### TEXA S C OU R T OF A PPEAL S, THIR D DIST R ICT , AT AU STIN

NO. 03-0 6 -00 335 -CV
App e lla nt , F ar m e r s Te xa s C ount y M ut ual Ins ur anc e Co m pany // Cross-Appellants, Irene Rom o and Fenn Ratcliff e, Ind ividu ally and on Behal f of All Other P ersons Sim ilarly Situ ated
v. Appellees, Irene R om o and Fenn Ratcliff e , Ind ividu ally and on Behal f of All Other P ersons Sim ilarly Situ ated // C r os s- App e lle e s, F ar m e r s Te xa s C ount y M ut ual Ins ur anc e Co m panyand

USA A C ount y M ut ual Ins ur anc e Co m pany

F ROM THE DISTRICT CO URT OF TRAVIS COUNTY , 201S T JUDICIAL DISTRICT NO. D-1- GN-06- 0018 24 , HO NORAB LE SUZ ANNE COVINGTO N , JUDGE PRESIDI NG

O P I N I O N
I n thi s d e c la

r a to r y ju d g me n t a c ti o n , Pl a in ti f f s I r e n e Ro mo an d

F e n nRatc lif

fe challeng e the pr opriety

of installment pay

ment plan f

e e s c h a r g e d by USAA County

Mutual I nsuranc e Company and an a ffiliate of

Fa rmers Te x as C o u n t y

Mutual I nsuranc e Company for pr oviding installment pay

ment plans t o auto insuranc e policy holders. Romo and Ratcliffe claim that the char g es to policy

holders for elec ting to pa

y premiums in installments pursuant to the pay ment plans are not authorized by

the Texas I nsuranc e Code, violate the filed rate doctrine , and bre ach the parties’ contra cts of insuranc e. The y seek r ecove ry

of the installment pay

ment plan fe es they

have pa id a nd a lso se e k to have a

c la ss c e rt if

ie d c on sis tin g of

sim ila rl y sit uate d p oli c y

ho lde rs .USAA did not appea l beca use it had not c ollected any of the ty pe of f ees in dispute af

ter 1 Dec ember

1, 2004. 2 The trial court rende red decla rations that (1) the installment fees at issue are subject to c erta in f

iling require ments under the Texas I nsuranc e Code, but ( 2) county mutua l insurance
c omp anie s w e re no t su

bje c t to the se fi lin g re qu ir e me nts un til De c e mbe r 1 , 2 00 4, wh e n th e y be c a me
rate re g ulate d, and th erefo re, (3) the c ha rg e s w e re no t pr oh ibi te d b y the ins ur anc e c od e pr ior to De c e mbe r 1, 20 04 . F arm e rs and the Pla int if

fs a pp e a l. Fa

rmers a rg ues that the fe es in question have 1

ne ve r b e e n a

nd a re no t no w s ub

je c t to fi lin g re qu ir e me nts under th e ins ur anc e c od e pr ov isi on in question and, alter

natively , even if

the fe es ar e subjec t to such filing require ments, the Plaintiffs have
no private right of

action under

the insuranc e code provisions at issue to recove r the fe es they paid. The Plaintiffs ar g ue that the f ees i n q u es t i o n have be en subjec t to filing re quirements since the companies be g an cha

rg ing the fee s, that they

are entitled to decla

rations t hat t he filed rate doc trine

a pp lie s to the fe e s p ri or

to D e c e mbe r 1 , 2 00 4, and that si nc e ne ith e r i ns ur e r fi le d the se c ha rg e s w ith the De pa rtme nt o f I

ns ur anc e , th e ins ur e rs we re no t e nti tle d to c oll e c t th e fe e s. We conclude that the installment fees at i s s u e we re not subjec t to the filing
re qu ir e me nts a lle g e d b y

the Pla int if

fs un de r e ith e r t

he c ur re nt v e rs ion

of the a pp lic a ble statut e or

its p r e d e c e s s o r . T h e r e f

o r e , w e r e v e r s e t h e d i s t r i c tc o u rt ’ s d e c l ar a t i o n s t o t h e c o n t r ar y.
Backg ro und Fa

rmers a nd USAA are county mutual insurance companies formed under t he laws of the State of Te xas an d ea c h ha s a ce rt if ic a te of a uth or ity fr om t he Com mis sio ne r o f I

ns ur anc e to do business in the State of Texas. They both write six -month private pa s s en g er a uto insuranceThe installment fe es at issue for the named plaintiffs varie d betwee n $3.00 and $6.50 per 2 month. 3 policies in Texas. I n addition, a n aff iliate of USAA wr ites twelve-month re sidential proper ty rente rs po lic ie s in

Te xas. Fr om October

1987 to October

2002, Romo (toge ther with her husband who is now dece ased) was insure d under a series of six -month private passeng er auto policies written by Texas F arm e rs I ns uran ce Com

pa ny . T e xas F arm e rs I ns ur anc e Com pa ny wi thd re w f ro m th e pr ivate passeng er a

uto insurance marke t in Tex as and, in October 2002, the R omos’ policy was replace d by

a private passeng er auto policy written by Fa rmers Texas County Mutual I nsuranc e Company , one of the de fe nd ants in t

his c a se . T his po lic y

ha s si nc e be e n r e ne we d e ve ry six mo nth s to the pr e se nt. F ro m N ov e mbe r 2 00 2 to the pr e se nt, Ra tc lif fe ha s be e n ins ur e d un de r a se ri e s o f s ix-m on th p ri vate p a s s e n g e r a u t o p o l i c i e s w r i t t e nb y U S A A C o u n t y M u tu a l In s u r an c e C o mp an y. B oth Rom o a nd Ra tc lif fe we re of

fe re d th e op tio n o f p ay ingthe pr e miums f or the ir policies in monthly

installments rather than in a single lump sum when due , and both elec ted to do
so. The opti on to pay

in monthly

installments included an additional servic e fe e for the installment pla n t hat va ri e d d e pe nd ingon

the size of

the pr e mium pa

y me nt. Th e pa

rt ie s st ipu la te that bo th 2 options, (1) paying pr emiums in full upon ren ew al wi t h o u t incurringa ser vice f ee a nd (2) pa y ing premiums in monthly installments tog ether with a service fee , wer e disclosed to Romo and Ratcliff e, and that ea ch voluntarily

elec ted to pay

premiums in installm ents along with the service fee

.I t is un dis pu te d that F arm e rs and F I E are “ a ff ili a te s” un de r the Ho ldi ngCom pa ny Sy ste ms 3 Reg ulatory

Act. Te x . I ns. Code Ann. § 823.003 (West 2007). 4 The in s t al l ment pay

ment plan offe red to F arme rs’s insureds ha s, since 1984, bee n of fe re d by F arm e rs I ns ur anc e Exc ha ng e (“ F I E” ), an a ff

ili a te of F arm e rs . Fa

rmers’ s insureds, such 3 as Romo, who wish to take advantag e of an ins tallment pay ment plan s ign a

Monthly Pay ment Plan Ag re e me nt w ithF I E that in c lud e s an a g re ement to p ay the mon thl y

se rv ic e fe e . F I E the n c oll e c ts pr e miu m pay

m e n t s o n b e h a l f o f F ar m e r s a s w e l l a s t h e s e r

v i c e f e e p r o v i d e d

f o r i nt h e M o n thl y Pay ment Plan Agr eeme nt. FI E forw ards the insura nce pr emium on to Far

mers and r etains the ser

vice fe e purs ua

nt t o a 19 84 Ad min istrativ e Se rv ic ingAg re e me nt b e tw e e n it and F arm e rs . Th e Ad min istrativ e Se rv ic ing Ag re e me nt, fi le d with the State B oa

rd of I ns ur anc e in 1991, provides that F I E will perfor m “pre mium collection s er v i ce s ” o n behalf of F arme rs for “policy holders of [Fa

rmers] who elec t to remit pr em iums on a monthly pay ment plan.” The Administrative Servicing Ag ree ment also provides that the se rvice char g es f o r providing the installment pay

ment plan ar e not premiums for insurance, but are c harg es for the servic es of F I E, and

ar e t h e p r o p e rt y

o f F IE
. T h i s ar

r an g e m e n tf

o r p r e m i u m c o l l e c t i o ns e r

v i c e s t o b e p e r f

o r m e d b y F IE for F arme rs was de emed a pproved by the Commiss ioner of I nsuranc e by

operation of law pursua

nt to the Holding Company Sy stems Re g ulatory Act and has never been disa pproved or

challeng ed by t h e C ommissi oner of

I nsuranc e. See Tex. I ns. Code Ann. § 823.103 (West 2007); Act of Ma y 27, 1 9 9 1 , 7 2 d

L e g . , R. S. , c h

. 2 4 2 , § 8
. 0 3 , 1 9 9 1 T e x. G e n . L aw s 9 3 9 , 1 0 1 6

- 1 7 , c o d if ie d a t f ormer Tex. I ns. Code art. 21.49-1, § 4(d), recodifie d by Act of May 22, 2001, 77th L eg ., R.S., ch. 1419, § 1, sec. 823.103, 2001 Te x . Gen. L aws 3658, 3700.The c laims are not based on an allegation that the s ervic e fees were not disclosed or we re 4 mis re pr e se nte d in

a ny wa y . The re is n o d isp ute that th e fe e s w e re fu lly and a c c ur a te ly

dis c los e d b oth to the Plaintiffs and to the Texas Depa rtment of Insuranc e, and that the Plaintiffs voluntarily elec ted to u se the of

fe re d inst a llm e nt pla

ns and pa y the a dd iti on a l fe e s. Th e c ru x of t he Pla int if

fs ’ c la ims is that the insurers we re r equire d to file the amount of t he service f ees w ith the Texas Depar tment of Insuranc e and, unle ss the amounts we re fi l ed , policy holders could not be c harg ed these fee s wh e the r t he y and the De pa rtme nt o f I

ns ur anc e we re awa

re of the fe e s o r n ot. 5 USAA offe red its insureds thre e differe nt installment pay ment plans without using the se rv ic e s of a su

bs idi ary or a ff

ili a te c omp any . USA A ins ur e ds su c h a s Ratc lif fe wh o e le c te d to pa y the ir pr e miums i n in sta llm e nts fo rw ard e d th e se rv ic e fe e fo r t he ins tall men t pl an d ir e c tly to US AA t o get h er

wi t h ea ch p re m i u m p ay

m en t
. As o f Ma y

1 , 2 0 0 4 , US AA h ad

s t o p p edas s es s i n g a fe e fo r a ny of its ins ta llm e nt p ay

me nt p lans . Romo an d R at cl iffe or igina lly filed this action in Aug ust 2003 seeking relief indiv i d u ally

as we ll as class re lief for a cla ss of similarly

situated policy

holders. The y

claim that section 912.201 of the insurance code and its predec essor—a rticle 17.25, sec tion 6 of the insuranc e code—r equire d Fa

rmers a nd USAA to f

ile a schedule of the amounts they or their a ffiliates c harg ed policy holders for

elec ting to pay

their auto insura

nce pr emiums in inst allments over time rathe r than in a single lump sum wh en due. They asser ted claims for

decla ratory relief to have these fee s 4 decla red subjec t to the filing re quirements of section 912.201 and its pre dece ssor as well as subjec t to the filed rate doctrine . The Plaintiffs claim that, as a conseque nce of the filing require ments and the filed rate doctrine, the defe ndants’ collection of the fe es wa s illega l and/or a br eac h of contra ct beca us e a schedule of the f

ees ha d not been f

iled with the Depa

rtment of Insuranc e. Romo and Ra tc lif fe a lso a sse rt e d thr e e c a

us e s of a c tio n fo r dama g e s: (1 ) ov e rc ha rg e , (2 ) br e ach o f contra c t, and (3) money

had and r ece ived.6 Defendants F arme rs and USAA a nswere d and filed c ounterc laims for dec laratory relief seeking decla

rations that the installment pa y ment plan fee s in que stion are not subjec t to the fi lin g r e qu i r e m e n t s o f

s e c t i o n9 1 2
. 2 0 1 o r

i t s p r e d e c e s s o r , an d

e v e ni f t h e y w e r e , t h e f

i l e d ra te doctrine did not oper ate to bar t h ei r coll ection of the fee s. Thus, their collec tion of the fee s was
a uth or ize d a

nd le g a l. Sin c e the c ro ss- c la ims fo r de c larator y re lie f we re qu e sti on s of law that w ou ld g ov e rn wh e the r the un de rl y ing c la ss cl a ims c ou ld g o for wa rd , the pa rt ie s ag re e d to sev e r the c la ims for de clar atory

relief from the c laims for dama g es and f iled cross-motions for summar y judgme nt in t he se ve re d d e c larator

y jud g me nt a c tio n. Th e pa rt ie s st ipu la te d to th e ma te ri a l f a c ts r e la tin g to the ir c la ims fo r de c larator y re lie f. On a

pp e a l, F arm e rs and USA A a lso a sse rt that th e re is n o p ri vate rig ht of ac tion under sec tion 912.201 and, there fore , the trial court lacke d subject matter jur isdiction over the Plaintiffs’ claims for de clar atory relief beca use Romo a

nd Ratcliffe do not have standing to p ur su e tho se c la ims

. Stan dard of Revie w

We revie w t he sum mary judgme nt de novo. J oe v . Two Thi rty

Nin e J oin t V e ntu re , 14 5 S. W.3 d 1 50 , 1 56 (T e x. 20 04 ). Th e sta nd ard s f or re viewing a su mm ary

jud g me nt a

re we ll established: (1) the movant must demonstrate that there is no ge nuine issue of mate rial fa ct and that it is entit led to judgme nt as a matter of law; (2) in deciding whether a disputed issue of mate rial fa ct exis ts that would preclude summary judgme nt, we take all evidenc e fa vorable to the non-movant as true; and ( 3) we indulge ever y rea sonable infe re n ce and re solve any doubts in favor of the non-movant. Nixon v. Mr. Prop. Mgm t. Co. , 690 S.W .2d 546, 548-49 (Te x . 1985). When, as her e, bo th p art ie s f

ile mot ion s f

or su mma ry jud g me nt a

nd the c ourt de nie s b oth

in p art and g ra nts bo th i n7

part, we must review the summar y judgme nt evidence prese nted by both sides, decide a ll questions prese nted, and rende r t he judgment t hat t he trial court should have rende red. See City of Garland

v . Da lla s M

or nin g Ne ws , 22 S.W .3d 351, 356 (Tex. 2000). The material fa cts relating to the nature of the installment plan servic e fe es ar e not in dispute. Consequently , whe ther the se rvice fee s at iss ue a re su bje c t to fi lin g re qu ir e me nts un de r se c tio n 91 2. 20 1 of the ins ur anc e c od e and its prede cessor

is a question of law. Subj ect Matter Jurisdiction

Subject matter jurisdiction i s essential to t he author ity of a c ourt to decide a ca se. Texas Ass’n of B us. v. Texas Air Control Bd. , 8 52 S.W. 2d 44 0, 44 3 ( Te x. 19 93 ). Stand ingis i mpl ic it in the conce pt of subj ect matter jurisdiction and is a component of subje ct matter jurisdiction. Id.

a t 44 3- 45 . T hu s, a

pla int if f m us t ha ve sta nd ing fo r the c ourt

to h a ve su

bje c t matte r j ur isd ic tio n to decide the merits of the c laims. Id. ; State Bar of Tex . v. Gome z , 891 S.W
. 2d 243, 245 (Tex. 1994). Subject matter jurisdi ction is never pr esumed a nd is an issue that may

be ra ised for the first time on appea l, and a lac k of subj ec t m att er jurisdiction on the pa rt of the c ourt ca

nnot be waive d by

the parties. Te

x as As s’ n o

f B us . , 852 S.W .2d at 443-45. Fa rmers a nd USAA ar g ue on appe al that the Plaintiffs do not have a private r ight of action to e nforc e or seek a reme dy for any potential violations of, or failure s to comply with, section 912. 2 0 1
. T h e y a s s e r

t th a t th e p o w e r to e n f

o r c e s e c ti o n 9 1 2
. 2 0 1 r e s ts e xc lu s iv e ly w ith the Depa rtment of Insuranc e and the Commi ssioner of Insuranc e, and that the Plain t i ff s ’ claims for decla ratory relief in this case “arise under or are premised on” an allege d violation of sec tion 912.201 and its prede cessor . There fore , Fa rmers and USAA conclude, t he P laintiffs lack standingto pursue8

their cla ims for dec laratory relief in this case bec ause those c l ai m s n ece ssarily involve an adjudication of w hether

Fa rmers a nd USAA have failed to c omply with section 912.201. Pla int iffs Ro mo and

Ra tc lif fe c ounte r t

hat th e y are no t se e kin g to p ur su e a pr ivate
cause of ac tion for a violation of section 912.201 and it s prede cessor . Rather, they argue, they

are pursuing claims for br eac h of contract as well as common law c laims for money had and r ece ived and over char g e t h at h ap pen to turn on whe ther F arme rs and USAA f iled the amounts they

have
c ha rg e d in a c c or da nc e wi th s e c tio n 9 12 .2 01 . T he y c on te nd that if Fa rm e rs and USA A f a ile d to fi le the a mou nt o f t he ins ta llm e nt p ay

me nt plan

fe e s in a c c or da nc e wi th s e c tio n 9 12 .2 01 and its prede cessor , such a f

ailure w ould g ive rise to a breac h of t he parties’ contracts of insurance unde r the theory that the insurer s are only allowed by law to c ontrac t f or amounts that are filed pursua nt to section 912.201. Charg ing a ny amount not filed i n acc ordanc e with sec tion 912.201, they argue, is i lle g a l and

is a br e a c h o f c on tr a c t because in su rers are a llo we d b y law t o c oll e c t on ly

“ lawf ull y pr e sc ri be d r a te s” purs ua

nt to the ir c on tr a c ts of ins ur anc e . Rom o and Ra tc lif fe ’s the or y is a s f oll ow s:

• c on tr a c ts of ins ur anc e re qu ir e ins ur e rs to c ha rg e on ly lawf ull y pr e sc ri be d amou

nts ;

• by virtue of the f

iled rate d o ct rine, law fully presc ribed amounts for the policies inv ol v e d i n th i s c a s e ar e t h o s e a m o u n t s f i l e d w i t h t h e D e p art m e n t o f I n s u r an c e in acc ordanc e with sec tion 912.201 and its predec essor;

• F arm e rs a nd

USA A d id not fi le the ins ta llm e nt pay me nt p lan f

e e s in a c c or da nc e wi th section 912.201;

• the installment pay ment plan fees, t here fore , are not lawfully presc ribed amounts that may be cha rg ed;

• by char g ing a

nd collecting the fe es F arme rs and USAA brea ched their contra cts of ins ur anc e wi th Romo and

Ra tc lif fe g ivi ngri se to c la ims fo r b re a c h o f c on tr a c t a s w e ll as re lated cla ims for money had and r ece ived and ove rcha rg e; and,The unde rly ing c auses of action for

brea ch of c ontrac t, money had and r eceived, and 5 overc harg e have been s ev er ed into a separ ate c ause numbe r to allow re solution of the claims for decla ratory relief in t h i s ca s e. W e addr ess standing in this case only with reg ard to the r equeste d decla ratory relief

. We e x press no opinion a s to the Plainti ffs’ sta nding w ith respec t to the underlying cause s of ac tion in the severe d cause

. 9 • Romo and Ratcliffe ha ve standing t o seek de clar atory relief as to whethe r the filed rate d o ct ri n e and, as a c orollary , section 912.201 apply to the installment pay

ment plan fe es at issue not a s a private cause of action for a failure to c omply with section 912.201, but as a pa

rt of their c ontrac t dispute. The jur is d ic ti o n a l is s u e h e r e is th e Pl a in ti f f s ’ s ta n d in g to h a v e th e ir r e qu e st for decla ratory relief adjud i ca t ed rathe r than the me rits of the under ly ing c ause of action for brea ch of c ontrac t. I n this inst ance , the standing issue is disti nct from the me rits. I n such ca ses, a court should not adjudicate the m erits of the pa rties’ c laims in deciding the issue of standing

. See Bland Indep. Sch. Dist. v. Blue , 3 4 S. W.3 d 5 47 , 5 54 -5 5 ( Te x. 20 00 ); In re Sullivan , 157 S.W .3d 911, 920 (Tex. App.—Housto n [ 1 4 t h Dist.] 2005, orig . proce eding ). Romo and Ratcliffe have soug ht de c larator y re lie f a s to the a

pp lic a tio n o f a

statut e and

the a pp licati on

of the fi le d r a te do c tr ine to
c e rt a in i te ms p ote nti a lly

a dd re sse d b y that st a tut e . T he y

have ple a de d th a t th e y

se e k th is r e lie f i n
c on ne c tio n wi th the ir un de rl y ing c la im f or br e a c h o f c on tr a c t. The c onnection of se ction 912.201 5 to the re quest for de clar atory relief here is that an alleg ed fa ilure to comply with the filing require ments of section 912.201 coupled with cha rg ing a n unfiled amount constitutes a bre ach of the contra ct of insurance

. The P laintiffs claim t he failure to comply with section 912.201 while cha rg ing the installment pay

ment plan fee s is a brea ch of contra ct and they will seek re medies for

that brea ch. This may or may not be a viable claim, but this is the alleg ation. I t doe s not imply a private rig ht of action to sue for

a violation of section 912.201. The underly ing dispute relating to the reque st for10

decla ratory relief is for breac h of contra ct. The a lleg ed noncomplianc e with the statute is simply one
c omp on e nt o f t

he a lle g e d b re a c h of co ntr a c t. Wh e the r t he re is a ny me ri t to thi s th e or

y or any me ri t or viability

to the underlying br eac h of contra ct claim is an inquiry appropr iate for a dispositi on on the merits of the unde rly ing c laim rather than disposition as a matter of s t an ding a nd jurisdiction with respec t to the reque st for dec laratory relief in this case. Romo and Ratcliffe ha

ve standing to seek a

judicial resolution of t he leg al questions of wh e the r t he statut e a t issu e and the fi le d ra te do c tr ine a pp ly in the mann e r that the y c la im a ff e c ts the am o u n t s t hat the insurer s are allowed to cha rg e under their contra cts of insuranc e. As policy holders alleg ing a

brea ch of t h e i n s u ra n ce c ontrac t they have a justiciable interest in the
re so lut ion of the qu e sti on s. We hol d that the tr ia l c ourt

ha d s ub je c t matte r j ur isd ic tio n to a dd re ss the questions prese nted by the claims for

decla ratory relief in this case.
Fili ng Re qui re ments Und

e r the Sta tute The Plaintiffs’ c laims are ba sed on the a rg ument that former article 17.25, section 6 of the insura

nce c ode and its ame nded ver sion curre ntly in force , s ec t i o n 9 1 2 .201, require d and continue to re quire c ounty mutual insura

nce companies to f

ile with the Depa

rtment of Insuranc e a
sc he du le of

the a mou

nts th e y c ha rg e ins ur e ds fo r a llo wi ngpa y me nts to b e ma de in i ns ta llm e nts
. For mer a rticle 17.25, sec tion 6 provided:
Sec. 6. S uch companies shall file wit h the B oard a schedule of its rates, the a mount of po lic y fe e , in sp e c tio n f

e e , mem bers hip f

e e , o r i nit ia l c ha

rg e by wh a te ve r n a me c a lle d, to b e c ha

rg e d it s p oli c y

ho lde rs or

tho se a pp lyingfo r p oli c ie s.11

Act of June 7, 1951, 52d L eg ., R.S., ch. 491, § 1, art. 17.25, sec. 6, 1951 Tex. Gen. L aws 868, 1043 [hereinaf ter 1951 Ac t] , repeale d byAct of Ma y 22, 2001, 77th L eg ., R.S., ch. 1419, § 31(a), 2001 Tex. Gen. L aws 3658, 4208 [here inafter 2 0 0 1 Act]. Article 17.25, sec tion 6 was rec odified and repla ced e ffe ctive June 1, 2003, see 2 001 Act, § 33, 2001 Te x . Gen. L aws at 4201, by section 91 2. 20 1 o f t

he ins ur anc e c od e , w hic h p ro vid e s: A county mutual insurance company shall file wit h the department a schedule of the a mou nts the c omp any

c ha rg e s a po lic y

ho lde r or an a

pp lic ant f or a po lic y , r e g ard le ss of the term the company

uses to ref

er to those c harg es, including “rate,” “ policy fee ,” “inspec tion fee,” “member ship fee,” or “initial cha rg e.” A county

mutual insurance company shall file premium, expense, and loss experience data with the de partment in the manner

presc ribed b y t h e co m m issioner. An insurer shall file the sche dules and data require d under this sec tion accor ding to r ules promulg ated by

the commissioner.
Tex. I ns. Code Ann. § 912.201 (West 2007).

The text o f ar t i cl e 1 7.25, section 6 wa s first enac ted in 1947 as ar ticle 4860a- 20, section 2a(d) of the Tex as R evised Civil St atutes. SeeAct of June 5, 1947, 50th L eg ., R.S., ch. 367, § 1, sec. 2a (d), 1947 Te x . Gen. L aws 739, 741, repeale d by 1951 Act, § 4, 1 9 5 1 T ex . Ge n . L aws at 1094. I t was re codified in 1951 without c hang e as article 17.25, section 6 of the insura nce c ode,

see 1 9 5 1 A c t, § 1, art. 17.25, se c . 6 , 1 9 5 1 T e x. G e n . L aw s a t 1 0 4 9 ( r e p e a le d 2 0 0 1 ) , an d

th e te xt
rema ined uncha

ng ed b y the leg islature until the statute was a g ain re codified a s section 912.201 eff ective 2003, see 2001 Act, § 1, sec . 912.201, 2001 Tex. Gen. L aws at 3975. The re codification of ar ticle 17.25, sec tion 6 was part of the state’s ong oing statutory revision and codif ication prog ram begu n i n 1963. The prog ram c ontemplates a topic- by -topic re vision of the state’s g ener al and perma nent s tatute l aw without substantive chang e. Tex. I ns. Code Ann. § 30.001(a ) (West 2007).12 F or me r a rt ic le 17 .2 5, se c tio n 6 re qu ir e d c ounty mut ua l in sura nc e c omp anie s to fi le a sche dule of two ty

pes of c harg es to “policy

holders or those a

pply ing f or policies”: (1) the company ’s rates; and (2) the amount of policy fee , inspection fee , membership fe e, or initial cha rg e by whateve r name called.
See 1951 Act, § 1, ar

t. 17.25, se c. 6, 1951 Tex. Ge n. L aws a t 1043 (repe aled 2001) . The installment pa y me nt p lan fe e s at issu e in thi s ca se do no t fa ll into e ith e r of the se c a te g or ie s. Th e y are no t a rate
nor a c omponent of a rate
. Nor a re the y an initial char g e for

a policy that might g o by

a var iety of labels such a s “policy

fee ,” “inspe ction fee ,” or “ membership fee .” I t is undisput ed by the par ties that the installment pay

ment plan fe es at issue are a charg e associated with the compa ny ’s providing

an o p ti o n a l p la

n f o r a p o li c y

h o ld e r to p ay h is o r h e r p r e mi u m in in s ta ll me n ts
. T h e parties have stipulated that a policy

holder may

avoid these c harg es altog ether and re ceive the same insura nce
cover ag e by

paying the pre mium for the policy in full when due. The ref ore, since the fe es at issue

are no t a rate or an in iti a l c ha

rg e fo r a po lic y , for

me r ar tic le 17 .2 5, se c tio n 6 did

no t r e qu ir e c ounty mutual insurers to file a schedule of amounts they or their a ffiliates c harg ed for providing the option to pay premiums in installm ents. Acc ording ly , the trial cour t erre d in declar ing that the installment fee s are char g es cove red by former article 17.25, section 6. T h is in te r p r e tati o nis c o n s is te n t w it h th e r e g u lato r

y s tr u c tu r e im p le me n te d

b y the De pa rtme nt of I ns ur anc e . Sin c e 19 92 , the De pa rtme nt ha s re qu ir e d a

uto ins ur e rs oth e r t

ha n c ounty mut ua l in sure rs to of

fe r an ins ta llm e nt pa

y me nt pla n purs ua nt to Rul e 14 of

the Te xas Auto mob ile Rules and Rating Manual. Rule 14 wa s made a pplicable to county mutual insure rs in 1997 pur suant13

to P e r s o n a l A u to Po li c y ( “ PA P” ) Sp e c ia l I n s tr u c ti o n N o . 1 1 , w h ic h is p art o f th e p o li c y form that county mutual insurers ar e re quired to use in T exas. Rule 14 both r equire s auto insurers to make an installment pay

ment plan ava ilable to policy holders and e x pressly

allows t h e i n s u rer s to charg e a
re g ulate d f

e e fo r m a kin g the pla

n avail abl e. I t is un dis pu te d th a t F arm e rs and USA A w e re in
c omp lia nc e wi th R

ule 14 duri nga ll r e le va

nt t ime fr a me s. F or me r a rt ic le 17 .2 5, se c tio n 6 wa s in fo rc e a t th e tim e Rul e 14 wa s o ri g ina lly pr omu lg a te d a

nd a t th e tim e that th e De partme nt o f I ns ur anc e ma de Rul e 14 a pp lic a ble to c ounty mutual insurers. The Depa rtment of I nsuranc e has ne ver taken the position that the fee s authorized by Rule 14 were require d to be filed p u rsuant to forme r ar ticle 17.25, sec tion 6 or its successor section 912.201. I t is undisput ed that the De partment ha s been responsible for the enf orce ment of former article 4860a-20, se ction 2a(d) , former article 17.25, section 6, and cur rent sec tion 912.201 since 1947 an d that the Depa rtment has neve r re quired a county mutual insurer to file the a mount of a service char g e for

an installment pay

ment plan pursuant to these statutes. The De partment h as a s p ec i fic re g ulatory

scheme with respec t to inst allment pay ment plans and the f

ees insure rs
are allowed to char ge with respect to those plans. The Depa rtment does not consider former article 17.25, section 6 and its su cc es s or sec tion 912.201 part of that re g ulatory scheme

. “Construction of a statute by the admini strative ag ency char g ed with its enforc ement is entitled to serious consider ation, so long a s the co n s t ru ct i on is reasona ble and doe s not contradict the plain lang uag e of the statute.” Tar ra nt A pp ra isa l D ist . v . M

oo re , 845 S.W .2d 820, 823 (Tex. 1993);
s ee State v . Pub l i c Ut i l

. C o mm’n of Tex

. , 883 S.W .2d 190, 196 (Tex. 1994) (“[T]he contempora

neous construc tion

o f a s ta tu te b y th e a d ministrative a g ency

char g ed with its enforc ement14

is e nt itled

to g re a t w e ig ht. ” ); Texas Employe rs’ Ins. Ass’n v . Holmes , 196 S.W .2d 390, 395 (Tex. 1 9 4 6 ) ( “ [T ]h e p r a c ti c a l in te r p r e tati o n o f th e A c t b y th e a g e n c y c h ar g e d w it h the duty

of administering it is entit led to the hig hest respe ct from the c ourts.”); Stanford v. Butler , 181 S.W .2d 269, 273 (Tex. 1944) (“T he conte mporane ous construction of a n act by those who ar e cha

rg ed with the duty

of its enforc ement . . . is wo rt h y o f s er i o us consideration as an aid to interpr etation, particula rly wher e such c onstruction has bee n sanctioned by long a cquiesc ence .” (quoting 39 T EX . J UR . Statutes § 1 25 (1 93 6) ))

. Th e De pa rtme nt of I ns ur anc e ’s pr a c tic a l c on str uc tio n of fo rm e r a rt ic le 17.25, section 6 and its re g ulatory scheme for de ali n g with premium installment pay ment plans including the char g es for those plans are consistent with the lang uag e of the statute and e ntitled to serio u s c o n s id e r a ti o n . N o th in g in th e la n g u a g e o f

f o r me r arti c le 1 7
. 2 5 , s e c ti o n6 r e qu ires the adoption of a

n interpre tation inconsistent with the i nterpre tation and pra ctice of the Depa rtment of Insuranc e. The De partme n t o f I nsuranc e continued its re g ulatory scheme relating to pre mium installment pa

y ment plans and did not requir e sche dules of cha rg es for those plans to be filed e ven afte r for mer a rticle 17.25, section 6 was re place d by section 912.201. The D epar tment’s treatment of the statute befor e and afte r the 2003 rec odification proce ss w as the same. This is , o f course, consistent with the proposi t i o n t h at t he re codification process did not make a substantive chang e. See Te x. I ns . Cod e Ann. § 30 .0 01 (a ). Ho we ve r, the qu e sti on of wh e the r the re c od if ic a tio n of a rt ic le 17 .2 5, se c tio n 6 —n owse c tio n 9 12 .2 01 —d id, in f a c t, i nv olv e a su bs tan ti ve c ha ng e (e ve n if inadver tent) to now re quire that the i nstallment pay ment plan charg es at issue are subject to filing require ments raises a

n additional issue.15 Romo and Ratcliffe point to the languag e of the rec odified statute and a rg ue that the
rec odified version require s county mutual insurers to file a

schedule of anyamount that the company char g e s a p o li c y

h o ld e r o r a

p p li c an t f o r a p o li c y r e g ar d le s s o f w h a t th e c h ar g e is f o r . Ro mo and Ratcliffe rely

on the following lang uag e in sec tion 912.201: A county mutual insurance company shall file with the Depa

rtment a schedule of the a mou nts the c omp any

c ha rg e s a po lic y ho lde r o r a

n a pp lic ant fo r a po lic y , r e g ard le ss of the ter m the company

uses to ref

er to those c harg es . . . .
Id. § 912.201. This lang uage i s , fr o m a gra mmatical standpoint, a structura l chang e fr om the lang uag e of former article 17.25, section 6. I t uses essentially the same w ords, but moves the cla uses around in a

way that allows for a

n argument that, wheth er de liberate or not, the mea ning of the statute was c hang ed in the re codification process. See F leming Foods of Tex., Inc

. v. Ry lander , 6 S.W. 3d 27 8, 28 6 ( Te x. 19 99 ) ( wh e n s pe c if i c p r o v i s i on s o f a

“ no ns ub sta

nti ve ” c od if

ic a tio n a re dir e c t, unambig uous, and ca

nnot be re conciled w ith prior law, the c odification rather than the prior, repe aled statute must be g iven ef fec t). The r eshuff

ling of the clause s in the statute cer tainly alters the clea r statement in for

mer a rticle 17.25, sec t i o n 6 that limit ed the c harg es cove red to two specific cate g ories—(1) a rate, and (2) an initial cha rg e for a policy

(by whateve r name called) . The structure of the re codified statute pr ovides less clea r g uidance as to wha t ch arge s are cover ed and wh a t c ha rg e s are no t. On its face , the new la

ng uag e could c onceiva

bly be re ad as r equiring county mutual insurers to file a schedule of any amount they char g e poli cy holders (or applicants for policies) for lit e ra lly any

thi ng . Ho we ve r, the re are a numbe r of pr ob le ms wit h th is c on str

uc tio n. I f r e a d to a

pp lyFa rmers a nd USAA ar g ue that the langua g e of section 912.201 mandates this interpretation 6 b e c a u s e t h e c o d i f

i e d v e r s i o no f

t h e s t a tu t e s h o u l d

b e r e a d i n s u c h a w ay t h a tt h e w o r d s “ f o r a p o l i c y” mod if y the te rm “ c ha rg e s” rathe r t

ha n th e ter m “ap pli c ant. ” Th is g ra mmatic a l ma

ne uv e r w ou ld make the statute literally apply only to char g es “f

or a policy” made to a policy holder or a

n “applica nt” as opposed to any

char g e (unc onstrained by modify ing la

ng uag e) a n insurer mig ht make to a policy

holder or a

n “applica

nt for a policy .” Howe ver, the history of the text of section 912.201 does not support this reading . For mer a rticle 17.25, sec ti o n 6 appli ed to amounts “to be c harg ed policy holders or those apply ing for poli cies.” The nonsubst antive revision repre sented by section 912.201 uses the phra se “amounts the company char g es a policy

holder or a

pplicant for a

policy .” I t is appare nt that the codifier s wer e attempting to f ollow their statutory

mandate to r estate the law
“ in m od e rn

Am e ri c an E ng lis h to the g re a te st e xten t po ssi ble ,” and repl aced the p hr a se “ tho se applying for policies” with the phrase “applica nts for policies.” See Tex. I ns. Code Ann. § 30.001(b) (We st 2 00 7) . Wh e the r t he re pla c e me nt i mpr ov e d o r m od e rn ize d th e En gli sh in the statut e is de bata ble . H ow e ve r, it i s mo re re a so na ble —in lig ht o f t he fa c t th a t th e 20 03 c od if ic a tio n o f a

rt ic le 17.25, section 6 wa s intended t o be nonsubstantive—to re ad the phr ase “ for a policy ” to be associate d with the term “a pplicant” r ather

than the ter

m “cha rg es.” 16 to any char g e, the statute would cover any ty pe of char g e by an insurance company —whether

or not the cha rg e wa s relate d to the insurance policy or the insura

nce r el ati onship—simpl y beca use the person c harg ed also ha

ppened to be a policy

holder or an applicant for a policy . For example, there would be nothing to limi t the statute’s application to amounts a company might cha

rg e a pe rson for renting a piec e of pr operty owned by

the company , or for

amounts t h e company

might cha

rg e for using a company parkingg ara g e if the person char g ed also happene d to be a policy holder. Such a

n extraordinarily

broad r eadingof the statute would be possible, but not reasonable

. Th e le g isl a tur e pla inl y int e nd e d the statut e to r e qu ir e c ounty mut ua l in sure rs to f

ile

a mou nts that the y c ha

rg e “ a po lic y

ho lde r” or “ an a

pp lic ant f or a po lic y ” tha

t relate to the policy of insurance
. This is evidence d by the fa ct that the list of examples of charg es “included” unde r the 6 statute’s cove rag e ar e al l char g es tied to the purc hase of the insuranc e policy

—rate , policy

fee , inspection fee , membership fee, or initial cha rg e. “I ncludes” is a term of e nlarg ement and not of17

limit ation or exclusi ve enume ration and doe s not create a pr esumption that components not
e xpre sse d are e xclu de d. Te x. Go v’ t Cod e Ann. § 31 1. 00 5( 13 ) (We st 20 05 ). Ho we ve r, the pr inc ipl e of statut or

y c on str uc tio n k no wn a s e jus de m ge ne ris lim its the br e a dth of g e ne ra l te rm s in a statut e when the statute g ives examples or a list o f wh at is intended to be cove red. “ [W ]hen words of a g ener al nature are used in c onnection with the desig nation of par ticular objec ts or classes of persons or thing s, the meaningof the g ener al words will be re s t ri cted to the pa rticular de signation.” See State v. Fidelity &Deposit Co. of Md. , 223 S.W .3d 309, 312 (Tex. 2007) (quoting Hilco Elec . Coop. v. Midlothian Butane Gas Co. , 111 S.W .3d 75, 81 (Tex. 200 3 )). I n other wor ds, the principle of

e jus de m ge ne ris dir e c ts that the te rm “ c ha rg e s” a s u se d in

se c tio n 9 12 .2 01 —s inc e it i s u se d g e ne ra lly without any

definition—be i nterpre ted t o include only char g es of the s ame kind, class, or nature a s the ty pes of c harg es listed in the statute. Id. I n a dd iti on , r e a din g the statut e to inc lud e c ha rg e s that have no thi ng a t a ll t o d o w ith the insuranc e policy

arguably runs afoul of the princ iple of statutory construction that we consider the conseque nces of a particula r construction and not c onstrue a statute in a manner that will produce absurd results. Tex. Gov’t C ode Ann. § 311.023 ( West 2005); see Fle ming Foods , 6 S.W .3d at 284;

see also State v. Hodges , 92 S.W .3d 489, 494 (Tex. 2002). To construe the statute to apply to any
and a ll c ha

rg e s an ins ur e r mig ht make to a po lic y ho lde r r e g ard le ss o f w he the r t ho se c ha rg e s r e la te to the i nsuranc e poli cy

—e.g . parking g ara g e fees for visitors to the company ’s building who ha ppen to b e po lic y

ho lde rs or c a fe te ri a c ha rg e s to e mpl oy e e s wh o us e the c omp any ’s c a fe te ri a and are a lso policy holders—would lead to a

bsurd and plainly

unintended re sults. As the Texas S upreme Court noted in State v. Hodge

s , the construc tion of the statute advoc ated by Hodg es in that ca se wa s18

l i n g u i s t i c a l l y po ssi ble , but it was not r easona ble nor require d by the statute’s languag e, and the court declined to ado p t i t. 9 2 S. W. 3 d a t 4 9 5
. Si mi la

r ly , h e r e it

is p o s s ib le to c o n s tr

u e th e r e c o d if

ied statute as apply

ing to c harg es made by

an insurer

reg ardle ss of their connec t i o n t o t he policy of insurance , but such a c onstruction is not reasona ble in light of the purpose of the statute, the history of the statute, the te x t rea d as a w hole, the re g ulatory scheme in place a ddressing the cha rg es at issue, and the p o t en t i al consequence s of such a broad c onstruction. Thus, g iven the history and text of section 912.201, we are of the view that it should be interprete d to include only those cha rg es that
are of the same kind, c lass, or nature as a r ate, policy fee , inspection fee , membership fe e, or initial char g e. Another pr oblem with the construction adv o c a te d by Romo and Racliffe is that it runs counter to the stated leg islative intention that the 2003 c odification be without substantive chang e. Te x. I ns . Co de Ann. § 3 0. 00 1( a ). Th e Pla int if fs ’ co ns tr uc tio n wou ld n e c e ssa

ri ly e nta il a dr a ma tic chang e in this statute—a cha ng e at odds with the De partment of I nsuranc e’s r eg ulatory

enfor ceme nt of the statute. I t would involve chang ing the char g es cove red f rom two specif

ic categ ories that ar e
e xp r e s s ly a s s o c iate d

w it h th e p o li c y

o f in s u r an c e to an y

th in g anin s u r e r

mi g h t f in d it s e lf c h a r g ing a policy holder, whe ther the c harg e re lates to the insurance relationship or something else a ltoge ther. S u c h ani n a d v e rt e n tc h an g e i s c e rt a i n l y p o s s i b l e , a s d e m o n s t r a t e d b y Fleming Foods of Texas, Inc

. v. Ry lander , 6 S.W .3d 278 (Tex. 1999). The c ourt held i n that case that if the cha ng e occ urs in clea

r,
un a mbi g uo us langua g e in t he re c od if ie d v e rs ion

of the statut e , we are ob lig a te d to e nf or c e the statut e as written a

nd g ive effec t to the i ntention of the leg islature as e x presse d in the unambiguous words of t h e s t at ute unless there is an obvious error , such as a ty pog raphic al er

ror, or application of the19

literal l ang uag e of the s tatute would produc e an a bsurd re sult. Fleming Foods , 6 S.W .3d at 284-85. The c h an g e in

th e s tatute a t i s s u e h e r e , h o w e v e r , is n o t t h e s a me s o rt o f

c h an g e th a t t

h e c o u rt w as fa c e d w ithinFleming Foods . H e re , th e c ha ng e in t he str uc tur e of the statut e do e s not d ic ta te a sin g le construction that is so clea r, unambig uous, and without absurd r esult that we a re c ompelled to g ive it effe ct. Rather, the rec odified st atute, while conce ivably subject to the construc tion advocate d by the Pla int if

fs , c an b e and

is m ore r easo nab ly

c on str ue d in a mor e lim ite d f

a sh ion wh e n r e a d a s a whole with appr opriate pr inciples of statutory construction applied. Construing sec tion 912.201 t o apply to char g es that ar e of the same kind, cla ss, or nature as a r ate or

an initial charg e for

a policy has the be nefit of r econc iling the history of the statute, the De partment of I nsuranc e’s r eg ulatory

view of the statute, the existence of a specific , separ ate r eg ulatory

structure to deal with t he ins tallment pay ment plan fees at issue, and the f act that the c o d if ic a ti o n o f s e c ti o n 9 1 2
. 2 0 1 w a s in te n d e d to b e d o n e w it h o u t s u b s ta n ti v e c h an g e. The Pla int if fs ’ c on str uc tio n w ou ld p ut t

he se va ri ou s fa c tor s in

c on fl ic t a nd c re a te un ne c e ssa

ry pr ob le ms in the enfor ceme nt and application of section 912.201. Consequently , we hold that sec tion 912.201,
as cur rently formulated, a

pplies to charg es made by county mutual insurers that are of the same kind, clas s , o r n a tu

r e a s a r a te o r an in it ia l c h ar g e f o r a p o li c y r e g ar d le s s o f w h a t th a t c h arg e is ca lled. As noted pre viously , the installment pay ment plan fe es at issue in this ca s e ar e n ot such a c harg e. Acc ording ly , the trial cour t erre d in declar ing that the installment fees a re c har ges co v ere d by section 912.201.20

Conclu sion Our c onclusion that former article 17.25, section 6 and its succe ssor section 912.201 do not apply

to the installment pay

ment plan fe es at issue in this case ef fec tively moots any

question
re g ard ingthe a

pp lic a tio n o f t

he fi le d r a te do c tr ine , a

nd we do no t r e a c h th a t is su e . We re ve rs e de c laratio ns 1, 2, and

3 in the F ina l D e c lara

tor y Judg me nt e nte re d b y

the dis tr ic t c ourt

in t his c a us e
and ho ld a s f oll ow s:
1. The fe es charg ed by Fa rmers Te x as County

Mutual I nsuranc e Company and USAA County

Mutual I nsuranc e Company fo r m aking an installment pay ment plan ava ilable for the pay ment o f p r e mi u ms o n a utomobile insura

nce policies are not char g es cove red by Texas I nsuranc e Code sec tion 912.201 or its predec essor, for

mer Te x as I nsuranc e C ode article 17.25, section 6, and are no t re qu ir e d to be fi le d w iththe Te xas D e pa rtme nt o f I

ns ur anc e purs ua

nt t o those statutes; and 2. The c ollection of the ser vice c harg es fr om Plainti ffs I rene Romo and Fe nn Ratcliffe by Fa

rmers Texas County Mutual I nsuranc e Company and USAA County Mutual I nsuranc e Company , respe ctively , for pr oviding a n installment pay

ment plan for the automobile i n s u ranc e pre miums paid by Plaintiffs I rene Romo and Fe nn Ratcliffe is not prohibited by law for failure of F arm e rs Te xas C ounty

Mu tua l Ins ur anc e Com

pa ny and US AA Co un ty Mutual I nsuranc e Company to have f iled a sche dule of such c harg es with the Depa rtment of I nsuranc e pursuant to Texas I nsuranc e C ode sec tion 912.201 or its prede cessor , former Texas I nsuranc e Code a

rticle 17.25, sec tion 6. Our holding is li m i t ed to the leg al questions of (1) the construc tion of section 912.201 and its prede cessor as stated a

nd (2) whe ther t h e ch ar g es at issue a re subjec t to the filing21

require ments of those statutes. We of fer no opinion a s to the propriety of the c harg es in any

other context or with respec t to any other law

.

__________________________________________

G. Alan Waldrop, Just ice Be fore J ustices Patterson, Pember ton and Waldrop Affir med in part; Rever sed and Rende red in pa rt Filed: Apr il 15, 2008