Allstate Ins. Co. v. Watson
In Allstate Ins. Co. v. Watson, 876 S.W.2d 145, 147-50 (Tex. 1994), the Court refused to extend Vail to allow a third-party claimant to sue the defendant's insurer for not settling a liability claim against its insured.
The Court emphasized that the Legislature had specifically refused to create such a cause of action under the statute, and distinguished the unfair settlement practice in Vail as one that arose in the context of the special relationship between an insured and its insurer. Id. at 149.
Because a third party to the insurance contract enjoys no such special relationship, the Court refused to confer upon Watson, a third-party claimant, the rights and remedies of an insured:
A third party claimant has no contract with the insurer or the insured, has not paid any premiums, has no legal relationship to the insurer or special relationship of trust with the insurer, and in short, has no basis upon which to expect or demand the benefit of the extra-contractual obligations imposed on insurers under art. 21.21 with regard to their insureds. Id.