Coterill–Jenkins v. Tex. Med. Ass'n Health Care Liab. Claim Trust

Decision Date10 October 2012
Docket NumberNo. 14–11–00697–CV.,14–11–00697–CV.
PartiesKatrina COTERILL–JENKINS, Executrix of the Estate of Charles K. Jenkins, M.D., Appellant, v. TEXAS MEDICAL ASSOCIATION HEALTH CARE LIABILITY CLAIM TRUST and Houston Northwest Radiology Association, P.A., Appellees.
CourtTexas Court of Appeals

OPINION TEXT STARTS HERE

Christian Jenkins, Arlington, TX, for appellant.

Marion Woodrow Kruse, Jr., Alicia Thais Freed, Larry D. Thompson, Scott Benjamin Novak, Houston, TX, for appellees.

Panel consists of Chief Justice HEDGES and Justices SEYMORE and BROWN.

OPINION

JEFFREY V. BROWN, Justice.

Appellant Katrina Coterill–Jenkins, executrix of the estate of Charles K. Jenkins, M.D., appeals the trial court's summary judgments granted in favor of appellees, Texas Medical Association Health Care Liability Claim Trust (TMLT) and Houston Northwest Radiology Association (HNRA) on Coterill–Jenkins's breach-of-contract and other claims. Coterill–Jenkins's claims concern a professional-liability policy HNRA purchased from TMLT on behalf of her husband, Charles K. Jenkins, M.D. Shortly after the policy was purchased, Dr. Jenkins died, and TMLT returned the premium payment to HNRA. Coterill–Jenkins contends Dr. Jenkins was the policyholder and therefore the premium should have been returned to his estate. In five issues, Coterill–Jenkins contends the trial court erred by granting TMLT and HNRA's motions for summary judgment, denying her motion for summary judgment, granting summary judgment on the claims added in her second amended petition, and sustaining TMLT's objections to her evidence.

I

Dr. Jenkins was a physician with HNRA until he left in September 2006. Dr. Jenkins and HNRA memorialized the terms and conditions of his departure in an exit letter. Among other things, the exit letter provided that HNRA was obligated to obtain and pay for prior-acts professional-liability insurance, sometimes called “tail coverage,” for Dr. Jenkins:

3. According to your Employment Contract, and the Hospital Contracts to which reference is made, you are required to maintain prior acts professional liability insurance (tail) coverage at your expense for five years after your employment with HNRA terminates. However, the Executive Committee has agreed to purchase such insurance coverage for you at the expense of HNRA. This agreement overrides the referenced provision in the Employment Contract.

HNRA issued a check for Dr. Jenkins's tail coverage to TMLT in the amount of $37,306.00. TMLT deposited the check and issued an “extended reporting endorsement” providing for the coverage.1

Dr. Jenkins died on December 17, 2006. When TMLT learned of Dr. Jenkins's death and that he had not practiced medicine since leaving HNRA in September, it cancelled the policy and returned to HNRA the $37,306.00 payment for the extended reporting endorsement. The tail coverage was not cancelled, however, and remained in effect.

Coterill–Jenkins filed suit in April 2010 alleging breach of contract against TMLT. She later amended her petition to add allegations of breach of contract by HNRA.2 In 2011, HNRA filed a traditional motion for summary judgment, and TMLT filed both a no-evidence and a traditional motion for summary judgment. Coterill–Jenkins then amended her petition to add claims of breach of the duty of good faith and fair dealing and misappropriation of funds against both TMLT and HNRA. Coterill–Jenkins also claimed breach of fiduciary duty against TMLT. At the same time, Coterill–Jenkins filed a motion for summary judgment on her claims against TMLT and HNRA.

On July 18, 2011, the trial court signed separate orders granting TMLT's and HNRA's motions for summary judgment and denying Coterill–Jenkins's motion for summary judgment. Because we conclude the trial court did not err by granting TMLT's and HNRA'a traditional motions for summary judgment, we do not address TMLT's no-evidence motion.

II
A

We review summary judgments de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.2005). A traditional summary judgment under Rule 166a(c) is properly granted only when the movant establishes that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law. Tex.R. Civ. P. 166a(c); Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215–16 (Tex.2003). In reviewing either a no-evidence or traditional summary-judgment motion, we must take as true all evidence favorable to the nonmovant and draw every reasonable inference and resolve all doubts in favor of the nonmovant. Mendoza v. Fiesta Mart, Inc., 276 S.W.3d 653, 655 (Tex.App.-Houston [14th Dist.] 2008, pet. denied).

When we review cross-motions for summary judgment, we consider both motions and render the judgment that the trial court should have rendered. Mid–Continent Cas. Co. v. Global Enercom Mgmt., Inc., 323 S.W.3d 151, 153–54 (Tex.2010); Weingarten Realty Mgmt. Co. v. Liberty Mut. Fire Ins. Co., 343 S.W.3d 859, 862 (Tex.App.-Houston [14th Dist.] 2011, pet. denied).

B

Coterill–Jenkins briefs her first and third issues together. In her first issue, she contends that the trial court erred in granting TMLT's motion for summary judgment on her breach-of-contract claim. In her third issue, she contends that the trial court erred in failing to grant her motion for summary judgment asserting breach of contract against TMLT. To recover for breach of contract, a plaintiff must show (1) the existence of a valid contract, (2) the plaintiff performed or tendered performance, (3) the defendant breached the contract, and (4) the plaintiff suffered damages as a result of the defendant's breach. Parker Drilling Co. v. Romfor Supply Co., 316 S.W.3d 68, 72 (Tex.App.-Houston [14th Dist.] 2010, pet. denied).

In these issues, Coterill–Jenkins posits that Dr. Jenkins was the policyholder of the tail coverage; therefore, TMLT should have promptly refunded any unearned premium to him, and its failure to do so constitutes a breach of contract. The policy does not identify Dr. Jenkins as a “policyholder,” nor does the term appear anywhere in the policy. Instead, Dr. Jenkins is identified only as the “named insured,” which is defined as “the physician so designated in the Declarations Page.”

To prove that Dr. Jenkins was the policyholder entitled to return of the premium paid for the extended reporting endorsement, Coterill–Jenkins first points to a provision of the Insurance Code which provides that an insurer “shall promptly refund the appropriate portion of any unearned premium to the policyholder” if the policy has a remaining unearned premium reserve and is canceled or terminated by the insured or the insurer before the end of its term. See Tex. Ins.Code § 558.002. But Coterill–Jenkins acknowledges that TMLT was created as a healthcare-liability-claim trust under former Insurance Code article 21.49–4, which provides that such an entity is not engaged in the business of insurance and the Insurance Code does not apply to it. See Act of May 30, 1977, 65th Leg., R.S., ch. 817, § 31.13, 1977 Tex. Gen. Laws 2063, 2064, repealed by Act of May 25, 2005, 79th Leg., ch. 727, § 18(a)(6), 2005 Tex. Gen. Laws 2186, 2187 (effective April 1, 2007) (“The trust is not engaged in the business of insurance under this code and other laws of this state and the provisions of any chapters or sections of this code are declared inapplicable to a trust organized and operated under this article, provided that the State Board of Insurance may require any trust ... to satisfy reasonable minimum requirements to insure the capability of the trust to satisfy its contractual obligations.”).

Although Coterill–Jenkins concedes that TMLT is not subject to the Insurance Code, she nevertheless argues that because former section 21.49–4 also provides that the State Board of Insurance may sanction a trust that violates the Insurance Code, section 558.002 of the Code “should be relevant to good[-] faith issues and fiduciary duties” of TMLT. But Coterill–Jenkins cites no authority for applying section 558.002 to TMLT in contravention of the express language of former article 21.49–4; therefore, we decline to impose liability on TMLT based on section 558.002's provision that unearned premiums be returned to the policyholder.

Coterill–Jenkins next argues that Dr. Jenkins's policy provides that his interest is not assignable and therefore, as policyholder, his estate was entitled to the refund of the premium HNRA paid, citing the following language:

No Named Insured's interest under this policy is assignable. If any such insured shall die or be adjudged incompetent, this insurance shall thereupon terminate automatically as to such insured, but shall cover the legal representative of such insured's estate as an insured with respect to liability previously incurred and covered by this policy. Pro rata return premium will be computed from the date of termination.

Coterill–Jenkins acknowledges that this provision does not specifically provide that the premium will be returned to the insured, but she argues it may be implied from the paragraph's context.

In support of her contention, Coterill–Jenkins cites Fuller v. Security Union Insurance Co., 37 S.W.2d 235 (Tex.Civ.App.-Fort Worth 1931, no pet.). In that case, several firms and individuals purchased property insurance from Security Union through an agent, Fuller. Id. at 236. The policies expressly provided that if a policy is cancelled after the premium was paid, “the unearned portion shall be returned on surrender of this policy or last renewal.” Id. Security Union cancelled the policies, but did not refund the premiums to the firms or individuals. Id. The policyholders assigned their rights to a refund to Fuller in exchange for new policies with other companies. Id. Fuller then sued the insurance company to recover the refunds. Id. The court concluded that because the policies expressly stipulated that unearned premiums...

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