Court Opinion

ID: 4665077
Source: CourtListenerOpinion
Date Created: 2021-03-05 01:00:43.023827+00
Date Added: 2024-06-11T08:02:39.994898
License: Public Domain

Case: 19-20779     Document: 00515766444        Page: 1   Date Filed: 03/04/2021

           United States Court of Appeals
                for the Fifth Circuit
                                                                     United States Court of Appeals
                                                                              Fifth Circuit

                                                                            FILED
                                                                        March 4, 2021
                                 No. 19-20779                          Lyle W. Cayce
                                                                            Clerk

   American Guarantee and Liability Insurance Company,

                                                          Plaintiff—Appellee,

                                     versus

   ACE American Insurance Company,

                                                       Defendant—Appellant.

                  Appeal from the United States District Court
                      for the Southern District of Texas
                            USDC No. 4:18-CV-382

   Before Jolly, Jones, and Willett, Circuit Judges.
   Edith H. Jones, Circuit Judge:
         Mark Braswell died after his road bike collided with a stopped truck.
   His survivors (the Braswells) sued the truck’s owner, the Brickman Group
   Ltd., LLC. Brickman was primarily insured by ACE and secondarily insured
   by AGLIC. ACE rejected three Braswell settlement offers before and during
   trial, and the jury awarded the Braswells nearly $28 million. The Braswells
   and Brickman eventually settled for nearly $10 million, of which AGLIC, the
   excess carrier, paid nearly $8 million. AGLIC sued ACE, arguing that
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                                      No. 19-20779

   because ACE violated its Stowers 1 duty to accept one of the three settlement
   offers for the primary policy limits, ACE had to cover AGLIC’s settlement
   contribution. The district court agreed on both counts. We agree that ACE’s
   Stowers duty was triggered by the Braswells’ third offer, and that ACE
   violated this duty. The district court’s judgment is affirmed.
                                            I.
          At trial the Braswells 2 asserted Brickman caused Mark’s death under
   two negligence theories: (1) Brickman’s driver stopped short directly in front
   of Mark, and (2) Brickman’s truck was parked in an inherently dangerous
   spot. But premised on the substantial evidence of Mark’s comparative
   negligence, Brickman’s counsel believed it had a strong case in defense.
   Brickman was primarily insured by ACE (up to $2 million in liability), with
   excess coverage by AGLIC (up to $10 million in liability in excess of ACE’s
   $2 million). ACE controlled Brickman’s settlement negotiations.
          The facts were disputed. There was evidence that Brickman’s truck
   had been stopped for four or five minutes, or one to two minutes, or that it
   had actually stopped short in front of Mark. 3 No orange cones had been
   placed around the truck despite Brickman’s policy of using safety cones.
   Significantly, Mark’s helmet was cracked down the middle, indicating he was
   not watching where he was going. Brickman’s driver admitted it was
   dangerous, though legal, to park where he did. Moreover, Brickman’s
   witnesses were far less compelling and sympathetic than members of the
   Braswell family. Finally, the trial judge was known to be plaintiff-friendly,
   and the Braswells’ lawyer was well known and highly capable.
          Considering these factors, Brickman’s counsel mocked up the
   “value” of the Braswell case for settlement purpose, i.e., how much should

          1
            G.A. Stowers Furniture Co. v. Am. Indem. Co., 15 S.W.2d 544 (Tex. Comm’n App.
   1929)) [hereinafter Stowers].
          2
           Mark’s mother (Sandra Braswell), wife (Michelle Braswell), and two children
   (Matthew and Mary Braswell).
          3
            Notably, this theory was only supported by a Brickman employee’s, Renner’s,
   statement to Michelle Braswell.
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   ACE agree to settle for. Counsel estimated $1.25 to $2 million. ACE also
   conducted juror research that yielded two conclusions: it was important to
   prove at trial that the truck did not stop short and that the truck was legally
   parked. 4 After reviewing this material, AGLIC’s case manager valued a “risk
   neutral” settlement at “no more than 500K, not primary’s 2M.” 5 No one
   on the defense side thought a verdict over $2 million was likely.
            On the eve of trial, the Braswells’ counsel made the first of three
   settlement offers, asking for $2 million. ACE counter-offered $500,000. The
   Braswells rejected this counter, and the parties went to trial. Events quickly
   turned against Brickman. The judge: excluded evidence that Brickman’s
   truck was legally parked; allowed Michelle Braswell to testify about the
   “stop-short” statement of a Brickman employee; and allowed Michelle to
   testify about her daughter Mary’s psychological trauma, self-harm, suicide
   attempts, and hospitalization, all caused by her father’s death. Michelle was
   an exceptional witness. After the plaintiffs’ closing statement, AGLIC’s case
   manager communicated that a verdict in excess of $2 million was possible
   “[g]iven the adverse evidentiary . . . rulings.”
            The case was submitted to the jury. Before the jury reached a verdict,
   the Braswells’ counsel made two more settlement demands. First, he orally
   offered Brickman a high/low of “$1.9MM to $2.0MM with costs.” ACE
   believed this offer was outside of its settlement valuation, as the inclusion of
   “costs” would push the final settlement value beyond its $2 million policy
   limit. Brickman rejected the offer. Then the Braswells’ counsel emailed a
   third offer to Brickman’s counsel:
            Plaintiffs renew their prior offer to settlement for the policy
            limits of $2 million. Such offer will expire when the jury
            announces that it has a verdict. Thanks much. 6

            4
           In these focus groups over three-fourths of the jurors found Mark more than 50%
   comparatively negligent.
            5
                This same manager was also effusive about Brickman’s chances of success at
   trial.
            6
                ACE identified this offer as a renewal of the Braswell’s first offer.
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   Brickman declined that offer and countered; the Braswells withdrew all
   offers.
             The next day the jury returned a verdict of nearly $40 million. After
   deducting 32% for Mark’s comparative negligence, the trial court rendered
   judgment against Brickman for nearly $28 million. The Braswells and
   Brickman eventually settled for nearly $10 million (avoiding appellate
   litigation). ACE paid its policy limit of $2 million, and AGLIC furnished the
   excess amount of nearly $8 million.
             AGLIC then sued ACE in federal court for equitable subrogation, 7
   urging ACE had violated its Stowers duty to Brickman by rejecting the
   Braswells’ settlement offers. Ruling on dueling summary judgment motions,
   the district court held that “all three demands” invoked the Stowers duty.
   Then, following a bench trial, the court held that the first rejection was
   reasonable under Stowers but the last two were not. From the resulting
   judgment for the entirety of AGLIC’s excess payment, ACE has appealed.
                                                    II.
             “We review grants of summary judgment de novo,” affirming “if the
   movant shows that there is no genuine dispute as to any material fact and the
   movant is entitled to judgment as a matter of law.” 8 When reviewing a bench
   trial judgment, we inspect findings of fact for clear error and review legal
   conclusion de novo. 9 Sitting in diversity, we apply Texas substantive law. 10
             On appeal, ACE raises two issues. First, it asserts, the court erred by
   holding that all three offers triggered Stowers. 11 AGLIC doesn’t cross-appeal

             7
           ACE doesn’t contest AGLIC’s ability to sue under equitable subordination.
   Compare Gen. Star Indem. Co. v. Vesta Fire Ins. Corp., 173 F.3d 946, 950 (5th Cir. 1999).
             8
             Petzold v. Rostollan, 946 F.3d 242, 247 (5th Cir. 2019) (internal quotations
   omitted); Fed. R. Civ. P. 56(a).
             9
                  Colonial Penn Ins. v. Mkt. Planners Ins. Agency Inc., 157 F.3d 1032, 1037 (5th Cir.
   1998).
             10
                  Wisznia Co. v. Gen. Star Indem. Co., 759 F.3d 446, 448 (5th Cir. 2014).
             11
              And, since no Stowers duty arose, the subsequent bench trial judgment that ACE
   violated its Stowers duty is moot.
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   the court’s holding that ACE fulfilled its Stowers duty for the first offer; any
   argument regarding this offer is forfeited and we don’t address it further. 12
   Second, the court erred in determining that ACE violated Stowers by rejecting
   the second and third settlement offers. 13 We address each contention in turn.
                                                 A.
            Under Texas law, the Stowers duty requires an insurer “to exercise
   ordinary care in the settlement of claims to protect its insureds against
   judgments in excess of policy limits.” 14 But not all settlement demands give
   rise to a Stowers duty. 15 “The Stowers duty is not activated by a settlement
   demand unless: (1) the claim against the insured is within the scope of
   coverage, (2) there is a demand 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.” 16                 Further, Stowers applies only when “the
   settlement’s terms [are] clear and undisputed.” 17 The offer “must also be
   unconditional” and cannot “carry[] risks of further liability.” 18 For Stowers
   to apply in this case, the Braswells’ offers must have met the three Stowers

            12
                 Cinel v. Connick, 15 F.3d 1338, 1345 (5th Cir. 1994).
            13
               AGLIC doesn’t cross-appeal the court’s holding that ACE fulfilled its Stowers
   duty for the first offer; any argument regarding this offer is forfeited and we don’t address
   it further. Cinel v. Connick, 15 F.3d 1338, 1345 (5th Cir. 1994).
            14
              Am. Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 843 n.2 (Tex. 1994) (citing
   Stowers, 15 S.W.2d 544).
            15
               State Farm Lloyds Ins. Co. v. Maldonado, 963 S.W.2d 38, 41 (Tex. 1998) (“A
   demand above policy limits, even though reasonable, does not trigger the Stowers duty to
   settle.” (internal quotations omitted)).
            16
                 Tex. Farmers Ins. Co. v. Soriano, 881 S.W.2d 312, 314 (Tex. 1994).
            17
                 Rocor Int’l, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburg, 77 S.W.3d 253, 263 (Tex.
   2002).
            18
             Danner v. Iowa Mut. Ins. Co., 340 F.2d 427, 429–30 (5th Cir. 1964); Soriano,
   881 S.W.2d at 314 (stating that, for an offer to invoke Stowers, it must “propose to release
   the insured fully in exchange for a stated sum of money”).
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   prerequisites, 19        “clearly      state[d]      a    sum      certain,” 20      and   been
   “unconditional.” 21
            The district court held that all three demands were “unconditional,
   within policy limits, and presented an offer for a full release,” thus triggering
   Stowers. We disagree regarding the second offer, but the third offer did
   trigger a Stowers duty. 22
            The Braswells’ second offer sought “$1.9MM to $2.0MM with costs.”
   The question raised is whether that offer was ambiguous. Unless the offer
   “clearly state[s] the proposed settlement’s terms,” the insurer cannot
   transgress Stowers by rejecting it. 23 The record here indicates that the
   requested “costs” were ambiguous.                        ACE believed “costs” included
   litigation expenses and court costs. In contrast, AGLIC believed “costs”
   were limited to court costs. AGLIC even acknowledged in its briefing that
   ACE was confused as to what “costs” meant, 24 and AGLIC’s case manager
   acknowledged that “costs” could have more than one meaning.
   Accordingly, “the record reveals great confusion about that offer’s terms,”
   and, lacking the clear statement of a sum certain, the offer did not invoke
   Stowers. 25
            The third offer, however, stated:
            On behalf of Michelle Lynn Braswell, Individually, and as Next
            Friend of Matthew Braswell and Mary Braswell and as
            Independent Executrix of the Estate of William Markley

            19
                 Soriano, 881 S.W.2d at 314.
            20
                 Rocor Int’l, Inc., 77 S.W.3d at 263.
            21
                 Danner, 340 F.2d at 429–30.
            22
                 Again, the first offer is not at issue on appeal. See supra note 13.
            23
              Rocor Int’l, Inc., 77 S.W.3d at 263; see also Mid-Continent Ins. Co. v. Liberty Mut.
   Ins. Co., 236 S.W.3d 765, 776 (Tex. 2007).
            24
             “AGLIC alleges ACE mistakenly believed ‘costs’ included litigation expenses
   and therefore the demand exceeded its policy limits.”
            25
                 77 S.W.3d at 263. We need not reach AGLIC’s ancillary arguments concerning
   this offer.
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           Braswell, deceased, and Sandra South Bra[s]well
           (“Plaintiffs”), I am writing to convey an unconditional offer to
           settle all claims against The Brickman Group Ltd. and
           Guillermo Rafael Bermea (“Defendants”).
           . . . Please be advised that Michelle and Sandra Braswell hereby
           make this unconditional offer to settle within the primary
           policy limits represented to us to be applicable to any judgment
           rendered in this case to settle any and all claims that were
           asserted or could be asserted in the above-referenced matter for
           the total sum of $2,000,000.00.
   ACE advances three arguments why the third offer did not generate a Stowers
   duty, but only one requires discussion. 26 It goes as follows: because Michelle
   asserted claims alongside her minor children, whom she represented as next
   friend, this generated adverse interests and mandated at least court and
   perhaps guardian ad litem approval of any settlement. Therefore, “[t]hese
   requirements of third-party approval for a settlement made the plaintiffs’
   demand inherently conditional.” Because no Texas court has ruled on this
   issue in the Stowers context, we must make an Erie guess. 27

           26
              Contrary to ACE’s contention, this offer is not partial and proposes to settle all
   claims from all plaintiffs. The offer states it was made “[o]n behalf of Michelle Lynn
   Braswell,” both “Individually, and as Next Friend of Matthew Braswell and Mary
   Braswell.” When the second paragraph states that “Michelle and Sandra Braswell hereby
   make this unconditional offer to settle,” this court considers Michelle to include herself
   both “Individually, and as Next Friend of Matthew Braswell and Mary Braswell.” RSUI
   Indem. Co. v. The Lynd Co., 466 S.W.3d 113, 118 (Tex. 2015) (citation omitted) (providing
   that Texas courts “give effect to all of the words and provisions so that none is rendered
   meaningless”). Second, the phrase “within the primary policy limits represented to us to
   be applicable” does not contain conditional phrasing, and again contrary to ACE’s
   position, is best characterized as a statement of fact, not an unmet condition precedent.
   Criswell v. European Crossroads Shopping Ctr., Ltd., 792 S.W.2d 945, 948 (Tex. 1990) (“In
   order to make performance specifically conditional, a term such as ‘if.’ ‘provided that,’ ‘on
   condition that,’ or some similar phrase of conditional language must normally be
   included.”); cf. Wilcox v. Am. Home Assurance Co., 900 F. Supp. 850, 859 (S.D. Tex. 1995)
   (holding “based upon” was sufficiently conditional); Ins. Corp. of Am. v. Webster,
   906 S.W.2d 77, 80–81 (Tex. App.—Houston [1st Dist.] 1995, writ denied) (same for “[i]n
   reliance upon”).
           27
             Ironshore Eur. DAC v. Schiff Hardin, L.L.P., 912 F.3d 759, 764 (5th Cir. 2019)
   (“If the Texas Supreme Court has not ruled on an issue, we make an Erie guess, predicting
   what the Texas Supreme Court would do if faced with the same facts.” (cleaned up)).
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            Serving as her children’s next friend in the underlying lawsuit,
   Michelle asserted claims for herself and them against Brickman, but their
   claims were distinct from each other. The third settlement offer covered all
   of these claims, but it did not specify which plaintiffs would get what percent
   of the $2 million.
            In Texas, “[a] minor does not have the legal capacity to employ an
   attorney or anyone else to watch over her interests . . . . [Instead] Rule 44 of
   the rules of civil procedure authorizes appearance by a next friend.” 28 “If an
   adverse interest arises between the real plaintiff and next friend, the next
   friend is no longer competent to represent the minor.” 29 “If the court
   determines that a conflict exists, the court must appoint a guardian ad
   litem.” 30 If no guardian ad litem is appointed when required, “a judgment
   entered in favor of a minor . . . is not binding on him, and he may thereafter
   sue to have it set aside.” 31 And even if a guardian is properly appointed and
   agrees to the settlement, “a judgment ratifying the compromise cannot be
   rendered without a hearing and evidence that the settlement serves the
   minor’s best interest.” 32
            The Texas courts thus hold that if a settlement offer is accepted and
   if the trial court perceives an adverse interest between a parent and her
   children, 33 the trial court must appoint a guardian ad litem who, along with
   the court, has to approve the settlement in order to bind the minors. 34 Texas

            28
              Byrd v. Woodruff, 891 S.W.2d 689, 704 (Tex. App.), writ denied (May 4), writ
   dismissed by agreement (Sept. 28), writ withdrawn (Sept. 28, 1995).
            29
                 Id.; see also Missouri-Kansas-Texas R. Co. v. Pluto, 138 Tex. 1, 6 (Tex. Comm’n App.
   1941).
            30
            Byrd, 891 S.W.2d at 705; Ford Motor Co. v. Stewart, Cox, & Hatcher, P.C.,
   390 S.W.3d 294, 297 (Tex. 2013).
            31
             Howell v. Fifth Court of Appeals, 689 S.W.2d 396, 398 (Tex. 1985) (Gonzalez, J.
   dissenting).
            32
                 Byrd, 891 S.W.2d at 705.
            33
                 Tex. R. Civ. Proc. 173.
            34
                 Howell, 689 S.W.2d at 398 (Gonzalez, J. dissenting).
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   courts have not explicitly determined whether any uncertainty about judicial
   and third-party approval necessarily creates an unacceptable “risk[] of
   further liability” that precludes a Stowers duty. 35
           ACE relies on several cases to support its contention that “[a] conflict
   of interest between the minor and next friend often arises in a settlement
   situation where the parties vie for different portions of a fixed settlement
   amount.” 36 In Howell, for instance, a mother (among other parties) sued on
   behalf of herself and as next friend for minor children to recover for her
   husband’s death. 37 After a settlement was negotiated and agreed upon, the
   court appointed a guardian ad litem for the children because it found adverse
   interests between the mother and the minors. The mother immediately
   nonsuited the case. The Texas Supreme Court did not rule on a mandamus
   order, which had become moot.                     But the record probably supported
   appointment of a guardian ad litem because “the mother, who was twenty-
   five years old, was given over 90% of the proposed settlement value.” 38
           In Pluto, a mother was killed in an accident and her son injured. 39 The
   father, acting as his son’s next friend, quickly settled with the railroad for the
   father’s injuries and the son’s loss of his mother, but the settlement did not
   compensate the son for his personal injuries. Later on, the son sued the
   railroad company to set aside the settlement. The reviewing court agreed to
   do so because “[t]he record shows without dispute that the father, while

           35
             Danner, 340 F.2d at 430; cf. Jones v. Highway Ins. Underwriters, 253 S.W.2d 1018,
   1022 (Tex. Civ. App. 1952), writ refused n.r.e.(finding a settlement offer conditional, and
   not controlled by Stowers, because an intervenor with claim to 50% of plaintiffs’ damages
   had to approve settlement).
           36
              Byrd, 891 S.W.2d at 705 (emphasis added); Howell, 689 S.W.2d at 398 (Gonzalez,
   J., dissenting) (“When a parent sues on his or her own behalf and also as a representative
   of minor children for injuries arising out of the same occurrence a conflict of interests
   between the two often arises, particularly in a settlement situation where the parties vie for
   different portions of a fixed settlement amount.”).
           37
                689 S.W.2d at 396–97.
           38
                Id. at 398 (Gonzalez, J., dissenting).
           39
                138 Tex. at 5.
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   acting as next friend, was interested in the settlement agreement adversely to
   his children,” and the railroad had notice of the father’s adverse interests
   when they settled. 40 A similar result occurred in Gallegos v. Clegg. 41
           Although Michelle asserted her own distinct claims alongside her
   children’s, that is where the similarities with Howell, Pluto, and Gallegos end.
   That intrafamilial conflicts may occur in such cases suggests prudent state
   courts will appoint guardians ad litem to represent minor plaintiffs. 42 And in
   fact, that is what the state court did here. Consequently, had Michelle
   accepted the lump sum settlement offer, the guardian ad litem would have
   focused on assuring the children obtained their fair share—after the $2
   million check had cleared. ACE offered no evidence whatsoever either that
   Michelle would have placed maximizing her damages above her children’s
   claims or that it feared the possibility. Instead, the only evidence points to
   ACE’s having refused to settle because it was convinced it would win the
   case. The factual premises underlying ACE’s inherent conflict theory utterly
   fail. In any event, and more generally (although without specific guidance
   from Texas courts), we perceive no inherent ex ante conflict, and thus no
   “conditionality” precluding the Stowers duty, where a lump sum settlement
   offer is accepted on behalf of parents and children. In such circumstances,
   the issue of fairly dividing the proceeds arises only after the settlement is

           40
               Id. (“[S]ome of the minor children (brothers and sisters of Julius) were not
   injured in the collision and in the judgment were awarded the same amount as was Julius,
   i.e., $750.”).
           41
               417 S.W.2d 347, 352–53 (Tex. Civ. App. 1967), writ refused n.r.e. (Oct. 18, 1967)
   (finding an adverse interest because the record showed “[the father] was trying to recover
   as much as he could on account of his own alleged injuries and at the same time represent
   his minor son on account of injuries suffered by him in the same collision”); see also Clark
   v. McFerrin, 760 S.W.2d 822, 828 (Tex. App.), writ denied (Apr. 19, 1989) (holding that,
   because the children “and their mother . . . were parties in the same lawsuit,” and the
   children “had claims separate and distinct from their mother, their next friend,” “a
   conflict in interest could have arisen during settlement negotiations or the prosecution of
   the suit . . . [and the] trial court d[id] not abuse its discretion in appointing a guardian ad
   litem.”); Coleman v. Donaho, 559 S.W.2d 860, 864 (Tex. Civ. App. 1977), writ dismissed
   (Mar. 22, 1978) (same).
           42
                See Tex. R. Civ. Proc. 173.
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   agreed upon, and Texas courts have the duty to scrutinize the
   apportionments.
           Because the record is void of any specter of adverse interests between
   Michelle and her children had the third lump sum settlement offer been
   accepted, her children would have been bound by it. Accordingly, the offer
   generated a Stowers duty because it “proposed to release the insured fully”
   and it was not conditional. 43
                                              B.
           ACE also contends that the district court erred in concluding that
   ACE violated its settlement duty as to the third offer. Under Stowers, an
   insurer is required to exercise ordinary care in responding to qualifying
   settlement demands; when presented with a “settlement demand[] within
   policy limits,” an insurer cannot respond negligently. 44 Whether an insurer
   responds negligently hinges on whether “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.” 45
           Reviewing ACE’s response to its Stowers duty, the district court
   reasoned in pertinent part:
           ACE [] breach[ed] its [Stowers] duty when it rejected the. . .
           Third Demand[]. When [the Braswells] made th[is] demand[],
           ACE was aware of all of the adverse rulings and evidence
           presented during trial including, most importantly, the

           43
                Soriano, 881 S.W.2d at 314.
           44
              Garcia, 876 S.W.2d at 846, 848 (stating that an insurer is not negligent if it
   “exercise[s] [the] degree of care and diligence” of “an ordinarily prudent person” in
   response to a settlement offer). We pause to note the lack of demarcation between whether
   the Stowers duty is triggered (i.e., was the offer reasonable) versus whether the Stowers duty,
   once triggered, is met (i.e., did the insurer reasonably respond to a reasonable offer).
   Compare Garcia, 876 S.W.2d at 848 (providing that Stowers is only triggered by reasonable
   demands), with Soriano, 881 S.W.2d at 316 (providing that, once Stowers is triggered, an
   insurer is negligent if it acts unreasonably in refusing to settle). But we continue under
   Texas’s framework as we understand it: whether ACE, once its Stowers duty was triggered,
   was negligent in rejecting the Stowers offer.
           45
                Garcia, 876 S.W.2d at 849.
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           extensive evidence about Mary Braswell, Michelle Braswell’s
           testimony about the stop short theory, and [the trial judge’s]
           decision not to allow testimony that the Brickman truck was
           legally parked and had not received any citations. These
           rulings, which exacerbated the known weaknesses in the case,
           should have changed ACE’s calculus . . . . A reasonable insurer
           would have reevaluated the settlement value of the case [and
           accepted the Braswells’ offer].
           ACE’s challenge in this court hinges solely on whether the trial
   court’s adverse rulings were likely to be reversed on appeal. In other words,
   although the trial went poorly for ACE and its decision to reject the
   Braswells’ final settlement offer may appear unreasonable, ACE was not
   actually negligent since the trial court’s “errors” likely rendered the
   judgment reversible on appeal. The evidence underlying the district court’s
   factual findings cannot support its judgment, ACE argues, because the
   district court did not consider ACE’s appellate prospects.
           ACE omits that the district court did not consider the possibility of
   appellate reversal because ACE made no such argument. ACE concededly
   never argued to that court as a legal matter that Stowers requires
   consideration of appellate prospects. ACE cannot raise this novel legal
   theory for the first time on appeal, and we do not address it. 46 But even if we
   review the evidentiary sufficiency challenge de novo, 47 the evidence is clearly
   sufficient to support the bench trial verdict that “[a] reasonable insurer
   would have reevaluated the settlement value of the case [and accepted the

           46
             Estate of Duncan v. Comm’r of Internal Revenue, 890 F.3d 192, 202 (5th Cir. 2018)
   (“This court will not consider arguments first raised on appeal.” (citation omitted)). ACE
   disagrees, urging it can assert this new legal argument on appeal because “a defendant
   [does not] waive[] a challenge to the sufficiency of the evidence by failing to raise it before
   a bench trial.” Miraglia v. Bd. of Supervisors of La. State Museum, 901 F.3d 565, 573 (5th
   Cir. 2018) (citation omitted). But sufficiency of the evidence challenges do not include
   novel legal arguments—we only consider whether “the trial court’s findings are supported
   by substantial evidence.” Transcon. Gas Pipe Line Corp. v. Societe D’Exploitation du Solitaire
   SA, 299 F. App’x 347, 349 (5th Cir. 2008) (unpublished) (internal quotations omitted).
   And such trial court findings, by definition, cannot include legal arguments never even
   presented in the trial court.
           47
                Colonial Penn Ins., 157 F.3d at 1037.
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Case: 19-20779       Document: 00515766444              Page: 13       Date Filed: 03/04/2021

                                        No. 19-20779

   Braswells’ third offer].” After all, by the time that offer was made, the trial
   had taken a demonstrable turn against Brickman. 48 Two of the adverse
   rulings (disallowing evidence that the truck was legally parked and allowing
   the stop-short statement attributed to a Brickman employee) aggravated
   Brickman’s greatest known weaknesses in this case. Considering all of the
   trial circumstances, an “ordinarily prudent insurer” in ACE’s position
   would have realized that the “likelihood and degree” of Brickman’s
   “potential exposure to an excess judgment” had materially worsened since
   the trial’s inception. When presented with the Braswells’ third offer, an
   ordinary, prudent insurer would have accepted it. The evidence placed
   before the district court is sufficient to support that ACE violated its Stowers
   duty by failing to reevaluate the settlement value of the case and accept the
   Braswells’ reasonable offer.
                                       Conclusion
           The district court’s judgment is AFFIRMED.

           48
             By this point, the judge had excluded evidence about the Brickman truck’s legal
   parking. And the court had allowed Michelle to testify about Renner’s out-of-court “stop
   short” statement. Finally, the judge allowed Michelle’s testimony about Mary’s
   psychological issues stemming from her father’s death. As the district court explained, the
   testimony about Mary “was pretty powerful stuff” and had a “real impact on a jury.”
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