Southland Lloyd's Ins. Co. v. Tomberlain

• Decision Date: 22 March 1996
• Docket Number: No. 06-94-00131-CV,06-94-00131-CV
• Citation: 919 S.W.2d 822
• Parties: SOUTHLAND LLOYD'S INSURANCE CO. and James D. Webb, III, Appellants, v. Charles W. TOMBERLAIN, Individually and d/b/a Charles Tomberlain Insurance Agency and Charles M. Tomberlain, Appellees.
• Court: Texas Court of Appeals

Page 822

919 S.W.2d 822

SOUTHLAND LLOYD'S INSURANCE CO. and James D. Webb, III, Appellants, v. Charles W. TOMBERLAIN, Individually and d/b/a Charles Tomberlain Insurance Agency and Charles M Tomberlain, Appellees.

No. 06-94-00131-CV.

Court of Appeals of Texas Texarkana.

Argued Jan. 17, 1996.

Decided March 22, 1996.

Edward L. Merritt, Gregory P. Grajczyk, Harbour, Kenley, Boyland, Smith & Harri, Longview, for appellants.

Rex Nichols, Jr., Law Offices of Rex Nichols, Jr., Longview, Gregory D. Smith, Ramey & Flock, Tyler, Donald W. Cothern, Ramey & Flock, Tyler, for appellees.

Before CORNELIUS, C.J., and BLEIL and GRANT, JJ.

PER CURIAM.

Southland Lloyd's Insurance Company and James Webb, III appeal the judgment entered in a suit by Charles M. Tomberlain for delayed payment of an insurance claim. Southland and Webb also appeal the judgments entered on their counterclaim against Charles M. (Chuck) Tomberlain, and on their third-party claim against Charles W. Tomberlain, d/b/a Charles Tomberlain Insurance Agency, for breach of contract and fiduciary duty. In addition, Chuck Tomberlain cross-appeals the trial court's failure to treble the damages awarded by the jury. Because we hold that the court erred in charging the jury, excluding expert testimony offered by Southland, and granting Chuck Tomberlain's motions for directed verdict, we reverse and remand the case for a new trial.

Charles W. Tomberlain is an independent insurance agent who owns the Charles Tomberlain Insurance Agency in Longview. His son, Chuck Tomberlain, is an agent with the agency. In addition, Chuck Tomberlain owns and manages numerous real properties in and around Longview. In 1988, Chuck Tomberlain purchased a small house, located at 220 Myrle Street in Longview, from the United States Department of Housing and Urban Development in a discount auction for $13,200.00. Chuck Tomberlain then spent approximately $500.00-$1,000.00 improving the house. On September 9, 1988, Chuck Tomberlain executed a contract for sale of the house to Trennis Willis for $20,000.00, to be paid in monthly installments over ten years at twelve percent interest. Willis immediately began occupying the house. Chuck Tomberlain, acting as agent for the Charles Tomberlain Insurance Agency, issued a policy on the house with Republic Insurance Company in August 1988. On August 15, 1991, the Republic insurance policy on the house expired. Chuck Tomberlain did not renew the policy at that time because his father's agency had stopped writing policies with Republic.

On October 11, 1991, again acting as his own agent, Chuck Tomberlain completed, signed, and submitted an application for a $25,000.00 fire insurance policy on the house with Southland. Southland thereafter approved the policy, but reduced the coverage amount to $20,000.00. Sometime before October 16, Willis vacated the house without notifying Chuck Tomberlain. Chuck Tomberlain immediately began cleaning and repairing the house, and arranged for a new tenant to move in December 1.

In the early morning hours of November 20, 1991, a fire started and burned substantial portions of the house's interior before being extinguished. Damage was estimated by the fire department at $20,000.00. A fire department investigation concluded that the fire was of suspicious origin and was started with the aid of accelerants.

Chuck Tomberlain telephoned Southland on November 20, the day of the fire, to notify them of the loss. The next day, November 21, he faxed them a completed claim form along with a copy of the fire marshal's report. Over the next two months, Chuck Tomberlain called Southland periodically to check on the status of the claim. He was told that an investigation was being conducted. The first written response that he received in regard to his claim was a letter from Webb dated January 24, 1992. The letter stated that Southland had determined that the fire was the result of arson and that the company had requested further investigation. Chuck Tomberlain's attorney sent a demand letter to Southland on February 4, requesting that it pay the claim in full.

Southland responded to the demand letter by way of two letters dated February 7, 1992. One letter, addressed to Charles W. Tomberlain, announced that Southland was immediately cancelling its agency agreement with the Tomberlain Agency and notified the agency that Southland intended to seek damages against it for its misrepresentations on the Myrle Street property application. The other letter was written to Chuck Tomberlain's attorney by J. Duncan Webb, IV, James Webb's son and a licensed attorney who performs work for Southland. In the letter, the younger Webb stated that Southland was investigating Chuck Tomberlain's claim as a potential arson incident and that Southland felt it had been "duped" by misrepresentations on the insurance application. The letter demanded that Chuck Tomberlain produce all records and documents of any kind pertaining to the property and to his employment history with the Tomberlain Insurance Agency.

On February 7, 1992, the same date as the two Southland letters, Chuck Tomberlain sued Southland and James Webb. The petition charged Southland with statutory violations in its handling of the claim, breach of the common-law duty of good faith and fair dealing, and negligence. Southland responded by denying all of the allegations of the petition and by filing a counterclaim against Chuck Tomberlain for breach of his fiduciary duties as an agent, breach of his contractual responsibilities as specified in the agency agreement, and negligence in preparing the application. Southland also filed a third-party action against the agency and Charles W. Tomberlain on the same grounds alleged against Chuck Tomberlain in the counterclaim, seeking indemnification from the agency should Chuck Tomberlain be awarded any damages from Southland. On September 9, 1992, in the midst of the lawsuit, Southland paid Chuck Tomberlain $20,900.00 in settlement of his claim, with the intention of pursuing its third-party action against the agency for indemnification. Chuck Tomberlain, however, refused to drop his suit, opting instead to seek additional damages against Southland.

At the close of the evidence, the court granted Chuck Tomberlain's motions for directed verdict on article 21.55 of the Insurance Code (TEX.INS.CODE ANN. art. 21.55, § 2 (Vernon Supp.1996) [the prompt-payment-of-claims statute] ), and both Chuck Tomberlain's and the agency's motions for directed verdicts as to all counter- and third-party claims raised by Southland. The case was submitted to the jury on the issues of common-law good faith and fair dealing and statutory unfair insurance practices. The jury found Southland and Webb liable on both counts and found that their conduct was knowing and intentional. It awarded Chuck Tomberlain damages of $107,514.61.

Southland contends that the trial court erred in precluding its expert witness from testifying. Southland attempted to call a Dewitt Altpeter, as an expert witness, to testify regarding the propriety of Chuck Tomberlain's actions and the actions of the Tomberlain agency in completing and submitting the application for insurance. The trial court ruled that Altpeter was not qualified to testify as an expert witness concerning the standard of care for insurance agents because he was not at the time, nor had he ever been, a licensed Texas recording agent.

As with other evidentiary matters, the determination of whether an expert witness is qualified to testify is left largely to the trial court's discretion and will not be disturbed on appeal absent a showing that the court clearly abused that discretion. State Farm Fire & Casualty Co. v. Gandy, 880 S.W.2d 129, 136 (Tex.App.--Texarkana 1994, writ granted); Guerrero v. Smith, 864 S.W.2d 797, 802 (Tex.App.--Houston [14th Dist.] 1993, no writ); see also E.I. du Pont de Nemours and Co. v. Robinson, 38 Tex.Sup.Ct.J. 852, 860, --- S.W.2d ----, ---- (June 15, 1995). Even if such an abuse of discretion is shown, the trial court's evidentiary error will warrant reversal only if it was reasonably calculated to cause, and probably did cause, the rendition of an improper judgment. TEX.R.APP.P. 81(b)(1); Gee v. Liberty Mut. Fire Ins. Co., 765 S.W.2d 394, 396 (Tex.1989); CNA Ins. Co. v. Scheffey, 828 S.W.2d 785, 790 (Tex.App.--Texarkana 1992, writ denied). In making this determination, the appellate court must review the entire record. McCraw v. Maris, 828 S.W.2d 756, 758 (Tex.1992).

A witness may qualify as an expert by virtue of his or her knowledge, skill, experience, training, or education. TEX.R.CIV.EVID. 702. Southland argues that the requirement imposed by the trial court that an expert witness be licensed in the relevant area of expertise is an illogical and unnecessarily restrictive reading of Rule 702. Southland notes that many competent experts in a variety of fields are career academics who lack a professional license in their area of expertise.

The Tomberlains and the agency cite two cases in support of the trial court's exclusion of Altpeter's testimony. In Prellwitz, the court held that a witness who is to give an expert opinion about the standard of care within a particular licensed profession must be licensed in that same profession. Prellwitz v. Cromwell, Truemper, Levy, Parker and Woodsmale, Inc., 802 S.W.2d 316, 317 (Tex.App.--Dallas 1990, no writ). The defendant in Prellwitz was a licensed architect and mechanical engineer. The two witnesses that the plaintiff hoped to have testify regarding the standard of care in the defendant's profession were a construction manager/consultant and a marketing manager. The court in Prellwitz emphasized that the proffered experts were not even employed in the same field as the defendant and, to underscore the importance of this point, noted that architects and mechanical engineers are required to be licensed, as plaintiff's potential...