VA Surety Co Inc v. Wright ( 2008 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
January 22, 2008
No. 06-41723 Charles R. Fulbruge III
Clerk
VIRGINIA SURETY COMPANY INC
Plaintiff-Appellee
v.
GEORGE ROYLE WRIGHT, doing business as Wright & Associates GMAC
Real Estate
Defendant-Appellant
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 5:05-CV-101
Before KING, BARKSDALE, and DENNIS, Circuit Judges.
PER CURIAM:*
For this Texas diversity action, George Royle Wright contests the
summary judgment awarded Virginia Surety Company, declaring it had no duty
to defend or indemnify Wright in the Texas state-court action filed against him.
The district court held the policy’s conditions to coverage were not satisfied
because Wright could not establish notice of the state-court action was first
received subsequent to the policy’s inception date. Primarily at issue is whether,
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
No. 06-41723
under Texas agency law, notice of the state-court action received and signed for
by Wright’s employee prior to that inception date is imputed to Wright.
AFFIRMED.
I.
In 2000, Laredo Independent School District (LISD) and Wright entered
into a “real estate broker/client relationship”, by which Wright agreed to assist
LISD in negotiating for, and acquiring, real property. Unsatisfied with the price
paid for that property, LISD filed the state-court action against Wright on 10
June 2004, asserting, inter alia, he made fraudulent representations regarding
the value and condition of the property, causing LISD to pay more than market
value. On 25 June 2004, Wright submitted notice of the action to his
professional liability insurance carrier, Virginia Surety, for coverage
consideration. (The policy’s inception date is 7 March 2004.) The company
agreed to provide a defense but reserved its right to withdraw.
After assuming Wright’s defense, Virginia Surety learned of a demand
letter sent to Wright by LISD’s counsel on 27 October 2003 by certified mail,
return receipt requested. The demand letter, mailed to Wright’s office, gave pre-
suit notice of LISD’s complaint, as required by the Texas Deceptive Trade
Practices Act. Receipt was acknowledged on 28 October 2003 by one of Wright’s
employees, Nora Manzo, who signed the receipt. Manzo was primarily a
property manager but testified she received mail on occasion. Wright concedes
Manzo signed the return receipt bearing the words “demand letter” but
maintains he never personally received, or was made aware of, that letter until
Virginia Surety notified him about it.
LISD’s demand letter was received by Manzo prior to the policy’s 7 March
2004 inception date. The policy covered wrongful acts only if all four of the
following conditions were satisfied:
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No. 06-41723
1. the wrongful act took place on or after the
Retroactive Date;
2. prior to the inception date of th[e] policy period
no Insured had knowledge of such wrongful act
and had no basis to reasonably anticipate a claim
that would be covered by this policy. . . .;
3. the claim arising out of the wrongful act is first
made against any insured during the policy
period; and
4. the claim is reported in writing to [Virginia
Surety] no later than 60 days after the end of the
policy period or, if applicable, during an extended
claims reported period . . . .
(Emphasis added.) The third condition to coverage is primarily at issue here.
In August 2004, after becoming aware of the LISD demand letter, Virginia
Surety denied coverage and withdrew from Wright’s defense. Virginia Surety
filed this declaratory-judgment action in May 2005, seeking judgment that, for
the LISD litigation, there is no coverage, including no duty to defend or
indemnify, under the policy. Wright counter-claimed for, inter alia, a declaration
that Virginia Surety owes a defense and indemnity for that litigation.
Cross-motions for summary judgment were filed; and, on 9 November
2006, the district court granted judgment for Virginia Surety, denying Wright’s
cross-motion. The district court focused on the third condition for coverage,
holding: no genuine issue of material fact exists on whether Wright could
establish the claim arising out of the wrongful act was first made against him
during the policy period. The court, applying Texas agency law, found Manzo
was Wright’s agent and, therefore, imputed to Wright her pre-inception-date
receipt of the demand letter.
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No. 06-41723
II.
As noted, Wright must satisfy all four conditions to coverage under the
policy. In other words, Virginia Surety prevails if it establishes Wright cannot
satisfy any single condition. The district court held no coverage was required
because Wright could not satisfy condition three and addressed no other
conditions. Therefore, our analysis begins with whether Wright was first made
aware of LISD’s claim prior to the policy’s 7 March 2004 inception date. For this
diversity action, Texas law, of course, applies. Specifically, at issue is whether,
under Texas agency law, Manzo’s pre-inception-date receipt of the demand letter
may be imputed to Wright.
A summary judgment is reviewed de novo, applying the same standards
as did the district court. E.g., Nat’l Union Fire Ins. Co. v. Willis, 296 F.3d 336,
339 (5th Cir. 2002). Such judgment is appropriate when there is no genuine
issue of material fact and the movant is entitled to judgment as a matter of law.
FED. R. CIV. P. 56(c); see, e.g., Celotex Corp. v. Catrett, 477 U.S. 317, 322-23
(1986).
A.
Wright maintains our analysis is narrowed by language in the policy and,
therefore, a “limited” agency analysis is applied to whether he received notice of
the 27 October 2003 demand letter. In applying agency law, however, the policy
terms are not supplemented; general agency principles are applied to the policy.
As recognized by the district court, contract law may be supplemented by agency
law. See, e.g., Mississippi v. Richardson, 817 F.2d 1203, 1207 (5th Cir. 1987)
(applying Mississippi agency law); RESTATEMENT (SECOND) OF CONTRACTS § 52
(1981) (“The rules stated in the Restatement . . . are supplemented by the law
of agency, and in the absence of [a] contrary statement it is assumed that any
necessary act may be performed on behalf of a contracting party by his agent.”).
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No. 06-41723
B.
It goes without saying that, “[u]nder general principles of agency law,
notice to an agent is deemed notice to the principal if the agent’s acts were
within his authority”. Norwood v. Litwin Eng’rs & Constructors, Inc., 962
S.W.2d 220, 225 (Tex. App. 1998) (citing Polland & Cook v. Lehmann, 832
S.W.2d 729, 738 (Tex. App. 1992)); see also Grissom v. Watson, 704 S.W.2d 325,
327 (Tex. 1986). When, as here, there is no genuine issue of material fact,
whether an agency relationship exists is a question of law. Campbell v.
Hamilton, 632 S.W.2d 633, 635 (Tex. App. 1982). The general rule in Texas
regarding the creation of an agency relationship follows:
“As between parties to the relation, there must be a
meeting of the minds in establishing the agency, and
the consent of both the principal and the agent is
necessary to create the agency, although such consent
may be implied rather than expressed. The principal
must intend that the agent act for him, the agent must
intend to accept the authority and act on it, and the
intention of the parties must find expression in either
words or conduct between them.”
Elite Towing, Inc. v. LSI Fin. Group, 985 S.W.2d 635, 643 (Tex. App. 1999)
(quoting Grissom, 704 S.W.2d at 326). “An agency relationship may be found
from underlying facts or direct and circumstantial evidence showing the
relationship of the parties.” Id. (citations omitted).
At issue in Elite Towing was whether the appellant received proper notice
of a trial setting. Id. at 642-44. The court found the notice was correctly
addressed to appellant’s attorney and sent by certified mail, return receipt
requested. Id. at 638. The certified notice was received and signed for by
another attorney, who was with another firm in the building. Id. The court
recognized the other attorney had on occasion signed for mail on behalf of
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No. 06-41723
appellant’s attorney, and held a principal-agent relationship existed. Id. at 644.
Notice of the trial was imputed, therefore, to appellant’s attorney. Id.
The facts at hand are even more compelling for there being an agency
relationship than those in Elite Towing. On 27 October 2003, LISD mailed a
certified letter, return receipt requested, to Wright, notifying him of its intent
to sue. The following day, the return receipt was signed by Manzo, an employee
in Wright’s office since 1996. Wright maintains a genuine issue of material fact
exists on whether Manzo was his agent for purposes of receiving mail. Manzo,
however, was a long-time employee of Wright and had accepted mail for Wright
on prior occasions. In fact, Wright admitted he personally received the mail only
on Saturdays; on other days it was delivered to someone else in his office. Along
this line, Wright’s office procedure did not prohibit Manzo, or any other
employee, from receiving the mail.
Therefore, no genuine issue of material fact exists on whether Wright
“intend[ed] that [Manzo] act for him, [and Manzo] . . . intend[ed] to accept the
authority and act on it”. Id. at 642-43. Accordingly, an agency relationship
existed, and notice of the demand letter to Manzo is imputed to Wright. See
Norwood, 962 S.W.2d at 225.
C.
For the first time at oral argument, Wright asserted this court should
distinguish between being an agent for purposes of receiving mail and being an
agent for purposes of signing for it. It is well settled that this court generally
“do[es] not consider assertions made for the first time at oral argument”. United
States v. Bigelow, 462 F.3d 378, 383 (5th Cir. 2006); see also United States v.
Ogle, 328 F.3d 182, 191 n.9 (5th Cir. 2003). We decline to reach this new issue.
III.
For the foregoing reasons, summary judgment was proper.
AFFIRMED.
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