Affirmed and Opinion filed May 17, 2012.

In The

Fourteenth Court of Appeals

NOS. 14-10-00821-CV

14-10-00856-CV 

14-10-01145-CV

MILTON GARCIA, Appellant

V.

BANK OF AMERICA CORPORATION, BAC HOME LOAN SERVICING, LP,

and NEWPORT INSURANCE COMPANY, Appellees

On Appeal from the 11th District Court

Harris County, Texas

Trial Court Cause No. 2009-59268

O P I N I O N

In this consolidated appeal, Milton Garcia appeals from the trial court’s grant of 

summary judgments favoring appellees, Bank of America Corporation (―BOA‖), BAC 

Home Loan Servicing, LP (―BAC‖), and Newport Insurance Co. (―Newport‖). BOA 

owned the mortgage on Garcia’s home, BAC is a mortgage servicing company that 

serviced Garcia’s mortgage, and Newport issued a lender-placed insurance policy to 
2

BOA on Garcia’s property. Seeking compensation for damage his property sustained in 

Hurricane Ike, Garcia alleged that he was a third-party beneficiary of the insurance policy 

Newport issued to BOA, and raised a variety of claims against BOA and BAC related to 

the procurement of insurance and management of an escrow account. We affirm.

I. Background

Garcia purchased a home in Harris County in 1998, with the aid of a home equity 

loan. Pursuant to the mortgage agreement, Garcia was required to maintain insurance on 

the property sufficient to protect the mortgagee’s interest in the property. If Garcia failed 

to provide such insurance, the mortgagee was authorized to purchase insurance for the 

property but was not required to purchase insurance which protected Garcia’s interest in 

the property, i.e., any value in the property beyond the amount owed on the loan. Under 

the escrow agreement contained within the loan documents, Garcia was to pay an amount 

for insurance premiums into an escrow account, and the mortgagee was to use those 

funds to pay for either the insurance provided by Garcia, or in the event he failed to 

provide such insurance, for insurance placed by the mortgagee.

In 2004, Countrywide Home Loans acquired Garcia’s mortgage. At the time, 

Garcia had a homeowner’s insurance policy with National Lloyds Insurance. When 

Garcia failed to renew this policy, Countrywide purchased a ―lender-placed‖ policy from 

Newport Insurance.1 This new policy listed Countrywide as the only insured party. 

According to appellees, the new policy was procured because Garcia failed to maintain 

coverage on the property as required under the mortgage agreement. According to 

Garcia, appellees should have either used escrow funds to pay premiums to renew the 

insurance with National Lloyds or obtained other insurance that covered his interests as 

well as those of Countrywide. Garcia also alleges that he is an intended third-party 

beneficiary of the Newport policy.

 

1 Newport is sometimes referred to both in the briefs and in documents filed below as ―Balboa 

Insurance.‖ It is not completely clear why different names are used, but at one point in his pleadings, Garcia 

suggested that Balboa owns Newport. No issues turn on the distinction. Within this opinion, we will use the 

name ―Newport‖ to encompass assertions made regarding both Newport and Balboa.
3

When Hurricane Ike hit Texas in September 2008, Garcia’s house sustained 

significant damage. Garcia subsequently sued Newport, alleging that while it paid him 

some money to repair the damage to his house, it failed to adequately compensate him as 

required under the insurance policy.2 Garcia later amended his pleadings to add 

Countrywide, BOA (which had purchased Countrywide), and BAC (the mortgage 

servicing arm of BOA) as defendants. Countrywide later was dismissed from the lawsuit. 

Against BOA and BAC, which Garcia refers to as the ―Bank Defendants,‖ he alleged that 

they improperly switched the insurance paid with the escrow funds to the lender-placed

policy with Newport. The Newport policy was designed to solely or primarily protect the 

interests of the lender rather than the homeowner, as would have been the case under the 

National Lloyds policy.3

After the case was removed to federal court and then returned to state court, the 

state trial court granted summary judgment favoring all three defendants without 

specifying the grounds therefor. In its motion, Newport alleged that Garcia could not sue 

under the insurance policy because he was neither a named insured nor a third-party 

beneficiary. In its motion, BOA contended that it had no role in the ownership or 

servicing of Garcia’s mortgage. Lastly, in its motion, BAC attempted to conclusively 

disprove at least one element of each of Garcia’s claims against it.

II. Standards of Review

In proceedings on a traditional motion for summary judgment, the movant has the 

burden to show that there is no genuine issue of material fact and he or she is entitled to 

judgment as a matter of law. See M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 

S.W.3d 22, 23 (Tex. 2000) (per curiam). If the movant satisfies this requirement, the 

 

2 Garcia’s causes of action against Newport included: breach of contract, violations of the Insurance 

Code and Deceptive Trade Practices Act (DTPA), and breach of the duty of good faith and fair dealing.

3 The specific claims against BOA and BAC included: breach of the duty of good faith and fair 

dealing, breach of fiduciary duty, negligence, breach of contract, DTPA violations, Insurance Code violations, 

common law and statutory fraud, negligent misrepresentation, and conspiracy to commit fraud and breach of 

fiduciary duty.
4

burden shifts to the non-movant to raise a fact issue sufficient to defeat summary 

judgment. Walker v. Harris, 924 S.W.2d 375, 377 (Tex. 1996).

In determining whether a fact issue exists precluding summary judgment, evidence 

favorable to the non-movant is taken as true, and all reasonable inferences are carried in 

the non-movant’s favor. See City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex. 2005). 

We review a trial court’s grant of summary judgment de novo. Ferguson v. Bldg.

Materials Corp. of Am., 295 S.W.3d 642, 644 (Tex. 2009). We must affirm a summary 

judgment if any ground in the motion that would support the judgment is meritorious. 

Progressive Cty. Mut. Ins. Co. v. Kelley, 284 S.W.3d 805, 806 (Tex. 2009).

Resolution of the issues in this appeal involve interpretation of contract and 

insurance policy language. The interpretation or construction of an unambiguous 

contract is a matter of law to be determined by the court. Am. Mfrs. Mut. Ins. Co. v. 

Schaefer, 124 S.W.3d 154, 157 (Tex. 2003). When interpreting a contract, our primary 

concern is to ascertain and give effect to the intent of the parties as expressed in the 

agreement. Seagull Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342, 345 (Tex.

2006). To discern this intent, we examine and consider the entire writing in an effort to 

harmonize and give effect to all of its provisions so that none will be rendered 

meaningless. Id. No single provision taken alone will be given controlling effect; rather, 

all the provisions must be considered with reference to the whole instrument. Id. 

Interpretation of an insurance policy is governed by the same rules of construction 

applicable to other contracts. Nat’l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 

517, 520 (Tex. 1995).

III. Newport’s Motion

As stated, Newport’s motion was based solely on its assertion that Garcia was 

neither a named-insured nor an intended third-party beneficiary of the lender-placed 

insurance policy. In his response below and on appeal, Garcia has focused on the thirdparty beneficiary argument.
5

A. Third-Party Beneficiary Law

A third party may recover on a contract made between other parties only if the 

parties intended to secure some benefit to that third party, and only if the contracting 

parties entered into the contract directly for the third party’s benefit. Stine v. Stewart, 80 

S.W.3d 586, 589 (Tex. 2002). The mere fact that a person might receive an incidental 

benefit from a contract does not give that person a right of action to enforce the contract. 

Id. In determining whether a third party can enforce a contract, the intention of the 

contracting parties is controlling. S. Tex. Water Auth. v. Lomas, 223 S.W.3d 304, 306 

(Tex. 2007). The intention to confer a direct benefit to a third party must be clearly and 

fully spelled out, or enforcement by the third party must be denied. Id. Courts may not 

create third-party beneficiary contracts by implication. Stine, 80 S.W.3d at 589. There is 

a presumption in Texas against third-party beneficiary agreements. Tawes v. Barnes, 340 

S.W.3d 419, 425 (Tex. 2011).

Texas recognizes two forms of third-party beneficiary: creditor and donee. Garcia 

contends only that he was a creditor beneficiary. A party is a creditor beneficiary if no 

intent to make a gift appears from the contract (which would make the party a donee 

beneficiary), but performance will satisfy an actual or asserted duty of the promisee to the 

beneficiary. Lomas, 223 S.W.3d at 306; Esquivel v. Murray Guard, Inc., 992 S.W.2d 

536, 543 (Tex. App.—Houston [14th Dist.] 1999, pet. denied).4 This duty may be an 

indebtedness, contractual obligation, or other legally enforceable commitment to the third 

party. Esquivel, 992 S.W.2d at 544. The promisee must intend that the beneficiary will 

have the right to enforce the contract. Id. 

B. Arguments and Analysis

Newport relied on the insurance policy itself, as well as other documents, to 

demonstrate that the parties to the policy, Newport and Countrywide, did not intend to 

 

4 Garcia does not argue in the alternative that he was a donee beneficiary. Such would require a clear 

intention to provide a gift to the beneficiary and would be rare in a business relationship. Esquivel, 992 S.W.2d 

at 543.
6

provide any direct benefit to Garcia but merely contracted to protect Countrywide’s 

secured interest in the property. Garcia is not listed as a primary or additional insured in 

the policy. Although he is listed in the policy as the owner of the property, mere

identification by itself does not suggest that he was an intended third-party beneficiary. 

See Union Pacific R.R. Co. v. Novus Intern., Inc., 113 S.W.3d 418, 422 n.1 (Tex. App.—

Houston [1st Dist.] 2003, pet. denied) (explaining that identification of a party in a 

contract is not determinative of third-party beneficiary status).

Garcia bases his contention that he was a creditor beneficiary primarily on 

language in the policy (found in endorsement 001), indicating that in the event the

covered amount of a covered loss exceeded the value of Countrywide’s interest in the 

property, payment for the loss would be made to Countrywide and Garcia.

5

 Garcia 

argues that this language clearly indicates an intention to secure a benefit for him and 

thus he could sue to enforce the policy provisions. The very same one-page endorsement, 

however, contains language at the bottom explaining that ―Notwithstanding the 

foregoing, nothing contained in this endorsement shall make a Mortgagor in legal 

possession of the Insured Residential Property or Commercial Property an Insured or an 

additional insured under this Policy.‖ This language indicates that contrary to Garcia’s 

suggestion, there was no intent in endorsement 001 to provide a benefit to Garcia that he 

would have the right to enforce; in other words, any benefit provided was incidental. Cf.

MCI Telecomms. Corp. v. Tex. Util. Elec. Co., 995 S.W.2d 647, 651 (Tex. 1999) (holding 

that although contract in question provided certain benefits to third party, third party was 

not an intended third party beneficiary where no contractual language indicated parties 

 

5

The provision in question reads in full as follows:

Loss or damage, if any, shall be adjusted with and made payable to YOU. In the event 

that the covered amount of a covered loss exceeds Your interest in the covered property 

and a mortgagor is in legal possession of the Insured Residential Property or Commercial 

Property at the time of payment for loss or damage payment, [sic] will be made to You 

and the mortgagor.

The policy explained that the terms ―you‖ and ―your‖ were used therein to refer to the named 

insured, in this case, Countrywide.
7

entered contract directly to benefit third party and provision indicated contract should not 

be interpreted as conferring any benefits on third party).

6

Furthermore, Garcia fails to point out what duty Countrywide allegedly owed to 

him that benefits under the insurance policy would have satisfied. The policy does not 

demonstrate that any benefits thereunder were to satisfy any duty Countrywide owed to 

Garcia.7 Unless Countrywide owed Garcia a duty that the promise to pay insurance 

proceeds could satisfy, Garcia could not be a creditor beneficiary but was instead an 

incidental beneficiary with no right to enforce the contract. See, e.g., MCI Telecomms., 

995 S.W.2d at 651.

The trial court properly granted summary judgment favoring Newport because 

Newport established as a matter of law that Garcia was neither an insured nor an intended

third-party beneficiary under the policy.8 Accordingly, we overrule Garcia’s first issue.

 

6 Garcia further notes that the same endorsement also authorized him to notify Newport of damage to 

the insured property. Such permission, however, does not connote a clear intention to confer a direct benefit to 

Garcia. See Lomas, 223 S.W.3d at 306. Furthermore, the admonishment in the endorsement that nothing 

therein should be construed as making a mortgagor an insured or additional insured under the policy also 

applied to this provision. Moreover, under the mortgage agreement between Garcia and Countrywide, Garcia 

was obligated to promptly report any damage to the property to the insurer. In other words, this was a duty 

owed by Garcia, not a benefit he was to receive.

Garcia additionally cites a provision in the policy providing that ―No one‖ could bring legal action on 

the policy unless there had been full compliance with the policy and the action was brought within two years of 

the damage in question. Garcia suggests that the fact that this provision did not limit itself to the named insured 

suggests the parties envisioned others might be able to bring suit to enforce the policy as well. However, that 

this single provision uses somewhat indistinct language does not ―clearly and fully spell[] out‖ that the parties to 

the policy intended to confer a direct benefit on Garcia under the policy. See Lomas, 223 S.W.3d at 306.

7 Additionally, the mortgage agreement between Countrywide and Garcia provided that in the event 

Countrywide were to procure lender-placed insurance, it would not be obligated to purchase insurance that also 

protected Garcia’s interest.

That the premiums for the lender-placed policy were derived from funds provided by Garcia is no 

evidence of an intent by Countrywide and Newport to insure Garcia’s interest. Garcia was obligated under the 

mortgage agreement to pay for insurance; Countrywide was not obligated to procure insurance that protected 

Garcia’s interest.

8

In support of his position that borrowers can be third-party beneficiaries of lender-placed policies, 

Garcia cites numerous cases from other jurisdictions, principally federal district courts in Louisiana, Alabama, 

and Mississippi. This authority is not binding on this court, but in any event, each of these cases is readily 

distinguishable. See, e.g., Lee v. Safeco Ins. Co. of Am., No. 08-1100, 2008 WL 2622997, at *3-5 (E.D. La. Jul. 

2, 2008) ) (applying Louisiana law, which is substantially dissimilar regarding third party beneficiaries, and 
8

IV. Bank of America’s Motion

In his second issue, Garcia contends the trial court erred in granting summary 

judgment favoring BOA. In its motion, the sole ground BOA asserted for summary 

judgment was that it simply played no role in the ownership or servicing of Garcia’s 

mortgage. In support, it attached an affidavit from one of its vice presidents, Devra 

Lindgren, who averred as follows:

My name is Devra Lindgren. I am a Vice President/Assistant 

Corporate Secretary with Bank of America Corporation. In that position I 

am familiar with the relationship between Countrywide Home Loans, Inc. 

and Bank of America Corporation. Bank of America Corporation did not 

assume ownership of any of the loans issued by Countrywide Home Loans, 

Inc. to borrowers at time of the purchase of Countrywide Home Loans, Inc. 

by Bank of America Corporation. Bank of America Corporation has never 

been involved in the servicing of any of the mortgage loans issued to 

borrowers by Countrywide Home Loans, Inc.

As a result, Bank of America Corporation would not have had any 

involvement in either the ownership or servicing of the mortgage loan 

issued to Milton P. Garcia, Jr. by Countrywide Home Loans, Inc.

A summary judgment may be based on uncontroverted testimonial evidence of an 

interested witness ―if the evidence is clear, positive and direct, otherwise credible and 

 

involving substantially dissimilar policy language); Jones v. Gen. Ins. Co. of Am., No. 07-0855-WS-C, 2009 

WL 1537866, at *8-10 (S.D. Ala. May 29, 2009) (emphasizing a course of dealing between the parties and that 

performance under the contract satisfied a duty by the promissee to the borrower); Turner v. Gen. Ins. Co. of 

Am., No. 5:09cv00057-DCB-JMR, 2009 WL 3247302, at *2-4 (S.D. Miss. Oct. 7, 2009) (involving policy 

which covered personal property of homeowner and required payment directly to homeowner and not 

discussing requirement that performance be in satisfaction of a duty the promisee owed the borrower).

In contrast to the cases Garcia cites, the policy in the present case required payment of any amount 

above the value of the lender’s interest be paid to both the lender and the borrower, did not specifically require 

compliance with policy terms by the borrower, did not cover the borrower’s personal property, and included 

language stating that any amounts paid above the value of the lender’s interest in the property would not make 

the borrower an insured or additional insured under the policy. Furthermore, Garcia presented no evidence of a 

course of dealing that evidenced the parties’ intent to confer a direct benefit on him.

We additionally note that a divided panel of the First Court of Appeals recently held that an insurer 

under a lender-placed policy failed to prove entitlement to summary judgment against a homeowner’s claim to 

be an intended third-party beneficiary of the policy. Alvarado v. Lexington Ins. Co., Nos. 01-10-00740-CV, 01-

10-01150-CV, 2012 WL 1355733, at *17 (Tex. App.—Houston [1st Dist.] Apr. 19, 2012, no pet. h.). Some of 

the policy language at issue in that case, however, is not contained in the policy before us in the present case. 

See id. at *12-16.
9

free from contradictions and inconsistencies, and could have been readily controverted.‖ 

Tex. R. Civ. P. 166a(c); see also Trico Techs. Corp. v. Montiel, 949 S.W.2d 308, 310 

(Tex. 1997). When an affidavit meets these criteria and the opposing party fails to 

controvert the affidavit through deposition testimony, interrogatories, or other discovery, 

the affidavit is competent summary judgment evidence. See Trico Techs., 949 S.W.2d at 

310.

Garcia’s appellate briefing regarding BOA is entirely a critique of Lindgren’s 

affidavit. Garcia’s most salient points are that Lindgren (1) speaks only regarding loans 

―issued‖ by Countrywide, while his loan was acquired by Countrywide after issuance by 

another lender; (2) only negated an ownership interest at the time BOA purchased 

Countrywide, not subsequent ownership or involvement; (3) did not negate any 

supervision or control by BOA over Countrywide; (4) states BOA ―would not have had‖ 

involvement but does not say it ―did not have‖ involvement; and (5) did not affirmatively 

establish personal knowledge or the truth or correctness of her testimony. Additionally, 

Garcia questions how a different BOA officer, Stephen Grzeskowiak, could have 

expressed considerable knowledge regarding Garcia’s loan when Lindgren denied BOA 

had any involvement with the loan. We will consider each of these arguments in turn.

First, Garcia points out that Lindgren states BOA had no involvement with any 

loans ―issued‖ by Countrywide, but Countrywide did not issue Garcia’s loan, it acquired

it from another lender. While this distinction may be accurate, it is a semantic point at 

best. Cf. Martinez v. City of San Antonio, 768 S.W.2d 911, 915 (Tex. App.—San 

Antonio 1989, no writ) (refusing to participate in ―a semantical word game‖ while 

interpreting affidavit). The fact that Lindgren intended the term ―issued‖ to be used in an 

expansive way is demonstrated by the fact that she concludes from BOA’s lack of 

involvement in loans ―issued‖ by Countrywide that BOA would not have had any 

involvement with Garcia’s loan in particular. Furthermore, if Lindgren’s statement was 

inaccurate, Garcia could have controverted it through the discovery and summary 

judgment response processes. See Trico Techs., 949 S.W.2d at 310. He did not do so.
10

Next, Garcia asserts that Lindgren only negated an ownership interest at the time 

BOA purchased Countrywide, not any subsequent ownership or involvement with 

Garcia’s loan. However, Lindgren’s statements in the affidavit are not as limited as 

Garcia suggests. Lindgren stated that BOA ―has never been involved in the servicing of 

any of the mortgage loans‖ and ―would not have had any involvement in either the 

ownership or servicing of‖ Garcia’s loan. This language was comprehensive enough to 

negate any interest at the time of purchase or subsequent thereto.

Garcia further points out that Lindgren did not specifically negate the possibility 

that BOA exerted supervision or control over Countrywide in regard to Garcia’s loan. 

However, as appellees point out, Garcia’s live pleading at the time judgment was granted 

did not contain any allegations of supervision or control. A summary judgment movant 

is not required to negate all potential bases for liability, only those actually pleaded. See

Smithkline Beecham Corp. v. Doe, 903 S.W.2d 347, 355 (Tex. 1995). Furthermore, even 

if such theories had been pleaded, Lindgren’s affidavit statements were sufficient to 

negate such involvement. Lindren effectively denied any involvement by BOA in 

regards to Garcia’s loan.

Garcia additionally argues Lindgren did not affirmatively establish personal 

knowledge of the matters she referenced in her affidavit. Lindgren, however, permissibly 

explained that her knowledge came via her position as vice president and assistant 

corporate secretary with BOA. See Valenzuela v. State & County Mut. Fire Ins. Co., 317 

S.W.3d 550, 553 (Tex. App.—Houston [14th Dist.] 2010, no pet.) (compiling cases 

addressing similar statements in affidavits).9

 Next, Garcia points out that in her affidavit Lindgren stated that BOA ―would not 

have had any‖ involvement with his loan and did not specifically say that BOA ―did not 

 

9 To the extent Garcia urges that Lindgren’s affidavit cannot support summary judgment because in it 

she did not expressly say that her statements are based on her ―personal knowledge‖ or that the facts recounted 

are ―true and correct,‖ such argument raises a matter of form that Garcia waived by not making it in the trial 

court. See, e.g., New AAA Apartment Plumbers, Inc. v. DPMC-Briarcliff, L.P., No. 14-05-00485-CV, 2006 WL 

2827275, *2 (Tex. App.—Houston [14th Dist.] Oct. 5, 2006, no pet.).
11

have any‖ involvement. But these phrases are substantial equivalents. Moreover, this is 

again an overly restrictive reading of the affidavit. Lindgren stated BOA ―did not assume 

ownership‖ and ―has never been involved in the servicing‖ of Countrywide’s loans, thus 

it ―would not have had any involvement‖ with Garcia’s specific loan. In context, the 

―would not have had any‖ language does not suggest Lindgren was attempting to hide 

behind semantics as Garcia suggests.

Lastly, Garcia questions how another BOA officer, Senior Vice President Stephen 

Grzeskowiak, could have expressed considerable knowledge regarding Garcia’s loan in 

his affidavit when Lindgren denied BOA had any involvement with the loan in hers. As 

appellees point out, however, Grzeskowiak’s affidavit was not based on his experience 

with Garcia’s loan while at BOA. Grzeskowiak stated in his affidavit that his knowledge 

of lender-placed insurance policies in general and Garcia’s situation in particular was 

based upon (1) previous employment ―where [his] responsibilities included lender placed 

policies,‖ and (2) a review of Garcia’s ―loan file.‖ Contrary to Garcia’s suggestion, there 

is no apparent discrepancy between Lindgren’s and Grzeskowiak’s affidavits.

We find all of Garcia’s challenges to Lindgren’s affidavit to be without merit. 

Because Garcia does not raise any other arguments attacking the grant of summary 

judgment favoring BOA, we conclude the trial court did not err in granting that judgment. 

Garcia’s second issue is overruled.

V. BAC Home Loan Servicing’s Motion

Garcia’s third issue challenges the summary judgment favoring BAC. BAC is the 

mortgage servicing arm of BOA. BAC and BOA filed a joint motion for summary 

judgment, making separate arguments for each entity. In contrast to the portion of the 

motion concerning BOA, in which BOA denied any connection to Garcia’s mortgage, 

BAC acknowledges involvement in the servicing of Garcia’s mortgage. BAC primarily 

argues instead that it properly performed any obligations it had to Garcia and did not 

breach any duties it may have owed him. Although the motion does not specify whether 

it was a traditional motion or a no-evidence motion, the specific arguments made are of 
12

the traditional variety. See Tex. R. Civ. P. 166a(c). Thus, the initial burden was on BAC

to demonstrate that there is no genuine issue of material fact and it is entitled to judgment 

as a matter of law. See M.D. Anderson, 28 S.W.3d at 23.

Garcia’s extensive claims against BAC included the following: (1) breach of the 

duty of good faith and fair dealing; (2) breach of fiduciary duty; (3) negligence; (4) 

breach of contract; (5) violations of the Deceptive Trade Practices Act (DTPA); (6) 

common law fraud; (7) statutory fraud; (8) violations of the Texas Insurance Code; (9) 

negligent misrepresentation; and (10) conspiracy to commit fraud and breach of fiduciary 

duty.10 In its motion, BAC addressed each of Garcia’s causes of action. BAC also

attached Grzeskowiak’s affidavit to the motion, in which he stated that he had reviewed 

Garcia’s loan file, ―was previously employed in a position where [his] responsibilities 

included lender placed policies,‖ and had personal knowledge of the facts presented. 

Grzeskowiak further averred that Countrywide acquired Garcia’s mortgage in 2004, 

Garcia was consistently in default on the loan, and Countrywide had worked with him to 

get the payments current. At the time Countrywide acquired the loan, Garcia had his own 

insurance policy with National Lloyds Insurance, but that policy came up for renewal in 

September 2004 and was not renewed by Garcia.11 According to Grzeskowiak, because

Garcia did not fulfill his obligation under the mortgage agreement to maintain insurance 

on the subject property, a lender-placed policy was purchased and multiple notices were 

sent to Garcia before and after placement of the policy.12 The ―loan file‖ Grzeskowiak 

relied upon in making his affidavit was not attached as such to the affidavit; however, 

included as attachments to the affidavit were copies of various notices Grzeskowiak said 

 

10 Garcia’s petition actually addressed each of the causes of action discussed in this section against three 

entities (BOA, BAC, and Countrywide) that he called ―the Bank Defendants.‖ However, in this section, we will 

examine each cause of action only as it pertained to BAC.

11 Grzeskowiak stated that Countrywide contacted Garcia’s agent when a renewal of the policy was not 

submitted, but the agent was unable to produce a renewal policy.

12 Grzeskowiak did not specify who procured the lender-placed policy, sent notices to Garcia, or later 

renewed the lender-placed policy. Countrywide was the named insured on the policy, and the return address on 

the notices is for Countrywide.
13

had been sent to Garcia, as well as a copy of the master insurance policy that was issued 

to Countrywide (i.e., the lender-placed policy).

We will discuss each cause of action raised by Garcia; however, as will be seen, 

several of the claims can be analyzed together because the grounds on which summary 

judgment was granted against them are similar.13

A. Breach of Duty of Good Faith and Fair Dealing Claims

Under his cause of action alleging a breach of the duty of good faith and fair 

dealing, Garcia asserted that BAC created a ―special relationship‖ when it procured the 

lender-placed insurance policy on Garcia’s property with funds he placed in escrow. 

Garcia acknowledges that a duty of good faith does not ordinarily arise between parties to 

a mortgage agreement, see Federal Deposit Insurance Corp. v. Coleman, 795 S.W.2d 

706, 709 (Tex. 1990); however, he insists that such a duty arose here when BAC 

procured the lender-placed policy. See generally Hudspeth v. Enter. Life Ins. Co., 358 

S.W.3d 373, 389-90 (Tex. App.—Houston [1st Dist.] 2011, no pet. h.) (discussing 

creation of a special relationship and duty of good faith and fair dealing in the insurance 

context). According to Garcia, because of this special relationship, BAC had a duty to 

insure that all of the benefits under the policy were paid to him, and BAC violated that 

duty by not making sure he received the proceeds.

In its motion, BAC explained, inter alia, that as authorized by the mortgage 

agreement, the lender-placed policy was procured solely for the mortgage company and 

solely to protect the secured interest of the mortgage company, and Garcia was not 

entitled to any proceeds from the policy under the terms of the mortgage agreement or the 

policy itself. Therefore, according to BAC, procurement of the policy did not create any 

 

13 Garcia spent a considerable portion of his brief arguing that BAC’s motion was too conclusory to 

support the judgment and failed to provide sufficient citation to authority and the summary judgment evidence. 

While not a model of exposition, we find BAC’s motion sufficient. It provided proper citation to legal authority 

in key places and referenced particular key documents in the record. Moreover, as will be discussed in detail 

below, a number of Garcia’s causes of action were based on very similar allegations that could properly be 

addressed through shorthand references to arguments already made in the motion.
14

special relationship between BAC and Garcia and there was no breach of a duty for good 

faith and fair dealing in such a relationship by not insuring that Garcia received proceeds 

from the policy.

We agree with BAC. As described in detail above, the lender-placed policy was 

procured pursuant to the mortgage agreement, which permitted such a policy to be 

obtained under certain circumstances and specified that the policy would not necessarily 

cover Garcia’s interest in the property. Furthermore, the policy itself did not provide any 

direct benefit to Garcia for which he was entitled to sue. Consequently, BAC did not sell 

Garcia insurance or purchase insurance for him, and BAC’s procurement of the policy 

did not create any duty for it to ensure that Garcia received proceeds under the policy. 

See Hudspeth, 358 S.W.3d at 389-90; see also Barrand, Inc. v. Whataburger, Inc., 214 

S.W.3d 122, 139 (Tex. App.—Corpus Christi 2006, pet. denied) (holding that regardless 

of whether a duty of good faith and fair dealing arose under parties’ agreement, party was 

not obligated by that duty to perform acts counter to agreement provisions). Moreover, 

since no such duty existed, no such duty was subsequently breached. Accordingly, the 

trial court did not err by granting summary judgment favoring BAC on Garcia’s claim of 

breach of the duty of good faith and fair dealing.

B. Breach of Fiduciary Duty Claim

In his breach of fiduciary duty cause of action, Garcia alleged that a fiduciary duty 

existed because BAC was (1) ―the agent to insure that [Garcia] received all benefits he 

was entitled to under the policy‖ and (2) the escrow agent for the insurance premium 

payments. Garcia asserted BAC breached these alleged fiduciary duties by failing to 

ensure Garcia received all payments due him under the policy, failing to procure nonlender-placed insurance on the property, and failing to timely and properly pay insurance 

premiums from the escrow account for renewal of the National Lloyds policy.

Relying primarily on the mortgage documents and the escrow agreement, BAC 

asserted that it owed no fiduciary duties to Garcia and breached no such duties. As 

discussed in the immediately prior section of this opinion, BAC had no duty (agency–
15

based or otherwise) to insure Garcia received any benefits under the lender-placed policy, 

so no fiduciary duty could be based on such an alleged duty or agency relationship. 

Thus, the first basis Garcia provided for creation of a fiduciary duty is without merit.

BAC has not expressly denied that it was the escrow agent for Garcia’s insurance 

premiums. Cases in which courts have described escrow agents as owing fiduciary duties 

to both parties to an escrow agreement have considered the issue in the context of 

closings on real property wherein the agent has a fiduciary duty to both sides in the 

transaction. See Shoalmire v. U.S. Title of Harrison County, No. 06-09-00034-CV, 2010 

WL 271302, at *5 (Tex. App.—Texarkana 2010, no pet.) (mem. op.).; Gary E. Patterson 

& Assocs., P.C. v. Holub, 264 S.W.3d 180, 203 (Tex. App.—Houston [1st Dist.] 2008, 

pet. denied); Trahan v. Lone State Title Co. of El Paso, Inc., 247 S.W.3d 269, 286 (Tex.

App.—El Paso 2007, pet. denied). Other cases have explained that when the escrow 

agreement simply provides for the payment of funds by the mortgagor into an account for 

the mortgagee’s use to meet tax, insurance, and other obligations—as appears to be the 

case here—no fiduciary relationship is created. See Monumental Life Ins. Co. v. HayesJenkins, 403F.3d 304, 318-10 & n.27 (5th Cir. 2005); White v. Mellon Mortg. Co., 995 

S.W.2d 795, 801 (Tex. App.—Tyler 1999, no pet.) (citing Wesson v. Jefferson Sav. & 

Loan Ass’n, 641 S.W.2d 903, 905 n.2 (Tex. 1982)).

14

Regardless of whether an escrow agent owes a fiduciary duty, the duties of the

agent are limited and defined by the escrow agreement itself. See Shoalmire, 2010 WL 

271302, at *5; Trahan, 247 S.W.3d at 286; White, 995 S.W.2d at 801. The escrow 

agreement in the present case did not require BAC to insure that Garcia received all 

payments due him under any insurance policy or to procure any insurance policy for 

Garcia; to the contrary, the burden of procuring insurance under the mortgage documents 

 

14 Garcia asserts in his brief that the supreme court in Wesson suggested that a fiduciary relationship 

would be created if an escrow agreement required the mortgagee to pay insurance premiums from escrow funds. 

641 S.W.2d at 905 n.2. This is not a reasonable reading of Wesson. The court therein stated: ―The escrow 

relationship does not in itself impose a duty to acquire insurance in the absence of an agreement to do so.‖ Id. 

As fully discussed in this opinion, the mortgage agreement at issue in this case did not require any of appellees 

to acquire insurance protecting Garcia’s interest in the property.
16

was on Garcia. Therefore, summary judgment was properly granted against claims based 

on these alleged fiduciary duty breaches.

As stated, Garcia additionally asserted that BAC failed to timely and properly pay 

the insurance premiums from funds in the escrow account. The escrow agreement did, in 

fact, require timely payments be made for insurance premiums. Garcia’s specific claim, 

as explained in his briefing to this court, is that BAC failed to send the premiums to 

Garcia’s former insurance carrier, National Lloyds, ―to renew the policy.‖ But nothing in 

the mortgage documents, including the escrow agreement, placed a duty on BAC to 

renew a policy originally procured by Garcia. To the contrary, the duty to provide and 

maintain insurance for the property was squarely on Garcia.15 Accordingly, the trial court 

properly granted summary judgment against Garcia’s breach of fiduciary duty claims.

C. Failure to Pay Premiums

Similar to the last claim discussed under fiduciary duty above, several of Garcia’s 

other causes of action were also premised on allegations that BAC either failed to pay 

premiums to renew the policy and was obligated to do so or misrepresented that it would 

make such payments. Garcia alleged: breach of contract,16 common law fraud,17

statutory fraud,18 negligence,19 negligent misrepresentation,20 DTPA violations,21 and 

violations under chapter 541 of the Insurance Code.22

 

15 Paragraph 5 of the agreement states that Garcia ―shall keep the improvements now existing or 

hereafter erected on the Property insured against loss,‖ and ―[t]his insurance shall be maintained . . . .‖

16 In his breach of contract cause of action, Garcia asserts that BAC had a duty under the escrow 

agreement to pay the insurance premiums and failure to do so was a breach of contract.

17 Under his common law fraud cause of action, Garcia alleged that BAC represented it would 

perform under the escrow agreement and pay the insurance premiums timely, and such representation was 

material, false, and made with the intent for Garcia to rely on it.

18 In his statutory fraud cause of action, Garcia alleged that BAC violated section 27.01 of the Texas 

Business and Commerce Code by making a false representation that it would perform under the escrow 

agreement. Tex. Bus. & Comm. Code § 27.01.

19 In his claim for negligence, Garcia alleged that as escrow agent, BAC had a duty to timely pay 

insurance premiums out of the escrow account and failing to do so caused him damages.
17

The mortgage agreement makes clear that BAC had no duty to renew the National 

Lloyds policy; the duty to provide and maintain insurance under the agreement was 

always on Garcia. Grzeskowiak explained in his affidavit that because Garcia did not 

fulfill his obligation to maintain insurance, a lender-placed policy was obtained to protect 

the mortgagee’s interest in the property. Grzeskowiak further identified numerous 

notices sent to Garcia apprising him of the issue both before and after placement of the 

policy.

In his responsive affidavit, Garcia asserted that ―I was under the impression that I

had full insurance coverage and that every month when I made my mortgage payment, I 

paying [sic] toward an insurance premium for a policy that my bank was purchasing on 

my behalf.‖ He further stated that Countrywide never instructed him that he needed to 

get his own insurance policy, and it was his belief that ―he paid money into an escrow 

account every month and Countrywide chose the insurance policy which was the 

[Newport] policy.‖ Additionally, he averred that ―It is not true that I allowed an 

insurance policy to lapse and therefore the mortgage company procured a force placed 

policy on my residence.‖

At no point in his affidavit, however, did Garcia allege that any representations 

were made by BAC regarding payment of the insurance premiums. Garcia’s beliefs and 

impressions, in light of the unambiguous terms of the mortgage agreement placing the 

burden on him to provide and maintain insurance, are of no legal significance. This case 

is therefore unlike the situation addressed by the Amarillo Court of Appeals in Pankow v. 

 

20 Under his negligent representation cause of action, Garcia alleged that BAC supplied false 

information for his guidance in that it represented it would timely pay premiums and thereby caused him 

damages.

21 In regards to his DTPA claims, for which he did not cite specific sections of the act, Garcia alleged 

that he was a consumer of BAC’s escrow agent services. He further asserted that BAC made representations 

about those services in order to induce Garcia into using those services, and he was subsequently damaged by 

BAC’s failure to pay the insurance premiums in accordance with the escrow agreement.

22 Lastly, in his Insurance Code claims under chapter 541, Garcia alleged that BAC violated sections 

541.051, .052, and .061 in making misrepresentations regarding timely payment of insurance premiums, thus 

inducing Garcia into allowing a policy to lapse. Tex. Ins. Code §§ 541.051, .052, .061.
18

Colonial Life Insurance Co. of Texas, 932 S.W.2d 271, 277-78 (Tex. App.—Amarillo 

1996, writ denied). In Pankow, the plaintiff sued her mortgage lender and the insurer 

under a credit life policy that had not been renewed. Id. at 273. She was able to defeat 

summary judgment on certain of her causes of action with evidence that her lender 

represented that sums from an escrow account would be used to renew the credit life 

policy but such sums were never transferred as promised. Id. at 277-78.

Here, BAC demonstrated it had no duty to under the mortgage agreement to pay 

premiums to renew the policy and the notices it sent to Garcia contain no such promises. 

In response, Garcia did not specifically allege any promise was made by BAC to renew 

the policy. Accordingly, the trial court did not err in granting judgment against claims 

premised on allegations BAC either failed to pay premiums to renew the policy or 

misrepresented that it would make such payments.

D. Negligence

In his claim for negligence, Garcia additionally asserted that BAC owed him a 

legal duty to insure that he received all of the benefits and payments he was due for 

damage from Hurricane Ike. In its motion, BAC again asserted, based primarily on the 

mortgage documents, that it had no legal duty to insure that Garcia received all benefits. 

As fully discussed above, BAC had no duty to insure Garcia received any benefits. 

Accordingly, the trial court properly granted judgment on Garcia’s negligence claim.

E. Insurance Code Claim

Garcia further alleged that BAC violated section 556.051 of the Texas Insurance 

Code by requiring that Garcia purchase insurance from a company affiliated with BAC. 

Section 556.051 reads as follows:

556.051. Unfair Method of Competition or Unfair Practice: Tying

(a) A depository institution engages in an unfair method of competition or 

an unfair practice in the sale of insurance by the depository institution if the 

depository institution:
19

(1) is an agent and, as a condition of extending or renewing credit, 

leasing or selling property, or furnishing services, requires the 

purchase of insurance from the depository institution or a subsidiary 

or affiliate of the depository institution, or from or through a 

particular agent, insurer, or any other person or entity; 

(2) conditions the terms of credit or the sale or lease of property on 

acquisition of insurance from or through the depository institution, a 

subsidiary or affiliate of the depository institution, or any other 

particular person or entity; 

(3) rejects a required policy solely because the policy has been 

issued or underwritten by a person or entity that is not associated 

with the depository institution; or 

(4) imposes a requirement on an agent or broker who is not 

associated with the depository institution that is not imposed on an 

agent or broker who is associated with the depository institution or a 

subsidiary or affiliate of the depository institution.

(b) This section does not prevent a person who lends money or extends 

credit from placing insurance on property if the mortgagor, borrower, or 

purchaser fails to provide required insurance in accordance with the terms 

of the loan or credit document.

Tex. Ins. Code § 556.051.

As BAC explained in its motion for summary judgment, the record demonstrates 

that Garcia had the option under the mortgage agreement to provide his own insurance, 

and a lender-placed policy was obtained, pursuant to the mortgage agreement, only after 

Garcia failed to renew the prior policy or otherwise provide insurance. Moreover, there 

is no indication in the record that Garcia was required to obtain insurance from a 

company affiliated with the lender as a condition of extending credit.

BAC additionally relies on subsection 556.051(b), which specifically states that 

the section should not be read as preventing a lender from placing insurance on a 

property when the mortgagor fails to provide required insurance. This is precisely the 

situation in the present case. Nonetheless, Garcia contends that subsection (b) does not 

authorize a purchase of insurance in such a situation from an affiliated company. 

However, if Garcia were correct, then it would be difficult to discern what role subsection 
20

(b) played in section 556.051. See Lamar Homes, Inc. v. Mid-Continent Cas. Co., 242 

S.W.3d 1, 19 (Tex. 2007) (explaining that in interpreting the meaning of a statute, it must 

be read as a whole and construed in such a manner as to harmonize all of its provisions). 

We interpret this subsection to mean that a depository institution’s placement of 

insurance on property would not violate prohibitions of subsection (a), without regard to 

whether the insurance was purchased from an affiliate or subsidiary of the depository 

institution, after a purchaser’s failure to provide required insurance. In short, BAC 

demonstrated as a matter of law that it did not violate Insurance Code section 556.051. 

Accordingly, the trial court did not err in granting judgment on this cause of action.

F. Conspiracy

Lastly, Garcia alleged that BAC conspired with all of the other named defendants 

to commit fraud and breach of fiduciary duty. Specifically, Garcia complained that the 

defendants unlawfully required him to purchase insurance coverage from entities 

―affiliated with a lending institution who [sic] extended credit to‖ Garcia. As explained 

above in regard to Garcia’s allegations under the Insurance Code, the summary judgment 

record demonstrates that BAC did not, in fact, require Garcia to purchase insurance from 

an entity affiliated with a lending institution extending credit to Garcia. Therefore, the 

trial court did not err in granting judgment regarding conspiracy.

VI. Conclusion

The trial court did not err in granting summary judgment favoring Newport, BOA, 

or BAC. Consequently, we affirm the trial court’s judgment.

/s/ Martha Hill Jamison

Justice

Panel consists of Justices Frost, Seymore, and Jamison.