Dagley v Haag Engineering

• Decision Date: 23 March 2000
• Citation: 18 S.W.3d 787
• Parties: <!--18 S.W.3d 787 (Tex.App.-Houston 2000) ELBERT EUGENE DAGLEY, JR. ET AL., Appellant v. HAAG ENGINEERING CO., Appellee NO. 14-98-01053-CV In The Fourteenth Court of Appeals
• Court: Texas Court of Appeals

Page 787

18 S.W.3d 787 (Tex.App.-Houston[14th Dist.] 2000)

ELBERT EUGENE DAGLEY, JR. ET AL., Appellant v HAAG ENGINEERING CO., Appellee

NO. 14-98-01053-CV

In The Fourteenth Court of Appeals

March 23, 2000.

On Appeal from the 281st District Court, Harris County, Texas, Trial Court Cause No. 97-20710-A

[Copyrighted Material Omitted] Panel consists of Justices Amidei, Edelman and Wittig.

CORRECTED OPINION

Maurice Amidei, Justice

Appellants appeal the summary judgment granted in favor of Haag Engineering Co. in a suit arising out of the alleged wrongful denial of insurance claims under appellants' homeowner's policies for damage purportedly sustained in a hail storm. We affirm.

Background

Appellants are owners of 45 homes, which they claim sustained significant damage as the result of a hail storm. Appellants are also policyholders with State Farm Fire and Casualty Company and State Farm Lloyds (collectively "State Farm"). State Farm either denied appellants' claims or offered appellants' less than what they believed was the actual damage to their homes.

State Farm hired Haag to perform certain engineering services on five homes with regard to the hail storm.¹ Prior to the storm, Haag also had provided State Farm with materials regarding the evaluation of hail storm damage. Those materials generally state that hail stones less than one inch in diameter will not cause damage to composition shingle roofs. Appellants contend that based on Haag's estimates that the hail stones were 1/2" to 3/4" in diameter, State Farm's rejection of their claims was "preordained."

Appellants brought claims against Haag for negligence, conspiracy, tortious interference, and violations of the Texas Deceptive Trade Practices Act ("DTPA") and the Texas Insurance Code related to wrongful denial of their claims. The trial court granted summary on all of appellants' claims against Haag.²

Standard of Review

To prevail on a motion for summary judgment, the defendant must establish that no material fact issue exists and it is entitled to judgment as a matter of law. See Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 222 (Tex. 1999). Once the defendant establishes that no genuine issue of material fact exists regarding an element of the plaintiff's claim, the plaintiff must present competent summary judgment evidence raising a fact issue on that element. See Guest v. Cochran, 993 S.W.2d 397, 401 (Tex. App.-Houston [14th Dist.] 1999, no pet.). In conducting this review, we take as true all evidence favorable to the nonmovant, and we make all reasonable inferences in the nonmovant's favor. See KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999).

Negligence

Appellants contend the trial court erred in granting summary judgment on their negligence claim against Haag. To prevail on a cause of action for negligence, the plaintiff must satisfy three elements: (1) a legal duty owed by the defendant to the plaintiff; (2) breach of that duty; and (3) damages proximately caused by the breach. See Van Horn v. Chambers, 970 S.W.2d 542, 544 (Tex. 1998). The threshold issue in a negligence case is whether the defendant owed a duty to the plaintiff. See Thapar v. Zezulka, 994 S.W.2d 635, 637 (Tex. 1999). Whether the defendant owed a duty to the plaintiff is a question of law for the court to decide from the particular facts of the case. See Golden Spread Council, Inc. v. Akins, 926 S.W.2d 287, 289 (Tex. 1996).

The duty of good faith and fair dealing emanates from the special relationship between an insurer and its insured. See Natividad v. Alexsis, Inc., 875 S.W.2d 695, 697-98 (Tex. 1994). The special relationship exists because the insured and the insurer are parties to a contract that is the result of unequal bargaining power. See id. at 698. Without such a contract, there is no special relationship. See id. Absent privity of contract with the insured, an insurance carrier's agents or contractors owe no such duty to the insured. See id.

The Dallas Court of Appeals has extended the rationale of Natividad to negligence claims against parties not in privity of contract with an insured. See Dear v. Scottsdale Ins. Co., 947 S.W.2d 908, 916-17 (Tex. App.-Dallas 1997, writ denied). In Dear, the insured sued the independent adjuster, which the insurance company had hired, for improperly or negligently investigating its claims. See id. at 916. The court found that the independent adjuster, having been hired by the insurer, had no relationship with the plaintiff and, therefore, did not owe the plaintiff a duty. See id. at 917.³

The San Antonio Court of Appeals considered similar facts in a case involving both State Farm and Haag. See Muniz v. State Farm Lloyds, 974 S.W.2d 229 (Tex. App.-San Antonio 1998, no pet.). In Muniz, the dispute centered on whether damage to the plaintiff's home was covered under the homeowner's policy. See id. at 231. The original dispute centered on what caused the soil beneath the plaintiff's house to shift. See id. The plaintiff's contended that water leaking from the house's plumbing caused the clay beneath the foundation to swell, which would be covered by the policy. See id. State Farm claimed the shift was cause by the "inherent vice" of the neighborhood's soil, which would not be covered by the policy. See id. In support of its position, State Farm cited a report by Haag noting that its investigation showed the plumbing did not cause the shifting. See id.

The Muniz court noted the lack of privity between Haag and the plaintiffs, i.e., that Haag had never worked for the plaintiffs, but was acting as an agent of State Farm in investigating the plaintiffs' claim. See id. at 235. Relying on reasoning in Dear, the court found the trial court properly granted summary judgment on the plaintiffs' negligence claim because Haag owed no duty to the plaintiffs. See id. at 236-37.⁴

Here, there is no dispute that State Farm, not appellants, hired Haag to investigate appellants' storm damage claims. Finding Dear and Muniz persuasive, we conclude that Haag did not owe a duty to appellants in its investigation of their claims or providing evaluation materials to State Farm. Therefore, trial court did not err in granting summary judgment on appellants' negligence claim.

DTPA

Next, appellants assert the trial court erred in granting summary judgment on their claims that Haag violated the DTPA.⁵ The DTPA prohibits "[f]alse, misleading, or deceptive acts or practices in the conduct of any trade or commerce . . ." TEX. BUS. & COM. CODE ANN. 17.46(a) (Vernon Supp. 2000). To recover under the DTPA, the plaintiff must establish: (1) he was a consumer of the defendant's goods or services; (2) the defendant committed false, misleading, or deceptive acts in connection with the lease or sale of goods or services; and (3) such acts were a producing cause of actual damages to the plaintiff. See Brown v. Bank of Galveston, N.A., 963 S.W.2d 511, 513 (Tex. 1998).

The Texas Supreme Court has found the defendant's deceptive trade act or practice is not actionable under the DTPA unless it was committed in connection with the plaintiff's transaction in goods and services. See Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 650 (Tex. 1996). The "in-connection-with" requirement imposes a limitation of liability consistent with the underlying purposes of the DTPA, i.e., to protect consumers in consumer transactions. See id. at 649-50.

The Amstadt case involved DTPA claims by homeowners against manufacturers of, and suppliers of raw material used in the manufacture of, polybutylene plumbing systems. See id. at 650. At issue was whether the Legislature intended that upstream suppliers of raw material and component parts be liable under the DTPA when none of their misrepresentations reached consumers. See id. at 647. The court found the upstream manufacturers and suppliers never directly marketed or promoted their product to the homeowners; therefore, any misrepresentations made with regard to their product were not made with the relevant consumer transactions, i.e., the purchase of the homes. See id. at 650-652. Although one defendant marketed the plumbing system to homebuilders, this fell short of the nexus required for DTPA liability. See id. at 651-52. The court's analysis applies with equal force to allegations based on misrepresentations and unconscionable acts. See id. at 652.

Although Amstadt concerns defendants who were suppliers and manufacturers, we find its underlying analysis pertinent to the facts of this case. As in Amstadt, none of Haag's alleged misrepresentations were directly communicated to appellants. State Farm hired Haag to investigate certain hail storm damage claims. Haag submitted its evaluation materials, findings, and opinions to State Farm, not to appellants.

Moreover, in the absence of a special relationship, Haag cannot be liable under the DTPA for its alleged improper investigation of appellants' claims. See Dear, 947 S.W.2d at 917 (stating the adjuster could not be liable to the plaintiff "for improper investigation and settlement advice, regardless of whether Dear phrased his allegations as negligence, bad faith, breach of contract, tortious interference, or DTPA claims"). Therefore, we find the trial court did not err in granting summary judgment on appellants' DTPA claims.

Insurance Code

Appellants contend the trial court erred in granting summary judgment on their claim that Haag violated the Article 21.21 of the Texas Insurance Code. The purpose of article 21.21 "is to regulate trade practices in the business of insurance by defining, or providing for the determination of, all such practices in this state which constitute unfair methods of competition or unfair or deceptive acts or practices and by prohibiting the trade practices so defined or determined." TEX. INS. CODE ANN. art. 21.21, 1(a) (Vernon Supp. 2000). An action under article 21.21 may be maintained against "the person...