Court Opinion

ID: 28804
Source: CourtListenerOpinion
Date Created: 2010-04-25 09:29:54+00
Date Added: 2024-06-11T14:55:44.293831
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS

                                 FOR THE FIFTH CIRCUIT

                                         No. 01-11317

       RSR CORP.; QUEXCO INC; QUEMETCO, INC.;
       QUEMETCO METALS LIMITED, INC.,

                                                            Plaintiffs-Counter Claimants-
                                                            Appellants,

                                             versus

       GREAT NORTHERN INSURANCE CO.,
       CHUBB & SON, INC.,

                                                            Defendants-Counter Defendants-
                                                            Appellees.

                   Appeal from the United States District Court for
                           the Northern District of Texas
                             (USDC No. 3:99-CV-961)
           _______________________________________________________
                                September 11, 2002

Before REAVLEY, BARKSDALE and CLEMENT, Circuit Judges.

PER CURIAM:*

       RSR Corp., the insured, appeals the dismissal of its claims against Great Northern

       *
        Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
Insurance Co., its insurer, and Chubb & Son, an insurance broker. We affirm the judgment of the

district court for the following reasons:

       1.      RSR contests the district court’s Rule 12(b)(6) dismissal of its claim against its

               insurer under Texas Insurance Code. RSR has failed to identify the “unfair

               settlement practice” that is prohibited by Article 21.21 § 4, or the Texas Supreme

               Court’s interpretation of that statute, in which Great Northern engaged. See

               Rocor Int’l, Inc. v. Nat’l Union Fire Ins. Co., 77 S.W.3d 235, 262 (Tex. 2002).

               The district court did not err by dismissing RSR’s Article 21.21 claim.

       2.      RSR complains of the district court’s order of summary judgment on its breach of

               contract claim because Great Northern initially sought reimbursement for the

               settlement amount, failed to investigate the claim, and settled over RSR’s

               objections. The insurance policy at issue contained a clause allowing the insurer to

               settle any claim or dispute it “deem[ed] expedient.” Although Great Northern did

               not have the right to conduct RSR’s defense once it disputed coverage, it did not

               lose the right to settle the case within policy limits for a reasonable amount. See

               Dear v. Scottsdale Ins. Co., 947 S.W.2d 908, 913-914 (Tex. App.--Dallas 1997,

               writ denied) (“This [‘deems expedient’] language unambiguously vests [the

               insurer] with an absolute right to settle third-party claims in its own discretion and

               without [the insured’s] consent... .”).

       3.      RSR contends the district court erred by granting summary judgment on its

               allegation that Great Northern negligently settled the claims against it. In a third-

               party insurance case, an insurer must accept a reasonable settlement offer from the

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              claimant within or at policy limits if a prudent insurer would accept the offer in the

              same circumstances. See G.A. Stowers Furniture Co. v. Am. Indem. Co., 15
S.W.2d 544 (Tex. Comm’n App. 1929, holding approved). An insurer’s liability in

              negligence must be founded upon a breach of the duty articulated in Stowers. See

              Ford v. Cimarron Ins. Co., 230 F.3d 828, 832 (5th Cir. 2000). Great Northern

              settled the claims against RSR within policy limits for a reasonable amount, and

              thus the district court did not err in finding that Great Northern did not breach its

              Stowers duty as a matter of law.

       4.     Finally, RSR has failed to establish that it has been damaged by Great Northern’s

              settlement of the claims. There is no evidence that Great Northern settled for an

              excessive amount, regardless of the effect of the settlement on the availability of

              funds to satisfy future claims arising from the same circumstances. The

              reasonableness of a settlement turns on whether a reasonably prudent insurer

              would have settled the claim considering solely the merits of the claim and the

              potential liability of the insured. Texas Farmers Ins. Co. v. Soriano, 881 S.W.2d
312, 316 (Tex. 1994). The case settled within policy limits and Great Northern

              has paid RSR for all of the defense expenses it incurred. As damages are a prima

              facie element of each of RSR’s claims, summary judgment was proper on this

              ground alone.

The judgment of the district court is AFFIRMED.

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