Protective Life Ins. Co. v. Russell
| Decision Date | 31 January 2003 |
| Docket Number | No. 12-02-00018-CV.,12-02-00018-CV. |
| Citation | 119 S.W.3d 274 |
| Parties | PROTECTIVE LIFE INSURANCE COMPANY, Appellant, v. Peggy Ann RUSSELL, Appellee. |
| Court | Texas Court of Appeals |
James A. Ellis Jr., Carrington, Coleman, Sloman & Blumenthal, L.L.P., Dallas, for appellant.
B. Prater Monning, III, Monning & Wynne, L.L.P., Dallas, for appellee.
Panel consisted of WORTHEN, C.J. and GRIFFITH, J.
Our opinion of November 27, 2002 is withdrawn, and this opinion is issued to correct a clerical error in the original opinion of the court.
Appellant Protective Life Insurance Company ("PLIC") appeals the trial court's grant of summary judgment and award of damages in favor of Appellee Peggy Ann Russell ("Mrs. Russell"). PLIC presents five issues for review. We modify the trial court's judgment, and affirm as modified.
On September 16 and 24, 1998, James E. Russell signed and submitted to PLIC the two parts of an application for life insurance ("the Application") in order to obtain life insurance coverage for himself. Just above the signature lines on Part II of the Application is a section entitled "Declarations" which states:
I (We) represent that all statements and answers made in all parts of this application are full, complete and true to the best of my knowledge and belief. It is understood and agreed that:
(a) All such statements and answers shall be the basis of any insurance issued.
(b) No agent or medical examiner can make, alter or discharge any contract, accept risks, or waive the Company's rights or requirements.
(c) No insurance shall take effect unless: (1) a policy is delivered to the Owner; (2) the full first premium is paid while the proper insured(s) is (are) alive; and (3) there has been no change in health and insurability from that described in this application. However if the premium is paid as set forth in the Temporary Life Insurance Receipt and the Receipt is delivered to the Owner, the terms of Receipt shall apply.
The Application also contained two areas for the applicant to indicate whether the PLIC policy was intended to replace any other existing life insurance policies with any other companies. On Mr. Russell's application, he stated that he was currently insured by a $500,000.00 life insurance policy issued by Chubb Life and directly under that statement, he indicated that he intended for the PLIC policy to replace or change an existing insurance policy. In response to the question, "Within the past 5 years, has any proposed insured had a heart attack, stroke, cancer, heart surgery or any immune disorder?" Mr. Russell answered "no." Mr. Russell signed this application on September 16.
On September 24, the day he signed Part II of the Application, Mr. Russell submitted to a medical examination by PLIC and provided blood and urine samples. In the Application, Mr. Russell disclosed the name and address of his physician, Dr. Wayne Propst, and described the nature of his prior medical conditions and the treatment Dr. Propst rendered for those conditions. PLIC also secured a copy of Mr. Russell's medical records from Dr. Propst prior to issuing the policy in question. This part of the application, signed by both Mr. Russell and a medical examiner for PLIC, asks the following questions, along with others:
Have you ever had, been told you had, or been treated for:
a. Chest pain, pulse irregularity, high blood pressure, rheumatic fever, heart murmur, heart attack, stroke, or other disorder of the heart or circulatory system?
b. Cancer, tumor, or disorders of the lymph glands?
Mr. Russell checked the "yes" box next to question (a) and checked the "no" box next to question (b). On the application, Mr. Russell explained that he had been treated for high blood pressure and was taking medication for that condition. He also explained that every other year, he undergoes a routine physical examination by Dr. Propst. Mr. Russell stated that in his last physical in 1996, an electrocardiogram test was performed, a chest x-ray was taken and blood was drawn for testing. These diagnostic tests showed no abnormalities. PLIC took this information into account and adjusted the amount of the premium to reflect Mr. Russell's pre-existing condition.
In October and November 1998, Mr. Russell sought treatment from Dr. Propst for back pain, nausea and bloating. Dr. Propst performed a series of tests on Mr. Russell and eventually ruled out any fractures. A chest x-ray showed no abnormalities. On November 12, 1998, Dr. Propst ordered an abdominal sonogram, and the results showed a 36 x 33 mm mass in Mr. Russell's liver. Dr. Propst then ordered an abdominal CT scan that disclosed "multiple rounded low densities" in Mr. Russell's liver that "have the quite typical appearance of metastases." Dr. Propst, suspecting that Mr. Russell had colon cancer, ordered a colonoscopy. The colonoscopy was negative for colon cancer. Dr. Propst then referred Mr. Russell to an oncologist, Dr. Robert Droder.
On November 11, before Mr. Russell's appointment with Dr. Droder, PLIC wrote a letter to Mr. Russell thanking him "for allowing Protective Life to provide your life insurance coverage." At the same time, PLIC notified Mr. Russell's agent, Jimmy Tallent ("Tallent"), that Mr. Russell's application had been approved by PLIC.
On November 19, Mr. Russell had his first appointment with Dr. Droder, and Mrs. Russell accompanied her husband to the appointment. After examining Mr. Russell, Dr. Droder made an initial written evaluation of Mr. Russell's condition and explained to Mr. Russell that he had a "probable carcinoma of unknown primary." No biopsy had been performed, but Dr. Droder noted that Mr. Russell was "relatively asymptomatic." Dr. Droder did not tell Mr. Russell on November 19 that he in fact had cancer.
On November 20, Mr. Russell visited Tallent's office. Mr. Russell paid the initial premium and was provided the original policy. He also signed the policy on the signature page, right under the same "Declarations" language used in the PLIC application. Upon receipt of the policy, Mr. Russell did not tell Tallent that he had been told that he possibly had cancer. On November 25, five days after Mr. Russell paid for and received the PLIC policy, Dr. Droder told Mr. Russell that he had cancer.
Mr. Russell died January 27, 1999. On February 11, 1999, Mrs. Russell and Tallent completed and signed one of PLIC's claim forms and on February 12, Tallent mailed the claim form to PLIC. One hundred thirty-seven days later, on June 29, 1999, PLIC denied the claim on the basis that no condition precedent to the effectiveness of the insurance policy had occurred because Mr. Russell's health and insurability changed from the time that he filled out the application (September 16 and 24) and the date he physically obtained the policy (November 20).
Mrs. Russell filed suit on November 6, 2000. PLIC and Mrs. Russell each moved for summary judgment. On October 26, 2001, the trial court denied PLIC's motion for summary judgment and granted Mrs. Russell's motion on her claims for benefits under the policy and damages under article 21.55 of the Texas Insurance Code, plus prejudgment interest and attorney's fees. PLIC filed a motion for new trial and alternatively for modification of the judgment, but its motion for new trial was overruled and the motion to modify was granted only as to the accrual date for article 21.55 damages.
PLIC appeals the judgment, contending that the trial court erred in (1) granting summary judgment in favor of Mrs. Russell for the $500,000.00 life insurance proceeds and in denying PLIC's motion for summary judgment, (2) granting summary judgment in favor of Mrs. Russell for $216,739.72 in damages under article 21.55 of the Texas Insurance Code, (3) improperly calculating the amount of damages to be awarded under article 21.55, if any such damages should be awarded, (4) improperly calculating the amount of prejudgment interest, if any policy proceeds or article 21.55 damages should be awarded, and (5) awarding Mrs. Russell attorney's fees, if no policy proceeds or article 21.55 damages should be awarded.
In its first issue, PLIC argues that the trial court erred when it ruled that PLIC is liable to Mrs. Russell for the proceeds of the policy.
We review a summary judgment de novo. Vardeman v. Mustang Pipeline Co., 51 S.W.3d 308, 311 (Tex.App.-Tyler 2001, pet. denied). Accordingly, when cross-motions for summary judgment are filed, we consider the evidence supporting both motions. Cedillo v. Gaitan, 981 S.W.2d 388, 390 (Tex.App.-San Antonio 1998, no pet.). We uphold a Rule 166a(c) summary judgment only if the summary judgment record establishes there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law on a ground set forth in the motion. Tex.R. Civ. P. 166a(c); e.g., Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985). In deciding whether the summary judgment record establishes the absence of a genuine issue of material fact, we view as true all evidence favorable to the non-movant and indulge every reasonable inference, resolving all doubts in the non-movant's favor. Id. Since both parties moved for summary judgment, this court has the authority to (1) affirm the judgment, (2) reverse the judgment and render the judgment that the trial court should have rendered, or (3) reverse the judgment and remand the case to the trial court for further proceedings. Members Mut. Ins. Co. v. Hermann Hosp., 664 S.W.2d 325, 328 (Tex.1984).
The crucial issue is whether the language PLIC included in the life insurance policy and application is a condition precedent or a representation about Mr. Russell's condition at the time he obtained possession of the policy.
The language in the application page and the policy at issue...
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