INAC Corp. v. Underwriters at Lloyd's
| Decision Date | 26 July 2001 |
| Docket Number | No. 14-00-00106-CV,14-00-00106-CV |
| Citation | 56 S.W.3d 242 |
| Parties | <!--56 S.W.3d 242 (Tex.App.-Houston 2001) INAC CORP., Appellant v. UNDERWRITERS AT LLOYD'S, HOUSTOUN WOODWARD EASON GENTLE TOMFORDE ANDERSON, INC., AND GARY D. "BO" BURRIS, Appellees Court of Appeals of Texas, Houston (14th Dist.) |
| Court | Texas Court of Appeals |
On Appeal from the 61st District Court Harris County, Texas Trial Court Cause No. 98-20989
[Copyrighted Material Omitted] Panel consists of Justices Hudson and Seymore and Senior Chief Justice Murphy*
The main issue in this case is whether Appellant INAC Corp. ("INAC") complied with Tex. Ins. Code Ann. art. 24.17(d) (Vernon Supp. 2000) when it sent notice of cancellation to Houstoun Woodward Eason Gentle Tomforde Anderson, Inc. d/b/a Insurance Alliance ("Insurance Alliance")--a company that was authorized by the Underwriter appellees to act as their agent for receiving notices of cancellation from the insured--Midcon Offshore, Inc. ("Midcon"). INAC appeals from a summary judgment denying recovery of unearned premiums allegedly due upon cancellation of two insurance policies. The trial court granted motions for summary judgment in favor of appellees--the Underwriters, Insurance Alliance, and Gary D. "Bo" Burris. The trial court denied INAC's motions for summary judgment against the appellees. We hold that the trial court should have denied the Underwriters' motion for summary judgment against INAC because Tex. Ins. Code Ann. art. 24.17(d) allowed INAC to mail notice of cancellation to the Underwriters in care of Insurance Alliance; however, we hold that the trial court properly denied INAC's motion for summary judgment against the Underwriters because INAC did not prove that it was entitled to judgment as a matter of law on its claims for unearned premiums. Therefore, we reverse that portion of the trial court's judgment granting the Underwriters' motion for summary judgment against INAC. We also sever INAC's claims against the Underwriters and remand these claims to the trial court for further proceedings. Because the trial court properly granted the motion for summary judgment filed by Insurance Alliance and Burris, we affirm the portion of the trial court's judgment dismissing INAC's claims against these parties.
INAC provides financing to its customers to purchase insurance. On or about October 31, 1995, INAC and Midcon entered into a Commercial Premium Finance Agreement ("Finance Agreement"), under which INAC financed $904,477.28 in premiums for Midcon's purchase of various insurance policies. This suit involves INAC's claims for unearned premiums on two of those policies--Policy Nos. S531576 and S531577. The insurers on these two policies were the Underwriter appellees, writing through the Lloyd's of London market or the Institute of London Underwriters market ("Underwriters").1 Policy No. S531576 was a Maritime Employers Liability Policy, and Policy No. S531577 was an Energy Package Policy. Both were surplus lines policies with a one-year term from November 1, 1995 through October 31, 1996. Insurance Alliance, acting in part through its agent Gary D. "Bo" Burris, was the broker/surplus lines agent through whom the Underwriters sold the two policies.
In the Finance Agreement, Midcon agreed to pay INAC eleven monthly installments. As security for its debt to INAC and as permitted by Chapter 24 of the Texas Insurance Code, Midcon assigned INAC all unearned premiums, policy dividends, and loss payments under the policies. In addition, as part of the Finance Agreement, Midcon gave INAC a power of attorney, authorizing it to cancel the financed policies:
You [Midcon] are appointing us [INAC] your ATTORNEY-IN-FACT for the purpose of canceling the policies financed by the agreement for nonpayment of premium within ten (10) days . . . after it is due . . . You also agree that we may receive all sums assigned to us, and execute and deliver on your behalf all documents relating to the policies which are necessary to carry out this agreement . . .
On Midcon's behalf, INAC paid the financed amount by check to Insurance Alliance. Insurance Alliance accepted the check and deposited the proceeds into its own account. In addition, Lynne Marshall, an assistant supervisor at Insurance Alliance, signed a confirmation, agreeing that the conditions of an "Advice of Financed Premium" were acceptable. This Advice of Financed Premium stated, among other things, as follows:
This is to advise you of the acceptance of the Premium Finance Agreement in respect to the below described policies, and we have so notified the insured. It is essential, due to the terms of the Premium Finance Agreement, that the following instructions be observed:
1. --All return premiums which may become payable under the financed policies must be paid to INAC
After first deducting and retaining its commissions, Insurance Alliance forwarded the premium funds to the Underwriters.
Midcon did not make its June payment. INAC gave Midcon notice of default and notice of its intent to cancel. When Midcon failed to cure the default, INAC attempted to cancel the policies effective June 30, 1996, by mailing notice of cancellation to the Underwriters in care of Insurance Alliance.2 The Underwriters had authorized Insurance Alliance to receive notices of cancellation from Midcon; however, the Underwriters claim that the insurance policies and Tex. Ins. Code Ann. art. 24.17 ("art. 24.17") do not allow INAC to send notices of cancellation to the Underwriters through their agent, Insurance Alliance.
Midcon subsequently filed bankruptcy. Midcon owes INAC at least $389,977.78. INAC asserts that premiums are earned pro rata over the life of the policies and that INAC should have received a total of $306,239.54 in unearned premiums on the two policies. None of the appellees returned any of the premiums on these policies. INAC filed suit against the Underwriters, Insurance Alliance and Burris, seeking a declaratory judgment, foreclosure of its security interests in the unearned premiums, damages for breach of contract, various other claims, and recovery of attorney's fees.
First the Underwriters, and then Insurance Alliance and Burris, filed respective motions for summary judgment. INAC filed cross-motions for summary judgment in response to both motions. The Underwriters, Insurance Alliance, and Burris all contended that they were not liable for unearned premiums because INAC did not send notice of cancellation directly to the Underwriters. Instead, notice was sent to the Underwriters in care of Insurance Alliance. The defendants argued that this was not proper notice under art. 24.17. Also, they argued that the Underwriters had already earned all of the policy premiums because a covered loss in excess of the policy premiums occurred before the alleged cancellation of the policies. The trial court denied INAC's motions and granted take-nothing summary judgments in favor of the Underwriters, Insurance Alliance, and Burris. In addition, the court granted a summary judgment in favor of the Underwriters on their claim against Insurance Alliance for full indemnity as to all amounts for which the Underwriters may be held liable to INAC in this case.3 Insurance Alliance has not appealed this summary judgment, which has become final.
On appeal, INAC argues that its motions for summary judgment should have been granted and that appellees' motions should have been denied. INAC presents five issues for review: (1) whether INAC's notices of cancellation were legally effective and imposed on the Underwriters the obligation to cancel the policies and refund the unearned premiums to INAC; (2) in the alternative, whether the Underwriters waived their objections to INAC's sending notice to the Underwriters in care of Insurance Alliance; (3) in the alternative, whether the Underwriters were prejudiced by INAC's sending notice to the Underwriters in care of Insurance Alliance; (4) whether, under the Finance Agreement, the insurance policies, and applicable law, Insurance Alliance and Burris are liable to INAC for the unearned premiums; and (5) whether the Underwriters, Insurance Alliance, and Burris are liable for INAC's attorney's fees.
A party moving for summary judgment must establish its right to summary judgment on the issues presented to the trial court by conclusively proving all elements of the movant's claim or defense as a matter of law. See Tex. R. Civ. P. 166a(c); Havlen v. McDougall, 22 S.W.3d 343, 345 (Tex. 2000). When both parties move for summary judgment, each party must carry its own burden, and neither can prevail because of the failure of the other to discharge its burden. The Atrium v. Kenwin Shops of Crockett, Inc., 666 S.W.2d 315, 317-18 (Tex.App.--Houston [14th Dist.] 1984, writ ref'd n.r.e.). Each being a movant, the burden is the same for both parties: to establish entitlement to a summary judgment by conclusively proving all the elements of the claim or defense as a matter of law. Odeneal v. Van Horn, 678 S.W.2d 941 (Tex.1984). When both sides move for summary judgment and the trial court grants one motion and denies the other, this court should review all summary-judgment proof, determine all issues presented, and render the judgment that the trial court should have rendered. FM Properties Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000).
This court reviews the summary-judgment proof using familiar standards of review. See Dolcefino v. Randolph, 19 S.W.3d 906, 916 (Tex. App.--Houston [14th Dist.] 2000, pet. denied). When a trial court's order granting summary judgment does not specify the grounds relied upon, this court must affirm summary judgment if any of the summary-judgment grounds are meritorious. FM Properties Operating Co., 22 S.W.3d at 872.
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