Holmes Family Investment Company, L.P. v. Gilliam Insurance Agency, Inc. and Mark Gilliam ( 2021 )

In The
Court of Appeals
Ninth District of Texas at Beaumont
__________________
NO. 09-20-00019-CV
__________________
HOLMES FAMILY INVESTMENT COMPANY, L.P., Appellant
V.
GILLIAM INSURANCE AGENCY, INC. AND
MARK GILLIAM, Appellees
__________________________________________________________________
On Appeal from the 410th District Court
Montgomery County, Texas
Trial Cause No. 17-09-11698-CV
__________________________________________________________________
MEMORANDUM OPINION
Holmes Family Investment Company, L.P. (“HFIC”) appeals the trial court’s
orders granting Gilliam Insurance Agency, Inc.’s and Mark Gilliam’s (“Gilliam
Defendants”) No-Evidence and Traditional Motion for Summary Judgment and
denying HFIC’s Cross-Motion for Summary Judgment. We affirm.
1
Background
According to HFIC’s Sixth Amended Petition, the live petition at the time the
trial court granted the Gilliam Defendants’ motion for summary judgment and
denied HFIC’s motion for summary judgment, HFIC is the owner of a 584-acre tract
of land in Montgomery County, Texas (“the property”). Over the past decades,
easements were granted at various times to certain pipeline companies (“Pipeline
Companies”) to install and maintain pipelines across the property. In 2003, Liberty
Materials, Inc. entered into a Sand and Gravel Lease Agreement with HFIC to
conduct sand mining operations on the property.
In 2014, Brock’s Logging, Inc. entered into a Timber Sales Agreement with
HFIC to conduct timber operations on the property. The Timber Sales Agreement
provided that Brock’s would
. . . indemnify and hold [HFIC] harmless from any damage as a result
of their operations in cutting and removing timber sold under this
agreement; as well as any other injury of any cause or nature . . .
resulting or arising from the acts or omissions of [Brock’s], whether
negligent or intentional . . . [Brock’s] agrees to indemnify and defend
[HFIC] . . . from and against any and all injuries, claims, demands, or
actions made by any person against [HFIC], including any purported
acts and/or omissions of negligence of [HFIC] . . . which in any way
arise out of or are connected to the operations set forth in this
agreement.
Brock’s engaged Gilliam Insurance Agency to obtain insurance for the logging work
it contracted to perform on HFIC’s property, and Brock’s was insured by Maxum
Indemnity Company (“Maxum”) through Policy Nos. BDG 0073610-01 and BDG
2
0073610-02. On June 30, 2014, Gilliam Insurance Agency provided Brock’s with a
Certificate of Liability Insurance wherein HFIC was purportedly listed as an
additional insured on Maxum insurance policy insuring Brock’s, and HFIC received
the certificate on or about that same date. However, HFIC was not an additional
insured under the Maxum insurance policy insuring Brock’s.
In September of 2017, the Pipeline Companies filed lawsuits against HFIC
for, among other things, damage to pipelines arising out of Liberty’s sand mining
activities and Brock’s timber activities on the Property. HFIC served notice and
formal demands to the Gilliam Defendants for defense and indemnity, which were
denied.
HFIC sued the Gilliam Defendants as third-party defendants 1 for fraud,
violations of Chapter 541 of the Texas Insurance Code and the Texas Deceptive
Trade and Practices Act, negligence, and negligent misrepresentation. HFIC
affirmatively pleaded the discovery rule, asserted that the “tort/misrepresentation”
based causes of action did not accrue until the injuries by the Gilliam Defendants
became discoverable, and that the Gilliam Defendants’ wrongful acts and HFIC’s
resulting injuries were inherently not discoverable at the time they occurred.
1
HFIC also sued Brock’s as a third-party defendant. The trial court signed an
order granting the Joint Motion for Dismissal with Prejudice filed by HFIC and
Brock’s, and the order dismissed with prejudice all claims by and between HFIC and
Brock’s. Brock’s is not a party to this appeal.
3
The Gilliam Defendants’ Motion for Summary Judgment
In the Gilliam Defendants’ First Amended No-Evidence and Traditional
Motion for Summary Judgment, the Gilliam Defendants argued that although a
Certificate of Liability Insurance was issued to Brock’s by Gilliam Insurance
Agency in 2014 in which HFIC was purportedly listed as an additional insured,
HFIC was not an additional insured under the policy. According to the Gilliam
Defendants, they are entitled to summary judgment because (1) HFIC’s claims
against the Gilliam Defendants are barred by the statute of limitations; (2) the
Gilliam Defendants did not make any representation directly to HFIC; (3) Texas
Law under Via Net v. TIG Ins. Co., 211 S.W.3d 310, 314 (Tex. 2006), bars HFIC’s
purported reliance on the Certificate of Liability Insurance; and (4) HFIC’s damages
were not proximately caused by the Gilliam Defendants but are the result of erosion
of land subsidence, which is explicitly excluded under the insurance policies issued
by Maxum to Brock’s. The Gilliam Defendants also argued that HFIC produced no
evidence as to each of its claims against the Gilliam Defendants. The Gilliam
Defendants attached an affidavit of Mark Gilliam, the Certificate of Liability
Insurance, Maxum Insurance Policy No. BDG 0073610-01, Maxum Insurance
Renewal Policy No. BDG 0073610-02, discovery responses, the Timber Agreement,
deposition excerpts, and the letter from Maxum denying coverage.
4
The Gilliam Defendants argued that HFIC’s claims are all based on its
allegation that the Gilliam Defendants improperly listed HFIC as an additional
insured on the Certificate of Liability Insurance, and therefore, HFIC’s alleged
injury occurred in or around June 2014, when the Certificate of Liability was issued
and received by Holmes.2 The Gilliam Defendants asserted that HFIC filed its
negligence, negligent misrepresentation, Insurance Code and DTPA violation claims
on May 10, 2018, more than two years after the respective statute of limitations
expired.
HFIC’s Cross-Motion for Summary Judgment and Response to
the Gilliam Defendants’ Motion for Summary Judgment
In HFIC’s Cross-Motion for Summary Judgment and Response to the Gilliam
Defendants’ No-Evidence and Traditional Motion for Summary Judgment, HFIC
argued that even though the Gilliam Defendants mistakenly represented in the
Certificate of Insurance that HFIC was an additional insured, the Gilliam
Defendants, unbeknownst to HFIC, never contacted Maxum or anyone else to have
HFIC added as an additional insured. HFIC argued that its injury—that HFIC was
never added as an additional insured to the insurance policy despite being assured
by the Gilliam Defendants otherwise—was of the nature that was undiscoverable
through the exercise of reasonable diligence because (1) HFIC had no duty to read
2
The Gilliam Defendants also asserted that they did not provide the Certificate
of Liability Insurance directly to HFIC, but instead provided it to Brock’s.
5
the policy; (2) even if HFIC had done so, due to the language contained in the policy
and Certificate of Insurance, HFIC could reasonably conclude it was covered under
the policy; and (3) there was no need for HFIC to scrutinize the policy until such
time that an event occurred that would otherwise trigger coverage. According to
HFIC, the triggering event was the Pipeline Companies’ claims against HFIC and
Maxum’s subsequent denial of coverage on January 2, 2018. HFIC relied on Brown
& Brown of Texas, Inc. v. Omni Metals, Inc., 317 S.W.3d 361, 393 (Tex. App.—
Houston [1st Dist.] 2010, pet. denied), in arguing that because it is not a party to an
insurance contract, like in Via Net, but rather a third party that was intended to be an
additional insured, the discovery rule applies to HFIC’s claims. HFIC further argued
it presented summary judgment evidence to defeat the Gilliam Defendants’ motion
and show that HFIC is entitled to summary judgment as a matter of law on each of
its claims.
The Gilliam Defendants’ Summary Judgment Reply and
Summary Judgment Response
Among other things, the Gilliam Defendants argued in their Reply to HFIC’s
Response to the Gilliam’s Motion for Summary Judgment and Response to HFIC’s
Motion for Summary Judgment that HFIC incorrectly argued that the discovery rule
applies to HFIC’s claims and that Via Net only applies to contract claims. According
to the Gilliam Defendants, Via Net states that whether the discovery rule applies
depends on the type of injury at issue, not the claim. The Gilliam Defendants assert
6
that Sabine Towing & Transportation Co., Inc. v. Holliday Insurance Agency, Inc.,
54 S.W.3d 57, 62-63 (Tex. App.—Texarkana 2001, pet. denied), and Via Net
foreclose HFIC’s claims because those cases hold that a mistake in a certificate of
coverage is not inherently undiscoverable and that claims based on a coverage
certificate misstatement accrue when the plaintiff receives the certificate. The
Gilliam Defendants also argued that HFIC’s reliance on Brown is misplaced because
that case did not involve the discovery rule or the statute of limitations, and Brown
concerned the duty of an insured’s customer, not a prospective insured, to read an
insurance policy despite issuance of an incorrect certificate of coverage.
HFIC’s Reply to the Gilliam Defendants’ Summary Judgment
Response and Sur-Response to Summary Judgment Reply
In part, HFIC responded that the Gilliam Defendants misrepresent Via Net’s
holding, misrepresented Brown’s holding, and that HFIC’s factual situation is akin
to Brown, not Via Net. HFIC also argued that Sabine Towing and Transportation is
not controlling or determinative in this case, that even if HFIC had read the policy,
its injury was still undiscoverable because of the numerous references to the rights
of “additional insureds[,]” and that Brown controls because HFIC does not claim it
is entitled to coverage as an additional insure but rather a customer of the insured
(Brock’s) and received false information about coverage status.
7
Appellate Issues
In issue one, HFIC argues that its claims are not time barred because the
discovery rule deferred the accrual of HFIC’s claims until HFIC was denied
coverage. In issue two, HFIC argues its misrepresentation-based claims can be
supported by an indirect misrepresentation by Gilliam. In issue three, HFIC argues
its reliance on the Gilliam Defendants’ admitted misrepresentation was justifiable.
In issue four, HFIC argues that the Gilliam Defendants failed to establish that
HFIC’s damages were not proximately caused by the Gilliam Defendants’ admitted
misrepresentation. In issue five, HFIC argues its summary judgment evidence was
sufficient to survive the Gilliam Defendants’ no-evidence motion for summary
judgment.
Standard of Review
We review rulings on motions for summary judgment using a de novo
standard. See Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex.
2003). The trial court’s order granting summary judgment does not specify the basis
for the ruling; thus, we must affirm the trial court’s judgment if any of the theories
advanced by the movant are meritorious. W. Invs., Inc. v. Urena, 162 S.W.3d 547,
550 (Tex. 2005).
We must consider the ruling on the no-evidence portion of the Defendants’
hybrid motions for summary judgment before considering the ruling on the
8
traditional portion of the Defendants’ motion. See Ford Motor Co. v. Ridgway, 135
S.W.3d 598, 600 (Tex. 2004). In reviewing a no-evidence motion, we view the
evidence in the light most favorable to the non-movant. Id. at 601. The Texas
Supreme Court has explained that the trial court must grant a no-evidence motion if
(1) there is a complete absence of evidence of a vital fact, (2) the court is barred by
rules of law or of evidence from giving weight to the only evidence offered to prove
a vital fact, (3) the evidence offered to prove a vital fact is no more than a scintilla,
or (4) the evidence conclusively established the opposite of the vital fact. King
Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003). Because a trial court’s
decision granting a no-evidence motion for summary judgment is essentially a
pretrial directed verdict, the same legal sufficiency standard is used in reviewing
rulings made by trial courts on motion for directed verdicts. Id. at 750-51. “A
genuine issue of material fact exists if more than a scintilla of evidence establishing
the existence of the challenged element is produced.” Ridgway, 135 S.W.3d at 600.
“When the evidence offered to prove a vital fact is so weak as to do no more than
create a mere surmise or suspicion of its existence, the evidence is no more than a
scintilla and, in legal effect, is no evidence.” Kindred v. Con/Chem, Inc., 650 S.W.2d
61, 63 (Tex. 1983).
“If the non-movant fails to meet its burden under the no-evidence motion,
there is no need to address the challenge to the traditional motion as it necessarily
9
fails.” First United Pentecostal Church of Beaumont v. Parker, 514 S.W.3d 214,
219 (Tex. 2017). A party moving for traditional summary judgment meets its burden
by proving that there is no genuine issue of material fact, and it is entitled to
judgment as a matter of law. Tex. R. Civ. P. 166a(c).
The party asserting an affirmative defense has the burden of pleading and
proving the defense as a matter of law such that there is no genuine issue of material
fact. Montgomery v. Kennedy, 669 S.W.2d 309, 310-11 (Tex. 1984); see also Tex.
R. Civ. P. 94. A defendant is entitled to summary judgment on the affirmative
defense of limitations if it conclusively establishes all necessary elements of that
affirmative defense. Velsicol Chem. Corp. v. Winograd, 956 S.W.2d 529, 530 (Tex.
1997); Thomas v. Omar Invs., Inc., 129 S.W.3d 290, 293 (Tex. App.—Dallas 2004,
no pet.). Summary judgment will be affirmed only if the record shows that the
defendant conclusively proved all elements of the affirmative defense as a matter of
law. Thomas, 129 S.W.3d at 293.
Analysis
First, we must decide whether the discovery rule applies to HFIC’s claims. In
its first issue, HFIC argues that its claims are not time barred because the discovery
rule deferred the accrual of HFIC’s claims until HFIC was denied coverage. HFIC
asserts that the injury it suffered because of the Gilliam Defendants’ misconduct was
10
that HFIC was never added as an additional insured to the policy despite being
assured by Gilliam that it was. According to HFIC,
[t]he nature of such injury is undiscoverable through the exercise of
reasonable diligence because (1) HFIC had no duty to read the Policy;
(2) even if HFIC had done so, due to the language contained in the
Policy and Certificate of Insurance, HFIC could reasonably conclude it
was covered under the Policy; and (3) there was no need for HFIC to
scrutinize the Policy until such time that an event occurred that would
otherwise trigger coverage.
HFIC asserts the triggering event here was the filing of the Pipeline
Companies’ claims against HFIC and Maxum’s subsequent denial of coverage,
which did not occur until January 2, 2018.
In response to the Gilliam Defendants’ argument that under Via Net the
discovery rule does not apply to HFIC’s claims, HFIC argues that Via Net does not
apply here. According to HFIC, Via Net is distinguishable because it was a breach
of contract case in which the claims were brought by a party to the insurance
contract. HFIC asserts that in Brown, the Court declined to extend the reasoning in
Via Net and concluded that the discovery rule applies to claims “based on false
representations of the contents of insurance policies.” According to HFIC, it is a
third party to the contract and the parties intended HFIC to be an additional insured
and the claims are “based on false representations of the contents of insurance
policies[,]” and therefore, Brown applies.
11
Generally, questions surrounding when a party’s cause of action accrues are
decided as a matter of law. See Moreno v. Sterling Drug, Inc., 787 SW.2d 348, 351
(Tex. 1990); Willis v. Maverick, 760 S.W.2d 642, 644 (Tex. 1988); Webb v. Crawley,
590 S.W.3d 570, 583 (Tex. App.—Beaumont 2019, no pet.) (citing Exxon Corp. v.
Emerald Oil & Gas Co., L.C., 348 S.W.3d 194, 202 (Tex. 2011)). “A cause of action
generally accrues, and the statute of limitations begins to run, when facts come into
existence that authorize a claimant to seek a judicial remedy.” Johnson & Higgins
of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 514 (Tex. 1998). If the
discovery rule applies to a claim, “[t]he discovery rule delays accrual until the
plaintiff ‘knew or in the exercise of reasonable diligence should have known of the
wrongful act and resulting injury.’” Schlumberger Tech. Corp. v. Pasko, 544 S.W.3d
830, 834 (Tex. 2018) (quoting S.V. v. R.V., 933 S.W.2d 1, 4 (Tex. 1996)). The
discovery rule is “‘a very limited exception to statutes of limitations,’” and is
available only “when the nature of the plaintiff’s injury is both inherently
undiscoverable and objectively verifiable.” Wagner & Brown, Ltd. v. Horwood, 58
S.W.3d 732, 734 (Tex. 2001) (quoting and citing Comput. Assocs. Int’l, Inc. v. Altai,
Inc., 918 S.W.2d 453, 455-56 (Tex. 1996)); see also Barker v. Eckman, 213 S.W.3d
306, 312 (Tex. 2006); Treuil v. Treuil, 311 S.W.3d 114, 119 (Tex. App.—Beaumont
2010, no pet.). When the defendant moves for summary judgment based on an
affirmative defense such as limitations, the defendant has the burden to prove
12
conclusively all the elements as a matter of law. See KPMG Peat Marwick v.
Harrison Cty. Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999); Winograd, 956
S.W.2d at 530. Whether an injury is inherently undiscoverable is a question of law.
See Via Net, 211 S.W.3d at 313-14.
The discovery rule is generally restricted “to exceptional cases to avoid
defeating the purposes behind the limitations statute.” Id. at 313. Because the
discovery rule is a plea in confession and avoidance, a party seeking to avail itself
of the discovery rule must plead the discovery rule as a matter in avoidance. Woods
v. William M. Mercer, Inc., 769 S.W.2d 515, 517-18 (Tex. 1988). “An injury is not
inherently undiscoverable when it is the type of injury that could be discovered
through the exercise of reasonable diligence.” BP Am. Prod. Co. v. Marshall, 342
S.W.3d 59, 66 (Tex. 2011). Under the discovery rule, even if the plaintiff does not
have actual knowledge of the harm, the statute of limitations begins to run when the
plaintiff objectively should have known, by using reasonable diligence, of the facts
giving rise to the cause of action. See United Healthcare Servs., Inc. v. First St. Hosp.
LP, 570 S.W.3d 323, 336 (Tex. App.—Houston [1st Dist.] 2018, pet. denied) (citing
Syrian Am. Oil Corp., S.A. v. Pecten Orient Co., 524 S.W.3d 350, 360 (Tex. App.—
Houston [1st Dist.] 2017, no pet.)). “‘Thus, the plaintiff’s lack of diligence can defeat
application of the discovery rule.’” Id. (quoting DeWolf v. Kohler, 452 S.W.3d 373,
391 (Tex. App.—Houston [14th Dist.] 2014, no pet.)). A wrong or injury is not
13
inherently undiscoverable if it “generally is capable of detection within the time
allotted for bringing such suits.” See Comput. Assocs. Int’l, Inc., 918 S.W.2d at 457.
In Sabine Towing & Transportation Company, the plaintiff, an employee of
SuperIn, Inc., one of Sabine’s contractor’s, filed a personal injury suit against
Sabine. 54 S.W.3d at 58. In contemplation of situations like this, Sabine had required
all its contractors to have a current certificate of insurance on file with its insurance
and risk management department. Id. In October 1990, SuperIn purchased a
comprehensive general liability policy from Holliday Insurance Agency. Id. The
policy also contained blanket waivers of additional insureds endorsements. Id.Because SuperIn routinely performed work for Sabine, a copy of its certificate of
insurance was forwarded to Sabine via Holliday on October 16, 1990. Id. Sabine
sought liability coverage under SuperIn’s insurance policy via the blanket waiver of
subrogation and additional insured endorsement provisions included on the
insurance certificate on file for SuperIn, which were named in favor of Sabine. Id.Ultimately, Holliday notified Sabine that it was not covered by SuperIn’s policy. Id.
at 59. Sabine sued Holliday for negligently representing that Sabine was an
additional insured under SuperIn’s policy. Id. Sabine settled with the plaintiff and
most of the settlement was paid by Sabine’s liability insurance carrier. Id. After a
nonjury trial, the trial court rendered a take-nothing judgment in favor of Holliday.
Id. Sabine appealed, arguing, in part, that the discovery rule should apply to defer
14
commencement of the limitations period. Id. In affirming the trial court’s judgment,
the Texarkana Court of Appeals explained that it could not say that Holliday’s denial
of coverage was an inherently undiscoverable injury:
All Sabine needed to do to discover the alleged injury was to conduct a
routine check regarding the insurance certificate with Holliday and
inquire whether insurance coverage was in effect. Unfortunately,
Sabine failed to seek any additional assurances from Holliday other
than the bare insurance certificate indicating that Sabine was an
additional insured pursuant to its insurance procurement requirement.
Had Sabine exercised due diligence, it would have insisted on a formal
approval from Sequia before allowing SuperIn to commence work.
Finally, the fact that Sabine allowed nine months to elapse before
receiving a response from Holliday suggests that Sabine failed to
exercise the reasonable diligence Texas courts have traditionally
required to trigger exemption from statutes of limitations under the
discovery rule. Sabine’s failure to discover its lack of coverage does not
save it from being barred by limitations. Accordingly, we find that the
two-year statute of limitations did expire on October 16, 1992, two
years after Sabine first received SuperIn’s certificate of insurance,
almost thirteen months before Sabine first filed suit against Holliday.
Id. at 62-63 (footnote omitted).
In Via Net, Safety Lights informed its vendors early in 1996 that it would no
longer buy from them unless it was added as an additional insured under their
commercial general liability policies. 211 S.W.3d at 312. Via Net agreed to do so,
and its insurance broker issued a certificate of insurance listing Safety Lights as
“holder” and stating that “holder is added as additional insured re: General
Liability.” Id. The certificate also stated:
15
This certificate is issued as a matter of information only and confers no
rights upon the certificate holder. This certificate does not amend,
extend or alter the coverage afforded by the policies below.
Id. However, Via Net’s policy with Lumbermens Mutual Casualty Company did not
provide for additional-insured coverage, and no endorsement adding it as an
additional insured was ever issued. Id. In 1997, a Via Net employee was injured
when Safety Lights’ employees dropped a steel plate on his hand. Id. The Via Net
employee sued, and Safety Lights requested a defense from Lumbermens. Id.
Lumbermens denied the claim in a letter that Safety Lights received on December 9,
1997. Id. On December 7, 2001, Safety Lights filed a breach of contract suit against
Via Net for failing to add it as an additional insured. Id. The parties agreed the four-
year statute of limitations applied. Id. Via Net moved for summary judgment on the
ground that more than four years had elapsed since the alleged breach of contract,
and the trial court granted the motion. Id. The court of appeals reversed, finding the
discovery rule could defer accrual until Safety Lights received Lumbermens’ denial
on December 9th. Id.
On appeal, Via Net argued that the discovery rule did not apply and defer
accrual because a failure to add a third party as an additional insured is not inherently
undiscoverable. Id. at 313. The Texas Supreme Court explained that the legal
question of whether an injury is inherently undiscoverable “is decided on a
categorical rather than case-specific basis; the focus is on whether a type of injury
16
rather than a particular injury was discoverable.” Id. at 313-14 (emphasis in
original). In reversing the court of appeals’ judgment and holding that the discovery
rule is inapplicable to defer accrual of the claim, the Court explained
Safety Lights argues that it acted diligently by obtaining a certificate of
insurance listing it as an additional insured. But the certificate warned
that it conferred no rights and was limited by the underlying policy. . . .
Given the numerous limitations and exclusions that often encumber
such policies, those who take such certificates at face value do so at
their own risk.
Id. at 314.
In Brown, a 1995 fire damaged Omni’s steel stored in a facility operated by
Port Metal. 317 S.W.3d at 368. Transcontinental, Port Metal’s insurer, denied
coverage for damages to Omni’s steel on the ground that Port Metal’s “all risk”
bailee policy was subject to an exclusion for goods stored at Port Metal for more
than sixty days for which Port Metal received a storage fee. Id. at 370. Omni paid
storage fees to Port Metal. Id. Omni filed suit against Port Metal and other
defendants it alleged were responsible for the fire and added Port Metal’s insurance
agent and insurer as defendants. Id. Omni’s suit against the insurance agent and
insurer were severed from claims against settling defendants and Omni sued the
insurance agent and insurer for negligent misrepresentation and violations of the
DTPA under former article 21.21, section 16 of the Texas Insurance Code. Id. On
appeal, the First District of Houston Appeals Court declined to extend the reasoning
17
in Via Net I and Via Net II3 regarding the due diligence obligations of a person
claiming to be entitled to insurance proceeds as a party to an insurance contract to
persons bringing claims under the Texas Insurance Code alleging negligent
misrepresentation and violations under the DTPA based on false representations of
the contents of insurance policies by insurance agents and companies upon which
the plaintiff relied in its business dealings and that caused the plaintiff to suffer
economic damages. Id. at 393. In holding that Omni had no legal duty to obtain and
read Port Metal’s bailee insurance policy or to verify its terms in order to maintain
its suit, the First Court of Appeals explained:
In Via Net I, the relevant holding was that a party claiming to be entitled
to insurance coverage as an additional insured under an insurance
policy, and therefore claiming to be in contractual privity with the
insurance company, cannot rely on a certificate of insurance to extend
more coverage than is actually conveyed by the policy itself, any more
than the named insured can. Rather, a party claiming to be an additional
insured is held to the same burden as the named insured of reading the
policy to ascertain its right to coverage. See Via Net II, 211 S.W.3d at
314. Here, under a far different set of circumstances, Omni was not an
additional insured, but a customer of an insured, and the question is
whether Omni could justifiably rely upon the affirmative
misrepresentations of the insurance agent for a third party, Port Metal,
that Port Metal was insured and, therefore, that Omni’s steel was
protected by Port Metal’s insurance, which were made both orally and
in certificates of insurance solicited and relied upon by Omni for use in
its own business dealings.
3
In Brown, the First Court of Appeals refers to Via Net v. TIG Ins. Co., 211
S.W.3d 310, 313 (Tex. 2006) as Via Net II, and to an earlier-filed federal companion
case as Via Net I.
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Id. at 393 (emphasis in original).
Here, the factual circumstances are more like those in Via Net than in Brown.
In the present case, HFIC was a prospective additional insured who relied on a
certificate of insurance in believing it was insured (like in Via Net), and HFIC was
not an insured’s customer like in Brown. We disagree with HFIC’s contention that
Via Net is inapplicable because Safety Lights’ claims were for breach of an insurance
contract. Here, like in Via Net, HFIC relied on the certificate of insurance that
expressly stated that
[t]his certificate is issued as a matter of information only and confers
no rights upon the certificate holder. This certificate does not
affirmatively or negatively amend, extend or alter the coverage
afforded by the policies below. This certificate of insurance does not
constitute a contract between the issuing insurer(s), authorized
representative or producer, and the certificate holder.
Important: If the certificate holder is an additional insured, the
policy(ies) must be endorsed. If subrogation is waived, subject to the
terms and conditions of the policy, certain policies may require an
endorsement. A statement on this certificate does not confer rights to
the certificate holder in lieu of such endorsement(s).
Applying the rationale in Via Net and Sabine Towing & Transportation, the
discovery rule does not apply to the type of injury here, where there is a lack of
insurance coverage despite a certificate of insurance stating otherwise because the
injury was not inherently undiscoverable because HFIC could have inquired with
the insurer to determine whether HFIC was in fact an additional insured. Via Net,
211 S.W.3d at 313-15; Sabine Towing & Transp., 54 S.W.3d at 62-63. Because the
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discovery rule does not apply, HFIC’s claims accrued on the date HFIC alleged it
received the certificate of insurance—June 30, 2014. See id. HFIC brought its claims
for negligence, negligent misrepresentation, and violations of the Insurance Code
and DTPA on May 10, 2018, more than two years after its injury accrued and,
therefore, are barred by limitations. See Tex. Bus. & Com. Code Ann. § 17.565
(DTPA claims must be brought within two years of the date of the false, misleading,
or deceptive act or practice); Tex. Civ. Prac. & Rem. Code Ann. § 16.003(a)
(negligence and negligent misrepresentation claims must be brought not later than
two years after the cause of action accrues); Tex. Ins. Code Ann. § 541.162 (statute
of limitations for violations of Insurance Code is two years). We overrule issue one.4
Based on our determination that HFIC’s causes of action against the Gilliam
Defendants are barred by limitations, we need not address HFIC’s remaining issues.
See Tex. R. App. P. 47.1. We affirm the trial court’s judgments.
AFFIRMED.
_________________________
LEANNE JOHNSON
Justice
Submitted on July 22, 2021
Opinion Delivered November 4, 2021
Before Golemon, C.J., Horton and Johnson, JJ.
4
To the extent HFIC argued at oral argument that HFIC should be held to a
different standard as to due diligence because it is a family limited partnership and
not a sophisticated company, HFIC cites no caselaw or statute, nor are we aware of
any, to support that argument.
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