Texas Farmers Ins. Co. v. McGuire

• Decision Date: 10 February 1988
• Docket Number: No. C-6311,C-6311
• Citation: 744 S.W.2d 601,31 Tex.Sup.Ct.J. 23
• Parties: TEXAS FARMERS INSURANCE COMPANY, Petitioner, v. Glen McGUIRE, et al., Respondents.
• Court: Texas Supreme Court

Page 601

744 S.W.2d 601

TEXAS FARMERS INSURANCE COMPANY, Petitioner, v. Glen McGUIRE, et al., Respondents.

No. C-6311.

Supreme Court of Texas.

Feb. 10, 1988.

Dewey J. Gonsoulin, Mehaffy, Weber, Keith & Gonsoulin, Beaumont, for petitioner.

Dale Dowell, Rienstra, Dowell & Flatten, Beaumont, for respondents.

OPINION ON REHEARING

MAUZY, Justice.

Our opinion of October 21, 1987 is withdrawn and the following is substituted.

This is a suit on an insurance policy. The insurer, Texas Farmers Insurance Company, denied coverage. The insured, Glen McGuire, sued for breach of contract; he also alleged violations of the Texas Deceptive Trade Practices--Consumer Protection Act and the Texas Insurance Code. Based on a jury verdict, the trial court rendered judgment in favor of Texas Farmers. In a per curiam opinion, the court of appeals reversed, rendered judgment in favor of McGuire, and awarded treble damages. 727 S.W.2d 1 (1987). We reverse the judgment of the court of appeals and affirm that of the trial court.

Glen McGuire was involved in an automobile accident while driving a truck owned by his employer. He promptly contacted his personal insurance agent who reported the loss to the insurer, Texas Farmers. James Bearden, a claims representative for Texas Farmers, contacted McGuire by telephone and took a recorded statement. From this initial statement, Bearden learned that McGuire was driving one of his employer's trucks rather than one of his own. This information raised a question of coverage under the policy.

A few days later, Bearden mailed McGuire a non-waiver agreement which McGuire signed and returned. Bearden then contacted McGuire again and obtained a second statement. McGuire's second statement provided Texas Farmers with the information it needed to solidify its own defense of noncoverage under the policy. A couple of months later, Texas Farmers notified McGuire that the policy would not provide coverage.

Eventually, McGuire was sued by the occupants of the other car involved in the accident. At this point, Texas Farmers sent a reservation of rights letter to McGuire advising him that the policy might not afford coverage, that it would defend the lawsuit without waiving any of its rights, and that McGuire was at liberty to engage counsel of his own choice at his own expense. A judgment of $12,547.55 was ultimately rendered against McGuire. Texas Farmers refused to satisfy the judgment on the ground of noncoverage.

It is clear that the insurance policy did not provide coverage for McGuire's regular use of his employer's truck. McGuire does not contest this determination of noncoverage under the policy. However, McGuire argues that Texas Farmers was estopped to deny coverage because Bearden had failed to advise McGuire to obtain another attorney before securing his second statement. The court of appeals adopted McGuire's argument, relying on Employers Casualty Company v. Tilley, 496 S.W.2d 552 (Tex.1973).

We hold that the court of appeals erred in applying the estoppel rule of Tilley to the facts of this case. The doctrine of estoppel cannot be used to create insurance coverage when none exists by the terms of the policy. ¹ Washington Nat. Ins. Co. v. Craddock, 130 Tex. 251, 109 S.W.2d 165 (1937).

Waiver and estoppel may operate to avoid a forfeiture of a policy, but they have consistently been denied operative force to change, re-write and enlarge the risks covered by a policy. In other words, waiver and estoppel cannot create a new and different contract with respect to risks covered by the policy.

Great American Reserve Insurance Co. v. Mitchell, 335 S.W.2d 707 (Tex.Civ.App.--San Antonio 1960, writ ref'd). In Tilley, the...