Marcotte v. American Motorists Ins. Co., 82-2207

• Decision Date: 11 July 1983
• Docket Number: No. 82-2207,82-2207
• Citation: 709 F.2d 378
• Parties: Evis MARCOTTE, Plaintiff-Appellee, v. AMERICAN MOTORISTS INSURANCE CO., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 378

709 F.2d 378

Evis MARCOTTE, Plaintiff-Appellee, v. AMERICAN MOTORISTS INSURANCE CO., Defendant-Appellant.

No. 82-2207.

United States Court of Appeals, Fifth Circuit.

July 11, 1983.

William W. Vernon, Daniel M. McClure, Fulbright & Jaworski, Houston, Tex., for defendant-appellant.

R. Leon Pettis, Michael L. Baker, John G. Bissell, Beaumont, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Eastern District of Texas.

Before REAVLEY and JOHNSON, Circuit Judges, and WYZANSKI ^*, District Judge.

REAVLEY, Circuit Judge:

In this diversity case a jury returned a verdict for plaintiff Evis Marcotte, finding that he was totally and permanently disabled under the terms of a disability insurance policy with his former employer, Velsicol Chemical Corporation. The jury also found that Velsicol's insurer, American Motorists Insurance Company ("AMIC"), a member of the Kemper Group of insurance companies ("Kemper"), made certain misrepresentations to Marcotte when he became insured, thereby violating the Texas Deceptive Trade Practices Act, Tex.Bus. & Com.Code Ann. tit. 4, Sec. 17.41 et seq. (Vernon Supp.1982) [hereinafter referred to as "DTPA Sec. ____"]. The jury awarded Marcotte $221,655 on the DTPA claim, and this award was tripled by the district court in accordance with that statute. AMIC appeals from the award of $664,965 treble damages plus $30,000 in attorneys' fees. We reverse the award of damages under the DTPA, hold that Marcotte's cause of action under that statute is time-barred, and remand to the district court for the entry of judgment for damages on Marcotte's breach of contract claim.

Factual Background

Evis Marcotte began work as a process operator for Velsicol in February of 1975. At that time he signed an enrollment card provided to him by Velsicol for a group long-term disability insurance policy with AMIC. His signature authorized Velsicol to deduct the monthly insurance premium from his salary.

The disability policy signed by Marcotte provided that monthly benefit payments would begin 180 days after an employee suffered a disabling injury. Such benefits would be paid until the employee reached age 65, as long as the employee remained totally disabled. The policy contained two definitions of "total disability." During the first two years after an injury, an employee was totally disabled if he was completely unable to perform each and every duty pertaining to his occupation, i.e., in this case, Marcotte's job with Velsicol. After two years of payments, total disability was defined as the complete inability of an employee to engage in each and every gainful occupation for which he was reasonably fitted by education, training or experience.

On January 10, 1976, less than one year after he began work for Velsicol, Marcotte fell from a highway billboard sign while working on a moonlighting job. He broke the heel bones in his feet as a result of the fall, which has since necessitated corrective surgery on several occasions. Because he was unable to return to work at Velsicol, Marcotte applied for disability insurance benefits. An adjuster from Kemper visited Marcotte in his home and gave him a booklet explaining the terms of the policy. This visit was allegedly the first time Marcotte ever received anything in writing that contained the provisions of his policy.

On July 8, 1976, upon expiration of the 180 day waiting period following the injury, AMIC or Kemper began paying monthly disability benefits to Marcotte. These payments were made for two years, plus a few additional days, until July 31, 1978. On August 18, 1978, Kemper wrote Marcotte that it was thereafter discontinuing the monthly disability payments because medical reports indicated that he did not meet the more stringent definition of total disability applicable beyond two years after an injury.

Marcotte filed this diversity action against AMIC on December 3, 1979, when Kemper refused to reinstate the disability benefit payments despite medical evidence from Marcotte's family physician that he was permanently and totally disabled. Although Marcotte originally alleged four separate theories of recovery, only the two theories that were ultimately submitted to the jury are relevant to this appeal: (1) breach of the insurance contract by AMIC by a wrongful denial of liability or coverage, based on Tex.Ins.Code Ann. art. 3.62; and (2) misrepresentations regarding the policy, based on the DTPA.

Special interrogatories were submitted to the jury. In interrogatories I and II the jury found that Marcotte was totally and permanently disabled under the terms of the policy on July 31, 1978, the date on which Kemper discontinued disability payments. The jury's answers to interrogatories I and II constitute a finding of liability under the breach of contract claim. In response to interrogatory III the jury found for Marcotte on the DTPA claim, writing in the blank provided that he had suffered damages of $221,655.

Timeliness of Marcotte's Claim under the DTPA

One of many contentions raised by AMIC on appeal is that Marcotte's misrepresentations claim under the DTPA is untimely, and therefore the district court's treble damage award of $664,965 must be reversed. We agree.

The DTPA was amended effective August 27, 1979, to provide a two year statute of limitations on all actions brought under that statute. See DTPA at Sec. 17.56A. There is no indication in the statute or in Texas case law, however, that this 1979 amendment operates retroactively. Though we are faced with the situation where no specifically identified limitations period was in effect in this DTPA case which arose before 1979, we conclude that Texas would also apply a two year limitations period--that found in the former Tex.Rev.Civ.Stat.Ann. art. 5526(4)--to DTPA claims arising before August 27, 1979.

At the time the factual circumstances herein occurred, art. 5526(4) prescribed a two year limitations period in actions where the indebtedness was not evidenced by a contract in writing. ¹ Marcotte's breach of contract claim was founded upon a written contract--the Kemper insurance policy--but the same cannot be said for his misrepresentations claim under the DTPA. In Texas a suit for treble damages under the DTPA is a claim for statutory damages, and the Texas courts have long held that a suit seeking to enforce an obligation created by statute is an "action for debt" covered by the two year limitations period of art. 5526(4). See Rose v. First State Bank, 122 Tex. 298, 59 S.W.2d 810 (1933); Overton v. City of Houston, 564 S.W.2d 400, 403 (Tex.Civ.App.--Houston [1st Dist.] 1978, writ ref'd n.r.e.). Furthermore, Marcotte's DTPA claim is founded on certain misrepresentations he contends that AMIC made concerning the policy's coverage, and the two year statute of limitations has traditionally been applied to actions in tort for fraudulent misrepresentation. See Mooney v. Harlin, 622 S.W.2d 83, 84-85 (Tex.1981); Reynolds-Southwestern Corp. v. Dresser Industries, Inc., 438 S.W.2d 135, 140 (Tex.Civ.App.--Houston [14th Dist.] 1969, writ ref'd n.r.e.). Thus, we conclude...