Erika Brown v. American Fidelity Assurance Company and TerraHealth, Inc.

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-09-042-CV
ERIKA BROWN APPELLANT
V.
AMERICAN FIDELITY APPELLEES
ASSURANCE COMPANY
AND TERRAHEALTH, INC.
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FROM THE 362ND DISTRICT COURT OF DENTON COUNTY
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MEMORANDUM OPINION 1
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I. INTRODUCTION
Appellant Erika Brown appeals the trial court’s grant of summary
judgment in favor of Appellees American Fidelity Assurance Company and
TerraHealth, Inc. In three issues, Brown argues that the trial court erred by
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 See Tex. R. App. P. 47.4.
(1) overruling some of her special exceptions and objections to Appellees’
motions for summary judgment, (2) granting TerraHealth’s motion for summary
judgment, and (3) granting American Fidelity’s motion for summary judgment.
We will affirm.
II. F ACTUAL AND P ROCEDURAL B ACKGROUND
TerraHealth provides medical staffing, medical consulting, and IT support
for healthcare delivery systems. TerraHealth offers its employees a voluntary
life insurance benefit through American Fidelity. Employees who choose to
participate are required to pay the entire premium for the coverage that they
have chosen.
Natalie Perez began working for TerraHealth on November 13, 2003. On
that day, TerraHealth’s human resources manager Ginger Liles gave Perez the
enrollment forms for various types of insurance and told her how much each
would cost. Liles did not have any discussions with Perez about underwriting
or where the applications would be sent.
With Liles’s help, Perez filled out an application for a life insurance policy
in the amount of $249,000, which was to be issued by American Fidelity. On
the application, Perez named her sister, Brown, as the primary beneficiary of the
policy. After Perez completed the application, Liles sent it to a broker who was
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to forward it to American Fidelity. Liles told Perez that the effective date for
the life insurance policy would be December 1, 2003.
Perez died on December 2, 2003. Several days later, American Fidelity
received Perez’s application for life insurance. On January 8, 2004, not having
received word of Perez’s death, Paula Prentice of American Fidelity sent a fax
to one of TerraHealth’s employees stating that Perez needed to complete an
additional form so that American Fidelity could finish processing Perez’s
application. Ultimately, the Estate of Natalie Perez 2 filed a claim with American
Fidelity. American Fidelity notified the estate in a letter dated February 10,
2004, that it had not approved Perez’s life insurance application because Perez
had not completed a required exam prior to her death.
Brown thereafter filed suit against Appellees. Brown alleged causes of
action against American Fidelity for breach of insurance contract, violations of
Texas Insurance Code article 21.21, failure to promptly pay her claims under
the policy, violations of the Texas Deceptive Trade Practices Act (DTPA), and
breach of the duty of good faith. Brown alleged causes of action against
TerraHealth for violations of the DTPA and negligent misrepresentation.
TerraHealth and American Fidelity filed separate motions for summary
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 Following Perez’s death, an estate was opened, and the probate court
appointed Anthony A. Perez as temporary administrator of the estate.
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judgment, along with several supplemental motions. After reviewing the
Appellees’ motions for summary judgment and the amendments and
supplements thereto, as well as Brown’s responses; hearing the arguments of
the parties; and considering the summary judgment evidence offered by all
parties, the trial court granted Appellees’ motions for summary judgment and
signed a take-nothing judgment in Appellees’ favor on all of Brown’s claims
against both Appellees. Brown filed a motion for new trial, which the trial court
denied. This appeal followed.
III. S UMMARY J UDGMENT S TANDARD OF R EVIEW
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) & cmt.;
Hamilton v. Wilson, 249 S.W.3d 425, 426 (Tex. 2008).
When reviewing a no-evidence summary judgment, we examine the entire
record in the light most favorable to the nonmovant, indulging every reasonable
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inference and resolving any doubts against the motion. Sudan v. Sudan, 199
S.W.3d 291, 292 (Tex. 2006). We review a no-evidence summary judgment
for evidence that would enable reasonable and fair-minded jurors to differ in
their conclusions. Hamilton, 249 S.W.3d at 426 (citing City of Keller v. Wilson,
168 S.W.3d 802, 822 (Tex. 2005)). We credit evidence favorable to the
nonmovant if reasonable jurors could, and we disregard evidence contrary to
the nonmovant unless reasonable jurors could not. Timpte Indus., Inc., 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).
IV. S UMMARY J UDGMENT P ROPERLY G RANTED FOR A MERICAN F IDELITY
In her third issue, Brown argues that the trial court erred by granting
American Fidelity’s motion for summary judgment. Brown contends that
Perez’s application for life insurance constitutes a policy and that therefore a
valid, enforceable contract existed between Perez and American Fidelity.
The essential 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
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plaintiff. Harris v. Am. Prot. Ins. Co., 158 S.W.3d 614, 622–23 (Tex.
App.—Fort Worth 2005, no pet.). A valid and binding contract is formed by
(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. Critchfield v. Smith, 151 S.W.3d 225, 233 (Tex. App.—Tyler 2004,
pet. denied).
Here, the application is just that—an application. It is titled “Individual
Life Application” and requests the “Proposed Insured[‘s] Information.” It further
states, “I understand that the information collected will be used to determine
my eligibility for insurance.” The record reflects that as of the date of Perez’s
death, her application had not been received by American Fidelity; there is no
evidence that prior to Perez’s death American Fidelity knew that she was an
employee of TerraHealth, and there is no evidence that as of the date she died,
anyone at American Fidelity even knew that Perez had filled out an American
Fidelity insurance application. Although Brown argues that the agent’s
signature on the application somehow converts the application into a contract,
this simply is not the case. See Mo. State Life Ins. Co. v. Boles, 288 S.W.
271, 274 (Tex. Civ. App.—El Paso 1926, writ dism’d w.o.j.) (stating that it is
manifest upon the face of the instrument that district agent’s approval related
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to the preceding agent’s certificate; it was not an approval of the application
in the sense of acceptance by the insurance company of the application). In
order to process the application, American Fidelity required an exam and
additional paperwork, neither of which was completed before Perez died. Thus,
no valid, enforceable life insurance contract existed at Perez’s death.
No valid and enforceable contract existed between Perez and American
Fidelity; thus, American Fidelity has conclusively, as a matter of law, defeated
an essential element of Brown’s breach of contract claim. 3 Moreover, without
a contract and without any evidence that American Fidelity ever spoke to or
dealt with Perez, Brown’s causes of action for violations of Texas Insurance
Code article 21.21, failure to promptly pay her claims under the policy,
violations of the DTPA, and breach of the duty of good faith must also fail.
After reviewing the record in the light most favorable to the nonmovant, we
hold that the trial court properly granted summary judgment for American
Fidelity on all of Brown’s causes of action. We therefore overrule Brown’s third
issue.
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 There is also no evidence of an implied-in-fact contract. The fact that
TerraHealth deducted payments for life insurance (and later reimbursed the
estate for them) cannot create a contract between Brown and American Fidelity
when American Fidelity had not received Perez’s paperwork as of December 1.
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V. T RIAL C OURT P ROPERLY G RANTED S UMMARY J UDGMENT FOR T ERRAH EALTH
In her second issue, Brown argues that the trial court erred by granting
TerraHealth’s combined no-evidence and traditional motion for summary
judgment. Brown contends that TerraHealth is liable for negligent
misrepresentation because Liles misrepresented the effective date of insurance
coverage to Perez. Brown also pleads her DTPA claim jointly against American
Fidelity and TerraHealth.
The elements of a claim for negligent misrepresentation are as follows:
(1) the representation is made by a defendant in the course of his business or
in a transaction in which it has a pecuniary interest; (2) the defendant supplies
false information for the guidance of others in their business; (3) the defendant
did not exercise reasonable care or competence in obtaining or communicating
the information; and (4) the plaintiff suffers pecuniary loss by justifiably relying
on the representation. Fed. Land Bank Ass’n v. Sloane, 825 S.W.2d 439, 442
(Tex. 1991). The “false information” contemplated in a negligent
misrepresentation case is a misstatement of existing fact, not a promise of
future conduct. See Allied Vista, Inc. v. Holt, 987 S.W.2d 138, 141 (Tex.
App.—Houston [14th Dist.] 1999, pet. denied).
A consumer may maintain a DTPA action against a defendant who uses
or employs a false, misleading, or deceptive act or practice that is
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(1) specifically enumerated in a subdivision of subsection (b) of section 17.46
and (2) relied on by the consumer to the consumer’s detriment. See Tex. Bus.
& Com. Code Ann. § 17.50(a)(1) (Vernon Supp. 2009). Brown pleaded that
TerraHealth had violated section 17.46(b) of the DTPA by committing one or
more of the following acts:
(a) Causing confusion or misunderstanding as to Insurer’s
and/or Employer’s goods and services [by stating that they] had
sponsorship, approval, characteristics, ingredients, uses, benefits,
or quantities that they did not have;
(b) Representing that the agreement between the parties
confers or involves rights, remedies, or obligations that it does not
have or involve, or that are prohibited by law; and/or
(c) Failing to disclose information concerning goods and
services which was known to Insurer and/or Employer at the time
of the transaction, and such failure to disclose was intended to
induce Plaintiff into a transaction which [s]he would not have
entered had the information been disclosed.
See also Tex. Bus. & Com. Code Ann. § 17.46(b)(5), (12), (24) (Vernon Supp.
2009) (defining “false, misleading, or deceptive acts or practices” to include the
above acts).
Here, there is no evidence to support the second and third elements of
Brown’s claim for negligent misrepresentation. The summary judgment
evidence shows that an American Fidelity new business status worksheet listed
the effective date of Perez’s proposed policy as December 1. In fact, Brown’s
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own expert testified in his deposition that Liles had followed American Fidelity’s
procedures by providing Perez with an effective date of December 1 for Perez’s
proposed policy. No evidence exists that the December 1 effective date given
by Liles to Perez was false or that if Perez had completed the application
process and received a policy it would not have had an effective date of
December 1. Consequently, the trial court properly granted TerraHealth’s no-
evidence motion for summary judgment on Brown’s negligent misrepresentation
claim.
Likewise, no summary judgment evidence exists that TerraHealth
employed false, misleading, or deceptive acts or practices under section
17.46(b) of the DTPA when it acted as a conduit in passing along the American
Fidelity life insurance application to Perez and when it provided information to
Perez about the application that Brown’s expert conceded was appropriate.
Accordingly, no evidence exists that TerraHealth engaged in any false,
misleading, or deceptive act as required for Brown to state a cause of action
under the DTPA subsections she pleaded. See Tex. Bus. & Com. Code Ann.
§ 17.46(b)(5), (12), (24); Chausse v. Dallas Cowboys Football Club, Ltd., No.
05-96-00429-CV, 1997 WL 739556, at *6 (Tex. App.—Dallas Dec. 2, 1997,
pet. denied) (not designated for publication) (holding that to the extent season
ticket holders relied on misrepresentations as their basis for DTPA claims, their
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argument had no merit as to the Cowdens because there was no evidence the
Cowboys made any misrepresentation to them). Consequently, the trial court
properly granted TerraHealth’s no-evidence motion for summary judgment on
Brown’s DTPA claims. We overrule Brown’s second issue. 4
VI. S PECIAL E XCEPTIONS
In her first issue, Brown argues that the trial court erred by overruling
some of her special exceptions and objections to Appellees’ motions for
summary judgment. We address each of the special exceptions and objections
below.
A. Standard of Review
We review a trial court’s ruling on special exceptions for abuse of
discretion. Ross v. Goldstein, 203 S.W.3d 508, 512 (Tex. App.—Houston
[14th Dist.] 2006, no pet.). If the court has acted without reference to guiding
rules and principles, then it has abused its discretion. Id. On appeal, we accept
as true all material factual allegations and all factual statements reasonably
inferred from the allegations set forth in the excepted to pleadings. Sorokolit
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 Because we hold that the trial court correctly granted TerraHealth’s
no-evidence motion for summary judgment, we need not address Brown’s
complaints concerning the granting of TerraHealth’s traditional motion for
summary judgment. See Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600
(Tex. 2004).
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v. Rhodes, 889 S.W.2d 239, 240 (Tex. 1994). We liberally construe pleadings
because special exceptions are only a challenge to determine if the fair notice
requirements of pleadings have been met. See Wortham v. Dow Chem. Co.,
179 S.W.3d 189, 198–99 (Tex. App.—Houston [14th Dist.] 2005, no pet.).
If by examining the plaintiff’s pleadings alone, we may ascertain with
reasonable certainty the elements of a cause of action and the relief sought, the
pleading is sufficient. Id. at 198.
B. Exceptions and Objections to TerraHealth’s motion
Brown specially excepted and objected to TerraHealth’s original motion
for summary judgment on the basis that it was unclear whether it was brought
as a traditional motion for summary judgment or a no-evidence motion for
summary judgment. A review of TerraHealth’s original motion for summary
judgment reveals that it clearly asserted the standard of review for both
traditional and no-evidence summary judgment motions. Consequently, there
was sufficient basis for the trial court to overrule this special exception and
objection.
Brown specially excepted and objected to TerraHealth’s original motion
for summary judgment, to the extent that it was deemed to be a no-evidence
motion for summary judgment, on the basis that TerraHealth failed to identify
the specific elements to which it alleged there was no evidence, including any
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element of unconscionable action under the DTPA. TerraHealth’s original
motion for summary judgment, however, states that Brown cannot prove that
any misrepresentation was made to Perez. And TerraHealth’s second
supplemental motion for summary judgment argues both that the information
Liles provided to Perez was not false and that such representation was not
unconscionable. Thus, there was sufficient basis for the trial court to overrule
this special exception and objection.
Brown specially excepted and objected to paragraph 11 of TerraHealth’s
original motion for summary judgment on the basis that it erroneously asserted
that “The Estate of Natalie Perez filed a claim with AFAC.” This complained-of
statement was not relevant in our analysis, as demonstrated above. Thus, the
trial court could have granted TerraHealth’s motion for summary judgment
without considering the challenged statements or evidence. See FWT, Inc. v.
Haskin Wallace Mason Prop. Mgt., L.L.P., No. 02-08-00321-CV, 2009 WL
4114140, at *14 (Tex. App.—Fort Worth Nov. 25, 2009, no pet. h.).
Brown specially excepted and objected to exhibit B of TerraHealth’s
original motion for summary judgment to the extent that paragraph 8 of Liles’s
affidavit asserted that Liles “followed the procedures required by AFAC
Assurance Company.” As set forth above, Brown’s own expert agreed with
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this, so there was sufficient basis for the trial court to overrule this special
exception and objection.
C. Exceptions and Objections to American Fidelity’s motion
Brown specially excepted and objected to American Fidelity’s original
motion for summary judgment on the basis that American Fidelity did not
specify which of the elements of a valid, enforceable contract, if any, were
being challenged. American Fidelity’s motion, however, challenged the
existence of all five elements in arguing that there was no contract. This
provided sufficient basis for the trial court to overrule this special exception and
objection; the other arguments that Brown makes along the lines of the breach
of contract claim are also defeated by American Fidelity’s argument that there
was no contract.
Brown specially excepted and objected to an affidavit that was an exhibit
to American Fidelity’s motion for summary judgment. This affidavit is not
relevant in our analysis, as demonstrated above. Thus, the trial court could
have granted American Fidelity’s motion for summary judgment without
considering the challenged affidavit. See FWT, Inc., 2009 WL 4114140, at
*14.
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Because the trial court had sufficient bases for overruling Brown’s special
exceptions and objections to TerraHealth’s and American Fidelity’s motions for
summary judgment, we overrule Brown’s first issue. 5
VII. C ONCLUSION
Having overruled Brown’s three issues, we affirm the trial court’s
judgment.
PER CURIAM
PANEL: WALKER and LIVINGSTON, JJ.
DELIVERED: January 14, 2010
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 American Fidelity in its brief raises an issue on whether the trial court
properly overruled its objections to Brown’s summary judgment evidence.
Based on our disposition of Brown’s issues, we need not address American
Fidelity’s issue. See Tex. R. App. P. 47.1.
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