Court Opinion

ID: 9666639
Source: CourtListenerOpinion
Date Created: 2023-08-24 01:23:30.866369+00
Date Added: 2024-06-11T18:15:31.616991
License: Public Domain

ENOCH, Justice,
concurring.
I join in the judgment of the Court. I write separately because both the Court and Justice Hecht engage in an admittedly thorough but unnecessary review of the foundational underpinnings of the tort of bad faith. The avowed purpose of these writings is to “clarify” how a reviewing court, in a bad faith case, is to conduct a “no evidence” review. But we have already dealt with this concern in Lyons v. Millers Cas. Ins. Co., 866 S.W.2d 597 (Tex.1993), and National Union Fire Ins. Co. v. Dominguez, 873 S.W.2d 373 (Tex.1994).
What really is going on here is that most members of the Court are unsettled about the efficacy of the tort of bad faith in the first instance. Indeed, cogent arguments have been made that the tort should be eliminated. See, e.g., 950 S.W.2d at 862 (Hecht, J., concurring). The bottom line, however, is that the Court has concluded that *80under certain facts and as between certain contracting parties, the bad faith tort (or some variation of that cause of action) should continue to exist. Having reached this conclusion, rather than anguishing over the tort and crafting a “clarified” standard of liability in bad faith cases, we should simply apply the no evidence test, as articulated in Lyons and Dominguez.
I
Universe Life complains on appeal that the evidence is legally insufficient to support the jury finding of bad faith. Thus, we must perform a “no evidence” review to determine if there is any evidence from which the fact-finder could have concluded that there was no reasonable basis for Universe Life to have delayed payment of Giles’s claim.
The Court identifies the “problem” with the application of the traditional no evidence standard of review to bad faith actions as follows:
A plaintiff in a bad-faith case must prove the absence of a reasonable basis to deny the claim, a negative proposition. Yet, under our no-evidence standard of review, an appellate court must resolve all conflicts in the evidence and draw all inferences in favor of a bad-faith finding. It has been argued, then, that if the reviewing court must give no weight to the insurer’s evidence of a reasonable basis for the denial or delay in payment of a claim, no judgment can be reversed for want of evidence because there will never be any evidence of a reasonable basis.
950 S.W.2d at 51 (Spector, J., plurality opinion for the Court) (citations omitted). This is precisely the problem that we addressed in Lyons and Dominguez. Lyons, 866 S.W.2d at 600; Dominguez, 873 S.W.2d at 376.
In Lyons, we noted that under traditional no evidence review, the appellate court examines the record in light of the claims asserted to determine whether there is some evidence supporting each element of the plaintiffs cause of action. Lyons, 866 S.W.2d at 600. Obviously, what constitutes “some evidence” depends on the nature of the claim asserted. Therefore, we particularly emphasized in Lyons that “when a court is reviewing the legal sufficiency of the evidence supporting a bad faith finding, its focus should be on the relationship ... the evidence arguably supporting the bad faith finding [has] to the elements of bad faith.” Id. (emphasis added).
Before today’s writings, the elements of bad faith under Texas law were that “the insurer had no reasonable basis for denying or delaying payment of [a] claim, and [the insurer] knew or should have known that fact.” Transportation Ins. Co. v. Moriel, 879 S.W.2d 10, 18 (Tex.1994); Aranda v. Insurance Co. of N. Am., 748 S.W.2d 210, 213 (Tex.1988). The Court now purports to abandon the “no reasonable basis” standard and replace it with a “liability has become reasonably clear” standard. 950 S.W.2d at 55 (Spector, J., plurality opinion for the Court); 950 S.W.2d at 169 (Hecht, J., concurring). I suggest that this semantic recasting of the elements of bad faith in no way alters the character of proof necessary for a plaintiff to prevail, nor does it change the manner in which an appellate court ought to conduct a legal sufficiency review in a bad faith case. Liability is “reasonably clear” only when there is no reasonable basis for an insurer to deny coverage (or, if one prefers the converse, if there exists a reasonable basis to deny coverage, liability is not “reasonably clear”).
In any event, the law is well established in Texas that an insurer retains “the right to deny invalid or questionable claims and will not be subject to [bad faith] liability for an erroneous denial of a claim.” Aranda, 748 S.W.2d at 213. Thus, a no evidence point of error should be sustained only if the plaintiff failed to present some evidence that (1) the insurer had no reasonable basis to deny the claim, and (2) the insurer knew or should have known there was no reasonable basis.
The source of confusion for my colleagues and, apparently, for the lower courts as well, seems to be a failure to grasp the significance of Lyons and Dominguez. Justice Hecht demonstrates the confusion when he says, “[t]he reasonableness of the insurer’s decision can be judged only by weighing the *81evidence for and against the claim.” 950 S.W.2d at 58 (Hecht, J., concurring). The evidence before the factfinder on the issue of bad faith is not the equivalent of the information before the insurer when it makes the decision to deny or delay payment. In performing a no evidence review of a bad faith finding, an appellate court must examine the evidence before the factfinder in the light most favorable to the verdict, not the information before the insurer.
In Lyons, for example, the plaintiff insisted that her report showing that the damage to her house was covered by her insurance policy was some evidence that her insurer acted in bad faith by not paying the claim. We said that evidence of coverage is not evidence of bad faith. Lyons, 866 S.W.2d at 600-601. Our point was that the claimant does not prove bad faith by simply parsing through the information available to the insurer and pointing only to those pieces of information suggesting coverage. She must take all of the information available to the insurer and present some evidence that no reasonable insurer would have denied or delayed payment of her claim based on that information. Looking again at Lyons, the insurer had before it not only the plaintiffs expert’s report demonstrating coverage, but also its own expert’s reports demonstrating no coverage. The plaintiffs bad faith claim failed because she presented no evidence to the factfinder that, based on all the information before the insurer, no reasonable insurer would have denied coverage. For example, there was no evidence before the jury that “the reports of [the] experts [indicating non-coverage] were not objectively prepared, or that [the insurer’s] reliance on them was unreasonable.” Lyons, 866 S.W.2d at 601.
We made this point again in Dominguez. An appellate court, in conducting a legal sufficiency review in a bad faith case, must first “determinen what potential basis an insurance company may have had for denying [the] claim.” Dominguez, 873 S.W.2d at 376. In virtually all bad faith cases, the insurer will have put forth some purportedly reasonable basis for the denial or delay in payment. It is the plaintiffs burden, under the “no reasonable basis” element of the tort (or, now, I suppose, under the “reasonably clear” element), to put before the factfinder some evidence that no reasonable insurer would have relied on the information before the insurer to deny or delay payment, or that the insurer’s proffered reasons were a pretext or a sham, or that the information before the insurer at the time it denied coverage was known or should have been known to be unreliable. If the plaintiff has presented some evidence of this type to the jury, the “traditional rules of legal sufficiency review” are quite adequate to guide us to the conclusion that the no evidence point of error should be rejected.1 Dominguez, 873 S.W.2d at 376.
As in Lyons, where we said the plaintiff may not parse through the information before the insurer and pull out only the information showing coverage to prove bad faith, we said in Dominguez that neither may the appellate courts, in doing a no evidence review of a bad faith finding, parse through the record accepting or rejecting bits and pieces of information considered by the insurer to decide whether there is any evidence supporting the jury’s finding. Rather, the appellate court must examine the evidence before the factfinder to determine if there is any evidence supporting the finding that, considering all of the information before the insurer, no reasonable basis exists for an insurer to deny or delay payment of the claim.
II
All that remains is to apply the traditional rules of legal sufficiency review to the facts before us. I agree with the Court that Universe Life’s no evidence challenge fails. Indeed, although it does not do so explicitly, the Court effectively applies the Lyons /Dominguez articulation of the no evidence test in this case, despite its “modification” of the elements of bad faith. Cf. Nicolau, 950 *82S.W.2d at 51 (Spector, J., plurality opinion for the Court) (expressly citing and relying on Lyons and Dominguez in performing no evidence review).
Under Lyons and Dominguez, our legal sufficiency review begins with the determination of what potential basis Universe Life had for delaying payment of Giles’s claim. As the Court notes, Universe Life articulated its purported “reasonable basis” for delaying payment in its briefing to this Court:
The denial of the claim as a pre-existing condition was justified because the undisputed medical records revealed that Mrs. Giles had “a positive history of heart disease,” that -she had probably suffered a heart attack that was caused by atheros-clerotic cardiovascular disease, that the atherosclerotic cardiovascular disease was an illness that had been medically treated with Mevaeor, and that she had received treatment for this illness within the twelve months preceding the issuance of the policy. The Mevaeor and Lorelco that were prescribed as a treatment for an illness that was later positively diagnosed as atherosclerosis, constitutes medical care within the exclusionary language of the policy.
The next step in our no evidence review is to ascertain whether there is some evidence before the factfinder that no reasonable insurer would have delayed payment of Giles’s claim for these reasons. Like the Court, I have little difficulty in finding that there is such evidence in the record. First, the full context of the medical report relied on by Universe Life clearly shows that Giles, while having a family history of heart disease, “has never had any [personal] history of heart problems.” Second, the medical records show that, prior to the effective date of Giles’s coverage, she was treated for high cholesterol, but not for heart disease. Third, Giles’s physicians wrote to Universe Life after it initially denied the claim to explain and correct inaccurate information in the medical record. These physicians informed Universe Life that: (1) Giles did not suffer chest pains before her policy became effective; and (2) Giles received Mevaeor and Lorelco not for heart problems, but for hypercholesteremia.
This evidence is legally sufficient to sustain the jury finding that Universe Life, considering all the information before it, lacked a reasonable basis to delay payment of Giles’s claim. Accordingly, I would affirm the judgment of the court of appeals.

. Justice Hecht would convert the newly-adopted element of "liability has become reasonably clear” from a jury question to a legal one. 950 S.W.2d at 70 (Hecht, J., concurring). I am not convinced that there is a principled reason to do so. Whether a basis for denial of coverage is reasonable is inherently a fact question.