Hart v. Berko, Inc.

• Decision Date: 14 July 1994
• Docket Number: No. 08-93-00083-CV,08-93-00083-CV
• Parties: Phil HART and D.J. Enterprises, Inc. d/b/a Associated Insurance Agency, Appellants, v. BERKO, INC. d/b/a El Encanto, Appellee.
• Court: Texas Court of Appeals

Page 502

881 S.W.2d 502

Phil HART and D.J. Enterprises, Inc. d/b/a Associated Insurance Agency, Appellants, v. BERKO, INC. d/b/a El Encanto, Appellee.

No. 08-93-00083-CV.

Court of Appeals of Texas El Paso.

July 14, 1994.

Rehearing Denied Aug. 24, 1994.

David R. Pierce, Scott, Hulse, Marshall, Feuille, Finger & Thurmond, El Paso, for appellants.

E. Link Beck, Beck & James, El Paso, for appellee.

Before BARAJAS, C.J., and KOEHLER and LARSEN, JJ.

OPINION

KOEHLER, Justice.

This is a suit brought under provisions of the Texas Deceptive Trade Practices Act and the Texas Insurance Code by the policy owner against its insurance agent for damages arising out of a dispute over alleged representations concerning the amount of fire insurance coverage in effect at the time of a substantial fire loss. The jury found in answer to a broad-form question submitted to it that the agent had engaged in one or more of four acts of conduct without being required to specify which act or acts the agent had engaged. We affirm.

RELEVANT FACTS

In January of 1990, Berko, Inc. d/b/a El Encanto (Berko), through its Vice President, Sara Blaugrund (Blaugrund), requested that Phil Hart (Hart), employed by D.J. Enterprises, Inc. d/b/a Associated Insurance Agency (D.J.) ¹ , increase the amount of insurance coverage on its building from $242,000 to $650,000. According to Blaugrund, Hart represented to her that he had obtained fire coverage of $600,000 on the building. On February 27, 1990, the building was completely destroyed by a fire. On the day after the fire, Hart notified Blaugrund that the building had only $242,000 coverage.

Berko subsequently filed suit against Appellants alleging violations of the Texas Deceptive Trade Practices--Consumer Protection Act (DTPA) and the Texas Insurance Code. Appellants counterclaimed against Berko for unpaid earned premiums on several insurance policies. Trial was to a jury, which found that certain violations of the DTPA and Insurance Code by Hart were a producing cause of damage, that the acts were committed knowingly, and that the damage to Berko was $358,000. The jury also found for Appellants on their counterclaim. After trebling the damages and adding prejudgment interest and attorney's fees and subtracting the amount of the counterclaim, the court rendered judgment on the verdict in favor of Berko and against Appellants for approximately $1,218,805.

In this appeal, Appellants contend in seven points of error that there was either no evidence or insufficient evidence that the alleged misrepresentation was a producing cause of Berko's injury (points one and two); that neither Berko's pleadings nor the jury findings support an automatic trebling of damages, an unlisted violation of DTPA Section 17.46(a) does not trigger the mandatory treble damage provisions of TEX.INS.CODE ANN. art. 21.21, § 16, and the court erred in rendering judgment for treble damages because the jury question on Hart's conduct failed to segregate the one act alleged to be an Insurance Code violation from the three acts not so alleged (points three, four, and five); that the court erred in entering judgment based on the answer to an incorrectly worded liability question where the jury could, and may, have found that Hart committed "a false, misleading or deceptive act or practice" without separate findings that he committed a specific act and that such act was false, misleading or deceptive (point six); and that the trial court erred in imposing liability on Hart based on a finding that his conduct may have been merely misleading (point seven).

SUFFICIENCY OF EVIDENCE

Appellants' first two points on appeal attack the factual and legal sufficiency of the evidence to support the "producing cause" finding. When confronted with both legal and factual sufficiency points, we are first to examine the legal sufficiency question. Texmarc Conveyor Co. v. Arts, 857 S.W.2d 743, 745 (Tex.App.--Houston [14th Dist.] 1993, writ denied). In considering a "no evidence" legal sufficiency point, we consider only the evidence and reasonable inferences which tend to support the jury's findings and disregard all evidence and inferences to the contrary. Stafford v. Stafford, 726 S.W.2d 14, 16 (Tex.1987); Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965). If there is more than a scintilla of evidence to support the questioned finding, the "no evidence" point fails. Stafford, 726 S.W.2d at 16; Worsham Steel Co. v. Arias, 831 S.W.2d 81 (Tex.App.--El Paso 1992, no writ); Fuentes v. McFadden, 825 S.W.2d 772 (Tex.App.--El Paso 1992, no writ).

In the case of a factual sufficiency challenge, the court must first examine all of the evidence, Lofton v. Texas Brine Corporation, 720 S.W.2d 804, 805 (Tex.1986); and after considering and weighing all of the evidence, the court may set aside the finding only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986). Since an appellate court is not a fact finder, it may not pass upon the credibility of the witnesses or substitute its judgment for that of the trier of fact, even if the evidence would support a different result. Clancy v. Zale Corporation, 705 S.W.2d 820, 826 (Tex.App.--Dallas 1986, writ ref'd n.r.e.).

Stated in another way, Appellants assert that there is either no evidence or not enough evidence to prove that Hart's alleged misrepresentation was a producing cause of Berko's damages. This Court has recognized that in order to recover damages for deceptive acts under Article 21.21 of the Insurance Code, a plaintiff is required to prove that the conduct in question was a producing cause of any damages sustained. First Am. Title Company of El Paso v. Prata, 783 S.W.2d 697, 701 (Tex.App.--El Paso 1989, writ denied). See also TEX.INS.CODE ANN. art. 21.21 (Vernon 1981 & Supp.1994); TEX.BUS. & COMM.CODE ANN. § 17.50(a) (Vernon 1987 & Supp.1994); Weitzel v. Barnes, 691 S.W.2d 598, 600 (Tex.1985). A producing cause is "an efficient, exciting, or contributing cause,...." Rourke v. Garza, 530 S.W.2d 794, 801 (Tex.1975); Prata, 783 S.W.2d at 701. The evidence must establish that the damages alleged were factually caused by the defendant's conduct. Prata, 783 S.W.2d at 701; Rotello v. Ring Around Products, Inc., 614 S.W.2d 455 (Tex.Civ.App.--Houston [14th Dist.] 1981, writ ref'd n.r.e.).

Appellants assert that because Blaugrund testified that even "if she had known that Hart had not yet obtained the additional fire coverage on February 21, she would not have looked for other insurance not [sic] would she have taken any other precautions against fire." Therefore, the argument goes, Berko cannot show that it relied on Hart's alleged statement and cannot predicate producing cause solely on Blaugrund's "mistaken belief" that Berko had a total fire coverage of $600,000 on its building. Their reliance on Royal Globe Ins. Co. v. Bar Consultants, Inc., 577 S.W.2d 688, 694-95 (Tex.1979), is misplaced. Although Royal Globe reads in terms of the insured being adversely affected and injured when it relied on the agent's misrepresentation of coverage, it is clear from that opinion and subsequent cases that the "reliance" only entailed believing it was covered when it was not so covered, not that it would have taken other action if it had known that it was not covered. 577 S.W.2d at 694.

Both parties cite State Farm Fire & Casualty Co. v. Gros, 818 S.W.2d 908 (Tex.App.--Austin 1991, no writ), to support their respective positions on presence or absence of producing cause. In Gros, the question was whether the alleged misrepresentation by the insurance agent that damage to the insureds' home resulting from landslide would be covered, was a producing cause of the insureds' loss where the evidence showed that the insureds could not have obtained the desired coverage from any other source. Although the Gros Court muddied the water by speculating on what the insureds might have done if they had known that damage from landslide was not covered, the primary holding was to the effect that the insureds were not required to prove other available insurance coverage in order to establish producing cause, they need only show that as a result of the misrepresentation, they believed that they were covered by insurance when they were not so covered, citing Royal Globe, 577 S.W.2d at 694. Although neither reliance nor foreseeability are necessary elements of recovery, the evidence must establish that the alleged false, misleading, or deceptive act was a producing cause of the plaintiff's actual damages, otherwise there is no cause of action. Prata, 783 S.W.2d at 701. See also South Texas Nat'l Bank of Laredo v. United State Fire Ins. Co., 640 F.Supp. 278, 280 (S.D.Tex.1985) (Absence of any allegations that plaintiff had relied upon or was injured by the alleged misrepresentation required dismissal).

It is clear from cases following Royal Globe that reliance is not a necessary element that a consumer must prove in order to recover under Section 17.50(a)(4) of the DTPA or Section 16, Article 21.21 of the Texas Insurance Code. Weitzel, 691 S.W.2d at 600; Celtic Life Ins. Co. v. Coats, 831 S.W.2d 592, 596 (Tex.App.--Austin 1992) aff'd as modified, 1994 WL 278107 (Tex., June 22, 1994); Crawford & Co. v. Garcia, 817 S.W.2d 98, 101 (Tex.App.--El Paso 1991, writ denied); Prata, 783 S.W.2d at 701. The proof need only establish that the damages were factually caused by the defendant's misrepresentation. Crawford, 817 S.W.2d at 101. Unlike the fact situations in Crawford and Prata, where there was no evidence that the conduct or representation of the defendants were the producing causes of damages sustained by the plaintiffs in those cases, the following testimony of Blaugrund that Hart told her he had obtained the additional coverage was evidence of the producing cause of Berko's loss in the amount of $358,000:

(Plaintiff's Attorney): Now, after...