Full opinion text
MEMORANDUM OPINION AND ORDER SIDNEY A. FITZWATER, Chief Judge. This insurance litigation involves coverage and extra-contractual causes of action arising from the handling of claims made under commercial general liability and umbrella policies following Hurricanes Katrina and Rita. After the court narrowed the case through rulings on pretrial motions, the parties tried the balance of the lawsuit to a jury, which ruled partially in favor of the insurer and partially in favor of the insureds, and the court entered a judgment in accordance with the verdict. Both sides challenge the verdict and judgment by post-judgment motions that present these principal questions: whether Texas recognizes a claim for breach of duty of good faith and fair dealing in the third-party claims handling context presented here; whether the jury could reasonably have found in favor of the insureds on the grounds of their unfair settlement practices counterclaim that the jury decided in their favor; and whether the jury could reasonably have found against the insureds on their Hurricane Rita breach of contract counterclaim. For the reasons that follow, the court holds that the insureds are not entitled to relief on any counterclaim, and it enters an amended judgment in favor of the insurer. I A To place this litigation and today’s decision in context, the court begins by recounting some of the pertinent background facts and procedural history, some of which it draws from its pretrial memorandum opinions and orders. These consolidated cases concern insurance coverage and extra-contractual claims involving commercial general liability and umbrella policies that covered pollution incidents under an Oil & Gas Endorsement. See Mid-Continent Cas. Co. v. Eland Energy, Inc., 2009 WL 3074618, at *1 (N.D.Tex. Mar. 30, 2009) (Fitzwater, C.J.) (“Mid-Continent I”). Plaintiffcounterdefendant Mid-Continent Casualty Co. (“Mid-Continent”) initiated this litigation by filing a declaratory judgment action against defendants-counterplaintiffs Eland Energy, Inc. and Sundown Energy LP (collectively, “Sundown,” unless the context otherwise requires). Shortly thereafter, Eland and Sundown filed suit asserting contractual and extra-contractual claims against Mid-Continent. After the two cases were consolidated, Mid-Continent was aligned as plaintiff-counter-defendant and Eland and Sundown as defendants-counterplaintiffs. The parties litigated the case at trial, however, as if Eland and Sundown were the plaintiffs and Mid-Continent the defendant. The dispute between Sundown and Mid-Continent arose in connection with the escape of crude oil from storage tanks at Sundown’s oil and gas facility near Port Sulphur, Louisiana, following Hurricane Katrina, and from the escape of that oil from a containment boom constructed during the Hurricane Katrina cleanup operations, following Hurricane Rita. Id. Hurricane Katrina struck the Louisiana coast on August 29, 2005, and Hurricane Rita made landfall on September 24, 2005. Id. At all times pertinent to this litigation, Mid-Continent insured Sundown under a commercial general liability policy (“Primary Policy”) and an umbrella policy (“Umbrella Policy”). Id. at *2. The Primary Policy had limits of $1 million per occurrence and $2 million in the aggregate, and included a duty to defend. Id. An Oil & Gas Endorsement provided coverage for a “Pollution Incident.” Id. The Umbrella Policy had an aggregate limit of $5 million and included a right, but not a duty, to associate with an underlying insurer and the insured to defend. Id. The U.S. Coast Guard (“Coast Guard”) mandated that Sundown clean up the areas surrounding Sundown’s facility that were affected by the escape of crude oil. Id. at *1-2. Five lawsuits (the “Underlying Litigation”) — including Blanchard, a class action lawsuit — were filed against Sundown by neighboring property owners and commercial fishermen affected by the spillage of oil due to Hurricane Katrina. Id. at *2. Sundown tendered the Underlying Litigation to Mid-Continent for defense and indemnification, and Mid-Continent informed Sundown that it would provide a defense to the class action lawsuits subject to a reservation of rights. Id. Because of Mid-Continent’s reservation of rights, Sundown asserted that there was a conflict and that it was entitled to independent counsel. Id. Mid-Continent eventually agreed that Sundown could be represented by Jones, Walker, Waechter, Poitevent, Carrére & Denegre, L.L.P. (“Jones Walker”) and that Mid-Continent would reimburse Sundown for its attorney’s fees at Mid-Continent’s typical rates for appointed counsel. Id. Mid-Continent tendered the Primary Policy and Umbrella Policy limits to Sundown on March 22, 2006 and August 18, 2006, respectively. Id. Sundown informed Mid-Continent that it was placing its Hurricane Katrina cleanup claim “in abeyance” in order to use the insurance proceeds to pay for the class action lawsuits, and it declined to negotiate the checks. Id. Sundown sought to place its claim “in abeyanee” so that it could pursue reimbursement for government-mandated cleanup costs from a fund established under the Oil Pollution Act of 1990 (“OPA Fund”). Id. at *3, *10. Sundown was concerned that, if Mid-Continent paid for Sundown’s cleanup costs, Mid-Continent would have no further duty to defend Sundown in the Underlying Litigation and, through its subrogation rights, would be entitled to any available reimbursement from the OPA Fund. Id. at *10. The court in Mid-Continent I held that Sundown did not have the right to place its cleanup claim “in abeyance,” and that Mid-Continent exhausted the limits of the Primary Policy when it tendered the $1 million check to Sundown. Id. at *11-12. In Mid-Continent Casualty Co. v. Eland Energy, Inc., No. 3:06-CV-1576-D (N.D.Tex. Oct. 22, 2009) (Fitzwater, C.J.) (“Mid-Continent II ”), and Mid-Continent Casualty Co. v. Eland Energy, Inc., 2010 WL 610713 (N.D.Tex. Feb. 22, 2010) (Fitzwater, C.J.) (“Mid-Continent IIP'), the court held that Sundown had incurred $5,469,650.65 in covered cleanup costs by the time Mid-Continent tendered the Umbrella Policy limits, and that Mid-Continent’s $5 million tender fulfilled its obligations under the Umbrella Policy. Mid-Continent II, slip op. at 25; Mid-Continent III, 2010 WL 610713, at *1. Sundown submitted a Hurricane Rita cleanup claim on July 12, 2006. Mid-Continent I, 2009 WL 3074618, at *30. Mid-Continent acknowledged receipt of the claim and stated that it was starting an investigation. Id. Mid-Continent denied the claim by letter dated July 19, 2007. Pretrial Order (“PTO”) ¶ 52. Mid-Continent stated that the Hurricane Rita claim was not covered because Sundown did not provide notice of the claim as soon as practicable, Hurricane Rita did not cause a second “Pollution Incident,” and Sundown did not provide notice of a government mandate for cleanup due to Hurricane Rita. See P. JMOL Resp. App. 10-11. B In Mid-Continent I, II, and III, the court granted in part and denied in part the summary judgment motions of both parties. Sundown’s remaining counterclaims were tried to a jury, which returned a verdict partially in favor of Sundown and partially in favor of Mid-Continent. The court submitted the case to the jury on 13 questions. The first five pertained to Sundown’s Hurricane Rita contractual or extra-contractual counterclaims, the next five related to Sundown’s Hurricane Katrina contractual or extra-contractual counterclaims, and the final three concerned damages. The jury found the following: • Sundown did not prove its Hurricane Rita duty to indemnify breach of contract counterclaim (Question No. i); • Sundown did not prove its bad faith investigation counterclaim — that Mid-Continent failed to affirm or deny coverage of Sundown’s Hurricane Rita claim within a reasonable period of time, or that Mid-Continent refused to pay Sundown’s Hurricane Rita claim without conducting a reasonable investigation of the claim (Question No. 2); • Sundown did not prove that Mid-Continent’s misrepresentation of the Primary Policy was a producing cause of damages to Sundown (Question No. 4); • Sundown proved its unfair settlement practices counterclaim as to Hurricane Katrina on five grounds: (1) Mid-Continent misrepresented to Sundown a material fact or policy provision relating to coverage at issue; (2) Mid-Continent failed to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim when Mid-Continent’s liability had become reasonably clear; (3) Mid-Continent failed to provide promptly to Sundown a reasonable explanation of the factual and legal basis in the policy for Mid-Continent’s offer of a compromise settlement of a third-party claim; (4) Mid-Continent failed to affirm or deny coverage of Sundown’s claim within a reasonable time; and (5) Mid-Continent refused to pay Sundown’s claim without conducting a reasonable investigation of the claim (Question No. 6); • with respect to the foregoing five grounds, Mid-Continent acted knowingly only as to ground (3) — when it failed to provide promptly to Sundown a reasonable explanation of the factual and legal basis in the policy for Mid-Continent’s offer of a compromise settlement of a third-party claim — but Mid-Continent did not act knowingly with respect to grounds (1), (2), (4), or (5) (Question No. 7); • Sundown proved its breach of duty of good faith and fair dealing counterclaim as to two grounds: (1) Mid-Continent consciously undermined Sundown’s defense in the Underlying Litigation, which caused Sundown injury independent of Sundown’s policy claim, and (2) Mid-Continent failed to conduct a reasonable investigation of Sundown’s Hurricane Katrina claim, which caused Sundown injury independent of Sundown’s policy claim (Question No. 8); • with respect to both of the foregoing grounds, Mid-Continent acted fraudulently, maliciously, or with gross negligence when it breached its duty of good faith and fair dealing (Question No. 9); and • Sundown did not prove its Hurricane Katrina duty to defend breach of contract counterclaim as to two grounds: (1) Mid-Continent refused to pay for all of Sundown’s reasonable and necessary defense fees and costs, and (2) Mid-Continent attempted to control and exercise improper influence over the defense through its audits of legal bills (Question No. 10). The jury found that Sundown was entitled to compensatory damages in the sum of $2 million for the increased cost of the Blanchard settlement (Question No. 11). The jury did not award any compensatory damages on any other basis, including for the following: Hurricane Rita cleanup costs; attorney’s fees that Sundown incurred cooperating with Mid-Continent’s Hurricane Rita investigation and researching and responding to Mid-Continent’s denial of the claim on grounds of late notice; the increased cost of settling another class action (Isla); the unreimbursed defense costs in the Underlying Litigation under Mid-Continent’s contractual duty to defend; or other damages for Mid-Continent’s breach of its duty of good faith and fair dealing. The jury awarded Sundown $1.75 million in additional damages based on its findings that Mid-Continent had knowingly engaged in unfair settlement practices (Question No. 12). And the jury awarded Sundown $4.7 million in exemplary damages based on its findings that Mid-Continent had breached its duty of good faith and fair dealing and had done so fraudulently, maliciously, or with gross negligence (Question No. 13). In sum, the jury found against Sundown on its Hurricane Rita duty to indemnify breach of contract counterclaim, Hurricane Rita bad faith investigation counterclaim, Hurricane Rita bad faith misrepresentation counterclaim, and Hurricane Katrina duty to defend breach of contract counterclaim. The jury found in Sundown’s favor on its Hurricane Katrina unfair settlement practices counterclaim and, in part, on its counterclaim that the violation was knowing. The jury also ruled in Sundown’s favor on its Hurricane Katrina breach of duty of good faith and fair dealing counterclaim, and it found that in breaching this duty, Mid-Continent had acted fraudulently, maliciously, or with gross negligence. The jury awarded Sundown $2 million in compensatory damages, $1.75 million in additional damages for Sundown’s unfair settlement practices counterclaim, and $4.7 million in exemplary damages for Sundown’s breach of duty of good faith and fair dealing counterclaim. In post-judgment motions, Mid-Continent renews the motion for judgment as a matter of law that it made during trial, moves for a new trial (subject to its renewed motion for judgment as a matter of law), and moves to alter or amend the judgment (subject to its renewed motion for judgment as a matter of law and motion for new trial). Sundown renews the motion for judgment as a matter of law that it made during trial. II The court turns first to Mid-Continent’s renewed motion for judgment as a matter of law under Fed.R.Civ.P. 50(b). “A motion for judgment as a matter of law ‘challenges the legal sufficiency of the evidence to support the verdict.’ ” Jacobs v. Tapscott, 516 F.Supp.2d 639, 643 (N.D.Tex.2007) (Fitzwater, J.) (quoting Hodges v. Mack Trucks, Inc., 474 F.3d 188, 195 (5th Cir.2006)), aff'd, 277 Fed.Appx. 483 (5th Cir.2008). Judgment as a matter of law is appropriate with respect to an issue if there is no legally sufficient evidentiary basis for a reasonable jury to find for a party on that issue. This occurs when the facts and inferences point so strongly and overwhelmingly in the movant’s favor that reasonable jurors could not reach a contrary verdict. In considering a Rule 50 motion, the court must review all of the evidence in the record, drawing all reasonable inferences in favor of the nonmoving party; the court may not make credibility determinations or weigh the evidence, as those are jury functions. In reviewing the record as a whole, the court must disregard all evidence favorable to the moving party that the jury is not required to believe. That is, the court should give credence to the evidence favoring the nonmovant as well as that evidence supporting the moving party that is uncontradicted and unimpeaehed, at least to the extent that that evidence comes from disinterested witnesses. Brennan’s Inc. v. Dickie Brennan & Co., 376 F.3d 356, 362 (5th Cir.2004) (citations, brackets, and internal quotation marks omitted). “A jury verdict must stand unless there is a lack of substantial evidence, in the light most favorable to the successful party, to support the verdict.” Am. Home Assurance Co. v. United Space Alli anee, LLC, 378 F.3d 482, 487 (5th Cir. 2004) (citation omitted). Ill Mid-Continent moves for judgment as a matter of law concerning the jury’s findings that Mid-Continent knowingly engaged in unfair settlement practices with respect to Hurricane Katrina and that Mid-Continent breached its duty of good faith and fair dealing and, in doing so, acted fraudulently, maliciously, or with gross negligence. The following facts developed during trial, viewed under the applicable standard, see supra § II, or established under the PTO are pertinent to Mid-Continent’s motion and to the parts of the verdict that enable Sundown to recover from Mid-Continent. Following Hurricanes Katrina and Rita, Sundown notified Mid-Continent of its claim for coverage and demanded defense and indemnification in the Underlying Litigation, including three class actions filed in the Eastern District of Louisiana. Under a reservation of rights, Mid-Continent undertook Sundown’s defense, appointing two Louisiana attorneys, Tony Clayton, Esquire (“Clayton”) and Paul Preston, Esquire (“Preston”), to defend Sundown in the Underlying Litigation. Sundown maintained that the reservation of rights created a conflict of interest between Sundown and Mid-Continent that entitled Sundown to choose its defense counsel. Mid-Continent eventually allowed Sundown to select its counsel, and Sundown chose Jones Walker. Mid-Continent and Sundown disagreed, however, about Jones Walker’s hourly rates. While this issue was being resolved, Clayton and Preston continued working secretly for Mid-Continent against Sundown’s wishes. On October 7, 2005 Mid-Continent and Sundown met to discuss how the Underlying Litigation should be handled and the status of Sundown’s cleanup operations. During the meeting, Mary Frances Hermes (“Hermes”) of Sundown took notes, which Sundown introduced at trial. Michael Chernekoff, Esquire (“Chernekoff’), a Jones Walker partner who represented Sundown, testified that Preston and Clayton had expressed strong interest in visiting Port Sulphur to view the affected areas right away. Hermes testified that Carl Rosenblum, Esquire (“Rosenblum”), a Jones Walker partner who represented Sundown, indicated that all decisions should be cleared through him and that Sundown wanted him to be the contact person. Following the meeting, Rosenblum attempted to set up a time for Preston, Clayton, Rosenblum, and Steve Haltom (“Haltom”), a Mid-Continent Assistant Vice President and the Home Office Claim Supervisor, to visit the affected area, and Rosenblum agreed to accompany them on October 27, 2005. Three days before the visit, on October 24, 2005, Chernekoff and Rosenblum attempted to reach Haltom and Preston to advise them that Sundown had selected Jones Walker as its counsel and that the services of Preston and Clayton were no longer required. Chernekoff cancelled the visit to Port Sulphur, but he later learned that Preston and Clayton had made a visit despite the cancellation. When Chernekoff asked Haltom if he had sent Preston and Clayton to visit the site, Haltom apologized and admitted that he had. Chernekoff testified that at the October 7 meeting, everyone agreed and understood that Rosenblum would be the point person with respect to any visits to the facilities. Mid-Continent directed Clayton and Preston to visit the areas affected by the oil spill, and when they did, they met with Chris Leopold (“Leopold”). Preston had learned of Leopold from Scott Yount, Esquire, an attorney who worked with Preston. Leopold owned a Dollar General store and a boat shed near the Sundown facility. Leopold testified that he had attempted to contact Sundown to discuss the cleanup of his property by knocking on the door of Sundown’s temporary trailer. Leopold told the person who answered the door that he wanted to have his property cleaned up. The person did not say anything and shut the door. Tom Hilton (“Hilton”), former operations manager for Sundown, testified that he learned of Leopold’s visit to the Sundown trailer from Mitch Thompson, Sundown’s on-site manager, and that Leopold wanted Sundown to take some action to clean up his property. Mid-Continent sent Luther Holloway (“Holloway”) to evaluate and settle claims, and Holloway met with Leopold. Due to illness, Holloway was replaced by Dana Futrell (“Futrell”). Haltom hired Futrell as the adjuster to investigate and settle with Leopold and to establish a baseline for settling with other landowners. Leopold was completely dissatisfied with Futrell’s work, and he testified that he believed that Futrell was unqualified, incompetent, and “like a used car salesman trying to be an environmental adjuster.” Tr. 4A:52-53. Unbeknownst to Sundown, Mid-Continent hired an environmental engineer, Dennis Lambert (“Lambert”), to test the soil on Leopold’s property. Lambert found two so-called “hot spots,” or areas of contamination, and he copied Leopold on the email to Mid-Continent relaying the test results. But Lambert’s analysis contained mistakes, and Mid-Continent asked Paul Muthig (“Muthig”) to review Lambert’s findings. Haltom explained that he understood from Muthig that Lambert had applied the wrong standard and had found “hot spots” in error. Muthig informed Mid-Continent that it was unlikely that the diesel spots on Leopold’s property originated from Sundown’s facility, which contained unrefined crude oil. See Tr. 8A:15 (“[Tjhere is no information to show that the minor amount of diesel range organics impacts in 8 percent of the soil samples taken by Lambert Engineers is in any way related to a crude oil release[J”) Without consulting with or informing Sundown, Mid-Continent made a settlement offer of $54,536.00 to Leopold on June 2, 2006. Sundown learned of this offer on July 21, 2006 and demanded that it be immediately withdrawn. After Mid-Continent withdrew the offer, Leopold joined the Blanchard class action as a named class representative. Leopold had been provided the faulty Lambert testing, but he had not been given the corrected Muthig analysis. Leopold testified that Mid-Continent’s dealings with him could have had a ripple effect on the adjoining landowners and their dealings with Mid-Continent and Sundown. According to Sundown, Mid-Continent’s dealings with Leopold reeked havoc for Sundown in its defense of the Blanchard class action. The other two class actions were dismissed against Sundown, and Sundown paid nothing in exchange. But Sundown maintains that, had Mid-Continent not engaged in bad faith interference in the investigation and claims handling, Sundown would have settled the Blanchard case for no more than $1 million. Instead, Sundown ultimately paid $2 million to settle Blanchard. The jury found that $2 million represented the increased cost to Sundown of settling Blanchard. Of critical importance to Mid-Continent’s motion for judgment as a matter of law, the jury did not find that Sundown was entitled to compensatory damages for any other alleged injuries. IV Mid-Continent moves for judgment as a matter of law dismissing Sundown’s counterclaim for breach of duty of good faith and fair dealing. A The jury found that Sundown proved its counterclaim for breach of duty of good faith and fair dealing on two grounds: (1) Mid-Continent consciously undermined Sundown’s defense in the Underlying Litigation, which caused Sundown injury independent of its policy claim; and (2) Mid-Continent failed to conduct a reasonable investigation of Sundown’s Hurricane Katrina claim, which caused Sundown injury independent of its policy claim. Mid-Continent posits that Texas law does not provide a common law cause of action, other than under Stowers in the context of third-party claims handling. It also contends that the evidence is legally insufficient for a reasonable jury to have found against Mid-Continent on this counterclaim. Mid-Continent maintains that the court should not have submitted a common law tort question to the jury because the only non -Stoivers liability of an insurer for handling a third-party claim is statutory liability under Tex. Ins. Code Ann. § 541.060(a) (West 2003 & Supp.2010), not common law liability for breaching a duty of good faith and fair dealing. Sundown argued during and after trial that Mid-Continent breached its duty of good faith and fair dealing in its handling of third-party claims, in connection with Sundown’s Hurricane Katrina claim and the Underlying Litigation. See Ds. JMOL Resp. 22 (“[D]espite having complied with its payment obligations under the policy, in the course of its handling of the class actions, Mid-Continent committed extreme acts which culminated in Sundown’s having to pay $2 million in settlement on the Blanchard case.”). The court therefore addresses Mid-Continent’s motion on this ground as it pertains to a third-party insurance claim. Mid-Continent contends that, because the court held in Mid-Continent I and the jury found that Mid-Continent did not breach the Primary Policy and the Umbrella Policy in any respect, Mid-Continent cannot be held hable under the common law unless it committed an extreme act that caused Sundown injury unrelated to and independent of Sundown’s policy claim. The court instructed the jury that, under Texas law, an insured can recover for breach of the duty of good faith and fair dealing when an insurer commits some act, so extreme, that the act would cause injury independent of the claim. The court first asked the jury to decide whether Sundown had proved this claim on the ground that Mid-Continent had consciously undermined Sundown’s defense in the Underlying Litigation, and whether this conduct had caused Sundown injury independent of its policy claim. Mid-Continent argues that the court based this question on two decisions of the Supreme Court of Texas: Republic Insurance Co. v. Stoker, 903 S.W.2d 338, 341 (Tex.1995), and State Farm Mutual Automobile Insurance Co. v. Traver, 980 S.W.2d 625 (Tex.1998). The Supreme Court of Texas stated in Stoker that the general rule that there can be no claim for bad faith when an insurer has promptly denied a claim that is in fact not covered does not exclude “the possibility that in denying the claim, the insurer may commit some act, so extreme, that would cause injury independent of the policy claim.” Stoker, 903 S.W.2d at 341 (citation omitted). For ease of reference, the court will refer to this statement from Stoker as the “Stoker language.” And in Traver the court held that an insurer’s Stowers duty, coupled with rights provided under the insurance contract, generally protect an insured against an insurer’s erroneous refusal to defend a third-party claim against the insured. Traver, 980 S.W.2d at 629. But the court also stated that special circumstances were present in Traver because “the plaintiffs allegations are not that the insurer merely refused a defense, but that the insurer consciously undermined the insured’s defense.” Id. (emphasis added). Mid-Continent contends that there is no recognized cause of action under Texas law that would support submitting this question to the jury or support the jury’s finding in favor of Sundown. Mid-Continent maintains that the Stoker language is dicta; the Stoker language has never been applied by a Texas court; the Stoker language has never been applied by a federal court except in one distinguishable case; the Traver language is dicta and has never been applied by a federal or Texas court; and the Stoker language has been applied once by the Fifth Circuit in a distinguishable case. Sundown responds that the jury question was properly based on Stoker and Traver, and that this court recognized the Stoker language in Nunn v. State Farm Mutual Automobile Insurance Co., 729 F.Supp.2d 801 (N.D.Tex.2010) (Fitzwater, C.J.). Sundown argues that the Stoker and Traver factors apply precisely to the facts of this case: although Mid-Continent complied with its payment obligations under the policies, Mid-Continent committed extreme acts in the course of handling third-party claims that resulted in Sundown’s liability for $2 million for the increased cost of settling the Blanchard case. Sundown contends that the cases on which Mid-Continent relies— which address an insurer’s discretion to settle claims without the consent of the insured — are inapposite because Mid-Continent failed to conduct an objective investigation of Sundown’s liability, offered Leopold a settlement in order to exhaust policy limits and avoid paying for Sundown’s defense, and secreted all of its activities from Sundown. Sundown also argues that Northwinds Abatement, Inc. v. Employers Insurance of Wausau, 258 F.3d 345 (5th Cir.2001), applied the Stoker language and is binding precedent. B In this diversity case that is governed by Texas law, the court must determine whether Texas recognizes a cause of action for breach of duty of good faith and fair dealing in the context of an insurer’s handling a third-party claim. “ ‘As a general rule there can be no claim for bad faith when an insurer has promptly denied a claim that is in fact not covered.’ ” Mid-Continent I, 2009 WL 3074618, at *27 (quoting Stoker, 903 S.W.2d at 341). In other words, if the insurer has not breached the insurance contract, the insurer is generally not liable under the common law. When handling a first-party claim, however, an insurer owes its insured a duty of good faith and fair dealing in the processing of the insured’s claim. “Under Texas law, an insurer owes a duty of good faith in handling its insured’s own claim of loss.” Med. Care Am., Inc. v. Nat’l Union Fire Ins. Co. of Pittsburg, 341 F.3d 415, 425 (5th Cir.2003) (emphasis added and citation omitted); Vandeventer v. All Am. Life & Cas. Co., 101 S.W.3d 703, 722 (Tex.App.2003, no pet.) (citing Stoker and noting that “Texas law has long recognized a common law duty of good faith and fair dealing in the context of processing and payment of claims under first-party insurance coverage” (emphasis added)). In the first-party claim context, an insurer “breaches its duty of good faith and fair dealing by denying a claim when the insurer’s liability has become reasonably clear[,]” although “a bona fide coverage dispute does not rise to the level of bad faith.” Med. Care Am., 341 F.3d at 425-26 (internal quotation marks and citations omitted). But when handling a third-party claim, an insurer owes the insured no duty of good faith and fair dealing. “An insured, however, has no claim for bad faith premised on the insurer’s investigation or defense of a claim brought against it by a third party.” Id. at 425 (emphasis added and citations omitted); see also Taylor v. Allstate Ins. Co., — S.W.3d -, -, 2011 WL 1233331, at *6 (Tex.App. Mar. 31, 2011, no pet.) (holding that insured’s claims against insurer arose out of its conduct in handling a third-party claim and that insured was fully protected by his contractual and Stoivers rights such that it was unnecessary for court to recognize cause of action for tortious interference in that context); Fed. Ins. Co. v. Infoglide Corp., 2006 WL 2050694, at *15 (W.D.Tex. July 18, 2006) (noting that “Texas law on the issue of the viability of a claim for breach of the duty of good faith and fair dealing with respect to third party claims appears to be clear” and that courts have refused to recognize such a duty in handling third-party insurance claims). Rather, “[a]n insurer’s common law duty in this third party context is limited to the Stowers duty to protect the insured by accepting a reasonable settlement offer within policy limits.” Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co., 236 S.W.3d 765, 776 (Tex.2007) (citation omitted). “This is because ‘an insured is fully protected against his insurer’s refusal to defend or mishandling of a third-party claim by his contractual and Stowers rights,’ which give rise to causes of action sounding in contract and negligence.” Med. Care Am., 341 F.3d at 425 (quoting Md. Ins. Co. v. Head Indus. Coatings & Servs., Inc., 938 S.W.2d 27, 28-29 (Tex.1996)). Texas law does not provide a cause of action for breach of the duty of good faith and fair dealing in the context of an insurer’s handling of a third-party claim. The court therefore holds that Sundown’s only common law remedy in the context of a third-party claim is under Stowers. See, e.g., Liberty Mut. Ins., 236 S.W.3d at 776 (holding that insurer’s common law duty to act reasonably when handling insured’s defense is limited to Stowers duty). C Sundown argues that the jury question was properly based on Traver, and that the Traver factors apply precisely to the facts of this case. Sundown suggests that Traver provides an exception to the general prohibition against a claim for breach of good faith and fair dealing in the third-party claim context. Mid-Continent responds that the statement in Traver on which the court framed Question No. 8 is dicta and has never been applied by a state or federal court. It also contends that, in Traver, the insurer purposely attempted to lose the insured’s case in an effort to avoid Stowers liability to another insured. Mid-Continent posits that it did the opposite in this case. Sundown does not respond to Mid-Continent’s argument that the “consciously undermine” language of Traver is dicta; it argues instead that the evidence supports the jury’s finding that Mid-Continent consciously undermined Sundown’s defense. The court holds that the “consciously undermine” language in Traver is dicta. In Traver the plaintiff (“Traver”) sued his insurer (“State Farm”) alleging malpractice in State Farm’s defense of a personal injury claim, breach of duty of good faith and fair dealing, negligence, breach of duty to defend, breach of the Stowers duty, and violations of the Texas Deceptive Trade Practices-Consumer Protection Act (“DTPA”) and the Texas Insurance Code. Traver, 980 S.W.2d at 626. Traver was the executor for the estate of the insured, Mary Davidson. Id. The trial court granted summary judgment for State Farm on all grounds, and the court of appeals reversed and remanded the malpractice, DTPA, and Insurance Code claims, holding that an insurer is responsible for the malpractice of an attorney it provides an insured. Id. at 627. The court of appeals also held that Traver could not recover on his claim for breach of the duty of good faith and fair dealing because “an insurer owes no duty of good faith to its insured in the context of a third-party liability claim.” Id. The Supreme Court of Texas reversed the judgment of the court of appeals, holding that an insurer is not vicariously liable for the malpractice of an attorney it provides an insured. Id. at 629. Because Traver did not apply for a writ of error on his breach of good faith and fair dealing claim, the courts of appeals’ judgment was final in this respect. Id. On the issue of breach of duty of good faith and fan1 dealing, the court of appeals held that, “in the context of third-party insurers, Texas law recognizes only one tort duty, which is the duty stated in Stowers.” Traver v. State Farm Mut. Auto. Ins. Co., 930 S.W.2d 862, 870 (Tex.App. 1996) (citing Soriano, 881 S.W.2d at 319 (“A ‘bad faith’ version of the duty to settle, like that imposed by some other jurisdictions, would presumably supplant the negligence standard recognized in Stowers .... [T]he Stoivers doctrine is the exclusive common-law remedy available to an insured in [the third-party claim] situation.”) (Cornyn, J., concurring)), rev’d, 980 S.W.2d 625 (Tex.1998). Traver’s claim for breach of duty of good faith and fair dealing was not before the Texas Supreme Court, and it therefore had no basis to reverse the decision of the court of appeals in this respect. The Texas Supreme Court stated that “the court of appeals’ judgment regarding [the duty of good faith and fair dealing] is final.” Traver, 980 S.W.2d at 629. Although the issue was not before it, the Texas Supreme Court noted that the facts of Traver were quite different from those in Head Industrial, in which the court held that the Stowers duty, together with the rights conferred by the insurance contract, were sufficient to protect the insured in the context of a third-party claim. Id. (citing Head Industrial, 938 S.W.2d at 29). The Traver court surmised that the facts of Traver were different because, in Head Industrial, the plaintiff alleged that the insurer merely refused to defend him, and in Traver the plaintiff alleged that the insurer consciously undermined the insured’s defense. Id. Because the claim for breach of duty of good faith and fair dealing was not before the Traver court, its discussion of that claim is dicta. Likewise, Sundown has not cited, nor has the court found, any federal case citing or quoting Traver’s “consciously undermined” language or adopting it as a standard for imposing liability. Traver was decided in 1998, and in the ensuing years only one Texas court has mentioned the “consciously undermined” language. See Southstar Corp. v. St. Paul Surplus Lines Ins. Co., 42 S.W.3d 187, 192 (Tex.App.2001, no pet.). In Southstar the court noted that Traver distinguished its facts from those in Head Industrial, and the Souths-tar court concluded that “an insured who alleges only that the insurer wrongfully refused a defense is limited to bringing Stowers claims and claims under the insurance contract.” Id. Ultimately, the Southstar court held that “[b]ecause the act giving rise to liability for negligence is breach of the insurer’s duty to defend under the insurance agreement, [the insureds’] claims for negligence and gross negligence are barred as a matter of law.” Id. at 194. Southstar did not apply or discuss Travels “consciously undermine” language. Accordingly, this court holds that Travels language is dicta and is not a recognized basis in Texas law for imposing liability. D Sundown argues that a cause of action for breach of duty of good faith and fair dealing is available if Mid-Continent committed an extreme act that caused injury independent of the policy claim. It posits that the jury question was properly based on Stoker, and that the Stoker factors apply precisely to the facts of this case. Stoker does not provide Sundown a remedy in this case because, as the court will explain, (1) Stoker addressed a first-party insurance claim, and in that context a claim exists under Texas law for breach of duty of good faith and fair dealing; (2) the Stoker language is dicta; and (3) Stoker has never been applied by a Texas or federal court to find a breach of duty of good faith and fair dealing. 1 First, Stoker addressed a claim of breach of good faith and fair dealing in the context of a first-party insurance claim, not a third-party insurance claim. After a multiple-car accident, the Stokers submitted a claim to Republic Insurance Co. (“Republic”) to recover under their uninsured/underinsured vehicle coverage. Stoker, 903 S.W.2d at 339. Republic denied the Stokers’ uninsured motorist claim, and they sued Republic for breach of the insurance contract, breach of duty of good faith and fair dealing, and violations of the DTPA and the Texas Insurance Code. Id. Because the Stokers sought recovery for their own loss, their claim was a first-party claim. See Lamar Homes, 242 S.W.3d at 17. The Stoker court stated that in handling an insured’s first-party claim, “[a]n insurer has a duty to deal fairly and in good faith with its insured in the processing and payment of claims.” Stoker, 903 S.W.2d at 340 (citing Arnold v. Nat’l Cnty. Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex.1987)). And in the first-party context, the Stoker court stated that while “[a]s a general rule there can be no claim for bad faith when an insurer has promptly denied a claim that is in fact not covered,” it did not exclude the possibility that “in denying the claim, the insurer may commit some act, so extreme, that would cause injury independent of the policy claim.” Id. at 341 (citing O’Malley v. U.S. Fid. & Guar. Co., 776 F.2d 494, 500 (5th Cir.1985); Aranda v. Ins. Co. of N. Am., 748 S.W.2d 210, 214 (Tex.1988)). As the court notes swpra at § IV(A), the relevant insurance claims in this case are third-party claims; Sundown complains that Mid-Continent’s handling of third-party claims damaged Sundown. Stoker says nothing regarding an insurer’s duty of good faith and fair dealing in its handling of third-party claims. 2 Mid-Continent also contends that the Stoker language is dicta and that it has been referred to as a “theoretical possibility.” The court agrees. See SnyderGeneral Corp. v. Century Indem. Co., 907 F.Supp. 991, 1006 (N.D.Tex.1995) (Fitzwater, J.) (“[T]he [Stoker ] court also said, albeit in dicta, that there are exceptions [to the general rule]”), ajfd in part and vacated in part on other grounds, 113 F.3d 536 (5th Cir.1997); see also Toledo-Lucas Cnty. Port Auth. v. Axa Marine & Aviation Ins. Ltd., 220 F.Supp.2d 868, 874 n. 7 (N.D.Ohio 2002) (noting that the Stoker language is dicta), rev’d on other grounds, 368 F.3d 524 (6th Cir.2004); Gen. Star Indem. Co. v. Sherry Brooke Revocable Trust, 243 F.Supp.2d 605, 612 (W.D.Tex. 2001) (“[The insureds] hang their extra-contractual claims on a single line of dictum in Stoker, in which the Texas Supreme Court stated [the Stoker language]”); Potomac Ins. Co. v. Woods, 1996 WL 450687, at *6 (E.D.Tex. July 22, 1996) (“In dicta the [Stoker ] court left open the theoretical possibility that in a case in which the insurer has no liability under the policy there could be a bad faith claim; however, the court made clear that only the most extreme acts could subject an insurer to bad faith liability.”); Laas v. State Farm Mut. Auto. Ins. Co., 2001 WL 1479228, at *4 (Tex.App.2001, no pet.) (not designated for publication) (“Indeed, the supreme court in Stoker, mentioned in dicta the possibility, that in denying a claim, an insurer might commit some act, so extreme, there could be an injury independent of the policy claim.” (citation omitted)). Courts, including the Texas Supreme Court, have referred to the Stoker language as expressing a possibility that the court contemplated but did not decide. See, e.g., Stoker, 903 S.W.2d at 341 (noting possibility that insurer may commit an extreme act that causes injury independent of policy claim, but that “[tjhese circumstances are not present in this case.”); Am. Motorists Ins. Co. v. Fodge, 63 S.W.3d 801, 804 (Tex.2001) (noting that the Stoker court “did not exclude the possibility” of an extreme act exception and “cited no examples”); Provident Am. Ins. Co. v. Castaneda, 988 S.W.2d 189, 199 (Tex.1998) (describing the possible exception in Stoker as one that the Stoker court “contemplated”); Gates v. State Farm Cnty. Mut. Ins. Co. of Tex., 53 S.W.3d 826, 831 (Tex. App.2001, no pet.) (“The [insureds] rely on the following language from Stoker indicating a bad faith claim might exist .... Assuming, without deciding, an insurer in denying a claim may commit an act so extreme to cause an injury independent of the policy claim, we conclude an insured may not recover under this theory unless the insured can establish ‘extreme’ conduct by the insurer during the claims process.” (emphasis added)). “[T]he Stoker court did not find that any extreme act had occurred in that instance and did not offer any insight into what might be considered an extreme act justifying a bad faith finding.” Valley Forge Ins. Co. v. Shah, 2009 WL 291080, at *11 n. 84 (S.D.Tex. Jan. 30, 2009) (emphasis added) (citing Stoker, 903 S.W.2d at 341). The court therefore holds that Stoker language is dicta and expresses a mere possibility that bad faith liability could be imposed in regard to a first-party claim in specific circumstances that the Supreme Court of Texas has yet to identify. 3 Mid-Continent also maintains that the Stoker language has not been applied by any Texas court. Sundown does not directly respond to this allegation, focusing instead on the Fifth Circuit’s decision in Northwinds. Sundown has not cited, and the court has not located, any Texas decision that relies on the Stoker language to hold that an insurer can be liable based on a common law claim for breach of duty of good faith and fair dealing. Several Texas courts discuss the language used in Stoker, and some appear to assume that it could apply, but none expressly holds that Stoker or the Stoker language creates a common law claim under the facts of a particular case. In Castaneda the Supreme Court of Texas held that any “extreme” act by the insurer in handling the insured’s claim in that case did not cause any independent injury, “as contemplated in Stoker.” Castaneda, 988 S.W.2d at 199 (emphasis added). The court premised this conclusion on the fact that the only damages awarded by the jury that were not policy benefits were for loss of credit reputation, and this loss stemmed from the denial of benefits. Id. In Deschenes ex rel. Patton v. Farmers Insurance Exchange, 2002 WL 971911 (Tex.App. May 13, 2002, petdenied) (not designated for publication), the insured argued that he presented summary judgment evidence of extreme conduct sufficient to separate his breach of conduct claim from his bad faith claim. Id. at *4. The insured’s evidence included an affidavit by his attorney that the insurance agent gave the insured inappropriate information regarding coverage and failed to notify the insurer about a potentially serious claim. Id. The court implicitly held that the Stoker language might provide an exception but found that the summary judgment evidence failed to raise a fact issue as to extreme conduct. Id. In Gates the insured relied on language from Stoker “indicating a bad faith claim might exist despite the absence of a breach of the insurance policy[.]” Gates, 53 S.W.3d at 831 (emphasis added). The court assumed arguendo that there could be a bad faith claim, but it held that the insured did not present sufficient evidence of an extreme act to create an issue of material fact that would ■ defeat summary judgment. Id. As evidence of the insurer’s extreme act, the insureds argued that the insurer breached an agreement entered into under Tex. R. Civ. P. 11 after litigation had begun. Id. The court affirmed the trial court’s award of summary judgment for the insurer because the insureds failed to point to any evidence of extreme conduct by the insurer during the claims process. Id. In Betco Scaffolds Co. v. Houston United Casualty Insurance Co., 29 S.W.3d 341 (Tex.App.2000, no pet.), the court implicitly assumed that the Stoker language could possibly provide an exception to the general rule, but it held that the insured’s allegation that the insurer committed spoliation of the claim file was not “so extreme as to cause [the insured] injury independent of its policy or bad faith claims.” Id. at 348. The court therefore affirmed the judgment for the insurer. Id. The court has found no Texas state court that holds that a recovery is available under the Stoker language in the first-party claim context, much less in the context of handling of a third-party claim. Moreover, the Texas Supreme Court has noted that there are no examples of what conduct would result in such recovery, which confirms the absence of controlling authority. See Fodge, 63 S.W.3d at 804 (noting that, in Stoker, the court did not exclude the possibility that an insurer’s denial of a claim might be in bad faith if its conduct were extreme and produced damages unrelated to and independent of the policy claim but that the Texas Supreme Court “cited no examples”); see also Shah, 2009 WL 291080, at *11 n. 84 (“[T]he Stoker court did not find that any extreme act had occurred in that instance and did not offer any insight into what might be considered an extreme act justifying a bad faith finding.”). In Potomac Insurance the court noted that the Stoker court “hinted that wholesale failure to investigate might be the type of act that could expose an insurer to a meritorious bad faith claim.” Potomac Ins., 1996 WL 450687, at *6 (citing Stoker, 903 S.W.2d at 341; SnyderGeneral, 907 F.Supp. at 1006). 4 Mid-Continent also posits that no federal court, other than the Fifth Circuit in Northwinds, has applied the Stoker language. In Shah the Southern District of Texas noted that the Stoker court “left open the possibility that an insurer could act in bad faith in legitimately denying a claim if the insurer committed ‘some act, so extreme, that ... cause[d] injury independent of the policy claim.’ ” Shah, 2009 WL 291080, at *11 (quoting Stoker, 903 S.W.2d at 341). The insured argued that the insurer’s “conduct has been extreme[;] it has caused independent injuries such as mental anguish, anxiety and concern over financial ruin, lost wages, and the cost of a defense, the cost to assert its contractual right to a defense, health issues and the like.” Id. (internal quotation marks and citation omitted). Although the Shah court agreed that the insured’s difficulty with the insurer’s claim processing had caused the insured misery and difficulty, it required that the insured “point to actions by [the insurer] that were extreme, rather than to the extreme nature of [the insured’s] alleged damages.” Id. In General Star the court characterized the insureds’ extra-contractual claims as hanging “on a single line of dictum in Stoker, in which the Texas Supreme Court stated that it did not ‘exclude the possibility that in denying the claim, the insurer may commit some act, so extreme, that would cause injury independent of that claim.’ ” Gen. Star, 243 F.Supp.2d at 612 (quoting Stoker, 903 S.W.2d at 341). The insureds maintained that the Stoker language applied directly to their case because the insurer waited too long to investigate and deny their claim. Id. at 612-13. The court granted summary judgment for the insurer on the insureds’ extra-contractual claims because the insureds failed to provide evidence of causation or damages. Id. at 613. The court declined to recognize that there was a tort such as “bad faith unreasonable delay in denying a claim,” and it did not determine whether the insured presented sufficient evidence on that claim to survive a summary judgment motion. Id. In Woods the Eastern District of Texas acknowledged that Stoker “in dicta ... left open the theoretical possibility” of an exception to the general rule. Woods, 1996 WL 450687, at *6. The court held that because a detailed factual investigation was not required to properly deny the insured’s claim where the responsive pleading and requests for admission established a legal defense, the theoretical possibility of a Stoker exception for extreme conduct did not apply. Id. at *7. The court therefore granted the insurer’s motion for summary judgment as to the insured’s bad faith counterclaim. Id. In sum, no federal court (including Northwinds, as the court will explain below) has held that an insured can recover under the Stoker language for breach of duty of the duty of good faith and fair dealing. E Sundown maintains that Northwinds provides a cause of action under Texas law, is directly on point, and is controlling. According to Sundown, in Northwinds the insurer solicited another party to file a baseless claim against the insured. Sundown argues that the facts of the instant case fall under Northwinds because Mid-Continent sought out Leopold and encouraged him to make a baseless claim against Sundown, even though Mid-Continent had no evidence that any oil on Leopold’s property came from Sundown’s facility. For several reasons, the court disagrees with Sundown concerning the precedential value of Northwinds. First, the Northwinds panel did not hold that an exception to the general rule applied with respect to a claim for breach of duty of good faith and fair dealing. Second, although district courts must follow “a legally indistinguishable decision of the Fifth Circuit ... unless overruled en banc or by the United States Supreme Court,” MCI Telecommunications Corp. v. United Showcase, Inc., 847 F.Supp. 510, 512 (N.D.Tex.1994) (Fit2water, J.) (citation omitted), in a diversity case, this court is obligated “to follow subsequent state court decisions that are clearly contrary to a previous decision of [the Fifth Circuit].” Farnham v. Bristow Helicopters, Inc., 776 F.2d 535, 537 (5th Cir.1985) (citing Broussard v. S. Pac. Transp. Co., 665 F.2d 1387, 1389 (5th Cir.1982)). The Fifth Circuit decided Northwinds in July 2001. Several Texas cases decided after Northwinds indicate that the Stoker language is not well-established Texas law. Third, Northwinds is factually distinguishable from the present case. 1 Northwinds did not apply the Stoker language in the context of a claim for breach of the duty of good faith and fair dealing. In Northwinds the panel discussed the Stoker language in a section entitled “STATUTORY CLAIMS,” and it permitted the insured to recover on its statutory causes of action under the DTPA and the Insurance Code. See North-winds, 258 F.3d at 352-53. The panel noted that the insured could have a statutory remedy even if the insured had no viable breach'of contract claim. Id. But the panel explained that “[w]here, as here, there has been no ... violation of the duty of good faith and fair dealing, the bar for establishing extra-contractual liability is high: the insurer must ‘commit some act, so extreme, that it would cause injury independent of the policy claim.’ ” Id. (quoting Stoker, 903 S.W.2d at 341) (emphasis added). The panel therefore mentioned the Stoker language in affirming the insurer’s liability under the Insurance Code and the DTPA (extra-contractual remedies) in the absence of a breach of contract remedy and in light of the insured’s extreme acts. The panel did not allow for or apply an exception to the general rule that there is no cause of action for breach of duty of good faith and fair dealing. This court therefore concludes that Northwinds does not hold that the Stoker language provides an exception to the general rule that there is no cause of action for breach of duty of good faith and fair dealing in the third-party claims handling context. 2 Moreover, even if Northwinds applied the Stoker language in the third-party claims handling context, several Texas cases decided after Northwinds indicate that the Stoker language is not well-established Texas law. In 2005, the Texas Supreme Court decided Progressive County Mutual Insurance Co. v. Boyd, 177 S.W.3d 919 (Tex. 2005). The court stated: “ [w]e have left open the possibility that an insurer’s denial of a claim it was not obliged to pay might nevertheless be in bad faith if its conduct was extreme and produced damages unrelated to and independent of the policy claim.” Id. at 922 (emphasis added) (citing Stoker, 903 S.W.2d at 341). Boyd— which was decided several years after Northwinds — does not mention North-winds, and it characterizes liability under the Stoker language as a mere “possibility.” Likewise, the Texas Supreme Court decided Fodge in November 2001, four months after the Fifth Circuit decided Northwinds. Fodge observed that “[in Stoker ], we did not exclude the possibility that an insurer’s denial of a claim it was not obliged to pay might nevertheless be in bad faith if its conduct were ‘extreme’ and produced damages unrelated to and independent of the policy claim. We cited no examples.” Fodge, 63 S.W.3d at 804 (quoting Stoker, 903 S.W.2d at 341). Like Boyd, Fodge did not mention Northwinds. And Fodge seemed to emphasize the undeveloped state of the doctrine by highlighting the absence of cited examples in Stoker of what would qualify as bad faith conduct. Three decisions of Texas courts of appeals issued after Northwinds indicate that the Stoker language is not well-established Texas law, and none mentions Northwinds: Laas, decided in November 2001; Gates, decided in August 2001; and Crocker v. American National General Insurance Co., 211 S.W.3d 928 (Tex.App. 2007, no pet.), decided in January 2007. See Laas, 2001 WL 1479228, at *4 (“Indeed, the supreme court in Stoker, mentioned in dicta the possibility, that in denying a claim, an insurer might commit some act, so extreme, there could be an injury independent of the policy claim.”); Gates, 53 S.W.3d at 831-32 (noting that Stoker indicated that bad faith claim might exist despite absence of breach of insurance contract and “[ajssuming, without deciding, an insurer in denying a claim may commit an act so extreme to cause an injury independent of the policy claim”) (emphasis added); Crocker, 211 S.W.3d at 936 (noting that although “the court in Stoker did not exclude ‘the possibility that in denying the claim, the insurer may commit some act, so extreme, that it would cause injury independent of the policy claim,’ ” the insureds did not argue that such exception applied). Based on the decisions of the Supreme Court of Texas that mention the Stoker language and the decisions of Texas courts of appeals that have addressed the question, the court holds that there is no cause of action against an insurer for breach of duty of good faith and fair dealing in the context of third-party claims handling under Texas law. The common law remedies available in this context are limited to Stowers claims and breach of contract claims. 3 Even if the court assumes arguendo that such a cause of action is available under Northwinds, the facts of Northwinds are materially distinguishable from those of this case. In Northwinds a company (“North-winds”) in the asbestos abatement business obtained workers’ compensation insurance from the Texas Workers’ Compensation Insurance Facility (the “Facility”). Northwinds, 258 F.3d at 348. Employers Insurance of Wausau (“Wausau”) was the designated servicing company that issued North-winds’ policy. Id. Essentially, the Facility was the insurer and divided reinsurance liability in proportion to the premiums received by each member (e.g., Wausau), and Wausau was the servicer and issued the policy, investigated, reported, and paid claims, and provided legal support under the policy. Id. at 348 & n. 2. Northwinds sued Wausau for mishandling workers’ compensation claims filed by Northwinds employees, specifically alleging that Wausau paid the claims without investigating them, resulting in increased insurance premiums for North-winds and lost business due to customer perception that Northwinds was a safety risk. Id. at 348. Northwinds also sued for defense costs it had incurred in defending a baseless suit brought against it by the Facility at Wausau’s prompting. Id. at 349. The jury found in favor of Northwinds on several claims and awarded damages for, inter alia, North-winds’ attorney’s fees incurred in defending the lawsuit brought by the Facility. Id. The Fifth Circuit held that Northwinds could not recover under Texas law on its common law claims for negligent claims handling and fraud on the contract. Id. at 352. Texas law does not recognize either cause of action unless the defendant’s conduct “ ‘would give rise to liability independent of the fact that a contract exists between the parties [such that] the plaintiffs claim may also sound in tort.’ ” Id. (quoting Sw. Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494 (Tex.1991)). North-winds’ common law claims were based on the allegation that Wausau falsely stated that it was fully investigating the workers’ compensation claims, and on the damages Northwinds suffered when it was unable to contest the claims. Id. The panel held that Wausau could not be held liable for common law claims because “[n]o liability independent of the contractual duty to handle claims exists as a result of this false statement.” Id. In addressing the statutory claims under the DTPA and the Insurance Code, the panel essentially restated the Stoker language. It held that “[w]here, as here, there has been no breach of contract or violation of the duty of good faith and fair dealing, the bar for establishing extra-contractual liability is high: the insurer must ‘commit some act, so extreme that [it] would cause injury independent of the policy claim.’” Id. at 353 (emphasis added) (quoting Stoker, 903 S.W.2d at 341). The panel explained its rationale for upholding the verdict under the Stoker standard: Wausau’s successful efforts to persuade the Facility to sue Northwinds baselessly involved acts that a reasonable jury could find extreme, and they clearly caused Northwinds extra-contractual damages, as the company had to spend over $55,000 defending itself against the lawsuit. Examined under the deferential standard of appellate review, the evidence supports the finding of an extreme extra-contractual act sufficient to satisfy the Stoker standard. Id. The Northwinds panel affirmed the verdict in this respect because Wausau had successfully encouraged the Facility (the insurer) to baselessly sue Northwinds (the insured). This “extreme act” by Wausau was entirely unrelated to Wausau’s handling of the underlying workers’ compensation claims about which Northwinds complained. Northwinds sued Wausau, complaining of Wausau’s handling of four workers’ compensation claims, and, independently, of Wausau’s encouragement of the baseless suit by the F