Opinion
NO. 09-11-00636-CV
09-06-2012
JACOB OLIVER, Appellant v. PRIME INSURANCE COMPANY, Appellee
On Appeal from the 9th District Court
Montgomery County, Texas
Trial Cause No. 10-11-12754 CV
MEMORANDUM OPINION
This is an appeal from the trial court's dismissal of plaintiff's lawsuit based on a finding of an enforceable forum-selection clause. Appellant argues that the trial court erred in dismissing his claims against Xinsurance and Evolution Insurance Brokers ("EIB") and in denying his motion to modify the order of dismissal. We affirm the judgment of the trial court.
FACTUAL AND PROCEDURAL BACKGROUND
Appellant, Jacob Oliver, was a flight instructor, employed by MVP Aviation ("MVP"). In connection with his job as a flight instructor, Oliver sought to obtain insurance from Prime Insurance Company ("Prime") to cover liability that could arise from his role as a flight instructor and for property damage to the aircraft he was using in the performance of his job duties. MVP had an insurance policy with AXA Insurance Company that covered physical damage for non-owned aircraft, however, the policy had a $14,000 deductible. Oliver obtained an insurance policy from Prime to cover, among other things, the AXA deductible. Oliver timely paid the premiums.
In October 2009, a flock of birds flew into the flight path of the helicopter Oliver was piloting while giving flight instruction to a student. Though Oliver took steps to avoid colliding with the birds, upon landing the helicopter, it was discovered that one or more birds made contact with the helicopter's blades and caused damage in excess of $14,000. After Prime denied coverage for the full amount of the deductible, Oliver filed suit against Prime. Oliver asserted claims for insurance code violations, deceptive trade practices, negligent misrepresentation, and fraud. Prime answered and filed a motion to dismiss based on a forum-selection clause set forth in the insurance policy. Shortly thereafter, Oliver filed his first amended petition adding Xinsurance as a defendant and later filed his second amended petition adding EIB as a defendant.
In his second amended petition, Oliver alleged that he obtained a quote from "Xinsurance/Prime's" website, which represented that Oliver was able to customize his insurance to fit his needs. Oliver alleged that "[a]t some point, [he] came into contact with" EIB. Oliver alleged that "Xinsurance, Prime, and EIB appear to be related[.]" Oliver further alleged that after requesting a quote, he was "contacted by a representative of [d]efendants" and during his "conversation with [d]efendants' representative, [he] specifically indicated that his primary need was to obtain an insurance policy that provided coverage for physical damage to non-owned aircraft." Oliver alleged that he expressly stated he was purchasing the policy to cover the $14,000 deductible. According to Oliver, "[d]efendants represented that they would provide the requested coverage." Oliver asserted causes of action against Xinsurance, Prime, and EIB collectively for insurance code violations, deceptive trade practices, negligent misrepresentation, and fraud.
In May 2011, several weeks after Xinsurance and EIB were added as defendants, but prior to either party filing an answer or otherwise appearing in the suit, the trial court denied Prime's motion to dismiss. On June 27, 2011, Xinsurance filed an original answer and general denial and stated that Prime "doing business as Xinsurance" was incorrectly sued as Xinsurance. On June 29, 2011, EIB filed Defendant's First Amended Original Answer, which stated that EIB was doing business as "Xinsurance," that Xinsurance was incorrectly sued, and clarifying that "Prime Insurance Company does not do business as 'Xinsurance'" EIB further pleaded, "pursuant to a mandatory forum selection clause, this lawsuit must be dismissed because it was filed in the improper forum."
In June 2011, Prime filed a petition for writ of mandamus asking this Court to order the trial court to vacate its order denying Prime's motion to dismiss the suit based on the mandatory forum-selection clause in the insurance policy. This Court conditionally granted Prime's petition for writ of mandamus. See In re Prime Ins. Co., No. 09-11-00349-CV, 2011 WL 3505143, at *3 (Tex. App.—Beaumont Aug. 11, 2011, orig. proceeding) (mem. op.). Pursuant to our memorandum opinion and judgment, the trial court then vacated its order denying Prime's motion to dismiss and entered an order granting the motion to dismiss in its entirety and dismissing the "lawsuit and all claims and causes of action brought by [Oliver]." Oliver filed a motion to modify the trial court's order asking the trial court to limit its dismissal to Prime and allow him to proceed on his claims against Xinsurance and EIB. Oliver argued that his claims against Xinsurance and EIB should not be dismissed because they were not parties to the lawsuit at the time the motion to dismiss was filed, and were not parties to the forum-selection clause. With his motion, Oliver submitted the affidavit of a claims supervisor and the paperwork from Prime's file, which includes the insurance policy that contains the forum-selection clause. Prime and EIB responded to the motion to modify the court's order and argued the trial court's order was proper.
The petition for writ of mandamus is not part of the record on appeal.
Xinsurance did not respond as Prime and EIB asserted that EIB does business as "Xinsurance" and the suit was incorrectly filed against "Xinsurance."
In their response to Oliver's motion to modify, Prime and EIB argued that this court held in the mandamus proceeding that all of Oliver's claims "'relate to coverage and payment under the insurance policy[,]' and therefore, all of 'Oliver's claims fall within the scope of the forum-selection clause.'" See Prime, 2011 WL 3505143, at *2. Prime and EIB pointed to Oliver's allegations in his second amended petition, which pleading they asserted was before this Court in the mandamus proceeding, wherein Oliver alleged that they were collectively liable for representing that Prime's policy would provide coverage for the $14,000 deductible. They further contend that Oliver alleged that he used "Xinsurance/Prime's website" to obtain the policy, and relied on the fact that, like the policy, the website had a forum-selection clause designating Utah as the only appropriate forum for this suit. Prime and EIB attached the affidavit of Mark Fisher, Vice President and General Counsel of Prime Holdings Insurance Services, Inc. to their response. Fisher stated that Prime Holdings wholly owns Prime and EIB. Fisher stated that Prime is a surplus lines insurance carrier, and EIB is "Prime Holdings Insurance Services, Inc's in-house excess and surplus lines brokerage." Fisher further stated that "EIB also does business as Xinsurance." The trial court denied Oliver's motion to modify its order dismissing the lawsuit and this appeal followed.
ANALYSIS
In three issues, Oliver argues that we should reverse the trial court's order dismissing his claims against EIB because EIB never sought dismissal of Oliver's claims, EIB lacks standing to enforce the forum-selection clause in Oliver's insurance policy, and the forum-selection clause on the Xinsurance website is inapplicable to his claims.
Oliver also argues the trial court's order was improper in that it dismissed his claims against Xinsurance. Prime and EIB have continually asserted, and the Fisher affidavit establishes, that Xinsurance is not a legal entity. Rather, EIB also does business as "Xinsurance."
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Oliver argues in issue one that the trial court's order was improper because EIB did not seek dismissal of Oliver's claims. In conjunction with its First Amended Original Answer, EIB specifically pleaded "pursuant to a mandatory forum selection clause, this lawsuit must be dismissed because it was filed in the improper forum." In its prayer for relief, EIB also requested that the case be dismissed. Compare Wood v. Walker, 279 S.W.3d 705, 709 (Tex. App.—Amarillo 2007, no pet.) (holding that trial court violated plaintiff's right to procedural due process in dismissing claims against property owner when court granted county's plea to the jurisdiction and motion to dismiss and in so doing also dismissed plaintiff's claims against the property owner even though she had not filed any pleadings seeking dismissal). Oliver argues that the trial court dismissed Oliver's claims against EIB sua sponte. To the contrary, the trial court dismissed Oliver's claims pursuant to EIB's pleading and pursuant to this Court's decision in the mandamus proceeding. EIB had answered and pleaded for dismissal of the lawsuit on the basis of the forum-selection clause before this Court's decision in the mandamus proceeding and before the trial court vacated its original order and entered its order of dismissal. Further, when Oliver filed his motion to modify the trial court's order, EIB responded to that motion and argued that the trial court's order was proper. In such motion, each side was provided an opportunity to assert their position as to the applicability of the forum-selection clause to the remaining parties. Assuming without finding procedural error, any such error would be harmless as all parties were before the trial court and were heard on the issues at hand, thus satisfying any due process concerns. See Tex. R. App. P. 44.1(a); see also Campbell v. Stucki, 220 S.W.3d 562, 570 (Tex. App.—Tyler 2007, no pet.) (Due process requires notice and an opportunity to be heard at a reasonable time and in a reasonable manner); cf. Whiteside v. Ford Motor Credit Co., 220 S.W.3d 191, 194-95 (Tex. App.—Dallas 2007, no pet.) (concluding procedural error was harmless in summary judgment proceeding where appellant was provided opportunity to present his response and evidence). For these reasons, we overrule Oliver's first issue.
In issue two, Oliver argues that EIB does not have standing to enforce the forum-selection clause because it is not a party to the insurance policy between Oliver and Prime. The paperwork from Prime, submitted by Oliver with his motion to modify the trial court's order, establishes that EIB was the "producer" of the insurance policy. The cover letter to the Insurance Policy and Policy Receipt Form has EIB's name and logo on it. The letter states, "[w]e are pleased to provide the enclosed Insurance Policy, Policy Receipt Form ("PRF"), and Quick Reference Guide, for the Insured named on the Declarations." The letter directs the insured to sign the PRF and return it to the stated address within ten days. The signature line lists "EIB International" with "Policy Services." The PRF, declarations, insurance identification card, and insurance policy, along with some additional paperwork, all appear to have been attached to EIB's cover letter. The PRF has Prime's name and address at the top and is directed "TO THE PRODUCER AND INSURED[.]" Like the policy, the PRF also contains a forum-selection clause, which states that the insured "understands and consents to the jurisdiction of the courts in the State of Utah and agrees that those courts shall be the exclusive forum for the resolution of any claims or disputes arising between the parties related to any insurance coverage issues and any payments due the Insured under the Policy[.]" The PRF is signed by Oliver. The declarations page, which provides specific information related to the terms of coverage and liability under the policy, was expressly issued "in conjunction with" and as "a part of" the policy, and lists "Prime Insurance Company" as the "Underwriting Syndicate" and "EIB International, LLC" as the "Producer" of the policy. As is evidenced by EIB's cover letter, the "producer" of an insurance policy generally acts as the seller of the policy and delivers the policy to the insured. See generally Spring v. Walthall, Sachse & Pipes, Inc., No. 04-05-00228-CV, 2005 WL 2012669, at *1 (Tex. App.—San Antonio 2005, no pet.) (insurance "producer" sells insurance to businesses and individuals). The evidence in the record establishes that Prime and EIB are both owned by Prime Holdings Insurance, Services, Inc. Prime is a surplus lines insurance carrier and EIB is Prime Holdings's in-house excess and surplus lines broker. The record establishes that EIB was involved in the transaction regarding the insurance policy.
In support of their argument that the trial court properly dismissed all claims asserted by Oliver, Prime and EIB rely on the fact that Oliver alleged that they were collectively liable for the alleged representations about the coverage the policy provided. The same causes of action were asserted collectively against both parties. In his second amended petition, Oliver collectively asserted causes of action for insurance code violations, deceptive trade practices, negligent misrepresentation, and fraud against all defendants. Oliver alleged that "Prime, Xinsurance and EIB misrepresented the terms of the subject insurance policy and misrepresented the benefits and advantages promised by the subject insurance policy in violation of [the] Texas Insurance Code[.]" "Additionally, Prime, Xinsurance and EIB made misrepresentations about the subject [of the] insurance policy . . . in violation of [the] Texas Insurance Code[.]" Oliver further alleged that Prime, Xinsurance, and EIB collectively violated the Deceptive Trade Practices Act and additionally that "Prime, Xinsurance, and EIB made representations to Mr. Oliver in connection with Mr. Oliver's purchase of the insurance policy at issue[,]" and "Mr. Oliver was induced into purchasing the policy based on Prime, Xinsurance and EIB's representation that the policy would provide coverage for $14,000 for physical damage to non-owned aircraft to cover the $14,000 deductible[.]"
The claims in Oliver's second amended petition were before this Court in the mandamus proceeding. In holding that the trial court abused its discretion in denying the motion to dismiss, the mandamus opinion concluded that Oliver's claims were related to the coverage and payment under the insurance policy, and Prime established that the policy contained a forum-selection clause that required the suit to be brought in Utah. Prime, 2011 WL 3505143, at *3. Specifically, we concluded that "[t]he parties' dispute relates to Prime's coverage and payment of a policy" and Oliver's "factual allegations relate to coverage and payment under [his] insurance policy." Id. at *2. Because Oliver collectively asserts allegations of concerted misconduct against Prime and EIB, Oliver's claims against EIB likewise fall within the scope of the policy's forum-selection clause.
The Texas Supreme Court has recognized that if all it takes to avoid a forum-selection clause is to join defendants who are not parties to the agreement, forum-selection clauses will be of little value. See In re Int'l Profit Assocs., Inc., 274 S.W.3d 672, 680 (Tex. 2009). Courts have allowed non-signatories to an agreement containing a forum-selection clause to enforce the clause on the basis of equitable estoppel. See Deep Water Slender Wells, Ltd v. Shell Int'l Exploration & Prod., Inc., 234 S.W.3d 679, 693-94 (Tex. App.—Houston [14th Dist.] 2007, pet. denied); Phoenix Network Techs. (Europe) Ltd. v. Neon Sys., Inc., 177 S.W.3d 605, 622 (Tex. App.—Houston [1st Dist.] 2005, no pet.). Equitable estoppel may be applied when a signatory to the contract containing the forum-selection clause "raises allegations of substantially interdependent and concerted misconduct by both nonsignatories and one or more signatories to the contract." Deep Water, 234 S.W.3d at 694 (citing Meyer v. WMCO-GP, L.L.C., 211 S.W.3d 302, 306 (Tex. 2006)). Because Oliver raised allegations of substantially interdependent and concerted misconduct, EIB may enforce the forum-selection clause. See Deep Water, 234 S.W.3d at 694; see also Phoenix Network Techs., 177 S.W.3d at 622. Therefore, the trial court did not abuse its discretion in dismissing Oliver's claims against EIB or in denying Oliver's motion to modify the trial court's order. We overrule issue two.
Because we overrule issue two, we need not address issue three. Tex. R. App. P. 47.1. We affirm the judgment of the trial court.
AFFIRMED.
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CHARLES KREGER
Justice
Before McKeithen, C.J., Gaultney and Kreger, JJ.