Court Opinion

ID: 9778480
Source: CourtListenerOpinion
Date Created: 2023-08-29 21:07:16.386949+00
Date Added: 2024-06-11T07:33:09.811357
License: Public Domain

GREEN, Justice,
dissenting.
My dissent to the February 11, 1998 panel decision is withdrawn and the following is substituted.
The question presented is whether an insured under an excess liability insurance policy has a negligence and bad faith cause of action against its insurer to recover damages caused by the insurer’s failure to promptly settle with a third-party claimant after liability has become reasonably clear. Four members of the court, including this author, hold that no bad faith claim exists under these facts. However, five members of the court hold that an insurer may be negligent when an insured is caused to incur defense costs as a result of the insurer’s failure to promptly settle, even though the policy specifically excludes coverage for such expenses. It is to the latter holding that I respectfully dissent.
The insurance policy between Rocor and National Union was an excess indemnity policy that promised to pay up to its limit any judgment in excess of the primary insurance coverage. National Union fully performed its obligations under the policy, which specifically excluded any duty to defend. That notwithstanding, five members of the court would permit Rocor to recover its defense costs from National Union. This holding is apparently based on an insurer’s duty to “fairly settle” claims against its insured when it takes control of the settlement negotiations. However, even recognizing that an insurer may owe extra-contractual duties to its insured arising out of the agency relationship that develops in its conduct in defending and settling claims on behalf of the *817insured, see Ranger County Mut. Ins. Co. v. Guin, 723 S.W.2d 656, 659-60 (Tex.1987), those duties do not exist where there is no duty to defend. National Union did not owe Rocor a defense under its policy, and neither did National Union assume any extra-contractual duties to Rocor when it conducted settlement negotiations with the third-party claimant. Once Rocor tendered its deductible, together with the policy limits of the primary liability policy, National Union was entitled by its policy to conduct settlement negotiations independent of Rocor. Rocor is thus not entitled to a recovery based on negligence.
The trial court’s judgment was correct and it should have been affirmed.