Guzman v. Allstate Assurance Co.

• Decision Date: 10 November 2021
• Docket Number: No. 20-11247,20-11247
• Parties: Mirna GUZMAN, Plaintiff—Appellant, v. ALLSTATE ASSURANCE COMPANY, Defendant—Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

18 F.4th 157

Mirna GUZMAN, Plaintiff—Appellant,

v.ALLSTATE ASSURANCE COMPANY, Defendant—Appellee.

No. 20-11247

United States Court of Appeals, Fifth Circuit.

FILED November 10, 2021

Frederic Marshall Wolfram, Wolfram Law Firm, P.C., Amarillo, TX, Carol Lynn Wolfram, Esq., Law Office of Carol Lynn Wolfram, Denton, TX, for Plaintiff-Appellant.

David P. Donahue, Louis Frank Mendez, Bressler, Amery & Ross, P.C., Birmingham, AL, Stephanie Jean James, Underwood Law Firm, P.C., Amarillo, TX, for Defendant-Appellee.

Mark A. Ticer, Counsel, Law Office of Mark A. Ticer, Dallas, TX, for Amicus Curiae Bertha Arce.

Before Davis, Elrod, and Oldham, Circuit Judges.

Jennifer Walker Elrod, Circuit Judge

Saul Guzman died on January 29, 2019, after suffering a seizure. He was twenty-eight years old. Mirna, his wife and life insurance beneficiary, filed a claim with Allstate to collect the $250,000 in policy proceeds. After conducting a routine contestable-claim investigation, Allstate rescinded the policy and refused to pay. Mirna sued, and the district court granted Allstate's motion for summary judgment. Mirna now appeals the district court's decision. Because there is a genuine issue of material fact about whether Guzman was a smoker when he applied for life insurance, we REVERSE.

I.

Saul Guzman applied for a life insurance policy from Allstate on August 17, 2017. In his application, Guzman disclosed his history of seizures. But he denied using tobacco or nicotine products. In response to the question: "Do you currently use tobacco or nicotine?", Guzman answered "No." And in response to the question: "If ‘no’ ... have you ever used tobacco or nicotine?", Guzman also answered "No." After receiving some of Guzman's medical records and the results of his blood and urine tests

, Allstate issued him a policy of $250,000 at a "Standard Non Tobacco" annual premium rate. Guzman made Mirna, his wife, the beneficiary.¹

Guzman died on January 29, 2019, after suffering a seizure at work. Mirna filed a claim with Allstate to recover the policy proceeds, and Allstate began a contestable-claims investigation. During the investigation, Allstate obtained additional medical records. Upon discovering that most described Guzman as a smoker, Allstate sent the records along for two "underwriting referrals" to determine whether Guzman would have been issued the same policy if he had disclosed that he was a smoker. Both underwriting referrals determined that Guzman would not have been issued the same policy. On this basis, Allstate informed Mirna that it was rescinding the contract and gave her a premium refund of $433.84.

II.

Mirna contended that Allstate wrongly rescinded the policy. She sued Allstate in state court for breach of contract, violation of the Texas Deceptive Trade Practice–Consumer Protection Act (DTPA),² and for violation of § 542.003 of the Texas Insurance Code.³ Allstate removed to federal court under diversity jurisdiction and filed a counterclaim for declaratory judgment based on Guzman's alleged misrepresentation. It then moved for summary judgment on its counterclaim.

The parties chiefly disputed whether Guzman was a smoker at the time he filled out his application. As evidence that he was, Allstate pointed to Guzman's medical records, most—though not all—of which described Guzman as a smoker. In her response, Mirna flatly denied that her husband was a smoker. She submitted her own deposition and two affidavits, one from her and the other from Guzman's sister, Martha. Based on their knowledge of Guzman and the fact that they never saw him smoke or smelled smoke on his person or belongings, both Mirna and Martha denied that he was a smoker.

The district court granted Allstate's motion for summary judgment. It determined that there was no genuine dispute of material fact as to whether Guzman made (1) a representation; (2) of a material fact; (3) that was false; and (4) upon which Allstate relied. See Mayes v. Mass. Mut. Life Ins. Co. , 608 S.W.2d 612, 616 (Tex. 1980).⁴

Mirna now appeals. She argues that the district court erred in denying her motion to file a sur-reply, in granting summary judgment, and in denying her motion for a new trial.

III.

We review a grant of summary judgment de novo. Brown v. City of Houston , 337 F.3d 539, 540 (5th Cir. 2003). In doing so, we view the evidence in the light most favorable to the nonmovant and construe all reasonable inferences in her favor. E.g., Deville v. Marcantel , 567 F.3d 156, 163–64 (5th Cir. 2009). Summary judgment is only appropriate when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a).

When the movant also carries the burden of proof at trial, as when he asserts an affirmative defense, his burden is even higher; he must "establish beyond peradventure all of the essential elements of the claim or defense." Fontenot v. Upjohn Co. , 780 F.2d 1190, 1194 (5th Cir. 1986). Only if the movant succeeds must the nonmovant "designate specific facts showing that there is a genuine issue for trial." McCarty v. Hillstone Rest. Grp., Inc. , 864 F.3d 354, 357 (5th Cir. 2017) (quoting Boudreaux v. Swift Transp. Co. , 402 F.3d 536, 540 (5th Cir. 2005) ).

Finally, courts may not "evaluate the credibility of the witnesses, weigh the evidence, or resolve factual disputes." Int'l Shortstop, Inc. v. Rally's, Inc. , 939 F.2d 1257, 1263 (5th Cir. 1991) (citing Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 253–55, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). The sole question is whether a "reasonable jury drawing all inferences in favor of the nonmoving party could arrive at a verdict in that party's favor." Id.

Guzman made two tobacco-related representations on his insurance application. First, he denied being a "smoker." Second, he denied that he had "ever used tobacco or nicotine." A "misrepresentation" requires that one of these statements was false at the time the representation was made. See Mayes , 608 S.W.2d at 616 ("[I]f the answers to the questions in the application were untrue at the time they were given, the untrue answers constituted misrepresentations."). This misrepresentation must also be material. A representation is material if it "actually induces the insurance company to assume the risk." Darby v. Jefferson Life Ins. Co. , 998 S.W.2d 622, 628 (Tex. App.—Houston [1st Dist.] 1995, no writ). "[T]he principal inquiry in determining materiality is whether the insurer would have accepted the risk if the true facts had been disclosed." Robinson v. Reliable Life Ins. Co. , 569 S.W.2d 28, 29 (Tex. 1978).

The district court erred in holding that there was no genuine issue of material fact about whether Guzman was a smoker at the time of his application. After noting Allstate's evidence of Guzman's medical records, the court turned to Mirna's and Martha's affidavits. The court determined that because the affidavits and deposition were "self-serving" they must be supported by other facts in the record. Finding none, the court held the evidence insufficient to create a fact issue. This was wrong for two reasons.

First, "self-serving" affidavits and depositions may create fact issues even if not supported by the rest of the record. Where self-interested affidavits are otherwise competent evidence, they may not be discounted just because they happen to be self-interested. Indeed, "[e]vidence proffered by one side to ... defeat a motion for summary judgment will inevitably appear ‘self-serving.’ " Dall./Fort Worth Int'l Airport Bd. v. INet Airport Sys., Inc. , 819 F.3d 245, 253 n.14 (5th Cir. 2016). But self-serving evidence may not be discounted on that basis alone. How much weight to credit self-interested evidence is a question of credibility, which judges may not evaluate at the summary judgment stage. E.g., Int'l Shortstop, Inc. , 939 F.2d at 1263.

Rather, self-serving evidence must only comport with the standard requirements of Federal Rule of Civil Procedure 56. Self-serving affidavits and declarations, like all summary judgment evidence, must "be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated." FED. R. CIV. P. 56(c)(4). And these facts must be particularized, not vague or conclusory. Kariuki v. Tarango , 709 F.3d 495, 505 (5th Cir. 2013).

When these requirements are met, self-serving evidence is sufficient to create a genuine issue of material fact. E.g., Bargher v. White , 928 F.3d 439, 445 (5th Cir. 2019) ("Simply being ‘self-serving,’ however, does not prevent a party's assertions from creating a dispute of fact."); INet Airport Sys. , 819 F.3d at 253 n.14 ; see also Lester v. Wells Fargo Bank, N.A. , 805 F. App'x 288, 291 (5th Cir. 2020) (collecting cases and holding that "[a] non-conclusory affidavit can create genuine issues of material fact that preclude summary judgment, even if the affidavit is self-serving and uncorroborated"). Conversely, when we have held self-serving affidavits or depositions insufficient to create a fact issue, it is because their contents were either conclusory, vague, or not based on personal knowledge.⁵

Unlike in these cases, Mirna's and Martha's affidavits are competent summary judgment evidence. They are based on personal knowledge, set out facts that are admissible in evidence, are given by competent witnesses, and are particularized rather than vague or conclusory. Mirna and Martha testify about their personal experiences with Guzman. In her deposition and affidavit, Mirna claimed that Guzman was not a smoker; that she was often with Guzman and would know if he smoked; that she is "able to tell whether [people] use tobacco because they have a peculiar and specific smoke smell"; and that neither Guzman nor his belongings, including his clothes and truck, ever smelled like smoke. Martha made substantially similar claims in her own...