In a case of first impression, the Texas Supreme Court has held that an insurer has no duty to process a single-accident vehicle claim without asking the insured to take photographs or to issue a safety warning with such a request. The decision overturns a divided San Antonio Court of Appeals, which ruled en banc that the insurer’s duty of good faith and fair dealing may cover such a request because it is connected with claims processing. The court of appeals further suggested that asking an insured to take photographs and thereby placing the insured at some risk of harm may indicate the insurer’s voluntary undertaking affirmative action for the insured’s protection.
Elephant Insurance Company, LLC v. Kenyon (No. 20-0366) arose from a single-vehicle accident. The insured’s spouse arrived at the scene and began taking pictures of the vehicle, when he was struck by another vehicle and fatally injured. At the time of the accident, the insured was on the phone with the insurer’s call center, which requested photographs. Kenyon sued the insurer, alleging negligence, gross negligence, negligent undertaking, and negligent training and licensing (there are also UM/UIM claims, but they are not part of the appeal). Kenyon’s negligence theory asserts that the insurer’s call center employee was negligent in instructing her to take photos because it substantially increased the risk of harm to her husband. She alleged that an insurer owed a duty “to act as a reasonable and prudent insurance company” and breached the duty when it instructed her to take the photos at the scene of the accident. Alternatively, she argued, even if the insurer did not owe such a duty, it created one by taking voluntary affirmative action to assume the duty.
The insurer moved for traditional and no-evidence summary judgment, which the trial court granted (except as to the UM/UIM claims). The trial court allowed Kenyon to take a permissive interlocutory appeal. The San Antonio court of appeals affirmed, but on rehearing the en banc court withdrew the opinion and issued a new opinion, over two dissents, holding that in a permissive interlocutory appeal, the court could only decide whether the insurer owed any duty at all to Kenyon and could not determine whether any such duty actually applied to the facts of the case.
In an opinion by Justice Devine, SCOTX held that no duty exists. “Before a duty is recognized,” Justice Devine wrote, “courts must weigh the ‘social, economic, and political questions and their application to the facts at hand’ to determine whether a duty exists and what it is.” This requires a balancing test involving several factors, including “the risk, foreseeability, and likelihood of injury [weighed] against the social utility of the actor’s conduct, the magnitude of the burden of guarding against the injury, and the consequences of placing the burden on the defendant.” While the determination of the existence of a duty may depend on the specific facts of the case, the court must also consider “the broader context of similarly situated actors.” In this case, the court of appeals failed to consider the “parameters or applicability of the duty to the circumstances alleged.” It further “artificially constricted the scope of appellate review, suggesting that permissive interlocutory appeals are substantively different because the procedural vehicle for pursuing one is different than other types of appeals.” By doing so, the court of appeals failed to follow SCOTX precedent placing permissive interlocutory appeals on “equal footing with other appeals with respect to disposition on the merits” [citing Sabre Travel International, Ltd. v. Deutsche Lufthansa AG, 567 S.W.3d 725 (Tex. 2019)].
Having determined that the court of appeals erred in not reaching the merits, SCOTX turned to the duty issue, holding that the insurer’s duty of good faith and fair dealing does not extend to Kenyon’s negligence and gross negligence. That duty is derived from the unequal bargaining power inherent in the special insurer-insured relationship, not “post-accident guidance inquiring about, ensuring, or protecting an insured’s safety.” Next the Court applied the Phillips factors to determine whether a distinct duty existed in this case. Justice Devine’s analysis found that the insurer could not reasonably foresee that Kenyon’s husband would arrive on the scene after the accident, begin taking pictures, and be struck by another vehicle. Even so, such an event was equally foreseeable to the plaintiffs, which is analogous to an open and obvious condition. Simply put, imposing a duty on the insurer under these circumstances would impose the burden of liability for acts of third parties over whom the insurer has no control.
Similarly, Kenyon’s negligent undertaking theory fails because getting on the phone with the insurer’s call center to initiate the claims process is not an action necessary to protect the insured’s person’s or things, a required element for a Good Samaritan duty undertaken voluntarily or for consideration. Further, the insurer’s employee did not instruct Kenyon or her husband about how or when to take photos, nor did Kenyon request any safety guidance. “Because neither Elephant nor its call-center employee engaged in an affirmative course of action necessary for the protection of Kenyon’s person or property,” Justice Devine concluded, “there is no cause of action for negligent undertaking.”
This decision places an important check on appellate courts that see undeniably tragic situations and try to fashion some way to allow the plaintiff’s case to survive a no duty summary judgment. Kudos to the trial court for following the law and to the dissenters on the San Antonio court of appeals for reminding the court of its duties.