USA – TEXAS Trends and Developments Contributed by: Stephen Melendi, Aaron Mitchell, Lisa Songy and Matt Rigney, Tollefson Bradley Mitchell & Melendi, LLP
able demands and settle third-party claims against insureds. Generally speaking, Stowers and its progeny require an insurer to exercise ordinary care in the set- tlement of claims to protect insureds against excess judgments. The duty is activated by a settlement demand when in a case where the insureds liability is reasonably clear and: • the claim against the insured is within the scope of coverage; • there is a demand within policy limits; and • the terms of the demand are such that an ordinar- ily prudent insurer would accept it, considering the likelihood and degree of the insured’s potential exposure to an excess judgment. As noted above, freight brokers’ level of culpability under the law is extremely uncertain at this time, only adding more uncertainty for insurers when faced with demands by claimants seeking to invoke the duties owed under the Stowers doctrine. This uncertainty has only added fuel to the fire and created larger demands and risk.
Bottom line As the trend of higher settlement demands, settle- ments and verdicts in commercial transportation matters continues, the frequency of claims against freight brokers will likely increase unless the United States Supreme Court steps in and definitively sets the standard of care for freight broker liability, which would allow freight brokers and their insurers to act with more certainty. Whether the Supreme Court’s ruling in Montgomery v Caribe Transport creates clarity or further uncertainty remains to be seen. However, the firm remains hopeful that some clarity on the issue will arise in 2026.
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