Court Opinion

ID: 215181
Source: CourtListenerOpinion
Date Created: 2011-04-21 17:21:21+00
Date Added: 2024-06-11T17:28:23.051912
License: Public Domain

Case: 10-20307 Document: 00511453584 Page: 1 Date Filed: 04/21/2011

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                 FILED
                                                                            April 21, 2011
                                       No. 10-20307
                                                                            Lyle W. Cayce
                                                                                 Clerk

ORETHA LEWIS,
as Personal Representative of the Estate of Chavon Lewis, Deceased,
and for All Others Similarly Situated,

                                                   Plaintiff-Appellant,

versus

AIG LIFE INSURANCE COMPANY;
SPECIALTY SERVICE SOLUTIONS, LLC; STEVEN FERGUSON,

                                                   Defendants-Appellees.

                    Appeal from the United States District Court
                         for the Southern District of Texas
                               USDC No. 4:08-CV-215

Before SMITH, WIENER, and OWEN, Circuit Judges.
JERRY E. SMITH, Circuit Judge:*

       In this diversity case, Oretha Lewis appeals the dismissal of her complaint

       *
         Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
    Case: 10-20307 Document: 00511453584 Page: 2 Date Filed: 04/21/2011

                                   No. 10-20307

asserting various theories of recovery under Texas law following her daughter’s
death while working for a shipping company. Lewis alleges that the insurer and
the insurance agent unlawfully delivered insurance proceeds to her daughter’s
employer, who listed itself as the beneficiary in violation of Texas insurable-
interest law. Because the only available remedy is a constructive trust against
the wrongful beneficiary, Lewis has failed to state a cause of action for which she
is entitled to relief, so we affirm the dismissal.

                                         I.
      Shippers Stevedoring Company (“Shippers”) purchased accident insurance
policies for its employees from AIG Life Insurance Co. (“AIG”) through Specialty
Service Solutions (“Specialty”), an insurance broker headed by Steven Ferguson.
The policies named Shippers as the beneficiary. Chavon Lewis, one of the em-
ployees covered by the policies, was killed when a forklift backed over her. Ship-
pers filed a claim, and AIG paid it $250,000 in proceeds.

                                         II.
      Chavon Lewis’s mother, Oretha Lewis, sued AIG, Specialty, and Ferguson,
alleging that they violated Texas Insurance Code § 1251.005, which provides
that insurance proceeds are payable only to the insured or his assigns. Lewis’s
complaint included claims for conversion, unjust enrichment, negligence, breach
of the duty of good faith and fair dealing, violations of the Texas Insurance Code,
and fraudulent concealment. Lewis also alleged that the defendants conspired
with Shippers to commit those torts. The district court dismissed the claims
without prejudice under Federal Rule of Civil Procedure 12(b)(6), holding that
Lewis’s sole remedy under Texas law is the imposition of a constructive trust
against Shippers and that Lewis did not plead her conspiracy claim with

                                         2
     Case: 10-20307 Document: 00511453584 Page: 3 Date Filed: 04/21/2011

                                       No. 10-20307

sufficient specificity.1

                                             III.
                                              A.
       We review the dismissal of a complaint under Rule 12(b)(6) de novo.2
“Where an insurer pays the proceeds of a policy to a beneficiary having no insur-
able interest, Texas courts have consistently held that a constructive trust is the
appropriate remedy.” DeLeon v. Lloyd’s London, Certain Underwriters, 259 F.3d
344, 350 (5th Cir. 2001). Other causes of action against the insurer are not al-
lowed, because “the plaintiff[] had no contractual relationship with the insurer.”
Id. at 351. Lewis contends that DeLeon does not foreclose other remedies, be-
cause the court stated that a constructive trust is “an avenue of recovery” rather
than “the avenue.”3 We decline to infer from those two words that other reme-
dies exist, because the remainder of the DeLeon opinion refutes Lewis’s argu-
ment. “Since constructive trust is already available to plaintiffs in such cases,
nothing suggests that the legislature thought plaintiffs needed additional protec-
tion.”4 Moreover, DeLeon rested on Tamez v. Certain Underwriters at Lloyd’s,
London, 999 S.W.2d 12, 21 (Tex. App.SSHouston [14th Dist.] 1998, pet. denied),
a case with similar facts that confirmed that a constructive trust against the
beneficiary is the only remedy, so the insured’s common-law claims against the

       1
        Because we decide this appeal on the ground of a pure issue of Texas law, we do not
address the claim of lack of specificity.
       2
         EPCO Carbon Dioxide Prods., Inc. v. JP Morgan Chase Bank, NA, 467 F.3d 466, 469
(5th Cir. 2006).
       3
         DeLeon, 259 F.3d at 351 (“Once the named beneficiary is paid, Texas applies the equit-
able remedy of constructive trust to provide an avenue of recovery for a lawful beneficiary.”
(citation omitted)).
       4
           Id. at 352.

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                                        No. 10-20307

insurer should be dismissed.5
       Lewis protests that the equitable remedy of a constructive trust is not
available to her, because Speciality and Ferguson have “unclean hands.” That
assertion is incorrect. Equitable remedies require that “the complaining party
must come to the court with clean hands and must have acted promptly to en-
force its rights.”6 Lewis, not Specialty or Ferguson, is the complaining party, so
even if Speciality and Ferguson have unclean hands, Lewis can recover through
the equitable remedy of a trust.
       We also reject Lewis’s contention that we should reform the contract to
make her a beneficiary capable of suing AIG directly. Lewis claims she is a stat-
utory beneficiary under § 1251.005 of the Texas Insurance Code, which requires
that the proceeds of a group or blanket accident and health insurance policy
must be paid to “(1) the insured; (2) the insured’s designated beneficiary; (3) the
insured’s estate; or (4) if the insured is a minor or otherwise not competent to
give a valid release, the insured’s parent, guardian, or other person actually sup-
porting the insured.” Lewis contends that that statute makes her a policy bene-
ficiary as a matter of law. We rejected that argument in DeLeon, 259 F.3d at
353, stating that “we remain convinced that Texas courts, wearing their com-
mon-law hats, would not conclude that reformation and a corresponding breach
of contract action are necessary.”

       5
         See also Wilke v. Finn, 39 S.W.2d 836, 838 (Tex. Comm’n App. 1931) (“When an insur-
ance company has issued a policy upon the life of a person, payable to one who has no insura-
ble interest in the life insured, or when a policy has been assigned to one having no such inter-
est, the insurance company must nevertheless pay the full amount of the policy, if otherwise
liable, because it has so contracted; and it is no concern of the insurer as to who gets the pro-
ceeds, except to see that it is paid to the proper parties, under its agreement. It is simply re-
quired to perform its contract, and the law will dispose of the money according to the rights
of the parties.” (internal quotation marks and citation omitted)).
       6
       Landry’s Seafood Inn & Oyster Bar-Kemah, Inc. v. Wiggins, 919 S.W.2d 924, 927 (Tex.
App.SSHouston [14th Dist.] 1996, no writ) (emphasis added).

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                                         No. 10-20307

                                               B.
       Lewis’s contention that she appropriately pleaded a claim for civil conspir-
acy is similarly unavailing. Under Texas law, civil conspiracy is a “derivative
tort.”7 Therefore, “to prevail on a civil conspiracy claim, the plaintiff must show
that the defendant was liable for some underlying tort.”8 Because the defen-
dants are not liable to Lewis for any underlying tort, she cannot prevail on her
civil conspiracy claim.
       The judgment dismissing the complaint without prejudice is AFFIRMED.

       7
        Baty v. ProTech Ins. Agency, 63 S.W.3d 841, 864 (Tex. App.SSHouston [14th Dist.]
2001, pet. denied) (on rehearing) (citing Tilton v. Marshall, 925 S.W.2d 672, 681 (Tex. 1996)).
       8
           Id. (citing Trammell Crow Co. No. 60 v. Harkinson, 944 S.W.2d 631, 635 (Tex. 1997)).

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