This life insurance claim opinion is from the Northern District of Texas, Dallas Division, and is styled, Wharlest Jackson v. Farmers New World Life Insurance Company.
Among other causes of action, Jackson has sued Farmers under an insurance policy for violations of the Texas Deceptive Trade Practices Act (DTPA). Farmers has filed a Partial Motion to Dismiss the lawsuit based on the allegation that Jackson has not properly pled a DTPA claim against Farmers. The Court reviewed the papers filed with the Court and discussed and ruled as follows.
Crystal Jackson purchased a life insurance policy from Farmers. Wharlest Jackson was the sole beneficiary of the policy. Crystal died in a motorcycle accident and Wharlest made a claim which Farmers denied based on alleged misrepresentations in the policy application.
Farmers filed the Motion for Partial Dismissal on various causes of action and the DTPA cause of action is discussed here.
Farmers first argues that Wharlest does not have standing under the DTPA. In order to recover under the DTPA, Wharlest must establish that he is a consumer under the statute and that his consumption was the producing cause of his injuries. Whether a Plaintiff is a consumer under the DTPA is a question of law.
Pursuant to DTPA, Section 17.45(a), a consumer is:
an individual, partnership, corporation,this state, or subdivision or agency of this state who seeks or acquires by purchase or lease, any goods or services, except that the term does not include a business consumer that has assets of $25million or more, or that is owned or controlled by a corporation or entity with assets of $25million or more.
A party whose only relation to an insurance policy is to seek policy proceeds is not a consumer under the DTPA. This is because such a party does not seek to purchase or lease any of the services of the insurer. However, a party seeking policy proceeds may be considered a consumer if the proceeds used to purchase the insurance policy were community funds shared by the party who bought the policy and the beneficiary. Farmers argues that Wharlest has not alleged that the Policy was purchased with community funds; rather, Farmers contends that “Plaintiff alleges that Crystal Jackson purchased the Policy and that Wharlest is the sole beneficiary.” Thus, Farmers asserts that Wharlest has not established consumer standing under the DTPA. In response, Wharlest argues that there is a presumption “that the Policy was purchased with community funds and is thus community property” because “under Texas law, property possessed by either spouse during or on dissolution of marriage is presumed to be community property.”
The Court agrees with Wharlest. Under Texas Supreme Court law, “property possessed by either spouse during or on dissolution of marriage is presumed to be community property.” The Texas Supreme Court in a previous decision explained that “this general rule applies to life insurance policies”and held that the life insurance policy at issue in that case was presumed to be community property because it was issued during the marriage.
Here, Crystal Jackson’s life insurance policy lists Wharlest as her “Spouse/Domestic Partner.” Thus, the Court finds that, at the motion-to-dismiss stage, the presumption that community funds were used to purchase the Policy applies, and thus Wharlest has pled standing under the DTPA.
Farmers argues that cases such as the previous Texas Supreme Court case are inapposite because such cases “do not apply the presumption to the present question: whether the factual allegations pleaded are sufficient to allow the Court to reasonably infer that the Policy premiums were paid with community funds.” However, as the Court noted above, the Policy itself—which Farmers seeks to use to its advantage—establishes that Wharlest and Crystal Jackson were married at the time the Policy was created, therefore invoking the community-property presumption. Thus, the Court concludes that for the purposes ofr esolving this motion, Wharlest has standing under the DTPA.