Dear v. Scottsdale Ins. Co.

• Decision Date: 13 March 1997
• Docket Number: No. 05-95-00705-CV,05-95-00705-CV
• Parties: William C. DEAR and William C. Dear & Associates, Inc., Appellants, v. SCOTTSDALE INSURANCE COMPANY, Paul B. Van Ness, Johnson & Sylvan, P.C., And Hammerman & Gainer, Inc., Appellees.
• Court: Texas Court of Appeals

Page 908

947 S.W.2d 908

William C. DEAR and William C. Dear & Associates, Inc., Appellants, v. SCOTTSDALE INSURANCE COMPANY, Paul B. Van Ness, Johnson &

Sylvan, P.C., And Hammerman & Gainer, Inc., Appellees.

No. 05-95-00705-CV.

Court of Appeals of Texas,

Dallas.

March 13, 1997.

Robert M. Clark, Clark & Seay, Dallas, Jennifer S. Riggs, Jennifer S. Riggs, P.C., Austin, for Appellants.

Gary D. Lykins, Russell H. Roden, Gwinn & Roby, Dallas, Stephen E. Friend, D. Bradley Dickinson, Judy K. Shore, Vial Hamilton Koch & Knox, L.L.P., Dallas, for Appellees.

Before KINKEADE, WHITTINGTON and HANKINSON, JJ.

OPINION ON MOTION FOR REHEARING

HANKINSON, Justice.

On our own motion, we withdraw our November 1, 1996 opinion and substitute this opinion. We also vacate our November 1, 1996 judgment.

William C. Dear and William C. Dear & Associates, Inc. (collectively referred to as

"Dear") appeal the grant of summary judgments in favor of Scottsdale Insurance Company ("Scottsdale"), Hammerman & Gainer, Inc. ("H & G"), and Paul B. Van Ness ("Van Ness") and Johnson & Sylvan, P.C. In the trial court, Dear alleged that appellees improperly investigated, handled, and settled lawsuits filed against Dear, which were covered by a Scottsdale professional liability insurance policy. In three points of error, Dear contends the trial court erroneously granted summary judgment because appellees failed to negate conclusively the various contractual, tort, and statutory causes of action that he asserted. In an additional point of error, Dear contends the trial court erroneously sustained Van Ness and Johnson & Sylvan's and Scottsdale's objections to affidavits Dear filed in opposition to their motions for summary judgment. In a cross-point of error, Scottsdale argues that the trial court erroneously denied one ground for its motion for summary judgment because, as a matter of law, Dear could not prove damages. We affirm in part, reverse in part, and remand for proceedings consistent with this opinion.

FACTS

William C. Dear operates as a private investigator through William C. Dear & Associates, Inc. Scottsdale issued a professional liability insurance policy to Dear. The policy provided that Scottsdale had the right and duty to defend lawsuits alleging professional liability filed against Dear. The policy expressly and unambiguously permitted Scottsdale to investigate and settle any covered claims against Dear as Scottsdale deemed expedient.

In 1987, Barbara Russo retained Dear to investigate the death of Dan Beckon, a Canadian jockey. After Dear began his investigation, Russo apparently became dissatisfied, claiming Dear overcharged her and fraudulently and negligently investigated Beckon's death. In 1990, Russo sued Dear. Dear notified Scottsdale of Russo's lawsuit, and Scottsdale agreed to defend Dear. Scottsdale retained the law firm of Johnson & Sylvan to represent Dear. Van Ness, an attorney employed by Johnson & Sylvan, was assigned to defend Dear. Scottsdale also retained H & G to do independent adjusting work in connection with the Russo litigation. H & G is an independent adjusting firm that never had a contractual relationship with Dear.

Dear also retained a personal attorney, Paul Leech, to represent him in the Russo litigation. Leech filed and pursued a counterclaim against Russo seeking damages for nonpayment of fees, extortion, blackmail, loss of personal and business reputation, loss of business, breach of contract, slander, attorney's fees, and punitive damages.

The trial court ordered the Russo litigation to mediation. The parties mediated the case three times. The last mediation occurred on September 9, 1991. Jean Nelson, Scottsdale's representative, participated by telephone. Dear, Leech, and Van Ness attended the mediation in person. Russo made a policy limits settlement demand for $300,000. When informed of this demand, Dear objected to settling the litigation and refused to consent to any settlement. Dear and Leech left the mediation before it concluded.

During the mediation, the mediator telephoned Nelson and advised her that Scottsdale would be well advised to accept Russo's policy limits demand of $300,000. The mediator told Nelson that, based on the evidence, he believed that a jury might find against Dear and award Russo significant damages. Nelson accepted Russo's demand to settle within the policy limits for $300,000, in exchange for a full release of Dear's potential liability. Dear did not release his counterclaim against Russo. In deciding to settle this litigation, Nelson considered the mediator's opinions, questions of fact on the liability issues, and the likelihood of a large jury award.

On September 19, 1991, Van Ness telephoned Leech and told him that Scottsdale had settled Russo's claims. On September 20, 1991, Russo and Dear finalized the settlement documents, and the trial court entered an agreed order of dismissal. Leech pursued Dear's counterclaim against Russo to verdict in an October 1992 trial.

In March 1992, Chloe Hafford and John and Bess Gill sued Dear. Hafford, who is Russo's mother, alleged in her lawsuit that Scottsdale again provided Dear coverage and a defense. Scottsdale also settled the Hafford and Gill claims after mediation for $10,000 and $20,000, respectively. The settlement agreement reflects that: (1) Hafford and the Gills intended to settle their claims against Dear and released Dear; (2) Dear refused to pay any money to settle those claims; (3) Scottsdale paid money to settle claims that Hafford and the Gills asserted against Scottsdale; and (4) Hafford, the Gills, Dear, and Scottsdale agreed to keep the settlement terms confidential unless compelled to make disclosure by subpoena or other compulsory process. Scottsdale later released loss runs that showed losses paid to Hafford and the Gills on Dear's behalf.

Dear conducted an intensive and intrusive investigation of her life in retaliation for her daughter's suit against Dear. The Gills claimed in their lawsuit that Dear committed improprieties while investigating their daughter's disappearance.

PROCEDURAL BACKGROUND

On September 20, 1993, Dear filed this lawsuit. He claimed that Scottsdale's, H & G's, and Van Ness and Johnson & Sylvan's conduct caused him damages, including loss of business and reputation, mental anguish, and physical pain. Dear specifically claimed that their course of conduct made it more difficult and more expensive to obtain professional liability insurance, which is statutorily required for him to operate as a private investigator. Dear alleged multiple causes of action against each appellee.

Scottsdale

Dear sued Scottsdale, alleging that Scottsdale negligently: (1) investigated, handled, and settled claims filed against him; and (2) reported the Gill and Hafford settlements as claims paid on Dear's behalf. Dear also contended that Scottsdale tortiously interfered with his contract with Johnson & Sylvan and Van Ness; breached its contract with Dear to provide a defense in the Russo litigation; and breached its agreement not to disclose the Hafford and Gill settlements in Dear's loss runs. Finally, Dear claimed that Scottsdale's conduct breached its duty of good faith and fair dealing and violated the Texas Deceptive Trade Practices Act ("DTPA"). Scottsdale moved for summary judgment, asserting three grounds: (1) it had an absolute right to settle the Russo, Hafford, and Gill claims; (2) a reasonable basis for settling those claims existed; and (3) Dear could not, as a matter of law, establish any damages caused by Scottsdale's conduct.

Hammerman & Gainer

Dear contended that H & G negligently investigated and evaluated Russo's claims and then changed its evaluation of the case based on pressure from Van Ness. Dear then alleged that in doing so, H & G tortiously interfered with his relationship with his attorneys. Dear further alleged that H & G's conduct constituted a breach of its contract with Scottsdale to evaluate Russo's claims and that Dear was a third-party beneficiary to that contract. Finally, Dear claimed that the manner in which H & G investigated, handled, or settled Russo's claims breached its duty of good faith and fair dealing and the DTPA. H & G moved for summary judgment, asserting as a matter of law that: (1) H & G owed no duty to Dear; (2) no contractual relationship existed between H & G and Dear; and (3) Scottsdale had an absolute legal right to settle Russo's claims.

Van Ness and Johnson & Sylvan

Finally, Dear alleged that Van Ness and Johnson & Sylvan negligently: (1) investigated the facts of the Russo litigation and facts regarding Russo herself; (2) settled Russo's claims without a confidentiality agreement; and (3) settled Russo's claims without Dear's consent and against his express wishes. This conduct, according to Dear, influenced Scottsdale's decision to settle Russo's claims and constituted tortious interference with Dear's contractual relationship with Scottsdale. Dear also maintained that the manner in which Van Ness and Johnson & Sylvan investigated, handled, and settled Russo's claims breached their fiduciary duty and their duty of good faith and fair dealing. Dear finally contended that this conduct constituted a breach of contract and a DTPA violation.

Van Ness and Johnson & Sylvan moved for summary judgment, asserting: (1) they did not settle Russo's claims, Scottsdale did; (2) they did not breach any duty owed to Dear while they defended him in the Russo litigation; (3) the doctrines of collateral estoppel and res judicata prevented relitigation of the claims that Dear alleged; (4) the statute of limitations barred Dear's action; (5) Texas does not recognize a cause of action against an attorney for breach of contract or breach of the duty of good faith and fair dealing; and (6) Texas does not recognize a cause of action for alleged violation of the disciplinary rules of professional conduct.

The trial court granted appellees' motions...