Kelly Spurlock, as Legal Representative for the Estate of J.O. Spurlock v. Beacon Lloyds Insurance Company and Grantham-Adkins Insurance Agency , 494 S.W.3d 148 ( 2015 )

Opinion filed January 29, 2015
In The
Eleventh Court of Appeals
__________
No. 11-12-00357-CV
__________
KELLY SPURLOCK, AS LEGAL REPRESENTATIVE FOR THE
ESTATE OF J.O. SPURLOCK, Appellant
V.
BEACON LLOYDS INSURANCE COMPANY AND
GRANTHAM-ADKINS INSURANCE AGENCY, Appellees
On Appeal from the 29th District Court
Palo Pinto County, Texas
Trial Court Cause No. C43924
OPINION
This appeal involves the interpretation of a homeowner’s insurance policy.
Specifically, we must construe the policy to determine if coverage exists for a
personal property loss alleged to have occurred after the death of the named
insured. Appellant, Kelly Spurlock (Spurlock), as legal representative for the
Estate of J.O. Spurlock, brought suit against Beacon Lloyds Insurance Company
(Beacon) to recover proceeds under a homeowner’s insurance policy for the loss of
personal property that was allegedly stolen from a residence. Spurlock also named
Grantham-Adkins Insurance Agency (Grantham-Adkins) as a defendant. Spurlock
asserted that, if the homeowner’s insurance policy that was issued by Beacon did
not provide coverage for the loss of personal property, Grantham-Adkins was
negligent in failing to procure coverage for the loss. Beacon and Grantham-Adkins
filed motions for summary judgment on Spurlock’s claims. The trial court granted
the motions in separate orders. Spurlock appeals the trial court’s orders. We
affirm.
Background Facts
J.O. Spurlock owned and lived in a house in Mineral Wells, Texas, that he
insured with Beacon. The policy that Beacon issued to J.O. Spurlock was a Texas
Homeowners Policy Form HO-A No. 42 TLO 7009742. J.O. Spurlock was the
only named insured under the policy. The policy was effective from May 31,
2008, to May 31, 2009. The “RESIDENCE PREMISES/DWELLING” listed in
the declarations page of the policy was identified by the legal description of J.O.
Spurlock’s house. The street address of the house was 704 Cedar in Mineral
Wells. The policy provided dwelling coverage and personal property coverage.
J.O. Spurlock died in January 2009. Spurlock was appointed as the
representative of J.O. Spurlock’s estate. In April 2009, Spurlock discovered that
items of personal property had been removed from J.O. Spurlock’s house at 704
Cedar in Mineral Wells. Spurlock contended that the missing personal property
items had been stolen and that the policy issued by Beacon provided coverage for
the stolen personal property. Accordingly, Spurlock filed a claim with Beacon in
which he sought to recover for the loss that resulted from the theft. Beacon
2
concluded that the policy did not provide coverage for the stolen property.
Therefore, Beacon denied Spurlock’s claim.
Spurlock filed suit against Beacon and Grantham-Adkins, the insurance
agent that procured the Beacon policy for J.O. Spurlock. Spurlock alleged claims
against Beacon for breach of contract, breach of the duty of good faith and fair
dealing, common-law fraud, fraud by nondisclosure, violations of the Unfair
Settlement Practices Act, violations of the Deceptive Trade Practices Act, and
violations of the Prompt Payment of Claims Act. Spurlock alleged claims against
Grantham-Adkins for common-law fraud, fraud by nondisclosure, violations of the
Unfair Settlement Practices Act, violations of the Deceptive Trade Practices Act,
violations of the Prompt Payment of Claims Act, negligent procurement, and
negligent misrepresentation. Spurlock sought to recover actual damages, a
statutory penalty, additional damages under the Deceptive Trade Practices Act,
exemplary damages, and attorney’s fees.
Beacon filed a combined traditional and no-evidence motion for summary
judgment. Beacon moved for summary judgment on all of Spurlock’s claims
against it. Spurlock filed a response to the motion. The trial court entered an order
granting Beacon summary judgment on Spurlock’s breach of contract claim.
Grantham-Adkins filed a traditional motion for summary judgment on all of
Spurlock’s claims against it. Spurlock filed a response to the motion. On the same
day, Spurlock filed an amended petition in which he alleged only claims for breach
of contract and violations of the Prompt Payment of Claims Act against Beacon
and a claim for negligent procurement of insurance coverage against Grantham-
Adkins. Thus, in his amended petition, Spurlock abandoned the other claims that
he had alleged in his earlier petition. See Wheeler v. Methodist Hosp., 95 S.W.3d
628, 634 n.2 (Tex. App.—Houston [1st Dist.] 2002, no pet.).
3
The trial court entered an order granting summary judgment to Beacon on
Spurlock’s remaining claim against it for its alleged violations of the Prompt
Payment of Claims Act. The trial court entered a separate order granting summary
judgment to Grantham-Adkins on Spurlock’s claim against it for negligent
procurement. Collectively, the trial court’s summary judgment orders disposed of
all of Spurlock’s claims against Beacon and Grantham-Adkins.
Issues on Appeal
Spurlock presents two issues for review. In his first issue, he contends that
the Beacon policy provided coverage for his claim for loss of personal property
and that, therefore, the trial court erred by granting summary judgment to Beacon.
In his second issue, he contends that, if the policy did not provide coverage for his
claim, Grantham-Adkins was negligent in failing to procure insurance to cover
such a claim and that, therefore, the trial court erred by granting summary
judgment to Grantham-Adkins.
Standard of Review
Beacon moved for traditional summary judgment on Spurlock’s claims for
breach of contract and for violations of the Prompt Payment of Claims Act.
Grantham-Adkins moved for traditional summary judgment on Spurlock’s claim
for negligent procurement of insurance coverage.
We review a summary judgment de novo. Travelers Ins. Co. v. Joachim,
315 S.W.3d 860, 862 (Tex. 2010). The movant for traditional summary judgment
must show that there is no genuine issue of material fact and that it is entitled to
judgment as a matter of law. TEX. R. CIV. P. 166a(c); Mann Frankfort Stein &
Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). In reviewing a
summary judgment, we must consider all of the evidence in the light most
favorable to the nonmovant, indulging every reasonable inference in favor of the
nonmovant and resolving any doubts against the movant. Goodyear Tire &
4
Rubber Co. v. Mayes, 236 S.W.3d 754, 756 (Tex. 2007). We must consider
whether reasonable and fair-minded jurors could differ in their conclusions in light
of all of the summary judgment evidence presented, and we may not ignore
undisputed summary judgment evidence that cannot be disregarded. Id. at 755,
757.
Interpretation of Insurance Policy
We construe insurance policies according to the same rules of construction
that apply to contracts. Don’s Bldg. Supply, Inc. v. OneBeacon Ins. Co., 267
S.W.3d 20, 23 (Tex. 2008); Nat’l Union Fire Ins. Co. v. Crocker, 246 S.W.3d 603,
606 (Tex. 2008). In applying these rules, our primary concern is to ascertain the
parties’ intent as expressed in the policy’s language. Tanner v. Nationwide Mut.
Fire Ins. Co., 289 S.W.3d 828, 831 (Tex. 2009); Kelley-Coppedge, Inc. Highlands
Ins. Co., 980 S.W.2d 462, 464 (Tex. 1998). We give policy terms their ordinary
and commonly understood meaning unless the policy itself shows the parties
intended a different, technical meaning. Tanner, 289 S.W.3d at 831; Don’s Bldg.
Supply, 267 S.W.3d at 23. No one phrase, sentence, or section of a policy should
be isolated from its setting and considered apart from other provisions. Forbau v.
Aetna Life Ins. Co., 876 S.W.2d 132, 134 (Tex. 1994). In addition, we must give
the policy’s words their plain meaning, without inserting additional provisions into
the contract. Crocker, 246 S.W.3d at 606.
If an insurance policy uses unambiguous language, we must enforce it as
written. Don’s Bldg. Supply, 267 S.W.3d at 23. If policy language is worded so
that it can be given a definite or certain legal meaning or interpretation, then it is
unambiguous and is construed as a matter of law. Am. Mfrs. Mut. Ins. Co. v.
Schaefer, 124 S.W.3d 154, 157 (Tex. 2003); Coker v. Coker, 650 S.W.2d 391, 393
(Tex. 1983). If, however, the policy is susceptible to more than one reasonable
5
interpretation, then it is ambiguous, and we will resolve the ambiguity in favor of
coverage. Don’s Bldg. Supply, 267 S.W.3d at 23.
The Homeowner’s Policy
The only named insured under the policy was J.O. Spurlock. The policy
provided dwelling coverage (Coverage A) and personal property coverage
(Coverage B). The dwelling coverage provided that Beacon covered “the dwelling
on the residence premises shown on the declarations page including structures
attached to the dwelling.” The personal property coverage provided that Beacon
covered “personal property owned, worn or used by an insured while on the
residence premises.” The coverage for a loss of personal property occurring on
the residence premises had a limit of liability of $52,400. Under the policy,
Beacon also covered “personal property owned, worn or used by an insured
anywhere in the world.” The coverage for a loss of personal property occurring off
the residence premises had a limit of liability of $5,240.
The underlined terms in the policy were defined in the policy. The policy
defined “residence premises” as “the residence premises shown on the
declarations page.” The “residence premises” included “the one or two family
dwelling, including other structures, and grounds, where an insured resides or
intends to reside within 60 days after the effective date of this policy.” The
residence premises/dwelling shown on the declarations page was identified as
Lot 9-10, Block 2, Westwood Hills, which was the legal description of J.O.
Spurlock’s house and property at 704 Cedar in Mineral Wells. As defined in the
policy, the term “insured” meant J.O. Spurlock and “residents of [his] household
who [were his] relatives; or other persons under the age of 21 and in the care of
any person named above.”
The policy provided that “[Beacon] insure[d] against physical loss to the
property described in Coverage A (Dwelling) and Coverage B (Personal Property)
6
caused by a peril listed below, unless the loss is excluded in Section I Exclusions.”
One of the listed perils was “[t]heft, including attempted theft and loss of property
from a known place when it is likely that the property has been stolen.”
The policy contained various conditions to coverage for the dwelling and
personal property. One of the conditions provided as follows:
9. Death. If the named insured dies, we insure:
a. the named insured’s spouse, if a resident of the same
household at the time of death.
b. the legal representative of the deceased. However, if this
legal representative was not an insured at the time of
death of the named insured, this policy will apply to such
legal representative only with respect to the premises of
the original named insured.
c. any person who is an insured at the time of such death,
while a resident of said premises.
The term “premises,” which was used in Sections 9.b. and 9.c., was not a defined
term in the policy.
Analysis of Coverage Issue
As stated above, the personal property coverage provided that Beacon
covered “personal property owned, worn or used by an insured while on the
residence premises.” Section 9.b. of the conditions provided that, upon the death
of the named insured, Beacon would insure the legal representative of the
deceased. However, Section 9.b. also provided that, if the legal representative was
not an insured under the policy at the time of the named insured’s death, the policy
would apply to the legal representative “only with respect to the premises of the
original named insured.” Unlike the residency requirements set forth in
Sections 9.a. and 9.c. for the named insured’s spouse and other persons who were
7
insureds at the time of the named insured’s death, Section 9.b. did not contain a
requirement that the legal representative reside at the premises to obtain coverage
under the policy.
Spurlock was not an insured under the policy when J.O. Spurlock died.
Therefore, under Section 9.b., the policy applied to Spurlock “only with respect to
the premises of the original named insured.” The word “premises” is not defined
in the policy. Under Spurlock’s interpretation of the provision, he contends that,
following J.O. Spurlock’s death, the policy provided coverage for losses of
personal property that occurred on the subject premises at 704 Cedar in Mineral
Wells but that the policy did not provide coverage for losses of personal property
that occurred off the premises. For the reasons stated below, we conclude that,
following J.O. Spurlock’s death, the policy did not provide coverage for any loss
of personal property. Therefore, we disagree with Spurlock’s contention that the
policy provided coverage for losses of personal property that occurred on the
subject premises.
Because “premises” is not defined in the policy, we must give the term its
ordinary and commonly understood meaning. Tanner, 289 S.W.3d at 831; Don’s
Bldg. Supply, 267 S.W.3d at 23. The definition of “premises,” in relevant part in
the Merriam Webster’s Collegiate Dictionary, is “a tract of land with the buildings
thereon” or “a building or part of a building usu[ally] with its appurtenances (as
grounds).” MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY 980 (11th ed. 2004).
Similarly, “premises” is defined in relevant part by Black’s Law Dictionary as “[a]
house or building, along with its grounds.” BLACK’S LAW DICTIONARY 1371 (10th
ed. 2014). The San Antonio Court of Appeals has stated that, “[u]nder the
dictionary definitions of the word ‘premises’ a tract of land may be intended, as
when used in a conveyance, or a building located upon land, as is generally the
case in a fire insurance policy.” Associated Indem. Corp. v. Nat’l Sur. Corp., 287
8
S.W.2d 714, 716 (Tex. Civ. App.—San Antonio 1956, no writ.). The Beacon
policy defines the term “residence premises” in a similar manner. Under the
policy, the definition of “residence premises” includes “the one or two family
dwelling, including other structures, and grounds where an insured resides.”
The above dictionary definitions establish that the ordinary meaning of
“premises” is a house or building and the grounds upon which the house or
building is located. None of the above definitions includes “personal property” in
the definition of “premises.” Accordingly, we conclude that the plain meaning of
“premises” as used in the Beacon policy is unambiguous and does not include
personal property. Based on its plain meaning, the undefined term “premises” in
the Beacon policy includes J.O. Spurlock’s house and the grounds upon which it
was located. The Beacon policy insured the legal representative of the named
insured only with respect to the “premises” of the original named insured. Given
the ordinary meaning of “premises,” we conclude that, upon J.O. Spurlock’s death,
the policy provided dwelling coverage to Spurlock but did not provide personal
property coverage to him, whether the loss of personal property occurred on or off
the premises.
We find it significant that Section 9.b. of the Beacon policy did not
specifically refer to “personal property” of the original named insured. In
Hundley, the policy provided that, upon the death of the named insured, the
insurance company would insure “the legal representative of the deceased but only
with respect to the premises and property of the deceased covered under the policy
at the time of death.” Mun. Mut. Ins. Co. of W. Va. v. Hundley, 723 S.E.2d 398,
400 (W. Va. 2011). In Long, the policy provided that, in the event of the death of
the named insured, “the Named Insured shall mean . . . the legal representative
but only with respect to the premises and property of the deceased covered under
this policy at the time of such death.” Long v. Federated Mut. Ins. Co., 431 F.
9
Supp. 473, 474 (W.D. Tenn. 1976). In this case, the parties could have included
similar language in Section 9.b. had they intended for the policy to provide
coverage for a loss of personal property after the death of J.O. Spurlock. For
example, Section 9.b. could have provided that the policy would apply to the legal
representative “only with respect to the premises and personal property of the
original named insured.” The absence of such language supports our conclusion
that the policy did not provide coverage to Spurlock for a loss of personal property
occurring after J.O. Spurlock died.
The language in Section 9.c. of the Beacon policy also supports the
conclusion that the undefined term “premises” does not include personal property.
Section 9.c. provides that, if the named insured dies, Beacon will insure “any
person who is an insured at the time of such death, while a resident of said
premises.” If the parties intended the undefined term “premises” to include the
house and personal property, the use of the word “premises” in Section 9.c. would
require the insured to be a resident of J.O. Spurlock’s house and his personal
property, which would not be possible.
We conclude that the language in the Beacon policy unambiguously
provided that, upon J.O. Spurlock’s death, the policy did not provide personal
property coverage to Spurlock. Therefore, the trial court did not err in granting
Beacon a traditional summary judgment on Spurlock’s claim that Beacon breached
the insurance contract.
Spurlock also alleged a claim against Beacon for violations of the Prompt
Payment of Claims Act. See TEX. INS. CODE ANN. §§ 542.051–.061 (West 2009 &
Supp. 2014). To recover on such a claim, an insured must show that the insurer “is
liable for a claim under an insurance policy.” Id. § 542.060(a). There can be no
liability under the Act if the insured’s claim is not covered by the policy.
Progressive Cnty. Mut. Ins. Co. v. Boyd, 177 S.W.3d 919, 922 (Tex. 2005).
10
Because Spurlock’s claim for loss of personal property was not covered by the
Beacon policy, Spurlock cannot succeed on his claim that Beacon violated the Act.
See id. Accordingly, the trial court did not err in granting Beacon a traditional
summary judgment on Spurlock’s claim that Beacon violated the provisions of the
Prompt Payment of Claims Act.
The trial court properly granted summary judgment to Beacon on Spurlock’s
claims against it. Spurlock’s first issue is overruled.
Analysis of Negligent Procurement Issue
In his second issue, Spurlock contends that, if the Beacon policy did not
cover his claim for the theft of personal property that occurred after J.O.
Spurlock’s death, then Grantham-Adkins was negligent in failing to procure
insurance that would have covered the claim. The elements of a negligence claim
are (1) a legal duty owed by one person to another, (2) a breach of that duty, and
(3) damages proximately caused by the breach. D. Houston, Inc. v. Love, 92
S.W.3d 450, 454 (Tex. 2002). In Texas, an insurance agent, such as Grantham-
Adkins, owes the following common-law duties to a client for whom it undertakes
to procure insurance: (1) to use reasonable diligence in attempting to place the
requested insurance and (2) to inform the client promptly if unable to do so.
May v. United Servs. Ass’n of Am., 844 S.W.2d 666, 669 (Tex. 1992); Sonic Sys.
Int’l, Inc. v. Croix, 278 S.W.3d 377, 389 (Tex. App.—Houston [14th Dist.] 2008,
pet. denied). A client’s request to an insurance agent for a specific type of
insurance gives rise to these duties on the part of the agent. See Moore v. Whitney-
Vaky, Ins. Agency, 966 S.W.2d 690, 692 (Tex. App.—San Antonio 1998, no pet.).
J.O. Spurlock died on January 26, 2009. Spurlock alleged in his petition
that, prior to J.O. Spurlock’s death, J.O. Spurlock requested coverage for contents
from Grantham-Adkins in connection with his purchase of insurance. Spurlock
also alleged that he or his representative notified Grantham-Adkins of J.O.
11
Spurlock’s death, that he or his representative requested Grantham-Adkins to
continue to provide the coverage provided by the Beacon policy, and that
Grantham-Adkins never informed J.O. Spurlock or him that the Beacon policy did
not provide coverage for contents upon J.O. Spurlock’s death. Spurlock further
alleged that, on or about March 12, 2009, he made a claim under the Beacon policy
for the damage or loss due to theft or vandalism of personal property that occurred
at 704 Cedar in Mineral Wells.
We note that the allegations in Spurlock’s petition are not competent
summary judgment evidence. Laidlaw Waste Sys. (Dallas), Inc. v. City of Wilmer,
904 S.W.2d 656, 660 (Tex. 1995). Grantham-Adkins presented summary
judgment evidence in support of its motion for summary judgment. The evidence
included Spurlock’s deposition testimony. The evidence showed that Stephanie
Lou Cordell was J.O. Spurlock’s caretaker and lived with J.O. Spurlock before he
died. Cordell claimed that she was J.O. Spurlock’s common-law wife and that she
owned J.O. Spurlock’s house. In April 2009, Spurlock obtained an order from a
justice of the peace evicting Cordell from the premises. Spurlock testified that he
did not obtain access to J.O. Spurlock’s house until after Cordell was evicted.
After the eviction, Spurlock entered the house and discovered that contents had
been removed from the house. Spurlock believed that Cordell had stolen the
property.
Spurlock testified that he and his friend, John Backer, contacted Grantham-
Adkins after J.O. Spurlock died. Spurlock believed that he and Backer made two
telephone calls to Grantham-Adkins. However, Spurlock did not know when
either of the calls occurred. Spurlock said that, during the first call, he and Backer
informed Grantham-Adkins that J.O. Spurlock had died and that Spurlock was in
the process of being appointed as the administrator of J.O. Spurlock’s estate.
Spurlock also said that he and Backer requested Grantham-Adkins to renew the
12
Beacon policy and to change the mailing address on the policy. Spurlock testified
that, during the second call, he and Backer informed Grantham-Adkins about the
theft of personal property from J.O. Spurlock’s residence.
Backer stated in correspondence to Spurlock’s attorney that “Kelly Spurlock
informed the Grantham-Adkins Agency about J.O.’s death and the theft in April
2009.” When asked about this statement in his deposition, Spurlock acknowledged
that his first contact with Grantham-Adkins following J.O. Spurlock’s death may
have occurred in April 2009, after Spurlock entered J.O. Spurlock’s house and
discovered the theft.
Backer’s statement constituted summary judgment evidence that Spurlock
did not contact Grantham-Adkins until after the loss occurred. During his
deposition, Spurlock could only speculate as to when he contacted Grantham-
Adkins. Spurlock filed an affidavit in response to Grantham-Adkins’s motion for
summary judgment. In the affidavit, Spurlock did not provide any additional
information as to his contact with Grantham-Adkins. Spurlock did not present
summary judgment evidence that he requested any type of insurance coverage
from Grantham-Adkins before the loss occurred. Specifically, there was no
summary judgment evidence that Spurlock requested Grantham-Adkins to procure
insurance to cover a theft of contents from J.O. Spurlock’s home. Spurlock neither
alleged in his petition nor presented summary judgment evidence that J.O.
Spurlock requested coverage from Grantham-Adkins that would have covered a
theft of personal property from his residence after his death.
The summary judgment evidence did not raise a fact issue on whether
Spurlock requested insurance coverage from Grantham-Adkins before the theft. In
the absence of such a request, Grantham-Adkins did not owe a duty to Spurlock to
use reasonable diligence to obtain insurance. See Moore, 966 S.W.2d at 692.
Grantham-Adkins established that there was no genuine issue of material fact on
13
Spurlock’s negligent procurement claim and that it was entitled to judgment as a
matter of law. Therefore, we conclude that the trial court did not err by granting
summary judgment to Grantham-Adkins. Spurlock’s second issue is overruled.
This Court’s Ruling
We affirm the orders of the trial court in which it granted the summary
judgments.
JOHN M. BAILEY
JUSTICE
January 29, 2015
Panel consists of: Wright, C.J.,
Willson, J., and Bailey, J.
14