First Federal Sav. and Loan Ass'n of San Antonio v. Bustamante
| Decision Date | 26 November 1980 |
| Docket Number | No. 16328,16328 |
| Citation | 609 S.W.2d 845 |
| Parties | FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF SAN ANTONIO, Appellant, v. Roberto BUSTAMANTE et ux., Appellees. |
| Court | Texas Court of Appeals |
Defendant, First Federal Savings and Loan Association of San Antonio, appeals from a judgment awarding plaintiffs, Roberto Bustamante and wife, Bertha Bustamante damages and attorney's fees as a result of violations by defendant of the Texas Consumer Credit Code.
The claimed violations consist of (1) a failure to comply with the provisions of Tex.Rev.Civ.Stat.Ann. art. 5069-5.03 (Vernon 1967) which requires that when any requested or required insurance is sold or procured by the lender at a premium or rate of charge not fixed or approved by the State Board of Insurance, the lender shall include such fact in the Disclosure Statement; and (2) a failure to comply with Tex.Rev.Civ.Stat.Ann. art. 5069-14.05(c) (Vernon 1976) ), which required that the annual percentage rate be disclosed to within an accuracy of one-fourth of one percent.
The trial court granted plaintiffs' motion for summary judgment, insofar as the statutory violations are concerned, and awarded plaintiffs statutory damages in the amount of $1,000.00 for the violation of section 14.05(c), and statutory damages in the amount of $16,956.00 for the violation of section 5.03(3). Following a hearing concerning attorney's fees, the trial court awarded plaintiffs $4,000.00 as attorney's fees through the trial stage, with provisions for additional fees in the event of an appeal.
The documentary evidence establishes as a matter of law that the defendant required credit life insurance as a condition of the contract and that such insurance was procured by plaintiff. The premium charged for such insurance, which was financed by plaintiff, was $1,000.00. The disclosure statement does not reveal that such premium had not been fixed or approved by the State Board of Insurance.
Plaintiff's motion for summary judgment is supported by the affidavit of Robert C. McAnelly, manager of the credit life insurance section of the State Board of Insurance. This affidavit recites that the affiant, in his capacity as manager of such section, is familiar with and has knowledge of "those credit insurance premiums or rates which have been fixed or approved by the State Board of Insurance." This affiant then certifies that the "Credit Life Insurance premium or rate of charge of American National Insurance Company, shown on the attached Certificate Number L247763, under Group Policy Number 01-2725, is not and has never been fixed or approved by the State Board of Insurance."
The attached certificate reflects the credit life insurance purchased by plaintiffs in connection with the loan made by defendant.
The supporting affidavit is direct, positive and recites that the affiant has knowledge of the facts stated therein. Defendant did not, in the trial court, question the formal sufficiency of the affidavit, nor did it file any affidavit tending to show that the rates had been approved. The affidavit relied on by plaintiffs is sufficient, under these circumstances, to establish as a matter of law that the rates or premiums in question had not been fixed or approved by the State Board of Insurance. See, Mobile America Sales Corp. v. Rivers, 556 S.W.2d 378, 381 (Tex.Civ.App. San Antonio 1977, writ dism'd).
Defendant's contention that the summary judgment cannot be upheld because there is no showing that the rate or premium charged for the credit insurance is unlawful, is without merit. The violation does not consist in the charging of an unlawful premium. A failure to disclose that the premium has not been approved is all that need be shown in order to establish the violation.
Defendant insists that the summary judgment record discloses at least the existence of an issue of material fact in connection with its asserted defense that the violation, if any, resulted from a bona fide error. In support of this contention defendant relies on the affidavits of Dave W. Statham, head of defendant's installment loan department, and Thomas M. Porter.
Porter's affidavit states that(1) he had been involved in the "credit life insurance field" since 1960, and had represented American National Insurance Company since 1968; (2) American National had "advised" him that "group policies being used in the State of Texas to insure credit life risk with terms to ten years have been filed with the State Board of Insurance and that said policies have been approved by the State Board of Insurance"; (3) "all necessary approvals from the State Board of Insurance to issue this coverage have been obtained and the terms and conditions and rates are lawful and in compliance with the provisions of the Texas Insurance Code"; and (4) all of the "above information has been relayed to Dave W. Statham, Vice President of First Federal Savings and Loan Association of San Antonio with the authority to rely thereon."
In his affidavit Statham stated: (1) He was told by Porter that all necessary approvals had been obtained in reference to the insurance policies and, as a result, he never "made any disclosures that the rates were fixed or approved by the State Board of Insurance Company (sic) since (he) was under the impression that they were fixed or approved by the State Board of Insurance Commission." (2) In reference to the information supplied by Porter, Statham "never informed the consumers in any transactions and, in particular, the Roberto Bustamante transaction, that the rates were not fixed or approved since all along (he) thought the rates were fixed or approved." (3) "Until a Court proves different, it is still my impression from the information supplied to me by Thomas M. Porter; that all approvals for American National Insurance Company have been obtained and in particular, the policy which is the subject matter of this suit ...."
The Porter affidavit does not state that the rates or premiums had been approved by the State Board of Insurance. It establishes no more than that the group policies had been filed with and approved by the Board and that the rates are lawful. The same is true of the Statham affidavit, which merely recites that the affiant was told by Porter that all necessary approvals had been obtained in reference "to the insurance policies." The approval of "group policies" is one thing. The...
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