law-insurers-duty-of-good-faith-and-fair-dealins: common-law vs. statutory duties, obligations
A court recently recognized Head Industries has since been partially superceded by statute because the
Head Industries court generally declined to recognize a duty of good faith and fair dealing by the insurer to
the insured with respect to handling third-party claims; but suit was filed before enactment of Texas
Insurance Code provisions allowing an insured to sue its insurer for unfair claims settlement practices.
Chickasha Cotton Oil Co. v. Houston Gen. Ins. Co., No. 05-00-01789-CV, 2002 WL 1792467, at *7 (Tex.
App.- Dallas Aug. 6, 2002, no pet.) (not designated for publication). However, Head Industries has not
been overruled relative to an insured's attempt to impose common-law, as opposed to statutory, duties on
an insurer with respect to settling third-party claims. See Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co.,
236 S.W.3d 765, 776 (Tex. 2007) (confirming “Stowers is the only common-law tort duty in the context of
third-party insurers responding to settlement demands").
 Contrary to the concurrence's assertion, our decision is grounded on authority from the Texas
Supreme Court, and not just a sister-court case, because Duddlesten relied on, and we have quoted, the
Head Industries court's recitation of the rule that an insurer owes no common-law duty to its insured relative
to handling a claim against the insured outside the Stowers context (the same quotation cited in the
concurrence). We have emphasized Duddlesten because it is an example of a court's applying that rule to
facts somewhat similar to this case, i.e., an insured's allegation that its insurer improperly paid an invalid
claim against the insured, thereby causing financial loss to the insured. Methodist does not seem to
dispute the general no-duty law; rather, it argues this rule is inapplicable in this case because the parties'
relationship was not insured/insurer or there is some sort of exception when a claim falls within the
deductible. Therefore, instead of discussing the history of the no-duty rule, such as the language in
Ranger County Mutual Insurance Co. v. Guin, 723 S.W.2d 656, 659 (Tex. 1987) later recognized as
dictum, we have focused on application of that established law to a scenario similar to the present case –
Duddlesten - and rejected Methodist's contention that this law should not apply to the present case.
The Methodist Hospital v. Zurich American Inc. Co. (Tex. App. - Houston [14th Dist.] Jul. 7, 2009)
(Seymore) (INSURANCE LITIGATION: insured's suits against worker's compensation carrier alleging
wrongful payment of noncompensable injury claims within the deductible)(insurer's duty of good faith and
fair dealings, negligent claims handling, express warranty claim, breach of warranty - elements, conclusory
AFFIRMED: Opinion by Justice Seymore
Before Justices Frost, Seymore and Guzman
14-07-00663-CV The Methodist Hospital v. Zurich American Insurance Company, Tamera McKinney and
Appeal from 280th District Court of Harris County
CONCURRING: Concurring Opinion by Justice Frost (higlighting applicable binding Supreme Court