UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 96-20953

ANNETTE M. RINER; SUZETTE MARRIOTT,

Plaintiffs-Appellants,

VERSUS

ALLSTATE LIFE INSURANCE COMPANY,

Defendant-Appellee.

Appeals from the United States District Court

for the Southern District of Texas

December 16, 1997

Before KING, DAVIS, and DeMOSS, Circuit Judges.

DeMOSS, Circuit Judge:

Annette Riner (Riner) and Suzette Marriott (Marriott) sued

Allstate Life Insurance Company (Allstate) after Allstate refused

to pay benefits under a temporary insurance agreement on the life

of their father, Robert Marriott (Mr. Marriott). Allstate defended

on the theory that alleged misrepresentations in the insurance

application absolved it of liability. The district court granted

summary judgment in favor of Allstate, and Riner and Marriott

appealed. We reverse the district court’s judgment in favor of

Allstate and render judgment in favor of Riner and Marriott on the
2

issue of coverage. We remand the cause to the district court for

further development of the remaining liability issues and for a

determination of damages. 

MATERIAL FACTS

Prior to 1994, Mr. Marriott had five back surgeries, which

left him with chronic back pain. That back pain became aggravated

and was joined by a feeling of loneliness and sadness after his

wife of more than thirty years left him. Following his divorce in

June 1994, Mr. Marriott wanted to replace his life insurance

policy, which named his ex-wife as beneficiary, with a new policy

naming his daughters as beneficiaries. 

Riner referred Mr. Marriott to an Allstate agent. On June 29,

1994, Allstate sent an agent to Mr. Marriott’s home to take his

application information. Allstate’s lengthy standardized

application contained a list of medical questions. The applicant

responded to those questions by checking boxes marked “yes” or

“no.” When a box was marked “yes,” the application contained

additional space for further explanation by the applicant. Mr.

Marriott disclosed that he had chronic back problems and certain

other medical problems. Mr. Marriott’s application is marked “no,”

however, with respect to whether he had ever received treatment for

the use of alcohol or received treatment for depression within the

past three years. 

Mr. Marriott explained to the agent that he was “groggy” from

medication he was taking for back pain. After completing the
 

1 Although the record does not conclusively establish

whether the Allstate agent or Mr. Marriott completed the

application form, the handwriting and tone of the answers is most

consistent with the conclusion that the Allstate agent completed

the application for Mr. Marriott, a fact that is clearly relevant

with respect to whether Mr. Marriott’s answers were intentionally

deceitful.

3

application, the agent requested an initial premium check in the

amount of $276.23. The record reflects that Mr. Marriott was too

affected by the painkillers he was taking to complete the check.

For that reason, the agent completed the premium check, which was

then signed by Mr. Marriott.1 In return, the agent issued a

“Receipt and Temporary Insurance Agreement” to Mr. Marriott.

Although the agent left a copy of the agreement, the agent did not

leave a copy of Mr. Marriott’s application with Mr. Marriott. The

temporary insurance agreement provided that Mr. Marriott’s premium

was received as “payment for life insurance” in the amount of

$100,000. The agreement further provided that temporary coverage

would start when Mr. Marriott’s medical exam was completed. Mr.

Marriott completed the medical exam on July 26, 1994. 

Six days after the exam, Mr. Marriott died suddenly of either

an aneurism or heart disease. Thereafter, his daughters made a

claim under the temporary insurance agreement. On the claim form,

Suzette Marriott indicated that Mr. Marriott was seeing a doctor

for “depression/chronic pain.” Allstate requested Mr. Marriott’s

medical records and began an investigation to determine whether it

would pay benefits under the temporary insurance agreement. Three

months later, Allstate denied liability under the temporary

insurance agreement. Allstate denied liability because it
 

2 TEX. INS. CODE art. 21.35 (Vernon Supp. 1998) provides:

Except as otherwise provided in this code, every

contract or policy of life insurance issued or contracted

for in this State shall be accompanied by a written,

photographic or printed copy of the application for such

insurance policy or contract, as well as a copy of all

questions asked and answered given thereto. The

provisions of Articles 21.16, 21.17, and 21. 19 of this

4

concluded that, contrary to Mr. Marriott’s answers in the

application, he had received treatment for his use of alcohol and

for depression. 

PROCEEDINGS IN THE DISTRICT COURT

Mr. Marriott’s beneficiaries, Riner and Marriott, sued

Allstate in Texas state court. Allstate properly removed the

matter to federal court. In federal court, Riner and Marriott

amended their complaint, alleging that Allstate’s refusal to pay

violated certain provisions of the Texas Insurance Code and the

Texas Deceptive Trade Practices Act. Riner and Marriott also

contended that Allstate’s actions constituted a breach of contract

and a breach of Allstate’s duty of good faith and fair dealing.

Allstate answered that Mr. Marriott’s misrepresentations in the

application absolved it of all liability. 

Riner and Marriott moved for summary judgment on the issue of

Allstate’s liability, arguing that Allstate could not rely upon any

misrepresentations in the application to deny coverage because

Allstate failed to attach a copy of Mr. Marriott’s application to

the temporary insurance agreement, as required by article 21.35 of

the Texas Insurance Code.2
code shall not apply to policies of life insurance in

which there is a clause making such policy indisputable

after two (2) years or less, provided premiums are duly

paid; provided further, that no defense based on

misrepresentation made in the application for, or in

obtaining or securing, any contract of insurance upon the

life of any person being or residing in this State shall

be valid or enforceable in any suit brought upon such

contract for the said term of two (2) years have been

paid to, and received by, the company issuing such

contract of its intention to rescind the same on account

of misrepresentation so made, unless it shall be shown on

the trial that such misrepresentation was material to the

risk and intentionally made.

5

Allstate responded that it was not required to attach the

application because the temporary insurance agreement was not a

“contract or policy of insurance” within the meaning of article

21.35. Alternatively, Allstate maintained that its delivery of the

application and temporary insurance agreement to Mr. Marriott’s

beneficiaries after the death claim was filed satisfied the

requirements of article 21.35. Allstate did not file its own

motion for summary judgment. 

The district court, acting sua sponte and without notice to

the parties, granted summary judgment in favor of Allstate. The

district court held that the temporary insurance agreement was not

a “contract or policy of insurance” within the meaning of article

21.35. Instead, the district court reasoned that the temporary

insurance agreement was merely a promise to provide insurance

relating back to the date of application, if and when Mr. Marriott

was determined to be an acceptable risk. Alternatively, the

district court held that Allstate did not breach its statutory

obligation to attach the application to the temporary insurance
6

agreement because Part 2 of the application, which recorded Mr.

Marriott’s medical examination, was not completed until he was

examined on July 26, 1994.

Riner and Marriott moved for reconsideration of the district

court’s denial of their motion for summary judgment and the

district court’s sua sponte entry of summary judgment in favor of

Allstate. The motion was denied, and Riner and Marriott appealed

both the final judgment and the district court’s denial of their

motion for reconsideration. 

DISCUSSION

I.

Allstate Issued an Enforceable Contract for Temporary Insurance

To resolve this appeal, we must first determine whether the

temporary insurance agreement provided to Mr. Marriott was a

“contract of insurance,” as Riner and Marriott claim, or instead a

conditional offer to provide coverage, as Allstate claims and the

district court held. 

Texas law governs our interpretation of the temporary

insurance agreement. We review the district court’s interpretation

of Allstate’s temporary insurance agreement de novo. Gladney v.

Paul Revere Life Ins. Co., 895 F.2d 238, 241 (5th Cir. 1990)

(reviewing the district court’s interpretation of Mississippi

insurance law).

Allstate argues that a receipt and temporary insurance

agreement is a novel creature that can never be a “contract or
7

policy of insurance” as contemplated by article 21.35. See TEX.

INS. CODE art. 21.35 (Vernon Supp. 1998) (requiring that the

application be attached to “every contract or policy of

insurance”). We disagree. Texas law recognizes that a receipt and

temporary insurance agreement can create a binding contract to

provide temporary insurance. See, e.g., United Founders Life Ins.

Co. v. Carey, 363 S.W.2d 236, 240-43 (Tex. 1962) (receipt issued

with application may create enforceable contract for temporary

insurance); Life Ins. Co. of the Southwest v. Nims, 512 S.W.2d 712,

714 (Tex. Civ. App.--San Antonio 1974, no writ) (binder and receipt

issued by insurance company upon payment of initial premium held to

be contract of insurance); South Coast Life Ins. Co. v. Robertson,

483 S.W.2d 388, 391 (Tex. Civ. App.--Tyler 1972, writ ref’d n.r.e.)

(“It has been held by the Supreme Court that conditional receipts

such as the one presently before us provide for temporary life

insurance.”). Whether any particular agreement for temporary

insurance is a “contract of insurance” depends upon the language of

the particular agreement, as interpreted using ordinary rules of

contract construction. Carey, 363 S.W.2d at 241 (“the wording of

the particular receipt in controversy controls” whether a receipt

creates an enforceable contract affording temporary coverage).

When there is doubt about whether the agreement provides temporary

coverage, or merely a conditional promise to consider the

application, the construction that affords coverage will be

adopted. See id. at 242-43; see also Blaylock v. American Guar.

Bank Liab. Ins. Co., 632 S.W.2d 719, 721 (Tex. 1982) (setting forth
 

3 Blaylock, 632 S.W.2d at 721.

8

the general rule for determining whether coverage exists). “The

policy of strict construction against the insurer is especially

strong when the court is dealing with exceptions and words of

limitation.”3 

The temporary insurance agreement issued to Mr. Marriott

provides that $276.73 has been received “as payment for life

insurance,” subject to certain limitations defined in the

agreement. Under a heading entitled “When Temporary Insurance

Starts,” the agreement provides that insurance will start on the

date of the agreement, provided that (1) payment is accepted, (2)

Part 1 of the application (containing the medical questionnaire) is

completed, and (3) Question 25 of the application does not call for

a medical exam. If, as in Mr. Marriott’s case, the application

requires a medical exam, then the agreement specifies that

insurance will start when the contemplated medical exam is

complete. 

Under a heading entitled “When Temporary Insurance Will Stop,”

the agreement provides that temporary insurance will end when the

first of any of the following conditions occurs: (1) Allstate

provides notice that it is no longer considering the application;

(2) Allstate provides notice that further medical exams in addition

to the one requested in Question 25 of the application are

required; (3) Allstate agrees to provide the coverage applied for

in the application; (4) Allstate agrees to provide coverage other

than as applied for in the application; or (5) sixty days passes.
9

With respect to Allstate’s decision to provide the coverage applied

for, the agreement states that the permanent insurance “will then

be provided by the policy as of its start date and not by this

Agreement.” 

Under a heading entitled “Amount of Insurance,” the agreement

provides that the temporary insurance will have the same benefits,

provisions and limitations as the plan applied for, subject to a

limitation of $500,000 “under this Agreement and all other

Agreements issued for pending applications for each person to whom

this receipt applies.”

Under a heading entitled “Conditions Under Which There is No

Coverage,” the agreement provides, in relevant part, “[i]f in the

answers in the application, there is fraud or misrepresentation

material to the home office underwriter’s acceptance of the risk,

then no insurance starts under the Agreement.” 

Finally, at the very bottom of the agreement, and below the

signature line, there is an “agent reminder” that states: “If

there is any ‘Yes’ answer to questions 9, 10, 11, 12 or 13, DO NOT

accept money or give this receipt. Submit a trial application.” 

For the reasons that follow, we conclude that Allstate is

obligated to pay proceeds to Riner and Marriott under the terms of

the temporary insurance agreement. 
 

4 Allstate cites numerous cases for the proposition that

temporary insurance coverage is by its very nature conditioned upon

a showing that the applicant was both insurable and an acceptable

risk when the application was made. We disagree. All of the cases

cited by Allstate involve receipts or temporary agreements with

language expressly requiring insurability, acceptability, or both

as an enforceable condition precedent to coverage. National Life

& Accident Ins. Co. v. Blagg, 438 S.W.2d 905, 907 (Tex. 1969)

(insurance effective on date of deposit or medical examination

provided that the “Proposed Insured . . . was insurable and

acceptable”); Carey, 363 S.W.2d at 238 (“insurance effective on

date of this receipt or date of completion of the medical

examination . . . if in the opinion of the [insurer] . . . the

Proposed Insured is insurable and acceptable for insurance”); Harp

v. Valley Forge, 577 S.W.2d 746, 747 (Tex. Civ. App.--San Antonio

1979, writ dism’d) (“[i]f the company determines to its

satisfaction that the proposed insured was insurable under the

company’s rules and standards, then the insurance shall take

effect”); Nims, 512 S.W.2d at 714 (“the insurance applied for is

effective from the date of application provided . . . that the

applicant be a risk acceptable to the company”); Robertson, 483

S.W.2d at 390 (coverage to take effect on the latest of several

dates “provided the following conditions precedent to coverage are

met: (1) That on such date each person proposed for insurance is

10

II.

Temporary Insurance Started 

When Mr. Marriott Completed His Medical Exam

The district court held that Mr. Marriott did not apply for

“gap” coverage. Instead, the district court found that the

temporary insurance agreement was nothing more than a promise to

provide coverage that related back to the application date if and

when Allstate determined that Mr. Marriott was an acceptable risk.

The district court’s construction is negated by the plain

language of the agreement. The agreement states that insurance

will start when Mr. Marriott’s medical exams are complete. There

is no language in the agreement either implicitly or explicitly

conditioning the start date for temporary insurance upon Mr.

Marriott’s insurability or Allstate’s acceptance of the risk.4 To
insurable and acceptable for the plan and amount of the insurance

applied for”). There is no such language in the subject agreement.

 

5 Thus, Allstate conditioned only the permanent, rather

than the temporary, coverage upon insurability and acceptability.

11

the contrary, the structure of the agreement is such that temporary

insurance does not terminate when Allstate determines not to accept

the risk, unless Allstate provides written notice to the applicant.

Moreover, the temporary insurance does terminate when Allstate

decides to accept the risk by issuing permanent coverage.5

Further, the terms of the agreement provide that the temporary

insurance, which takes effect once the medical exam is completed,

is supplanted by the permanent policy, which takes effect “as of

its start date and not by” the terms of the temporary insurance

agreement. Based upon the plain language of the agreement, we

cannot agree with the district court’s finding that the temporary

insurance agreement was a relation-back policy that did not provide

coverage until Allstate approved the risk. Indeed, the plain and

unambiguous language of the agreement exhibits an intent to provide

temporary or “gap” coverage during the period that Mr. Marriott’s

application was pending.

The agreement provides that “[i]f the answer to Question 25 in

the application is ‘Yes,’ temporary insurance on each person named

in Question 25 will start when all medical exams are completed for

that person.” Allstate keys into the use of the plural form

“exams” to argue that no contract of insurance arose under the

agreement because it could have required additional examinations

after reviewing the initial examination required by Question 25 of
12

the application. Although facially appealing, Allstate’s argument

fails when viewed in light of other contract provisions. 

The provision stating when insurance will start refers to

medical exams contemplated by Question 25 in the application.

Similarly, the agreement provides that insurance will stop “the

date we write to the Owner that a medical exam is required (other

than any exams referred to in Question 25), in which event

insurance will stop with respect only to the person(s) required to

have a medical exam.” Thus, the agreement requires that Allstate

provide written notice that additional medical examinations are

required. Until such notice is provided, the temporary coverage

arising under the agreement continues. For that reason, Allstate’s

argument that it retained an unconditional right to consider asking

for more medical exams, and that no insurance arose until it

signaled its agreement to accept Mr. Marriott’s application, must

fail.

The district court also held that the agreement lacked a

required element of mutuality because Allstate retained the

unilateral right to terminate both the temporary insurance and the

pending application for permanent coverage. We cannot agree. Both

sides offered valuable consideration. Mr. Marriott paid an initial

premium in exchange for Allstate’s promise to provide temporary

coverage when Mr. Marriott completed the medical examination.

While it is true that Allstate retained the right to unilaterally

terminate consideration of Mr. Marriott’s application, the

agreement required that Allstate provide notice that it intended to
13

exercise that option. Texas law does not require that every right

or obligation by one party be met with an identical right or

obligation in the other. Howell v. Murray Mortgage. Co., 890

S.W.2d 78, 87 (Tex. App.--Amarillo 1994, writ denied) (“Generally

there is mutuality in the case of mutual promises by both parties

to the contract which furnish a consideration each for the other,

or where both parties undertake to do something -- even though

every obligation of one party is not met by an equivalent counter

obligation of the other.”). Moreover, Allstate’s right to void

coverage at its option did not render the contract void or

unenforceable when Allstate did not, in fact, exercise that option,

but instead embarked upon performance by considering Mr. Marriott’s

application.

Mr. Marriott applied for binding temporary coverage that was

not conditioned upon Allstate’s acceptance of his application.

Absent some other policy defense, the terms of the policy require

the conclusion that the temporary coverage arose when Mr. Marriott

completed the medical examination on July 26, 1994 as required by

the application.

III. 

Temporary Insurance Was Not Terminated

Moreover, none of the six conditions that could have

terminated the temporary coverage occurred. Allstate did not

provide notice one way or the other regarding its decision on Mr.

Marriott’s application for permanent insurance. Allstate did not

notify Mr. Marriott that it was going to require additional medical
14

examinations. Finally, the sixty-day time period during which the

agreement could remain valid did not expire. Thus, none of the

conditions which are defined in the agreement as capable of

terminating coverage occurred. Allstate’s obligation under the

temporary agreement arose on July 26, 1994 and, absent some other

factor, was in effect at the time of Mr. Marriott’s death. 

IV.

Allstate’s Attempt to Condition Coverage upon Truthful

Application Answers was Ineffective as a Matter of Law

Allstate attempts to avoid the conclusion that it must pay

benefits under the temporary insurance agreement by arguing that no

contract was formed because truthful application answers were a

condition precedent to coverage. Thus, Allstate maintains that Mr.

Marriott’s alleged misrepresentations preceded and avoided the

formation of any contract. 

Reading the agreement leaves no doubt that Allstate intended

to condition coverage upon truthful answers in the separate

application. The agreement specifies that “no insurance will start

if the application contains fraud or misrepresentation that is

material to the underwriter’s acceptance of the risk.” The plain

language of the agreement supports Allstate’s position that no

contract was formed. That position is defeated, however, by Texas

statutory and common law limiting the effect that untruthful

answers in a life insurance application can have on coverage.

Under Texas law, the responses given in a life insurance

application are mere representations, rather than warranties that
 

6 Mayes, 608 S.W.2d at 616 (reversing Court of Appeals’

conclusion that truthful application answers were a condition

precedent to coverage and holding that application answers are mere

representations subject to the elements of a misrepresentation

defense); American Nat’l Ins. Co. v. Paul, 927 S.W.2d 239, 243

(Tex. App.--Austin 1996, writ denied) (“Where the language of the

policy expressly provides that coverage does not take effect unless

the applicant is in good health, the good health provision is

enforceable as a condition precedent. . . . However, where the

language in the policy states that the answers in the application

are true and correct at the time of delivery of the policy, such a

requirement is merely a representation.”); Cartusciello v. Allied

Life Ins. Co., 661 S.W.2d 285, 286-88 (Tex. App.--Houston [1st

Dist.] 1983, no writ) (rejecting insurer’s argument that

misrepresentation in the application operated as a condition

precedent to coverage and subjecting the insurer’s argument to the

ordinary elements of an affirmative defense for misrepresentation).

 

7 In an insurance contract, a warranty is a statement made

by the insured, which is susceptible to no construction other than

that the parties mutually intended that the policy should not be

binding unless such statement be literally true. Lane v.

Travelers Indem. Co., 391 S.W.2d 399, 402 (Tex. 1965). Warranties

in insurance applications are strongly disfavored in the law, and

even fairly obvious attempts to create warranties in the

application process have been rejected by Texas courts. See, e.g.,

Cartusciello, 661 S.W.2d at 287; Allied Bankers Life Ins. Co. v. De

La Cerda, 584 S.W.2d 529, 532 (Tex. App.--Amarillo 1979, writ ref’d

n.r.e.).

15

would be capable of making coverage void or voidable.6 Short of

inserting an unambiguous “good health warranty” demonstrating that

the parties intended the contract to rise or fall on the literal

truth of an insured’s general certification of good health,7 Texas

has not allowed an insurer to change that result by contracting to

make truthful application answers a condition precedent to

coverage. See Mayes, 608 S.W.2d at 616; Cartusciello, 661 S.W.2d

at 286-88; see also 48 TEX. JUR. 3D Insurance Contracts and Coverage

§§ 544-45 (1995). Rather, article 21.16 and article 21.35 of the

Texas Insurance Code prescribe the effect that untruthful answers

in an application can have on coverage. Article 21.16 provides
16

that a provision making coverage void or voidable based upon

misrepresentation in an insurance application is of no effect.

TEX. INS. CODE art. 21.16 (Vernon 1981). An insured’s misrepresentation in an application is, of course, a serious matter. But

the insurer’s remedy is limited to an affirmative policy defense,

which is available only when the representation is material and the

application is attached to the contract or policy of insurance.

Id.; TEX. INS. CODE art. 21.35 (Vernon Supp. 1998).

Allstate does not cite any Texas authority to the contrary.

Instead, Allstate relies primarily upon Gladney v. Paul Revere Life

Ins. Co., 895 S.W.2d 238 (5th Cir. 1990) for the premise that an

insurer may place conditions precedent in a temporary insurance

agreement. Our decision is not in conflict with that modest

premise. We agree that a Texas insurer may impose many different

types of conditions precedent upon both temporary and permanent

coverage. See, e.g., Mayes, 608 S.W.2d at 616 (recognizing the

enforceability of a good health warranty); Blagg, 438 S.W.2d at

907; Carey, 363 S.W.2d at 238; Harp, 577 S.W.2d at 747; Nims, 512

S.W.2d at 714; Robertson, 483 S.W.2d at 390 (all recognizing the

enforceability of a condition precedent requiring insurability,

acceptability, or both). 

More importantly, Gladney is a diversity case applying

Mississippi law. The rule limiting the effect of a provision

conditioning life insurance coverage upon truthful application

answers is a creature of Texas law. Regardless of what Mississippi

is willing to tolerate, Texas law forbids our giving effect to a
17

provision making truthful application answers a condition precedent

to temporary life insurance coverage. Thus, the provision

identified by Allstate is insufficient to defeat contract

formation. 

V.

Allstate is Precluded from Relying upon Representations

in Mr. Marriott’s Application to Avoid Coverage

Allstate may still assert an affirmative defense based upon

Mr. Marriott’s misrepresentations, if any, in the application

process. That defense is qualified, however, by the statutory rule

that statements made in a life insurance application are not

admissible to establish a misrepresentation unless the application

is attached to and made part of the insurance policy. See

Fredonia, 881 S.W.2d 279 (applying TEX. INS. CODE art. 21.35);

National Lloyds Ins. Co. v. McCasland, 566 S.W.2d 565, 566 (Tex.

1978) (failure to comply with article 21.35 “renders evidence of

representations made in applying for insurance inadmissible into

evidence”); Johnson v. Prudential Ins. Co., 519 S.W.2d 111, 114

(Tex. 1975) (“Article 21.35 . . . has been repeatedly applied to

prevent the use of statements of the insured which were not

attached to the policy”).

Allstate maintains that article 21.35 does not apply to

contracts providing temporary insurance. Having already concluded

that the temporary insurance agreement issued in this case was a

“contract of insurance” under Texas law, we have no difficulty

finding that the Texas legislature intended to include contracts
18

affording temporary coverage within the realm of article 21.35. 

Nothing in the plain language of article 21.35 excludes an

agreement to provide temporary coverage from the scope of that

article. To the contrary, the article provides that it applies to

“every contract or policy of life insurance.” We are persuaded,

both by the Texas legislature’s direct command to include “every”

contract, and the legislature’s attempt to distinguish between a

“contract” and a “policy,” that there is no principled basis for

excluding contracts providing insurance for a limited period of

time from the scope of article 21.35. For that reason, Allstate

cannot avoid liability under the contract by claiming that the

temporary insurance agreement was outside the scope of article

21.35.

We are also persuaded by the fact that the purpose of the

statute is well served in this context. The purpose of the

requirement embodied in article 21.35 is to provide a life

insurance applicant with the opportunity to review and reconsider

the answers provided in the application during his or her lifetime.

Mayes, 608 S.W.2d at 283. The record establishes that Mr. Marriott

was severely compromised by the painkillers in his system. The

Allstate agent was informed of Mr. Marriott’s condition. Indeed,

the record conclusively establishes that the Allstate agent filled

out Mr. Marriott’s premium check and strongly suggests that the

agent also completed the lengthy and fact-intensive application

form. Surely, leaving Mr. Marriott a copy of the completed

application responses would have afforded him an opportunity to
19

review his responses when he was unaffected by disabling pain

medication. If that opportunity were provided, it is possible that

Mr. Marriott would have corrected any misstatements concerning his

medical condition. 

Allstate warns that including temporary insurance agreements

within that group of contracts subject to article 21.35 will render

insurers unable to protect themselves from uninsurable risks. We

disagree. First of all, Allstate could have made insurability or

acceptability a condition precedent to coverage under the temporary

insurance agreement. It did not do so. Moreover, Allstate could

have protected itself from the effect of any misrepresentations by

simply attaching a copy of the Mr. Marriott’s application to the

temporary insurance agreement. Once again, Allstate did not do so.

Our holding is not that Allstate cannot protect itself from

uninsurable risks, but that it failed to take those precautions in

this case.

Allstate contends that it could not have attached the

application because Part 2 (recording the medical examination) was

not completed until July 26, almost one month after the temporary

insurance agreement issued. We disagree. Mr. Marriott’s answers

to the key medical questions could have been left with Mr. Marriott

on the evening he completed the application that was submitted to

Allstate. Creating the application form in multiple parts to

facilitate this procedure does not seem unduly burdensome.

Allstate’s argument is also self-defeating. Allstate could have

provided Mr. Marriott with a copy of the application and temporary
20

insurance agreement at the time of or immediately after the medical

examination was completed. Allstate chose not to pursue this

course of action either. Instead, the record supports the

conclusion that Allstate did not provide either Mr. Marriott or his

beneficiaries with a copy of Mr. Marriott’s application until more

than four months after his initial application, more than three

months after his medical examination and subsequent death, and

almost two months after the death claim was filed with Allstate.

Even then, Allstate apparently ignored several requests for the

document before tendering it to Mr. Marriott’s beneficiaries.

Allstate’s failure to attach the application, or to provide

copies of the application together with the temporary insurance

agreement within a reasonable time frame, means that Allstate

cannot rely upon Mr. Marriott’s representations in the application

to avoid coverage. For that reason, whether Mr. Marriott

misrepresented his medical history, whether Mr. Marriott intended

to deceive Allstate, whether Mr. Marriott’s misrepresentations

would have been material to the risk assumed by Allstate, and other

similar issues argued by the parties are immaterial. Stated

simply, Mr. Marriott’s misrepresentations, if any, in the

application are inadmissible to assist Allstate’s efforts to defeat

coverage. 

A grave danger in insurance cases, particularly when we are

exercising our diversity jurisdiction, is that a particular holding

will be read too broadly. Both sides of this dispute have cited

cases to this Court for general propositions that fall apart once
21

the specific language of the agreement in the cited case is

compared with the specific language at issue in this case. Let

there be no confusion. We are not purporting to define the precise

language required to create an insurance contract. Neither do we

establish any new or general rule that temporary insurance

agreements, conditional receipts or binders do or do not create

enforceable insurance contracts under Texas law. Rather, our

conclusion that the temporary insurance agreement issued to Mr.

Marriott was a “contract of insurance” subject to the requirements

of article 21.35 is necessarily dependent upon the facts of this

case. We do nothing more than interpret the agreement between

these parties. 

CONCLUSION

The temporary insurance agreement furnished to Mr. Marriott at

the time he applied for life insurance with Allstate was a binding

contract for temporary insurance coverage pending approval of his

application with Allstate. Coverage began when Mr. Marriott

completed the medical examination required by the application and

was not terminated by the occurrence of any condition specified in

the contract. Allstate’s attempt to make truthful application

answers a condition precedent to coverage is inconsistent with

Texas law defining an insurer’s qualified right to avoid coverage

on the basis of an applicant’s untruthful representations in a life

insurance application. 

Article 21.35 precludes an insurer from relying upon
 

8 For example, Riner and Marriott’s claim under the Texas

Deceptive Trade Practices Act alleges that Allstate “knowingly”

engaged in a deceptive act or practice. Riner and Marriott’s claim

under the Texas Insurance Code alleges that Allstate made

misrepresentations of its own and unreasonably refused to pay

benefits. Riner and Marriott’s claim for breach of the duty of

good faith and fair dealing requires a showing that Allstate

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representations in a life insurance application unless a copy of

the application is attached to and made part of the contract or

policy of insurance. Allstate failed to leave Mr. Marriott with a

copy of his application, either at the time of application or at

the time that coverage became effective. Allstate’s failure to

comply with the relevant statutory provision renders any evidence

that Mr. Marriott made misrepresentations in his application

inadmissible and precludes Allstate’s misrepresentation defense as

a matter of law. Having advanced no other defense to liability,

Allstate is obligated to provide benefits to Mr. Marriott’s

beneficiaries.

For the foregoing reasons, the district court’s entry of

summary judgment in favor of Allstate was improper, and Riner and

Marriott are entitled to summary judgment on the issue of coverage.

Although Riner and Marriott moved for summary judgment on the issue

of Allstate’s “liability,” our holding cannot sweep so broadly.

Riner and Marriott’s claims for violation of the Texas Insurance

Code and the Texas Deceptive Trade Practices Act and for violation

of the common-law duty of good faith and fair dealing all involve

some conduct on the part of the insurer that is in addition to and

independent of the insurer’s obligation to pay proceeds under the

contract of insurance.8 With respect to these claims, the summary
unreasonably failed to investigate or settle Riner and Marriott’s

claim. 

23

judgment record is insufficiently developed to justify a rendition

of summary judgment in favor of Riner and Marriott on the issue of

“liability.” We must therefore remand the case for further

development of the issues material to a determination of Allstate’s

liability on these claims. 

Riner and Marriott also pleaded that Allstate’s failure to pay

benefits under the temporary insurance agreement was a breach of

contract. With respect to that claim, our conclusion that Allstate

is obligated to pay Riner and Marriott at least the $100,000

proceeds of the temporary insurance agreement is sufficient to

support our rendition of judgment in favor of Riner and Marriott.

Accordingly, the district court’s grant of summary judgment in

favor of Allstate is REVERSED. 

Judgment is RENDERED in favor of appellants Riner and Marriott

on the issue of Allstate’s obligation to provide coverage and

benefits under the temporary insurance agreement and on the issue

of Allstate’s liability to Riner and Marriott for breach of

contract.

The cause is REMANDED for further development of additional

liability issues relating to Riner and Marriott’s remaining claims

for breach of the duty of good faith and fair dealing and for

violations of the temporary insurance agreement and the Texas

Deceptive Trade Practices Act, and for a determination of damages

in addition to the $100,000 face amount of the temporary insurance
24

agreement.