Ostrovitz & Gwinn, LLC v. First Specialty Insurance Company , 2012 Tex. App. LEXIS 10379 ( 2012 )

AFFIRM; Opinion issued December 13, 2012
In The
Qtmtrt uf .ppiat
.iift1i Dhtrirt ut rxzu at Oa11a
No. 05-1 1-00143-CV
OSTROVITZ & GWINN, LLC, Appellant
V.
FIRST SPECIALTY INSURANCE COMPANY, Appellee
On Appeal from the 191st Judicial District Court
Dallas County, Texas
Trial Court Cause No. 06-09925-i
OPINION
Beibre Justices O’Neill, FitzGerald, and Lang-Miers
1 By Justice FitzGerald
Opinion
Appellant Ostrovitz & Gwinn. LLC (“Landlord”) owned a commercial property in Dallas,
Texas. which it leased to a tenant in 2003. The tenant obtained property insurance from appellee
First Specialty Insurance Company.
2 Landlord was identified in the policy as a loss payee, not as a
named or additional insured. After a fire damaged the buildings on the property in 2006, Landlord
sought compensation from First Specialty. and First Specialty took the position that Landlord was
I
We note that a version of this opinion was inadvertently transmitted to West and Lexis and appeared on their electronic sers ices with an
issuance date of November 29. 2012 That opinion was not officially issuedh the Court and is not the opinion of the Court. This is the opinion
of the Court.
— First Specialt asserted in the trial court and asserts on appeal that its correct lame is First Specialty Insurance Corporation ‘A e rvill refer to
it simply as First Spceiali\ iii this opinion
entitled to no insurance benefits. Landlord sued First Specialty and others on a variety ot theories.
Li rsl Specialt\ obtained partial summary judgment on most ol I andlord s chums against it. and
Landlord appealed after the rest of its claims were disposed of. We affirm.
I. BACKCROUNL
A. Factual allegations
Landlord alleged the following in its live pleading. In 1998 ii leased some real property in
Dallas County to a company now known as Integral Texas Pallet Operations, LP(”Tenant”). In 2003
that lease was renewed for a five-year term. The 1998 lease required Tenant to insure the buildings
on the property and to have landlord named as an additional insured on the policy. On account of
a mutual mistake. Landlord alleged. the 20t)3 lease did not contain this insurance requirement.
A First Specialty insurance policy was in effect on September 9, 2006, when a fire occurred
on the leased premises, damaging the buildings there. First Specialty advised Landlord that there
was no coverage of Landlord’s loss under the policy.
B. Procedural history
Landlord sued Tenant. First Specialty. and the individual who allegedly set the fire. I ancllord
later amended its pleadings and added another defendant. Keith D. Peterson & Company, Inc., which
was allegedly First Specialty’s agent.
3 In its live pleading, Landlord asserted claims against First
Specialty for breach of contract, violations of various provisions of the insurance code, violations
of the DTPA. negligence, negligent misrepresentation. promissory estoppel. and declaratory
judgment. First Specialty counterclaimed fir a declaratoryjudgment that Landlord was not entitled
to any recovery under the insurance policy in question.
Landlords live plcading its third amended petition. also iiiel udes a 111th de lndant in the st\ Ic of the case. Insurance 0131cc ofAmerica Inc..
hut the body of the pleading includes no claim against that defendant.
Landlord tiled a motion entitled “Plainti us First Amended Motion for Partial Summary
Judement for Declaratory Relief (Insurable Interest and Financial Interest).” By this motion.
I .andlord sought a partial summary judgment declaring that both Tenant and Landlord had insurable
interests in the damaged buildings. declaring that Fenant had no financial interest in those buildings.
and ordering First Specialty to deposit policy proceeds into the registry of the court for division
between Landlord as owner of the buildings and Tenant as owner of the damaged personal property.
The appellate record contains no written order disposing of this motion, but First Specialty avers in
its appellate brief that the trial judge orally denied that motion at a hearing on June 23, 2010.
First Specialty filed a motion for summary judgment in which it challenged all of Landlord’s
claims on various grounds. including some no-evidence grounds under Texas Rule of Civil
Procedure I 66a(i). The judge heard First Specialty’s motion, and on July 28. 2010, the judge signed
an order granting First Specialty’s “Traditional Motion for Summary Judgment” as to all of
Landlord’s claims against First Specialty except declaratory judgment. On September 2. 2010. the
judge signed a second order additionally granting summary judgment for First Specialty as to some
of Landlord’s claims on no-evidence grounds. but expressly denying summary judgment as to
Landlord’s declaratory-judgment claim. Thereafter, all of the remaining claims in the case were
disposed of by other orders. As part of that process, Landlord nonsuited its declaratory-judgment
claim against First Specialty on December 13, 2010. The final order in the case was a dismissal of
Landlord’s claims against Tenant on January 11. 2011.
Landlord timely filed its notice of appeal. Because Landlord’s appellate issues concern only
its claims against First Specialty, First Specialty is the only appellee in this appeal. See Showbiz
Multimedia. Lt(’ v. Mountain States Mortg. (‘irs., Inc.. 303 S.W.3d 769. 771 n.3 (Tex.
App—Houston [1 st Dist.j 2009, no pet.).
II. MOTION TO ANIEIcD NorIE OF APPEAL
After oral argument. Landlord filed a motion 11w leave to tile an amended notice of appeal.
We grant the motion.
A. Pertinent facts
The notice of appeal that appears in the clerk’s record is missing page two. Thus. some of
the text ofthe notice ofappeal is missing; an incomplete sentence cuts offat the bottom ofpage one.
and the next page in the record is page three, which contains only the signature block. Landlord filed
a copy of the notice of appeal with the clerk of this Court the same day it filed its notice of appeal
in the trial court. The copy filed with the clerk of this Court is also missing page two.
In its appellee’s brief. First Specialty raises aditThrent complaint regarding Landlord’s notice
of appeal. First Specialty argues that the notice of appeal limits Landlord’s appeal to the partial-
summary-judgment order signed on July 28,2010, and does not invoke appellate jurisdiction over
the partial-summary-judgment order signed on September 2, 2010 or the oral denial of Landlord’s
motion for partial summary judgment in June 23, 2010. Therefore. First Specialty concludes, we
should “sever and dismiss the complaints related to those rulings.” First Specialty relies on the
opening language of the notice of appeal, which reads as follows:
[Landlord] desires to appeal, and does appeal the adverse summaryjudgment against
it granted to [First Specialty] on July 28, 2010. This Order Granting First
Specialty[’s] Traditional Motion for Summary Judgment was made final by the entry
ofthe subsequent following orderw
Following this verbiage, Landlord begins a list of subsequent orders that cuts off in the middle of
the third item because of the omission of page two noted above. The partial list on page one does
not include the partial-summary-judgment order signed on September 2, 2010. Nor does it include
the January 11.2011 order dismissing Landlord’s claims against Tenant, which was the order that
-4-
resulted in a linal. appealable judgment in the case.
We inlormed Landlord’s counsel during oral argument that page two of its notice of appeal
was missing. Several days later. Landlord tiled a motion for leave to file an amended notice of
appeal. with a proposed amended notice of appeal attached as hxhihit A. Iand1ord’s proposed
amended notice of appeal not only cures the missing—page problem we pointed out but also addresses
First Specialty’s argument by changing the first sentence of the notice of appeal to recite that
Landlord desires to appeal, and does appeal the interlocutory adverse summary judgments against
it granted to I)efendant First Specialty Insurance Company on June 23. 2010. July 28. 2010. and
September 2, 2010.” First Specialty filed a response in opposition to Landlord’s motion for leave
to amend.
B. Application of the law to the facts
Texas Rule of Appellate Procedure 25.1(g) provides as follows:
An amended notice of appeal correcting a defect or omission in an earlier filed notice
may be filed in the appellate court at any time before the appellant’s brief is filed.
The amended notice is subject to being struck for cause on the motion of any party
affected by the amended notice. After the appellant’s brief is filed, the notice may
be amended only on leave of the appellate court and on such terms as the court may
prescribe
TEx. R. App. P. 25.1(g). The Texas Supreme Court has indicated that appellate courts should freely
grant leave to amend a notice of appeal when leave is sought. In one recent case. an insurance carrier
asserting subrogation rights against an alleged tortfeasor filed a notice of appeal in the name of its
insured even though its insured apparently did not desire to appeal. Warwick Towers Council ofCo
owners ex rel. St. Paul Fire & Marine Ins. Co. v. Park Warwick, LP., 244 S.W.3d 838. 838—39
(Tex. 2008) (per curiam). The court of appeals dismissed the appeal after oral argument because the
Ihere is no June 23. 2010 order in the record hut as noted above. First Specialty avers that there as an oral denial of Landlords motion on
that dale.
carrier failed to name itself as the appellant in the notice of appeal Id. at i’30. Ihe carrier tiled a
motion for rellcari1l and a motion to amend its notice of appcal. and the court o fappeals denied both
motions. Id. (in further appeal. the supreme court reversed, concluding that the carrier had made
a hona tide attempt to appeal by filing the notice of appeal and h listing its own interest in the
docketing statement and other appellate pleadings. Id. Accordingly. the court of appeals erred by
refusing to allow the carrier to amend its notice of appeal. Id. at 840.
Landlord’s original notice of appeal was a hona fide attempt to invoke our jurisdiction and,
therefore, successfully did so. See Sweedv, Nyc, 323 S.W.3d 873, 875 (Tex. 2010) (per curiam)
(“[Al timely filed document, even if defective. invokes the court of appeals’ jurisdiction.”); see also
JT’arwick Towers Coujicil. 244 S.W.3d at 839. But the notice was defective because it was missing
page two and did not state the date of the final, appealable order in the case. See iix. R. APP. P.
25.l(d)(2) (“The notice of appeal must . . . state the date of the judgment or order appealed from
.“). The proposed amended notice corrects the defect and satisfies Rule 25.l(d)(2)bv identifying
the order that actually constituted the final, appealable order in the case—the January 11 2011 order
.
dismissing Landlord’s claims against Tenant. See Lehmann v. Har-Con Corp., 39 S.W.3d 191, 200
(Tex. 2001) (“[ljf a court has dismissed all of the claims in a case but one, an order determining the
last claim is final.”) (footnote omitted): see also Perry v. Cohen, 272 S.W.3d 585, 587 (Tex. 2008)
(per curiam) (noting that Rule 25.1(d)(2) required appellants to state in their notice only the date
their suit was dismissed, not that they were challenging an earlier interlocutory order sustaining
special exceptions).
First Specialty’s opposition to Landlord’s motion for leave is directed to Landlord’s request
to modify the first sentence of its notice of appeal. In its original notice of appeal. Landlord stated
that it was appealing from the July 28. 2010 partial summary judgment. but in its proposed amended
notice of appeal I andlord states that it is appealing partial—summary—judgment orders dated June 23.
20 I 0. and September 2
201 0. as eli. First Specialty argues that Landlord should not he allowed
to make this amendment because I .andiord did not timely file a notice ot appeal 1mm the newly
added partial-summary-judgment orders, and thus we did not acquire appellate jurisdiction over
those orders. We disagree. In our view, the change in the opening sentence of the notice of appeal
is immaterial because the rules do not require an appellant to list in the notice of’ appeal every
interlocutory ruling that appellant may wish to challenge on appeal. See (Junnerman v. Basic Capital
;gint., Inc., 106 S.W.3d 821. $24 ( l’ex. App.—Dailas 2003. pet. denied) (holding that notice of
appeal from final judgment hrought forward the entire case, including earlier interlocutory’ orders
that were not independently appealable”): see also Vuzquez v. Vazque;. 292 S.W.3d 80, 82—83 (Tex.
App.—Houston [14th Dist.] 2007, no pet.) (holding that appellant did not limit his issues on appeal
by gratuitously listing only some of those issues in his notice of appeal”): Anderson v. Long. 118
S.W.3d 806, 809-1 0 (Tex. App.--—Fort Worth 2003. no pet.) (holding that appellant could challenge
interlocutory partial summary judgment even though notice of appeal stated that appeal was from
order sustaining subsequent plea to the jurisdiction): Tex. Sling, Ld. v. J?.B. Foods. Inc., 82 S.W.3d
644,647—48 (Tex. App.—San Antonio 2002, pet. denied) (holding that notice of appeal from default
judgment that was the final order in the case also allowed appellant to raise appellate issues
challenging prior interlocutory order dismissing part of case for want of prosecution). Thus, the fact
that Landlord specifically mentioned its intention to appeal the July 28. 2010 partial summary
judgment in its original notice of appeal did not preclude it from raising appellate challenges to other
interlocutory rulings as well. Allowing Landlord to file the amended notice of appeal will not
change the scope of our jurisdiction or broaden the range of appellate issues Landlord may raise.
We grant landlord’s motion for leave to file an amended notice of appeal.
- 7--
III. Si 4J L)I{L) OF RFvIEw
\Ve review a summary judgment de novo. SniiI, v. i)cnei’e. 28 S.W.3d 904. 90’) ( lex.
App.——--Dallas 2009. no pet.). When we review a traditional summary judgment in ftivor ol a
defendant, we determine whether the delèndant conclusivel disproved an clement of the plainti fis
claim or conci usivelv proved every element o Ian aflirmative defense. Am. lohacLo ( o. v. (Irinnell.
95 1 S.W.2d 420. 425 (Tex. 1997); Smith, 285 S.W.3d at 909. We must take evidence favorable to
the nonmovant as true. and we must indulge every reasonable inference and resolve every doubt in
favor of the nonmovant. Sysco Food Servs,, Inc. v. Trapnell, 890 S.W.2d 796, 800 (Tex. 1994);
Smith. 285 S.W.3d at 909.
When we review a no-evidence summary judgment, we inquire whether the nonmovant
adduced sufficient evidence to raise a genuine issue of fact on the challenged elements. Smith, 285
S.W.3d at 909. ‘[Wje review the evidence in the light most favorable to the respondent against
whom the summary judgment was rendered. If the respondent brings forth more than a scintilla of
probative evidence to raise a genuine issue ofmaterial fact, a no-evidence summary judgment cannot
properly be granted.” Smith v. O’Donnell. 288 S.W.3d 417, 424 (Tex. 2009) (citations omitted).
That is, a no-evidence summary judgment should be reversed if the evidence is sufficient for
reasonable and fair-minded jurors to differ in their conclusions. See Hamilton v. Wilson, 249 S .W.3d
425, 426 (Tex. 2008) (per curiam).
IV. ANAixsis
Landlord raises ten issues on appeal. its first five issues concern its breach-of-contract claim
and its declaratory-judgment claim. Its remaining issues concern its tort claims.
—8—
A. Breach of contract
1. Introduction
In issues one. three. four. and five. Landlord attacks the summaryjudgment on its breach-of.
contract claim against First Specialty. but it presents a single argument under those issues. In its first
issue. Landlord complains generally that the trial judge erred by granting First Specialty’s motion
for summaryjudgment. This issue is sufficiently broad to encompass all of Landlord’s arguments.
See Malooly Bros., Inc v. Napler, 461 S.W.2d 119, 121 (Ta. 1970).
The elements ofa claim for breach ofcontract are: (1) a valid contract between the plaintiff
and the defendant, (2) perfonnance or tender of perfonnance by the plaintiff, (3) breach by the
defendant, and (4) damage to the plaintiff as a result of the breach. In re SIaley. 320 S.W.3d 490.
499 (Ta. App.—Dallas 2010. no pet.). First Specialty raised two grounds for summary judgment
on Landlord’s claim for breach of the insurance policy. First it argued that Landlord had no
standing to sue on the policy because Landlord was not a party to the policy. Second, it argued that
it had not breached the policy in any event because Landlord’s rights were derivative of Tenant’s,
and Tenant had no financial interest in the damaged real property.
2. Prlvity under the insurance policy
Insurance policies are contracts, so the rights and duties they create and the rules governing
their interpretation are those generally pertaining to contracts. (Rico Cat Co. v. AlliedpilotsAss ‘n,
262 S.W.3d 773, 778 (Tex. 2008). Under the general law of contracts, a party must show either
privity orthird-party-beneflciaiy status in order to have standing to sue for breach ofcontract OAJC
CommercialAssets, LLC v. Stonegate Vilt, LP., 234 S.W.3d 726,738 (Tex. App.—Dallas 2007,
pet. denied). Privity exists if the defendant was a party to an enforceable contract with either the
plaintiff or someone who assigned his or her cause of action to the plaintiff. Id.
-9-
Considering for the moment only the four corners of the policy itself. we conclude that
Landlord was not a party to the policy and therefore was not in privily with First Specialty?
Generally, a property-insurance policy is a personal contact between the insured and the insurer.
See Trawlers Fire Ins. Ca v. Steinmann, 276 S.W.2d 849,851 (rex. Civ. App.—Dallas 1955, writ
ref’d n.r.c.). Landlord is neither a named insured nor an additional insured under the policy.
Landlord does not allege that it was assigned a breach-of-contract claim by someone in privity.
Accordingly, we conclude that, considering only the language of the policy itself, privity between
Landlord and First Specialty is lacking.
We proceed to consider whether Landlord raised a genuine fact issue as to its standing,
whether as a third-party beneficiary or otherwise.
3. Standing as a third-party beneficIary
a. General legal prhielples
Toqualifyasathird-partybeneflciaçy,athirdpartymustshowthatftiseitheradoneeor
creditor beneficiary of the contract, and not one who is benefited only incidentally by its
performance. MCI Telecomms. Corp. v. Ta. Utik Elec. Ca. 995 S.W.2d 647,651 (Tex. 1999).
The intention of the contracting parties is controlling. Id. “The intention to contract or confer a
direct benefit to a third party must be clearly and fully spelled out or enforcement by the third party
must be denied.” Id.; accordBasic Capital MgmL, Inc. it Dynex Commercial, Inc., 348 S.W.3d 894,
900 (Ta 2011). We Wean the parties’ intention from the words oftheir contract, and not from what
they allegedlymeant Alvarado v. Lexington Ins. Ca, No. Ol-l0-00740-CV, 2012 WL 5194057, at
6 (rex. App.—Houston [1st Dist] Oct 18, 2012, no pet). “All doubts must be resolved against
Landlord apes that asepa docamiess adedEvidenceo(Propenylnsuratcc’ anotmied to an independent contract between landlord
5
and First Specialty or modified the insurance policy so an to make landlord a panty thereto. We address this aguntent later in the opinion.
-10-
conlerring third-party beneficiary status.” iiwt’s v. Barnes, 340 S.W 3d 419. 425 (Tex. 2011): see
a/vu First Ifinon Vu! ‘1 Bunk v. Richmun! ( a/n/al Partners I. L P.. 1 6X S.W.3d 917. 929 ([cx.
App.—1)allas 2005. no pet.) (“If there is any reasonable doubt as to the intent of the contracting
parties to conflra direct benefit on the third party. then the third—party beneficiary claim must fail.’).
Texas courts have occasionally recognized third—party beneficiaries in the insurance context when
the policy language so requires. See, e.g.. Paraçon Sales Co. v. iVfi Ins. Co., 774 S.W.2d 659.
660—61 (Tex. 1989) (per curiarn).
Landlord argues that the foregoing rules are modified in the insurance context because of the
rule that any ambiguities in an insurance policy are to be resolved in favor of coverage. See, e.g.,
Progressive Cnty. tint. Ins. Co. i Sink, 107 S.W.3d 547. 551 (Tex. 2003). But as First Specialty
points out. a third person who is not a party to a contract of insurance usually is not entitled to a
strict construction in his favor in determining whether the contract was made for his benefit.”
McBroome—Benne!tPlunthing. Inc. v. Villa France, Inc.. 515 S.W.2d 32.37 (Te. Civ. App.—Dallas
1974. writ refd n.r.c.). Thus. the rule that ambiguities in an insurance policy: are resolved in favor
of coverage does not apply to our inquiry into whether Landlord is a third-party beneficiary of
Tenant’s insurance policy. To the contrary, if there is any reasonable doubt, Landlord’s claim to
third-party-beneficiary status must fail. See First Union Nat ‘1 Bank, 168 S.W.3d at 929.
b. Policy language
We begin with the language of the policy. Cf. MCI Telecomnis. Corp.. 995 S.W.2d at 650
(“Our analysis of the third-party beneficiary issue requires us to interpret the contract between CI
and MoPac.”). According to the declarations page. the policy affords commercial property coverage
and commercial inland marine coverage. The schedule of named insureds includes Tenant and did
not include Landlord. The policy’s ‘Schedule of Locations” includes the leased premises and, next
—Il—
to the leased premises. listed an amount of $1 .838,668 for “l3ldgs. l3ppi. Stock & Mobile
hquipment.’ ‘I he main property—coverage part of the policy is entitled “lluilcling and Personal
Property Coverage 1 orm.” This 14—page coverage form defines “we” as First Specialty and “von”
as the named insureds. Section A ol the coverage form, entitled “Coverage, provides that First
Specialty “will pay Ir direct physical loss of or damage to Covered Property at the premises
described in the Declarations caused by or resulting from any Covered Cause of Loss.” But section
A does not say who is entitled to enforce First Specialty’s obligation to pay in the event of a covered
loss to covered property.
The payment of claims is addressed in section E of the coverage Ibrm, entitled “Loss
Conditions.” Section E.4. entitled “Loss Payment.” contains the following terms:
d. We will not pay’ you more than your financial interest in the Covered
P rope rt.
e. We may adjust losses with the owners of lost or damaged property if other
than you. If we pay the owners, such payments will satisfy your claims
against us for the owners’ property. We will not pay the owners more than
their linancial interest in the Covered Property.
On our reading of section E.4.e, First Specialty reserves the right—but assumes no obligation—to
adjust losses with and pay an owner of covered property who is not a named insured. The provision
further establishes that such payments will count towards satisfaction of any claim by the named
insured. But section E.4.e does not clearly show an intent by Tenant and First Specialty to confer
a direct benefit on Landlord. Rather, section E.4.e seems to confer a right on First Specialty by
giving First Specialty the option of paying the owners of covered property, even if the owners are
not named insureds. and providing that such payments will satisfy the named insured’s claim for the
6
Tins parteul ar form is an SO lOrm and hears the legend UP 00 1 0 04 02’
—12—
owner s property.
Finally, the loss—payment terms ol section E.4 arc supplemented by a separate. two—page
policy endorsement entitled “Loss Payable Provisions.’ The endorsement identilies I andlord by
name as a “Loss Payee” in an attached schedule.
8 The endorsement also adds some additional terms
to the loss-payment provi sions found in section F of the coverage form. The parties focus on section
B of the endorsement. entitled “LOSS PAYABLE.” which provides:
For Covered Property in which both you and a Loss Payee shown in the Schedule or
in the I)cc larations have an insurable interest, we will:
Adjust losses with you: and
2. Pay any claim for loss or damage jointly to you and the Loss Payee,
as interests may appear.
On our reading, section B of the endorsement, like section F of the coverage form, is not a clear
promise by First Specialty to pay a loss payee for covered damage to covered property, even in the
absence of a claim by the named insured. To the contrary. in section B. First Specialty assumes the
duty of adjusting losses only with the named insured. If First Specialty ever pays a claim that fits
the description in section B, it promises to pay the claim jointly to [the named insuredi and the Loss
Payee, as interests may appear,” but section B contains no clear promise by First Specialty to pay a
claim by a loss payee in the absence of a claim by the named insured.
Thus, considering only the language of the policy, and before considering any other evidence
or judicial decisions on point, we are inclined to conclude that the policy does not clearly and fully
demonstrate an intention by ‘I’enant and First Specialty to contract for the direct benefit of Landlord.
The endorsement is an ISO tbrm and bears the legend “CP 12 18 06 95”
8
To be precise, the schedule of loss payees includes “Gwinn & Ostrovitz,” not Ostrovitz & Gwinn. L IC. In its appellate brieF First Specialty
avers that “Ostrovitz& Gssinn is listed as a loss payee in the Policy” and cites the schedule of loss payecs in support. so despite the discrepancy there
is no dispute that Landlord is a loss payee under the policy.
—l 3
Under such a conclusion, Landlord would lack standing to sue as a third—party beneficiary of the
policy.
c. Judicial interpretations of loss-payee provisions
The parties cite numerous authorities from Texas and other jurisdictions in support of their
respective policy interpretations. But few if any of their authorities address loss-payee standing, and
none closely analyze that issue under the same policy language involved in this case, so the
precedents are of little use.
Several Texas decisions have turned on the interpretation of loss-payee provisions, but we
have not found a Texas case specifically addressing the standing or third-party-beneficiary status of
a loss payee under these particular policy provisions. In the auto-insurance context, there are a few
cases in which a court has entertained a loss payee’s suit for coverage directly against the insurance
carrier. See, e.g.. Progressive Cniy. Mitt. Ins. Co. v. Budget Motors, Inc., No. 05-02-01763-CV,
2003 WL 2154451 1 (Tex. App.Dallas July 10, 2003, no pet.) (mem. op.); Fire & (‘as. Ins. Co. of
Conn, v. BusLease, Inc., No. 08-0l-00277-CV, 2002 WL 1301570 (Tex. App.-—El Paso June 13,
2002, pet. denied) (not designated for publication); Old Am. Mitt. Fire Ins, Co. v. GulfStates Fin.
Co., 73 S.W.3d 394 (Tex. App.—Houston [1 st Dist.] 2002, pet. denied); Don Chapman Motor Sales,
Inc. v. Nat’lSav. Ins. Co., 626 S.W.2d 592 (Tex. App.—Austin 1981, writ ref d n.r.c.). Landlord
argues that this means the courts implicitly recognized loss-payee standing. We need not decide
whether Landlord is correct because the cases are distinguishable. The question of third-party-
beneficiary standing depends on the language used in the contract. Some of the opinions cited above
do not quote or describe in any detail the relevant loss-payee provisions, so they are not instructive
precedents in the instant case. See Progressive Cnty. Mut. Ins. Co., 2003 WL 21544511. at *1....5;
Fire & Cas. Ins. Co., 2002 WI. 1301570, at *5 The others involve policy provisions that are
—14--
distinctly more protective of the loss payee’s interest than the language in the First Specialty policy.
See U/cl Am 73 S.W.Sd at 395: Don ( huj,mcen. 626 S.W.2d
. at 594. In short. we have lound no
Texas case authority that weighs against our preliminary conclusion that I .andlord is not a third—party
beneficiary of this policy.
Similar!, cases from other jurisdictions are of little help. Only a few ol them specifically
address a loss payee’s third-party-beneficiary status, and even those generally do not carefully
analyze the policy language in question. For example, First Specialty relies heavily on Northwestern
National (‘asualty Co. v. Khosa, Inc., 520 N.W.2d 771 (Minn. Ct. App. 1994). Khosa supports First
Specialty’s position because the policy language involved in that case closely tracks the loss-payable
endorsement involved in this case, the named insured made no claim on the policy, and the court
held that the loss payee had no rights under the policy because its rights were derivative of the rights
of the named insured. Id. at 774—75. But the court did not explain why or how the policy language
supported its holding, so its opinion is not particularly persuasive.
Somewhat more persuasive is May v. ,lIid-Ceniurv Insurance Co.. 1 5 1 P.3d 132 (OkIa.
2006). In that case. a condominium owner suffered some fire damage to her unit. Id. at 134. She
sued Mid-Century, which was the insurer for her homeowner’s association, for bad faith in refusing
to pay her claim under the association’s policy. Id. The Oklahoma Supreme Court concluded that
the carrier owed the plaintiff no legal duty under the policy, based largely on a loss-payment clause
in the policy that provided. We may adjust losses with the owners of lost or damaged property if
other than you [the named insured].” id. at 137 n.18. 140—41. The court concluded that this
clause—which also appears in the policy involved in the instant case—gave the insurance carrier the
exclusive choice to settle covered claims with the association or with the unit owners, thereby
negating any contractual right running directly to the unit owners. Id. at 140—4 1 May supports our
.
—15—
viev that the above—quoted clause shows an intention to contèr an option on the insurance carrier.
and not a direct benefit on a loss payee.
Authorities from a few other junsdictions support Landlord, but they are unpersuasive
because the liil to explain why the particular policy language involved justified treating a loss
payee as a third-party beneficiary. See, e.g., DeMay v. Dependable Ins, Co.. 638 So. 2d 96, 97 (Fla.
Dist. Ct. App. 1994); C’anal ins. Co. v. Savannah Bank & Trust Co., 352 S.E.2d 835, 839 (Ga. Ct.
App. 1987): Itinschel v. iransconlinen/al Ins. Co.. 839 P.2d 64. 70 ( Kan. Ct. App. 1992): see also
Waic’rfleldMorig. Buckete State AIut. Ins. Co.. No. 93—CA—53. 1994 WE 527594, at *4 (Ohio. Ct.
App. Sept. 30. 1 994) (holding that there was a genuine fact issue as to whether loss-payee was third-
party beneficiary of insurance policy). Some secondary authorities also support Landlord’s position.
hut they likewise offer no justification grounded in policy language. See 2DB JoHN A. APPLEMAN
& JEAN APPLEMAN, INSURANCE LAw AND PRAc11CE § 11749 (1980); 17 LEE R. Russ & TH0M,\s
F. SEGALLA, COUCH ON INSURANCE 3D § 242:69 (2005). Thus, Landlord’s authorities are not
particularly persuasive.
d. Extrinsic evidence
Finally, the parties refer us to some extrinsic evidence. Of course, extrinsic evidence may
be considered only if the policy is ambiguous. See Carhona v. CHMed., Inc., 266 S.W.3d 675, 681
(Tex. App.—-Dallas 2008, no pet.) (1f the agreement is not ambiguous then the courts do not
consider extrinsic evidence in interpreting the agreement.”). Although neither party argues that the
policy is ambiguous, we will assume arguendo that it is because, as shown below, the extrinsic
evidence does not affect the outcome.
Landlord argues that we should interpret the policy in light of revised loss-payable provisions
that appear in a subsequent ISO form. According to Landlord, a 2007 ISO form provides that the
—16--
insurer will adjust a building owners damages or losses with it as loss payee. The argument thils.
First, Landlord provides no record citation for this alleged form, and we cannot find it in the
appellate record. Thus, we cannot rely on it. Moreover, even assuming the revised form exists and
says what Landlord claims it says. it would not support Landlord’s position. Regardless of the
contents ofthe revised policy, the policy language pertinent to this case still would not clearly show
an intention to make a loss payee like Landlord a third-party beneficiary. In addition,, when a drafter
changes the language of a text. it often signifies a change in meaning. See Friedrich Air
(]ondiiioning & Rçfrig. Ca v. Bexar Appraisal Din, 762 S.W.2d 763. 767 (Tex. App.—San
Antonio 1988, no writ) (stating that legislative change in the law tends to show an intention to
change the law): çf PopCap Games, Inc. v. MwnboJumbo, LLC, 350 S.W.3d 699, 708 (Tex.
App.—Dallas 2011, pet. denied) (“The use of different language in different parts of a contract
generally means that the parties intended different things.”). Thus, the existence of a revised form
that clearly makes a loss payee a third-party beneficiary would not tend to show that a prior version
of the form using difkrent verbiage had the same meaning.
Other extrinsic evidence tends to support First Specialty’sposition. One witness testified by
deposition that he interpreted section B ofthe loss-payable endorsement to mean that First Specialty
had no obligation to pay the loss payee unless the named insured asked First Specialty to do so.
Mother witness testified by deposition that looking at the policy “in isolation of all other facts,”
there was nothing in the policy that provided for the loss payee to have a direct claim or cause of
action against First Specialty.
Thus, assuming for the sake of argument that we can properly consider extrinsic evidence
in this case, we conclude that the extrinsic evidence does not support Landlord’s position in this
case.
—17—
e. Conclusion
Ihe legal lest is hether the insurance policy clearly and tullv spells out an intention 1w
lenant and First Specially to confir a direct benelit on Landlord. See M( 7 Telecoinn,s. Corp.. 997
S.W.2d at 65 I In ease of an reasonable doubt, we must rule against Landlord on the issue. See
Firs! Limon Aii ‘1 Iia,ik. 168 S.W.3d at 929. We conclude that the insurance policy does not clearly
and fully spell out the necessary intention. Accordingly, the trial judge properly granted summary
judgment on Landlord’s breach-of-contract claim to the extent Landlord relies on third-party-
beneficiary status under the policy.
4. Standing under the “Evidence of Property Insurance”
Landlord argues that it also had standing to sue First Specialty Ibr breach of contract based
on a one-page certificate entitled “Evidence of Property Insurance” (EPI) dated September 11.2006
(two days after the fire).
5 According to Landlord, this document gave rise to an independent contract
and “functions as a contract of insurance” between it and First Specialty.
The EPI certificate states at the top. “This is evidence that insurance as identified below has
been issued, is in ibrce. and conveys all the rights and privileges afforded under the policy.” The
certificate has several blanks that have been filled in with typewritten information. For example, the
policy involved in this case is identified by policy number and policy period, and the policy period
includes the date of the fire involved in this case. “Ostrovits [sicj & Gwinn, LLC” is listed in a box
labeled “Additional Interest.” There are three small boxes labeled “mortgagee,” “loss payee,” and
“additional insured” respectively; only the loss-payee box is marked with an “X.” A box labeled
“REMARKS (Including Special Conditions)” contains the following typewritten language:
[he document hears the legend ACOR[) 27 (3193 f at the bottom landlord also hied two otherEl’l cert,tieates but thes recite policvperiods
that do not encompass the date of the flrc involved in this case. Thus, those documents are not relevant to our breach—of-contract analysis
—-1 8—
‘$lO..OOO.OOO I.oss Limit per Occurrence / Certificate Holder is Loss Payee with
respect to their interest as Landlord/Owner in the above locations /30 day notice of
cancellation except 10 days for nonpayment of premium
Another box labeled CANCELLATlON” contains the sentence. policy is subject to the
premiums. forms. and rules in effect for each policy period.”
We reject Landlord’s position and hold that the EPI certificate did not create or amount to
a contract of insurance directly between Landlord and First Specialty. The first sentence of the
document recites that the document is “evidence” that the insurance described below exists; there
is no indication in the document that it constitutes an insurance contract in and of itself. Moreover,
that sentence states only that the insurance policy bbjjffifl below. . . conveys all the rights and
privileges afforded under the policy”; it does not indicate that the EPI certificate is intended to
change those rights and privileges. The description of the insurance found in the remainder of the
document also does not improve Landlord’s status beyond its status as provided in the policy itself.
The document contains a recitation that Landlord is “Loss Payee with respect to their interest as
Landlord/Owner in the above locations.” and the box labeled “loss payee” is marked. These
statements accurately state Landlord’s status under the policy, but we have already concluded that
a loss payee under the policy does not enjoy the right to sue First Specialty on the policy directly.
We conclude the EN certificate did not constitute a contract between Landlord and First Specialty
or change Landlord’s status under the policy. See TIG Ins. Ca v. Sedgwick James of Wash., 276
F.3d 754, 761 (5th Cir. 2002) (stating that policy terms control over the terms of a certificate of
insurance when the certificate expressly incorporates the policy’s terms).
Landlord’s authorities do not support its position, it relies on Asousa Pannersh4p v.
ManzqfacturersAlliance Insurance Co (InreAsousaPannership),No. 03-1005.2005 WL2857983
(Bankr. E.D. Pa Sept. 232005), qff’d, No. 05-57192006 WL 2828890 (E.D. Pa Sept. 29.2006),
-19-
br the proposition that the LPI form involved in this case can be used to make a landlord an
additional insured or loss pa\ee under an insurance policy. In that case. an insurance agent issued
an EP1 cerli licate that erroneously listed the recipient as an additional insured on the poi icy, and the
court concluded that this obliged the insurance carrier to treat the recipient an additional insured.
2005 WL 2857983. at * I 6. In the instant case. by contrast, the EPI certificate did not indicate that
.
Landlord was anything hut a loss payee, which is also what the policy itsell’provided. Landlord cites
two other cases for the proposition that a loss payee may rely on representations made in an EPI
certificate. See Corndisco Ventures, Inc. v, Fed. Ins. Co. (in re Comdisco Ventures, mc,), No. 04 C
2007, 2005 WL 1377856 (N.D. III. June 8, 2005 ) Brown & Brown of Tex., Inc. v. Omni Metals, Inc.,
317 S.W.3d 361 (Tex.App.—i-iouston list Dist.I 2010. pet. denied). The cases stand for the
proposition that an EPI certificate can support a claim for misrepresentation. Coindisco, inc.. 2005
WE 1377856. at *8. Brown & Brown, 317 S.W.3d at 383—96, but they say nothing about whether
the EPI certificate involved in this case can support a breach-of-contract claim by Landlord directly
against First Specialty.
We conclude that the EPI certificate was not a contract between Landlord and First Specialty
and did not make Landlord a party to the insurance policy.
5. Conclusion
First Specialty demonstrated as a matter of law that Landlord was not in privity with First
Specialty on Tenant’s insurance policy, that Landlord was not a third-party beneficiary ofthe policy,
and that the EPI certificate did not confer on Landlord any additional contractual rights against First
Specialty. Accordingly. the trial judge correctly granted summary judgment in favor of First
Specialty on Landlord’s breach-of-contract claim. We need not address the parties’ other arguments
over whether Tenant had a financial interest in the damaged buildings.
2 0—
B. I)eclaratory judgment
In its second issue on appeal, Landlord asserts that the trial judge erred by denying its First
Amended Motion for Partial Summary Judgment for Declaratory Relief We conclude the issue is
moot because Landlord later nonsuited its claim for declaratory judgment. Thus, there is no live
claim on which we could grant judgment even if we were to agree with Landlord’s position, and
there is no live controversy for us to consider, See MeNeill v. Hubert, 23 S.W.2d 33 1, 332—33 (Tex.
1930) (holding that appeal of interlocutory order was mooted when plaintiffnonsuited the only claim
in the case).
C. Other claims
In issues six through ten, Landlord contends that the trial judge erred by granting summary
judgment against Landlord on its claims for 1)TPA violations, insurance-code violations,
misrepresentation, negligence, and promissory estoppel. Landlord presents a single argument in
support of all five of these issues, without clearly delineating which part of its argument relates to
each claim. We address the claims in turn.
1. DTPA and insurance-code claims
Landlord aFleged that First Specialty violated the DTPA by violating sections 17.46(5) and
17.46(12) of the business and commerce code and by violating sections 54 1.060 and 541.061 of the
insurance code. See TEX. Bus. & C0M. CODE ANN. § 17.50(a) (West 2011). Landlord also asserted
claims directly under section 541.060 and 541.061 of the insurance code. See TEx. INS. CODE ANN.
§ 541.060—.061, 541.15 1 (West 2009). First Specialty raised the following summary-judgment
grounds against these claims: (1) First Specialty established that it was not liable to Landlord for
breach of contract, so it could not be liable to Landlord under the DTPA, (2) First Specialty
established that the parties’ dispute was nothing more than a non-actionable bona fide coverage
—21—
dispute. (3) there is no claim under rexas law for bad faith in underwriting, (4) Landlord could
produce no evidence that First Specialty violated the relevant sections ofthe DTPA or the insurance
code, (5) Landlord could produce no evidence of detrimental reliance as required by sections
1 7.46(bX5) and 1 7.46(bXl 2) ofthe DTPA. and (6) Landlord could produce no evidence ofdamages
independent from its breach-of-contract damages.
First Specialty’s no-evidence grounds are dispositive. In response to those arguments.
Landlord relies on the EPL certificates it received and on an affidavit by one of Landlord’s owners,
Ed Ostrovitz. Ostrovitz testified that he requested the EPI certificates to confirm for Landlord’s
creditor that the property. including Landlord’s interest therein, was insured by Tenant. He also
testified that Landlord did not seek its own property insurance because each year it relied on the
representations contained in the certificates. As for the EPI certificates themselves, it appears to us
that the certificate relating to the policy in effect at the time ofthe fire is irrelevant because it is dated
two days after the fire and so could not have influenced Landlord’s pre-loss decisions about insuring
its own property. The two earliercertificates concerned policies in effect from March2003 to March
2004 and March 2004 to March 2005, respectively. We will assume arguendo that these earlier
certificates could have influenced Landlord’s insurance decisions with respect to the property
relevant to the time of the fire.
With respect to section 1 7.46(b)(5) ofthe DTPA. we examine whether Landlord adduced any
evidence that First Specialty represented that any services had “sponsorship, approval,
characteristics, ingredients, uses, benefits, or quantities” that they did not have, or that a person had
“a sponsorship, approval, status, affiliation, or connection” that he, she, or it did not have. See Thx.
Bus. & COM. CODE ANN. § 17.45(3) Cperson” includes business entities and groups); Id.
§ I 7.46(bX5). Landlord argues that its evidence shows that First Specialty falsely assured Landlord
—22—
that its interest in its huildinrs was covered by lenani’s policies. Vvc disaree. Both of the pre—tire
EPI certi ticates show that Landlord was a loss payee and not an additional insured. Both cerli ticates
state. ‘Certificate Holder is Loss Payee with respect to their interest as Landlord / Owner of the
locations listed above. $10,000,000 Loss Limit / $1 00.000 Deductible.’ Landlord adduced no
evidence that the policies evidenced 1w these certificates did not make Landlord a loss payee.
Landlord adduced no evidence that First Specialty represented its policies to have characteristics or
benefits that they did not, or that Landlord enjoyed a status that it did not. Landlord has not shown
error with respect to the disposition of this DTPA theory.
\Vith respect to section 1 7.46(h)( 1 2) of the DTPA. we consider whether Landlord adduced
any evidence that First Specialty represented that an agreement conferred or involved rights.
remedies, or obligations that it did not have or involve. See id. § I 7.46(b)( 12). For the same reasons
stated above, we conclude Landlord adduced no evidence that First Specialty made any such false
representations.
Landlord asserted claims against First Specialty both under the DTPA and directly under the
insurance code lbr violating the insurance code in the following respects:
1. by making an untrue statement of material fact, see TEx. INS. CODE ANN.
§ 541.061(1);
2. by failing state a material fact that is necessary to make other statements
made not misleading, see Id. § 541.061(2):
3. by making a statement in such a manner as to mislead a reasonably prudent
person to a false conclusion of material lhct. see Id. § 541.061(3);
4. by misrepresenting material facts or policy provisions relating to the coverage
at issue in connection with settlement, see id. § 541 .060(a)( 1);
5. by failing to attempt in good faith to effectuate a prompt, fair, and equitable
settlement of a claim as to which liability has become reasonably clear, see
Id. § 541.060(a)(2)(A):
 6. by failing to provide promptly a reasonable explanation of the bases for
denial of a claim, see Id, § 541 .060(a)(3):
7. by ihiling to affirm or deny coverage or submit a reservation of rights letter
within a reasonable time, see Id. § 541.060(4);
g. by refusing to pay a claim without a reasonable investigation, see Id.
§ 541 .060(a)f7);
9. by compelling Landlord to file suit to recover the amount due under a policy:
10. by making a material misstatement of the law.
The EPI certificates and Ostrovitz affidavit have nothing to do with most of these theories, and we
conclude that theories one and four through ten are supported by no evidence. Theories two and
three present a closer question, requiring us to consider whether the EPI certificates were misleading
rather than simply false. We conclude that they were not misleading. Although the certificates
plainly stated that Landlord was a loss payee and not an additional insured, they did not explain what
rights Landlord enjoyed as a loss payee. Thus, the certificates were somewhat unclear. This lack
of clarity, however, does not rise to the level of being misleading, because the certificates pointed
beyond themselves to the underlying insurance policies for the specific terms of those policies. The
certificates stated that the insurance identified therein “conveys all the rights and privileges afforded
under the policy.” The certificates also provided that “the policy is subject to the premiums, forms,
and rules in effect for each policy period.” Because the EPI certificates plainly referred the reader
to the identified insurance policies for the actual rights, privileges, and terms of those policies, we
conclude that they were not misleading. Our conclusion is supported by a recent decision of the
Fifth Circuit in which it held that a policy description was not misleading because it plainly stated
that the terms of the actual insurance policy governed whenever the description was silent or
conflicted with the policy. See Tolhert ex rd. Tolbert v. Nat ‘1 Union Fire Ins. Co. ofPittsburgh, Pa.,
657 F.3d 262. 267—70 0th (jr. 2011) (applying Texas law).
Landlord relies heavily on the case of Brou’n & Brmvn o/ 1 evu. Inc. i’ (hnni Ucla/v. Inc..
3 1 7 S.W.Sd 36 1 ( lex App.—- I louston i st Dist. I 201 0. pet. denied). 1 hat case is distinguishable.
Omni Metals stored over $2 million worth of steel in a warehouse operated b a company called Port
Metals. Sec /d. at 370. Port Metals insured the premises through an insurance agency, and an agent
incorrectly told Port Metals that the insurance policy covered stored materials like Omni Metals’.
Jd. at 371. The agent later realized his mistake hut did not correct it. Id. art 371—72. Omni Metals
requested and received certificates of insurance from the agency three times. Id. at 372. One
certificate recited that the policy’s coverage “INCLUDES PROPERTY OF OTI-IERS IN CUSTODY
OF INSURED.” while the other two recited that the insurance covered “All Risk.” Id. The
certificates also contained a disclaimer that they were informational only and did not amend the
coverage afforded by the policies described therein. Id. There was a fire that destroyed $2.6 million
worth of Omni Metals’ steel, and the insurer denied coverage. Id. at 370. At trial on Omni Metals’
claims for negligent misrepresentation and L)TPA violations, the insurance agent admitted that the
first certificate of insurance was “untrue,” and the insurance agency’s expert testified that the
certificates were “misleading.” Id. at 372. The jury found in favor of Omni Metals, and the court
of appeals held that the evidence was sufficient to support the misrepresentation and DTPA findings.
Despite the disclaimers in the certificates of insurance, the court of appeals held that the evidence
ofaffirmative misrepresentations by the insurance agent was sufficient to support the jury’s findings.
Id. at 384—87. In the instant case. by contrast. Landlord has not adduced any evidence of false
representations or misleading statements by First Specialty. At most. Landlord adduced evidence
that First Specialty furnished FPI certificates that were unclear as to what rights Landlord enjoyed
under the policies but were clear that Landlord was a loss payee and not an additional insured. This
vas not enough to delat F1rst Specialtvs no—evidence motion br summary judgment.
The trial judge correcti granted suinmar\ judgment as to Landlord’s [) FPA and insurance—
code claims.
2. NeIigent misrepresentation
Landlord alleged that First Specialty committed negligent misrepresentation when its agent.
Keith D. Peterson & Company, issued the EPI certificate to Landlord. The elements of’ negligent
misrepresentation are (1) the defendant made a representation in the course of its business or in a
transaction in which it had an interest. (2) the defendant supplied false intbrrnation for the guidance
of others in their business, (3) the defindani did not exercise reasonable care or competence in
obtaining or communicating the infarmation, and (4) the plaintiff suffered pecuniary loss by
justifiably relying on the representation. Cunningham v, Tarski, 365 S.W.3d 179, 186-87 (Tex.
App.—Dallas 2012. pet. denied). First Specialty moved for summary judgment on this claim on
both traditional and no—evidence grounds. First Specialty argued that the evidence conclusively
refuted the first two elements of negligent misrepresentation. and additionally that Landlord could
not produce any evidence that First Specialty made any representations or that First Specialty
provided any false information.
We uphold the summary judgment on both no-evidence grounds. As to the first ground,
Landlord assumes without demonstrating that the representations in the EPI certificates are
imputable to First Specialty. Each certificate. however. recites that the ‘producer” of the certificate
is Keith D. Peterson & Co., Inc., not First Specialty. Landlord asserts in its brief that First Specialty
issued the EPI certificates “by and through K.D. Peterson & Company, Inc.,” but Landlord cites no
evidence that would raise a fact issue as to the existence of an agency relationship between Keith D.
Peterson & Co., Inc. and First Specialty. Thus, the EP1 certificates, standing alone, are no evidence
ola statement by First Specialty, and no evidence ofthe trst element ot negligent misrepresentation.
Moreover. we conclude that Landlord has adduced no evidence that the EPI ccrtilicates
conveyed ‘false information.” The EPI certiflcates that related to the policy periods from 2003 to
2005 recite that Landlord had an “additional interest” and was a loss payee on those two policies,
hut they also indicate that Landlord was not an additional insured. ‘l’hev also recite that there was
a $10,000,000 loss limit on those policies. Landlord has adduced no evidence that those
representations were false. I .andlord argues that because the certificates did not explain the limited
rights of loss payees, these statements were partial disclosures that created a false impression that
it and its property were covered by the policies. But the certitcates make clear that l.andlord was
not an additional insured, and that the rights and privileges conveyed by each policy were those
“afforded under the policy.” Unlike Browii & Brown, this case does not involve any aftirnmtive
misrepresentations by First Specialty that Landlord enjoyed coverage that the policies did not
actually confer. See 317 S.W.3d at 384—87. Thus. Landlord adduced no evidence that First
Specialty conveyed false infbrmation to Landlord.
The trial judge correctly granted summary judgment as to Landlord’s negligent-
misrepresentation claim.
3. Promissory estoppel
Landlord alleged that First Specialty is liable for promissory estoppel based on the EPI
certiflcates. “The requisites of promissory’ estoppel are: (1) a promise. (2) foreseeability of reliance
thereon by the promisor, and (3) substantial reliance by the prornisee to his detriment.” English v.
Fischer, 660 S.W.2d 521, 524 (Tex. 1983). First Specialty attacked the first and third elements of
the claim on both traditional and no-evidence grounds.
In its appellants briet Landlord devotes only one short paragraph to its promissory-estoppel
—27—
claim. Landlord concludes. without citation to the record, that it “)ustiliahlv relied on the declaration
of $10 million in Property coverage to its detriment” We will not “search a voluminous record
without suflicient guidance from an appellant to determine ‘ hether an assertion of reversible error
is valid.” I3arneti v. Coppell N. Tex, Court, Lid., 123 SW.3d 804. 817 (Tex. AppJ)allas 2003,
pet. denied). Landlord’s attack on the summary judgment with respect to its prornissory-estoppel
claim is waived.
Even if we were to address Landlord’s argument, we would conclude it is without merit,
based on First Specialty’s no-evidence challenge to the element of detrimental and substantial
reliance. Two of the three EPI certificates concern insurance policies that had expired long before
the September 9, 2006 fire took place, so they are no evidence that Landlord incurred substantial and
detrimental reliance on them with respect to the fire. The EPI certificate evidencing the insurance
policy in effect at the time of the fire is dated two days after the tire. so it is logically impossible for
Landlord to have incurred detrimental reliance on that post-loss certificate with respect to the fire.
The Ostrovitz affidavit mentioned above contains the following testimony:
As I [sic J result of receiving the evidence of property insurance each year and the
representations contained therein, neither myself nor Ostrovitz & Gwinn sought to
obtain separate or additional property insurance on the buildings, rather I relied on
the representations contained in the evidence of property insurance that I received
each year that the buildings leased by [FCC) were continuously insured for $lOrn and
that Ostrovitz & Gwinn’s interest as landlord and owner was also insured for $lOm.
This testimony is conclusory and does not demonstrate that Landlord received and relied on any EPI
certificate that evidenced insurance coverage in effect at the time of the fire and was received by
Landlord before the fire occurred. Thus. the Ostrovitz affidavit, even in conjunction with the EPI
certificates, is no evidence of substantial and detrimental reliance by Landlord.
The trial judge correctly granted summary judgment as to Landlord’s promissory-estoppel
2 8—
claim.
4. Negligence
landlord asserted a claim against First Spccialt and Keith I). Peterson & Company lr
general negligence. Landlord alleged that Tenant requested them to insure Landlords interest “as
owner and landlord.” and that they negligently failed to do as requested. The elements of negligence
are a duty, a breach of that duty. and damages proximately caused by the breach. Kruger (o. v.
Hwood. 1 97 S.W.3d 793. 794 (Tex. 2006) (per curiarn). In its summary-judgment motion. First
Specially asserted that the evidence proved that it owed no duty to Landlord and that, to the extent
it did owe a duty to Landlord, it did not breach that duty. The gist of’ First Specialty’s argument was
that Tenant’s agent asked for Landlord to be added to Tenant’s insurance policy as a loss payee, and
that is what Keith I). Peterson & Company did. First Specialty also raised a no-evidence attack on
the element of duty.
The existence of a legal duty is a question of law for the court to decide based on the
particular facts surrounding the occurrence in question. ;l!cou, Inc. v. Behringer. 235 S.W.3cl 456.
459—60 (i’ex. App.—Dallas 2007. pet. denied). We consider several related factors, including the
risk, foreseeability, and likelihood ofinjury. weighed against the social utility of the actor’s conduct,
the magnitude of the burden of guarding against the injury, and the consequences of placing the
burden on the dclendant. Id. at 460. First Specialty points out that the supreme court has already
adopted a clear no-duty rule in this area: an insurance agent owes his customer no duty to extend the
customer’s insurance coverage merely because the agent knows that the customer has a need for
additional coverage. McCall v. Marshall. 398 S.W.2d 106, 109 (Tex. 1965). This rule applies
especially when there is no evidence of prior dealings in which the agent has taken care of his
customer’s needs without consulting him. Id. The supreme court has also held that an insurance
agent who undertakes to procure insurance for a client owes that client a duty ofreasonable diligence
in attempting to place the requested insurance and to inlbrm the client promptly if unable to do so.
May v. United Sen’s. Ass n ofAm., 844 S.W.2d 666,669 (Tex. 1992).
We review the evidence in the light most favorable to Landlord. The evidence showed that
Tenant’s retail insurance agent was a company called Insurance Office of America (bA). David
Keith Thompson ofbOA serviced Tenant’s account on a day-to-day basis. IfTenant wanted a policy
or wanted to change a policy. bOA would go througb Keith D. Peterson to accomplish that result.
Thompson testified in deposition that he sent a fax to Erin Hanson at Keith D. Peterson & Company.
Inc. stating that Landlord “needs evidence of property coverage including their [sic] interest as
owner” of two locations, one of which was the property involved in this case. The fax was dated
November II. 2003. Thompson testified that by his fax. he was attempting to convey a request that
Landlord be added to Tenant’s insurance policy as a loss payee. He assumed that this is what would
happen. The EPI certificates indicate that Landlord was in fact added to the insurance policies as
a loss payee. and the actual policy involved in this case included Landlord as a loss payee.
The summary-judgment evidence thus shows that Tenant’s agent made a single request for
insurance coverage—that Landlord be added to Tenant’s property insurance as loss payee with
respect to two locations. We hold, consistent with McCall v. Marshal4 that First Specialty owed
Landlord no legal duty to extend insurance coverage for Landlord’s benefit beyond the coverage
requested by Tenant. See Leigh v. Kuenstier, No. 14-08-00245-CV. 2009 WL 3126538. at 3 (Tex.
App.—Houston [14th Dist] Oct 1, 2009, no pet.) (mem. op.) (holding that insurance agent who
procured insurance as requested by his client “had no duty to do more”). Alternatively, to the extent
First Specialty did owe a duty to Landlord, we hold that First Specialty conclusively established that
it satisfied that duty by providing the coverage requested and expected by Tenant Thus, the trial
—30--
)
4
r
C
E
j) C
tJ)
7
C C
C
Q
)
-
— -
C,
C
C
C
C
I)
C
1)
C)
C)
niirt tü ‘pra1
.Fift1i Ditrirt nf Irxzn tt Ja1ht
JUDGMENT
OSTROVfl7. & G\VINN. LLC. Appellant Appeal from the 1 91st .Judicial I)istrict
Court of Dallas Counts. Texas, (Tr.Ct.No.
No. 05-l1-OO]43-CV V. O6.O9925-J).
Opinion delivered by Justice FitzGerald,
FIRST SPECIALTY INSURANCE Justices O’Neill and Lang-Miers
COMPANY. Appel lee participating.
In accordance with this Court’s opinion of’ this date, the judgment of the trial court is
AFFIRMED. It is ORDERED that appellee First Specialty Insurance Company recover its
costs of this appeal from appellant Ostrovitz & Gwinn. LLC.
Judgment entered I)ccember 13. 2012.
KFRRY P. F El/GERAlD —
.JL ‘lI(’I