Texas Employers Ins. Ass'n v. Puckett

Citation822 S.W.2d 133
Decision Date21 November 1991
Docket NumberNo. 01-90-00291-CV,01-90-00291-CV
PartiesTEXAS EMPLOYERS INSURANCE ASSOCIATION, Appellant, v. Howell PUCKETT, Jr., Appellee. (1st Dist.)
CourtCourt of Appeals of Texas

Janet Giessel Townsley, Mike Phillips, David Edwards, Houston, for appellant.

Michael L. Atkinson, Conroe, for appellee.

Before SAM BASS, DUNN and HUGHES, JJ.

OPINION

SAM BASS, Justice.

This is a suit for breach of the duty of good faith and fair dealing. Texas Employers Insurance Association appeals a jury verdict of approximately $1.9 million.

We affirm.

Howell Puckett, appellee, was injured while working for Bechtel Petroleum, Inc. Texas Employers Insurance Association (TEIA), Bechtel's workers' compensation carrier, began to pay weekly benefits to Howell. Following surgery, Howell was unable to return to work and his disability worsened. On September 19, 1984, TEIA terminated his weekly compensation benefits, allegedly informing him that their action was required by law. TEIA offered to settle for $8,400. Puckett refused and retained counsel soon thereafter.

Puckett sued TEIA for breach of the fiduciary duty of good faith and fair dealing; unfair claims settlement practices; deceptive trade practices; and breach of contract. On the day of trial, Puckett settled his compensation claim for $37,500. The jury found in Puckett's favor on all theories and awarded him mental anguish damages in the amount of $150,000; punitive damages in the amount of $1,500,000; and $200,000 in attorney's fees. The trial court signed the judgment on January 4, 1990. TEIA paid the judgment and now seeks recovery of that amount plus 10% interest from Puckett.

In its first point of error, TEIA complains that Puckett's counsel engaged in incurable jury argument. To preserve error on curable argument, counsel must object and request the court to instruct the jury to disregard the argument. Objection is not required in the case of incurable argument, however, which is argument so inflammatory that its harmful or prejudicial nature cannot be cured by an instruction to disregard. Gannett Outdoor Co. of Texas v. Kubeczka, 710 S.W.2d 79, 86 (Tex.App.--Houston [14th Dist.] 1986, no writ). TEIA did not object or request an instruction to disregard or a mistrial.

TEIA contends that during argument Puckett's counsel improperly stated facts which were not in evidence; referred to "hundreds of similar cases" involving the same offending conduct by TEIA; referred to alleged attempts by TEIA to conceal evidence and suppress the truth during discovery; called TEIA employees "fat cats;" and encouraged the jury to abandon their neutrality and identify with the plaintiff.

To demonstrate that jury argument was harmful, a party must demonstrate (1) an error; (2) that was not invited or provoked; (3) that was preserved by the proper trial predicate such as an objection, a motion to instruct, or a motion for mistrial; or (4) that was not curable by an instruction, a prompt withdrawal of the statement, or a reprimand by the judge; and (5) that the argument by its nature, degree and extent constituted reversibly harmful error, including (6) the argument's probable effect on a material finding. Standard Fire Ins. Co. v. Reese, 584 S.W.2d 835, 839-40 (Tex.1979).

A reversal must come from an evaluation of the whole case, which begins with the voir dire and ends with closing argument. The complainant must show that the probability that the improper argument caused harm is greater than the probability that the verdict was grounded on the evidence. Reese, 584 S.W.2d at 840. The test is whether a juror of ordinary intelligence could have been persuaded by the argument to agree to a verdict contrary to that to which he would have agreed but for such argument. Kubeczka, 710 S.W.2d at 86-87.

The test, under the facts of this case, is whether the jury's verdict was probably grounded on evidence of TEIA's conduct in its dealings with Puckett or whether counsel's jury argument probably swayed them to render a verdict contrary to that evidence. TEIA does not provide record references to assist the Court in its evaluation of the record as a whole (1763 pages in length).

In addition to his own testimony and that of an attorney who testified to TEIA's pattern and practice of unfair claims settlement practices, Puckett relied primarily on the testimony and admissions of five TEIA representatives. Puckett also introduced documentary evidence from TEIA's own files which supported certain inferences from the testimony. The evidence showed the following:

(1) TEIA violated Article 8306, § 10 of the Workers' Compensation Act 1 by terminating Puckett's benefits when he had not been released by any doctor and was still unable to return to work. One expert witness for TEIA testified that this practice by TEIA was unreasonable.

(2) Even if Puckett had been only partially incapacitated, TEIA violated Article 8306, § 12 2 by refusing to pay reduced weekly compensation benefits to Puckett when he would not accept a lump sum in settlement. Again TEIA's expert agreed this practice was unreasonable.

(3) TEIA violated Industrial Accident Board Rule 53.60 which allowed for suspension of benefits only on certain conditions, none of which applied in Puckett's case.

(4) TEIA committed unfair claims settlement practices as prohibited by State Bd. of Ins. Rule 41454.

(5) TEIA violated its own Workers' Compensation Manual by discontinuing benefits before negotiating settlement with an injured worker.

(6) By inference, TEIA attempted to cover up its violation of its own manual by producing to Puckett a copy of the manual which was missing the section prohibiting such practices.

(7) TEIA admitted inventing terminology to use in that part of the IAB "A-2" 3 form that indicates the reasons for suspending payment of benefits because TEIA knew that the IAB did not approve suspending benefits when a claimant had reached "maximum medical improvement."

(8) TEIA also stated that it was generally their practice "whenever we had a specific injury, when a disability rating was given, compensation was stopped; and we tried to give the man their A-2 additional money." They stopped the benefits even though the worker was totally incapacitated and could not return to work. The TEIA manual did not endorse this practice.

(9) TEIA further admitted that it lied when it stated on Puckett's A-2 form that Puckett's benefits were suspended because he had returned to work.

(10) And finally, while insisting at the time of trial that they considered Puckett's injury a specific injury, TEIA admitted that it ignored its own counsel's advice that it was imperative to follow up with Puckett's doctor to determine whether Puckett had a general rather than a specific injury.

The jury found that TEIA's conduct was unconscionable. Although TEIA defended on grounds that its actions were, in fact, customary in the insurance industry and, therefore, reasonable, TEIA calls our attention to no specific evidence in the record which would have persuaded a juror of ordinary intelligence to agree to a contrary verdict in the absence of counsel's jury argument.

Counsel may properly argue reasonable inferences from the evidence. See Reese, 584 S.W.2d at 837. Hyperbole, a figurative technique of oral advocacy and a part of our legal heritage and language, is not improper. Id. at 838. 4 Whether by cross-examination or advocacy, the jury may be encouraged to weigh, evaluate, and test the evidence before it. Id. Here, examining the whole record, we conclude that the jury's verdict is amply supported by the evidence. We cannot say that but for the argument of Puckett's counsel, the jury would have reached any other verdict than it did.

TEIA's first point of error is overruled.

We next consider TEIA's points of error number two, nine, and 10, all of which raise challenges to the sufficiency of the evidence:

Point of Error No. 2. The evidence was insufficient to sustain the jury's finding of a breach of the duty of good faith and fair dealing, insomuch as there was no evidence establishing industry standard.

Point of Error No. 9. There was no evidence or the evidence was legally insufficient to support the jury's answers to questions no. 1 and 7 of the jury charge.

Point of Error 10. The jury's answers to questions no. 1 and 7 were so against the great weight and preponderance of the evidence as to be manifestly wrong and unjust.

Question one inquired whether TEIA had failed to deal with Puckett fairly and in good faith; question seven inquired whether TEIA had engaged in unfair claims settlement practices.

A claimant who sues a workers' compensation carrier for breach of the duty of good faith and fair dealing must establish: (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, based on its duty to investigate, should have known that there was not a reasonable basis for denying or delaying payment of the claim. Aranda v. INA, 748 S.W.2d 210, 213 (Tex.1988).

Proof of liability, therefore, requires an objective determination of whether a reasonable insurer under similar circumstances would have delayed or denied the claim. The second element balances the right of the carrier to reject an invalid claim with the duty of the carrier to investigate whether the claim is compensable. Aranda, 748 S.W.2d at 213. According to the Aranda court, this burden will be met by establishing that the carrier actually knew or should have known there was no reasonable basis to deny the claim or delay payment. Id.

On the first element, TEIA insists that proof of the standard of conduct in the insurance industry, as evidenced by the practices of other insurance carriers, is a prerequisite to showing whether an insurer acted reasonably. Since Puckett did not prove that other insurance companies would have acted differently from TEIA in...

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