Court Opinion

ID: 9466804
Source: CourtListenerOpinion
Date Created: 2023-08-05 01:28:09.754692+00
Date Added: 2024-06-11T17:39:58.020077
License: Public Domain

FAY, Circuit Judge,
dissenting:
With great respect and affection for my sisters, I dissent. Under Texas law prevailing at the time Mission issued the contested policy, any contractual attempt to foreshorten the claim period to a time less than two years rendered the limitation clause void. Tex.Rev.Civ.Stat.Ann. art. 5545 (Vernon 1958). At the time it issued the policy, Mission knew that their standard clause limiting the claim period to twelve months was void in Texas. To reinstate a valid claim period limitation, Mission could have added to Port Arthur’s policy a specific endorsement limiting the claim period to a specific and lawful time. Instead, Mission relied on a standard contractual provision fixing the claim period limitation at “the shortest limit of time permitted by the laws of [Texas].” The policy never made any more specific reference to the Texas limitations statute that Mission deemed applicable.
In previous cases, Texas courts have indicated that specificity is important when matter extraneous to the contract is incorporated by reference. See, e.g., Southern Travelers’ Association v. Cole, 45 S.W.2d 675 (Tex.Civ.App. — Dallas 1931) (holding unenforceable a policy provision incorporating by reference the insurer’s by-laws). Certainly the limitations clause here does not specify which Texas statute Mission was attempting to incorporate. Moreover, I do not find any dicta in American Surety Co. of New York v. Blaine, 272 S.W. 828 (Tex.Civ.App. — Texarkana 1925), to be persuasive precedent for finding Tex.Rev.Civ. Ann. art. 5545 (Vernon 1958) the plainly applicable section. The Blaine court held only that the four-year statutory limitations period applied because the insurance contract provided for specifically applicable statutory provisions to supersede contrary contractual provisions. The court did restate the insurer’s appellate contention that it had intended the shortest lawful limitation to apply; but the court never indicated that even a manifest intent to incorporate the statutory minimum would be valid absent explicit reference to the precise law the insurer wished to incorporate. Only by extended implication can the conclusion be reached that a less explicit reference would have met the Blaine court’s approval. I would not hold that Mission’s vague reference to the “shortest limit of time permitted by the laws of [Texas]” gave Port Arthur clear notice of the limitations period Mission deemed applicable.
Tex.Rev.Stat.Ann. art. 5545 (Vernon 1958) does ostensibly fix the minimum claims limitation at two years. Even had Port Arthur guessed that Mission intended this statute to govern, however, it would have had little guidance in determining the actual deadline it faced. Over the years, *371this court and Texas courts have shaded the statutory boundaries of the minimum limitation period until the borders are blurred. Some courts have found unlawful limitations periods of two years and a day, because, under the policy, time began to run before the proof or notice of loss period expired, during which time the insured could not sue. E.g., National Military Mutual Life Insurance Co. v. Cross, 379 S.W.2d 96 (Tex.Civ.App. — Corpus Christi 1964); Southern Travelers’ Association v. Cole, 45 S.W.2d 675 (Tex.Civ.App. — Dallas 1931). Many courts have approved deadlines of two years and one day without discussing whether a flat two-year deadline would be unlawful. E.g., Culwell v. St. Paul Fire & Marine Ins. Co., 79 S.W.2d 914 (Tex.Civ. App. — Eastland 1935). This court, however, has suggested that a two-year deadline would be appropriate. Holston v. Implement Dealers Mutual Fire Insurance Co., 206 F.2d 682, 684 (5th Cir. 1953).
Specificity becomes crucial at the fringes of the claim period. Because courts have not sharply defined the outer bounds of the state's minimum limitation period, I am reluctant to hold the present claim time-barred. Rather, I would hold that a statutory provision sufficiently lacking in precision to give Texas courts pause, as to both its applicability and meaning, renders vague any contract clause which incorporates it by reference. Vagueness in a contractual provision must be construed against the contract’s drafter. Republic National Bank of Dallas v. Northwest National Bank of Fort Worth, 578 S.W.2d 109, 115 (Tex. 1978). Accordingly, I would find that the abbreviated limitations period is unlawful and that Texas’ general limitations statute for contract disputes, Tex.Rev.Civ.Stat.Ann. art. 5527 (Vernon 1958), should therefore apply. See National Military Mutual Life Insurance Co. v. Cross, 379 S.W.2d 96, 99 (Tex. Civ.App. — Corpus Christi 1964). The claim against Mission having been filed well within the four-year period fixed under section 5527, it should not be time-barred.
Moreover, I would find that the record evidences sufficient proof to support the trial court’s verdict. Accordingly, I would affirm.