Court Opinion

ID: 9890969
Source: CourtListenerOpinion
Date Created: 2023-10-17 00:00:34.793116+00
Date Added: 2024-06-11T13:37:29.335993
License: Public Domain

Case: 23-10267         Document: 00516932826             Page: 1      Date Filed: 10/16/2023

              United States Court of Appeals
                   for the Fifth Circuit
                                      ____________
                                                                                United States Court of Appeals
                                                                                         Fifth Circuit
                                       No. 23-10267
                                     Summary Calendar                                  FILED
                                     ____________                               October 16, 2023
                                                                                  Lyle W. Cayce
   Mirna Guzman,                                                                       Clerk

                                                                     Plaintiff—Appellant,

                                             versus

   Allstate Assurance Company,

                                                Defendant—Appellee.
                      ______________________________

                      Appeal from the United States District Court
                          for the Northern District of Texas
                                USDC No. 2:19-CV-187
                      ______________________________

   Before Davis, Willett, and Oldham, Circuit Judges.
   Per Curiam: *
          Plaintiff-Appellant, Mirna Guzman, appeals the district court’s judg-
   ment following a bench trial in favor of Defendant-Appellants Allstate Assur-
   ance Company (“Allstate”). We AFFIRM.

          _____________________
          *
              This opinion is not designated for publication. See 5th Cir. R. 47.5.
Case: 23-10267         Document: 00516932826              Page: 2       Date Filed: 10/16/2023

                                          No. 23-10267

                                                I.
           Mirna Guzman filed suit against Allstate concerning a life insurance
   policy issued to her husband, Saul Guzman. In Mr. Guzman’s August 17,
   2017 life insurance application, he disclosed a history of seizures, but repre-
   sented that he did not currently use, nor had ever used, tobacco or nicotine
   products. Based on Mr. Guzman’s application and Allstate’s pre-issuance
   investigation, 1 Allstate issued Mr. Guzman a $250,000 policy at a “Standard
   No Tobacco” annual premium rate.
           Mr. Guzman died on January 29, 2019, after he suffered a seizure. As
   the primary beneficiary of the policy, Mirna made a formal claim with Allstate
   for the policy’s proceeds. In response, Allstate conducted a routine contest-
   able-claims investigation during which it obtained additional copies of Mr.
   Guzman’s medical records. In the additional medical records, Allstate dis-
   covered that Mr. Guzman had reported to medical providers that he was a
   current smoker or in one case that he was a former smoker. 2 After reviewing
   the results of the contestable-claims investigation, Allstate’s chief under-
   writer issued two reports concluding that if Mr. Guzman had disclosed his

           _____________________
           1
            As part of its pre-issuance investigation, Allstate issued Mr. Guzman a urine test,
   which was negative for the presence of nicotine. Mr. Guzman also represented to the
   medical examiner who took his urine sample that he had “[n]ever” used “any form of
   tobacco or nicotine.” Finally, Allstate reviewed some of Mr. Guzman’s medical records
   from Faith Medical Clinic which stated that as of July 25, 2015, Mr. Guzman had never
   smoked.
           2
               These additional records include the following: (1) Mr. Guzman’s medical
   records from Baptist St. Anthony Health System reflect that he was a “smoker” as of April
   17, 2016. (2) Mr. Guzman’s records from his June 29, 2016 visit to Texas Neurology state
   that he is a smoker who smokes “some days, but not every day.” (3) Mr. Guzman’s Faith
   Medical Clinic records from an April 24, 2017 visit state that he is a former smoker, but his
   records from two subsequent visits on May 31 and July 1, 2017 to the same clinic both reflect
   Mr. Guzman was an every day smoker.

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                                            No. 23-10267

   smoking history, Allstate would not have issued him the same policy. On this
   basis, Allstate informed Mirna that it had elected to rescind the policy.
           Mirna sued Allstate in state court for breach of contract, violation of
   the Texas Deceptive Trade Practice-Consumer Protection Act, and for vio-
   lation of § 542.003 of the Texas Insurance Code. Allstate timely removed
   the case to federal court under diversity jurisdiction and filed a counterclaim
   for declaratory judgment that Mr. Guzman’s policy was properly rescinded
   due to material misrepresentations made by Mr. Guzman in the application.
           This case is before us for the second time. In the first appeal, Mirna
   challenged the district court’s order granting summary judgment to Allstate
   on its counterclaim. This Court reversed that judgment on the grounds that
   there was an issue of fact about whether Mr. Guzman was a smoker when he
   applied for life insurance. 3 On remand, the case was tried by consent before
   a magistrate judge. Following a two-day bench trial, the district court issued
   its findings of fact and conclusions of law, holding that Allstate satisfied all
   the elements for recission on the grounds of misrepresentation and was there-
   fore entitled to rescind Mr. Guzman’s policy under § 705.051 of the Texas
   Insurance Code. 4
           On appeal for the second time, Mirna raises two arguments: (1) the
   district court committed clear error in finding that Allstate satisfied the intent
   to deceive element of its claim for rescission; and (2) the court abused its
           _____________________
           3
               Guzman v. Allstate Ins. Co., 18 F.4th 157, 162 (5th Cir. 2021).
           4
             “Under our precedent, an insurer cannot avoid contractual liability based on a
   misrepresentation in an application for any type of insurance without pleading and proving:
   (1) the making of the representation; (2) falsity of the representation; (3) reliance by the
   insurer; (4) intent to deceive on the part of the insured in making the same; and (5) the
   materiality of the misrepresentation.” Am. Nat’l Ins. Co. v. Arce, No. 21-843, 2023 WL
   3134718, *5 (Tex. Apr. 28, 2023). The fourth element—intent to deceive—is the only
   element at issue in this appeal.

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                                         No. 23-10267

   discretion in admitting the testimony of Allstate’s former chief underwriter.
   We address each in turn.
                                              II.
           Mirna first argues that the trial court made a clearly erroneous factual
   finding that Mr. Guzman acted with intent to deceive Allstate. “The
   standard of review for a bench trial is well established: findings of fact are
   reviewed for clear error and legal issues are reviewed de novo.” 5 A trial
   court’s finding of fact is clear error if it is “implausible in the light of the
   record considered as a whole.” 6
           The district court, following trial, held that Mr. Guzman intentionally
   misrepresented his status as a smoker based on the following evidence
   presented at trial: (1) “Mr. Guzman had a history of smoking” which he
   misrepresented in his application; (2) he “knew his status as a smoker would
   amount to an increase of the policy premiums;” and (3) medical records
   show that he also minimized the extent of his epilepsy in his application.
           Mirna does not dispute that the above evidence supports an inference
   that Mr. Guzman intentionally deceived Allstate, but instead she contends
   that “[o]ther evidence in the record negates an intent to deceive.” However,
   “the great deference owed to the trial judge’s findings compels the
   conclusion that ‘[w]here there are two permissible views of the evidence, the
   factfinder’s choice between them cannot be clearly erroneous.’” 7

           _____________________
           5
             Guzman v. Hacienda Recs. & Recording Studio, Inc., 808 F.3d 1031, 1036 (5th Cir.
   2015) (internal quotation marks and citation omitted).
           6
             Brumfield v. Cain, 808 F.3d 1041, 1057 (5th Cir. 2015) (internal quotation marks
   and citation omitted).
           7
            Guzman, 808 F.3d at 1036 (quoting In re Luhr Bros., Inc., 157 F.3d 333, 338 (5th
   Cir. 1998)).

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                                             No. 23-10267

   Accordingly, because the trial court’s finding on the intent to deceive prong
   of Allstate’s counterclaim is not implausible in light of the evidence in the
   record, we find no clear error.
           Second, Mirna asserts that the district court abused its discretion by
   allowing Allstate’s chief underwriter to testify about the threshold sensitivity
   of the urine test for nicotine given to Mr. Guzman on the grounds that such
   testimony was expert in nature and failed to meet the requirements of
   Daubert v. Merrell Dow Pharmaceuticals, Inc. 8                  Allstate argues that the
   underwriter’s testimony was based on her personal knowledge and therefore
   was not expert testimony and that even if it was expert testimony improperly
   admitted, any resulting error was harmless.
           We review the district court’s determination of admissibility of expert
   evidence for abuse of discretion. 9 If we find an abuse of discretion, “we next
   review the error under the harmless error doctrine, affirming the judgment,
   unless the ruling affected substantial rights of the complaining party.” 10
   “The party asserting the error has the burden of proving that the error was
   prejudicial.” 11
           We need not decide whether the court erred in admitting the
   testimony from Allstate’s underwriter because Mirna has failed to carry her
   burden of proving that the court’s error was prejudicial. Mirna’s opening
   brief states that the district court “expressly relied on [the underwriter’s

           _____________________
           8
                509 U.S. 579 (1993).
           9
            Bocanegra v. Vicmar Servs., Inc., 320 F.3d 581, 584 (5th Cir. 2003) (citing Moore v.
   Ashland Chem., Inc., 151 F.3d 269, 274 (5th Cir. 1998)).
           10
              Id. (citing Great Plains Equip., Inc. v. Koch Gathering Sys., Inc., 45 F.3d 962, 967
   (5th Cir. 1995)).
           11
                Ball v. LeBlanc, 792 F.3d 584, 591 (5th Cir. 2015) (citation omitted).

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                                           No. 23-10267

   testimony] in its ruling,” and that such reliance was an abuse of discretion,
   but fails explain how her substantial rights were affected by the testimony. 12
           The district court cited to the underwriter’s testimony about the
   sensitivity of the urine test as part of its analysis as to whether Mr. Guzman
   misrepresented his smoking history in his application.                        However, as
   discussed above, there was evidence in the record aside from the
   underwriter’s testimony to support the district court’s finding as to the
   falsity of Mr. Guzman’s representations.                  In light of all the evidence
   presented, and given that Mirna has made no showing as to how the
   testimony affected her substantial rights, we affirm the district court’s
   evidentiary ruling. 13
                                                III.
           Accordingly, for the above reasons and those set forth by in the mag-
   istrate judge’s findings of fact and conclusions of law, we AFFIRM.

           _____________________
           12
              For the first time in her reply brief, Mirna conclusively argues that the admission
   of the underwriter’s testimony was not harmless because the urine test “supports a no-
   smoker status for Saul, which is admittedly controverted in the medical records,” and
   “fatally undercuts an inference that Saul intended to deceive Allstate regarding his smoker
   status.” Mirna has waived this argument by raising it for the first time in her reply brief on
   appeal. See Dixon v. Toyota Motor Credit Corp., 794 F.3d 507, 508 (5th Cir. 2015).
   Regardless, Mirna’s argument misses the mark by failing to explain how the admission of
   the underwriter’s testimony “was likely to affect the outcome of the trial, in light of all the
   evidence presented.” U.S. Bank Nat’l Ass’n v. Verizon Commc’ns, Inc., 761 F.3d 409, 431
   (5th Cir. 2014) (citing United States v. Limones, 8 F.3d 1004, 1008 (5th Cir. 1993)).
           13
             See Novick v. Shipcom Wireless, Inc., 946 F.3d 735, 741 (5th Cir. 2020) (“An error
   does not affect substantial rights if the court is sure, after reviewing the entire record, that
   the error did not influence the jury or had but a very slight effect on its verdict.” (citation
   omitted)).

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