Palo Pinto insurance lawyers know the above question can be difficult to answer. Each situation is different. The Stowers doctrine in the law is an example to look toward for some understanding.
The heart of a Stowers claims is the 1929 decision in G. A. Stowers Furniture Co. v. American Indemnity.
In Stowers, the insurance company refused to accept a third party’s offer to settle the asserted claim within policy limits and a judgment in excess of the policy limits resulted. The court imposed a duty for an insurance company to handle settlement demands reasonably.
In 1994, the Texas Supreme Court, in a case styled, American Physicians v. Garcia ruled there are three elements to look to:
- the claim against the insured is within the scope of coverage;
- the amount of the demand is within the policy limits; and
- the terms of the demand are such that an ordinary prudent insurer would accept it, considering the likelihood and the degree of the insured’s potential exposure to an excess judgment.
1998, case law, Trinity Universal Insurance v. Bleeker, says the offer to settle must be a full release of all claims. In Bleeker, a hospital lien was not included in the “full release.”
The 1994 case, Texas Farmers Insurance v. Soriano, addressed the situation where there are multiple claimants and the case, along with it’s line of cases, should be read to understand how to handle a situation where there are multiple claimants.
The 1999 case, Travelers Indemnity Co. v. Citgo Petrolium Corp. is a United States 5th Circuit opinion dealing with multiple insureds. This is another case with a complicated fact situation that needs to be read when there are multiple insureds.
The Citgo opinion is followed by a 2011 opinion styled, Pride Transportation v. Continental Casualty Co. Again, with a complicated fact situation. Be aware that these cases need to be read in light of the particular situation an insurance lawyer may be facing.
Finally, we have a 2014 opinion from the Houston Court of Appeals styled, Patterson v. Home State County Mutual Insurance Company. The ruling was that there was not a proper Stowers demand made upon the insurance companies. At first it appears the lawyers did all they needed to do with their Stowers demand but the court did not agree.
As with most of these Stowers cases, the facts can be complicated and each of the cases need to be read. Then a comparison with what occurred in the cases compared with the fact scenario that is being faced.