UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 00-20746
ALPHA/OMEGA INSURANCE SERVICES, INC.,
Plaintiff-Appellant,
VERSUS
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
Defendant-Appellee.
Appeal from the United States District Court
For the Southern District of Texas
November 5, 2001
Before JONES, SMITH, and DeMOSS, Circuit Judges.
DeMOSS, Circuit Judge:
Plaintiff Alpha/Omega Insurance Services, Inc. appeals the
trial court’s granting of summary judgment in favor of defendant
Prudential Insurance Company of America. For the reasons expressed
below, we vacate the trial court’s summary judgment and remand to
that court for consideration of Alpha/Omega’s conversion and
tortious-interference claims.
I. BACKGROUND
In July 1991, Prudential appointed Alpha/Omega as a “special
agent,” authorized to write and sell Prudential’s property and
casualty insurance.1 On December 7, 1995, Prudential gave
Alpha/Omega notice that it was terminating this agency relationship
on December 31, 1995. Alpha/Omega immediately protested
Prudential’s failure to provide it six months’ written notice of
termination and continued renewal payments as mandated by the Texas
Insurance Code. See TEX. INS. CODE ANN., art. 21.11-1 § 1(a)-(b).
In a letter dated December 22, 1995, Prudential acknowledged its
“unique relationship” with Alpha/Omega and agreed to comply with
article 21.11-1. Accordingly, the termination date was extended to
June 30, 1996, and Prudential continued paying Alpha/Omega renewal
commissions through December 31, 1996.
In February 1996, Prudential began notifying Alpha/Omega’s
clients insured by Prudential about the nonrenewal and offering
replacement polices with other carriers. Alpha/Omega complained to
Prudential about this contact with its clients, and Prudential
agreed to stop soliciting these clients.
On June 27, 1997, Alpha/Omega sued Prudential in Texas state
court for fraud, misrepresentation, conversion, and tortious
1
Alpha/Omega is an “independent insurance agent,” which means
that it is not owned or controlled by any insurer or group of
insurers and its agency agreement does not prohibit the
representation of other insurers.
2
interference with existing and prospective contractual relations.
Prudential removed the case to federal court on diversity grounds.
Central to Alpha/Omega’s claims was the theory that Prudential
stole its “book of business,”2 thereby allowing it to contact and
steal Alpha/Omega’s customers.
On February 1, 1999, the trial court granted Prudential
summary judgment on all claims. It concluded that Alpha/Omega had
not introduced facts to support its fraud and misrepresentation
claims, and that Prudential owned the book of business, thus
rendering conversion and tortious interference impossible.
Alpha/Omega filed a timely appeal from this final judgment to this
Court. In an unpublished opinion, we affirmed the granting of
summary judgment on Alpha/Omega’s fraud and misrepresentation
claims. However, we reversed the judgment on the conversion and
tortious-interference claims because we concluded that “the
question of ownership of the book of business is a contested
factual issue.”3 Accordingly, we vacated that part of the summary
2
The term “book of business” refers to a copy of the policy
containing the date of the insurance policy, the name of the
insured, the date of its expiration, the amount of insurance
premiums, the property covered, and the terms of insurance.
3
We noted that the question of ownership turned on the terms
of the parties’ agreement governing their relationship. The
relevant clause states: “All books, accounts . . . records . . .
and all other items provided by [Prudential], and relating to or
connected with the business of [Prudential] . . . shall be the
property of [Prudential].”
Ultimately we concluded that “the contract provision [is]
ambiguous, and inasmuch as Alpha/Omega . . . submitted evidence
3
judgment and remanded those claims to the trial court.
On January 28, 2000, Prudential filed a motion for panel
rehearing, urging that “regardless of who owned the book of
property and casualty insurance, the tortious interference and
conversion claims fail as a matter of law.” We denied the motion
without comment.
On remand, Prudential filed a second motion for summary
judgment, asserting, as it had in its motion for rehearing, that
ownership of the book of business was irrelevant because
“Alpha/Omega received all relief that the Texas Insurance Code
authorizes it—a terminated insurance agency—to receive for claims
that relate to the termination of the relationship with Prudential
or that relate to the book of business.”
On August 10, 2000, the trial court again granted Prudential
summary judgment on Alpha/Omega’s conversion and tortious-
interference claims. The court acknowledged our opinion that a
fact issue existed about ownership of the book of business. But
the court agreed with Prudential’s assertion that this ownership
issue was immaterial. Alpha/Omega timely appealed the trial
court’s granting of this second summary judgment to this Court.
II. THE PARTIES’ CONTENTIONS
that the disputed contractual provision did not convey the book of
business to Prudential, a fact issue sufficient to survive summary
judgment exists.”
4
Alpha/Omega argues that, because this Court already reversed
the trial court’s first granting of summary judgment on
Alpha/Omega’s conversion and tortious interference claims, the
trial court was barred by the “law of the case” doctrine from
revisiting these issues in its second summary judgment order. In
the alternative, Alpha/Omega argues that the trial court erred by
concluding that the Texas Insurance Code’s termination provisions
preempt its common-law conversion and tortious interference claims.
Finally, Alpha/Omega argues that summary judgment was improper
because Prudential failed to conclusively establish the elements of
its affirmative defenses of privilege and justification.
Prudential, on the other hand, argues that the law of the case
doctrine does not apply here because no prior ruling exists on the
issues the trial court decided in the second summary judgment.
Moreover, Prudential contends that summary judgment was proper
because it conclusively negated elements of Alpha/Omega’s
conversion and tortious-interference claims. And, finally,
Prudential contends that it conclusively established all the
elements of its affirmative defenses.
III. THE LAW OF THE CASE DOCTRINE
“The law of the case doctrine, as formulated in this circuit,
generally precludes reexamination of issues of law or fact decided
on appeal, either by the district court on remand or by the
5
appellate court itself on a subsequent appeal.” Todd Shipyards
Corp. v. Auto Transp., 763 F.2d 745, 750 (5th Cir. 1985). As we
have noted, it is premised “on the salutary and sound public policy
that litigation should come to an end.” Terrell v. Household Goods
Carriers’ Bureau, 494 F.2d 16, 19 (5th Cir. 1974) (quoting White v.
Murtha, 377 F.2d 428, 431 (5th Cir. 1967)).
The doctrine’s reach does have its limits. For example,
unlike res judicata, the law of the case doctrine applies only to
issues that were actually decided, rather than all questions in the
case that might have been decided, but were not. Morrow v.
Dillard, 580 F.2d 1284, 1290 (5th Cir. 1978). But, the issues need
not have been explicitly decided; the doctrine also applies to
those issues decided by “necessary implication.” In re Felt, 255
F.3d 220, 225 (5th Cir. 2001). In other words, even when issues
have not been expressly addressed in a prior decision, if those
matters were “fully briefed to the appellate court and . . .
necessary predicates to the [court’s] ability to address the issue
or issues specifically discussed, [those issues] are deemed to have
been decided tacitly or implicitly, and their disposition is law of
the case.” Id.
With these premises in mind, we turn to whether the trial
court’s second summary judgment was an erroneous revisiting of
issues already decided by this Court in Alpha/Omega’s prior appeal.
In its first summary-judgment order, the trial court specifically
6
noted that its granting summary judgment on Alpha/Omega’s
conversion and tortious-interference claims was predicated on its
conclusion that Prudential owned the book of business.
On appeal of that first summary judgment to this Court,
Alpha/Omega argued that a genuine issue of material fact existed
about the ownership of the book of business. In part, it reasoned
that Prudential’s admission that Article 21.11-1 of the Texas
Insurance Code applied to its relationship with Alpha/Omega was
important because Article 21.11-1 only applies if Alpha/Omega—not
Prudential—owns the book of business.4
In response, the vast majority of Prudential’s brief was
dedicated to the argument that its contract with Alpha/Omega
unambiguously granted it ownership of the book of business. It
also argued that its compliance with Article 21.11-1 was voluntary,
not mandatory, because article 21.11-1 does not apply if it owns
the book of business. Only two sentences of Prudential’s brief
were dedicated to the alternative argument that ownership of the
book was irrelevant because “even if [Alpha/Omega] had owned the
book of business, it received all that it was legally entitled to
receive under the law and cannot be heard to complain.”
This Court’s opinion reversing the first summary judgment on
4
Section 21.11-1 does not apply to an agency’s termination
“where the policies and the insurance business is owned by the
company and not by the agent.” TEX. INS. CODE. ANN., art. 21.11-1
§ 3.
7
the conversion and tortious-interference claims also focused solely
on the trial court’s finding that Prudential owned the book of
business. And we characterized the parties’ arguments as limited
to this issue:
Alpha/Omega alleges that Prudential converted
Alpha/Omega’s book of business and tortiously interfered
with Alpha/Omega’s contracts with its own clients.
Prudential counters that it owns the book of business and
therefore cannot have converted its own property or
tortiously interfered with its own contracts.
Because we concluded that “the question of ownership of the book of
business is a contested fact issue,” we vacated the trial court’s
judgment as to Alpha/Omega’s conversion and tortious-interference
claims.
In Prudential’s motion for panel rehearing, it focused for the
first time on the argument that ownership of the book of business
was irrelevant. Specifically, it asserted that it had conclusively
established that, regardless of who owned the book of business,
(1) its actions were privileged and justified, (2) Alpha/Omega
could not establish its conversion claim, and (3) Alpha/Omega was
paid all it was due under the Texas Insurance Code. And, for the
first time on rehearing, Prudential argued that “the rights of a
terminated agency derive solely from statutorily created
obligations” under the Texas Insurance Code. In other words,
Prudential contended that Alpha/Omega could only claim damages
8
under article 21.11-1, and, because Prudential complied with
article 21.11-1, Alpha/Omega has already received the only remedy
it could arguably be entitled.
On remand, Prudential filed another motion for summary
judgment in the trial court, making the identical arguments it made
in its motion for rehearing. The trial court granted the motion,
noting that Alpha/Omega had not shown that Prudential violated the
Texas Insurance Code. In addition, the Court concluded that the
“Texas Insurance Code remedy subsumes all common law causes of
action that might arise from an agreement such as that between the
plaintiff and Prudential.” Consequently, the court concluded,
because “the contractual agreement between the plaintiff and
Prudential is governed by state statutory law and not state common
law[,] . . . any suit filed by the plaintiff is conscribed by the
statutorily created remedies.”
Based on our review of these prior proceedings in this case,
we cannot conclude that the issues addressed by the trial court’s
second summary judgment were decided, either explicitly or by
necessary implication, by our prior decision reversing the trial
court’s first summary judgment. The trial court’s first summary
judgment, the parties’ original briefs to this court, and our prior
opinion all framed the relevant issue as being the ownership of the
book of business. While we could have gone beyond the scope of the
summary-judgment order and the parties’ briefs to independently
assess the relevance of the ownership issue, our opinion does not
9
reflect that we did so. Thus, because the law of the case doctrine
only applies to issues we actually decided, rather than issues that
we could have decided, Morrow, 580 F.2d at 1290, we hold that our
prior opinion addressing only the narrow issue of who owned the
book of business did not bar the trial court from subsequently
granting summary judgment on other grounds.
We likewise reject Alpha/Omega’s argument that our denial of
Prudential’s motion for panel rehearing amounted to an express
decision on the merits of the arguments the motion presented. Our
denial of a motion for panel rehearing does not amount to a
decision on the merits. Cf., Fernandez v. Chardon, 681 F.2d 42, 51
n.7 (1st Cir. 1982) (“[T]he denial of a petition for rehearing can
have no greater precedential effect than the denial of a petition
for certiorari, which is to say none.”), aff’d, 462 U.S. 650
(1983); Crider v. Keohane, 526 F. Supp. 727, 728 (W.D. Ok. 1981)
(“[T]he failure of the Petition for Rehearing does not imply any
judgment on the merits of this issue.”). Accordingly, because
neither our prior opinion nor our denial of Prudential’s motion for
rehearing rendered the trial court’s second summary judgment
improper under the law of the case doctrine, we must consider
whether the summary judgment was improper on any other grounds.
IV. THE TEXAS INSURANCE CODE
The trial court’s second summary-judgment order states, in
10
pertinent part:
[T]he compelling question presented by Prudential
is whether any cause of action survives the
plaintiff’s failure to obtain a finding from the
state insurance commission that Prudential violated
stated law when it cancelled the insurance agency
agreement between the plaintiff and Prudential.
Prudential asserts, and it is undisputed, that
state law provides the formula and method for
resolving this type dispute. And, Prudential has
paid statutory obligations.
It is undisputed that the sum of the plaintiff’s
tort claims arises from Prudential’s termination of
the insurance agency agreement between the
plaintiff and Prudential. Thus, assuming that
Article 21.11-1 of the Texas Insurance Code is
applicable, an administrative resolution of the
plaintiff’s termination claim, combined with a
failure to secure an administrative finding that
Prudential violated state law, bars claims of
misrepresentation, fraud, tortious interference,
conversion, negligence, malice, and attorney’s
fees. See, Linick v. Employers Casualty, 822
S.W.2d 297 (Tex. App.—San Antonio 1991, no writ);
Metropolitan Property and Liability Ins. Co. v.
Bridewell, 933 S.W.2d 358 (Tex. App.—Waco 1996, no
writ).
This court is also of the opinion that the Texas
Insurance Code remedy subsumes all common law
causes of action that might arise from an agreement
such as that between the plaintiff and Prudential.
Stated differently, the Court is of the opinion
that the contractual agreement between the
plaintiff and Prudential is governed by state
statutory law and not state common law. See Tex.
Ins. Code, Art. 21-11-1; 21.49-2B; see also Art.
21.11-1 § 7. Thus, any civil suit filed by the
plaintiff is conscribed by the statutorily created
remedies. Id.
Our review of the Texas Insurance Code provisions and the two cases
on which Prudential and the trial court rely leads us to a
different conclusion.
11
Article 21.11-1 of the Texas Insurance Code governs the
cancellation of agency contracts by fire and casualty insurance
companies. It provides notice and commission payment requirements
that insurance companies must follow when terminating an agency
contract. TEX. INS. CODE ANN., art. 21.11-1 § 1 (a)-(b). Article
21.49-2B also requires insurance companies to give notice to the
insured of nonrenewal for that nonrenewal to be effective. TEX.
INS. CODE ANN., art. 21.492B, § 5. The parties here do not dispute
that Prudential complied with all these requirements.
However, Alpha/Omega asserts that its conversion and tortious
interference claims are not based on violations of these Texas
Insurance Code provision. Rather, Alpha/Omega asserts, its
complaint is premised on Prudential’s other actions. Specifically,
Alpha/Omega complains about Prudential’s converting its book of
business and its soliciting Alpha/Omega’s customers to place their
insurance with another carrier.
We agree that Alpha/Omega’s claims are not based on statutory
violations. Thus, Prudential’s and the trial court’s reliance on
Linick v. Employers Mut. Cas. Co., 822 S.W.2d 297 (Tex. App.—San
Antonio, no writ) is misplaced.
In Linick, the issue was whether “the judiciary or an
administrative board, i.e., the State Board of Insurance of Texas,
has primary jurisdiction over a civil suit for damages brought by
a local recording agent against an insurance company for failing to
12
comply with the Texas Insurance Code and an Agency-Company
Agreement.” 822 S.W.2d at 298. The primary jurisdiction doctrine
was at issue because Linick involved a prior statutory provision,
not applicable to this case, that stated:
If it is found, after notice and an opportunity to
be heard as determined by the board, that an
insurance company has violated [Article 21.11-1],
the insurance company shall be subject to a civil
penalty of not less than $1,000 nor more than
$10,000, and it shall be subject to a civil suit by
the agent for damages suffered because of the
premature termination of the contract by the
company.”
Id. (quoting TEX. INS. CODE ANN, art. 21.11-1 § 5 (amended 1993)).
It was undisputed in Linick that the plaintiff’s only claim was one
for “damages statutory authorized by article 21.11-1,” and that
“such a suit does not exist at common law.” Id. at 300 (emphasis
added). Thus, the sole issue was whether the plaintiff, before
bringing suit to enforce this statutory remedy, had to exhaust its
administrative remedies as contemplated by article 21.11-1 § 5 and
plead all conditions precedents were satisfied before bring suit.
Id. at 299. Ultimately, the court concluded that the plaintiff’s
“failure to follow the statutorily required procedures resulted in
the trial court’s lack of jurisdiction over appellant’s cause of
action.” Id.
Here, the trial court’s reliance on Linick is incorrect for
two reasons. First, unlike in Linick, the plaintiff here is not
asserting a cause of action based on a violation of the Texas
13
Insurance Code. In fact, Alpha/Omega emphatically denies that its
complaint is about premature termination of its agency agreement or
Prudential’s failure to comply with the Texas Insurance Code.
Second, the Texas Insurance Code provision that the Linick
court interpreted as requiring a board finding of a statutory
violation before bringing suit was expressly changed by the Texas
Legislature, in its very next session, to provide that “[a]ny agent
who has sustained actual damages as a result of a company’s
violation of this article may maintain an action against the
company, without regard to whether or not there has been a finding
by the board that there has been a violation of this article.”
TEX. INS. CODE Ann., art. 21.11-1 § 7 (emphasis added). Despite this
change, the trial court here inexplicably framed the issue as
“whether any cause of action survives the plaintiff’s failure to
obtain a finding from the state insurance commission that
Prudential violated state law.” Then, citing Linick, the court
concluded that “an administrative resolution of the plaintiff’s
termination claim, combined with a failure to secure an
administrative finding that Prudential violated state law, bars
claims of misrepresentation, fraud, tortious interference,
conversion, negligence, malice, and attorney’s fees.” While this
order is somewhat ambiguous, it appears that the court applied the
statutory administrative exhaustion requirement announced in Linick
to Alpha/Omega’s claims, even though the Texas Legislature had
14
clarified that there was no administrative exhaustion requirement.
In other words, the Court imposed a requirement from the Texas
Insurance Code that was no longer the law.5
We also find the trial court’s reliance on Metropolitan
Property and Liab. Ins. Co. v. Bridewell, 933 S.W.2d 358 (Tex.
App.—Waco, 1996, orig. proceeding) unpersuasive. The only issue
in Bridewell was whether a terminated insurance agency could be
forced to arbitrate its common-law and statutory claims with its
contract claim that was the subject of an arbitration agreement.
933 S.W.2d at 360. The Bridewell court held that the claims must
be arbitrated together because, under the FAA, any doubts about
whether a claim falls within the scope of an arbitration agreement
must be resolved in favor of arbitration. See id. at 361. We fail
to see how Bridewell’s conclusion that the plaintiff’s tort,
statutory, and contract claims had to be arbitrated together
supports the trial court’s conclusion in this case that the Texas
Insurance Code “subsumes all common law causes of action.”6
5
See Act of May 8, 1993, 73rd Leg., ch 685, § 5.04, 1993 Tex.
Gen. Laws 2562, 2603 (codified at TEX. INS. CODE ANN., art. 21.11-1
§ 6-7) (amending article 21.11-1 to clarify that there is no
administrative exhaustion prerequisite to an agent’s bringing
suit).
6
Notably, Bridewell, decided five years after Linick, did not
hold that the plaintiff’s tort claims were subsumed by its
statutory claims, as Prudential urges us to hold here. It merely
concluded that the claims should be arbitrated together.
15
V. CONCLUSION
In sum, we hold that the law of the case doctrine did not bar
the trial court’s second summary judgment. However, we conclude
that the trial court erred by holding (1) that Alpha/Omega’s
failure to secure a finding from the board that Prudential had
violated the Texas Insurance Code was fatal to its claims, and (2)
that the Texas Insurance Code remedy for violations of the Code
subsumes Alpha/Omega’s conversion and tortious interference claims.
Accordingly, we vacate the trial court’s summary judgment and
remand Alpha/Omega’s conversion and tortious interference claims to
that court.7
7
Nothing in this opinion shall preclude the trial court from
considering summary judgment on other grounds not addressed here or
in our prior opinion.
16
Alpha/Omega Insurance Services, Inc. v. Prudential Insurance Co. of America
Court: Court of Appeals for the Fifth Circuit
Date filed: 2001-11-05
Citations: 272 F.3d 276
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