{"id":526,"date":"2024-11-07T13:41:05","date_gmt":"2024-11-07T17:41:05","guid":{"rendered":"https:\/\/blogs.duanemorris.com\/insurancelaw\/?p=526"},"modified":"2024-11-07T13:43:34","modified_gmt":"2024-11-07T17:43:34","slug":"cases-were-watching-fifth-circuit-appeal-of-summary-judgment-on-stowers-demand","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/insurancelaw\/2024\/11\/07\/cases-were-watching-fifth-circuit-appeal-of-summary-judgment-on-stowers-demand\/","title":{"rendered":"Cases We\u2019re Watching: Fifth Circuit Appeal of Summary Judgment on Stowers Demand"},"content":{"rendered":"\n

By: Daniel B. Heidtke<\/a><\/strong><\/p>\n\n\n\n

Finding that the Stowers <\/em>doctrine was not \u201cactivated,\u201d the United States District Court for the Southern District of Texas entered summary judgment in favor of an insurer on its declaratory relief claim.  After an underlying judgment was entered against its insured, the insurer sought declaratory relief establishing that it owed only its remaining policy limits for an excess verdict. The trial court agreed with the insurer, entered summary judgment, and the matter is now on appeal to the United States Court of Appeals for the Fifth Circuit.<\/p>\n\n\n\n

The coverage dispute arose out of an underlying personal injury suit filed in Texas state court.  In the underlying suit, the claimants sued the insured for injuries sustained while at the insured\u2019s business.  The claimants\u2019 counsel sent a written settlement offer to the insured, requesting \u201cpayment of all policy limits of any and all insurance contract,\u201d which was subsequently rejected.  The claimants eventually prevailed at trial against the insured, obtaining a verdict totaling $3.2 million.  The insurer tendered its remaining limits, but the claimants asserted that the insurer was obligated to pay the entire<\/em> judgment because the claimants\u2019 pre-trial settlement demand was a proper Stowers <\/em>demand.<\/p>\n\n\n\n

The trial court provided background on the so-called Stowers<\/em> doctrine and demands:<\/p>\n\n\n

\u201cUnder G.A. Stowers Furniture Co. v. American Indem. Co<\/em>., 02 S.W.2d 544 (Tex. Comm\u2019n. App. 1929, holding approved), Texas law imposes a \u2018basic tort duty,\u2019 known as the Stowers<\/em> doctrine, under which insurers, \u2018when faced with a settlement offer within policy limits, must accept the offer \u2026 when an ordinarily prudent insurer would do so in light of the reasonably apparent likelihood and degree of that insured\u2019s potential exposure to a valid judgment in the suit in excess of policy limits.\u2019\u201d Law Office of Rogelio Solis PLLC v. Curtis<\/em>, 83 F.4th 409, 411 n.1 (5th Cir. 2023) (quoting Travelers Indem. Co. v. Citgo Petroleum Corp., 166 F.3d 761, 761 (5th. Cir. 1999)). \u201cWhen . . . the insurer\u2019s negligent failure to settle results in an excess judgment against the insured, the insurer is liable under the Stowers doctrine for the entire amount of the judgment, including the part exceeding the insured\u2019s policy limits.\u201d G.A. Stowers Furniture Co<\/em>., 15 S.W.2d at 548.<\/p>\n\n\n\n\n\n\n

But, \u201ca duty under the Stowers<\/em> doctrine is not activated by a settlement demand unless:<\/p>\n\n\n

\u201c(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.\u201d Am. Guarantee and Liability Ins. Co. v. ACE American Ins. Co.,<\/em> 990 F.3d 842, 847 (5th Cir. 2021).<\/p>\n\n\n

Most importantly for this matter, the trial court explained, \u201cStowers<\/em> applies only when the \u2018settlement\u2019s terms [are] clear and undisputed,\u201d and \u201cmust clearly state a sum certain.\u201d Id<\/em>. (citing Rocor Int’l, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh<\/em>, 77 S.W.3d 253, 262\u201363 (Tex. 2002)).<\/p>\n\n\n\n

In light of those requirements, the trial court held, the claimants\u2019 demand for \u201call policy limits of any and all insurance contracts\u201d lacked the \u201cnecessary specificity\u201d to invoke an obligation under Stowers<\/em>.  The trial court explained, \u201cboth the Fifth Circuit and Texas Supreme Court have made clear that settlement offers must be unambiguous and demonstrative of a clear intent of a sum certain.\u201d Am. Guarantee and Liability Ins. Co.,<\/em> 990 F.3d at 847 (finding that a settlement offer made within a range lacked the clear statement of a sum certain insufficient to invoke the Stowers<\/em> duty); Rocor Int’l, Inc<\/em>., 77 S.W.3d at 262\u201363 (holding that \u201ca proper settlement demand must clearly state a sum certain and propose to fully release the insured\u201d). Accordingly, the trial court entered summary judgment in the insurer\u2019s favor holding that it owed no duty under Stowers<\/em>.<\/p>\n\n\n\n

The trial court\u2019s summary judgment ruling is currently on appeal in to the United States Court of Appeals for the Fifth Circuit, Golden Bear Insurance Company v. 34 S&S LLC, et al.<\/em>, Case No. 24-20332.<\/p>\n","protected":false},"excerpt":{"rendered":"

By: Daniel B. Heidtke Finding that the Stowers doctrine was not \u201cactivated,\u201d the United States District Court for the Southern District of Texas entered summary judgment in favor of an insurer on its declaratory relief claim.  After an underlying judgment was entered against its insured, the insurer sought declaratory relief establishing that it owed only … <\/p>\n

Continue reading “Cases We\u2019re Watching: Fifth Circuit Appeal of Summary Judgment on Stowers Demand”<\/span><\/a><\/p>\n","protected":false},"author":243,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[255,308,12,19,111,485,471],"ppma_author":[431],"class_list":["post-526","post","type-post","status-publish","format-standard","hentry","category-general","tag-appeal","tag-daniel-heidtke","tag-insurance","tag-insurance-coverage","tag-settlement","tag-stowers","tag-texas"],"authors":[{"term_id":431,"user_id":243,"is_guest":0,"slug":"dbheidtke","display_name":"Daniel B. Heidtke","avatar_url":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-content\/uploads\/sites\/12\/2024\/10\/Danny-Heidtke-LinkedIn-6249-e1729870422263-100x100.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/posts\/526","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/users\/243"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/comments?post=526"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/posts\/526\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/media?parent=526"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/categories?post=526"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/tags?post=526"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/insurancelaw\/wp-json\/wp\/v2\/ppma_author?post=526"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}