OPINION
No. 04-10-00546-CV
TEXAS FARM BUREAU MUTUAL INSURANCE CO.,
Appellant/Cross-Appellee
v.
Shannan ROGERS and Cristen Bazan,
as legal heirs of Cynthia Bazan, deceased,
Appellees/Cross-Appellants
From the 198th Judicial District Court, Kerr County, Texas
Trial Court No. 09437B
The Honorable Charles Sherrill, 1 Judge Presiding
Opinion by: Sandee Bryan Marion, Justice
Sitting: Catherine Stone, Chief Justice
Sandee Bryan Marion, Justice
Rebecca Simmons, Justice
Delivered and Filed: July 27, 2011
REVERSED AND RENDERED
Appellant/cross-appellee, Texas Farm Bureau Mutual Insurance Co. (“Farm Bureau”),
appeals from the jury’s verdict and award to appellees/cross-appellants, Shannan Rogers and
Cristen Bazan (“the Heirs”), in a suit involving a homeowner’s insurance policy. We reverse
and render judgment that the Heirs take nothing.
1
The Honorable M. Rex Emerson is the presiding judge of the 198th District Court of Kerr County. However, the
Honorable Senior Judge Charles Sherrill presided over the trial as a visiting retired judge and signed the judgment at
issue in this appeal.
04-10-00546-CV
BACKGROUND
In 2008, Cynthia Bazan purchased a house in Kerr County with a mortgage from
Regency Solutions (“Regency”), which required her to obtain insurance on the house. Bazan
applied for a homeowner’s insurance policy from Farm Bureau and was initially rejected due to
lack of tiling around a wood-burning stove in the house. Bazan had the stove tiled and reapplied
for a policy, signing a second application. Based on the second application, Bazan was approved
for a homeowner’s insurance policy (“the policy”). The policy provided coverage up to
$160,000 for the house itself and up to $96,000 for personal property inside the house.
On January 14, 2009, a fire completely destroyed Bazan’s house and all of its contents.
Bazan made a claim on the policy, and Farm Bureau began a criminal background check of
Bazan and a “cause and origin” investigation of the fire. On January 16, 2009, Farm Bureau’s
local claims department obtained Bazan’s criminal record. On January 21, 2009, Farm Bureau’s
fire investigator listed the cause of the fire as “undetermined.” On January 22, 2009, prior to
completing its criminal investigation of Bazan, Farm Bureau made a $5000 advance payment to
Bazan for emergency expenses.
On January 26, 2009, Bazan admitted in an interview with a Farm Bureau claims
investigator that she had a criminal record, although she expressly denied in both of her
insurance policy applications that she had ever been convicted of a criminal offense. In fact,
Bazan had a lengthy criminal record, including convictions for DWI, public intoxication, theft,
assault, possession of a controlled substance, burglary, and forgery, as well as numerous
probation violations. Farm Bureau’s Waco-based underwriting manager, Gary Ryan, became
aware of Bazan’s criminal record on January 30, 2009 and made the decision to rescind her
policy. On February 4, 2009, Farm Bureau sent notice to Bazan and Regency that it was
-2-
04-10-00546-CV
rescinding the policy as of the original application date and returning Bazan’s premium payment
based on the concealment of her criminal record on the policy application. The policy contained
a provision stating:
2. Concealment or Fraud. This policy is void as to you and any other insured,
if you or any other insured under this policy has intentionally concealed or
misrepresented any material fact or circumstance, made false statements or
committed fraud relating to this insurance, whether before or after a loss.
In its letter to Bazan, Farm Bureau informed Bazan, “[D]ue to the material misrepresentation on
the original application concerning your prior criminal convictions[, w]e consider the above
contract null and void . . . .”
On February 17, 2009, Farm Bureau paid Regency $127,549.69—the full balance of
Bazan’s mortgage lien. Farm Bureau claims this payment was required by the policy’s Mortgage
Clause.
On March 4, 2009, Bazan’s attorney sent Farm Bureau a DTPA demand letter requesting
actual damages in the amount of $256,000 (the sum of the full policy limits for both the house
and its contents) plus interest from the date of loss and attorney’s fees. Farm Bureau refused to
pay Bazan anything more under the policy.
Bazan subsequently sued Farm Bureau for breach of contract, DTPA violations, unfair or
deceptive acts or practices under the Texas Insurance Code, and negligence. She sought
damages in the amount of $256,000, damages for mental anguish, treble damages under the
DTPA, and attorney’s fees in the amount of $155,890 ($120,890 for trial, $25,000 for appeal to
the court of appeals, and $10,000 for appeal to the Supreme Court). Farm Bureau
counterclaimed for fraud, seeking reimbursement for the $5000 emergency expenses payment to
Bazan, for payments to local fire departments, and for the $127,549.69 mortgage payment to
-3-
04-10-00546-CV
Regency. Farm Bureau later amended its claim to request only nominal damages in the amount
of $1.
Bazan died on March 5, 2010, a few weeks before trial. Two of her three children, the
Heirs, filed a suggestion of death asking to proceed as their mother’s legal heirs. Farm Bureau
filed a motion to show authority, arguing there were potential unknown heirs to Bazan’s estate.
The trial court held a hearing on the motion and allowed the Heirs to proceed. Farm Bureau then
filed a motion to dismiss, arguing the Heirs did not have standing to pursue Bazan’s DTPA
claims. In a pretrial hearing, the trial court denied the motion.
After a four-day trial, the trial court submitted twelve questions to the jury. The jury
made the following findings:
• Bazan made a material misrepresentation in the policy application;
• Farm Bureau ratified the insurance contract with Bazan;
• Farm Bureau did not engage in any unfair or deceptive act or practice with Bazan;
• Farm Bureau caused confusion or misunderstanding as to the source, sponsorship,
approval, or certification of goods or services but did not do so knowingly; and
• Farm Bureau did not fail to comply with its duty of good faith and fair dealing with
Bazan.
The jury awarded the following damages to Bazan:
• Policy benefits for the house: $30,450.31
• Policy benefits for the house’s contents: $15,000.00
• Mental anguish: $0
• Trial attorney’s fees: $108,801.00
• Appellate attorney’s fees: $0
The jury awarded $1 to Farm Bureau on its counterclaim.
Both parties subsequently filed motions for judgment notwithstanding the verdict
(“JNOV”). The Heirs argued in their motion that they were entitled to the full $160,000 policy
limit for the house, the full $96,000 policy limit for the house’s contents, and $120,890 for trial
attorney’s fees. Farm Bureau argued in its motion that (1) the issue of ratification should not
-4-
04-10-00546-CV
have been submitted to the jury; (2) there was no evidence Farm Bureau caused confusion or
misunderstanding as to the source, sponsorship, approval, or certification of goods or services;
(3) the Heirs lacked standing to pursue Bazan’s DTPA claim; (4) the Heirs waived any right to
contract damages because they failed to submit a breach of contract question to the jury; and (5)
the Heirs had no right to attorney’s fees. The trial court held a hearing on the motions for JNOV,
following which it denied Farm Bureau’s motion and granted in part the Heirs’ motion, awarding
the Heirs the full $96,000 policy limit for the contents of the house, as well as appellate
attorney’s fees. The trial court later denied Farm Bureau’s motion to modify the judgment.
HEIRS’ STANDING TO BRING DTPA CLAIM
In its first issue, Farm Bureau argues Bazan’s DTPA claim did not survive her death and,
therefore, the Heirs did not have standing to pursue the claim at trial. This court has repeatedly
held that a DTPA claim does not survive the death of the original consumer. Lukasik v. San
Antonio Blue Haven Pools, Inc., 21 S.W.3d 394, 401–02 (Tex. App.—San Antonio 2000, no
pet.) (parents of deceased child could not pursue child’s DTPA claims for defective pool in
which he drowned); Mendoza v. Am. Nat’l Ins. Co., 932 S.W.2d 605, 609 (Tex. App.—San
Antonio 1996, no writ) (representative of deceased insured’s estate could not bring insured’s
DTPA claims against insurance company); First Nat’l Bank of Kerrville v. Hackworth, 673
S.W.2d 218, 221 (Tex. App.—San Antonio 1984, no writ) (en banc) (deceased bank customer’s
estate could not bring customer’s DTPA claims against bank). In Hackworth, this court held that
a deceased consumer’s estate cannot pursue a cause of action under the DTPA because the
statute does not explicitly provide for survival and because the right to recovery under the DTPA
is punitive in nature—“a purely personal right.” 673 S.W.2d at 220–21. Similarly, in Lukasik,
this court held that the parents of a deceased child did not have standing to pursue their child’s
-5-
04-10-00546-CV
DTPA claims either as representatives of the child’s estate or as individuals because they were
not “consumers” as defined by the statute. 21 S.W.3d at 402.
Here, Farm Bureau raised the survivability issue in a pretrial motion to dismiss for lack of
standing. Farm Bureau argued the Heirs did not have standing to bring Bazan’s DTPA claims
either individually or as the beneficiaries of Bazan’s estate because this court has held DTPA
claims do not survive the death of the consumer. The trial court held a hearing and denied the
motion, permitting the Heirs to proceed to trial. Because this court has held DTPA claims do not
survive the death of the plaintiff-consumer and cannot be pursued by the consumer’s estate or by
individual beneficiaries of the consumer’s estate who are not themselves “consumers,” the Heirs
in this case did not have standing to pursue Bazan’s DTPA cause of action. Therefore, the jury’s
finding on the DTPA cause of action that Farm Bureau caused confusion or misunderstanding as
to the source, sponsorship, approval, or certification of goods or services will not support an
award of damages. Accordingly, we next consider whether the jury’s finding that Farm Bureau
ratified the insurance contract supports an award of damages and attorney’s fees.
RATIFICATION
In its second issue, Farm Bureau argues that because the contract as to Bazan was void
based on Bazan’s material misrepresentation, it could not be ratified; therefore, Farm Bureau
contends the jury’s finding that it ratified the insurance contract with Bazan is immaterial and
has no legal basis.
To void an insurance policy based on the insured’s misrepresentation(s) in the policy
application, the insurer has the burden to plead and prove the following: (1) the insured made a
representation, (2) the representation was false, (3) the insurer relied upon the false
representation, (4) the insured made the false representation with the intent to deceive the
-6-
04-10-00546-CV
insurer, and (5) the false representation was material. Mayes v. Mass. Mut. Life Ins. Co., 608
S.W.2d 612, 616 (Tex. 1980); Garcia v. John Hancock Variable Life Ins. Co., 859 S.W.2d 427,
431 (Tex. App.—San Antonio 1993, writ denied). “[M]ateriality of the risk must be viewed as
of the time of the issuance of the policy, rather than at the time the loss occurred, and . . . the
principal inquiry in determining materiality is whether the insurer would have accepted the risk if
the true facts had been disclosed.” Robinson v. Reliable Life Ins. Co., 569 S.W.2d 28, 29 (Tex.
1978). As a general rule, a void contract cannot be ratified. Lawrence v. CDB Servs., Inc., 44
S.W.3d 544, 555–56 (Tex. 2001) (Baker, J., dissenting); Jack v. State, 694 S.W.2d 391, 397
(Tex. App.—San Antonio 1985, writ ref’d n.r.e.).
Here, the policy stated:
2. Concealment or Fraud. This policy is void as to you and any other insured,
if you or any other insured under this policy has intentionally concealed or
misrepresented any material fact or circumstance, made false statements or
committed fraud relating to this insurance, whether before or after a loss.
The jury was instructed as follows:
You are instructed that a material misrepresentation occurs in an insurance
contract setting when:
1) a person makes a representation
2) that is false
3) that is relied upon by the insurer
4) the misrepresentation is made with the intent to deceive on the part of the
insured in making the application
5) the misrepresentation is material
“Misrepresentation” means a false statement of fact, including but not limited to
concealment and failure to disclose.
“Material” means a reasonable person would attach importance to and would be
induced to act on the information in determining his choice of actions in the
transaction in question.
-7-
04-10-00546-CV
In answering whether or not a misrepresentation, if any, which you may find is
material, you must view the circumstances from the standpoint of [Farm Bureau]
at the time of the issuance of the policy to Cynthia Bazan.
You are instructed that under the law the intent to induce is the same as the intent
to deceive.
The jury answered “YES” to Question 1 (“Did CYNTHIA BAZAN make a material
misrepresentation to [FARM BUREAU] in her applications for insurance?”). Because the jury
found Bazan made a material misrepresentation in her policy application, the policy was void
and could not be ratified. See Jack, 694 S.W.2d at 397. Therefore, the jury’s finding that Farm
Bureau ratified the insurance contract was immaterial and will not support an award of damages
and attorney’s fees.
CONCLUSION
Because the jury’s findings on the DTPA claim and the issue of ratification cannot
support the award of damages and attorney’s fees in this case, we need not address Farm
Bureau’s remaining issues on appeal, nor need we address the Heirs’ sole issue on cross-appeal
(whether they are entitled to the full $160,000 policy limit for Bazan’s house). We reverse the
trial court’s judgment and render judgment that the Heirs take nothing.
Sandee Bryan Marion, Justice
-8-