RZQ, L.L.C. v. McClelland & Hine, Inc.
| Decision Date | 15 April 2021 |
| Docket Number | NUMBER 13-19-00471-CV |
| Parties | RZQ, L.L.C., HAMEED QURAISHI, M.D., RAFATH QURAISHI, M.D., AADAM QURAISHI, M.D., AND ADVANCED MEDICAL IMAGING, L.L.C., Appellants, v. MCCLELLAND AND HINE, INC., Appellee. |
| Court | Texas Court of Appeals |
On appeal from the 389th District Court of Hidalgo County, Texas.
Before Chief Justice Contreras and Justices Longoria and Tijerina
In this appeal concerning issuance of a commercial surplus lines insurance policy, appellants RZQ, L.L.C. (RZQ), Hameed Quraishi, M.D., Rafath Quraishi, M.D., Aadam Quraishi, M.D.,1 and Advanced Medical Imaging, L.L.C. argue that the trial court erred by granting summary judgment dismissing their claims against appellee McClelland and Hine, Inc. (MHI). We affirm in part and reverse and remand in part.
MHI is a surplus lines insurance agent based in San Antonio.2 In 2011, appellants hired Felipe Farias, an insurance agent, to obtain property and liability coverage for their medical offices and equipment in Brownsville, Weslaco, McAllen, and Edinburg. Farias contacted MHI underwriter Wendy O'Brien, who, in turn, contacted Dave Pulley, an underwriter with Insurance Exchange Brokerage Services (IEBS), an unlicensed surplus lines insurer and an affiliate of Prime Insurance Company (Prime). On May 18, 2011, Pulley provided a written "Indication Quote" to O'Brien. O'Brien then altered the quote by removing Pulley's and IEBS's names and contact information, by adding her own name and contact information and that of MHI, and by changing the annual premium amount. O'Brien forwarded the altered quote to Farias, and appellants accepted it.
IEBS sent a binder to MHI on June 3, 2011. See TEX. INS. CODE ANN. § 549.001(2) (). The binder was on IEBS letterhead but stated that Prime was the "Insurer." Before forwarding the binder to Farias, O'Brien altered it toreplace Prime's name and contact information with those of MHI.
It is undisputed that neither the quote nor the binder indicated that, as part of the proposed policy with Prime, appellants would be required to agree to forum-selection and choice-of-law clauses. It is also undisputed that MHI did not advise appellants of the existence of those clauses in the Prime policy.
On June 22, 2011, a storm caused damages to appellants' office and equipment in McAllen. Appellants submitted a claim to Prime asserting they had incurred over $1.4 million in property damages from the storm, including the loss of an $800,000 MRI machine. A dispute arose, and Prime refused to pay the claim. In June of 2013, appellants sued Prime and other defendants3 in Hidalgo County, Texas, for breach of contract, negligence, and violations of the Texas Deceptive Trade Practices Act (DTPA) and the Texas Insurance Code. Appellants alleged that Prime failed to pay "reasonable and necessary benefits" as the policy required; misrepresented a material fact or policy provision; and failed to effectuate a prompt, fair, and equitable settlement of their storm damage claim. See id. § 541.060.
Prime moved to dismiss appellants' suit on grounds that the policy contained a mandatory forum selection clause requiring any suit arising from the policy to be brought in Utah.4 The trial court denied Prime's motion to dismiss, and Prime filed a petition forwrit of mandamus with this Court. In August of 2014, Prime tendered a check to appellants in the amount of $48,500—purportedly representing the value of a replacement MRI machine, with interest since February 2013—but appellants refused the check. Subsequently, we conditionally granted mandamus relief to Prime and directed the trial court to enforce the forum-selection clause and to grant Prime's motion to dismiss. In re Prime Ins., No. 13-14-00490-CV, 2014 WL 5314514 (Tex. App.—Corpus Christi-Edinburg Oct. 16, 2014, orig. proceeding) (mem. op.). On February 13, 2015, in compliance with our ruling, the trial court vacated its earlier denial and rendered an order dismissing the claims against Prime.
On June 3, 2015, appellants filed an amended petition adding MHI as a defendant on claims of breach of contract, breach of fiduciary duty, negligence, and fraudulent inducement. Appellants argued MHI breached its agreement and its duties by, among other things, "failing to procure a commercial insurance policy in accordance with the quote and binder." They claimed that the binder (as "altered" by O'Brien) violated the insurance code because it was a "surplus lines document" but did not include a mandatory statutory disclaimer; did not state the name and address of the "true" insurer; and did not state the "coverage, conditions, and term of the insurance." See TEX. INS. CODE ANN. § 891.101(b), (c). Appellants also argued that MHI violated the insurance code because it: (1) lacked the authority to deliver the binder to Farias; and (2) failed to promptly issueand deliver the underlying Prime policy or a certificate, cover note, or other confirmation of insurance. See id. § 981.103; 28 TEX. ADMIN. CODE § 15.105. They further asserted that MHI misrepresented the terms and conditions of coverage and thereby fraudulently induced them into entering into the Prime policy.
MHI filed a motion for traditional and no-evidence summary judgment in March 2016, arguing that appellants' claims are barred by the law of the case doctrine due to our 2014 opinion in the mandamus proceeding. MHI also argued: (1) appellants' breach of contract claim fails because no contract existed between appellants and MHI and there is no evidence of breach; (2) appellants' negligence and fiduciary duty claims fail because there was no evidence MHI, as an agent or broker, breached any duty to appellants; and (3) appellants' fraud claim fails because they did not assert MHI made any misrepresentations about the coverage provided under the Prime Policy.
Appellants filed a response to the motion alleging that the law of the case doctrine does not apply because there has been no direct appeal in the case. Appellants further contended that there is more than a scintilla of evidence to support their claims. In support, they attached an affidavit by appellant Hameed Quraishi stating that MHI issued a quote which "created a false impression" because it "did not disclose restrictive enforcement of rights and remedies provisions, including, but not limited to a Utah forum selection clause and Utah choice of provision." Quraishi averred that "I would not have had an opportunity to discover the forum selection clause until the commercial insurance policy was delivered after coverage was bound." Quraishi stated that appellants would not have accepted the quote if MHI had made "a full disclosure" concerning the forum selection and choice of law clauses. He also stated that MHI "failed to promptly deliver"the Prime policy to appellants as required by the insurance code, see TEX. INS. CODE ANN. § 981.103(a); and that if the policy had been promptly delivered, appellants "would have procured additional insurance to allow for claims in Texas." Quraishi claimed in his affidavit that, as a result of MHI's negligence and misrepresentations, appellants incurred over $90,000 in attorney's fees required to litigate a declaratory judgment action brought by Prime against appellants in Utah.
The trial court granted MHI's summary judgment by written order on January 24, 2016, but later vacated that order and granted appellants' motion to file a supplemental summary judgment response. Appellants did so in 2017, attaching additional evidence, including excerpts of deposition testimony by a Prime corporate representative, Jaime Gustafson, stating that it was "MHI's responsibility" to "distribute the quote, binder and policy documentation" to appellants, and that MHI would have been familiar with Prime's forms and thus would have known about the forum selection and choice of law clauses in the policy. According to Gustafson, a "Policy Receipt Form and Coverage Conditions Summary" was attached to the policy which set forth the subject forum selection and choice of law clauses and stated:
TO THE PRODUCER AND INSURED: Coverage provided under the Policy referenced below is expressly conditioned upon you (the "Insured") reviewing and properly executing and returning this Policy Receipt Form and Coverage Conditions Summary ("Form") to us (the "Insurer") within 10 days of receipt of the Policy.
Gustafson stated that it was "the broker's responsibility" to get the form signed by the insured, and yet appellants did not sign and return the form. Appellants' supplemental response also included deposition testimony by an MHI supervisor, Leslie Ann Lloyd, stating that it appeared from an internal email that MHI had not yet received a copy of the policy as of August 25, 2011.
MHI filed an amended summary judgment motion on May 9, 2019, reiterating the arguments made in its earlier motion and additionally asserting that each of appellants' claims are barred by limitations. Appellants filed a response to the amended motion reiterating their earlier arguments and also contending their claims are not time-barred because "the facts that authorized [them] to seek judicial remedy against MHI for its representations concerning the Policy did not come into existence until February 13, 2015," the date on which the trial court first enforced the forum selection clause by dismissing their claims against Prime. Appellants did not contend in their response to the amended summary judgment motion that the limitations period was tolled due to application of the discovery rule, though they made that allegation in their live petition dated November 16, 2016.
The trial court granted...
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