Howard v. Ina County Mutual Insurance Co.

OVARD, Before JAMES and HANKINSON, JJ. BACKGROUND

OPINION undisputed purposes The facts HANKINSON, Justice. personal suffered appeal. of this This case involves written acci- injuries as of an automobile the result exception In- to article 5.06-1 of the Texas motorist on with an underinsured Feb- dent Code, statutory provision gov- surance accident, ruary At time of the motorists erning uninsured underinsured vehicle, driving company act- Howard was appeals T. Howard coverage. Michael employment scope of his with ing within the grant trial court’s (“Palestine”). Contractors, Inc. Palestine County favor of INA Mutual Insurance Com- liability coverage insured Palestine (“INA”) pany and the denial his own sum- automo- on its vehicles under a commercial mary judgment motion. Howard contends August policy period for the bile issued generally the trial court erred re- August policy The insured 1992 to 1993. policy reject to forming the insurance cover- named 202 vehicles for seventeen insureds age retroactively expired policy under an $91,- one-year premium of an with estimated by considering the the intent to 522. determining coverage. policy parties’ We hold that the intent not be premium charge INA did Palestine a determining in- considered in whether the (“UM/ motorists for uninsured/underinsured validly rejected sured uninsured/underin- UIM”) during policy period. coverage the coverage sured motorists under article 5.06- policy The included a Texas cover- 1(1) Code, of the Texas Insurance and there- (the “original age coverage selection form fore, cov- motorists uninsured/underinsured form”). vice-president, Palestine’s selection erage rejected retroactively. cannot be As a Jenkins, signed Phil the form but to result, we conclude that uninsured/underin- coverage to three date it or select coverage sured existed at the time motorists appears options That form within available. of Howard’s accident. We reverse the trial copy policy of attached the the entire judgment court’s and remand to the trial summary judgment: proceedings. court INA’s motion for further Contractors, iployers, Agency H Inc. J Palestine United Policy Applicant Agent’s or Name Named Insured Number amended, 5.06-1, Code, provisions acknowledge In I of Insurance as accordance with Article Texas Coverage given opportunity purchase I Motorists have been Uninsured/Underinsured (or liability policy up for which amounts to the automobile limits I have on shown applied), right given I and I also Motorists have have been Uninsured/Underinsured choice(s): Coverage following and have made the entirety. hereby Coverage in n I Motorists its 1. Uninsured/Underinsured hereby property damage n I feature of 2. Uninsured/Underinsured Coverage only. Motorists entirety, Coverage hereby accept in its n I Motorists 3. Uninsured/Underinsured realizing apply only for motor which meet will vehicles provided policy. in this definition of “owned as automobiles” for) (or applied on all rejection(s) apply shown future The indicated above shall on the change Company of vehicle policies and all future issued to me because of renewals of such writing coverage, notify company in interruption until I or because of Coverage is desired. Motorists thereafter Uninsured/Underinsured Phil Jenkins /s/ Applicant Signature of Named Insured or Date policy. Because Jen- February

In fits under Palestine’s with connection accident, signed selection filed a claim for bene- kins Howard UIM form, duty INA treated it as a good all for breach of the faith and fair dealing and denied Howard’s because no exist- against claim. Howard filed suit INA on granted ed under the trial court 27, 1994, alleging June a cause of action for INA’s motion ordered that take duty good breach of the faith and fair nothing by his claim.

dealing by denying claim in the absence a written of UM/UIM STANDARD OF REVIEW 26,1994, September On Jenkins executed a summary This Court reviews a (the coverage rejection new form judgment de novo to determine whether a form”), coverage rejection “1994 indicating party’s right prevail is established as a Palestine’s Enters., Capitan matter of law. See Inc. v. entirety policy period “8/15/92— Jackson, —El provided part: That form 8/15/93.” appellate Paso An court In provisions accordance with the of Arti- procedures follows well-established when re 5.06-1, Code, cle Texas Insurance as viewing summary judgment: amended, given opportuni- I have been The movant for ty purchase Uninsured/Underinsured showing has the burden of that there is Coverage up Motorists in amounts genuine issue of material fact and liability coverage automobile limits have summary judg- it is entitled to my policy, on I given and have also been law; ment as a of matter right to Uninsured/Underin- deciding disput- 2. In whether there is Coverage sured Motorists and have made precluding ed material fact issue sum- choice(s): following mary judgment, evidence favorable (xx) hereby reject I 1. Uninsured/Underin- true; the non-movant will be taken as Coverage sured Motorists in its en- and tirety; or Every reasonable inference must be indulged in favor of the non-movant rejeetion(s) ap- indicated above shall and doubts in resolved its favor. ply my policy and on all renew- future policies als such and all Property Management Nixon v. Mr. of future Company issued to me because of Inc., (Tex.1985). 546, 690 S.W.2d 548-49 A change coverage, of vehicle or or because movant, plaintiff, conclusively prove as must interruption of an until noti- MMP, all essential elements of his claim. fy Company writing that thereafter Jones, (Tex.1986). 59, Ltd. v. 710 S.W.2d 60 Motorists Cover- Summary judgment Uninsured/Underinsured proper for a defendant is age is desired. summary judgment when evidence ne- gates plaintiffs an essential element of the added.) (Emphasis cause of action as a matter of law. Black 2, 1994, On November Howard and INA 20, Lloyds v. Victoria 27 summary judgment. each filed motions for (Tex.1990). summary judgment Howard moved for on his claim, asserting grounds bad faith as both When move for sum statutory mary judgment, party Palestine failed to meet re- each bears the burden quirements of Texas establishing judgment Insurance Code for that it is entitled to rejecting law, coverage because it party as a matter of and neither can rejecting prevail select either box on the because of the other’s failure to dis original coverage charge Guynes selection form. INA his burden. v. Galveston summary (Tex.1993); judgment County, moved for on two (1) Williams, grounds: voluntarily Lloyds, Palestine and INA Farm v. State Inc. policy retroactively reformed the to reflect S.W.2d 549-50 —Dallas denied). grants their intent and If writ the trial court one UM/ other, originally UIM at the time INA motion and render denies the we (2) policy; judgment issued the and INA was not liable the trial court should have reject the Strauss, agreement to and Palestine’s UM/ rendered. Jones policy, as re- (Tex.1988). does not Because But if a movant UIM judgment formed, coverage in its en- rejects show its entitlement law, the ease cannot be argues must remand that it tirety, as a matter of we further INA Motors trial court. Gibbs v. General claim when no denying to the Howard’s liable for (Tex.1970). Corp., 450 existed. summary judg- for both move When summary judg prevail on its To accompa- ment, all the we consider evidence motion, negated must have determining whether ment nying both motions of action for cause of Howard’s party’s motion. Dallas Coun- element grant either fair duty good faith and Aerobics Dist. v. Institute breach ty Appraisal for Research, (Tex.App.— duty to deal owes a dealing. An insurer in the fairly good Dallas faith with its insured Republic payment of claims. processing DISCUSSION (Tex. Stoker, 338, 340 Ins. Co. v. error, Howard chal- In first 1995). duty good faith A breach contend- lenges (1) the trial court’s dealing when: and fair is established failed to ing that Palestine denying or de basis existed reasonable of law. writing as a matter policy; under the laying payment of benefits rejection, Howard ar- Without (2) have insurer knew or should coverage existed as a matter gues UM/UIM no reasonable basis existed known four In related of error of law. the claim. delaying payment of denying or (1) six, argues that: through objective requires an The first element Id. policy retro- trial court could not reform the insur of whether a reasonable determination actively legislature created an because the have circumstances would er under similar exception general rule allow- express Id. This re delayed or denied the claim. (2) contract; ing retroactive reformation of a not that the insurer will quirement assures retroactive reformation frustrates stat- of a claim as an erroneous denial be liable for in- operation by creating a class of ute’s long as a reasonable basis existed coverage the sureds unable to obtain the denial. Id. (3) provide; par- legislature intended to in deter- ties’ intent should not be considered seeking bene An insured’s claim (4) existed; mining whether of an policy independent is under the fits policy expired, because the insurance had against the alleging faith claim bad insured’s improper. reformation is retroactive Transportation (citing Id. at 340-41 insurer. (Tex. Moriel, 10, 17 Ins. Co. re- argues policy can be INA 1994)). faith lies Generally, no claim for bad agree- and Palestine’s formed to reflect INA a claim that promptly denies when an insurer reject policy at the time the issued ment Stoker, 903 policy. under the (1) is not covered the Texas because: UM/UIM claim, however, denying a In S.W.2d at 341. specify timing does not Insurance Code act may some extreme insurer commit (2) an rejection; was never an of the Howard injury independent policy (3) that causes policy; and Pales- under the INA insured (4) faith. Id. to the level of bad coverage; claim and rises reject tine intended alleg plead not facts beneficiary Howard does of Because not an intended Howard was (5) act INA injury by some extreme considering in- caused coverage; and UM/UIM claim, denying we focus on in reforming committed appropriate in tent is rule, negat whether, general INA under also contends INA action or cause of complaining about the an element of Howard’s of error ed raise valid cause of summary judgment. conclusively proved that no denial of his presents two is This case action existed. Summary Judgment INA’s (1) and INA’s in Palestine’s sues: whether policy to reform the may be considered coverage rejec- tent argues that the 1994 (2) wheth- coverage; to reflect INA to policy tion form reformed Tatum, policy er INA reform the the Bureau Mut. Ins. Co. v. coverage retroactively. (Tex.App. Tyler denied); writ — Sloan, 565 at Although a writ Article 5.06-1 of the Texas In rejection mandatory, ten is the statute does provides part: surance Code in require special procedure not special liability No automobile insurance ... cov- language writing, for the and execution of a ering liability arising ownership, out of the satisfactory rejection requires only written maintenance, any or use of motor vehicle Sloan, by minimal effort the insured. See delivery shall be delivered or issued for in 565 S.W.2d at 585. provided state unless is liberally Courts must construe thereto, supplemental therein or in at least give public article 5.06-1 to full effect the limits described the Texas Motor policy broadly requiring Act, Safety-Responsibility Vehicle under Ass’n, Stracener v. United Servs. Auto. Board, provisions protection (Tex.1989); Sloan, persons insured thereunder who pur S.W.2d at 583. Because of its remedial legally damages entitled to recover from corollary pose, and as a to the courts’ liberal operators owners or of uninsured or un- interpretation effecting derinsured motor vehicles because bodi- rejection exception to article ly injury resulting ... therefrom. The general strictly 5.06-1’s rule should be con coverages required under this Article shall Sloan, protect strued to the insured. applicable not be where insured 583; Boggs, at Guarantee Ins. Co. v. named in the shall the cover- (Tex.Civ.App. age writing; provided —Amarillo unless dism’d). Thus, absent a written requests named insured thereafter such rejection, eveiy liability policy automobile writing, such need delivered this State includes provided supplemental in or to a coverage by operation of law. See renewal where the named insured 5.06-1(1); Boggs, Tex. Ins.Code Ann. art. rejected has in connection (when rejection S.W.2d at 269 of UM cover policy previously with a him issued to ineffective, age is cover includes UM the same insurer or affiliate insurer. law). age by operation of 5.06-1(1) (Vernon Tex Ins.Code Ann. art. 1981) added). (emphasis Initially, argue This Court has rec we note that INA does not ognized legislature’s purpose protect that its coverage selection form met conscientious, rejection requirement insured motorists from fi of article 5.06-1(1). by negligent, financially argues nancial loss caused no written irresponsible operators rejection coverage owners and of unin existed as a UM/UIM summary judgment sured or underinsured motor vehicles. See matter of law. INA’s (1) County Tex. copy policy Farmers Mut. Ins. Co. v. evidence includes: a Grif 861, fin, (Tex.App. containing original coverage 868 S.W.2d 864 the selection —Dallas 1993, denied); form; Traylor rejection coverage v. Cascade Ins. form and the 1994 292, (2) (Tex.App. Ray- 294 S.W.2d the affidavits of Jenkins and —Dallas writ). 5.06-1, By enacting no article mond Hall. C. This evidence shows Jen- legislature public policy signed original coverage the declared that the kins the selection requires coverage offering options coverage of this State be form un- three UM/UIM part every liability provided made a automobile der the The form a method (1) issued, policy subject only reject to limit to: in its entire- (2) exception. Casualty ty; reject Employers property damage ed Co. v. the feature of Sloan, (3) (Tex.Civ.App.— coverage; accept the UM/ n.r.e.). failed, Austin writ ref 'd in entirety. statute’s UIM Jenkins however, exception provides limited to date the form or to select however, coverage; coverage option. Through the insured Hall’s affidavit reject writing. testimony, original must in the INA conceded that the Tex 5.06-1(1); Ann. art. Farm form to meet article 5.06- Texas Ins.Code v. 746; Lloyd’s Ins. Co. St. Paul l(l)’s at written re- S.W.2d statutory requirement of a 524, 527 Huang, 808 S.W.2d September Fong the Chun jection. Hall testified 1991, writ “necessary” Dist.] [14th be- was 1994 “correction” —Houston denied) v. Forder Co. (citing a Cherokee Water failed to select cause Palestine (un (Tex.1987) hause, 741 S.W.2d option. is to correct objective of reformation derlying policy strictly construe the We preparing written made mutual mistake reject coverage. purports to language that instrument)). 584; Sloan, Boggs, at See signed original the at 269. Jenkins summary judgment evidence INA’s minimal form and with selection Hall. affidavits Jenkins included the easily one of the have checked effort could signed time he that at the Jenkins testified signature line to located above the two boxes of Pales rejection form on behalf original the coverage. rejection of the Palestine’s indicate tine, Palestine to the intention” of “it was Sloan, Jen at 585. Because See coverage. Hall testified reject UM/UIM rejection option, the not select a kins did 26,1994 rejection September the INA issued bearing only form selection original” to “accu form form to “correct rejec signature failed to meet the written coverage was and is that such rately reflect 5.06-1(1). See id. requirement of article tion 15,1992 period August rejected policy however, that because article argues, INA it 15,1993.” argued that INA also August 5.06-1(1) rejection to require does paid premium for Palestine charged and accident, writing before the copy by the coverage, evidenced reflect policy to reform the were entitled to its motion. policy attached the time at their intent argues that the real policy issued. INA subject bearing Statutes contracting case is whether the issue this defining the contracts or matter of insurance the cov- parties originally intended parties to insurance rights and liabilities of accident but had not done erage before the part of the contract. See contracts become INA con- of a mutual mistake. so because Ins. v. Underwriters Carroll Universal showing mutual mistake tends evidence (Tex.Civ.App. —Houston (1) premium the absence of a includes: n.r.e.). Because writ ref'd [14th Dist.] (2) coverage; and Jen- charge for UM/UIM State, absent every of insurance testimony that the Hall’s affidavit kins’s and cover rejection, includes a written Fi- parties intended to law, that result ensues age by operation of nally, contends that without reforma- parties to the intent of the regard to without tion, changes make an insured could never Unigard Sec. insurance contract. dis- issued. We once 303, 308 Schaefer, 572 S.W.2d Co. agree with all of these contentions. 817; Carroll, (Tex.1978); at recognize that at 269. We Boggs, 527 S.W.2d may equitably reform a Courts import pro emphasized the legislature our prove if the a definitive contract suffering financial motorists tecting insured in the same explicit agreement, understood and by negligence of owners caused loss mistake, both, by mutual but their sense mo uninsured or underinsured operators of express the contract fails to therefore, vehicles; strictly construe we tor Nat’l Ins. Huttleston v. Beacon agreement. reject cover purports to language that policy 741, (Tex.App. 746 —Fort Consequently, purpose. age achieve that to denied) 1992, Champlin (citing writ Worth in deter apply the rules used not 376, we should Chastain, v. Co. Oil & Ref. intent and acts contracting parties’ mining (Tex.1965)). policy an insurance While reject considering an insured whether mistake, when because of mutual may be reformed Unigard, 572 coverage. See ed contemplates altera necessarily UM/UIM reformation (same aspects public policy at 308 policy language to S.W.2d tion or amendment for article as exist article 5.06-1 at the exist for parties true intent reflect the Code). We Huttleston, Insurance of the Texas 822 5.06-3 inception. of its See time hold, therefore, parties’ may coverage coverage rejection that intent UIM on the 1994 whether, determining form, not be considered in rejection only became effective on 5.06-1(1), under article a valid of Thus, the date executed. Jenkins’s testimo- coverage exists.1 Because we do ny reject UWUIM Palestine intended to UM/UIM not parties consider the intent of the de- coverage policy at the time the issued and termining rejection coverage, of it UM/UIM pre- INA’s contention the absence of a follows, hold, and we also charge payment coverage mium or may policy reject not reform the to retroac- parties’ evidenced the to intent tively mandated coverage carry weight no and must not be 5.06-1(1). article determining considered in whether Palestine rejected 15, August at the time the argues To the extent that the policy issued. coverage rejection adequate form was August August to reform the 1992 to and, instead, If we did not hold so consid- policy, plain language we note the of ered INA’s and Palestine’s intent and re- rejects coverage “my policy that form policy reject coverage formed the retroac- policy on all future renewals of such tively, judicially rewriting we would be policies.” September and all future On exception limited 1994, “my policy” only policy referred to the unique include circumstances to each situa- in effect at that time: the renewal of the premium tion —such as the absence of a August August policy. 1992 to charged paid in the absence specific language, Because of its the 1994 rejection. expression of a clear written coverage rejection only applied form only That result would increase and bur- Berry renewal Texas Farm litigation, pub- den but would also violate the Bureau Mut. Ins. policy legislature already lic our has declared denied) (renew —Waco recognize our support: courts must new, separate, al creates and distinct coverage by absent written insured). contract between insurer and insured, every liability coverage automobile today We do not hold that an insurance coverage by opera- includes UM/UIM policy may holdings never be reformed. Our tion of law. ability do not interfere with the policy insuring Because INA’s Palestine freely, expand contract and we do not contained written the mandat- Instead, coverage

law. in this case rests coverage, ed UM/UIM upon plain language of article 5.06-1 of existed time of the accident. The trial at.the There, the Texas Insurance Code. we find no granting court erred in INA’s language that indicates a written judgment. entered after a issues, could or should have retroac- Summary Judgment Howard’s including extinguish- tive the effect of effect— during claims that have arisen liberally We construe Howard’s first interim. complain of error to that the trial court erred only denying summary judgment. holdings limit our to those his We governed by duty good insurance contracts article 5.06- sued INA for breaeh of the dealing by wrongful 1 of faith and fair the Texas Insurance Code. Our decision denial public policy supporting the claim harmonizes the benefits. Howard legislation specific summary judg- with the facts of this case. asserted his motion for wrongfully Jenkins failed to at the ment that INA denied claim signed original coverage time he the selection because it had no written rejected finally coverage required form. When as under article 5.06-1 of Jenkins UM/ parties provisions 1. But see Oldaker v. Travelers Ins. tween of additional to be in- (Tex.Civ.App. S.W.2d 403-04 Paso policy, presumptive" in "it would be of cluded —El writ) (where no written of UM coverage). court to define intended existed, agreement absent other be- Stoker, at 341. A motion responded Code. INA See the Texas Insurance competent grounds expressly present failed to evi- must stand or fall on the that Howard summary judgment. We supporting dence motion. McConnell v. presented in the agree Dist., with INA. Indep. Southside Sch. (Tex.1993). Howard Because insurer, duty As an INA owed its insured a allege grounds present evidence estab- and in fairly good process- in faith to deal and the lishing a of each of the ele- as matter law Stoker, payment and of claims. See action, the trial of his cause of court ments summary his prevail S.W.2d at 341. To denying not err in Howard’s did

judgment, proved must have each Howard 862; judgment. Guynes, 861 S.W.2d at See Initially, action. element of his cause of McConnell, at 341. proved Howard have his must classification policy. as insured under Palestine’s four, six, five, of error points We sustain proved, id. Howard must have Once also point portion that Howard’s first of and (1) proved no reasonable that: basis existed complaining error the trial court erred delaying denying payment for or INA’s motion, summary judgment granting INA’s (2) policy; and benefits under the INA knew portion but we that of Howard’s overrule that no or should have known reasonable point complaining the trial court first error denying delaying pay- basis existed summary judgment in denying erred his mo- ment of id. his claim. See disposition of tion. Because of our these ground Howard asserted as the sole points, we not consider Howard’s sec- need summary judgment that UM/UIM ond and of error.2 See Tex. third existed because Palestine failed to select R.App. 90(a). P. signed option when it court’s We reverse the trial and form. selection We have concluded proceedings remand for consistent further that because Palestine failed to opinion. with this coverage writing, cov- erage policy. existed under the have We

also that could not concluded reform the OVARD, Justice, dissenting. retroac- I court properly Because believe the trial tively. Even with estab- reformed the insurance contract reflect law, however, lished as a matter Howard’s contracting par- actual summary judgment motion for failed to set ties, respectfully dissent. grounds present proof establishing forth and

as a of law each element matter of his cause and, Insurance contracts policies are as of action. such, applicable subject to rules to con generally. Group v. tracts Hernandez effect, argued, Howard because Gulf (Tex.1994). Lloyds, 875 included no rea- meeting essence of contract involves the sonable INA to deny basis existed for the minds the two between allege present claim. Howard failed to and Bass, agreement. E.g., Zurich Ins. Co. evidence, any evidence, much less conclusive (Tex.Civ.App. that he was insured under How- —Dallas 1969, writ); Deposit v. Federal Sonne allege present ard failed to conclusive Corp., 881 evidence a reasonable under insurer —Hous 1994, writ [14th ton When Dist.] similar circumstances would not denied have agreement, to an have come his claim and that INA knew or should have in a terms can memorialized written con denying known that no reasonable basis for his claim at the time INA it. tract. existed denied point admitting as asserts in his second of error trial court erred evidence allowing INA and Palestine to reform INA and Pales- the reformed contract between retroactively was tine because the contract neither relevant dramatically unfairly rights would affect his pursuant nor admissible evidence rules 401 accident, law, arising poli- from and 402 of Rules of Civil Evidence. the Texas error, cy. In his third Howard asserts

222 parties correctly incorporated

When both to the contract are mis- been in the instru- taken as to what the mistake, terms through ment mutual and this is contract or when there is a unilateral true even when there have been several re- by fraud, mistake induced the courts can period years. newals of the contract over a reform the written memorialization to reflect Co., Automobile Ins. 275 at 838. S.W.2d the actual terms of the contract. Auto- fact, In courts in this state have discussed Co., mobile Ins. Co. v. United Elec. Serv. option dealing reformation as an when with a (Tex.Civ.App. Worth —Fort under article 5.06-1. In n.r.e.). underlying writ refd The ob- Co., Oldaker v. Travelers Insurance jective of reformation is to correct a mutual court discussed article 5.06-1 and whether in preparing mistake made a written instru- allowing there was a mutual mistake ment, truly so that the instrument reflects option court the to reform the contract. Ol- original agreement parties. Cher- daker, at 404. The court con- Forderhause, okee Water Co. v. 741 S.W.2d party seeking cluded that reformation (Tex.1987). 377, 379 Reformation is not an by had not clear convincing established and alteration or amendment of the actual con- evidence that mutual mistake or unilateral tract, merely change but a to the written Oldaker, by mistake induced fraud existed. truly memorialization to more reflect what at 404. That court inferred that parties agreed. reforming had In by had mutual mistake or mistake induced change instrument the court does not proven, permissi- fraud been reformation was by parties, terms of the contract made it Oldaker, ble. 497 S.W.2d at 404. merely declares what those terms were.1 Co., Automobile Ins. 275 S.W.2d at 840. majority goes beyond any opinion oth- Thus, necessarily reformation relates back to jurisdiction expands er case in this the time that the contract was first severely current law to restrict an individu- writing. memorialized in majority al’s contractual freedoms. The remedy For the of reformation to be avail Employers Casualty Co. v. ground able on the of mutual mistake the Sloan, Unigard Security Insurance Co. v. parties must have reached a definite Schaefer, and Guarantee Insurance Co. v. explicit agreement, understood the same Boggs support public policy decisions both, by agreement sense which has been However, expansion of the law. none of misstated in the written contract because of directly expands these cases is contracting par mistake common to both majority opinion the law as the does. ties. Zurich Ins. 443 S.W.2d at 374. The Sloan decision deals with an oral con requires Reformation that the facts and cir tract, orally, where the was denied warranting cumstances reformation be estab agreement but the never was memorialized by convincing clear and lished evidence. Ol writing parties and the did not seek refor daker v. Travelers Ins. 497 S.W.2d Sloan, Employers Casualty mation. Co. v. writ). (Tex.Civ.App. Paso —El (Tex.Civ.App. —Austin majority acknowledges, As the courts n.r.e.). 1978, writ ref'd The Sloan decision repeatedly this state have allowed insurance never discussed reformation and stands for contracts to be reformed to reflect the true proposition of unin parties. contract that existed between the coverage must be in sured/underinsured Chastain, Champlin Refining Oil & Co. writing. (Tex.1965). Reforma- policy may Unigard tion of an In the court addressed Personal be effected Injury agree- even after a loss has occurred if the Protection under article 5.06-3 and a actually ment made has not written “Exclusion Named Driver” that .of legislature 1. Even when the mandates that a their mutual mistake failed to state the agreement writing, term of an be in reformation agreement writing. in the National Resort Com example, is not barred. munities, Cain, For statute of frauds (Tex. Inc. v. is no bar to the reformation of contract for the 1975). sale of land where the had an having coverage coverage or not having article 5.06-3 not mention or refer to the did party. When act of the other Security Ins. Co. v. the fraudulent coverage. Unigard (Tex.1978). should have the happens, the courts this Schaefer, 572 S.W.2d agreement. address Unigard power also did not to reform The decision proposition and stands for the reformation to contract is Additionally, the freedom rejection express of article that clear and right the courts should important required.2 coverage is 5.06-3 legislature provid has uphold. The seek to simply analyzes the Boggs The decision automatic inclusion with the ed the insured coverage language of article coverage when of uninsured/underinsured Specifically, the court determines 5.06-1. coverage dur to address the parties the fail must be “issued” in the statute the word However, ing negotiations. uninsured/un- Ins. Co. v. strictly construed. Guarantee mandatory in coverage is not derinsured (Tex.Civ Boggs, 527 S.W.2d 268-69 Am. Ins. Greene v. Great this state. See dism’d). 1975, writ None of .App.—Amarillo Co., (Tex.Civ.App.— remedy equitable these decisions raises the n.r.e.). Article writ ref'd Beaumont reformation, opinions nor do of these tak prevent insureds from 5.06-1 does not expand language the of article 5.06-1. unin ing risks associated with on known agree majority’s analysis of the with the This Court motorists. sured/underinsured However, policies 5.06-1. behind article expresses the article 5.06-1 has held that case, that, question with the this there is no unin guarantee legislative intent not reformation, the of uninsured/un- every case. coverage in sured/underinsured coverage by Palestine falls within derinsured County Mut. Ins. Co. Farmers Texas plain language policies of the statute. (Tex.App.— Griffin, 868 showing a of mutual mistake. There is clear legislature The Dallas agreed parties Both to the contract that the that, although provided also included a terms of the insurance contract required not to have uninsured/underin- rejection of cover- uninsured/underinsured when, meeting of through a sured age. parties had a On these terms the unin they agree not to have the minds “meeting upon the con- of the minds” which coverage, they put must sured/underinsured pay tract was created. Palestine did coverage in not to have writ agreement premium coverage. The written me- (Ver 5.06-1(1) Ann. art. ing. Tex Ins.Code contract did not reflect morialization 1981). non required by as article 5.06-1. expand the law legislature If the wishes parties sought to reform the contract to The under these circum- so that reformation agreement. reforma- reflect their true The remedy, limiting proper thus stances is not writing, required by article tion was in as freedoms, contracting parties’ contractual 5.06-1, and related back when so, should do but this Court then it should reflecting agreement signed, therefore was expand the law upon it itself to not take parties. of the the true or contract language of the statute. beyond plain majority holding limits Although the has stated that Supreme Texas Court under the only to bar reformation article 5.06-1 was purposes of the coverage under one of uninsured/underinsured thoughtful mo- 5.05-1, protect than the conscientious bar will affect more article fi- by negligent, against losses caused in this torist limited circumstances involved Francis v. only nancially irresponsible motorists. case Mutual mistake is not case. Serv. Ins. utilized International reformation when (Tex.1976). case, In this the choice may also be warranted courts. Reformation was or not to have the whether of fraud. See Zurich the case reformation, control. Palestine solely under Palestine’s By barring at 375. not to have the prevented from decided could be uninsured/underin- one coverages simi- policy aspects two are so Unigard that its hold- court stated in dicta 2. The Unigard, public 572 S.W.2d at 308. applied lar. 5.06-1 since also article sured If Howard was under the impression

false that Palestine did have that

coverage, pursue against he could an action majority opinion,

Palestine. Under the How- reject-

ard has received a windfall. Palestine pay premiums

ed and did not coverage, premi- and INA did not collect

ums for the equitable remedy

Reformation is an However, sparingly.

should be used when

the facts are clear and both are in case,

agreement, as in this courts should ability to

have the reform contracts to reflect parties.

the true contract made between the Palestine,

Because I that INA and believe contract, effectively

the two

reformed their contract for insurance to re-

ject I uninsured/underinsured

would overrule Howard’s of error.

would affirm the trial court’s was not uninsured/underinsured at effect the time of the accident. BANK, Appellant,

HUMBLE NATIONAL

DCV, INC., Appellee.

No. 14-94-00959-CV. Texas, Appeals

Court (14th Dist.).

Houston

Aug. 1996.

Rehearing Overruled Nov.

Case Details

Case Name: Howard v. Ina County Mutual Insurance Co.

Court Name: Court of Appeals of Texas

Date Published: Aug 28, 1996

Citation: 933 S.W.2d 212

Docket Number: 05-95-00489-CV

Court Abbreviation: Tex. App.