank: 3

Heading: Liability Absent a Duty to Defend

Text: National Union contends that, irrespective of Rocor's liability theory or the sufficiency of the evidence to support it, National Union cannot be liable for Rocor's defense costs because it had no duty to defend Rocor, and the Stowers duty is premised upon the insurer's control of the insured's defense. We disagree. In Stowers, we held that an insurer that failed to use ordinary care could be liable for a judgment against its insured in excess of policy limit. Stowers, 15 S.W.2d at 546-47. While the insurer in that case, unlike National Union, had the duty to defend its insured, our decision was also based upon the insurer's control over settlement: [T]he indemnity company had the right to take complete and exclusive control of the suit against the assured, and the assured was absolutely prohibited from making any settlement, except at his own expense, or to interfere in any negotiations for settlement or legal proceeding without the consent of the company; the company reserved the right to settle any such claim or suit brought against the assured. Id. at 547 (emphasis added). In this case, while National Union did not have a contractual duty to defend Rocor, it did have a duty to indemnify Rocor for covered losses. As in Stowers, the policy prohibited the insured from settling a suit, except at its own expense, without the insurer's consent. And it is undisputed that National Union assumed exclusive control over settlement negotiations after January 1990. Rocor seeks to recover its defense costs not as a measure of contractual damages, but as tort damages for National Union's alleged delay in settling the case once it assumed control of the settlement negotiations. In light of that control, the same considerations that led to our decision in Stowers are present in this case. National Union is not exempt from liability for unfair claim settlement practices merely because it had no contractual duty to defend Rocor.