COURT OF APPEALS

SECOND DISTRICT OF TEXAS

FORT WORTH

NO. 02-12-00516-CV

1 LINCOLN FINANCIAL COMPANY APPELLANT

V.

AMERICAN FAMILY LIFE

ASSURANCE COMPANY OF

COLUMBUS

APPELLEE

----------

FROM COUNTY COURT AT LAW NO. 2 OF TARRANT COUNTY

TRIAL COURT NO. 2011-000868-2

----------

MEMORANDUM OPINION1

----------

I. INTRODUCTION

In ten issues, Appellant 1 Lincoln Financial Company appeals from an 

adverse summary judgment granted in favor of Appellee American Family Life 

Assurance Company of Columbus (Aflac). We will affirm.

 

1See Tex. R. App. P. 47.4.
2

II. BACKGROUND

Adriana Harrison obtained a life insurance policy from Aflac in October 

2003. In addition to coverage on Harrison’s life, the policy contained a rider that 

provided life insurance coverage on her dependent children in the amount of 

$15,000. Harrison was the beneficiary under the rider, and for benefits to be 

payable thereunder, Aflac had to receive proof that the insured child had died 

while the rider was in effect. The policy was expressly assignable.

Harrison’s daughter died on June 7, 2010, during the term of the policy. 

To pay for the funeral, on June 16, 2010, Harrison assigned the benefits under 

the rider ($15,000) to Harrison’s Funeral Home, which she owns and operates, 

and the funeral home reassigned the benefits to 1 Lincoln. Veronica Herrera, a

1 Lincoln employee, spoke with Aflac representatives to verify the details of the 

policy, and on June 18, 2010, 1 Lincoln wired $14,2502to Harrison’s Funeral 

Home and submitted the assignment and other documents to Aflac. Aflac did not

immediately process the claim, however, because 1 Lincoln did not submit a 

certified death certificate.

On July 30, 2010, Harrison again assigned her benefits under the child 

rider to Funeral Funding Center, Inc. (FFC).3 Soon thereafter, in early August 

 

2

1 Lincoln imposed a $750 service charge on Harrison’s Funeral Home for 

the loan.

3

In exchange for the assignment, FFC either paid Harrison money or paid 

for the bill that she owed to her funeral home.
3

2010, FFC submitted the assignment, an Aflac claim form, and a certified death 

certificate for Harrison’s daughter to Aflac, and Aflac paid the death benefits

under the rider to FFC. 1 Lincoln later learned that Aflac had paid the benefits to 

someone else, and it questioned Harrison about the other assignment. Harrison 

gave 1 Lincoln a number of excuses and ultimately never reimbursed it for the 

money that it had loaned her funeral home.

1 Lincoln sued Aflac for negligence, breach of contract, promissory 

estoppel, and negligent misrepresentation and sought damages in the amount of 

$15,000. 1 Lincoln claimed that Aflac was at fault for not paying 1 Lincoln’s

earlier-in-time assignment and that Aflac had assured that it would remit the 

benefits under the rider to 1 Lincoln. Aflac moved for summary judgment on 

each of 1 Lincoln’s claims, arguing that it was entitled to summary judgment not 

only on the merits of each claim, but also because 1 Lincoln lacked the capacity 

to pursue the suit because its corporate privileges had been forfeited.4 1 Lincoln 

responded in part that it had capacity to pursue its suit because it had changed 

its name to Lincoln Factoring, LLC. Aflac replied that, to the extent that it made 

any difference, 1 Lincoln had not merely changed its name; instead, Lincoln 

Factoring was a completely different company, and summary judgment was 

 

4

The parties used the term “standing” at trial, but Aflac’s argument 

implicated 1 Lincoln’s capacity to sue. See John C. Flood of DC, Inc. v. 

SuperMedia, L.L.C., 408 S.W.3d 645, 650 (Tex. App.—Dallas 2013, pet. denied).
4

proper because 1 Lincoln lacked capacity to prosecute its claims. The trial court 

granted Aflac’s motion without stating its reasons, and this appeal followed.

III. STANDARD OF REVIEW

In a summary judgment case, the issue on appeal is whether the movant 

met the summary judgment burden by establishing that no genuine issue of 

material fact exists and that the movant is entitled to judgment as a matter of law. 

Tex. R. Civ. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 

289 S.W.3d 844, 848 (Tex. 2009). A defendant who conclusively negates at 

least one essential element of a cause of action is entitled to summary judgment 

on that claim. Frost Nat’l Bank v. Fernandez, 315 S.W.3d 494, 508 (Tex. 2010). 

Once the defendant produces sufficient evidence to establish the right to 

summary judgment, the burden shifts to the plaintiff to come forward with 

competent controverting evidence that raises a fact issue. Van v. Pena, 990 

S.W.2d 751, 753 (Tex. 1999).

We take as true all evidence favorable to the nonmovant, and we indulge 

every reasonable inference and resolve any doubts in the nonmovant’s favor. 

20801, Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008); Provident Life & 

Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). We consider the 

evidence presented in the light most favorable to the nonmovant, crediting 

evidence favorable to the nonmovant if reasonable jurors could and disregarding 

evidence contrary to the nonmovant unless reasonable jurors could not. Mann 

Frankfort, 289 S.W.3d at 848. When a trial court’s order granting summary 
5

judgment does not specify the ground or grounds relied on for its ruling, summary 

judgment will be affirmed on appeal if any of the theories presented to the trial 

court and preserved for appellate review are meritorious. Star-Telegram, Inc. v. 

Doe, 915 S.W.2d 471, 473 (Tex. 1995).

IV. CAPACITY

Insofar as the trial court granted Aflac summary judgment on the ground 

that 1 Lincoln lacked capacity to sue, 1 Lincoln argues in its third, fourth, fifth, 

and sixth issues that the trial court erred because (1) Aflac waived its right to 

challenge 1 Lincoln’s capacity to prosecute this suit by not raising that ground in 

a verified pleading and (2) 1 Lincoln and Lincoln Factoring should be treated as 

the same entity.

Aflac responds that instead of objecting at the summary judgment stage to 

its failure to challenge 1 Lincoln’s capacity in a verified pleading, 1 Lincoln tried 

the issue by consent. Because 1 Lincoln joined the issue on the merits, Aflac 

argues that 1 Lincoln cannot complain about the pleading deficiency for the first 

time on appeal. On the merits, Aflac argues that 1 Lincoln lacked the capacity to 

prosecute its claims as a matter of law because it forfeited its corporate privileges 

for failing to pay franchise taxes, which is dispositive of the entire appeal.

1 Lincoln’s waiver argument is misplaced. When capacity is contested, 

rule of civil procedure 93 requires that a verified plea be filed unless the truth of 

the matter appears of record. Sixth RMA Partners, L.P. v. Sibley, 111 S.W.3d 

46, 56 (Tex. 2003). A party who fails to raise the issue of capacity in the trial 
6

court may not raise the issue for the first time on appeal. See Pledger v. 

Schoellkopf, 762 S.W.2d 145, 145‒46 (Tex. 1988); Dakil v. Lege, 408 S.W.3d 9, 

11‒12 (Tex. App.—El Paso 2012, no pet.).

This is not a case in which Aflac failed to challenge 1 Lincoln’s capacity in 

the trial court and is now attempting to raise it for the first time on appeal. That 

argument would no doubt be waived. See Pledger, 762 S.W.2d at 146. Instead, 

Aflac raised the issue of 1 Lincoln’s capacity in its motion for summary judgment, 

albeit in an unverified pleading. The appropriate inquiry therefore is not whether 

Aflac “waived” its right to challenge 1 Lincoln’s capacity for filing an unverified 

pleading, as 1 Lincoln suggests, but how 1 Lincoln responded to Aflac’s deficient 

but timely pleading.

Issues subject to pleading requirements, like verified denials and 

affirmative defenses, may be tried by consent, including in summary judgment 

proceedings. See Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 495 (Tex. 

1991); Basic Capital Mgmt., Inc. v. Dynex Commercial, Inc., 348 S.W.3d 894, 

899 (Tex. 2011). It is well established that a party who fails to raise the lack of a 

proper pleading and allows an issue to be tried by consent cannot later raise the 

pleading deficiency for the first time on appeal. Roark, 813 S.W.2d at 495.

Instead of objecting to Aflac’s failure to file a verified pleading challenging 

capacity, 1 Lincoln litigated the issue, arguing that it had capacity to sue Aflac 

because it had changed its name to Lincoln Factoring. 1 Lincoln thus tried the 

capacity issue by consent, and it cannot argue for the first time on appeal that the 
7

summary judgment was improperly granted on account of Aflac’s failure to file a 

verified pleading according to rule 93. See id.; see also Tex. R. Civ. P. 90 

(“Every defect . . . in a pleading . . . which is not . . . brought to the attention of 

the judge in the trial court . . . shall be deemed to have been waived by the party 

seeking reversal on such account . . . .”). We overrule 1 Lincoln’s third and fourth 

issues.

Aflac argues that that 1 Lincoln lacked the capacity to prosecute all of its 

claims as a matter of law because it forfeited its corporate privileges for failing to 

pay franchise taxes. Aflac directs us to a provision of the tax code that states 

that when the privileges of a corporation are forfeited, the corporation shall be 

“denied the right to sue or defend in a court of this state.” Tex. Tax Code Ann. 

§ 171.252(1) (West 2008). But as we recently explained, federal and state courts 

have long interpreted section 171.252 to preclude entities only from filing suit 

after forfeiting their right to do business, not to prohibit them from continuing an 

action filed before their privileges had been forfeited. See Waterway Ranch, LLC 

v. City of Annetta, 411 S.W.3d 667, 673 (Tex. App.—Fort Worth 2013, no pet.) 

(citing Tex. Clinical Labs, Inc. v. Leavitt, 535 F.3d 397, 403‒04 (5th Cir. 2008); 

Mossler v. Nouri, No. 03-08-00476-CV, 2010 WL 2133940, at *5‒6 (Tex. App.—

Austin May 27, 2010, pet. denied)).

1 Lincoln filed its original petition on February 7, 2011. A document

contained in the summary judgment record states that 1 Lincoln’s corporate 

charter was forfeited on February 10, 2012, about one year later. Within that 
8

document is a statement that “[t]he Comptroller of Public Accounts has 

determined that the taxable entity [1 Lincoln] has not revived its forfeited 

privileges within 120 days after the date that the privileges were forfeited.”

[Emphasis added.] This is the only summary judgment evidence that is relevant 

to when 1 Lincoln forfeited its corporate privileges, and it does not establish when 

the privileges were forfeited. The statement could mean that as of February 10, 

2012, it had been exactly 120 days since 1 Lincoln forfeited its corporate 

privileges, which would put that date at October 11, 2011, many months after 

1 Lincoln filed suit. Or it could mean that 1 Lincoln had forfeited its corporate 

privileges at some other prior point in time and that it had been 120 days since 

then. Under that interpretation, no dates are certain. The statement is therefore

insufficient to demonstrate that 1 Lincoln had forfeited its corporate privileges 

before suing Aflac. Because there is no summary judgment evidence that 

1 Lincoln had forfeited its corporate privileges before February 7, 2011, the trial 

court could not have granted Aflac summary judgment on the ground that 

1 Lincoln lacked capacity to prosecute this suit. See Waterway Ranch, 411

S.W.3d at 673. We overrule 1 Lincoln’s fifth and sixth issues as moot.

V. NEGLIGENCE

1 Lincoln argues in its first issue that the trial court erred by granting Aflac

summary judgment on its negligence claim because Harrison assigned her 

benefits under the policy to 1 Lincoln before she assigned the same benefits to 

FFC. According to 1 Lincoln, long-standing Texas law requires that its first-in-
9

time assignment be paid before FFC’s later-in-time assignment. In its tenth 

issue, 1 Lincoln argues that Aflac was negligent by allowing Harrison to defeat its 

rights as an irrevocable assignee.

The supreme court has clarified that “a party states a tort claim when the 

duty allegedly breached is independent of the contractual undertaking and the 

harm suffered is not merely the economic loss of a contractual benefit.” 

Chapman Custom Homes, Inc. v. Dallas Plumbing Co., No. 13-0776, 2014 WL 

4116839, at *2 (Tex. Aug. 22, 2014). In arguing that Aflac was negligent for 

paying the benefits to FFC, 1 Lincoln does not complain that Aflac violated any 

duty outside of its contractual responsibility under the policy or that it suffered 

any losses aside from the benefits under the rider. Because 1 Lincoln does not 

contend that Aflac breached any duty independent of its contractual obligation,

and because the loss of which 1 Lincoln complains is limited to its expectancy 

under the rider, 1 Lincoln’s claim, if any, lies in contract, not tort. See id. We 

hold that the trial court did not err by granting Aflac summary judgment on 

1 Lincoln’s negligence claim, and we overrule its first and tenth issues.

VI. BREACH OF CONTRACT

1 Lincoln argues in its second and ninth issues that the trial court erred by 

granting summary judgment on its breach of contract claim. Aflac argued in its 

motion for summary judgment that it had no enforceable contract with 1 Lincoln, 

but 1 Lincoln’s claim is predicated upon the rights that it acquired as an assignee, 

not as a party that directly contracted with Aflac. An assignment is simply a 
10

transfer of some right or interest. Shipley v. Unifund CCR Partners, 331 S.W.3d 

27, 28 (Tex. App.—Waco 2010, no pet.) (op. on reh’g). When an assignee holds 

a contractually valid assignment, that assignee steps into the shoes of the 

assignor and may assert those rights that the assignor could assert. See Gulf 

Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 420 (Tex. 2000). Thus, although 

Aflac and Harrison originally contracted for life insurance benefits, when Harrison 

assigned her rights under the child rider to 1 Lincoln, 1 Lincoln stepped into 

Harrison’s shoes as the beneficiary under the rider and acquired her rights 

thereunder.

Aflac argues that “[t]o the extent Lincoln contends it became, essentially, a 

party to the insurance policy by virtue of the assignment, the Policy includes a 

provision whereby Aflac specifically disclaim[ed] liability for the validity or effect of 

any assignment.” Indeed, the insurance policy states, “We [Aflac] will not be 

responsible for the validity or effect of any assignment.” Of course, this language 

does not disclaim liability under the policy in the event of an assignment, but it 

does disclaim any contractual liability for a dispute between an assignor and an 

assignee over an assignment. As Aflac points out, it “confirmed by contract what 

already should be the case: with regard to any assignment agreement between 

Harrison and some third party, any disputes over the assignment or benefits 

thereunder should be resolved between Harrison and the third party.” This is 

precisely the situation that we have in this case. Aflac honored an assignment—

as it was contractually bound to do—when it received sufficient proof from FFC
11

that a covered child had died while the rider was in effect. The source of 

1 Lincoln’s alleged injury, however, is not that Aflac complied with its obligation 

under the policy as to FFC instead of 1 Lincoln, but that Harrison assigned the 

same benefits to two different entities, which ultimately left 1 Lincoln with a 

worthless assignment. Because Aflac specifically disclaimed any liability for such 

a dispute—one between Harrison and a third party—summary judgment was 

proper on 1 Lincoln’s contract claim.5 We overrule 1 Lincoln’s second and ninth 

issues.

VII. PROMISSORY ESTOPPEL AND NEGLIGENT MISREPRESENTATION

In its seventh and eighth issues, 1 Lincoln argues that the trial court erred 

by granting summary judgment on its promissory estoppel and negligent 

misrepresentation claims.

Although primarily a defensive issue, promissory estoppel is also a cause 

of action available to a promisee who has acted to his detriment in reasonable 

reliance on an otherwise unenforceable promise. Wheeler v. White, 398 S.W.2d 

93, 96 (Tex. 1965). As for negligent misrepresentation, one element is that the 

 

5

1 Lincoln argues that the provision disclaiming liability under 

circumstances like this does not apply to the beneficiary’s right to assign after the 

insured dies, which is what happened here. Not only did 1 Lincoln not raise this 

argument in the trial court, the contention is not supported by the plain language 

of the unambiguous policy. See City of Houston v. Clear Creek Basin Auth., 589 

S.W.2d 671, 678 (Tex. 1979) (reasoning that nonmovant may not raise on appeal 

new grounds for reversing summary judgment); Glover v. Nat’l Ins. Underwriters, 

545 S.W.2d 755, 761 (Tex. 1977) (reasoning that plain language of insurance 

policy will be given effect when the parties’ intent is discernable from the 

language).
12

defendant supplied false information for the guidance of another. McCamish, 

Martin, Brown & Loeffler v. F.E. Appling Interests, 991 S.W.2d 787, 791 (Tex. 

1999). Aflac argues that summary judgment was proper because there is no 

evidence that Aflac made a promise or supplied false information to 1 Lincoln.

Herrera, the 1 Lincoln employee who spoke with Aflac representatives to 

verify the details of the insurance policy, testified at her deposition that she had 

asked Aflac (1) whether the policy would cover the $15,000 assignment, 

(2) whether the policy had any outstanding loans, (3) whether there were any 

unpaid premiums, (4) whether the policy was contestable, (5) whether the policy 

had to be reinstated, and (6) about information regarding the beneficiary. 

Herrera confirmed that she did not ask whether there had been any other 

verification calls or assignments submitted and, more importantly, that no Aflac 

representative had told her that Aflac would honor the assignment and pay the 

benefits to 1 Lincoln.

In a letter dated June 18, 2010, 1 Lincoln notified Aflac that it was relying 

upon Aflac’s representation that it “would recognize the assignment to 

[1 Lincoln].” However, Herrera, who signed the letter, acknowledged that Aflac 

did not state that it would accept 1 Lincoln’s assignment and that the statement in 

the letter was not reflected in her notes from her conversation with Aflac 

representatives. Herrera verified that Aflac’s representatives had not said 

anything that was not reflected in her notes. The form letter thus did not 

accurately represent the parties’ communications, according to 1 Lincoln’s own 
13

employee, and it cannot be used to artificially manufacture a fact issue. See

Mann Frankfort, 289 S.W.3d at 848 (providing that we credit evidence favorable 

to the nonmovant if reasonable jurors could do so).

1 Lincoln argues that Aflac committed a violation of insurance code section 

541.061, but it did not plead or raise this issue in the trial court, and it may not 

raise it for the first time on appeal. See City of Houston, 589 S.W.2d at 678.

We hold that the trial court properly granted summary judgment on 

1 Lincoln’s promissory estoppel and negligent misrepresentation claims because 

Aflac conclusively negated an essential element of each claim: that Aflac made 

a promise and supplied false information to 1 Lincoln. See F.E. Appling 

Interests, 991 S.W.2d at 791; Wheeler, 398 S.W.2d at 96. We overrule 

1 Lincoln’s seventh and eighth issues.

VIII. CONCLUSION

Having overruled all of 1 Lincoln’s issues, we affirm the trial court’s 

judgment.

/s/ Bill Meier

BILL MEIER

JUSTICE

PANEL: MCCOY, MEIER, and GABRIEL, JJ.

DELIVERED: October 2, 2014