Texas Department of Insurance and Cassie Brown, in Her Official Capacity as Commissioner of the Texas Department of Insurance v. Stonewater Roofing, Ltd. Co.

Supreme Court of Texas
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No. 22-0427
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Texas Department of Insurance and Cassie Brown, in her Official
Capacity as Commissioner of the Texas Department of Insurance,
Petitioners,

v.

Stonewater Roofing, Ltd. Co.,
Respondent

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On Petition for Review from the
Court of Appeals for the Seventh District of Texas
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JUSTICE BLACKLOCK, joined by Justice Boyd, concurring in the
judgment.

The challenged statute, which regulates “public insurance
adjusting,” prohibits a contractor like Stonewater from “act[ing] on
behalf of an insured in negotiating for or effecting the settlement of a[n]
[insurance] claim.” See Tex. Ins. Code §§ 4102.001(3)(A)(i), 4102.051(a).
The statute also prohibits Stonewater from holding itself out as
authorized to take such actions on an insured’s behalf. Id.
§ 4102.001(3)(B). These prohibitions are remarkably narrow. To the
extent there is any doubt about their scope, I would construe them
narrowly in order to avoid difficult constitutional questions about their
compliance with the First Amendment. See Paxton v. Longoria,
646 S.W.3d 532, 539 (Tex. 2022).
As the Court correctly observes, Chapter 4102 of the Insurance
Code does not regulate the content of Stonewater’s speech. It regulates
only the agency relationship between parties in a commercial
transaction. I do not agree with the Court’s characterization of the
transaction as “nonexpressive.” Ante at 14. Negotiation of a settlement
is surely expressive. But Chapter 4102 does not prohibit a contractor
from negotiating with an insurance company regarding settlement of an
insured homeowner’s claim for repairs. Instead, the statute merely
prohibits the contractor from acting as an insured’s agent—“act[ing] on
behalf of an insured”—in those negotiations. Chapter 4102 thus
regulates the legal consequences of the contractor’s speech, not the
content of that speech. It does so by prohibiting the contractor’s speech,
whatever it may be, from binding the insured or speaking for the
insured. For this reason, I agree with the Court that, properly and
narrowly construed, Chapter 4102 does not abridge anyone’s freedom of
speech. See U.S. Const. amend. I.
The reason Stonewater’s free-speech claim fails is very simple,
and we need not comb through a rat’s nest of U.S. Supreme Court
precedent to find it. The statute does not prohibit Stonewater from
saying anything to insurance companies—other than “I am negotiating
or settling this claim as an agent for the insured,” or an equivalent
statement suggesting that the contractor is authorized to “act[] on behalf
of [the] insured.” Tex. Ins. Code § 4102.001(3)(A)(i). Any such

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statement would be false, of course, because the Legislature has
outlawed such an agency relationship due to understandable concerns
about the conflicts of interest that can arise between a contractor and a
homeowner when an insurance company is paying for home repairs. 1
The constitutional right of free speech is not violated when the
government prohibits a party from misrepresenting its lawful role in a
commercial transaction. 2 That is all this statute does with respect to
Stonewater’s speech, as far as I can tell. The contractor cannot tell the
insurance company, falsely, that it has legal authority to act on the
insured’s behalf. Id. Likewise, the contractor cannot lead the insured
to believe, falsely, that the contractor has legal authority to act on the
insured’s behalf. Id. § 4102.001(3)(B). Otherwise, the contractor can
talk freely with both the insurance company and the homeowner about
anything they would like to talk about.
Crucially, the contractor and the insurance company are free to
talk all day long about the negotiation and settlement of an insured’s
claim, as long as the contractor does not “act[] on behalf of an insured in
negotiating for or effecting the settlement.” Id. § 4102.001(3)(A)(i)
(emphasis added). This statute does not prohibit contractors from

1 In a general sense, the homeowner and the contractor are aligned;

both want the house to be fixed and both want the insurance company to pay
for it. But conflicts of interest regarding the details can arise, of course. For
example, the contractor may prefer the approach to fixing the house that
maximizes its profit, but the insured may be better off with a different
approach.
2 See, e.g., Cent. Hudson Gas & Elec. Corp. v. Pub. Serv. Comm’n of N.Y.,

447 U.S. 557, 566 (1980) (holding that “[f]or commercial speech to come within
[the First Amendment], it at least must concern lawful activity and not be
misleading”).

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speaking with insurance companies about the scope of insurance
coverage or about the details or costs of the work the contractor is doing
and the insurance company is funding. Instead, the statute only
prohibits a contractor from acting in a representative capacity, “on
behalf of an insured.” Id. As long as any understanding worked out
between the contractor and the insurance company must be
independently authorized by the insured—and as long as all involved
know that the contractor is never “act[ing] on behalf of” the insured—
then nothing in this statute prohibits contractors like Stonewater from
haggling with an insurance company over the details of construction
costs and insurance coverage. Few homeowners want to be deeply
involved in such conversations, and nothing in Chapter 4102 prohibits
contractors from discussing these things with insurance companies so
the homeowner does not have to.
The one aspect of Stonewater’s practice that runs afoul of the
statute is its explicit promise to negotiate claims on behalf of
homeowners. This is exactly what the statute prohibits, verbatim.
Quite obviously, however, the Constitution is not offended by the
statute’s requirement that Stonewater refrain from falsely holding itself
out as authorized to serve as the insured’s commercial agent when the
law prohibits such an agency relationship because of the clear potential
for conflicts of interest.
Again, the statute prohibits Stonewater only from acting “on
behalf of” the insured in the negotiation or settlement of a claim.
Stonewater and other contractors are perfectly free to speak to the
insurance company about the negotiation or settlement of a claim—or

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about anything else. And Stonewater is free to tell homeowners that it
can make their lives much easier by dealing with the insurance company
regarding the claim, just as many helpful contractors (who want to
please their customer and get paid by the insurance company) often do.
What Stonewater may not tell homeowners is that it will act on their
behalf—as their agent—to negotiate and settle their claim for them,
which is something it lacks the lawful authority to do.
Apart from the question of its agency relationship with the
insured, nothing else Stonewater has said or claims it wants to say is
prohibited by this statute. I see no reason Stonewater cannot advertise
that it has experience dealing with insurance companies and helping
homeowners manage the insurance claim process. I do not necessarily
read the Court’s opinion to suggest otherwise, but to the extent it does,
ante at 25–26, I disagree. The only speech prohibited by the statute
would be the false statement or suggestion that the contractor is
authorized to act as the insured’s agent in the negotiation or settlement
of a claim. If the Department of Insurance has interpreted the statute
to prohibit any more than this, it has done so in error.
I do not join the Court’s opinion, but I agree with its observation
that the Department of Insurance only “wins the day because
[Chapter 4102] operate[s] much more narrowly than Stonewater fears.”
Ante at 12. Although Stonewater’s constitutional claims fail, its effort
to establish the legality of its business model succeeds in many

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respects. 3 If the Legislature had prohibited contractors from helping
their customers by speaking with insurance companies about the many
questions of coverage and cost that often arise during home repairs, then
this would be a much different case, one in which the First-Amendment
question might very well resolve in favor of Stonewater and its
homeowner-customers.
***
The Court’s opinion engages much more than I do with the
notoriously labyrinthine case law on the doctrinal dichotomy between
speech and conduct. Justice Young rightly calls the precedent a
“mind-numbing morass.” Post at 2 (Young, J., concurring). I do not
criticize the Court for engaging with the law on the terms offered by the
parties. Even so, my preference is to decide this case without
perpetuating and deepening the mind-numbing morass. The way judges
explain their decisions in free-speech cases need not always deal so
heavily in the doctrinal mumbo jumbo with which courts have long
obscured the simple and beautiful words of the First Amendment.
I respectfully concur in the Court’s judgment.

James D. Blacklock
Justice

OPINION FILED: June 7, 2024

3 I agree with the Court that Stonewater’s “void-for-vagueness” claim

fails. If properly and narrowly construed as described above, the statute is
perfectly clear.

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