Opinion issued October 25, 2012
In The
Court of Appeals For The
First District of Texas ———————————— NO. 01-11-00378-CV ——————————— BEVERLY WOODS, Appellant V. AMERICAN NATIONAL INSURANCE COMPANY, Appellee
On Appeal from the 269th District Court Harris County, Texas Trial Court Case No. 2006-63583
MEMORANDUM OPINION
This is a dispute over the amount of disability benefits required to be paid
under a credit-disability insurance policy issued in conjunction with the purchase
and financing of a car. Plaintiff-appellant Beverly Woods appeals the summary judgment entered in favor of defendant-appellee American National Insurance
Company (ANICO) on Woods’s breach-of-contract and breach-of-fiduciary-duty
claims. We affirm.
BACKGROUND
On December 29, 1998, Woods purchased a new vehicle, which was
financed by defendant ILA 1351 Federal Credit Union (ILA). The loan called for
repayment over seventy-two months. As part of that same transaction, Woods
purchased an ANICO insurance policy for seventy-two months of credit-life
insurance coverage and sixty months of credit-disability insurance. This dispute
involves only the disability insurance.
Woods made payments on her car for thirty months. In July 2001, she
suffered an injury and applied for disability benefits under the ANICO policy.
ANICO approved her claim and paid her benefits for the next thirty months, for a
total of $29,333.33. ANICO did not pay towards the last twelve months of the car
note because, under its interpretation of the insurance contract, the policy’s sixty
month term is measured from the effective date of the policy; thus, benefits were
payable only on months of disability during the first sixty months of the seventy-
two months loan. Woods disagreed, arguing that the contract provided for up to
sixty months of benefits beginning at the time of her disability. Thus, under her
2 interpretation, Woods expected the insurance to pay benefits towards the remaining
forty-two months of her car note, rather than just thirty months.
After ANICO quit paying benefits towards Woods’s car loan, the credit
union declared her to be in default, accelerated her note, and pursued a claim
against her for the remaining amount on the note, late charges, collection costs, and
attorneys’ fees. Woods sued ANICO and ILA for breach of contract and breach of
fiduciary duties. She later dismissed her claims against ILA.
ANICO moved for traditional and no-evidence summary judgment, arguing
that it had made all required payments under the policy. The trial court granted
summary judgment in ANICO’s favor.
ISSUES ON APPEAL
On appeal, Woods argues that the trial court erred in granting summary
judgment because there is an ambiguity in the insurance contract about when the
sixty month term of insurance begins—either on the policy effective date or the
date of disability—that creates an issue of fact. With regard to her breach-of-
contract claim, she argues that ambiguity should be construed in her favor to begin
the sixty-month term upon disability, and that ANICO thus breached the contract
by discontinuing payments months thirty months after her disability. With regard
to her fiduciary-duty claim, she argues that ANICO breached a duty to her by
3 making a misleading partial disclosure (i.e., the sixty-month term of insurance)
without disclosing when that sixty-month term begins and ends.
APPLICABLE LAW
A. Summary Judgment
We review a trial court’s summary judgment de novo. Travelers Ins. Co. v.
Joachim, 315 S.W.3d 860, 862 (Tex. 2010). 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 grounds are meritorious. Beverick v. Koch
Power, Inc., 186 S.W.3d 145, 148 (Tex. App.—Houston [1st Dist.] 2005, pet.
denied).
To prevail on a no-evidence motion for summary judgment, the movant
must assert 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 specified in the motion. Mack Trucks, Inc. v. Tamex, 206 S.W.3d
572, 582 (Tex. 2006); Hahn, 321 S.W.3d at 524.
In a traditional summary judgment motion, the movant has the burden to
show that no genuine issue of material fact exists and that the trial court should
4 grant judgment as a matter of law. 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 traditional summary judgment must conclusively negate at
least 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).
B. Insurance Policy Interpretation
The construction of a contract is a question of law for the court. Edwards v.
Lone Star Gas Co., a Div. of Enserch Corp., 782 S.W.2d 840, 841 (Tex. 1990);
Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). The general rules of contract
construction govern insurance policy interpretation. Tex. Farmers Ins. Co. v.
Murphy, 996 S.W.2d 873, 879 (Tex. 1999); State Farm Life Ins. Co. v. Beaston,
907 S.W.2d 430, 433 (Tex. 1995). We should assume the parties to a contract
intended every clause to have some effect; we cannot strike down any portion of a
contract absent irreconcilable conflict. See Edlund v. Bounds, 842 S.W.2d 719,
726 (Tex. App.—Dallas 1992, writ denied). If a contract is found to be
ambiguous, its interpretation becomes a fact issue. Coker, 650 S.W.2d at 394. For
insurance policies in particular, however, when ambiguous policy terms permit
more than one reasonable interpretation, we construe the policy against the insurer.
See State Farm Fire & Cas. Co. v. Vaughan, 968 S.W.2d 931, 933 (Tex. 1998);
5 Nat’l Union Fire Ins. Co. v. Hudson Energy Co., 811 S.W.2d 552, 555 (Tex.
1991). This is so especially when the policy terms exclude or limit coverage. See
Vaughan, 968 S.W.2d at 933.
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Opinion issued October 25, 2012
In The
Court of Appeals For The
First District of Texas ———————————— NO. 01-11-00378-CV ——————————— BEVERLY WOODS, Appellant V. AMERICAN NATIONAL INSURANCE COMPANY, Appellee
On Appeal from the 269th District Court Harris County, Texas Trial Court Case No. 2006-63583
MEMORANDUM OPINION
This is a dispute over the amount of disability benefits required to be paid
under a credit-disability insurance policy issued in conjunction with the purchase
and financing of a car. Plaintiff-appellant Beverly Woods appeals the summary judgment entered in favor of defendant-appellee American National Insurance
Company (ANICO) on Woods’s breach-of-contract and breach-of-fiduciary-duty
claims. We affirm.
BACKGROUND
On December 29, 1998, Woods purchased a new vehicle, which was
financed by defendant ILA 1351 Federal Credit Union (ILA). The loan called for
repayment over seventy-two months. As part of that same transaction, Woods
purchased an ANICO insurance policy for seventy-two months of credit-life
insurance coverage and sixty months of credit-disability insurance. This dispute
involves only the disability insurance.
Woods made payments on her car for thirty months. In July 2001, she
suffered an injury and applied for disability benefits under the ANICO policy.
ANICO approved her claim and paid her benefits for the next thirty months, for a
total of $29,333.33. ANICO did not pay towards the last twelve months of the car
note because, under its interpretation of the insurance contract, the policy’s sixty
month term is measured from the effective date of the policy; thus, benefits were
payable only on months of disability during the first sixty months of the seventy-
two months loan. Woods disagreed, arguing that the contract provided for up to
sixty months of benefits beginning at the time of her disability. Thus, under her
2 interpretation, Woods expected the insurance to pay benefits towards the remaining
forty-two months of her car note, rather than just thirty months.
After ANICO quit paying benefits towards Woods’s car loan, the credit
union declared her to be in default, accelerated her note, and pursued a claim
against her for the remaining amount on the note, late charges, collection costs, and
attorneys’ fees. Woods sued ANICO and ILA for breach of contract and breach of
fiduciary duties. She later dismissed her claims against ILA.
ANICO moved for traditional and no-evidence summary judgment, arguing
that it had made all required payments under the policy. The trial court granted
summary judgment in ANICO’s favor.
ISSUES ON APPEAL
On appeal, Woods argues that the trial court erred in granting summary
judgment because there is an ambiguity in the insurance contract about when the
sixty month term of insurance begins—either on the policy effective date or the
date of disability—that creates an issue of fact. With regard to her breach-of-
contract claim, she argues that ambiguity should be construed in her favor to begin
the sixty-month term upon disability, and that ANICO thus breached the contract
by discontinuing payments months thirty months after her disability. With regard
to her fiduciary-duty claim, she argues that ANICO breached a duty to her by
3 making a misleading partial disclosure (i.e., the sixty-month term of insurance)
without disclosing when that sixty-month term begins and ends.
APPLICABLE LAW
A. Summary Judgment
We review a trial court’s summary judgment de novo. Travelers Ins. Co. v.
Joachim, 315 S.W.3d 860, 862 (Tex. 2010). 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 grounds are meritorious. Beverick v. Koch
Power, Inc., 186 S.W.3d 145, 148 (Tex. App.—Houston [1st Dist.] 2005, pet.
denied).
To prevail on a no-evidence motion for summary judgment, the movant
must assert 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 specified in the motion. Mack Trucks, Inc. v. Tamex, 206 S.W.3d
572, 582 (Tex. 2006); Hahn, 321 S.W.3d at 524.
In a traditional summary judgment motion, the movant has the burden to
show that no genuine issue of material fact exists and that the trial court should
4 grant judgment as a matter of law. 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 traditional summary judgment must conclusively negate at
least 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).
B. Insurance Policy Interpretation
The construction of a contract is a question of law for the court. Edwards v.
Lone Star Gas Co., a Div. of Enserch Corp., 782 S.W.2d 840, 841 (Tex. 1990);
Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). The general rules of contract
construction govern insurance policy interpretation. Tex. Farmers Ins. Co. v.
Murphy, 996 S.W.2d 873, 879 (Tex. 1999); State Farm Life Ins. Co. v. Beaston,
907 S.W.2d 430, 433 (Tex. 1995). We should assume the parties to a contract
intended every clause to have some effect; we cannot strike down any portion of a
contract absent irreconcilable conflict. See Edlund v. Bounds, 842 S.W.2d 719,
726 (Tex. App.—Dallas 1992, writ denied). If a contract is found to be
ambiguous, its interpretation becomes a fact issue. Coker, 650 S.W.2d at 394. For
insurance policies in particular, however, when ambiguous policy terms permit
more than one reasonable interpretation, we construe the policy against the insurer.
See State Farm Fire & Cas. Co. v. Vaughan, 968 S.W.2d 931, 933 (Tex. 1998);
5 Nat’l Union Fire Ins. Co. v. Hudson Energy Co., 811 S.W.2d 552, 555 (Tex.
1991). This is so especially when the policy terms exclude or limit coverage. See
Vaughan, 968 S.W.2d at 933.
Whether a contract is ambiguous is a question of law for the court to decide
by looking at the contract as a whole in light of the circumstances present when the
contract was entered. Columbia Gas Transmission Corp. v. New Ulm Gas., Ltd.,
940 S.W.2d 587, 589 (Tex. 1996). A contract is unambiguous if it can be given a
definite or certain legal meaning. Id. An ambiguity does not arise, however,
simply because the parties advance conflicting interpretations of the policy. Id.
But if the insurance policy is subject to one or more reasonable interpretations, it is
ambiguous and the interpretation that most favors coverage for the insured will be
adopted. Nat’l Union Fire Ins. Co., 811 S.W.2d at 555.
ANALYSIS
The parties agree that whether the trial court’s summary judgment was
proper rests on the issue of whether ANICO’s insurance policy is ambiguous about
when the sixty-month term of insurance begins and ends.
Not all of the blanks on the insurance contract were filled in at the time of
Woods’s purchase. The following provisions relate to the disability insurance:
Total Disability Benefits Commence from The [blank] Day When Disability Continues For [blank] Days. Effective Date of Insurance 12-29-98
6 Terms (Months) 60 Term Date of Insurance [blank] Initial Amount of Insurance [blank] Monthly Payment $1,000.00 Single Premium for Term $2,304.80 Woods argues that because the line on which the termination date should be
written is blank, there is an ambiguity about the termination date that should be
construed in her favor.
In response, ANICO argues that Woods interpretation is not reasonable, and
that there is no ambiguity in the policy. According to ANICO, the sixty-month
term of coverage began on the effective date of December 29, 1998, meaning that
it would terminate sixty months later on December 29, 2003. ANICO also notes
that the contract specifically warns the insured about the possibility that the
insurance purchased may not fully cover a loan in the event of disability:
THE MONTHLY DISABILITY BENEFITS PROVIDED HEREUNDER MAY NOT BE SUFFICIENT TO COVER THE ACTUAL INSTALLMENT PAYMENTS COMING DUE UNDER THE LOAN, AND THE TERM OF THE DISABILITY INSURANCE COVERAGE MAY BE LESS THAN THE TERM OF THE LOAN.
“Whether a provision in a contract is ambiguous is answered by looking at
the entire contract and giving effect to each provision.” Besteman v. Pitcock, 272
S.W.3d 777, 784 (Tex. App.—Texarkana 2008, no pet.). Construing the insurance
7 policy here as a whole, we conclude that the policy’s failure to expressly provide a
termination date does not render the policy ambiguous.
The policy states that “[t]he term begins on the Effective Date and ends at
11:59 p.m. on the Termination Date.” The policy also provides an “Effective
Date” of December 29, 1998. Despite the line for termination date being left
blank, if the policy’s sixty-month term begins on this effective date of December
29, 1998 (as the policy provides), the termination date must necessarily be
December 29, 2003. Given that there are policy provisions from which a definitive
termination date can be derived, the lack of an express termination date does not
render the policy ambiguous. See id. (“If a contract is worded so that a court may
properly give it a definite or certain legal meaning or interpretation, then it is not
ambiguous.”).
The interpretation Woods advances, i.e., that the sixty-month term begins
upon disability rather than the effective date, directly contradicts the policy
provision providing that the term begins on the effective date of the policy. We
must reject an interpretation that conflicts with policy provisions in favor of an
interpretation giving effect to all its provisions. See, e.g., Royal Maccabees Life
Ins. Co. v. James, 146 S.W.3d 340, 345 (Tex. App.—Dallas 2004, no pet.) (“We
should assume the parties to a contract intended every clause to have some effect;
we cannot strike down any portion of a contract absent irreconcilable conflict.”).
8 The parties agree that ANICO made the required payments from the date of
Woods’ disability through December 29, 2003. Accordingly, the trial court
correctly granted summary judgment on Woods’s breach-of-contract claim against
ANICO.
For the same reasons, the trial court correctly granted summary judgment on
Woods’s fiduciary-duty claim. Woods argues that ANICO breached a fiduciary
duty to her by specifying a sixty-month term in the insurance contract without
specifying when that sixty-month term began and ended. Because we have held
that the insurance contract did in fact disclose when the sixty-month term began
and ended, no fact issue exists as to Woods’s fiduciary-duty claim, rendering
summary judgment proper.1
CONCLUSION
We affirm the trial court’s judgment.
1 In addition to arguing that it did not fail to disclose material information, ANICO contends that summary judgment was also proper on this claim because there “is no general fiduciary duty between an insurance company and its insured.” Woods does not, however, appear to rely on the parties’ status as parties to the insurance contract but, rather, asserts that ANICO made a misleading partial disclosure that gave rise to a duty of full disclosure. Because we agree with ANICO that, as a matter of law, there was no failure to disclose, we need not address under what circumstances, if any, a fiduciary duty could arise between parties to an insurance contract. 9 Sherry Radack Chief Justice
Panel consists of Chief Justice Radack and Justices Bland and Huddle.