Beacon Nat. Ins. Co. v. Reynolds

• Decision Date: 16 October 1990
• Docket Number: No. 02-88-253-CV,02-88-253-CV
• Citation: 799 S.W.2d 390
• Parties: BEACON NATIONAL INSURANCE COMPANY, Appellant, v. Ken Dell REYNOLDS, Appellee.
• Court: Texas Court of Appeals

Page 390

799 S.W.2d 390

BEACON NATIONAL INSURANCE COMPANY, Appellant, v. Ken Dell REYNOLDS, Appellee.

No. 02-88-253-CV.

Court of Appeals of Texas,

Fort Worth.

Oct. 16, 1990.

Joe E. Shaddock, Wichita Falls, for appellant.

Schenk & Sanders, Dean A. Sanders, Wichita Falls, for appellee.

Before WEAVER, C.J., and JOE SPURLOCK, II and LATTIMORE, JJ.

OPINION

WEAVER, Chief Justice.

Ken Dell Reynolds, appellee, sued Beacon National Insurance Company, appellant, for breach of an insurer's duty of good faith and fair dealing. The case arose out of the appellee's efforts to collect for the loss of two Suzuki four-wheelers under a homeowner's insurance policy alleged to have been written and issued by appellant. Appellant's motion for an instructed verdict and its motion for judgment n.o.v., based on the assertion that the appellee sued the wrong defendant, were overruled. Based on the jury's answers to special issues, the trial court granted judgment in appellee's favor for $1,800.00 actual damages and $50,000.00 exemplary damages. Appellant has perfected this appeal and raises ten points of error. We affirm.

Under its first three points of error, appellant contends that the insurance policy in question was not issued by the appellant but was issued by First Preferred Insurance Company, who was not made a defendant in the lawsuit, and that the appellee simply sued the wrong defendant and proved no cause of action against the appellant.

This case involves a situation not uncommon in the insurance industry whereby various insurance companies form an insurance group through which each of the participating companies issues insurance policies, and where, as here, the defendant insurance company against whom the suit was filed claims it did not issue the policy, that the policy was issued by another member of the group, that the insured sued the wrong party and that the defendant company who was sued was not liable. The question before us is whether the defendant insurance company which was sued can avoid liability under the policy sued upon by raising this issue by a motion for an instructed verdict after the plaintiff has rested, as the appellant attempted to do in this case, or whether it must raise the issue by a verified plea under TEX.R.CIV.P. 93.

Appellant's assertion that appellee had sued the wrong defendant was not called to the trial court's attention until the appellant filed its motion for a directed verdict after appellee had rested, following two and one-half days of trial. The trial court severely criticized the appellant's attorney for raising this issue for the first time at this stage of the trial, after extensive discovery procedures had been conducted and at least two pretrial conferences had been held during the twenty months the case had been pending. In response to an inquiry by the trial court, concerning whether the appellant had raised this point by a verified plea under Rule 93, the attorney for appellant stated that it was raised by paragraph 2 of appellant's First Amended Original Answer filed on February 17, 1988. When the trial court indicated that this language did not allege a defect of parties the appellant's attorney stated that if "we didn't issue the policy, that is a special denial of the policy."

The trial court on its own motion struck appellant's First Amended Original Answer, for not being timely filed, and stated that "[t]here is now no verified pleading under Rule 93 alleging a defect of parties." The trial court then permitted the appellee to reopen the evidence, proceeded with the trial, and heard testimony outside the presence of the jury. The appellant called no witnesses. At the close of the testimony, the appellee elected not to take a nonsuit and to proceed to judgment.

Judgment was entered by the trial court in favor of appellee against Beacon National Insurance Company, First Preferred Insurance Company, Petrolia Insurance Company and/or any of them and/or Beacon Insurance Group. This appeal was perfected only by the appellant, Beacon National Insurance Company. Portions of the recitals and findings contained in the judgment are here set forth:

Beacon National Insurance Company, Defendant, appeared by a corporate officer of Beacon Insurance Group which is composed of Beacon National Insurance Company, First Preferred Insurance Company and Petrolia Insurance Company, and by attorney, and announced ready for trial....

... The Court specifically finds that the Defendant, Beacon National Insurance Company, never raised any defect of parties pursuant to Rule 93, T.R.C.P. The Court further finds that the Beacon Insurance Group includes Beacon National Insurance Company, First Preferred Insurance Company and Petrolia Insurance Company, and that although different entities may be named in some policies of insurance, the three entities composing the Beacon Insurance Group are for purposes of management, management decisions, and all decisions having to do with the representation of any of them in this cause, controlled by the same corporate officers, and that the same decisions were made in this case as would have been made if any other of the companies composing the Beacon Insurance Group, or Beacon Insurance Group itself had been named as Defendant herein.

These findings are well supported by the evidence. B.D. Loving, the Executive Vice President of Beacon Insurance Group and of each of the companies composing the group, testified that the group is composed of three companies, Beacon National Insurance Company, First Preferred Insurance Company and Petrolia Insurance Company, the latter two of which are owned by, and the figures for which are included in the balance sheet of, Beacon National Insurance Company; all of these companies have the same officers and are manned by the same personnel; they all have the same address, and correspondence pertaining to policies issued by any of the companies is sent under the letterhead of Beacon Insurance Group; claims for all of the companies are processed by the same personnel; citations for lawsuits filed against any of the companies are served on the same person; and that the distinction between these companies was merely one on paper. Loving further testified that the fact Beacon National Insurance Company and not First Preferred Insurance Company was sued in this case did not in any way prejudice the company in the development, investigation, and litigation of the claim; that everybody at the group that needed to know was cognizant of the facts involved in the lawsuit and was not misled in any way because of the technical party that it was filed against, nor were they placed at a disadvantage in obtaining relevant evidence to defend the suit; that, practically speaking, in terms of how they ran their day-to-day business at the group, it does not matter whether Beacon National Insurance Company, Beacon Insurance Group, or First Preferred Insurance Company had been included in the lawsuit as the nominal defendant; and that it would not affect how the claim was handled no matter what company was named in the petition. Appellant's trial counsel implied he represented both Beacon National Insurance Company and First Preferred Insurance Company, and stated that he knew this was a suit against the wrong party when he got the citation, which was apparently before he filed the original answer for appellant on July 14, 1986.

The insurance policy involved here was issued on a form which was headed "TEXAS STANDARD HOMEOWNERS POLICY." On the first page of the policy the name of the group, The Beacon Insurance Group, appears in bold letters. To the left of that name appears the names of the three companies composing the group, being Beacon National Insurance Company, First Preferred Insurance Company and Petrolia Insurance Company, and immediately to the left of each of those names appears a square or a "box." Immediately beneath the names of the three companies there appears, in small print, the words "COVERAGE IS PROVIDED BY THE COMPANY INDICATED BY" followed by a square or a "box" with an "X" in the center. Two copies of the policy are contained in the record before us, both of which were introduced by the appellee. Plaintiff's exhibit 6 is a copy of the policy furnished to appellee by his insurance agency following the loss of the property. Plaintiff's exhibit 8 is the copy of the policy initially furnished to appellee, with the original having been sent to the mortgagee. Neither of these copies reflect an "X" entirely within the box adjacent to any of the names of the companies in the group. Each of the copies shows two "X's" (not in exactly the same location on the two copies) which are either partially in or are touching the box adjacent to the name of First Preferred Insurance Company. There is no testimony to the effect, nor was there any contention by appellee at the trial, that the location of these "X's" on these copies of the policy confused or misled the appellee as to the correct name of the issuer.

Appellee argues, in response to the first three points of error, that there is sufficient evidence to support a judgment that appellant, Beacon National Insurance Company, issued the policy in question. He did not urge before the trial court that appellant executed the policy, but only argued that it had failed to deny its execution of the policy by a verified plea. Appellee also contends on this appeal that appellant failed to put on evidence that the policy was issued by First Preferred Insurance Company. However, it was the appellee's burden to prove the policy which he sued on. The record does not reflect any findings of the trial court, implied or otherwise, that appellant issued the insurance policy. Neither is there a specific finding by the trial court that the policy was issued by First Preferred Insurance Company. However, in light of the remarks made by the trial court, that a defect of parties has to be...