United Fire Lloyds Insurance Company v. Raymond Losano

Opinion filed May 18, 2006

Opinion filed May 18, 2006

                                                                        In The

    Eleventh Court of Appeals

                                                                 ____________

                                                          No. 11-05-00030-CV

                                                    __________

              UNITED FIRE LLOYDS INSURANCE COMPANY, Appellant

                                                             V.

                                     RAYMOND LOSANO, Appellee

                                         On Appeal from the 259th District Court

                                                          Jones County, Texas

                                                   Trial Court Cause No. 20,394

                                              M E M O R A N D U M   O P I N I O N

At issue in this declaratory judgment suit is the meaning of a supplemental death benefits endorsement to a personal auto policy.  The trial court granted relief to the policyholder, Raymond Losano.  We reverse and render in part and reverse and remand in part.

United Fire Lloyds Insurance Company presents three issues on appeal.  In its first issue, United argues that the policy was not ambiguous and that it performed its obligations under the policy.  We agree.

Rules of contract construction govern the interpretation of insurance policies.  Tex. Farmers Ins. Co. v. Murphy, 996 S.W.2d 873, 879 (Tex. 1999).  Whether an agreement is ambiguous is a question of law to be decided from all of the circumstances in existence when the contract was made.  State Farm Fire & Cas. Co. v. Vaughan, 968 S.W.2d 931 (Tex. 1998).  An insurance policy will not be ambiguous if the court can give it a definite legal meaning. Nat=l Union Fire Ins. Co. v. CBI Ind., Inc., 907 S.W.2d 517 (Tex. 1995).  It is the duty of a court to give words their plain meaning and to enforce the contract as it is written.  Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157-59 (Tex. 2003); Hargis v. Md. Am. Gen. Ins. Co., 567 S.W.2d 923 (Tex. Civ. App.CEastland 1978, writ ref=d n.r.e.).  Not all differences in the interpretation of a contract result in an ambiguity.  Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 134 (Tex. 1994).  The parties can offer differing interpretations of a contract, but that alone does not give rise to an ambiguity.  Schaefer, 124 S.W.3d at 157.  Before an ambiguity will arise, the language in the contract must be susceptible to two or more reasonable interpretations.  Id.

Losano was the named insured under an auto insurance policy issued by United. Losano=s wife, a covered person under the policy, was in a vehicle accident and died from injuries received in that accident. United paid Losano uninsured/underinsured motorist benefits, personal injury protection benefits, and property damage benefits.  United also paid Losano $2,500 as a supplementary death benefit under an endorsement to the policy.  Losano claimed that United owed him another $7,500 in supplementary death benefits under that endorsement; this declaratory judgment action followed. 

After a bench trial, the trial court awarded Losano supplemental death benefits in the amount of $7,500 plus attorney=s fees of $20,000.

The endorsement in Losano=s policy that gives rise to the disagreement is entitled A573A-SUPPLEMENTARY DEATH BENEFIT.@  The endorsement contains language that A[c]overage under [the] endorsement is provided and payable only when other benefits are paid or payable under: Personal Injury Protection Coverage, Medical Payments Coverage and/or Auto Death Indemnity as afforded by this policy.@  This language of the policy then follows: AIt is agreed that Medical Payments Coverage, Personal Injury Protection Coverage and/or Auto Death Indemnity are extended to add the following: We will pay a supplementary death benefit equal to the limit shown for the applicable coverages@ (emphasis added).  

The policy contains a $10,000 per person limit under this provision.  Losano claims that this provision creates the ambiguity in the contract.  We disagree. The $10,000 limit is clearly designed to deal with situations where, for example, claims are made under the applicable coverages as extended by Endorsement 573A and those claims, alone or in combination with one or more of the three situations mentioned in the endorsement (for which coverage exists), would be in excess of $10,000.  Here, that could not happen because personal injury protection was the only applicable coverage; claims under that coverage were limited to $2,500.  If there had been a premium charged for medical payments coverage and auto death indemnity and the limits of each had been $4,000, for example, then any recovery would be limited to $10,000.  Losano could not have recovered $10,500 in supplementary death benefits under those assumed facts.  The $10,000 cap is simply a limit of liability for supplementary death benefits. Losano=s interpretation of the policy is not a reasonable one in this case.  Schaefer, 124 S.W.3d at 154.

We hold that the policy is unambiguous insofar as supplementary death benefits are concerned. Neither medical payments coverage nor auto death indemnity are applicable coverages.  The policy provides, ACOVERAGE IS PROVIDED WHERE A PREMIUM AND LIMIT OF LIABILITY IS SHOWN.@  No premiums or liability amounts are shown for medical payments coverage or auto death indemnity.  Therefore, there is no coverage under the policy for medical payments or auto death indemnity; and, as a matter of law, they are not applicable coverages under which supplemental death benefits would be payable under the facts of this case.  The only coverage listed in Endorsement 573A for which a premium is shown in the policy declarations is personal injury protection.  The limit of liability shown for personal injury protection in the declarations is $2,500.  Therefore, under the supplementary death benefit provision, the maximum amount that United owed Losano was $2,500; it paid that amount to him.  United=s first issue on appeal is sustained.

The trial court awarded attorney=s fees to Losano under Tex. Civ. Prac. & Rem. Code Ann. ' 37.009 (Vernon 1997).   Under Section 37.009, Athe court may award costs and reasonable and necessary attorney=s fees as are equitable and just.@  Because we are reversing the trial court=s judgment for Losano, it would not be Aequitable and just@ to affirm the award of attorney=s fees to appellees.  Fajkus v. First Nat=l Bank of Giddings, 735 S.W.2d 882, 887 (Tex. App.CAustin 1987, writ den=d).  United=s third issue on appeal is sustained insofar as the same requests a remand for a reconsideration of the award of attorney=s fees.

We reverse the declaratory judgment issued by the trial court and render judgment that United has satisfied the requirements of the policy issued to Losano.  We reverse and remand the issue of attorney=s fees to the trial court.

JIM R. WRIGHT

CHIEF JUSTICE

May 18, 2006

Panel consists of:  Wright, C.J., and

McCall, J., and Strange, J.