George E. Guidry and Dwight W. Andrus Insurance, Inc. v. Environmental Procedures, Inc. and Advanced Wirecloth Inc.
388 S.W.3d 845
Tex. App.2012Background
- Two insureds sued their Texas-based insurance broker Guidry and employer for procuring insurance from 1991–1994 from a non-admitted carrier (OMI) without proper license/training.
- Insureds alleged that OMI was financially unstable and that Guidry failed to disclose this; they argued OMI should have contributed more toward Derrick settlement.
- Derrick Manufacturing Co. sued for patent infringement and unfair competition; Derrick settlements totaled $15 million (global, with related claims) and $5 million was the umbrella coverage limit at issue.
- OMI provided $5 million umbrella coverage for Oct 1, 1992–Sept 30, 1993; Insureds settled with OMI for $500,000 in 2001.
- Jury found Guidry negligent and knowingly violated the Texas Insurance Code; damages included $5 million (OMI’s supposed contribution), $75,000 (value gap for the policy), $1,000,000 punitive damages, and $350,000 attorneys’ fees; trial court reduced by OMI’s $500,000 settlement and entered final judgment for the Brokers.
- The appellate court reversed, holding there is no evidence that Guidry’s conduct caused the alleged damages and that sanctions were not warranted; Insureds take nothing on remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Causation of damages from Guidry’s conduct | Guidry failed to disclose OMI’s surplus- lines status and lack of Texas licensing. | No evidence that an admitted carrier would have paid more toward the Derrick settlement or that available admitted coverage would have covered the Derrick claims. | No legally sufficient evidence that Guidry caused the $5M damages; reversal and take-nothing judgment. |
| Limitations defense applicability | Limitations should bar claims. | Need not reach due to no damages. | Not reached; no relief addressed on this basis. |
| Misrepresentation and harm required for damages | Guidry misrepresented or failed to disclose issues harming insureds. | No evidence that misrepresentations caused economic loss; no damage link. | Insureds failed to prove causation; no damages from misrepresentation. |
| Knowingly violating Insurance Code | Gu idry knowingly violated the Insurance Code. | Evidence insufficient of knowing conduct causing damages. | No evidence supporting knowing violation leading to damages. |
| Sanctions under Rule 13 | Rule 13 sanctions warranted against Insureds. | Trial court did not err in denying sanctions. | Trial court did not abuse discretion; sanctions denied. |
Key Cases Cited
- Cruz v. Andrews Restoration, Inc., 364 S.W.3d 817 (Tex. 2012) (legal-sufficiency review; evidence must support inferences for verdict)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (standard for reviewing verdicts; civil-litigation standards)
- Ford Motor Co. v. Ridgway, 135 S.W.3d 598 (Tex. 2004) (evidentiary sufficiency; inference and fair-minded jurors)
- Serv. Corp. Int’l v. Guerra, 348 S.W.3d 221 (Tex. 2011) (no-evidence standards; permissible inferences)
- King Ranch, Inc. v. Chapman, 118 S.W.3d 742 (Tex. 2003) (no evidence or inference sufficiency standards)
- Metro Allied Ins. Agency, Inc. v. Lin, 304 S.W.3d 830 (Tex. 2009) (causation in insurance-agent negligence requires available coverage for claims)
- Two Pesos, Inc. v. Gulf Ins. Co., 901 S.W.2d 495 (Tex.App.—Hou. (14th Dist.) 1995) (loss-in-progress doctrine; coverage applicability)
- State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430 (Tex. 1995) (prohibition on recovering fees without actual damages)