Court Opinion

ID: 9763387
Source: CourtListenerOpinion
Date Created: 2023-08-29 02:43:52.263313+00
Date Added: 2024-06-11T12:57:11.929374
License: Public Domain

GAMMAGE, Justice,
joined by
HIGHTOWER, DOGGETT and SPECTOR,
Justices, concurring in part and dissenting in part from the opinion and concurring in part and dissenting in part from the judgment.
I dissent from the majority’s holding that the duty of good faith and fair dealing does not extend to both National Union and its adjusting company, Alexsis. This court has never held that privity between the parties is a necessary talisman giving rise to the duty of good faith and fair dealing.1 Moreover, this court, unlike other jurisdictions which require privity, has declined to base the duty on an implied covenant in contract. Arnold v. Nat. County Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex.1987), citing English v. Fischer, 660 S.W.2d 521, 522 (Tex.1983); cf. Gruenberg v. Aetna Ins. Co., 9 Cal.3d 566, 108 Cal.Rptr. 480, 510 P.2d 1032 (1973). By its decision today to require contractual privity, the majority blurs the distinction between the breach of a covenant in contract and the breach of a duty arising from a relationship, ironically a distinction Justice Gonzalez, the author of the majority opinion, earlier felt worthy of note. See Chitsey v. National Lloyds Ins. Co., 738 S.W.2d 641, 643 n. 1 (1987).
The duty of good faith and fair dealing “emanates not from the terms of the insurance contract, but from an obligation imposed in law ‘as a result of a special relationship between the parties governed or created by a contract.’ ” Viles v. Security National Ins. Co., 788 S.W.2d 566, 567 (Tex.1990). Here, although there is no contract between Natividad and the insurance company’s agent, Alexsis, there is a contract whereby Alexsis promised to handle the claims of Reveo employees in accordance with the terms of the policy issued by National Union. Consequently, when Alexsis directly dealt with Natividad the relationship was governed by the workers’ compensation insurance contract.
*701In addition, Natividad stands as beneficiary under Alexsis’ contract.2 Natividad, entitled to timely benefits provided by law to employees injured on the job, may actually have received the funds from National Union, “but the responsibility to see that those funds were properly and timely paid rested upon Alexsis.” Natividad, 833 S.W.2d at 547. The majority attempts to discount this reality by arguing that Natividad failed to plead a third party beneficiary theory. What is important, however, is not whether Nativi-dad is actually a third party beneficiary, but whether the chain of contracts from National Union to Alexsis, delegating the duties owed to Natividad, created a “special relationship” between Natividad and National Union’s agent. See Viles, 788 S.W.2d at 567.
A special relationship is one “marked by shared trust or an imbalance in bargaining power.” F.D.I.C. v. Coleman, 795 S.W.2d 706, 708-709 (Tex.1990). This court has declared that such a relationship exists between a claimant and the employer’s workers’ compensation carrier. Aranda v. Insurance Co. of N. America, 748 S.W.2d 210, 212 (Tex.1988). The majority states that this relationship arises from the unequal bargaining power of the parties to the contract. The duty of good faith and fair dealing, however, is meant to protect the insured from that power which is wielded after the contract is made. “[Wjithout such a cause of action insurers can arbitrarily deny coverage and delay payment of a claim with no more penalty than interest on the amount owed.” Arnold, 725 S.W.2d at 167; Aranda, 748 S.W.2d at 212. In Arnold, we reasoned that “[a]n insurance company has exclusive control over the evaluation, processing and denial of claims” and can use that control in such a way that would subject the insured to “economic calamity.” Arnold, 725 S.W.2d at 167; Aranda, 748 S.W.2d at 212.
Here, the exclusive control which we found so threatening is held not by the carrier, but by its agent, Alexsis. National Union delegated to Alexsis its own sole authority to handle individual Reveo workers’ compensation claims not exceeding $50,000. Alexsis exercised exclusive control over the evaluation, processing and denial of Natividad’s particular workers’ compensation claims. With such control, Alexsis was exclusively empowered to commit acts which could forestall the prompt payment or reasonable denial of claims. See Scott Wetzel Services, Inc. v. Johnson, 821 P.2d 804, 812 (Colo.1991). The reasoning for recognizing the duty to the covered employee from the employer’s carrier extends as well to the carrier’s agent, the adjusting company which deals directly with the employee. See Aranda, 748 S.W.2d at 212.
The majority concludes that because a carrier may be held liable for its agent’s actions, no cause of action is necessary against the agents themselves. See Wetzel, 821 P.2d at 813 (Rovira, C.J., dissenting). The court in Wetzel, faced with this argument, acknowledged that to best serve the policy of the compensation act, the cause of action should serve to deter inappropriate conduct of the actor, here the agent who deals directly with the insured. Wetzel, 821 P.2d at 812. Attempting to distinguish Wetzel, the majority states the decision was based on Colorado’s compensation act, which seeks to provide compensation through a “summary and speedy ... procedure.” See Wetzel, 821 P.2d at 812. But doesn’t our own compensation act seek to provide “speedy, equitable relief’ so that injured employees are protected from the “economic calamity of disabling injuries”? Aranda, 748 S.W.2d at 212, citing Texas Employers’ Insurance Ass’n v. Wright, 128 Tex. 242, 97 S.W.2d 171, 172 (1936).
Because I believe you must punish the actor to curb the actions, I respectfully dissent.3 National Union and Alexsis have the *702duty of good faith and fair dealing, whether the power derives from a contract with the insured or through a delegation of duties under the same contract.
I join that part of the majority opinion which deals with Natividad’s claims of intentional infliction of emotional distress, with the following clarification. By this concurrence I give no credence to this court’s previous holdings which effectively shield insurance companies from responsibility for their actions. I would allow Natividad her claim for the adjuster’s breach of the duty of good faith and fair dealing which is denied by the majority holding. I would also allow Nativi-dad her claims for negligent infliction of emotional distress which this court took away in Boyles v. Kerr, 855 S.W.2d 593 (Tex.1993). I concur with the majority only because the specific facts of this case do not rise to the level of “extreme and outrageous conduct” necessary for a claim of intentional infliction of emotional distress. Other insureds suffering the brunt of bad faith insurers, however, may very well be able to allege sufficient facts to meet the demands of this cause of action.

. See e.g. Manges v. Guerra, 673 S.W.2d 180 (1984). There, we held that the special relationship between an executive mineral rights owner and the nonexecutive owners gave rise to the duty of utmost good faith. The contract in that case, however, was between Manges and the Guerra partnership, not the individual nonexecu-tive owners. Manges, 673 S.W.2d at 181.

. In Aranda, we recognized a legal fiction by holding that the insured employee is party to a tripartite agreement and exchanges a "promise for a promise” with the employer's insurance carrier. Aranda v. Insurance Co. of N. America, 748 S.W.2d 210, 212 (Tex.1988). When the carrier delegates his duty to fulfill that promise, the employee necessarily becomes a third party beneficiary under the delegation contract, here between National Union and AIG. Under the majority's holding, however, Natividad would not even have a cause of action against AIG, the entity which steps directly into the carrier’s contractual relationship.

. I would affirm the decision of the court of appeals that Steen, Alexsis’ employee, does not owe the insured a personal duty of good faith *702and fair dealing. The duties under the insurance contract were delegated to Alexsis. Alexsis merely ordered its employee, Steen, to perform the duties held by the adjusting firm. The duties, therefore, including the implied duty of good faith and fair dealing, stop with Alexsis.