Suing On A Life Insurance Policy, Who Can Do It?

A natural question for someone in Grand Prairie, Fort Worth, Dallas, Arlington, or anywhere else in Texas to wonder about. Can the policyholder sue? Can the beneficiary sue? Can an estate administrator sue? The answer is one of those that depends on the facts and circumstances. Here is a case that gives some guidance.
The case is out of the San Antonio Court of Appeals and the opinion was issued in 1996. The style of the case is Mendoza v. American National Life Insurance Company. Here are the facts:
Jerry Mendoza purchased a $25,000 life insurance policy from American National on August 1, 1991. Carrion was a named beneficiary of the policy. The October premium was not paid. The policy provided for a 31 day grace period. On November 1, 1991, the last day of the grace period, American National’s district manager, Sitka, verbally agreed to extend the grace period until November 4, 1991. The policy, however, specifically provided that only American National’s president, vice-president or secretary had the authority to extend this time period. Jerry Mendoza died in an automobile accident on November 3, 1991. The premium was never paid. In a prior appeal, this court affirmed a summary judgment in favor of American National on Mendoza’s breach of contract, negligence and bad faith claims. This appeal concerns the trial court’s granting of summary judgment on Mendoza’s claims for intentional infliction of emotional distress, Insurance Code and DTPA violations.
In its’ opinion the court said that in order to qualify as a consumer under the DTPA, a person must seek to acquire goods or services by purchase or lease and those goods or services must form the basis of the complaint. Lack of privity between a plaintiff and defendant does not preclude a plaintiff from establishing consumer status. Section 541.060 provides standing to “any person” who has been injured by another’s engaging in an unfair or deceptive act or practice in the business of insurance. Therefore, a plaintiff may assert causes of action under the DTPA even though the plaintiff is not a consumer. Carrion, a named beneficiary of the policy, would clearly be injured as a result of Sitka’s alleged misrepresentations. Therefore, Carrion has standing. Mendoza’s mother, in her capacity as representative of his estate, however, does not have standing.
Although the policy provides that Sitka does not have authority to extend its termination date, it is well settled in Texas that such provisions are ineffectual to prevent parol waiver of such provisions and conditions by an authorized agent acting within the scope of his authority. Assuming Sitka exceeded his authority in modifying the agreement, because American National selected Sitka as its agent, American National assumed the risk for Sitka exceeding his instructions. American National cannot escape liability for Sitka’s misrepresentation that coverage would be extended until November 4, 1991. The fact that American National conducted an investigation after Mendoza’s death to determine if the accident was alcohol related was not conducted in an outrageous manner and could not support an action for intentional infliction of emotional distress.
Only Carrion has standing to assert Insurance Code or DTPA claims. Accordingly, the summary judgment as to Carrion was reversed.
A reading of the above should be confusing to most people. The case serves as yet another illustration for why an experienced Insurance Law Attorney needs to be involved in a claims when an insurance company denies a claim for benefits.