Most of our belongings were destroyed in the fire. Since the fire we have been unable to live at or use the home, and have had to rent other lodging and make other arrangements. It was my understanding that as long as we remained at the home our insurance would cover the home and our belongings. Finally, the mortgage holder has contacted us after this fire explaining that there is a possibility for us owing additional fees due to the property not being insured.
By an order dated February 25, 2013, the trial court granted Priority One’s motion for summary judgment and entered a take-nothing judgment on the Rhines’ claims.
The Rhines claim on appeal that the trial court’s decision was erroneous because at the time of the second fire, the Rhines were still using the property as their primary residence, and "[n]owhere in the policy is ownership of the premises mentioned as a prerequisite or requirement for coverage to take effect." They further argue that because they could still owe money to the mortgage holder even though a foreclosure had taken place if a deficiency existed between the amount owed and the amount realized at the trustee’s sale, they sustained pecuniary loss from the home’s destruction. Employing this rationale, they state that they retained an insurable interest in the property even after the foreclosure had been completed. With respect to policy cancellation, the Rhines say that they believe that "sending a letter to Appellants stating that the insurance policy had been cancelled had no effect on the validity of the contract" and that Priority One’s obligations contained in the policy remained in force and effect.
II. Standard of Review
A traditional motion for summary judgment is granted only when the movant establishes there are no genuine issues of material fact and it is entitled to judgment as a matter of law. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We review de novo the grant or denial of a motion for summary judgment "to determine whether a party’s right to prevail is established as a matter of law." Lamar Corp. v. City of Longview, 270 S.W.3d 609, 613 (Tex. App.—Texarkana 2008, no pet.); see Nash v. Beckett, 365 S.W.3d 131, 136 (Tex. App.—Texarkana 2012, pet. denied) (citing Mann, 289 S.W.3d at 848).
When reviewing the grant or denial of a traditional summary judgment, we take as true all evidence favorable to the nonmovant and indulge every reasonable inference and resolve any doubts in the nonmovant’s favor. Limestone Prods. Distribution, Inc. v. McNamara, 71 S.W.3d 308, 311 (Tex. 2002) (per curiam); Rhone–Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999). On appeal, the movant must show that there is no material fact issue and that the movant is entitled to judgment as a matter of law. McNamara, 71 S.W.3d at 311; Steel, 997 S.W.2d at 223; City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979).
In its no-evidence summary judgment, Priority One represented that no evidence existed as to one or more essential elements of the Rhines’ claims on which they would have the burden of proof at trial. See Tex. R. Civ. P. 166a(i). The Rhines were then required to present evidence raising a genuine issue of material fact on the challenged elements. See id. To defeat a no-evidence motion for summary judgment, the Rhines were not required to marshal all proof; the response needed only point out evidence that raised a fact issue on the challenged elements. See Tex. R. Civ. P. 166a(i) cmt.
A no-evidence summary judgment is essentially a pretrial directed verdict. Therefore, we apply the same legal sufficiency standard in reviewing a no-evidence summary judgment as we apply in reviewing a directed verdict. Wal–Mart Stores, Inc. v. Rodriguez, 92 S.W.3d 502, 506 (Tex. 2002). We must determine whether the Rhines produced any evidence of probative force to raise a fact issue on the material questions presented. See id.; Woodruff v. Wright, 51 S.W.3d 727, 734 (Tex. App.—Texarkana 2001, pet. denied). The Rhines will defeat Priority One’s no-evidence summary judgment motion if they presented more than a scintilla of probative evidence on each element of their claim. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003); Jackson v. Fiesta Mart, Inc., 979 S.W.2d 68, 70–71 (Tex. App.—Austin 1998, no pet.).
Where, as here, both parties file dispositive cross motions for summary judgment and the court grants one and overrules the other, we review both the grant and the denial. Tex. Mun. Power Agency v. Pub. Util. Comm’n of Tex., 253 S.W.3d 184, 192 (Tex. 2007). Thus, in this case, we are to review the summary judgment evidence presented by each party, determine all questions presented, and render judgment as the trial court should have rendered. Id.; Comm’rs Court of Titus Co. v. Agan, 940 S.W.2d 77, 81 (Tex. 1997); Nash, 365 S.W.3d at 136.
In our review, we consider all the summary judgment evidence in the light most favorable to the non-movant, disregarding all contrary evidence and inferences. Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997). When a trial court’s order granting summary judgment does not specify the ground or grounds relied on for its ruling, summary judgment will be affirmed on appeal if any of the theories advanced are meritorious. Hill v. Bartlette, 181 S.W.3d 541, 544 (Tex. App.—Texarkana 2005, no pet.) (citing Star–Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995)).
III. The Trial Court’s Denial of the Rhines’ Motion and Grant of Priority One’s Motion Was Proper
A. The Rhines’ Motion for Summary Judgment
The Rhines’ sought declaratory judgment of the existence of a valid insurance contract at the time of the second fire. However, the record contains a letter from Priority One to the Rhines cancelling the policy due to vacancy of the premises—an option available to the insurer under the terms of the contract. Although the Rhines were warned that the policy would be cancelled November 4, 2011, there is no evidence that the Rhines made any response to the letter.
The Rhines’ response to Priority One’s allegation that cancellation of the policy was due to vacancy of the premises appears to indicate that the apparent vacancy was due to the October fire and the repairs being conducted in the home. Their motion for summary judgment states, "Anything with the home’s appearance which may have given the impression that it was not in use was due to ongoing repairs from a previous fire." However, the notice of vacancy sent by Priority One occurred prior to the October fire (the first fire).
Although the Rhines’ affidavits claim that "the house listed in the insurance contract was our primary residence" and that "my family still lived at the home" at the time of the November fire (even though their ownership in the property had been foreclosed on), they had not made their mortgage payments for over nine months, several letters sent to the home during the September–November timeframe remained unclaimed, and, while the Rhines’ might have considered the home their primary residence, there is no contradiction in the record of the claim that they had moved a substantial part of their personal property from the dwelling prior to either of the fires as alleged in Priority One’s October 5, 2011, letter.
Nevertheless, we find the evidence of a lack of vacancy as of October 5, 2011, inconclusive. Because there were genuine issues of material fact regarding whether the dwelling was vacant at the time alleged in Priority One’s letter, the Rhines did not meet their burden to show that they were entitled to declaratory judgment as a matter of law. The genuine fact issues with regard to the vacancy and cancellation of the policy also precluded the Rhines from establishing their breach of contract claim. Thus, denial of their traditional motion for summary judgment was proper.[6]
B. Priority One’s Motion for Summary Judgment
In their no-evidence motion for summary judgment, Priority One argued that the Rhines had failed to produce a scintilla of evidence establishing that its denial of coverage was a false representation of fact knowingly or "recklessly [made] without knowledge of the truth." The elements of common-law fraud are:
"(1) that a material representation was made; (2) the representation was false; (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker made the representation with the intent that the other party should act upon it; (5) the party acted in reliance on the representation; and (6) the party thereby suffered injury."
Aquaplex, Inc. v. Rancho La Valencia, Inc., 297 S.W.3d 768, 774 (Tex. 2009) (per curiam) (quoting In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex. 2001) (citing Formosa Plastics Corp. v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998))); see Johnson & Johnson Med., Inc. v. Sanchez, 924 S.W.2d 925, 930 (Tex. 1996). "[F]raud claims require scienter." Air Routing Int’l Corp. (Canada) v. Britannia Airways, Ltd., 150 S.W.3d 682, 692 (Tex. App.—Houston [14th Dist.] 2004, no pet.). Here, the record fails to include any summary judgment evidence establishing either the scienter requirement or the requirement that the Rhines relied on the denial of coverage. Thus, the no-evidence motion for summary judgment on this claim was properly granted.
Priority One also argued that the Rhines’ DTPA and Texas Insurance Code claims failed because there was no evidence provided that showed a lack of good faith on the part of Priority One. The Rhines’ claimed that Priority One engaged in unfair settlement practices under the Texas Insurance Code and the DTPA because "it was clear that Plaintiffs’ policy covered the fire at issue in this matter." Section 541.060 of the Texas Insurance Code states,
It is an . . . unfair or deceptive act or practice in the business of insurance to engage in the following unfair settlement practices with respect to a claim by an insured or beneficiary:
(2) failing to attempt in good faith[[7] to effectuate a prompt, fair, and equitable settlement of:(A) a claim with respect to which the insurer’s liability has become reasonably clear . . . .
Tex. Ins. Code Ann. §541.060(a)(2)(A) (West 2009).
A person who sustains actual damages may bring an action against another person for those damages caused by the other person engaging in an act or practice:
(1) defined by Subchapter B to be an . . . unfair or deceptive act or practice in the business of insurance; or (2) specifically enumerated in Section 17.46(b), Business & Commerce Code, as an unlawful deceptive trade practice if the person bringing the action shows that the person relied on the act or practice to the person’s detriment. Tex. Ins. Code Ann. § 541.151 (West 2009) (footnote omitted).
The Rhines’ petition failed to specify which of the listed acts enumerated in DTPA, Section 17.46(b) were violated, and there was no evidence that the Rhines relied on an alleged deceptive act or practice to their detriment. Thus, the no-evidence motion for summary judgment on this claim was proper.
In order to prove unfair settlement practices under the Texas Insurance Code, the Rhines were required to show that Priority One "knew or should have known that it was reasonably clear that the claim was covered." Universe Life Ins. Co. v. Giles, 950 S.W.2d 48, 56 (Tex. 1997); see Tex. Ins. Code Ann. § 541.060(a)(2)(A); Lyons v. Millers Cas. Ins. Co. of Tex., 866 S.W.2d 597, 599–600 (Tex. 1993). Here, the coverage was denied due to the alleged vacancy, "but when there is evidence on either side, [as there is here] the issue is a fact question." Giles, 950 S.W.2d at 56.
Also, the issue of whether it was reasonable for Priority One to conclude that the Rhines lacked an insurable interest in the property is a fact question for the jury because reasonableness is determined using an objective standard of whether a reasonable insurer would have delayed or denied payment on a claim. Id. (explaining difficulty in reviewing these claims in no-evidence context); but see Aleman v. Zenith Ins. Co., 343 S.W.3d 817, 823 (Tex. App.—El Paso 2011, no pet.). Thus, rather than addressing the issue in the no-evidence context, we resolve the matter by analyzing Priority One’s traditional motion for summary judgment.
In its traditional motion, [8] Priority One sought to establish the lack of an insurable interest due to the foreclosure proceedings. The "Homeowners" insurance policy was issued to provide "Property Coverage." It contained a condition entitled "Insurable Interest and Limit of Liability" clarifying that "[e]ven if more than one person has an insurable interest in the property covered, we will not be liable in any one loss . . . to the insured for more than the amount of the insured’s interest at the time of loss." Written proof of loss under the policy was required to include "the interest of the insured and all others in the property involved including all liens on the property."[9]
There is no dispute that the Rhines’ interest in the property was lost through foreclosure prior to the loss occasioned by the November fire. Therefore, the Rhines’ status had been reduced to only that of tenants at sufferance as a result of the foreclosure sale. Jones v. Tex. Pac. Indem. Co., 853 S.W.2d 791, 793 (Tex. App.—Dallas 1993, no writ).
A claimant has the burden to prove an insurable interest, which is a question of law. Id. at 794. "’[A]n insurable interest exists when the assured derives pecuniary benefit or advantage by the preservation and continued existence of the property or would sustain pecuniary loss from its destruction.’" Smith v. Eagle Star Ins. Co., 370 S.W.2d 448, 450 (Tex. 1963) (finding that because fire destroyed home in which Smith was living, she suffered pecuniary loss in form of loss of use in home even though she did not own it); Valdez v. Colonial Cnty. Mut. Ins. Co., 994 S.W.2d 910, 914 (Tex. App.—Austin 1999, pet. denied); St. Paul Fire & Marine Ins. Co. v Daughtry, 699 S.W.2d 321, 322 (Tex. App.—San Antonio 1985, writ ref’d n.r.e). Thus, ownership or title in the home was not necessarily mandatory in order for the Rhines to have an insurable interest in the home. See Smith, 370 S.W.2d at 450.
Citing to the above caselaw, the Rhines assert that the foreclosure did not divest them of their insurable interest. In a case almost factually identical to this one, the Dallas Court of Appeals held otherwise. Jones, 853 S.W.2d at 793. In that case, William and Elaine Jones owned a home subject to a mortgage interest held by Henry and Diana Martin. Id. When the Joneses defaulted on their mortgage payments, the Martins foreclosed. Id. Even after the foreclosure, the Joneses remained in the house, but their status was reduced to that of tenants at sufferance; the house burned down eleven days later. Id. The Joneses sued on the policy to collect for the structural damage to the home. Upholding the trial court’s grant of the insurance company’s motion for summary judgment, the court found that "[a]s tenants at sufferance, the Joneses were subject to immediate eviction. They had no future legal interest in the dwelling, and diminished motive and opportunity to protect the property." Id. at 795. Thus, our sister court concluded there was no insurable interest in the dwelling. Id. Likewise, we find that the Rhines had no insurable interest in the dwelling at the time the second fire took place and that Priority One’s summary judgment on this point was proper.[10]
In Jones, the insurance company paid the Joneses for personal property damage resulting from the fire. This begs the question of whether the same is required in this case. In other words, did the Rhines establish a pecuniary loss, and thus, an insurable interest in their personal property? A review of the policy reveals the following statement: "We do not cover: . . . property of roomers or tenants." Because the Rhines were tenants at sufferance, the policy prevented their recovery for personal property damage.[11] Accordingly, summary judgment on Priority One’s traditional motion was proper as to personal property damage as well.
IV. Conclusion
We affirm the trial court’s judgment.
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