Can someone in Burleson, Benbrook, Crowley, Cleburne, Keene, Joshua, Arlington, Pantego, Mansfield, Fort Worth, Granbury, or any other place in Texas assign the benefits of their insurance policy to someone else? The answer is, it depends.
Like other contract rights, the right to insurance proceeds can be assigned, giving the assignee the right to recover under the policy. This was stated in the 1968, Texas Supreme Court case, McAllen State Bank v. Texas Bank & Trust Company. However, a policy may contain a non-assignment clause, which will be enforced.
An example of this can be found in the case styled, Texas Farmers Insurance Company v. Sally Gerdes, By and Through Her Assignee, Griffin Chiropractice Clinic. This is a case decided in 1994, by the Fort Worth Court of Appeals.
In this case the trial court had granted a motion for summary judgment in favor of Griffin Chiropractice Clinic (Griffin) and against Texas Farmers Insurance Company (Farmers). Farmers appealed the trial court’s decision.
The parties agreed there was no dispute regarding the facts of the case. The record reflects that on November 18, 1990, Sally Gerdes was injured when a vehicle, in which she was riding as a passenger, was involved in a minor collision. The automobile was owned and operated by a Farmers insured. The policy provided Personal Injury Protection benefits coverage to any passenger injured while occupying a covered automobile with the permission of the insured.
On November 21, 1990, Gerdes began a series of treatments at Griffin. Without obtaining written consent from Farmers, Gerdes signed an assignment of rights, dated November 20, 1990, assigning “any and all claims, demands, and causes of action of whatsoever kind and nature, which I now have or may have in the future against any third person or entity, including, but not limited to, any insurance company …” Following reciept of the assignment, Farmers paid Gerdes $1,003 for the chiropractic treatments under the PIP coverage of the Farmers policy. Gerdes never paid Griffin.
Griffin filed suit against Farmers for payment premised on the assignment of rights executed by Gerdes.
On this appeal Farmers argued that Griffin failed to prove a valid assignment existed.
The court then stated, “To recover an assigned cause of action, the party claiming the assigned rights must prove a cause of action existed that was capable of assignment and the cause was in fact assigned to the party seeking recovery.”
There was no dispute that Gerdes was entitled to compensation for medical treatment for injuries suffered while occupying an automobile insured by Farmers. In addition, there was no dispute that Gerdes signed an assignment of rights assigning her cause of action to Griffin. The sole issue before the court was therefore, the validity of the assignment of rights. Without a valid assignment, no breach of contract could have occurred.
Generally, a contract of insurance is subject to the same rules of construction as other contracts. If the insurance contract is worded so that it can be given a certain definite meaning or interpretation, then it is not ambiguous, and the court will construe the contract as a matter of law. Moreover, where there is no ambiguity, it is the court’s duty to give words their plain meaning. In the Farmers policy there was a non-assignment clause. The court said it was unambiguous and provided:
“Your rights and duties under this policy may not be assigned without our written consent.”
Texas courts have consistently enforced non-assignment clauses. In addition, the prohibition against the assignment of rights by a named insured to an insurance contract has been upheld by this particular appeals court in the case, Dallas County Hospital District v. Pioneer Casualty Company.
Based on the above the court issued the following written opinion:
“We hold Gerdes, as a third-party beneficiary to the insurance contract, assumed the same rights and duties as the named insured. We further hold the non-assignment clause contained in the insurance contract effectively barred an assignment of rights. The assignment Gerdes executed accordingly had no effect. Griffin acquired no rights against Farmers, and Farmers assumed no duties to Griffin. Because there was no breach of contract, we reverse the judgment of the trial court and render a take-nothing judgment.
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