Court Opinion

ID: 2866471
Source: CourtListenerOpinion
Date Created: 2015-09-06 01:38:48.976331+00
Date Added: 2024-06-11T13:29:47.548506
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-02-00641-CV

Kathryn Payne and Carnell Gulley, Appellants

v.

Mid-Century Insurance Company of Texas, Appellee

FROM THE COUNTY COURT AT LAW NO. 2 OF TRAVIS COUNTY
NO. 261,045, HONORABLE ORLINDA NARANJO, JUDGE PRESIDING

M E M O R A N D U M   O P I N I O N

	This is an appeal from a summary judgment rendered against appellants Kathryn
Payne and Carnell Gulley.  The parties stipulated to certain material facts.  The dispute arose out of
a motor vehicle collision with a third party; both appellants were in Kathryn Payne's automobile and
both were injured.  The issue concerns whether appellants are entitled to personal injury protection
("PIP") benefits under the terms of a policy insuring Payne and issued by appellee Mid-Century
Insurance Company of Texas (hereafter "Mid-Century").  The trial court held that they were not. 
We will affirm.

Facts

	Eddie Lynn Garner, a Farmers Insurance Group agent, has written all of the insurance
policies for the Payne family since 1991.  On or about April 11, 1994, Kathryn's mother purchased
a Texas Farmers Insurance Company (hereinafter "Farmers") policy naming Kathryn as the rated
driver and signed an agreement deleting PIP coverage.  Thereafter, Kathryn Payne and her parents,
Wanda and Rodger Payne, were named insureds in Farmers policy number 3916 88 98 (hereinafter
"the Farmers policy"). On April 19, 1996, Kathryn signed an agreement rejecting PIP coverage in
connection with the Farmers policy.  The waiver provided that the "rejection shall apply on this
policy and all future renewals or replacements of this policy." 
	On April 20, 2001, the Farmers policy was cancelled and the automobile insurance
policy number 3988 84 66 issued by Mid-Century insuring Kathryn became effective (hereinafter
"the Mid-Century policy"). (1)  This was the policy in effect at the time of the automobile accident;
both appellants were covered persons under the policy.  Wanda Payne obtained the Mid-Century
policy covering Kathryn and signed an agreement deleting PIP coverage.  Kathryn never signed a
subsequent agreement deleting PIP coverage nor did she ever request PIP coverage.  The declarations
page sent to Kathryn reflected that she had no PIP coverage.  The Paynes never paid a premium for
PIP coverage on any policy insuring Kathryn Payne, all of which were obtained through Garner as
their agent.
	The collision occurred on July 20, 2001.  Mid-Century denied both appellants' claims
for PIP benefits on the basis that the policy did not provide PIP coverage.  Appellants filed this
action to construe the policy.  Both sides filed motions for summary judgment; the trial court granted
Mid-Century's motion and denied the motion of Payne and Gulley, who appeal.
Standard of Review

	The propriety of a summary judgment is a question of law; we review the trial court's
decision de novo.  Natividad v. Alexis, Inc., 875 S.W.2d 695, 699 (Tex. 1994).  The standards for
reviewing a motion for summary judgment are well established: (1) the movant has the burden of
showing that no genuine issue of material facts exists and that it is entitled to judgment as a matter
of law; (2) evidence favorable to the nonmovant will be taken as true; (3) every reasonable inference
must be indulged in favor of the nonmovant and any doubts resolved in its favor.  Nixon v. Mr. Prop.
Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985); see Tex. R. Civ. P. 166a (c).  A defendant who
moves for summary judgment has the burden of disproving one essential element of the plaintiff's
cause of action or showing that the plaintiff cannot succeed on any theory pleaded.  See San Antonio
Express News v. Dracos, 922 S.W.2d 242, 247 (Tex. App.--San Antonio 1996, no writ).

Discussion

	Our disposition of the appeal turns on application of the insurance code's provision
requiring that every automobile liability policy provide personal injury protection coverage except
as provided by statute.  The relevant terms are as follows:

No automobile liability insurance policy . . . covering liability arising out of the
ownership, maintenance, or use of any motor vehicle shall be delivered or issued for
delivery in this state unless personal injury protection coverage is provided therein
or supplemental thereto.  The coverage required by this article shall not be
applicable if any insured named in the policy shall reject the coverage in writing;
provided, unless the named insured thereafter requests such coverage in writing,
such coverage need not be provided in or supplemental to a renewal policy if the
named insured has rejected the coverage in connection with a policy previously
issued to him by the same insurer or by an affiliated insurer.

Tex. Ins. Code Ann. art. 5.06-3(a) (West 1981) (emphasis added).  Thus, every automobile liability
policy must include PIP coverage as a matter of law unless effectively waived in accordance with
the statute.  PIP is not required if any insured named in the policy rejects coverage in writing.  See
Old Am. County Mut. Fire Ins. Co. v. Sanchez, 81 S.W.3d 452, 459-60 (Tex. App.--Austin 2002,
pet filed).  The rejection must be express and clear, and must be signed by a person explicitly named
as an insured in the policy.  Id. at 460.  Further, unless the named insured thereafter requests the
coverage in writing, PIP need not be provided in a renewal policy if the named insured has rejected
PIP coverage in connection with a policy previously issued to the insured by an affiliated insurer. 
Id. at 458-59 nn.5-6.  The "named insured" is a term of art that refers specifically to the insured listed
on the declarations page of the insurance policy.  Id. at 459.  Absent a valid rejection, PIP coverage
applies as a matter of law.  Id. 
	Farmers and Mid-Century are affiliated companies as that term is defined in article
5.06-3 of the Texas Insurance Code.  Kathryn was an insured named in the Farmers policy; she 
rejected PIP coverage in connection with the Farmers policy and never requested PIP coverage
thereafter.  Kathryn alone was the named insured in the Mid-Century policy.  After the accident,
Mid-Century denied PIP coverage on the basis that its named insured had rejected PIP coverage in
a policy previously issued to her by an affiliated company.  The first question becomes whether the
Mid-Century policy was a renewal of the Farmers policy.  If so, Kathryn's 1996 written rejection was
effective as to the Mid-Century policy.
	Mid-Century filed a motion for summary judgment alleging that it was entitled to
judgment for at least two reasons: (1) the Mid-Century policy was a renewal of the Farmers policy
by an affiliated company, therefore Kathryn Payne's 1996 waiver of coverage in connection with the
Farmers policy applies to the Mid-Century policy, and (2) Wanda Payne's 2001 waiver of PIP
coverage was effective as to the Mid-Century policy because she was both an "insured named in the
policy" and Kathryn Payne's agent authorized to waive coverage on her behalf. (2)
	Appellants, on the other hand, responded that the written rejection Kathryn signed 
in 1996 was ineffective as to the Mid-Century policy for two reasons.  First, although the Mid-Century policy might be considered a replacement of the Farmers policy, it could not be a renewal
of the Farmers policy because the earlier policy insured three persons, Kathryn and her parents, while
the Mid-Century policy covered only Kathryn.  Further, Kathryn's written rejection agreeing that it
applied to replacement policies was of no effect because the statute only provides that such a written
rejection applies to a renewal policy but does not expressly state that it can apply to a replacement
policy. Therefore, they argue, any earlier written waiver could not apply to the Mid-Century policy
and, because Kathryn never signed a new waiver, appellants were entitled to judgment that the Mid-Century policy provided PIP coverage as a matter of law.  Furthermore, they deny that Wanda was
an insured named in the Mid-Century policy or that she was Kathryn's agent for the purpose of
rejecting PIP coverage and, therefore, Wanda's 2001 waiver was ineffective as to the Mid-Century
policy.
	We hold that Kathryn's 1996 written waiver effectively rejected PIP benefits under
the Mid-Century policy.  The summary judgment will stand on this basis.  For that reason, we need
not decide whether Wanda was authorized to reject coverage on Kathryn's behalf or address any
remaining issues.
	It has long been the general rule that a renewal of a policy constitutes a separate and
distinct contract for the period of time covered by the renewal unless the renewal document shows
by clear and unambiguous terms that the parties' intent was not to make a new contract but to
continue the original contract in force.  Great Am. Indem. Co. v. State, 229 S.W.2d 850, 853 (Tex.
Civ. App.--Austin 1950, writ ref'd).  The commonly accepted definition of the term "renew"
includes "to begin again," "to reestablish,""to recommence," "to resume," and "to replace." Berry
v. Texas Farm Bureau Mut. Ins. Co., 782 S.W.2d 246, 248 (Tex. App.--Waco 1989, writ denied)
(quoting Black's Law Dictionary 1165 (5th ed. 1979).  Unless the parties expressly state otherwise,
a renewal constitutes a replacing of the old contract with a new contract for the term stated. 
Berry,782 S.W.2d at 248.  The term "envisions the creation of something new with a nexus to the
old."  Id.  The legislature provided that a written rejection of benefits executed in connection with
one policy applies to a renewal policy.  The term renewal policy does not include only a policy which
extends the initial or original policy; it includes every new, separate, and distinct successive contract
between parties connected in an unbroken chain of coverage back to the original or initial policy on
which coverage was rejected.  Id.
	In a case very similar to the one before us, the court in Berry was called upon to
decide whether the named insured's written rejection of uninsured motorist coverage made in
connection with one policy applied to a successive policy. (3)  The court held that by using the term
"renewal policy" in the statute, the legislature intended the term to include a new contract between
parties that replaces a preceding policy without a lapse of coverage.  Because the named insured had
rejected coverage in connection with the issuance of the initial policy, the company was not required
to provide uninsured motorist coverage in the later policy.  Id.
	Appellants attempt to distinguish Berry on the basis that there "the contested policies
of insurance were identical except for the numbers."  Our reading of the opinion does not reveal this
fact or reflect that the court's holding turns on this fact.  Appellants argue that the Mid-Century
policy cannot be considered a renewal of the Farmers policy because the Farmers policy insured
Kathryn and her parents, while the Mid-Century policy insured only Kathryn.  As they argue, "From
Wanda and Rodger Payne's perspective, the Mid-Century policy was no insurance at all." 
Appellants do not address the summary judgment proof that identical coverage was provided
Kathryn in an unbroken chain under the two policies.  They cite no authority for their assertion that
a renewal policy must have identical parties and terms as the earlier policy.
	The Berry opinion reflects that Berry was the named insured in an unbroken chain
of automobile liability coverage policies, and that she executed a written rejection of benefits form
initially but not in connection with the later policy in effect at the time of the incident giving rise to
her claim.  The court held that each later policy created a new contract but that nevertheless each was
considered a renewal policy because it replaced the previous one in an unbroken chain, with no lapse
in coverage, back to the one on which coverage was rejected.  Id..
	Kathryn signed a written rejection of PIP in connection with a policy in which she
was an insured named in the policy; she never requested PIP coverage; thereafter, an affiliated
company issued her a policy in which she was the named insured; the new policy replaced the older
one without a lapse of coverage.  From Kathryn's perspective, the Mid-Century policy was a renewal
policy.
	We hold that under these facts, the Mid-Century policy was a renewal policy.  Thus, 
Mid-Century was not required to provide PIP in its policy because Kathryn had rejected the coverage
in writing in connection with the issuance of the Farmers policy, a policy previously issued to her
by an affiliated insurer.  For these reasons, the trial court did not err in granting summary judgment
in favor of Mid-Century and in overruling appellants' motion.
	We overrule the appellants' complaints on appeal and affirm the judgment.

  
					Marilyn Aboussie, Justice
Before Justice Kidd, B. A. Smith and Aboussie*
Affirmed
Filed:   August 29, 2003
*	Before Marilyn Aboussie, Chief Justice (retired), Third Court of Appeals, sitting by assignment. 
See Tex. Gov't Code Ann. § 74.003(b) (West 1998).
1.   Although the fact was not stipulated, the uncontroverted proof shows that the Mid-Century
policy provided Kathryn the same coverage and limits as the Farmers policy, but at a lower cost. 
Wanda and Rodger Payne became insured under a separate Farmers policy.
2.   Mid-Century also alleged that Wanda's 1994 waiver was effective because it was in
connection with a policy previously issued by an affiliated insurer.  The company does not assert this
basis on appeal; it relies instead on Kathryn's 1996 waiver except in one reference at the end of its
argument in support of this ground in which it adds, "Furthermore, under the ruling promulgated by
Berry . . . the April 11, 1994, Agreement Deleting Personal Injury Protection signed by Wanda Payne
effectively rejects PIP coverage in the Mid-Century policy."
3.   The statutory provision for rejecting uninsured/underinsured motorist coverage utilizes
almost identical language as the PIP statute.  Tex. Ins. Code Ann. art. 5.06-1(1) (West 1981).