Aranda v. Insurance Co. of North America

• Decision Date: 18 December 1986
• Docket Number: No. B14-86-173-CV,B14-86-173-CV
• Citation: 722 S.W.2d 755
• Parties: Miguel ARANDA, Appellant, v. INSURANCE COMPANY OF NORTH AMERICA and Lumbermans Mutual Casualty Company, Appellees. (14th Dist.)
• Court: Texas Court of Appeals

Page 755

722 S.W.2d 755

Miguel ARANDA, Appellant, v. INSURANCE COMPANY OF NORTH AMERICA and Lumbermans Mutual Casualty Company, Appellees.

No. B14-86-173-CV.

Court of Appeals of Texas Houston (14th Dist.).

Dec. 18, 1986.

Rehearing Denied Jan. 15, 1987.

Karen A. Lerner, Houston, for appellant.

Joe L. Guyton, Kurt Groten, Houston, for appellees.

Before ROBERTSON, SEARS and CANNON, JJ.

OPINION

ROBERTSON, Justice.

The trial court sustained special exceptions to appellant's fourth amended petition and ordered appellant to amend his pleadings within forty-five days. Appellant failed to amend; accordingly, the trial court dismissed the cause. In five points of error appellant contends his petition properly alleged a cause of action. We disagree and affirm.

Appellant's claim was based upon the appellee's alleged failure to negotiate his claim for workers' compensation benefits. He based his cause of action upon four theories: (1) the violation of the [common law] duty of good faith and fair dealing owed to an insurance claimant; (2) the intentional infliction of a prima facie tort based upon duties created by the rules of the Industrial Accident Board; (3) the intentional infliction of duress; and (4) the intentional infliction of emotional distress.

Since the special exceptions were sustained as to the legal and factual sufficiency of the pleadings, we must assume the facts as alleged to be true. Appellant alleged that each of the appellees were insurance carriers carrying insurance under the provisions of the Texas Workers' Compensation Act. On March 15, 1982, Insurance Co. of North America (INA) carried a policy of Workers' Compensation insurance on AMF Tuboscope, one of appellant's employers. On that same date, Lumberman's Mutual Casualty Co. (Lumberman's) carried a policy of Workers' Compensation insurance on Uni-Mineral, appellant's other employer. Appellant was earning wages from both employers which entitled him to the maximum compensation benefit from either employer. On March 15, appellant began to experience the first manifestations of a repetitious traumatic injury which continued to the point that he was unable to work on March 26. This injury was compensable under the Workers' Compensation statute because it was caused by activities performed by appellant in the course and scope of his employment with both AMF Tuboscope and Uni-Mineral. Appellant alleged that he was entitled to benefits from either of the appellees under Art. 8306, Sec. 20 V.A.C.S.

Appellant filed a claim for Workers' Compensation benefits on April 19, stating AMF Tuboscope as his employer and INA as the carrier. Appellant later filed a second claim for compensation naming Uni-Mineral as his employer and Lumberman's as the carrier. INA and Lumberman's investigated the claims and determined that appellant was employed by both companies, that the injuries sustained by appellant were the result of his work at either or both of his employers, and that his injuries were compensable. Unable to agree between themselves as to which carrier bore primary responsibility, neither appellee initiated or paid weekly disability benefits until the claims could be presented at a prehearing conference before the Industrial Accident Board.

Appellant alleged that both of the appellees breached their duty of good faith and fair dealing by, among other things: failing to make payments to appellant when each appellee knew that he was entitled to those payments under the terms of the Workers' Compensation statute and the respective insurance policies; failing to attempt to settle in good faith, promptly and equitably, appellant's claim for Workers' Compensation benefits when each appellee's liability was clear; and intentionally depriving appellant of his legally protected property interest in his Workers' Compensation benefits. Each of the acts or omissions was alleged to be distinct and independent of the claim for compensation, even though they arose out of the claim for compensation. In addition, INA was alleged to have violated its duty of good faith and fair dealing by failing to attempt in good faith to effectuate a prompt and fair settlement of appellant's claim by working with Lumberman's to settle the claim.

This conduct was alleged to have been done intentionally and with conscious disregard of appellant's rights and with intent to inflict emotional distress upon appellant, thus justifying an award for punitive damages. The specific damages claimed were not connected to damages compensable under the Workers' Compensation statute.

In his first point of error appellant contends the court erred in sustaining the special exception to his cause of action for the appellee's violation of the duty of good faith and fair dealing. In English v. Fischer, 660 S.W.2d 521, 522 (Tex.1983) the supreme court rejected the theory advocated by appellant in the following language:

A basis for the judgments below was the adoption of a novel theory of law enunciated only by California courts. That theory holds that in every contract there is an implied covenant that neither party will do anything which injures the right of the other party to receive the benefits of the agreement. The courts below call this a covenant of "good faith and fair dealing."

This concept is contrary to our well-reasoned and long-established adversary system which has served us ably in Texas for almost 150 years. Our system permits parties who have a dispute over a contract to present their case to an impartial tribunal for a determination of the agreement as made by the parties and embodied in the contract itself. To adopt the laudatory sounding theory of "good faith and fair dealing" would place a party under the onerous threat of treble damages should he seek to compel his adversary to perform according to the contract terms as agreed upon by the parties. The novel concept advocated by the courts below would abolish our system of government according to settled rules of law and let each case be decided upon what might seem "fair and in good faith," by each fact finder. This we are unwilling to do.

While appellant concedes that English v. Fischer is "the principal case dealing with the duty of contracting parties to perform in good faith", he argues that, "the Court only held that this covenant of good faith and fair dealing is not present in every contract." He then cites Travelers Ins. Co. v. Savio, 706 P.2d 1258 (Colo.1985) where the court held that a workers' compensation complainant could bring an action against a compensation carrier for bad faith, and argues that "the same duty should extend to workers' compensation claimants in Texas." We disagree.

It is clear that appellees' denial of appellant's claim, or their failure to pay compensation due appellant under any enforceable contract, does not in any way reduce appellant's rights under the contract. Rodriguez v. Texas Employers' Insurance Association, 598 S.W.2d 677 (Tex.Civ.App.--Fort Worth 1980, writ ref'd n.r.e.); General Accident, Fire & Life Assurance Corp., Ltd. v. Legate, 578 S.W.2d 505 (Tex.Civ.App.--Texarkana 1979, writ ref'd n.r.e.); Lone Star Life Insurance Co. v. Griffin, 574 S.W.2d 576 (Tex.Civ.App.--Beaumont 1978, writ ref'd n.r.e.). While this principle would apply to the denial of any first party claim, it is noted that the Rodriguez case involved an action for extra-contractual damages under worker's compensation insurance for refusing to "promptly and fairly settle" the compensation claim. The court denied recovery on such claim and pointed out that the claimant "possessed a statutorily created cause of action under the Workers' Compensation Act" and that the "denial of liability did not terminate or lessen its [the carriers] obligations under that Act." Rodriguez, 598 S.W.2d at 679...