Insurance lawyers often see situations where the agent selling the insurance policy made false representations regarding the policy at issue. Here is how the Courts look at these situations.
According to the 1990, Texas Supreme Court opinion styled, DeSantis v. Wackenhut Corp., a false representation must involve an existing or past material fact, rather than a statement of opinion, judgment, probability, or expectation in order to constitute actionable fraud. Statements concerning future contingent events, sales talk, “puffing,” and other similar statements are not considered actionable misrepresentations. This was stated in a 1978, Tyler Court of Appeals opinion styled, Hicks v. Wright and other cases. And according to a 1976, Dallas Court of Appeals opinion styled, Stone v. Enstam, representations concerning future events are not actionable unless at the time the statement or promise was made, the person making it did not intend to perform.
As to suing the insurance agent, a 1960, Fort Worth Court of Appeals stated in a case styled R. O. McDonnell Dev. Co. v. Schlueter, that all persons who commit fraud are liable for the consequences of such fraud. All parties to a fraudulent transaction are responsible for the acts or representations of the other participants undertaken based upon a mutual understanding or in furtherance of common plan, design or scheme.
The 14th District Court of Appeals stated in 1970, that with regard to a principal agency relationship, a principal may be held liable for the fraudulent representations of an agent if an agency relationship existed and if the acts committed by the agent were within the scope of the agent’s authority. The style of that case is, Pasadena Assoc. v. Connor.
In the 1994, Tyler Court of Appeals opinion, McKnight v. Riddle & Brown, P.C., the court recognized that a lawyer for the insurance company can be liable for participating in fraud. The Court stated:
Texas has long held that while an attorney is authorized to practice his profession without making himself liable for damages, where an attorney acting for his client participates in fraudulent activities, his action is “foreign to the duties of an attorney.”
Similarly, as seen in the 1997, Texarkana Court of Appeals opinion styled, DiGrazia v. Atlantic Mut. Ins. Co., another party’s liability insurer could be sued for fraudulent statements that caused the injured party to delay suing the insured until after limitations ran.