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Following the settlement of a third-party liability claim, the excess insurance carrier, as the insured’s equitable subrogeesued the primary insurance carrier and the attorneys the primary insurer hired to defend the insured. The excess carrieralleged that it had been forced to settle the third-party claim for too much because the attorneys and primary carrier hadmishandled the insured’s defense. We consider two primary issues: (1) whether a release agreement, executed betweenthe insured and its attorneys during the attorney-client relationship, bars the insurance carriers’ equitable subrogation claimsfor legal malpractice; and (2) whether the primary carrier and attorneys may assert the excess carrier’s own negligence insettling the third-party claim as an affirmative defense to the excess carrier’s equitable subrogation claim. We conclude thatthe release agreement is not a complete bar. We further conclude that appropriate allegations of negligence or misconductagainst the excess carrier may be asserted in defense to that carrier’s equitable subrogation claim. Although we do notagree in all respects with the court of appeals’ reasoning, we conclude that its judgment is correct, and we affirm it. 955S.W.2d 120. I. Procedural History In September 1991, Wolf Point Shrimp Farm and its owner sued Granada Food Corporation for damages allegedlycaused by Granada’s improper processing and marketing of shrimp grown and harvested at Wolf Point the previous fall.Granada immediately hired the law firm of Keck, Mahin & Cate (KMC) as its attorneys in the suit. Shortly thereafter,KMC tendered the defense of the suit to Granada’s primary insurance carrier, Insurance Company of North America(INA), and Granada’s excess insurance carrier, National Union Fire Insurance Company of Pittsburgh, Pa. (National).INA’s primary policy for the relevant period provided a limit of $1 million per occurrence. National’s commercial umbrellapolicy provided an additional $9 million in excess coverage. INA agreed to defend Granada under a reservation of right to contest coverage. Granada, which under the INA policyhad the right to select its own defense counsel, chose to keep KMC. INA therefore formally engaged KMC to defendGranada in the Wolf Point litigation, with Grant Cook and Robert A. Plessala assuming primary responsibility for thedefense. The excess policy did not require National to investigate or defend claims against Granada as long as anotherunderlying insurance carrier was providing a defense. While National did have the right to associate in the defense and trialof any claim it deemed a threat to its liability, it did not exercise that right in the Wolf Point litigation. During the litigation, Wolf Point demanded $3.6 million to settle the suit. Both INA and National were informed of thedemand, but neither insurer expressed interest in settling for this amount, and KMC advised that the case could probablybe settled for less than half this sum. In January 1992, the trial court gave the Wolf Point litigation a preferential trial setting for April 28, 1992. KMC’s effortsto continue the setting were unsuccessful, and the case proceeded to trial. On the first day of trial, INA tendered its policylimits to National. Two days later, National settled the suit for $7 million, and a final judgment was later signed for thatamount. Less than two years later, National filed this suit against INA and KMC to recover the money it paid to settle the WolfPoint suit. National alleged that INA and the attorneys had mishandled Granada’s defense, forcing National to settle thethird-party claim to protect both Granada and itself from an excess judgment. National’s claims against INA includedallegations of negligence, gross negligence and violations of the Texas Insurance Code, and its claim against KMC was forlegal malpractice. Because all of these claims belonged to the insured, National asserted them under the doctrine ofequitable subrogation. INA denied responsibility and asserted a cross-claim against KMC for malpractice and an affirmative defense againstNational, based on the excess carrier’s contributory negligence or comparative responsibility. KMC also deniedresponsibility and affirmatively pled that a release agreement between it and the insured barred National’s and INA’sclaims. KMC additionally asserted affirmative defenses of contributory negligence and comparative responsibility againstNational. All parties filed motions for summary judgment. The trial court’s rulings on these motions eliminated for trial all but National’s negligence claim against INA. The trial courtgranted summary judgment for KMC on the two insurance carriers’ subrogation claims for malpractice because of theKMC-Granada release agreement. The trial court also granted partial summary judgment for National, rejecting INA’sand KMC’s affirmative defenses of contributory negligence and comparative responsibility. Finally, the trial court grantedINA a partial summary judgment, eliminating National’s claims of gross negligence and Insurance Code violations. Afterresolving these motions, the trial court severed National’s and INA’s claims against KMC, assigned these claims a newcause number, and rendered a final judgment that the two insurers take nothing against KMC. National and INAappealed. The court of appeals affirmed in part, [FOOTNOTE 1] reversed in part, and remanded the cause to the trial court. 955 S.W.2d 120.Concluding that the Granada-KMC release was not a bar to the insurance carriers’ malpractice claims, the court reversedthe take-nothing summary judgment and remanded these claims to the trial court. The court also reversed the trial court’sruling on National’s motion for summary judgment, holding that KMC and INA could raise National’s comparativeresponsibility as a defense. The court, however, limited the relevant time period for proving this defense to National’sconduct after INA’s tender of the primary policy limits. Because we agree that these claims must be remanded to the trialcourt for further proceedings, we affirm the court of appeals’ judgment. We agree that KMC and INA can raise National’scomparative responsibility in defense to the respective negligence claims against them. We further agree that KMC wasnot entitled to summary judgment on the release, although we disagree with how the court of appeals construed thatagreement. II. The Release KMC and Granada signed the release on April 10, 1992, a little more than two weeks before the Wolf Point trial was tobegin. According to KMC, Granada owed it a substantial sum for past legal services unrelated to Wolf Point and wantedto clear that debt from its balance sheet. Thus, in exchange for KMC’s promise to forgive these unpaid fees, Granadareleased KMC from “all demands, claims or causes of action of any kind whatsoever, statutory, at common law orotherwise, now existing or that might arise hereafter, directly or indirectly attributable to the rendition [of] professional legalservices by KMC to Granada between June 1, 1988 and April 1, 1992.” The trial court concluded that the release of “alldemands, claims or causes of action” was broad enough to cover the Wolf Point litigation. The court of appeals construedthe release more narrowly, however, concluding that the parties’ intention “in entering into this release was to resolve theissue of unpaid fees, not to release KMC from any and all legal malpractice claims.” 955 S.W.2d at 129. Because INA,not Granada, was paying for the Wolf Point defense, the court of appeals concluded that it was not included within therelease. A. Scope of the Release KMC complains that the court of appeals erroneously implies “unpaid fees” as a limitation on its consideration under therelease. KMC submits that its consideration for the agreement is set forth in paragraph 2 which, in plain language, releasesany and all claims Granada may have against KMC directly or indirectly attributable to KMC legal services between June1, 1988 and April 1, 1992. Unpaid legal fees are not mentioned. Unpaid fees are only mentioned in the recitals at the beginning of the agreement and again in the first numbered paragraphwhich sets out Granada’s consideration for the release. The agreement begins: WHEREAS, KMC has performed legal services for Granada since June of 1988; WHEREAS, as of the date written above, Granada owes KMC a substantial sum for outstanding and unpaid invoices for professional legal services rendered to Granada up to April 1, 1992 (the “Unpaid Fees”); WHEREAS, KMC and Granada desire to resolve the issue of the Unpaid Fees to their mutual satisfaction; and WHEREAS, KMC has advised Granada in writing that independent representation is appropriate in connection with the execution of this Agreement. NOW, THEREFORE, in exchange for the mutual promises, agreements and releases herein contained, KMC and Granada do hereby agree as follows: * * * Paragraphs 1 and 2 immediately follow and set out the consideration to Granada and to KMC for the agreement. Inparagraph 1, KMC forgives Granada for all unpaid legal fees for services rendered between June 1, 1988 and April 1,1992: 1. KMC hereby releases, and by these presents does hereby release, acquit and forever discharge Granada, its agents, servants, employees, officers, directors, affiliates and all persons, natural or corporate, in privity with them or any of them from any demands, claims or causes of action of any kind which KMC had or might have, directly or indirectly attributable to the Unpaid Fees owed to KMC by Granada for professional legal services rendered between June 1, 1988 and April 1, 1992, it being intended to release Granada from any obligation to pay such Unpaid Fees. Then in paragraph 2, Granada releases all claims it has, or may have, against KMC in connection with KMC’s legalservices to Granada during the same time period: 2. Granada hereby releases and by these presents does hereby release, acquit and forever discharge KMC, its agents, servants, employees, partners, affiliates and all persons, natural or corporate, in privity with it, from any and all demands, claims or causes of action of any kind whatsoever, statutory, at common law or otherwise, now existing or that might arise hereafter, directly or indirectly attributable to the rendition or [sic] professional legal services by KMC to Granada between June 1, 1988 and April 1 1992. The court of appeals thus reads the “unpaid fees” mentioned in the recitals and paragraph 1 as an implied limitation on theclaims mentioned in paragraph 2. KMC sees no reason to imply this limitation. But the court of appeals relies on ourholding in Victoria Bank and Trust Co. v. Brady, 811 S.W.2d 931 (Tex. 1991), to read the release narrowly. In Brady,we said that a releasing instrument must mention the claim to be released to be effective. Id. at 938. Because the release agreement here did not mention the Wolf Point claim, the court concluded it should be applied only tothose claims which were mentioned; i.e. those claims involving unpaid fees. 955 S.W.2d at 129. We conclude that our decision in Brady does not control the construction of this release. The agreement in Bradypurported to release all claims attributable to a specific loan transaction between a bank and its customer. In subsequentlitigation between these parties, the customer raised claims relating to another transaction with the bank, and the bankraised the release in defense. In rejecting the bank’s defense, we noted that the parties’ agreement plainly limited itself tothe specific loan and thus did not cover this other transaction. Id. at 939. The present release is clearly broader than theone in Brady. It is not expressly limited to a specific claim or transaction but rather purports to cover “all demands, claimsor causes of action of any kind whatsoever.” Nothing in Brady forbids such a broad-form release. Brady simply holds thatthe release must “mention” the claim to be effective. Id. at 938. It does not require that the parties anticipate and identifyeach potential cause of action relating to the release’s subject matter. See Memorial Med. Center v. Keszler, 943S.W.2d 433, 435 (Tex. 1997). Although releases often consider claims existing at the time of execution, a valid releasemay encompass unknown claims and damages that develop in the future. See Cannon v. Pearson, 383 S.W.2d 565, 570(Tex. 1964); Quebe v. Gulf, C. & S.F. Ry., 81 S.W. 20, 22 (Tex. 1904). Thus, we conclude that this release was sufficient to forgive all claims against KMC for malpractice attributable to legalservices rendered to Granada “between June 1, 1988 and April 1, 1992.” Although the release does not identify specificcases, it does expressly forgive Granada’s existing debt to KMC for legal services rendered from June 1, 1988 to April 1,1992 in return for Granada’s release of all present and future claims attributable to KMC’s legal work during this sameperiod. The court of appeals’ construction imposes a symmetry that is simply absent from the agreement’s language. Whilethe recitals in this release are concerned primarily with the issue of Granada’s unpaid legal fees, they do not convey anintent to limit the consideration to KMC for the forgiveness of those fees. The recitals merely state the parties’ generaldesire “to resolve the issue of Unpaid Fees to their mutual satisfaction.” Paragraphs 1 and 2 then explain the parties’ mutualsatisfaction — KMC forgives all unpaid legal bills; Granada releases all claims relating to KMC’s legal services renderedduring a specific time period. Because the release forgives KMC for any legal malpractice it may have committed duringthis period, the court of appeals erred in holding to the contrary. Nevertheless, we do not agree with KMC that this release completely bars National’s and INA’s claims. [FOOTNOTE 2] The releasedoes not apply to “claims of causes or action … directly or indirectly attributable to the rendition [of] professional legalservices by KMC to Granada” after April 1, 1992. Because the Wolf Point trial did not begin until April 28, 1992, andKMC’s representation continued through trial, the plain terms of the release do not bar National’s or INA’s malpracticeclaims based solely on services KMC rendered after April 1, 1992. Thus, while the release may bar proof of certainelements of National’s malpractice claim, it may not bar other elements. B. Validity of the Release As Granada’s equitable subrogee, National also challenges the validity of this release. The court of appeals did not reachthis issue because of its view that the release covered only KMC’s “unpaid” legal work. 955 S.W.2d at 129. Because wedisagree with that view, we consider this additional challenge. National contends that the trial court erred in enforcing the release because Granada did not understand the agreement andwas not fully informed before signing it. Alternatively, National argues that if Granada intended to release the Wolf Pointclaim, the agreement is a sham. At the very least, National submits, there are fact questions about whether the release wasnegotiated at arms length and in good faith. National urges that the summary judgment for KMC was erroneous undereither argument. Contracts between attorneys and their clients negotiated during the existence of the attorney-client relationship are closelyscrutinized. See Archer v. Griffith, 390 S.W.2d 735, 739 (Tex. 1964). Because the relationship is fiduciary in nature,there is a presumption of unfairness or invalidity attaching to such contracts. [FOOTNOTE 3] See Ames v. Putz, 495 S.W.2d 581, 583(Tex. Civ. App. — Eastland 1973, writ ref’d). Further, our disciplinary rules forbid an attorney from making an agreementthat prospectively limits the attorney’s malpractice liability to the client unless (1) the agreement is permitted by law, and(2) the client is independently represented in making the agreement. See Tex. Disciplinary R. Prof’l Conduct 1.08(g).KMC maintains that its conduct can withstand this scrutiny, but it also argues that National waived this issue by failing atany time to plead it in the trial court. See Tex. R. Civ. P. 94. We disagree. By raising the issue of the release’s validity in itsresponse to KMC’s motion for summary judgment, National preserved the issue for appeal. See In re B.I.V., 870 S.W.2d12, 13 (Tex. 1994); Womack v. Allstate Ins. Co., 296 S.W.2d 233, 237 (Tex. 1956). KMC had the burden on summary judgment to prove that the release agreement it negotiated with Granada was fair andreasonable. See Archer, 390 S.W.2d at 739; see also Willis v. Maverick, 760 S.W.2d 642, 646 (Tex. 1988); TexasBank & Trust v. Moore, 595 S.W.2d 502, 508-09 (Tex. 1980); International Bankers Life Ins. Co. v. Holloway,368 S.W.2d 567, 576 (Tex. 1963); Thigpen v. Locke, 363 S.W.2d 247, 252 (Tex. 1962); Fitz-gerald v. Hull, 237S.W.2d 256, 261 (Tex. 1951); Cooper v. Lee, 12 S.W. 483, 486 (Tex. 1889). Further, it was KMC’s burden as afiduciary to establish that Granada was informed of all material facts relating to the release. See Schlumberger Tech.Corp. v. Swanson, 959 S.W.2d 171, 175 (Tex. 1997)(citing Johnson v. Peckham, 132 Tex. 148, 120 S.W.2d 786,788 (1938))(fiduciary duty requires full disclosure of all important information). The present summary judgment recorddoes not establish the state of Granada’s information or that the agreement was fair and reasonable. The only evidence thatKMC identifies is a recitation in the release that KMC “advised Granada in writing that independent representation [wouldbe] appropriate in connection with the execution of this Agreement.” This bare recitation is not sufficient to rebut the”presumption of unfairness or invalidity attaching to the contract.” Archer, 390 S.W.2d at 739; see also Ames, 495S.W.2d at 583. Accordingly, KMC has not carried its summary judgment burden. Because KMC has not established thatthe release agreement is a complete defense to National’s and INA’s equitable subrogation claim, we next consider if anyother defenses are available to KMC. III. Equitable Subrogation In American Centennial Insurance Co. v. Canal Insurance Co., 843 S.W.2d 480 (Tex. 1992), we recognized anexcess insurer’s right to assert a legal malpractice claim against the insured’s defense attorney through equitablesubrogation. Although Texas law does not permit a nonclient to sue an attorney for malpractice, we reasoned thatpermitting an excess carrier to stand in the shoes of its insured and assert the insured’s claims would not burden the existingattorney-client relationship with additional duties or create potential conflicts of interest for the attorney. Id. at 484.”Subrogation permits the insurer only to enforce existing duties of defense counsel to the insured.” Id. In a concurringopinion, a majority of the Court in Canal also stated that the defendant to the equitable subrogation claim, whether theprimary carrier or an attorney, should “have any defense available against either the insured or the excess carrier, includingthe excess carrier’s unreasonable refusal to cooperate in the defense and settlement of the action.” Id. at 486 (Hecht, J.concurring). In this case, KMC and INA claim that National’s own negligence caused it to settle the third-party claim against Granadafor more than it otherwise would have. Relying on the concurring majority’s observation in Canal, KMC and INA arguethat the fact finder should consider National’s alleged negligence in apportioning responsibility for Granada’s allegedlymishandled defense. While the court of appeals agreed that KMC and INA could assert National’s contributorynegligence or comparative fault against National, it concluded that National had no duty to act, and thus could not itselfhave been negligent, until after the primary carrier tendered or exhausted its policy limits. The court accordingly limitedproof of National’s negligence to conduct after INA tendered its policy limits on April 28. 955 S.W.2d at 138. BothKMC and INA complain of that limitation here. A. Excess Carrier’s Duty to Defend KMC argues that the finder of fact should be permitted to consider National’s conduct before INA’s tender of the primarypolicy limits equally with National’s post-tender conduct. Although INA was providing Granada’s defense, KMC suggeststhat National’s pre-tender conduct was relevant because National also had a duty to contribute to that defense. Accordingto KMC, that duty arose once liability under the excess policy became reasonably clear. KMC cites four cases and twocommentaries in support of its position. Both commentators explain, however, that KMC’s favored view is not shared bya majority of courts that have considered the issue. See Ostrager & Newman, Handbook on Insurance CoverageDisputes, � 6.03[c], at 296 (10th ed. 2000); 14 Couch on Insurance 2nd � 51:36, at 446-47 (1982). The majority rule is that “[w]here the insured maintains both primary and excess policies, … the excess liability insurer isnot obligated to participate in the defense until the primary policy limits are exhausted.” See Texas Employers Ins. Ass’nv. Underwriting Members of Lloyds, 836 F. Supp. 398, 404 (S.D. Tex. 1993)(quoting 14 Couch on Insurance 2nd �51:36, at 446 and citing numerous cases); see also 14 Russ & Segala, Couch on Insurance 3rd �� 200:44-200:45(1999); Ostrager & Newman, supra � 6.03[b], at 294. The majority rule is supported by the reasonable expectations ofthe insured and its insurance carriers. Excess insurers are able to provide relatively inexpensive insurance with high policylimits because they require the insured to contract for underlying primary insurance with another carrier. The primarycarrier generally provides a much lower amount of coverage, but must insure against what is likely to be a greater numberof claims and must provide a defense. See Harville v. Twin City Fire Ins. Co., 885 F.2d 276, 279 (5th Cir. 1989);Hartford Accident & Indem. Co. v. Continental Nat’l Am. Ins. Cos., 861 F.2d 1184, 1187 (9th Cir. 1989). Thepremiums charged are thus a reflection of the risks undertaken. Because the primary insurer’s duty to defend extends tocovered claims without regard to their amount, an excess insurer’s duty to defend is not typically invoked merely because aclaim has been asserted against the insured in excess of primary limits. See 1 Windt, Insurance Claims & Disputes � 4.11(3rd ed. 1995). Thus, we agree with the court of appeals that National’s alleged negligence in failing to participate in orotherwise contribute to Granada’s defense before the primary carrier’s tender of policy limits is irrelevant to the claims ofcontributory negligence or comparative fault. Although National’s duty to defend was not invoked before tender, neither could National affirmatively disrupt or harm theinsured’s defense. See Canal, 843 S.W.2d at 486 (Hecht, J. concurring); see also Bank One, Texas, N.A. v. Stewart,967 S.W.2d 419, 434 (Tex. App.–Houston [14th Dist.] 1998, pet. denied)(duty to cooperate is implied in everycontract in which cooperation is necessary for performance). Any evidence that National interfered with or controlled thedefense before tender may be relevant to the issue of comparative responsibility. See, e.g., Birmingham Fire Ins. Co. v.American Nat’l Fire Ins. Co., 947 S.W.2d 592, 596 (Tex. App.–Texarkana 1997, writ denied)(comparativeresponsibility issue submitted against excess carrier who negligently disclosed information to plaintiff’s counsel inthird-party claim against insured). KMC complains that National failed to appear for a deposition during the Wolf Pointlitigation and was held in contempt by the trial court. It is not clear from the summary judgment record how this conductharmed the insured’s defense; but if KMC can show that it did, such evidence would be relevant to the issue of National’scomparative responsibility. B. Excess Carrier’s Duty to Settle KMC also argues that the $7 million settlement was excessive and that National should bear some responsibility because ithad the opportunity to settle the case for much less. Specifically, KMC points out that National did not respond to,suggest counter offers to, or even discuss the plaintiff’s $3.6 million settlement demand presented weeks before the trialbegan. An insurer’s duty to settle is independent of its duty to defend. 14 Couch on Insurance 3rd �� 203:12-203:13; 1 Windt,supra � 5.26, at 350. An excess insurer owes its insured a duty to accept reasonable settlements, but that duty is also nottypically invoked until the primary insurer has tendered its policy limits. 1 Windt, supra � 5.26; Cf. Employers Nat’l Ins.Co. v. General Accident Ins. Co., 857 F. Supp. 549, 554-55 (S.D.Tex. 1994)(when excess liability is likely, an excessinsurer may interject itself into settlement negotiations before tender by the primary insurer). Here the primary insurer didnot tender its limits until the trial began, well after the $3.6 million demand had been withdrawn. National did not assumecontrol of the defense before INA tendered its limits and had no duty to evaluate the $3.6 million settlement demand untilafter that tender. Accordingly, National’s failure to respond to the settlement demand is not evidence of its contributorynegligence or comparative fault. C. Excess Carrier’s Duty of Ordinary Care INA [FOOTNOTE 4] complains that even though National may not have been under a duty to participate in the defense, investigation ornegotiation of the Wolf Point case prior to INA’s tender, INA should nevertheless be permitted to use evidence ofNational’s mismanagement of the excess claim to show National’s comparative responsibility. INA urges that a reasonablyprudent excess carrier would have done more than National did to protect itself from liability under the excess policy.Specifically, INA says that National should have: explored coverage issues more diligently, reserved its rights against theinsured, investigated the merits of the third-party claim more thoroughly, hired independent counsel to monitor thethird-party claim, supervised its claims adjuster more closely, and demanded to settle the claim months before trial. Theseactions, INA submits, were necessary under National’s duty to protect itself. See Walgreen-Texas Co. v. Shivers, 154S.W.2d 625, 630 (Tex. 1941)(contributory negligence is that conduct which creates an unreasonable risk of harm tooneself). The court of appeals, however, concluded that National could not have been negligent in failing to take the actionssuggested by INA because it had no duty to act before INA tender its policy limits. We agree. As we have explained,before INA’s tender, responsibility for Granada’s defense rested with the primary carrier and KMC. During this period,National was not required to supervise the insured’s defense and had no duty to anticipate that INA or Granada’sattorneys were not performing appropriately, if indeed they were not. See De Winne v. Allen, 277 S.W.2d 95, 98 (Tex.1955)(claimant is not contributorily negligent for failing to anticipate the negligence of another). In fact, INA and KMC stilldeny that the defense was mishandled, contending instead that National was so disorganized that it failed to reasonablyfollow the progress of the case. But, as we have explained, National had no duty to act until INA tendered its limits andsurrendered the defense to National. See 1 Windt, supra � 2.01, at 31. Accordingly, we agree with the court of appealsthat National’s pre-tender conduct is irrelevant to the issue of comparative responsibility unless there is evidence thatNational interfered with the insured’s defense or assumed control of the defense at some earlier point in time. D. Excess Carrier as a Volunteer KMC contends that National is not entitled to equitable subrogation because National voluntarily settled the case againstGranada. KMC submits that had National thoroughly investigated the underlying claim it would have discovered that itsexcess policy did not provide coverage for the Wolf Point claim. If National was indeed under no obligation to indemnifyits insured, KMC reasons, subrogation would not be available. We disagree. An insurer who pays a third-party claim against its insured is not a volunteer if the payment is made in good faith and undera reasonable belief that the payment is necessary to its protection. See Arkwright-Boston Mfrs. Mut. Ins. Co. v. AriesMarine Corp., 932 F.2d 442, 447 (5th Cir. 1991). In the context of equitable subrogation, “Texas courts have beenliberal in their determinations that payments were made involuntarily.” Argonaut Ins. Co. v. Allstate Ins. Co., 869S.W.2d 537, 542 (Tex. App.–Corpus Christi 1993, writ denied). An excess insurer’s payment to settle a suit against theinsured has been said to be presumptively involuntary for subrogation purposes. See id. at 543. KMC’s position is contrary to our liberal application of the reasonable belief rule. Adopting it would significantly increasepotential conflicts of interest between insureds and their insurers. “If an insurance company’s right to subrogation could bechallenged by the wrongdoer on the grounds that the policy did not actually provide coverage, it would necessarily be inthe company’s interest to litigate all questionable claims with its insured. The effect of ignoring the reasonable belief rule,therefore, is to discourage insurance companies from paying or settling disputed claims and thereby force insureds moreoften into litigation with their insurers.” 1 Windt, supra � 10.10 at 150-51. KMC’s conception of the volunteer doctrine isbad public policy, and we decline to adopt it. E. Causation INA argues that because National’s subrogation rights are based upon equitable principles, fairness requires that all ofNational’s conduct — both pre- and post-tender — be considered in a comparative responsibility issue. The parties’respective liability theories, however, fail to raise any issue about National’s pre-tender conduct. INA asserts that National caused its own harm by deciding to negotiate and settle the Wolf Point litigation without firstmaking a reasonable assessment of coverage, liability facts or potential damages. This lack of preparation, INA reasons,caused National to pay too much. Similarly, KMC asserts that National settled the Wolf Point litigation for too much notbecause of any fault by KMC, but because National erroneously lacked faith in KMC’s work. KMC likewise attributesthe excessive settlement to National’s own panic following INA’s abrupt tender of the primary policy limits. National, onthe other hand, agrees that it may have settled the claim for too much, but contends that it was forced to negotiate the $7million dollar settlement because INA’s inadequate supervision and KMC’s inept trial preparation put it and the insured atgrave financial risk. Thus, everyone apparently agrees that the settlement was excessive. They only disagree on who wasat fault for the excessive amount being paid. To recoup any of its payment, National must prove that its $7 million settlement was excessive in the abstract, yetreasonable under these circumstances because of the defense provided for Granada. If the value of the case with acompetent defense would have equaled or exceeded $7 million, then National suffered no harm regardless of whetherINA or KMC mishandled the insured’s defense. Even if National can prove that its settlement was excessive, it must alsoprove that INA or KMC mishandled the defense and that a judgment for Wolf Point in excess of the case’s true value [FOOTNOTE 5]would have resulted from KMC’s malpractice. National’s entitlement to damages will thus depend on proof that the truevalue of Wolf Point’s claim was less than $7 million but that KMC’s malpractice inflated its value. Assuming such proof,National may then recover as damages the difference between the true and inflated value less any amount saved by thesettlement. IV. Conclusion The release agreement between KMC and the insured, assuming it is valid, does not foreclose legal malpractice claimsarising from KMC’s actions or omissions after April 1, 1992. The court of appeals therefore correctly reversed thesummary judgment for KMC and remanded National’s and INA’s claims for trial. The court of appeals also correctlyreversed the summary judgment for National on KMC’s and INA’s affirmative defense of comparative responsibility. Thecourt of appeals further properly limited the scope of that defense to National’s post-tender conduct, although pre-tenderconduct might be admissible if the insured’s defense were harmed by National’s interference. Because there is no error inthe judgment of the court of appeals, we affirm. THOMAS R. PHILLIPS, Chief Justice OPINION DELIVERED: May 25, 2000 CONCURRING OPINION Justice Hecht, concurring in part and concurring in the judgment. I agree with the Court’s statement of the case and its resolution of the issues relating to the release; hence, I join in Parts Iand II of the Court’s opinion. I also conclude on the record before us that Insurance Company of North America, theprimary insurer against a third-party liability claim, and Keck, Mahin & Cate, the attorneys hired to defend the claim, havenot shown that they should be entitled, in defense of this equitable subrogation action brought by the excess carrier,National Union Fire Insurance Company of Pittsburgh, PA, to offer evidence of National’s conduct that occurred beforeINA tendered its policy limits to settle the liability claim against its insured. But I do not agree with the broad basis onwhich the Court founds this conclusion in Part III of its opinion. INA provided $1 million in primary liability coverage, and National provided $9 million in excess coverage. As the Courtstates, “[t]he excess policy did not require National to investigate or defend claims against [the insured] as long as anotherunderlying insurance carrier was providing a defense.” [FOOTNOTE 6] But as the Court also notes, “National did have the right [underits policy] to associate in the defense and trial of any claim it deemed a threat to its liability”. [FOOTNOTE 7] National alleges in this equitable subrogation action that it had to pay an excessive amount to settle a liability claim becauseof INA’s and KMC’s mishandling of the defense of the claim. INA and KMC argue that National’s own conductcontributed to the payment of an excessive settlement. The Court holds that National’s conduct prior to INA’s tender ofpolicy limits to the third-party liability claimant is irrelevant unless National interfered with or took control of the defense.The Court bases this holding on a general rule that an excess insurer has no duty to defend or settle a liability claim beforethe primary insurer has tendered the limits of its policy. The Court purports to follow the “majority rule” that an “‘excess liability insurer is not obligated to participate in the defense[of a third-party claim] until the primary policy limits are exhausted.’” [FOOTNOTE 8] The authority cited for this proposition is the 1982Couch on Insurance treatise, which adds, two sentences later: “But certain courts have held that the excess carrier mustparticipate in the defense and share in the cost of defense when it is clear that the potential judgment against the insuredmay be substantially greater than the amount of the primary policy limits.” [FOOTNOTE 9] It is not at all clear from the 1999 supplementto the treatise whether the rule stated in 1982 still holds true. [FOOTNOTE 10] Later treatises, including the third edition of Couch onInsurance, which the Court cites as additional source material, reflect some erosion from the so-called “general rule”. Oneof these treatises explains: Where the insured maintains both primary and excess policies, the general rule is that an excess liability insurer is not obligated to participate in the defense until the primary policy limits are exhausted. Accordingly, it has been held that an excess insurer has no duty to defend where there was no evidence that the underlyingpolicy limits would be exceeded, where an exclusion in primary insurer’s policy relieved the primary insurer of the duty toindemnify the insured, or where there was no allegation that the primary insurer might become insolvent. An excess insurer may have a duty to defend an insured where the claim against the insured is in excess of the limits of theunderlying coverage. Some courts have held that an excess carrier must participate in the defense and share in the cost ofdefense when it is clear that the potential judgment against the insured may be substantially greater than the amount of theprimary policy limits. [FOOTNOTE 11] The other treatise refers to the Court’s rule as “the traditional view” but cites numerous cases for the proposition that “inappropriate circumstances, excess carriers may owe a duty to participate in the insured’s defense.” [FOOTNOTE 12] The Court offers one policy justification for the “general rule” — that excess insurance is less expensive because excessinsurers’ “duty to defend is not typically invoked”. [FOOTNOTE 13] In this case, however, National’s refusal to involve itself in the defenseof the claim resulted in its ultimately paying $7 million to settle a claim that plaintiffs had been willing earlier to settle for$3.6 million. This is some indication, at least, that an excess insurer’s complete abstention from the litigation until theprimary limits are tendered makes excess insurance more expensive, not less expensive. INA and KMC never believedthat the claim could be settled within primary policy limits, and thus INA had little to gain by tendering its limits. HadNational intervened to attempt to settle the case, the result would almost certainly have been far less than the $7 million itpaid after trial began. These circumstances are hardly unique. Even if National succeeds in its claims against INA andKMC and recoups a part of what it paid, insurance rates will still be affected. The point is, it is not intuitively obvious, asthe Court seems to think — and it is certainly not obvious from this case — that the Court’s “general rule” keeps downinsurance costs. I am not persuaded that an excess insurer never has a duty to defend or settle a claim against its insured before primarycoverage is exhausted. An excess carrier that has the right to intervene in the defense may be obligated to do so to protectitself and its insured when it is clear that the liability claim will exceed primary coverage. Take the following example. Psues D, whose primary insurer, PI, assumes the defense. P’s claim is probably worth $5 million, which exceeds PI’s$100,000 policy limits and EI’s excess policy limits of $1 million. P offers to settle for $1.1 million, but PI refuses,believing D has an absolute defense to P’s claim. EI does nothing. When P obtains a judgment for $5 million, PI must pay$100,000, EI must pay $1 million, and D must pay $3.9 million. D has no Stowers claim against PI because it neverreceived a settlement demand within its policy limits, and, under the Court’s absolute rule, D has no claim at all against EI. [FOOTNOTE 14] This result obtains even though D paid premiums for insurance that would have settled his liability. Also, EI has nosubrogation claim against PI because D has no claim to which EI could be subrogated. Thus, the principal cause of theexcess judgment, PI, is wholly insulated from responsibility. This is but one instance in which I think an excess insurer’sduty to be involved in the defense of a claim must be carefully examined. A rule absolutely insulating an excess insurer from responsibility for any defense of a claim prior to tender of the primarycoverage is even less defensible, it seems to me, in an equitable subrogation action like this one. Suppose in my examplethat A, the attorneys hired to defend the claim, urge PI to accept P’s offer, but PI refuses. So A writes EI as follows: We know that you have no duty to assist in the defense of this case, but you do have the right under your policy to protect your own interests, and you should exercise that right now. P has made a settlement offer within primary and excess coverage although liability could be much greater. We are worried that not only could your limits be exhausted but that D himself could even be exposed personally. We have handled this case superbly to have obtained as low an offer as P has made. Attached is a complete summary of what we have done and what we have decided not to do. If P ultimately obtains by judgment or settlement much more than the present offer, as we almost certainly think he will, then it will not surprise us if you try to shift some of the responsibility for your inaction to us, claiming that we did not properly handle the case. If that happens, we want to be able to defend ourselves by showing that you were fully warned, and that any complaints you make against us are pretextual to cover your own ineptness. So if you sue us later, we intend to introduce this letter into evidence so that the jury can see what really happened. Assuming EI has refused to involve itself in D’s defense, the Court’s rule would bar A from offering this evidence that EI’ssubsequent malpractice claim was a disengenuous effort to look for someone else to share in the burden of what was paidto P. A strong argument can be made, I think, that the excess insurer’s hands are not clean for purposes of its equitableclaim of subrogation. But I do not have to decide that issue here. I am not prepared to decide exactly when an excess insurer may be liable forrefusing to involve itself in the defense of a claim. The weight of the learned commentary and the differences in themultitude of cases in the area convinces me that the Court should proceed more carefully than it does today. The recordbefore us does not present circumstances that justify admission of the type of evidence KMC and INA wish to offeragainst National. I do not say that no such evidence exists, only that it is not reflected in our record. On that narrow basis,I agree that the court of appeals reached the correct result. NATHAN L. HECHT, Justice Opinion delivered: May 25, 2000 :::FOOTNOTES::: FN1 The court of appeals agreed that INA was entitled to summary judgment on National’s claims of gross negligence andviolation of the Insurance Code because National’s theory of equitable subrogation limited it solely to indemnification. 955S.W.2d at 133. National has not appealed that part of the court’s opinion and judgment, and that issue is not before us. FN2 We assume, without deciding, that Granada’s agreement with KMC could affect National’s and INA’s respective rightsagainst KMC because neither insurance carrier argues differently in this Court. FN3 The presumption applies in this case because the release was negotiated during KMC’s representation of Granada.Conversely, had Granada severed the attorney-client relationship with KMC and hired new attorneys before agreeing tothe release, the presumption would not have arisen. FN4 As the court of appeals explained, the merits of National’s negligence claim against INA is not a part of this appealbecause the trial court denied INA’s motion for summary judgment, leaving the claim for trial. 955 S.W.2d at 125-26.Such claim was therefore not part of the severed cause appealed to that court. The court of appeals, however, consideredthe merits of INA’s affirmative defense of comparative responsibility to National’s negligence claim as being part of theappeal. On that issue it reversed the trial court’s summary judgment that had foreclosed this defense. KMC has raised theidentical issue in its appeal, and no other party has objected to including the merits of INA’s separate but identical defensein the appeal. Under these rather unusual circumstances, we also consider INA’s arguments as part of this appeal. FN5 The true value is the recovery Wolf Point would have obtained following a trial in which Granada had a reasonablycompetent, malpractice-free defense. FN6 Ante at ___. FN7 Ante at ___. FN8 Ante at ___ (quoting Texas Employers Ins. Ass’n v. Underwriting Members of Lloyds, 836 F. Supp. 398, 404(S.D. Tex. 1993) (quoting 14 George J. Couch, Couch on Insurance 2d � 51.36 (1982))). FN9 14 Couch on Insurance 2d � 51.36, at 446 (1982). FN10 See Couch on Insurance 2d � 51.36 (Supp. 1999) (citing numerous cases). FN11 Lee R. Russ & Thomas F. Segalla, Couch on Insurance 3d �� 200.44-.45 (1999) (footnotes omitted). FN12 Barry R. Ostrager & Thomas R. Newman, Handbook on Insurance Coverage Disputes � 6.03 (9th ed., 1998)(footnotes omitted). FN13 Ante at ___. FN14 See Westchester Fire Ins. Co. v. American Contractors Ins. Co. Risk Retention Group, 1 S.W.3d 872 (Tex.App.–Houston [1st Dist.], no pet.).
Keck, Mahin & Cate, Grant Cook, et al. v. National Union Fire IN THE SUPREME COURT OF TEXAS No. 98-0034 KECK, MAHIN & CATE, GRANT COOK, AND ROBERT A. PLESSALA, Petitioners v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, P.A., Respondent v. INSURANCE COMPANY OF NORTH AMERICA, Respondent On Petition for Review from the Court of Appeals for the Fourteenth District of Texas Argued January 5, 2000 Chief Justice Phillips delivered the opinion of the Court in which Justice Enoch, Justice Owen, Justice Baker, JusticeAbbott, Justice Hankinson, Justice O’Neill and Justice Gonzales joined. Justice Hecht filed a concurring opinion, joining Parts I and II of the Court’s Opinion and the Court’s Judgment.
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