Life Ins. Co. of Southwest v. Brister

• Decision Date: 18 December 1986
• Docket Number: No. 2-85-062-CV,2-85-062-CV
• Citation: 722 S.W.2d 764
• Parties: LIFE INSURANCE COMPANY OF the SOUTHWEST and Texas Steel Company, Appellants, v. M.C. BRISTER, Jr., on Behalf of Himself and all Others Similarly Situated, Appellees.
• Court: Texas Court of Appeals

Page 764

722 S.W.2d 764

LIFE INSURANCE COMPANY OF the SOUTHWEST and Texas Steel Company, Appellants, v. M.C. BRISTER, Jr., on Behalf of Himself and all Others Similarly Situated, Appellees.

No. 2-85-062-CV.

Court of Appeals of Texas Fort Worth.

Dec. 18, 1986.

Shannon, Gracey, Ratliff & Miller and John H. Hudson, III, and Brown, Herman, Scott, Dean & Miles and J. Lyndell Kirkley, Fort Worth, for appellants.

Law Offices of Wallace Craig, P.C., and W. Brice Cottongame, Fort Worth, for appellees.

Before the court en banc.

OPINION

JOE SPURLOCK, II, Justice.

This is an interlocutory appeal, pursuant to TEX.REV.CIV.STAT.ANN. art. 2250 (Vernon Supp.1986), from an order determining that this case should be maintained as a class action under TEX.R.CIV.P. 42. The trial court designated M.C. Brister, Jr. (hereinafter referred to as appellee) to represent a class of employees of appellant, Texas Steel Company. The employees in the class were those who received workers' compensation benefits but did not receive the disability benefits provided under the Employee Benefit Plan issued by appellant, Life Insurance Company of the Southwest. The class action claim alleges breach of contract and misrepresentation.

We affirm the trial court's order certifying this class.

Appellants raise three points of error challenging the proceedings at the hearing and the certification order. In points of error one and two, appellants contend that the trial court abused its discretion in certifying this case as a class action because: (1) the appellee made no showing that this case is maintainable as a class action under the requirements of TEX.R.CIV.P. 42(b); and (2) the proper application of law to the undisputed facts in this case establishes that this case is not maintainable as a class action under any of the provisions of TEX.R.CIV.P. 42(b). In the third point of error, appellants argue that the trial court erred in refusing to allow the introduction of evidence about, and the cross-examination of appellee concerning, the settlement of a lawsuit in the Federal District Court that involved claims made on the same basis and facts as those involved in this state court lawsuit.

Appellee's claim of breach of contract and misrepresentation involves the accident and sickness weekly benefits under the Employee Benefit Plan, Plan No. 902, issued by Life Insurance of the Southwest, as provided to Class No. 2 employees of the Texas Steel Company since January 1, 1978. Class No. 2 covers only full-time hourly employees. For these employees, the Employee Benefit Plan provides accident and sickness weekly benefits in the following amounts:

Weekly Benefits will be paid commencing with the

1. 1st day of disability due to accidental bodily injury or the

2. 4th day of disability due to sickness

Weekly Benefits are payable for a maximum period of

1. 13 weeks of disability due to sickness,

2. 26 weeks of disability due to accidental bodily injury

Weekly Benefits payable: $80.00

If the total amount of indemnity payable as Workmen's Compensation and A & S Benefits under this Plan exceeds 66 2/3% of the employee's earnings the amount of A & S benefit will be reduced so that the total payment will not exceed 66 2/3% of earnings.

In order to receive these accident and sickness weekly benefits, the Employee Benefit Plan requires notice and proof of claim according to the following provisions:

Written notice of injury or of sickness upon which claim may be based must be given to the Plan within thirty days of the date of the commencement of the first loss for which benefits arising out of each such injury or sickness may be claimed.

Notice given by or in behalf of the covered person to the Plan at its Executive Office or to any authorized agent of the Plan with particulars sufficient to identify the covered individual, shall be deemed to be notice to the Plan. Failure to furnish notice within the time provided in the Plan shall not invalidate any claim if it shall be shown not to have been reasonably possible to furnish such notice and that such notice was furnished as soon as was reasonably possible.

The Plan, upon receipt of the notice required by the Plan, will furnish to the claimant such forms as are usually furnished by it for filing proof of loss. If such forms are not so furnished within fifteen days after the Plan receives such notice, the claimant shall be deemed to have complied with the requirements of the Plan as to proof of loss upon submitting, within the time fixed in the Plan for filing proofs of loss, written proof covering the occurrence, character and extent of the loss for which claim is made.

Affirmative proof of loss of time on account of disability or of hospital confinement for which claim is made must be furnished to the Plan within ninety days after the termination of the period for which claim is made. Affirmative proof of any other loss on which claim may be based must be furnished to the Plan not later than ninety days after the date of such loss.

The original 1978 Employee Benefit Plan stated that the appellants would pay the accident and sickness weekly benefits only under the following terms: ¹

Upon receipt of notice and due proof as required herein, that any employee, while covered for Accident and Sickness Weekly Benefits under the plan shall have become wholly and continuously disabled so as to be prevented thereby from performing any and every duty pertaining to his employment, as a result of any accidental bodily injury or any sickness and that during the period of such disability such employee shall have been under the regular and direct care of a licensed physician and surgeon;

The Plan agrees to pay, subject to the terms and conditions hereof, Weekly Benefits for the period during which the employee is so disabled and under such care; provided, however, that

1. Weekly Benefits of the amount specified in the Schedule of Benefits shall be paid commencing with the applicable day of disability specified in the Schedule of Benefits, and

2. In no event will such Weekly Benefits be paid for longer than the applicable maximum period, specified in the Schedule of Benefits, for any one continuous period of disability whether due to one or more causes, for all successive periods of disability due to the same or related cause or causes which are separated by less than two weeks, of continuous, full-time, active work, except that if weekly benefits are payable because of injury as provided in 1. above, the maximum period shall be two (2) times that shown in the Schedule of Benefits.

If the employee returns to full-time, active work for a continuous period of at least two weeks, any subsequent disability shall be deemed a new disability irrespective of its cause or causes.

In no event will such Weekly Benefits be paid for any disability caused by pregnancy.

In his breach of contract claim, appellee contends that he and other Texas Steel Company employees suffered accidental bodily injury and/or sickness entitling them to benefits from workers' compensation and from the Employee Benefit Plan, but that the appellants failed to pay the required benefits under the Plan. Appellee alleges that all conditions precedent to the liability of appellants under the Plan were performed and had occurred, except in cases where the appellants' acts induced these employees not to perform.

Appellee also claims that the appellants made various misrepresentations concerning the accident and sickness weekly benefits of the Employee Benefit Plan which constituted violations of the Unfair Competition and Unfair Practices provisions in the Texas Insurance Code, TEX.INS.CODE ANN. art. 21.21, sec. 4 (Vernon 1981), the Texas Deceptive Trade Practices-Consumer Protection Act (DTPA), TEX.BUS. & COM.CODE ANN. sec. 17.41 et seq. (Vernon Pamph.1986), and the Unfair Claim Settlement Practices Act, TEX.INS.CODE ANN. art. 21.21-2 (Vernon 1981). ² Accordingly, appellee claims that each injured class member is entitled as a matter of law to receive three times the amount of actual damages sustained as a result of appellants' misrepresentations.

In his misrepresentation claim in the original petition, appellee refers to a paragraph in a booklet prepared and distributed by the appellants to all active Texas Steel Company employees in the first quarter of 1979, which describes the accident and sickness weekly benefits under the Employee Benefit Plan. This paragraph states:

Weekly benefits are payable in the event of loss of earning due to accident or sickness which prevents you from performing any and every duty pertaining to your employment. For occupational accident or sickness, the difference between worker's compensation and the weekly indemnity maximum shown in the Schedule of Benefits will be paid. ³

Appellee claims that this paragraph does not accurately reflect the provisions of the Plan contract and therefore constitutes a misrepresentation to the Texas Steel Company employees. In the same paragraph of his original petition, appellee also alleges that in addition to the misrepresentation in the employee booklet, various agents and representatives of appellants misrepresented to the class members the benefits due under the Employee Benefit Plan.

In his Motion for Class Certification, appellee claims to represent all employees of Texas Steel Company who were entitled to receive both workers' compensation benefits and $80 per week of disability and/or sickness benefits under the Employee Benefit Plan, but who did not receive these weekly benefits for the period from January 1, 1978 until December 31, 1981. At the hearing on his Motion for Class Certification, appellee relied solely on his own testimony and on the answers of appellant Texas Steel Company to his First Set of Interrogatories.

The answers to the First Set of Interrogatories, introduced into evidence at the certification hearing, reveal that: (1) from 1979 to 1981, there were 146...