Life Insurance – Authority Of Insurance Company Manager

Life insurance attorneys in the Dallas Fort Worth area would want to know about a 1996, San Antonio Court of Appeals case holding an insurance company responsible for the conduct of one of it’s managers. The style of the case is, Mendoza v. American National Insurance Company. Here is the relevant information from the case.
Jerry Mendoza purchased a $25,000.00 life insurance policy from American National on August 1, 1991. The October premium was not paid. The policy provided for a thirty-one 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, the San Antonio Court of Appeals affirmed a summary judgment in favor of American National on Mendoza’s breach of contract, negligence, and bad faith claims. The current 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.
This court held 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 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 as declared in the Insurance Code or the DTPA.
Therefore, a plaintiff may assert causes of action under the Insurance Code for violations of 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 under the Insurance Code. Mendoza’s mother, in her capacity as representative of his estate, however, does not have standing to assert Insurance Code or DTPA claims because those claims do not survive Mendoza’s death and his mother is not a “consumer” in her own right.
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 a 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 and DTPA claims. Accordingly, the summary judgement as to Carrion was reversed. Otherwise, the summary judgment in favor of American National was affirmed.