Court Opinion

ID: 9763768
Source: CourtListenerOpinion
Date Created: 2023-08-29 02:55:13.883139+00
Date Added: 2024-06-11T07:29:49.563839
License: Public Domain

Chief Justice PHILLIPS
concurs on rehearing,
joined by Justice HECHT and Justice ENOCH.
I concur in the judgment of the Court and join in its opinion, so far as it goes. As the Court makes clear, our holding that an insurer is liable for the tortious misrepresentations of its soliciting agent made in the course of the agent’s authority is consistent with fundamental agency principles as applied in most other jurisdictions. On rehearing, however, Celtic, along with amicus curiae Jackson National Life Insurance Company, complains that our decision cannot be reconciled with the specific language of articles 21.02 and 21.04 of the Texas Insurance Code. Because I believe the Court should have addressed these contentions, I write separately.
Article 21.02 provides in part as follows:
Any person who solicits insurance on behalf of any insurance company ... shall be held to be the agent of the company for which the act is done, or the risk is taken, as far as relates to all the liabilities, duties, requirements and penalties set forth in this chapter. This article does not authorize an agent to orally, in writing, or otherwise alter, amend, modify, waive, or change a term or condition of an insurance policy or application for an insurance policy....
TexJns. Code art. 21.02 (emphasis added). Article 21.04 similarly provides as follows:
Any person who solicits an application for life, accident, or health insurance, or property or casualty insurance, shall, in any controversy between the insured or the insured's beneficiary and the company issuing any policy upon such application or between the insured or the insured’s dependents and that company, be regarded as the agent of the company, and not the agent of the insured, but such agent shall not have the power to waive, change or alter any of the terms or conditions of the application or policy.
Tex.Ins. Code art. 21.04 (emphasis added).
These provisions present a soliciting agent from contractually modifying the terms of a policy. Our decision does not conflict with this rule. We do not hold Celtic contractually liable because its agent modified the policy; rather, we hold Celtic vicariously liable under the Insurance Code and the Deceptive Trade Practices Act for its agent’s tortious misrepresentation.
Jackson contends that this is a distinction without a difference. Imposing liability on Celtic for Harrell’s misrepresentations, according to Jackson, is tantamount to allowing the agent to modify the policy. I disagree. Although in this ease Coats recovered the expense of his son’s treatment as if it had been covered under the policy, he was able to do so only because the jury found that Harrell’s conduct was a producing cause of such damages. That finding is not before us for review, as Celtic does not challenge the measure of damages. But Coats did not obtain a policy covering psychiatric treatment in excess of $10,000, and Harrell's misrepresentations did not, standing alone, make Celtic liable for non-covered treatments during the policy period.1
Our holding is merely an extension of the Court’s decision in Royal Globe Ins. Co. v. Bar Consultants, 577 S.W.2d 688, 693 (Tex.1979). There, we recognized that article 21.02 does not authorize a soliciting agent to bind the insurer to terms contrary to those of *102the written policy,2 but we nevertheless held that the insurer could not escape liability for its agents’ misrepresentations that violate article 21.21 of the Texas Insurance Code or section 17.46 of the Deceptive Trade Practices Act.

. The extent of damages produced by a misrepresentation concerning the scope of coverage might depend on such factors as when the representation was made, whether the represented coverage was in fact available from other sources, the difference in value between the policy as represented and the policy as actually delivered, and whether the insured incurred expenses that otherwise would not have been incurred based on the representation.

. The Court recognized this limitation even though at that time article 21.02 did not expressly so provide. The present language expressly limiting a soliciting agent's authority to alter or modify policy terms was added by the Legislature in 1985. See Acts 1985, 69th Leg., ch. 203, § 1, eff. May 24, 1985.