Price v. Texas Employers' Ins. Ass'n, 12-89-00097-CV

• Citation: 782 S.W.2d 938
• Decision Date: 29 December 1989
• Docket Number: No. 12-89-00097-CV,12-89-00097-CV
• Parties: Bonnie F. PRICE, Appellant, v. TEXAS EMPLOYERS' INSURANCE ASSOCIATION, Appellee.
• Court: Court of Appeals of Texas

Page 938

782 S.W.2d 938

Bonnie F. PRICE, Appellant, v. TEXAS EMPLOYERS' INSURANCE ASSOCIATION, Appellee.

No. 12-89-00097-CV.

Court of Appeals of Texas,

Tyler.

Dec. 29, 1989.

Jimmy Negem, Bailey, Negem, Patterson & Drott, Tyler, for appellant.

Joann N. Wilkins, David M. Weaver, Burford & Rayburn, Dallas, for appellee.

PER CURIAM.

This is an appeal from a summary judgment entered against Appellant, Bonnie F. Price, in her suit against Appellee, Texas Employers' Insurance Association (hereinafter "TEIA"), for breach of the duty of good faith and fair dealings in the processing and handling of two workers' compensation claims (hereinafter referred to as "bad faith claim"). We affirm the trial court's summary judgment.

The underlying workers' compensation claims were settled in March of 1988, and the settlement is evidenced by a Release executed by Appellant and her attorney on March 10, 1988, and filed with the trial court on March 21, 1988. Said settlement agreement was approved in open court on March 21, 1988, and a judgment which had been agreed to and approved by the parties' attorneys was signed by the court on that date.

Approximately one month after settlement of her claims for injuries, Appellant brought a bad faith claim against Appellee. Appellee answered, and thereafter moved for summary judgment on the basis that: (1) the present bad faith claim was barred by the judgment in the prior suit involving the workers' compensation claims; (2) the agreement (Release) and judgment in the prior suit constituted judicial admissions of Appellant which estopped Appellant from asserting the present claim; and (3) the summary judgment evidence conclusively negated at least one essential element of Appellant's bad faith claim. The trial court heard the Appellee's motion for summary judgment on March 10, 1989, and entered its "Order Granting Motion for Summary Judgment of Texas Employers' Insurance Association" (hereinafter "Summary Judgment"). Appellant has appealed from the trial court's Summary Judgment asserting two points of error.

The standard of review on appeal from a summary judgment is "whether the summary judgment proof establishes as a matter of law that there is no genuine issue of fact as to one or more of the essential elements of plaintiff's cause of action." Gibbs v. General Motors Corp., 450 S.W.2d 827 (Tex.1970).

In 1988, the Texas Supreme Court held that an insurance carrier handling a workers' compensation claim owes a duty of good faith and fair dealing to the claimant, and the breach of that duty is a tort separate and distinct from the underlying claim for injury and is independent of the Industrial Accident Board's (hereinafter "IAB") rules. Aranda v. Insurance Company of North America, 748 S.W.2d 210 (Tex.1988). To be successful on a bad faith claim, the claimant must establish both of the following elements:

(1) the absence of a reasonable basis for denying or delaying payment of the benefits of the policy, and

(2) that the carrier knew, or should have known, that there was not a reasonable basis for denying the claim or delaying payment of the claim.

Id. at 213. The court in Aranda further pointed out that in applying this test, insurance carriers still maintain the right to deny invalid, uncertain or questionable claims, and are not subject to liability for an erroneous delay of a claim. Id. at 213; Izaguirre v. Texas Employers' Insurance Association, 749 S.W.2d 550, 555 (Tex.App.--Corpus Christi 1988, writ denied).

Appellant's first point of error states that the trial court erred in granting Appellee's motion for summary judgment because the settlement of Appellant's underlying workers' compensation claim did not bar Appellant's bad faith claim on the basis of the doctrine of res judicata or some other ground of estoppel.

The applicability of collateral estoppel to a particular judgment is a question of law. Martin v. U.S. Trust Co. of New York, 690 S.W.2d 300 (Tex.App.--Dallas 1985, writ ref'd n.r.e.).

In order to collaterally estop Appellant, Appellee must have established that:

(1) the party against whom collateral estoppel is asserted was a party or in privity with a party to the prior action;

(2) the issue decided in the first action was identical to the issue in the pending action;

(3) the issue was actually litigated;

(4) the opposing party had a full and fair opportunity to litigate the merits of the issue; and

(5) the issue finally was determined on the merits and was necessary, essential and material to the outcome of the prior action.

Benson v. Wanda Petroleum Company, 468 S.W.2d 361 (Tex.1971); Martin, 690 S.W.2d at 307.

In the case at bar, on March 21, 1989, after having heard evidence in the case, a judgment was entered by the trial court which states in relevant part:

The Court having heard evidence thereon, is of the opinion that the liability of Defendant as well as the extent of alleged injury are indefinite, uncertain and incapable of being satisfactorily established.... (Emphasis ours.)

Below the judge's signature, the attorneys for both parties signed the judgment as "Agreed and Approved." A certified copy of this judgment was placed into evidence in support of Appellee's Motion for Summary Judgment, and for the reasons stated below, we find that the judgment satisfies all five elements necessary to collaterally estop Appellant from relitigating the issue of the existence of a "questionable claim."

First, Appellant was a party to the prior action for recovery on her workers' compensation claims. Second, the issue decided in the action for workers' compensation benefits was identical to the issue necessary to prove a bad faith claim. The judgment in the first suit determined that Appellee's liability was "indefinite, uncertain and incapable of being satisfactorily established." The central issue in Appellant's bad faith cause of action is whether there is a reasonable basis for denying or delaying payment on the claim; if the claim is "indefinite, uncertain and incapable of being satisfactorily established," then a reasonable basis for denial or delay exists. Aranda, 748 S.W.2d 210-13. Thus, the issue of whether the claim was questionable, i.e., uncertain, has already been decided by the first suit.

Third, the issue has been litigated. Pursuant to Tex.Rev.Civ.Stat.Ann. Art. 8307 § 12a (Vernon's Supp.1989):

[T]he court may approve a settlement agreement presented at any time before the jury has returned in the trial of the suit. In approving the agreement, the court may either conduct a hearing on the agreement or approve it without a hearing if the claimant submits a sworn affidavit acknowledging his agreement to settle the cause of action and evidencing his full understanding of all the provisions of the settlement agreement.

In the present case, the judgment reflects that the court heard evidence on the settlement of the claim before approving the settlement and entering its judgment. The principle of collateral estoppel applies whether the issue is heard by a tribunal or is determined by agreement of the parties. Withers v. Republic National Bank, 248 S.W.2d 271 (Tex.Civ.App.--Beaumont 1951, writ ref'd n.r.e.).

Fourth, Appellant has had a full and fair opportunity to litigate the issue. Appellant instigated the suit against TEIA for collection on her claims for injuries under the...