Glenda and Larry Rice v. Metropolitan Life Insurance Company

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-09-248-CV
GLENDA AND LARRY RICE APPELLANTS
V.
METROPOLITAN LIFE APPELLEE
INSURANCE COMPANY
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FROM THE 67TH DISTRICT COURT OF TARRANT COUNTY
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OPINION
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In this life insurance dispute, appellants Glenda and Larry Rice raise ten
points to appeal the trial court’s order granting the traditional and no-evidence
summary judgment motion of appellee Metropolitan Life Insurance Company
(MetLife). We affirm in part and reverse and remand in part.
Background
Underlying facts
Glenda purchased group universal life (GUL) insurance for herself and a
life insurance rider for her husband Larry, as her dependant, from MetLife
through a plan offered by her employer, Avon Products, Inc. Larry’s rider
provided $50,000 in coverage. Glenda retired from Avon in March 2003.
MetLife sent a letter dated May 10, 2003 that was addressed to Glenda
and described her insurance options upon retirement. The letter contained
information in its upper right corner, under the title of “Coverage Information
as of 5/10/2003,“ about the amount of Glenda’s own coverage and of Larry’s
coverage (described specifically in the letter at $50,000). It then stated in part,
You’ve worked for many years to ensure a solid financial
future. Now it’s time to relax and let us keep a promise that we
made to you when you enrolled for Group Universal Life insurance.
You trusted MetLife to provide a flexible life insurance benefit that
would meet a lifetime of protection needs. Now, at this very
important stage of your life, we’d like to continue to offer you a
menu of coverage options. Most likely, your coverage needs have
changed since you first enrolled for GUL. The enclosed brochure
and options sheet explains the options now available to you.
Please review these options carefully. Please note that your
current coverage will remain effective while you assess your
choices . . . . To choose an option, simply complete the attached
election form, sign where indicated, and return to MetLife in the
envelope provided. . . .
2
We look forward to continuing to serve your needs and help
you keep your promises. Again, congratulations and our best
wishes during your retirement!
The election form explained Glenda’s coverage options: (1) “CONTINUE
MY GUL COVERAGE,” (2) “ELECT A PAID-UP BENEFIT,” (3) “ELECT A METLIFE
ANNUITY,” or (4) “SURRENDER YOUR COVERAGE & RECEIVE YOUR CASH
FUND BALANCE.” Glenda initially sent MetLife a fax in which she chose the
fourth option, but later on the same day that she sent the first fax, after
speaking with a MetLife employee named Summer, Glenda sent another fax
stating that she wanted to continue her coverage under the first option.
The second fax that Glenda sent stated in part, “I just discussed my decision
to retain my coverage with Summer, your customer service associate. She has
assured me my coverage will neither lapse nor be cancelled.”
The certificate of insurance for Glenda’s group life insurance plan states
that term life insurance for dependants ends on the date of the employee’s
retirement.1 However, for about two and a half years after Glenda’s retirement,
MetLife continued to bill and accept quarterly premium payments for both
Glenda’s coverage and Larry’s rider coverage. Glenda received a “Group
1
During discovery, Glenda admitted that she received the certificate; her
admission does not indicate when she received it.
3
Universal Life Report” for the period of January to December 2005 that
mentioned Larry’s $50,000 in coverage. 2
In July 2005, MetLife discovered that it had billed the Rices for Larry’s
coverage since Glenda’s retirement in 2003, so in the latter part of 2005,
MetLife stopped billing the Rices for that coverage without notice to Glenda.
When Glenda received the bill for the final quarter of 2005, she saw for the first
time that MetLife had stopped billing for Larry’s coverage. When she called
MetLife in December 2005, MetLife’s employee, Angelica Ridge, explained to
her that MetLife did not cover term life insurance for dependants under the
Avon group policy upon an employee’s retirement and that Larry’s coverage had
been canceled “effective July 2005.” 3 Glenda told Angelica that no one
notified her of Larry’s coverage cancellation. Despite this, according to Glenda,
Angelica told her that the premiums that Glenda had paid for Larry’s coverage
2
The Group Universal Life Report shows the values of the coverage and
details financial activity related to the coverage.
3
MetLife later corrected the effective date of the cancellation of Larry’s
coverage retroactively to March 2003 (the month of Glenda’s retirement).
According to MetLife, it discovered its billing mistake in a records audit.
MetLife’s representative Mark Money swore, “[T]he dependent spouse coverage
must be manually changed in the system. When Mrs. Rice retired she
continued her life insurance coverage and was billed on a quarterly basis.
Mistakenly[,] MetLife’s system was not manually changed to end the dependent
spouse coverage billing.”
4
would not be refunded and that Larry’s coverage was in place through July
2005.
Procedural history
The Rices filed claims against MetLife for bad faith, breach of contract,
violation of the Texas Deceptive Trade Practices-Consumer Protection Act
(DTPA),4 violation of chapter 541 of the insurance code, 5 money had and
received (based on the nonreturn of the Rices’ premium payments for Larry’s
coverage), promissory estoppel, breach of fiduciary duty, and fraud by
nondisclosure. MetLife filed, in one document, a traditional and no-evidence
motion for summary judgment on all of the Rices’ claims. The court granted
the motion in its entirety without specifying reasons for doing so. The Rices
filed their notice of this appeal.
The Trial Court’s Order Granting MetLife’s Summary Judgment Motion
In their first nine points, the Rices argue that the trial court erred by
granting MetLife’s traditional and no-evidence summary judgment motion
against their various claims.
4
See Tex. Bus. & Com. Code Ann. §§ 17.41–.63 (Vernon 2002 & Supp.
2009).
5
See Tex. Ins. Code Ann. §§ 541.001–.454 (Vernon 2009).
5
Standards of review
Traditional summary judgment motions
A defendant who conclusively negates at least one essential element of
a cause of action is entitled to summary judgment on that claim. IHS Cedars
Treatment Ctr. of DeSoto, Tex., Inc. v. Mason, 143 S.W.3d 794, 798 (Tex.
2004). Once the defendant produces sufficient evidence to establish the right
to summary judgment, the burden shifts to the plaintiff to come forward with
competent controverting evidence that raises a fact issue. Van v. Pena, 990
S.W.2d 751, 753 (Tex. 1999).
We review a summary judgment de novo. Mann Frankfort Stein & Lipp
Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We consider the
evidence presented in the light most favorable to the nonmovant, crediting
evidence favorable to the nonmovant if reasonable factfinders could and
disregarding evidence contrary to the nonmovant unless reasonable factfinders
could not. Id. We indulge every reasonable inference and resolve any doubts
in the nonmovant’s favor. 20801, Inc. v. Parker, 249 S.W.3d 392, 399 (Tex.
2008). We must consider whether reasonable and fair-minded factfinders could
differ in their conclusions in light of all of the evidence presented. See Wal-
Mart Stores, Inc. v. Spates, 186 S.W.3d 566, 568 (Tex. 2006); City of Keller
v. Wilson, 168 S.W.3d 802, 822–24 (Tex. 2005).
6
No-evidence summary judgment motions
After an adequate time for discovery, the party without the burden of
proof may, without presenting evidence, move for summary judgment on the
ground that there is no evidence to support an essential element of the
nonmovant’s claim or defense. Tex. R. Civ. P. 166a(i). The motion must
specifically state the elements for which there is no evidence. Id.; Timpte
Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009). The trial court must
grant the motion unless the nonmovant produces summary judgment evidence
that raises a genuine issue of material fact. See Tex. R. Civ. P. 166a(i);
Hamilton v. Wilson, 249 S.W.3d 425, 426 (Tex. 2008).
Like our review of traditional summary judgment motions, when reviewing
a no-evidence summary judgment, we examine the entire record in the light
most favorable to the nonmovant, indulging every reasonable inference and
resolving any doubts against the motion. Sudan v. Sudan, 199 S.W.3d 291,
292 (Tex. 2006). And also like traditional motions, we review a no-evidence
summary judgment for evidence that would enable reasonable and fair-minded
factfinders to differ in their conclusions. Hamilton, 249 S.W.3d at 426 (citing
City of Keller, 168 S.W.3d at 822). We credit evidence favorable to the
nonmovant if reasonable factfinders could, and we disregard evidence contrary
to the nonmovant unless reasonable factfinders could not. Timpte Indus., Inc.,
7
286 S.W.3d at 310 (quoting Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572,
582 (Tex. 2006)). If the nonmovant brings forward more than a scintilla of
probative evidence that raises a genuine issue of material fact, then a no-
evidence summary judgment is not proper. Smith v. O’Donnell, 288 S.W.3d
417, 424 (Tex. 2009).
Breach of contract
In their third point, the Rices contend that the trial court erred by granting
summary judgment against their breach of contract claim. Insurance policies
are contracts. Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663, 665 (Tex.
1987); see Markel Ins. Co. v. Muzyka, 293 S.W.3d 380, 385–86 (Tex.
App.—Fort Worth 2009, no pet.) (describing various principles of contract
interpretation that apply to insurance policies). “The elements of a breach of
contract claim are (1) the existence of a valid contract, (2) 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.) (citing Harris v. Am. Prot. Ins. Co., 158
S.W.3d 614, 622–23 (Tex. App.—Fort Worth 2005, no pet.)).
MetLife has not expressly argued that the certificate of insurance does
not qualify as a valid contract or that the Rices did not perform under that
8
contract. Rather, MetLife moved for summary judgment on the grounds that
(1) there was no evidence that it breached the contract because its termination
of Larry’s coverage upon Glenda’s retirement was mandated by the terms of
the certificate of insurance and (2) the Rices have not suffered damages.
The Rices contend that MetLife waived its termination of Larry’s coverage
under the certificate of insurance when it accepted premiums for two and a half
years and represented in writing after Glenda’s retirement that Larry had
coverage. Furthermore, they contend that the “correspondence and the
associated oral and written exchanges between MetLife and [Glenda] in May of
2003 is . . . an extension of the original policy or a new contract implying the
same terms.” In MetLife’s motion for summary judgment, it stated,
“Mistakenly, and to the benefit of Mr. Rice, MetLife kept coverage in place and
continued to charge group premiums for the dependent coverage until July
2005 when the mistake was discovered.”
MetLife relies on Ulico Casualty Company v. Allied Pilots Association to
contend that coverage under the policy cannot be expanded by the waiver or
estoppel doctrines. 262 S.W.3d 773, 775–87 (Tex. 2008).6 In Ulico, the
6
Waiver is the intentional relinquishment of a right actually known or
intentional conduct inconsistent with claiming that right; estoppel prevents one
party from misleading another to the other’s detriment or to the misleading
party’s own benefit. Id. at 778.
9
Texas Supreme Court considered whether an insurer’s claims-made liability
insurance policy (requiring notification during the policy period to the insurer of
a claim against the insured) could be extended by those doctrines to cover a
suit against the insured by a third party that was filed within the policy period
but was not reported to the insurer until after the policy expired. Id. at
775–77. In that case, although the insured had untimely reported the claim
against it, the insurer reviewed the claim and sent the insured a letter stating
that the insured’s defense costs would be paid. Id. at 775–76. Thus, the
insured pursued its defense, but when the insured’s counsel submitted a
$635,000 bill for costs incurred while defending the insured, the insurer sought
a declaratory judgment to determine that it did not owe the costs under the
policy. Id. at 776.
At the trial of the insurer’s declaratory judgment case, the jury decided
that the insurer had agreed to pay the insured’s defense costs separately from
the insurer’s original policy with the insured, had waived its right to assert that
the policy did not cover the costs, and was estopped from asserting that the
policy did not cover the costs. Id. The trial court set aside the jury’s finding
that the insurer agreed to pay the costs apart from the policy but entered
judgment as to the jury’s waiver and estoppel findings. Id. We affirmed the
trial court’s judgment. Id. at 776–77.
10
In reversing our decision, the supreme court noted that when a policy
covers risks for a certain time period (such as the certificate of insurance does
here by ending Larry’s term insurance on the date of the Glenda’s retirement),
“the time of the event allegedly triggering coverage is a precondition to
coverage and is not considered a defensive matter to be pleaded and proved by
the insurer. The insurer has neither a ‘right’ nor a burden to assert noncoverage
of a risk or loss . . . .” 7 Id. at 778 (citation omitted). Then, the court explained
that it had
addressed the question of whether the contractual coverage of an
insurance policy can be expanded by waiver or estoppel over
seventy years ago in Washington National Insurance Co. v.
Craddock, 130 Tex. 251, 109 S.W.2d 165 (Tex. 1937). In that
case, Craddock, the insured, was entitled to weekly indemnity
payments if he became incapacitated from an accidental injury.
The policy specifically excepted gunshot wound injuries from
coverage. Craddock accidentally shot himself with a pistol,
submitted a claim, and the insurer started paying weekly benefits.
After making eleven payments, the insurer stopped paying because
the injury was not covered. Craddock sued. In his pleadings
Craddock acknowledged that the policy specifically excepted
injuries from gunshot wounds from coverage. Craddock claimed
that he told the company’s agent and filed his claim showing he
7
The Rices have asserted that MetLife’s failure to exercise its option to
terminate the policy upon Glenda’s retirement, its written affirmation of
coverage two months after Glenda’s retirement, and its acceptance of
premiums for over two years amounted to a waiver of the option. But the
certificate of insurance does not state that MetLife has an option to terminate
upon Glenda’s retirement; it states that “Dependent Term Insurance will end”
upon retirement. [Emphasis added.]
11
was injured by a gunshot, yet the insurer paid weekly benefits.
The issue and this Court’s answer were straightforward:
[B]ut he alleged further that the company having paid
him 11 weeks’ indemnity for an accidental injury
produced by a gunshot wound, had waived this
condition of the policy, and was therefore bound and
obligated to pay him the remaining 93 weekly
installments, and was estopped from denying its
liability by virtue of such waiver. He alleged also that
he had gone to considerable expense in securing and
preparing claims and proof of injury.
. . . The question presented is not whether the
act of the insurance company in making payments
would constitute a waiver of its right to forfeit the
policy on account of some breach by the insured of its
terms, but is whether a contractual liability may be
created by a waiver. By its policy the insurance
company did not assume any liability for the risk
declared upon and no consideration moved to it after
the accident for the assumption of such liability.
The insured seeks to create that liability by invoking
the doctrine of waiver. The doctrine cannot be made
to serve that purpose.
Id. at 778–79 (some citations omitted).
Thus, conforming to its Craddock decision, the supreme court in Ulico
held that waiver and estoppel cannot be used to rewrite an insurance policy and
expand coverage. Id. at 781, 787; see also Metro Allied Ins. Agency, Inc. v.
Lin, 304 S.W.3d 830, 836 (Tex. 2009) (stating that the “law is clear that
misrepresentations about insurance coverage cannot, under the doctrine of
estoppel, expand coverage provided in an insurance policy”); Tex. Farmers Ins.
12
Co. v. McGuire, 744 S.W.2d 601, 603 (Tex. 1988) (op. on reh’g) (stating that
waiver and estoppel “have consistently been denied operative force to change,
re-write and enlarge the risks covered by a policy.”). And in harmony with
Ulico, Texas courts had previously held that an insurer’s acceptance of
premiums does not create coverage through the waiver or estoppel doctrines.
See, e.g., Great Am. Reserve Ins. Co. v. Mitchell, 335 S.W.2d 707, 708 (Tex.
Civ. App.—San Antonio 1960, writ ref’d) (holding that when a life insurance
policy said that coverage terminated when an employee reached the age of
sixty-five, the insurer’s acceptance of premiums after the insured reached that
age did not create coverage by waiver or estoppel).
Accordingly, under the binding precedent of Ulico, we cannot agree with
the Rices that MetLife’s acceptance of premiums or its other actions create a
fact question as to whether the termination-upon-retirement clause of the
certificate of insurance—the original contract between the parties—was
negated or rewritten because of waiver or estoppel.8
8
The Rices discuss the waiver and estoppel doctrines in their first point,
in which they contend that the trial court erred by not applying those doctrines
to this case. To the extent that the Rices rely on their discussion of waiver and
estoppel in their first point to assert that their claims dependent on the parties’
contract should succeed because Larry’s original coverage was extended by an
alteration of the certificate of insurance, we overrule the Rices’ first point for
the reasons discussed above.
13
The Rices also argue that MetLife should be liable for breach of the
original insurance contract because it did not issue a personal policy to Larry or
give Larry an application for such a policy upon the termination of his rider
coverage in March 2003. The portion of the certificate of insurance relating to
riders states that MetLife would “issue a personal policy of life insurance . . .
to a Dependent if that Dependent applie[d] for it in writing during” the “31 day
period after the date the Dependent Term Insurance on that Dependent ends”
because of the employee’s retirement. Although the certificate of insurance
does not expressly state that MetLife must issue a personal policy apart from
a timely application or even that MetLife was required to inform the Rices about
their ability to apply for a personal policy, the Rices essentially contend that
MetLife’s giving them a fair opportunity to convert Larry’s rider coverage into
individual coverage is an implied term of the certificate. In a related argument,
they also assert that MetLife was required to provide notice that Larry’s rider
coverage had been canceled because notice of cancellation was an implied term
of the certificate.
We must usually look only to the written contract to determine the
obligations of parties, and it is typically not proper for us to imply terms that
contradict a contract’s express language. See Universal Health Servs., Inc. v.
Renaissance Women’s Group, P.A., 121 S.W.3d 742, 747 (Tex. 2003).
14
In other words, courts “cannot make contracts for [the] parties.”
HECI Exploration Co. v. Neel, 982 S.W.2d 881, 888 (Tex. 1998) (quoting Gulf
Prod. Co. v. Kishi, 129 Tex. 487, 493, 103 S.W.2d 965, 968 (1937)). Thus,
A covenant will not be implied unless it appears from the express
terms of the contract that “it was so clearly within the
contemplation of the parties that they deemed it unnecessary to
express it,” and therefore they omitted to do so, or “it must appear
that it is necessary to infer such a covenant in order to effectuate
the full purpose of the contract as a whole as gathered from the
written instrument.”
Neel, 982 S.W.2d at 888 (emphasis added) (quoting Danciger Oil & Ref. Co. v.
Powell, 137 Tex. 484, 490, 154 S.W.2d 632, 635 (1941)); see Fielding, 289
S.W.3d at 850. An implied covenant “must rest entirely on the presumed
intention of the parties as gathered from the terms as actually expressed in the
written instrument itself.” Universal Health Servs., Inc., 121 S.W.3d at 748
(emphasis added).
Under these standards, we cannot conclude that MetLife’s giving the
Rices notice of their opportunity to gain individual coverage for Larry after
Glenda’s retirement or sending them official notice of the cancellation of Larry’s
original coverage are implied terms of the certificate of insurance. As gathered
from the written instrument itself—the certificate of insurance—and not from
MetLife’s actions, Larry’s original coverage explicitly ended upon Glenda’s
retirement, and the Rices therefore had to apply for a personal policy for Larry
15
within thirty-one days after her retirement.9 Because the certificate of
insurance particularly described these conditions, we conclude that MetLife’s
sending notice of the conditions after Glenda retired was neither “clearly within
the contemplation of the parties” nor “necessary . . . to effectuate the full
purpose of the contract.” See Neel, 982 S.W.2d at 888; see also Hartland v.
Progressive County Mut. Ins. Co., 290 S.W.3d 318, 324 (Tex. App.—Houston
[14th Dist.] 2009, no pet.) (“A notice of cancellation is not required when a
policy expires under its own terms.”). While it may seem reasonable to require
such additional notice as an implied term of the certificate of insurance under
the circumstances of this case, “[i]t is not enough to say that an implied
covenant is necessary in order to make the contract fair.” Neel, 982 S.W.2d
at 889; see Universal Health Servs., Inc., 121 S.W.3d at 748.
We also cannot agree with the Rices that MetLife’s providing an
application form for a personal insurance policy for Larry is an implied term of
the original certificate of insurance. Although the Rices question how they
9
We recognize that MetLife has stated that it gave Larry an opportunity
to apply for a personal policy in 2005. In MetLife’s summary judgment motion,
it stated that it did so “as a courtesy.” Because the parties’ original insurance
contract could not be changed through waiver or estoppel to end Larry’s
original coverage on any date other than Glenda’s retirement, MetLife was not
contractually required to extend the personal policy conversion period that was
conditioned on Glenda’s retirement.
16
were supposed to apply for a personal policy without an “application form” that
was provided by MetLife, the certificate of insurance does not require any
particular form; it places the burden on the dependant to apply for a personal
policy “in writing” during the application period. The Rices have not cited any
authority holding that an insurance company has an implied contractual duty to
supply an “application form” in a similar circumstance.
For all of these reasons, we overrule the Rices’ third point to the extent
that their breach of contract claim rests on a breach of the original certificate
of insurance; we conclude that the Rices have not presented more than a
scintilla of evidence to support that claim.
On the other hand, we conclude that the evidence creates a genuine fact
question regarding whether MetLife breached a new, separate agreement
regarding Larry’s coverage. As we have explained,
Under Texas law, the requirements of a valid contract are: (1) an
offer; (2) an acceptance in strict compliance with the terms of the
offer; (3) a meeting of the minds; (4) each party’s consent to the
terms; and (5) execution and delivery of the contract with the
intent that it be mutual and binding. Consideration is also a
fundamental element of a valid contract.
Hubbard v. Shankle, 138 S.W.3d 474, 481 (Tex. App.—Fort Worth 2004, pet.
denied) (citation omitted); see Burges v. Mosley, 304 S.W.3d 623, 629 (Tex.
App.—Tyler 2010, no pet.) (“For a contract to exist, there must be an offer,
17
acceptance, and consideration.”); Domingo v. Mitchell, 257 S.W.3d 34, 39
(Tex. App.—Amarillo 2008, pet. denied).
To determine whether an offer and acceptance and thus a “meeting of
the minds” occurred, we use an objective standard, “considering what the
parties did and said, not their subjective states of mind.” Domingo, 257
S.W.3d at 39 (citing Komet v. Graves, 40 S.W.3d 596, 601 (Tex. App.—San
Antonio 2001, no pet.)); see Paciwest, Inc. v. Warner Alan Props., LLC, 266
S.W.3d 559, 568 (Tex. App.—Fort Worth 2008, pet. denied); Angelou v.
African Overseas Union, 33 S.W.3d 269, 278 (Tex. App.—Houston [14th Dist.]
2000, no pet.) (“Unexpressed subjective intent is irrelevant.”). ”[V]aluable and
sufficient consideration for a contract may consist of either a benefit to the
promisor or a loss or detriment to the promisee. Thus when a promisee acts to
his detriment in reliance upon a promise, there is sufficient consideration to bind
the promisor to his promise.” Jennings v. Radio Station KSCS, 708 S.W.2d 60,
61 (Tex. App.—Fort W orth 1986, no writ); see Frequent Flyer Depot, Inc. v.
Am. Airlines, Inc., 281 S.W.3d 215, 224 (Tex. App.—Fort W orth 2009, pet.
denied), cert. denied, 130 S. Ct. 2061 (2010).
In Ulico, the supreme court upheld the trial court’s decision to disregard
the jury’s determination that the parties had entered into a separate agreement
for the payment of the insured’s defense costs. Ulico, 262 S.W.3d at 789–90.
18
The supreme court reasoned that there was no consideration for such a
separate agreement; the insured did not present any evidence that the insurer
received a benefit in exchange for continuing payment of the costs or that the
insured suffered a detriment by undertaking an obligation, surrendering a legal
right, changing whether it would have paid the costs based on the insurer’s
representation that it would pay them, or otherwise acting in a different way
because the insurer agreed to pay the costs. Id.
Unlike in Ulico, the Rices suffered a detriment because Glenda continued
to pay premiums for Larry’s coverage for more than two years while relying on
MetLife’s representations that he had coverage, and she averred in her affidavit
that because of “MetLife’s cancellation of the policy after 2½ years and the
state of [Larry’s] health,” she was unable “to now obtain coverage” for him.
Also, MetLife received the premiums and kept them for several years although
it eventually repaid them.10 Thus, reviewing the record in the light most
favorable to the Rices, we conclude that the evidence raises a genuine issue of
10
Craddock is likewise distinguishable because in Craddock, the insured
did not argue that a new contract had been created but only that the coverage
of his contract with the insurer had been changed by waiver, and the supreme
court stated that “no consideration moved” to the insurer after the gunshot
accident for an assumption of liability. 130 Tex. at 252–55, 109 S.W.2d at
165–67. Similarly, the insured in Mitchell relied only on waiver and estoppel
and did not contend that a new contract had been created. 335 S.W.2d at
707.
19
material fact about whether the Rices gave consideration for a new agreement
with MetLife regarding Larry’s coverage.
Similarly, we also hold that the evidence raises a genuine issue of material
fact on the remaining elements of the formation of a new contract and on a
breach of that contract. The evidence, when viewed objectively rather than
subjectively (in other words, when looking at what the parties actually said in
their 2003 exchanges and disregarding MetLife’s 2005 contention that it was
merely mistaken when it represented that Larry maintained coverage), presents
a genuine fact issue on offer, acceptance, meeting of the minds, and delivery
of the contract with the intention that it be mutual and binding. Particularly,
the evidence shows the following: (1) in May 2003, MetLife sent a letter to
Glenda that gave her the option of continuing her coverage, 11 (2) Glenda
responded to the letter by informing MetLife that she wanted to retain the
coverage, (3) MetLife’s employee, Summer, told Glenda that the coverage
“would neither lapse nor be cancelled,” (4) Glenda paid premiums for her own
11
MetLife relies on the fact that the option that Glenda chose in response
to MetLife’s May 2003 letter stated, “CONTINUE MY GUL COVERAGE.”
But we conclude that MetLife’s letter may reasonably be read to also give
Glenda the option of continuing Larry’s coverage because the top right-hand
corner of the letter specifically showed that his coverage was still effective, the
letter told Glenda that her “current coverage [would] remain effective,” and it
stated she would continue to pay the same premium rates (which included
Larry’s premium) as she had when she was employed with Avon.
20
coverage and for Larry’s coverage multiple times after May 2003, and
(5) MetLife responded by sending a report to Glenda that confirmed Larry’s
coverage.
Also, the evidence creates a genuine fact issue on a breach of the new,
separate contract and resulting damages because MetLife later stopped billing
for Larry’s premiums and told Glenda that Larry did not have coverage, and
Glenda could not obtain other coverage for Larry after the cancellation of the
policy. See El Paso Prod. Co. v. Valence Operating Co., 112 S.W.3d 616, 621
(Tex. App.—Houston [1st Dist.] 2003, pet. denied) (op. on reh’g) (explaining
that a repudiation of a contract comprises a breach of it); Bumb v. InterComp
Techs., L.L.C., 64 S.W.3d 123, 125 (Tex. App.—Houston [14th Dist.] 2001,
no pet.) (same).
For these reasons, indulging every reasonable inference in the Rices’
favor, we hold that the trial court erred by granting MetLife’s no-evidence
summary judgment motion against the Rices’ breach of contract claim because
there is more than a scintilla of probative evidence to support the Rices’ theory
that MetLife breached a new agreement regarding Larry’s coverage. 12
12
We note that MetLife’s brief indicates its belief that the parties had the
authority to enter into a new agreement for coverage after the coverage
originally terminated upon Glenda’s retirement. Specifically, MetLife concedes
in its brief that “[a]lthough [Glenda’s] retirement date was in 2003 and [Larry’s]
21
See Smith, 288 S.W.3d at 424; Sudan, 199 S.W.3d at 292. Thus, we sustain
the Rices’ third point to the extent that it rests on their argument that MetLife
breached a new contract for the coverage.
Duty of good faith and fair dealing
In their second point, the Rices claim that the trial court erred by granting
summary judgment against their bad faith (breach of the duty of good faith and
fair dealing) claim. Texas courts have long recognized a common law duty of
good faith and fair dealing in insurance relationships. Vandeventer v. All Am.
Life & Cas. Co., 101 S.W.3d 703, 722 (Tex. App.—Fort Worth 2003, no pet.);
see Arnold v. Nat’l County Mut. Fire Ins. Co., 725 S.W.2d 165, 167 (Tex.
1987). An insurer breaches the duty of good faith and fair dealing when it
“wrongfully cancels an insurance policy without a reasonable basis” and the
insurer “knew or should have known of that fact.” Union Bankers Ins. Co. v.
Shelton, 889 S.W.2d 278, 283 (Tex. 1994) (explaining that the “insurer’s
ability to unilaterally cancel an insurance policy and the insured’s inability to
prevent cancellation demonstrates a great disparity in bargaining power
between the two parties”); see Columbia Universal Life Ins. Co. v. Miles, 923
right to convert the group dependent life coverage to an individual policy had
expired . . ., MetLife extended the conversion option.”
22
S.W.2d 803, 811 (Tex. App.—El Paso 1996, writ denied); Hopkins v. Highlands
Ins. Co., 838 S.W.2d 819, 827 (Tex. App.—El Paso 1992, no writ).
The Rices contend that MetLife is liable for bad faith because it canceled
Larry’s coverage retroactively in 2005 when there was no reasonable basis for
the cancellation and initially refused to refund premiums. We have held that the
evidence raises a genuine fact issue about whether the parties formed a
contract in May 2003 that gave Larry new coverage. Accordingly, we conclude
that there is more than a scintilla of evidence that MetLife wrongfully canceled
Larry’s new coverage without a reasonable basis and knew or should have
known of that fact. The evidence shows that MetLife told Glenda that her
coverage would neither lapse nor be canceled, continued to accept premiums
for Larry’s coverage for over two years, confirmed to the Rices after 2003
through a Group Universal Life Report that Larry still had coverage, and then
canceled the coverage while telling her that it was in place through July 2005
(which is inconsistent with MetLife’s claim that the coverage expired in March
2003 upon Glenda’s retirement and that Larry did not obtain new coverage
through the parties’ communications).
We conclude that a genuine issue of material fact exists to preclude the
trial court’s decision to grant summary judgment against the Rices on their bad
faith claim. We therefore sustain the Rices’ second point.
23
Promissory estoppel
In their fourth point, the Rices argue that the trial court erred by granting
summary judgment against their promissory estoppel claim.13 The Rices alleged
in their petition that by “continuing to accept premium payments . . ., [MetLife]
promised [the Rices] that [MetLife] would continue to provide insurance as long
as the premiums were paid.” They also asserted that they relied on MetLife’s
alleged promise by continuing to pay the premiums and by not seeking alternate
insurance for Larry. MetLife moved for summary judgment against the Rices’
promissory estoppel claim on the ground, among others, that it did not make
any promise that Larry’s coverage would last forever. The Rices responded by
directing the trial court to, among other documents, MetLife’s May 10, 2003
letter.
Although estoppel based on an insurer’s misrepresentations may not be
used to expand coverage contractually, an insurer’s actions can result in it
being estopped from refusing to “make its insured whole” for “any damages
[the insured] sustains because of the insurer’s actions.” Ulico, 262 S.W.3d at
782, 787. “If a promisee has reasonably and detrimentally relied on an
13
MetLife did not expressly label its summary judgment motion as to the
Rices’ promissory estoppel claim as traditional or no-evidence. We will treat the
motion as a traditional motion because a no-evidence motion must specify the
elements of a claim for which there is no evidence. See Tex. R. Civ. P. 166a(i).
24
otherwise unenforceable promise, he may have a cause of action for promissory
estoppel.” MCN Energy Enters., Inc. v. Omagro de Colombia, L.D.C., 98
S.W.3d 766, 774 (Tex. App.—Fort Worth 2003, pet. denied); see In re
Weekley Homes, L.P., 180 S.W.3d 127, 133 (Tex. 2005) (orig. proceeding)
(explaining that when “a promisor induces substantial action or forbearance by
another, promissory estoppel prevents any denial of that promise if injustice can
be avoided only by enforcement”).
“The elements of promissory estoppel are: (1) a promise,[ 14 ]
(2) foreseeability of reliance on the promise by the promisor, and (3) substantial
detrimental reliance by the promisee.” Hubbard, 138 S.W.3d at 482; see MCN
Energy Enters., Inc., 98 S.W.3d at 774. Although promissory estoppel is
normally a defensive theory, it may serve as a substitute for an unsuccessful
breach of contract claim. See Wheeler v. White, 398 S.W.2d 93, 97 (Tex.
1965); Medistar Corp. v. Schmidt, 267 S.W.3d 150, 163 (Tex. App.—San
Antonio 2008, pets. denied).
We have held that the Rices’ breach of contract claim, to the extent that
it rests on MetLife’s breaching the certificate of insurance and does not rest on
14
A “promise” is a “manifestation of an intention to act . . . in a specified
manner, conveyed in such a way that another is justified in understanding that
a commitment has been made.” Black’s Law Dictionary 1332 (9th ed. 2009).
25
MetLife’s breaching a subsequent contract between the parties, cannot succeed
as a matter of law because despite MetLife’s actions, Larry’s coverage under
the certificate of insurance was not extended past Glenda’s retirement.
Because there was no contract for Larry’s original coverage under the certificate
of insurance past March 2003, promissory estoppel may apply to MetLife’s
representation of that coverage if a factfinder determines that the parties did
not later enter into a new contract for the coverage. See Doctors Hosp. 1997,
L.P. v. Sambuca Houston, L.P., 154 S.W.3d 634, 636 (Tex. App.—Houston
[14th Dist.] 2004, pet. abated) (stating that “Texas courts have held that
promissory estoppel becomes available to a claimant only in the absence of a
valid and enforceable contract”); Secure Comm, Inc. v. Anderson, 31 S.W.3d
428, 431 n.3 (Tex. App.—Austin 2000, no pet.) (“[P]romissory estoppel and
breach of contract may be mutually exclusive causes of action.”); see also
Wheeler, 398 S.W.2d at 94, 97 (holding that a plaintiff could recover on a
promissory estoppel theory when pled as an alternative to breach of contract).
MetLife’s letter to Glenda represented under a heading of “Coverage
Information” that as of May 10, 2003, the face amount of Glenda’s “Spouse
Term” coverage was $50,000. The letter notified Glenda, “[Y]our current
coverage will remain effective while you assess your choices,” and it told her
that MetLife wanted to “keep a promise” that it had made to her.
26
Glenda’s affidavit says that about three weeks after the date of MetLife’s
letter, MetLife’s employee, Summer, told Glenda that her coverage on the policy
would neither lapse nor be canceled. It also explains that Glenda “regularly
received bills from MetLife entitled ‘Group Universal Life Payment Notice’ and
a ‘Group Universal Life Report’ both stating the $50,000 coverage for [Larry]
was included.” Glenda submitted the 2005 “Group Universal Life Report” as
evidence; that report, under the heading of “Beginning Values 12/31/04,”
states, “Spouse Rider Face Amount: 50,000.00.“
We conclude that when viewed in the light most favorable to the Rices,
this evidence creates a genuine issue of material fact as to whether MetLife
made a promise to continue Larry’s coverage and whether it was foreseeable
to MetLife that the Rices would rely on that promise. See Tex. R. Civ. P.
166a(c). Although MetLife argues that the language related to the four
insurance options that were presented to Glenda in May 2005 on the election
form concerns only Glenda’s coverage and does not explicitly mention Larry’s
coverage, for the reasons stated above, we conclude that a genuine fact issue
exists as to whether MetLife represented that both Glenda’s and Larry’s
27
coverage would be extended if she chose the first option that was labeled
“CONTINUE MY GUL COVERAGE.” 15
MetLife argues that the Rices’ promissory estoppel claim fails because
Glenda was deemed to know the terms contained in the certificate of insurance,
including the term that Larry’s coverage ended upon her retirement. We have
noted that a named insured is presumed to have read its policy and to know the
policy’s contents. Jenkins v. State & County Mut. Fire Ins. Co., 287 S.W.3d
891, 897 (Tex. App.—Fort Worth 2009, pet. denied). However, the Texas
Supreme Court has held that this presumption may be overcome by proof that
the insured did not know the policy’s contents when it was accepted. Colonial
Sav. Ass’n v. Taylor, 544 S.W.2d 116, 119 (Tex. 1976) (quoting Fireman’s
Fund Indem. Co. v. Boyle Gen. Tire Co., 392 S.W.2d 352, 355 (Tex.1965));
see Ins. Network of Tex. v. Kloesel, 266 S.W.3d 456, 476 (Tex. App.—Corpus
Christi 2008, pet. denied); Union Nat. Bank of Little Rock v. Moriarty, 746
S.W.2d 249, 250–51 (Tex. App.—Texarkana 1987, writ denied) (explaining
15
MetLife does not expressly challenge the reliance element in the portion
of its brief related to the Rices’ promissory estoppel claim; we will address the
Rices’ reliance on MetLife’s representation of Larry’s coverage below when we
analyze the trial court’s decision to grant summary judgment on some of the
Rices’ other claims.
28
that an ”insured is allowed to rely on the knowledge and expertise of the
insurer”).
The evidence shows that the Rices paid premiums for Larry’s coverage
for over two years after Glenda retired and that Angelica Ridge had to explain
to Glenda in 2005 that Larry no longer had coverage because Glenda thought
that a quarterly bill’s omission of a premium charge for his coverage “was a
mistake.” Viewed in the light most favorable to the Rices, this evidence creates
a genuine fact issue as to whether the Rices had knowledge of the term of the
certificate of insurance that caused Larry’s original coverage to expire.
Therefore, we cannot agree with MetLife that for summary judgment purposes,
the Rices are deemed to know the contents of their policy or that their
promissory estoppel claim must fail on that basis.
We also agree with the Rices’ statement that under the circumstances in
this case, it would be unreasonable to charge them with knowing and following
the terms of the certificate of insurance when MetLife, which issued the
certificate, did not even follow its own terms for over two years by
continuously accepting quarterly premiums for Larry’s coverage after Glenda’s
retirement. Finally, even if the Rices actually knew about the term of the
certificate that ended Larry’s coverage upon Glenda’s retirement or were
charged with constructive knowledge of that term, MetLife’s acts that occurred
29
after her retirement gave them a reason to believe that MetLife was either
altering or not enforcing that term and that Larry’s coverage had been extended
despite the term.16
For these reasons, we hold that, indulging all inferences in the Rices’
favor, the trial court erred by granting MetLife’s summary judgment motion on
the Rices’ promissory estoppel claim. We sustain the Rices’ fourth point.
DTPA
In their fifth point, the Rices argue that the trial court erred by granting
summary judgment against their DTPA claim. In the trial court, MetLife moved
for summary judgment on that claim on the ground that there was no evidence
of it.
False, misleading, or deceptive acts or practices
The DTPA creates a cause of action when a consumer suffers from
“[f]alse, misleading, or deceptive acts or practices in the conduct of any trade
or commerce.” Tex. Bus. & Com. Code Ann. § 17.46(a). Such “acts or
practices” include “representing that goods or services have . . . characteristics
. . . which they do not have” and “representing that an agreement confers or
16
MetLife also argues in response to some of the Rices’ other points that
they were deemed to know the contents of their policy. For the same reasons
that we decline to accept MetLife’s reasoning as to the Rices’ promissory
estoppel claim, we also decline to do so as to those points.
30
involves rights, remedies, or obligations which it does not have or involve.” Id.
§ 17.46(b)(5), (12); see Commonwealth Lloyds Ins. Co. v. Downs, 853 S.W.2d
104, 116 (Tex. App.—Fort Worth 1993, writ denied).
To prevail on a DTPA claim, a plaintiff must prove that the defendant’s
misrepresentation was the producing cause of the plaintiff’s injuries. Tex. Bus.
& Com. Code Ann. § 17.50(a); Alexander v. Turtur & Assocs., Inc., 146
S.W.3d 113, 117 (Tex. 2004); Main Place Custom Homes, Inc. v. Honaker,
192 S.W.3d 604, 616 (Tex. App.—Fort Worth 2006, pet. denied). Producing
cause requires that the defendant’s act be both a cause-in-fact and a
“substantial factor” in causing the injuries. Honaker, 192 S.W.3d at 616.
The plaintiff must also prove that it relied on the defendant’s misrepresentation
to its detriment. Tex. Bus. & Com. Code Ann. § 17.50(a)(1)(B).
The Rices contend that MetLife’s May 10, 2003 letter, Glenda’s phone
conversation with Summer, and MetLife’s prolonged acceptance of premiums
create a genuine fact dispute about whether MetLife engaged in false,
misleading, or deceptive acts because it misrepresented that all of the terms of
her original insurance policy, including Larry’s coverage, would be continued if
she elected to do so. We agree.
MetLife’s letter explicitly stated that as of May 2003, Larry had $50,000
in coverage. It then told Glenda that the “current coverage would remain
31
effective” and appeared to give her the option to continue that coverage by
continuing to “pay the same rates as when [she was] an active employee.”
We hold that under the relevant no-evidence summary judgment standards, this
evidence and the other evidence detailed above creates a fact issue about
whether MetLife misrepresented the continuation of Larry’s coverage,
precluding summary judgment on that part of the Rices’ DTPA claim.17
See Tex. R. Civ. P. 166a(i); Lennar Corp. v. Great Am. Ins. Co., 200 S.W.3d
651, 700 (Tex. App.—Houston [14th Dist.] 2006, pets. denied) (op. on reh’g)
(relating that an insurer’s affirmative misrepresentation that creates an insured’s
mistaken belief about coverage may be actionable under the DTPA); State Farm
Fire & Cas. Co. v. Gros, 818 S.W.2d 908, 912–13 (Tex. App.—Austin 1991,
no writ) (holding that an insurer was liable under the DTPA for misrepresenting
the terms of an insurance policy).
MetLife asserts, however, that if there was a misrepresentation, it cannot
be a producing cause of the Rices’ injuries and the Rices could not have
detrimentally relied on it because (1) Larry had an opportunity to purchase a
17
MetLife contends that the “crux of [the Rices’] claims under the DTPA
is MetLife’s alleged wrongful termination . . . as opposed to
misrepresentations.” But the Rices’ appellate brief and their summary judgment
response show that they base their DTPA claims on MetLife’s May 2003 letter,
MetLife’s conversation with Glenda, and MetLife’s acceptance of quarterly
premium payments.
32
personal policy form MetLife in December 2005 but failed to do so and (2) the
Rices’ premiums for Larry’s coverage have been returned to them with interest
(after they filed their lawsuit). 18 But even if we consider MetLife’s evidence to
support its no-evidence summary judgment motion,1 9 that evidence does not
conclusively establish that MetLife gave Larry an opportunity to purchase a
personal policy in December 2005. Angelica Ridge’s affidavit does not indicate
that she expressly told Glenda that she could purchase a personal policy for
Larry. And while the affidavit states that Angelica told Glenda in December
2005 that she would “request a conversion notice” based on Glenda’s
“cancelled spouse rider” and asserts that such a notice was mailed to Glenda,
Glenda’s affidavit states that she never received any notice of the cancellation
of Larry’s coverage and that Angelica told her that an agent would contact her
about purchasing a personal policy but that she was never contacted by an
agent.
18
The parties agreed during oral argument that the premium payments
have now been properly refunded to the Rices.
19
The supreme court has held that courts may not consider evidence that
is attached to a movant’s no-evidence summary judgment motion unless the
evidence “creates a fact question.” Binur v. Jacobo, 135 S.W.3d 646, 651
(Tex. 2004); see Garcia v. State Farm Lloyds, 287 S.W.3d 809, 816 (Tex.
App.—Corpus Christi 2009, pet. denied).
33
As to MetLife’s second argument, the Rices concede that MetLife has
returned money equal to the premiums that they paid for Larry’s coverage after
Glenda’s retirement. However, we conclude that the evidence presented by the
Rices still creates a fact issue on detrimental reliance. Glenda’s affidavit
concludes by stating, “Due to MetLife’s cancellation of the policy after 2½
years and the state of my husband[‘]s health, it is not within my family’s
financial means to now obtain coverage for my husband.” Indulging every
inference in the Rices’ favor, we hold that this statement adequately relates
that the passage of time associated with MetLife’s allegedly wrongful acts (in
which the Rices thought that Larry had coverage when he did not) deprived the
Rices of the opportunity to obtain coverage elsewhere. See Sudan, 199
S.W.3d at 292. Thus, we hold that the statement comprises more than a
scintilla of evidence of the Rices’ detrimental reliance on MetLife’s
representation to Glenda even if, as MetLife argues, the statement does not use
the words “rely” or “reliance” but instead uses the word “cancellation.”
See Smith, 288 S.W.3d at 424.
For these reasons, we conclude that the trial court erred by granting
MetLife’s summary judgment motion against the part of the Rices’ DTPA claim
that alleges that MetLife engaged in false, misleading, or deceptive acts or
practices, and we sustain the Rices’ fifth point to that extent.
34
Unconscionability
Next, the Rices assert that the trial court erred by granting MetLife’s
summary judgment motion against their DTPA unconscionability claim.
To maintain a claim for unconscionability under the DTPA, a plaintiff must prove
that it suffered from an act or practice that, to the plaintiff’s detriment, took
advantage of its lack of knowledge, ability, experience, or capacity to a grossly
unfair degree. See Tex. Bus. & Com. Code Ann. §§ 17.45(5), .50(a)(3);
Bradford v. Vento, 48 S.W.3d 749, 760 (Tex. 2001) (“Unconscionability under
the DTPA is an objective standard for which scienter is irrelevant.”). To prove
an unconscionable action or course of action, a plaintiff must show that the
resulting unfairness was glaringly noticeable, flagrant, complete, and
unmitigated. Ins. Co. of N. Am. v. Morris, 981 S.W.2d 667, 677 (Tex. 1998).
MetLife moved for summary judgment on the Rices’ unconscionability
claim on a no-evidence basis. The evidence that the Rices presented, viewed
in the light most favorable to them, shows that MetLife represented that Larry
had coverage when the Rices did not know that he did not have coverage under
the certificate of insurance, accepted premiums for the alleged noncoverage for
over two years and did not properly refund them until after the Rices filed their
motion for new trial, never sent the Rices written notice of the termination of
Larry’s coverage when it said that it would, told Glenda that an agent would
35
contact her about purchasing a personal policy for Larry when an agent never
did so, and therefore left the Rices without an opportunity to obtain coverage
for Larry through MetLife or elsewhere (unless the parties’ exchanges created
new coverage for Larry in May 2003). We conclude that these facts comprise
more than a scintilla of evidence of unconscionability under the standard above
and therefore preclude summary judgment. See Tex. R. Civ. P. 166a(i); Smith,
288 S.W.3d at 424. Thus, we sustain the remaining portion of the Rices’ fifth
point.
Insurance code
In their sixth point, the Rices assert that the trial court erred by granting
MetLife’s summary judgment motion against their insurance code claim.
The Rices pled that MetLife violated chapter 541 of that code because it
misrepresented “the insurance policy by making untrue statements of material
fact in regard to the policy” and by failing “to disclose material facts in regard
to coverage.”
The insurance code creates a cause of action for damages caused by an
insurer’s misrepresenting the terms or benefits of an insurance policy or by an
insurer’s engaging in an act “specifically enumerated in Section 17.46(b),
Business & Commerce Code, as an unlawful deceptive trade practice.”
Tex. Ins. Code Ann. § 541.151; see id. § 541.051(1). We have held that the
36
Rices provided more than a scintilla of evidence that MetLife misrepresented the
terms or benefits of Larry’s coverage and that the Rices’ detrimental reliance
on that misrepresentation caused them damages by precluding their opportunity
to obtain coverage elsewhere. Thus, for the same reasons that we sustained
the Rices’ fifth point, we also sustain their sixth point and hold that the trial
court erred by granting MetLife’s summary judgment motion as to the Rices’
claim under the insurance code.
Breach of fiduciary duty
In their seventh point, the Rices contend that the trial court erred by
granting summary judgment against their breach of fiduciary duty
claim. MetLife moved for summary judgment on the basis that there is no
evidence that it had a fiduciary duty to the Rices.
Where the underlying facts are undisputed, determination of the existence
and breach of a fiduciary duty is a question of law that is exclusively within the
province of the court. Meyer v. Cathey, 167 S.W.3d 327, 330 (Tex. 2005).
As we have explained,
Due to its extraordinary nature, the law does not recognize a
fiduciary relationship lightly. Therefore, whether such a duty exists
depends on the circumstances.
Fiduciary duties may arise from formal and informal
relationships and may be created by contract. . . . A person is
justified in placing confidence in the belief that another party will
37
act in his best interest only where he is accustomed to being
guided by the judgment or advice of the other party and there
exists a long association in a business relationship as well as
personal friendship. Thus, the relationship must exist prior to and
apart from the agreement that is the basis of the suit.
Cotten v. Weatherford Bancshares, Inc., 187 S.W.3d 687, 698 (Tex.
App.—Fort Worth 2006, pet. denied) (emphasis added and footnotes omitted);
see Meyer, 167 S.W.3d at 331 (explaining that there must be a “special
relationship of trust and confidence” to create a fiduciary relationship in an
ordinary business transaction). An insurer does not generally have a fiduciary
duty toward its insured. See E.R. Dupuis Concrete Co. v. Penn Mut. Life Ins.
Co., 137 S.W.3d 311, 318 (Tex. App.—Beaumont 2004, no pet.) (citing
Wayne Duddlesten, Inc. v. Highland Ins. Co., 110 S.W.3d 85, 96 (Tex.
App.—Houston [1st Dist.] 2003, pet. denied)); Garrison Contractors, Inc. v.
Liberty Mut. Ins. Co., 927 S.W.2d 296, 301 (Tex. App.—El Paso 1996), aff’d,
966 S.W.2d 482 (1998); cf. Berry v. First Nat’l Bank of Olney, 894 S.W.2d
558, 560 (Tex. App.—Fort Worth 1995, no writ) (holding that a bank did not
automatically have a fiduciary relationship with its customers and that the
customers therefore had the burden to respond to the bank’s summary
judgment motion by providing evidence of specific facts showing a special
relationship).
38
Glenda said in her affidavit, “I have been a customer of MetLife on several
occasions throughout my life . . . .” The Rices have not directed us to any
other evidence concerning their relationship with MetLife apart from the
coverage at issue in this case. We hold that Glenda’s sole statement in her
affidavit does not constitute more a scintilla of evidence that the Rices had a
special relationship of confidence and trust with MetLife to create a fiduciary
relationship. See Crim Truck & Tractor Co. v. Navistar Int’l Transp. Corp., 823
S.W.2d 591, 595 (Tex. 1992) (explaining that “[n]either is the fact that the
relationship has been a cordial one, of long duration, evidence of a confidential
relationship”), superseded by statute on other grounds as stated in Subaru of
Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 225–26 (Tex.2002).
Thus, we hold that the trial court properly granted summary judgment against
the Rices’ breach of fiduciary duty claim, and we overrule their seventh point.
Fraud by nondisclosure
In their eighth point, the Rices contend that the trial court erred by
granting summary judgment against their fraud by nondisclosure claim. They
alleged in their amended petition that MetLife had a duty to disclose the
termination of Larry’s coverage but did not.
Fraud by nondisclosure is a subcategory of fraud. Schlumberger Tech.
Corp. v. Swanson, 959 S.W.2d 171, 181 (Tex. 1997). “As a general rule, a
39
failure to disclose information does not constitute fraud unless there is a duty
to disclose the information. . . . Whether such a duty exists is a question of
law.” Bradford, 48 S.W.3d at 755.
The Rices asserted in the trial court that MetLife had a duty to disclose
the termination of Larry’s coverage under the certificate of insurance solely
because the Rices allegedly had a confidential relationship with MetLife.20
See World Help v. Leisure Lifestyles, Inc., 977 S.W.2d 662, 670 (Tex.
App.—Fort Worth 1998, pet. denied) (explaining that a “party has an
affirmative duty to disclose where there is a confidential or fiduciary
relationship”). For the same reasons as those discussed above, we hold that
the evidence presented by the Rices is insufficient to raise a material fact
dispute about a confidential relationship between the Rices and MetLife.
Therefore, we hold that the trial court did not err by granting MetLife’s
summary judgment motion on the Rices’ fraud by nondisclosure claim, and we
overrule the Rices’ eighth point.
20
We have held that a duty to disclose may arise from circumstances
unrelated to a confidential or fiduciary relationship between the parties.
See Citizens Nat’l Bank v. Allen Rae Invs., Inc., 142 S.W.3d 459, 477 (Tex.
App.—Fort Worth 2004, no pet.) (op. on reh’g). However, issues that are not
presented to the trial court “shall not be considered on appeal as grounds for
reversal.” Tex. R. Civ. P. 166a(c); see Head v. U.S. Inspect DFW, Inc., 159
S.W.3d 731, 740 n.6 (Tex. App.—Fort Worth 2005, no pet.).
40
Damages
In their ninth point, the Rices argue that the trial court improperly granted
MetLife’s summary judgment motion on the ground that they did not present
any evidence of damages.21 The Rices pled that they were entitled to recover
the following damages: (1) “[l]oss of coverage under the policy amounting to
$50,000,” (2) “[l]oss of opportunity to obtain affordable alternative coverage,”
(3) “[l]oss of premiums paid to [MetLife],” and (4) “mental anguish damages.”
We have held that the evidence raises a genuine fact issue about whether
the parties entered into a contract in May 2003 for Larry’s coverage.
Accordingly, we hold that there is a genuine fact issue about whether the Rices
lost the value of that coverage if MetLife wrongfully canceled it, and we sustain
the Rices’ ninth point to that extent.
The Rices have not responded to MetLife’s contention that they presented
no evidence of mental anguish damages. Also, the Rices admit that the
premiums paid for Larry’s coverage have been refunded. Thus, we overrule the
Rices’ ninth point to the extent that the trial court’s order precludes those
damage theories. See Haire v. Nathan Watson Co., 221 S.W.3d 293, 302
21
MetLife moved for summary judgment on the ground that its actions did
not cause damages generally; MetLife did not assert that the Rices had to
present evidence of a particular amount of damages.
41
(Tex. App.—Fort Worth 2007, no pet.) (affirming the trial court’s decision to
grant summary judgment as to claims that were not challenged on appeal).
However, we conclude that the final statement in Glenda’s affidavit (that
because of MetLife’s actions and the state of Larry’s health, the Rices could not
obtain alternative coverage for him) comprises some evidence of the Rices’
remaining damage theory—loss of the “opportunity to obtain affordable
alternative coverage.” Thus, we hold that the trial court could not properly
grant summary judgment on that ground.
For these reasons, we sustain the Rices’ ninth point to the extent that it
regards damages related to the loss of their coverage and the loss of their
opportunity to obtain affordable alternative coverage. We overrule their ninth
point to the degree that it relates to damages for mental anguish or the return
of premium payments.
The Trial Court’s Denial of The Rices’ Motion for New Trial
In their tenth point, the Rices contend that the trial court erred by denying
their motion for new trial based on newly discovered evidence that MetLife had
deducted premiums from Glenda’s cash fund account rather than correctly
returning them. Whether to grant a new trial because of newly discovered
evidence “is within the discretion of the trial court. To determine whether a
trial court abused its discretion, we must decide whether the trial court acted
42
without reference to any guiding rules or principles; in other words, whether the
act was arbitrary or unreasonable.” Hutson v. Tri-County Props., LLC, 240
S.W.3d 484, 490–91 (Tex. App.—Fort Worth 2007, pet. denied) (footnote
omitted). The party who seeks a new trial on the ground of newly discovered
evidence must show: (1) the evidence has come to light after trial, (2) it was
not owing to want of due diligence that the evidence did not come to light
sooner, (3) the new evidence is not cumulative, and (4) the evidence is so
material that it would likely produce a different result if a new trial were
granted. Id. at 491.
In their motion for new trial, the Rices conceded that before MetLife filed
its motion for summary judgment, its counsel had given them $2,152.17 for
the apparent return of the premiums (and six percent interest) that they had
paid for Larry’s coverage since Glenda’s retirement. But the Rices alleged that
MetLife had wrongfully removed the money from Glenda’s cash fund account
instead of actually refunding it.22 MetLife filed a response to the motion for
22
The cash fund account—labeled by MetLife as the “Accumulation
Fund”—includes money from premium payments in excess of the cost of the
insurance. Glenda swore in an affidavit,
The cash-fund account was funded with money [she] had paid in
to cover future premiums, and was not at all related to prior
premiums [she] had paid. It . . . became obvious to me that
MetLife had taken my own money . . . and sent it to me to make
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new trial, the trial court held an evidentiary hearing, MetLife filed a
supplemental response, and the trial court denied the motion.
MetLife’s supplemental response establishes that the premium payments
had not been properly refunded to the Rices at the time of the trial court’s
summary judgment decision. However, the response shows that as of July
2009, Glenda’s cash fund account had been fully and correctly replenished by
MetLife to its pre-withdrawal amount.
The Rices argue that the improper refund that had occurred at the time
that MetLife’s summary judgment motion was filed “caused [the Rices] to not
defend . . . the cause of action Money Had and Received, and amounted to a
fraud on the court.” They contend that a different result would occur because
the trial court “would be able to judge the case without considering the false
affidavits” of MetLife that stated that the premiums had been properly
refunded.
me believe that they had actually refunded the premiums . . . .
....
. . . In short, I had to pay MetLife for life insurance that
MetLife says never existed, and then I had to pay myself for the
refund of my premiums.
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We cannot agree with the Rices’ assertion that their newly discovered
evidence is so material that it would likely produce a different result. As to the
Rices’ money had and received claim, which is based solely on the nonreturn
of the premium payments for Larry’s coverage, the evidence established that
at the time the trial court denied the Rices’ motion for new trial, those
payments had been correctly refunded to them. Thus, the Rices would not be
able to obtain a different result on that claim. See Everett v. TK-Taito, L.L.C.,
178 S.W.3d 844, 860 (Tex. App.—Fort Worth 2005, no pet.) (“Money had and
received is an equitable action that may be maintained to prevent unjust
enrichment when one person obtains money, which in equity and good
conscience belongs to another.”).
Similarly, as to the Rices’ other claims, if the trial court based all or part
of its decision to grant MetLife’s summary judgment motion on the fact that
MetLife had correctly refunded the premium payments, its decision was not
likely to change. By the time the trial court denied the Rices’ motion for new
trial, those payments had been correctly refunded. Finally, although the Rices
assert that MetLife perpetuated a fraud on the court, MetLife’s supplemental
response to the Rices’ motion for new trial shows that MetLife’s delay in
correctly refunding the premium payments was caused by inadvertent computer
errors.
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For these reasons, we hold that the evidence that the Rices attached to
their motion for new trial is not so material that it would likely produce a
different result if a new trial were granted and that the trial court therefore did
not abuse its discretion by denying the motion. See Hutson, 240 S.W.3d at
490–91. We overrule the Rices’ tenth point.
Conclusion
Having overruled the Rices’ first, third (in part), seventh, eighth, ninth (in
part), and tenth points, we affirm the trial court’s summary judgment order to
the extent that it grants MetLife’s summary judgment motion as to (1) the
Rices’ breach of contract claim concerning their theories about the breach of
the certificate of insurance that created Larry’s original coverage, (2) the Rices’
claims for breach of fiduciary duty and fraud by nondisclosure, and (3) the
Rices’ damage theories of loss of premiums and mental anguish.
However, having sustained the Rices’ second, third (in part), fourth through
sixth, and ninth (in part) points, we reverse the trial court’s order to the extent
that it grants MetLife’s summary judgment motion as to (1) the Rices’ breach
of contract claim as limited to their theory about the breach of a new, separate
agreement for Larry’s coverage beginning in May 2003, (2) the Rices’ bad faith,
promissory estoppel, DTPA, and insurance code claims, and (3) the Rices’
damage theories regarding their loss of coverage and loss of opportunity to
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obtain alternate coverage. As limited to the portions of the trial court’s order
that we reverse, we remand this case for further proceedings.
TERRIE LIVINGSTON
CHIEF JUSTICE
PANEL: LIVINGSTON, C.J.; DAUPHINOT and GARDNER, JJ.
DELIVERED: August 31, 2010
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