Fifth Circuit Finds Stowers Demand By Parent And Minor Child Valid Because Court Approval Of Settlement Of Minor’s Claim Was Not Required And The Demand Was Thus Not Conditional
The U.S. Fifth Circuit Court of Appeals held that a joint settlement offer by a parent and minor child was not a conditional offer (requiring court approval for the minor’s settlement and thus not a valid Stowers demand) because there was no need for court approval under the circumstances. Am. Guarantee & Liab. Ins. Co. v. ACE Am. Ins. Co., 2021 U.S. App. LEXIS 6402, at *2 (5th Cir. [Tex.] 2021).
Following a fatality involving a bicyclist striking a stopped truck, a jury entered a substantial excess verdict against the truck owner. Prior to trial there were several Stowers demands, all of which were rejected. In subsequent litigation, there was litigation involving the validity of the Stowers demands (and the recoverability of the excess judgment). One of the demands was a joint demand to settle the claims of the surviving spouse and minor child of the deceased bicyclist. The truck owner’s insurer argued that it was not a proper Stowers demand because it required a court to approve the minor’s settlement, making the demand conditional and not a valid Stowers demand. The Fifth Circuit made an Erie guess that there is no conditionality precluding the Stowers duty where a lump sum settlement offer is accepted on behalf of parents and children because acceptance of the offer would have constituted a full release of the insured and the issue of fairly dividing the proceeds between parent and child arises only after the settlement is agreed upon, and a court would have the duty to scrutinize the apportionment.