Michael D. Lee v. the Rogers Agency, C. Michael Rogers & New York Life Ins. Co.
06-15-00037-CV
| Tex. App. | Nov 9, 2015Background
- Plaintiff Michael D. Lee purchased three New York Life whole‑life policies in the mid‑1980s and paid a lump sum in 1989 to make them "fully paid up" based on agent Rogers' representations.
- Lee transferred legal ownership of the policies to an irrevocable trust (trustee Richard Dial) on June 10, 1991; after that date Lee had no ownership interest per NY Life forms.
- A nationwide class settlement in Willson v. New York Life (final judgment dated Feb. 1, 1996; settlement referenced July 28, 1995) defined class members as persons/entities who had an ownership interest in one or more NY Life policies at the time of policy termination or at the settlement date and covered policies from 1982–1994.
- NY Life notified the trust (not Lee personally) about policy lapse/termination in May 2012; Lee sued in March 2014 asserting extra‑contractual claims (negligence, DTPA, Insurance Code, declaratory relief, breach of contract) based on the 1989 misrepresentations.
- Defendants moved for summary judgment arguing res judicata based on the Willson class settlement; the trial court granted the motion and dismissed Lee’s claims with prejudice. Lee appeals, arguing he is not bound by the Willson judgment for multiple due‑process and class‑definition reasons.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Willson class judgment precludes Lee's claims (res judicata) | Lee was not a Willson class member because he lacked ownership on the settlement/termination dates | Willson judgment bars Lee under res judicata | Court below granted summary judgment for defendants (appeal challenges this) |
| Whether Lee is in privity with the Willson class/trust | Lee is not in privity: he was neither a successor in interest for these claims nor represented or in control of the Willson action | Defendants claim privity via prior ownership, alleged representation by the trust, or trust documents | Appellant argues material fact disputes exist; trial court accepted defendants' res judicata contention (appellate review de novo) |
| Whether Lee received constitutionally adequate notice of the class settlement | Lee received no individual notice; only the trust was notified; thus due‑process notice requirement not met | Defendants argue notice to the trust sufficed to bind Lee | Appellant contends absence of individual notice (or inadequate notice) precludes preclusion; trial court nonetheless granted judgment on res judicata |
| Whether extra‑contractual claims (DTPA/Ins. Code/bad faith) are barred by class settlement | These statutory/common‑law claims are independent of contractual benefits and accrue to "persons"; they need not be transferred with policy ownership | Defendants rely on class settlement to extinguish those claims | Appellant argues these claims survived transfer to the trust and were not litigated/compensated in Willson; trial court resolution adverse to appellant is the subject of this appeal |
Key Cases Cited
- Barr v. Resolution Trust Corp., 837 S.W.2d 627 (Tex. 1992) (defining res judicata and its elements)
- Travelers Ins. Co. v. Joachin, 315 S.W.3d 860 (Tex. 2010) (elements for claim preclusion)
- Intratex Gas Co. v. Beeson, 22 S.W.3d 398 (Tex. 2000) (class‑definition and ascertainability principles)
- Celtic Life Ins. Co. v. Coats, 885 S.W.2d 96 (Tex. 1994) (insurer/agent liability for misrepresentations separate from contract benefits)
- Johnson v. General Motors Corp., 598 F.2d 432 (5th Cir. 1979) (due‑process notice requirement for absent class members)