Opinion issued December 31, 2019

In The

Court of Appeals 

For The 

First District of Texas 

————————————

NO. 01-18-00851-CV

———————————

WHITE LION HOLDINGS, L.L.C. AND BERNARD J. MORELLO, 

Appellants

V.

INSGROUP, INC. D/B/A AGIA AGRICULTURAL INS. AGENCY, Appellee

On Appeal from the 268th District Court

Fort Bend County, Texas

Trial Court Case No. 06-DCV-148721

MEMORANDUM OPINION

White Lion Holdings, L.L.C. purchased an insurance policy from Scottsdale 

Insurance Company. There were two intermediaries involved in the transaction: 
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U.S. Risk and Insgroup, Inc.1 White Lion did not receive the coverage it believed

was contractually due, and it, along with its sole member and manager, Bernard J. 

Morello, (collectively referred to as White Lion) sued all three entities. U.S. Risk 

settled with White Lion. Scottsdale also settled with White Lion. Scottsdale and 

White Lion executed a settlement release in 2008. White Lion went to trial against 

the only remaining defendant, Insgroup, in 2018. 

After White Lion rested, Insgroup moved for a directed verdict, arguing that 

it was included in the release White Lion executed 10 years earlier. The trial court 

granted the motion, dismissed the jury, and entered judgment in Insgroup’s favor. 

White Lion appeals, arguing that the trial court erred in concluding that the release 

with Scottsdale also released White Lion’s claims against Insgroup.

We reverse.

Standard of Review

A trial court may direct a verdict for a defendant when a plaintiff fails to 

present evidence raising a fact issue essential to its right of recovery or when the 

evidence conclusively proves a fact that establishes the defendant-movant’s right 

 

1 Many insurance transactions involve one or more intermediaries. See Michael 

Sean Quinn, “Agents” and “Brokers”: Texas Statutory Definitions and RuleEntailing Characterizations, 8 J. TEX. INS. L. 2, 2 (Fall 2007). The intermediaries

may be referred to as agents, brokers, producers, or other titles. See id.; see also 

May v. United Servs. Ass’n of Am., 844 S.W.2d 666, 669 n.8 (Tex. 1992) 

(discussing insurance agents and brokers who sell insurance); Spring v. Walthall, 

Sachse & Pipes, Inc., No. 04-05-00228-CV, 2005 WL 2012669, at *1 (Tex. 

App.—San Antonio 2005, no pet.) (noting that insurance producers also sell

insurance).
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to judgment 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 sufficiency 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 evidence in the light most favorable to 

the non-movant. Tex. Emp’rs Ins. Ass’n v. Page, 553 S.W.2d 98, 102 (Tex. 1977); 

Mikob Props., Inc. v. Joachim, 468 S.W.3d 587, 594 (Tex. App.—Dallas 2015, 

pet. denied). We can consider any reason why the directed verdict should have 

been granted, even if not stated in the party’s motion. Gomer v. Davis, 419 S.W.3d 

470, 476 (Tex. App.—Houston [1st Dist.] 2013, no pet.).

The Release and Directed Verdict

After White Lion presented its evidence and rested, Insgroup orally moved 

for a directed verdict, relying on the release White Lion executed in connection

with its settlement with Scottsdale a decade earlier. The Scottsdale release states 

that, in consideration of the settlement amount, White Lion releases, acquits and 

forever discharges 

SCOTTSDALE INSURANCE COMPANY, its officers, directors, 

shareholders, agents, attorneys, and employees, heirs, assigns, and 

members; their affiliated, related, successor, subsidiary and parent 

companies and corporations, and their officers, directors, 

shareholders, agents, attorneys and employees; and all their insurers, 

hereinafter known collectively as the Released Parties, from any and 

all claims, demands and causes of action of whatsoever nature, 

whether in contract or in tort, and for all other losses and damages of 
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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 to, any and all claims or causes of action 

arising out of, or in any way related to, the damages allegedly 

sustained by Plaintiffs, White Lion Holdings, L.L.C. and Bernard 

Morello, as the result of contractors removing equipment pursuant to 

the bankruptcy sale of the former Vision Metals steel plant . . . .

Stated more succinctly, White Lion released Scottsdale and its “agents” from all 

claims related to damage caused by contractors removing equipment from White 

Lion’s Fort Bend property.

Insgroup made three arguments in support of its motion for directed verdict.

First, it argued that the broad language of the release resulted in the release of all 

claims White Lion may have in connection with the Scottsdale insurance policy. 

Second, it argued that, by statute, and as a matter of law, Insgroup is an agent of 

Scottsdale, citing to Section 4001.051 of the Texas Insurance Code and, therefore, 

Insgroup was one of the “Released Parties,” which was defined in the release to 

include Scottsdale and its “agents.” Third, it argued that the directed verdict was 

mandatory in that Insgroup had pleaded release as an affirmative defense and 

White Lion had not amended its pleading to assert a defense to that affirmative 

defense, relying on Ellis v. Woods, 453 S.W.2d 509 (Tex. App.—El Paso 1970, no 

writ).

White Lion made two arguments in response. First, it argued that Insgroup 

waived its affirmative defense by litigating the case for 10 years without arguing 
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the release insulated it from liability, not providing any context or argument in its 

pleadings that raised release as an affirmative defense, and seeking relief, including

attorney’s fees, although the release—if Insgroup actually was a party to it—would 

have prevented such a claim between parties to the release. White Lion argued that 

the law does not support ambush tactics such as these.

Second, White Lion argued that the conduct of the parties makes clear that 

Insgroup was not a released party. White Lion noted that, after the Scottsdale 

settlement, Scottsdale sought and obtained a severance so that a judgment could be 

entered resolving White Lion’s claims against it. According to White Lion, a

severance would not have been needed if the only remaining defendant—

Insgroup—was also released when Scottsdale settled. White Lion pointed out that 

Insgroup did not seek dismissal at the time of the release, did not oppose the

severance, and never took any steps to indicate to the parties or to the trial court 

that it considered itself covered by the release, except amending its answer to 

plead, without context, the affirmative defense of release.

Insgroup responded by reurging its points about the release language being 

broad, the Insurance Code designating it as Scottsdale’s agent as a matter of law, 

and the failure of White Lion to plead any defense to release.

At that point, the trial court granted the directed verdict, stating, “It is very 

clear in my mind that this was a full and complete release.” About a month later, 
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the trial court entered a final take-nothing judgment in Insgroup’s favor. The 

judgment states that Insgroup argued that the release was dispositive of White 

Lion’s claims against it and moved for a directed verdict, that the trial court 

considered Insgroup’s argument and White Lion’s response, and that the trial court 

granted the directed verdict.

The Appeal Presents a Question of Law

Insgroup was the defendant in the trial court. A directed verdict in its favor 

was proper only if Insgroup established a right to judgment as a matter of law. 

Prudential Ins. Co., 29 S.W.3d at 77. In other words, there had to be legally 

insufficient evidence to permit recovery against it. See S.V., 933 S.W.2d at 8. This 

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

On appeal, Insgroup argues that it is entitled to an affirmance of the trial

court’s judgment, regardless of merit, because White Lion requested only a partial 

reporter’s record on appeal and failed to include in its request a statement of points 

or issues to be presented. See TEX. R. APP. P. 34.6(c) (permitting a party to present

a partial reporter’s record 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 the complete reporter’s record, White Lion has made it impossible for the 

Court to review all evidence presented . . . [and] forfeited appellate relief.” We 

disagree.
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“The appellate record consists of the clerk’s record and, if necessary to the 

appeal, the reporter’s record.” TEX. R. APP. P. 34.1 (emphasis added). When a 

contention amounts to a strict question 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 attached to pleadings filed with the trial court and is in

the clerk’s record. Cf. Sam Houston Hotel, L.P. v. Mockingbird Restaurant, Inc., 

191 S.W.3d 720, 721 (Tex. App.—Houston [14th Dist.] 2006, no pet.) (noting that

reporter’s record was required in that case because issues required reference to 

evidence admitted at trial).

Because White Lion presents a question of law regarding whether its release 

with Scottsdale also released its claims against Insgroup and because the release 

was part of the clerk’s record on appeal, we reject Insgroup’s argument that it is 

entitled to affirmance regardless of the merits.

Pleading a Defense to an Affirmative Defense

Insgroup argues that White Lion may not defend against Insgroup’s 

affirmative defense of release because White Lion failed to amend its pleading to 

assert any defense to the claimed release. Insgroup argues by analogy that a 

plaintiff must plead the discovery rule in response to a defendant’s pleading of the 

affirmative defense of statute of limitations. See TEX. R. CIV. P. 94; Woods v. 

William M. Mercer, Inc., 769 S.W.2d 515, 518 (Tex. 1988) (“A party seeking to 
8

avail itself of the discovery rule must therefore plead the rule, either in its original 

petition or in an amended or supplemented petition in response to defendant’s 

assertion of the defense as a matter in avoidance”).

Here, though, White Lion admits it 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 Insgroup given that Insgroup was not identified by name or 

sufficiently descriptive text as a released party. 

The rule on affirmative defenses requires that “[i]n a pleading to a preceding 

pleading, a party shall set forth affirmatively” any matter “constituting an 

avoidance or affirmative defense.” TEX. R. CIV. P. 94. According to the Texas 

Supreme Court, an affirmative defense is “[a] defendant’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 complaint are true.” Zorrilla v. Aypco Constr. II, LLC, 469 

S.W.3d 143, 155–56 (Tex. 2015) (quoting affirmative defense, Black’s Law 

Dictionary (10th ed. 2009)). An avoidance “derives from the historic English 

common-law pleas of ‘confession and avoidance’” and 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 156 (quoting confession and avoidance, 
9

Black’s Law Dictionary (10th ed. 2009)); see Godoy v. Wells Fargo Bank, N.A., 

575 S.W.3d 531, 536 (Tex. 2019) (quoting same). 

White Lion’s position is not an affirmative defense or a matter of avoidance

that would invoke Rule 94’s requirement to 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. See Campbell v. 

Abrazo Adoption Assocs., No. 04-07-00093-CV, 2007 WL 3271608, at *3 (Tex. 

App.—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, 699 (Tex.

2000)). White Lion was not required to amend its petition to hold Insgroup to that 

burden. 

We cannot agree that White Lion was required to amend its pleading to deny 

that Insgroup could meet its burden to establish its affirmative defense, with the 

penalty of an automatic take-nothing judgment for failure to do so. See Godoy, 575 

S.W.3d at 536 (concluding that party was not required to amend pleading in 

response to legal argument and noting that court will “reject form-over-substance 

requirements that favor procedural machinations over reaching the merits of a 

case.”). Having rejected Insgroup’s procedural arguments, we will review the legal 

issue presented.
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A Party is Not Released Unless 

Adequately Identified in the Release

One of the arguments Insgroup made to the trial court was that the broad 

language in the release effectively released any conceivable claim White Lion 

might have related to the Scottsdale insurance policy. This argument contravenes

the rule established in McMillen v. Klingensmith, 467 S.W.2d 193 (Tex. 1971), 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 

rule, a release of one tortfeasor operated as a release of all tortfeasors. See id. Over 

time the harshness of the rule and its perverse incentives on nonsettling defendants 

led to its rejection. See McMillen, 467 S.W.2d at 196; Duncan, 665 S.W.2d at 422; 

see also Philadelphia Indem. Ins. Co. v. SSR Hospitality, Inc., No. 08-CV-680-

JRN, 2010 WL 11506976, at *6 & n.17 (W.D. Tex. Nov. 1, 2010) (order).

The Texas Supreme Court rejected the rule in McMillen. 467 S.W.2d at 196.

A new rule was announced: “a release of a party or parties named or otherwise 

specifically identified fully releases only the parties so named or identified, but no 

others.” Id.

There are several important interests that were furthered by abolishing the 

“unity of release” rule and, instead, requiring specific identification of nonsettling 
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tortfeasors who would thereafter benefit from the release. Duncan, 665 S.W.2d at 

422. First, doing so would “encourage both partial and full settlements.” Id. 

Second, it would “avoid unfairly depriving injured Texas residents of their full 

satisfactions.” Id. Third, it would “avoid providing an incentive to tortfeasors to 

delay or to stay out of early settlement negotiations.” Id. Fourth, it would “ensure 

that Texas claimants do not inadvertently lose their valuable rights against 

unnamed and perhaps unknown tortfeasors by settling with only one of the 

wrongdoers.” Id. The new rule was adopted in recognition that a “nonsettling 

tortfeasor should not fortuitously escape compensating his Texas victim simply 

because of settlement arrangements that did not encompass him or his conduct and 

to which he contributed nothing.” Id. 

As a result, under McMillen and Duncan, a nonsettling tortfeasor—like 

Insgroup—cannot claim the protection of a release unless “the release refers to him 

by name or with such descriptive particularity that his identity or his connection 

with the tortious event is not in doubt.” Id. at 420; see Schomburg v. TRW Vehicle 

Safety Sys., Inc., 242 S.W.3d 911, 914 (Tex. App.—Dallas 2009, pet. denied).

There is no longer unity of release in Texas; for Insgroup to benefit from the 

Scottsdale release, it must show that it was either referred to by name or “with such 

descriptive particularity” that its inclusion in the release “is not in doubt.” Id.
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Whether a release refers to a tortfeasor with 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. Butler, 137 S.W.3d 199, 218 (Tex. App.—Houston [1st Dist.] 

2004, pet. denied).

Insgroup Did Not Establish as a Matter of Law that it was a 

Released Party as to Non-Insurance Code Claims

Insgroup’s argument to the trial court why it was a released party as a matter 

of law relied on Insurance Code section 4001.051(b). That section provides that, 

regardless “whether the act is done at the request of or by the employment of an 

insurer, broker, or other person, a person is the agent of the insurer for which the

act is done or risk is taken for purposes of the liabilities, duties, requirements, 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

insurance on behalf of the insurer; (2) receives or transmits other than on the 

person’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) takes any other action in the making or consummation of an insurance 

contract for or with the insurer other than on the person’s own behalf . . . .” TEX.

INS. CODE § 4001.051(b) (emphasis added). Insgroup argued to the trial court that 

it was Scottsdale’s agent as a matter of law, thereby mandating that it was covered 

by the term “agent” in the release.
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On appeal, White Lion notes that Section 4001.051 was enacted after the 

release was executed and argues that it is inapplicable. Insgroup has responded that 

the predecessor statute, Insurance Code article 21.02, defined “agents” in 

“substantially similar terms.” Article 21.02(a) provided that “[a]ny person who 

solicits insurance on behalf of any insurance company . . . or who takes or 

transmits other than for himself any application for insurance or any policy of 

insurance to or from such company, . . . or who shall receive or deliver a policy of 

insurance of any such company, . . . shall be held to be the agent of the company 

for which the act is done . . . as far as relates to all the liabilities, duties, 

requirements and penalties set forth in this chapter.” TEX. INS. CODE art. 21.02

(effective Sept. 1, 2001 to March 31, 2005) (emphasis added).

Insgroup’s statutory argument ignores limiting language found in both 

versions of the statute. An entity that solicits or transmits an insurance policy is the 

agent of the insurer only “as far as relates to all the liabilities, duties, requirements 

and penalties set forth in” the Insurance Code. Id.; see TEX. INS. CODE

§ 4001.051(b) (using similar terms). The statute does not make Insgroup the agent 

of Scottsdale for all purposes. 

This limitation within the statute was noted by the Fourteenth Court of 

Appeals in Westview Drive Invs., LLC v. Landmark Am. Ins. Co., 522 S.W.3d 583 

(Tex. App.—Houston [14th Dist.] 2017, pet. denied). There, an insured argued that 
14

its broker was the agent of the insurer as a matter of law with regard to the 

insured’s fraud claim, citing Section 4001.051(b). Id. at 604. The court rejected the 

argument, holding that, by its terms, the Insurance Code provision created an 

agency relationship only for purposes of specific statutes, not for purposes of the 

common-law fraud claim. Id. (quoting the language “for the purposes of the 

liabilities, duties, requirements, and penalties” of particular statutes). Under that 

court’s analysis, the Insurance Code does not make an insurance intermediary the 

insurer’s agent as a matter of law with regard to non-statutory, common law tort 

claims. See id. 

We adopt the Fourteenth Court of Appeals’s interpretation and hold that 

neither Article 21.02 nor its successor, Section 4001.051(b), establishes Insgroup 

as Scottsdale’s agent as a matter of law outside the realm of the enumerated

Insurance Code and Occupations Code provisions. See TEX. INS. CODE

§ 4001.051(b) (designating person as agent 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 Insurance 

Code provisions and Chapter 107 of the Occupations Code).

White Lion and Insgroup were mid-trial when the trial court granted the 

directed verdict. White Lion’s live petition asserted claims against Insgroup for 

negligence, negligent misrepresentation, violations of the Deceptive Trade 
15

Practices Act, violations of the Insurance Code, and breach of contract. As a matter 

of law, the referenced Insurance Code provisions, on which Insgroup relied in 

moving for a directed verdict, do not designate Insgroup as Scottsdale’s “agent” for 

purposes of White Lion’s common-law and DTPA claims or its breach-of-contract 

claim. See Westview Drive Invs., 522 S.W.3d at 604. The trial court erred in 

granting a directed verdict—judgment as a matter of law—against White Lion on 

those claims.

Conclusion

We affirm the trial court’s directed verdict as to White Lion’s Insurance 

Code violation claim and reverse it as to all other claims. We remand the suit to the 

trial court for additional proceedings.

Sarah Beth Landau

Justice

Panel consists of Chief Justice Radack and Justices Landau and Hightower.