concluding that prejudgment settlement/assignment agreement "confuse[s] and distort[s]" positions of parties, and prohibiting such agreements under certain circumstances where defendant's insurer has made good faith effort to adjudicate coverage issues prior to adjudication of plaintiff's claim
How later courts described this case
- concluding that prejudgment settlement/assignment agreement "confuse[s] and distort[s]" positions of parties, and prohibiting such agreements under certain circumstances where defendant's insurer has made good faith effort to adjudicate coverage issues prior to adjudication of plaintiff's claim
- surveying historical evolution of assignability of rights in equity and common law and noting that Texas decisional law has long permitted assignments of non-negotiable instruments and "rights not covered by the statute" (citing Kelley v. Bluff Creek Oil Co, 309 S.W.2d 208, 212 (Tex. 1958); O'Leary, 167 S.W.2d at 721)
- noting that “[disputes between [the insurer] and [insured defendant] can often be expeditiously resolved in an action for declaratory judgment while [the plaintiffs] claim is pending,” and that insurers often “will assume the burden of having the issues resolved” to prevent undue burden on the insured
- stating that A[a] plaintiff who thinks a defendant should be covered by insurance may be willing to . . . assist in obtaining an adjudication of the insurer's responsibility@
Written by the judges who cited it.
Distinguished
Distinguished by Yorkshire Insurance Co. v. Seger, 2013 Tex. App. LEXIS 8968 (2013)
In concluding that Gandy was inapplicable to the settlement agreement in ATOFINA, the Court identified two key distinctions: no assignment and no Gandy concerns.
Distinguished by State Farm Lloyds Insurance Co. v. Maldonado, 935 S.W.2d 805 (1996)
As such, the decision in Gandy is inapplicable in the present case.
The opinion
ENOCH, Justice,
concurring.
I concur in the Court’s judgment and parts I, II, III, IV(A), and V of the opinion. The focus of this case is on whether Pearce can assign his claim against his insurance company for breach of its duty to defend. The essence of Pearce’s claim is that had he been properly defended, he would have received a more favorable result in his lawsuit. This is analogous to a legal malpractice claim. Consequently, Zuniga v. Groce, Locke & Hebdon, 878 S.W.2d 313 (Tex.App.—San Antonio 1994, writ ref'd) resolves the question. The assignment of Pearce’s claim is invalid.
The Court, however, goes beyond this simple resolution. Its discussions in parts IV(B) and (C) move beyond criticism of assignments of claims in duty to defend cases and attack prejudgment assignments in insurance cases generally. Furthermore, the Court imports into its opinion language from H.S.M. Acquisitions, Inc. v. West, 917 S.W.2d 872 (Tex.App.—Corpus Christi 1996, writ denied), a case that does not involve an assignment of a chose in action. The Court need not enter into these additional discussions to resolve this case, and I am not confident that the conclusions implicit in these discussions are correct.
The Court’s judgment is correct. Thus, I concur.