James Hansen v. Lonnie Roach and Bemis, Roach & Reed
03-15-00378-CV
| Tex. App. | Oct 23, 2015Background
- Plaintiff James Hansen, a neurosurgeon and sole member of Austin Neurosurgical (a professional association), suffered a disabling injury on June 5, 2010 and was unable to perform surgery thereafter.
- Austin Neurosurgical owned disability office-expense (DOE) policies issued by Northwestern Mutual that paid covered overhead while the insured was totally or partially disabled.
- Hansen voluntarily surrendered his medical license on April 8, 2011. Northwestern Mutual refused DOE benefits after that date, arguing the policy terminates when the insured "ends the operation of the business."
- In the underlying coverage suit the trial court found Hansen had "closed his business" on the surrender date and denied part of the claimed benefits; Hansen sought appeal, but his appellate counsel Lonnie Roach failed to timely perfect the appeal and the appeal was dismissed.
- Hansen sued Roach and his firm for legal malpractice, alleging Roach's failure to perfect the appeal proximately caused the loss of DOE benefits that would have been recovered on appeal. Central legal question: whether surrendering the medical license brought Austin Neurosurgical to an end such that DOE coverage terminated, or whether the association continued in existence for the statutory winding-up period and coverage continued.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Hansen "end the operation of the business" (thus terminating DOE coverage) when he surrendered his medical license? | Hansen: surrender did not end the business; Austin Neurosurgical continued to exist to wind up (collect assets, pay liabilities), so coverage continued. | Northwestern Mutual: surrender meant the insured ended operation and coverage terminated at that date. | Court: Business did not end on surrender; winding-up obligations kept the entity in existence and coverage continued for the winding-up period. |
| Interpretation of the policy term "ends the operation of the business" — ambiguous or unambiguous? | Hansen: term must be construed in favor of coverage; given statutory winding-up rules, the term does not mean immediate termination upon surrender. | Northwestern Mutual: plain reading supports termination when insured can no longer perform services. | Court: Applied contract construction rules favoring coverage and statutory winding-up; rejected narrow insurer reading. |
| Was Roach's failure to timely perfect the appeal the proximate cause of Hansen's loss of DOE benefits? | Hansen: yes — a timely perfected appeal would likely have reversed and recovered the unpaid benefits; Roach's negligence proximately caused the damages. | Roach/Firm: argued either the outcome on appeal would not have changed or that the surrender ended coverage regardless. | Court: Found Roach negligent in failing to perfect appeal and that this proximately caused Hansen's loss (damages calculated as unpaid benefits plus interest). |
| Standard of review for legal and factual determinations in this malpractice-appellate context | Hansen: legal questions (policy interpretation, statutory winding-up) reviewed de novo; proximate cause in appellate malpractice treated as legal question suited to de novo review. | Defendants: urged deference to trial-court findings. | Court: Legal issues reviewed de novo; no deference to trial court's legal conclusions about coverage termination. |
Key Cases Cited
- Coker v. Coker, 650 S.W.2d 391 (Tex. 1983) (rules on interpreting unambiguous contracts and construing ambiguous policy terms against insurer)
- Walker v. Packer, 827 S.W.2d 833 (Tex. 1992) (standard for appellate review and the scope of review of trial-court rulings)
- Grider v. Mike O’Brien, P.C., 260 S.W.3d 49 (Tex. App.—Houston [1st Dist.] 2008) (discusses appellate procedure and related causation issues in legal malpractice context)
- Jackson v. Van Winkle, 660 S.W.2d 807 (Tex. 1983) (principles on legal conclusions and de novo review)
- Kelly-Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d 462 (Tex. 1998) (rules on construing insurance policy provisions in favor of coverage)