COURT REJECTS THIRD-PARTY BREACH OF ORAL CONTRACT CLAIM AGAINST INSURER

Recently, the Tyler Court of Appeals rejected a third-party claimant’s direct action against an insurer’s managing general agent alleging breach of oral contract, after finding that the third-party lacked standing to bring the lawsuit.  In Haygood v. Hawkeye Insurance services, Inc., 2012 WL 1883811 (Tex.App. – Tyler, May 23, 2012), the insured vehicle rear ended the Haygood vehicle and the car was determined to be a total loss.  Extensive negotiations over the next two years failed to settle the claim for damage to the vehicle and Haygood ultimately filed suit against the insured for negligence and, also Hawkeye Insurance alleging they breached three oral agreements reached during settlement negotiations.  The trial court granted summary judgment in favor of Hawkeye Insurance and this appeal followed.

On appeal, the court observed that Texas law will not allow a third-party to enforce a policy directly against the insurer until the insured’s obligation to pay has been finally determined.  The court construed the rule as one of standing and found that there was no evidence to show any written agreement or judgment of liability against the insured.  And, because this condition precedent had not been met, the court affirmed summary judgment in favor of Hawkeye Insurance.