Clint Simon D/B/A Sherlock Pest v. Tudor Insurance Company

Citation: Not availableDocket: 05-12-00443-CV

Court: Court of Appeals of Texas; February 4, 2014; Texas; State Appellate Court

Original Court Document: View Document

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The Court of Appeals for the Fifth District of Texas affirmed a summary judgment in favor of Tudor Insurance Company and Norman P. Hines III against Clint Simon d/b/a Sherlock Pest and Certain Underwriters at Lloyd’s, London, in an insurance coverage dispute. The appellants contended that the trial court erred by granting summary judgment and denying their motions for continuance and to compel. The case revolves around Simon’s business license for wood-destroying insect inspections and the insurance policy issued by Tudor, which included an 'absolute exclusion' for professional liability related to such inspections. This exclusion was explicitly acknowledged by Simon in both the original insurance application submitted in December 2007 and a subsequent renewal application in November 2008, which reiterated the exclusion for Wood Destroying Insect Inspections and emphasized that Errors and Omissions coverage was not available for home inspectors. The court deemed that all significant legal issues had been resolved, leading to the affirmation of the trial court’s decision.

On November 25, 2008, Hines, representing Tudor, signed a certificate of insurance for Sherlock Pest, submitted to the Texas Department of Agriculture. The certificate indicated that the insurance policy was effective from December 17, 2008, to December 17, 2009, and outlined coverage limits of $200,000 for bodily injury and property damage per occurrence, with a total aggregate of $300,000. It clarified that the certificate was for informational purposes only and did not confer rights. Tudor did not specify any excluded pest control work categories in the certificate.

On December 1, 2008, Tudor issued a renewal policy for the same coverage period, which included endorsements from Simon's original 2007 policy that excluded coverage for bodily injury and property damage related to pest inspections. Subsequently, Sherlock Pest performed a wood-destroying insect inspection, leading to a lawsuit from the homeowners against Simon d/b/a Sherlock Pest and Sherlock Spec for allegedly improper inspection. Tudor denied coverage for this claim based on the policy exclusions.

Appellants claimed that Underwriters, the professional liability carrier for Sherlock Spec, settled the homeowners' claim and obtained a release against Simon. They then sued Tudor and Hines for deceptive trade practices, insurance fraud, negligent misrepresentation, and breach of contract, arguing reliance on the certificate of insurance's accuracy. Tudor moved for summary judgment, asserting that the claims failed due to the explicit policy exclusions. The trial court denied the appellants' motion for continuance and granted Tudor’s summary judgment, also denying the motion to compel Tudor to respond to interrogatories.

Hines filed a motion for traditional summary judgment, which the trial court granted after denying appellants’ motions for continuance and reconsideration regarding Tudor's summary judgment hearing. Appellants appealed, claiming errors in both the granting of summary judgment for Tudor and Hines and the denial of their motions. The standard of review for traditional summary judgment is de novo, requiring the moving party to show no genuine issue of material fact exists and entitlement to judgment as a matter of law. Without specified grounds for the trial court's decision, any meritorious ground may be affirmed.

Appellants argue that summary judgment was improperly granted because Tudor, through Hines, allegedly engaged in fraudulent misrepresentation of insurance coverage to pest control companies and the state agency regulating them. They claim the trial court erred in concluding that they could not have reasonably relied on these representations. Their appeal focuses on section 1951.312 of the occupations code, which mandates sufficient insurance coverage for pest control business licenses. Appellants assert reliance on a certificate that purportedly indicated full coverage without exclusions. Conversely, appellees maintain that the summary judgment was proper, asserting that Simon's acknowledgment of exclusions in the application precludes appellants' claims as a matter of law.

Simon could not justifiably rely on the certificate of insurance filed with the state, as appellees argue that it did not represent any coverage for inspections. They assert that section 1951.312 of the occupations code does not create a cause of action against insurers. Appellees maintain that the certificate accurately reflected Sherlock Pest’s coverage under the Tudor policy, which met the statutory requirement for general liability coverage. They claim that since the Simon Parties cannot recover their claims, Underwriters’ claims also fail legally.

Citing *Howard v. Burlington Insurance Co.*, the appellees argue that the case presents stronger evidence for summary judgment because Simon signed an application that clearly excluded inspections coverage, unlike the insured in *Howard*, who had not signed such an application. Appellants counter that *Howard* is not applicable due to differences in the involvement of a local recording agent and the nature of the marketing practices, as well as the absence of false certificates of insurance in that case.

The summary judgment evidence shows that Simon acknowledged in his insurance application that the coverage excluded liability for wood destroying insect inspections. The court referenced that a person cannot justifiably rely on a representation when there are "red flags" indicating that such reliance is unwarranted. The endorsements in both the original and renewal policies explicitly excluded coverage for professional and inspection services, underscoring the principle that the insurance policy’s language governs, and the insured must be familiar with its terms. The certificate of insurance also stated that it did not alter the coverage provided by the policies.

The certificate of insurance explicitly states it is for informational purposes only, conferring no rights to the holder, and that the parties' rights and liabilities are determined by the original policies, which may be amended. Legal precedents emphasize that such certificates do not grant coverage rights, as noted in Via Net v. TIG Ins. Co. and Evanston Ins. Co. v. ATOFINA Petrochemicals, Inc. The summary judgment evidence indicated that the documents signed by Simon d/b/a Sherlock Pest did not lead a reasonable person to believe that insurance coverage included liability for wood destroying insect inspections. The court upheld that the express terms of Simon’s insurance application, the 'Absolute WDI Exclusion,' and the insurance policy collectively indicated no coverage for such inspections. Consequently, the appellees were entitled to summary judgment, as the Simon Parties failed to establish a genuine issue of material fact regarding their claims under the DTPA, insurance code violations, common law fraud, and negligent misrepresentation. The absence of a contract requiring defense against the claims also invalidated the breach of contract claim. Furthermore, Underwriters’ claims were similarly dismissed since they could not recover on their claims due to the failure of the underlying claims. In a separate issue, the appellants argued the trial court improperly denied their motions for continuance and to compel discovery, asserting that they could not adequately respond to the summary judgment motions without the requested discovery.

Appellees contend that appellants have waived their appeal regarding the denial of motions for continuance and to compel due to a lack of cited legal authority and insufficient substantive argument. The standard of review for such denials is for abuse of discretion, defined as a decision that is arbitrary and unreasonable. Appellants referenced appellate procedure rule 33.1(a) concerning error preservation but failed to provide a detailed rationale for why the trial court's denials were improper. They claimed the trial judge's comments suggested the relevance of requested materials and asserted that they were hindered in responding to summary judgment motions. However, they did not substantiate how additional time and discovery would have impacted their ability to respond. The brief lacked a clear argument supported by legal citations, leading to a waiver of the issue on appeal. Consequently, the court resolved the appellants’ issues against them, affirming the trial court's judgment and ordering appellants to bear the costs of the appeal.