Opinion issued December 31 , 2019

In The 

## Court of Appeals For The 

## First District of Texas

———————————— NO. 01 - 18 - 00851 - CV

——————————— WHITE LION H OLDINGS , L.L.C. AND BERNARD J. MORELLO , Appella nt s V. INSGROUP, INC. D/B/A AGIA AGRICULTURAL I NS. AGENCY , A pp ell e e

On Appeal from the 268th District Court Fort Bend County, Texas Trial Court Ca se No. 06 - DCV - 148721

MEMORANDUM OPINION White Lion Holdings, L.L.C. purchased an insurance policy f rom Scottsdale Insurance Company. There were two inter mediaries inv ol ved in the transaction:2

U .S. Risk and Insgroup, Inc. 1 White Lion did not receive the coverage it be lieved was contractually due , and it , al o ng with its sole member and manager, Bernard J. Morello , (collectively referred to a s White Lion) sued all three e nt ities. U.S. Risk

s ettled with White Lion

. Scottsda le also settled with White Lion

. Scotts dale and W hite Lion executed a settlement release in 200 8

. White Lion went to trial ag a inst the only remai ning defendant, Insgroup , in 2018

. After White L ion rested , Insgroup moved for a directed verdict , arguing that it was included in the release White Lion execu ted 10 years earlier . The trial court granted the motion , dismiss ed the jury, and entered judgment in Insgroup ’ s favor. White Li on appeal s , arg uing that th e tr ial court erred in co ncluding that the release with Scottsdal e also released White Lion ’ s claims against Insgroup

. We reverse. Standard of Rev iew A trial court may direct a verdict for a defendant when a plaintiff fails to pres ent evidence raising a fa ct issue essential to its right of recovery or when the evidence conclusively proves a fact that esta blishes t he defendant

- movant ’ s right

1 Many insurance transactions involve one or more intermediaries

. See Michael Sean Quinn, “

Agents ” and “Brokers ”: Texas Statutory Definitions and Rule

Entail i ng Characterizations , 8 J. T EX
. I NS
. L. 2 , 2 ( Fall 200 7)

. T he int ermediar ies may be referred to as agent s , broker s , producer s , or other tit le s . See id. ; see also Ma y v. United Servs. Ass ’n of Am

. , 8 44 S.W.2d 666, 669 n.8 (Tex. 1992) ( dis c ussing insurance agents and brokers who sell insurance ); Spring v. Walthall , Sachs e & Pipes, Inc. , No. 04

- 05

- 00228

- CV, 2005 WL 2012669, at *1 (Tex. App.

— San Antonio 2005, no pet.) ( n oting that insurance producer s al so sell insuran ce ).3

to judgm ent as a matter of law. Prudential Ins. Co. of Am. v. Fin. Review Servs. , Inc. , 29 S. W.3d 74, 77 (Tex. 2000)

. In reviewing the grant of a directed verdict, we follow the standard of review for assessing legal su fficiency of the evidence. S.V. v. R. V. , 933 S.W.2d 1, 8 (Tex. 1996); see generally City of Keller v. Wilson , 168 S.W.3d 802 (Tex. 2005). We consider the e vi dence in the light most favorable t o the non - movant
. Tex. Emp ’ rs Ins. Ass ’ n v. Page , 553 S.W.2d 98, 102 (Tex

. 1977) ; Mikob Props. , Inc. v. Joachi m , 468 S.W.3d 587 , 594 (Tex. App.

— Dallas 2015, pet. denied)

. We can consider any reas on why the directed verdi c t should have been granted, even if not stated in the party ’ s motion. Gomer v. Davis , 419 S.W.3d 470 , 476 ( Te x. App.

— Houston [1st Dist.] 2013, no pet.).

The Release and Direct ed Verdict After White Lion presented its evidence and rested, Ins group orally m o ved for a directed verdict, relying on the release White Lion executed in connection with its settle ment with S cottsdale a decade earlier. The Scottsdale release states that, in consideration of the settlement amount , White Lion releases, acquits a nd fore v er discharges S COTTSDALE I NSURANC E C OMPANY , its officers, directors, shareholders, agents, attorneys, and employees, heirs, assigns, and members; their aff

iliated , related , successor, subsidiary and parent companies and corporati ons, and their off icers, d irectors, shareholders, agents, attorneys and employees; and all their insurers, hereinafte r known col lectively as the Released P arties , f rom any and all claims, demands and cau ses of action of whatsoever nature, whether in cont ract or in tort, and for al l other losses and damages of4

every kind or character which have accrued, or may ever accrue , by reason of the matters or transactions made the basis of this litigation, including, but not limited t o , any and all claims or causes of action arising o ut of, o r in any w ay related t o , the damages allegedly sustained by Plaintiffs, White Lion Holdings , L.L.C. an d Bernard Morello, as the res ult of contractors removing equipment pursuant to the bankruptcy sale of the forme r Vision Metals steel plant

. . . . S tated more succinctly , White Lion r eleased Scottsdale and its “agents ” from all claims r elated to d amage caused by contractors removing equ ipment from W hite Lion ’s Fort Bend property. Insgroup made t hree arguments in support of its motion for directed v erdict

. First, it argued that the broad langu age of the release resulted in the release of all claims White Lion may have in connection with the Scottsdale insurance policy

. Secon d, it argued that , by statute, and as a matter of law, Insgroup is an agent of Scott s dale, citing to Section 4 001.05 1 of the Texas Insurance Code and, there fore, Insg roup was one of the “Re leased Parties , ” which was define d in the release to include Scottsdale and its “agents. ” Third, it argued that the directed verdict was mandatory in t h at Insgroup had pleaded release as a n affirmativ e defen se and White Lion had not amended its pleading to assert a defense to that affirmative defense, relyin g on Ellis v. Woods , 4 53 S.W.2d 509 (Tex. App.

— El Paso 1 970, no writ). White Lion made tw o argum e nts in re sponse. First, it argued that I nsgroup
w aived its affirmative defense by litigating the ca se for 10 years withou t arguing5

the release insulated it from liability, not providing any context or argument in its pleadings that raised release as an af f irmative defense, and se eking rel ief , includi ng attorney ’ s fees, although the release

— if Insgroup actually was a party to it

— would have preve nted such a claim between parties to the release. White Lion argued that the law do es not support ambush tactics s u ch as these. Second, White Lion arg ued that t he con duct of the par ties makes clear that Insgroup was not a rele ased party. White Lion noted that , after the Scottsdale
set tle ment , Scottsdale sought an d obtained a severance so that a judgment could be
enter e d resolving White Lion ’ s claims aga inst it. A ccording to White Lion, a severance would not have been needed if the only rema in ing def endant

— Insgroup

— was al so release d when Scottsdale settled. White Lion pointed out that In sgroup did not seek dismissal at t he time of the r elease, did not opp ose the

se verance, and never took any st e ps to in dicate to the parties or to the trial court that it cons idered itself c overed by t he release , except amending its answer to plead , without context, the affirmative de fen s e of release. Insgroup r esponded b y reur ging its points about the release language being broad, the Ins urance Code designating it as Scottsdale ’ s agent as a matter of law , and t he failure of White Lion to p lead a ny defense to release

. At that point , the tri al court granted the directed verdict , stating, “ It is very clear in my mind that this w as a full and complete release

. ” About a month later,6

the trial court entered a f inal take

- nothing judgment in Insgroup ’ s favor. The j udgment st ates that Insgroup argue d that the r elease was dispositiv e of White Lion ’ s claims against it and moved for a directed verdict, that the trial c ourt considered Insgroup ’ s argument and White Lion ’ s re sponse , and that the trial court granted the dir ected v e rd ict

.

The Appeal Presents a Questi on of Law Insgroup was the defendant in the trial court. A directed verdict in its favor was proper only i f Insgroup established a right to judgment as a matter of law. Prudential Ins. Co. , 29 S. W.3d at 7 7

. In othe r word s , t here ha d to be le gally insufficient evidence to permit recovery against it. See S.V. , 933 S.W.2d at 8

. This presen ts a question of law. See City of Keller , 168 S.W.3d at 822

. On appeal, Insgroup argues that it is entitled to an affirm ance of th e tria l
court ’ s judgment, regardl ess of m erit, because White Lion requested only a partial reporter ’ s r ecord on appeal and failed to include in its request a statement of points or issu es to be presented. See T EX . R. A PP . P. 34.6 (c) ( permitt ing a party to presen t a partial reporter ’ s reco rd if the party includes in the request a statement of the points or issues to be presented on appeal ). Insgroup argues that , “ [b] y failing to request t he complete reporter ’ s record, White Lion has made it impossi b le for th e Cour t to review all evidenc e pr esented . . . [and] forfeited appellate relief. ” We disagr ee.7

“ The appellate record consists of the clerk ’ s record and, if necess ary to the appeal , the reporter ’ s record. ” T EX . R. A PP . P. 34 .1 (emphas is added) . When a contention a mounts to a strict questio n of law, a reporter ’ s record is not necessary. See In re J.A.B. , 13 S.W.3d 813, 815 (Tex. App.

— Fort Worth 2000, no pet.)

. Moreover, the release was attache d to pleadings filed with the tria l court and is in the clerk ’ s record. C

f . Sam Houston Hotel, L.P. v. Mockingb i rd Restaurant , Inc. , 191 S.W.3d 720, 721 (Tex. App.

— Houston [14th Dist.] 2006, no pet.) (noting that reporter ’ s record was required i n that case because issues required r eference to evidence admitted at trial ). Becaus e White Lion presents a que stion of law regarding whether its release with Scottsdale also released its claims ag ainst Insg roup and because the releas e
was part of the clerk ’ s record on appeal, we reject Insg roup ’ s argument that it is entitle d to affirma nc e regardless of the merits

.

P leading a Defense to an Aff irmative Defense Insgroup argues that White Lion may not defend ag ainst Insgroup ’s affirmative defense of release because Whi te Lion failed to amend it s pleading to assert any defense to th e claimed r elease. Insgroup argues by anal ogy that a pl aintiff must plead the discovery rule in response to a defendant ’s pleading of the affirmative defens e of statute of limitations. See T EX . R. C IV . P. 94; Woods v. W illiam M. Mercer, Inc. , 769 S.W.2d 515, 518 (Te x . 1988) ( “ A party seeking to8

avail itself of the discovery rule must therefore plead the rule, either in its original petition or in an amended o r supplemented petition in response to defendant ’ s assertion o f the defense as a matter in avoid ance ” ). Here, t hough, White Lion admits i t signed a release as part of its settlement with Scottsdale and that the release identified certain released parties

. What White Lion disputes is that the release has any relevance to the status of White Lion ’ s claims against In s group given that Ins group was not identified by name or sufficient ly descriptive text as a rel eased party

. The rule on affirmative defenses requires that “[i]n a pleading to a prec eding pleading, a party sh all set forth affirmatively” any matter “constit u ting an avoidance or affir mative defense.” T EX . R. C IV . P. 94. According to the Texas Supr eme Court, a n affirmative defense is “[a] defen dant ’ s assertion of facts and arguments that , if true, will defeat the plaintiff ’ s or prosecution ’ s claim, even if all the allegations in the com plaint are true.” Zorrilla v. Aypco Constr. II, LLC , 469 S.W.3d 143, 155

– 56 (Tex. 2015) (quoting affirmative de fense , Black ’ s Law Dictionary (10th ed. 2009 )). An avoidance “derives from the historic English

common - law pleas of ‘c o nfession and avoidance’ ” a nd means “a plea in which a defendant admits allegations but pleads additional facts that deprive the admitted facts of an adverse legal effect.” Id. at 15 6 (quoting confession and avoidance ,9

Black ’ s Law Dictionary (10th ed. 2009 ) ) ; see Godoy v. Wells Farg o Bank, N.A. , 575 S.W.3d 531, 536 (Tex. 2019) (quoting same). White Lion ’ s position i s not a n affir mative defense or a matter of avoidance that would invo ke Rule 94 ’ s requirement t o raise defensive matters. Cf. Godoy , 575 S.W.3d at 536; Zorrilla , 469 S.W. 3d at 156

. It is, instead, a simple rejection of the proposition that Insgroup was a released party. Insgroup had the burden to establish its affirmative defense. Se e Campbell v. A brazo Adoption Assocs. , No. 04

- 07

- 00093

- CV , 2007 WL 3271608, at *3 (Tex. Ap p.
— San Antonio Nov. 7 , 2007, pet. denied ) (mem. op.) (citing Keck, Mahin & Cate v. Nat ’ l Union Fire Ins. Co. of Pittsburgh, Pa. , 20 S.W.3d 692, 6 99 (Tex. 20 00) )

. White Lion was not r equired to amend its petition to ho ld Insgrou p to that burden

. We cannot agree that White Lion was required to amend its pleading to deny th at Insgroup could meet its burd en to establish its affirm ative defense , with the p enalty of an a u tomatic take

- nothing judgment for fail ure to do so. See Godoy , 575 S.W.3d at 536 (concluding that party was not required to amend p leading in

re sponse to legal argument and noting tha t court will “ reject form

- over - substance requirements that favor procedura l m achinations over reaching the merits of a

case. ” ). H aving rejected Insgroup ’ s procedural arguments , we wi ll review the legal issue presented.10 A Party is Not Released Un less Adequ ately Identified in th e Re lease One of the arguments Insgroup made t o the trial co urt was that the broad l an guage in the release effectively release d any conceivabl e claim White Lion might have related to the Scott sdale insuranc e pol icy . This argument con travenes the rule establis hed in McMillen v. Klingensmith , 467 S.W.2d 193 (Tex. 197 1) , as later interpreted in Duncan v. Cessna Aircraft Co. , 665 S.W.2d 414 , 419

– 20 (Tex. 1984)

. Before McMillen and Duncan , Texas followed the common

- law doctrine referred to as the “unity of release rule. ” Duncan , 665 S.W.2d at 419

. Under that rul e, a rele ase of o ne tort feasor operated as a release of all tortfeasors. See id. Over time the harshness of the rule and its perverse in centives on non settl ing defendants led to its reject ion. See McMillen , 4 67 S.W.2d at 196 ; Duncan , 665 S.W.2d at 422;

s ee a lso Ph il adelphia Indem

. Ins. Co. v. SSR Hospi tality, Inc. , No. 08

- CV

- 680

- JRN, 2010 WL 115 06976, at *6 & n.17 ( W.D. Tex. Nov. 1, 2010) ( order )

. The Texas Supreme Court rejecte d t he rule in McMillen

. 467 S.W.2d at 196. A new rule was announced: “ a rel ease of a party or parties named or otherwise specifically identified fully releases only the p a rties so named or identified, but no others

. ” Id. T here are several important in ter est s that were furthered by abolishing the

“ unity of release ” rule and, ins tead , requiring specific identification of nonsettling11

tortfeasors who would thereafter benefit from the release. Duncan , 665 S.W .2d at 422. First, doing so would “ encourage both pa rtial and full settl e me nts. ” Id. Second, it would “ avoid unfairly depriving inj ured Texas residents of their full satisfactions. ” Id. Third, it would “ avoid providing an i ncentive to tortfeasors to delay or to stay out of early settlement negotiations. ” Id

. Fourth, it would “ e nsure that Texas claimants do not inadvertently lose t heir valuable rights against unnamed and perhaps unknown tortfeasor s by settling with only one o f the wrongdoers. ” Id. The new rule was adopted in reco gnition that a “ nonsettling
to rtfeasor should not fortuit ously escape compensating h is Texas victim simpl y be cause of settlement arrangements that di d not encompass him or his conduct and to which he c ontributed nothing. ” Id. As a result, u nder McM illen and Duncan , a nonsettling tortf easor
— like Insgroup

— cannot claim the protection of a release unless “ t he re leas e refers to him by name or w ith s uch descriptive particularity that his identity or his conn ection with the tortious event is not in doubt. ” Id. at 420 ; see Schomburg v. TRW V eh icle Safety Sy s ., Inc. , 242 S.W.3d 911, 914 (Tex. App.

— Dallas 2009, pe t. de nied ). There is no longer unity of release in Te xas ; f or Insgroup to benefit from the Scottsdale release, it must show that it was either referred to by na me or “ with such descripti ve particularity ” that its inclusion in t he release “ is not in doubt

. ” Id.12

W he ther a rel ease refers to a tortfeasor wit h descriptive particularity so as to leave no doubt is reviewed do novo

. See Schomburg , 242 S.W.3d at 914

– 15 ; Atl. Lloyds Ins. Co. v. Bu tle r , 137 S.W.3d 199, 218 ( Tex. App.

— Houston [1st Dist.] 2004 , pet. denied)

. In sgroup Did Not Establish as a Matter of La w t hat it was a Released Party as to Non - Insuranc e Code Claims In sgroup ’s argument to the trial court why it was a released party as a matter of law relied on Ins urance Code section 4001.05 1(b ) . That section prov ides that, regardless “wh ether t he act is done at the request of or by the employment of an i nsurer, broker, or other person, a person is the agent of the insurer for whi ch the act is done or risk is t aken for purposes of the liabilities , duties, requi reme nts, and penalties provided by this title, Chapter 21, or a provision listed in Section 4001. 009 , ” if the person does any of nine enumerated acts, including “ (1) solicits insur ance on behalf of the ins urer; (2) recei ves or transmits oth er than on the pers on ’ s own behalf an application for insurance or an insurance policy to or from the insurer ; . . . (4) receives or transmits an insurance policy of the insurer ; . . . [or] (8) t akes any other action in the making or consummation of an ins urance contract for or with the insurer other than on the person ’ s own behalf

. . . . ” T EX . I NS . C ODE § 4001.051 (b) (emphasis added)

. Ins group argued to the trial court that it was Scottsdale ’ s agent as a matter of law, thereby mandating that it was c overed by th e te rm “ agent ” in the release.13

O n appeal, White Lion note s that Section 4001.051 was enacted after the

re lease was execute d and argue s that it i s ina pplicable. Insgroup has re spon d ed that the predecessor statute, Insurance Co de article 21.02, defined “ age nts ” in

“ substantially similar t erms. ” A rticle 21.02 (a) provided that “[a]ny person who solicits insurance on behalf of any insurance company

. . . or wh o takes or transmits othe r than for himself any application for insurance or an y policy of insurance to or from such company,

. . . or who shal l receive or deliver a policy of insurance of any such company,

. . . shall be held to be the agent of the compan y for which the act is do ne . . . as far as relates to all the liabilities, duties, requirements and pe nalt ies set forth in this chapter. ” T EX . I NS . C ODE art. 21.02 ( effective Sept. 1, 2001 to March 31, 2005) (emphasis added)

. Insgroup ’ s statutory argument ignores l imiting languag e found in both versions of the statute. An entity that solicits or transmits an i nsurance policy is the agent of the i nsurer only “ as far as relates to all the liabil ities , duties, re quirements and penalties set forth in ” the Insurance Code. Id

. ; see T EX . I NS . C ODE § 4001.051(b) (usin g similar terms). The statute does not make Insg roup the agent of Scottsdale for all purposes. Th is limitation within the statute was noted by the Fourte enth Court of A ppeals in Westview Dr ive I nv s . , LLC v. Landmark Am. I ns. Co. , 522 S.W.3d 583 (Tex. App.

— Houston [14th Dist.] 2017, pet. denied). Th ere, an insured argued that14

its broker was the agent of the insurer as a matter of law with regard to the insu red ’ s frau d claim , citing Section 4001.051(b). Id. at 604. The cour t rejected the argument, holding that, by its terms, the Insurance Cod e provis ion crea ted an agency relationship only for purposes of specific statutes, not for purposes of the

common - law f

raud clai m . Id. (quoting the language “ for the purposes of t he liabilities, du ties, requirements, and penalties ” of particular statutes)

. Under that

cour t ’ s anal ysis, the Insuranc e Code does not make a n ins urance intermediary the insurer ’ s agent as a mat te r of law with regard to non - statutory , comm on law tort claim s. See i d. We adopt the Fourteenth Court of Appeal s ’ s interpretat ion and hol d that neither Article 21.02 nor its successor , Section 4001. 051(b) , establish es Insgroup as Scottsdale ’s agent as a m atter of law outside the realm of the enumera ted Insu rance Cod e and Occupations Code provisions

. See T EX . I NS . C ODE § 4001.051(b) ( designati ng person as ag ent of insurer “ for purposes of the liabilities, duties, requirements, and penalties provided by this title, Chapter 21, or a provision listed in Section 4001.009 ” ); § 4001.009 (listing various Insuranc e Code provisions and Chapter 107 of th e Occupations C ode)

. White Lion and Insgroup were mid

- trial when the trial court granted the directed verd ict. White Lion ’s live p etition asserted claims ag ainst Insgroup for neg ligence, negligent misrepresentation, violati o ns of the Deceptive Trade15

Practi ces Act , violat ions of the Insurance Code , and breach of contract. A s a mat ter of law, the referenced Insurance Code provisio ns , on which Insgroup relied in movi ng for a directed verdict, do not designate Insgroup as Scottsdale ’ s “ agent ” for purposes of Wh ite Lion ’ s comm on - law and DTPA claims or its breach

- o f

- contract claim

. See Westview Dr ive I nv s . , 522 S.W.3d at 604. The trial court erred in granting a directed verdict

— judgm ent as a matter of law

— against White Lion on those claims. Conclusion We affir m the trial court ’ s di rect ed verdict as to White Lion ’ s Insur ance Code v iolati on claim and reverse it as to all other c l aim s . We remand the suit to the trial court for additional proceedings.

Sarah Beth Landau Justice Panel consists of Chie f Justice Radack an d Justices Landau a nd Hightower.