Life Insurance – Unusual Situation

This San Antonio Court of Appeals opinion is one for life insurance lawyers to read and know about. It is a 1996 opinion styled, Mendoza v. American National Insurance Co.
Jerry Mendoza purchased a $25,000.00 life insurance policy on August 1, 1991. The October premium was not paid. The policy provided for a thirty-one day grace period. On November 1, 1991, the last day of the grace period, American National’s district manager, Sitka, verbally agreed to extend the grace period until November 4, 1991. The policy, however, specifically provided that only American National’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 National on Plaintiff’s breach of contract, negligence and bad faith claims. This appeal concerns the trial court’s granting of summary judgment on Plaintiff’s claims for intentional infliction of emotional distress, Insurance Code and DTPA violations.
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 consumer status. The Insurance Code 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 Code; rules and regulations of the 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 misrepresentation. Therefore, Carrion has standing under the Texas Insurance Code. Mendoza’s mother, in her capacity as representative of his 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 exend 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 National assumed the risk for Sitka exceeding his instructions. American National cannot escape liability for Sitka’s misrepresentation that coverage would be extended until November 4, 1991. The fact that American National 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 Insurance Code and or DTPA claims. Accordingly, the summary judgement as to Carrion was reversed. Otherwise, the summary judgment in favor of American National was affirmed.