Bland Brown Jr. and Andra Lynn Brown v. James Carrell Individually and James Carrell D/B/A Carrell Insurance ( 2016 )

In The
Court of Appeals
Ninth District of Texas at Beaumont
_________________
NO. 09-15-00016-CV
_________________
BLAND BROWN JR. AND ANDRA LYNN BROWN, Appellants
V.
JAMES CARRELL INDIVIDUALLY AND JAMES CARRELL D/B/A
CARRELL INSURANCE, Appellee
________________________________________________________________________
On Appeal from the 258th District Court
Polk County, Texas
Trial Cause No. CIV-27275
________________________________________________________________________
MEMORANDUM OPINION
Bland Brown Jr. and Andra Lynn Brown (hereinafter referred to as “the
Browns”) appeal the grant of take-nothing summary judgment in favor of James
Carrell Individually and James Carrell d/b/a Carrell Insurance (hereinafter
collectively referred to as “Carrell”). The Browns contend the trial court erred in
granting Carrell’s traditional and no-evidence motions for summary judgment. We
affirm the trial court’s judgment.
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I. Background
The Browns own a home with an adjacent guest house in Livingston, Texas.
The Browns purchased windstorm insurance for their guest house from Germania
Insurance Company (“Germania Insurance”) through its agent, Carrell. The
Browns also purchased flood insurance from Clara Quinn, an agent at Germania
General Agency, Inc. (“Germania General”), which culminated in a flood policy
issued by insurer Delta Lloyds, now known as Harleysville Mutual Insurance
Company (“Harleysville”). The evidence in the record reflects that Carrell is not
associated with Germania General. The undisputed summary judgment evidence is
that Germania Insurance does not write flood insurance policies and that Carrell
did not sell flood insurance policies and did not procure the flood insurance policy
on behalf of the Browns. It is also undisputed that the Browns never provided
Carrell with a copy of the flood insurance policy. The Browns did not fill out an
application for flood insurance with Carrell or anyone at his agency. Mr. Brown
testified that the mortgage company procured the policy at closing, and he only
assumed the flood policy was written through Carrell.
According to the Browns, flooding and wind-driven rain from Hurricane Ike
damaged their guest house. Thereafter, they contacted Carrell and reported the
loss. The Browns contend they assumed Carrell was the agent for both the
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windstorm and flood policies and that he would submit a claim to Germania
Insurance and Harleysville. However, Carrell only notified Germania Insurance of
the Browns’ windstorm claim and did not notify Harleysville of their flood claim.
Eventually, Harleysville denied the Browns’ flood claim in part because the claim
was not timely submitted. Germania Insurance issued two settlement checks to the
Browns to cover the windstorm damage, but the Browns were dissatisfied with the
settlement amount offered. Germania Insurance denied any further coverage to the
guest house.
Thereafter, the Browns filed suit on December 29, 2010, against
Harleysville, Germania Insurance, and Harleysville’s independent adjuster. The
case was removed to federal court, where a partial judgment was entered
dismissing all claims against Harleysville and its independent adjuster, but
remanding the Browns’ case against Germania Insurance to state court. See Brown
v. Harleysville Mut. Ins. Co., No. 9:10-CV-190, 2011 U.S. Dist. LEXIS 82607, *1-
2 (E.D. Tex. 2011). Germania Insurance entered into a settlement agreement with
the Browns regarding their state court claims and the Browns executed a release.
Thereafter, the Browns filed suit against Carrell alleging a number of causes
of action, including breach of fiduciary duty, breach of contract, negligence,
negligent misrepresentation, and violations of the Texas Insurance Code. On
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February 18, 2014, Carrell filed a no-evidence motion for summary judgment.
And, on July 8, 2014, Carrell filed a traditional motion for summary judgment. The
Browns filed a motion for summary judgment on October 3, 2014. The trial court
denied the Browns’ motion for summary judgment.
On October 27, 2014, the trial court entered an order on Carrell’s no-
evidence motion for summary judgment. In that order, the trial court went through
each of the Browns’ causes of action and indicated whether the trial court was
granting or denying Carrell’s no-evidence motion on that claim. The trial court
granted summary judgment in favor of Carrell on the Browns’ causes of action for
breach of fiduciary duty, breach of contract, negligent misrepresentation, violations
of the Texas Insurance Code, and claims for mental anguish and punitive damages.
The trial court denied Carrell’s no-evidence motion for summary judgment as to
the Browns’ cause of action for negligence and their claims for attorney’s fees.
However, the same day, the trial court entered an order titled, “Final
Judgment[.]” The trial court’s Final Judgment provides in part:
Upon consideration of the No-Evidence Motion for Summary
Judgment and the Traditional Motion for Summary Judgment filed by
Defendant [Carrell], the Court, after reviewing the motions, the
response(s) and pleadings on file, and the applicable law, and
evidence, is of the opinion that said Motions are meritorious and
should be GRANTED. It is therefore,
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ORDERED, that Plaintiffs, [the Browns], shall take nothing
from Defendant [Carrell], by reason of this suit. A take nothing
judgment is hereby ordered in favor of [Carrell], as to all claims
asserted herein. 1
The Browns appealed from this final judgment.
II. Standard of Review
When both sides move for summary judgment and the trial court grants one
motion and denies the other, we consider both sides’ summary judgment evidence,
determine all questions presented, and render the judgment the trial court should
have rendered. Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s London, 327
S.W.3d 118, 124 (Tex. 2010). Therefore, we review all grounds asserted in both
the Browns’ and Carrell’s motions.
When a motion for summary judgment presents both no-evidence and
traditional grounds, we review the no-evidence grounds first. See Ford Motor Co.
v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004). If a nonmovant fails to produce
more than a scintilla of evidence under the no-evidence standards, there is no need
for an appellate court to analyze whether the movant’s summary judgment proof
satisfied the burden related to traditional summary judgment motions. Id. In
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The Browns argue in their appellate brief that the trial court’s order on the
no-evidence motion for summary judgment and its final judgment improperly
contradict. However, an order denying a motion for summary judgment is
interlocutory and may be changed or modified until final judgment is rendered. See
In re Staley, 320 S.W.3d 490, 502 (Tex. App.—Dallas 2010, no pet.).
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determining whether the evidence produced is more than a scintilla, we must view
the evidence in the light most favorable to the non-movant. Id. at 601. “[M]ore
than a scintilla of evidence exists if the evidence ‘rises to a level that would enable
reasonable and fair-minded people to differ in their conclusions.’” Id. (quoting
Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997)). However,
if the evidence produced “‘to prove a vital fact is so weak as to do no more than
create a mere surmise or suspicion of its existence, the evidence is no more than a
scintilla and, in legal effect, is no evidence.’” Id. (quoting Kindred v. Con/Chem,
Inc., 650 S.W.2d 61, 63 (Tex. 1983)).
III. No-Evidence Motion for Summary Judgment
On appeal, the Browns argue that they presented more than a scintilla of
evidence to the trial court in support of their causes of action for breach of
fiduciary duty, breach of contract, violations of “chapter 541” and “chapter 542 of
the DTPA[,]” negligence, negligent misrepresentation, and to show they were
entitled to damages for mental anguish, exemplary damages, and attorney’s fees.
We address each argument below.
A. Breach of Fiduciary Duty
To establish a breach-of-fiduciary-duty claim, the Browns must show (1) a
fiduciary relationship between them and Carrell; (2) a breach by Carrell of his
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fiduciary duty to the Browns; and (3) an injury to the Browns or benefit to Carrell
as a result of Carrell’s breach. See Fred Loya Ins. Agency, Inc. v. Cohen, 446
S.W.3d 913, 919 (Tex. App.—El Paso 2014, pet. denied) (quoting Dernick Res.,
Inc. v. Wilstein, 312 S.W.3d 864, 877 (Tex. App.—Houston [1st Dist.] 2009, no
pet.)). The Browns contend that the relationship they had with Carrell was an
agency relationship, which is one type of a formal fiduciary relationship. See
Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 200 (Tex. 2002) (“[A]gency
is also a special relationship that gives rise to a fiduciary duty.”).
In Texas, there is no presumption of agency; thus, a party who alleges
agency has the burden to prove the relationship. IRA Res., Inc. v. Griego, 221
S.W.3d 592, 597 (Tex. 2007) (per curiam). An agency relationship is a consensual
relationship that exists between two parties, in which one party, the agent, acts on
behalf of the other party, the principal, subject to the principal’s control. TOKA
Gen. Contractors v. Wm. Rigg Co., No. 04-12-00474-CV, 2014 WL 1390448, at
*8 (Tex. App.—San Antonio Apr. 9, 2014, pet. denied) (mem. op.). “For an
agency relationship to exist, there must be (1) a meeting of the minds between the
parties to establish the relationship, and (2) some act constituting the appointment
of the agent.” Id. The only evidence the Browns rely upon to show that they had an
agency relationship with Carrell was Carrell’s testimony that he was their
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insurance agent for obtaining the windstorm policy. Even if an agency relationship
existed between Carrell and the Browns regarding the windstorm policy, there is
no evidence that the scope of that agency, actual or apparent, extended to cover the
flood insurance policy. The Browns failed to present any evidence to show a
meeting of the minds between them and Carrell for Carrell to act as their agent
with regard to the flood insurance policy or other evidence to reasonably show that
he had apparent authority to act as an agent for Harleysville. The summary
judgment evidence is that the Browns only assumed Carrell would take care of
reporting their flood claim. Further, the Browns presented no evidence that Carrell
had any authority regarding the Browns’ flood policy or that they had the right to
control Carrell’s actions regarding the flood policy, elements necessary to show a
principal-agent relationship. We conclude that the Browns have failed to meet their
burden of producing summary judgment evidence to raise a genuine issue of
material fact as regards the first element of a breach-of-fiduciary-duty cause of
action. The trial court did not err in granting summary judgment in favor of Carrell
on the Browns’ cause of action for breach of fiduciary duty.
B. Breach of Contract
The Browns contend they “have established [their] breach of contract” cause
of action. Insurance policies are contracts. Barnett v. Aetna Life Ins. Co., 723
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S.W.2d 663, 665 (Tex. 1987); see Markel Ins. Co. v. Muzyka, 293 S.W.3d 380, 385
(Tex. App.—Fort Worth 2009, no pet.) (explaining that the construction of an
insurance policy is according to the same rules of construction that apply to
contracts). To recover on a breach of contract claim, a plaintiff must show (1) the
existence of a valid contract, (2) the performance or tendered performance by the
plaintiff, (3) breach of the contract by the defendant, and (4) resulting damages to
the plaintiff. Fieldtech Avionics & Instruments, Inc. v. Component Control.Com,
Inc., 262 S.W.3d 813, 825 (Tex. App.—Fort Worth 2008, no pet.). In reviewing
the Browns’ petition, we note that the only contracts to which the Browns refer
include: (1) the insurance policy between the Browns and Harleysville for flood
coverage and, (2) the policy between the Browns and Germania Insurance for
windstorm coverage. There are no remaining disputes regarding windstorm
coverage, and the Browns make no claim in this lawsuit regarding Carrell’s actions
in regards to that policy. This dispute only concerns Carrell’s alleged actions and
inactions related to the flood policy. The undisputed summary judgment evidence
is that Carrell was not the agent that procured the flood policy. Rather, an agent
named Clara Quinn obtained the flood policy from Harleysville. There is no
evidence that Carrell had anything to do with the procurement of the flood policy
or the ability to file a claim on behalf of the Browns under such policy. Further,
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there is no evidence that the Browns paid to Carrell any premiums for the flood
policy.
On appeal, the Browns contend that “at least a verbal contract existed
between [them] and Carrel to submit a flood claim.” While the Browns’ brief cites
to a number of pages in the record to support this contention, none of the record
references cited actually support their claim that Carrell entered into a verbal
agreement with the Browns to report the flood claim. Rather, much of the cited
evidence supports that the Browns merely made an assumption that Carrell would
file the flood claim. We conclude the Browns produced no evidence that a valid
contract existed between them and Carrell in regards to the flood insurance policy,
or that Carrell breached any duty to the Browns in regards to that policy. The trial
court did not err in granting summary judgment in favor of Carrell on the Browns’
breach of contract cause of action.
C. Unfair Insurance Practices
On appeal, the Browns argue that they have established that Carrell
participated in unfair insurance practices under “chapter 541” and “chapter 542 of
the DTPA[.]” However, the Browns did not allege any causes of action directly
under the DTPA. Additionally, the DTPA is codified in subchapter E, chapter 17
of the Texas Business and Commerce Code. See Tex. Bus. & Com. Code Ann. §
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17.41 (West 2011). Generally, the purpose of chapters 541 and 542 of the Texas
Insurance Code is to regulate the business of insurance by prohibiting deceptive or
unfair insurance practices and unfair claim settlement practices, and to promote the
prompt payment of claims by insurers. See Tex. Ins. Code Ann. §§ 541.001,
542.001, 542.003, 542.054 (West 2009). In their petition, the Browns specifically
alleged that Carrell violated sections 541.060 and 542.051 of the Texas Insurance
Code. We construe the Browns’ appellate brief as arguing that they produced more
than a scintilla of evidence to support their claims of unfair insurance practices
under the Texas Insurance Code.
1. Section 541.060
Section 541.060(a) enumerates a list of “unfair settlement practices” that
constitute “an unfair method of competition or an unfair or deceptive act or
practice in the business of insurance” in respect to a claim by an insured or
beneficiary. Id. § 541.060(a). The Browns alleged generally that Carrell violated
“numerous provisions” of section 541.060 of the Texas Insurance Code; however,
they never identified the provisions allegedly violated.
The only specific action that the Browns complain about regarding Carrell is
that Carrell did not notify Harleysville of the Browns’ flood claim or notify them
that he was unable to submit a flood claim on their behalf. In their brief, the
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Browns argue that the basis of their claims is that Carrell “failed to do what [he]
promised and [was] obligated to do: submit a flood claim when directed to do so”
or notify them of his inability to submit the claim. However, as noted above, there
is no evidence in the summary judgment record that Carrell ever promised to report
the flood claim for the Browns. The Browns do not identify any provision in
section 541.060 that Carrell’s actions allegedly violated. We conclude that
Carrell’s failure to report a claim for a policy that he did not procure and was
otherwise not associated with does not give rise to any cause of action for any of
the unfair settlement practices identified in section 541.060(a). See id. §
541.060(a).
Because we have concluded that the trial court properly granted summary
judgment in favor of Carrell on the Browns’ claims under section 541.060, we
need not address their claim for damages and attorney’s fees under section
541.152(a). See Tex. Ins. Code Ann. § 541.152(a) (West Supp. 2016) (providing
that a prevailing plaintiff in an action under this subchapter may obtain actual
damages, court costs, and reasonable and necessary attorney’s fees).
2. Section 542.051
The Browns also alleged that Carrell was liable under section 542.051 for
causing them to lose flood insurance policy proceeds. However, section 542.051 is
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a defining section of the statute and does not prohibit any specific act. See id. §
542.051 (defining “business day”, “claim”, “claimant”, and “notice of claim”).
Additionally, the Browns do not address this provision in their appellate brief as a
basis for their claims or any other provision under subchapter B of chapter 542. On
appeal, the Browns argue that Carrell committed a violation of section
542.003(b)(2) when he failed “to acknowledge with reasonable promptness
pertinent communications relating to a claim arising under the insurer’s policy.”
We have reviewed the Browns’ petition, and even under a liberal construction, we
conclude they did not allege any claims based on a violation of section 542.003 of
the Texas Insurance Code in their petition to the trial court. Furthermore, even if a
violation of section 542.003 had been pleaded, we conclude that section regulates
insurers, and does not create any duty to the insureds by insurance agents. See id. §
542.003(a), (b); see also Tex. City Patrol, LLC v. El Dorado Ins. Agency, Inc., No.
01-15-01096-CV, 2016 WL 3748780, at *2 (Tex. App.—Houston [1st Dist.] July
12, 2016, no pet.) (mem. op.). As such, the Browns have failed to show that
summary judgment on their claims under the Texas Insurance Code was improper.
We conclude the trial court did not err in granting summary judgment in favor of
Carrell on the Browns’ claims for unfair insurance practices.
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D. Negligence
On appeal, the Browns contend that Carrell owed them a duty to report their
flood claim when they instructed him to do so and that Carrell’s failure to file their
claim with Harleysville was a breach of that duty. Alternatively, the Browns
contend that Carrell owed them a duty to inform them that he could not submit the
flood claim after they had asked him to do so. The Browns, however, have cited no
case law or other authority to support the imposition of any such duties on Carrell.
A plaintiff seeking to recover on a cause of action for negligence must prove
three elements: (1) legal duty owed by one person to another, (2) breach of that
duty, and (3) damages proximately caused by the breach. Kroger Co. v. Elwood,
197 S.W.3d 793, 794 (Tex. 2006); D. Houston, Inc. v. Love, 92 S.W.3d 450, 454
(Tex. 2002). The existence of a legal duty is a question of law for the court to
decide based on the particular facts surrounding the occurrence at issue. Alcoa, Inc.
v. Behringer, 235 S.W.3d 456, 459–60 (Tex. App.—Dallas 2007, pet. denied). It is
true that in Texas, an insurance agent owes certain common-law duties to a client
for whom the agent undertakes to procure insurance, including the duty to use
reasonable diligence in attempting to place the requested insurance and the duty to
inform the client promptly if unable to do so. Sonic Sys. Int’l, Inc. v. Croix, 278
S.W.3d 377, 389 (Tex. App.—Houston [14th Dist.] 2008, pet. denied).
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Furthermore, the courts have found that an insurance agent has no legal duty to
extend the insurance protection of his client merely because the agent has
knowledge of the need for additional coverage for that client, especially in the
absence of evidence of prior dealings where the agent customarily has taken care
of his client’s needs without consulting him. Id. at 394 (quoting McCall v.
Marshall, 398 S.W.2d 106, 109 (Tex. 1965)). Here, however, the Browns are not
complaining about Carrell’s failure to procure insurance coverage or the failure to
seek an extension of that protection. In fact, the Browns do not complain that
Carrell did anything wrong in the procurement of or handling of their windstorm
policy. There is no evidence of a special business relationship between the Browns
and Carrell such that the Browns would have a reasonable expectation that Carrell
would assume the responsibility of reporting a flood insurance claim on their
behalf without specific consultation. Their assumption that Carrell would file a
claim under the flood insurance policy, without more, cannot create a legal duty.
We find no case law and the Browns cite no cases or other authority to support that
Carrell owed the Browns a legal duty to undertake to report a claim on the flood
policy. We conclude that the trial court did not err in granting summary judgment
in Carrell’s favor on the Browns’ common-law negligence claim. We overrule the
Browns’ appellate issues pertaining to this cause of action.
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E. Negligent Misrepresentation
The Browns contend that they have produced summary judgment evidence
to support each element of their cause of action for negligent misrepresentation.
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 information for the guidance of others in
their business, (3) the defendant did not exercise reasonable care or competence in
obtaining or communicating the information, and (4) the plaintiff suffered
pecuniary loss by justifiably relying on the representation. Fed. Land Bank Ass’n
of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991); Brown & Brown of Tex., Inc.
v. Omni Metals, Inc., 317 S.W.3d 361, 384 (Tex. App.—Houston [1st Dist.] 2010,
pet. denied). The Browns argue that Carrell “made representations in the course of
[his] business, or in a transaction in which [he] had a pecuniary interest and
supplied false information to [the Browns].” However, the Browns have failed to
identify on appeal any representations that Carrell allegedly made to them
regarding the flood insurance policy or any claim under that policy and have failed
to cite to any evidence to support their allegation that Carrell supplied the Browns
with any false information. Instead, the summary judgment evidence shows that
the Browns only assumed Carrell would submit a claim on their behalf.
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We conclude the trial court did not err in granting summary judgment in
favor of Carrell on the Browns’ cause of action for negligent misrepresentation.
Having concluded that summary judgment in favor of Carrell was proper on
all of the Browns’ claims, we conclude the Browns’ claims for mental anguish
damages, exemplary damages, and attorney’s fees are moot, and we overrule those
issues. For all the reasons stated above, we affirm the trial court’s judgment.
AFFIRMED.
______________________________
CHARLES KREGER
Justice
Submitted on October 29, 2015
Opinion Delivered December 29, 2016
Before McKeithen, C.J., Kreger and Johnson, JJ.
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