COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-12-00516-CV
1 LINCOLN FINANCIAL COMPANY APPELLANT
V.
AMERICAN FAMILY LIFE APPELLEE
ASSURANCE COMPANY OF
COLUMBUS
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FROM COUNTY COURT AT LAW NO. 2 OF TARRANT COUNTY
TRIAL COURT NO. 2011-000868-2
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MEMORANDUM OPINION1
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I. INTRODUCTION
In ten issues, Appellant 1 Lincoln Financial Company appeals from an
adverse summary judgment granted in favor of Appellee American Family Life
Assurance Company of Columbus (Aflac). We will affirm.
1
See Tex. R. App. P. 47.4.
II. BACKGROUND
Adriana Harrison obtained a life insurance policy from Aflac in October
2003. In addition to coverage on Harrison’s life, the policy contained a rider that
provided life insurance coverage on her dependent children in the amount of
$15,000. Harrison was the beneficiary under the rider, and for benefits to be
payable thereunder, Aflac had to receive proof that the insured child had died
while the rider was in effect. The policy was expressly assignable.
Harrison’s daughter died on June 7, 2010, during the term of the policy.
To pay for the funeral, on June 16, 2010, Harrison assigned the benefits under
the rider ($15,000) to Harrison’s Funeral Home, which she owns and operates,
and the funeral home reassigned the benefits to 1 Lincoln. Veronica Herrera, a
1 Lincoln employee, spoke with Aflac representatives to verify the details of the
policy, and on June 18, 2010, 1 Lincoln wired $14,2502 to Harrison’s Funeral
Home and submitted the assignment and other documents to Aflac. Aflac did not
immediately process the claim, however, because 1 Lincoln did not submit a
certified death certificate.
On July 30, 2010, Harrison again assigned her benefits under the child
rider to Funeral Funding Center, Inc. (FFC).3 Soon thereafter, in early August
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1 Lincoln imposed a $750 service charge on Harrison’s Funeral Home for
the loan.
3
In exchange for the assignment, FFC either paid Harrison money or paid
for the bill that she owed to her funeral home.
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2010, FFC submitted the assignment, an Aflac claim form, and a certified death
certificate for Harrison’s daughter to Aflac, and Aflac paid the death benefits
under the rider to FFC. 1 Lincoln later learned that Aflac had paid the benefits to
someone else, and it questioned Harrison about the other assignment. Harrison
gave 1 Lincoln a number of excuses and ultimately never reimbursed it for the
money that it had loaned her funeral home.
1 Lincoln sued Aflac for negligence, breach of contract, promissory
estoppel, and negligent misrepresentation and sought damages in the amount of
$15,000. 1 Lincoln claimed that Aflac was at fault for not paying 1 Lincoln’s
earlier-in-time assignment and that Aflac had assured that it would remit the
benefits under the rider to 1 Lincoln. Aflac moved for summary judgment on
each of 1 Lincoln’s claims, arguing that it was entitled to summary judgment not
only on the merits of each claim, but also because 1 Lincoln lacked the capacity
to pursue the suit because its corporate privileges had been forfeited.4 1 Lincoln
responded in part that it had capacity to pursue its suit because it had changed
its name to Lincoln Factoring, LLC. Aflac replied that, to the extent that it made
any difference, 1 Lincoln had not merely changed its name; instead, Lincoln
Factoring was a completely different company, and summary judgment was
4
The parties used the term “standing” at trial, but Aflac’s argument
implicated 1 Lincoln’s capacity to sue. See John C. Flood of DC, Inc. v.
SuperMedia, L.L.C., 408 S.W.3d 645, 650 (Tex. App.—Dallas 2013, pet. denied).
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proper because 1 Lincoln lacked capacity to prosecute its claims. The trial court
granted Aflac’s motion without stating its reasons, and this appeal followed.
III. STANDARD OF REVIEW
In a summary judgment case, the issue on appeal is whether the movant
met the summary judgment burden by establishing that no genuine issue of
material fact exists and that the movant is entitled to judgment as a matter of law.
Tex. R. Civ. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding,
289 S.W.3d 844, 848 (Tex. 2009). A defendant who conclusively negates at
least one essential element of a cause of action is entitled to summary judgment
on that claim. Frost Nat’l Bank v. Fernandez, 315 S.W.3d 494, 508 (Tex. 2010).
Once the defendant produces sufficient evidence to establish the right to
summary judgment, the burden shifts to the plaintiff to come forward with
competent controverting evidence that raises a fact issue. Van v. Pena, 990
S.W.2d 751, 753 (Tex. 1999).
We take as true all evidence favorable to the nonmovant, and we indulge
every reasonable inference and resolve any doubts in the nonmovant’s favor.
20801, Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008); Provident Life &
Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). We consider the
evidence presented in the light most favorable to the nonmovant, crediting
evidence favorable to the nonmovant if reasonable jurors could and disregarding
evidence contrary to the nonmovant unless reasonable jurors could not. Mann
Frankfort, 289 S.W.3d at 848. When a trial court’s order granting summary
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judgment does not specify the ground or grounds relied on for its ruling, summary
judgment will be affirmed on appeal if any of the theories presented to the trial
court and preserved for appellate review are meritorious. Star-Telegram, Inc. v.
Doe, 915 S.W.2d 471, 473 (Tex. 1995).
IV. CAPACITY
Insofar as the trial court granted Aflac summary judgment on the ground
that 1 Lincoln lacked capacity to sue, 1 Lincoln argues in its third, fourth, fifth,
and sixth issues that the trial court erred because (1) Aflac waived its right to
challenge 1 Lincoln’s capacity to prosecute this suit by not raising that ground in
a verified pleading and (2) 1 Lincoln and Lincoln Factoring should be treated as
the same entity.
Aflac responds that instead of objecting at the summary judgment stage to
its failure to challenge 1 Lincoln’s capacity in a verified pleading, 1 Lincoln tried
the issue by consent. Because 1 Lincoln joined the issue on the merits, Aflac
argues that 1 Lincoln cannot complain about the pleading deficiency for the first
time on appeal. On the merits, Aflac argues that 1 Lincoln lacked the capacity to
prosecute its claims as a matter of law because it forfeited its corporate privileges
for failing to pay franchise taxes, which is dispositive of the entire appeal.
1 Lincoln’s waiver argument is misplaced. When capacity is contested,
rule of civil procedure 93 requires that a verified plea be filed unless the truth of
the matter appears of record. Sixth RMA Partners, L.P. v. Sibley, 111 S.W.3d
46, 56 (Tex. 2003). A party who fails to raise the issue of capacity in the trial
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court may not raise the issue for the first time on appeal. See Pledger v.
Schoellkopf, 762 S.W.2d 145, 145‒46 (Tex. 1988); Dakil v. Lege, 408 S.W.3d 9,
11‒12 (Tex. App.—El Paso 2012, no pet.).
This is not a case in which Aflac failed to challenge 1 Lincoln’s capacity in
the trial court and is now attempting to raise it for the first time on appeal. That
argument would no doubt be waived. See Pledger, 762 S.W.2d at 146. Instead,
Aflac raised the issue of 1 Lincoln’s capacity in its motion for summary judgment,
albeit in an unverified pleading. The appropriate inquiry therefore is not whether
Aflac “waived” its right to challenge 1 Lincoln’s capacity for filing an unverified
pleading, as 1 Lincoln suggests, but how 1 Lincoln responded to Aflac’s deficient
but timely pleading.
Issues subject to pleading requirements, like verified denials and
affirmative defenses, may be tried by consent, including in summary judgment
proceedings. See Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 495 (Tex.
1991); Basic Capital Mgmt., Inc. v. Dynex Commercial, Inc., 348 S.W.3d 894,
899 (Tex. 2011). It is well established that a party who fails to raise the lack of a
proper pleading and allows an issue to be tried by consent cannot later raise the
pleading deficiency for the first time on appeal. Roark, 813 S.W.2d at 495.
Instead of objecting to Aflac’s failure to file a verified pleading challenging
capacity, 1 Lincoln litigated the issue, arguing that it had capacity to sue Aflac
because it had changed its name to Lincoln Factoring. 1 Lincoln thus tried the
capacity issue by consent, and it cannot argue for the first time on appeal that the
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summary judgment was improperly granted on account of Aflac’s failure to file a
verified pleading according to rule 93. See id.; see also Tex. R. Civ. P. 90
(“Every defect . . . in a pleading . . . which is not . . . brought to the attention of
the judge in the trial court . . . shall be deemed to have been waived by the party
seeking reversal on such account . . . .”). We overrule 1 Lincoln’s third and fourth
issues.
Aflac argues that that 1 Lincoln lacked the capacity to prosecute all of its
claims as a matter of law because it forfeited its corporate privileges for failing to
pay franchise taxes. Aflac directs us to a provision of the tax code that states
that when the privileges of a corporation are forfeited, the corporation shall be
“denied the right to sue or defend in a court of this state.” Tex. Tax Code Ann.
§ 171.252(1) (West 2008). But as we recently explained, federal and state courts
have long interpreted section 171.252 to preclude entities only from filing suit
after forfeiting their right to do business, not to prohibit them from continuing an
action filed before their privileges had been forfeited. See Waterway Ranch, LLC
v. City of Annetta, 411 S.W.3d 667, 673 (Tex. App.—Fort Worth 2013, no pet.)
(citing Tex. Clinical Labs, Inc. v. Leavitt, 535 F.3d 397, 403‒04 (5th Cir. 2008);
Mossler v. Nouri, No. 03-08-00476-CV, 2010 WL 2133940, at *5‒6 (Tex. App.—
Austin May 27, 2010, pet. denied)).
1 Lincoln filed its original petition on February 7, 2011. A document
contained in the summary judgment record states that 1 Lincoln’s corporate
charter was forfeited on February 10, 2012, about one year later. Within that
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document is a statement that “[t]he Comptroller of Public Accounts has
determined that the taxable entity [1 Lincoln] has not revived its forfeited
privileges within 120 days after the date that the privileges were forfeited.”
[Emphasis added.] This is the only summary judgment evidence that is relevant
to when 1 Lincoln forfeited its corporate privileges, and it does not establish when
the privileges were forfeited. The statement could mean that as of February 10,
2012, it had been exactly 120 days since 1 Lincoln forfeited its corporate
privileges, which would put that date at October 11, 2011, many months after
1 Lincoln filed suit. Or it could mean that 1 Lincoln had forfeited its corporate
privileges at some other prior point in time and that it had been 120 days since
then. Under that interpretation, no dates are certain. The statement is therefore
insufficient to demonstrate that 1 Lincoln had forfeited its corporate privileges
before suing Aflac. Because there is no summary judgment evidence that
1 Lincoln had forfeited its corporate privileges before February 7, 2011, the trial
court could not have granted Aflac summary judgment on the ground that
1 Lincoln lacked capacity to prosecute this suit. See Waterway Ranch, 411
S.W.3d at 673. We overrule 1 Lincoln’s fifth and sixth issues as moot.
V. NEGLIGENCE
1 Lincoln argues in its first issue that the trial court erred by granting Aflac
summary judgment on its negligence claim because Harrison assigned her
benefits under the policy to 1 Lincoln before she assigned the same benefits to
FFC. According to 1 Lincoln, long-standing Texas law requires that its first-in-
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time assignment be paid before FFC’s later-in-time assignment. In its tenth
issue, 1 Lincoln argues that Aflac was negligent by allowing Harrison to defeat its
rights as an irrevocable assignee.
The supreme court has clarified that “a party states a tort claim when the
duty allegedly breached is independent of the contractual undertaking and the
harm suffered is not merely the economic loss of a contractual benefit.”
Chapman Custom Homes, Inc. v. Dallas Plumbing Co., No. 13-0776, 2014 WL
4116839, at *2 (Tex. Aug. 22, 2014). In arguing that Aflac was negligent for
paying the benefits to FFC, 1 Lincoln does not complain that Aflac violated any
duty outside of its contractual responsibility under the policy or that it suffered
any losses aside from the benefits under the rider. Because 1 Lincoln does not
contend that Aflac breached any duty independent of its contractual obligation,
and because the loss of which 1 Lincoln complains is limited to its expectancy
under the rider, 1 Lincoln’s claim, if any, lies in contract, not tort. See id. We
hold that the trial court did not err by granting Aflac summary judgment on
1 Lincoln’s negligence claim, and we overrule its first and tenth issues.
VI. BREACH OF CONTRACT
1 Lincoln argues in its second and ninth issues that the trial court erred by
granting summary judgment on its breach of contract claim. Aflac argued in its
motion for summary judgment that it had no enforceable contract with 1 Lincoln,
but 1 Lincoln’s claim is predicated upon the rights that it acquired as an assignee,
not as a party that directly contracted with Aflac. An assignment is simply a
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transfer of some right or interest. Shipley v. Unifund CCR Partners, 331 S.W.3d
27, 28 (Tex. App.—Waco 2010, no pet.) (op. on reh’g). When an assignee holds
a contractually valid assignment, that assignee steps into the shoes of the
assignor and may assert those rights that the assignor could assert. See Gulf
Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 420 (Tex. 2000). Thus, although
Aflac and Harrison originally contracted for life insurance benefits, when Harrison
assigned her rights under the child rider to 1 Lincoln, 1 Lincoln stepped into
Harrison’s shoes as the beneficiary under the rider and acquired her rights
thereunder.
Aflac argues that “[t]o the extent Lincoln contends it became, essentially, a
party to the insurance policy by virtue of the assignment, the Policy includes a
provision whereby Aflac specifically disclaim[ed] liability for the validity or effect of
any assignment.” Indeed, the insurance policy states, “We [Aflac] will not be
responsible for the validity or effect of any assignment.” Of course, this language
does not disclaim liability under the policy in the event of an assignment, but it
does disclaim any contractual liability for a dispute between an assignor and an
assignee over an assignment. As Aflac points out, it “confirmed by contract what
already should be the case: with regard to any assignment agreement between
Harrison and some third party, any disputes over the assignment or benefits
thereunder should be resolved between Harrison and the third party.” This is
precisely the situation that we have in this case. Aflac honored an assignment—
as it was contractually bound to do—when it received sufficient proof from FFC
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that a covered child had died while the rider was in effect. The source of
1 Lincoln’s alleged injury, however, is not that Aflac complied with its obligation
under the policy as to FFC instead of 1 Lincoln, but that Harrison assigned the
same benefits to two different entities, which ultimately left 1 Lincoln with a
worthless assignment. Because Aflac specifically disclaimed any liability for such
a dispute—one between Harrison and a third party—summary judgment was
proper on 1 Lincoln’s contract claim.5 We overrule 1 Lincoln’s second and ninth
issues.
VII. PROMISSORY ESTOPPEL AND NEGLIGENT MISREPRESENTATION
In its seventh and eighth issues, 1 Lincoln argues that the trial court erred
by granting summary judgment on its promissory estoppel and negligent
misrepresentation claims.
Although primarily a defensive issue, promissory estoppel is also a cause
of action available to a promisee who has acted to his detriment in reasonable
reliance on an otherwise unenforceable promise. Wheeler v. White, 398 S.W.2d
93, 96 (Tex. 1965). As for negligent misrepresentation, one element is that the
5
1 Lincoln argues that the provision disclaiming liability under
circumstances like this does not apply to the beneficiary’s right to assign after the
insured dies, which is what happened here. Not only did 1 Lincoln not raise this
argument in the trial court, the contention is not supported by the plain language
of the unambiguous policy. See City of Houston v. Clear Creek Basin Auth., 589
S.W.2d 671, 678 (Tex. 1979) (reasoning that nonmovant may not raise on appeal
new grounds for reversing summary judgment); Glover v. Nat’l Ins. Underwriters,
545 S.W.2d 755, 761 (Tex. 1977) (reasoning that plain language of insurance
policy will be given effect when the parties’ intent is discernable from the
language).
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defendant supplied false information for the guidance of another. McCamish,
Martin, Brown & Loeffler v. F.E. Appling Interests, 991 S.W.2d 787, 791 (Tex.
1999). Aflac argues that summary judgment was proper because there is no
evidence that Aflac made a promise or supplied false information to 1 Lincoln.
Herrera, the 1 Lincoln employee who spoke with Aflac representatives to
verify the details of the insurance policy, testified at her deposition that she had
asked Aflac (1) whether the policy would cover the $15,000 assignment,
(2) whether the policy had any outstanding loans, (3) whether there were any
unpaid premiums, (4) whether the policy was contestable, (5) whether the policy
had to be reinstated, and (6) about information regarding the beneficiary.
Herrera confirmed that she did not ask whether there had been any other
verification calls or assignments submitted and, more importantly, that no Aflac
representative had told her that Aflac would honor the assignment and pay the
benefits to 1 Lincoln.
In a letter dated June 18, 2010, 1 Lincoln notified Aflac that it was relying
upon Aflac’s representation that it “would recognize the assignment to
[1 Lincoln].” However, Herrera, who signed the letter, acknowledged that Aflac
did not state that it would accept 1 Lincoln’s assignment and that the statement in
the letter was not reflected in her notes from her conversation with Aflac
representatives. Herrera verified that Aflac’s representatives had not said
anything that was not reflected in her notes. The form letter thus did not
accurately represent the parties’ communications, according to 1 Lincoln’s own
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employee, and it cannot be used to artificially manufacture a fact issue. See
Mann Frankfort, 289 S.W.3d at 848 (providing that we credit evidence favorable
to the nonmovant if reasonable jurors could do so).
1 Lincoln argues that Aflac committed a violation of insurance code section
541.061, but it did not plead or raise this issue in the trial court, and it may not
raise it for the first time on appeal. See City of Houston, 589 S.W.2d at 678.
We hold that the trial court properly granted summary judgment on
1 Lincoln’s promissory estoppel and negligent misrepresentation claims because
Aflac conclusively negated an essential element of each claim: that Aflac made
a promise and supplied false information to 1 Lincoln. See F.E. Appling
Interests, 991 S.W.2d at 791; Wheeler, 398 S.W.2d at 96. We overrule
1 Lincoln’s seventh and eighth issues.
VIII. CONCLUSION
Having overruled all of 1 Lincoln’s issues, we affirm the trial court’s
judgment.
/s/ Bill Meier
BILL MEIER
JUSTICE
PANEL: MCCOY, MEIER, and GABRIEL, JJ.
DELIVERED: October 2, 2014
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