Yancey v. Floyd West & Co., 2-87-263-CV

• Decision Date: 28 July 1988
• Docket Number: No. 2-87-263-CV,2-87-263-CV
• Citation: 755 S.W.2d 914
• Parties: John YANCEY, d/b/a the Yancey Agency, Appellant, v. FLOYD WEST & COMPANY, Crum & Forster Insurance Companies, and United States Fire Insurance Company, Appellees.
• Court: Texas Court of Appeals

Page 914

755 S.W.2d 914

John YANCEY, d/b/a the Yancey Agency, Appellant, v. FLOYD WEST & COMPANY, Crum & Forster Insurance Companies and United States Fire Insurance Company, Appellees.

No. 2-87-263-CV.

Court of Appeals of Texas Fort Worth.

July 28, 1988.

Rehearing Denied Sept. 8, 1988.

Mark A. Hendrix and D. Bradley Dickinson, Vial, Hamilton, Koch & Knox, Dallas, for appellees.

Elvin E. Tackett, Grapevine, for appellant.

Before BURDOCK, FARRIS and LATTIMORE, JJ.

OPINION

LATTIMORE, Justice.

Appellant, plaintiff below, brought suit against appellees seeking damages for: alleged failure to provide a defense against intervenor, Midway Camp, pursuant to an insurance contract; violations of the Texas Deceptive Trade Practices Act; and violations of article 21.21 of the Insurance Code. Appellees requested, and the trial court granted, summary judgment contending appellant was not covered by any of the applicable policies for the claim at issue.

Appellant brings three points of error alleging error in granting summary judgment.

We affirm.

Due to the complexity of the order of events, a statement of the facts is necessary. Appellant operated a business known as The Yancey Agency which was engaged in the sale of insurance policies to the general public. In 1980, appellant procured an underlying policy of insurance from United States Fire Insurance Company ("USFIC") through Floyd West & Company ("West") and Crum & Forster Insurance Companies ("CFIC"), bearing a policy number of 540 285295 5 ("Yancey policy"). This policy had an effective policy period of July 14, 1980 through July 14, 1981. Appellant further obtained an "umbrella policy" ("Yancey umbrella policy"), policy number 523 157095 8, which is additional coverage that did not go into effect until the limits of the underlying policy were first exhausted. The Yancey umbrella policy had a policy period of July 14, 1981 through July 14, 1982. On page two of the Yancey umbrella policy was a "supplemental declarations" sheet, reflecting that the primary policy was effective until July 14, 1982.

On April 1, 1982, Yancey sold the assets of The Yancey Agency to Diversified Insurance Services, Inc. ("Diversified"); as of that date, Yancey became an employee of Diversified. At the time of the sale, Diversified had its own underlying policy of insurance applicable to its business operations, issued by USFIC, bearing a policy number of 540 391 791 6 ("Diversified policy"). This policy was in effect from January 29, 1982 through January 29, 1983. Diversified also had an umbrella policy ("Diversified umbrella policy"), number 523 144999 8, with attached supplemental declarations sheet stating the effective date of the umbrella policy from January 29, 1982 through January 29, 1983. By endorsement effective April 23, 1982, Yancey became an additional insured under the Diversified policy.

Intervenor Midway Camp ("Midway"), an insurance customer of appellant, wrote a demand letter on September 10, 1982, alleging appellant made an error and omission in failing to procure for Midway flood insurance beginning during the period of October 1981. Midway requested flood coverage from appellant, who agreed to submit an application for coverage on their behalf but failed to do so. Approximately nine days later Midway's property was flooded. Appellees refused to undertake Yancey's defense in the Midway action on the basis that no claim was made during the term of the policies issued to Yancey, and the Diversified policies did not provide for coverage for alleged errors and omissions on the part of Yancey prior to the policy's retroactive date of April 23, 1982.

In December of 1986, Yancey and Midway entered into an agreed judgment in that action in the amount of $625,000.

By his first point of error, appellant alleges the trial court erred in granting appellees' motion for summary judgment because appellant was covered by all four underlying and umbrella policies, both at the time of the occurrence of the event precipitating the claim of professional errors and at the time the claim was made by the alleged injured party. Appellant contends that his coverage was continuous from the Yancey policy to the Diversified policy, and that he was covered by all four policies. The only changes made in the Diversified policy when The Yancey Agency was made an additional named insured was an address change for Diversified and a statement adding the second location of The Yancey Agency in Grapevine, Texas. The Diversified policy was in full force and effect until January 29, 1983.

Appellant alleges that the retroactive date on the Yancey policy is July 14, 1978, and on the Diversified policy is January 29, 1979; otherwise, the insurance contracts are identical. Basically, appellant argues that he is an insured of appellees from July 14, 1978, to January 29, 1983. Appellant contends that he is covered by the two policies because he cannot control the time during which an alleged injured party seeks to sue him for damages. Appellant further contends the court should hold that he was covered by the policies as a matter law due to the ambiguity within the contracts and, further, as a matter of public policy.

We first address appellant's allegation that there was an ambiguity within the contracts, specifically that appellee would have to "add words" to the contract to exclude the appellant from coverage. By crosspoint, appellee contends appellant has waived the ambiguity argument pursuant to TEX.R.CIV.P. 166-A(c). We agree. Appellant has waived the issue on appeal that exclusion in the policy was ambiguous and should be strictly construed against the insurer by failing to raise the alleged ambiguity in the trial court. See Allright, Inc. v. Pearson, 735 S.W.2d 240 (Tex.1987); Dorchester Development v. Safeco Ins., 737 S.W.2d 380, 383 (Tex.App.--Dallas 1987, no writ); TEX.R.APP.P. 52(a). Further, appellant does not cite any authority under which the exclusion in this case is ambiguous. Where points of error are raised for the first time on appeal, nothing is presented for review. Dorchester, 737 S.W.2d at 383; TEX.R.APP.P. 52(a). Nowhere in the written motions or other responses in the trial court does appellant refer us to his theory of ambiguity within the policies. Even had appellant not waived this specific issue, he would not prevail on appeal.

In a summary judgment case, the issue on appeal is whether the movant met his burden for summary judgment by establishing that there exists no genuine issue of material fact and that he is entitled to judgment as a matter of law. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 678 (Tex.1979); TEX.R.CIV.P. 166-A. The burden of proof is on the movant, and all doubts as to the existence of a genuine issue as to a material fact are resolved against him. Great American R. Ins. Co. v. San Antonio Pl. Sup. Co., 391 S.W.2d 41, 47 (Tex.1965). Therefore, we must view the evidence in the light most favorable to the non-movant. See id. In deciding whether there is a material fact issue precluding summary judgment, all conflicts in the evidence will be disregarded and the evidence favorable to the non-movant will be accepted as true. Montgomery v. Kennedy, 669 S.W.2d 309, 311 (Tex.1984); Farley v. Prudential Insurance Company, 480 S.W.2d 176, 178 (Tex.1972). Every reasonable inference from the evidence must be indulged in favor of the non-movant and any doubts resolved in his favor. Montgomery, 669 S.W.2d at 311. Evidence which favors the movant's position will not be considered unless it is uncontroverted. Great American, 391 S.W.2d at 47. The function of the summary judgment is not to deprive a litigant of his right to trial by jury, but to eliminate patently unmeritorious claims and untenable defenses. Gulbenkian v. Penn, 151 Tex. 412, 252 S.W.2d 929, 931 (1952). See also Great American R. Ins. Co. v. San Antonio Pl. Sup. Co., 391 S.W.2d 41, 46-47 (Tex.1965).

It is fundamental that insurance policies are controlled by rules of construction which are applicable to contracts generally. Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663, 665 (Tex.1987). The determination of whether terms are ambiguous is a question of law. Brooks, Tarlton, et al v. U.S. Fire Ins., 832 F.2d, 1358, 1364 (5th Cir.1987). The determination of whether a contract is ambiguous in light of its wording and the surrounding circumstances is a question of law, although once the contract is found to be ambiguous, the determination of the parties' intent through extrinsic evidence is a question of fact. J.B. Watkins v. Petro-Search, Inc., 689 F.2d 537, 538 (5th Cir.1982). We must interpret and construe insurance policies liberally in favor of the insured and strictly against the insurer, especially when dealing with exceptions and words of limitation. Kelly Associates, Ltd. v. Aetna Casualty and Surety Co., 681 S.W.2d 593, 596 (Tex.1984); Blaylock v. American Guarantee Bank Liability Insurance Co., 632 S.W.2d 719, 721 (Tex.1982); Ramsey v. Maryland American General Insurance Co., 533 S.W.2d 344, 349 (Tex.1976). When the language of a policy is susceptible of more than one reasonable construction, the courts will apply the construction that favors the insured and permits recovery. Barnett, 723 S.W.2d at 666; Kelly, 681 S.W.2d at 596; Glover v. National Ins. Underwriters, 545 S.W.2d 755, 761 (Tex.1976); Ramsay, 533 S.W.2d at 349. Where the clause of the insurance policy subject to dispute involves exceptions or limitations on the insurer's liability under the policy, even more stringent construction than usual is required. Glover, 545 S.W.2d at 761; Adrian Associates v. National Surety Corp., 638 S.W.2d 138, 140 (Tex.App.--Dallas 1982, writ ref'd n.r.e.). These special rules favoring the insured are only applicable where there is an ambiguity in the policy; if the term in question is susceptible of only one reasonable construction, then these rules do not apply. ...