Karl Wallace v. Amtrust Insurance Company of Kansas, Inc., John Cole Insurance Agency, Inc. and John Cole, Individually

IN THE
TENTH COURT OF APPEALS
No. 10-14-00209-CV
KARL WALLACE,
Appellant
v.
AMTRUST INSURANCE COMPANY OF KANSAS, INC.,
JOHN COLE INSURANCE AGENCY, INC.
AND JOHN COLE, INDIVIDUALLY,
Appellee
From the 278th District Court
Walker County, Texas
Trial Court No. 1125693
MEMORANDUM OPINION ON REHEARING
In several issues, appellant, Karl Wallace, challenges summary judgments entered
in favor of appellees, AmTrust Insurance Company of Kansas, Inc., John Cole Insurance
Agency, Inc., and John Cole, individually. In our original opinion, we reversed the trial
court’s judgment as to AmTrust and affirmed the judgment entered in favor of the Cole
defendants. In response to our opinion, Wallace filed a motion for rehearing challenging
our conclusion with respect to the Cole defendants. After reviewing the record, we grant
Wallace’s motion for rehearing, withdraw our memorandum opinion and judgment
issued January 14, 2016, and substitute the following in its place. We reverse and remand.
I. BACKGROUND
Until the time of his death in 2007, Wallace’s father lived on property located at
1100 Lone Oak Drive in Oakhurst, Texas—a few hundred miles from Fort Worth, Texas.
This property included both a mobile home and 130 acres of land. Because he had been
granted a life estate in the property, Robert Guenther began living in the mobile home
until he died in 2009. Wallace, a resident of Fort Worth, subsequently took sole
ownership of the property in late 2009.
Realizing that the property was left vacant and that the mobile home was
deteriorating, Wallace decided to sell the property. However, to protect his interest in
the interim, Wallace contacted John Cole of the John Cole Insurance Agency, Inc. to
procure insurance. Wallace transacted with Cole because Cole’s company had insured
the property for Wallace’s father.
Because he did not have authority to sell or bind coverage on behalf of AmTrust,
Cole had to submit an application for insurance to Stroud Insurance Agency, Inc.—a
managing general agency that had a duty to follow the underwriting guidelines of
AmTrust. Cole asserts that Stroud and AmTrust do not issue Farm and Ranch insurance
policies on properties that are vacant or unoccupied at the time the insurance application
Wallace v. Amtrust Insurance Company of Kansas, Inc. Page 2
is submitted. Wallace claims that he told Cole that the property was vacant and
unoccupied. Nevertheless, an insurance application was submitted to Stroud and
AmTrust for approval.
Wallace admitted that, on January 12, 2010, he signed the commercial application
of insurance that was submitted to Stroud and AmTrust for approval. Wallace further
testified that he believed that he answered all of the application questions truthfully. In
any event, Cole, on behalf of Wallace, indicated that the property was 100% occupied,
among other things. Furthermore, in the Farm and Ranch Supplemental, which was
made a part of the application, Cole indicated that none of the dwellings on the property
were vacant or unoccupied. Once the application was completed, Cole faxed the
document to Wallace for review. Cole instructed Wallace to verify the accuracy of the
statements and to correct any mistakes. Without making any corrections, Wallace signed
the application, including the Farm and Ranch Supplemental, and returned it to Cole,
who, in turn, submitted the application to Stroud for approval. Stroud and AmTrust
ultimately approved Wallace’s application and issued a policy, with a renewal effective
on January 18, 2011. The policy was subsequently renewed.
No problems arose until January 29, 2011, when a grass fire destroyed the mobile
home on the property. In an affidavit that was executed on May 17, 2012, and later struck
by the trial court as to the Cole defendants, Wallace noted the following:
I turned in the claim for the loss to the house the day after the loss. Within
a week or two at most, I gave statements and answered questions posed to
Wallace v. Amtrust Insurance Company of Kansas, Inc. Page 3
me by the adjuster. At that time, the adjuster was informed that the house
was vacant and unoccupied at the time of the loss and had been vacant and
unoccupied since I had taken possession of it. The adjuster was also
informed that all utilities were off at the house and had been since I had
taken possession of the house. I told them this in response to their repeated
requests to provide them with utility bills.
AmTrust began investigating Wallace’s claim.
In the meantime, Wallace filed suit against AmTrust and the John Cole Insurance
Agency, asserting numerous claims against: (1) the John Cole Insurance Agency for
violations of the Texas Insurance Code and the Texas Deceptive Trade Practices Act; and
(2) AmTrust for breach of contract and violations of the Texas Insurance Code.
Nevertheless, as part of AmTrust’s investigation, Wallace submitted to an examination
under oath on July 26, 2011. Thereafter, on August 18, 2011, AmTrust sent a letter to
Wallace’s attorney, stating:
This is to follow up on our conversation after the recent examination under
oath of Karl Wallace. More particularly, AmTrust Insurance Company of
Kansas, Inc. (“AmTrust”) discovered several things during the
examination. First, it determined that the house was both vacant and
unoccupied not only at the time of loss, but also, prior to the time that the
application for insurance was filled out and sent to AmTrust for review.
Mr. Wallace testified that both he and Mr. John Cole knew that the property
was vacant and unoccupied. Mr. Wallace confirmed that it was his
signature on the application. He was not under duress or any other
condition that would have forced him to sign the application. Mr. Wallace
knew that the executed application would be analyzed by AmTrust for the
purposes of determining whether to issue the policy or not.
As we discussed, AmTrust does not issue or underwrite residential
properties that are vacant or unoccupied. The risk of loss is simply too high.
Accordingly, AmTrust is under no obligation to pay your client any benefits
that he contends are due and owing under the policy.
Wallace v. Amtrust Insurance Company of Kansas, Inc. Page 4
AmTrust hereby offers to settle the case on the following terms and
conditions. If Mr. Wallace will agree to dismiss AmTrust from the lawsuit
with prejudice, AmTrust will immediately refund all premiums going back
to the original policy it issued to Mr. Wallace. The first policy became
effective on or about January 11, 2010.
Wallace declined AmTrust’s settlement offer and proceeded with his lawsuit.
Wallace later amended his petition to include John Cole as an individual defendant. In
his live petition, Wallace made agency claims, including liability for acts and omissions
occurring within the scope of actual or apparent authority, and vicarious-liability and
negligence claims against all the defendants. As to AmTrust, Wallace alleged: (1)
statutory vicarious liability under section 4001.051 of the Texas Insurance Code; (2) that
AmTrust violated numerous other provisions of the Insurance Code; and (3) breach-of-
contract and breach-of-the-duty-of-good-faith-and-fair-dealing claims. With respect to
the Cole defendants, Wallace asserted claims for DTPA and Texas Insurance Code
violations.
In response to Wallace’s petitions, the Cole defendants filed traditional and no-
evidence motions for summary judgment, arguing that, among other things, Wallace
admitted that Cole did not make a misrepresentation regarding the insurance policy; the
Cole defendants owed no duty to Wallace to procure coverage not specifically requested
by Wallace; and the Cole defendants had no duty to extend Wallace’s insurance
Wallace v. Amtrust Insurance Company of Kansas, Inc. Page 5
protection.1 More specifically, the summary-judgment motions of the Cole defendants
addressed Wallace’s Insurance Code and DTPA claims, but did not explicitly address his
negligence or vicarious-liability claims.
In any event, Wallace responded to the Cole defendants’ summary-judgment
motions and attached as exhibits Wallace’s examination under oath, deposition
testimony from both Cole and Wallace, and Wallace’s May 17, 2012 affidavit. Later, the
Cole defendants moved to strike Wallace’s May 17, 2012 affidavit as a sham. On
September 25, 2012, the trial court granted the Cole defendants’ motion to strike and
granted their traditional and no-evidence motions for summary judgment.
Subsequently, Wallace filed a motion to reconsider the rulings on the Cole defendants’
motions; the trial court denied Wallace’s motion for reconsideration.
Additionally, AmTrust filed a traditional motion for summary judgment, which
was supplemented several times to include collateral estoppel assertions and a motion
for rescission.2 Wallace responded to AmTrust’s summary-judgment motion and
attached as exhibits: (1) Wallace’s examination under oath; (2) deposition testimony from
1 In support of their no-evidence motion for summary judgment, the Cole defendants contended
that there was no evidence that they “committed false, misleading or deceptive acts that were a producing
cause of actual damages to the Plaintiffs. Accordingly, Plaintiff has failed to provide any evidence
supporting one or more elements of its DTPA claim and summary judgment is proper as a matter of law.”
Additionally, the Cole defendants argued that there was no evidence that they violated Chapter 541 of the
Insurance Code or that their actions or practices were a producing cause of Wallace’s actual damages.
2 Although not relevant to this appeal, AmTrust filed cross-claims for contribution and/or
indemnity against the Cole defendants, and the Cole defendants moved for summary judgment on the
cross-claims. AmTrust eventually non-suited its cross-claims against the Cole defendants.
Wallace v. Amtrust Insurance Company of Kansas, Inc. Page 6
both Cole and Wallace; and (3) affidavits executed by Wallace on April 10, 2012 and May
17, 2012. Thereafter, AmTrust objected to Wallace’s May 17, 2012 affidavit, arguing that
“[a] party cannot file an affidavit to contradict his own deposition testimony without any
explanation for the change in the testimony, for the purpose of creating a fact issue to
avoid summary judgment.” However, AmTrust did not obtain a ruling on its objection
to Wallace’s affidavit.
On June 10, 2014, the trial court entered its final judgment, wherein the trial court:
(1) once again denied Wallace’s motion for reconsideration and granted the Cole
defendants’ motions for summary judgment; (2) granted AmTrust’s motion for summary
judgment and its supplemental materials; (3) granted AmTrust’s summary judgment
based on collateral estoppel; (4) granted AmTrust’s motion to rescind the insurance
policies; and (5) ordered AmTrust to refund the premiums paid by Wallace for the
insurance policies. The trial court also dismissed all of Wallace’s claims against AmTrust
and the Cole defendants with prejudice and ordered that Wallace take nothing by his
lawsuit. This appeal followed.
II. STANDARD OF REVIEW
Different standards of review apply to summary judgments granted on no-
evidence and traditional grounds. See TEX. R. CIV. P. 166a(c), (i). A no-evidence summary
judgment is equivalent to a pre-trial directed verdict, and we apply the same legal
sufficiency standard on review. Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex.
Wallace v. Amtrust Insurance Company of Kansas, Inc. Page 7
2006). Once an appropriate no-evidence motion for summary judgment is filed, the non-
movant, here Wallace, must produce summary judgment evidence raising a genuine
issue of material fact to defeat the summary judgment. See TEX. R. CIV. P. 166a(i). “A
genuine issue of material fact exists if more than a scintilla of evidence establishing the
existence of the challenged element is produced.” Ford Motor Co. v. Ridgway, 135 S.W.3d
598, 600 (Tex. 2004). We do not consider any evidence presented by the movant unless it
creates a fact question. Binur v. Jacobo, 135 S.W.3d 646, 651 (Tex. 2004).
“Less than a scintilla of evidence exists when the evidence is ‘so weak as to do no
more than create a mere surmise or suspicion of fact.’” Ortega v. City Nat’l Bank, 97 S.W.3d
765, 772 (Tex. App.—Corpus Christi 2003, no pet.) (op. on reh’g) (quoting Kindred v.
Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983)). Conversely, more than a scintilla exists
when the evidence “raises to a level that would enable reasonable and fair-minded people
to differ in their conclusions.” Id. (citing Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 25 (Tex.
1994)). In determining whether the non-movant has met his burden, we review the
evidence in the light most favorable to the non-movant, crediting such evidence if
reasonable jurors could and disregarding contrary evidence unless reasonable jurors
could not. Tamez, 206 S.W.3d at 582; City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.
2005).
In contrast, we review the trial court’s grant of a traditional motion for summary
judgment de novo. See Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex.
Wallace v. Amtrust Insurance Company of Kansas, Inc. Page 8
2003). When reviewing a traditional motion for summary judgment, we must determine
whether the movant met its burden to establish that no genuine issue of material fact
exists and that the movant is entitled to judgment as a matter of law. See TEX. R. CIV. P.
166a(c); Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002). The movant bears the
burden of proof in a traditional motion for summary judgment, and all doubts about the
existence of a genuine issue of material fact are resolved against the movant. See Grant,
73 S.W.3d at 215. We take as true all evidence favorable to the non-movant, and we
indulge every reasonable inference and resolve any doubts in the non-movant’s favor.
Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). We will affirm a
traditional summary judgment only if the record establishes that the movant has
conclusively proved its defense as a matter of law or if the movant has negated at least
one essential element of the plaintiff’s cause of action. IHS Cedars Treatment Ctr. of DeSoto,
Tex., Inc. v. Mason, 143 S.W.3d 794, 798 (Tex. 2004); Am. Tobacco Co. v. Grinnell, 951 S.W.2d
420, 425 (Tex. 1997).
When the trial court’s judgment does not specify which of several grounds
proposed was dispositive, we affirm on any ground offered that has merit and was
preserved for review. See Joe v. Two Thirty Nine J.V., 145 S.W.3d 150, 157 (Tex. 2004).
Moreover, when a party moves for summary judgment under both rules 166a(c) and
166a(i), “[we] first review the trial court’s summary judgment under the standards of rule
166a(i).” Ridgway, 135 S.W.3d at 600.
Wallace v. Amtrust Insurance Company of Kansas, Inc. Page 9
III. AMTRUST AND THE NOTICE PROVISION OF SECTION 705.005
OF THE INSURANCE CODE
Among the many arguments advanced by Wallace on appeal is that AmTrust
failed to meet its burden regarding a required statutory notice provision—namely,
section 705.005 of the Insurance Code. See TEX. INS. CODE ANN. § 705.005 (West 2009).
Section 705.005 provides the following:
(a) This section applies to any suit brought on an insurance policy issued or
contracted for after June 29, 1903.
(b) A defendant may use as a defense a misrepresentation made in the
application for or in obtaining an insurance policy only if the defendant
shows at trial that before the 91st day after the date the defendant
discovered the falsity of the representation, the defendant gave notice
that the defendant refused to be bound by the policy:
(1) to the insured, if living; or
(2) to the owners or beneficiaries of the insurance policy, if the
insured was deceased.
(c) This section does not:
(1) make available as a defense an immaterial misrepresentation; or
(2) affect the provisions of Section 705.004[3].
3 Section 705.004 of the Insurance Code states:
(a) An insurance policy provision that states that false statements made in the application
for the policy or in the policy make the policy void or voidable:
(1) has no effect; and
(2) is not a defense in a suit brought on the policy.
(b) Subsection (a) does not apply if it is shown at trial that the matter misrepresented:
Wallace v. Amtrust Insurance Company of Kansas, Inc. Page 10
Id. On appeal, Wallace contends that “AmTrust did not conclusively prove that it
provided the required notice because a fact issue remains regarding when it discovered
the misrepresentations.”4 In making this argument, Wallace relies heavily on his May 17,
2012 affidavit, which was struck as to the Cole defendants but not as to AmTrust.
As summary-judgment evidence, AmTrust submitted the August 18, 2011 letter it
sent to Wallace, wherein AmTrust noted that it discovered misrepresentations during
Wallace’s July 26, 2011 examination under oath and that AmTrust had no obligation to
pay Wallace under the policy. However, in his May 17, 2012 affidavit, which was
included in the summary-judgment evidence as to AmTrust, Wallace indicated that,
among other things, he notified the AmTrust adjuster that the house was vacant and
unoccupied at the time of the loss and had been vacant and unoccupied since he had
taken possession of the property. See Randall v. Dallas Power & Light Co., 752 S.W.2d 4, 5
(Tex. 1988) (“[A] deposition does not have controlling effect over an affidavit in
(1) Was material to the risk; or
(2) Contributed to the contingency or event on which the policy became due and
payable.
(c) It is a question of fact whether a misrepresentation made in the application for the
policy or in the policy itself was material to the risk or contributed to the contingency
or event on which the policy became due and payable.
TEX. INS. CODE ANN. § 705.004 (West 2009).
4The record reflects that Wallace raised this contention in his response to AmTrust’s traditional
motion for summary judgment.
Wallace v. Amtrust Insurance Company of Kansas, Inc. Page 11
determining whether a motion for summary judgment should be granted.” (citing Gaines
v. Hamman, 163 Tex. 61, 358 S.W.2d 557, 562 (1962))); Cantu v. Peacher, 53 S.W.3d 5, 10-11
(Tex. App.—San Antonio 2001, pet. denied) (“Most differences between a witness’s
affidavit and deposition are more a matter of degree and details than direct contradiction.
This reflects human inaccuracy more than fraud.”); see also TEX. R. CIV. P. 166a(f)
(authorizing the use of affidavits as summary-judgment evidence so long as certain
criteria are met).5 According to Wallace, this conversation occurred within a week or two
of the grass fire, which would have been in mid-February 2011.
Given that we take as true all evidence favorable to Wallace, and we indulge every
reasonable inference and resolve any doubts in Wallace’s favor, see Valence Operating Co.,
164 S.W.3d at 661, we believe that the statements Wallace made in his May 17, 2012
affidavit raise a material fact issue as to whether AmTrust complied with the notice
provision of section 705.005(b) of the Insurance Code. See TEX. INS. CODE ANN. §
705.005(b). In other words, the record contains competent summary-judgment evidence
that AmTrust may have discovered Wallace’s false statements in mid-February 2011, but
5 Texas Rule of Civil Procedure 166a(f) states the following, in relevant part:
Supporting and opposing affidavits shall be made on personal knowledge, shall set forth
facts as would be admissible in evidence, and shall show affirmatively that the affiant is
competent to testify to the matters stated therein. Sworn or certified copies of all papers
or parts thereof referred to in an affidavit shall be attached thereto or served therewith.
The court may permit affidavits to be supplemented or opposed by depositions or by
further affidavits.
TEX. R. CIV. P. 166a(f).
Wallace v. Amtrust Insurance Company of Kansas, Inc. Page 12
did not deny coverage under the policy until August 18, 2011, which was more than
ninety days after mid-February 2011. We therefore conclude that the trial court erred in
granting summary judgment in favor of AmTrust. See TEX. R. CIV. P. 166a(c); Knott, 128
S.W.3d at 215; Grant, 73 S.W.3d at 215. And because AmTrust was not entitled to
summary judgment on their misrepresentation defenses, we cannot say that it was
entitled to rescission of the insurance policies at this time. See, e.g., Hannon, Inc. v. Scott,
No. 02-10-00012-CV, 2011 Tex. App. LEXIS 3624, at **27-27 (Tex. App.—Fort Worth May
12, 2011, pet. denied) (mem. op.) (“Rescission is an equitable remedy that extinguishes
legally valid contracts that must be set aside because of, among other things, fraud. Upon
rescission, the rights and liabilities of the parties are extinguished; any consideration paid
is returned, together with such further special damage or expense as may have been
incurred by the party wronged; and the parties are restored to their respective positions
as if no contract had ever existed.”). Furthermore, we need not address Wallace’s other
complaints regarding AmTrust because section 705.005 of the Insurance Code “applies to
any suit brought on an insurance policy issued or contracted for after June 29, 1903,”
because Wallace’s claims in the trial court were derived from AmTrust’s refusal to
provide coverage under the insurance policies, and because the crux of AmTrust’s
defense was that Wallace made misrepresentations in the insurance application—a
scenario that is covered by Chapter 705 of the Insurance Code. See TEX. INS. CODE ANN.
§ 705.005; see also TEX. R. APP. P. 47.1, 47.4. We sustain Wallace’s first issue.
Wallace v. Amtrust Insurance Company of Kansas, Inc. Page 13
IV. THE COLE DEFENDANTS
In his second and third issues, Wallace contends that the trial court abused its
discretion in granting the Cole defendants’ motion to strike his May 17, 2012 affidavit and
that the trial court erred in granting summary judgment in favor of the Cole defendants.
A. Applicable Law
“Rulings on the admission or exclusion of summary judgment evidence are
reviewed under an abuse of discretion standard.” Moreno v. Quintana, 324 S.W.3d 124,
127 (Tex. App.—El Paso 2010, pet. denied) (citing Barraza v. Eureka Co., A Div. of White
Consol. Indus., Inc., 25 S.W.3d 225, 228 (Tex. App.—El Paso 2000, pet. denied)). “A trial
court abuses its discretion when the trial court fails to act in accordance to guiding rules
or principles.” Id. (citing Bowie Mem’l Hosp. v. Wright, 79 S.W.3d 48, 52 (Tex. 2002)).
B. Discussion
1. The Sham-Affidavit Doctrine
Here, the Cole defendants filed a motion to strike Wallace’s affidavit as a sham.
Specifically, the Cole defendants alleged that the affidavit contradicted Wallace’s earlier
deposition testimony and was only filed to create a fact issue to avoid summary
judgment. The trial court ultimately granted the motion to strike Wallace’s affidavit.
In Thompson v. City of Corsicana Housing Authority, this Court declined to recognize
the sham-affidavit doctrine and noted the following:
Wallace v. Amtrust Insurance Company of Kansas, Inc. Page 14
In one of the earliest reported cases disclosed by our research, the San
Antonio Court of Civil Appeals had the following to say about the rule on
affidavits made in bad faith:
While this section provides penalties for the making of affidavits in
bad faith, the striking of the offending affidavit or pleading is not
made one of them. We think it rather apparent that the trial judge
was of the opinion that appellants were evasive and equivocal of
statement and were trifling with the court by raising frivolous and
groundless defenses. But such conclusions necessarily involve fact
questions relating to the credibility of witnesses, which under our
system of jurisprudence must be determined by a jury [when
demanded] in actions to determine civil liability. A case may be
determined by summary judgment only when no material fact issues
are involved and questions of law alone are presented.
Toliver v. Bergmann, 297 S.W.2d 208, 210 (Tex. Civ. App.—San Antonio 1956,
no writ) (citations omitted).
....
We believe Toliver states the correct rule. It is certainly arguable that Nance
made her affidavit in bad faith to avoid what appeared a certain summary
judgment on her premise defect claim. However, that goes directly to her
credibility, which is not an issue on which a court can grant a summary
judgment. As we have said on another occasion, conflicts or inconsistencies
in the summary judgment evidence of a single witness create a fact issue to
be resolved by a jury.
....
For these reasons, we adhere to our statement in Sosebee. If a party provides
inconsistent or conflicting summary judgment proof, that party has created
a fact issue for the trier of fact to resolve. As the Supreme Court has stated,
[i]f the motion involves the credibility of affiants or deponents, or the
weight of the showings or a mere ground of inference, the motion should
not be granted.
It can be argued that this approach allows an unscrupulous party to
file summary judgment affidavits solely for the purpose of creating “sham”
Wallace v. Amtrust Insurance Company of Kansas, Inc. Page 15
fact issues. However, we must rely on attorneys as officers of the court to
honor their duty of candor toward the court. An attorney’s failure to
observe this duty constitutes professional misconduct for which sanctions
may be imposed.
57 S.W.3d 547, 556-58 (Tex. App.—Waco 2001, no pet.) (internal citations & quotations
omitted); see Baker v. City of Robinson, 305 S.W.3d 783, 794 (Tex. App.—Waco 2009, pet.
denied).
Therefore, because this Court does not recognize the sham-affidavit doctrine, we
conclude that the trial court abused its discretion in striking Wallace’s affidavit from the
summary-judgment record. See Baker, 305 S.W.3d at 794; Thompson, 57 S.W.3d at 556-58;
see also Moreno, 324 S.W.3d at 127. Accordingly, in analyzing Wallace’s complaints about
the summary judgment entered in favor of the Cole defendants, we will consider
Wallace’s affidavit as part of the summary-judgment record.
2. The Summary Judgment in Favor of the Cole Defendants
As noted earlier, Wallace made agency claims, including liability for acts and
omissions occurring within the scope of actual or apparent authority, and vicarious-
liability and negligence claims against the Cole defendants. Additionally, Wallace
asserted DTPA and Insurance-Code violations against the Cole defendants. In response
to Wallace’s claims, the Cole defendants filed no-evidence and traditional motions for
Wallace v. Amtrust Insurance Company of Kansas, Inc. Page 16
summary judgment as to Wallace’s DTPA and Insurance-Code violations.6 However, the
Cole defendants’ summary-judgment motions did not address all of Wallace’s claims.
The Texas Supreme Court has stated that: “Summary judgments, however, may
only be granted upon grounds expressly asserted in the summary judgment motion.” G
& H Towing Co. v. Magee, 347 S.W.3d 293, 297 (Tex. 2011) (citing TEX. R. CIV. P. 166a(c);
McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 341 (Tex. 1993)). “Granting
summary judgment on a claim not addressed in the summary judgment motion therefore
is, as a general rule, reversible error.” Id. (citing Chessher v. Sw. Bell Tel. Co., 658 S.W.2d
563, 564 (Tex. 1983) (per curiam)).
In its final judgment, the trial court granted the Cole defendants’ summary-
judgment motions and dismissed all of Wallace’s claims against the Cole defendants with
prejudice. As such, the trial court ordered that Wallace “take nothing by his suit” against
the Cole defendants. This is not authorized under the law governing summary
judgments. See Magee, 347 S.W.3d at 297; McConnell, 858 S.W.2d at 341; Chessher, 658
S.W.2d at 564. The Cole defendants did not move for summary judgment as to all of
6 The Cole defendants do assert in their summary-judgment motions that they did not “owe a legal
duty to extend the insurance protection of Plaintiff.” However, in his live pleading, Wallace alleged that
the Cole defendants owed him “a duty to assure that Plaintiff received the services he requested and paid
for” and that the failure to exercise ordinary care in performing that duty proximately caused him damage.
A review of the record demonstrates that the duty alleged by Wallace differs from the duty described by
the Cole defendants in their summary-judgment motions. As such, it appears as if the trial court not only
improperly granted summary judgment as to Wallace’s agency and vicarious-liability claims, but also his
negligence claims. And even if one were to construe the Cole defendants’ summary-judgment motions as
properly addressing Wallace’s negligence claims, after taking as true all evidence favorable to Wallace, the
non-movant, we conclude that the record evidence raises a fact issue as to the breach element of Wallace’s
negligence cause of action against the Cole defendants.
Wallace v. Amtrust Insurance Company of Kansas, Inc. Page 17
Wallace’s claims. Accordingly, the trial court could not grant summary judgment on
Wallace’s negligence, agency, and vicarious-liability claims and ultimately enter a take-
nothing judgment in the Cole defendants’ favor. See Magee, 347 S.W.3d at 297; McConnell,
858 S.W.2d at 341; Chessher, 658 S.W.2d at 564; see also LaGoye v. Victoria Wood Condo. Ass’n,
112 S.W.3d 777, 786 (Tex. App.—Houston [14th Dist.] 2003, no pet.) (“Because a trial court
cannot grant more relief than was requested by a motion for summary judgment, the trial
court erred in granting summary judgment on these unchallenged claims. . . . . Therefore,
we reverse summary judgment as to the claims that are based on alleged violations of the
Real Estate Licensing Act, breach of a duty of good faith and fair dealing, breach of a duty
to fairly settle claims, and unfair claims settlement practices, and remand those claims to
the trial court.” (internal citations omitted)). We therefore sustain Wallace’s second and
third issues.
V. CONCLUSION
Having sustained all of Wallace’s issues on appeal, we reverse the trial court’s final
judgment as to AmTrust and the Cole defendants and remand for proceedings consistent
with this opinion.
AL SCOGGINS
Justice
Wallace v. Amtrust Insurance Company of Kansas, Inc. Page 18
Before Chief Justice Gray,
Justice Davis, and
Justice Scoggins
Reversed and remanded
Opinion delivered and filed June 2, 2016
[CV06]
Wallace v. Amtrust Insurance Company of Kansas, Inc. Page 19