Mediation and the Stowers Demand Lawsuit: A Texas Mediator's Perspective
As a Texas mediator with years of attorney experience as well, I have had a front-row seat to some of the most challenging settlement negotiations the Texas legal frontier has to offer. Few scenarios bring the heat quite like a personal injury case involving a "Stowers demand." This unique Texas doctrine, named after the seminal Stowers Furniture Co. v. American Indemnity Co. case, injects a powerful element of risk for the insurance carrier. It essentially creates a potential bad-faith claim if the insurer fails to settle within policy limits when a reasonable opportunity to do so arises. This high-stakes dynamic fundamentally alters the mediation process, transforming a standard negotiation into a high-wire act where the carrier’s own exposure can quickly eclipse that of its insured.
The atmosphere in the room when a Stowers demand is active is palpably different. The plaintiff's counsel arrives with a sense of leverage, having met all the technical requirements of the demand, effectively putting the ball squarely in the insurance company's court. The carrier’s representative, often a seasoned claims professional accompanied by "coverage counsel," is acutely aware that their decisions are being scrutinized under a different legal standard. The typical mediation dance of offers and counteroffers is compressed, as the deadline for the demand looms large. My role shifts from facilitating a general compromise to focusing sharply on the reasonableness of the plaintiff’s demand relative to the evidence presented, ensuring the carrier has a documented, defensible rationale for whatever decision they make.
The core of the mediation often boils down to a rigorous, reality-testing phase regarding case valuation. The plaintiff's team presents their "Stowers package," a meticulously curated collection of evidence aimed at demonstrating a verdict potential far exceeding the policy limits. The insurer’s challenge is to find flaws in this valuation without outright dismissing the potential jury risk. We dissect medical records, expert opinions, and venue-specific jury verdict data. The pressure here is not just about the value of the underlying injury claim, but the exponential risk of the "excess judgment" should the case proceed to trial and a bad faith claim be triggered later. I must ensure both sides understand the black-and-white nature of the Stowers doctrine, moving them past emotional arguments to focus purely on a cold, calculated risk analysis.
In my experience, a successful mediation under these circumstances requires a frank and sometimes uncomfortable conversation about the "tail" of the exposure—the excess liability that extends beyond the policy limits. When negotiations stall, it's usually because the gap between the policy limit and the plaintiff’s perception of trial value is too vast. I find myself shuttling between rooms, emphasizing the finality of the settlement for the insured and the carrier's potential catastrophic exposure. The goal is to get the carrier to the policy limit, or at least a defensible number, by illustrating the immense downside of a jury trial. The insured, often a passive participant in the negotiation process, becomes a central figure as their financial future hangs in the balance.
Finally, mediating a case with a Stowers demand is about navigating legal leverage and managing existential risk. It’s a powerful tool in the Texas plaintiff’s arsenal and a significant stressor for insurance carriers. As a mediator, my success is measured not just by achieving a signature on a settlement agreement, but by helping the parties make a sound, defensible business decision under immense pressure. The Stowers doctrine can sometimes expedite settlement, forcing all parties to confront the high price of uncertainty in a Texas courtroom, or it can derail settlement, making for some of the most intense, focused, and critical mediations in Texas.