Understanding the Stowers Demand Doctrine


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In our last article, we briefly discussed some of the key ingredients of a successful Stowers demand. Those are:

  • There must be coverage;

  • The demand cannot exceed policy limits;

  • The defendant’s liability must be reasonably clear;

  • The offer must be reasonable; and

  • The demand must be unconditional and offer the defendant a full release.

This list may be deceptively simple. Perfecting a Stowers demand is much easier in theory than it is in practice, and requires technical, not just substantial compliance. “Almost” will not get the job done. Each element of a Stowers demand must be satisfied. When putting a demand together, it is your responsibility to make sure that it passes muster. Insurers have no obligation to point out flaws or deficiencies in your work, and waive nothing by failing to object to a defective Stowers demand. It is no excuse or exception that the insurer allegedly knows what a demand means in spite of contradictory or unclear terms, or even an admission by an insurer that it seemed to know what you meant.

Here are a few things to remember when making your own Stowers demand.

Ambiguous Due to Multiple Insureds Must Be Included

A valid Stowers demand must be unambiguous and not subject to dispute. At least one Houston Court of Appeals case suggests that it must also include a release of all insureds, such as the driver and owner of the vehicle. If there are two named insureds, then under Patterson v. Home State County Mut. Ins. Co., both insureds would need to be named or defined in order to have a valid Stowers demand.

“A valid Stowers demand must be unambiguous and not subject to dispute.”

A Minor Issue

As stated, a Stowers demand must be unconditional. But is an offer to settle on behalf of a minor in litigation anything but conditional when it’s subject to guardian ad litem (“GAL”) and/or court approval? The very nature of a minor’s status means that any settlement must have court and GAL approval. Consequently, a Stowers offer involving a minor could not occur. To put it in perspective, it would be no different than making a policy limits demand and not mentioning a hospital lien which the insurer knew exists. However, there are no cases on point addressing this issue.

“As stated, a Stowers demand must be unconditional.”

Bundling of Claims

If a demand bundles three claims together – pairing a weak claim with a strong claim – it can disqualify the stronger claim from Stowers treatment. Coupling these claims together when seeking aggregate policy limits will not impose Stowers duties on the liability insurer. Bundling claims in this way tries to obtain the aggregate limits of a liability policy and avoid the per person limit by attempting to create excess exposure in order to be paid both per person limits or the aggregate policy limit. These types of offers are often treated as conditional offers, which, again, cannot satisfy Stowers. In order to settle in a bulk situation, the insurer must settle all claims as a package for the policy limits – the condition being that one cannot be without the other.

“These types of offers are often treated as conditional offers, which, again, cannot satisfy Stowers.”

No Reasonable Insurer Would Have Accepted It

Finally, a Stowers demand must have evidence that a reasonably prudent insurer would have accepted it, considering the likelihood and degree of the insured’s potential exposure to an excess judgment. If coverage is not an issue, the demand must demonstrate, with accompanying documentation and surrounding circumstances, that a reasonably prudent insurer would accept it assuming there was a demand for policy limits. Was the liability of the insured reasonably clear? Of course, “reasonably clear” is viewed from the perspective of the insurer. However, whether the insurer’s liability was reasonably clear at the time of the demand is inherently fact-specific and presents a fact issue for the jury, not a question of law for the court. Thus, expert testimony would seem to be required to determine what a reasonably prudent insurer would do. Simply because an excess verdict was rendered does not automatically mean liability was reasonably clear at the time the Stowers demand was made.

“…a Stowers demand must have evidence that a reasonably prudent insurer would have accepted it…”

Give It Time

Assuming no disagreement on the terms of a Stowers demand, the time given to respond must be reasonable. The Supreme Court has stated that the Stowers remedy of shifting the risk of an excess judgment onto the insurer is inappropriate absent proof that the insurer was presented with a reasonable opportunity to prevent the excess judgment by settling within the applicable policy limits. In Trinity Universal Ins. Co. v. Bleeker, the appellate court stated that the carrier had to have a reasonable time to evaluate an offer. While, in that case, the court determined Trinity had time to evaluate the offer since the offer had no time limit, it did not say what would constitute a “reasonable” amount of time. In Allstate Ins. Co. v. Kelly, it was decided that a 14-day limit was considered reasonable under the “facts and circumstances” of the case. Whether there has been a reasonable time to respond, “will generally present a quintessential, constituent fact issue that is subsumed within the jury’s application of the reasonably prudent insurer standard.” Which more or less means we will know it when we see it. If, for example, a 21-day deadline was reasonable when no medical specials were sent to the carrier until two days before the deadline, that would be an issue for a jury to decide.

“…the time given to respond must be reasonable.”

All of this to say that, when making a Stowers demand, it is best to check your work. The entire point is to settle claims quickly and efficiently. Making sure you have met the Stowers standard is the best way to do that.