IN THE

TENTH COURT OF APPEALS

No. 10-12-00105-CV

SHERRIE LOUISE TAYLOR,

Appellant

v.

FOREMOST LLOYDS OF TEXAS, 

ALVIN LANCE LOUGH 

AND BANK OF AMERICA, NA,

Appellees

From the 18th District Court

Johnson County, Texas

Trial Court No. C200900407

MEMORANDUM OPINION

Appellant, Sherrie Louise Taylor, challenges the trial court’s summary judgment 

in favor of appellees, Alvin Lance Lough and Bank of America, N.A. (the “Bank”).1 In 

one issue, Taylor asserts that the trial court erred in granting summary judgment in 

favor of the Bank and denying her summary-judgment motion. We affirm.

 

1 Though named as a party to the judgment and appeal, Lough has not filed a brief in this matter.
Taylor v. Foremost Lloyds of Texas Page 2
Taylor v. Foremost Lloyds of Texas Page 3

I. BACKGROUND

The dispute in this case centers on who is entitled to insurance proceeds 

associated with a house that burned down. Taylor claims that she is entitled to the 

proceeds because, among other things, she and Lough lived together in a house located 

at 116 Wood Dale in Burleson, Texas, from 2005 to 2007. Apparently, Taylor continued

living in the house after the couple broke up and Lough moved out in mid-2007.

In any event, on March 1, 2007, Lough, an “unmarried person,” executed a 

homestead lien contract and deed of trust with the Bank for a loan secured by the 

property at issue in this case—the proceeds of which, according to Taylor, were used to 

buy land to move Lough’s feed store. The contract and deed of trust specifically stated 

that Lough granted the Bank a lien . . . “in and to the following described real property, 

together with all improvements, all proceeds (including without limitation premium 

refunds) of each policy of insurance relating to any of the improvements, or the Real 

Property . . . .”

As of March 1, 2007, the Johnson County property records indicated that title to 

the property was vested in Lough. The terms of the contract and deed of trust required 

Lough to purchase and maintain “policies of fire insurance with standard extended 

coverage endorsements” for the property, including “an endorsement providing that 

coverage in favor of Lender will not be impaired in any way by any act, omission or 

default of Owner or any other person.” The contract and deed of trust also stated that: 

“Whether or not Lender’s security is impaired, Lender may, at Lender’s election, receive 

and retain proceeds of any insurance and apply the proceeds to the reduction of the 
Taylor v. Foremost Lloyds of Texas Page 4

indebtedness, payment of any lien affecting the Property, or the restoration and repair 

of the Property.”

Thereafter, Lough purchased a fire insurance policy from Foremost Lloyd’s of 

Texas (“Foremost”). On the declarations page of the insurance policy, Lough was listed 

as the insured and the Bank was identified as the mortgagee. The “Mortgage Clause” of 

the insurance policy provided the following:

b. We will pay for any covered loss of or damage to buildings or 

structures to the mortgagee shown on the declarations page as interests 

appear.

c. The mortgagee has the right to receive loss payment even if the 

mortgagee has started foreclosure or similar action on the building or 

structure.

. . . .

e. If we pay the mortgagee for any loss or damage and deny payment to 

you [Lough] because of your acts or because you fail to comply with the 

terms of this policy:

. . . .

(2) the mortgagee’s right to recover the full amount of the 

mortgagee’s claim will not be impaired.

Nowhere in the insurance policy is Taylor listed as an insured.

In her third amended petition for declaratory relief, Taylor alleged that Lough 

executed a quitclaim deed to the property in favor of her on January 29, 2007. However, 

Taylor did not record this deed until September 17, 2007. Furthermore, the Bank 

contends in its brief that Lough and Taylor executed reciprocal quitclaim deeds to the 
Taylor v. Foremost Lloyds of Texas Page 5

property on or about January 29, 2007; thus, Taylor did not have a clear ownership 

interest in the property.2

In July 2007, the relationship between Lough and Taylor soured, and a dispute 

arose over ownership of the property. After Taylor recorded her deed, Lough filed suit, 

seeking a declaration that he is the owner of the property and that Taylor’s deed is 

void.3 After several settings, the trial court signed a final judgment in favor of Taylor 

on May 26, 2009. Specifically, the final judgment stated that Taylor owned the property 

in question pursuant to the quitclaim deed.

On May 30, 2009, the property was damaged by fire. Thereafter, Taylor sued 

Lough and Foremost to recover the proceeds from the insurance covering the property. 

The Bank intervened, seeking a declaration that it was entitled to the insurance 

proceeds pursuant to the terms of the insurance policy. Foremost deposited the 

insurance proceeds into the registry of the court and was subsequently non-suited.

Later, the Bank filed traditional and no-evidence motions for summary 

judgment, arguing that it was entitled to the insurance proceeds because: (1) the Bank 

is a third-party creditor beneficiary under the insurance policy with standing to enforce 

its rights to the proceeds; (2) Taylor lacks standing to challenge the enforceability of the 

insurance policy because she is a stranger to the contract; and (3) even if Taylor has 

standing, her challenges to the enforceability of the insurance policy fail as a matter of 

 

2 The record does not contain a copy of the quitclaim deed allegedly executed by Taylor in favor 

of Lough. However, Lough directs us to an affidavit he executed and deposition testimony, wherein he 

alleged that “Sherrie Taylor simultaneously executed a quitclaim deed of the same property back to me.” 

Taylor disputes this assertion.

3 The Bank was originally named as a party to Lough’s suit, but it was subsequently non-suited.
Taylor v. Foremost Lloyds of Texas Page 6

law. The Bank’s summary-judgment motion was scheduled to be heard on February 2, 

2012. 

On January 27, 2012, Taylor responded to the Bank’s summary-judgment 

motions and also filed a “counter motion” for summary judgment, wherein she argued 

that the Bank’s lien is invalid because the Bank had notice of Taylor’s homestead rights 

and did not obtain her consent to the lien; the Bank had actual and constructive notice 

of Taylor’s ownership interest in the property; res judicata and collateral estoppel 

barred the Bank from disputing Taylor’s ownership interest; and the Bank’s lien 

violated the Texas Constitution’s prohibitions governing liens on homesteads. 

The Bank objected to Taylor’s “counter motion” for summary judgment because 

it was not served at least twenty-one days before the scheduled hearing. See TEX. R. CIV.

P. 166a(c). The record does not contain an explicit ruling on the Bank’s objection.

On February 2, 2012, the trial court conducted a hearing on the Bank’s 

“Amended Traditional and No[-]Evidence Motion for Summary Judgment, Plaintiff’s 

Response, Intervenor’s Reply, the evidence on file, and the arguments of counsel.” The 

trial court made no mention of Taylor’s “counter motion.” In any event, the trial court 

granted the Bank’s summary-judgment motion without specifying the grounds. As a 

result of the trial court’s judgment, the Bank was awarded the insurance proceeds 

deposited in the court’s registry, and Taylor took nothing.

Taylor subsequently filed a motion for new trial and a motion for 

reconsideration, both of which were denied by the trial court. This appeal followed.
Taylor v. Foremost Lloyds of Texas Page 7

II. STANDARD OF REVIEW

The purpose of a declaratory action is to establish the existing rights, status, or 

other legal relationships between the parties. City of El Paso v. Heinrich, 284 S.W.3d 366, 

370 (Tex. 2009); see TEX. CIV. PRAC. & REM. CODE ANN. § 37.002(b) (West 2008). Suits for 

declaratory judgment are intended to determine the rights of parties when a 

controversy has arisen, but before any wrong has been committed. See Armstrong v. 

Hixon, 206 S.W.3d 175, 179 (Tex. App.—Corpus Christi 2006, pet. denied); Montemayor v. 

City of San Antonio Fire Dep’t, 985 S.W.2d 549, 551 (Tex. App.—San Antonio 1998, pet. 

denied).

Declaratory judgments are reviewed under the same standards as other 

judgments and decrees. See TEX. CIV. PRAC. & REM. CODE ANN. § 37.010 (West 2008); 

Hawkins v. El Paso First Health Plans, Inc., 214 S.W.3d 709, 719 (Tex. App.—Austin 2007, 

pet. denied). We look to the procedure used to resolve the issue at trial to determine the 

standard of review on appeal. See Hawkins, 214 S.W.3d at 719; Armstrong, 206 S.W.3d at 

179; see also City of Galveston v. Tex. Gen. Land Office, 196 S.W.3d 218, 221 (Tex. App.—

Houston [1st Dist.] 2006, pet. denied). Because the trial court determined the 

declaratory judgment through summary judgment proceedings, we review the 

propriety of the trial court’s declarations under the same standards that we apply to 

summary judgments. See City of Galveston, 196 S.W.3d at 221; City of Austin v. Garza, 124 

S.W.3d 867, 871 (Tex. App.—Austin 2003, no pet.); Lidawi v. Progressive County Mut. Ins. 

Co., 112 S.W.3d 725, 730 (Tex. App.—Houston [14th Dist.] 2003, no pet.).
Taylor v. Foremost Lloyds of Texas Page 8

The function of a summary judgment is to eliminate patently unmeritorious 

claims and untenable defenses, not to deprive litigants of the right to a trial by jury. 

Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 228 (Tex. 2004). We review the 

grant or denial of a summary judgment de novo. See Tex. Mun. Power Agency v. Pub. 

Util. Comm’n of Tex., 253 S.W.3d 184, 192, 199 (Tex. 2007); see also Provident Life & 

Accident Ins. Co., 128 S.W.3d 211, 215 (Tex. 2003). If the trial court’s order granting 

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

we will affirm the judgment on appeal if any of the theories advanced by the movant 

are meritorious.4 Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001).

Here, the Bank filed traditional and no-evidence motions for summary judgment 

in response to Taylor’s request for a declaration that she is entitled to the insurance 

proceeds. When a party moves for both a traditional and a no-evidence summary 

judgment on the same ground, we first review the trial court’s judgment under the 

 

4 Taylor urges us to apply the standard governing instances where both parties have filed 

motions for summary judgment. We decline to do so for two reasons. See, e.g., Mid-Continent Cas. Co. v. 

Global Enercom Mgmt., 323 S.W.3d 151, 153-54 (Tex. 2010) (stating that when both parties move for 

summary judgment and the trial court grants one motion and denies the other, the reviewing court 

should review the summary-judgment evidence presented by both sides, determine all questions 

presented, and render the judgment the trial court should have rendered). First, the record reflects that 

Taylor filed her “counter motion” for summary judgment on January 27, 2012, which was less than 

twenty-one days before the scheduled hearing on the motions. See TEX. R. CIV. P. 166a(c) (providing that 

the summary-judgment motion and any supporting affidavits shall be filed and served at least twentyone days before the time specified for hearing); see also Rutledge v. Miller, No. 10-05-00018-CV, 2006 Tex. 

App. LEXIS 889, at **2-3 (Tex. App.—Waco Feb. 1, 2006, no pet.) (mem. op.). Therefore, because Taylor’s 

“counter motion” for summary judgment was not filed in compliance with the Rules of Civil Procedure, 

the trial court was not required to consider it at the February 2, 2012 hearing. See TEX. R. CIV. P. 166a(c); 

see also Etheredge v. Hidden Valley Airpark Assoc., 169 S.W.3d 378, 383 (Tex. App.—Fort Worth 2005, pet. 

denied) (noting that summary judgment is a harsh remedy and that courts must strictly construe the 

notice requirements of Texas Rule of Civil Procedure 166a). This brings us to the second reason why we 

decline to apply the standards suggested by Taylor. The trial court, in its final judgment specifically 

noted that it only considered the Bank’s traditional and no-evidence motions for summary judgment, 

Taylor’s response, the Bank’s reply, the evidence on file, and the arguments of counsel. Nowhere in the 

final judgment does the trial court state that it considered Taylor’s “counter motion” for summary 

judgment. Therefore, we decline to apply the summary-judgment standards suggested by Taylor.
Taylor v. Foremost Lloyds of Texas Page 9

standards of rule 166a(i) pertaining to no-evidence motions for summary judgment. 

Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004); All Am. Tel., Inc. v. USLD 

Commc’ns, Inc., 291 S.W.3d 518, 526 (Tex. App—Fort Worth 2009, pet. denied); see TEX.

R. CIV. P. 166a(i). If the non-movant failed to produce more than a scintilla of evidence 

under that burden, then there is no need to analyze whether the movant’s summaryjudgment proof satisfied the rule 166a(c) burden for traditional motions for summary 

judgment. See Ridgway, 135 S.W.3d at 600; see also All Am. Tel., Inc., 291 S.W.3d at 526.

We review a no-evidence motion for summary judgment under the same legal 

sufficiency standard used to review a directed verdict. King Ranch, Inc. v. Chapman, 118 

S.W.3d 742, 750-51 (Tex. 2003). After an adequate time for discovery has passed, a party 

without the burden of proof at trial may move for summary judgment on the ground 

that the nonmoving party lacks supporting evidence for one or more essential elements 

of its claim. See TEX. R. CIV. P. 166a(i); Espalin v. Children’s Med. Ctr. of Dallas, 27 S.W.3d 

675, 682-83 (Tex. App.—Dallas 2000, no pet.). Once a no-evidence motion for summary 

judgment has been filed, the burden shifts to the nonmoving party to present evidence 

raising an issue of material fact as to the elements specified in the motion. Mack Trucks, 

Inc. v. Tamez, 206 S.W.3d 572, 581-82 (Tex. 2006). The trial court should not grant a noevidence motion for summary judgment if the nonmovant brings forth more than a 

scintilla of probative evidence to raise a genuine issue of material fact on the challenged 

element. Smith v. O’Donnell, 288 S.W.3d 417, 424 (Tex. 2009). More than a scintilla of 

evidence exists if the evidence would enable reasonable and fair-minded jurors to differ 

in their conclusions. Hamilton v. Wilson, 249 S.W.3d 425, 426 (Tex. 2008) (per curiam); 
Taylor v. Foremost Lloyds of Texas Page 10

Macias v. Fiesta Mart, Inc., 988 S.W.2d 316, 317 (Tex. App.—Houston [1st Dist.] 1999, no 

pet.) (noting that less than a scintilla of evidence exists when the evidence is “so weak 

as to do no more than create a mere surmise or suspicion” (citing Kindred v. Con/Chem, 

Inc., 650 S.W.2d 61, 63 (Tex. 1983))). We review the evidence presented by the motion 

and response in the light most favorable to the party against whom the summary 

judgment was rendered, crediting evidence favorable to that party if reasonable jurors 

could, and disregarding contrary evidence unless reasonable jurors could not. Tamez, 

206 S.W.3d at 581-82; King Ranch, Inc., 118 S.W.3d at 750.

III. ANALYSIS

In what appears to be a multifarious argument, Taylor contends that the trial 

court erred in granting the Bank’s summary judgment for reasons previously stated in 

her “counter motion” for summary judgment. The Bank counters that Taylor lacks 

standing to challenge the enforceability of the insurance policy because she is a stranger 

to the contract. The Bank further argues that it is a third-party creditor beneficiary 

pursuant to the insurance policy, and as such, it is entitled to the insurance proceeds as 

a matter of law.

A. Third-Party Beneficiaries to Insurance Contracts

Insurance policies are contracts, so the rights and duties they create and the rules 

governing their interpretation are those generally pertaining to contracts. Ulico Cas. Co. 

v. Allied Pilots Ass’n, 262 S.W.3d 773, 778 (Tex. 2008). Under the general law of 

contracts, a party must show either privity or third-party-beneficiary status in order to 
Taylor v. Foremost Lloyds of Texas Page 11

have standing to sue. OAIC Commercial Assets, L.L.C. v. Stonegate Vill., L.P., 234 S.W.3d 

726, 728 (Tex. App.—Dallas 2007, pet. denied).

To qualify as a third-party beneficiary, a third party must show that it is either a 

donee or creditor beneficiary of the contract, and not one who is benefited only 

incidentally by its performance. MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 

647, 651 (Tex. 1999). The intention of the contracting parties is controlling. Id. “The 

intention to contract or confer a direct benefit to a third party must be clearly and fully 

spelled out or enforcement by a third party must be denied.” Id.; accord Basic Capital 

Mgmt., Inc. v. Dynex Commercial, Inc., 348 S.W.3d 894, 900 (Tex. 2011). We glean the 

parties’ intention from the words of their contract, and not from what they allegedly 

meant. Seagull Energy E & P, Inc. v. Eland Energy, Inc., 207 S.W.3d 342, 345 (Tex. 2006); 

see also Ostrovitz & Gwinn, LLC v. First Specialty Ins. Co., No. 05-11-00143-CV, 2012 Tex. 

App. LEXIS 10379, at *16 (Tex. App.—Dallas Dec. 13, 2012, no pet.). “All doubts must 

be resolved against conferring third-party beneficiary status.” Tawes v. Barnes, 340 

S.W.3d 419, 425 (Tex. 2011); see First Union Nat’l Bank v. Richmont Capital Partners I, L.P., 

168 S.W.3d 917, 929 (Tex. App.—Dallas 2005, no pet.) (“If there is any reasonable doubt 

as to the intent of the contracting parties to confer a direct benefit on the third party, 

then the third-party beneficiary claim must fail.”). Texas courts have occasionally 

recognized third-party beneficiaries in the insurance context when the policy language 

so requires. See, e.g., Paragon Sales Co. v. N.H. Ins. Co., 774 S.W.2d 659, 660-61 (Tex. 1989) 

(per curiam).
Taylor v. Foremost Lloyds of Texas Page 12

B. Discussion

Here, the evidence indicates that Lough and Foremost entered into the insurance 

contract to directly benefit the Bank. In fact, as a condition of the loan, Lough was 

required to secure the fire-insurance policy specifically for the Bank’s benefit. 

Furthermore, the insurance policy at issue identifies the Bank as the mortgagee and 

states that, in the event of damage or loss to the property, the Bank, as mortgagee, is 

entitled to the insurance proceeds. Thus, it is clear from the document itself that the 

parties intended for the Bank to be a third-party creditor beneficiary to the insurance 

policy so long as the Bank’s mortgage encumbered the property. See Stine v. Stewart, 80 

S.W.3d 586, 589 (Tex. 2002) (“In contrast, an agreement benefits a ‘creditor’ beneficiary 

if, under the agreement, ‘that performance will come to him in satisfaction of a legal 

duty owed to him by the promise. This duty may be an indebtedness, contractual 

obligation[,] or other legally enforceable commitment owed to the third party.” (internal 

citations omitted)). It is also clear from the insurance policy that Lough was the only 

named insured. Further, the contract and deed of trust between Lough and the Bank 

identifies Lough as the sole owner of the property at the time both documents were 

executed.

Despite this, Taylor asserts that she was the true owner of the property when the 

deed of trust and insurance policy were executed, and thus, the insurance policy and 

deed of trust are invalid and the Bank is not entitled to the insurance proceeds. 

However, in asserting these arguments, Taylor did not proffer probative evidence 

indicating that she has standing to challenge the insurance policy. She does, however, 
Taylor v. Foremost Lloyds of Texas Page 13

rely on the quitclaim deed, which was signed on January 29, 2007, prior to the execution 

of the insurance policy.

Taylor’s contentions in this case resemble those made in another case—

Automobile Insurance Company of Hartford, Connecticut v. Young, 85 S.W.3d 334 (Tex. 

App.—Amarillo 2002, no pet.). In Young, the tenant appellee tried to obtain insurance 

proceeds associated with the landlord’s fire-insurance policy that covered the property 

where the tenant lived. Id. at 335-36. The tenant “conceded that she was not designated 

as an insured under the policy.” Id. at 337. Instead, she “claimed that she was entitled 

to recover from Hartford [the insurance company issuing the policy] under constructive 

trust or creditor beneficiary theories because she also had an insurable interest in the 

property.” Id. Reversing the trial court’s summary-judgment order, the Amarillo Court 

of Appeals noted that “a fire insurance policy is a personal contract between the insurer 

and the insured named in the policy and a stranger to the policy may not ordinarily 

maintain a suit on it” and concluded that the tenant “was a ‘stranger’ to the policy” and, 

thus “could not maintain a suit thereon.” Id. at 336-37 (citing St. Paul Lloyd’s Ins. Co. v. 

Huang, 808, S.W.2d 524, 527 (Tex. App.—Houston [14th Dist.] 1991, writ denied); Duval 

County Ranch Co. v. Alamo Lumber Co., 663 S.W.2d 627, 632 (Tex. App.—Amarillo 1983, 

writ ref’d n.r.e.)).

In this case, Taylor did not produce any evidence showing that she was a named 

insured or a party to the insurance policy. Furthermore, the insurance policy does not 

indicate that Taylor is a third-party beneficiary of the policy. As such, we agree with 

the Bank that Taylor is a “stranger” to the insurance policy and therefore lacks standing 
Taylor v. Foremost Lloyds of Texas Page 14

to challenge its enforceability. See id. at 336-37; Huang, 808 S.W.2d at 527; Duval County 

Ranch Co., 663 S.W.2d at 632; Travelers Fire Ins. Co. v. Steinmann, 276 S.W.2d 849, 851 

(Tex. Civ. App.—Dallas 1955, no writ) (noting that “by the terms of the policies, the 

insurer is not to be liable beyond the interest of the insured in the property, a stranger 

to the contract cannot collect thereon simply because he was the owner of an undivided 

interest in the property”); see also Campbell v. Auto Ins. Co., No. 07-06-0158-CV, 2007 Tex. 

App. LEXIS 3643, at *5 (Tex. App.—Amarillo May 9, 2007, no pet.) (“With respect to 

property insurance policies, Texas law has long held that a party who is a complete 

stranger to the contract is not in a legal position to recover any interest in the policy 

proceeds.”). Thus, we cannot say that Taylor has raised a material fact issue 

challenging the Bank’s status as third-party-creditor beneficiary under the insurance 

policy and its entitlement to the insurance proceeds. See Francis, 46 S.W.3d at 242 

(noting that when the trial court does not specify the grounds upon which it relies in 

granting summary judgment, the summary-judgment order will be affirmed on appeal 

if any of the theories advanced by the movant are meritorious).

In any event, we also note that Taylor’s reliance on the quitclaim deed does not 

create a material fact issue about who is entitled to the insurance proceeds. The record 

demonstrates that Taylor did not record her deed until September 17, 2007, which was 

after (1) Lough and the Bank entered into the insurance contract and deed of trust; and 

(2) the Bank recorded its deed of trust in Johnson County.5 See TEX. PROP. CODE ANN. § 

 

5 The Bank recorded its lien in the “Official Public Records of Johnson County, Texas” on August 9, 

2007.
Taylor v. Foremost Lloyds of Texas Page 15

13.001(a) (West 2004).6 In fact, the Bank included as an exhibit to its summaryjudgment motion a copy of a “Property Report” conducted by Nationwide Appraisal 

Services Corporation. The report listed that title to the property was vested in Lough 

and that the property was free and clear of any other judgments or liens.

Based on the foregoing, we conclude that Taylor failed to produce more than a 

scintilla of summary-judgment evidence to raise a genuine issue of material fact 

regarding her lack of standing to challenge the enforceability of the insurance policy 

and her entitlement to the insurance proceeds. See Smith, 288 S.W.3d at 424; Hamilton, 

249 S.W.3d at 427; Ridgway, 135 S.W.3d at 600; see also All Am. Tel., Inc., 291 S.W.3d at 

526. Accordingly, we cannot say that the trial court erred in granting summary 

judgment in favor of the Bank. See King Ranch, Inc., 118 S.W.3d at 750-51; see also Francis, 

46 S.W.3d at 242. We therefore overrule Taylor’s sole issue on appeal.

 

6 Section 13.001 of the Texas Property Code provides, in relevant part, that:

(a) A conveyance of real property or an interest in real property or a mortgage or deed of 

trust is void as to a creditor or to a subsequent purchaser for a valuable consideration 

without notice unless the instrument has been acknowledged, sworn to, or proved and 

filed for record as required by law.

(b) The unrecorded instrument is binding on a party to the instrument, on the party’s heirs, 

and on a subsequent purchaser who does not pay a valuable consideration or who has 

notice of the instrument.

TEX. PROP. CODE ANN. § 13.001(a)-(b) (West 2004).
Taylor v. Foremost Lloyds of Texas Page 16

IV. CONCLUSION

Having overruled Taylor’s sole issue on appeal, we affirm the judgment of the 

trial court.

AL SCOGGINS

Justice

Before Chief Justice Gray,

Justice Davis, and

Justice Scoggins

Affirmed

Opinion delivered and filed March 7, 2013

[CV06]