Court Opinion

ID: 9763350
Source: CourtListenerOpinion
Date Created: 2023-08-29 02:42:19.065067+00
Date Added: 2024-06-11T12:56:37.167146
License: Public Domain

ENOCH, Justice,
dissenting.
If this were a breach of contract case, I would agree that for Gulf Group to avoid its duty to cover the Hernandezes’ underinsured claim, it would have to show a loss of “expected benefit.”
However, this case is not about a breach of contract. This case is about coverage. The insuring agreement states:
This insurance does not apply:
a) to bodily injury or property damage with respect to which the insured, ..., without written consent of the company, makefs] any settlement with any person ... who may be legally liable therefore. ...
The Hernandezes raise four points of error in this Court. All four points, though, ask one question, may an insurance company that is not materially prejudiced by a settlement deny coverage under an uninsured/underin-sured motorist policy that contains a consent to settle exclusion. In support of their position, the Hernandezes argue that the exclusion is inconsistent with the purposes of the Texas Uninsured or Underinsured Motorist statute, Tex.Ins.Code Ann. art. 5.06-1 (Vernon 1981).
The Court is correct in recognizing that the other states that have addressed this issue, and that have “imposed a prejudice requirement,” have done so “primarily on public policy grounds.” See 875 S.W.2d 693, n. 4. And in this context, this Court has already addressed the Hernandezes’ argument. Guaranty County Mutual Ins. Co. v. Kline, 845 S.W.2d 810 (Tex.1992). Guaranty held that “the settlement clause is clearly consistent with, and indeed advances the purpose of article 5.06-1(6).” Id. at 811. Implicit in the acceptance of this consent to settle exclusion is the idea that the insurance company might not be prejudiced and that an inequitable result might occur. See Members Mut. Ins. Co. v. Cutaia, 476 S.W.2d 278 (Tex.1972). While Cutaia involved a notice of claim provision, rather than a settlement clause, the issue was whether to impose a prejudice requirement. In refusing to impose a prejudice requirement, this Court stated that even though an injustice might occur by disallowing an otherwise valid claim, this Court should not overreach its boundaries and imply new standards into insurance contracts. Id. at 281.
This Court has consistently upheld consent to settle exclusions. E.g., Kline, 845 S.W.2d at 811; Ford v. State Farm Mut. Auto. Ins. Co., 550 S.W.2d 663, 665 (Tex.1977); Dairyland County Mut. Ins. Co. v. Roman, 498 S.W.2d 154, 159 (Tex.1973); see also, Huttleston v. Beacon Nat’l Ins. Co., 822 S.W.2d 741, 742 (Tex.App.—Fort Worth 1992, writ denied). Among these cases, there were undoubtedly insurance companies that were not prejudiced, but the point of the consent to settle exclusion is to not usurp the insurance companies’ subrogation rights.
In this case, when an insured person asks for consent to settle, Gulf conducts a thorough financial check of the motorist to ensure that he cannot satisfy a judgment. It cannot be gainsaid that most insureds do not have the resources to conduct such an inves*695tigation. Irrespective of the stipulations,1 what the Hernandezes are asking this Court to do is allow all insureds to settle as quickly as possible with the person at fault, then, years later (two years in this case) make a claim against their underinsured motorists policy. Without the claim, the insurance company is unaware that it needs to investigate the negligent person and determine whether or not he is judgment proof. Concomitantly, how will the insurance company prove prejudice two years after the accident, not only faced with trying to locate the negligent party, but without the aid of civil process to assist in discovering the tortfeasor’s assets? This approach is not the way in which the uninsured/underinsured motorist provision was designed to work.
For the above reasons, I would affirm the judgment of the court of appeals. I therefore dissent.

. The court should additionally be wary of taking a position founded upon public policy considerations, which thus affects all parties to insuring agreements, in a case literally conceded away by one of the litigants.