Beneficiary Of Life Insurance Policy May Assert Section 541.060 Claims

Irving life insurance lawyers need to know every little aspect of the law in order to properly represent their clients.  A 1996, San Antonio Court of Appeals opinion deals with one of these “little” aspects of the law.  The opinion is styled, Mendoza v. American National Insurance Company.

Jerry Mendoza purchased a $25,000.00 life insurance policy from American on August 1, 1991.  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’s district manager, Sitka, verbally agreed to extend the grace period until November 4, 1991.  The policy, however, specifically provided that only American’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 on Plaintiff’s breach of contract, negligence and bad faith claims.  This appeal concerns the trail court’s granting of summary judgment on Plaintiffs’ claims for intentional infliction of emotional distress, Insurance Code and DTPA violations.

The 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 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; rules and regulations issued under the Insurance Code or Section 17.46 of the DTPA.  Therefore, a plaintiff may assert causes of action under the Insurance Code for violations of Section 17.46 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, Clarion has standing under the Insurance Code.  Mendoza’a mother, in her capacity as representative of the the 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 selected Sitka as its agent, American assumed the risk for Sitka exceeding his instructions.  American cannot escape liability for Sitka’s misrepresentation that coverage would be extended until November 4, 1991.  The fact that American 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 Section 541.060 and or DTPA claims.  Accordingly, the summary judgement in favor of American is affirmed.