Dixey Evans v. Globe Life and Accident Insurance Company ( 2014 )

Opinion filed October 31, 2014
In The
Eleventh Court of Appeals
__________
No. 11-13-00092-CV
__________
DIXEY EVANS, Appellant
V.
GLOBE LIFE AND ACCIDENT
INSURANCE COMPANY, Appellee
On Appeal from the 220th District Court
Comanche County, Texas
Cause No. CCCV10-00710A
MEMORANDUM OPINION
Dixey Evans appeals from a summary judgment against her and in favor of
Globe Life and Accident Insurance Company. The trial court held as a matter of
law that Evans had no legal claim to the proceeds from two life insurance policies
that insured the lives of her two adult children, C.E. Jones (Chance) and David
Nelson Jones II (David II).
Upon Chance’s and David II’s accidental and tragic deaths that occurred less
than six months apart, Globe Life paid the full benefit of the two policies to Connie
Jones, Chance’s and David II’s stepmother and the current wife of their father,
David Nelson Jones. Connie was the named beneficiary in each policy, but
Appellant asserts that Globe Life was prohibited from paying Connie because
Connie had no insurable interest in Chance and David II and because Chance and
David II had not signed the policies or a beneficiary designation that named
Connie as beneficiary to each policy. We affirm.
I. Background Facts
David Nelson Jones owned and operated a company called Jones Drilling,
Inc. David’s three sons—Eli Eric Wayne Jones (Eli), Chance, and David II—all
worked for him at Jones Drilling. All three sons owed their father money, so on
his authority, Connie applied to Globe Life for life insurance policies on Eli,
Chance, and David II. 1 Jones Drilling paid for the policies, and Connie thought
that there was a death benefit of $30,000 on Chance’s and David II’s policies, but
the policies each paid a total benefit of $175,000 in the event of an accidental
death. Chance and David II were both employed by Jones Drilling at the time the
policies were issued; David II was the company’s only driller. Chance and
David II were still employed by Jones Drilling at the time of their respective
deaths. The two policies named Connie Jones as the sole designated beneficiary.
Both Chance and David II knew about the policies, but neither Chance nor
David II signed the policies; they also did not complete a designated beneficiary
form naming a beneficiary.
David II and Chance died in two separate accidents in 2008: David II died in
an accident on July 7, 2008, and Chance died in an accident on December 13,
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Eli died four years before Chance and David II, and his tragic death is not part of this case.
2
2008. At the time of his death, David II was married to Stephanie Jones, with
whom he had a minor son, A.J. Chance was not married and had no children.
After David II’s death, Connie filed a claim with Globe Life, and it paid her
$175,000, the full benefit under the policy that insured him. After Chance’s death,
Connie also made a claim with Globe Life, and it paid Connie $175,000, the full
benefit under the policy that insured Chance. Connie deposited the entire
$350,000 in life insurance proceeds into Jones Drilling’s bank account.
Stephanie was aware of the policy that insured her husband, David II, but
she did not notify Globe Life of her or A.J.’s purported interests in the policy prior
to Globe Life’s payment of the proceeds to Connie. Appellant did not know that
the policies existed until after Connie had received the proceeds from Globe Life
for both policies. Appellant did not inform Globe Life that she disputed Globe
Life’s payment of the policies’ benefits to Connie before Globe Life paid those
benefits to Connie.
II. Procedural History
Appellant initiated the underlying suit by seeking a divorce and partition of
property held by David Nelson Jones. 2 Appellant added Globe Life as a defendant
after learning that Globe Life had paid insurance proceeds to Connie. Appellant
alleged that Connie lacked an insurable interest under the Globe Life policies; that
Appellant was entitled to payment from Globe Life under the policy that had
insured Chance; and that Stephanie, individually and as next friend of A.J., should
be paid the benefits under the policy that had insured David II. Stephanie, whom
Appellant had named as a defendant in Appellant’s suit, brought cross-claims
against Globe Life and Connie and asserted that Connie lacked an insurable
interest in the life of David II. Stephanie sought the imposition of a constructive
2
Although Appellant brought suit seeking a divorce, there is evidence that her marriage to David
Nelson Jones had previously been annulled.
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trust on the proceeds of the policy insuring her husband’s life to be held for the
benefit of her son and herself as the only heirs of David II.
Globe Life moved for summary judgment against Appellant and Stephanie,
requesting that the trial court order that Appellant and Stephanie take nothing on
their claims against Globe Life. Globe Life asserted that it was discharged from
liability because it properly paid all benefits owed under the policies to Connie—
the designated beneficiary with an insurable interest—without having received
notice of an adverse claim.
The trial court granted Globe Life’s motion for summary judgment and
entered a take-nothing judgment against Appellant and Stephanie on their claims
against Globe Life. The trial court later severed the causes of action against Globe
Life, and Appellant filed this appeal.3
III. Issue Presented
Appellant argues that the trial court erred when it entered summary
judgment in favor of Globe Life because Connie had no insurable interest in
Chance and David II. In addition, Appellant argues that, under the Texas
Insurance Code, Globe Life was prohibited from paying life insurance proceeds to
a beneficiary named in the policy because the insured did not sign the policy
application or designate in writing a named beneficiary.
IV. Standard of Review
Globe Life moved for traditional summary judgment, but it also included a
paragraph in its motion that asserted there was “no evidence” that it had
wrongfully paid Connie. It also asserted in the same paragraph that Appellant had
no legal basis, and no evidence, to claim that she was entitled to recover monies
from Globe Life. The standard of review for summary judgments under Texas
3
Stephanie did not appeal from the trial court’s summary judgment.
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Rule of Civil Procedure 166a is well established. Nixon v. Mr. Prop. Mgmt. Co.,
690 S.W.2d 546, 548–49 (Tex. 1985). We review a summary judgment de novo.
Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010).
The movant for traditional summary judgment must show that there is no
genuine issue of material fact and that it is entitled to judgment as a matter of law.
See TEX. R. CIV. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v.
Fielding, 289 S.W.3d 844, 848 (Tex. 2009). A defendant who moves for
traditional summary judgment must either negate at least one essential element of
the nonmovant’s cause of action or prove all essential elements of an affirmative
defense. See Randall’s Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex.
1995). When summary judgment is granted on traditional grounds, we take the
evidence adduced in favor of the nonmovant as “true” and draw every reasonable
inference and resolve all doubts in the nonmovant’s favor. Id. (citing El Chico
Corp. v. Poole, 732 S.W.2d 306, 315 (Tex. 1987)).
The party that files a no-evidence motion for summary judgment alleges
there is no evidence of one or more essential elements of a claim or defense on
which the adverse party would have the burden of proof at trial. See TEX. R.
CIV. P. 166a(i). The adverse party then must respond with evidence to raise a
genuine issue of material fact on each of the challenged elements in the claim or
defense. See id. A no-evidence summary judgment is essentially a pretrial
directed verdict, and we apply the same legal sufficiency standard in reviewing a
no-evidence summary judgment as we apply in reviewing a directed verdict. King
Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750–51 (Tex. 2003).
With a no-evidence motion, we review the evidence in the light most
favorable to the nonmovant, disregarding all contrary evidence and inferences. Id.
at 751 (citing Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex.
1997)). A no-evidence summary judgment is improperly granted if the respondent
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brings forth more than a scintilla of probative evidence to raise a genuine issue of
material fact. Id. (citing TEX. R. CIV. P. 166a(i) and Wal-Mart Stores, Inc. v.
Rodriguez, 92 S.W.3d 502, 506 (Tex. 2002)). Less than a scintilla of evidence
exists when the evidence is “so weak as to do no more than create a mere surmise
or suspicion” of a fact. Id. (quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63
(Tex. 1983)). More than a scintilla of evidence exists when the evidence “rises to a
level that would enable reasonable and fair-minded people to differ in their
conclusions.” Id. (quoting Merrell Dow Pharm., 953 S.W.2d at 711).
V. Analysis
A. Connie’s Insurable Interest by Affinity
Appellant contends that Globe Life improperly paid the benefits of the two
policies to Connie, the sole beneficiary named in the policies, because Connie did
not have an insurable interest in Chance or David II. Globe Life asserts that
Connie had an insurable interest in the policies as a matter of law and that Globe
Life was discharged from liability because it paid the proceeds of the policies to
Connie, as the named beneficiary, without having received notice of an adverse
claim to the proceeds of the policies.
Traditionally, Texas courts have prohibited a person from purchasing an
insurance policy on the life of another if that person does not have an insurable
interest on the life of the insured. Cheeves v. Anders, 28 S.W. 274, 275 (Tex.
1894). This insurable interest must be continuing; in other words, the named
beneficiary must have an insurable interest in the insured’s life when the policy is
issued and when the insured dies. Allen v. United of Omaha Life Ins. Co., 236
S.W.3d 315, 322 (Tex. App.—Fort Worth 2007, pet. denied). Two public policy
concerns justify this theory of law: we should not promote a practice that
encourages one to take another’s life, and no one should be permitted to wager on
the life of another. Gray v. Nash, 259 S.W.3d 286, 291 (Tex. App.—Fort Worth
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2008, pet. denied); Stillwagoner v. Travelers Ins. Co., 979 S.W.2d 354, 358 (Tex.
App—Tyler 1998, no pet.).
The Texas Supreme Court has recognized three classes of persons who,
under common law, have an insurable interest in the life of another: “(1) one so
closely related by blood or affinity that he wants the other to continue to live,
irrespective of monetary considerations; (2) a creditor; and (3) one having a
reasonable expectation of pecuniary benefit or advantage from the continued life of
another.” Empire Life Ins. Co. of Am. v. Moody, 584 S.W.2d 855, 859 (Tex. 1979).
With respect to the first class of persons, affinity is defined as “[t]he relation that
one spouse has to the blood relatives of the other spouse” or “[a]ny familial
relation resulting from a marriage.” BLACK’S LAW DICTIONARY 70 (10th ed.
2014).
Furthermore, Section 573.024 of the Government Code provides that two
individuals are related to each other by affinity if they are married to each other or
“the spouse of one of the individuals is related by consanguinity to the other
individual.” TEX. GOV’T CODE ANN. § 573.024(a) (West 2012). This section of the
Government Code is cross-referenced as the proper definition of affinity by portions
of the Insurance Code, Estates Code, and Family Code. See TEX. INS. CODE ANN.
§ 4101.056(c) (West Supp. 2014); TEX. EST. CODE ANN. § 123.051(2-a) (West
2014); TEX. FAM. CODE ANN. § 71.003 (West 2014).
Connie was married to Chance and David II’s biological father at the time
the policies were issued and at the time of their respective deaths. By any of the
definitions provided above, Connie was related to the deceased by affinity. Thus,
as a matter of law, Connie had an insurable interest in Chance and in David II.
B. Texas Insurance Code §§ 1103.102, 1103.103, 1103.054, 1103.056
Appellant also argues that Globe Life is not entitled to a discharge of
liability under Section 1103.103 of the Texas Insurance Code because the
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decedents did not designate Connie as a beneficiary under the policies; Appellant
argues that Connie cannot have an insurable interest because her designation as
beneficiary was not made by the decedents and the decedents did not sign the
policies. See INS. § 1103.103 (West 2009). Globe Life responds that Section
1103.103 has no application to the facts of this case because it applies only to an
insurer that pays life insurance proceeds to a third-party beneficiary designated in
writing by an insured as permitted under Section 1103.056 of the Texas Insurance
Code. Globe Life relies upon Texas common law, as discussed above, as the basis
for Connie’s insurable interest.
Sections 1103.102 and 1103.103 relate to an insurance company’s payment
to a beneficiary designated in accordance with the Insurance Code and to an
insurance company’s discharge of liability. Section 1103.102(a) provides that, “if
an individual obtains a policy insuring the individual’s life, designates in writing a
beneficiary to receive the proceeds of the policy, and files the written designation
with the company, the company shall pay the proceeds that become due on the
death of the insured to the designated beneficiary.” Id. § 1103.102(a). Section
1103.103 of the Insurance Code provides that “a company that issues a life
insurance policy is discharged from all liability under the policy if the company
pays the proceeds of the policy to a designated beneficiary under
Section 1103.102(a)” and the company has not received notice of an adverse claim
to the policy proceeds. Id. § 1103.103.
Section 1103.054 of the Texas Insurance Code provides that an “individual”
may “apply for a policy insuring the individual’s life” and “designate in writing in
the application for the policy any individual, partnership, association, corporation,
or other legal entity as . . . a beneficiary of the policy.” Id. § 1103.054.
Section 1103.056 provides that an individual of legal age may “consent to the
purchase of or application for an individual or group life insurance policy by a
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third party” and “designate or consent to the designation of any individual,
partnership, association, corporation, or other legal entity as . . . a beneficiary of
the policy.” Id. § 1103.056.
Appellant’s argument is that the only way for a third party to purchase or
apply for a policy insuring the life of another is by satisfying the requirements of
Section 1103.054 or 1103.056. This argument contravenes the common law and
would create a new requirement for the common-law insurable interest
classifications in the context of third-party purchasers of life insurance policies. In
enacting the provisions relied upon by Appellant, the legislature provided a method
for individuals to create an insurable interest for the benefit of any person or entity
properly designated as a beneficiary by the insured. In doing so, the legislature
established a new class of insurable interest holder; it did not create a new
requirement for designating a beneficiary if that beneficiary otherwise has an
insurable interest under the common law. A similar approach has been followed
by our sister courts. See McCall v. Smith, 252 S.W.3d 663, 665 (Tex. App.—
Houston [14th Dist.] 2008, pet. denied); Allen, 236 S.W.3d at 322–23;
Stillwagoner, 979 S.W.2d at 358–59.
We find no reason to interpret Sections 1103.054 and 1103.056 to place a
limitation on a third party’s ability to purchase a policy insuring the life of another
if the third party has an insurable interest under the common law. We decline to
adopt Appellant’s interpretation that Section 1103.056 has added requirements to
the common law on insurable interests. As we have previously explained, Connie
had an insurable interest in the lives of the deceased as a matter of law, and she
was entitled to collect the proceeds of the life insurance policies in which she was
named the beneficiary. Because Globe Life properly paid the proceeds of the
policies to Connie without having received notice of any adverse claim, it was
discharged from any liability as to Appellant. We overrule Appellant’s sole issue.
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VI. This Court’s Ruling
We affirm the judgment of the trial court.
MIKE WILLSON
JUSTICE
October 31, 2014
Panel consists of: Wright, C.J.,
Willson, J., and Bailey, J.
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