Opinion issued February 27, 2014
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-12-00168-CV
———————————
PAMELA LOMBANA, AS TRUSTEE OF THE FERNANDO LOMBANA
INVESTMENT TRUST 10-6-98; PAMELA LOMBANA, AS TRUSTEE OF
THE CHRISTINA ELISA LOMBANA TRUST AGENCY; PAMELA
LOMBANA, AS TRUSTEE OF THE NATALIA ELIZABETH LOMBANA
TRUST AGENCY; PAMELA LOMBANA, AS TRUSTEE OF THE
NICHOLAS FERNANDO LOMBANA TRUST AGENCY, Appellant
V.
AIG AMERICAN GENERAL LIFE INSURANCE COMPANY, F/K/A THE
OLD LINE LIFE INSURANCE COMPANY OF AMERICA, Appellee
On Appeal from the 270th District Court
Harris County, Texas
Trial Court Case No. 1026662
MEMORANDUM OPINION
Appellant, Pamela Lombana (“Lombana”), acting as the trustee of the
Fernando Lombana Investment Trust 10-6-98, the Christina Elisa Lombana Trust
Agency, the Natalia Elizabeth Lombana Trust Agency, and the Nicholas Fernando
Lombana Trust Agency, challenges the trial court’s rendition of summary
judgment in favor of appellee, AIG American General Life Insurance Company, on
her claims against AIG for breach of contract, breach of an oral or implied contract
to reinstate, promissory estoppel, negligence, violations of the Texas Insurance
Code, 1 violations of the Texas Deceptive Trade Practices Act (“DTPA”), 2 breach
of the duty of good faith and fair dealing, fraud, and fraud by nondisclosure. In
eleven issues, Lombana contends that the trial court erred in granting AIG
summary judgment on her claims.
We affirm.
Background
In October 1998, Dr. Fernando Lombana (“Dr. Lombana”) created the
Fernando Lombana Investment Trust 10-6-98 (“the Investment Trust”), which was
to be funded by the proceeds of life insurance policies, including a $4 million AIG
life insurance policy. Distributions from the Investment Trust were to be made to
1
See TEX. INS. CODE ANN. §§ 541.060, 541.061, 542.055 (Vernon 2009).
2
See TEX. BUS. & COM. CODE ANN. § 17.41–.926 (Vernon 2011 & Supp.2013).
2
three “Descendent Trusts” established for Dr. Lombana’s children: the Christina
Elisa Lombana Trust Agency, the Natalia Elizabeth Lombana Trust Agency, and
the Nicholas Fernando Lombana Trust Agency. Dr. Lombana named his wife,
Lombana, the trustee of the Investment Trust 3 as well as the Descendent Trusts.
The $4 million AIG life insurance policy, number MM0357292 (“the
Policy”), 4 went into effect on January 28, 2003. It insured Dr. Lombana’s life and
named the Investment Trust as the “owner” and “primary beneficiary” of the
Policy with Lombana, the trustee, as the “premium payor.”
The Policy contained the following language pertinent to Lombana’s claims:
PREMIUM PAYMENT
The first premium is due on the date of issue and is payable at our
home office or to an authorized agent, insurance will not take effect
before this premium is paid. Later premiums are due and payable at
the intervals and for the period shown . . . while the insured is alive.
Later premiums may be sent to our home office or given to an
authorized agent in exchange for a receipt signed by one of our
officers. With our consent, premiums may be paid at other intervals.
Any premium, after the first, not paid on or before its due date will be
in default. Each due date will be the date of default.
....
3
Dr. Lombana and Lombana divorced after the Investment Trust was created, but
Lombana remained the trustee.
4
The Policy was originally issued by The Old Line Life Insurance Company of
America, a predecessor in interest to AIG.
3
GRACE PERIOD
A 31 day grace period, without interest charge, is allowed for the
payment of each premium after the first. This policy will stay in force
during this period. If the premium is not paid before the end of the
grace period, insurance will end and this policy will lapse.
....
ELIGIBILITY
If your policy lapses, it may be eligible for reinstatement if all of the
following conditions are met:
1. The policy has been in force continuously for at least five years
immediately prior to the date of lapse;
2. All premiums have been paid in a timely manner during this
period;
3. The lapse results from an unintentional default in premium
payments caused by the mental incapacity of the insured; and
4. We receive a request for reinstatement and proof of the insured’s
mental incapacity within one year from the date of the lapse.
....
PROOF AND REQUEST
To establish proof of the insured’s mental incapacity, we must be
provided with a clinical diagnosis by a physician licensed in Texas
and qualified to make the diagnosis. We will accept the proof and
request for reinstatement from:
1. you;
2. the insured, if you are not the insured;
3. the legal guardian of the insured;
4. other legal representative of the insured; or
5. the legal representative of the estate of the insured.
....
4
MENTAL INCAPACITY
Mental incapacity means lacking the ability, based on reasonable
medical judgment, to understand and appreciate the nature and
consequences of a decision regarding failure to pay a premium when
due and the ability to reach an informed decision in the matter.
....
REINSTATEMENT
We will reinstate an eligible policy within a period of one year after
the date of lapse. We will require payment of all unpaid premiums,
plus 6% interest, from the date of lapse to the date of reinstatement.
1. Your policy will be treated as if it has been in force continuously
since the lapse;
2. The policy provisions will apply as if there had been no lapse; and
3. You will be required to make any and all future premium payments
required by the policy provisions to keep the policy in force.
....
DEFINITIONS
Lapse – The due date of the last premium that remains unpaid after
the expiration of the grace period defined in the policy.
....
PAYMENT OF PROCEEDS
Proceeds will be payable on the date of the insured’s death. This
policy will terminate on the earlier of (1) the date of the insured’s
death, or (2) the final expiry date.
Upon receipt of due proof of the insured’s death, we will pay the
insured’s beneficiary the face amount. We will add to the face
amount any premium paid for the period beyond the policy month in
which the insured’s death occurs. If death occurs during the grace
5
period of an unpaid premium, an amount equal to one month’s
premium will be deducted from the proceeds.
Due proof of the insured’s death will consist minimally of our
company claim form completed by the beneficiary and a certified
copy of the death certificate of the insured.
Interest as required by law will be added to the proceeds payable
under this policy.
(Emphasis added.)
In October 2006, Dr. Lombana was diagnosed with rheumatoid arthritis, and
his health deteriorated. Prior to the Policy’s annual premium due date of April 28,
2008, AIG sent a billing notice to the Investment Trust at 414 Alkire Lake Drive,
Sugarland, Texas 77478.5 Lombana admits that this premium payment was not
made. On May 18, 2008, AIG sent a payment reminder to the Investment Trust at
the Alkire Lake address, but the U.S. Postal Service returned it to AIG, showing a
change of address to “5307 Saint George Square Ln., Houston, Texas 77056.”
AIG then forwarded the payment reminder to the St. George address. No premium
payment was made during the 31-day grace period provided by the Policy, and the
5
In 2004, Lombana had requested that her address as premium payor be changed
from “414 Alkire Lake Drive, Sugarland, Texas 77478” to “2323 Wirt Road,
Houston, Texas.” In 2006, Dr. Lombana, as the insured, requested that his address
also be changed from the Alkire Lake Drive address to the Wirt Road address.
AIG continued to send correspondence to the Investment Trust to the Alkire Lake
address until it was notified by the U.S. Postal Service of a change of address for
the Investment Trust, after which it sent correspondence to the Wirt Road address.
6
Policy lapsed on the date of default, April 28, 2008. AIG then sent a Notice of
Termination to the Investment Trust on June 27, 2008.
Summary-judgment evidence, consisting of Lombana’s deposition testimony
and AIG’s telephone log notes reveal that, seven months later, on January 22,
2009, Lombana telephoned an AIG call center. Lombana testified that because the
AIG representative told her that the Policy had lapsed in April 2008, she requested
policy reinstatement forms and provided an address and fax number for AIG to
send her the forms. Lombana explained that the AIG representative told her that
she had to send AIG a premium payment of $7,017.20 when she received the
forms. The AIG log notes reflect that the “PO,” or “policy owner,” requested that
reinstatement forms be sent that day to a fax number, and AIG log notes from
January 26, 2009 indicate that the reinstatement forms were sent via fax and mail,
but no address or fax number is shown in the notes. An AIG representative
testified that AIG had no fax confirmation and the notes should have indicated the
number to which the fax had been sent. Lombana asserted that she did not receive
any reinstatement forms, but concedes that she did not contact AIG again until
after Dr. Lombana’s death.
Dr. Lombana died on April 30, 2009, more than a year after the Policy had
lapsed for non-payment of premiums. Representing Dr. Lombana’s estate,
JPMorgan Chase contacted AIG on August 24, 2009 to notify AIG of his death and
7
request certain forms related to his insurance policies. AIG, in a letter dated
September 9, 2009, notified JPMorgan Chase that the Policy had terminated in
2008, and it enclosed copies of the Reminder of Payment Due and Notice of
Termination.
Lombana subsequently filed the instant lawsuit and, on the same day, mailed
three checks to AIG for the “reinstatement” of the Policy. In the memo line for the
checks she noted, “Reinstatement of policy #MM0357292.” In conformance with
its standard practice, AIG deposited the checks into a “suspense account” and later,
after determining that the Policy had terminated and the matter was in litigation,
returned the funds to Lombana. AIG paid on four other life insurance policies,
which were in force at the time of Dr. Lombana’s death, totaling $7 million in
death benefits.
In its summary-judgment motion, AIG challenged all of Lombana’s claims.
AIG asserted that, as a matter of law, Lombana did not have standing to sue and it
was otherwise entitled to judgment in its favor on Lombana’s claims for breach of
contract, breach of an oral or implied contract to reinstate, violations of the Texas
Insurance Code, violations of the DTPA, fraud, fraud by nondisclosure, and breach
of the duty of good faith and fair dealing. AIG also asserted that Lombana had no
evidence to support her claims for breach of contract, breach of an oral or implied
contract to reinstate, promissory estoppel, violations of the Texas Insurance Code,
8
violations of the DTPA, breach of the duty of good faith and fair dealing, fraud,
fraud by nondisclosure, and negligence.6 After a hearing, the trial court granted
AIG summary judgment without stating the reasons for its ruling.
Standard of Review
We review a trial court’s summary judgment de novo. Valence Operating
Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); Provident Life & Accident Ins.
Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). In conducting our review, we take
as true all evidence favorable to the nonmovant, and indulge every reasonable
inference and resolve any doubts in the nonmovant’s favor. Valence Operating,
164 S.W.3d at 661; Provident Life & Accident Ins., 128 S.W.3d at 215. If a trial
court grants summary judgment without specifying the grounds for granting the
motion, we must uphold the trial court’s judgment if any of the asserted grounds
are meritorious. Beverick v. Koch Power, Inc., 186 S.W.3d 145, 148 (Tex. App.—
Houston [1st Dist.] 2005, pet. denied).
A party seeking summary judgment may combine in a single motion a
request for summary judgment under the no-evidence standard with a request for
summary judgment as a matter of law. Binur v. Jacobo, 135 S.W.3d 646, 650
(Tex. 2004). When a party has sought summary judgment on both grounds and the
6
Lombana does not challenge the trial court’s grant of summary judgment on her
negligence claim.
9
trial court’s order does not specify its reasons for granting summary judgment, we
first review the propriety of the summary judgment under the no-evidence
standard. See TEX. R. CIV. P. 166a(i); see Ford Motor Co. v. Ridgway, 135 S.W.3d
598, 600 (Tex. 2004). If we conclude that the trial court did not err in granting
summary judgment under the no-evidence standard, we need not reach the issue of
whether the trial court erred in granting summary judgment as a matter of law. See
Ford Motor Co., 135 S.W.3d at 600.
To prevail on a no-evidence summary-judgment motion, the movant must
establish that there is no evidence to support an essential element of the
nonmovant’s claim on which the nonmovant would have the burden of proof at
trial. See TEX. R. CIV. P. 166a(i); Hahn v. Love, 321 S.W.3d 517, 523–24 (Tex.
App.—Houston [1st Dist.] 2009, pet. denied). The burden then shifts to the
nonmovant to present evidence raising a genuine issue of material fact as to each
of the elements challenged in the motion. Mack Trucks, Inc. v. Tamez, 206 S.W.3d
572, 582 (Tex. 2006); Hahn, 321 S.W.3d at 524.
In a matter-of-law summary-judgment motion, the movant has the burden to
show that no genuine issue of material fact exists and the trial court should grant
judgment as a matter of law. See TEX. R. CIV. P. 166a(c); KPMG Peat Marwick v.
Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). A defendant
moving for summary judgment as a matter of law must conclusively negate at least
10
one essential element of each of the plaintiff’s causes of action or conclusively
establish each element of an affirmative defense. Sci. Spectrum, Inc. v. Martinez,
941 S.W.2d 910, 911 (Tex. 1997). The motion must state the specific grounds
relied upon for summary judgment. TEX. R. CIV. P. 166a(c).
Standing
In her first issue, Lombana argues that the trial court erred in granting AIG
summary judgment on the ground that she lacked standing and capacity to sue AIG
because she is empowered by the Investment Trust and Texas law to take the
necessary actions to wind up the trust and complete distribution to the beneficiaries
after Dr. Lombana died and because she amended her petition to bring suit as
representative of the Descendent Trusts. In its summary-judgment motion, AIG
argued that Lombana, as a matter of law, did not have standing to sue AIG because
the Investment Trust terminated per its terms upon Dr. Lombana’s death and it
could not have a justiciable interest in the outcome of the case. Lombana did
initially sue AIG in her capacity as “trustee of the Fernando Lombana Investment
Trust 10-6-98,” but she later amended her petition to sue in her capacity as the
trustee of the Descendant Trusts.7
We review the question of standing de novo. See Mayhew v. Town of
Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998). A party must have both standing
7
We note that a trust is an entity that can sue and be sued only through its personal
representative. Ray Malooly Trust v. Juhl, 186 S.W.3d 568, 570 (Tex. 2006).
11
and capacity to bring a lawsuit. Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d
845, 848 (Tex. 2005). The focus in a standing issue is upon the question of
whether the party bringing the lawsuit has a sufficient relationship with it so that
there is a justiciable interest in the outcome. Id. Standing exists if the party
bringing the lawsuit is personally aggrieved by the alleged wrong. Nootsie, Ltd. v.
Williamson Cnty. Appraisal Dist., 925 S.W.2d 659, 661 (Tex. 1996). Capacity is
procedural in nature, and the focus in a capacity inquiry is upon the personal
qualifications of a party to litigate. Id. at 662. It is an issue that must be raised by
a verified pleading or it is waived. See TEX. R. CIV. P. 93(1), (2). A party may
lack standing because that party does not have a justiciable interest in the outcome
of a case, but still have capacity when the party has the legal authority to act.
Nootsie, 925 S.W.2d at 661.
AIG correctly notes that the Investment Trust terminated upon Dr.
Lombana’s death. See TEX. PROP. CODE ANN. § 112.052 (Vernon 2011); Sorrel v.
Sorrel, 1 S.W.3d 867, 871 (Tex. App.—Corpus Christi 1999, no pet.). However,
the property code allows a settlor to provide in the trust instrument how property
may or may not be disposed of in the event of failure, termination, or revocation of
the trust. See TEX. PROP. CODE ANN. § 112.053 (Vernon 2011). Here, the express
terms of the Investment Trust state that “upon termination the remaining property
of this trust shall be distributed . . . [t]he proceeds of all life insurance policies on
12
the Grantor’s life . . . shall be distributed to the Trustee of the trust . . . to be
administered and distributed to [the beneficiaries].”
The legal title held by the trustees and the equitable title held by the
beneficiaries merged in the beneficiaries when Dr. Lombana died and the
Investment Trust terminated. During the existence of a trust, legal title to the res is
in the trustee and equitable title is in the beneficiaries. Shearrer v. Holley, 952
S.W.2d 74, 78 (Tex. App.—San Antonio 1997, no writ). Upon termination, legal
and equitable interests merge and the beneficiaries acquire full ownership interest
in the property. See id. However, trustees retain the powers necessary to wind up
the affairs of the trust or to distribute the trust property in accordance with the
terms of the trust. TEX. PROP. CODE ANN. § 112.052; cf. Nowlin v. Frost Nat’l.
Bank, 908 S.W.2d 283, 289 (Tex. App.—Houston [1st Dist.] 1995, no writ);
RESTATEMENT (SECOND) OF TRUSTS § 344 (1959).
Here, the Descendant Trusts are beneficiaries of the Investment Trust. AIG
does not question that the Descendant Trusts have both standing and capacity in
this lawsuit with Lombana acting as the legal representative of the Descendant
Trusts. As beneficiaries of the Investment Trust, the Descendant Trusts each have
a sufficient relationship with the lawsuit so that there is a justiciable interest in the
outcome. See Lovato, 171 S.W.3d at 848. As trustee of each of the Descendant
Trusts, Lombana has standing in this lawsuit. Accordingly, we hold that the trial
13
court erred in granting summary judgment for AIG on the ground that Lombana
lacked standing.
We sustain Lombana’s first issue.
Breach of Contract
In her second issue, Lombana argues that the trial court erred in granting
AIG summary judgment on her breach-of-contract claim because she presented
evidence raising genuine issues of material fact precluding summary judgment.
She asserts that the Policy was existing and in force at the time of Dr. Lombana’s
death and AIG breached the contract by failing and refusing to pay the Policy
benefits and sending correspondence to the wrong address.
In its motion, AIG asserted that Lombana had no evidence of “a valid
contract upon which [she] is basing this claim,” “performance by [her] under the
contract,” or “breach of contract by [AIG].” AIG argued that because the payment
of premiums was a “condition precedent to the establishment of liability of the
insurer” and Lombana had failed to pay the premiums, the Policy had terminated
prior to the death of Dr. Lombana. AIG also argued that, as a matter of law, it had
not breached the contract by not sending the reinstatement correspondence to the
correct address because no provision of the Policy required it to send such
correspondence, and, regardless, it did not send the correspondence to the wrong
address.
14
Insurance policies are contracts and are controlled by the same general rules
that govern contract construction. See Barnett v. Aetna Life Ins. Co., 723 S.W.2d
663, 665 (Tex. 1987); Columbia Cas. Co. v. CP Nat’l., Inc., 175 S.W.3d 339, 343
(Tex. App.—Houston [1st Dist.] 2004, no pet.). The elements of a valid contract
are (1) an offer, (2) an acceptance, (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. See Prime Prods., Inc. v. S.S.I. Plastics, Inc., 97
S.W.3d 631, 636 (Tex. App.—Houston [1st Dist.] 2002, pet. denied). To establish
a valid contract, a plaintiff must prove that the parties agreed on all of the essential
terms of the contract and the essential terms were sufficiently certain so as to
define the parties’ legal obligations. See Nickerson v. E.I.L. Instruments, Inc., 874
S.W.2d 936, 939 (Tex. App.—Houston [1st Dist.] 1994, writ denied). To establish
a claim for breach of contract, a plaintiff must prove (1) the existence of a valid
contract between the plaintiff and the defendant, (2) the plaintiff’s performance or
tender of performance, (3) the defendant’s breach of the contract, and (4) the
plaintiff’s damages as a result of the breach. See Prime Products, 97 S.W.3d at
636.
When entered, on January 28, 2003, the Policy constituted a legal contract
between AIG and Lombana as trustee of the Investment Trust. See Columbia Cas.
Co., 175 S.W.3d at 343. By its terms, the Policy required Lombana as trustee of
15
the Investment Trust and acting as premium payor to make premium payments at
regular intervals. The Policy further provided in pertinent part as follows:
[A]ny premium, after the first, not paid on or before its due date will
be in default. Each due date will be the date of default. . . . A 31 day
grace period . . . is allowed for the payment of each premium, after the
first. This Policy will stay in force during this period. If the premium
is not paid before the end of the grace period, insurance will end and
this policy will lapse.
As a matter of law, the insurance provided by the Policy “end[ed]” and was
not “in force” after the end of the grace period. See MacIntire v. Armed Forces
Benefit Ass’n, 27 S.W.3d 85, 89 (Tex. App.—San Antonio 2000, no pet.) (stating
that when grace period passes without payment of defaulted premium, insurance
policy lapses and terminates); P.M. Baker v. Penn. Mut. Life Ins. Co., 617 S.W.2d
814, 816 (Tex. Civ. App.—Houston [14th Dist.] 1981, no writ). Moreover, by its
express terms, the lapsed Policy terminated upon the death of Dr. Lombana.
An insurance policy constitutes a contract for the period of time that is
covered in the contract. See Hartland v. Progressive Cnty. Mut. Ins. Co., 290
S.W.3d 318, 322 (Tex. App.—Houston [14th Dist.] 2009, no pet.); Zuniga v.
Allstate Ins. Co., 693 S.W.2d 735, 738 (Tex. App.—San Antonio 1985, no writ);
Harrington v. Aetna Cas. & Sur. Co., 489 S.W.2d 171, 176 (Tex. App.—Waco
1972, writ. ref’d n.r.e.). Thus, the Policy insured Dr. Lombana’s life only during
the policy period. And, for an insurance contract to be renewed, the insurer’s
16
renewal offer must be accepted by the insured completely and unequivocally.
Hartland, 290 S.W.3d at 322.
It is well settled that the payment of premiums is a condition for acceptance
of an insurance contract, necessary for contract formation. See id. Thus, under
Texas law, the payment of premiums is a condition precedent to the existence of
liability of the insurer. See id.; Walker v. Federal Kemper Life Assur. Co., 828
S.W.2d 442, 449 (Tex. App.—San Antonio 1992, writ denied). If an insured fails
to meet the condition of premium payment, the policy expires. Southland Life Ins.
Co. v. Hopkins, 244 S.W. 989, 990 (Tex. Comm’n App. 1922, judgm’t adopted)
(holding that failure to pay premium “would ipso facto terminate all liability”
under insurance policy); Hartland, 290 S.W.3d at 322; Walker, 828 S.W.2d at 447;
Zuniga, 693 S.W.2d at 738. Here, Lombana presented no evidence that she paid
the premium due on April 28, 2008 or at any time during the thirty-one day grace
period that followed. In fact, Lombana admitted that she did not pay the premium
and acknowledged that the Policy had lapsed for nonpayment of the premium as of
April 28, 2008.
Because Lombana did not pay the Policy premium, the condition for
acceptance of the contract was not met. See Walker, 828 S.W.2d at 447; Viking
Cnty. Mut. Ins. Co. v. Jones, No. 05-91-01815-CV, 1992 WL 211068, at *3 (Tex.
App.—Dallas Aug. 31, 1992, no writ) (mem. op., not designated for publication)
17
(offer by insurer to renew insurance contract must be accepted completely and
unequivocally by insured to constitute new contract); Zuniga, 693 S.W.2d at 738
(renewal policy never came into existence because insured did not make payments
in accordance with policy terms); So. Farm Bureau Cas. Ins. Co. v. Davis, 503
S.W.2d 373, 377 (Tex. App.—Amarillo 1973, writ ref’d n.r.e.) (offer for renewal
of auto insurance could not come to fruition until premium was paid); Trinity
Universal Ins. Co. v. Rogers, 215 S.W.2d 349, 352 (Tex. App.—Dallas 1948, no
writ) (contract not completed when insured did not indicate acceptance of renewal
policy). Thus, by its own terms, the Policy lapsed and the insurance “end[ed]”
when Lombana failed to pay the premiums by the end of the thirty-one day grace
period. See Hopkins, 244 S.W. at 990; Hartland, 290 S.W.3d at 322; Walker, 828
S.W.2d at 447; Zuniga, 693 S.W.2d at 738.
In sum, because Lombana failed to pay the requisite premiums as per the
terms of the Policy, the Policy lapsed, the insurance ended, and the Policy
terminated upon the death of Dr. Lombana on April 30, 2009. Dr. Lombana’s life
had not been insured since April 29, 2008, for just over twelve months prior to his
date of death. Therefore, Lombana cannot establish an essential element of her
breach of contract claim, i.e., the existence of a valid contract. Accordingly, we
hold that the trial court did not err in granting AIG summary judgment on
Lombana’s claim for breach of contract.
18
We overrule Lombana’s second issue.
Waiver and Estoppel
In her fourth and fifth issues, Lombana argues that the trial court erred in
granting AIG summary judgment on her claim for promissory estoppel because she
presented evidence that “AIG made representations to her and remained silent on
other matters [AIG] would later claim were necessary for reinstatement of a lapsed
policy.” Lombana further argues that AIG is estopped and has waived its
argument that her non-payment of premiums caused the Policy to terminate
because of AIG’s “course of dealing of repeatedly sending late payment offers,” by
accepting her late payment of the Policy premiums in 2010 and keeping the
payment for an extended period of time, and by violating the terms of the Policy
including its “multiple failures to change the Policy contact information and send
the reinstatement forms.”
The elements of a claim for promissory estoppel are: (1) a promise; (2)
foreseeability of reliance on the promise by the promisor; and (3) substantial
detrimental reliance by the promisee. Leach v. Conoco, Inc., 892 S.W.2d 954, 959
n. 2 (Tex. App.—Houston [1st Dist.] 1995, writ dism’d w.o.j.). Although
promissory estoppel is normally pleaded as a defense, it may be asserted by a
plaintiff, as here, as an affirmative ground for relief. Fertic v. Spencer, 247
S.W.3d 242, 250 (Tex. App.—El Paso 2007, pet. denied). If a valid contract exists
19
covering the alleged promise, a plaintiff cannot recover under promissory estoppel.
See id.; Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 226
(Tex. 2002) (the doctrine of promissory estoppel presumes that no contract exists);
Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684 (Tex. 2000) (allowing for
no recovery under a quasi-contract or unjust enrichment theory where a valid
express contract covers the disputed subject matter). Here, because a contract
governed the terms under which AIG would pay insurance proceeds to the
Investment Trust following Dr. Lombana’s death, promissory estoppel does not
apply.
“Waiver by custom and estoppel are the same concept.” MacIntire, 27
S.W.3d at 89 (quoting Blanton v. John Hancock Mut. Life Ins. Co., 345 F. Supp.
168, 170 (N.D. Tex. 1971), aff’d per curium, 463 F.2d 421 (5th Cir. 1972)).
“Waiver is the intentional relinquishment of a right actually known, or intentional
conduct inconsistent with claiming that right.” Ulico Cas. Co. v. Allied Pilots
Ass’n, 262 S.W.3d 773, 778 (Tex. 2008). The elements of waiver are: (1) an
existing right, benefit, or advantage held by a party; (2) the party’s actual
knowledge of its existence; and (3) the party’s actual intent to relinquish the right
held or intentional conduct that is inconsistent with the right. Id.
Lombana further asserts that she presented “sufficient evidence of an
agreement to waive requirements to reinstate other than the payments of the
20
premium” and she entered into an “agreement” with AIG on January 22, 2009 in
which she was “reassured . . . that the Policy was still in force, and had no
requirements other than payment of the reinstatement premium.” In support of her
position, Lombana relies on Equitable Life Assurance Society v. Ellis, 147 S.W.
1152 (Tex. 1912). She argues that she should not be held to any additional
reinstatement requirements because the parties’ “past dealing,” along with the
January 22, 2009 “agreement,” eliminated any other requirements for
reinstatement. Lombana asserts that to hold otherwise would be to “attach a
condition that the proposal itself did not impose.” See Ellis, 147 S.W. at 1157.
In Ellis, after the expiration of the grace period for the policy in question, the
insured was involved in active and continuous back-and-forth written negotiations
regarding the payment of premiums, changing the premium due dates, and
discussing a loan using the policy as security so that the insured could pay the
premiums. 147 S.W. at 1155–56. These negotiations were conducted by “a
general officer of the company,” the “superintendent of its extension and loan
department” through the cashier of a local office, who had the requisite authority to
so negotiate. Id. at 1153, 1155–56. The court concluded that the fact that the
insurer was willing to offer the insured a loan on the policy showed that the insurer
believed that the policy possessed value, noting “[i]t is unbelievable that this
company would have been offering to make a loan and take as security for it
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something that it recognized and held to be defunct and void and incapable of
possessing any value.” Id. at 1156. By acting as if the policy had value, the
insurer showed that it “desired to be understood as willing to forego its right of
forfeiture and continue the policies in force as security for its loan and as
protection upon Ellis’ life.” Id. at 1157. In other words, the insurer acted as if the
policy had “continued validity,” and its negotiations with the insured evidenced a
waiver of conditions of reinstatement that were contained in the policy itself. Id.
Lombana asserts that AIG waived termination of the Policy, even after the
death of Dr. Lombana, noting that in Ellis the insurer had made an offer to the
insured to reinstate the policy in question and the offer was still open at the time of
his death. Id. at 1158 (“As the question of waiver is to be determined by the
company’s conduct and not by any failure by Ellis to act in the premises . . . that
the transaction was not so completed by Ellis did not relieve its act of its force as
an affirmative evidence of waiver, or at least as tending to establish it.”). Lombana
argues that because AIG never rescinded or withdrew the AIG call representative’s
January 22, 2009 “agreement” to reinstate the Policy, it was “still operative,
despite [Dr. Lombana’s] death, for a reasonable period.” And she asserts that she
raised a fact question as to whether she responded to AIG’s waiver of additional
requirements in a reasonable fashion based on AIG’s failure to update the contact
information, AIG’s failure to forward the reinstatement forms to the Wirt Road
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address and fax, and the fact that she was dealing with Dr. Lombana’s final illness
and death.
Here, however, the express terms of the Policy prohibit the type of
“agreement” that Lombana asserts the AIG call representative made with her on
January 22, 2009. The Policy expressly states that it “may not be changed, nor any
of [AIG’s] rights or requirements be waived, except in writing by one of our
authorized officers.” (Emphasis added.)
Moreover, AIG took no further action after it sent notification of termination
of the Policy on June 27, 2008. There were no written communications with Dr.
Lombana or with Lombana as trustee for the Investment Trust demonstrating that
AIG believed that the Policy had “continued validity” or value. The summary-
judgment evidence shows that when Lombana telephoned the AIG call center on
January 22, 2009, she was told that she had to “reinstate” the Policy because it had
lapsed seven months earlier on April 28, 2008. Lombana presented no evidence
that AIG negotiated with her or treated the Policy as if it was still in force after Dr.
Lombana had died.
Regardless, AIG could not have waived termination of the Policy after the
death of its insured. See MacIntire, 27 S.W.3d at 90. Because the lapsed Policy
had terminated when Dr. Lombana died, there was no contract to reinstate. See id.
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Lombana further argues that the performance of the condition precedent of
payment of premiums was excused because AIG prevented her performance by
various actions. However, she presented no evidence that AIG prevented her
performance. After her initial request on January 22, 2009 for forms to reinstate
the lapsed Policy, she, despite asserting that she never received the forms, made no
further request of AIG for the forms. And there is no evidence that AIG did
anything to prevent Lombana from paying the Policy premiums to reinstate the
Policy before the death of Dr. Lombana. In fact, she did not contact AIG again
until after Dr. Lombana’s death on April 30, 2009.
Lombana did not present evidence creating a question of material fact
regarding her payment of premiums, any excused nonpayment, or waiver or
estoppel based on negotiations with AIG demonstrating that AIG recognized the
continued validity of the policy. Similarly, Lombana points to no evidence
demonstrating that AIG actually in any way prevented her from paying the Policy
premiums. Accordingly, we hold that the trial court did not err in granting AIG
summary judgment on Lombana’s claim for promissory estoppel.
We overrule Lombana’s fourth and fifth issues.
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Breach of Oral or Implied Contract to Reinstate the Policy
In her third issue, Lombana argues that the trial court erred in granting AIG
summary judgment on her claims for breach of oral or implied contract to reinstate
the Policy because she presented evidence to establish fact issues on these claims.
Lombana asserts that AIG entered into a new oral contract to reinstate the
Policy during her January 22, 2009 telephone conversation with the AIG call
center representative. However, she presented no evidence that the AIG call
representative had any authority to enter into such an oral contract with her, nor did
she present evidence of the parties’ “mutual assent” or meeting of the minds. See
David J. Sacks, P.C. v. Haden, 266 S.W.3d 447, 450 (Tex. 2008) (stating that “[a]
meeting of the minds is necessary to form a binding contract”).
Moreover, according to Lombana’s own testimony, she believed that she had
to make a premium payment before the Policy would be reinstated. As previously
discussed, Lombana provided no evidence that she made any such premium
payment before the death of Dr. Lombana. Thus, even if Lombana and the AIG
call representative had entered into an oral or implied contract to reinstate the
Policy, Lombana did not perform her obligation under the oral contract to pay the
Policy premium so that the Policy would be reinstated.
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Accordingly, we hold the trial court did not err in granting AIG summary
judgment on Lombana’s claims for breach of an oral or implied contract to
reinstate the policy.
We overrule Lombana’s third issue.
Texas Insurance Code and DTPA Violations
In her sixth, seventh, eighth, and ninth issues, Lombana argues that the trial
court erred in granting AIG summary judgment on her claims against AIG for
violations of the Texas Insurance Code and the DTPA because she presented
evidence that AIG failed to conduct a reasonable investigation into whether she
entered into a contract to reinstate the Policy, the AIG call representative made
affirmative representations and omitted material facts during the January 22, 2009
telephone call, and AIG failed to timely pay benefits due under the Policy.
Having concluded that the Policy had lapsed prior to, and had terminated
upon, the death of Dr. Lombana, and Lombana provided no evidence that an oral
or implied contract was entered into during her January 22, 2009 telephone call
with the AIG call representative, we further conclude that there is no basis for
Lombana’s claims that AIG violated the Texas Insurance Code or the DTPA. See
Walker, 828 S.W.2d at 453; Shindler v. Mid–Continent Life Ins. Co., 768 S.W.2d
331, 334–35 (Tex. App.—Houston [14th Dist.] 1989, no writ). Accordingly, we
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hold that the trial court did not err in granting AIG summary judgment on
Lombana’s claims that AIG violated the Texas Insurance Code and DTPA.
We overrule Lombana’s sixth, seventh, eighth, and ninth issues.
Good Faith and Fair Dealing
In her tenth issue, Lombana argues that the trial court erred in granting AIG
summary judgment on her claim that AIG violated its common law duty of good
faith and fair dealing because evidence of reinstatement of the Policy and her
payment of premiums in 2010 made AIG’s liability “reasonably clear.”
Having concluded that the Policy had lapsed, the insurance had ended prior
to the death of Dr. Lombana, and the Policy terminated upon his death, we further
conclude that AIG did not breach a contractual duty to Lombana by denying her
claim as the trustee of the Investment Trust, and, thus, AIG could not, as a matter
of law, have acted in bad faith. See Republic Ins. Co. v. Stoker, 903 S.W.2d 338,
341 (Tex. 1995). Accordingly, we hold that the trial court did not err in granting
AIG summary judgment on Lombana’s claim that AIG violated the common law
duty of good faith and fair dealing.
We overrule Lombana’s tenth issue.
Fraud and Fraud by Nondisclosure
In her eleventh issue, Lombana argues that the trial court erred in granting
AIG summary judgment on her claim that AIG committed fraud or fraud by
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nondisclosure because she presented evidence that AIG had “voluntarily disclosed”
some information about reinstatement of the Policy to her, but failed to disclose
additional requirements. She asserts that the parties had a “special relationship,”
requiring disclosure of “any additional requirements [AIG] would impose to
reinstate” the Policy, and AIG had a duty to disclose “the whole truth concerning
what it would require to reinstate the Policy.” In its summary-judgment motion,
AIG argued that Lombana’s claim for fraud and fraud by nondisclosure failed as a
matter of law due to a lack of justiciable reliance and because she provided no
evidence of a material misrepresentation, made with knowledge of its falsity or
without knowledge of the truth upon which AIG intended that she rely.
In order to recover on an action for fraud, a party must prove that: (1) a
material representation was made; (2) the representation was false; (3) when the
speaker made the representation, he knew it was false or made it recklessly without
knowledge of the truth as a positive assertion; (4) the speaker made it with the
intention that it should be acted upon by the party; (5) the party acted in reliance
upon it; and (6) the party thereby suffered injury. Soluntioneers Consulting, Ltd. v.
Gulf Greyhound Partners, Ltd., 237 S.W.3d 379, 385 (Tex. App.—Houston [14th
Dist.] 2007, no pet.).
Fraud by nondisclosure is a subcategory of fraud. Id. Failure to disclose
information is actionable only when there is a duty to disclose. Id. The duty to
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disclose may arise: (1) when the parties have a confidential or fiduciary
relationship; (2) when one party voluntarily discloses information; (3) when one
party makes a representation which gives rise to the duty to disclose new
information that the party is aware makes the earlier representation misleading or
untrue; or (4) when one party makes a partial disclosure and conveys a false
impression, which gives rise to the duty to speak. Id. Whether such a duty exists
is a question of law. Bradford v. Vento, 48 S.W.3d 749, 755 (Tex. 2001).
In regard to Lombana’s assertion that she had a “special relationship” with
AIG that required disclosure of any additional requirements for reinstatement of
the Policy, we note that an informal fiduciary relationship, which may arise from
“a moral, social, domestic or purely personal relationship of trust and confidence,”
is generally called a “confidential relationship.” Associated Indem. Corp. v. CAT
Contracting, Inc., 964 S.W.2d 276, 287 (Tex. 1998). A confidential relationship
exists in cases in which “‘influence has been acquired and abused, in which
confidence has been reposed and betrayed.’” Id. (quoting Crim Truck & Tractor
Co. v. Navistar Int’l Transp. Corp., 823 S.W.2d 591, 594 (Tex. 1992)). However,
an insurer generally does not have a fiduciary relationship giving rise to a duty to
an insured. See Rice v. Metro. Life Ins. Co., 324 S.W.3d 660, 678–79 (Tex.
App.—Fort Worth 2010, no pet.). Here, Lombana has presented no evidence that
she had a confidential or fiduciary relationship with AIG.
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Likewise, Lombana presented no evidence that the AIG call representative
made a material misrepresentation during the January 22, 2009 telephone
conversation with her with knowledge of its falsity, or that the AIG call
representative made a misrepresentation with the intent that Lombana rely on it.
Accordingly, we hold that the trial court did not err in granting AIG
summary judgment on Lombana’s claim for fraud and fraudulent nondisclosure.
Conclusion
We affirm the judgment of the trial court.
Terry Jennings
Justice
Panel consists of Justices Jennings, Brown, and Huddle.
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