                                                                      ACCEPTED
                                                                  03-15-00378-CV
                                                                          7899900
                                                       THIRD COURT OF APPEALS
                                                                  AUSTIN, TEXAS
                                                           11/19/2015 10:15:27 AM
                                                                JEFFREY D. KYLE
                                                                           CLERK
                No. 03-15-00378-CV

                      In the                      FILED IN
                                           3rd COURT OF APPEALS
                                               AUSTIN, TEXAS
              Third Court of Appeals      11/19/2015 10:15:27 AM
                                             JEFFREY D. KYLE
                 at Austin, Texas                  Clerk




                 JAMES HANSEN
                             Appellants

                        v.

               LONNIE ROACH and
              BEMIS, ROACH & REED
                             Appellees


               APPELLEES' BRIEF


                  John R. Shepperd
                  State Bar No. 18236050
                  713-353-2010
                  713-784-7780 (fax)
                  John.shepperd@wilsonelser.com
                  WILSON ELSER MOSKOWITZ
                  EDELMAN & DICKER, LLP
                  909 Fannin Street, Suite 3300
                  Houston, TX 77010


             Oral Argument Requested



2110219v.3
                            TABLE OF CONTENTS

TABLE OF CONTENTS

INDEX OF AUTHORITIES                                                   iii

STATEMENT OF THE CASE                                                  1

STATEMENT REGARDING ORAL ARGUMENT                                      1

ISSUES PRESENTED                                                       2

STATEMENT OF FACTS                                                     2

SUMMARY OF ARGUMENT                                                    10

ARGUMENT AND AUTHORITIES .                                             14

   A.        Standard of Review: Two Standards Apply                   14

             1.   Legal sufficiency standard of review applies
                  to evidentiary rulings . .                          . 14

             2.   De Novo standard of review applies when
                  interpreting the contract                            16

   B.        The trial court correctly held that Hansen's business
             ended on April 8, 2011 when he voluntarily surrendered
             his medical license                                       17

             1.   The facts indicate the practice ended when
                  Hansen surrendered his medical license              17

             2.   Hansen did nothing after the injury to continue
                  his practice, and he took positive steps to end
                  his practice                                        18




2110219v.3
    C.       The Lower Courts Interpreted Hansen's DOE Policies
             Correctly                                                 20

             1.   The policy language defines when a practice ends
                  and when DOE payments stop                           20

             2.   The position of Texas courts on insurance policy
                  exclusion provisions that are found to be
                  ambiguous                                             22

             3.   The Benefit Termination provision of Hansen's
                  DOE policy is not ambiguous                           23

             4.   Hansen's interpretation of the Benefit Termination
                  provision is unreasonable                            28

   D.        The Business Organizations Code is Irrelevant . .          31

             1.   The policy does not recognize a "winding up"
                  period as a prerequisite to a business ending        . 31

             2.   Hansen cites no case law that says the Business
                  Organizations Code applies                            33

             3.   Hansen cannot prevail even if the Business
                  Organizations Code applies ..                        . 34


   E.        Northwestern Mutual's Breach Does Not Entitle
             Hansen to All the Benefits Under the Policy . .           . 36

Conclusion                                                             38

Prayer                                                                 39

Certificate of Compliance with TRAP, Rule 9.4(i)(3)                    40

Certificate of Service                                                 40

                                                                          ii
2110219v.3
                      INDEX OF AUTHORITIES

                                CASES

Barnett v. Aetna Life Insurance Co., 723 S.W.2d 663, 666
    (Tex. 1987)                                                  23, 28

Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983)                       16

City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005) . . . .     15

Dow. Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001) . .       14, 15

El Paso Natural Gas Co. v. Minco Oil & Gas, Inc.,
     8 S.W.3d 309, 312 (Tex. 1999)                                    16

Grider v. Mike O'Brien, PC, 260 S.W.3d 49 (Tex. App.—
     Houston [1st Dist.] 2008, pet. den)                               14

Kelly-Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d 462,
      464 (Tex. 1998)                                            22, 23

Mead v. Johnson Group, Inc., 615 S.W.2d 685, 689
    (Tex. 1981)                                                       36

Milhouse v. Weisenthal, 775 S.W.2d 626 (Tex. 1989)                    8, 9

Quick v. City of Austin, 7 S.W.3d 109, 116 (Tex. 1998)                 16

Paul Revere Life Insurance Company v. Klock, 169 So.2d 493
     (Fla. Ct. App. 1964)                                              24

Principal Mutual Life Insurance Company v. Toranto,
     1997WL 279751 (N.D. Tex. 1997)                        25, 26, 27, 28

Waggoner v. Marrow, 932 S.W.2d 627, 631 (Tex.App.
    — Houston [14th Dist.] 1996, no writ)                              16


                                                                        iii
2110219v.3
Wilson v. Monarch Life Insurance Company, 971 F.2d 312
     (9th Cir. 1992)                                     24, 25




                     STATUTES AND CODES

TEX. BUS. ORG. CODE Chapt. 11.052 .                          34

TEX. BUS. ORG. CODE Chapt. 11.052(a)                        35

TEX Bus. ORG. CODE ANN. §301.003(2)(A)                      34
TEX Bus. ORG. CODE ANN. §301.006                            35
TEX Bus. ORG. CODE ANN. §301.007(a)                         35
TEX BUS. ORG. CODE ANN. §301.007(b)                         35
TEX Bus. ORG. CODE ANN. §301.007(e)                         35




                                                             iv
2110219v.3
                           No. 03-15-00378-CV

                                  In the
                        Third Court of Appeals
                            at Austin, Texas

                            JAMES HANSEN
                                          Appellants
                                     v.

                         LONNIE ROACH and
                        BEMIS, ROACH & REED
                                          Appellees


                          APPELLEE'S BRIEF


       Comes now Appellees Lonnie Roach and Bemis, Roach & Reed

("Roach") and files this Appellees' Brief.


                      STATEMENT OF THE CASE

       Appellees accept Appellant's Statement of the Case.


             STATEMENT REGARDING ORAL ARGUMENT

       Oral argument is requested by Appellees insofar as it was

requested by Appellant.


                                                               1
2110219v.3
                         ISSUES PRESENTED

       Appellees accept Appellant's Issues Presented.


                        STATEMENT OF FACTS

       On June 5, 2010, James Hansen, M.D., an Austin neurosurgeon,

sustained an injury while biking. (Tab F, Jnt. Ex. 1, Joint Stipulation

of Facts #1) Since this accident, Hansen has not performed surgery,

seen patients or otherwise returned to his solo surgical practice. (Tab

F, Jnt. Ex. 1, Joint Stipulation of Facts #s 16 — 18) Likewise, Hansen's

P.A., Austin Neurosurgical & Spine Institute, P.A. ("P.A.") has not

provided medical services to patients since that date. (Tab F, Jnt. Ex. 1,

Joint Stipulation of Facts # 19)

       Hansen was in solo practice, so he was the only member licensed

to perform the type of service for which the P.A. was formed. (Tab F,

Jnt. Ex. 1, Joint Stipulation of Facts # 35). Neither Hansen nor his P.A.

employed any other neurosurgeons since the date of the accident to

continue the operation of the business. (Tab F, Jnt. Ex. 1, Joint

Stipulation of Facts # 20) Hansen has never had another neurosurgeon

practicing with his P.A. before or after the accident. (Tab F, Jnt. Ex. 1,

                                                                         2
2110219v.3
Joint Stipulation of Facts # 21) Hansen has not attempted to practice

neurosurgery since the accident. (Tab F, Jnt. Ex. 1, Joint Stipulation of

Facts # 22)

       Regarding the dissolution of his practice, Hansen testified as

follows in various depositions:

       Q:     Now I know you closed your practice. When did you do
              that?
              Kind of officially about a month after my injury, so it
              would have been early July last year.

(Tab F, Jnt. Ex. 1, Joint Stipulation of Facts # 40)'

       Q:     I understand you've closed your office?
       A:     That is correct.
       Q:     Do you currently have any employees in the practice of
              medicine?
       A: I don't have any employees. My corporation has no
            employees other than myself.

(Tab F, Jnt. Ex. 1, Joint Stipulation of Facts # 41)

       Q:     Have you sent out a letter to all your patients advising
              them that you were closing your practice?
       A: Yes.
(Tab F, Jnt. Ex. 1, Joint Stipulation of Facts # 41)

       Q:     Has anything changed with regard to your condition
              that suggests that you plan to return to the practice of
              medicine?
                                                                         3
2110219v.3
       A: No.

(Tab F, Jnt. Ex. 1, Joint Stipulation of Facts # 42)

       In October 2010, Hansen terminated his malpractice insurance

coverage. (Tab F, Jnt. Ex. 1, Joint Stipulation of Facts # 25) On April

8, 2011, Hansen surrendered his Texas medical license. At that time he

was under a medical board investigation. (Tab F, Jnt. Ex. 1, Joint

Stipulation of Facts # 28) In addition, since January 1, 2010, twenty

medical malpractice lawsuits was filed against Hansen. (Tab F, Jnt.

Ex. 1, Jnt Stipulation of Facts # 31)

       Prior to the bike accident, Hansen purchased disability policies

covering both the loss of his personal income and his business overhead

expenses in the event of a disability. (Tab F, Jnt. Ex. 1, Jnt Stipulation

of Facts #s 2 and 7) These policies were issued by Northwestern

Mutual Life Insurance Company ("Northwestern Mutual"), the

defendant in the Underlying Suit. (Tab B, Page 1) After his biking

injury, Hansen submitted claims for benefits under both the disability

and the overhead expense policies. (Tab F, Jnt. Ex. 1, Jnt Stipulation of

Facts #s 9 and 10) Northwestern Mutual began paying the disability

income benefits, and that policy was not in issue in the Underlying Suit,


                                                                        4
2110219v.3
nor is it at issue in the present case. (Tab F, Jnt. Ex. 1, Jnt Stipulation

of Facts # 9)

       The Underlying Suit dealt with Northwestern Mutual's actions

under the two Disability Overhead Expense ("DOE") policies that

Hansen purchased. (Tab B). The DOE policies provided a combined

benefit of up to $25,000.00 per month with aggregate benefits of

$600,000.00. (Tab F, Jnt. Ex. 1, Jnt Stipulation of Facts #s 6 and 13;

Tab F, Pl. Exhibit #s 1 and 2) The parties stipulated that if benefits

were not terminated under the policy, Hansen's covered overhead

expenses would exceed the maximum benefit of $25,000.00 per month

for each month benefits were payable. (Tab F, Jnt Ex 1, Jnt Stipulation

of Facts # 13)

       After completing its investigation, Northwestern Mutual denied

Hansen's claim for DOE benefits. (Tab F, Jnt. Ex. 1, Joint Stipulation

of Facts # 12) Northwestern Mutual gave the following explanation for

why the benefits could not be paid:

       As previously communicated to Dr. Hansen, we are still
       unable to provide benefits under these polices because it is
       our determination that the operation of the business has
       ended. The contracts define business as follows at section
       1.6: "Except as provided in sections 8.3 and 8.9, the word
       "business" means the Insured's business or the Insured's

                                                                          5
2110219v.3
       professional practice at the time disability starts." Also, as
       you know, at section 2.2 under Benefit Termination or
       Adjustment the contract goes on to say that "If the Insured
       ends the operation of the business while totally or partially
       disabled, benefits for Covered Overhead Expense and Waiver
       of Premium will end."

       The business or professional practice that Dr. Hansen was
       engaged in at the time his disability started was that of
       neurosurgery. Dr. Hansen admits that he was the practice.
       Because he was a solo practitioner and he cannot perform
       the duties of his practice, there is no practice. Without a
       practice, the operation of the business (as that term is
       defined by the policy) has ended.

(Tab F, Pl. Ex 1, No. 8)

       Northwestern Mutual offered to pay Hansen $75,000,

representing three months of coverage associated with a reasonable

time for Hansen to wind down his business. (Tab F, Jnt Ex 1, Jnt

Stipulation of Facts # 14) Hansen rejected that offer and retained Roach

to file suit. (Id.) Prior to trial, the parties stipulated to the facts. (Tab

F, Jnt. Ex. 1, Jnt Stipulation of Facts #s 1 — 42) The Underlying Suit

was tried to the court without a jury. (Tabs H and I) No additional

testimony was heard at trial. (Tab L) The court determined the

following:




                                                                           6
2110219v.3
    Findings of fact:

    • Hansen closed his business on the date he surrendered his
      medical license, April 8, 2011.

    Conclusions of law:

    • Northwestern Mutual breached its contract with Plaintiff when it
      denied his claim;

    • Hansen's entitlement to monthly benefits ended on the date he
      surrendered his medical license pursuant to section 2.2 of the
      policy which provides in part:

             BENEFIT TERMINATION OF ADJUSTMENT. If the
             Insured ends the operation of his business while totally
             or partially disabled, benefits for Covered Overhead
             Expense and Waiver of Premium will end.

   • Hansen is entitled to recover monthly benefits of $201,827.96
     (representing 8 months and two days of benefits payable at a rate
     of $25,000 per month).

   • Hansen is entitled to a premium refund of $6,056.01, representing
     the amount of the premium paid by Hansen to Northwestern
     Mutual in November 2010.

   • Hansen is entitled to recover statutory interest (at 18% pursuant
     to §542.060 of the Texas Insurance Code) in the amount of
     $105,203.70, plus reasonable attorney fees.

(Id.)
        In essence, the trial judge in the Underlying Suit disagreed with

Northwestern Mutual's position that Hansen ended the operation of his

business approximately three months after the biking accident on June

                                                                        7
2110219v.3
5, 2010. Likewise, the trial judge disagreed with Hansen's position that

the operation of his business had not ended and would continue into the

indeterminate future. Rather, the court concluded that Hansen ended

the operation of his business on April 8, 2011, when he surrendered his

medical license. (Id.)

       Hansen was dissatisfied with this verdict and requested that

Roach appeal the judgment. Based on correspondence received from the

Court's Clerk, Roach erroneously believed that the Final Judgment was

entered on October 25, 2013. Consequently, Roach missed the deadline

file his notice of appeal. The Third District Court of Appeals dismissed

the appeal for want of jurisdiction. In a letter dated March 8, 2014,

Roach notified Hansen of his error and the dismissal by the court of

appeals. (Tab P) Hansen then sued Roach and the Firm.

       (Tab 0) In response to Request for Admissions filed in the present

lawsuit, Roach admitted that his failure to file a timely Notice of Appeal

in the Underlying Suit was negligence. (Tap P)

       In an appellate malpractice case where the issue of causation

hinges on the possible outcome of an appeal, the issue is to be resolved

by the trial court as a matter of law. Millhouse v. Weisenthal, 775


                                                                        8
2110219v.3
S.W.2d 626, 628 (Tex. 1989). Consequently, the trial judge who

presided over Hansen's legal malpractice case against Roach found

herself standing in the shoes of the Third Court of Appeals who

otherwise would have heard the appeal had it been timely filed.                                       Id.

        The same stipulated evidence before the court in the Underlying

Case was also before the trial court in the legal malpractice case, which

is the same stipulated evidence before this Court today. On May 27,

2015, the court in the legal malpractice case granted judgment for the

Defendants, because it did not find legally sufficient evidence to

overturn the court's verdict in the Underlying Case. (Appendix A to

Appellant's Brief) In so doing, the court concluded that Roach's

negligence did not proximately cause injury to Hansen.

        That court reached the following conclusions of laws:

        2        Plaintiff's entitlement to monthly benefits ended on
                 April 8, 2011, the date he closed his business.
                 Collection of accounts receivable did not constitute the
                 "continuing operation of the Insured's business" within
                 the plain meaning of the applicable provisions of the
                 insurance policy between Northwestern Mutual Life
                 Insurance Company and Plaintiff.

I The trial court in the legal malpractice case made a finding of fact that the judge in the Underlying Suit did
not abuse her discretion in finding Plaintiff closed his business on April 11, 2011, when he surrendered his
medical license. Appellant noted in his Brief that a review as to whether a judge abused her discretion is a
conclusion of law. However, the determination that Hansen's practice ended when he surrendered his
medical license on April 8, 2011 is a finding of fact.

                                                                                                              9
2110219v.3
        4    A timely filed appeal would not have changed the
             outcome in the Underlying Case. Accordingly,
             Defendants' failure to timey (sic) appeal did not
             proximately cause loss or harm to Plaintiff.



                      SUMMARY OF ARGUMENT

        Hansen's DOE policy provided for payment of expenses incurred

"in the continuing operation of the insured's business.), The DOE policy

included a Benefit Termination provision stating payments would end if

Hansen "ends the operation of his business" while totally or partially

disabled. The issues before the court in the Underlying Suit were (1)

What is meant by the phrase "operation of his business" as that phrase

is used in the policy?; and (2) When did Hansen end the operation of his

business?" The court in the Underlying Suit found that Hanosen's

business was seeing patients and performing surgery on them. The

continuing operation of Hansen's business did not include the collection

of accounts receivable and the payment of debts. Therefore, Hansen's

business ended when he voluntarily surrendered his medical license.

       The court in the legal malpractice trial heard the same evidence

and reached the same conclusions on all questions of law and fact.



                                                                      10
2110219v.3
        Hansen wants this Court to ignore the definitive end of his

practice on April 8, 2011, and focus on the continued existence of his

P.A. He argues that his business has not ended so long as there are

accounts receivable to collect and debts to pay. That logic ignores the

distinction between Hansen's practice of neurosurgery and Hansen's

collection of fees and payment of debts. The Benefit Termination

provision in Hansen's DOE policy states the specific circumstances

when benefits will end. Applying Hansen's flawed logic would negate

the Benefit Termination provision of the policy. Physicians who

permanently ended their medical practice due to disability could avoid

the Business Termination provision simply by dragging out their

financial affairs until every last penny available under the policy was

collected.

        Hansen similarly argues that he is entitled under the Texas

Business Organizations Code to a winding up period to dissolve his

P.A..        Since his P.A. was formed under the Texas Business

Organizations Code, Hansen argues that he is entitled a reasonable

amount of time to settle the affairs of the P.A.; i.e., collect accounts

receivable and pay existing debts.


                                                                     11
2110219v.3
       The fact that Hansen created a P.A. to protect himself from

personal liability has no bearing on when his business ended under the

terms of the policy. Determining that coverage persists based on

whether a practice was incorporated would result in an inconsistent

application of the policy. It would entitle Hansen to ongoing DOE

payments even after he ended his practice due to disability, so long as

he was still winding up the corporation. But Hansen would not receive

those same DOE payments if he was unincorporated and stopped

practicing due to disability.

       There is no mention in the DOE policies about affording Hansen a

winding up period to dissolve his professional association. Indeed, there

is no mention that the dissolution of Hansen's P.A. is a prerequisite to

ending the operation of his business. Rather, the policy says in plain

terms that the DOE benefits end when "the insured ends the operation

of his business while totally or partially disabled."

       Austin Neurolosurgical & Spine Institute, P.A. may have been the

name Hansen practiced under, but his business was seeing patients and

operating on them. When Hansen voluntarily surrendered his medical




                                                                      12
2110219v.3
license, he gave up his ability to see patients and operate on them. In

so doing, he ended his business.

        Finally, Hansen argues he is entitled to every penny of the DOE

policy benefits because Northwestern Mutual breached the contract.

Hansen contends that this breach means that the Benefit Termination

provision of the policy no longer applies. Appellees agree that when one

party to a contract commits a material breach of the contract, the other

party is excused from a subsequent breach. But that has nothing to do

Hansen's decision to surrender his medical license. Hansen's voluntary

surrender of his medical license was not a breach of the insurance

contract. Indeed, there was no evidence at trial in the Underlying Case

that Hansen's voluntary surrender of his medical license was in any

way related to Northwestern Mutual's breach of contract.

       The trial court in the legal malpractice action correctly ruled that

a timely appeal would not have changed the outcome in the Underlying

Case. Therefore, Roach's failure to timely appeal did not proximately

cause Hansen any harm. This ruling was based on the plain language

of the contract, and the application of that language to the stipulated




                                                                        13
2110219v.3
facts. Hansen's practice ended when he surrendered his medical license

on April 8, 2011. He was not entitled to benefits after that date.


                     ARGUMENT & AUTHORITIES

       A.    Standard of Review: Two Standards Apply

             1.   Legal sufficiency standard of review applies to
                  evidentiary rulings

       In determining whether Roach's negligence proximately caused

injury to Hansen, the trial court in the legal malpractice case stepped

into the shoes of this Court. Grider v. Mike O'Brien, P.C., 260 S.W.3d

49 (Tex. App. — Houston [1st Dist.] 208, pet. den.). It was charged with

determining whether Hansen would have been successful in the appeal

of the Underlying Case had this Court presided over a perfected appeal.

Id. This Court must now determine whether the trial court in the legal

malpractice case ruled correctly when it found that Roach's negligence

did not proximately cause injury to Hansen.

       The legal sufficiency standard applies when a court assesses the

sufficiency of the evidence supporting the trial court's ruling.     Dow

Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001). When a party


                                                                      14
2110219v.3
attacks the legal sufficiency of an adverse finding on an issue in which

he has the burden of proof, he must demonstrate on appeal that the

evidence establishes, as a matter of law, all vital facts in support of the

issue. Id. In conducting its review, this Court "must first examine the

record for evidence that supports the [trial court's adverse] finding,

while ignoring all evidence to the contrary." City of Keller v. Wilson,

168 S.W.3d 802, 822 (Tex. 2005). If there is no evidence to support the

trial court's finding, the reviewing court then must examine the entire

record to determine if the contrary position is established as a matter of

law. Id.

       The court in the Underlying Case made one finding of fact:

Hansen "closed his business on the date he surrendered his medical

license, April 8, 2011." (Tab L) Since Hansen challenges this finding of

fact, this Court must determine whether there is any evidence to

support it. This Court can reject the trial court's finding if there is (1) a

complete absence of evidence of a vital fact (2) the court is barred from

reviewing evidence offered to establish a vital fact; or (3) no more than a

scintilla of evidence was offered to prove a vital fact; or (4) the evidence

conclusively establishes the opposite of that fact. Id. at 811.


                                                                          15
2110219v.3
             2. De Novo standard of review applies when
                 interpreting the contract

        Once this Court determines the legal sufficiency of the findings of

facts reached by the trial court, it then must consider those facts in

light of the language found in Hansen's DOE insurance policy. Whether

a contract is ambiguous is a question of law.        Coker v. Coker, 650

S.W.2d 391, 393 (Tex. 1983). De novo review is applied to address

issues that are purely a question of law. See, e.g., El Paso Natural Gas

Co. v. Minco Oil & Gas, Inc., 8 S.W.3d 309, 312 (Tex. 1999). Under a de

novo standard of review, the reviewing court "exercises its own

judgment and re-determines each issue of fact and law," affording the

lower court's decision absolutely no deference. Quick v. City of Austin,

7 S.W.3d 109, 116 (Tex. 1998). The appellate court simply substitutes

its judgment for the judgment of the trial court.

       This Court must uphold conclusions of law on appeal if the

judgment can be sustained on any legal theory the evidence supports.

Waggoner v. Morrow, 932 S.W.2d 627, 631 (Tex. App. -- Houston [14th

Dist.] 1996, no writ). Incorrect conclusions of law do not require

reversal if the controlling findings of fact support the judgment under a

correct legal theory. Id.

                                                                        16
2110219v.3
        B.   The Trial Court Correctly Held that Hansen's Business
             Ended on April 8, 2011 When he Voluntarily
             Surrendered his Medical License


             1.   The facts indicate the practice ended when
                  Hansen surrendered his medical license


       Hansen's ability to practice medicine ended when he suffered

neurological injuries in a biking accident on June 5, 2010. After that

date, he never returned to his solo practice. (Tab F, Jnt. Ex. 1, Joint

Stipulation of Facts # 16) He never performed another surgery. (Tab F,

Jnt. Ex. 1, Joint Stipulation of Facts # 18). He never treated another

patient. (Tab F, Jnt. Ex. 1, Joint Stipulation of Facts # 17). Indeed,

Hansen testified that he "kind of officially" closed his practice in July,

2011. (Tab F, Jnt. Ex. 1, Joint Stipulation of Facts # 40). At this point,

one could argue that Hansen's business had ended. Yet he still had his

medical license and was undergoing physical therapy presumably in an

effort to regain the ability to return to work. It wasn't until Hansen

took the affirmative act of voluntarily surrendering his medical license

that his business unequivocally came to an end pursuant to the terms of

the policies.




                                                                       17
2110219v.3
        On April 8, 2011, the operation of Hansen's business ended when

the Texas Medical Board formally accepted the Agreed Order wherein

Hanson represented under oath that he had closed his medical practice

and was voluntarily surrendering his medical license. Monthly

expenses incurred after a business has closed are not normal and

customary in the continuing operation of the insured's business,

because the business is not continuing to operate. The policy provides

unambiguous language as to when the payments under the DOE policy

end: payments end when the insured "ends his business while totally or

partially disabled." Once Hansen voluntarily surrendered his medical

license the continuing operation of his business ceased.

             2.   Hansen did nothing after the injury to continue
                  his practice, and he took positive steps to end his
                  practice

       Hansen could have taken measures to continue the business. For

instance, he could have hired a locum tenens physician to provide

neurosurgical services. This point was raised in the following excerpt

from the deposition of Sharon Ann Hyde, corporate representative for

Northwestern Mutual:


                                                                        18
2110219v.3
        Q:   How does a solo practitioner, who is insured under this
             Northwestern DOE policy who becomes totally
             disabled, not have — be deemed to have ended his
             practice?
        A:   We have had claims where people have brought in, for
             instance, a locum tenens.
        Q:   I'm sorry. A what?
        A:   A locum tenens.
        Q:   What is that?
       A: Like a fill-in doctor, a temporary doctor. They could
            bring somebody in — maybe not a locum tenens — but
            they could bring somebody else in to continue keeping
            the business afloat. You know, it — they could hire
            somebody to take on any of those patients that were to
            be referred.
(Tab F, P1. Ex. 1, Deposition of Sharon Ann Hyde, p. 31)

       Hansen took no measures to keep his doors open. Indeed, he took

the opposite approach by sending letters to all of his patients advising

them that he was closing his practice. (Tab F, Jnt. Ex. 1, Joint

Stipulation of Facts # 41) The end of his medical practice was solidified

when he proactively surrendered his medical license on April 8, 2011

rather than simply let it expire. (Tab F, Pl. Ex 6)

       Hansen's medical practice was already closed on the date he

surrendered his medical license as evidenced by the following excerpts

from the Finding of Facts set forth in the Medical Board Order:
                                                                       19
2110219v.3
       6.    . . . Respondent has closed his medical practice.

        7    Respondent has indicated to the Board that he agrees
             to surrender his Texas medical license in lieu of further
             disciplinary proceedings.

(Tab F, Pl. Ex 6, page 2) Under the terms of the Agreed Order of

Voluntary Surrender, Hansen agreed to "immediately cease practice in

Texas." (Tab F, Pl. Ex 1, No 6)

       The DOE policy only provides coverage for normal and customary

expenses incurred in the continuing operation of the business. (Tab F,

P1. Ex 1, Nos. 1 and 2, page 6) Since Hansen testified that he kind of

officially closed his practice in July 2010, that he contacted all of his

patients and told them he closed his practice, and that he told the Texas

Medical Board in an official proceeding that he had closed his practice

in order to secure an Agreed Order dismissing its investigation of him,

there was no continuing operation of Hansen's business.

       C.    The Lower Courts Interpreted Hansen's DOE Policies
             Correctly

             1.   The policy language defines when a practice ends
                  and when DOE payments stop

       Appellant correctly noted that the following provisions from the

DOE policy are relevant
                                                                         20
2110219v.3
       GENERAL TERMS AND DEFINITIONS.                    The policy
       provides a monthly benefit for Covered Overhead Expenses
       when the Insured is totally or partially disabled. (Tab F, Pl.
       Ex 1, No. 1, Insurance policy, page 5)

       BUSINESS. Except as provided sections 8.3 and 8.9, the
       word "business" means the Insured's business or the
       Insured's professional practice at the time disability starts.
       (Tab F, Pl. Ex 1, No. 1, Insurance policy, page 5)

       COVERED OVERHEAD EXPENSE.              Covered Overhead
       Expense is the total of monthly expenses that are normal
       and customary in the continuing operation of the insured's
       business." (Emphasis added) (Tab F, Pl. Ex 1, No. 1,
       Insurance policy, page 6)

       BENEFIT TERMINATION.             If the Insured ends the
       operation of his business while totally or partially disabled,
       the benefits for Covered Overhead Expense and Waiver of
       Premium will end. (Emphasis added) (Tab F, P1. Ex 1, No. 1,
       Insurance policy, page 8)

       Hansen omitted another important provision found in the

Definitions Section of the Disability Overhead Expense Supplement.

This provision provides the following:

       BENEFIT TERMINATION.            Your Disability Overhead
       Expense policy is designed to help cover overhead expense
       for the owner during your covered partial or total disability.
       Therefore, if you end the operation of your business or
       professional practice while disabled, benefits for Covered
       Overhead Expense and Waiver of Premium will terminate.
       (Emphasis added) (Id.)




                                                                        21
2110219v.3
       Hansen's DOE policy only provides coverage for "expenses that are

normal and customary in the continuing operation of the insured's

business." The DOE policy makes it clear that the policy benefits

terminate when "the Insured ends the operation of the business while

totally or partially disabled." The DOE Supplement gives greater

specificity to the terms by stating that benefits end if the insured ends

the operation of his business or professional practice. Benefits under

the policy do not end when the insured stops collecting accounts

receivable and paying debts. Likewise, benefits do not end when the

insured winds up his professional association. Benefits end when the

insured ends his professional practice.

             2.   The position of Texas courts on insurance policy
                  exclusion provisions that are found to be
                  ambiguous

       The court is obligated to construe an insurance contract so as to

ascertain the true intent of the parties as expressed in the instrument.

Kelly-Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d 462, 464 (Tex.

1998). A contract is deemed ambiguous only if it is subject to two or

more reasonable interpretations. Id. If the language of the contract

leads to a definite or certain legal meaning, then it is not ambiguous.
                                                                       22
2110219v.3
Id. If the language of the contract is subject to two or more reasonable

interpretations, then it is ambiguous. Id. Where an insurance contract

drafted by the insurer is ambiguous, then it should be construed strictly

against the insurer and in favor of the insured. Barnett v. Aetna Life

Insurance Co., 723 S.W.2d 663, 666 (Tex. 1987). Where the language at

issue in the policy involves an exclusion of liability under the policy,

then the insured's construction of the exclusionary clause must be

adopted so long as that construction is not itself unreasonable. Id.

                  3.   The Benefit Termination provision of Hansen's
                       DOE policy is not ambiguous

       Hansen argues that the Benefit Termination provision of the DOE

policy contains an ambiguity that mandates it be interpreted in his

favor. This provision provides that DOE benefits end if the Insured

ends the operation of his business" while totally or partially disabled.
             CC




Hansen recognizes that "operation of his business" could mean

practicing neurosurgery, and that the "operation of his business" ended

when he surrendered his medical license. But Hansen argues that an

ambiguity exists since "operation of his business" also could mean his

P.A.'s ongoing payment of debts and collection of accounts receivable.


                                                                         23
2110219v.3
       Only a handful of cases across the country have dealt with the

subject in this lawsuit. None of these cases considered whether the

pertinent policy language was ambiguous. None of those cases held

that the operation of a medical practice means collecting accounts

receivable and paying debts after the physician practice has ended.

       The most noted opinion on the subject is Wilson v. Monarch Life

Ins. Co., 971 F.2d 312   (9th   Cir. 1992). In that case Wilson, an Oregon

chiropractor, sought to collect benefits under his DOE policy after he

was deemed totally disabled by his physician. Meanwhile, Wilson's

license was revoked and he sold his chiropractic practice. The

insurance company discontinued the DOE benefits. Wilson sued the

insurance company and argued that he continued running his business

because he continued to collect accounts receivable, and he continued to

incur overhead expenses related to those collections. The       9th   Circuit

Court of Appeals rejected that argument in the following passage:

       The mere collection of accounts receivable does not
       constitute running a chiropractic office or business in the
       plain meaning of those words. This case is analogous to Paul
       Revere Life Insurance Company v. Klock, 19 So.2d 493
       (Fla.Ct.App. 1964). In Klock, the court held that a dentist
       could not collect overhead expenses "in the conduct and
       operation of the insured's office," after the dentist sold his
       practice but during the period he retained his obligations on

                                                                           24
2110219v.3
       an office lease. Id. at 495. Here, we have not merely the sale
       of a practice, but a state order forbidding Wilson from
       practicing as a chiropractor. Under these circumstances, he
       no longer was running his office or business.

Id. at 313.

       Hansen argues that Wilson can be distinguished from this case

because the chiropractor seeking ongoing DOE payments had sold the

corporate entity under which his practice operated. But that was only

one of several factors that guided the Wilson court's reasoning. While

the court noted that Wilson's sale of his business to another was a factor

in its decision, it also reasoned that Wilson could not be running his

business when he was forbidden by state order from practicing. Id. The

trial court in the Underlying Case took the identical position when it

held that Hansen's business ended when he surrendered his medical

license on April 8, 2011.

       A Texas case following Wilson is Principal Mutual Life Insurance

Co. v. Toranto, 1997 WL 279751 (N.D. Tex. 05/15/1997), an unpublished

opinion out of the Northern District of Texas. In that case, Dr. Toranto,

a plastic surgeon practicing in Dallas, purchased several DOE polices.

These DOE policies stated that they would cover "the usual and

customary monthly business expenses [Dr. Toranto was] responsible for

                                                                        25
2110219v.3
in the operation of [his] business." Id. at *5. After he became disabled,

Dr. Toranto made a claim under the DOE policies. Meanwhile, Toranto

entered into a Practice Management Agreement with another surgeon

whereby the second surgeon completely took over Toronto's practice. Id.

at *5. Nevertheless, Toronto provided evidence that he continued to

incur business overhead expenses associated with his practice in excess

of $24,000 per month even after this Practice Management Agreement

was signed. Id. at *6.

       The insurance company moved for summary judgment, arguing

that it had no obligation to continue paying on the policy since Dr.

Toranto had stopped practicing and had sold his practice. The court

noted that the policy was "specifically designed to pay benefits for

overhead expenses incurred while the insured continued to operate his

trade or business." Id. at *5 (emphasis in original). In finding that the

insurance company's obligation to pay under the DOE policy had ended,

the court held the following:

       . . . any expenses Toranto may have incurred after February
       13, 1996, are irrelevant if he was no longer operating his
       practice, and there is no indication anywhere in the records
       that he continued to operate his practice after February 13,
       1996. Id. at *6.


                                                                       26
2110219v.3
       It made no difference whether Toranto sold his practice or closed

it. Once the practice ended, the right to recover under the DOE policy

ended as well. Hansen's ongoing debt collection and debt payment is no

more relevant in this case than it was in Toranto.

       It is important to note that the definition of "covered overhead

expenses" found in Dr. Toranto's policy is very similar to the definition

of that same phrase in Hansen's policy:

       Toranto Policy

       Covered Overhead Expenses — "[Toranto's] share of the usual
       and customary monthly business expenses [he is]
       responsible for in the operation of [his] business.
Id.
       Hansen Policy

       Covered Overhead Expense — "the total of monthly expenses
       that are normal and customary in the continuing operation
       of the insured's business . . . "

(Tab F, Jnt. Ex. 1, DOE Policy, Section 1.7, page 6) The court never

entertained the argument that the language in the Toranto Policy was

ambiguous.

       The court found that once Dr. Toranto ceased the operation of his

business, the insurance company's obligation to make disability


                                                                       27
2110219v.3
payments ceased. Toranto, 1997 WL 279751 at *5. The same logic

applies to Hansen. Once Hansen surrendered his medical license, the

operation of his business ceased, and Northwestern Mutual's obligation

to continue disability bnefits ceased. The fact that overhead expenses

continued had no bearing on the courts' determination in the Wilson

decision or in the Toranto decision, so it should have no bearing in

Hansen's case.

             4. Hansen's interpretation of the Benefit
                 Termination provision is unreasonable

       Even if the Benefit Termination Provision is found to be

ambiguous, the court cannot accept the insured's construction of the

provision if that construction is unreasonable. Barnett, 723 S.W.2d at

666. Hansen wants this Court to ignore the definitive end of his

practice on April 8, 2011, and focus on the continued existence of his

P.A. He argues that his "business" is Austin Neurosurgical & Spine

Institute, P.A. While that may be the name of his P.A., that is not his

business as that term is used in the policy. Interpreting whether

coverage exists based on how Hansen titled his business will lead to an

inconsistent application of the policy.

                                                                     28
2110219v.3
       Hansen was a neurosurgeon in solo practice, plain and simple.

His business was a surgical practice where he saw patients and

operated on them. Filing articles of incorporation with the Secretary of

State didn't change the nature of his business. That business ended

from a practical standpoint when Hansen suffered his injury on June 5,

2010, and it ended from a legal standpoint when he surrendered his

medical license on April 8, 2011.

       But under Hansen's theory, his business continues and he is

entitled to receive benefits under the DOE policies so long as his P.A.

exists. What if Hansen had registered his practice under an assumed

name or d/b/a rather than a P.A.? Under Hansen's theory, his business

would continue to exist and he could keep getting money under the

DOE policy so long as he continued to pay the nominal annual fee to the

county where the assumed name is registered.

       What if Hansen merely practiced under his own name rather than

as a P.A. or under an assumed name? Using Hansen's reasoning, this

Court would have to reach a different result because Hansen would

have no corporate structure or assumed name standing between him

and the end of his practice. Instead, Hansen's DOE benefits would end


                                                                      29
2110219v.3
once he surrendered his license. The mere fact that Hansen formed a

professional association to limit his personal liability should not create

an exception to the Benefit Termination provision of his DOE policy.

       Hansen further tries to obfuscate the clear language of the DOE

policies when he directs this court's attention to dictionary definitions of

the terms "close" and "end." Definitions for these common words are

unnecessary and represent an attempt to divert this Court's focus from

the key issue in this case. This case isn't about whether "close" and

"end" mean the different things. This case is about whether Hansen's

practice ended on the date he surrendered his medical license versus an

unknown date in the future when he eventually decides to dissolve his

P.A. Hansen wants this Court to rule that his practice ends when he

winds up his P.A. But the unambiguous language in his DOE policy

states that the practice ends when he ends the operation of his business

or professional practice. Hansen's business was treating patients. His

business ended when he permanently ended his ability to see patients

by surrendering his license on April 8, 2011.

       Hansen interprets "operation of his business" to include collecting

accounts receivable and paying bills even if they continue years after


                                                                         30
2110219v.3
Hansen closed his practice and surrendered his license.              This

interpretation of the phrase is unreasonable. It would force the court to

recognize the business as ongoing so long as there are unpaid invoices

or debt obligations related to the practice. Under that reasoning, if

Hansen doesn't aggressively pursue one receivable then the business

hasn't ended. Likewise, if Hansen decides to extend the terms of the

loan that he personally made to his P.A., then the business continues.

In short, Hanson could make the business last in perpetuity.

      It is evident that Hansen kept his P.A. alive largely for the

purpose of repaying a loan he made to himself so that he could claim

those payments under his DOE coverage. (Tab F, Pl. Ex 9) This activity,

long after Hansen has left the practice of medicine, does not reflect

normal and customary expenses incurred in the continuing operation of

the Insured's business as envisioned in Section 1.7 of the policy.


      D.    The Business Organization Code is Irrelevant

            1.   The policy does not recognize a "winding up"
                 period as a prerequisite to the business ending

      Hansen contends his business continues until he completes the

winding up of his P.A.         He cites Section 11.052 of Business

                                                                       31
2110219v3
Organizations Code to support his position that his business is not

terminated until the winding up process is completed. He contends that

the business continues to the extent necessary to wind up its affairs.

According to Hansen, that winding up is comprised of paying liabilities

and collecting accounts receivable. But Hansen has failed to show that

the Business Organization Code has any bearing on the interpretation

of his DOE policies.

       The Underlying Suit was a contract case. The issue was whether

Hansen was entitled to payments under his DOE policies for the

continuing operation of his business after he became permanently

disabled, stopped practicing medicine, closed his doors and surrendered

his medical license. Hansen was a neurosurgeon. His business was

seeing patients and operating on them. Once he surrendered his license

and permanently ended his practice due to disability, his business of

seeing patients and operating on them came to an end. There is no

mention in the DOE policies about affording Hansen a winding up

period to dissolve his professional association. Indeed, there is no

mention that the dissolution of Hansen's P.A. is a prerequisite to ending

the operation of his business. Rather, the policy says in plain terms


                                                                      32
2110219v.3
that the DOE benefits end when "the insured ends the operation of his

business while totally or partially disabled."

       If Hansen had no professional association and merely practiced

medicine as an individual, there is no question that the DOE benefits

would end once Hansen, due to disability, stopped seeing patients,

closed his doors and surrendered his medical license. This would be

true whether or not Hansen had ongoing debts to pay and accounts

receivable to collect. Consequently, it should make no difference that

Hansen practiced medicine through a P.A. His practice still ended on

April 8, 2011 when he surrendered his license and thereby ended his

ability to practice medicine. The trial court in the underlying case and

the trial court in the malpractice lawsuit ruled correctly. No harm

came from failing to perfect Hansen's appeal.

             2.   Hansen cites no case law that says the Business
                  Organizations Code applies

       The Business Organizations Code provides the parameters for

creating and dissolving business entities. Hansen's P.A. is a fictional

entity created, in part, to insulate Hansen from personal liability for the

acts or omissions of his business. Hansen cites no statute or case law

                                                                        33
2110219v.3
supporting his position that the terms of the DOE policies should take

into account the Business Organization Code when determining when

Hansen ended the operation of his business.           Therefore, the court

cannot look to the Business Organizations Code for guidance. The court

can look only to the language of the policy and cases interpreting

similar policies under similar facts. As noted above, the policy language

and the case law support the verdict of the underlying trial court that

Hansen's practice ended on April 8, 2011. The trial court committed no

error, so the outcome would not have changed had the appeal in the

underlying case been perfected.

             3.   Hanson cannot prevail even if the Business
                  Organizations Code applies

       Even assuming that the Business Organizations Code has some

bearing on how Hansen's DOE policies should be interpreted, the

statute still would not change the court's reading of the policy. A

professional association such as Hansen's P.A. is defined as an

association "formed for the purpose of providing the professional service

rendered by a doctor of medicine . .      PP
                                               TEX   Bus. ORG. CODE ANN.

§301.003(2)(A). Hansen's P.A. may provide medical/surgical services

                                                                        34
2110219v.3
only through a licensed physician. TEx BUS. ORG. CODE ANN. §301.006.

The owner of Hansen's P.A. must be a licensed physician. TEX BUS.

ORG. CODE ANN. §301.007(a). Once Hansen ceased being a licensed

physician, he was required to "promptly relinquish [his] ownership

interest" in his P.A. TEX BUS. ORG. CODE ANN. §301.007(b). Thereafter,

Hansen may act as the owner of his P.A. only for the purpose of winding

up the affairs of the P.A. TEx Bus. ORG. CODE ANN. §301.007(e). This

does not mean the P.A. gets to continue so long as any debts are owed or

any accounts receivable exist. Hansen must wind up his P.A. "as soon

as reasonably practicable." TEX Bus. ORG. CODE ANN. §11.052(a).

        The Findings of Fact and Conclusions of Law in the underlying

case are silent on whether a winding up under the Business

Organizations Code was contemplated by the verdict. Indeed, there is

no mention of the Business Organizations Code anywhere in the court's

record in the underlying suit. Presumably this is because the statute is

not applicable. Another possibility is that the court took the Business

Organizations Code into consideration and determined that ample time

for a winding up of Hansen's P.A. had passed by the time Hansen

surrendered his license on April 8, 2011. In either event, the Business


                                                                      35
2110219v.3
Organizations Code was not determinative in the Underlying Case or in

the legal malpractice trial, and it should not be determinative today.


       E.    Northwestern Mutual's Breach Does Not Entitle
             Hansen to All the Benefits Under the Policy

       Hansen's last argument is that he is entitled to maximum

payment of the DOE policy benefits because Northwestern Mutual

breached the contract. He contends that this breach means the Benefit

Termination provision of the policy no longer applies. Hansen cites

Mead v. Johnson Group, Inc., 615 S.W.2d 685 (Tex. 1981), to further his

position that the date he voluntary surrendered his medical license

should not be construed as the date his business ended.

       Mead stands for the position that when one party to a contract

commits a material breach of the contract, the other party is excused

from a subsequent breach. Id. at 689. The problem with this argument

is that Hansen's voluntary surrender of his medical license was not a

breach of the insurance agreement. It was simply an event that

triggered the Benefit Termination provision of the policy.

       If Northwestern Mutual's breach of contract caused Hansen to end

his business earlier than he otherwise would have, then Hansen might

                                                                         36
2110219v.3
be able to argue that he is entitled to DOE payments for that period of

time the practice would have existed but for the breach. This argument

was not made the Underlying Suit. Moreover, there was no evidence in

the Underlying Suit that Northwestern Mutual's breach caused Hansen

to voluntarily surrender his Medical License any sooner than he

otherwise would have. Perhaps that is why Hansen merely implies that

he surrendered his medical license as a consequence of Northwestern

Mutual's breach and offers no evidence to substantiate the claim.

       In contrast, there is evidence that the primary financial obligation

of Hansen's P.A. was the $758,313.51 loan that Hansen personally

made to his P.A. just three weeks prior to his career ending bicycle

injury. (Tab F, Pl. Ex 1, No. 9) In addition, there is evidence that

Hansen had more than 20 pending medical malpractice lawsuits filed

against him. (Tab F, Jnt. Ex. 1, Joint Stipulation of Facts, #31)

Finally, there is evidence that Hansen agreed to surrender his license

"in lieu of further disciplinary proceedings." (Tab F, Pl. Ex 1, No. 8).

The trial court had many reasons to conclude that Hansen decision to

surrender his medical license had nothing to do with Northwestern

Mutual's breach.


                                                                        37
2110219v.3
       A court of appeals can reverse a trial court's verdict if there is no

evidence to support the trial court's finding. The facts provide the

requisite evidence to support the trial court's finding in the Underlying

Suit that Hansen ended his practice on April 8, 2011.


                              CONCLUSION

       Based on the plain and unambiguous reading of the DOE policy,

the trial court in the Underlying Case correctly ruled that Hansen's

business — treating neurosurgical patients — ended when he stopped

seeing patients, closed his doors to the public, discontinued his

malpractice insurance and voluntarily surrendered his medical license.

The fact that Hansen continued to pursue accounts receivable and pay

debts had no bearing on the date that his practice ended. Likewise, the

fact that Hansen formed a professional association did not create an

exception to the Benefit Termination provision in his DOE policies.

       The policy does not provide that the dissolution of Hansen's P.A. is

a prerequisite to ending the operation of his business. If this Court

determined that the Business Organizations Code entitled a physician

to DOE payments pending the dissolution of his P.A., then DOE policies

would apply differently depending on whether a physician was or was
                                                                         38
2110219v.3
not incorporated. A physician with an incorporated practice would

continue to get DOE payments, but an unincorporated physician would

not since the Business Organizations Code would not apply.

       Finally, Hansen's argument that Northwestern Mutual's breach of

the contract negates the Benefit Termination provision of the contract is

unsupported by the law and it is unsupported by the facts. Moreover,

there is no evidence that Hansen would have ended his practice at a

later date had Northwestern Mutual's breach not occurred.

       Had Roach properly perfected the appeal this Court would have

affirmed the trial court's judgment and Hansen's outcome would not

have changed. Therefore, Roach's failure to perfect the appeal did not

proximately cause any harm to Hansen.


                               PRAYER

       Wherefore, Appellees pray that the court affirm the judgment of

the trial court and render judgment on behalf of Appellees as to all

causes of action.

                                 WILSON ELSER MOSKOWITZ
                                 EDELMAN & DICKER
                                 909 Fannin Street, Suite 3300
                                 Houston, TX 77010
                                 (713-785-7780 (fax)
                                                                       39
2110219v.3
                                   /s/John R. Shepperd
                                   John R. Shepperd
                                   State Bar No. 18236050
                                   713-353-2010
                                   John.Shepperd@wilsonelser.com




             Certificate of Compliance with TRAP 9.4(i)(3)

       This brief contains a total of 7641 words excluding the parts
exempted under TRAP 9.4(i)(1), as verified by Microsoft Word. This
brief is therefore in compliance with TRAP 9.4(0(2)(B).

                                        /s/John R. Shepperd



                           Certificate of Service

     A copy of this brief has been served on all counsel of record in
accordance with the Texas Rules of Appellate Procedure this 19th day of
November, 2015.

Scott R. Kidd
Scott V. Kidd
Kid Law Firm
819 West 11th Street
Austin, Texas 78701
512-330-1713 - Telephone
512-330-1709 - Facsimile
scott@kiddlawaustin.com
svk@kiddlawaustin. corn

                                        /s/John R. Shepperd


                                                                    40
2110219v.3
