=
In=20 The
For=20 The
SHIHCHE =
E. LIN,=20
INDIVIDUALLY AND D/B/A APTUS COMPANY, AND SUNG-PING H. LIN,=20
Appellants METRO =
ALLIED=20
INSURANCE AGENCY, INC. AND C. MICHAEL MCGLOTHLIN,=20
Appellees
On =
Appeal from the=20
189th District Court Harris =
County,=20
Texas Trial =
Court Cause=20
No. 2000-56702
MEMORANDUM=20
OPINION A jury found that Metro Allied =
Insurance=20
Agency, Inc. and C. Michael McGlothlin (collectively "Metro") =
negligently=20
and in violation of the Texas Deceptive Trade Practices Act =
("DTPA"),=20
caused damages to Shihche E. Lin, individually and d/b/a Aptus =
Company,=20
and Sung-Ping H. Lin (collectively "Lin"). Metro moved for and was =
granted=20
a Judgment Notwithstanding the Verdict ("JNOV") ordering that Lin =
take=20
nothing. Lin complains that the trial court erred in granting the =
JNOV=20
because there was sufficient evidence: (1) to show that Metro =
knowingly=20
engaged in an unconscionable course of action that was a producing =
cause=20
of damages to Lin under the DTPA, (2) to show that Metro's =
negligence=20
proximately caused damages to Lin, and (3) to justify the trial =
court's=20
submission of the issues to the jury. Metro raises three =
cross-points=20
arguing that, if we hold that there was some evidence of liability =
and=20
damages under both the negligence and DTPA causes of action, we =
should=20
also hold that the evidence is factually insufficient. We reverse =
and=20
remand. In November =
1998, Lin=20
was awarded a $1,265,110 contract with the U.S. Government to =
upgrade the=20
technology in a hydroelectric plant located in Sault Sainte Marie, =
Michigan. The terms of the contract required Lin to purchase and =
maintain=20
both a Performance Bond, to ensure the timely performance of the =
contract,=20
and a Commercial General Liability Insurance ("CGL") policy. Six months later, in June of =
2000, Lin's=20
government contract was terminated, and the surety company =
fulfilled the=20
remainder of his contractual obligations in accordance with the =
terms of=20
the Performance Bond. After the contract was terminated, Lin =
canceled his=20
CGL policy with Metro and was refunded a pro-rated portion of the =
premium.=20
The surety company later brought suit against Lin, seeking =
$200,000 in=20
indemnity under the Performance Bond for the expenses it incurred =
while=20
completing Lin's government contract. After representing himself for =
more than=20
one year in the surety's suit, Lin asked Metro to defend him under =
the=20
terms of his CGL policy. Lin testified that McGlothlin indicated =
that an=20
insurance defense lawyer would be available to represent him. =
According to=20
Lin, on multiple occasions, McGlothlin promised that he was =
covered under=20
the CGL policy. Lin further testified that what followed these =
promises,=20
however, was months of waiting for an attorney to represent him. =
Lin=20
notified McGlothlin that the surety had filed a motion for summary =
judgment in its suit against him, and the next month Lin received =
a letter=20
from McGlothlin's errors and omissions attorney indicating that =
Lin's=20
claim was denied. The summary judgment was granted, and, several =
months=20
later, Lin paid the surety company $175,000 in settlement. Lin was =
eventually informed by McGlothlin that no policy had actually been =
written=20
for him. McGlothlin, on the other hand, =
testified=20
that he never made any promises to Lin regarding coverage under =
the CGL=20
policy, and, that it would be unusual for a CGL policy to have =
included=20
the type of coverage Lin was seeking. He emphasized in his =
testimony that=20
the only representations he made to Lin were that he had a policy. =
It was=20
not until Lin made a claim under the policy that McGlothlin =
realized that=20
he could not locate Lin's file. According to McGlothlin, he spent =
a=20
substantial amount of time looking for Lin's file, and he came to =
the=20
conclusion that the file had been removed from his desk prior to =
the=20
policy being written and was taken to an off-site storage facility =
without=20
his knowledge. After discovering that no policy existed, =
McGlothlin=20
notified his errors and omissions carrier and later informed Lin =
of the=20
problem. JNOV In four issues, Lin complains that the trial =
court=20
improperly granted Metro's motion for JNOV because there was =
sufficient=20
evidence to sustain the jury's findings that (1) Metro knowingly =
engaged=20
in an unconscionable course of action that was the producing cause =
of harm=20
to Lin and (2) Metro's negligence proximately caused Lin harm. Lin =
also=20
asserts that there was sufficient evidence to justify the trial =
court's=20
submission of the issues to the jury. A. Standard of Review An appellate court reviews a JNOV under a =
no-evidence=20
standard of review. Williams v. Briscoe, 137 S.W.3d 120, =
124=20
(Tex. App.--Houston [1st Dist.] 2004, no pet.). Under this =
standard of=20
review, we will affirm the JNOV only if the record reveals one of =
the=20
following: (1) the complete absence of a vital fact, (2) the court =
is=20
barred by the rules of law or of evidence from giving weight to =
the only=20
evidence offered to prove a vital fact, (3) the evidence offered =
to prove=20
a vital fact is no more than a scintilla, or (4) the evidence =
conclusively=20
established the opposite of the vital fact. City of Keller v.=20
Wilson, 168 S.W.3d 802, 810 (Tex. 2005). More than a =
scintilla of=20
evidence exists if the evidence "rises to a level that would =
enable=20
reasonable and fair-minded people to differ in their conclusions." =
King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. =
2003). If=20
the evidence does no more than create a mere surmise or suspicion =
of fact,=20
less than a scintilla of evidence exists. Id. In our =
review, we=20
consider only the evidence and reasonable inferences that tend to =
support=20
the jury's findings. Best v. Ryan Auto Group, Inc., 786 =
S.W.2d=20
670, 671 (Tex. 1990) (per curiam); Williams, 137 S.W.3d =
at 124.=20
That is, we view the evidence in the light most favorable to the =
verdict.=20
Williams, 137 S.W.3d at 124. B. DTPA In issue one, Lin argues that the trial court =
erred in=20
granting the JNOV because there was sufficient evidence to support =
the=20
findings that McGlothlin engaged in an unconscionable course of =
action=20
that was the producing cause of $200,000 in damages to Lin. In =
issue two,=20
Lin contends that the trial court erred in granting the JNOV =
because the=20
evidence was sufficient to support the findings that McGlothlin =
knowingly=20
engaged in an unconscionable course of action that was the =
producing cause=20
of $300,000 in damages to Lin. We agree. The jury was asked:
Did Mike McGlothlin/Metro Allied Insurance engage in any =
unconscionable=20
action or course of action that was a producing cause of damages =
to the=20
Plaintiffs? "Producing cause" means an efficient, exciting, or contributing =
cause=20
that, in a natural sequence, produced the damages, if any. There =
may be=20
more than one producing cause. An unconscionable action or course of action is an act or =
practice=20
that, to a consumer's detriment, takes advantage of the lack of =
knowledge,=20
ability, experience, or capacity of the consumer to a grossly =
unfair=20
degree. Answer "Yes" or "No" Answer: (Yes) The jury found that Lin should be compensated $200,000 because =
of such=20
conduct. Because it answered Question 3 "yes," the jury was =
asked:
Did Mike McGlothlin and/or Metro Allied Insurance engage in any =
such=20
conduct knowingly? "Knowingly" means actual awareness, at the time of the conduct, =
of the=20
falsity, deception, or unfairness of the conduct in question. =
Actual=20
awareness maybe [sic] inferred where objective manifestations =
indicate=20
that a person acted with actual awareness. In answering this question, consider only the conduct that you =
have=20
found was a producing cause of damages to Shihche E. Lin, =
Individually and=20
d/b/a Aptus and Sung-Ping Lin. Answer "Yes" or "No" Answer: (Yes) The jury awarded an additional $300,000 to Lin because Metro's =
conduct=20
was committed knowingly. As submitted, Lin's DTPA cause of action required a showing =
that=20
McGlothlin (1) engaged in an unconscionable act or course of =
action (2)=20
that was a producing cause of damages. If the jury believed that=20
McGlothlin did engage in such an activity, then Lin must show (3) =
that the=20
act or course of action was committed knowingly and (4) caused =
damage to=20
him. 1. Engaged in Unconscionable Act or Course of=20
Action It is undisputed that Metro did not issue a CGL policy for Lin, =
despite=20
representing to him that a policy had been issued and despite =
Metro's=20
acceptance of Lin's premium payment. Lin testified that McGlothlin =
repeatedly assured him that Metro's policy would cover him in his =
defense=20
against the surety's claim. Lin even testified that, on one =
occasion,=20
McGlothlin told him that Lin's missing file had been found, and =
the file=20
reflected that Lin was insured by Burlington Insurance. Over the =
course of=20
one year, Lin continued to pursue his right to legal =
representation under=20
his Metro policy, and, in response, Lin was assured that his =
lawyer would=20
be furnished "Tuesday," "next week," "week after next," "in ten =
days," and=20
"in 60 days." Lin testified that, in May, McGlothlin told him that =
he "had=20
coverage" and that McGlothlin was "working with the insured's =
lawyer to=20
defend my case." Seven months later, Lin learned that there was no =
policy,=20
no coverage, and no legal representation for him in the surety's =
case.=20
Because Lin was repeatedly assured that he was covered under the =
Metro=20
policy, he did not seek representation elsewhere, he did not =
attempt to=20
negotiate with the surety company, and he went to trial =
unrepresented,=20
ultimately resulting in a $175,000 settlement. The jury was instructed that "an unconscionable action or =
course of=20
action is an act or practice that, to a consumer's detriment, =
takes=20
advantage of the lack of knowledge, ability, experience, or =
capacity of=20
the consumer to a grossly unfair degree." We conclude that there =
is more=20
than a scintilla of evidence that, to Lin's detriment, =
McGlothlin's course=20
of action took advantage of Lin's lack of knowledge to a grossly =
unfair=20
degree. 2. Action was Producing Cause of Damages We must next determine if there was more than a scintilla of =
evidence=20
to show that McGlothlin/Metro's action or course of action was the =
producing cause of Lin's damages. The jury was instructed that=20
'"[p]roducing cause' means an efficient, exciting, or contributing =
cause=20
that, in a natural sequence, produced the damages, if any. There =
may be=20
more than one producing cause." The evidence, when reviewed in the =
light=20
most favorable to Lin, establishes that, had McGlothlin not =
represented to=20
Lin that he was covered under the policy, Lin would have had an=20
opportunity to obtain coverage elsewhere, such as from Elbert =
Insurance,=20
which gave him the original coverage quote. Had he been covered =
elsewhere,=20
Lin would not have been personally responsible for the settlement =
of the=20
surety's claim. We conclude that there is more than a scintilla of =
evidence to support the jury's affirmative finding to jury =
Question=20
3--"Did Mike McGlothlin/Metro Allied Insurance engage in any=20
unconscionable action or course of action that was a producing =
cause of=20
damages to the Plaintiffs?" Accordingly, we sustain issue one. 3. Action was Knowingly Committed Under the additional DTPA damages claim, the jury was asked if=20
McGlothlin/Metro engaged in the conduct knowingly. The jury was =
instructed=20
that '"[k]nowingly' means actual awareness, at the time of the =
conduct, of=20
the falsity, deception, or unfairness of the conduct in question. =
Actual=20
awareness maybe [sic] inferred where objective manifestations =
indicate=20
that a person acted with actual awareness." Lin testified that McGlothlin knew "early on" that no policy =
had been=20
issued, but he continued to mislead Lin to Lin's detriment. =
McGlothlin=20
even told Lin that he had been in contact with the lawyer who =
would be=20
representing Lin in the surety suit when, in fact, there was no =
such=20
lawyer. Lin testified that McGlothlin repeatedly told him not to=20
communicate with the surety's lawyers until his lawyer became =
available.=20
We conclude that there is more than a scintilla of evidence that=20
McGlothlin/Metro knowingly engaged in the action or course of =
action. 4. Action Caused Damage The jury was asked to determine if McGlothlin/Metro's knowing =
conduct=20
was a producing cause of damages to Lin. As previously stated, had =
Lin=20
been insured, he would not have been personally liable for the =
surety's=20
claim. Furthermore, Lin testified that he was in the process of =
entering=20
into settlement negotiations with the surety when McGlothlin told =
him not=20
to contact the surety's lawyers until his lawyer became available. =
Three=20
months later, the surety filed a motion for summary judgment, =
which was=20
ultimately granted. We conclude that there is more than a =
scintilla of=20
evidence to support the jury's affirmative finding to jury =
Question 5.=20
Accordingly, we sustain issue two. C. Negligence In issue three, Lin argues that the trial =
court erred=20
in granting the JNOV because there was sufficient evidence to =
sustain the=20
jury's finding that Metro's negligence proximately caused him =
damages in=20
the amount of $175,000. We agree. Here, the jury was asked:
Did the negligence, if any, of Michael McGlothlin/Metro Allied=20
Insurance Agency, Inc., proximately cause the injury in =
question? Answer "Yes" or "No": (YES) "Negligence," when used with respect to the conduct of any =
person,=20
means failure to use ordinary care, that is, failing to do that =
which a=20
person of ordinary prudence would have done under the same or =
similar=20
circumstances or doing that which a person of ordinary prudence =
would not=20
have done under the same or similar circumstances. "Ordinary care," when used with respect to the conduct of any =
person,=20
means that degree of care that would be used by a person of =
ordinary=20
prudence under the same or similar circumstances. "Proximate cause" means that cause which, in a natural and =
continuous=20
sequence, produces an event, and without which cause such event =
would not=20
have occurred. In order to be a proximate cause, the act or =
omission=20
complained of must be such that a person using ordinary care would =
have=20
foreseen that the event, or some similar event, might reasonably =
result=20
therefrom. There may be more than one proximate cause of an event. =
The=20
jury's finding was unanimous, but the trial court granted Metro's =
motion=20
for JNOV. If there is more than a scintilla of evidence that "the=20
negligence, if any, of [Metro], proximately cause[d] the injury in =
question," the trial court erred. See City of Keller, 168 =
S.W.3d=20
at 810. In the context of the instant =
appeal, it=20
is well established that an insurance agent agreeing to obtain =
insurance=20
owes the legal duty to obtain the insurance and, if he cannot, he =
must=20
notify his principal of failure. May v. United Servs. Ass'n of =
Am.,=20
844 S.W.2d 666, 669 (Tex. 1992); Frazer v. Tex. Farm =
Bureau Mut.=20
Ins. Co., 4 S.W.3d 819, 822 (Tex. App.--Houston [1st Dist.] =
1999, no=20
pet.). Implicit in a case alleging negligent failure to obtain =
insurance=20
is the requirement that the loss be one that is covered in =
some=20
policy. See Hardware Dealers Mut. Ins. Co. v. Berglund, =
393=20
S.W.2d 309, 310-11 (Tex. 1965); see also Stinson v. Cravens, =
Dargen=20
& Co., 579 S.W.2d 298, 300 (Tex. Civ. App.--Dallas 1979, =
no writ)=20
(affirming instructed verdict where appellant failed to bring loss =
under=20
coverage of any policy shown by evidence to be available).=20
Through McGlothlin's testimony, =
Metro=20
conceded that it agreed to obtain a CGL policy for Lin, accepted =
payment=20
for said policy, and failed to obtain the policy. McGlothlin also=20
testified that Lin was not notified of the failure to obtain a =
policy=20
until McGlothlin, himself, discovered the failure. McGlothlin =
testified=20
that he notified his errors and omissions carrier "[b]ecause I =
knew that=20
somebody in my office had messed up and I was responsible for it, =
and I=20
was going to take responsibility for it, and provided there was a =
covered=20
peril." This testimony constitutes some evidence of the existence =
of a=20
legal duty and breach of that duty on the part of Metro. See=20
Frazer, 4 S.W.3d at 822. In addition, the evidence =
admitted at=20
trial included the Elbert quote, which Lin testified was faxed to =
Metro=20
and he asked that the Elbert quote "will be my model" and an =
example of=20
the type of policy he sought. On the Elbert quote, the line =
providing for=20
"contractual coverage" was checked. According to Lin, this =
indicated that=20
the Elbert policy would have protected against claims like the =
surety's=20
claims in the underlying suit. Furthermore, McGlothlin =
acknowledged that=20
he had received the Elbert quote from Lin and that it seemed to =
include=20
coverage for contractual liability. This evidence rises to a level =
that=20
would enable reasonable and fair-minded people to differ in their=20
conclusions, and it is, thus, more than a scintilla of evidence =
that Lin's=20
contractual liability would have been covered under some =
policy.=20
See Stinson, 579 S.W.2d at 300. Finally, it was =
forseeable to=20
McGlothlin that his failure to prepare or obtain a policy for Lin =
would=20
leave Lin uninsured. We conclude that there is more than a =
scintilla of=20
evidence to support the jury's affirmative finding to Question 1.=20
Accordingly, =
we overrule=20
Lin's second issue. D. =
Submission In his fourth issue, Lin argues =
that=20
"there is sufficient evidence to require submission to the jury." =
Having=20
found more than a scintilla of evidence to support the jury's =
findings for=20
each of the questions submitted, we sustain issue four. =
In three =
cross-points,=20
Metro contends that there was factually insufficient evidence to =
support=20
(1) the jury's response to the liability issues under both the =
DTPA and=20
negligence theories, (2) the damage findings under Lin's DTPA and=20
negligence theories, and (3) the jury's answer that the =
unconscionable=20
conduct of McGlothlin/Metro resulted in a damage award of=20
$300,000. A. Standard of =
Review=20
In reviewing a factual =
sufficiency point,=20
we consider all the evidence supporting and contradicting the =
finding.=20
Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 =
(Tex.=20
1989); HTS Servs., Inc. v. Hallwood Realty Partners, =
L.P., 190=20
S.W.3d 108, 111 (Tex. App.--Houston [1st Dist.] 2005, no pet.). We =
set=20
aside the verdict only if the finding is so contrary to the =
overwhelming=20
weight of the evidence as to be clearly wrong and unjust. Cain =
v.=20
Bain, 709 S.W.2d 175, 176 (Tex. 1986). Jurors are the sole =
judges of=20
the credibility of the witnesses and the weight to give their =
testimony.=20
City of Keller, 168 S.W.3d at 819. They may choose to =
believe one=20
witness and disbelieve another. Id. B. =
Liability Metro contends that there was=20
insufficient evidence to support a finding that the breach of a =
contract=20
surety claim would have been covered by a CGL policy. On appeal, =
Metro=20
argues that it "would submit to the Court that [it is] not aware =
of any=20
insurance policy, of any type, that would insure a person for his=20
obligations in entering into a contractual agreement as part of =
the=20
purchase of a Performance Bond." McGlothlin testified that he had =
"never=20
encountered a surety issue on a CGL deal before" and, when asked =
if it was=20
his understanding that the CGL policy will cover a surety's claim, =
McGlothlin responded, "never." However, when asked whether he had =
seen an=20
MGA Metro contends that Lin could have proved coverage by =
"introducing a=20
standard CGL policy and having a qualified insurance expert give =
his=20
opinion that a surety claim would have coverage under the policy." =
We=20
disagree. By presenting evidence of some policy that =
would cover=20
the claim, Lin, at the very least, created a fact question as to =
coverage.=20
See Berglund, 393 S.W.2d at 310-11; see also =
Stinson,=20
579 S.W.2d at 300. The jury may choose to believe one witness and=20
disbelieve another. City of Keller, 168 S.W.2d at 819. =
Reviewing=20
the evidence in a neutral light, we conclude that the finding was =
not so=20
contrary to the overwhelming weight of the evidence as to be =
clearly wrong=20
and unjust. See Cain, 709 S.W.2d at 176. Accordingly, we =
overrule=20
Metro's cross-point one. C. Damages 1. DTPA and Negligence In cross-point two, Metro asserts that there =
was=20
factually insufficient evidence presented to the jury to support =
the=20
damage findings under Lin's DTPA and negligence theories. =
Specifically,=20
Metro argues that "no evidence was presented that if an attorney =
had been=20
hired to represent Lin in the surety lawsuit the outcome would =
have been=20
different." Thus, Metro argues that there was no evidence of =
causation to=20
support the damage findings. We disagree. In its briefing, Metro states that this is the same argument =
that it=20
makes with respect to causation to support any finding of =
liability in=20
this case. As noted above this argument oversimplifies Lin's =
complaint:=20
Lin complains that he was entitled to representation as well =
as=20
coverage for the claim under the policy he requested. As =
noted above=20
the evidence created a fact issue with respect to causation, and =
the fact=20
issue was resolved in Lin's favor. We overrule cross-point =
two. 2. Mental Anguish In cross-point three, Metro contends that there was factually=20
insufficient evidence to support the jury's answer that the =
unconscionable=20
conduct of McGlothlin/Metro resulted in a damage award of =
$300,000. After unanimously finding that McGlothlin and/or Metro =
knowingly=20
engaged in an unconscionable act or course of action, the jury was =
asked:
What sum of money, if any, in addition to actual damages, =
should be=20
awarded to Shihche E. Lin, Individually and d/b/a Aptus and =
Sung-Ping Lin=20
against Mike McGlothlin and/or Metro Allied Insurance because =
their=20
conduct was committed knowingly? Answer in dollars and cents, if any. Answer: ($300,000.00) "Damages" was not defined in the charge, and Metro did not =
object to=20
the wording of the charge. Metro contends that evidence is =
factually=20
insufficient to support a $300,000 finding of "mental anguish =
damages."=20
However, the jury's finding was not confined to mental anguish =
damages.=20
Under a "knowing" violation, the DTPA allows an additional award =
of three=20
times the economic damages. See Tex. Bus. & Com. Code =
Ann. =A7=20
17.50(b)(1) (Vernon Supp. 2006); George C. Hanks,=20
Jr. Justice Panel consists of =
Justices=20
Taft, Alcala, and Hanks. 1. " ' -- ' " --=20
3. Lin had made=20
premium payments, and, when Lin cancelled the policy on June 26, =
2000=20
after the government contract was terminated, he was issued a pro =
rata=20
refund. Once it was discovered that Metro had not issued a policy, =
Lin was=20
refunded the remainder of the premiums paid.=20
4. Lin did =
not object to=20
the charge, but the trial court overruled Metro's no-evidence =
objection to=20
the charge. Metro did not object to the form of the charge. =
5. McGlothlin=20
explained that an "MGA" was a managing general agent who =
represents "a=20
number of carriers."=20
6. A =
"surplus lines=20
policy" is one where the rates are not determined by the =
state.=20
7. Section =
17.50(b)(1)=20
provides that a DTPA plaintiff may recover: the amount of economic damages =
found by=20
the trier of fact. If the trier of fact finds that the conduct of =
the=20
defendant was committed knowingly, the consumer may also recover =
damages=20
for mental anguish, as found by the trier of fact, and the trier =
of fact=20
may award not more than three times the amount of economic =
damages; or if=20
the trier of fact finds the conduct was committed intentionally, =
the=20
consumer may recover damages for mental anguish, as found by the =
trier of=20
fact, and the trier of fact may award not more than three times =
the amount=20
of damages for mental anguish and economic damages. Tex. Bus. & Com. Code Ann. =
=A7=20
17.50(b). =