Opinion ID: 1778754
Heading Depth: 1
Heading Rank: 3

Heading: Effect of Subsequent Conduct of Employers and Attorney

Text: Even when no violation of public policy is involved, an estoppel may arise from silence, where there is a duty to speak, and failure to do so worsens or prejudices the position of the party to whom the duty is owed. Burnett v. Atteberry, 105 Tex. 119, 145 S.W. 582 (1912). Employers contends that no prejudice has been shown as a matter of law to have occurred by reason of its conduct or silence. We disagree. Tilley was led to make his employees available for statements, sometimes on his own time and at his own expense, with no reason to think that his attorney was working other than in his own interest. The second statement taken from his foreman, Grady Fore, on March 12, 1970, admittedly had as one of its purposes the development of late notice evidence against Tilley. It was taken by the attorney for that purpose at the request of Employers; and from that date until he withdrew from the Starky case on or about May 11, 1971, this attorney continued at various times to send evidence, information and briefs to Employers, at its request, on the late notice question. Such attorney originally engaged by Employers to represent Tilley will be referred to hereinafter as EmployersTilley attorney, to distinguish his actions from those of the present attorney engaged by Employers to bring this suit against Tilley for a declaratory judgment. A comparison of the Grady Fore deposition taken in this suit by Employers' present attorney with the question and answer statements of the same witness taken by the EmployersTilley attorney during the time he was representing Tilley, shows that the latter were the source of the former. In fact, Grady Fore's sworn statements previously taken by the Employers Tilley attorney were used in the examination of Fore by Employers' attorney in the present case, with threats of prosecution for perjury for changing or failing to recall his previous sworn statements. Employers argues that this work and gathering of evidence by the Employers Tilley attorney was not prejudicial because it could have been developed just as easily by one of Employers' agents, investigators or other attorneys. Armed with its nonwaiver agreement, that is precisely the manner in which Employers was free to develop its case against Tilley on the coverage question without running the risk of waiver or estoppel. Whether Employers would have been as successful in gathering evidence through other attorneys as it was through the attorney that Tilley and his employees thought to be looking after nothing but Tilley's defense, is a matter of speculation. It falls in the realm of what might have been. We are here concerned with what actually occurredthe means by which Employers actually developed the evidence of Grady Fore's knowledge and Tilley's alleged knowledge of the accident which occurred on November 25, 1967, on which the present declaratory judgment suit is based. It is undisputed that the work of the Employers Tilley attorney on the coverage issue now involved in this law suit was not on his own initiative or merely incidental to his defense of Tilley; it was at the instance and request of Employers and for its benefit against Tilley. As indicated, both Employers and the EmployersTilley attorney owed an obligation to immediately notify Tilley of the conflict on the specific coverage question which was known to them on or soon after October 9, 1969. Their failure to do so for nearly 18 months can be attributed only to Employers' desire to strengthen its position in preparation for the filing of the instant suit. We think prejudice to Tilley in the Starky case and in this case has been shown as a matter of law. Under the undisputed facts and circumstances of this case, it would be untenable to permit Employers to disclaim liability for the defense of Tilley in the Starky suit on account of the late notice defense. Its conduct being violative of the guiding principles and public policy heretofore discussed, we hold that Employers is estopped as a matter of law from denying the responsibilities under its policy for defense of the Starky suit. Accordingly, for the reasons stated in this opinion, the judgment of the Court of Civil Appeals is affirmed.