Kathleen Manion v. Security National Insurance Company and Financial Guardian of Texas and Carl Arnold ( 2002 )

                                   NUMBER 13-01-248-CV

                             COURT OF APPEALS

                   THIRTEENTH DISTRICT OF TEXAS

                                CORPUS CHRISTI

KATHLEEN MANION,                                                          Appellant,

                                                   v.

SECURITY NATIONAL INSURANCE

COMPANY, ET AL.,                                                            Appellees.

                        On appeal from the 410th District Court

                              of Montgomery County, Texas.

                                   O P I N I O N

                    Before Justices Dorsey, Rodriguez, and Wittig^[1]

                                   Opinion by Justice Wittig            

We address whether an insurance agent=s statement that a homeowner=s policy affords Afull coverage@ is an affirmative misrepresentation when that policy excludes flood damage.  Appellant, Kathleen Manion, bought a homeowner=s policy through Carl Arnold, independent agent for appellee, Financial Guardian of Texas, and issued by appellee, Security National Insurance Co.  Arnold stated the policy was Afull coverage.@  Manion did not discuss the specific coverage with Arnold, and incorrectly assumed the policy covered flood damage.  Her home later flooded and Security denied her claim.  Appellant brought suit for violations of the Texas Deceptive Trade Practices Act (DTPA) and Insurance Code.  The trial court granted summary judgment for all appellees.  We affirm.

                                                      Background

Kathleen Manion rented a house in Conroe and wanted insurance on her contents.  In September 1998, Manion was referred by a friend to Carl Arnold, an agent for Financial Guardian.  Manion told Arnold that she wanted Afull coverage@ on the home.  Arnold, an independent agent who did business with numerous carriers, found a standard ATexas Homeowner=s Policy@ for renters through Security National.  Arnold quoted Manion a rate for the policy and told her it was Afull coverage.@  Neither party discussed whether the policy covered flood damage.  Manion agreed to the policy, mistakenly assuming it covered flood damage.  When Manion received the policy a few days later, it included a cover letter advising her to check it to review her coverage.  She looked at a few pages, but did not notice that on page one of the policy, the AQuick Reference@ directed the reader to AExclusion@ information on page five.  On that page an AEXCLUSIONS@ section subheaded AWATER DAMAGE,@ which stated, AWe do not cover loss caused by or resulting from flood. . . .@ 

In November 1998, Manion=s house flooded and she incurred over $20,000 in property damage.  Manion notified Arnold, who told her that the policy did not cover flood damage. 

Manion hired a lawyer who made demand on all three appellees to pay her losses.  None of the appellees acknowledged her claim within fifteen days, as required by article 21.55 of the Insurance Code.  See Tex. Ins. Code Ann. art. 21.55 (Vernon Supp. 2002).

Manion sued, alleging that Arnold, individually and as agent for Security National and Financial Guardian, violated the DTPA and the Texas Insurance Code.  (Manion cited no specific provisions of these statutes in her petition.)  All appellees filed motions for summary judgment. Later, Manion amended her petition to allege Security National violated article 21.55 of the Insurance Code for failing to acknowledge her claim within fifteen days.  Id.  The trial court granted final summary judgment for all appellees.

Manion raises three issues on appeal.  First, she claims a fact issue existed as to whether Arnold made a misrepresentation, and whether that misrepresentation violated DTPA and article 21.21 of the Insurance Code.  Second, she alleges summary judgment was erroneous because Financial Guardian and Security National is liable for its agent Arnold=s misrepresentation.  Finally, she claims summary judgment was improper as to Security National because it violated article 21.55 of the Insurance Code and is estopped to deny her claims. 

Standard of Review

Appellees= summary judgment motions were argued variously under both the traditional and no-evidence standards.  We treat them as hybrid motions.

          In a no-evidence summary judgment, a party is entitled to summary judgment if there is no evidence of one or more essential elements of a claim or defense on which an adverse party would have the burden of proof at trial.  Tex. R. Civ. P. 166a(i).  In reviewing a no-evidence summary judgment, we apply the same legal sufficiency standard as in a directed verdict. Chapman v. King Ranch, Inc., 41 S.W.3d 693, 698 (Tex. App.BCorpus Christi 2001, pet. filed).  A no-evidence summary judgment is proper if the respondent fails to bring forth more than a scintilla of probative evidence in support of one or more essential elements of a claim.  Tex. R. Civ. P. 166a(i).  A traditional summary judgment is proper only when the movant establishes there is no genuine issue of material fact and it is entitled to judgment as a matter of law.  Tex. R.Civ. P. 166a(c); Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex. 1991). A trial court properly grants summary judgment in favor of a defendant if the defendant conclusively establishes all elements of an affirmative defense, or conclusively negates at least one element of the plaintiff's claim.  American Tobacco Co., Inc. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997).  We review the evidence in the light most favorable to the non-movant, disregarding all contrary evidence and inferences.  Randall's Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995).

Discussion

Misrepresentation

We first address Manion=s claims that Arnold violated the DTPA and the Insurance Code by misrepresenting that she was getting Afull coverage@ insurance and leaving her with the impression that such coverage included flood damage.

Viewing the summary judgment proof in the light most favorable to Manion, we find no affirmative misrepresentation was made about flood coverage.  The general rule is that in the absence of an affirmative misrepresentation, a mistaken belief about the scope of coverage is not actionable under DTPA or the Insurance Code.  Sledge v. Mullin, 927 S.W.2d 89, 94 (Tex. App.BFort Worth 1996, no writ).  In this case, Manion only made assumptions about coverage for flood damage.  Manion and Arnold never discussed flood coverage. Nor was there an allegation that Arnold claimed there were no exclusions in the policy or that he misrepresented what Afull coverage@ meant.  Further, Afull coverage@ is a vague term of art that doesn=t implicate any specific type of coverage.  See State Farm County Mut. Ins. Co. v. Moran, 809 S.W.2d 613, 620-21 (Tex. App.BCorpus Christi 1991, writ denied) (A[g]eneral claims by [an] insurer of the adequacy or sufficiency of coverage . . . are not generally actionable under the DTPA@; evidence did not show that insurer misrepresented what it meant by term of art Afull coverage@); Parkins v. Texas Farmers Ins. Co., 645 S.W.2d 775, 776-77 (Tex. 1983) (holding no misrepresentation where receipt for insurance stated policy was for Afire@ but policy contained exclusion from fire coverage where property was not owner-occupied); Douglas v. Delp, 987 S.W.2d 879, 886 (Tex. 1999) (holding that a lawyer=s general representation that a settlement agreement would protect the clients= interests too vague to support DTPA liability); see also State Farm Fire & Cas. Co., Inc. v. Slade, 747 So. 2d 293 (Ala. 1999) (holding that insurance agent=s statement that policy was Aall-risk, full-coverage-on-everything@ on policy that contained exclusion was not misrepresentation and did not mean there were no exclusions in policy).  Therefore, we hold that Arnold=s reference to the standard homeowner=s policy as Afull coverage,@ standing alone, was not an affirmative misrepresentation that the policy covered flood damage.

Manion=s claim also fails because she was deemed to know the contents of the policy, which specifically excluded flood coverage.  An insurance policy is a contract entered into between the parties whereby each party becomes bound by the terms of the agreement.  Ruiz v. Government Employees Ins. Co., 4 S.W.3d 838, 841 (Tex. App.BEl Paso 1999, no pet.).  An insured has a duty to read the policy and, failing to do so, is charged with knowledge of the policy terms and conditions.  Id.  A claim for misrepresentation cannot stand when the party asserting the claims is legally charged with knowledge of the true facts.  See Shindler v. Mid-Continent Life Ins. Co., 768 S.W.2d 331, 334 (Tex. App.BHouston [14th Dist.] 1989, no writ); see also Heritage Manor of Blaylock Properties, Inc. v. Petersson, 677 S.W.2d 689, 691 (Tex. App.BDallas 1984, writ ref'd n.r.e.).   It is undisputed that before the flood, Manion received a copy of the policy. With the policy was a cover letter advising her to Atake a few minutes to review [her] coverage.@  Manion admitted she reviewed a few pages, but did not look at the entire policy.  As noted, on page five, the policy clearly and prominently excluded flood damage.  Because of this, Manion=s claim for misrepresentation fails.  Shindler, 768 S.W.2d at 334.

Manion also argued that Arnold=s statement that the policy was Afull coverage@ was a negligent misrepresentation. Having found no misrepresentation, it follows that Manion=s claim for negligent misrepresentation is precluded. Additionally, because there is no viable claim against Arnold, there is likewise necessarily no claim against Financial Guardian or Security National under a respondent superior theory. Manion=s first two issues are therefore overruled.

                                    Article 21.55 of the Insurance Code

In her third issue, Manion claims the trial court erred in granting summary judgment for Security National because it failed to timely acknowledge her claim within fifteen days pursuant to article 21.55, section 2(a) of the Insurance Code.^[2]  It is undisputed that Security National failed to comply with this provision. Because of this, Manion claims that Security National is required under article 21.55, section 6, to pay Manion the amount of her claim plus an 18% statutory penalty.^[3]  Manion also claims Security National is Aestopped@ to deny her claim. 

The Texas Supreme Court in Allstate Ins. Co. v. Bonner, 51 S.W.3d 289 (Tex. 2001), has recently held that to successfully maintain a claim under section 6, a party must establish three elements:  (1) a claim under an insurance policy; (2) that the insurer is liable for the claim; and (3) that the insurer has failed to follow one or more sections of article 21.55 with respect to the claim. Id. at 291.  Because Manion=s claim was for flood damage, and flood damage was specifically excluded from the policy, Security National is not liable on her claim as a matter of law.  Thus Manion=s section 6 claim likewise fails.  See id.; see also Mid-Century Ins. Co. v. Barclay, 880 S.W.2d 807, 810-12 (Tex. App.BAustin 1994, writ denied). Further, Manion cites, and we find, no basis to apply the equitable remedy of estoppel to this statutory claim.  We overrule Manion=s final issue.^[4]

The judgment of the trial court is affirmed. 

    DON WITTIG

Justice

Do not publish. Tex. R. App. P. 47.3.

Opinion delivered and filed this the

15th day of August, 2002.

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^[1] Retired Justice Don Wittig, assigned to this Court by the Chief Justice of the Supreme Court of Texas pursuant to Tex. Gov=t Code Ann. ' 75.002 (Vernon 1998).

^[2] This provision states:

(a) Except as provided by Subsection (d) of this section, an insurer shall, not later than the 15th day after receipt of notice of a claim or the 30th business day if the insurer is an eligible surplus lines insurer:

(1) acknowledge receipt of the claim;

(2) commence any investigation of the claim;  and

(3) request from the claimant all items, statements, and forms that the insurer reasonably believes, at that time, will be required from the claimant.  Additional requests may be made if during the investigation of the claim such additional requests are necessary.

(b) If the acknowledgment of the claim is not made in writing, the insurer shall make a record of the date, means, and content of the acknowledgment.

Tex. Ins. Code Ann., art. 21.55, ' 2(a) (Vernon Supp 2002).

^[3] This section provides:

In all cases where a claim is made pursuant to a policy of insurance and the insurer liable therefor is not in compliance with the requirements of this article, such insurer shall be liable to pay the holder of the policy, or the beneficiary making a claim under the policy, in addition to the amount of the claim, 18 percent per annum of the amount of such claim as damages, together with reasonable attorney fees as may be determined by the trier of fact.  Such attorney fees shall be taxed as part of the costs in the case.

Tex. Ins. Code Ann., art. 21.55, ' 6 (Vernon Supp. 2002).

^[4] Manion also argues that the trial court erred in granting summary judgment on this issue because Security General=s motion for summary judgment did not specifically address Manion=s theory of recovery under section 21.55.  We disagree. As discussed above, an essential element of Manion=s article 21.55 claim B that she have a valid underlying claim B was negated by Security National=s original motion for summary judgment.  Security National=s no-evidence summary judgment prevented Manion from standing solely on her pleadings (amended or otherwise) and instead required her to bring forward sufficient evidence to withstand a motion for instructed verdict.  Lampasas v. Spring Ctr., Inc., 988 S.W.2d 428, 436 (Tex. App.BHouston [14th Dist.] 1999, no pet.).  This she failed to do. If a summary judgment attacks an element which is also necessary to other claims, then it may be deemed to cover additional causes of action under appropriate fact situations. Id. at 435-37.  Thus, the trial court=s final summary judgment on all issues was proper.