Lone Star Life Ins. Co. v. Griffin

• Decision Date: 26 October 1978
• Docket Number: No. 8117,8117
• Citation: 574 S.W.2d 576
• Parties: LONE STAR LIFE INSURANCE COMPANY, Appellant, v. Joseph B. GRIFFIN, Appellee.
• Court: Texas Court of Appeals

Page 576

574 S.W.2d 576

LONE STAR LIFE INSURANCE COMPANY, Appellant, v. Joseph B. GRIFFIN, Appellee.

No. 8117.

Court of Civil Appeals of Texas, Beaumont.

Oct. 26, 1978.

Rehearing Denied Nov. 16, 1978.

James J. Zeleskey, Lufkin, for appellant.

John Seale, Jasper, for appellee.

KEITH, Justice.

Defendant below appeals from an adverse judgment entered in a suit for disability benefits under a policy of insurance it had issued to the plaintiff. Upon the basis of the jury's answers to certain special issues, to be discussed hereinafter, the judgment awarded plaintiff the present or discounted value of all past due installments and those to accrue in the future, $34,518.40, twelve percent penalty, $4,142.21, plus $9,900.00 in attorney's fees. ¹

Purporting to act under Art. 17.50(b), Business and Commerce Code, and Section 16, Art. 21.21 of the Insurance Code, each of such awards was trebled so that the total judgment against the defendant was in the sum of $132,181.83, with interest at nine percent per annum. Defendant has perfected the appeal with a myriad of points of error complaining of the basic award and of the action of the court in trebling the recovery under the cited statutes.

1. The Suit on the Policy

Legal and factual sufficiency points are urged against the jury finding in Special Issue No. 3 that plaintiff's accidental injury on February 2, 1975, which resulted in his total disability was permanent. We will follow the accepted standards of review in our discussion of the evidentiary points. See Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965).

Plaintiff testified that on the night of February 2, 1975, as he was returning to his home from his farm, he passed by his drugstore. As was his custom, he entered the store to see if everything was normal (having been burglarized several times in the past). He smelled smoke which he found to be coming from the rear of his building. He testified that he emptied his fire extinguisher but his efforts were futile; that he was trying to get out of the building when an aerosol can exploded in his face; that he lost consciousness while upon the floor of the store near a door, and regained consciousness later in a hospital in Jasper.

Dr. Lee Popejoy testified as to his treatment of the plaintiff beginning at about two in the morning following the fire. He told of finding external burns on several parts of plaintiff's body but the most serious injury was to his lungs from the inhalation of smoke and fumes. Plaintiff was hospitalized for several weeks and testified that he was unable to do any work for several months thereafter.

Plaintiff operated a one-pharmacist store on the Courthouse Square in Newton and he secured the services of a retired pharmacist to help him for a while. He testified that he was unable to do the work of a pharmacist because of his difficulty in breathing and that while his health had improved, he still was unable to do his work in the store.

Dr. Popejoy testified positively and unequivocally that plaintiff's injuries were caused by the inhalation of the smoke and fumes which resulted in his total and permanent disability. Dr. Charles Anderson examined plaintiff for the defendant. His examination was more than two years after the accident and he found plaintiff to be only partially disabled, at the worst. Anderson attributed plaintiff's condition to his constant smoking of cigarettes which he admitted to have been addicted to for approximately fifty years. Anderson testified that plaintiff could do all of the work of a pharmacist but could not do any sustained heavy lifting.

Having condensed our lengthy factual record, we overrule defendant's first five points of error challenging the legal and factual sufficiency of the evidence to sustain the finding that the total disability was permanent.

2. Anticipatory Breach of the Insurance Contract

The policy of insurance provided that defendant would pay plaintiff $1,000 per month for sixty months for an accidental injury resulting in total disability and that it would pay $1,000 per month for twenty-four months for total disability resulting from sickness. Defendant paid several monthly payments of $1,000, noting on each check that the payment was for accidental injuries. Without any change in its medical information in its file and for some undisclosed reason the checks were coded to indicate that the disability was the result of sickness, not an accident. ² The twenty-fourth payment was coded to indicate a sickness disability payment and a letter was written which we quote in the margin. ³ The check indicated it was the last payment.

"If we can be of further assistance to you, please do not hesitate to contact us."

Plaintiff alleged and now contends that the defendant, by sending the quoted letter, "repudiated the provisions of its policy dealing with payment of benefits for disability resulting from accident" so as to entitle him to recover not only the past due payments but "also the present cash value of the future payments which are unaccrued." Although defendant contended that there was no anticipatory breach, the parties stipulated that a discount rate of five percent would be applied (and it was so applied) to the unaccrued payments in the judgment.

In Special Issue No. 6, the jury found that the defendant "repudiated the provisions of its policy dealing with payments of benefits for disability resulting from accident after making payments for 24 months." ⁴

Points six through ten, inclusive, attack the jury finding that the defendant repudiated its policy provisions upon the grounds that the evidence is legally and factually insufficient to sustain such finding. Actually, there are no disputed facts concerning such issue. Defendant wrote the letter; but, when plaintiff complained, it reopened the case, and had him examined by another doctor. Finally, after receiving Dr. Anderson's report, it tendered an additional $1,900 for disability accruing between the last payment and Anderson's examination. Insofar as there is a dispute in the record, we will follow the usual standards of review.

The parties cite and rely upon (or distinguish) the identical cases to support their opposing views. The latest expression on the subject which has come to our attention is the Supreme Court's opinion in Republic Bankers Life Ins. Co. v. Jaeger, 551 S.W.2d 30 (Tex.1976). The Court of Civil Appeals had affirmed a judgment for unaccrued monthly benefits with no allowance of a discount for present payment. (537 S.W.2d 503, 506) The Supreme Court found this to be error and the entire case was remanded to the trial court.

The Court also reaffirmed the correctness of the rule of law enunciated in Universal Life & Accident Ins. Co. v. Sanders, 129 Tex. 344, 102 S.W.2d 405 (1937). It is significant to note that the Supreme Court did not in any manner criticize or note its dissatisfaction with the basic holding of the Court of Civil Appeals, namely, that the letter quoted by the Court of Civil Appeals (537 S.W.2d at 505) "showed Republic's distinct, unequivocal and absolute intent to refuse to perform its obligation under the insurance contract" so as to constitute a repudiation of the policy.

In Jaeger, the insurer attempted to effect a unilateral rescission of the policy; here, defendant argues, it did no more than deny "that the facts as presented entitled the insured to recover under the policy." The difficulty with this argument is that sometime earlier, and for a reason even now unarticulated, the defendant had downgraded plaintiff's claim from an accidental injury causing total disability with a 60-month maximum payment to a sickness caused disability with a 24-month maximum payment period. This action was taken at a time when the insurer admittedly had no information (medically or otherwise) in its knowledge which would have authorized any change.

Defendant argues that under the doctrine of the Sanders Case, supra (102 S.W.2d at 407), there is no anticipatory breach shown when the insurer "merely denies liability or claims defenses under the terms of the policy" or refuses to pay "upon mistake or misunderstanding as to matters of fact or upon an erroneous construction of the disability clause." Considering the letter from its four corners and the condition of defendant's file at the time it was written, we are not impressed with this argument. We find no merit in the points under consideration and each is overruled. Jaeger, supra (537 S.W.2d at 506).

3. Treble Damages

Defendant has various points of error complaining of the action in overruling its objections to Special Issues Nos. 10 and 11, ⁵ in not disregarding the jury's answers to these special issues, and in rendering judgment for treble damages. We will discuss only those points necessary in rendering our decision.

The jury, in answering Special Issues Nos. 10 and 11 affirmatively, went one step further than saying defendant repudiated or breached its insurance contract with plaintiff. It found that defendant's actions constituted unconscionable conduct and false and misleading representations as to the benefits provided by the policy. Accordingly, the trial court concluded that defendant had violated the Deceptive Trade Practices Act, Tex.Bus. & Comm.Code Ann. § 17.50(a)(3), (4) (Supp.1978). We disagree with this conclusion and hold that as a matter of law defendant's actions did not constitute unconscionable conduct or false and misleading representations as defined in Section 17.50(a).

Under the plain provisions of his insurance policy, plaintiff had certain rights and defendant had certain obligations. Plaintiff was entitled to be paid $1,000 per month by defendant for a maximum of sixty months while he was totally disabled because of an accidental injury. When plaintiff became disabled, defendant's obligation to pay was triggered, but defendant breached this obligation after making payments for only twenty-four months....