Insurance Claims As Breach Of Contract Claims

Fort Worth insurance attorneys will tell you that an insurance policy is a contract. A 1992, Dallas Court of Appeals case gives a good example of how the Courts deal with this concept. The style of the case is, St Paul Insurance Company v. Rakkar.
This case deals with many insurance issues but here are the issues as it relates to contracts:
Rakkar owned a house in Jewett, Texas. On August 27, 1988, after the tenants who had been living in the house vacated the property, Rakkar travelled the four hours from his home in Whitesboro, Texas, to Jewett to inspect the property with the real estate agent who helped him manage the property. Rakkar planned to grill some hot dogs for his dinner, spend the night in the house, and return to Whitesboro the next day. With this plan in mind, Rakkar bought hot dogs, a small hibachi-type grill, lighter fluid, and obtained some charcoal. He also bought a bottle of drinking water because the water at the house had been shut off. When he got to the house, he opened the windows to air out the house and started the air conditioner. Because the grass around the house was tall and dry, he decided to light the grill in the kitchen and then carry it onto the patio after clearing a space for the grill on the patio. Rakkar set the grill on the kitchen floor. After lighting the grill, he had begun to work on the ceiling fan when his real estate agent arrived. She told Rakkar that she smelled something “hot,” and Rakkar showed her the hibachi grill sitting on the kitchen floor. She told him that he should move it outside because the heat from the grill could burn the linoleum flooring. After declining Rakkar’s invitation to join him for a hot dog, the real estate agent left. Rakkar decided to take the grill onto the patio. When he bent over the coals, he passed out. When he awoke five or six minutes later, the grill was overturned near the base of the cabinets, the coals were scattered over the kitchen floor, and the cabinets were on fire. Rakkar ran to the sink, but no water came out. Rakkar then ran to his neighbors to get assistance, but they were not at home. He then drove the half mile to the marina and called the fire department, which was fifteen to twenty miles away. By the time the fire truck arrived, the house was completely engulfed in flames. T he house burned to the ground.
The next day, Rakkar telephoned his insurance agent and reported the loss..
After receiving Rakkar’s sworn proof-of-loss form, St. Paul told Rakkar that it would notify him by January 15 of its decision whether to pay or deny the claim. St. Paul, however, waited until January 23 to tell Rakkar that it was denying the claim because:
The facts of the loss, the results of St. Paul’s good faith investigation, and Rakkar’s own sworn testimony overwhelmingly indicate that the claim is the result of an intentionally set, incendiary fire, and that all facts point to no other reasonable conclusion but that either … Rakkar, or an individual acting at his direction, both set the fire and precipitated its spread by use of flammable liquids throughout the structure.
St. Paul contends that the trial court erred in entering a written finding that Rakkar was entitled to contract damages of $60,000.
St. Paul noted in its brief, a plaintiff waives any ground of recovery on which no element is submitted to the jury unless the ground is conclusively established by the evidence. St. Paul maintains that Rakkar not only failed to prove breach of contract conclusively, but that Rakkar presented no evidence on his breach-of-contract claim. The record, however, demonstrated otherwise.
To prove breach of contract, Rakkar had to establish: (1) the existence of the contract sued upon; (2) his compliance with the terms of the contract; and (3) St. Paul’s breach of the contract. The following testimony by Grant established the first two of these elements:


Q Now, the Lake Limestone house, just to make sure that we have the correct understanding, there is no question as to whether or not it was insured at the time of the fire?

A That’s correct.

Q Dr. Rakkar had paid his premiums?

A (No response.)

Q He had paid his premiums?

A Yes, to [the] best of my knowledge.

Q You would be familiar with that fact? If he had not paid his premiums, you would know that, wouldn’t you?

A Right.

Q You are familiar with a letter that was sent by your lawyer, Mr. Nicholas, dated January the 23rd?

A Yes, I am.

Q That is the letter wherein the insurance company notified Dr. Rakkar that it wasn’t going to pay the claim?

A That is correct.

Q Did you authorize that letter?

A Yes, I did.

Q You understood the position the insurance company was taking was that Dr. Rakkar intentionally set the fire?

A Yes.

Q If the fire–let’s assume something. Let’s assume that the fire had not been intentionally set; I realize you are saying otherwise. But if you assume the fire is not intentionally set, what sum of money would have been paid under the policy?

A Sixty thousand dollars.

Q That was the maximum policy limits for that coverage?

A That is correct.

Q That is what would have been owed?

A Yes, sir.

* * * * * *

[Direct Examination]

Q Has money ever been paid to [Dr. Rakkar] for this claim?

A No. It has not.

This testimony, which was uncontroverted, conclusively established the existence of the contract (the insurance policy), Rakkar’s compliance with the terms of the contract (payment of premiums), and the damages sustained if St. Paul were in breach of contract ($60,000, the full amount of the policy). The only disputed issue was whether St. Paul breached the contract, and the only factual dispute on this issue was whether Rakkar intentionally caused the fire that destroyed his house. This disputed fact issue was submitted in question 1, to which the jury found that Rakkar did not intentionally burn down his house. Because all of the other elements of breach of contract were conclusively established, Rakkar did not waive his breach-of-contract claim by failing to request jury questions on those issues. This appeal point was overruled.
Rule 279 permits the trial court to enter written findings on elements of a cause of action not submitted to the jury but supported by the evidence as long as at least one element of the cause of action was submitted to and answered favorably by the jury. TEX.R.CIV.P. 279. Here, the only disputed fact issue concerning St. Paul’s breach of the contract was submitted to the jury in question 1, and the jury answered it favorably to Rakkar. Accordingly, Rule 279 permitted the trial court to enter the written finding that $60,000 “was owed pursuant to the policy.”

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