NUMBER 13-13-00566-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI – EDINBURG

C.L. THOMAS, INC. AND Appellants,

THOMAS FUELS LUBRICANTS

& CHEMICALS, INC.,

v.

LEXINGTON INSURANCE COMPANY

AND ACORDIA OF TEXAS, INC., Appellees.

On appeal from the 377th District Court

of Victoria County, Texas.

MEMORANDUM OPINION

Before Justices Rodriguez, Garza and Benavides

Memorandum Opinion by Justice Garza

Appellants, C.L. Thomas, Inc. and Thomas Fuels Lubricants and Chemicals, Inc. 

(collectively “Thomas”), challenge the summary judgment awarded in favor of appellees, 

Lexington Insurance Company (“Lexington”) and Acordia of Texas, Inc. (“Acordia”), in a 
2

dispute regarding insurance coverage for an arbitration award to a Thomas employee. 

We affirm in part and reverse and remand in part.

I. BACKGROUND

Gregory Morris, a truck driver employed by Thomas, suffered stab wounds to his 

neck in a physical altercation with a fellow Thomas truck driver on December 29, 2006. 

The dispute apparently arose when the other driver learned that both he and Morris were 

assigned to drive the same truck. Thomas fired both employees. In March 2007, Morris 

filed wrongful termination complaints with the Texas Workforce Commission and the 

Equal Employment Opportunity Commission, which were denied. He then filed suit 

against Thomas, alleging wrongful termination and defamation. The trial court granted 

Thomas’s motion to abate the proceedings and compel arbitration. After arbitration, 

Morris was awarded $5,091,777.48 including arbitrator fees, and a counterclaim made by 

Thomas was rejected. The trial court rendered judgment on the arbitration award and 

Thomas satisfied the judgment.

Seeking to recoup the amount it paid to Morris, Thomas made claims under 

insurance policies it had with Lexington and Great American Insurance Group (“Great 

American”). The Great American policy provided coverage for “all loss” that Thomas may 

be legally obligated to pay as a result of an “Employment Practices Wrongful Act,” which 

was defined in the policy as including wrongful dismissal. The policy stated in part that 

“[t]he Insureds shall, as a condition precedent to their rights under this Policy, give the 

Insurer notice in writing of any Claim . . . .” The policy was effective as to all claims made 

between April 15, 2006 and April 1, 2007.

The Lexington policy was an “umbrella” policy which generally covered liability for 
3

compensatory damages for personal injuries, including defamation, to the extent that 

such liability exceeded the applicable limits of certain other underlying policies covering 

Thomas. The limits of the various other policies were set forth in a “Schedule of 

Underlying Insurance” attached as an endorsement to the policy; however, the Great 

American policy was not listed in the schedule. The Lexington policy provided that, in the 

event of a covered claim for which there was no applicable primary insurance, Lexington 

would assume the duty to defend Thomas as the primary insurer. The Lexington policy, 

which was effective as to “occurrences” between April 1, 2006 and April 1, 2007, 

contained the following condition entitled “Notice of Occurrence, Claim, or Suit”:

A. The first Named Insured [Thomas] shall immediately notify us 

of any occurrence which may reasonably be expected to 

result in a claim against this policy. The first Named Insured 

will notify us on the assumption that an insured is liable and 

that an insured is liable for any amount claimed. . . .

B.

1. The first Named Insured [Thomas] shall immediately notify us 

in writing of any claim, alone or in combination with any other 

claims, to which this policy applies which may exceed 25% of 

the applicable amount set forth in the Schedule of Underlying 

Insurance. The first Named Insured will notify us on the 

assumption that an insured is liable and that an insured is 

liable for any amount(s) claimed.

. . . .

3. No insureds will, except at their own cost, voluntarily make a 

payment, assume any obligation, or incur any expense other 

than for first aid, without our consent.

Both of Thomas’s insurance claims were denied on the basis that Thomas had 

failed to timely provide notice of a potential claim. Thomas then filed the underlying suit 

against Lexington and Great American for breach of contract and violations of the Texas 
4

Insurance Code arising from the denials.1 Thomas also sued Acordia, alleging that it had 

breached a contract to provide insurance brokerage services to Thomas. Thomas alleged 

in particular that Acordia breached the contract by: (1) failing to notify Thomas that the 

Great American insurance policy was a claims-made policy2; (2) failing to timely deliver 

copies of all insurance policies to Thomas; and (3) failing to instruct Thomas as to the 

notice requirements of the Great American policy. Thomas further asserted that Acordia 

was negligent for failing to notify Thomas of the material terms of all of its insurance 

policies. The lawsuit also named Aon Risk Services Southwest, Inc. (“Aon”), which had 

replaced Acordia as Thomas’s insurance broker of record, as a defendant.

Lexington, Acordia, and Thomas each filed motions for summary judgment. 

Lexington’s motion argued that it was entitled to judgment as a matter of law because it 

did not receive notice of Thomas’s claim until six days after the arbitration award. It further 

argued that any notice Thomas may have given to Aon was insufficient to comply with the 

policy’s notice requirement because Aon was merely Thomas’s broker. Finally, Lexington 

argued that Thomas has no evidence of actual damages and cannot, as a matter of law, 

recover on any extra-contractual claims.3 Acordia alleged in its summary judgment 

 

1 Thomas alleged that Lexington violated the insurance code by: (1) misrepresenting a material 

fact or policy provision relating to the coverage at issue; (2) failing to attempt in good faith to effectuate a 

prompt, fair, and equitable settlement of a claim with respect to which its liability has become reasonably 

clear; and (3) refusing to pay a claim without conducting a reasonable investigation with respect to the 

claim. See TEX. INS. CODE ANN. § 541.060(a)(1), (a)(2)(A), (7) (West, Westlaw through 2013 3d C.S.).

2 A “claims-made” policy is a policy that only covers those claims first asserted during the policy 

period. Lennar Corp. v. Markel Am. Ins. Co., 413 S.W.3d 750, 762 n.1 (Tex. 2013) (Boyd, J., concurring).

It differs from an “occurrence” policy, such as the Lexington policy, which covers only claims arising out of 

occurrences happening within the policy period, regardless of when the claim is made. See id.

3 The Lexington policy also contained an endorsement entitled “Employment-Related Practices 

Exclusion” which stated in relevant part:

In consideration of the premium charged, it is understood and agreed that the Insurer shall 

have no obligation to defend or indemnify with respect to any claim alleging or asserting in 
5

motion that it was entitled to judgment as a matter of law because its contract to provide 

insurance brokerage services to Thomas terminated on December 1, 2006, prior to 

Morris’s injury.4 Acordia argued further that it had no common law or statutory duty to 

explain any policy terms to Thomas and that, even if it had a duty to explain policy terms, 

(1) Acordia provided Thomas with a summary of the policies at issue, and (2) Thomas 

cannot show that any breach of that duty caused it to suffer harm because Thomas relied 

on Aon for all of its claims reporting once Aon became its broker of record.5 Thomas’s 

summary judgment motion argued that it gave timely notice to Lexington and that, in any 

event, notice is not a condition precedent to coverage under that policy.

The trial court granted the summary judgment motions filed by Lexington and 

Acordia, denied the motion filed by Thomas,6 and ordered that Thomas take nothing by 

way of its claims against both appellees.7 This appeal followed.

 

any respect loss, injury, or damage (including consequential bodily injury) in connection

with Wrongful Termination of the Insured’s employees and/or Discrimination involving the 

Insured’s employees and/or Sexual Harassment of the Insured’s employees.

However, Lexington did not cite this exclusion as grounds for summary judgment and so we may not affirm 

on those grounds. See Stiles v. Resolution Trust Corp., 867 S.W.2d 24, 26 (Tex. 1993) (“[A] summary 

judgment cannot be affirmed on grounds not expressly set out in the motion or response.”).

4

In support of this contention, Acordia attached to its motion a letter signed by Michael Squillace, 

Thomas’s Director of Loss Prevention and Risk Management, dated December 4, 2006, which stated in 

relevant part:

This is to advise that effective Wednesday, December 1, 2006, we have appointed [Aon] 

as the exclusive Broker/Agent of Record for [Thomas] with respect to its Property, Flood, 

Workers Compensation, Auto, General Liability, Umbrella Liability, Crime/Employee 

Dishonesty, Employment Practices Liability insurance programs. . . . This appointment 

rescinds all previous appointments and the authorization contained herein shall remain in 

full force and effect until cancelled in writing by us.

5 Thomas’s summary judgment motion did not address its claims against Acordia, because 

Acordia’s summary judgment motion had already been granted at the time Thomas filed its motion.

6 Thomas does not contend on appeal that the trial court erred in denying its motion for summary 

judgment.

7 The final judgment granted a motion filed by Thomas to dismiss its claims against Great American 
6

II. DISCUSSION

A. Standard of Review and Applicable Law

We review summary judgments de novo. Neely v. Wilson, 418 S.W.3d 52, 59 

(Tex. 2013); Nalle Plastics Family L.P. v. Porter, Rogers, Dahlman & Gordon, P.C., 406 

S.W.3d 186, 199 (Tex. App.—Corpus Christi 2013, pet. denied). In doing so, we review 

the evidence “in the light most favorable to the nonmovant, indulging every reasonable 

inference and resolving any doubts against the motion.” City of Keller v. Wilson, 168 

S.W.3d 802, 824 (Tex. 2005).

A motion for summary judgment may be brought on no-evidence or traditional 

grounds. See TEX. R. CIV. P. 166a(c), (i). The party moving for summary judgment bears 

the burden of proof. Neely, 418 S.W.3d at 59. Though the burden varies for traditional 

and no-evidence motions, all parties here brought forth summary judgment evidence; 

therefore, the differing burdens are immaterial and the ultimate issue is whether a fact 

issue exists. See id.; Buck v. Palmer, 381 S.W.3d 525, 527 n.2 (Tex. 2012). A fact issue 

exists if there is more than a scintilla of probative evidence. Neely, 418 S.W.3d at 59. 

Evidence is more than a scintilla if it “rises to a level that would enable reasonable and 

fair-minded people to differ in their conclusions.” Serv. Corp. Int’l v. Guerra, 348 S.W.3d 

221, 228 (Tex. 2011). Evidence is less than a scintilla is if it is “so weak as to do no more 

than create a mere surmise or suspicion that the fact exists.” Regal Fin. Co. v. Tex Star 

Motors, Inc., 355 S.W.3d 595, 603 (Tex. 2010). 

 

and Aon with prejudice. Those entities are not parties to this appeal.
7

We will affirm a summary judgment if any of the theories presented to the trial court 

and preserved for appellate review are meritorious. Joe v. Two Thirty Nine Joint Venture, 

145 S.W.3d 150, 157 (Tex. 2004).

B. Lexington

Thomas argues by its first issue that the trial court erred in granting summary 

judgment to Lexington. In particular, Thomas contends that (1) Lexington did not 

conclusively establish that Thomas failed to comply with the policy’s notice provision; (2) 

fact issues exist as to whether Lexington was prejudiced; and (3) summary judgment on 

Thomas’s extra-contractual claims was improper.

1. Breach of Contract

We first address Thomas’s contract claim against Lexington. To recover for breach 

of contract, a plaintiff must prove that: (1) there is a valid, enforceable contract between 

the parties; (2) the plaintiff performed as required under the contract; (3) the defendant 

breached the contract; and (4) the defendant’s breach proximately caused the plaintiff’s 

injury. Tex. S. Rentals, Inc. v. Gomez, 267 S.W.3d 228, 242 (Tex. App.—Corpus Christi 

2008, no pet.).

In its contract claim, Thomas argued that Lexington breached a contractual duty 

to defend Thomas in Morris’s lawsuit once Thomas’s claim under the Great American 

policy was denied. In its summary judgment motion, Lexington argued that it was 

absolved of its responsibility to defend or indemnify Thomas for its arbitration and litigation 

costs because Thomas did not provide notice of its claim until six days after the arbitration 

award was issued.
8

The Lexington policy stated that coverage is “subject to the limits of liability, 

exclusions, conditions and other terms of this policy.” Condition 4.B of the policy required 

Thomas to “immediately” notify Lexington of any claim to which the policy applies “which 

may exceed 25% of the applicable amount set forth in the Schedule of Underlying 

Insurance.”8 “Claim” is defined in the policy as “a written demand upon the Insured for 

compensatory damages or services,” including “the service of suit or institution of 

arbitration proceedings against the Insured,” but not including “reports of accidents, acts, 

errors, occurrences, offenses or omissions which may give rise to a claim under this 

policy.”

We agree with Lexington that Thomas was required but failed to comply with the 

notice requirements. In particular, Morris’s 2008 arbitration demand constituted a “claim” 

as defined by the policy. Moreover, because the Great American policy—which covered 

liability for wrongful termination—was not listed in the Schedule of Underlying Insurance, 

it was apparent that Morris’s claim “may exceed 25% of the applicable amount set forth” 

in that schedule.9 Condition 4.B of the policy therefore required Thomas to “immediately”

notify Lexington of Morris’s claim. Thomas failed to do so.

 

8 Condition 4.A of the policy required Thomas to “immediately” notify Lexington of any “occurrence 

which may reasonably be expected to result in a claim” against the policy. Thomas argues by its third issue 

that Condition 4.A is ambiguous and that, therefore, Lexington could not have based its denial of the claim 

on Thomas’s failure to comply with that provision. In light of our conclusion herein that Thomas was 

required to report under Condition 4.B of the policy, we need not address this issue. See TEX. R. APP. P.

47.1.

9 The Schedule of Underlying Insurance listed eight policies, comprising four “Employers’ Liability” 

policies, two “Commercial Auto Liability” policies, and two “Commercial General Liability” policies. Each of 

the listed policies had a $1,000,000 per occurrence policy limit. Accordingly, even if we were to assume 

that all eight listed underlying policies covered Morris’s claim against Thomas, the coverage would be 

limited to $8,000,000. Morris’s arbitration demand sought $2.75 million, which is more than 25% of 

$8,000,000. Further, the policy stated that “[Thomas] will notify us on the assumption that an insured is 

liable and that an insured is liable for any amount(s) claimed.” Therefore, Thomas was required to report 

Morris’s arbitration demand under Condition 4.B of the policy.
9

This is not the end of our inquiry, however, because an insured’s failure to notify 

the insurer of an occurrence does not absolve the insurer from coverage unless the lack 

of notice prejudices the insurer.10 Harwell v. State Farm Mut. Auto. Ins. Co., 896 S.W.2d 

170, 174 (Tex. 1995); Liberty Mut. Ins. Co. v. Cruz, 883 S.W.2d 164, 165 & n.3 (Tex. 

1993); Blanton v. Vesta Lloyds Ins. Co., 185 S.W.3d 607, 611 (Tex. App.—Dallas 2006, 

no pet.); see Hernandez v. Gulf Group Lloyds, 875 S.W.2d 691, 692–93 (Tex. 1994) (“A 

fundamental principle of contract law is that when one party to a contract commits a 

material breach of that contract, the other party is discharged or excused from any 

obligation to perform. In determining the materiality of a breach, courts will consider, 

among other things, the extent to which the non-breaching party will be deprived of the 

benefit that it could have reasonably anticipated from full performance.”). The purpose of 

the timely notice requirement is “to enable an insurer to investigate the circumstances of 

an accident while the matter is fresh in the minds of the witness[es] so that it may 

adequately prepare to adjust or defend any claims that may be asserted against persons 

covered by its policy.” Blanton, 185 S.W.3d at 611–12 (citing Employers Cas. Co. v. 

Glens Falls Ins. Co., 484 S.W.2d 570, 575 (Tex. 1972)). When an insurer must prove it 

was prejudiced by the insured’s failure to comply with notice provisions, “the recognized 

purposes of the notice requirements form the boundaries of the insurer’s argument that it 

was prejudiced; a showing of prejudice generally requires a showing that one of the 

 

10 Lexington argues on appeal that, “when an umbrella policy provides drop-down coverage, notice 

is an essential part of the bargained-for exchange” and that it therefore did not need to show that it was 

prejudiced by Thomas’s late notice. However, because Lexington did not make that argument in its 

summary judgment motion, we may not affirm on those grounds. See Stiles, 867 S.W.2d at 26.
10

recognized purposes has been impaired.” Id. at 612 (citing 13 COUCH ON INSURANCE

§ 186:14 (3d ed. 2005)).

We conclude that Lexington met its summary judgment burden to show that it was 

prejudiced. Thomas notified Lexington of Morris’s arbitration claim only after the 

arbitration award was issued, and once issued, arbitration awards are “given the same 

effect as the judgment of a court of last resort.” Nafta Traders, Inc. v. Quinn, 339 S.W.3d 

84, 95 n.53 (Tex. 2011). Notice that comes after judgment defeats all of the recognized 

purposes of the notice requirements, because it renders the insurer unable to investigate 

the claim, defend the claim, or negotiate in an attempt to settle the claim. See Blanton, 

185 S.W.3d at 611–12 (citing Employers Cas. Co., 484 S.W.2d at 575).

Thomas contends that a fact issue existed as to prejudice because Lexington did 

not have an “absolute right to settle” claims under the language of the policy. We 

disagree. Section II.C of the policy, which applies to claims that are covered by underlying 

insurance policies, states:

we [Lexington] shall not be called upon to assume charge of the 

investigation, settlement or defense of any claims made or suit brought or 

proceedings instituted against the Insured, but shall have the right and be 

given the opportunity to be associated in the defense and trial of any such 

claims, suits or proceedings relative to any occurrence which, in our opinion, 

may create liability for us under the terms of this policy.

Under this provision, Lexington did not have an absolute right to settle claims but it did 

have the right “to be associated in the defense and trial of any such claims.” Lexington 

also notes that Section II.A of the policy, which applies to “claims resulting from 

occurrences not covered by underlying insurance, due to exhaustion of any aggregate 

limits by reason of losses paid thereunder,” provides Lexington with an explicit right to 

investigate, negotiate, and settle claims “as may be deemed expedient by us.” 
11

Regardless of whether Section II.A or Section II.C applied, Thomas’s late notice deprived 

Lexington of a valuable right. See Liberty Mut. Ins. Co. v. Cruz, 883 S.W.2d 164, 166 

(Tex. 1993) (holding that insured’s failure to provide notice prejudiced insurer as a matter 

of law in part because “[h]ad [the insurer] known of the suit, it might have chosen to 

answer for [the insured] and litigate the merits of the underlying suit”); cf. Hernandez, 875 

S.W.2d at 693 (noting that, when late notice deprives an insurer of a right that “has no 

value,” the insurer is not prejudiced). We therefore conclude that there is no issue of 

material fact as to whether Lexington was prejudiced by Thomas’s late notice. Summary 

judgment on the contract claims against Lexington was proper.

2. Extra-Contractual Claims

Thomas argues that summary judgment on its insurance code claims against 

Lexington was improper because (1) Lexington’s grounds for judgment on those claims 

were “premised on the absence of insurance coverage” and (2) there are fact issues as 

to whether Lexington was excused from performing under the policy due to Thomas’s late 

notice. We have already held that summary judgment was proper on the contract claims. 

And, Thomas did not allege that it suffered any injury from Lexington’s alleged insurance 

code violations other than the loss of benefits under the policy. See United Servs. Auto. 

Ass’n v. Gordon, 103 S.W.3d 436, 442 (Tex. App.—San Antonio 2002, no pet.) (noting 

that, generally, “[a]n insured is not entitled to recover extra-contractual damages unless 

the complained of actions or omissions cause injury independent of the injury resulting 

from a wrongful denial of policy benefits”). Moreover, even if Lexington had complied with 

all of the insurance code provisions that Thomas alleged were violated, it would still be 

entitled to deny Thomas’s claim because, as we have held, it was prejudiced by Thomas’s 
12

late notice. Cf. USAA Tex. Lloyd’s Co. v. Menchaca, No. 13-13-00046-CV, 2014 WL 

3804602, at *9 (Tex. App.—Corpus Christi July 31, 2014, no. pet. h.) (mem. op.) (noting 

that, under the “unique circumstances” present in that case, the insurer did not breach 

the policy but policy benefits were nevertheless the correct measure of damages caused 

by the insurer’s statutory violations, so the general rule pronounced in Gordon did not 

apply). Summary judgment was therefore proper on Thomas’s extra-contractual claims.

We overrule Thomas’s first issue.

C. Acordia

By its second issue on appeal, Thomas contends that the trial court erred in 

granting summary judgment to Acordia on Thomas’s claims for breach of contract and 

negligence.

1. Breach of Contract

As noted, Thomas’s breach of contract claim alleged that Acordia: (1) failed to 

notify Thomas that the Great American policy was a claims-made policy; (2) failed to 

timely deliver copies of all insurance policies to Thomas; and (3) failed to instruct Thomas 

as to the notice requirements of the Great American policy.

In support of its summary judgment motion, Acordia attached, among other things, 

a Client Service Agreement executed by Acordia and Thomas dated April 1, 2006. Under 

the agreement, Acordia was to provide “insurance brokerage services,” which was 

defined to include “review[ing] policies,” “provid[ing] insurance summary,” and “educat[ing 

Thomas] employees as needed.” The agreement also stated in relevant part:

This Agreement shall commence on the Effective Date hereof [April 1, 2006] 

and shall terminate on 1 April 2007. In the event of termination, Acordia will 

assist [Thomas] in arranging a smooth transition process. However, 

Acordia’s obligation and the obligation of its affiliates to provide services to 
13

[Thomas] will cease upon the effective date of termination, unless otherwise 

agreed in writing.

Notwithstanding the term of this Agreement, either party shall have the right 

to terminate this Agreement upon 90 days prior written notice. In the event 

of termination by [Thomas] prior to expiration, Acordia’s annual 

compensation will be deemed earned according to the following schedule: 

50% at inception; 75% after 6 months; 100% after nine months.

Also included in Acordia’s summary judgment evidence was a “Summary of Insurance” 

prepared by Acordia for Thomas dated July 25, 2006. The section of the summary 

describing Thomas’s employment practices liability coverage stated, in bold print at the 

top of the first page, that the Great American policy “is a Claims-Made Policy.” The 

following disclaimer was set forth in capitals and bold print at the bottom of each page of 

the summary: “This summary is for descriptive purposes only. Consult your policy for 

specific details on coverages.”11 The agreement does not explicitly require Acordia to 

provide copies of insurance policies to Thomas.

In response to Acordia’s summary judgment motion and on appeal, Thomas urges 

that there is a fact issue as to whether Acordia’s alleged breaches occurred prior to 

December 1, 2006, when Aon replaced Acordia as Thomas’s broker of record. Thomas 

contends that, even though Morris’s injury occurred after that date, the breaches as 

specifically alleged occurred before that date. Thomas also asserted that Acordia had an 

obligation to deliver copies of policies to Thomas under provisions of the agreement which 

stated that Acordia was to “follow up with insurance carriers for timely issuance of policies 

 

11 Acordia states on appeal that the “Summary of Insurance” was produced by Thomas in discovery.

In any event, there appears to be no dispute that Acordia initially provided the summary to Thomas as 

required by the contract.
14

and endorsements” and “following placement, deliver evidences of insurance prior to the 

expiration of [Thomas]’s current policies.”

First, with respect to the assertion that Acordia failed to notify Thomas that the 

Great American policy was a claims-made policy, the summary produced by Acordia 

establishes otherwise—it stated that the policy was a claims-made policy in bold type on 

each page. Second, Acordia established through the Client Service Agreement that it 

had no contractual obligation to deliver copies of insurance policies to Thomas within any 

specific time.12 Thomas did not produce a fact issue as to these specific claims. 

Therefore, summary judgment on these claims was proper. See TEX. R. CIV. P. 166a(c).

However, with respect to the claim that Acordia failed to instruct Thomas of the 

applicable notice requirements of the Great American policy, we find that Acordia did not 

establish its entitlement to judgment as a matter of law. The Client Service Agreement 

required Acordia to “educate [Thomas] employees as needed” regarding the applicable 

insurance policies. But Thomas produced deposition testimony by both its Director of 

Loss Prevention and Risk Management and its General Counsel stating that, though 

copies of the insurance policies were available, they did not read them. The Thomas 

executives further stated that they relied on Aon for all of its claim reporting services after 

Aon became broker of record.13 Acordia argues that this testimony established that 

Thomas was not proximately harmed by any failure by Acordia to advise Thomas 

 

12 Thomas concedes that Acordia provided copies of all applicable policies. It merely claims that 

this was not done in a timely manner.

13 Acordia objected to parts of the deposition testimony as lacking personal knowledge. The trial 

court sustained the objections and Thomas does not contest the ruling on appeal. However, the portions 

objected to by Acordia do not include the executives’ statements set forth above. Accordingly, those 

statements are properly part of the summary judgment record.
15

employees about the policies’ notice requirements. We disagree. Acordia was 

contractually obligated to “educate [Thomas] employees as needed” and, even if copies 

of all policies were eventually provided to Thomas,14 that does not in and of itself establish 

that there was no breach of this provision. In any event, it was reasonably foreseeable 

at the time Acordia allegedly failed to advise Thomas of the notice requirements that such 

failure may result in Thomas failing to timely file a claim with Great American. See 

Rodriguez-Escobar v. Goss, 392 S.W.3d 109, 113 (Tex. 2013) (“Proximate cause has 

two components: (1) foreseeability and (2) cause-in-fact.”); Doe v. Boys Clubs of Greater 

Dallas, Inc., 907 S.W.2d 472, 478 (Tex. 1995) (“Foreseeability . . . requires that a person 

of ordinary intelligence should have anticipated the danger created by a negligent act or 

omission.”); Boren v. Texoma Med. Ctr., Inc., 258 S.W.3d 224, 230 (Tex. App.—Dallas 

2008, no pet.) (“Foreseeability is not measured by hindsight, but instead by what the actor 

knew or should have known at the time of the alleged negligence.”); see also Timberwalk 

Apartments Partners, Inc. v. Cain, 972 S.W.2d 749, 756, 757 (Tex. 1998) (“Foreseeability 

requires only that the general danger, not the exact sequence of events that produced 

the harm, be foreseeable.”). The fact that Acordia was replaced by Aon as Thomas’s 

broker of record almost one month prior to Morris’s injury does not negate Thomas’s 

contention that Acordia’s failure to advise it of policy terms prior to December 1, 2006 was 

a “substantial factor” in Thomas’s failure to timely file its claim. See Rodriguez-Escobar, 

392 S.W.3d at 113 (“For a negligent act or omission to have been a cause-in-fact of the 

harm, the act or omission must have been a substantial factor in bringing about the harm, 

 

14 We note that the Thomas executives did not state, at their depositions, when Acordia provided 

copies of the insurance policies.
16

and absent the act or omission . . . the harm would not have occurred.”). Finally, we 

agree with Thomas that the language “This is a Claims-Made Policy,” which appeared in 

the insurance summary provided by Acordia, did not “educate” Thomas employees “as 

needed” because it did not set forth the notice requirements contained in the Great 

American policy.

Because Acordia failed to demonstrate its entitlement to judgment as a matter of 

law on Thomas’s claim that it failed to “educate [Thomas] employees as needed,” 

summary judgment was improper on this claim. See TEX. R. CIV. P. 166a(c).

2. Negligence

To establish negligence, a party must establish a duty, breach of that duty, and 

damages proximately caused by the breach. Kroger Co. v. Elwood, 197 S.W.3d 793, 794 

(Tex. 2006). As to its negligence claims, Thomas argues that there are fact issues as to 

whether Acordia breached its obligations (1) to educate Thomas’s employees and (2) to 

deliver insurance policies to Thomas.

We find that Acordia established its entitlement to judgment as a matter of law and 

that Thomas has not raised a fact issue as to these claims. The Texas Supreme Court 

has held that the acts of parties to a contract “may breach duties in tort or contract alone 

or simultaneously in both. The nature of the injury most often determines which duty or 

duties are breached. When the injury is only the economic loss to the subject of a contract 

itself, the action sounds in contract alone.” Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 

617, 618 (Tex. 1986); see Sw. Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 494–95 (Tex. 

1991). This is known generally as the economic loss rule. Sharyland Water Supply Corp. 
17

v. City of Alton, 354 S.W.3d 407, 415 (Tex. 2011).15 Here, the nature of Thomas’s injury 

is economic loss—i.e., the payment it was ordered to make to Morris—and that loss was 

directly related to the subject matter of the contract at issue. Acordia’s duties to educate 

Thomas’s employees as to policy terms and to deliver copies of policies arose, if at all, 

under the Client Service Agreement. Therefore, tort damages are unavailable to Thomas. 

See DeLanney, 809 S.W.2d 493, 495 & n.2 (holding that economic loss rule precluded 

tort recovery where duty “arose solely” from contract and noting that “there is no tort 

liability for nonfeasance, i.e., for failing to do what one has promised to do in the absence 

of a duty to act apart from the promise made”). Summary judgment was proper on 

Thomas’s negligence claims against Acordia. See TEX. R. CIV. P. 166a(c).

Thomas’s second issue is sustained in part and overruled in part.

III. CONCLUSION

We affirm the trial court’s judgment in part and reverse it in part as stated herein, 

and we remand the cause for further proceedings consistent with this opinion.

DORI CONTRERAS GARZA,

Justice

Do not publish.

TEX. R. APP. P. 47.2(b).

Delivered and filed the

11th day of September, 2014.

 

15 Courts have allowed recovery of economic damages—even absent physical injury or property 

damage—in suits for negligent misrepresentation, legal or accounting malpractice, breach of fiduciary duty, 

fraud, fraudulent inducement, tortious interference with contract, nuisance, wrongful death claims related 

to loss of support from the decedent, business disparagement, and some statutory causes of action. 

Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407, 418–19 (Tex. 2011). Thomas does not 

bring any such claims against Acordia.