Cantu v. Jackson Nat. Life Ins. Co.

• Citation: 579 F.3d 434
• Decision Date: 12 August 2009
• Docket Number: No. 08-40351.,08-40351.
• Parties: Alejandra Gomez CANTU, Plaintiff-Appellant, v. JACKSON NATIONAL LIFE INSURANCE COMPANY, a Michigan Corporation Doing Business in California; Romeo Cuellar, an Individual; Jesse Gutierrez, Jr., an Individual, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

579 F.3d 434

Alejandra Gomez CANTU, Plaintiff-Appellant, v. JACKSON NATIONAL LIFE INSURANCE COMPANY, a Michigan Corporation Doing Business in California; Romeo Cuellar, an Individual; Jesse Gutierrez, Jr., an Individual, Defendants-Appellees.

No. 08-40351.

United States Court of Appeals, Fifth Circuit.

August 12, 2009.

Ian Herzog (argued) and Evan Dashell Marshall, Santa Monica, CA, for Plaintiff-Appellant.

Richard A. Illmer (argued) and Chad A. Johnson, Brown McCarroll, Dallas, TX, for Jackson Nat. Life Ins. Co.

Kevin Frank Risley (argued) and George Howard Arnold, Thompson, Coe, Cousins & Irons, L.L.P., Houston, TX, for Cuellar.

Kerri K. Fields, Law Office of Kerri K. Fields, Bastrop, TX, for Gutierrez.

Appeal from the United States District Court for the Southern District of Texas.

Before SMITH, GARZA and CLEMENT, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

In a suit brought by Alejandra Cantu seeking proceeds from an insurance policy, the district court entered summary judgment for the defendants. We affirm.

I.

Jose Martinez, a citizen and resident of Mexico, sought to purchase life insurance. He was approached by Jesse Gutierrez, who worked for Romeo Cuellar, who in turn was an agent for Jackson National Life Insurance Company ("JNL"). Martinez eventually submitted applications for two $1 million policies; both named Cantu, his wife, as the beneficiary.

JNL will not issue policies for more than $500,000 to Mexican nationals. It therefore approved Martinez's applications but reduced the amount of the requested benefit. It sent the approved policies to Cuellar (who lives in Texas), along with a cover letter explaining that the policies would not go into effect until Martinez had submitted the first month's premiums and a signed addendum indicating that he accepted the reduction in benefit.

Gutierrez visited Martinez to deliver the approved policies on April 1, 2004. Martinez signed the documents and gave Gutierrez a check to pay the premiums. The check was drawn on a Merrill Lynch cash management account at Bank One in Texas. Because the account had insufficient funds when JNL presented the check for payment, the bank rejected it. On April 15, a week after JNL learned that the check had bounced, it sent letters to Cuellar and Martinez informing them of the nonpayment. Martinez died in an automobile accident the next day, April 16.

Cantu received JNL's letter regarding the bounced check on April 19 and immediately sent a replacement check by overnight delivery. She filed a claim for death benefits a few weeks later. JNL rejected the claim, explaining that the policy had not become effective during Martinez's lifetime.

Cantu sued JNL, Gutierrez, and Cuellar (collectively, "defendants") in California state court. She primarily alleged that JNL had breached the policies by failing to pay proceeds; she also included various bad faith, misrepresentation, and fraud claims. The case was removed to federal court and transferred to the Southern District of Texas. Cantu then sought to amend her complaint to add claims under Mexican law and Texas state law, including alleged violations of the Texas Insurance Code and the Texas Deceptive Trade Practices Act ("DTPA"). The district court granted the request as to the Texas law claims but denied it as to the Mexican law claims, finding that Mexican law was inapplicable. The court then granted summary judgment for the defendants.

II.

In denying Cantu's motion to assert claims under Mexican law, the court concluded that the Texas choice-of-law clauses in both policies precluded claims under foreign law. Cantu appeals, arguing that, because the policies have no reasonable relationship to Texas, the choice-of-law clauses are unenforceable, and Mexican insurance law should govern the dispute.

A.

The defendants contend that we do not have jurisdiction to consider the issue, because Cantu's notice of appeal mentions only the order granting summary judgment and does not separately specify the order rejecting the application of Mexican law. That is a technical violation of FED. R.APP. P. 3(c)(1)(B), which requires a notice of appeal to "designate the judgment, order, or part thereof being appealed[.]"

"[A] mistake in designating a judgment appealed from should not bar an appeal as long as the intent to appeal a specific judgment can be fairly inferred and the appellee is not prejudiced or misled by the mistake." Turnbull v. United States, 929 F.2d 173, 177 (5th Cir.1991). We have inferred an "intent to appeal" where the issue is addressed in the appellant's opening brief. See, e.g., United States v. Knowles, 29 F.3d 947, 950 (5th Cir.1994).

Cantu's opening brief directly indicates her intent to appeal the order rejecting the application of Mexican law. JNL claims that it "would be prejudiced by being forced to address this issue for the very first time at the response stage of appeal," but even had Cantu correctly filed her notice, JNL would be in the same position—appellees always address the issue for the first time at the response stage. Because there is no evidence of prejudice, we have jurisdiction to consider the issue.

B.

"This Court reviews questions of law, including conflicts of law questions, de novo[.]" Abraham v. State Farm Mut. Auto. Ins. Co., 465 F.3d 609, 611 (5th Cir.2006). As a federal court sitting in diversity, we apply the choice-of-law rules of the forum state. Caton v. Leach Corp., 896 F.2d 939, 942 (5th Cir.1990).

The Texas Uniform Commercial Code contains two provisions that plausibly govern this question. The first instructs that "when a transaction bears a reasonable relation to this state ... the parties may agree that the law ... of this state ... shall govern their rights and duties." TEX BUS. & COM.CODE § 1.301(a). When applying that provision, Texas courts look to the RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 187 ("the restatement") to determine whether a "reasonable relation" exists.¹

The second provision states that "[i]f a transaction ... is a `qualified transaction,' as defined in Section 271.001, then ... Chapter 271 governs" a choice of law clause. TEX. BUS. & COM.CODE § 1.301(c). Choice of law under chapter 271 is similar to § 1.301 in that both provide that choice-of-law clauses will be enforced where "the transaction bears a reasonable relation to [the chosen] jurisdiction." TEX. BUS. & COM.CODE § 271.005(a)(2).² Unlike § 1.301, however, chapter 271 is not interpreted with reference to the restatement but instead directly defines the five situations in which a "reasonable relation to a particular jurisdiction" exists:

(1) a party to the transaction is a resident of that jurisdiction;

(2) a party to the transaction has the party's place of business or, if that party has more than one place of business, the party's chief executive office or an office from which the party conducts a substantial part of the negotiations relating to the transaction, in that jurisdiction;

(3) all or part of the subject matter of the transaction is located in that jurisdiction;

(4) a party to the transaction is required to perform in that jurisdiction a substantial part of its obligations relating to the transaction, such as delivering payments; or

(5) a substantial part of the negotiations relating to the transaction occurred in that jurisdiction and an agreement relating to the transaction was signed in that jurisdiction by a party to the transaction.

TEX. BUS. & COM.CODE § 271.004(b).

The first question, then, is whether the two insurance policies constitute a "qualified transaction." If yes, we decide whether the Texas choice-of-law clauses are enforceable by checking whether one of the five "reasonable relationship" factors supplied by § 271.004(b) is met. If no, our analysis is governed by the restatement.

A "qualified transaction" is one "under which a party ... is obligated to pay or is entitled to receive[] consideration with an aggregate value of at least $1 million[.]" TEX. BUS. & COM.CODE § 271.001(1). Further, § 271.002 states that "two or more substantially similar or related transactions are considered a single transaction if the transactions: (1) are entered into contemporaneously; and (2) have at least one common party."

Cantu argues that the two policies are not "qualified transactions," because each is worth only $500,000. But under a plain reading of the statute, they should be aggregated as a single $1 million transaction—the two policies are substantially similar, they were entered into simultaneously, and the parties to them are identical. As further evidence, Martinez attempted to pay for both policies with a single check.

The next question is whether one of the five "reasonable relationship" factors of § 271.004(b) is met. JNL argues that factor 1 ("a party to the transaction is a resident of that jurisdiction") applies, because Cuellar, one of the agents who negotiated the insurance policies, lives in Texas. Cantu responds that "Cuellar is not a party to the contracts, but only an agent of [JNL] which is a party."

Cantu may be correct that Cuellar, as an agent, is not a party to the final insurance contract between JNL and Cantu, but the language of § 271.004(b)(1) requires only that a "party to the transaction" be a resident of the jurisdiction. Under the broad definition of transaction—combining substantially similar transactions that were entered into contemporaneously and had at least one common party—Cuellar qualifies as a party. He negotiated with Martinez, cosigned Martinez's insurance applications, and received remuneration from JNL for closing the sale. Accordingly, because one of the § 271.004(b) factors is satisfied, the Texas choice-of-law clause is enforceable, and the district court correctly denied Cantu's motion to assert Mexican law claims.

III.

The primary issue is whether JNL owes proceeds under the insurance contract. The district court concluded that, because of the bounced...