Insurance Network of Texas v. Harvey & Diana Kloesel

• Court: Court of Appeals of Texas
• Decided: April 3, 2008
• Docket: 13-05-00680-CV
• Status: Published

Opinion

NUMBER 13-05-680-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

INSURANCE NETWORK OF TEXAS, Appellant,

v.

HARVEY & DIANA KLOESEL, ET AL., Appellees.

On appeal from the 2nd 25th District Court of Lavaca County, Texas.

OPINION

Before Justices Yañez, Rodriguez, and Garza Opinion by Justice Yañez

Harvey and Diana Kloesel, individually and d/b/a Kloesels’ Steakhouse, Inc. (“the

Kloesels”), sued appellant, Insurance Network of Texas (“INT”), for breach of contract,

negligence, and violations of the Texas Insurance Code and the Texas Deceptive Trade

Practices Act (“DTPA”). A jury found that INT acted negligently and violated the DTPA,

causing the Kloesels’ damages. INT subsequently appealed the trial court’s amended final judgment and the Kloesels cross-appealed. We affirm the trial court’s judgment as written.

I. BACKGROUND

A. Pretrial Background

Harvey and Diana Kloesel are married. They have owned and operated Kloesels’

Steakhouse in Moulton, Texas since 1970. INT is an independent insurance agency. In

1993, the Kloesels wanted a different insurance company to safeguard their restaurant.

The Kloesels approached Gary Nitsche, an insurance agent with INT, to discuss having

INT procure insurance for their restaurant.1 When INT first procured a policy for the

Kloesels, it obtained the policy from Providence Washington Insurance Company

(“Providence”), an admitted carrier, for the 1993–1994 policy year. The Providence policy

covered communicable disease claims. During that policy year, the Kloesels expressed

their intent to add a horse-and-carriage operation to their restaurant. As a result,

Providence opted not to renew the Kloesels’ policy, which was set to expire in October

1994. INT notified the Kloesels of the need to change carriers and subsequently procured

for them a general liability policy from Burlington Insurance Company (“Burlington”), a

surplus lines carrier, for the 1994–1995 policy year. The Burlington policy covered claims

arising from the horse-and-carriage operation, which began in November 1994, but

excluded communicable disease claims. The Kloesels paid the premiums for this policy

and renewed it for the 1995–1996, 1996–1997, and 1997–1998 policy years.

During the 1997–1998 policy year, over ninety customers contracted Hepatitis A at

the Kloesels’ restaurant; the Texas Department of Health concluded that this likely resulted

1 At the tim e of their conversation, and for a few years following, Insurance Network of Texas was nam ed W eber-Peters Insurance Agency. “INT” will be used to represent both nam es.

2 from a food handler being infected with Hepatitis A. The Kloesels filed claims under the

Burlington policy, but Burlington denied the claims based on the communicable disease

exclusion. Two separate lawsuits were then filed against the Kloesels by the Simpsons

and the Lairds—customers who had contracted Hepatitis A. Burlington defended the

Kloesels in these two lawsuits under a reservation of rights. On December 13, 1999, the

Simpsons obtained a judgment in their favor (the “Simpson judgment”) worth $242,625.

Eight months later, on August 31, 2000, the Lairds obtained a judgment in their favor (the

“Laird judgment”) worth $323,441. INT declined to cover the Kloesels for the amounts

owed under the Simpson and Laird judgments.

During the eight-month period between the Simpson and Laird judgments, the

Kloesels and the Simpsons entered into an agreement entitled “Assignment and Covenant

not to Execute.” Under the agreement, the Kloesels assigned to the Simpsons all

negligence and statutory causes of action the Kloesels had, or would have, against INT;

the assignment allowed the Simpsons to bring suit against INT in either their own name or

the Kloesels’ name. The Simpsons, in return, agreed not to collect from the Kloesels any

portion of the amount owed under the Simpson judgment. Burlington later filed a

declaratory judgment action in federal court, leading a district court for the Southern District

of Texas to conclude, on March 27, 2001, that “Burlington [was] not required to indemnify

[the Kloesels] for any damages recovered against [the Kloesels] based on [their] patrons

contracting Hepatitis A, since the Burlington policy contains an enforceable ‘communicable

disease’ exclusion.”

B. Trial Background

3 On March 11, 2005, after lengthy legal wrangling, the Kloesels brought suit against

INT through their fifth amended petition.2 The Kloesels’ suit proceeded to trial, where they

obtained a favorable jury verdict that concluded the following: (1) INT committed

negligence that proximately caused the Kloesels’ damages; (2) the Kloesels did not commit

negligence that proximately caused their damages; (3) INT was “100%” responsible for the

Kloesels’ damages; (4) INT knowingly made misrepresentations relating to the Kloesels’

insurance policy, thus causing their damages; (5) INT knowingly engaged in an

unconscionable action or course of action that was the producing cause of damages to the

Kloesels; (6) an award of $929,180.82 could reasonably compensate the Kloesels for their

damages; and (7) the Kloesels’ reasonable attorney’s fees are $150,000 for preparation

and trial, $50,000 for an appeal to this Court, and $25,000 for an appeal to the Texas

Supreme Court.

The trial court entered a final judgment on August 1, 2005, awarding the Kloesels

(1) $929,180.82 for damages, “together with prejudgment interest thereon at the annual

rate of 6.0% from April 15, 2005 through the date the judgment is signed”; (2) an award of

attorney’s fees in accordance with the returned jury charge; and (3) $4,574.97 for court

costs. INT filed motions for new trial and judgment notwithstanding the verdict (“JNOV”).

Though the motions were denied, the trial court—after considering arguments raised in

INT’s motions—denied recovery on the DTPA and insurance code allegations. As a result,

the court eliminated the award of attorney’s fees in its amended final judgment.

C. Interpreting the “Amended Final Judgment”

2 The Lairds were intervenors in this suit.

4 The trial court’s “Amended Final Judgment” differed from the “Final Judgment” in

that the amended judgment did not afford the Kloesels an award of attorney’s fees. The

trial court, in the amended judgment, provided the following explanation for the change:

[T]he Court entered Judgment based upon the Jury’s verdict and the Defendants filed a Motion for New Trial and Motion for Judgment N.O.V., which, after considering the response thereto and hearing argument of Counsel, the Court granted in part by denying recovery on the DTPA and Insurance Code allegations and affirming the remainder of the recovery. The Judgment previously entered by the court on August 1, 2005 is hereby amended . . . .3

We believe a question exists as to what exactly the trial court was “denying.” We see two

possibilities: (1) the trial court denied the jury’s findings that INT knowingly made

misrepresentations and engaged in unconscionable action, and denied the award of

attorney’s fees as a result of this decision; or (2) the trial court did not deny the

aforementioned findings, but determined independently of those findings that awarding

attorney’s fees under the DTPA was improper and should be denied. The trial record

allows for both possibilities, given that INT’s motions asserted that (1) the jury’s DTPA

finding was not supported under the law, and (2) the Kloesels’ attorney erred by failing to

segregate fees attributable to the Kloesels’ DTPA claim, which INT asserted was required

because the Kloesels’ DTPA claim was joined with another claim for which attorney’s fees

were not recoverable.

Neither findings of fact nor conclusions of law accompany the amended judgment.

When an appellate court seeks to interpret a vague judgment, the judgment, like other

written instruments, is to be “construed as a whole toward the end of harmonizing and

3 Em phasis added.

5 giving effect to all the court has written.”4 The entire content of the judgment and the

record should be considered.5 In the instant case, the amended judgment states that the

trial court is “denying recovery on the DTPA and Insurance Code allegations.” The lack

of any reference to attorney’s fees and the use of the term allegations causes us to believe

that the trial court rejected the Kloesels’ DTPA causes of action, thus prompting the court’s

decision to deny the award of attorney’s fees. Because the record further permits such a

belief, we consider this to be the course of action taken by the trial court. We will thus

focus solely on the jury’s negligence finding—not the misrepresentation and

unconscionable conduct findings—in assessing whether the jury’s award of damages

should be upheld.

D. Issues on Appeal

INT’s appeal and the Kloesels’ cross-appeal arose from the trial court’s amended

judgment. In ten issues, INT raises arguments relating to (1) the Kloesels and Simpsons’

assignment and covenant not to execute (issues two, three, four, and nine); (2) the jury’s

negligence finding against INT (issues one, five, six, and eight); (3) the jury’s finding that

the Kloesels were not contributorily negligent (issue ten); and (4) the trial court’s jury

charge (issue seven). The Kloesels, in their cross-appeal, assert that the trial court erred

by not properly awarding prejudgment interest and by failing to award attorney’s fees.

II. ASSIGNMENT & COVENANT NOT TO EXECUTE ISSUES

In the issues relating to the assignment, INT contends that the Kloesels did not have

4 See Constance v. Constance, 544 S.W .2d 659, 660 (Tex. 1976) (em phasis added).

5 See Lone Star Cement Corp. v. Fair, 467 S.W .2d 402, 405 (Tex. 1971).

6 standing in the trial court, and that the trial court therefore lacked subject matter jurisdiction

to hear this case.6 Because subject matter jurisdiction is a threshold issue affecting the

power of this Court to reach the merits of INT’s appeal,7 we first address INT’s assignment

arguments, as well as related arguments concerning the covenant not to execute. These

arguments cannot adequately be addressed, however, without first explaining our

interpretation of the Kloesels’ assignment, covenant not to execute, and fifth amended

petition.

A. This Court’s Interpretation of the Assignment & Covenant Not to Execute

As previously mentioned, the Kloesels assigned their claims to the Simpsons in

exchange for a covenant not to execute (the “covenant”). A dispute exists between INT

and the Kloesels regarding the scope of the assignment and covenant. INT asserts that

the Kloesels assigned to the Simpsons all causes of action the Kloesels had, or would

have, against it, thus contending that the Kloesels had no standing to sue for damages

incurred through either the Simpson or Laird judgment. INT also asserts that the covenant

“operated as a release from the [Simpson and Laird] judgments and as a matter of law

those judgments cannot form the basis for the [Kloesels’] damages awarded by the trial

court.” The Kloesels, on the other hand, assert that the assignment and covenant are

entirely unrelated to the Laird judgment. We agree with the Kloesels.

INT’s paraphrasing of the assignment on appeal excludes language that clearly

demonstrates the Kloesels’ intent to only assign causes of action stemming from the

6 See Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W .2d 440, 443 (Tex. 1993).

7 See id.

7 Simpson judgment. The assignment states, in relevant part, that the Kloesels “do hereby

irrevocably assign to the Simpsons, all causes of action for damages they might have or

later acquire against . . . Insurance Network Of Texas . . . with regard to any negligence in

exposing [the Kloesels] to the Judgment entered in C.A. No. 98-25812; Judy Simpson and

Sidney Simpson v. Kloesels’ Steakhouse, Inc. . . .”8 It also states that “the Kloesels assign

each and every cause of action . . . on the account of, or arising out of, the entry of the

Judgment rendered in the underlying case . . . .”9

Furthermore, INT has provided no argument for why this Court should ignore the

“First Amendment to Assignment and Covenant Not to Execute,” an agreement that was

entered into by the Kloesels and Simpsons for the purpose of clarifying the intent of the

assignment.10 The agreement states:

At no time did the parties to the Assignment and Covenant not to Execute intend or contemplate that the assignment to the Simpsons would encompass anything other than a remedy for the Judgment entered in cause no. 98-25812; in other words, it was never contemplated or intended that the Simpsons were to be given all of the Kloesels’ causes of action for different claims that might be reduced to Judgment sometime in the future in favor of other claimants.

With regard to the covenant, INT never attempts to explain how it releases the Kloesels

from liability under the Laird judgment. Finding no reason ourselves, we conclude that only

the Simpson judgment is implicated by the covenant.

8 Em phasis added.

9 Em phasis added.

10 “[A]ssignm ents are governed by contract law. Contracts, of course, m ay be am ended. A m odified agreem ent takes the place of the original.” Cadle Co. v. Henderson, 982 S.W .2d 543, 546 (Tex. App.–San Antonio 1998, no pet.) (citations om itted). “[J]urisdictions have validated am endm ents to assignm ents, even if those am endm ents occur after suit has been filed.” Id.

8 B. This Court’s Interpretation of the Fifth Amended Petition

Because the Kloesels retained causes of action against INT stemming from the

Laird judgment, and the Simpsons were assigned causes of action against INT stemming

from the Simpson judgment, both the Kloesels and Simpsons initially brought suit against

INT through the “Plaintiffs’ Original Petition,” which stated: “COMES NOW Plaintiffs,

HARVEY KLOESEL and DIANA KLOESEL, INDIVIDUALLY AND D/B/A Kloesels’

STEAKHOUSE, INC., JUDY SIMPSON and SIDNEY SIMPSON, complaining of the

Defendant[] . . . INSURANCE NETWORK OF TEXAS . . . .” This style was present in the

first, second, third, and fourth amended petitions, but was changed in the fifth amended

petition to exclude the names of the Simpsons. In “Plaintiff’s Supplemental Response to

Defendant’s Motion to Dismiss,” the Kloesels’ trial counsel explained to the court why the

Simpsons’ names had been deleted from the fifth amended petition, stating: “Since the

Assignment from the Kloesels to the Simpsons gave the Simpsons permission to sue in

the Kloesels’ names, the action as it now stands preserves both the Kloesels’ and the

Simpsons’ causes of action.”11 In other words, counsel argued that the Kloesels’ name in

the fifth amended petition represented both the Kloesels and Simpsons.12

The use of the Kloesels’ name to refer to both parties warrants concern considering

the confusion such a practice may cause. It did, in fact, create confusion for this Court—a

confusion that was exacerbated by the failure of appellate counsel on both sides to

acknowledge or explain the dual use of the Kloesels’ name in the fifth amended petition.

11 W e note that the Sim psons and Kloesels were represented by the sam e attorney at pretrial and trial.

12 To avoid confusion, we note that any reference to “the Kloesels” in this opinion is intended to refer to only Harvey and Diana Kloesel. Sidney and Judy Sim pson will be referred to as “the Sim psons” and not as “the Kloesels.”

9 In reviewing law relevant to this matter, we found that (1) assignments may be whole or

partial transfers of the assignor’s claim;13 (2) the beneficial owner of a cause of action may

bring suit in the name of his or her assignor;14 and (3) the petition does not need to show

that it is brought for the benefit of another if the beneficial owner instituted the suit in the

name of the assignor.15 Though we have not uncovered any statute or case law that would

necessarily prohibit the beneficial owner and assignor from sharing the same name in a

petition, we believe that such a practice is only permissible when the defendant has been

informed of the dual use of the assignor’s name.16 In the instant case, INT was apprised

of the petition’s dual use of the Kloesels’ name. Moreover, INT did not raise arguments

specifically challenging the propriety of this action. Therefore, we will consider the

Kloesels’ name, as used in their fifth amended petition, as referring to both the Kloesels

and the Simpsons. It is with this understanding of the petition, as well as our

aforementioned view of the assignment and covenant, that we now address INT’s

arguments.

C. INT’s Assignment & Covenant Arguments

We begin by addressing INT’s second issue, wherein INT argues that the Kloesels’

13 Rainey-Mapes v. Queen Charters, Inc., 729 S.W .2d 907, 911 (Tex. App.–San Antonio 1987, writ dism ’d).

14 See Seiter v. Smith, 105 Tex. 205, 147 S.W . 226, 228 (1912).

15 See Camden Fire Ins. Ass’n v. Eckel, 14 S.W .2d 1020, 1021-22 (Tex. Com m 'n App. 1929, judgm 't adopted).

16 See R ESTATEM EN T (S EC ON D ) OF J UD GM ENTS § 37 cm t. D (1982) (“[I]f the obligor is not inform ed of the separation of ownership of the claim s, he is justified in assum ing that the action is by the transferor. The transferor has induced this assum ption by transferring the claim to one allowed to bring suit in the transferor’s nam e, while failing to apprise the obligor of the fact. As between the obligor and the transferor, it is therefore just that the latter bear the consequences ensuing from the discrepancy between appearance and reality regarding the parties involved in the action.”).

10 assignment to the Simpsons is against public policy in light of the Texas Supreme Court’s

decision in State Farm Fire & Casualty Company v. Gandy.17 In Gandy, the supreme court

held that a defendant’s assignment of his claims against his insurer to a plaintiff is against

public policy if all of the following occurs:

(1) it is made prior to an adjudication of plaintiff’s claim against defendant in a fully adversarial trial, (2) defendant’s insurer has tendered a defense, and (3) either (a) defendant’s insurer has accepted coverage, or (b) defendant’s insurer has made a good faith effort to adjudicate coverage issues prior to the adjudication of plaintiff’s claim.18

In the instant case, the Kloesels assigned their claim against INT to the Simpsons after the

Simpsons adjudicated their claim against the Kloesels in a fully adversarial trial. Therefore,

the Kloesels’ assignment does not fulfill all the necessary prongs for declaring an

assignment invalid under Gandy. We thus overrule INT’s second issue on appeal.

In issues three and nine, INT asserts that the Kloesels should not have been

awarded any damages because the covenant released the Kloesels from the Simpson and

Laird judgments; consequently, the trial court could not award damages on the basis of

those judgments. As already discussed, we find that the covenant did not affect what the

Kloesels owed under the Laird judgment; therefore, the trial court was free to award

damages stemming from the Laird judgment. The trial court was also free to award

damages stemming from the Simpson judgment because the Simpsons (as beneficial

owners of this claim) were entitled to recover in the Kloesels’ name. Issues three and nine

are overruled.

17 925 S.W .2d 696 (Tex. 1996).

18 Id. at 714 (em phasis added).

11 In its fourth issue, INT contends that the Kloesels assigned to the Simpsons all

causes of action the Kloesels had, or would have, against it, and that the Kloesels thus

have no standing to sue for damages incurred through both the Simpson and Laird

judgments. As already established, however, we find that the assignment only implicated

the Simpson judgment. The Kloesels thus retained the ability to bring a suit for damages

stemming from the Laird judgment, and the Simpsons were free to bring a suit in the

Kloesels’ name for damages stemming from the Simpson judgment. Accordingly, INT’s

fourth issue is overruled.

III. NEGLIGENCE ISSUES

At trial, the Kloesels argued that INT was negligent for (1) failing to “refer the

Kloesels to an agency which could obtain the necessary coverage”; (2) failing “to advise

[the Kloesels] of this critical deletion of coverage from its former policy” (i.e., explain policy

terms); and (3) procuring a general liability “policy for [their] restaurant that excluded

coverage for communicable disease.” The jury charge in this case did not require the jury

to specify the negligent act that INT committed to cause the Kloesels’ damages.

Therefore, we must render judgment on the jury verdict if any of INT’s alleged failures

constituted negligence and proximately caused the Kloesels’ loss.19

INT’s appeal attacks the jury’s negligence finding through four issues. INT asserts

that (1) it had no legal duty to refer the Kloesels to another insurance agency (issue six);

(2) it had no legal duty “to explain the exclusions in the insurance coverage” (issue one);

(3) it did not proximately cause the Kloesels’ damages because “the [Kloesels are] charged

19 See May v. United Servs. Ass’n of Am., 844 S.W .2d 666, 668 (Tex. 1992).

12 with having read the insurance policy exclusion in question” (issue five); and (4) there was

insufficient evidence to support the finding because “it was uncontroverted that [INT] gave

written notice to [the Kloesels] that the insurance policies contained a Communicable

Disease exclusion” (issue eight). In another negligence-related issue (issue ten) INT

asserts that there was factually insufficient evidence to support the jury’s negative

response to the contributory negligence question “based upon the uncontroverted failure

of the [Kloesels] to have read the written quotations, binders and insurance policies

containing the Communicable Disease exclusion.”

For purposes of clarity and organization, our analysis of these issues will begin with

issues one and six, wherein INT contests the element of duty. Issues five and eight, which

contest the element of proximate cause, will then be addressed along with the contributory

negligence challenge raised in issue ten.

A. INT’S NEGLIGENCE IN FAILING TO REFER & EXPLAIN POLICY TERMS

Negligence consists of three essential elements: (1) a legal duty owed by one

person to another, (2) a breach of that duty, and (3) damages proximately resulting from

the breach.20 Duty is the threshold inquiry.21 When no duty exists, there can be no

negligence.22

1. INT’s Duty to Refer

20 Critchfield v. Smith, 151 S.W .3d 225, 230 (Tex. App.–Tyler 2004, pet. denied) (citing El Chico Corp. v. Poole, 732 S.W .2d 306, 311(Tex. 1987)).

21 Id. (citing Poole, 732 S.W .2d at 311).

22 Id. (citing Rosas v. Buddies Food Store, 518 S.W .2d 534, 536 (Tex. 1975)); Sledge v. Mullin, 927 S.W .2d 89, 93 (Tex. App.–Fort W orth 1996, no writ); Pickens v. Tex. Farm Bureau Ins. Co., 836 S.W .2d 803, 805 (Tex. App.–Am arillo 1992, no writ).

13 On appeal, INT asserts that it had no duty to refer the Kloesels to another agency.

In response, the Kloesels do not cite case law to support the existence of a duty; they

simply argue that there “should” be a duty. At trial, INT’s expert witness testified that no

such duty existed, and the Kloesels’ expert witness testified that he knew of no case or

statute that established such a duty. Likewise, this Court knows of no case law that

supports the Kloesels’ contention that negligence may be found in an agent’s failure to

refer, and we decline to create such case law through this opinion. Because INT did not

have a duty to refer, the jury’s verdict cannot rest on this negligence theory. Issue six is

therefore sustained.

2. INT’s Duty to Explain Policy Terms

INT argues that it did not have a duty to explain the Burlington policy’s coverage

limitations to the Kloesels. In response, the Kloesels concede in their brief that there is no

duty to explain. At trial, the Kloesels’ expert witness testified that an insurance agent does

not have a legal duty to explain the terms and conditions of an insurance policy. This

testimony is in tune with the holdings of a few courts of appeals, which have likewise found

that no duty to explain exists.23 Though the Texas Supreme Court has not determined

whether an agent may be liable for failing to disclose a policy’s coverage limitations, it has

noted that other states are willing to impose liability when there is “an explicit agreement,

a course of dealing, or other evidence establishing an undertaking by the agent to

determine the customer’s insurance needs and to counsel the customer as to how they can

23 See Ruiz v. Gov’t Employees Ins. Co., 4 S.W .3d 838, 841 (Tex. App.–El Paso 1999, no pet.); Garrison Contractors, Inc. v. Liberty Mut. Ins. Co., 927 S.W .2d 296, 300 (Tex. App.–El Paso 1996), aff’d, 966 S.W .2d 482 (Tex. 1998); Amarco Petroleum, Inc. v. Tex. Pac. Indem . Co., 889 S.W .2d 695, 699 (Tex. App.–Houston [14th Dist.] 1994, writ denied); Heritage Manor of Blaylock Props., Inc. v. Petersson, 677 S.W .2d 689, 691 (Tex. App.–Dallas 1984, writ ref'd n.r.e.).

14 best be met.”24 The Kloesels, however, did not present any such evidence at trial. They

testified that they had no communication with Nitsche after their initial meeting with him;

furthermore, the record does not show that the Kloesels ever consulted with anyone from

INT concerning the adequacy of their liability coverage, nor that INT gave them any advice

in that regard. Therefore, even if we were willing to recognize a duty to disclose coverage

limitations based on a special relationship, the evidence in this case clearly establishes that

no such relationship existed. Accordingly, we find that the jury’s verdict cannot rest on

INT’s failure to explain the Burlington policy’s coverage limitations. Issue one is sustained.

B. INT’S NEGLIGENT POLICY PROCUREMENT & KLOESELS’ CONTRIBUTORY NEGLIGENCE

The Kloesels’ remaining negligence theory asserts that INT acted negligently by

selecting the Burlington policy; this theory directly challenges Nitsche’s professional

judgment in recommending the policy to the Kloesels. INT’s remaining issues on appeal

do not negate the theory’s implied contentions that INT owed a legal duty to the Kloesels

or that it breached a duty owed. More specifically, INT does not (1) defend the adequacy

of the Burlington policy, (2) contest whether it had a duty to procure a different policy, or

(3) contend that it did not breach a duty when it procured the Burlington policy.

Accordingly, the jury’s implied finding that INT breached a duty owed to the Kloesels by

selecting the Burlington policy remains uncontested.

The only issues INT provides that can conceivably negate the remaining negligence

theory are issues five and eight, which essentially raise the same argument: the Kloesels

are the sole cause of their damages because they are charged with having read the

24 May, 844 S.W .2d at 670 n.10.

15 Burlington policy’s communicable disease exclusion.25 We interpret this argument as

asserting that there is legally and factually insufficient evidence to show that INT’s

procurement of the Burlington policy proximately caused the Kloesels’ damages.26 INT’s

proximate cause challenge—by necessitating an inquiry as to whether the Kloesels are

legally presumed to have read and have knowledge of the communicable disease

exclusion—touches upon a matter that traditionally goes to the issue of contributory

negligence.27 Nevertheless, we will address this matter for all of INT’s desired purposes:

to assess (1) whether there is legally and factually sufficient evidence to show that INT’s

procurement of the Burlington policy proximately caused the Kloesels’ damages (issues

25 The heading of issue five states that “[t]he trial court erred in entering judgm ent for the [Kloesels] because as a m atter of law there can be no proxim ate cause or producing cause to establish dam ages when the insured is charged with having read the insurance policy exclusion in question.” The heading of issue eight states that “[t]here is no evidence or factually insufficient evidence to support the jury’s response to the negligence issue as it was uncontroverted that [INT] gave written notice to the [Kloesels] that the insurance policies contained a Com m unicable Disease exclusion.” The argum ent in issue eight— that written notice was provided to the Kloesels— sim ply leads to the contention that the Kloesels should be charged with having read their insurance policy, and that INT is therefore not the proxim ate cause of the Kloesels’ dam ages. This is the sam e argum ent raised in issue five.

26 Issues five and eight essentially challenge the jury’s negligence finding against INT by asserting that there is no evidence, or legally insufficient evidence, of proxim ate cause. Issue eight, however, also asserts that there was factually insufficient evidence of proxim ate cause.

27 See infra note 64. W e have attem pted to rationalize the applicability of INT’s argum ent (that the Kloesels have presum ed knowledge of their policy’s contents) to the negligence finding against INT. In so doing, we believe INT’s argum ent m ay be im pliedly contending that the Kloesels’ presum ed knowledge of their policy, and their failure to act on this knowledge by obtaining a replacem ent policy covering com m unicable disease claim s, are factual m atters that create a new and independent cause of their dam ages, thus absolving INT of any liability. See generally Dew v. Crown Derrick Erectors, Inc., 208 S.W .3d 448, 450 (Tex. 2006) (defining “new and independent cause” and noting that such a cause “supersedes the defendant's negligence . . . thereby relieving that defendant of liability”). It is not necessary for this Court to pass judgm ent on the propriety of negating proxim ate cause in this m anner. W e do note, however, that the aforem entioned factual m atters present a clearer challenge to a negative finding of contributory negligence. See generally Brown v. Frontier Theatres, Inc., 369 S.W .2d 299, 304 (“It is the general rule in Texas that where the undisputed evidence establishes the existence of a danger and the injured party has knowledge or is chargeable with knowledge of the danger and, without justification, exercises no care whatever, then there is shown a case of contributory negligence as a m atter of law.”).

16 five and eight);28 and (2) whether there is factually sufficient evidence to support the jury’s

negative finding of contributory negligence (issue ten).

1. Sufficiency of the Evidence Standards of Review29

In a legal-sufficiency review, “we must view the evidence in a light that tends to

support the finding of disputed fact and disregard all evidence and inferences to the

contrary.”30 However, “[t]he final test for legal sufficiency must always be whether the

evidence at trial would enable reasonable and fair-minded people to reach the verdict

under review. . . . [L]egal-sufficiency review in the proper light must credit favorable

evidence if reasonable jurors could, and disregard contrary evidence unless reasonable

jurors could not.”31 The jury is the sole judge of witnesses’ credibility, and it may choose

to believe one witness over another; a reviewing court may not impose its own opinion to

the contrary.32 Because it is the jury's province to resolve conflicting evidence, we must

assume that jurors resolved all conflicts in accordance with their verdict if reasonable

human beings could do so.33

When, as here, an appellant attacks the legal sufficiency of an adverse finding on

28 It is only under this argum ent that we determ ine whether the Kloesels’ rem aining theory can support the jury’s negligence finding. See W alling v. Metcalfe, 863 S.W .2d 56, 58 (Tex. 1993) (“W e have held repeatedly that the courts of appeals m ay not reverse the judgm ent of a trial court for a reason not raised in a point of error.”).

29 The sufficiency standards of review are set out to address both the legal and factual sufficiency challenge to the jury’s negligence finding against INT (issue eight) and the factual sufficiency challenge to the jury’s negative finding of contributory negligence (issue ten).

30 W al-Mart Stores, Inc. v. Miller, 102 S.W .3d 706, 709, 46 (Tex. 2003).

31 City of Keller v. W ilson, 168 S.W .3d 802, 827 (Tex. 2005).

32 Id. at 819.

33 Id.

17 an issue for which it did not have the burden of proof—here, the negligence claim asserted

by the Kloesels—the appellant must demonstrate that there is no evidence to support the

adverse finding.34 Such a no-evidence challenge will be sustained when “‘(a) there is a

complete absence of evidence of a vital fact, (b) the court is barred by rules of law or of

evidence from giving weight to the only evidence offered to prove a vital fact, (c) the

evidence offered to prove a vital fact is no more than a mere scintilla, or (d) the evidence

conclusively establishes the opposite of the vital fact.’”35 Evidence does not exceed a

scintilla if it is so weak as to do no more than to create a mere surmise or suspicion that

the fact exists.36

In reviewing a factual-sufficiency challenge to a jury finding on an issue on which

the appellant did not have the burden of proof, we consider and weigh all of the evidence

and set aside the verdict only if the evidence that supports the jury finding is so weak as

to make the verdict clearly wrong and manifestly unjust.37 In reviewing a factual-sufficiency

challenge to a jury finding on an issue on which the appellant had the burden of

proof—here, the defense of contributory negligence—the appellant must show that “the

adverse finding is against the great weight and preponderance of the evidence.”38 In either

type of factual-sufficiency challenge, we must examine both the evidence supporting and

34 Croucher v. Croucher, 660 S.W .2d 55, 58 (Tex. 1983).

35 King Ranch, Inc. v. Chapman, 118 S.W .3d 742, 751 (Tex. 2003) (quoting Merrell Dow Pharms., Inc. v. Havner, 953 S.W .2d 706, 711 (Tex. 1997)).

36 Ford Motor Co. v. Ridgway, 135 S.W .3d 598, 601 (Tex. 2004).

37 Cain v. Bain, 709 S.W .2d 175, 176 (Tex. 1986); Bay, Inc. v. Ramos, 139 S.W .3d 322, 329 (Tex. App.–San Antonio 2004, pet. denied).

38 Dow Chem. Co. v. Francis, 46 S.W .3d 237, 242 (Tex. 2001).

18 that contrary to the judgment.39 Additionally, the jury is the sole judge of witnesses’

credibility, and it may choose to believe one witness over another; a reviewing court may

not impose its own opinion to the contrary.40

2. Relevant Trial Testimony & Evidence

The Kloesels testified that INT did not specifically draw their attention toward the

communicable disease exclusion within the Burlington policy—an exclusion that did not

exist within the Providence policy previously procured by INT. INT, in turn, established

that the Kloesels received multiple written references of the communicable disease

exclusion in the form of insurance binders, quotes, and policies. INT submitted three

quotes that were provided to the Kloesels. The quotes stated a laundry list of policy

exclusions that were collectively referred to as “Conditions.” Though the “Conditions”

within the quotes shared a similar format, they varied with regard to the order in which

exclusions were listed. The following three paragraphs, containing the communicable

disease exclusion, appeared in the 1994, 1995, and 1997 quotes, respectively.

Conditions: Exclude: Employment Related Practices, Communicable Disease, Lead-Bearing Substance, Punitive Damages, New Entitles, Total Pollution, Asbestos, Sexual Action, Host Liquor, Assault and Battery, Work to Subways / Tunnels / Bridges / Sewers and Dams. Bodily injury or Property damage caused by aircraft or watercraft arising out of a contractual liability. Work performed by subcontractors is excluded.

Conditions: EXCLUDE: PERSONAL & ADVERTISING INJURY, MEDICAL PAYMENTS, FIRE DAMAGE, EMPLOYEES AS INSURED, EMPLOYMENT RELATED PRACTICES, NEW ENTITIES, TOTAL POLLUTION, COMMUNICABLE DISEASE, LEAD-

39 See id.; Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W .2d 442, 445 (Tex. 1989).

40 See Golden Eagle Archery, Inc. v. Jackson, 116 S.W .3d 757, 761 (Tex. 2003).

19 BEARING SUBSTANCE, PUNITIVE DAMAGES, ASBESTOS, SILICA DUST, TOXIC SUBSTANCE, SEXUAL ACTION, ASSAULT OR BATTERY, INDEPENDENT CONTRACTORS AND THEIR EMPLOYEES ATTACH: CONTRACTUAL LIABILITY LIMITATION, AMENDMENT OF LIQUOR LIABILITY EXCLUSION, PRODUCTS / COMPLETED OPERATIONS HAZARDS REDEFINED

Conditions: EXCLUDE: FIRE DAMAGE, MEDICAL EXPENSE, EMPLOYMENT RELATED PRACTICES, NEW ENTITIES, TOTAL POLLUTION, COMMUNICABLE DISEASE, LEAD- BEARING SUBSTANCE, PUNITIVE DAMAGES, ASBESTOS, SILICA DUST, TOXIC SUBSTANCE, SEXUAL ACTION, ASSAULT OR BATTERY, INDEPENDENT CONTRACTORS AND THEIR EMPLOYEES ATTACH: CONTRACTUAL LIABILITY LIMITATION, AMENDMENT OF LIQUOR LIABILITY EXCLUSION

The insurance binders provided to the Kloesels in 1994 and 1995 contained paragraphs

that mirrored those contained within the 1994 and 1995 quotes, respectively. Lastly, all

four Burlington policies purchased by the Kloesels contained the same communicable

disease exclusion, which resembled the following:

EXCLUSION – COMMUNICABLE DISEASE

This insurance does not apply to “bodily injury,” “property damage,” “personal injury” or “advertising injury” arising out of the transmission of or alleged transmission of any communicable disease.

Diana Kloesel, who handled the restaurant’s insurance matters, did not affirmatively

deny reading each of the aforementioned documents referencing the communicable

disease exclusion. Diana stated that she may have read some of the insurance quotes

and binders provided to her. She testified that she did not read all of the provisions in the

initial Burlington policy, such as the communicable disease exclusion, because she

assumed the policy (1) complied with the instructions provided to Nitsche by her husband

and (2) generally had the same coverages as the Providence policy. As a result of this

20 assumption, she did not read the Burlington policies for the subsequent years because

they were simply renewals of the initial Burlington policy.

Despite what she may have read, Diana testified that she did not understand what

the term “communicable disease” or the exclusion itself meant until after Burlington denied

claims relating to the Hepatitis A outbreak. Diana claimed that she did not inquire as to

what the terms or exclusion meant because she “did not think it was necessary.” In

discussing why she did not telephone INT to inform the agency that she did not understand

her policy’s provisions, she stated that she did not call because she “did not think it was

necessary” and “did not think [it] was [her] duty to do that.” When asked whether the

documents referencing the exclusion caused her to be aware that the restaurant would not

be covered for an event like the Hepatitis A outbreak, Diana replied that they “did not ring

an alarm” because she “depended on [Nitsche] to . . . get a policy that did exactly what

Harvey and [she] sat down and talked with [Nitsche about].”

According to the Kloesels, when they first talked with Nitsche about having INT

procure insurance policies for their restaurant, Harvey told Nitsche that he wanted “100

percent coverage on his policy, to be protected . . . for all the things that’s [sic] necessary

for a restaurant . . . to stay in business and be protected.” Harvey further stated that he

wanted to be “fully covered. He wanted . . . plenty of insurance on the building for fire or

any damages. And he wanted to be . . . covered if someone . . . got hurt in some way. He

wanted to be covered if a customer got sick or if there was anything wrong with the food,

. . . he just wanted everything covered.” The Kloesels did not specifically tell Nitsche,

however, that they had concerns about, or wanted coverage for, claims relating to

communicable disease, Hepatitis A, or the transmission of disease from employees to

21 customers.

The Burlington policy was the only policy offered by INT to the Kloesels for the

1994–1995 policy year. Diana testified that had she understood the import of the

communicable disease exclusion, she would not have purchased the Burlington policy and

would have contacted another “insurance agency to see if [she and her husband] could

find what [they] were looking for.” She also stated that after the outbreak, and during the

time they were being sued, INT offered the Kloesels a policy with Scottsdale Insurance

Company. The Kloesels purchased the Scottsdale policy because it covered

communicable disease related claims and because they “didn’t have time to shop”

elsewhere.

The Kloesels’ agent, Nitsche, testified that although an agent looks after his clients’

best interests, an agent’s ability to effectively do this depends on the clients informing the

agent as to “what is important to them.” Though Nitsche conceded that his clients come

to him expecting him “to have more knowledge than they have about insurance

coverage”—an expectation he conceded his clients rely on—he explained that clients still

“have to tell [the agent] their specific needs so [the agent], in turn, can get the answer from

the insurance company.” If he knows “what’s important to [the clients], [he] will

communicate that information to [his] insurance company and they will provide to [him] . . .

the best available policy that’s available for [his] customer.” Nitsche testified that he does

not, however, tell his clients “what’s best for them. Only they know what’s best for them.”

According to Nitsche, it is not possible to satisfy a request to obtain “full coverage”

because every policy contains exclusions. Nitsche contended that he satisfied the

Kloesels’ instructions because the Burlington policy covered food poisoning; he asserted,

22 without explanation, that there was a “big difference” between “somebody getting sick and

somebody getting a disease.” Nitsche was aware that the Burlington policy contained a

communicable disease exclusion; he explained, however, that he did not fully understand

the import of the exclusion. This is because it is the insurer that ultimately makes coverage

decisions, and because “[i]t’s the insurance company that decided on the language. It’s

their forms.” Nitsche further explained: “If there’s ever a technical question, we get it from

[the insurer]. They’re . . . the company in charge.” Consequently, Nitsche and INT do not

simply provide clients with an opinion or their “best guess” regarding the meaning of policy

terms; rather, “if there’s a question about a definition . . . they obtain that answer from the

insurance company or the broker in writing so [they] can communicate it back to [their]

client.”

Nitsche testified that his education, training, and experience has not resulted in him

knowing all of a restaurateur’s “biggest risks,” and that restaurateurs should know their

businesses better than he does. When asked, however, whether he expected the Kloesels

to understand the import of the communicable disease exclusion, Nitsche replied: “I have

no idea what they know, if they know what a communicable disease is. But you know, they

are in the restaurant business. To me, that would be a very important part of their

operation, and I mean, just not a communicable disease.”41 Nitsche testified that he

believed the Kloesels understood the exclusion, stating: “I think they should definitely

know because they had documentation in front of them to—if they had a problem with it,

they would’ve called.” He explained that clients, like the Kloesels, could call INT to acquire

41 Em phasis added.

23 information relating to their policy.

Roy F. Phillips, the Kloesels’ expert witness, testified that he believed INT was

negligent in procuring a policy for the Kloesels. Phillips contended that at the time that INT

initially procured the Burlington policy, in addition to the time of the Hepatitis A outbreak,

alternative policies were available that covered communicable disease claims and other

critical risks pertinent to the Kloesels’ restaurant. Though he acknowledged that the

Burlington policy covered some “catastrophic risks” that were uniquely pertinent to a

restaurateur, it was his view that “communicable disease [was] absolutely the number one

exposure.” Phillips stated that he would “absolutely not” procure a policy for a restaurateur

that excluded communicable disease claims. He testified that because communicable

disease is the “biggest hazard [the Kloesels] have,” had he procured the Burlington policy

for the Kloesels, he would have talked about the communicable disease exclusion with

them and would have had them acknowledge a letter that detailed the conversation.

Gary Beck was INT’s expert witness. He asserted that INT “exceed[ed] the standard

of care” in communicating policy information to the Kloesels. According to Beck, under the

law of the State, insureds are “deemed to know what’s in their policy if they’ve received it,”

without regard to whether the insured has actually read the policy. He also expressed his

belief that an insured, rather than an agent, is in a better position to know what is important

to them in terms of insurance coverage. When asked whether an agent, in procuring a

liability policy for a restaurateur, acts prudently by obtaining a policy that excludes

communicable disease claims, Beck responded: “Ideally, you would want communicable

diseases to be covered, but you can’t get everything covered.” It was further revealed that

when asked this same question during his deposition, Beck responded: “I would agree that

24 that’s not the desired coverage form.”

Beck testified that if the Kloesels were his customers, “it’s possible” that he would

have procured a policy containing a communicable disease exclusion. He then elaborated

on this response, stating: “If I knew there was something out there that had the coverage,

and I knew an agent that had it, I might’ve referred them. I would’ve—I would’ve probably

made Mr. Kloesel aware of it.” Beck claimed, however, that he ultimately would not have

referred the Kloesels to another agent because he thought that he would have “been able

to get the proper restaurant coverage” for the Kloesels. Beck’s cross-examination

concluded with the following exchange:

Q. Mr. Beck, as the owner of a restaurant, would you agree with me that it would never be prudent to purchase a CGL policy that excluded coverage for communicable disease?

A. As the owner, would it be prudent? Ever?

Q. Yeah.

A. If it was the only policy I could get. I wouldn’t want to—

Q. But—

A. —but it might—if—if it was the only policy that was available, if every insurance company in the world says, “were not going to write—we’re not going to cover communicable—or whatever, exclude communicable disease,” then rather than go without coverage generally, you might do it.

Q. But if you’re going to have coverage, you want to make sure your coverage includes communicable disease.

A. Sure.

3. Legal Framework Governing this Court’s Disposition of the Issues

The Texas Supreme Court afforded significant attention to the Kloesels’ negligence

25 theory in May v. United Services Association of America. In May, Daryl and Faith May

visited an insurance agency, where the Mays spoke with an agent.42 The Mays told the

agent that they were planning to have children and were interested in maternity and

dependent health coverage;43 the Mays informed the agent that this interest stemmed from

Faith May previously losing an infant child.44 The agent provided the Mays with the Double

Eagle policy, which “featured relatively low premiums and deductibles,” but contained a

“termination provision [that] allowed the underwriter to cancel the entire group at any time.

The policy also contained a deferral provision that permitted the underwriter to defer

coverage on group members or covered dependents who were hospitalized or totally

disabled at the time coverage began.”45 Sixteen months after acquiring the Double Eagle

policy, Faith May gave birth to a child that was born “with congenital heart and lung

disorders that required immediate medical attention.”46 Though the policy initially covered

the child’s medical expenses, a change in underwriters occurred and the new underwriter

“classified [the child] as a totally disabled dependent and, asserting the deferral provision

of the policy, refused to cover any of his medical expenses.”47 The child eventually died

42 May, 844 S.W .2d at 667.

43 Id.

44 Id.

45 Id.

46 Id. at 668.

47 Id. According to the suprem e court:

The deferral provision becam e applicable anew for all insured individuals when there was a change of underwriters. Thus, hospitalized or disabled individuals whose m edical care was covered because they becam e disabled at a tim e when they were already covered under the policy, or because they were born to individuals who were covered under the policy, faced the risk that they would lose coverage if the current underwriter dropped the entire group and

26 after living over two years without insurance coverage.48

The Mays sued the agency, alleging its agent made misrepresentations and acted

negligently by recommending and allowing the Mays to purchase the Double Eagle policy.49

The Mays acknowledged at trial that the agent told them “of the termination provision

allowing an underwriter to cancel coverage for the entire group.”50 The trial court entered

its judgment based on the jury’s verdict, which found in the Mays’ favor on the negligence

claim, but not on the misrepresentation claim.51 The court of appeals reversed the

negligence finding. The supreme court then affirmed the judgment of the court of appeals,

finding that there was no evidence in the record “that the agent breached the duty to use

reasonable care, skill and diligence in procuring insurance in any way that proximately

caused harm to the [Mays].”52 In the course of arriving at this finding, the supreme court

observed that though “[t]he Mays claim that [the agent] was negligent because he should

have known of the risk posed to them by the potential shifting of the underwriters, . . . they

offer no evidence as to why this risk was unjustified for them in particular, or why [the

agent] should have prevented them from assuming it.”53

a new underwriter took over.

Id. at 672 (footnotes om itted).

48 Id. at 668.

49 Id. at 671.

50 Id. at 670.

51 Id. at 666.

52 Id. at 666-67.

53 Id. at 672.

27 In the instant case, INT established at trial that the Kloesels received ample

documentation noting the communicable disease exclusion. The purpose of establishing

this was to formulate the argument that the Kloesels were given adequate notice of the

exclusion, should thus be presumed to have read the exclusion, and should thus be

considered the sole proximate cause of their damages. Unlike INT, the agency in May did

not have to argue that the insureds should be charged with having read the complained of

policy provision because, as previously mentioned, the insureds in May readily admitted

that they were made aware of the provision.54 The May court, however, did not reject the

Mays’ negligence theory based on this admission; rather, it rejected the theory after (1)

assessing the nature of communications between the Mays and their agent prior to the

policy’s procurement, and (2) rejecting the Mays’ contention that the procured policy was

uniquely unsuited for them.55 We read May as containing an implicit rejection of INT’s

assertion that an insured’s actual or implied reading of an insurance policy operates,

without exception, to bar the insured from recovering damages that are derived from an

agent’s negligent procurement of that policy.56 Even if we misconstrue May, however, this

Court finds that independent reasons exist for rejecting INT’s position.

In cases involving a suit brought by an insured against an insurer, Texas courts

have held that the insured is under a positive duty to read his policy and is presumed to

54 Id. at 670.

55 Id. at 672-73.

56 W e note that if INT’s reasoning under issues six and eight is correct, it appears as if the May m ajority m issed a very sim ple m eans of dism issing the Mays’ negligence theory. Under INT’s reasoning, the court could have quickly determ ined that the Mays were the sole proxim ate cause of their dam ages upon seizing hold of the fact that the Mays’ adm itted to being told of the policy provision at issue.

28 have done so,57 thus providing the basis for rejecting the insured’s attempt to reform the

policy. These cases, however, are distinct from suits brought by an insured against an

agent. In Aden v. Fortsh, the New Jersey Supreme Court succinctly explained this

distinction, stating:

When one contracts with another, the contracting parties may have an obligation to read the contract because if they assent without so doing, they cannot later assert that their agreement was different from that expressed in writing. Even in the contract-reformation context, there are exceptions to the rule, as when an insured “in all likelihood, will not read [the policy] over again and may not fairly be expected to do so.” In any event, what distinguishes the situation in which an insured employs the assistance of a professional insurance intermediary is that the insured then has the right to rely on the skilled broker’s presumed competence in executing the instructions given. Unlike when an insured sues an insurer, in a malpractice suit a written contract is not being challenged.58

The distinction drawn in Aden fosters an improved understanding of the legal

analysis utilized by the Texas Supreme Court in Colonial Savings Association v. Taylor.59

Colonial involved a suit brought by an insured against a party that was deemed to have

essentially assumed the role of an agent for the insured.60 The court stated that while

some jurisdictions have held that an insured has a legal duty to read his policy, the

prevailing view—joined by this State—is as follows:

“[A]n insured who accepts a policy without dissent, is presumed to know its contents, but the presumption may be overcome by proof that ‘he did not

57 E.g., Ruiz, 4 S.W .3d at 841; Cont’l Cas. Co. v. Bock, 340 S.W .2d 527, 533 (Tex. Civ. App.–Houston 1960, writ ref’d n.r.e).

58 Aden v. Fortsh, 776 A.2d 792, 805 (N.J. 2001) (citations om itted).

59 544 S.W .2d 116, 119 (Tex. 1976).

60 Id. at 119 (“Although Colonial was not an insurance agent or insurer issuing a policy to Taylor for consideration, Colonial did voluntarily undertake to provide insurance coverage for Taylor’s property (as found by the jury), and in this undertaking Colonial’s duty was sim ilar to that of an insurance agent.”).

29 know its contents when it was accepted, as by showing that when he received it he put it away without examination, or that he relied upon the knowledge of the insurer and supposed he had correctly drawn it.’”61

The court held that when an insured presents sufficient proof to overcome the

presumption, it then becomes the agent’s “burden to prove that [the insured] was negligent

in failing to read the policy.”62 If the fact-finder determines that the insured was not

negligent, the insured’s failure to read will not bar his recovery;63 this determination will

traditionally necessitate the inclusion of a contributory negligence question in the court’s

charge.64

An insured’s reading of certain policy provisions will often result in nothing more than

an exercise of the eyes. In other words, the fact that an insured has made himself

cognizant of the existence of certain terms in his policy does not necessarily mean that the

61 Id. (quoting Fireman’s Fund Indem. Co. v. Boyle Gen. Tire Co., 392 S.W .2d 352, 355 (Tex. 1965) (quoting Del. Ins. Co. v. Hill, 127 S.W . 283, 286-87 (Tex. Civ. App. 1910, writ ref.))) (em phasis added).

62 Id. (citing Schustrin v. Globe Indem. Co., 130 A.2d 897 (N.J. Super. Ct. App. Div. 1957)).

63 Id.

64 Schustrin, 130 A.2d at 899 (holding that “the m ere failure on the part of an insured to read a policy does not per se bar a recovery, but is a circum stance to be considered on the question of the plaintiff’s contributory negligence”); see Colonial, 544 S.W .2d at 119; see also Frank B. Hall & Co. v. Beach, Inc., 733 S.W .2d 251, 264 (Tex. App.–Corpus Christi 1987, writ ref’d n.r.e.) (recognizing that an insurance agent— who was raising a duty-to-read defense in response to a suit for negligence brought against him by an insured— was entitled to have the jury charge contain a contributory negligence question).

W e note that in addition to this State, m any other jurisdictions have determ ined that an insured’s failure to fam iliarize him self with his policy sim ply allows the agent to assert a contributory negligence defense, presenting a jury question in negligence actions. See, e.g., Darner Motor Sales v. Universal Underwriters Ins. Co., 682 P.2d 388, 403 (Ariz. 1984); Floral Consultants, Ltd. v. Hanover Ins. Co., 470 N.E.2d 527, 529 (Ill. App. Ct. 1984); Medtech Corp. v. Indiana Ins. Co., 555 N.E.2d 844, 850-51 (Ind. Ct. App. 1990); Johnson & Higgins of Pa., Inc. v. Hale Shipping Corp., 710 A.2d 318, 326 (Md. Ct. Spec. App. 1998); Twelve Knotts Ltd. P’ship v. Fireman's Fund Ins. Co., 589 A.2d 105, 114 (Md. Ct. Spec. App. 1991); Fillinger v. Nw. Agency, Inc., of Great Falls, 938 P.2d 1347, 1352 (Mont. 1997); Stoes Bros. v. Freudenthal, 463 P.2d 37, 40 (N.M. Ct. App. 1969); Fobare v. Mohawk Nat'l Bank, 352 N.Y.S.2d 138, 142 (N.Y. Sup. Ct. 1974); Kirk v. R. Stanford W ebb Agency, Inc., 330 S.E.2d 262, 264 (N.C. Ct. App. 1985); Schustrin, 130 A.2d at 899; Martini v. Beaverton Ins. Agency, 838 P.2d 1061, 1067 (Or. 1992); Riddle-Duckworth, Inc. v. Sullivan, 171 S.E.2d 486, 492 (S.C. 1969).

30 insured has thus acquired an understanding or appreciation of those terms. This is

because policy provisions may be simple or complex, and the insured reading the

provisions may be an experienced business person who is insurance savvy or an

unsophisticated individual who knows nothing about insurance. It thus behooves an

insured to not only read his policy, but to also question his agent on terms and conditions

that are not understood; the agent’s reiteration as to what is covered under the policy will

assist the insured in any later lawsuit.65 Though it clearly advantages an insured to explore

any confusion over terms read but not understood, it is not clear that an insured is always

negligent in failing to do so.

When we assess whether an insured is negligent in failing to read his policy, we do

not do so for the purpose of determining whether the insured should be excused from

failing to exercise his eyes; rather, we do so for the ultimate purpose of determining

whether the insured should be excused from failing to know and understand the contents

of his policy. An assessment of an insured’s negligence in remaining silent shares the

same ultimate purpose. Accordingly, we believe a fact-finder should be able to determine

that an insured is not negligent for failing to question or investigate the policy terms he

reads, but does not understand.66 In order to arrive at this determination, the fact-finder

65 “Efforts on behalf of insureds to understand their policy rem ain an effective m eans of resolving insurance disputes before they reach the litigation stage. An insured who does not review his or her policy will forego such an advantage.” Aden, 776 A.2d at 83.

66 Em bracing a contrary conclusion creates perplexing results. Let us assum e, for instance, that in a suit brought by an insured against his agent, the agent raises the defense that the insured is negligent for failing to read the policy provision that now serves as the basis for the insured’s suit. The insured then responds by arguing that his failure to read resulted from his reliance on the agent’s knowledge and the assum ption that the agent had acquired the coverage requested. In the end, the fact-finder— upon assessing the evidence relevant to the insured’s reliance— determ ines that the insured was not negligent for failing to take an affirm ative step towards fam iliarizing him self with the provision (i.e., failing to read the provision).

31 must find that (1) it was reasonable for the insured to have not understood the import of

the terms read, and (2) the insured’s failure to acquire an understanding of the terms was

directly related to the insured’s reasonable reliance on the agent’s knowledge and the

assumption that the agent had correctly drawn the policy in conformance with said

knowledge. Given the varying complexity of insurance terms and provisions, the varying

degrees of insurance knowledge possessed by insureds, and the varying communications

that may exist between an agent and insured, a fact-finder should assess what is

reasonable on a case-by-case basis. The common-sense rationale for permitting a fact-

finder to find in an insured’s favor is as follows:

“[W]hen [an agent] of repute is employed to effect an insurance against certain risks, the client is entitled to rely upon his instructions being properly carried out. It is no answer for the [agent] to say: ‘I handed you the policy and you should have examined it and seen whether it gave you the protection you required.’ . . . Business could not be carried on . . . if, when a person has been employed to use care and skill with regard to a matter, the [client] is bound to use his own care and skill to see whether the person employed has done what he was employed to do.”67

Because “[a]n insured who hires and pays a professional [agent] does so to reduce, if not

eliminate, the risk that an inadequate policy will be procured,”68 it stands to reason that

W hat would result, however, if the nature of the suit and the evidence relating to the insured’s reliance rem ained the sam e, but the insured now contends that he read the com plained of provision, while m aintaining that he never com prehended its im port nor initiated an attem pt to decipher it? Should the insured’s reading of the provision now prohibit the fact-finder from determ ining that the insured was not negligent for failing to take an affirm ative step towards fam iliarizing him self with the provision (i.e., failing to question and investigate the provision’s im port)? Answering this question in the affirm ative sim ply serves to discourage the insured from ever reading his policy. The insured is deterred from taking the m ost basic step towards safeguarding his interests because doing so serves to constrain his ability to sue his agent should he later incur dam ages stem m ing from what is discovered to be his agent’s negligence in procuring the policy. W e are not inclined to perm it such a result.

67 Aden, 776 A.2d at 805-06 (quoting Hampton Roads Carriers v. Boston Ins. Co., 150 F. Supp. 338, 343-44 (D.C. Md. 1957) (quoting A R N OU LD ON M ARINE INSU RAN CE 160 (13th ed., 1950))).

68 Id. at 805.

32 “[i]nsurance consumers who instruct their [agents] to provide coverage [should be] entitled

to have those instructions followed without regard to the insured’s failure to detect the

[agent’s] negligent conduct.”69

An agent’s client should be able to rely on the agent’s knowledge in two respects.

First, when the agent’s knowledge is composed of his client’s instructions regarding the

qualities desired in a policy, the client may rightly assume that the agent will procure a

policy in conformance with such knowledge. Second, the client may rightly assume that

the agent will procure a policy that a reasonably prudent agent would procure—a policy

that is reflective of the agent having exercised the appropriate degree of skill and

knowledge that an agent is expected to have upon entering the profession.70

4. Applying the Facts to the Framework

As established above, determining whether an insured is negligent for failing to fulfill

his duty to read is simply representative of a broader determination that inquires into

whether an insured is negligent for not knowing and understanding his policy’s contents.

69 Id. at 806. Unless circum stances exist for parties to think otherwise, we believe that an insured is entitled to rely on an agent to follow his instructions when not only procuring an initial policy, but also subsequent replacem ent policies.

70 The New Jersey Suprem e Court provided analysis pertinent to this m atter in Rider v. Lynch:

One who holds him self out to the public as an insurance broker is required to have the degree of skill and knowledge requisite to the calling. W hen engaged by a m em ber of the public to obtain insurance, the law holds him to the exercise of good faith and reasonable skill, care and diligence in the execution of the com m ission. He is expected to possess reasonable knowledge of the types of policies, their different term s, and the coverage available in the area in which his principal seeks to be protected. If he neglects to procure the insurance or if the policy is void or m aterially deficient or does not provide the coverage he undertook to supply, because of his failure to exercise the requisite skill or diligence, he becom es liable to his principal for the loss sustained thereby.

201 A.2d 561, 567 (N.J. 1964) (citations om itted).

33 It is this latter determination that guides the Court’s analysis in the instant case.71

The Kloesels’ testimony established the following: (1) the Kloesels did not read the

Burlington policy for the 1997–1998 policy year, nor did they fully read the previous

Burlington policies; (2) in the event that they read any reference to the communicable

disease exclusion in any of the binders or quotes provided by INT, they did not

comprehend or investigate its import; and (3) their decision to not take affirmative steps to

familiarize themselves with the exclusion was predicated upon their reliance on Nitsche’s

knowledge and the assumption that he had procured a policy in conformance with said

knowledge. In light of this testimony, we find that the Kloesels overcame the presumption

that they knew the contents of their policy, and it became the jury’s task to determine

whether the Kloesels’ lack of knowledge resulted from their own negligence.72

Diana’s testimony reveals that the only references to the communicable disease

exclusion that she may have read were within the Burlington quotes and binders. In those

documents, the exclusion was entirely formulated by the inclusion of the term

“communicable disease.” We believe the jury could have concluded that it was reasonable

for the Kloesels to not possess this term within their lexicon. Furthermore, the jury could

have rationally determined that it was reasonable for the Kloesels to not readily decipher

71 Though this broader inquiry better protects an insured by affording him the opportunity to deflect contributory negligence claim s while adm itting to having read his policy, it also better protects the agent. The inquiry forces us to look at the totality of the com m unication between the insured and the agent. Assum ing a m ore narrow focus in the present case, for instance, would com plicate m atters for INT. If we were to assess the Kloesels’ negligence based strictly on their failure to read their Burlington policy for the 1997–1998 policy year, we would perhaps be easily inclined to find in the Kloesels’ favor. This is because it was Diana’s uncontested testim ony that INT did not provide the Kloesels with a copy of the 1997–1998 policy; rather, INT provided a letter directing the Kloesels to refer to their previous policy for current coverage inform ation. W ith the previous policies outside the scope of a narrow review, we would be left to determ ine whether one should have a duty to read a docum ent he has not been provided.

72 See supra note 64.

34 the term’s import by simply reading the term and assessing its place within either the

quotes or binders. The term was not defined and there was no accompanying information

indicating the term’s relevance to the food served in the Kloesels’ restaurant. The jury may

have also determined that the term’s placement alongside other exclusions such as “Work

to Subways / Tunnels / Bridges / Sewers and Dams”—exclusions that were entirely

irrelevant to the Kloesels’ restaurant operation—further justified the Kloesels’ failure to

ascertain the term’s import.

The jury was also provided with evidence for assessing whether Nitsche procured

a policy in conformance with the Kloesels’ instructions. The Kloesels testified that they

requested a policy that provided “100 percent coverage” and left their restaurant “fully

covered.” We find, however, that these descriptive terms were vague, thus failing to

implicate any specific type of coverage that the Kloesels’ desired to be procured.73 We do

not believe, however, that the same can be said with regard to the Kloesels’ unconditioned

request for a policy that “covered if a customer got sick or if there was anything wrong with

the food.” The jury could have rationally determined that the Burlington policy’s

communicable disease exclusion specifically contravened this instruction; considering that

it was the restaurant’s food that facilitated the transmission of Hepatitis A to the Kloesels’

customers, it was reasonable for the jury to find that there was something “wrong with the

food” at the time of the transmission and that the customers “got sick” as a result.

73 See State Farm County Mut. Ins. Co. v. Moran, 809 S.W .2d 613, 620-21 (Tex. App.–Corpus Christi 1991, writ denied); Oldaker v. Travelers Ins. Co., 497 S.W .2d 402, 404 (Tex. Civ. App.–El Paso 1973, no writ) (stating that “it would be a presum ptive undertaking by the Court to attem pt to define coverage intended by parties to an insurance agreem ent by the expression, ‘full coverage’”); see also Manion v. Sec. Nat’l Ins. Co., No. 13-01-248-CV, 2002 Tex. App. LEXIS 6009, at *6 (Tex. App.–Corpus Christi Aug. 15, 2002, no pet.) (not designated for publication) (citing Moran, 809 S.W .2d at 620-21).

35 Though Nitsche contended that there is an important distinction between “somebody

getting sick and somebody getting a disease,” we fail to see it in this context. This Court

understands Nitsche’s contention that an agent’s ability to effectively serve his clients is

partly dependent upon his clients telling him what coverages are important to them.

Nevertheless, we also understand that those clients can only vocalize their desired

coverage with a limited degree of specificity. As a consequence, we embrace the following

viewpoint:

[A]n insurance [agent], in dealing with his clients, ordinarily invites them to rely upon his expertise in procuring insurance that best suits their requirements. It is not necessary for the client in order to establish a breach of duty to prove that he laid out for the [agent] the elements of a contract of insurance. It is sufficient to show that he authorized procurement of the insurance needed to cover the risks indicated and that the [agent] agreed to do so but failed or neglected to perform his duty. The terms of the contract to procure the insurance, the scope of the risk and subject matter to be covered, may be found by implication.74

It is clear that the jury in the instant case did not fault the Kloesels for failing to specifically

inform Nitsche that they had concerns about, or wanted coverage for, claims relating to

communicable disease, Hepatitis A, or the transmission of disease from employees to

customers. We do not find this decision unreasonable given that (1) the Kloesels were not

required to lay out every element of their desired policy and (2) their desire for

communicable disease coverage can be found by implication through their expressed

desire to have a policy that “covered if a customer got sick or if there was anything wrong

with the food.”

Finally, the jury was provided with evidence for assessing whether Nitsche failed to

74 Rider, 201 A.2d at 567.

36 procure a policy that a reasonably prudent agent would have procured. The jury heard

Nitsche acknowledge that communicable disease is a matter that is “a very important part

of [the Kloesels’] operation.” Phillips, the Kloesels’ expert witness, described

communicable disease as being the Kloesels’ “number one exposure” and “biggest

hazard.” Phillips and INT’s expert witness, Beck, both provided testimony strongly

indicating that the Burlington policy should not have been procured for the Kloesels. While

Phillips stated that he would “absolutely not” procure a policy for a restaurateur that

excluded communicable disease claims, Beck seemingly contended that such a policy

would be appropriate if it was the only policy available—essentially testifying that the

Burlington policy was only better than no policy at all. The jury heard, however, that other

policies were available at the time INT initially provided the Kloesels with the Burlington

policy. Phillips testified that INT had several options available for procuring a policy that

covered communicable disease claims; Beck, on the other hand, professed his belief that

he would have been able to procure a policy covering communicable disease claims had

the Kloesels been his clients. Based on all the testimony, we believe the jury had a

sufficient basis for finding that Nitsche failed to procure a policy that a reasonably prudent

agent would have procured.

5. Conclusion

Because the jury found that the Kloesels were not negligent in failing to take

affirmative steps to familiarize themselves with their policy’s communicable disease

exclusion, the Kloesels were not barred from recovering their damages from INT.75 We

75 See Colonial, 544 S.W .2d at 119.

37 believe the aforementioned trial evidence supports this finding. After applying the

appropriate standards of review, we hold (1) that the evidence is legally and factually

sufficient to find that INT’s procurement of the Burlington policy was the proximate cause

of the Kloesels’ damages,76 and (2) that the evidence is factually sufficient to support the

jury’s negative finding of contributory negligence. Issues five, eight, and ten are therefore

overruled.77

IV. JURY CHARGE ISSUE

In its seventh issue, INT asserts “[t]he trial court erred in refusing [its] requested jury

instruction regarding the legal duty imposed on an insured to read their insurance policy.”

The jury charge in this case included the following question: “Do you find that Harvey

and/or Diane [sic] Kloesel were negligent which was a proximate cause of their damages,

if any?” The jury answered this question in the negative. Prior to the charge’s submission

to the jury, however, INT wrote a proposed jury charge instruction and submitted it to the

trial court. Citing the supreme court’s decision in Thigpen v. Locke,78 INT provided the

following instruction: “A party to a contract is obligated to protect itself by reading what it

signs and its failure to do so is not excused by mere confidence and integrity of the other

party.” INT objected to the court’s failure to include the instruction in the charge, and the

court overruled this objection. On appeal, INT contends that “[b]y refusing the requested

76 W e note that because INT has failed to effectively negate all of three of the Kloesels’ negligence theories, the jury’s negligence finding against INT is upheld.

77 This Court has arrived at its holdings with the understanding that “[a]n insurance agent, like other professionals, is not a guarantor of the client’s happiness and should not be subject to liability any tim e the client is dissatisfied. . . . But as the agent should not bear responsibility for every bad result, neither should the consum er.” See May, 844 S.W .2d at 675 (Doggett, J., dissenting).

78 363 S.W .2d 247, 251 (Tex. 1962).

38 instruction, the jury was in the dark of what the law required of the [Kloesels] and how that

applied to the questions being answered by the jury.”

A. Applicable Law

We review a trial court’s decision to submit or refuse a particular instruction under

an abuse of discretion standard of review.79 A trial court must submit such instructions and

definitions as shall be proper to enable the jury to render a verdict.80 The court should not

burden the jury with surplus instructions.81 Consequently, every correct statement of the

law does not belong in the jury charge.82 A party is entitled to a jury question, instruction,

or definition if the pleadings and evidence raise an issue.83 An instruction is proper if it (1)

assists the jury, (2) accurately states the law, and (3) finds support in the pleadings and

evidence.84

Failure to submit an instruction shall not be deemed a ground for reversal of the

judgment unless a substantially correct instruction has been requested in writing and

tendered by the party complaining of the judgment.85 Substantially correct wording means

“one that in substance and in the main is correct, and that is not affirmatively incorrect.”86

79 In re V.L.K., 24 S.W .3d 338, 341 (Tex. 2000).

80 Certain Underwriters at Lloyd’s v. KKM Inc., 215 S.W .3d 486, 496 (Tex. App.–Corpus Christi 2006, pet. denied).

81 Accord v. Gen. Motors Corp., 669 S.W .2d 111, 116 (Tex. 1984).

82 Maddox v. Denka Chem. Corp., 930 S.W .2d 668, 671 (Tex. App.–Houston [1st Dist.] 1996, no writ).

83 Certain Underwriters at Lloyd’s, 215 S.W .3d at 496.

84 Id.

85 Id.

86 Placencio v. Allied Indus. Int’l, Inc., 724 S.W .2d 20, 21 (Tex. 1987).

39 Examples of improper instructions include those that misstate the law, mislead the jury, or

those that comment on the weight of the evidence.87 Impermissible comments would

include those where the court assumes the truth of a material controverted fact, or

exaggerates, minimizes, or withdraws some pertinent evidence from the jury’s

consideration.88

B. Discussion

INT’s submission of a proposed instruction to the trial court, as well as its objection

to the jury charge when it failed to contain the proposed instruction, preserved any error

for appeal.89 After reviewing the proposed instruction in light of the arguments raised at

trial, however, we find that the trial court could have properly refused the instruction

because it risked misleading the jury. In proclaiming that “[a] party to a contract is

obligated to protect itself by reading what it signs,” the proposed instruction suggests that

the obligation is conclusive—that there are no means by which an insured may negate or

rebut the imposition of such an obligation.

We begin by first recognizing that even the duty to read discussed in Thigpen—a

case involving two parties involved in a contractual dispute—is qualified by the fact that a

“finding of fraud, either actual or constructive,” may excuse a party to a contract from the

consequences of failing to read.90 Though Thigpen does not discuss additional

87 Torres v. Caterpillar, Inc., 928 S.W .2d 233, 241 (Tex. App.–San Antonio 1996, writ denied).

88 Id.

89 See State Dep’t of Highways & Pub. Transp. v. Payne, 838 S.W .2d 235, 241 (Tex. 1992) (“There should be but one test for determ ining if a party has preserved error in the jury charge, and that is whether the party m ade the trial court aware of the com plaint, tim ely and plainly, and obtained a ruling.”).

90 Thigpen, 363 S.W .2d at 253.

40 qualifications, our previous treatment of the preceding negligence issues establishes that

an insured’s duty to read is more qualified when assessed within the confines of a

negligence suit against an agent, than it is within the confines of a contractual dispute. A

fact-finder, for instance, may find that an insured was not negligent in failing to read as a

result of the insured's reasonable reliance on the agent's knowledge and the assumption

that the agent had correctly drawn the policy in conformance with said knowledge.91

Furthermore, many states have held, and this Court agrees, that the extent to which an

insured has a duty to read his policy is influenced by whether the policy is a new one or a

renewal.92

The Kloesels’ trial arguments permitted the jury to entertain any one of the

aforementioned qualifying factors in the course of assessing the Kloesels’ duty to read.

As a result, the trial court could have found that INT’s instruction created an unreasonable

risk of harm by potentially confusing the jury into believing that the Kloesels had an

unqualified duty to read. Accordingly, the trial court did not abuse its discretion in refusing

INT’s instruction. Because we need not reach whether the instruction was improper on any

other ground, we now overrule INT’s seventh issue.

V. KLOESELS’ CROSS -APPEAL

In two issues, INT’s cross-appeal asserts that the trial court erred by not properly

awarding prejudgment interest and by failing to award attorney’s fees.

A. Prejudgment Interest

91 See Colonial, 544 S.W .2d at 119.

92 See, e.g., W oodlawn Fraternal Lodge No. 525, F. & A.M. v. Commercial Union Ins. Co., 510 So. 2d 162, 164 (Ala. 1987); Cooper v. Berkshire Life Ins. Co., 810 A.2d 1045, 1067 (Md. App. Ct. 2002); Thomas v. Nw. Nat’l Ins. Co., 973 P.2d 804, 808 (Mont. 1998).

41 The Kloesels submitted a proposed judgment to the trial court which ordered that

(1) the Kloesels recover $929,180.82 together with prejudgment interest of $269,711.50,

and (2) “all sums of money awarded in this judgment shall bear post judgment interest in

the amount of 5% per year, compounded annually.” In lieu of this language appearing in

the trial court’s amended judgment, the judgment instead ordered that (1) the Kloesels

recover $929,180.82 “together with prejudgment interest thereon at the annual rate of 6.0%

from April 15, 2005 through the date the judgment is signed,” and (2) “all sums of money

awarded in this judgment shall bear post judgment interest in the amount of 6.0% per year,

compounded annually.” The Kloesels contend the trial court erred by denying the

$269,711.50 requested because doing so has prevented them from being made whole.

As a prerequisite to presenting a complaint for appellate review, the record must

show that a complaint was made to the trial court by a timely request, objection, or motion

that stated the grounds for the ruling that the complaining party sought from the trial court

with sufficient specificity to make the trial court aware of the complaint.93 Further, the trial

court must have ruled on the request, objection, or motion, either expressly or implicitly,

or refused to rule on the request, objection, or motion, and the complaining party must

have objected to the refusal.94 Though a complaint regarding prejudgment interest must

typically be preserved in the trial court through either a motion to amend or correct the

judgment or by a motion for new trial,95 we find that the Kloesels have preserved their

93 T EX . R. A PP . P. 33.1(a)(1)(A).

94 Id. at 33.1(a)(2).

95 See Miller v. Kendall, 804 S.W .2d 933, 945 (Tex. App.–Houston [1st Dist.] 1990, no writ) (m otion to am end or correct judgm ent or m otion for new trial is proper vehicle for preserving error in judgm ent); see also Allright, Inc. v. Pearson, 735 S.W .2d 240, 240 (Tex. 1987).

42 complaint as a result of the trial court implicitly overruling their proposed prejudgment

interest award.96

The Kloesels assert that trial court error is evidenced by the Texas Supreme Court’s

holding in Phillips Petroleum Co. v. Stahl Petroleum Co.97 We do not believe, however,

that Phillips assists the Kloesels’ argument. The cited to portion of the Phillips holding

establishes that interest is allowed on unpaid interest in Texas.98 The Kloesels were

awarded $929,180.82 to compensate them for the principal amounts owed under the

Simpson and Laird judgments ($323,441.52 and $242,625.34, respectively), as well as for

the postjudgment interest that had accrued under both judgments as of April 15, 2005.99

The trial court then provided for “prejudgment interest thereon at the annual rate of 6.0%

from April 15, 2005 through the date the judgment is signed”; in accordance with Phillips,

the prejudgment interest was applied to the principals and their accrued postjudgment

interests. We find that the amended judgment assessed the proper amount of interest

owed to the Kloesels; the additional $269,711.50 sought by the Kloesels would have

constituted an impermissible recovery, if obtained. We thus overrule the Kloesels’ first

issue.

B. Attorney’s Fees

96 See Benjamin Franklin Sav. Ass’n v. Kotrla, 751 S.W .2d 218, 224 (Tex. App.–Houston [14th Dist.] 1988, no writ) (holding that appellee’s cross-appeal issue— contending that the trial court erred in failing to award prejudgm ent interest— was preserved by appellee’s m otion for entry of judgm ent and proposed judgm ent which contained award of prejudgm ent interest).

97 569 S.W .2d 480, 488-89 (Tex. 1978).

98 Id.

99 The Simpson and Laird judgm ents each bore interest at a com pounded annual rate of 10%.

43 The trial court’s initial judgment awarded the Kloesels $150,000 in attorney’s fees

through the trial of this case, $50,000 if there is an appeal to this Court, and $25,000 if

there is an appeal to the Texas Supreme Court by INT. This award was omitted, however,

from the trial court’s amended judgment. The Kloesels’ second issue requests this Court

to reinstate the award. While the Kloesels’ brief contends that the award should be

reinstated because the award was not barred by the Kloesels’ assignment of claims to the

Simpsons, it does not contend that the trial court erred in striking the jury’s findings of

misrepresentation and unconscionable conduct on the part of INT. Because the Kloesels

have failed to argue that the trial court erred in striking these findings, we overrule the

Kloesels’ remaining issue.

VI. CONCLUSION

We affirm the judgment of the trial court.

LINDA REYNA YAÑEZ, Justice

Opinion delivered and filed this the 3rd day of April, 2008.