Hartland v. Progressive County Mut. Ins.

• Citation: 290 S.W.3d 318
• Decision Date: 23 April 2009
• Docket Number: No. 14-07-00955-CV.,14-07-00955-CV.
• Parties: Charles HARTLAND, Appellant v. PROGRESSIVE COUNTY MUTUAL INSURANCE COMPANY, Appellee.
• Court: Court of Appeals of Texas

290 S.W.3d 318

Charles HARTLAND, Appellant v. PROGRESSIVE COUNTY MUTUAL INSURANCE COMPANY, Appellee.

No. 14-07-00955-CV.

Court of Appeals of Texas, Houston (14th Dist.).

April 23, 2009.

Susanna Marie Zwernemann, Houston, TX, for appellants.

Mark Lapidus, Megan Lynette Knudsen, Houston, TX, for appellees.

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

MAJORITY OPINION

JOHN S. ANDERSON, Justice.

Appellant, Charles Hartland, filed suit against appellee, Progressive County Mutual Insurance Company, after the denial of an auto-insurance claim for a single-car accident. The jury found appellant did not mail the premium to renew the policy until after the policy had expired; therefore, appellant did not have insurance when the accident occurred. On appeal, appellant contends the parties formed a contract under the terms of the original renewal policy when appellee accepted his premium payment, and therefore, the policy covered the accident. In addition, appellant argues appellee violated the Texas Administrative Code when it denied his claim. We affirm.

I. Factual and Procedural Background

Appellant, Charles Hartland, obtained auto insurance through appellee, Progressive County Mutual Insurance Company. Policy number 37156966-1 began on November 9, 2003, at 12:01 a.m. and ended on May 9, 2004, at 12:01 a.m. Appellee sent appellant a renewal bill on April 14, and a renewal reminder on April 23, stating the renewal policy period would run from May 9 to November 9. Appellant claimed he mailed a check in the amount of the renewal premium on May 8; appellee attached a lockbox report to its counterclaim for declaratory judgment showing the postmark date was May 11. Joan Hartland, appellant's wife, was in a single-car accident on May 9, 2004 at approximately 8:00 a.m., damaging a car covered under the initial policy.

Appellee presented evidence that it received appellant's check on May 16, and on May 18, appellee sent appellant a revised renewal declarations page. Policy number 37156966-2 listed coverage dates from May 12, 2004, at 12:01 a.m. to November 12, 2004, at 12:00 a.m., excluding coverage for the date of the accident. Appellant requested review by appellee of the denial of the claim. On August 6, appellee again denied the claim, stating the policy was not in effect at the time of the loss. On December 29, appellant's attorney sent a letter asking appellee to reconsider; appellee denied the claim once again.

Appellant filed an original petition, alleging breach of contract, unfair claim-settlement practice, breach of duty of good faith and fair dealing, damages, and attorney fees. Appellee filed a counterclaim for declaratory judgment, stating it owed no duty or obligation to Hartland because the policy had expired. Appellee also filed a motion for summary judgment with the same contention as the declaratory judgment. The trial court denied the motion for summary judgment and the case went to trial. The jury answered "No" to the following question: "Do you find that Charles Hartland deposited his renewal policy premium payment with the post office on or before 12:01 a.m. on May 9, 2004?" Appellant then filed a motion for judgment notwithstanding the verdict and to disregard jury findings, arguing that even if he mailed his payment after the policy period ended, appellee formed a contract based on the original terms of the renewal by accepting his payment. The trial court denied appellant's motion and entered final judgment on the verdict.

II. Discussion

In three issues on appeal appellant contends the trial court erred when it denied appellant's motion for judgment notwithstanding the verdict because: (1) the parties formed an enforceable contract as a matter of law; and (2) appellee violated sections of the Texas Administrative Code, making any attempts to restrict appellant's coverage void.¹ Therefore, we will construe appellant's three issues as actually raising two issues on appeal.

A. The Standard of Review

A court may disregard a jury's verdict and render judgment notwithstanding the verdict (JNOV) if no evidence supports the jury's findings, or if a directed verdict would have been proper. Tiller v. McLure, 121 S.W.3d 709, 713 (Tex.2003). To determine whether a JNOV is appropriate, we apply the standards that govern "no evidence," i.e., legal-sufficiency review. See Keller v. Wilson, 168 S.W.3d 802, 823 (Tex.2005); Wal-Mart Stores, Inc. v. Miller, 102 S.W.3d 706, 709 (Tex.2003).

A legal-sufficiency point must be sustained: (1) when there is a complete absence of a vital fact; (2) when rules of law or evidence preclude according weight to the only evidence offered to prove a vital fact; (3) when the evidence offered to prove a vital fact is no more than a scintilla; or (4) when the evidence conclusively establishes the opposite of the vital fact. Keller, 168 S.W.3d at 810. Under the legal-sufficiency standard, we must credit evidence that supports the judgment if reasonable jurors could, and we must disregard contrary evidence unless reasonable jurors could not. See id. at 827. If the evidence falls within the zone of reasonable disagreement, we may not invade the fact-finding role of the jurors, who alone determine the credibility of the witnesses the weight to give their testimony, and whether to accept or reject all or any part of that testimony. See id. at 822. Unless "there is no favorable evidence" to support the challenged finding or "if contrary evidence renders supporting evidence incompetent ... or conclusively establishes the opposite" of the finding, we must affirm. See id. at 810-11.

B. Alleged Contract Formation

In his first issue, appellant argues that the jury's answer to question one of the charge is immaterial because an enforceable contract exists as a matter of law. Specifically, appellant contends the parties formed a contract under the original terms of the renewal policy when appellee retained payment on the forfeited policy. Appellant raised this issue for the first time in his motion for judgment notwithstanding the verdict.

Appellee characterizes this argument as an affirmative defense of waiver and asserts that appellant cannot raise this argument on appeal because it must have been pleaded or tried by consent. Assuming without deciding that appellant has properly preserved his complaint on appeal, appellant's first issue is without merit.

It is the general rule that a renewal of an insurance policy constitutes a separate and distinct contract for the period of time covered by the renewal. Zuniga v. Allstate Ins. Co., 693 S.W.2d 735, 738 (Tex.App.-San Antonio 1985, no writ). Any offer by the insurer to renew an insurance contract must be accepted by the insured completely and unequivocally to constitute a new contract. Viking County Mutual Ins. Co. v. Jones, No. 05-91-01815-CV, 1992 WL 211068, at *3 (Tex. App.-Dallas August 31, 1992, no writ) (not designated for publication). The payment of the premium in accordance with provisions of the insurance policy is a condition precedent to establishment of liability against the insurer. Id. The policy in this case states:

If we offer to renew or continue and you or your representative do not accept, this policy will automatically terminate at the end of the current policy period. Failure to pay the required renewal or continuation premium when due shall mean that you have not accepted our offer.

The renewal notice and bill sent by appellee provided the following payment instructions to appellant: "To renew your policy, please pay at least the minimum amount due by the due date." The jury found that appellant did not pay his premium on time. Because appellant failed to timely pay the renewal premium, the condition for acceptance of the renewal policy was not met and the policy did not begin, leaving appellant without insurance coverage when the accident occurred. See Id. at *4 (holding because insured did not timely pay renewal premium, policy was not canceled but expired under its own terms and once insured paid renewal premium insurer properly renewed policy effective on the date of the insured's payment); Zuniga, 693 S.W.2d at 738 (holding that since the renewal payment was not made in accordance with the terms of the policy, the renewal policy never came into existence); Southern Farm Bureau Cas. Ins. Co. v. Davis, 503 S.W.2d 373, 377 (Tex.App.-Amarillo 1973, writ ref'd n.r.e.) (stating offer for renewal of auto insurance could not come to fruition until premium paid); Trinity Universal Ins. Co. v. Rogers, 215 S.W.2d 349, 352 (Tex.App.-Dallas 1948, no writ) (stating no completed contract when insured did not indicate acceptance of renewal policy).

Relying heavily on the Texas Supreme Court case Bailey v. Sovereign Camp, W.O.W., appellant contends the parties formed an enforceable contract when appellee accepted appellant's late premium payment. Bailey was a member of Sovereign Camp, W.O.W., a fraternal benefit society. Bailey v. Sovereign Camp, W.O.W., 116 Tex. 160, 165, 286 S.W. 456, 456 (1926). As part of his membership, Bailey was issued a benefit certificate for $2,000, payable to his wife upon his death. Sovereign Camp, W.O.W. v. Bailey, 277 S.W. 782, 783 (Tex.App.-Texarkana 1925), rev'd, 116 Tex. 160, 286 S.W. 456 (1926). After Bailey died, his wife made a claim for the benefit certificate. Id. at 783. The organization denied the claim, stating that Bailey was never legally reinstated after his suspension for failure to pay his May dues. Id.

Under the organization's bylaws, Bailey could have been reinstated within 10 days after default if he paid all arrearages and dues and presented a warranty of good health. Bailey, 116 Tex. at 165, 286 S.W. at 456-57. Although Bailey mailed the money order on the tenth day, it was not received until the twelfth day. Bailey, 116 Tex. at 165, 286 S.W. at 457. As a result, Bailey's payment was untimely because payment had to be received by...