Opinion
No. 04-04-00761-CV
Delivered and Filed: June 22, 2005.
Appeal from the 218th Judicial District Court, Wilson County, Texas, Trial Court No. 02-04-0164-Cvw, Honorable Stella Saxson, Judge Presiding.
Affirmed.
Sitting: Alma L. LÓPEZ, Chief Justice, Karen ANGELINI, Justice Phylis J. SPEEDLIN, Justice.
MEMORANDUM OPINION
Annemarie Mudd appeals the no evidence and traditional summary judgments granted in favor of Selectquote Insurance Services of Texas, Inc. Mudd, administrator of the Estate of Michael Skinner (collectively "the Estate"), brought suit against Selectquote, alleging fraud and violations of the Texas Insurance Code § 21.21 and the Texas Deceptive Trade Practices Act. On appeal, the Estate contends that an insurance agent represented that a new policy would replace an old policy; therefore, the provision excluding coverage for death by suicide within two years of the issuance of the new policy was not applicable. The Estate contends that the summary judgment evidence raises a genuine issue of material fact.
Background
In February 1999, Margaret Skinner contacted Selectquote, seeking to obtain new life insurance policies covering herself, her children and her husband, Michael Skinner. Mrs. Skinner sought to obtain a ten-year term life insurance policy with $200,000.00 coverage for Mr. Skinner. Selectquote's representative, Heather McFadden determined, based on Mrs. Skinner's responses to the application questions, that the Valley Forge Life Insurance Company could provide the Skinners with the best coverage at the lowest price.
Once Mrs. Skinner decided upon the Valley Forge ("VF") policy and a monthly premium payment plan, McFadden asked Mrs. Skinner whether the Skinners had any other life insurance. Mrs. Skinner indicated that they did have another policy issued by Great Southern Life Insurance in the amount of $50,000.00 ("GSL policy") that they wanted "to get rid of."
Upon receipt of the Skinners' medical test results, McFadden contacted Mrs. Skinner regarding the progress of the Skinners' application for insurance. McFadden advised Mrs. Skinner that because of Mr. Skinner's medical results, Mr. Skinner's application was approved but at a higher premium than originally quoted. Mrs. Skinner did not immediately accept the policy. Eventually, Mrs. Skinner called Selectquote and accepted the policy covering Mr. Skinner at the higher premium.
Valley Forge issued the $200,000.00 term life insurance policy, number VISQ135523, covering Mr. Skinner on March 28, 1999. On July 27, 1999, approximately four months after Valley Forge issued the $200,000.00 policy, the Skinners cancelled the GSL policy. Mr. Skinner designated Mrs. Margaret Skinner as the primary beneficiary of the VF policy.
Mr. Skinner died on February 6, 2001 of a self-inflicted gunshot wound to the head. VF denied Mrs. Skinner's claim to recover for Mr. Skinner's death because suicide occurring within two years of issuance of the VF insurance policy is not a covered occurrence. Mrs. Skinner assigned her rights relating to the VF insurance policy to the Estate.
The Estate brought suit against Selectquote, alleging fraud and violations of the Texas Insurance Code § 21.21 and the Texas Deceptive Trade Practices Act. Specifically, the Estate alleged that Selectquote made affirmative misrepresentations and misrepresentations by omission regarding the GSL policy to be replaced and the VF policy. The Estate further alleged that Selectquote had a duty, having been placed on notice by an inquiry by Mrs. Skinner, to disclose the effect of the cancellation of the GSL policy, specifically, that Mr. Skinner would lose the incontestability provision of the GSL policy. Selectquote sought both a no evidence and traditional summary judgment on each of the Estate's claims. Following a hearing on the motions for summary judgment, the trial court signed an order granting Selectquote's motions.
The incontestability provision provided that after two years from issuance of the insurance policy, the only reason for denial of benefits is non-payment of insurance premiums.
In its no evidence motion for summary judgment, Selectquote argued that there was no evidence that: 1) the Estate has standing to sue under the GSL policy; 2) Selectquote stipulated, agreed or represented that the new policy would adopt any terms of the old policy; 3) Selectquote required cancellation of the old policy; 4) any causal connection existed between acts or omissions on the part of Selectquote and the cancellation of the old life policy by Mr. Skinner; 5) Selectquote owed Mr. Skinner a duty to disclose the effect of replacing an existing policy with a new policy; 6) Selectquote is an insurer; or 7) the Estate has sustained damages from any of Selectquote's alleged acts or admissions.
In its traditional motion for summary judgment, Selectquote argued it was entitled to summary judgment on the following grounds: 1) Mr. Skinner had already made the decision to purchase a new life insurance policy to replace his old policy before he contacted Selectquote; 2) under Texas law, Selectquote had no duty to disclose the consequences of replacing an existing life insurance policy with a new one; 3) Selectquote made no misrepresentation to Mr. Skinner for the purpose of inducing him to replace his old policy with a new one; 4) the contract for life insurance between Mr. Skinner and Selectquote constitutes the entire agreement between the parties and the contestability provision is clear on its face; and 5) the Estate sustained no damages.
The trial court's order does not distinguish on which grounds summary judgment was granted.
Standard of Review
We apply a de novo standard of review to summary judgments. Provident Life Acc. Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). A traditional motion for summary judgment is properly granted only when the movant establishes that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c). A no evidence summary judgment is improper if the non-movant presents more than a scintilla of probative evidence to raise a genuine issue of material fact. Forbes, Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167, 172 (Tex. 2003). More than a scintilla of evidence exists if it would allow reasonable and fair-minded individuals to differ in their conclusions. Id. Less than a scintilla of evidence exists when the evidence is so weak as to do no more than create a mere surmise of suspicion of fact. Id. When reviewing a summary judgment, we take as true all evidence favorable to the non-movant and we indulge every reasonable inference and resolve any doubts in the non-movant's favor. Science Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997).
When a trial court enters a summary judgment order that does not specify the particular grounds on which it is based, the appellant must show that each independent argument alleged in the motion for summary judgment is insufficient to support the trial court's order. Star Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995). Where the trial court's order does not specify the grounds relied upon for its ruling, we affirm if any of the summary judgment theories advanced are meritorious. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001).
Fraud
The essential elements of common law fraud are: 1) a material representation was made; 2) the representation was false; 3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; 4) the speaker made the representation with the intent that the other party should act upon it; 5) the party acted in reliance on the representation; and 6) the party thereby suffered injury. Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 727 (Tex. 2001). The Estate alleged that Selectquote made misrepresentations both overtly and by omission. In its motion for no evidence summary judgment, Selectquote argued that there was no evidence that Selectquote made misrepresentations to the Skinners, fraudulently induced the Skinners, or committed unconscionable acts in an effort to induce the Skinners to purchase a new life insurance policy and cancel the old. Selectquote further argued that the Estate also failed to show any proof that the Skinners acted on any of Selectquote's alleged misrepresentations or that the Estate suffered damages.
In response, the Estate presented McFadden's deposition and a transcribed telephone interview of Mrs. Skinner by McFadden as evidence that Selectquote represented to Mrs. Skinner that the VF policy would "replace" the GSL policy. The Estate also points to the application for insurance as further proof that Selectquote represented that the VF policy would replace the coverage in the GSL policy, including the provision that payment of the policy could be contested only for non-payment of premiums.
The Estate argues that, when Mrs. Skinner questioned McFadden regarding any potential effect another policy could have on VF's rates in response to McFadden's inquiry into the possible existence of another life insurance policy, McFadden should have explained to Mrs. Skinner that the VF policy contained a two year incontestability clause, which the GSL policy did not. The Estate argues that McFadden's omission of not explaining the differences in contestability between the two policies, when McFadden was aware that the Skinners had held the GSL policy for nine years and had passed the incontestability period in that policy, equates to a misrepresentation by omission. The Estate also asserts that Mrs. Skinner was led to believe that the VF policy could not be contested when McFadden assured Mrs. Skinner, "No, no. It won't effect [sic] your rates. We just need the information to fill out the replacement forms for you." The Estate points out that item 14 on the application for insurance includes a notation that the VF policy will replace the GSL policy. The Estate argues that this is further evidence of Selectquote's misrepresentations to the Skinners. The Estate contends that had the Skinners been aware that the VF policy would be contestable for a variety of reasons for two years, while the GSL policy could be contested only for non-payment of premiums, the Skinners would not have "replaced" the GSL policy with the VF policy.
A careful examination of the summary judgment evidence shows that during the initial conversation with McFadden, Mrs. Skinner indicated that the Skinners wanted to "get rid of" the GSL policy, which the Skinners did approximately four months after the VF policy was issued. McFadden assured Mrs. Skinner that having the GSL policy would not affect the rates for the VF policy. While McFadden testified in her deposition that she regularly advises customers on whether to cancel existing insurance policies, the summary judgment evidence shows that McFadden did not advise Mrs. Skinner to cancel the GSL policy; nor did McFadden predicate the acceptance of the Skinners' application for insurance through Selectquote on surrendering the GSL policy.
Once VF issued the new policy, the Skinners had twenty-one days to examine the policy and cancel it with a full refund if they were not satisfied with the policy. While McFadden did not affirmatively point out the incontestability clause of the VF policy, the clause is on the face of the policy. The policy does not contain any provision indicating that the incontestability clause was waived for the Skinners. After examining the VF policy, the Skinners kept the VF policy, indicating their acceptance of the terms of the VF policy, including the incontestability clause. Approximately three months later, the Skinners cancelled the GSL policy.
We have examined the summary judgment evidence to determine whether the Estate met its burden to show more than a scintilla of evidence raising a genuine issue of material fact. The evidence presented by the Estate does nothing more than create a mere surmise of suspicion of fact that Selectquote misrepresented to the Skinners the existence and effect of the incontestability clause and did so with the intention that the Skinners cancel the GSL policy, or that the Skinners relied on such a representation in deciding to cancel the GSL policy. We conclude that the Estate has failed to meet its burden as to its fraud claim. Because the Estate failed to raise a genuine issue of material fact as to the elements of fraud, the no evidence summary judgment for Selectquote on the Estate's fraud was properly granted. Tex. R. Civ. P. 166a(i).
Texas Insurance Code Deceptive Trade Practices Act
The Estate alleged that Selectquote violated the Texas Insurance Code and Deceptive Trade Practices Act by making representations and misrepresentations by acts and omissions regarding the GSL policy to be replaced and the VF policy. To sustain an action under the DTPA, the Estate must show that it is a consumer, Selectquote engaged in the use or employment of acts or practices in violation of Article 21.21 of the Insurance Code, and the acts constituted a producing cause of the Estate's damages. See Tex. Bus. Com. Code Ann. § 17.50(a)(4) (Vernon 2002).
The insurance code states that:
It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to misrepresent an insurance policy by:
(1) making an untrue statement of material fact;
(2) failing to state a material fact necessary to make other statements made not misleading, considering the circumstances under which the statements were made;
(3) making a statement in a manner that would mislead a reasonably prudent person to a false conclusion of a material fact;
(4) making a material misstatement of law; or
(5) failing to disclose a matter required by law to be disclosed
Tex. Ins. Code Ann. § 541.061 (Vernon 2004) (formerly codified at Tex. Ins. Code art. 21.21 (Vernon 1981)).
On appeal, the Estate argues that it presented evidence sufficient to raise a genuine issue of material fact as to its DTPA and insurance code claims. Selectquote argues, based on our decision in Moore v. Whitney-Vaky, that Selectquote is entitled to summary judgment because the Estate presented no evidence of misrepresentations. Selectquote further argues that the Estate's claim fails because "in the absence of some affirmative misrepresentation, a mistaken belief about the scope of coverage is not actionable." Moore v. Whitney-Vaky, 966 S.W.2d 690, 692 (Tex.App.-San Antonio 1998, no pet.) (quoting Sledge v. Mullin, 927 S.W.2d 89, 94 (Tex.App.-Fort Worth 1996, no writ)). In its reply brief, the Estate argues that in the case at hand, a specific misrepresentation was made.
Moore is instructive to the instant case. In Moore, Moore sought to impose liability under the insurance code for being sold a general commercial liability policy that did not cover employee lawsuits for retaliatory discharge. Moore v. Whitney-Vaky, 966 S.W.2d at 691. When he bought liability insurance, Moore thought that he was covered for any liability that could occur, but Moore admitted that the insurance agent never told him that the liability policy would cover all lawsuits against him. Id. We held that there was no cause of action for misrepresentation under the insurance code under these facts because no affirmative misrepresentation was made. Id. at 692-93.
Moore contended that he should have been informed of the provisions of the policy, and the agent never told him what was in the policy. Id. at 691. Moore admitted, though, that he never asked the agent to tell him what the policy covered, nor did he recall any conversations about the coverages he wanted prior to obtaining the policy. Id. In fact, the parties stipulated that the sole issue to be determined by the trial court was whether, as a matter of law, a duty existed on the part of the insurance company or agent to advise Moore regarding the type of coverage that would be provided under the policy. Id. We held that a claim based solely on the insured's mistaken belief about the scope of coverage would fail under the insurance code in the absence of some specific misrepresentation by the insurer or agent about the insurance. Id. at 692-93.
Similarly, in the instant case, Selectquote did not affirmatively represent to Mrs. Skinner that the VF policy would adopt all terms of the GSL policy, including its incontestability protection. The summary judgment evidence does not reveal whether the Skinners even believed the VF policy would be a benefit-for-benefit duplication of coverage. The conversation between McFadden and Mrs. Skinner centered around coverage and premium rates; the VF policy is a ten-year term life policy with $200,000.00 coverage compared to the GSL policy, which was a whole life policy with $50,000.00 coverage. Regardless of the Skinners' beliefs concerning the coverage of the VF policy, which the Skinners had twenty-one days to review, the policy clearly disclosed the policy terms and conditions, including the two-year incontestability provision.
The summary judgment evidence also fails to raise a genuine issue of material fact as to provisions (4) and (5) of the insurance code. See Tex. Ins. Code Ann. § 541.061 (Vernon 2004) (formerly codified at Tex. Ins. Code art. 21.21 (Vernon 1981)). The Estate does not allege that Selectquote made a material misstatement of law. Under the insurance code, an insurance agent does not have a duty to explain policy terms to an insured. Ruiz v. Government Employees Ins. Co., 4 S.W.3d 838, 841 (Tex.App.-El Paso 1999, no pet.); Garrison Contractors, Inc. v. Liberty Mut. Ins. Co., 927 S.W.2d 296, 300 (Tex.App.-El Paso 1996), aff'd, 966 S.W.2d 482 (Tex. 1998); Amarco Petroleum, Inc. v. Tex. Pac. Indem. Co., 889 S.W.2d 695, 699 (Tex.App.-Houston [14th Dist.] 1994, writ denied); Heritage Manor of Blaylock Props., Inc. v. Petersson, 677 S.W.2d 689, 691 (Tex.App.-Dallas 1984, writ ref'd n.r.e.). Instead, the insured has a duty to read the policy, and failing to do so, is charged with knowledge of the policy terms and conditions. Ruiz, 4 S.W.3d at 841; Amarco Petroleum, Inc., 889 S.W.2d at 699; Heritage Manor, 677 S.W.2d at 691.
Because the Estate has not produced more than a scintilla of evidence raising a material issue of fact as to its insurance and DTPA claims, summary judgment was properly granted as to these claims.
Conclusion
We affirm the judgment of the trial court.