Kennedy v. Sale
| Decision Date | 24 April 1985 |
| Docket Number | No. C-3767,C-3767 |
| Citation | 689 S.W.2d 890 |
| Parties | 6 Employee Benefits Cas. 1505 Francis KENNEDY, Petitioner, v. J. Woodford SALE, Respondent. |
| Court | Texas Supreme Court |
Bancroft & Mouton, Drew Mouton, Big Spring, for petitioner.
Freeman, Hyde & Martin, John G. Hude, Midland, for respondent.
This cause involves the definition of "consumer" under the Texas Deceptive Trade Practice-Consumer Protection Act ("DTPA"). Tex.Bus. & Comm.Code Ann. § 17.45(4) (Vernon Supp.1985). The question presented is whether an employee complaining of misrepresentations of the provisions of a group insurance policy is a "consumer," though the employer alone purchased the policy. The court of appeals held that the employee was not a consumer. 679 S.W.2d 733. We reverse the judgment of the court of appeals and affirm that of the trial court.
Francis Kennedy was an employee of the Martin County Hospital District. The Board of Managers of the hospital district decided to change group insurance carriers, from Blue Cross/Blue Shield to Southwest Medical Corporation Trust. J. Woodford Sale was the insurance agent.
After the policy was accepted, but before it went into effect, Sale met with hospital employees to explain the new provisions and benefits, as well as to collect signed enrollment cards from each employee. Kennedy and other employees testified that at this meeting Sale misrepresented the preexisting condition coverage, claiming that the policy offered full coverage without qualification, when in fact the policy provided only $4000 maximum coverage during the first year. Kennedy also testified that had he been correctly informed, he would have enrolled under his wife's group plan, which provided full coverage.
Shortly thereafter, Kennedy underwent surgery for a preexisting condition. The policy paid $4,000; Kennedy brought suit against Sale for the balance of $11,338.21, alleging a violation of the DTPA and common law fraud. The jury found that Sale had misrepresented preexisting condition coverage to Kennedy, but not to the Board of Managers. The trial court rendered judgment for Kennedy on his DTPA cause of action. The court of appeals, with one justice dissenting, reversed this judgment but remanded for a new trial on the common law fraud theory.
The court of appeals held that because Kennedy did not purchase the policy benefits directly from Sale, he was not a "consumer" as defined by the DTPA. In reaching this conclusion, the court of appeals placed substantial reliance on Delaney Realty, Inc. v. Ozuna, 593 S.W.2d 797 (Tex.Civ.App.--El Paso), writ ref'd n.r.e. per curiam, 600 S.W.2d 780 (Tex.1980). This court, while refusing writ, did not endorse the Delaney Realty court's reasoning. 600 S.W.2d 780 (Tex.1980). Less than one year later, we expressly disapproved the result in Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 539-40 (Tex.1981).
While Cameron v. Terrell & Garrett, Inc. is not conclusive on the question here presented, the decision is nonetheless highly instructive. The question presented in Cameron was whether a real estate agent could be held in violation of the DTPA where he was neither the buyer nor the seller of the property. In a unanimous opinion, we stated:
We find no indication in the definition of consumer in section 17.45(4), or any other provision of the Act, that the legislature intended to restrict its application only to deceptive trade practices committed by persons who furnish the goods or services on which the complaint is based. Nor do we find any indication that the legislature intended to restrict its application by any other similar privity requirement."
618 S.W.2d at 540-41 (emphasis added). This court further stated:
Keeping these principles in mind, we turn to an examination of the instant cause. The DTPA defines "consumer" as "an individual ... who seeks or acquires by purchase or lease, any goods or services." Tex.Bus. & Comm.Code Ann. § 17.45(4) (Vernon Supp.1985) (emphasis added).
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