Bell v. State Farm Insurance Companies

Case Number: 04-96-00008-CV 09/18/1997 Record returned to Court of Appeals 06/27/1997 Application for Writ of Error - Disposed proceeding denied 05/07/1997 Case forwarded to Court 05/05/1997 Reply filed 04/29/1997 Application for Writ of Error - Filed

OPINION

Allen H. Bell appeals from a summary judgment granted in favor of appellee State Farm Lloyds Ins. Co. ("Lloyds"). Arguing he was confused by State Farm's letterhead, Bell sued "State Farm Insurance Companies" within the limitations period as a "group of affiliated insurance companies" but failed to serve Lloyds. Because we find that Bell knew Lloyds was not served and not a party, and never added Lloyds as a party, we will not invoke TEX.R. CIV. P. 28 on his behalf. On the limitations defense, we affirm.

FACTS Bell was a public adjustor who helped his clients file claims with their insurance companies. Bell would evaluate the insured's loss and help with claims in return for an assignment of a portion of the proceeds. Bell took legal action when a trio of State Farm companies — State Farm General Insurance Company ("State Farm General"), State Farm Fire Casualty Company ("State Farm Fire Casualty") and State Farm Lloyds Ins. Co. ("Lloyds") — sent letters to his clients questioning the legality of Bell's representation. A typical excerpt, from a letter made the basis of Bell's original suit, follows:

Dear Ms. Garcia:

We acknowledge receipt of a copy of your Notice of Loss and Sworn Statement in proof of loss which has been forwarded to us by Al Bell and Associates. We have also received an Assignment of Interest and Proceeds of Insurance which you apparently have executed in favor of Al Bell and Associates. In light of this assignment, Al Bell and Associates will be entitled to receive a portion of any monies paid to you as a result of this claim and will, therefore, be necessary for us to include their names on any claim draft at the time of settlement of your claim. In as much [sic] as it does not appear that Al Bell and Associates is a licensed attorney, we will need to continue to communicate directly with you regarding the making [of] claims, settlement of the loss and also regarding any questions which you might have concerning your rights, duties or privileges under the policy rather than communicating with you through Al Bell and Associates. . . .

This letter, dated January 14, 1991, was signed by Julia T. Blakemore, a claim specialist with State Farm Fire Insurance Company. The letterhead identified the letter generally as coming from "State Farm Insurance Companies" and specifically from the "State Farm Claim Service Center, 4655 Walzem Road, San Antonio, Texas 78218." Eventually, more than a dozen letters with similar phrases and warnings were made part of the record in this proceeding. Many, but not all, of the letters identified which State Farm entity the agent worked for.

On January 9, 1992, Bell filed suit accusing the companies of tortious interference with his contractual relations with his clients. The petition was styled "Allen H. Bell v. State Farm Insurance Companies, et. al." The body of the petition also included Sue Noll, claims superintendent with State Farm Fire Casualty, as a defendant. The suit stated, "Defendant, State Farm is a group of insurance companies licensed to do business in Texas with various offices located in Bexar County, Texas. State Farm does business as State Farm Fire Casualty Insurance and State Farm General Insurance Company as well as other names." Service was completed on Noll and on Bruce Romig of Austin, designated agent for both State Farm Fire Casualty and State Farm General.

The original answer was filed on behalf of Noll, State Farm General and State Farm Fire Casualty. It stated that the companies were "improperly misnamed as `State Farm Insurance Companies', a nonexistent entity" and entered a general denial on behalf of State Farm General, State Farm Fire Casualty and Noll. These defendants subsequently removed the action to federal court on a plea of diversity.

One significant event occurred while the action was pending in federal court. Bell filed a Motion for Leave to File Amended Pleadings on September 18, 1992, specifically seeking to add Lloyds as a defendant. The motion noted that Lloyds had not been served and properly identified the company's designated agent for service of process in Dallas. The federal trial court did not rule on this motion because it remanded the cause to state court on March 3, 1993, after finding incomplete diversity among the parties.

On the same day the cause was remanded, defendants filed a motion for summary judgment. Bell responded by filing a Second Amended Petition on April 1, 1993, which purported to clarify the defendants' status:

Defendant, State Farm is a group of affiliated insurance companies each licensed to do business in Texas with various offices located in Bexar County, Texas or a defacto [sic] partnership of such companies. State Farm Fire Casualty Insurance State Farm General Insurance Company and State Farm Lloyds all do business as "State Farm" and as "State Farm Insurance Companies" and share employees. Defendant State Farm Insurance Companies has been served and has entered an appearance in this cause.

Summary judgments for State Farm General, State Farm Fire Casualty and Sue Noll were ultimately granted, along with a severance from whatever cause of action remained. Those judgments were not appealed.

On November 8, 1994, Bell moved for summary judgment against Lloyds, alleging that Lloyds was properly before the Court and had ignored requests for admissions, with the resulting deemed admissions establishing its liability for tortious interference as a matter of law. On December 9, 1994, Lloyds answered denying it was properly before the court; Bell's motion was subsequently denied. Lloyds then filed its own motion for summary judgment, alleging Bell's claim was barred by the statute of limitations, res judicata and legal justification, and that Bell failed to state a cause of action. The trial court granted Lloyds' motion in a general order that did not specify the ground on which it was granted. Plaintiff appeals, assigning six points of error.

STANDARD OF REVIEW Summary judgment is proper when the moving party establishes there is no genuine issue of material fact and therefore its entitlement to judgment as a matter of law. Nixon v. Mr.Property Management Co., 690 S.W.2d 546, 548-549 (Tex. 1985). The reviewing court will take as true all evidence favoring the nonmovant; every reasonable inference from the evidence will be indulged in favor of the nonmovant, and any doubts will be resolved in his favor. Nixon, 690 S.W.2d at 549. A defendant moving for summary judgment on an affirmative defense must conclusively prove all elements of that defense. Swilley v. Hughes, 488 S.W.2d 64, 67 (Tex. 1972). If the order is not specific as to the grounds on which the trial court granted summary judgment, we must affirm on any meritorious theory. Malooly Brothers, Inc. v. Napier,461 S.W.2d 119, 121 (Tex. 1970); Sipes v. Petry Stewart, 812 S.W.2d 428 (Tex.App — San Antonio 1991, no writ).

STATUTE OF LIMITATIONS Plaintiff's cause of action is governed by a two-year statute of limitations. TEX. CIV. PRAC. REM. CODE ANN. § 16.003 (Vernon 1986 and supp. 1997); Dwyer v. Sabine MiningCo., 890 S.W.2d 140, 142 (Tex.App — Texarkana 1994, writ denied). In his first point of error Bell complains that Lloyds failed to establish all elements of its affirmative defense of limitations as a matter of law. He argues that this is a suit on a trade name governed by TEX. R. CIV. P. 28, which would toll the statute of limitations and allow amendments to relate back to the date of the original filing. We believe that the Texas Supreme Court has limited application of TEX. R. CIV. P. 28 to exclude its operation in this case.

TEX. R. CIV. P. 28 allows any company, association or person to be sued in its "partnership, assumed or common name for the purpose of enforcing for or against it a substantive right." This is a procedural rule of equity which permits a court to depart from traditional notice requirements in the interest of justice.

Rule 28 allows the injured party to sue the obvious entity, the trade name, and thereby toll the statute pending the discovery of the particular corporate entity that should be sued. It ends the practice which allowed the shell company . . . to file a general denial and then to wait until the statute had run before disclaiming responsibility and pointing a finger at the corporation actually responsible.

Continental Trailways v. Hilland, 516 S.W.2d 279, 281 (Tex.App — Houston 1974), rev'd on other grounds subnom. Continental S. Lines, Inc. v. Hilland, 528 S.W.2d 828 (Tex. 1975); see also Enserch Corp. v. Parker,794 S.W.2d 2 (Tex. 1990).

Here, Bell arguably has sued Lloyds in its "trade name" of "State Farm Insurance Companies." However, once a plaintiff has identified the real party in interest, he must properly join that party or risk losing his cause of action. Baileyv. Vanscot Concrete Co., 894 S.W.2d 757 (Tex. 1995).

In Bailey, plaintiff was injured by a load of tainted concrete. The truck that delivered the concrete and the sales invoice were both marked "Express/Pennington."Id. at 758. Looking in the Tarrant County assumed name records, Bailey determined Vanscot Concrete Co. owned two companies: Express Concrete Company and Pennington Concrete Company. He filed suit against Vanscot. Id. Vanscot defended by arguing it had ceased to exist as the result of a merger and moved for summary judgment. Id. In his reply, Bailey asked the court to either allow him to proceed to trial against Vanscot as if no merger had occurred or to allow him to substitute Tarmac Texas, Inc., the successor company, as defendant. The court overruled the motion for summary judgment, but Bailey did not join Tarmac Texas. Id. After a jury returned a judgment in his favor, Bailey moved for judgment against "Vanscot Concrete Company d/b/a Express/Pennington Concrete Co." and "Tarmac Texas d/b/a Express/Pennington Concrete Co." The trial court entered judgment under the former but not the latter. Id.

The Court of Appeals reversed. It held that judgment could not be entered against a nonexistent company and that Tarmac Texas had never been properly joined as a party.Bailey, 894 S.W.2d at 759. Bailey argued that he had properly sued Tarmac Texas under its then-existing trade name, Express/Pennington Concrete Co., and that this action implicated TEX.R. CIV. P. 28 and Hilland, 516 S.W.2d at 281. The Texas Supreme Court held that it did not:

Once Vanscot identified Tarmac as the real party in interest in 1990, Bailey should have amended his pleadings to add Tarmac. Bailey could then have made a strong equitable estoppel argument under the principles articulated in Continental Southern Lines and Enserch that the trial court should toll the statute of limitations

since Tarmac had notice of the suit . . . This scenario never materialized, however, because Tarmac was never added as a party in this case. This court declines to correct Bailey's error by retroactively substituting in the correct party on his behalf.

Bailey, 894 S.W.2d at 761.

In this case, Bell knew that "State Farm Insurance Companies" was a mere trade name from the first reply to his lawsuit. We know that Bell knew Lloyds was not in the suit on September 18, 1992 (well within the limitations period) because that was when Bell tried to add Lloyds as a defendant in federal court. Given this, he cannot claim to have been misled by a defendant "laying behind the log" and the protections of TEX. R. CIV. P. 28 would be inappropriate.

If Bell had amended his pleadings to include Lloyds at any time before judgment against him, we would have a different case before us. Bell could have then invoked the principles ofHilland and Enserch to toll the statute of limitations. Bailey, 894 S.W.2d at 761.¹ For whatever reason, however, Bell chose not to add Lloyds as a party before judgment was rendered against him. Given the fact that Bell would not do this for himself, we will not do it for him.

On appeal, Bell seeks to remedy this situation by urging this court to take judicial notice that Bruce Romig is also listed as an underwriter for Lloyds. As an underwriter for a Texas Lloyds insurance corporation, Bell argues, Romig is a proper party for service of process under the Texas Insurance Code. We are not permitted to consider this new evidence or argument; Bell did not raise the issue in the trial court in opposition to the motion for summary judgment. An appellate court may only consider the record before the trial court at the time of the granting of the summary judgment motion. TEX. RULE CIV. P. 166a(c); City of Houston v. Clear Creek Basin Auth.,589 S.W.2d 671, 675 (Tex. 1979). We overrule Bell's first point of error.

Because our treatment of the first point of error is dispositive of this case, we need not reach the other points.

The judgment of the trial court is affirmed.

¹ Note that plaintiff in Bailey had a stronger claim to equity than in the instant case; Vanscot had actually been an operating company with a separate legal existence prior to Bailey's suit. Here the evidence shows "State Farm Insurance Companies" never had a separate legal existence.