AFFIRM; and Opinion Filed February 5, 2014.
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-12-00443-CV
CLINT SIMON D/B/A SHERLOCK PEST AND D/B/A SHERLOCK SPEC, AND
CERTAIN UNDERWRITERS AT LLOYD’S, LONDON, Appellants
V.
TUDOR INSURANCE COMPANY AND NORMAN P. HINES III D/B/A HOOPER &
HINES INSURANCE, Appellees
On Appeal from the 193rd Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-11-13433
MEMORANDUM OPINION
Before Justices Bridges, FitzGerald, and Lang-Miers
Opinion by Justice Lang-Miers
This is an insurance coverage dispute. Appellants Clint Simon d/b/a Sherlock Pest and
d/b/a Sherlock Spec (collectively, Simon Parties) and Certain Underwriters at Lloyd’s, London
appeal the summary judgment granted in favor of appellees Tudor Insurance Company and
Norman P. Hines III d/b/a Hooper & Hines Insurance. In two issues, appellants argue that the
trial court erred in granting summary judgment for appellees and in denying appellants’ motions
for continuance and motion to compel. 1 Because all dispositive issues are settled in law, we
issue this memorandum opinion. TEX. R. APP. P. 47.2(a), 47.4. We affirm.
BACKGROUND
Simon d/b/a Sherlock Pest holds a business license issued by the Structural Pest Control
Service of the Texas Department of Agriculture to perform wood destroying insect inspections as
part of the business of structural pest control. See TEX. OCC. CODE ANN. § 1951.003 (West
2012) (defining the business of structural pest control). In December 2007, Simon d/b/a
Sherlock Pest signed and submitted to Hines, an insurance agent, an application for insurance
entitled “Termite & Pest Control General Liability Application[.]” The application stated “WDI
excluded.” Simon also signed an accompanying “Absolute WDI Exclusion” that read:
I hereby agree to and acknowledge that I fully understand that this policy
contains an absolute exclusion for all professional liability or errors and omissions
claims or losses arising out of Inspection operations of any kind. The exclusion
specifically address [sic] but is not limited to, Wood Destroying Insect
Inspections, Real Estate Inspections with respect to all business concerns
regardless of the interest of insured.
I hereby state that I understand and agree with the above exclusions of
coverage.
Tudor subsequently issued a commercial liability policy to Simon d/b/a Sherlock Pest.
The policy reflected the exclusion that Simon had agreed to in his application and the WDI
exclusion in two endorsements, which stated:
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
EXCLUSION—DESIGNATED PROFESSIONAL SERVICES
This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
1
The Court also received an amicus brief from the Texas Pest Control Association.
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SCHEDULE
Description Of Professional Services:
1. STRUCTURAL PEST AND/OR WOOD-DESTROYING ORGANISM INSPECTIONS
....
This insurance does not apply to “bodily injury”, [or] “property damage”
. . . due to the rendering of or failure to render any professional service.
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
EXCLUSION—INSPECTION, APPRAISAL AND SURVEY COMPANIES
This endorsement modifies insurance provided under the following:
COMMERCIAL GENERAL LIABILITY COVERAGE PART
....
This insurance does not apply to “bodily injury”, [or] “property damage”
. . . for which the insured may be held liable because of the rendering of or failure
to render professional services in the performance of any . . . inspection . . .
services.
On November 17, 2008, Simon signed and submitted to Hines a “Pest Control Renewal
Application/Quote” that specified: “Excludes WDI Inspections Errors & Omissions (Signed
Rejection Form required)[.]” Simon agreed to and acknowledged an accompanying “Absolute
WDI Exclusion” that was identical to the exclusion that he signed with his original policy in
2007. The renewal application also stated that “WDI E&O not available for Home Inspectors[.]”
On November 25, 2008, Hines, as Tudor’s authorized representative, signed a certificate
of insurance for Sherlock Pest that was submitted to the Structural Pest Control Service of the
Texas Department of Agriculture. 2 The certificate noted that the policy’s effective date was
2
Previously, in December 2007, Hines, as Tudor’s authorized representative, had signed and submitted a certificate of insurance on behalf
of Sherlock Pest certifying the issuance of the original policy that contained the same provisions as the 2008 certificate.
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December 17, 2008 and the expiration date was December 17, 2009. In the certificate, Tudor
stated “that it ha[d] issued to the insured named herein a policy or policies of insurance providing
the types of insurance and limits of liability set forth herein.” The certificate clarified that the
certificate was “furnished for information only, confer[red] no rights on the holder and [was]
issued with the understanding that the rights and liabilities of the parties will be governed by the
original policies as they may be lawfully amended from time to time.” The certificate also
provided:
GENERAL LIABILITY: Applicant must file with the board a policy or
contract of insurance approved as sufficient by the board in an amount of not less
than $200,000 bodily injury and property damage coverage with a minimum total
aggregate of $300,000 for all occurrences, insuring him against liability for
damage to persons or property, under his care, custody, or control.
On the certificate, Tudor listed the limits of liability for “BODILY INJURY AND
PROPERTY DAMAGE” under the 2008 policy that it issued to Sherlock Pest as $200,000 for
each occurrence and $300,000 aggregate. The certificate included a space for Tudor to “[l]ist
any categories of pest control work or any pesticides excluded in this coverage[.]” Tudor did not
list any excluded categories.
On December 1, 2008, Tudor issued a renewal policy covering the policy period from
December 17, 2008 to December 17, 2009. The renewal policy included verbatim the two
endorsements that were included in Simon’s original 2007 policy, which excluded from coverage
(1) bodily injury and property damage resulting from providing or failing to provide structural
pest and wood destroying organism inspections and (2) bodily injury and property damage
resulting from providing or failing to provide inspection services.
Appellants allege that, while the renewal policy was in effect, Sherlock Pest performed a
wood destroying insect inspection on a home and provided the inspection report to Sherlock
Spec to include in a home inspection report. The homeowners subsequently sued Simon d/b/a
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Sherlock Pest and d/b/a Sherlock Spec for allegedly performing an improper wood destroying
insect inspection. Appellants allege that Simon d/b/a Sherlock Pest reported the claim to Hines
and Tudor, and Tudor denied the claim on the grounds that the policy excluded coverage for that
type of claim. According to appellants, Underwriters, the professional liability carrier for
Sherlock Spec, subsequently settled the homeowners’ claim and obtained a release of the claim
against Simon d/b/a Sherlock Pest and d/b/a Sherlock Spec.
Appellants then sued appellees alleging claims for deceptive trade and insurance
practices, common law fraud, and negligent misrepresentation and, as the basis for those claims,
contended that appellants were harmed because they relied on the truthfulness of the certificate
of insurance. Appellants also sued for breach of contract, claiming that appellees wrongfully
refused to defend the claim against Simon d/b/a Sherlock Pest. In a Supplemental Petition,
appellants asked for a declaratory judgment and for class certification of the claims.
Tudor filed a motion for traditional summary judgment on all claims, contending that all
of the claims failed as a matter of law because the documents expressly excluded inspections
coverage. Before a hearing on Tudor’s motion for summary judgment, appellants filed a motion
to compel Tudor to answer interrogatories and filed a motion for continuance of the hearing on
the motion for summary judgment. The trial court denied the motion for continuance and
granted Tudor’s motion for summary judgment. The trial court later also denied the motion to
compel. Then Hines filed a motion for traditional summary judgment. And appellants filed a
motion for continuance of the hearing on Hines’s motion for summary judgment and a motion
for reconsideration of the court’s denial of the motion for continuance of Tudor’s summary
judgment hearing. The court denied the motion for continuance and motion for reconsideration
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and granted Hines’s motion for summary judgment. 3 Appellants then filed this appeal,
contending that the trial court erred by granting summary judgment for Tudor and Hines and by
denying appellants’ motions for continuance and motion to compel.
SUMMARY JUDGMENT
Standard of Review
We review a traditional summary judgment de novo to determine whether a party’s right
to prevail is established as a matter of law. Orix Capital Mkts., LLC v. Am. Realty Trust, Inc.,
356 S.W.3d 748, 751 (Tex. App.—Dallas 2011, pet. denied). A party moving for traditional
summary judgment under rule of civil procedure 166a(c) must establish that no genuine issue of
material fact exists and that it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c);
Orix Capital, 356 S.W.3d at 751. When the trial court does not specify the grounds upon which
it relied in granting summary judgment, as here, we will affirm on any ground that is
meritorious. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000).
Arguments
Appellants’ Position
Appellants argue that appellees did not establish that they were entitled to summary
judgment because (1) Tudor, through its local recording agent Hines, “actively engages in a
practice of fraudulently misrepresenting the coverage provided by the junk insurance policies
they sell to Texas pest control companies” and (2) appellees “affirmatively misrepresent the
coverage they sell to the state agency responsible for licensing pest control companies.”
Although appellants contend that the trial court erred in granting summary judgment on
all of their claims—which included deceptive trade and insurance practices, common law fraud,
negligent misrepresentation, and breach of contract—appellants’ sole argument on appeal is that
3
Appellants then filed a notice of nonsuit of their supplemental petition for declaratory judgment and for class certification.
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the trial court erred in concluding that appellants could not have reasonably relied on appellees’
alleged representations. We confine our opinion to the argument presented on appeal. See Pat
Baker Co., Inc. v. Wilson, 971 S.W.2d 447, 450 (Tex. 1998) (per curiam); Ohnesorge v. Winfree
Acad. Charter Sch., 328 S.W.3d 654, 656 n.2 (Tex. App.—Dallas 2010, no pet.).
Appellants argue that section 1951.312 of the occupations code provides the basis for
their claims. It states:
(a) The department may not issue or renew a structural pest control business
license until the license applicant:
(1) files with the department a policy or contract of insurance, approved as
sufficient by the department, in an amount not less than $200,000 for
bodily injury and property damage coverage, with a minimum total
aggregate of $300,000 for all occurrences, insuring the applicant
against liability for damage to persons or property occurring as a result
of operations performed in the course of the business of structural pest
control on premises or any other property under the applicant’s care,
custody, or control[.]
TEX. OCC. CODE ANN. § 1951.312(a)(1) (West 2012). Appellants contended below that, because
the certificate filed with the state did not identify any exclusion, Simon “reasonably relied on the
fact that full coverage was provided.”
Appellees’ Position
Appellees argue that the trial court did not err by granting summary judgment and that
appellants’ claims were precluded as a matter of law because Simon signed the application and
WDI exclusion acknowledging that the policy would not include inspections coverage and the
insurance policy expressly excluded inspections coverage. They argue that Simon could not
have justifiably relied on any alleged representation that appellees would provide coverage for
inspections based on the certificate of insurance filed with the state.
Appellees also contend that section 1951.312 of the occupations code does not create a
cause of action against an insurer. See id. § 1951.312. They further argue that the certificate did
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not misrepresent Sherlock Pest’s coverage under the Tudor policy and that the certificate
complied with the statute by certifying that the Tudor policy provided Sherlock Pest with
statutorily required general liability coverage. And appellees contend that, because the Simon
Parties cannot recover on their claims, Underwriters’ claims also fail as a matter of law.
Appellees rely on Howard v. Burlington Insurance Co., 347 S.W.3d 783, 789–94 (Tex.
App.—Dallas 2011, no pet.). In Howard, this Court concluded that summary judgment was
proper dismissing an insured’s claims against an insurer and surplus lines agent, which included
breach of the insurance code and DTPA, breach of contract, negligent misrepresentation, and
fraud. Id. In response to the appellant’s argument that the insurance policy at issue provided
first-party coverage for his personal property and equipment, we concluded that it did not
because the plain language of the insurance quote and binder would not have caused a reasonable
person to believe that the insurance included first-party coverage, the application for insurance
specifically declined first-party coverage, and the plain language of the policy indicated that the
policy was a third-party liability policy and did not cover first-party claims. Id. at 789–92.
Appellees argue that this case presents stronger facts for summary judgment than Howard
because, in Howard, the insured had not signed the application that expressly excluded the
disputed coverage and, here, Simon signed the application and the “Absolute WDI Exclusion”
acknowledging that he understood and agreed that the policy excluded inspections coverage,
including inspections for wood destroying insects. Appellants argue that Howard does not apply
because this case, unlike Howard, involved a local recording agent, rather than an independent
insurance broker, because appellees actively market their policies with false promises, and
because false certificates of insurance were not at issue in Howard.
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Analysis
The summary judgment evidence established that, prior to Tudor’s submission of the
certificate of insurance for the renewal policy in 2008 and prior to the allegedly faulty home
inspection by Sherlock Pest, Simon expressly acknowledged in the application for insurance and
renewal application that the insurance for which he applied did not include coverage for liability
arising from wood destroying insect inspections. See Grant Thornton LLP v. Prospect High
Income Fund, 314 S.W.3d 913, 917, 923 (Tex. 2010) (concluding that summary judgment was
proper on investors’ claims against auditors and stating that “a person may not justifiably rely on
a representation if ‘there are “red flags” indicating such reliance is unwarranted’”) (quoting
Lewis v. Bank of Am. NA, 343 F.3d 540, 546 (5th Cir. 2003)); Howard, 347 S.W.3d at 798
(affirming summary judgment and concluding that a “claim for misrepresentation cannot stand
when the party asserting the claim is legally charged with knowledge of the true facts”).
In addition, the plain language of the two endorsements in both the original 2007 policy
and the renewal 2008 policy—which was in effect at the time of the allegedly improper
inspection—clearly excluded coverage for professional services and for inspection services. See
Howard, 347 S.W.3d at 792 (“Texas law is clear that the policy’s language controls and the
insured has a duty to read and be familiar with the terms of his own insurance policy.”). And
although appellants claim they relied on the certificate of insurance, that certificate specifically
stated that the certificate “neither affirmatively nor negatively amends, extends or alters the
coverage afforded by the policies scheduled herein.” The certificate also provided that it “is
furnished for information only, confers no rights on the holder and is issued with the
understanding that the rights and liabilities of the parties will be governed by the original policies
as they may be lawfully amended from time to time.” See Via Net v. TIG Ins. Co., 211 S.W.3d
310, 314 (Tex. 2006) (per curiam) (noting that a certificate of insurance “warned that it conferred
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no rights” and that “those who take such certificates at face value do so at their own risk”); see
also Evanston Ins. Co. v. ATOFINA Petrochemicals, Inc., 256 S.W.3d 660, 670 (Tex. 2008)
(stating “that an insurance certificate merely evinces the holder’s status as an insured and does
not create coverage”).
Consequently, appellees’ summary judgment evidence established that the terms of the
documents that Simon d/b/a Sherlock Pest signed and that were in effect when Tudor issued the
certificate of insurance and when Sherlock Pest performed the allegedly improper wood
destroying insect inspection would not have caused a reasonable person to believe that the
insurance that Tudor provided to Simon d/b/a Sherlock Pest included coverage for liability for
wood destroying insect inspections. See Hudspeth v. Enter. Life Ins. Co., 358 S.W.3d 373, 388–
89 (Tex. App.—Houston [1st Dist.] 2011, no pet.) (holding that, where insurance policy stated
requirement for submission of monthly claim forms, the trial court correctly held that, as a matter
of law, insurance company “did not make a misrepresentation in its policy” concerning the
monthly submission of claim forms); Howard, 347 S.W.3d at 789–90, 798 (concluding that the
“plain language” of insurance quote and binder “would not have caused a reasonable person to
believe” that the insurance included first-party coverage and that, unless the insurer or agent
made some specific misrepresentation about the insurance, a policyholder’s mistaken belief
about the availability or scope of insurance coverage is not generally actionable under the
insurance code or the DTPA); Moore v. Whitney-Vaky Ins. Agency, 966 S.W.2d 690, 692–93
(Tex. App.—San Antonio 1998, no pet.). And appellants did not raise a genuine issue of
material fact in response to the motions for summary judgment by their argument that they
reasonably relied on language in the insurance certificates. See Via Net, 211 S.W.3d at 314.
We conclude that the trial court did not err by granting summary judgment in favor of
appellees because the express terms of Simon’s application for insurance, the “Absolute WDI
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Exclusion,” and the insurance policy would not have caused a reasonable person to believe that
Simon d/b/a Sherlock Pest was offered and provided with coverage for liability arising from
inspections, including wood destroying insect inspections. See Howard, 347 S.W.3d at 789–92.
By disproving this common element for the claims for DTPA and insurance code violations,
common law fraud, and negligent misrepresentation, appellees were entitled to summary
judgment in their favor as a matter of law. And because there was no contract of insurance
requiring them to defend the claim against appellees, the claim for breach of contract was also
defeated. See id. at 792.
Finally, because the Simon Parties cannot recover on their claims, Underwriters’ claims
also fail as a matter of law. See Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co., 236 S.W.3d
765, 774 (Tex. 2007) (stating that, in the case of contractual and equitable subrogation, “the
insurer stands in the shoes of the insured, obtaining only those rights held by the insured against
a third party, subject to any defenses held by the third party against the insured”).
We resolve appellants’ first issue against them.
MOTIONS FOR CONTINUANCE AND TO COMPEL
In their second issue, appellants argue that the trial court erred in overruling their motions
for continuance of the hearings on appellees’ motions for summary judgment and in denying
appellants’ motion to compel discovery from Tudor. Appellants contend that they “were
hamstrung in their ability to respond to Appellees’ motions for summary judgment” without the
“relevant discovery” they requested. Appellees argue, among other grounds, that appellants have
waived this second issue on appeal because appellants have not cited legal authority or provided
substantive argument concerning why it was improper for the trial court to deny the motions for
continuance and motion to compel.
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Standard of Review
We review a trial court’s orders denying motions for continuance and a motion to compel
for an abuse of discretion. See Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 161 (Tex.
2004); Carbonara v. Tex. Stadium Corp., 244 S.W.3d 651, 658 (Tex. App.—Dallas 2008, no
pet.). “A trial court abuses its discretion when it reaches a decision so arbitrary and unreasonable
as to amount to a clear and prejudicial error of law.” Two Thirty Nine, 145 S.W.3d at 161.
Analysis
To support their position, appellants cite to rule of appellate procedure 33.1(a), which
states the general rule for preservation of error on appeal. TEX. R. APP. P. 33.1(a). And although
appellants contend that comments by the trial judge indicated the relevancy of the requested
materials and argue that they were “hamstrung” in responding to the summary judgment motions
without those materials, appellants do not provide substantive analysis explaining why denial of
the motions for continuance and motion to compel was improper. See Ollie v. Plano Indep. Sch.
Dist., 383 S.W.3d 783, 794 (Tex. App.—Dallas 2012, pet. denied) (“[A]n issue on appeal that is
not supported by argument or citation to legal authority presents nothing for the court to
review.”); In re J.P., 365 S.W.3d 833, 837 (Tex. App.—Dallas 2012, no pet.) (“Failure to cite
applicable authority or provide substantive analysis waives an issue on appeal.”).
And the brief does not address how the additional time and discovery would have
allowed them to respond to the motions for summary judgment. See Blake v. Lewis, 886 S.W.2d
404, 409 (Tex. App.—Houston [1st Dist.] 1994, no writ) (holding proponent of motion for
continuance should state items of discovery were material and show why they were material);
see also TEX. R. APP. P. 38.1(i) (“The brief must contain a clear and concise argument for the
contentions made, with appropriate citations to authorities and to the record.”).
We resolve appellants’ second issue against them.
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CONCLUSION
We resolve appellants’ two issues against them and affirm the trial court’s judgment.
/Elizabeth Lang-Miers/
ELIZABETH LANG-MIERS
JUSTICE
120443F.P05
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
CLINT SIMON D/B/A SHERLOCK PEST On Appeal from the 193rd Judicial District
AND D/B/A SHERLOCK SPEC, AND Court, Dallas County, Texas
CERTAIN UNDERWRITERS AT Trial Court Cause No. DC-11-13433.
LLOYD'S, LONDON, Appellants Opinion delivered by Justice Lang-Miers,
Justices Bridges and FitzGerald
No. 05-12-00443-CV V. participating.
TUDOR INSURANCE COMPANY AND
NORMAN P. HINES III D/B/A HOOPER
& HINES INSURANCE, Appellees
In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED.
It is ORDERED that appellees TUDOR INSURANCE COMPANY AND NORMAN P.
HINES III D/B/A HOOPER & HINES INSURANCE recover their costs of this appeal from
appellants CLINT SIMON D/B/A SHERLOCK PEST AND D/B/A SHERLOCK SPEC, AND
CERTAIN UNDERWRITERS AT LLOYD'S, LONDON.
Judgment entered this 5th day of February, 2014.
/Elizabeth Lang-Miers/
ELIZABETH LANG-MIERS
JUSTICE
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