Russell v. Hartford Cas. Ins. Co.

Decision Date16 March 1977
Docket NumberNo. 12470,12470
Citation548 S.W.2d 737
PartiesJohn L. RUSSELL, et ux., Appellants, v. HARTFORD CASUALTY INSURANCE COMPANY et al., Appellees. . On Motion for Rehearing
CourtTexas Court of Appeals

Laurin C. Currie, Rohde & Currie, Austin, for appellants.

Barry K. Bishop, Joan M. Burklin, Clark, Thomas, Winters & Shapiro, Austin, for appellee Hartford Cas. Ins. Co.

Richard T. McCarroll, Brown, Maroney, Rose, Baker & Barber, Austin, for appellees Warren Cowley, d/b/a Airways Rent-A-Car and Airways Rent-A-Car System, Inc.

SHANNON, Justice.

The opinion of this Court filed on February 2, 1977, is withdrawn, and the following opinion replaces it.

This is an appeal from a summary judgment entered by the district court of Travis County. Appellants, John L. Russell and wife, Linda L. Russell, filed suit against Wendland Farm Products, Inc., Hartford Casualty Insurance Company, Airways Rent-A-Car System, Inc., and Warren Cowley, doing business as Airways Rent-A-Car of Austin, Texas. The district court severed appellants' causes of action asserted against Hartford, Airways Rent-A-Car System, and Cowley from the negligence cause of action asserted by appellants against Wendland. The district court then entered a summary judgment in favor of Hartford, Airways Rent-A-Car System, and Cowley that appellants take nothing. We will affirm that judgment.

On September 11, 1974, a truck owned by Wendland Farm Products, Inc., and operated by its employee, collided with an automobile driven by Mrs. Russell. As a result of the collision Mrs. Russell was injured and her automobile was wrecked.

On the same day an adjuster for Hartford called upon the Russells. The adjuster arranged, at Hartford's cost, to provide a temporary rent car for the Russells' use from Airways Rent-A-Car System, Inc., and Warren Cowley, doing business as Airways Rent-A-Car of Austin, Texas.

Seven days later Hartford canceled the rent-car arrangement. On the same day an employee of Airways requested the Russells to return the rent car. They returned the car on the following day. Airways did not charge the Russells for the use of the car.

Because the entry of the summary judgment was grounded upon appellees' theory that appellants failed to state a cause of action, the petition will be examined.

As against Wendland, appellants alleged that their damages were caused proximately by the negligence of Wendland's driver. Appellants sought to recover $264,200 for personal injuries, past and future medical expenses, an unwanted pregnancy, loss of wages, loss of Mrs. Russell's services, and loss of their car. They also sought $900,000 in exemplary damages from Wendland for alleged gross negligence.

The Russells also joined Hartford as a defendant in their negligence suit against Wendland. The Russells pleaded that one basis for Hartford's joinder was that it was the liability carrier for Wendland and, as such, Hartford was bound to pay any judgment obtained against Wendland. As another basis for joinder, the Russells alleged that Hartford was "directly liable" to them by virtue of Tex.Ins.Code Ann. art. 21.21 § 16 (1973).

In the second "count" of the petition, appellants enumerated a litany of wrongs allegedly committed by Wendland, Hartford, Airways and Cowley, and all flowing in some manner from Hartford's cancellation of the rent-car arrangement. For purposes of convenience, these complaints will be termed the "unfair settlement practices" and the "conspiracy" theories.

Under their "unfair settlement practices" theory, the Russells pleaded that Hartford was guilty of engaging in false, misleading, or deceptive acts or practices in violation of Tex.Bus. and Comm.Code Ann. § 17.46(b) (1973) by causing confusion or misunderstanding on the part of the Russells as to the "sponsorship and approval" of a rent car by them until Hartford could obtain a comparable replacement vehicle for them; by representing that the Russells had unlimited use of the rent car with respect to time and mileage until Hartford obtained for them a replacement vehicle; and by making false or misleading statements concerning the need for a replacement vehicle or the need for and expense of repair of the Russells' car.

Also, under their "unfair settlement practices" theory, the Russells alleged that Hartford violated Tex.Ins.Code Ann. art. 21.21 § 4(4) (1957) in attempting "to coerce and intimidate" them by canceling the rent-car arrangement.

Finally, the Russells pleaded that Hartford violated Tex.Ins.Code Ann. art. 21.21-2 (1973) by knowingly misrepresenting to them pertinent facts or policy provisions relating to Wendland's coverage; by not attempting in good faith to effectuate prompt, fair, and equitable settlement of their claim; and by not attempting in good faith to settle promptly their claim where liability had become reasonably clear under one part of the policy in order to influence settlement under other parts of the policy.

The Russells sought to obtain a recovery from Hartford in the total sum of $45,000 for engaging in such unfair practices.

As another basis for joinder of Hartford, appellants alleged that Wendland "ratified Hartford's wrongful acts." In this connection appellants alleged that their attorney wrote to Hartford offering to settle the property damage aspect of the case for $3200 and advising Hartford of the "damaging effects of their (Hartford's) unfair, and deceptive settlement practices upon the Plaintiffs (the Russells) . . . " Hartford was requested to send a copy of that letter to its insured, Wendland. The Russells pleaded further that Hartford advised Wendland, and because Wendland unreasonably failed to request Hartford to accept the settlement offer, Wendland "ratified" Hartford's unfair settlement practices, and that this somehow furnished a further ground for joinder of Hartford.

The Russells' "conspiracy" theory is difficult to summarize. The appellants pleaded that Hartford and Wendland as "First Conspirator" and Airways Rent-A-Car System, Inc., and Cowley as "Second Conspirator" entered into a conspiracy "to injure" the Russells. The conspirators allegedly arranged to furnish a rent car to the Russells without informing them about any limitations on the number of days permitted by the arrangement or by the number of miles allowed to be driven each day and without informing the Russells as to the terms of the cancellation of the rent-car arrangement. Thereafter, the "First Conspirator" directed the "Second Conspirator" to advise the Russells of the cancellation of the arrangement and of the mileage limitations in the arrangement. As a result of such alleged conspiracy Mr. Russell had to arrange for a ride to work and arrangements had to be made with friends, relatives, and neighbors to take Mrs. Russell to the physician and other places. For such damages allegedly flowing from the conspiracy, the Russells sought as their due $540,000.

Under their first point of error, appellants claim that joinder of the liability insurance company was permitted by the exception in Tex.R.Civ.P. 51(b).

In Texas, and in most states, the liability insurance company, in absence of a statute or an express provision of the insurance contract, cannot be sued directly in a tort suit with or without the joinder of the insured. Green, Blindfolding the Jury, 33 Texas L.Rev. 157, 158 (1954). That rule is expressed in Tex.R.Civ.P. 51(b) and other rules. 1 Rule 51(b) prohibits the joinder of a liability or indemnity insurance company in a tort case unless the insurance company is " . . . by statute or contract directly liable to the person injured or damaged."

Appellants say that any one of the several statutory causes of action asserted by them against the liability insurance company for alleged violations of the Texas Insurance Code and the Texas Business and Commerce Code permits them to join the insurer under the exception in Rule 51(b). Appellants say that the insurer is by those statutes "directly liable to the person injured or damaged."

Appellants' argument ignores the fact that the exception in Rule 51(b) permits the joinder of the liability insurer in tort cases in which a statute has made the insurer directly...

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