Recently, the San Antonio Court of Appeals held that an automobile insurer failed to prove it had no duty to its insureds after it instructed them to take pictures at the scene of an accident.  In Kenyon v. Elephant Insurance Company, 2020 WL 1540392 (Tex.App.—San Antonio, 2020), the court withdrew its prior opinions and judgment, after an en banc reconsideration, and held that an insurer failed to establish as a matter of law, it “owed no duty” as to claims of common law negligence, negligent undertaking, negligent training, and gross negligence.

The Kenyons had an auto insurance policy with Elephant.  Lorraine Kenyon was involved in a one-car accident. She first called her husband, who arrived at the scene. She then called Elephant to report the accident and described the incident in detail to a representative.  The representative encouraged Kenyon to take pictures of the accident. While her husband, Theodore was taking pictures, another car struck him and he died as a result.

Kenyon filed a wrongful death and survival action in district court. In addition to suing the driver who struck Theodore for negligence, Kenyon sued Elephant. Kenyon alleged claims against Elephant based on several different negligence theories, misrepresentation under the Insurance Code and DTPA, and failure to timely settle and pay her uninsured/underinsured motorist claim.

Elephant moved for summary judgment, presenting various traditional and no-evidence grounds. The trial court rendered summary judgment on all claims except an untimely settlement claim. The order specified the sole basis for rendering partial summary judgment was Elephant “owed no duty” to the Kenyons.  The trial court granted Kenyon permission to appeal the order. The permission was limited to the negligence claims. And the appeal was limited to the sole issue of duty. The appellate court initially court dismissed the appeal in part and affirmed in part, then the Kenyon’s filed a motion to have the appellate court reconsider, en banc (by all the judges and not just a panel).

During the en banc reconsideration, the court first found that Elephant’s motion acknowledged “the insurer-insured relationship imposes a duty on the insurer to investigate claims thoroughly and in good faith.” Further, under Texas law “a duty is imposed” on an insurance company to exercise that degree of care and diligence which a man of ordinary care and prudence would exercise in the management of his own business. The court found Elephant had not met its traditional or no-evidence summary judgment burdens and that the summary judgment evidence was sufficient to create a fact question on the duty element of the negligence claim.  The court went on to find Elephant had also not met its summary judgment burden as to the duty element of the negligent undertaking, negligent training or gross negligence claims.

The opinion made clear it is limited to the narrow facts of the case.  After examining the various elements of duty, the court found the “general risk of harm in this case is foreseeable and unreasonable given the probability of death or serious bodily injury to insureds and first responders and the relatively low burden on insurance companies to exercise ordinary care under the narrow facts of this case.”  The court also held that “significant public policy considerations also weigh in favor of recognizing the existing duties that Kenyon alleged.”  The court held that Elephant had failed to establish as a matter of law it “owed no duty” as to the claims of common law negligence, negligent undertaking, negligent training, and gross negligence and reversed the trial court’s summary judgment as to those claims.

Editor’s note: MDJW will continue to monitor this case for what could be a broad expansion of an insurer’s legal duties when a claim is reported.

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