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Personal Injury

Texas Stowers Doctrine Insurance Settlements

The Stowers Doctrine | Good Faith in the Settlement of Claims

By | Car Wreck, Personal Injury

What is the Texas Stowers Doctrine?

Texas Stowers Doctrine Insurance SettlementsUnder the typical liability insurance policy both the insurer and the insured have mutual obligations and rights. The insured pays a premium to their insurance company to protect against unexpected losses and claims. On the other hand, the insurer has a duty to defend against claims covered under the policy and a right to control the defense of litigation should it arise.1 Included in the right to control litigation is the insurer’s authority to make the decisions concerning policy coverage, the merits of claims made by third parties against the insurance company, and the settlement of such claims.2 But what happens when an insurance company refuses an offer to settle within the policy limits?

According to the Stowers Doctrine, the insurer has an implied duty to act in good faith and accept reasonable settlement demands within policy limits.3 This is called the Stowers duty. Through this duty the insurer protects the insured against judgements in excess of policy limits. Under the Stowers Doctrine, if an insurance company negligently failed to accept a reasonable offer within policy limits and a jury then returns a verdict in excess of the policy limits, the insurance company may be liable for the entire verdict, even though it exceeds policy limits.4

History of the Stowers Doctrine

The Stowers Doctrine originated in 1929 from the Texas Supreme Court case G.A. Stowers Furniture Co. v. American Indemnity, Co., 15 S.W.2d 544 (Tex.). Stowers Furniture Co. had an auto insurance policy with American Indemnity for $5,000. During the policy term, a furniture employee’s truck was involved in an accident and suit was brought by the injured passenger, claiming $20,000 in damages. While the suit was pending, the injured party served Stowers with a letter offering to settle for $4,000—within policy limits. The letter gave a deadline to accept the offer and provided proof of the excessive damages. American Indemnity refused to settle and went to trial with the intention of saving money. They lost at trial and a jury awarded the injured party more than twice the amount of the policy. The terms of the insurance policy stated iStowers was responsible for a judgment in excess of the policy limits. Stowers paid the judgement and then sued the insurance company for reimbursement.

The Texas Supreme Court held that American Indemnity owed a duty to Stowers to exercise ordinary care in the settlement of claims. American Indemnity was responsible for protecting the insured up to the policy limit. The Court remanded the case to the district court to allow testimony of the serious nature of the passenger’s injuries to determine if American Indemnity was negligent in refusing the settlement offer.5 If American Indemnity rejected a reasonable settlement within the policy limits, they would potentially be liable for the entire judgement, even that in excess of the policy.6

The purpose behind Stowers is to put pressure on insurance companies to settle claims for the policy limit. Because insurance companies have complete power over litigation, they have a corresponding duty to their insured to exercise the same degree of care that a prudent person would exercise under similar circumstances. Failing to exercise such care is deemed negligent on the part of the insurance company.7 Put simply, the insured is protected from the insurance company taking a risk when a reasonable person would have settled.

How Does a Stowers Demand Work?

The Stowers Doctrine is a tool unique to Texas law and has created a new type of settlement demand: the Stowers demand. This demand is a time-sensitive letter sent to a third-party insurance carrier with an offer to settle within the insured’s policy limits.8 For a Stowers demand to be valid, five requirements must be met:

  1. the claim against the insured is within the scope of coverage;
  2. liability is reasonably clear;
  3. the demand is within the limits of the policy;
  4. the settlement terms are such that an ordinarily prudent insurer would accept it when considering the likelihood and degree of the insured’s potential exposure to an excess judgment; and
  5. the demand offers the insurer an unconditional, full release for liability.9

If these requirements are met and the insurer fails to accept the offer by the deadline, the defendant’s insurance company may be held responsible for verdict in excess of its insured’s policy limits.10

Footnotes:

  1.  Stephen G. Cochran, Texas Practice Series: Consumer Rights and Remedies § 5.13 (3d ed. 2017).
  2.  Id.
  3.  American Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 846 (Tex. 1994).
  4.  See G.A. Stowers Furniture Co. v. American Indemnity, Co., 15 S.W.2d 544, 547 (Tex. 1929).
  5.  Id. at 548
  6.  Id. at 547
  7.  Texas Farmers Ins. v. Soriano, 881 S.W.2d 312, 314 (Tex. 1994).
  8.  American Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 844–45 (Tex. 1994).
  9.  Id. at 849; Trinity Universal Ins. Co. v. Bleeker, 966 S.W.2d 489 (Tex. 1998).
  10.  See Ecotech Int’l, Inc. v. Griggs & Harrison, 928 S.W.2d 644, 646 (Tex. App.—San Antonio 1996, writ denied); Stowers Doctrine, Int’l Risk Mgmt. Inst.
E-Cigarette Exploding Battery Texas

Pants on Fire! Who is Liable if your E-Cigarette Explodes in Your Pocket?

By | Personal Injury

Vape Batteries and E-Cigarette Explosions:
Who is responsible for injuries or deaths caused by an “Industry-Wide” problem?

There has been plenty of debate on the health and safety effects of “vaping”, but the most dangerous aspect of electronic cigarettes is likely the potentially explosive lithium-ion batteries used to power them.

Since 2009, there have been over 200 reported incidents of fires and explosions, and at least one death, caused by exploding e-cigarettes in the U.S. As more products enter the market, the number of these explosions will continue to rise, as will the number of injuries and deaths.

If you or a loved one have been injured by an exploding e-cigarette, you may be entitled to compensation from the manufacturer or seller of the device. Our law firm has represented individuals that have suffered injuries from an exploding battery and we know how to pursue compensation.

What is an E-Cigarette?

An “electronic cigarette” refers to several different types of devices within a larger class. These devices come in varying shapes and sizes and are sometimes called e-cigs, personal vaporizers (VPs), mods, electronic nicotine deliver systems (ENDS), and vape pens. They are powered by lithium-ion batteries which produce a heated vapor that looks like smoke.

Risk of Injury Due to Explosion of Lithium-ion Batteries in E-Cigs is Exceedingly Dangerous

In 2016, the U.S. Fire Administration issued a report concluding that lithium-ion batteries should not be used in e-cigarettes due to the inherent risks of injuries due to explosion and fire. In reaching this conclusion, the agency examined 195 reported cases of e-cigarette battery explosions.

“The e-cigarette/lithium-ion battery combination presents a new and unique hazard to consumers. No other consumer product places a battery with a known explosion hazard such as this in close proximity to the human body. It is this intimate contact between the body and the battery that is most responsible for the severity of the injuries that have been seen.”

(McKenna, Lawrence. “Electronic Cigarette Fires and Explosions in the United States 2009-2016.” National Fire Data Center, U.S. Fire Administration.)

Who is Responsible if a Vape Pen Explodes?

In Texas, the manufacturer is generally responsible for the safety of its products. Only when the manufacturer is insolvent or beyond the reach of Texas courts can the sellers be held liable. Tex. Civ. Prac. & Rem. Code Sec. 82.003 (“Liability of Nonmanufacturing Sellers”).

Because most e-cigarettes and lithium-ion batteries are produced in China, it is often the vape shop or other retailer that sold the defective product who is responsible for the damages. As such, consumers should always purchase from reputable retailers who are more likely to be financially solvent and/or have insurance to cover the damages.

Under Texas law, any party who participated in the design, manufacture, or marketing of a defective product may be held responsible for damages. In the case of e-cigarettes, these products could be considered fundamentally defective because almost every product currently on the market requires the use of a lithium-ion battery, which is known to be potentially deadly.

Many of the risks associated with lithium-ion battery explosions occur due to improper handling of the devices. Because so little information is provided to consumers about proper handling, those responsible for the marketing of the devices may still be liable for any damages as a result of injuries or death.

If you or a loved one has been injured or killed by an exploding e-cigarette, it is important that you consult with a qualified attorney as soon as possible who can give you advice specific to your case. Our team of experienced attorneys is here to help.

Personal Injury Statute of Limitations

Time Limitations for Personal Injury Claims in Texas

By | Personal Injury

Personal Injury Statute of LimitationsIf you’ve been injured by someone else’s negligent or intentional act, you have a set amount of time to file a lawsuit seeking a remedy for your injury. This time limit is known as a statute of limitations and it is outlined in Chapter 16 of the Texas Civil Practice & Remedies Code.

The Statute of Limitations is Two Years for Most Claims

In most instances, the statute of limitations for personal injuries is two years from the date of the accident or injury, meaning a lawsuit must be filed no later than two years from that day. Lawsuits filed after this two-year period will be summarily dismissed unless you meet one of the few exceptions to the statute. Missing this statutory deadline means giving up the ability to ever pursue a remedy (also known as damages) for your injury claim.

There Are Very Few Exceptions to the Limitations Period

If you are under a legal disability the statute of limitations is tolled (suspended) until the disability is removed. These legal disabilities include:

  • Minor person under the age of 18
    • The statute is tolled until his/her 20th birthday, two years after reaching the age of majority (Weiner v. Watson, 900 S.W.2d 316, 321)
  • Persons of “unsound mind” who are “unable to participate in, control, or understand the progression and disposition of a lawsuit.” (Grace v. Colorito, 4 S.W.3d 765, 769)
    • It would have to be proven to the court that a person did not have the “mental capacity” to pursue litigation for a definite period of time.

If you believe you have a personal injury claim it is better to seek out the advice of a qualified personal injury attorney sooner rather than later. A Texas personal injury attorney can help you evaluate your claim’s statute of limitations and take steps to protect your rights.

Personal Injury Case Mediation

What to Expect When Your Personal Injury Case Goes to Mediation

By | Personal Injury

Personal Injury Case MediationAs a Fort Worth personal injury attorney, I have participated in hundreds of mediations where I represented victims of car accidents, work place negligence, defective products, assault, electrocution, and other manner of claims involving injury or death. In my experience, mediation may be the most effective tool for allowing all parties to best understand all aspects and perspectives about their case—the good, bad, and ugly—and to make an informed decision about whether to settle their case or move forward toward trial.

What is Mediation?

Mediation is a guided negotiation facilitated by a neutral third party, the mediator. As defined by Texas Civil Practice and Remedies Code Section 154.023:

(a) Mediation is a forum in which an impartial person, the mediator, facilitates communication between parties to promote reconciliation, settlement, or understanding among them.

(b) A mediator may not impose his own judgment on the issues for that of the parties.

Unlike a judge or an arbitrator, a mediator does not have the power to decide a case or to enter a judgment or award. Neither can a mediator force the parties to accept a settlement. Rather, the role of the mediator is to help open the lines of communication between the parties in a confidential setting.

What to Expect During a Personal Injury Mediation

Mediations frequently begin with what’s known as a “joint session” or “caucus.” The plaintiff, his or her lawyer, the defense lawyer, the insurance adjuster, and the mediator will gather in a conference room. When meeting the defendant’s representatives, I encourage my clients to shake hands and politely introduce themselves. Once the introductions have been made, the lawyers may put on brief presentations emphasizing what they feel is important about their respective cases. The parties do not put on evidence and the plaintiff will not be asked to testify. The parties will then break off into separate rooms with the defendant’s lawyer and adjuster in one room and the plaintiff and his or her attorney in another.

The mediator then spends time with each group getting to know the case and the parties involved. As a neutral third party with no stake in the outcome of the case, a mediator is in the unique position to offer a new perspective on the case. Good mediators will challenge the parties’ assertions and help them look at the case from different angles.

At some point during the process, the mediator will begin to carry demands and offers from one room to the other. The party to make the first “move” will depend on whether a demand or offer was previously extended. If the plaintiff made a demand to which the defendant never responded, the defendant should make the first move and vice-versa. Each party will respond with a counter-demand or offer of their own until the case either resolves or the parties reach an impasse.

Over the course of the mediation, the mediator will push both sides to consider potential weaknesses in their own cases while acknowledging the potential strengths of their opponents’. With each round of offers and demands, the gap between the parties will, ideally, begin to narrow until the parties are able to come together on a final number to settle the case.

What Happens if My Case Settles at Mediation?

If mediation is successful, the mediator will prepare an agreement for the participants to sign that generally sets forth the basic elements of the parties’ settlement agreement with the understanding that a more detailed and thorough agreement will be prepared by the lawyer for the defendant, subject to modifications made by the plaintiff’s lawyer. However, a mediation agreement is enforceable once signed, and either party to the agreement may require the other parties to be bound by its terms.

The mediation agreement will generally include a time frame for the defendant or its insurer to deliver checks to the plaintiff’s counsel for distribution. It is not uncommon, however, for this process to be delayed in order for the plaintiff’s lawyer to negotiate hospital liens, subrogation interests from health insurers, and outstanding medical bills.

What Happens if My Case Does Not Settle at Mediation?

When the parties are unable to reach an agreement at mediation, the mediator may make what is referred to as a “mediator’s proposal” in which the mediator proposes a settlement amount to each of the parties. The parties are instructed to confirm to the mediator by a certain date whether they accept or reject the proposal. The parties’ decisions to accept or reject are kept confidential and made known only to the mediator. Mediator’s proposals can be an effective tool when more time or settlement authority is needed to bring the case to a close.

Mediators will generally make a proposal only in cases where they feel there is at least some chance that both parties will accept. When the gap between the parties is too wide, a mediator’s proposal is unlikely to work and the parties are free to continue litigating the case or they may choose to continue negotiations with or without the assistance of the mediator. Depending on the case, the parties may choose re-mediate as the case gets closer to trial and fewer unanswered questions remain.

Even when a mediation fails to resolve the parties’ disputes, it has been my experience that almost all mediations are worthwhile experiences. The parties generally walk away from a failed mediation with a better understanding of the main issues in their case and are better able to focus their efforts going forward.