Guzman v. Allstate
18 F.4th 157
5th Cir.2021Background
- Saul Guzman applied for a $250,000 life policy on August 17, 2017 and answered “No” to both “Do you currently use tobacco or nicotine?” and “Have you ever used tobacco or nicotine?”
- Allstate issued the policy at Standard Non-Tobacco rates after reviewing some medical records and negative urine/nicotine testing; Mirna Guzman was named beneficiary.
- Saul Guzman died January 29, 2019; Allstate opened a contestable-claim investigation and obtained additional medical records, many of which labelled him a smoker.
- Allstate obtained underwriting referrals concluding Guzman would not have received the same policy if he had disclosed smoking; Allstate rescinded the policy and refunded premiums.
- Mirna sued for breach of contract and statutory claims; the district court granted Allstate summary judgment on the insurer’s declaratory counterclaim that Guzman misrepresented tobacco use.
- The Fifth Circuit reversed, holding a genuine dispute of material fact exists about whether Guzman was a smoker when he applied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was there a genuine dispute whether Guzman was a smoker at application? | Mirna: Guzman was not a smoker; she and his sister submitted detailed, personal affidavits and there were non-smoker records and a negative urine test. | Allstate: Multiple medical records described him as a smoker and underwriting referrals show insurer would not have issued the same policy. | Reversed summary judgment — a genuine factual dispute exists that must go to a jury. |
| Can "self‑serving" affidavits create a fact issue at summary judgment? | Mirna: Yes—if affidavits are based on personal knowledge, admissible, and particularized, they create fact issues. | Allstate: The affidavits are self‑serving and unsupported by the record, so they should be discounted. | Court: Self‑serving affidavits may suffice if competent and particularized; credibility is for the factfinder. |
| Did Allstate carry its burden (as movant asserting an affirmative defense) to prove misrepresentation/materiality at summary judgment? | Mirna: No—Allstate’s records are inconsistent, sources are unclear, and pre-issue records and tests support non-smoker status. | Allstate: Underwriting referrals and many records show falsity and materiality. | Court: Allstate failed to establish its defense beyond peradventure; record conflicts preclude summary judgment. |
| Does the Mayes five‑part misrepresentation test (including intent) govern insurer rescission? | Mirna (and amici): Argued Mayes may still apply. | Allstate/district court: Held intent element eliminated by statutory recodification as applied to §705.051. | Court: Declined to resolve applicability of Mayes on appeal; left the question open. |
Key Cases Cited
- Mayes v. Massachusetts Mutual Life Insurance Co., 608 S.W.2d 612 (Tex. 1980) (articulates five‑part common‑law misrepresentation defense in insurance cases)
- Anderson v. Liberty Lobby, 477 U.S. 242 (1986) (summary judgment standard regarding evidence and inferences)
- International Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257 (5th Cir. 1991) (trial courts may not weigh evidence or evaluate credibility on summary judgment)
- Brown v. City of Houston, 337 F.3d 539 (5th Cir. 2003) (de novo review for summary judgment rulings)
- Darby v. Jefferson Life Ins. Co., 998 S.W.2d 622 (Tex. App.—Houston [1st Dist.] 1999) (materiality inquiry centers on whether insurer would have accepted the risk)
- Robinson v. Reliable Life Ins. Co., 569 S.W.2d 28 (Tex. 1978) (materiality defined by insurer's hypothetical acceptance if true facts disclosed)