Court Opinion

ID: 9668145
Source: CourtListenerOpinion
Date Created: 2023-08-24 02:03:47.132558+00
Date Added: 2024-06-11T18:15:43.286439
License: Public Domain

ON REHEARING
CORNELIUS, Chief Justice.
Sabine Towing & Transportation Co., Inc. (Sabine) contends that we have erred by holding that its Article 21.21 cause of action is barred by limitations.5 This contention is predicated on the notion that the limitations period for its Insurance Code action did not begin to run on October 16, 1990, the date it received the certificate of insurance from Holliday Insurance Agency, Inc. (Holliday), as we have held, but rather began on April 28,1992, the date on which Holliday denied coverage. As support for this proposition, that limitations does not begin to run until coverage is denied, Sabine cites three cases: Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507 (Tex.1998); Celtic Life Ins. Co. v. Coats, 885 S.W.2d 96 (Tex. 1994); and Gilbreath v. White, 903 S.W.2d 851 (Tex.App. — Texarkana 1995, no writ). We find each case distinguishable from the present facts and overrule Sabine’s motion for rehearing.
The Texas Supreme Court was asked to decide whether, in a suit by an insured against its agent for the negligent breach of the agent’s duty to obtain insurance, the injury-producing cause was the denial of coverage. Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962 S.W.2d at 514. Although the Court ultimately held that limitations did commence on the date coverage was denied, it so held under very different circumstances from those here. In the Johnson & Higgins, case, Kenneco Energy itself purchased the insurance policies at issue from London underwriters, using Johnson & Higgins (J & H) as a broker. This first-party relationship is important because Kenneco’s injuries were based on additional coverages it specifically sought from J & H, which were subsequently denied. Of the two certificates of insurance obtained from J & H evincing these additional coverages, one for contingency coverage and one for insufficient coverage, only the latter was recognized as valid, and it only to the extent of physical loss or damage to the oil cargo, not lost profits.
Sabine, at best, claims a third-party relationship with Superin’s insurance carrier, Holliday. Consequently, Sabine neither contacted nor dealt with Holliday until it filed its insurance claim on July 8, 1991, nine months after first receiving the certificate of insurance. The main reason provided to Sabine for Holliday’s refusal of coverage was that Holliday required a written contract between its insured, Superin, and any additional insureds. Obviously, had Sabine known about this formal contractual requirement it would not have allowed Superin’s employees to board its vessels unless and until a written contract was executed bringing Sabine in compliance with Holliday’s coverage. Sabine contends that our holding places it in an untenable business position. We disagree. The fact that Sabine has an insurance and risk management department demonstrates that it is fully capable of conducting at least a cursory *65inquiry as to whether coverage is availing as per the bare insurance certificate it has on file. In light of Sabine’s apparent policy of requiring subcontractors like Superin to obtain additional insurance coverage, it is not so unreasonable to imagine that Sabine would actively ascertain both the compliance and viability of such coverage.6 The untenable position to which Sabine objects was created of its own devices — the lack of a written contract between itself and Superin.
Sabine also refers us to Celtic Life Ins. Co. v. Coats, a case in which the insured, Coats, sued his insurer, Celtic Life Insurance, for a misrepresentation regarding the amount of psychiatric coverage available under an employer-furnished health insurance plan. Celtic Life Ins. Co. v. Coats, 885 S.W.2d 96. Coats, the owner of Aloha Pools, sought health coverage for the company’s employees and their families, specifically seeking coverage of $20,000.00 or more for psychiatric care. Before purchasing the policy, Coats’ business manager noticed that the recommended policy only covered $10,000.00 for psychiatric care; however, Celtic’s agent assured her that the figure was limited to out-patient care. Based on this representation, Coats purchased the Celtic policy. Subsequently, Coats’ son was admitted to a hospital for psychiatric care. Coats filed a claim for his son’s in-hospital psychiatric treatment, but Celtic only paid $10,000.00 of the $27,000.00 expense.
The Texas Supreme Court, faced with a first-party insured who was not provided the coverage it specifically sought from its insurer, held that the Article 21.21 cause of action accrued on the date the insurance coverage was denied. Celtic Life Ins. Co. v. Coats, 885 S.W.2d at 100. Despite Sabine’s contention that we should follow the above holding, we find that the first-party status dealt with in Celtic Life Insurance and the third party status of Sabine in the present case precludes us from applying this “accrual on the date of denial” rule. Underpinning the court’s rationale in Celtic Life Insurance is the first-party relationship between Coats and Celtic. While the court found that Coats specifically requested $20,000.00 in coverage and received only $10,000.00 after the misrepresentation by Celtic’s agent, and held that the cause of action accrued on the date of denial by Celtic, its holding carries an implied finding that although the misrepresentation was injurious, that fact could not be determined unless and until an insurance claim was filed and subsequently denied. Because Coats was supplied with the representation that the requested coverage existed, it was unnecessary for him to delve any further to ascertain whether such was the case. In this case, Sabine was provided with only a bare certificate of insurance which specifically indicated that the certificate of insurance was issued for informational purposes only and conferred no rights on Sabine. We cannot say that a direct misrepresentation from an insurance agent, as in Celtic Life Insurance, is sufficiently analogous to the circumstances presented in this case. Accordingly, we are not inclined to apply the “accrual on the date of denial” rule in this case.
We now turn to Gilbreath v. White, a case in which we held that damage to property by an ice storm was not the triggering event for the commencement of the statute of limitations for a Deceptive Trade Practices Act or Insurance Code violation, but that limitations began to run on the date of the alleged misrepresenta*66tion or the discovery thereof. Gilbreath v. White, 903 S.W.2d 851 (Tex.App.-Texarkana 1995, no writ). The case arose out of a mortgage transaction executed in favor of Dale Gilbreath and Steve Milner. Gil-breath and Milner had loaned J.M. Young $30,000.00, and in return Young gave the two a deed of trust to some land and agreed to obtain insurance for any improvements to the land. Young obtained the insurance from Hocheim Prairie Farm Mutual Insurance Association (Hocheim) through its agent, Billy D. White. Subsequently, a riding arena on the property sustained extensive damage during an ice storm, and Hocheim denied coverage pursuant to a policy exclusion.
Although Gilbreath presents facts that are arguably more analogous to this case than either of the above-discussed cases, the facts are sufficiently distinguishable to provide for a different outcome. First, the issue presented in Gilbreath was not whether insurance coverage existed, but rather whether coverage under the policy was properly denied. In the present case, Holliday wholly denied coverage to Sabine because no such coverage existed. Next, the parties in Gilbreath could not have known that Hocheim would deny coverage based on fíne print in its insurance policy until such coverage was denied, but Sabine could readily ascertain the existence of insurance coverage by requesting a review by its insurance and risk management department.
Because the cases cited by Sabine are distinguishable from the present case, specifically that Sabine could have and should have undertaken a review of whether Hol-liday was providing it insurance coverage, we overrule its motion for rehearing.

. Tex.Ins.Code Ann. art. 21.21 (Vernon Supp. 2001).

. In fact, Sabine concedes as much in its first brief to this Court stating, ‘‘[i]f [we] had known [we] [were not] an additional insured under Superin’s insurance policy, Superin would not have been allowed to perform work for [us].”