Court Opinion

ID: 38079
Source: CourtListenerOpinion
Date Created: 2010-04-25 20:02:44+00
Date Added: 2024-06-11T08:50:22.401763
License: Public Domain

United States Court of Appeals
                                                                 Fifth Circuit
                                                              F I L E D
                        REVISED APRIL 20, 2005
                IN THE UNITED STATES COURT OF APPEALS          March 9, 2005

                         FOR THE FIFTH CIRCUIT            Charles R. Fulbruge III
                         _____________________                    Clerk

                              No. 03-40930
                         _____________________

MONUMENTAL LIFE INSURANCE CO.,

                               Plaintiff-Counter Defendant-Appellee,

versus

SONDRA HAYES-JENKINS,

         Defendant-Counter Claimant-Third Party Plaintiff-Appellant

ALVIN B. JENKINS, JR., Estate of

                                Defendant-Counter Claimant-Appellant
versus

NOVASTAR MORTGAGE

                                     Third Party Defendant-Appellee.

                      ---------------------
  Appeal from the United States District Court for the Eastern
               District of Texas, Sherman Division
                           (01-CV-297)
                      ---------------------

BEFORE JONES, WIENER, and PRADO, Circuit Judges.

WIENER, Circuit Judge:

     Appellant Sondra Hayes-Jenkins (“Sondra”) appeals the district

court’s grant of summary judgment in favor of appellees Monumental

Life Insurance Company (“MLIC”) and NovaStar Mortgage (“NovaStar”).

In MLIC’s declaratory judgment action, the court held that Sondra

was not entitled to benefits under MLIC’s policy of mortgage life

insurance and dismissed with prejudice her Texas state law claims
for breach of contract and negligence and for violations of the

Texas Deceptive Trade Practices Act and the Texas Insurance Code.

The district court also granted summary judgment to NovaStar,

dismissing Sondra’s third party claims against it.     We affirm in

part and reverse and remand in part.

                     I. FACTS AND PROCEEDINGS

     This dispute was precipitated by MLIC’s denial of Sondra’s

demand that the proceeds of a mortgage life insurance policy issued

by MLIC in connection with a home mortgage loan from NovaStar to

Sondra and her now-deceased husband, Alvin Jenkins (collectively

“the Jenkinses”), be applied to liquidate the remaining balance on

that loan.    MLIC refused thus to disburse the policy proceeds

because the Jenkinses had failed to pay the first premium due on

the policy prior to (1) its retroactively specified effective date

(April 1, 2001) and (2) the date of Alvin’s death (April 4, 2001).

As far as they go, the discrete facts underlying this case are

undisputed.

A.   The Mortgage Loan

     The Jenkinses purchased a home in Frisco, Texas in November

2000.    NovaStar, a residential mortgage lender, provided the

purchase-money loan secured by a deed of trust that was a first

mortgage lien on the property.1   At the loan closing, the Jenkinses

     1
        Presumably, the home became the Jenkinses’ community
property and each was jointly and severally liable on the purchase
obligation.

                                  2
executed a mortgage note, a Deed of Trust (“mortgage”), and an

Impound Authorization Agreement and First Payment Notification

(“escrow agreement”).       The escrow agreement authorized NovaStar to

collect and escrow funds from the Jenkinses “to pay for taxes,

insurance premiums, assessments, or other items relating to the

property     on   [their]     behalf.”2        Consistent     with   the   escrow

agreement, NovaStar sent invoices to the Jenkinses in the amount of

$2,808.70 each on or about the tenth day of each calendar month.

In addition to the basic amount required to amortize principal and

interest on the loan, the $2,808.70 included the estimated amount

needed to     cover   property    taxes       and   flood   and   fire   insurance

premiums on the encumbered property.

B.   The Mortgage Insurance Agreement

     At all times pertinent to this case, NovaStar was party to a

Mortgage Insurance Agreement with MLIC.              This agreement obligated

NovaStar to distribute “descriptive brochures and other promotional

materials    relating    to    [MLIC’s]       insurance     coverages”     to   its

borrowers. As consideration, NovaStar received a percentage of the

premiums collected on any insurance written by MLIC for NovaStar’s

borrowers.    The agreement also required NovaStar to facilitate the

collection of premiums by including the amount of the premium in

the insured borrower’s monthly invoice.                All MLIC brochures and

promotional materials required to be distributed under the Mortgage

     2
         Emphasis added.

                                          3
Insurance Agreement by NovaStar to its borrowers were subject to

NovaStar’s prior written approval.

      In January 2001, acting in accordance with its Mortgage

Insurance Agreement with MLIC, NovaStar mailed the Jenkinses an

unsolicited MLIC application (“the application”) for Mortgage Life

and     Disability   Insurance   underwritten   by   MLIC.   The   MLIC

application was mailed to the Jenkinses by a cover letter written

on NovaStar’s letterhead and was accompanied by a MLIC brochure

describing the MLIC policy.

C.    Cover Letter

      In the cover letter, NovaStar informed the Jenkinses that the

mortgage life insurance policy would pay off their entire mortgage

balance “up to $300,000” in the event of the death of either of

them.     The cover letter also promised the Jenkinses a thirty-day

“risk free” period, commencing on the date they received their

Certificate of Insurance/policy, during which period they would be

allowed to examine the policy without cost or obligation:

            This insurance is yours to try risk free. We’re
            confident that you’ll agree that [the insurance]
            provides    essential   protection.   Examine  the
            Certificate of Insurance for 30 days at no cost or
            obligation.     If you decide you don’t want the
            coverage,    for  any  reason,   just   return the
            Certificate to Monumental Life Insurance Company
            and you’ll [future tense] owe nothing.

D.    Brochure

      The accompanying MLIC brochure touted the advantages of the

thirty-day “risk free” period, stating in bold print:

                                    4
            Examine at No Risk for 30 Days.         When your
            certificate/policy arrives, look it over. If you
            don’t agree that this is sensible and affordable
            mortgage protection, simply return it within 30
            days of receiving it . . . and you won’t [future
            tense] owe a cent.    No questions asked.   In the
            meantime, you’ll [future tense] be fully covered
            while you make your decision.

In addition to explaining the thirty-day examination period, MLIC’s

brochure emphasized that the Jenkinses would not be required to

mail a separate check for their premium payments to either MLIC or

NovaStar.   The brochure promised the applicants that “[t]here are

no checks to write” and that their “insurance premium [would be]

conveniently added to [their] monthly mortgage payments.”

E.   Application

     The application reiterated these same assurances and added

that, should the Jenkinses decide to return the policy within the

thirty-day examination period, their “account will be credited in

full,” presumably referring to their NovaStar account as they had

none with MLIC.    The application further guaranteed the Jenkinses

that they would be “fully covered” by the insurance policy during

the thirty-day period while they examined the policy.

F.   The Jenkinses’ Response

     Sondra and Alvin promptly completed the application and mailed

it, as directed, to MLIC, where it was received on January 17,

2001.   Relying on the MLIC brochure’s assurances that no separate

check would be required and that their premiums would be added to

and included in their monthly invoices from NovaStar, as well as

                                  5
the assurances that they would “owe nothing” if they returned the

certificate/policy during the 30-day examination period (during

which they would nonetheless be covered), the Jenkinses neither

enclosed a check for their first insurance premium when they mailed

their application to MLIC nor unilaterally added the amount of this

first premium to their payments of any of NovaStar’s subsequent

monthly invoices.      As they had done each month since taking out

their   loan,   the   Jenkinses   mailed   their   check   in   payment   of

NovaStar’s March 10, 2001 on March 25, 2001, in the standard

invoiced amount of $2,808.70.

G.   Notice of Approval

     On March 14, 2001 —— after NovaStar had mailed its March 10th

invoice to the Jenkinses and before they mailed their March 25th

payment of that invoice to NovaStar —— MLIC mailed a letter to the

Jenkinses informing them that it had approved their application and

that their “certificate of Mortgage Life Insurance should arrive

shortly.”   There was no mention of the first-premium requirement

anywhere in this notice; neither did MLIC notify NovaStar that the

Jenkinses’ application had been approved.          This is because MLIC’s

arrangement with NovaStar specified that MLIC need only notify

NovaStar of newly approved insureds once per month, by the ninth

day of each calendar month.

     Alvin died unexpectedly on April 4, 2001.         The following day,

April 5, 2001, Sondra received the MLIC Certificate of Insurance

and policy in the mail.      The Policy Schedule specified that the

                                    6
insurance was effective April 1, 2001, three days prior to Alvin’s

death.    No notice of Alvin’s death was furnished to either MLIC or

NovaStar.

H.   The Policy

     The cover page of the policy made clear that coverage was

provided “[i]n consideration of your application and payment of the

first premium.”3     Consistent with this statement but contradictory

to the above-quoted future-tense assurances in NovaStar’s cover

letter and MLIC’s brochure, the cover page also contained the

following language in bold print:

            Thirty day right to examine policy. If you are not
            satisfied for any reason, you may return this
            policy within 30 days after receipt. Your premium
            will be refunded.

Immediately following this, a third statement on the cover page

informed the insureds that coverage had begun “on the Effective

Date of Insurance as shown on the Schedule of this Policy.”              And,

as noted, the Schedule specified April 1, 2001 as the effective

date of insurance, and thus the date on which coverage commenced.

     On April 9, 2001 —— eight days after the policy’s effective

date, four days after the MLIC policy was delivered by mail to

Sondra, and five days after Alvin’s death —— MLIC informed NovaStar

for the     first   time   that   the   Jenkinses’   application   had   been

approved.    The following day, April 10, 2001, NovaStar mailed the

     3
         Emphasis added.

                                        7
April invoice to the Jenkinses. For the first time, the Jenkinses’

monthly invoice (which Sondra timely paid on April 26, 2001)

included the amount of the premium for the MLIC policy.

     In May 2001, Sondra timely filed a claim with MLIC for

benefits under the policy.         MLIC immediately denied her claim,

asserting that no insurance was in effect at the time of Alvin’s

death.    In so doing, MLIC cited language in the “Premiums” section

of the policy (which the Jenkinses had never seen before it was

delivered to Sondra four days after the effective date and one day

after Alvin’s death) that required the Jenkinses to pay their first

premium “before the Effective Date of Insurance.”               MLIC asserted

its position that, because the Jenkinses had not paid their first

premium by either the April 1, 2001 effective date of the policy or

the April 4, 2001 date of Alvin’s death, the policy was not in

effect at the time of Alvin’s death.         In addition, MLIC pointed out

that the application contained a statement (in fine print in the

paragraph immediately above the applicant’s signature line) that

specified:

            [N]o insurance is in effect unless the application
            is approved by the Insurance Company, and the first
            premium is paid.

     MLIC then filed a declaratory judgment action in the district

court    seeking   a   holding   that   no   MLIC   insurance    covered   the

Jenkinses at the time of Alvin’s death and that Sondra is not

entitled to benefits under the policy in question. Sondra answered

the complaint and filed a counterclaim against MLIC alleging (1)

                                        8
breach of the insurance contract, (2) negligence, (3) negligent

misrepresentation, and (4) violations of the Texas Deceptive Trade

Practices Act (“DTPA”) and Texas Insurance Code.            She also filed a

third party complaint against NovaStar, asserting claims for (1)

breach of the escrow agreement, (2) negligence, (3) negligent

misrepresentation, and (4) violations of the DTPA and Insurance

Code.4

     MLIC    and    NovaStar    separately     filed   motions    for   summary

judgment.     In January 2003, the district court granted summary

judgment in favor of MLIC and NovaStar, holding that Sondra was not

entitled to benefits under the MLIC policy and dismissing all her

counterclaims claims and third party claims with prejudice.               Final

judgment was entered in June 2003, and Sondra timely filed a notice

of appeal.

                                 II. ANALYSIS

A. Standard of Review

     We    review   de   novo   a   district    court’s   grant    of   summary

judgment.5

B. MLIC’s Breach of Contract

     4
       Sondra has abandoned her       claims against MLIC for negligence
and negligent misrepresentation       and her claim against NovaStar for
negligent misrepresentation by        failing to brief these claims on
appeal.   See Sepulvado v. CSC        Credit Servs., 158 F.3d 890, 897
n.7(5th Cir. 1998)(claims not         briefed on appeal are considered
abandoned).
     5
         See Markos v. City of Atlanta, 364 F.3d 567, 570 (5th Cir.
2004).

                                       9
      As a general rule, “[t]he payment of the premium in accordance

with the provisions of an insurance policy is a condition precedent

to the establishment of liability of the insurer.”6             On appeal,

MLIC argues that the Jenkinses’ failure to pay the first premium

prior to either the April 1, 2001 effective date of the policy or

the April 4, 2001 date of Alvin’s death is legally conclusive that

no contract of insurance capable of being breached was in effect at

the time of Alvin’s death.      In response, Sondra asserts that MLIC

either waived its right to assert prepayment of the first premium

as   a condition    precedent   to    commencement   of   coverage,   or   is

estopped from doing so, by virtue of misrepresentations in the

cover letter, brochure, application, and approval letter regarding

what was required on the part of the Jenkinses to bring coverage

into effect.       Sondra also contends that, as MLIC’s agent for

collection of premiums, NovaStar was negligent in failing to

collect and remit her first premium prior to the April 1, 2001

effective date of the policy, thereby vicariously estopping its

principal, MLIC, from asserting prepayment of the first premium as

grounds   for   withholding     the   policy’s   proceeds.    As   Sondra’s

assertion of both waiver and estoppel based on MLIC’s own words and

      6
Walker v. Fed. Kemper Life Assurance Co., 828 S.W.2d 442,
449 (Tex. App. —— San Antonio 1992, reh. d.).

                                      10
conduct has facial merit, we remand to the district court for full

fact-finding on these claims.7

     1.     Equitable Estoppel

     Generally, Texas law defines estoppel as “conduct which causes

the other party to materially alter his position in reliance on

that conduct.”8       The elements of equitable estoppel are: “(1) A

false representation or concealment of material facts made with

knowledge    (actual      or   constructive)      of   those    facts,   (2)    with

intention that it should be acted on, (3) to a party without

knowledge,      or   means     of   knowledge     of   those    facts,   (4)     who

detrimentally relied upon those representations.”9

     MLIC contends that Sondra has failed to raise a genuine issue

of material fact as to the fourth element of equitable estoppel

because   she    cannot      show   that    she   relied   on   MLIC’s   post    hoc

notification that coverage had commenced on April 1, 2001.                To this

end, MLIC emphasizes that both the application and the approval

letter are silent as to when the insurance would become effective,

     7
       As we remand to the district court on the direct issues of
waiver and estoppel, we also remand on the issue of estoppel
grounded in respondeat superior.       This is because, on the
undeveloped summary judgment record before us, there could exist a
situation in which MLIC is not liable to Sondra by virtue of its
own actions but is vicariously liable by virtue of those of
NovaStar. We forgo discussion of the issue here for the reasons
stated below. See infra note 22.
     8
      Braugh v. Phillips, 557 S.W.2d 155, 158 (Tex. App. —— Corpus
Christi 1977, reh. d.).
     9
       Robinson v. Robinson, 961 S.W.2d 292, 231 (Tex. App. ——
Houston [1st Dist.] 1997).

                                           11
and that the only representation that coverage commenced on April

1, 2001 is contained in the policy itself, which Sondra did not

receive until April 5, 2001.   We find that the following evidence

raises a genuine issue of material fact, however, as to whether the

Jenkinses detrimentally relied on MLIC’s representations as to when

coverage under the policy would begin.

     Sondra has shown prima facie that she and Alvin might have

relied —— reasonably and to their detriment —— on MLIC’s earlier

representations in the brochure, the application, and the approval

letter, and Nova Star’s representations in the cover letter, about

the requirements to bring coverage into effect before Alvin’s death

on April 4.   Of particular importance are the representations in

these materials that relate to the 30-day “no risk” examination

period.   These representations, contained not only in the cover

letter and brochure but also highlighted in bold print at the top

of the application, state affirmatively that the Jenkinses will be

“fully covered” for 30 days while they “look over” their policy yet

omit any reference to the fact on which MLIC now relies —— that

coverage will become effective only on MLIC’s receipt of the first

premium payment.

     In fact, the only references to the requirement that the

prospective insured pay the first premium before the effective date

of the policy in any of the promotional materials sent to the

Jenkinses are (1) the inferences to be drawn from the statement in

the application that the Jenkinses’ account will be “credited in

                                12
full”   if   they   elect    to   return    the   policy   within    the   30-day

examination period and (2) the statement in fine print above the

applicant’s signature line that “no insurance is in effect unless

the application is approved by the Insurance Company and the first

premium is paid.”      When viewed in the context of MLIC’s repeated

emphasis that the 30-day period was “no risk” and the assurance

that “there are no checks to write,” these disclaimers may not have

been sufficient in themselves to place an applicant on notice that

payment of the first premium is a condition precedent to coverage.

       MLIC’s contentions are even more troubling when considered in

light of the fact that the completion instructions to potential

applicants do not recommend, much less expressly require, that the

applicant remit the first premium payment directly to MLIC with the

application.    Rather, MLIC’s solicitations instruct the applicant

merely to (1) “[i]ndicate the type of insurance desired;” (2)

“[d]etermine [the] premium based on the rates shown on the reverse

side [of the application];” and (3) “[c]omplete, sign, and return

your application      today.”       There    is   no   mention   whatsoever   of

remitting the initial premium, much less when, where, or to whom

the applicant should deliver the first premium payment.

       The instructions in the application go on to state that once

MLIC      approves          the     application,           the      applicants’

“[c]ertificate/[p]olicy will be issued and [the] premium will be

                                       13
added     to    [the   applicant’s]        monthly     mortgage    payment.”10

Significantly, this instruction does not state that the applicant

must do the adding.      A factfinder could thus reasonably conclude

that NovaStar —— rather than the applicant —— would be the one to

perform the “adding” function and that no further act will be

required on the part of the applicant.11           That this is a reasonable

reading from the viewpoint of an applicant is fostered by the

advice given to the applicant that no additional check will be

required.      Yet only by preparing and remitting a separate check

could the Jenkinses have paid the first premium (1) before the

effective date selected unilaterally by MLIC alone, or (2) before

Alvin’s death.

     Likewise,     MLIC’s   March   14,     2001     letter,   which   formally

notified the Jenkinses that their application had been approved, is

devoid of any admonition that coverage is conditioned on their

prior payment of the first premium.          Like the application itself,

this notice’s terse congratulatory statement, which informed the

Jenkinses that their Certificate of Insurance/Policy would “arrive

shortly,” could have implied to the Jenkinses that, by completing

and mailing their application to MLIC months earlier, they had

successfully completed all acts required on their part to bring

coverage into effect.

     10
          Emphasis added.
     11
       Indeed, NovaStar did just that, adding that amount of the
MLIC monthly payment to the Jenkinses’ mortgage invoice for April.

                                      14
     Neither does MLIC’s argument that the Jenkinses were somehow

remiss in not sending a separate check to MLIC or NovaStar for

their mortgage life insurance premium or in not adding the amount

of their premium to their March invoice from NovaStar entitle it to

summary judgment.    Not only do the instructions quoted above tell

the Jenkinses that their premium “will be added” to the monthly

mortgage payment (not that they must do the adding), but (1) the

brochure guarantees that “[t]here are no checks to write,” because

the “insurance premium [will be] conveniently added to [the]

monthly mortgage payment,” and (2) the application itself contains

the applicants’ express authorization for “the lender [NovaStar] to

add the premium for the Mortgage Insurance indicated above to [the

Jenkinses’] mortgage payment.”12

     Taken together and considered in combination, these statements

could lead an applicant to assume that MLIC did not make it

incumbent on them, as NovaStar’s borrowers, to mail a separate

check for their premium or, absent an invoice, to add the amount of

their premium to their payment to NovaStar for the month in which

MLIC’s approval letter is received.     The same is true as to any

requirement that a check for the first premium must be sent

directly to MLIC after it approved the application and before

coverage (and the 30-day risk-free period) would begin. Based on

the totality of these writings, any reasonable applicant could

     12
          Emphasis added.

                                   15
justifiably conclude that separately and independently paying the

first premium before coverage would become effective was simply not

required.

     Obviously, the Jenkinses did not rely on coverage commencing

specifically on April 1, 2001 because MLIC did not communicate that

date to them until April 5.        That contention by MLIC is a red

herring.     The record contains ample evidence that the Jenkinses

could have reasonably relied on (1) MLIC’s representation that

nothing more than completing their application and mailing it to

MLIC was required on their part to bring coverage into effect once

it was approved by MLIC, and (2) MLIC’s failure to communicate

clearly and unambiguously that payment of the first premium was a

condition precedent to coverage.         Accordingly, we conclude that

genuine issues of material fact exist as to whether the Jenkinses

relied on MLIC’s representations to their detriment.              We thus

remand this issue to the district court.

     2.      Waiver

     Under     Texas   law,   “waiver    is   a   voluntary,   intentional

relinquishment of a known right or intentional conduct inconsistent

with claiming that right.”13        Unlike estoppel, which requires

reliance, “[w]aiver of a right results as a legal consequence from

the unilateral act of the party against whom it operates [here,

     13
       First Interstate Bank, N.A. v. Interfund Corp., 924 F.2d
588, 595 (5th Cir. 1991)(citing Edwin M. Jones Oil Co. v. Pend
Oreille Oil & Gas Co., 794 S.W.2d 442, 447 (Tex. App. —— Corpus
Christi 1990))(emphasis added).

                                    16
MLIC], and no act of the party in whose favor it operates [here,

Sondra] is necessary to complete it.”14                The party asserting waiver

must show, as to the party asserting a right, “(1) an existing

right,    benefit,       or    advantage[,]        (2)    knowledge,        actual   or

constructive,       of   its   existence[,]        and    (3)   actual      intent   to

relinquish    the    right,     which      can   be    inferred   from      conduct.”15

“Although waiver is ordinarily a question of fact, when the facts

and circumstances are admitted or clearly established, the question

becomes one of law.”16

     At the outset, we reject MLIC’s contention that, because Texas

law precludes the use of the doctrines of waiver and estoppel to

create or extend insurance coverage, Sondra is prohibited from

relying on waiver as a means of establishing MLIC’s liability under

the policy.     MLIC mischaracterizes Sondra’s contention.                      Texas,

like many common law jurisdictions, adheres to the principle that

“waiver . . . cannot enlarge the risks covered by [an existing]

policy [nor can they] be used to create a new and different

contract with       respect     to   the    risk      covered   and   the    insurance

     14
       Pioneer Oil Co. v. Vallejo, 750 S.W.2d 928, 929 (Tex. App.
—— Corpus Christi 1988).
     15
       First Interstate, 924 F.2d at 595 (citing Missouri-Kansas-
Texas R.R. v. Heritage Cablevision of Dallas, Inc., 783 S.W.2d 273,
280 (Tex. App. —— Dallas 1989, no writ)).
     16
        Motor Vehicle Bd. of the Tex. Dept. of Transp. v. El Paso
Indep. Auto. Dealers Ass’n, Inc., 1 S.W.3d 108, 111 (Tex. 1999).

                                           17
extended [by an existing policy].”17      Texas insureds are not

prevented, however, from employing waiver to show that an insurer

has forfeited its right to assert a condition precedent in defense

of its responsibility under a putative new policy.18     This holds

true whether the condition precedent is actual delivery, payment of

the premium directly to the insurer as opposed to its authorized

agent, or prepayment of the first premium, which is the case here.19

Accordingly, to the extent that statements in MLIC’s application

     17
        Minnesota Mut. Life Ins. Co. v. Morse, 487 S.W.2d 317, 320
(Tex. 1972)(citing Great Am. Reserve Ins. Co. v. Mitchell, 335
S.W.2d 707 (Tex. App. —— San Antonio, 1960, writ ref’d))(emphasis
added).
     18
        “A condition precedent may be waived,” Kennedy v. McMullen,
39 S.W.2d 168, 174 (Tex. Civ. App. —— Beaumont, 1931, writ ref’d),
and the waiver of a condition precedent may be inferred from the
party’s conduct.” Sun Exploration & Prod. Co., 728 S.W.2d 35, 37
(citing Ames v. Great Southern Bank, 671 S.W.2s 447, 449 (Tex.
1984)).
     19
        See, e.g., Scott v. Nat’l Bankers Life Ins. Co., 253 S.W.2d
485, 488 (Tex. App. —— San Antonio 1952, reh. d.)(insurance company
may waive express condition precedent to insurer’s liability under
the policy); United Fid. Life Ins. Co. v. Handley, 53 S.W.2d 833,
838 (Tex. App. —— Amarillo 1932, reh. d.)(stipulation in insurance
application limiting insurer’s liability to the time when the
application was made and the first premium paid “was for the
benefit of the [insurer] and could be waived by it”). See also 45
TEX. JUR. 3D, INSURANCE CONTRACTS AND COVERAGE §85, §87 (Although “a
provision in a policy that declares that the policy shall not
become effective . . . until the premium has been paid is valid,”
“[t]he condition of prepayment of the premium may be waived by the
insurer”)(Jody L. Mikasen et al. eds., 3d ed. 1995)(cites omitted);
LEE R. RUSS & THOMAS F. SEGALLA, COUCH ON INSURANCE § 12:11 (3d ed.
1996)(“Since provisions requiring prepayment of premium are for the
benefit of the company, they may be waived by it, with the result
that the contract becomes binding without prepayment, even though
the policy provides that the premium must be prepaid, either at the
company’s office or to an agent duly authorized in writing to
receive it.”)(cites omitted).

                                18
form and insurance policy would make prepayment of the first

premium a condition precedent to commencement of coverage, that

condition is susceptible of waiver.

     More to the point of MLIC’s mischaracterization of what Sondra

seeks to accomplish, it is readily apparent that Sondra does not

employ waiver to “enlarge the risks covered by [an existing] policy

[or] to create a new and different contract with respect to the

risk covered and the insurance extended.”20   The policy that MLIC

issued explicitly covers the risk at issue, i.e., the death of

either mortgagor/insured, and extends that coverage up to the

proceeds amount sought by the beneficiary, i.e., payment of the

entire mortgage balance up to $300,000.

     When we examine the gravamen of Sondra’s waiver argument, the

legal possibility that MLIC might be held to have waived its right

to insist on prepayment of the first premium as a condition

precedent to coverage becomes apparent.   MLIC might have done so

when it unconditionally approved the Jenkinses’ application on

March 14, 2001, with an April 1, 2001 effective date, prior to

receiving the Jenkinses’ first premium payment directly, and in the

full knowledge that —— under its arrangement with NovaStar —— the

Jenkinses could not possibly have been invoiced by NovaStar for

their first premium until sometime after April 9, 2001, the next of

the monthly dates on which MLIC notifies NovaStar of approved

     20
          Morse, 487 S.W.2d at 320.

                                  19
applications.     MLIC might also have done so when it issued the

policy in the full knowledge of its documents’ assurances that the

insureds would not need to send a separate premium check, either to

MLIC with the application or to NovaStar as MLIC’s agent, and that

applicants would remain covered during the thirty days that they

had in which to examine their policy risk free.               Simply put,

because MLIC chose to adopt notification procedures that would not

permit the Jenkinses (or anyone similarly situated) to comply with

the policy’s requirement that the first premium be paid prior to

the date selected by MLIC as the effective date of coverage, MLIC

might well be held to have waived the right to assert that

commencement of coverage was barred by the Jenkinses’ failure to

pay the first premium before (1) the effective date (which was not

communicated to them until April 5, 2001) or (2) Alvin’s death (on

April 4, 2001).      This too will depend on the results of more

complete factfinding.

      As a matter of law, MLIC’s notification procedures might well

have resulted in its assumption of the risk that it could be liable

for   death   benefits   accruing   after   it   approved   the   insured’s

application and issued a policy, but before the insured paid the

first premium —— here, the span of more than a fortnight between

March 14 and April 1, 2001.     Accordingly, MLIC might ultimately be

found to have waived its right to assert prepayment of the first

premium as a condition precedent to coverage. We therefore reverse

the district court’s grant of summary judgment to MLIC in the

                                    20
declaratory judgment suit rejecting Sondra’s claim for breach of

contract,    and    we   remand    to   the     district     court    for       further

proceedings consistent with this opinion.21

C.   NovaStar’s Breach of Contract

      Sondra     contends   in    her   third    party     claim   that     NovaStar

breached its contractual duties under the escrow agreement by

failing timely to collect from the Jenkinses the initial premium on

their life insurance policy and remit payment to MLIC prior to the

effective date of the policy.             As discussed above, the escrow

agreement “authorize[d][NovaStar] to collect monthly impounds, if

applicable, in the manner detailed below [sic] to pay for taxes,

insurance premiums, assessments, or other items relating to the

property    on    [the   Jenkinses’]     behalf.”        Although         the    escrow

agreement   expressly       contemplates      the    escrowing       of    funds    for

“Mortgage   Insurance”      in    addition      to   those   for   principal       and

      21
       Although we recognize that we may direct summary judgment
in favor of a party who did not move for it in the district court
when no disputed facts exist, see Black Warrior Elec. Membership
Corp. v. Mississippi Power Co., 413 F.2d 1221 (5th Cir. 1969), we
decline to do so here under the procedural history of this case.
First, Sondra did not move for summary judgment on the waiver or
estoppel issues in the district court. MLIC has thus not had an
opportunity – even at the summary judgment stage – to develop the
evidentiary record or to brief these issues fully.      We deem it
prudent to remand these issues to the district court, which may
require full briefing on the issues or receive additional evidence,
if any, into the record — or both. At such a time, the district
court may decide that (1) summary judgment is proper if there still
exists no genuine issue of material fact, or (2) the case should
proceed to a trial on the merits. We merely note that, given the
procedural posture of this case and a less-than-fully developed
record, we decline to resolve these issues here.

                                        21
interest, property taxes,22 and flood and fire insurance, no dollar

amount was entered in the space provided for “Mortgage Insurance”

when the escrow agreement was signed by the parties.      Obviously,

this is because the Jenkinses had not procured such insurance at

the time the agreement was executed.       Nevertheless, the final

paragraph of the escrow agreement states

          The amount of each monthly impound to be collected
          is determined by [NovaStar].      The amounts are
          subject to adjustment from time to time. [The
          Jenkinses] agree to pay these modified impounded
          amounts along with each monthly payment of
          principal and interest.(emphasis added).

     Sondra insists that, in timely signing the mortgage life

insurance application, which expressly authorizes NovaStar “to add

the premium for the Mortgage Insurance indicated above to [the

Jenkinses’] mortgage payment,” and delivering the application to

MLIC as instructed in the MLIC documents that NovaStar furnished

and is presumed to have been pre-approved, she and her husband did

all that they possibly could to have the escrow amount timely

“adjusted” to include mortgage life insurance premiums.    Thus, she

argues, NovaStar’s failure to bill her and her husband for their

     22
       We are unpersuaded by NovaStar’s argument that the escrow
agreement does not permit the collection of mortgage life insurance
premiums because mortgage life insurance does not “relate[] to the
property.”   Not only does the agreement expressly contemplate
impounds for “Mortgage Insurance,” as discussed above, but any
ambiguity as to what types of insurance “relate[] to the property”
must be construed against NovaStar. Indeed, a mortgage or deed of
trust does not just “relate to the property,” it encumbers the
property as collateral security for the very obligation the balance
of which the mortgage insurance is committed to pay with its
proceeds.

                                22
first premium sufficiently in advance of the effective date of the

policy to comply with MLIC’s premium-first requirement constituted

a breach by NovaStar of the escrow agreement as modified by the

application for mortgage life insurance.

     We   agree    that    the   express     language      of   the   application

authorizing   NovaStar     to    add   the   amount   of    the   mortgage   life

insurance premium to the Jenkinses’ monthly invoice effectively

modified the escrow agreement to require the inclusion of amounts

sufficient    to   cover   mortgage     life    insurance       premiums.     Our

conclusion is bolstered by the fact that NovaStar did in fact

include the amount of the Jenkinses’ first mortgage life insurance

premium, albeit not until their April invoice, without requiring

the execution of a new or superseding escrow agreement or a

separate amendment.       The only question remaining as to this claim,

then, is whether a genuine issue of material fact exists with

respect to NovaStar’s alleged breach of the escrow agreement.

     NovaStar insists that its failure to bill the Jenkinses for

their first mortgage life insurance premium prior to the April 1,

2001 effective date of the policy cannot be construed as a breach

of NovaStar’s obligation under the escrow agreement, because MLIC

did not notify NovaStar until April 9, 2001 that the Jenkinses’

application had been approved.          Although these facts are correct,

we disagree with NovaStar’s legal conclusion.

     First, the record establishes that it was NovaStar’s decision

to receive monthly —— as opposed to weekly or even daily ——

                                       23
notification from MLIC as to which of NovaStar’s borrowers had been

approved for mortgage life insurance.     In her deposition, MLIC

representative Colleen Gizinski stated that MLIC’s notification

procedures varied among the mortgage companies with which it had

arrangements similar to NovaStar’s, but that, ultimately, it was

“up to the mortgage company” to decide how often it was to be

notified by MLIC of the approval for mortgage life insurance for

the lender’s borrowers. Some mortgage companies, at their request,

received weekly or daily notification from MLIC, but NovaStar

requested to be notified only once each month.   NovaStar points to

no evidence that would contradict this testimony.

     Moreover, MLIC’s and NovaStar’s cavalier treatment of such

notification establishes the fault of both defendants.      MLIC’s

permitting its mortgage guarantor/agent to select notification

procedures as dilatory as once per month, and NovaStar’s equal

disregard for the interests of its borrowers (and, presumably, with

considerable regard for the reduction of its own workload) inures

to the detriment of each.

     Second, as MLIC’s agent for the collection of premiums,

NovaStar is deemed to know the contents of both the policy and the

application, as well as the contents of the brochure and cover

letter that NovaStar itself promulgated. Thus, NovaStar is held to

have had knowledge of the policy’s requirement that the first

                                24
premium had to be paid prior to the effective date of insurance.23

Indeed, NovaStar not only transmitted all these documents to its

borrowers, it had the legal right to review and approve (or

disprove) the documents prepared and proffered by MLIC before

NovaStar promulgated them to its borrowers.      NovaStar cannot be

heard to claim ignorance of the contents of those papers.

     Accordingly, NovaStar’s decision to implement notification

procedures   that   were   obviously   flawed   to   the   extent   of

unnecessarily delaying receipt of information from MLIC as to which

of NovaStar’s borrowers had been approved for MLIC mortgage life

insurance —— undoubtedly until after the effective date of that

     23
        NovaStar’s contention that it is not MLIC’s agent for
collection of premiums under the Texas Insurance Code is meritless.
Under § 4001.051, an entity is the agent of the insurer if it: “(1)
solicits insurance on behalf of the insurer; (2) receives or
transmits other than on the person’s own behalf an application for
insurance or an insurance policy to or from the insurer; (3)
advertises or otherwise gives notice that the person will receive
or transmit an application for insurance or an insurance policy;
(4) receives or transmits an insurance policy of the insurer; . .
. (6) receives, collects, or transmits an insurance premium . . .
.” TEX. INS. CODE ANN. § 4001.051(b)(1)-(4), (6). As the terms of
NovaStar’s Mortgage Insurance Agreement with MLIC require NovaStar
both to solicit insurance on behalf of MLIC by mailing MLIC
insurance applications and advertisements to its borrowers and to
“provide the facility for payment of the required premium,”
NovaStar is indisputably MLIC’s agent for these acts under §
4001.051(b). Further, NovaStar’s argument that it is excepted from
agency status under § 4001.051(d) is equally meritless, as that
provision applies only to the referral of customers to an insurance
agent, not to an insurer such as MLIC.        TEX. INS. CODE ANN. §
4001.051(d) (“The referral by an unlicensed person of a customer or
potential customer to an agent is not an act of an agent under this
section, unless the unlicensed person discusses specific insurance
policy terms or conditions with the customer or potential
customer.”).

                                 25
insurance had already passed, in many instances —— raises the

genuine fact issue whether NovaStar breached its obligation under

the modified escrow agreement to collect and bill the Jenkinses

timely for their mortgage life insurance premiums.                  We hold that

the district court erred in granting summary judgment in favor of

NovaStar,     rejecting    Sondra’s    claim    against     it    for   breach   of

contract,      and   we   remand   this     issue   for    further      consistent

proceedings.

F.   NovaStar’s Breach of Fiduciary Duty24

      NovaStar’s billing and notification procedures also form the

basis of Sondra’s claim against her lender for breach of fiduciary

duty.      Specifically, Sondra asserts that NovaStar owed her and her

husband fiduciary duties, arising out of its dual role as (1) their

agent “for purposes of the collection and processing of [premium]

payments” and (2) MLIC’s “insurance agent/collection agent” for

procuring mortgage life insurance and collecting and remitting

payment of premiums “in a manner as to ensure effective coverage.”

She argues that NovaStar breached these duties by employing faulty

billing     and   notification     procedures   with      the    result   that   the

Jenkinses (and, presumably, many of NovaStar’s other borrowers) were

left uninsured for many days after the effective date specified in

the policy.       As we find that NovaStar did not owe a fiduciary duty

      24
        Although      Sondra has styled her cause of action against
NovaStar as one      for negligence, it is readily apparent that the
substance of her     claim is for breach of fiduciary duty, so we treat
it is as such on     appeal.

                                       26
to the Jenkinses, however, her claims grounded in such duties were

properly dismissed on summary judgment.

     Texas courts have recognized that, under some narrow sets of

circumstances, an insurance agent may be deemed to have acted as the

agent of both the insured and the insurer.25             The evidence in the

record    of   this   case,   however    ——   in   particular,    the        Mortgage

Insurance Agreement —— makes clear that at all relevant times

NovaStar was acting exclusively as MLIC’s agent for the solicitation

of insurance customers and the collection and remission of MLIC’s

mortgage life insurance premiums, and not as agent of the Jenkinses,

much less as their fiduciary.         The cases cited by Sondra in support

of her contention that NovaStar acted in dual capacities for both

MLIC and the Jenkinses are readily distinguishable.                   Not only was

it the insureds in the cited cases who solicited the agents to

obtain insurance coverage on their behalf —— the obverse of the

instant situation —— but the insurance agents themselves were

responsible for completing the applications and, after issuance,

delivering     the    policies   to     the   insureds.26        As     no    agency

     25
       See, e.g., Essex Ins. Co. v. Redtail Prods, Inc., No. Civ.
A. 3:97CV2120D, 1999 WL 627379, at *2 (N.D. Tex. Aug. 17 1999);
Maintain, Inc. v. Maxson-Mahoney-Turner, Inc., 698 S.W.2d 469, 472
(Tex. App. —— Corpus Christi 1985, reh. d.).
     26
       See, e.g., Essex, 1999 WL 627379, at *2 (insured contacted
agent to procure commercial general liability policy and agent
prepared and submitted application to insurer on insured’s behalf);
Maintain, 698 S.W.2d 469, 472 (Tex. App. —— Corpus Christi 1985,
reh. d.)(insured and agent entered contract whereby agent undertook
to secure insurance coverage on behalf of insured and insured
agreed to reimburse agent the amount of the premiums).

                                        27
relationship existed between NovaStar and the Jenkinses with respect

to obtaining coverage or collecting and remitting premiums, any

argument that NovaStar breached fiduciary duties allegedly arising

out of this relationship misses the mark.

      Neither does the escrow agreement or the Deed of Trust give

rise to a fiduciary duty owed by NovaStar to the Jenkinses. Neither

of these contracts expressly impose a duty on NovaStar to procure

mortgage life insurance for their borrowers.    And, the courts of

Texas have left no doubt that the mere “[p]ayment of funds by the

mortgagor into an escrow account for the mortgagee’s use to meet tax

and insurance obligations on the property as they accrue does not

create a trust or fiduciary relationship under Texas law.”27

      Finally, we agree fully that, as a matter of law, NovaStar was

MLIC’s agent for the solicitation of applications and the collection

and remission of premiums, and we reject out of hand Sondra’s

unsupported assertion that this agency relationship somehow gave

rise to a fiduciary duty on the part of NovaStar in favor of her and

her husband.   Accordingly, we affirm the district court’s grant of

summary judgment rejecting Sondra’s claims against NovaStar for

negligence cum breach of fiduciary duty.

G.   Texas Insurance Code and DTPA Violations

      27
       White v. Mellon Mortg. Co., 995 S.W.2d 795, 801 (Tex. App.
—— Tyler 1999)(citing Wesson v. Jefferson Sav. & Loan Ass’n, 641
S.W.2d 903, 905 n.2 (Tex. 1982)).

                                 28
     Sondra also claims that MLIC and NovaStar engaged in unfair

and deceptive practices under Article 21.21 § 4(1) of the Texas

Insurance Code28 and §§ 17.46(b)(12)29 and (24)30 of the DTPA by

representing to potential applicants, in the promotional materials

and the application form, that in every instance the applicants

would enjoy a thirty-day “risk free” period during which they could

(1) examine the policy and accept or reject it,31 (2) remain covered

by the insurance while they considered these options, and (3) owe

nothing if they timely rejected coverage.        To this end, she

     28
          Article 21.21 §4(1), “Misrepresentations and False
Advertising of Policy Contracts,” proscribes, inter alia, the
making or issuing of any statements representing the terms of any
policy “or the benefits or advantages promised thereby.” TEX. INS.
CODE ANN. § 21.21 4(1)(Vernon’s 1981 & Supp. 2004).
     29
       Section 17.46(b)(12) of the DTPA makes it unlawful for any
person to “represent[] that an agreement confers or involves
rights, remedies, or obligations which it does not have or involve,
or which are prohibited by law.” TEX. BUS. & COMM. CODE ANN. §
17.46(b)(12)(Vernon’s 2002 & Supp. 2004).
     30
       Section 17.46(b)(24) makes it unlawful for any person to
“fail[] to disclose information concerning goods or services which
was known at the time of the transaction if such failure to
disclose such information was intended to induce the consumer into
a transaction which the consumer would not have entered had the
information been disclosed.” TEX. BUS. & COMM. CODE ANN. § 17.46
(b)(24)(Vernon’s 2002 & Supp. 2004).
     31
        As an additional ground for establishing MLIC’s and
NovaStar’s liability under the Insurance Code and DTPA, Sondra
advances that the promotional materials are deceptive in that they
assure the applicant that “no separate checks are required” and
expressly provide that the first premium payment “will be added” to
the applicant’s monthly billing statement from NovaStar. Because
this argument was not made in the district court as a basis for
finding either MLIC or NovaStar liable under the Insurance Code or
the DTPA, however, it is waived.

                                29
maintains that, if enforced, MLIC and NovaStar’s monthly billing

and notification procedures, coupled with the application and

policy provisions that coverage would begin only after the first

premium is paid, would render the thirty-day period “meaningless.”

This is so, asserts Sondra, because in most cases the thirty-day

period will have expired (or almost expired) by the time (1) MLIC

notifies NovaStar of MLIC’s approval of the applicant for mortgage

life insurance and (2) NovaStar bills its borrower and receives the

premium from its borrower.

     In an effort to support this argument, Sondra has offered

evidence that the thirty-day period runs from the effective date of

the policy, rather than the date of payment of the first premium or

the date of the insured’s receipt of the policy.   In the Jenkinses’

case, the effective date specified in the policy was April 1, 2001,

four days prior to Sondra’s actual receipt of the policy on April

5, 2001 and three days before Alvin’s death on April 4, 2001.

NovaStar did not bill Sondra for the amount of the first premium

until April 10, 2001, one day after being notified by MLIC of its

approval of the Jenkinses; and Sondra timely submitted her premium

payment by virtue of the premium amount’s inclusion in the NovaStar

invoice of April 10, 2001, which Sondra timely paid on April 26,

2001. Under the interpretation of the terms of the policy advanced

by MLIC and NovaStar, coverage would not begin until MLIC (or

NovaStar as its agent) received Sondra’s first premium payment,

which could not have been until some time after she mailed it

                                30
following receipt of NovaStar’s invoice dated April 10, 2001 and

received later by Sondra.          Yet, by that time, only a fraction of

the promised thirty days following the effective date of the policy

remained, meaning that the purported “risk free” period was too

short to be meaningful.

       MLIC and NovaStar offer nothing that would be effective to

refute Sondra’s characterization of the thirty-day period. Instead

they    cling   to    the    argument     that   the    fine     print    above   the

applicants’      signature      line    on     the    application,       purportedly

informing the applicants that the first premium is absolutely

necessary to effectuate coverage, prevents these representations

from being either deceptive or misleading.                  In light of the obscure

nature of this statement, however, we find that reasonable jurors

could differ as to whether it effectively communicates to the

applicant that he will not, in fact, be “fully covered” during the

entire      thirty-day      examination      period    ——    even   when,   for   all

practical purposes, it has elapsed —— unless he has paid his first

premium.      This is especially so when it is remembered that this

statement must be viewed in context with all other documents and

timing issues.       For example, in references to the 30-day risk-free

examination period, the cover letter and the brochure employ the

future tense regarding payment of the initial premium.32

       32
       The cover letter states that “[i]f you decide you don’t want
the coverage, for any reason, just return the Certificate to
Monumental Life Insurance Company and you’ll [future tense] owe
nothing.”   Further, the brochure provides that “[i]f you don’t

                                          31
       We are satisfied that Sondra has raised a genuine issue of

material fact as to whether, in violation of § 17.46(b)(12), MLIC

and NovaStar represented to her and her husband that the insurance

agreement “confers a right which it does not have,” i.e., a full

thirty-day “risk free” trial period during which they would be

fully covered.     We are likewise satisfied that she has raised a

genuine issue of material fact as to whether, in violation of §

17.46(b)(24), MLIC and NovaStar failed adequately to disclose

information concerning the policy that they knew or should have

known was crucial to the potential insured’s decision to apply or

not apply for coverage, with the intent of inducing the Jenkinses

to purchase the insurance.

       Finally, we conclude that Sondra has raised a genuine issue as

to whether these purported misrepresentations were “a producing

cause of her injury,”33 viz., were it not for these confusing and

misleading statements and omissions, would Sondra and Alvin have

been likely to know that they needed to take additional steps to

bring coverage into effect?    Accordingly, we reverse the district

court’s grant of summary judgment in favor of MLIC and NovaStar on

agree that this is sensible and affordable mortgage protection,
simply return it within 30 days and you won’t [future tense] owe a
cent.”
       33
         To prevail on her DTPA claims, Sondra must show that (1) she
is   a consumer, (2) MLIC and NovaStar engaged in false, misleading,
or   deceptive acts, and (3) these acts constituted a producing cause
of   her damages. See Celtic Life Ins. Co. v. Coats, 885 S.W.2d 96,
99   (Tex. 1994).

                                  32
these     statutory      claims,     and    remand     for      further     proceedings

consistent with this opinion.

                                   III. CONCLUSION

A.   We reverse the district court’s grant of summary judgment

dismissing Sondra’s breach of contract claim against MLIC, and we

remand to the district court for further proceedings consistent

with this opinion.

B.   As to whether NovaStar breached its contractual obligation

under the escrow agreement timely to collect and remit payment for

mortgage       life    insurance     premiums,       we    hold     that    Sondra   has

established the existence of a genuine issue of material fact.                        We

therefore reverse the district court’s grant of summary judgment in

favor     of   NovaStar    on   this   claim,    and      we    remand      for   further

consistent proceedings.

C.   We conclude that Sondra has established the existence of a

genuine issue of material fact as to her claims against MLIC and

NovaStar for violations of the Texas Insurance Code and the DTPA.

We therefore reverse the district court’s grant of summary judgment

as   to    these      claims,   and    we    remand       for     further    consistent

proceedings.

D.   As for Sondra’s negligence cum breach of fiduciary duty claim

against NovaStar, we hold that, as a matter of law, NovaStar owed

no fiduciary duty to Sondra or her husband.                     We therefore affirm

                                            33
the district court’s grant of summary judgment in favor of NovaStar

dismissing that claim.

AFFIRMED in part; REVERSED and REMANDED in part.

                                34
EDITH H. JONES, Circuit Judge, specially concurring in part and

dissenting in part:

             Because no one anticipates the tragedy of unexpected

death, the commencement date of a mortgage life insurance policy is

ordinarily of little importance.            Here, Mr. and Mrs. Jenkins each

signed   a   statement   in    their    insurance      application    that      they

understood no insurance was effective until the application was

approved and the first premium was paid.              The majority repeatedly

refer to this statement as “fine print,” but it is no less a part

of the contract, and it appeared just above the applicants’ signa-

ture lines.     The district court applied the literal terms of the

application, the cover letter and the insurance policy itself, all

of which were consistent on this point.

             Notwithstanding     these      facts,    other     language   in    the

policies’    promotional      materials,     and     contract    documents,      and

Novastar’s payment handling procedures muddy the picture concerning

the policy’s effective date.           In occasionally caustic terms, the

majority overturns the district court’s grant of summary judgment

and reverses for trial on multiple causes of action.                  Unlike the

majority, I do not find in the circumstances of this case an

occasion for condemning the defendants’ practices so much as for

sorting out the confusion that existed between the defendants’

handling of mortgage life insurance applications and the provisions

                                       35
specifying when and how the necessary first premium payments would

be made.

           Because of the confusion, I agree that a fact issue

exists as to whether Monumental waived its requirement that the

first   premium   must   be   paid   before   the   thirty-day      risk-free

effective period of the insurance commenced. There is also a valid

question whether Novastar, having transmitted the insurance offer

to mortgagors and agreed to be the servicing agent for collection

of premiums, owed the Jenkinses a contractual obligation in regard

to the payment of the first premium and prompt commencement of the

policy.

           The facts before us do not, however, support causes of

action for estoppel under Texas law, or for violations of the Texas

Insurance Code or the DTPA. Texas law defines estoppel as “conduct

which causes the other party to materially alter his position in

reliance   on   that   conduct.”     Hruska   v.    First   State    Bank   of

Deanville, 747 S.W.2d 783, 785 (Tex. 1988).         The evidence does not

show that the Jenkinses relied on these defendants’ alleged miscon-

duct to their detriment.       They knew after receiving the March 14

acceptance letter that “the certificate of mortgage life insurance

should arrive shortly.”       They also knew, from the application they

signed, that coverage would not be in effect until the first

premium was paid and that they would not receive their next

Novastar billing statement until on or about April 10.              They did

not know that the effective date of the policy would be April 1,

                                     36
2001.   They could have elected to make the first insurance payment

any time after they received notice of approval, or they could have

(and did) risk waiting for Novastar’s April 10 invoice.              In neither

event did they rely at all on the policy’s becoming effective prior

to payment of the first premium.              The majority cites no Texas

caselaw to support its conclusion.

            As for the Texas statutory causes of action, I would hold

that even if there was undue confusion about the effective date of

the   policy    and   mechanism   for    paying    the    first   premium,   the

Jenkinses were not misled or injured under the terms of those

statutes.      The majority complains that Novastar’s actual billing

practices may have meant that Ms. Jenkins might have “only a

fraction of the promised thirty days” risk-free trial period avail-

able to her, a period “too short to be meaningful.”               The majority

misunderstands the thirty-day risk-free feature of the policy.

Risk-free does not mean cost-free.             Taken in context of all the

documents, this means only that a policyholder, having complied

with the requirement to pay the first premium as a condition of

policy coverage, could receive a refund of the premium for the

first thirty days.       (The documents accordingly said that if the

coverage was then dropped, “your account will be credited. . . .”).

The overall      operation   of   the    program   was    confusing,   but   the

defendants neither misled nor concealed its provisions.

            Finally,    it   should     be   emphasized    that   although   the

majority casts its interpretation of the facts in the light most

                                        37
favorable to Ms. Jenkins, as it should at this juncture, formal

factfinding is still necessary.

          With   due   respect,   I    concur   only   in   the   judgment

authorizing remand to proceed with Ms. Jenkins’s waiver claim

against MLIC and breach of contract claim against Novastar.

                                  38