Prudential Ins. Co. of Am. v. Durante
| Decision Date | 29 August 2014 |
| Docket Number | No. 08–12–00077–CV.,08–12–00077–CV. |
| Citation | 443 S.W.3d 499 |
| Parties | The PRUDENTIAL INSURANCE COMPANY of America and Pruco Life Insurance Company, Appellants/Cross–Appellees, v. Irasema Sagarnaga DURANTE, Appellee/Cross–Appellant. |
| Court | Texas Court of Appeals |
Charles T. Frazier Jr., Dallas, for Appellants.
David R. Pierce, Pierce & Little, PC, El Paso, for Appellee.
Before McCLURE, C.J., RIVERA, and RODRIGUEZ, JJ.
The Prudential Insurance Company and Pruco Life Insurance Company (collectively “Pruco”) appeal a judgment entered against them in favor of Irasema Sagarnaga Durante (“Sagarnaga”). This case arises out of Pruco's non-payment of life insurance proceeds based on a rejected change of beneficiary form by the insured. Pruco brings six issues: (1) Sagarnaga lacked standing to sue Pruco for breach of the insurance policy and common-law and statutory bad faith; (2) the evidence is legally and factually insufficient to support the finding Pruco breached the insurance policy; (3) the evidence is legally and factually insufficient to support the finding that Pruco breached common-law and statutory duties of good faith and fair dealing, specifically Chapters 541 and 542 of the Texas Insurance Code; (4) the trial court erred in admitting expert testimony over Pruco's objection; (5) the trial court erred by awarding Sagarnaga 18 percent statutory penalty interest on the claim amount of $375,000; and lastly (6) the trial court erred by awarding Sagarnaga attorney's fees. Sagarnaga cross-appealed, asserting in a single issue the trial court abused its discretion by failing to award her post-trial and appellate attorney's fees. We affirm in part, reform the judgment, and remand in part.
Dr. Arturo Garcia Fernandez was married to Margarita Henric Chavez, with whom he had three children: Eloisa, Cecilia, and Arturo Garcia Henric, Jr. In July 2002, Dr. Garcia purchased a Pruco life insurance policy (the “Policy”) for a death benefit of $750,000. In the application, Dr. Garcia designated his wife, Margarita, as the primary beneficiary and contingent beneficiaries were their three children. After Margarita's death in 2005, Dr. Garcia married Irasema Sagarnaga Durante in 2007.
In February 2008, Dr. Garcia called Pruco regarding the Policy. In that recorded conversation, Dr. Garcia requested a change of beneficiary form (“COB”) for the Policy. Pruco instructed Dr. Garcia that they would complete the COB form and send it to him for his approval and signature. The Pruco representative asked Dr. Garcia for the names of the beneficiaries and the percentages each would be assigned.1 Dr. Garcia replied that he wanted to designate his wife, Sagarnaga as a 50 percent beneficiary and his adult children as the remaining 50 percent beneficiaries. Pruco sent the COB form to Dr. Garcia, but the requested beneficiary designations were not included on the COB form.
On April 3, 2008, Dr. Garcia and Sagarnaga went to the El Paso Prudential office. Dr. Garcia spoke with Solis, a Pruco associate, and Schmid, a Pruco insurance agent. Sagarnaga, who speaks some English, was able to understand some of the discussion between her husband, Solis, and Schmid. Dr. Garcia explained to Sagarnaga the changes he was making to the Policy. Sagarnaga understood, during this meeting, Dr. Garcia executed the COB form making her a 50 percent beneficiary and the children the remaining 50 percent beneficiaries of the Policy.
Dr. Garcia's COB form, dated April 3, 2008, listed the beneficiaries as follows: the primary beneficiary designation stated Sagarnaga was to receive 50 percent of the Policy proceeds, 12 percent to Arturo Garcia, Jr., 13 percent to Eloisa, and 25 percent to Cecilia. The contingent beneficiary, however, in the section titled “Additional/Special Beneficiary Requests ” [Emphasis added] on the COB form, read as follows:
Pay 50% to Irasema Sagarnaga Durante, wife, if living otherwise same proportion of this to my two daughters and son, Arturo Garcia, Cecilia Garcia, Eloisa Garcia, if living, otherwise pay balance if any to Irasema Sagarnaga Durante, wife.
Pursuant to Pruco's contract, a policy owner could change, inter alia, the beneficiary, by sending to Pruco a request “in a form that meets our needs.” According to the terms of the Policy, if Pruco received a COB request, Pruco would record the change and file it. The change of beneficiary would be effective as of the date the request was signed. Pruco's internal procedures were clear that in order for a COB to be accepted in its entirety, it “must clearly specify the settlement to be in effect at the death of the Insured.”
The signed COB form by Dr. Garcia was received by Pruco on April 10, 2008. The COB form was routed to the “settlement options” department where it was reviewed by Mehrotra, a Pruco associate. While the primary beneficiary designation was satisfactory, Mehrotra found Dr. Garcia's changes for the contingent beneficiary or “additional/special beneficiary designation ” to be “ambiguous.” Based on the ambiguity regarding the contingent beneficiaries, Mehrotra initiated a “turndown procedure,” in which Pruco did not accept or record, in its entirety, Dr. Garcia's COB form. Pruco then prepared a new COB form. The new COB form did not change the primary beneficiary designation, it only modified the language for the additional/special beneficiary section, based on what Mehrotra believed Dr. Garcia was attempting to do. The beneficiary provision proposed by Mehrotra was as follows:
Mehrotra sent the new COB form to Dr. Garcia on April 14, 2008, and requested he review it. If after the review, the COB form stated what Dr. Garcia intended for the additional/special beneficiary section, he was to sign and return it to Pruco. If not, Dr. Garcia should contact Pruco to obtain a corrected COB form. Dr. Garcia received this correspondence, but there is no evidence the letter was opened or read by Dr. Garcia before he died.2
Dr. Garcia died in Brazil on September 22, 2009. Dr. Garcia's daughter, Eloisa, advised Pruco of his death two days later. The children each filed a claim for benefits under the Policy in October 2009.
On October 21, 2009, Sagarnaga met with Schmid in El Paso. She asserted that Dr. Garcia had changed the beneficiary designation to include her under the Policy. Pruco informed Schmid about the issue of Dr. Garcia's COB form. Schmid suggested Sagarnaga contact Pruco directly.
Sagarnaga then called Pruco and was advised Dr. Garcia's COB form naming her as a 50 percent beneficiary had not been accepted or recorded. Pruco stated Sagarnaga was not a beneficiary under the Policy. Pruco instructed Sagarnaga to submit a written statement regarding her claim including any additional supporting information within fifteen days.3
That same day, October 21, after her telephone call to Pruco, Sagarnaga sent a letter stating she was a beneficiary and made a claim for benefits. Pruco referred Sagarnaga's statement to its claims department to handle as an adverse claims case on October 27.4 On November 3, Pruco responded in writing to Sagarnaga, and explained that Dr. Garcia's COB form was unacceptable. Pruco stated that due to the lack of response by Dr. Garcia to their “turndown” letter, their position was that their liability was to the contingent beneficiaries, the three children. On November 13, Pruco sent a second letter reiterating their position and stated that if Sagarnaga had documentation to support her claim to submit it within ten days. On November 18, the claims of all parties were formally referred to Pruco's legal department. According to Pruco, the claim was referred after Pruco performed an internal investigation and they determined Sagarnaga's claim had merit.
On December 17, 2009, the children filed suit against Pruco, seeking payment of the entire death benefit, plus statutory penalties. On January 8, 2010, Pruco answered, counterclaimed and included a third party complaint interpleader action naming Sagarnaga. On March 9, 2010, Sagarnaga filed a counterclaim against Pruco, seeking 50 percent of the disputed death benefit and damages for: (1) breach of contract; (2) violation of the Prompt Payment Statute;5 (3) common-law bad faith; and (4) statutory bad faith claims. Sagarnaga also filed a third-party claim against Schmid and Prudential, seeking the same damages based on Schmid's purported negligence and Texas Insurance Code violations.
On March 9, 2010, Pruco filed a motion asking the court to interplead the death benefit pursuant to Tex.R.Civ.P. 43, find they had completely discharged all their liabilities to the claimants and dismiss with prejudice the lawsuits against them. On March 29, Sagarnaga filed her response arguing Pruco had not met the elements for relief under a Rule 43 interpleader action. At a hearing on March 25, 2010, the court granted Pruco's request to deposit 50 percent of the death benefit ($375,000) into the registry of the court, but denied Pruco's motion to dismiss. At that time, the children and Sagarnaga agreed 50 percent of the Policy benefit was to be paid directly to the children. On June 3, 2010, Pruco deposited $382,483.50 into the court's registry. Prior to trial, the children and Sagarnaga entered into another settlement agreement for an additional $90,000 from the remaining registry funds to be paid to the children. The children did not participate in the trial and the court later dismissed their claims.
The trial court conducted a two day trial in August 2011.6 At trial, a Pruco employee acknowledged the primary...
To continue reading
Request your trial
-
United of Omaha Life Ins. Co. v. Womack-Rodriguez
...Murry, has standing to pursue a breach of contract under Texas law upon the policyholder's death. Prudential Ins. Co. v. Durante , 443 S.W.3d 499, 509 (Tex. App. – El Paso 2014, pet. denied). Similarly, Durante also addressed the Texas Prompt Pay Statute and particularly, Tex. Ins. Code Ann......
-
Doctors Hosp. at Renaissance, Ltd. v. Emp'rs Ins. Co. of Wausau
...3d 455, 468–69 (W.D. Tex. 2020) ).59 United of Omaha Life Ins. Co. , 461 F. Supp. 3d at 468 (citing Prudential Ins. Co. v. Durante , 443 S.W.3d 499, 509 (Tex. App.—El Paso 2014, pet. denied) ).60 SOME, Inc. v. Hanover Ins. Co. , No. CV 21-493 (BAH), 2021 WL 2935893, at *6 (D.D.C. July 13, 2......
-
Lynch v. Lynch
...attorney's fees, and the attorney's fees award should be reconsidered in light of that success. See Prudential Ins. Co. v. Durante , 443 S.W.3d 499, 515 (Tex. App.—El Paso 2014, pet. denied) (reversing and remanding appellate attorney fee award for redetermination because appeal was partial......
-
Robertson v. Kids Kampus Creative Learning Ctr.
...law, "[a]n insurance policy is a contract between the insurer and the insured/owner of the policy." Prudential Ins. v. Durante, 443 S.W.3d 499, 506 (Tex. App.—El Paso 2014, pet. denied) (citing Hernandez v. Gulf Grp. Lloyds, 875 S.W.2d 691, 692 (Tex. 1994)). A policy's terms govern the owne......