Stewart Title Guar. Co. v. Aiello

In Stewart Title Guar. Co. v. Aiello, 941 S.W.2d 68, 40 Tex. Sup. Ct. J. 290 (Tex. 1997), the Court held that an agreed judgment requiring only payment of a sum of money extinguished the insurer's duty of good faith because "the only legal relationship between the parties following entry of judgment was that of judgment creditor and judgment debtor." Aiello, 941 S.W.2d at 69. An insurer's duty of good faith "arises because of the disparity of bargaining power inherent in the insurer-insured relationship." Id. at 71. But these concerns "simply do not arise in the judgment creditor - judgment debtor context." Id. The decision in Aiello thus turned on the parties' relationship to each other - once they stood as judgment debtor to judgment creditor, the insurer's good faith duty was extinguished, and the insured's bad faith cause of action was replaced by traditional judgment enforcement mechanisms. See id. at 71-72.