Casteel v. Crown Life Ins. Co.

• Decision Date: 28 August 1997
• Citation: 3 S.W.3d 582
• Parties: (Tex.App.-Austin 1997) William E. Casteel, Appellant v. Crown Life Insurance Company, Appellee NO. 03-96-00509-CV Filed:
• Court: Texas Court of Appeals

Page 582

3 S.W.3d 582 (Tex.App.-Austin 1997)

William E. Casteel, Appellant v. Crown Life Insurance Company, Appellee

NO. 03-96-00509-CV

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

Filed: August 28, 1997

Publication Ordered July 6, 1999.

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 147TH JUDICIAL DISTRICT NO. 91-11537, HONORABLE JOSEPH H. HART, JUDGE PRESIDING

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Before Chief Justice Carroll, Justices Aboussie and B. A. Smith

Marilyn Aboussie, Justice

This appeal arises out of a lawsuit involving multiple parties with claims and cross claims concerning the sale of life insurance policies to Randall and Sandra Ferguson. Specifically, the issues involved in this appeal pertain to a dispute between appellant William E. Casteel, an insurance agent or broker, who sued Crown Life Insurance Company ("Crown") for violations of Article 21.21 of the Texas Insurance Code, violations of the Deceptive Trade Practices Act ("DTPA"), and common law claims. The trial court granted partial summary judgment in favor of Crown on Casteel's common law claims. The cause proceeded to trial on Casteel's statutory claims, and the jury awarded damages in favor of Casteel against Crown and in favor of the Fergusons against both Crown and Casteel. Following post-trial motions for judgment by the parties, the trial court granted Crown's motion for judgment non obstante veredicto ("NOV") and rendered judgment that Casteel take nothing against Crown. Also following the trial, the Fergusons settled their claims against Crown and assigned their rights against Casteel to Crown. Crown, therefore, stands in the place of the Fergusons for the purposes of this appeal.

Casteel appeals: (1) the trial court's partial summary judgment on his common law claims, (2) the trial court's granting of judgment NOV, and (3) the trial court's refusal to apply a credit in favor of Casteel in the amount of the settlement payment by Crown to the Fergusons. Crown also appeals, challenging: (1) the sufficiency of the evidence to support the jury's award of damages for Casteel's past and future mental anguish; (2) the sufficiency of the evidence to support the jury's finding that Crown violated the DTPA by engaging in unfair or deceptive acts or practices in the business of insurance and did so knowingly; (3) the sufficiency of the evidence to support a finding that any action by Crown was a producing cause of Casteel's alleged injuries; (4) the sufficiency of the evidence to support the jury's award of damages to Casteel for past and future lost income; (5) the calculation of prejudgment interest; (6) the calculation of treble damages; (7) the award of attorney's fees to Casteel; (8) the exclusion of certain items of evidence; and (9) portions of Casteel's jury argument. We will reverse and render judgment on Casteel's 21.21 claim and on Casteel's award of damages for lost past and future income; reverse and remand judgment on the issues of (1) the application of settlement credits, (2) prejudgment interest, and (3) attorney's fees. We affirm the remaining portions of the judgment.

BACKGROUND

Between 1986 and 1989, Casteel, a licensed insurance agent or broker, sold life insurance policies for Crown. During these years, Casteel sold several of Crown's Modified Vanishing Premium Policies ("MVPs") to his clients, many of whom were friends from his church. The MVP policies provided for substantial premiums to be paid for a short period of time and then for the premiums to vanish, allowing the policy to carry itself by reinvesting the dividends from the policy. Crown provided Casteel with information and illustrations about the policies and how they worked. Casteel provided information regarding the proposed insureds to Crown, allowing Crown to produce illustrations for the proposed insureds. Then, Casteel presented the sales packages to the proposed insureds.

In 1990, Casteel began receiving complaints about the MVP policies. The clients had learned that, rather than operating as proposed, the premiums had not vanished, and in some cases, they would never vanish. Two of these unhappy clients were Randall and Sandra Ferguson. The Fergusons, as well as several other clients, sued Casteel and Crown for violations of the Deceptive Trade Practices Act ("DTPA"), Article 21.21 of the Texas Insurance Code ("Article 21.21"), and common law causes of action. See Tex. Bus. & Com. Code Ann. 17.46 (West 1987 & Supp. 1997); Tex. Ins. Code Ann. art. 21.21 (West 1991 & Supp. 1997). Crown initially agreed to provide representation to Casteel, and the attorney provided told Casteel that he had no cause of action against Crown for any misrepresentations made to him by Crown.

In 1994, Casteel discharged the attorney provided by Crown, hired new attorneys, and filed a cross-claim against Crown for violations of Article 21.21, DTPA violations, and common law causes of negligence, gross negligence, breach of the duty of good faith and fair dealing, breach of a fiduciary duty, fraud, and constructive fraud. Crown moved for summary judgment on Casteel's claims. The trial court granted summary judgment in favor of Crown on Casteel's common law causes of action but denied summary judgment on the Article 21.21 and DTPA claims. These two claims, as well as the Fergusons' claims, proceeded to trial.

On the Fergusons' claims against Crown and Casteel, the jury found that Crown had committed all of the acts alleged by the Fergusons and had done so knowingly, and that Casteel, like Crown, had engaged in false, misleading, unfair, or deceptive acts or practices which were producing causes of damages to the Fergusons but that Casteel had not acted knowingly. Additionally, the jury found that Crown was 99% responsible for the Fergusons' damages and that Casteel was 1% responsible. As for Casteel's cross-claims against Crown, the jury found that Crown had knowingly engaged in false, misleading, unfair, or deceptive acts or practices which were producing causes of damages to Casteel. The jury also found that Casteel had suffered past lost income in the amount of $400,000; will suffer future loss of income in the amount of $1,000,000; had suffered past mental anguish in the amount of $6,000,000; and will suffer future mental anguish in the amount of $100,000. The jury also awarded Casteel 40% of his recovery as attorney's fees.

Crown moved for judgment NOV. The trial court granted the motion: (1) rendering judgment on the jury verdict with respect to the Fergusons' claims against Casteel and holding Casteel individually liable for the Fergusons' actual damages, attorney's fees, and prejudgment interest in the amount of $1,366,983.00; (2) finding that Casteel is neither a "person" nor a "consumer" entitled to bring suit under Article 21.21 and rendering judgment that Casteel take nothing against Crown; and (3) dismissing the Fergusons' claims against Crown with prejudice following a post-trial settlement between Crown and the Fergusons.

Casteel appealed, raising four points of error challenging the trial court's judgment and partial summary judgment; Crown also appealed, raising nineteen cross points.

DISCUSSION

Casteel's Statutory Causes of Action

Article 21.21, section 16(a) of the Insurance Code creates and authorizes a statutory cause of action in the following terms:

Any person who has sustained actual damages caused by another's engaging in an act or practice declared in Section 4 of this Article to be . . . unfair or deceptive acts or practices in the business of insurance or in any practice specifically enumerated in a subdivision of Section 17.46(b), Business and Commerce Code, as an unlawful deceptive trade practice may maintain an action against the person or persons engaging in such acts or practices.

Tex. Ins. Code Ann. art. 21.21, 16(a) (West Supp. 1997) (emphasis added). Casteel alleged causes of action against Crown for "unfair or deceptive acts or practices in the business of insurance" and for a "practice specifically enumerated in a subdivision of Section 17.46(b)" of the Business and Commerce Code, a part of the DTPA.

In his first point of error, Casteel challenges the trial court's grant of judgment NOV in favor of Crown, claiming he is a "person" entitled to maintain an action under Article 21.21 of the Texas Insurance Code ("21.21").¹ Casteel argues that the trial court's ruling that he is not a person entitled to sue under the statute is contrary to the plain language of the statute itself. Crown argues that to have standing to sue, a "person" must be "either an insured or an intended beneficiary" of an insurance policy. This Court recently noted, however, that Article 21.21, section 16(a) states the required elements for an action under 21.21: (1) actual damages (2) sustained by any person and (3) caused by another's engaging in an act or practice (4) declared unfair or deceptive in section 4 of the article. Keightley v. Republic Ins. Co., 946 S.W.2d 124, 127-28 (Tex. App.-Austin 1997, no writ). Additionally, the plain language of section 2(a) defines "person" as "any individual . . . engaged in the business of insurance, including agents, brokers, adjusters, and life insurance counselors. Ins. Code art. 21.21, 2(a) (emphasis added). Nowhere in the article is "person" defined otherwise. See Ins. Code art. 21.21. The statutory elements are exclusive, and we may not add to them an element requiring a person to be either an insured or an intended beneficiary of an insurance contract. See Mingus v. Wadley, 285 S.W. 1084, 1087 (Tex. 1926); Keightley, 946 S.W.2d at 128 (refusing to require privity of contract for standing to sue under Article 21.21). Because the plain meaning of this definition includes agents and brokers as "persons," we hold that Casteel has standing to sue Crown for unfair and deceptive acts or practices in the business of insurance under Article 21.21, section 16(a).² We, therefore,...