Credit Life Insurance Case

When someone in Grand Prairie, Arlington, Fort Worth, Saginaw, Roanoke, Keller, Rhome, Colleyville, and other places in Tarrant County and Texas purchase something on credit or take out a loan, they will often times have the option of purchasing some sort of credit life and disability insurance. Here is a case dealing with what happened in one situation where this was done.
The style of the case is Norman v. League City National Bank and Life of America Insurance Company. This is a 1998, Houston Court of Appeals (1st Dist) case. Here is some background.
Mr. Norman applied for and obtained two loans from the Bank. In connection with the loans, he applied for and obtained credit life insurance from Life of America Insurance Company. Mr. Norman died before making any payments on either loan. The Bank submitted a claim to Life of America, but the claim was denied. The Bank then filed suit against Life of America for payment under the insurance policies. The bank also filed suit in probate court against Mr. Norman’s estate and Mrs. Norman for payment of the loans. Mrs. Norman then filed suit against the Bank and Life of America asserting claims under the Texas Insurance Code, the Texas Deceptive Trade Practices Act, (DTPA) and for breach of warranty. All actions by all parties were consolidated in the probate court.
The Bank and Life of America eventually settled their claims without notifying or involving Mrs. Norman. As a result of the settlement, the Bank charged off the full balance of the two loans without receiving any payments from Mrs. Norman or the estate. The Bank and Life of America then non-suited each other, and each filed a motion for summary judgment against Mrs. Norman. The trial court granted the motions for summary judgment in part, holding that the claims asserted by Mrs. Norman were without merit as a matter of law, but the court also found Mrs. Norman was a “prevailing party” under the DTPA and was therefore entitled to recover reasonable attorney’s fees. All parties involved in this case appealed.
This appeals court affirmed the trial court decision in part and reversed in part. The summary judgment in favor of the Bank and Life of America was proper because Mrs. Norman failed to present any evidence regarding damages that she suffered independent of having to pay the notes. She did not have to pay the notes because of the settlement between the Bank and Life of America. Mrs. Norman’s argument that she is entitled to recover mental anguish damages associated with her DTPA claim had no merit because it was raised for the first time on appeal and because she presented no evidence and requested no finding of a culpable mental state as required by the DTPA for recovery of mental anguish damages.
The Texas Insurance Code and the Texas DTPA both, only allow a prevailing party to recover attorney’s fees. Although Mrs. Norman prevailed on her defense of the Bank’s suit, in the sense that the bank non-suited it’s case against her, she did not prevail on the basis of any affirmative relief she sought. Therefore, she is not a prevailing party and is not entitled to recover attorney’s fees.
There are not a lot of cases on credit life insurance claims. But the theories of law for filing such suits are under the Texas Insurance Code and the Texas Deceptive Trade Practices Act. It is usually a good idea to get an experienced Insurance Law Attorney involved in this type of case or any type of case involving insurance issues or where an insurance company is being sued or where the insurance company is suing one of its insureds.