Court Opinion

ID: 9671826
Source: CourtListenerOpinion
Date Created: 2023-08-24 03:43:38.706933+00
Date Added: 2024-06-11T18:16:12.276181
License: Public Domain

HUTSON-DUNN, Justice,
dissenting.
I withdraw my previous dissenting opinion and substitute this one.
I dissent. The majority holds that ICA cannot be held negligent or grossly negligent under the Stowers doctrine because it did not receive an unconditional offer from Donna Zabodyn’s attorneys. In my view, the November 27, 1985, letter from Benton Mussle-white to John Marshall constituted an unconditional offer to settle Zabodyn’s case within the policy limits. In light of the facts of this case, I would hold that ICA breached its Stowers1 duty by not accepting the November 27 offer.
I. Was there an unconditional offer?
The record shows that Zabodyn’s attorneys made two settlement offers in this case.
A.The first offer
On July 15, 1985, Michael Sydow wrote a letter to John Marshall that stated:
You have now informed us that Webster has only $100,000.00 in insurance. Based upon your representation, Donna Johnson has authorized me to offer to settle her case against Webster for $100,000.00 Obviously, if there is other insurance, this offer shall be null and void.
I agree with the majority that this was a conditional offer that ICA had no duty to accept.
B. The second offer
On November 27, 1985, Benton Mussle-white wrote a letter to Marshall that stated:
Dear John:
You and your client, Dr. Ross Webster, have represented in Answers to Interrogatories that the liability insurance coverage on Dr. Webster is only $100,000.00. In reliance upon your representations to that effect, I, on behalf of Donna K Johnson, the Plaintiff, hereby offer to settle the case with Dr. Webster for the sum and amount of $99,999.00. In making this offer, we are invoking [the] Stowers doctrine and hereby request that you directly give Dr. Webster a copy of this letter, so that he may be personally aware of this offer and if he so chooses, demand that this settlement offer be accepted.... We will keep this offer open for a reasonable time, at least up until the commencement of jury selection on Monday, December 2, 1985.
(Emphasis added). I disagree with the majority that this was a conditional offer to settle.
C. Analysis
To determine whether a condition exists, we look at the intention of the parties as expressed in the language of the contract. Criswell v. European Crossroads Shopping Ctr., Ltd., 792 S.W.2d 945, 948 (Tex.1990). To make performance of a contract specifically conditional, a term such as “if’, “provided that”, “on condition that”, or some similar phrase of conditional language is normally included. Id. This same rule applies to make an offer conditional because a condition precedent may relate to either the formation of a contract or an obligation to perform an existing agreement. See Hohenberg Bros. Co. v. George E. Gibbons & Co., 587 S.W.2d 1, 3 (Tex.1976). The November 27 letter contains no such conditional language.
*84In the absence of conditional language, whether a contractual provision is a condition must be gathered from the intent of the parties as otherwise expressed in the body of the contract. See id. However, if the intent of the parties is doubtful, the agreement will be interpreted as creating a promise rather than a condition. Criswell, 792 S.W.2d at 948; Hohenberg, 537 S.W.2d at 3. When construing a contract, forfeiture by a condition precedent is to be avoided when another plausible reading of the contract is possible. Criswell, 792 S.W.2d at 948.
The November 27 offer stated that Mussle-white offered to settle the case based upon Dr. Webster’s representations; it did not indicate that the nonexistence of other insurance was a condition precedent to the validity of Musslewhite’s offer or the formation of a settlement contract. The formation of an executory contract necessarily requires each party to the contract to make a promise based upon the other party’s representations.2 See Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 496 (Tex.1991) (consideration consists of detriment that induces the making of a promise, and promise that induces the incurring of a detriment). Further, Musslewhite stated in the November 27 letter that the offer was intended to invoke the Stowers doctrine. Although Musslewhite could not invoke a Stowers duty from ICA to Dr. Webster without Dr. Webster’s request that the offer be accepted, this language is additional evidence that the November 27 offer was unconditional.
I realize that, in certain cases, the wording of an unambiguous contract may be considered in light of the circumstances surrounding the execution of the contract. Sun Oil Co. (Del.) v. Madeley, 626 S.W.2d 726, 731 (Tex.1981); Wadsworth Properties v. ITT Employment and Training Sys., Inc., 816 S.W.2d 819, 823 (Tex.App.—Houston [1st Dist.] 1991, writ denied). However, in my view, the surrounding circumstances clearly show that the November 27 letter was an unconditional offer to enter a settlement contract. Although the July 15 offer was expressly conditioned on the nonexistence of other insurance, it was written over four months earlier by a different attorney from a different law firm. I would hold that the terms of the July 15 offer are irrelevant with regard to the November 27 offer, and the November 27 offer was an unconditional offer.
II. Did the unconditional offer invoke the Stowers duty to settle?
As noted by the majority, liability does not exist under Stowers unless: (1) the claim against the insured is within the scope of coverage; (2) the demand is within policy limits; and (3) the terms of the demand are such that an ordinarily prudent insurer would accept it, considering the likelihood and degree of the insured’s potential exposure to an excess judgment. American Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 848 (Tex.1994). The first two elements of the Stowers duty are clearly satisfied in this case. Further, the evidence in this case is sufficient to support the jury’s finding that ICA breached its Stowers duty to Dr. Webster by not accepting the November 27 offer.
The evidence during the trial of this case showed that the defense witnesses who testified on Dr. Webster’s behalf in the underlying lawsuit gave less than ringing endorsements of Dr. Webster’s conduct during the discovery phase of the case. Further, the evidence showed that ICA knew that Zabo-dyn had sustained damages far in excess of Dr. Webster’s policy limits. As noted by the majority, there was testimony that ICA did not advise Dr. Webster of the progress of the case, the chances of an excess verdict, the probable amount of an excess verdict, and of the settlement offers. The record shows that ICA did not seek Dr. Webster’s consent to *85settle, nor did it notify him of its desire to try the case.
The evidence showed that Dr. Webster learned about the settlement offers on December 2, 1995, the date jury selection was scheduled to begin. The trial court continued the case until December 4. Dr. Webster wrote Hallmark on December 3 and demanded that ICA accept Musslewhite’s November 27 offer to settle the case. Hallmark testified that he read Dr. Webster’s letter the day before trial, and he called Marshall in response to the letter. Although Marshall said that Dr. Webster did not want to settle the case, Hallmark did not call Dr. Webster to verify Marshall’s statements despite evidence that Marshall was personally interested in trying the case. The testimony showed that ICA’s claim file for the case contained a letter from Marshall to Hallmark, written almost a year before trial but after ICA had already increased its reserves to the policy limits. In this letter, Marshall stated that he earned his money trying cases, and he enjoyed trying malpractice cases.
I would find the evidence legally and factually sufficient to support the jury’s finding that ICA acted negligently in settling Zabo-dyn’s claim against Dr. Webster. I would additionally address whether the evidence was sufficient to support the jury’s finding of gross negligence in light of Transportation Ins. Co. v. Moriel, 879 S.W.2d 10, 19-23 (Tex.1994).

. See G.A. Stowers Furniture Co. v. American Indem. Co., 15 S.W.2d 544 (Tex.Comm’n App.1929, holding approved).

. Had ICA accepted the November 27 offer and Musslewhite later learned about Webster’s other insurance, I believe that Zabodyn’s only remedy would be to pursue a claim for fraudulent inducement and rescission of the settlement contract. See DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex.1990), cert. denied, 498 U.S. 1048, 111 S.Ct. 755, 112 L.Ed.2d 775 (1991) (elements of fraudulent inducement action); Dallas Farm Mach. Co. v. Reaves, 158 Tex. 1, 307 S.W.2d 233, 238-39 (1957) (remedies for fraudulent inducement action); Burroughs Corp. v. Farmers Dairies, 538 S.W.2d 809, 810 (Tex.Civ.App.-El Paso 1976, writ ref'd n.r.e.). I do not address whether Zabodyn could have proven such a claim.