
Opinion issued December 17, 2009












In The
Court of Appeals
For The
First District of Texas




NO. 01-05-01190-CV




BROWN & BROWN OF TEXAS, INC. F/K/A POE & BROWN OF TEXAS,
INC. AND TRANSCONTINENTAL INSURANCE COMPANY, Appellants

V.

OMNI METALS, INC., Appellee




On Appeal from the 61st District Court
Harris County, Texas
Trial Court Cause No. 1996-36058A




OPINION ON REHEARING
          On March 20, 2008, a panel of this Court reversed the trial court’s judgment
and rendered judgment that Omni take nothing by its claims.  Omni did not file a
motion for rehearing, but instead filed a motion for en banc reconsideration.  We treat
the motion for en banc reconsideration as a motion for rehearing, grant rehearing, and
withdraw the March 20, 2008 opinion and judgment and issue this opinion and
judgment in their place.
          This case is on appeal from a trial court judgment in favor of appellee Omni
Metals, Inc., a buyer and seller of steel coils.  Port Metal Processing, Inc. (Port Metal)
stored steel belonging to Omni, processed that steel into coils, and temporarily stored
the finished coils for Omni.  Port Metal purchased insurance from appellant
Transcontinental Insurance Company (Transcontinental), originally through the
Russell Lee Jacobe Insurance Agency (Jacobe).  Jacobe was acquired on November
1, 1994 by Poe & Brown of Texas, Inc. (Poe & Brown), which is now known as
appellant Brown & Brown of Texas, Inc. (Brown & Brown).  
          The underlying proceeding on which this action is based is a suit for damages
arising from a fire that occurred on December 5, 1995 damaging Omni’s steel stored
in a facility operated by Port Metal.  The trial court granted Poe & Brown and
Transcontinental summary judgment on Omni’s negligent misrepresentation and
DTPA claims arising out of oral and written representations made by Poe & Brown,
Transcontinental’s local agent, to Omni and Port Metal, regarding Port Metal’s bailee
insurance coverage for Omni’s steel stored at Port Metal.  See Omni Metals, Inc. v.
Poe & Brown of Texas, Inc., No. 14-00-01081-CV, 2002 WL 1331720 (Tex.
App.—Houston [14th Dist.] June 13, 2002, pet. denied) (not designated for
publication).  The Fourteenth Court of Appeals reversed the summary judgment and
remanded the case to the trial court.
          The case was tried against Brown & Brown, Poe & Brown’s successor, and
Transcontinental before a jury beginning on October 11, 2005.  It was submitted to
the jury on theories of negligent misrepresentation and unfair or deceptive acts or
practices under former article 21.21 section 16 of the Texas Insurance Code and
section 17.46(b) of the Texas Deceptive Trade Practices Act (DTPA).  The trial court
rendered judgment on the jury verdict in favor of Omni on November 28, 2005. 
Defendants Transcontinental and Brown & Brown timely appealed.
          On appeal, Brown & Brown raises four issues.  It contends that (1) the
evidence is factually and legally insufficient to establish (a) that it made a negligent
misrepresentation or engaged in unfair or deceptive acts under the DTPA, (b) that the
representation caused Omni’s damages, (c) that Omni justifiably relied on Poe &
Brown’s misrepresentations, and (d) that Poe & Brown acted knowingly; (2) the
DTPA does not apply to Omni because Omni is not a consumer under the DTPA or
an insured or third party beneficiary under Port Metal’s Transcontinental insurance
policy; (3) attorney’s fees incurred in another lawsuit and awarded Omni in this suit
are not recoverable as damages; and (4) the trial court erred in not giving it a proper
credit for a $1,660,000 settlement in the other lawsuit.
          Transcontinental raises seven issues.  It contends that (1) Transcontinental
could not be liable for representations made by Poe & Brown (a) when Omni
presented no evidence that any representation of Poe & Brown was made with the
actual or apparent authority of Transcontinental and (b) when Omni failed to submit
a separate issue in the charge on Brown & Brown’s actual or apparent authority and
obtain a jury finding; (2) the evidence establishes as a matter of law that
Transcontinental is not liable for Poe & Brown’s actions in sending certificates of
insurance to Omni; (3) Omni’s misrepresentation claim is not viable, as a matter of
law, because (a) no one at Omni read the certificates of insurance, (b) the certificates
disclaimed any representation regarding coverage, (c) a statement made by Poe &
Brown to Port Metal’s president, Blake McKnight, in 1993 regarding coverage of
Omni’s product was not made to Omni, and (d) Port Metal’s president had no
authority to act for Transcontinental in representing to Omni that its metal was
covered by Port Metal’s bailee policy; (4) Omni was not entitled to recover attorney’s
fees of $740,000 for pursuing a tort action against the starters of the fire; (5) the
jury’s award of additional damages of $1,080,000 awarded Omni on its DTPA claims
against Transcontinental are erroneous because Transcontinental had no contact with
Omni and there is no evidence Transcontinental knew of any wrongful act, as
required for recovery of additional damages; (6) the trial court erred in not giving a
$1,660,000 settlement credit to Transcontinental that Omni received from third
parties; and (7) the trial court erred in not admitting evidence of a prior federal
judgment in Transcontinental’s favor.  In its own issues (3) and (4), Brown & Brown
joins in and adopts Transcontinental’s arguments and authorities with respect to
issues (5) and (6).
          We modify the judgment of the trial court and, as modified, affirm.
PROCEDURAL HISTORY
          Port Metal’s warehouse burned down on December 5, 1995, and Omni lost
$2,600,000 in steel stored at Port Metal.  Transcontinental, Port Metal’s insurer,
denied coverage for damages to Omni’s steel on the ground that Port Metal’s “all
risk” bailee policy was subject to an exclusion for goods stored at Port Metal for more
than sixty days for which Port Metal received a storage fee.  Omni paid storage fees
to Port Metal.  Omni filed suit against Port Metal and defendants it alleged were
responsible for the fire, namely Electrical Wire & Cable Company, Inc., Electrical
Redesign Company, Lighting Surplus, Harry Schubeck, Jr., and Textron, Inc.  It
subsequently added Poe & Brown, Port Metal’s insurance agent, and
Transcontinental, Port Metal’s insurer.  Omni settled separately with the original
defendants for a total of $1,660,000.  Omni spent $740,000 on attorney’s fees that
were not legally recoverable prior to settlement. 
          Omni’s suit against Transcontinental and Poe & Brown was severed from the
claims against the settling defendants.  In the severed suit, Omni raised claims against
Transcontinental and Poe & Brown for negligent misrepresentation and violations of
section 17.46(b) of the DTPA


 under former article 21.21, section 16 of the Texas
Insurance Code.


  Transcontinental and Poe & Brown successfully moved for
summary judgment.  Omni appealed the summary judgment to the Fourteenth Court
of Appeals, which reversed the judgment by opinion entered June 13, 2002, and
remanded the case for trial.  Omni Metals, Inc., 2002 WL 1331720.  This appeal
follows from the trial on remand from the Fourteenth Court of Appeals.
          In the original appeal of this case prior to trial on remand, the Fourteenth Court
of Appeals made a number of holdings pertinent to the instant appeal.  It held that Poe
& Brown voluntarily disclosed to Omni that Port Metal had bailee insurance which
covered “all risks,” and, therefore, that Poe & Brown had a duty to disclose the
storage fee exclusion, of which it was aware but Omni was not.  Id. at *3–4.  The
Court also held that a fact issue existed as to “whether [Poe & Brown] misrepresented
coverage because, under the circumstances, the ‘all risk’ certificate of insurance was
false and misleading.”  Id. at *4–5.  The Court further held that a fact issue existed
as to whether Poe & Brown could be held liable to Omni if it misrepresented
coverage to Port Metal by telling Port Metal’s president that the policy would cover
“[p]roduct owned by my customers for processing in-located in my facility.”  Id. at
*8.
          The court also refused Poe & Brown’s and Transcontinental’s request that it
hold that disclaimers in certificates of insurance delivered to Omni prevented the
creation of a false impression about coverage as a matter of law.  Id. at *6.  Rather,
it held that, given the “all risk” designation in the certificate, “the disclaimers in the
certificate present a conflicting fact that we must disregard in applying the summary
judgment standard of review.”  Id. at *7.  The court also rejected Poe & Brown’s and
Transcontinental’s argument that it had no duty to disclose because it had no duty to
explain policy exclusions to an insured.  Id. 
          In addition, the court refused to hold that Omni could not sue on the basis of
its reliance on misrepresentations made by Poe & Brown to Port Metal and repeated
by Port Metal to Omni.  Id.  Observing that “[c]ertain persons, other than the direct
recipient of a misrepresentation can sue for negligent misrepresentation,” the
Fourteenth Court held that the evidence raised a fact issue as to whether Poe &
Brown misrepresented coverage to Port Metal.  Id. at 7–8 (citing cases and
Restatement (Second) of Torts § 552(2) (1977)).  In response to Poe & Brown’s
argument that Omni had a duty to read the policy itself, the court held, “Omni’s
failure to read the policy does not support the granting of summary judgment.”  Id.
at *8.  In other words, the court held that Omni Metals had no legal duty to read the
policy.  The court further held that Omni was not prevented from bringing its DTPA
claims through article 21.21 section 16(a) of the Insurance Code by lack of consumer
status.  Id. at *9.
          The court refused to address Transcontinental’s argument that Omni could not
recover against Transcontinental and Poe & Brown attorney’s fees of $740,000 it had
incurred in pursuing a tort action against the third parties allegedly responsible for
starting the fire because the issue was not included in the motion for summary
judgment.  Id. at *10.  The court likewise refused to address the issue of Poe &
Brown’s actual or apparent authority to act as Transcontinental’s agent because it was
not presented in the motion for summary judgment.  Id.  The court remanded the case
for trial.  Id.
THE TRIAL
          The trial began on October 11, 2005.  The evidence at trial comported with, and
elaborated upon, the summary judgment evidence.  It showed that Omni was a
customer of Port Metal, a steel processing company; that Omni stored steel coils at
the Port Metal warehouse; and that Port Metal charged Omni a storage fee on steel
coils left at the warehouse longer than 60 days. 
          Blake McKnight, Port Metal’s president, testified that he asked Danny Sparks,
then an agent for Jacobe and later an agent for Poe & Brown, to insure the Port Metal
warehouse and its inventory, including steel that Port Metal’s customers were storing
at the warehouse.  However, the original policy, written in 1992, excluded from
coverage property held in storage for which a storage charge was made, as did the
1993, 1994, and 1995 renewals.  McKnight read the 1992 policy and asked Sparks
about the exclusion for stored property.  Sparks told him the exclusion did not apply
to property stored like Omni’s at Port Metal.  McKnight testified that he did not read
the 1995 insurance policy in effect at the time of the fire.
          Sparks testified that, by June 1993, he knew Port Metal was charging a storage
fee to its customers like Omni but that he did not explain to McKnight, to Port Metal,
or to any of Port Metal’s customers that the insurance policy excluded the steel Omni
was storing at Port Metal.  Sparks also knew, from at least June 28, 1993, that Port
Metal received revenues from its customers of $6,000 a month for storage fees.  And
he knew that Port Metal relied upon him to obtain coverage for all of its customers’
steel.
          Omni’s president, Arthur Tomes, spoke on several occasions with Port Metal’s
president, McKnight, and inquired whether Omni’s steel at Port Metal’s warehouse
was insured.  McKnight assured him it was.  Omni also requested and received
certificates of insurance from Jacobe and later from Poe & Brown to document Port’s
Metal’s insurance coverage for Omni’s steel to provide to Omni’s secured lender. 
Sparks delivered the certificates to Omni knowing that Omni wanted the certificates
to make sure that all its steel at Port Metal was covered.  The 1993 certificate sent by
Sparks to Omni noted the $3,000,000 bailee liability policy issued by
Transcontinental.  It also contained the statement, typed by Sparks, that Port Metal’s
insurance coverage “INCLUDES PROPERTY OF OTHERS IN CUSTODY OF
INSURED.”  Sparks admitted at trial that this was “untrue.”  In 1994 and 1995,
Sparks delivered insurance certificates to Omni containing the representation that the
insurance covered “All Risk.”  Brown & Brown’s expert testified at trial that the
certificates were “misleading.”  Each of the certificates contained the following
disclaimer: “THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION
ONLY AND CONFERS NO RIGHTS ON THE CERTIFICATE HOLDER.  THIS
CERTIFICATE DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE
AFFORDED BY THE POLICIES DESCRIBED BELOW.”
          Tomes, Omni’s president, testified at trial that he did not “personally read and
review every single certificate of insurance that came across to Omni” and that he did
not ask for or “actually receive the insurance policy rather than the certificate of
insurance” because the company “would think that the certificate of insurance would
be adequate to cover what we needed.”  He “just look[ed] at ‘all risks.’”  The
certificates confirmed what McKnight had told him, and he saw nothing on the
certificates that gave him any reason to doubt what McKnight had told him.  The
certificates were also reviewed by Debbie Hiner at Omni and then forwarded to
Omni’s secured lender as proof that the steel was insured.  Tomes testified that “they
were satisfied too.”
          On December 5, 1995, the warehouse caught fire and $2,600,000 million worth
of Omni’s steel was ruined.  The same day, Sparks approached Port Metal’s president,
McKnight, and told him, “If anybody asks you, don’t mention the word ‘storage.’” 
Sparks also telephoned another of Omni’s customers, Mike Lykos, and told him
“please do not mention the word ‘storage.’”
 
          Following the trial, the jury found the following:
1.       Transcontinental and Poe & Brown made negligent
misrepresentations on which Omni justifiably relied.
 
2.       Damages for the negligent misrepresentations of $704,267 (value
of steel), $370,964.72 (expenses incurred in selling the steel), and
$740,000 (attorney’s fees incurred by Omni in the lawsuit against
the parties who caused the fire).
 
3.       Transcontinental and Poe & Brown engaged in an unfair or
deceptive act that damaged Omni.
 
4.       Damages for the unfair or deceptive act of $704,267 (value of
steel), $370,964.72 (expenses incurred in selling the steel), and
$740,000 (attorney’s fees incurred by Omni in the lawsuit against
the parties who caused the fire).
 
5.       Transcontinental and Poe & Brown knowingly engaged in their
conduct.
 
6.       Treble damages for the knowing conduct of $1,620,000 for Poe
& Brown and $1,080,000 for Transcontinental.
 
7.       Attorney’s fees of $161,050.07 (preparation and trial), $50,000.00
(appeal to court of appeals), and $25,000.00 (appeal to supreme
court).
 
8.       Transcontinental’s and Poe & Brown’s negligence caused the
injury.
 
9.       Transcontinental was 40% responsible and Poe & Brown 60%
responsible.
 
          The trial court entered judgment on the jury verdict on November 28, 2005. 
In the judgment, it also awarded Poe & Brown and Transcontinental a settlement
credit against (1) the $704,267 awarded Omni by the jury for “the value of the loss
less any amounts Omni received from the sale of the steel or from Transcontinental”
and (2) the $370,964.72 awarded Omni by the jury for “reasonable and necessary
expenses incurred in attempting to sell the steel”; and (3) $169,213.61 for
prejudgment interest on the principal of (1) and (2) from December 13, 1996 through
April 13, 1999.  The total amount of the settlement credit was thus $1,244,445.33. 
The judgment expressly excluded from the settlement credit the $740,000 awarded
Omni by the jury as economic damages for “the amount of reasonable and necessary
attorneys’ fees and expenses incurred by Omni in a previous suit where Omni was
required to prosecute the previous suit as a consequence of Defendants’ wrongful
conduct.”
          The instant appeal follows from the trial court’s  November 28, 2005 judgment.
DISCUSSION
A.  Law of the Case Doctrine
          Because this case comes to us on appeal after remand from reversal of
summary judgment by the Fourteenth Court of Appeals, we consider, as a preliminary
matter, the “law of the case” doctrine.  That doctrine is defined as “that principle
under which questions of law decided on appeal to a court of last resort will govern
the case throughout its subsequent stages.”  Loram Maint., Inc. v. Ianni, 210 S.W.3d
593, 596 (Tex. 2006);  Yazdchi v. San Antonio Fed. Credit Union, No. 01-07-00189-CV, 2009WL 417299, at *3–4 (Tex. App.—Houston [1st Dist.] Feb. 19, 2009, no
pet.) (not designated for publication).  Under this doctrine, a court of appeals will
ordinarily be bound by its initial decision if there is a subsequent appeal in the case. 
Briscoe v.  Goodmark Corp., 102 S.W.3d 714, 716 (Tex. 2003).  “By narrowing the
issues in the successive stages of the litigation, the law of the case doctrine is
intended to achieve uniformity of decision, judicial economy, and efficiency.”  Id. 
It is based on public policy and is aimed at bringing finality to litigation.  Id.  A
decision rendered on an issue by an appellate court does not, however, absolutely bar
reconsideration of the issue on a second appeal.  Id.  The application of the doctrine
lies within the discretion of the court, depending on the circumstances of the case. 
Id.  It is an exception to the law of the case doctrine that the original decision was
clearly erroneous.  Id.
          Here, the Fourteenth Court of Appeals issued a number of rulings on the legal
issues presented by the parties’ motions for summary judgment.  The case was
subsequently tried in reliance on those rulings and a verdict rendered from which this
appeal is taken.  Therefore we will follow the law of the case established by the
Fourteenth Court of Appeals unless we conclude that, in some respect, it is clearly
erroneous.
 
B.  Omni’s Failure to Submit Issue and Obtain Jury Finding on
Poe & Brown’s Authority to Act as Transcontinental’s Agent

          In its first issue, Transcontinental argues that Omni failed to submit a separate
issue on agency in the charge and failed to obtain a separate jury finding on Poe &
Brown’s actual or apparent authority to act as its agent.


  Omni responds that
Transcontinental failed to make any timely objection to the absence of a separate
issue and therefore waived error and that, even if it had preserved error, the omitted
finding was a finding as to an element of the ground of recovery on Omni’s claims,
was supported by evidence, and was therefore deemed found under Texas Rule of
Civil Procedure 279.
          The jury charge did not contain a separate issue on Poe & Brown’s status as an
agent of Transcontinental.  However, the charge instructed the jury that “[a]uthority
for another to act for a party must arise from the party’s agreement that the other act
on behalf and for the benefit of the party” and that, if so authorized, “that other party
is also authorized to do whatever else is proper, usual, and necessary to perform the
act expressly authorized.”  It also instructed the jury that “[a]pparent authority exists
if a party (1) knowingly permits another to hold himself out as having authority or,
(2) through lack of ordinary care, bestows on another such indications of authority
that lead a reasonably prudent person to rely on the apparent existence of authority
to his detriment. . . .”
          Jury questions 1 and 3 then asked the jurors whether “one or more of the
Defendants made a negligent misrepresentation on which Omni Metals, Inc.
justifiably relied” or “engage[d] in any unfair or deceptive act or practice that caused
damages to Omni Metals.”  The questions asked the jurors to respond separately for
Poe & Brown and for Transcontinental.  The damages questions similarly requested
separate answers for each defendant.  Transcontinental did not object to the
instructions, and it did not object to the failure to submit a separate agency question. 
The judgment awarded actual damages, attorney’s fees, and costs jointly and severally
against Poe & Brown and Transcontinental.  It also awarded additional damages of
$1,620,000 against Brown & Brown f/k/a Poe & Brown and of $1,080,000 against
Transcontinental.
          1.       Waiver
          Texas Rule of Civil Procedure 274 requires that “[a] party objecting to a charge
must point out distinctively the objectionable matter. . . .  Any complaint as to a
question, definition, or instruction . . . is waived unless specifically included in the
objections.”  Tex. R. Civ. P. 274; see also Pitman v. Lightfoot, 937 S.W.2d 496, 520
(Tex. App.—San Antonio 1996, writ denied) (holding that by failing to challenge
court’s agency instruction on actual and apparent authority, appellants waived any
complaint on appeal regarding implied finding of agency relationship); Shandee
Corp. v. Kemper Group, 880 S.W.2d 409, 412 (Tex. App.—Houston [14th Dist.]
1994, writ denied) (holding that appellant waived complaint regarding agent’s
authority as imputed by Texas Insurance Code because he “did not object to the
instructions on the ground that they did not include a definition of the statutory
agency requirements”).
          Because there was no objection to the charge as submitted, we hold that
Transcontinental failed to preserve error with respect to the inclusion of an instruction
on actual and apparent authority in the jury charge and that its complaint is waived. 
Even if the issue were not waived, however, we would not find error.
          2.       Omission of an Element of the Charge
          Texas Rule of Civil Procedure 279, governing omissions from the charge,
provides, in relevant part:
          Upon appeal all independent grounds of recovery or of defense
not conclusively established under the evidence and no element of
which is submitted or requested are waived.  When a ground of recovery
or defense consists of more than one element, if one or more of such
elements necessary to sustain such ground of recovery or defense, and
necessarily referable thereto, are submitted to and found by the jury, and
one or more of such elements are omitted from the charge, without
request or objection, and there is factually sufficient evidence to support
a finding thereon, the trial court, at the request of either party, may after
notice and hearing and at any time before the judgment is rendered,
make and file written findings on such element or elements in support
of the judgment.  If no such written findings are made, such omitted
element or elements shall be deemed found by the court in such manner
as to support the judgment. . . . 

Tex. R. Civ. P. 279. 
          Under Rule 279, “[w]hen a question is omitted which constitutes only a part
of a ground of recovery, and other questions referable to that ground are submitted
and answered, the omitted elements are deemed found in support of the judgment if
no objection is made and they are supported by some evidence.”  Ins. Co. of N. Am.
v. Morris, 928 S.W.2d 133, 143 (Tex. App.—Houston [14th Dist.] 1996), rev’d on
other grounds, 981 S.W.2d 667 (Tex. 1998) (deeming apparent authority of surety to
make representations about quality of partnership investments found by acts of
participation, knowledge, or acquiescence by principal); see also Ramos v. Frito-Lay,
Inc., 784 S.W.2d 667, 668 (Tex. 1990) (stating that when “issues are omitted which
constitute only a part of a complete and independent ground and other issues
necessarily referable to that ground are submitted and answered, the omitted elements
are deemed found in support of the judgment if no objection is made and they are
supported by some evidence”); Lexington Ins. Co. v. Buckingham Gate, Ltd., 993
S.W.2d 185, 197–98 (Tex. App.—Corpus Christi 1999, pet. denied).
          Here, the actual or apparent authority of Poe & Brown to act as the agent of
Transcontinental is one of the elements of a finding of Transcontinental’s liability for
negligent misrepresentation and deceptive trade practices under the DTPA and the
Insurance Code.  We hold that, by Transcontinental’s failure to object to the omission
of a jury question on Poe & Brown’s actual or apparent authority to act as an agent
of Transcontinental in making representations about coverage to clients and third
parties, and by the submission of evidence that Poe & Brown made representations
regarding Port Metal’s bailee policy to Port Metal and to Omni, Poe & Brown’s status
as an agent of Transcontinental is deemed found.  See Tex. R. Civ. P. 279. 
          We overrule Transcontinental’s first issue.
C.  Poe & Brown’s Authority to Act as Transcontinental’s Agent
          In its second issue, Transcontinental argues that the evidence was both legally
and factually insufficient to support the jury’s answers to questions number 1, 2, 8,
and 9, finding Transcontinental liable for misrepresentation and violations of the
DTPA.  It argues that even if Poe & Brown’s agency status is deemed found, Poe &
Brown was a soliciting agent and that a soliciting agent “does not have authority to
alter the policy via representations, and thus, the insurer has no liability as a matter
of law where the agent issues a certificate of insurance that misstates coverage.”
          1.       Standard of Review of Legal and Factual Sufficiency of the
Evidence

          In a legal sufficiency, or “no-evidence” review, we determine whether the
evidence would enable reasonable and fair-minded people to reach the verdict under
review. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005).  In conducting
this review, we credit favorable evidence if reasonable jurors could, and disregard
contrary evidence unless reasonable jurors could not.  Id.  We consider the evidence
in the light most favorable to the finding under review and indulge every reasonable
inference that would support it.  Id. at 822.  We must sustain a no-evidence contention
only if (1) the record reveals a complete absence of evidence of a vital fact, (2) the
court is barred by rules of law or of evidence from giving weight to the only evidence
offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more
than a mere scintilla, or (4) the evidence establishes conclusively the opposite of the
vital fact.  Id. at 810; Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711
(Tex. 1997). When reviewing a no-evidence point of error,“all the record evidence
must be considered in the light most favorable to the party in whose favor the verdict
has been rendered, and every reasonable inference deducible from the evidence is to
be indulged in that party’s favor.”  Merrell Dow, 953 S.W.2d at 711.  “Anything more
than a scintilla of evidence is legally sufficient to support the finding.”  Formosa
Plastics Corp. v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 48 (Tex.
1998). In reviewing a challenge to the factual sufficiency of the evidence, we “must
consider and weigh all the evidence and should set aside the judgment only if it is so
contrary to the overwhelming weight of the evidence as to be clearly wrong and
unjust.”  Arias v. Brookstone, L.P., 265 S.W.3d 459, 468 (Tex. App.—Houston [1st
Dist.] 2007, pet. denied) (citing Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986)).
          The jury is the sole judge of witnesses’ credibility; it may choose to believe one
witness over another, and a reviewing court cannot impose its own opinion to the
contrary.  Wilson, 168 S.W.3d at 819; Arias, 265 S.W.3d at 468.  Because it is the
jury’s province to resolve conflicting evidence, we must assume that jurors resolved
all conflicts in accordance with their verdict if reasonable human beings could do so. 
Wilson, 168 S.W.3d at 819; Arias, 265 S.W.3d at 468. 
          2.       Evidence of Agency
          It is established law that 
an insurance company is generally liable for any misconduct by an agent
that is within the actual or apparent scope of the agent’s authority.  This
rule is based on notions of fairness: “since the principal has selected the
agent to act in a venture in which the principal is interested, it is fair, as
between him and a third person, to impose upon him the risk that the
agent may exceed his instructions.”
 
Celtic Life Ins. Co. v. Coats, 885 S.W.2d 96, 98–99 (Tex. 1994) (citations omitted);
Lexington Ins. Co. v. Buckingham Gate, Ltd., 993 S.W.2d 185, 197 (Tex.
App.—Corpus Christi 1999, pet. denied).  A local recording agent is “a person or firm
engaged in soliciting and writing insurance, being authorized by an insurance
company . . . to solicit business and write, sign, execute and deliver policies of
insurance, and to bind companies on insurance risks.”  Royal Globe Ins. Co. v. Bar
Consultants, Inc., 577 S.W.2d 688, 692 (Tex. 1979) (citing Act of May 23, 1951,
52nd Leg., R.S., ch. 491, 1951 Tex. Gen. Laws 1067, repealed by Act of May, 2003,
78th Leg., R.S., ch. 1274, § 26(a)(1), 2003 Tex. Gen. Laws 3641 (“former Tex. Ins.
Code art. 21.14, §2”); Lexington Ins., 993 S.W.2d at 198.  By necessary implication,
the local recording agent of an insurer has the authority to represent the coverage
afforded by the policies it sells.  Royal Globe, 577 S.W.2d at 694.  “If [the]
representations [are] false . . . under the explicit language of Section 16, Article 21.21
[of the Insurance Code] and Section 17.46(b)(12) of the DTPA, his actions
constitute[] a deceptive act or practice for which his principal is accountable.”  Id. 
However, a soliciting agent is someone “who does not sign and execute policies of
insurance, and who does not maintain company records of such transactions.” 
Maccabees Mut. Life Ins. Co. v. McNiel, 836 S.W.2d 229, 232 (Tex. App.—Dallas
1992, no writ) (citing former Tex. Ins. Code art. 21.14).  “It is the settled law of this
State that a soliciting agent of an insurance company has no power or authority to
make a contract on behalf of the company or to waive the terms of the policy.”  Int’l
Sec. Life Ins. Co. v. Finck, 496 S.W.2d 544, 546 (Tex. 1973); Lexington Ins., 993
S.W.2d at 199.  
          Whether an agency relationship exists is usually a question of fact, and
circumstantial evidence may be used to establish agency and the extent of the agent’s
authority.  Pitman, 937 S.W.2d at 521.  To determine whether an agent had apparent
authority we look to the acts of the principal “to see if those acts would lead a
reasonably prudent person using diligence and discretion to suppose that the agent
had the authority he purported to exercise.”  Shandee, 880 S.W.2d at 412 (quoting
Guthrie v. Republic Nat’l Ins. Co., 683 S.W.2d 634, 637 (Tex. App.—Houston [1st
Dist.] 1984, writ ref’d n.r.e.)).
          Transcontinental argues that Poe & Brown was a soliciting agent without
power to make a contract on behalf of Transcontinental.  However, the record reflects
that Poe & Brown was Transcontinental’s local recording agent.  The High
Performance Agency Agreement (the Agreement) between Transcontinental and Poe
& Brown gave Poe & Brown explicit authority “[t]o bind, execute and issue the kinds
of insurance contracts and bonds to which this Agreement applies. . . .”  In addition,
both Robert Pryor, Transcontinental’s “Authorized Agent,” and Sparks testified that
Poe & Brown acted as Transcontinental’s agent.  The Agreement expressly grants Poe
& Brown the authority “[t]o countersign insurance contracts, bonds, certificates and
endorsements.”  Moreover, Transcontinental represented that Poe & Brown was its
“authorized agent” on the insurance policy issued to Port Metal.  Likewise, the
certificates issued expressly represented that Pryor was Transcontinental’s
“authorized representative.”  Transcontinental presented no rebuttal evidence. 
          Reviewing the record evidence in the light most favorable to Omni and
indulging every reasonable inference in its favor, we hold that the evidence is legally
sufficient to show that Poe & Brown was Transcontinental’s local recording agent
and that it therefore had the actual authority to sell Transcontinental insurance
policies.  We further hold that Transcontinental knowingly permitted Poe & Brown
and Poe & Brown’s agents “to hold [themselves] out as having authority” to provide
certificates of insurance for Transcontinental insurance products to its insureds and
third parties and to make representations about the scope of insurance coverage to
them or, at the very least, that Transcontinental “bestow[ed] on [Poe & Brown] such
indications of authority” with respect to such actions that would “lead a reasonably
prudent person to rely on the apparent existence of authority to his detriment.”  See
Merrell Dow, 953 S.W.2d at 711.  
          Considering and weighing all the evidence, we hold that the implied finding
that Poe & Brown was Transcontinental’s local recording agent with the authority to
provide certificates of insurance and to make representations about the scope of
insurance coverage is not so contrary to the overwhelming weight of the evidence as
to be clearly wrong and unjust.  Arias, 265 S.W.3d at 468.  We hold, therefore, that
the evidence is legally and factually sufficient to show that Poe & Brown was
Transcontinental’s recording agent and that it had the actual authority to provide
certificates of insurance to its insureds and third parties and to make representations
about Port Metal’s insurance coverage as Transcontinental’s agent.
          We overrule Transcontinental’s second issue.
D.  Omni’s Standing to Maintain DTPA—Texas Insurance Code Claims
          In its second issue, Brown & Brown argues that Omni lacked standing to bring
a claim under the DTPA, specifically under subsections 17.46(b)(5) and (12) of the
Texas Business and Commerce Code, under which Omni’s DTPA claims were
submitted to the jury in Question 3 of the jury charge. See Tex. Bus. & Com. Code
Ann. §17.46(b)(5), (12).  Transcontinental argues that “Omni did not purchase or
seek to purchase the policy” and therefore it is not a consumer under the DTPA, as
required for standing under section 17.46(b)(5), nor does Omni fall within the scope
of “persons” permitted to bring DTPA claims under section article 21.21 section
16(a).  Brown & Brown acknowledges that consumer status is not required to bring
a claim under subsection 17.46(b)(12).
          Former article 21.21 section 16(a) of the Insurance Code provided that “any
person who has sustained actual damages caused by another’s engaging in an act or
practice declared in Section 4 of this Article to be unfair methods of competition or
unfair or deceptive acts or practices in the business of insurance or in any practice
specifically enumerated in a subdivision of Section 17.46(b), Business & Commerce
Code, as an unlawful deceptive trade practice may maintain an action against the
person or persons engaging in such acts or practices.”  Former Tex. Ins. Code art.
21.21, § 16(a), (b) (emphasis added).  The section required that, “[t]o maintain an
action for a deceptive act or practice enumerated in Section 17.46(b), Business &
Commerce Code, a person must show that the person has relied on the act or practice
to the person’s detriment.” Id.



 
          Former article 21.21, section 4 included among the actions defined as unfair
and deceptive acts or practices in the business of insurance the “[m]aking, issuing,
circulating, or causing to be made, issued or circulated, any . . . statement
misrepresenting the terms of any policy issued or to be issued or the benefits or
advantages promised thereby. . ., or using any name or title of any policy or class of
policies misrepresenting the true nature thereof. . . .”  Id. § 4(1).
          Section 17.46(b) of the Business and Commerce Code, which has not been
recodified, provides, in relevant part:
(b) . . . the term “false, misleading, or deceptive acts or practices”
includes, but is not limited to, the following acts:
 
. . . .
 
(5) representing that goods or services have sponsorship,
approval, characteristics, ingredients, uses, benefits, or quantities
which they do not have. . .
 
. . . .
 
(12) representing that an agreement confers or involves rights,
remedies, or obligations which it does not have or involve, or
which are prohibited by law[.]
 
Tex. Bus. & Com. Code Ann. § 17.46(b) (Vernon Supp. 2009).
          Section 17.50(a) of the DTPA, generally governing standing to bring a DTPA
claim, provides:
(a) A consumer may maintain an action where any of the following
constitute a producing cause of economic damages or damages for mental
anguish:
 
(1) the use employment by any person of a false, misleading, or
deceptive act or practice that is:
 
(A) specifically enumerated in a subdivision of
Subsection (b) of Section 17.46 of this subchapter; and
 
(B) relied on by a consumer to the consumer’s detriment[.]
 
Tex. Bus. & Com. Code Ann. § 17.50(a) (Vernon Supp. 2009) (emphasis added).
          1.       Omni’s Consumer Status Under § 17.46(b)(5)
          Brown & Brown acknowledges that former article 21.21, section 16(a) of the
Insurance Code did not incorporate the “consumer” standing requirement of section
17.50(a) of the DTPA unless the terms of the specific subsection under which a claim
was pled required consumer status.  See former Tex. Ins. Code art. 21.21, § 16(a). 
However, it argues that, in Crown Life Insurance Co. v. Casteel, the Texas Supreme
Court held that a plaintiff must prove consumer status to bring a DTPA claim for the
misrepresentation of “goods or services” under subsection 17.46(b)(5) and that Omni
does not qualify as a consumer under the DTPA, i.e., as one “who seeks or acquires
by purchase or lease, any goods or services.”  22 S.W.3d 378, 386–87 (Tex. 2000); see
Tex. Bus. & Com. Code Ann. §17.45(4).
          Our disposition of this issue is controlled by the law of the case.  With respect
to Omni’s consumer status, the Fourteenth Court of Appeals stated in Omni Metals:
          Omni brought its DTPA-based claims through article 21.21 of the
Insurance Code.  Tex. Ins. Code ann. art. 21.21, § 16(a) (Vernon Supp.
2002).  Article 21.21, section 16(a), provides a cause of action for
“unlawful deceptive trade practice[s]” defined under the laundry list of
DTPA section 17.26(b).  Article 21.21 does not require consumer status
to bring a DTPA-based cause of action.  Crown Life Ins. Co. v. Casteel,
22 S.W.3d 378, 386 (Tex. 2000).  “But if the terms of a subsection of
DTPA section 17.46(b) require consumer status, then consumer status is
required to bring an action under article 32.21 for its violation.”  Id.
 
          Omni pleaded violations of DTPA section 17.46(b)(5), (7), (12),
and (23).  By their terms, subsections (5), (7), and (23) require consumer
status.  Id. at 387.  However, subsection (12) does not require consumer
status.  Id.  Because consumer status is not required, the trial court erred
in granting summary judgment on Omni’s claim for violation of DTPA
section 17.46(b)(12).
 
          For the remaining DTPA provisions pled by Omni, we must
determine whether consumer status requires direct purchase or lease of
services from Poe  & Brown.  “Privity of contract with a defendant is not
required for the plaintiff to be a consumer.”  Amstadt v. U.S. Brass Corp.,
919 S.W.2d 644, 649 (Tex. 1996).  Further, “[t]he consumer does not
have to be the actual purchaser of the insurance in order to be classified
as a consumer under the DTPA.”  How Ins. Co. v. Patriot Fin. Serv. of
Texas, Inc., 786 S.W.2d 533, 539 (Tex. App.—Austin 1990), overruled
on other grounds by Hines v. Hash, 843 S.W.2d 464 (Tex. 1992). 
Accordingly, Omni is not denied consumer status by lack of privity with
Poe & Brown.  The trial court erred in granting summary judgment on
this ground. . . .
 
2002 WL 1331720, at *9.  We hold that the law of the case controls, and that Omni
was entitled to consumer status under section 17.46(b)(5) and was not required to have
consumer status under section 17.46(b)(12).  See id.
          2.       Omni’s Standing as a “Person” Under Former Article 21.21, Section
16(a)
 
          Brown & Brown also argues that Omni does not qualify as a “person” entitled
to make a claim under former article 21.21 section 16(a) of the Insurance Code
because Omni was not an “insured or third party beneficiary” of Port Metal’s
insurance policy.  Brown & Brown acknowledges that “any person” damaged by
another’s engaging in a practice specifically enumerated in subsection 17.46(b) as a
deceptive practice can bring a cause of action under that subsection.  However, it
argues that “[s]everal Texas courts . . . have construed the term ‘any person’ as used
in [former Texas Insurance Code article] 21.21 §16(a) to mean only the insured or a
third party beneficiary and have held that only an insured or third party beneficiary to
a policy have standing to bring a [DTPA–Texas Insurance Code] claim.”
          It is well established that an insurer’s misrepresentation regarding coverage is
actionable under the Texas Insurance Code and the DTPA against agents and
companies.  See Mem’l Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236, 243–44
(5th Cir. 1990) (recognizing cause of action in Texas under article 21.21 against
insurance carrier for false representation of coverage by insurance agent or company
acting as ERISA plan agent); Tenner v. Prudential Ins. Co., 872 F. Supp. 1571, 1573
(E.D. Tex. 1994) (holding that action could be maintained under DTPA against
insurance agent who allegedly acted outside scope of authority in misrepresenting that
life policies were paid in full); Royal Globe, 577 S.W.2d at 693 (holding that
misrepresentation by local recording agent as to coverage for damages for vandalism
was actionable under DTPA and Insurance Code); Celtic Life Ins. Co. v. Coats, 831
S.W.2d 592, 596 (Tex. App.—Austin 1992) (holding that misrepresentation as to
psychiatric benefits by health insurance agent was actionable under article 21.21 of the
Insurance Code and under DTPA), aff’d as modified, 885 S.W.2d 96 (Tex. 1994);
State Farm Fire & Cas. Co. v. Gros, 818 S.W.2d 908, 912–13(Tex. App.—Austin
1991, no writ) (holding that misrepresentation by local recording agent as to terms or
benefits of homeowner’s policy was unfair or deceptive act of principal); Hermann
Hosp. v. Nat’l Standard Ins. Co., 776 S.W.2d 249, 252–53 (Tex. App.—Houston [1st
Dist.] 1989, writ denied) (recognizing cause of action by hospital that  treated insured
under article 21.21, section 16 against insurers for allegedly misrepresenting that care
and treatment fell within insurance coverage).  
          In Aetna Cas. & Sur. Co. v. Marshall, the Texas Supreme Court held that
“[s]ection 16 of article 21.21 makes actionable any violation of [Texas Business and
Commerce Code section] 17.46.”  724 S.W.2d 770, 772 (Tex. 1987) (holding that
injured worker was entitled to recover treble damages against insurer in suit under
article 21.21, section 16 for “representing to him that it would provide benefits by the
agreement and then failing to do so”).  The court made it clear that contractual privity
or third party beneficiary status is not required for standing to bring claims against
insurers for negligent misrepresentation and deceptive acts and practices under the
Insurance Code and the DTPA.  Id.  It emphasized, “The question is simply whether
Aetna engaged in conduct prohibited by section 17.46.”  Id.  
          This Court, following Marshall, has likewise held that privity of contract is not
required for the imposition of a legal duty under article 21.21, section 16.  Hermann
Hosp., 776 S.W.2d at 252 (recognizing cause of action by hospital that treated insured
against insurers for allegedly misrepresenting that care and treatment fell within
insurance coverage).  We opined:
Hermann Hospital is not suing on an insurance policy or for the wrongful
denial of payment under [its patient’s] worker’s compensation insurance
policy.  It is suing for the damages it suffered by relying on the
representations of coverage allegedly made by appellees.  The supreme
court has held that misrepresentations as to coverage and benefits are
precisely the sort of conduct that give rise to a course of action under this
section.  Aetna, 724 S.W.2d at 772.  We find that as a practical matter,
the relationship between insurance companies and provides of health care
is a direct one, with the health care provider acting in reliance on the
representations of coverage made by the carriers.  Hospitals and other
health care providers must, and do, rely upon the insurance carriers
representations of coverage in making their decision regarding admission
of potential patients.  If insurance coverage and benefits can be verified,
the hospital will usually accept an assignment of benefits to insure it is
paid for any services rendered.  If insurance coverage and benefits cannot
be verified, or if no coverage exists, the medical provider can then make
alternative financial arrangements.  To insulate the insurance carriers
from liability leaves the medical care provider without recourse against
the party causing its damage, if it acts in reliance on the representation
of coverage.  Had the insurance carrier not falsely or negligently
provided information, appellant could have sought alternative means to
ensure that it received payment for service before rendering them.
 
Id. 
          The exact same reasoning applies in this case, in which Omni sought a
representation from Poe & Brown that its steel stored at Port Metal was insured for use
in its business dealings, specifically including reassurance that its steel was protected
by insurance and an assurance for its lender that the lender’s collateral was protected. 
Had Poe & Brown not falsely represented that Omni’s steel was covered by insurance,
Omni could have protected its own interests and those of its lenders either by notifying
Port Metal of the gap in the coverage extended by its bailee policy, so that Port Metal
could cure the defect in coverage, or by procuring coverage of its own, and it would
not have suffered the $3,000,000 loss it did suffer as a result of Poe & Brown’s false
assurance that “all risks” were covered by the policy.
          Brown & Brown, however, cites to a string of authorities that it contends
support its position, including Tamez v. Certain Underwriters at Lloyd’s, London, 999
S.W.2d 12 (Tex. App.—Houston [14th Dist.] 1998, pet. denied); Pineda v. PMI
Mortgage Insurance Co., 843 S.W.2d 660 (Tex. App.—Corpus Christi 1992, writ
denied); and Chaffin v. Transamerican Insurance Co., 731 S.W.2d 728 (Tex.
App.—Houston [14th Dist.] 1987, writ ref’d n.r.e.). 
          We find these cases distinguishable.  Each involved third party claimants under
an insurance policy where the insurer had not made any representation directly to the
third party upon which that party relied.  See Tamez, 999 S.W. 2d at 21–22 (denying
standing to third-party claimants seeking to recover insurance proceeds under policy
in which they were named neither as insured nor as beneficiary); Pineda, 843 S.W.2d
at 672–73 (denying standing to mortgagors to bring bad faith, insurance code, and
DTPA counterclaims against mortgage insurer when mortgagors’ claims were “all
premised on the spurious argument that they were ‘insureds’ under the PMI policy, in
privity with PMI, or were otherwise beneficiaries under the policy”); Chaffin, 731
S.W.2d at 731–32 (denying standing to homeowners claiming to be intended
beneficiaries of subcontractor’s insurance policy to bring fraud claim against insurance
company for initial allegedly wrongful denial of coverage to subcontractor when there
was no evidence that homeowners detrimentally relied on initial denial and
homeowners ultimately received entire coverage of policy).
          Unlike the plaintiffs in each of the foregoing cases, who brought claims of fraud
and deceptive statements against insurers based on alleged misrepresentations and bad
faith actions under a contract to which they were neither parties nor third party
beneficiaries, Omni bases its claims  upon false and misleading representations about
a third party’s insurance coverage made to it by the insurer’s agent for its use in its
business relations and upon which Omni detrimentally relied to its pecuniary loss. 
Omni thus falls squarely within the scope of persons entitled to sue for damages under
the plain language of former article 21.21, section 16(a).  
          We overrule Brown & Brown’s second issue.
E.  Negligent Misrepresentation and Unfair and Deceptive Acts
          In its first issue, Brown & Brown argues that the evidence is legally and
factually insufficient to establish that (a) Poe & Brown made a negligent
misrepresentation and engaged in an unfair or deceptive act; (b) the representation
caused Omni’s damages; (c) Omni justifiably relied on Poe & Brown’s
misrepresentation; and (d) Poe & Brown acted knowingly.  
          In its third issue, Transcontinental similarly argues that Omni’s
misrepresentation claim is not viable because (a) no one at Omni read the certificates
of insurance; (b) the certificates disclaimed any representation regarding coverage;
(c) there is no evidence that Sparks’s comment to Port Metal’s president, McKnight,
regarding the purpose of the storage charge exclusion was conveyed to anyone at
Omni; and (d) McKnight had no authority to act for Transcontinental when he stated
to Omni’s president, Tomes, that Omni’s stored steel was covered by Port Metal’s
bailee policy.
          The third and fourth of Transcontinental’s contentions—that Sparks’s comment
to Port Metal regarding the purpose of the storage charge exclusion and McKnight’s
statements to Tomes about coverage are not actionable against Transcontinental—are
not supported by any argument or authority and are therefore waived.  See Tex. R.
App. P. 38.1(i).  We address the remaining issues together as questions of the legal and
factual sufficiency of the evidence to support Omni’s negligent misrepresentation and
deceptive trade practices claims.
          1.       Appellants’ Negligent Misrepresentation
          In the first part of its first issue, Brown & Brown argues that the evidence is
legally and factually insufficient to support Omni’s misrepresentation claim and its
claims under former article 21.21 of the Texas Insurance Code and subsections
17.46(b)(5) and (12) of the DTPA.  Specifically, it contends that the evidence is
insufficient to support the jury’s answers to Jury Question 1, in which the jury was
asked whether Poe & Brown made a negligent misrepresentation, and Jury Question
3, in which the jury was asked whether Poe & Brown engaged “in any unfair or
deceptive act or practice that caused damages to Omni Metals.”  
          The charge defined “unfair or deceptive act or practice” to mean “1)
representing that goods or services had or would have characteristics that they did not
have; or 2) representing that an agreement confers or involves rights that it did not
have or involve.”  See Tex. Bus. & Com. Code Ann. §17.46(b)(5), (12).
a.       Appellants’ Duty to Disclose
          Brown & Brown argues that, of the four communications made to Omni
concerning Port Metal’s bailee insurance, three were made by Jacobe and only one by
Poe & Brown, which subsequently acquired Jacobe and has itself since been acquired
by Brown & Brown.  Thus, it alleges, the only communication between Poe & Brown
and Omni was the 1995 certificate of insurance delivered to Omni by Poe & Brown,
which stated that Port Metal had a $3,000,000 “All Risk” “Bailee Liability” policy
from Transcontinental.  The bailee policy stated that the insurer, Transcontinental,
“will pay for ‘loss’ . . . from any of the Covered Causes of Loss,” which it defined as
“RISKS OF DIRECT PHYSICAL ‘LOSS’ . . . except those causes of loss listed in the
Exclusions.”  Brown & Brown argues that, “[a]s a matter of law, Poe & Brown’s
certificate of insurance does not make a false representation by accurately describing
the bailee policy as an ‘All Risk’ policy.”  It refers us to State Farm County Mutual
Insurance Co. v. Moran, 809 S.W.2d 613 (Tex. App.—Corpus Christi 1991, writ
denied), and North American Ship Building, Inc. v. Southern Marine & Aviation
Underwriting, Inc., 930 S.W.2d 829 (Tex. App.—Houston [1st Dist.] 1996, no writ),
as support for its argument. 
          In Omni Metals, the Fourteenth Court of Appeals recited the elements of
negligent misrepresentation, namely, that (1) a representation was made by a
defendant in the course of business; (2) the defendant supplied false information for
the guidance of others in their business; (3) the defendant failed to exercise reasonable
care or competence in obtaining or communicating the information; and (4) the
plaintiff suffered pecuniary loss by justifiably relying on the representation.  2002 WL
1331720, at *4; see also Fed. Land Bank Ass’n v. Sloane, 825 S.W.2d 439, 442 (Tex.
1991).
          In the prior appeal of this case, the Fourteenth Court of Appeals pointed out that
a misrepresentation need not be an affirmative misrepresentation of fact.  It stated,
“Where there is a duty to speak, silence may be as misleading as a positive
misrepresentation of existing facts.”  Omni Metals, 2002 WL 2331720, at *3 (quoting
Smith v. Nat’l Resort Cmty., Inc., 585 S.W.2d 655, 658 (Tex. 1979)).  “Whether a duty
to disclose exists is a question of law.”  Id. (citing Bradford v. Vento, 48 S.W.3d 749,
755 (Tex. 2001)).  It further opined, “A duty to disclose may arise in four situations:
(1) when there is a fiduciary relationship; (2) when one voluntarily discloses
information, the whole truth must be disclosed; (3) when one makes a representation,
new information must be disclosed when that new information makes the earlier
representation misleading or untrue; and (4) when one makes a partial disclosure and
conveys a false impression.”  Id. (quoting Hoggett v. Brown, 971 S.W.2d 472, 487
(Tex. App.—Houston [14th Dist.] 1997, pet. denied)).
          Omni argued that Poe & Brown had a duty to disclose under Hoggett scenarios
three and four.  Id. at *4.  The Fourteenth Court of Appeals agreed.  Id.  Omni had
argued that Poe & Brown should have revealed the storage fee exclusion to correct
impressions left by earlier certificates of insurance.  Id.  The court observed that the
summary judgment evidence showed that the earliest certificate of insurance provided
to Omni, for Port Metal’s 1992–93 bailee policy, stated that “coverage includes
property of others in custody of insured.”  Id.  Sparks, an insurance agent employed
by Poe & Brown at the time of the fire loss, sent the certificate to Omni.  Id.  The
summary judgment evidence showed that Sparks was aware of the storage fee
exclusion by May of 1995.  Id.  He had been questioned about the storage fee
exclusion by Port Metal’s president, who told him Port Metal charged its customers
a storage fee.  Id.  Nevertheless, Sparks did not disclose or provide additional
information about the storage exclusion to Omni, even when he knew that Omni
wanted to make sure that its property was covered by insurance purchased by Port
Metal.  Id.  The court of appeals concluded, based on the summary judgment evidence,
that “Sparks never corrected the impression conveyed by the 1992–93 policy, which
was misleading given facts Sparks later learned.”  Id.  It held that these circumstances
created a fact issue as to whether appellees breached the duty prescribed under
Hoggett scenario three.  Id.
          Omni also contended that, under the circumstances, the “all risk” certificate of
insurance was a partial disclosure that conveyed a false impression and was therefore
false under Hoggett scenario four.  Id.  The Fourteenth Court of Appeals again agreed. 
Id.  It stated:
We conclude that the evidence shows Poe & Brown understood it was
answering Omni’s question, “Is my property at Port Metal’s facility
covered?”  At that time, Poe & Brown knew that Port Metal wanted to
cover all property of its customers, was aware of the storage exclusion in
the policy, and knew that Port Metal was charging its customers a storage
fee.  Despite this knowledge, the certificate of insurance was its only
answer, a partial answer, to Omni’s question.  The certificate verified “all
risk” bailee liability coverage with a $3,000,000 limit.  In deposition, Poe
& Brown’s corporate representative admitted that the term “all risk” did
not really cover all possible risks and was possibly confusing.  Thus,
taken in the light most favorable to Omni, the all risk designation left a
false impression under the circumstances.
 
Id.  The court held, “Accordingly, there is a fact issue whether appellees met their duty
under Hoggett scenario four.”  Id.
          In its second issue in Omni Metals, Omni argued that a fact issue existed as to
whether Poe & Brown had misrepresented coverage “because, under the
circumstances, the ‘all risk’ certificate of insurance was false and misleading.”  Id. 
Poe & Brown made the same argument it makes here—that the certificate could not
be considered a misrepresentation as a matter of law—and it relied upon the same
authority, North American Shipbuilding, in support of its argument.  Id. at *5.  The
Fourteenth Court of Appeals addressed Poe & Brown’s argument at length and found
North American Shipbuilding to be distinguishable “for several reasons.”  Id. 
          The court stated:
First, the “all risks” representation in that case was found in the insurance
policy, not just in two words on a certificate: “[this policy] insures
against all risks of physical loss or damage to the Vessel . . . except as
herein provided.”  930 S.W.2d at 831.  Second, an exclusion for faulty
workmanship was also fully delineated in the same document.  In
comparison, the certificate sent to Omni did not set for the storage
exclusion.  Third, the defendants in N. Am. Shipbuilding did not
communicate the “all risk” policy clause in response to a specific inquiry. 
In contrast, Poe & Brown provided the ‘all risk” certificate in response
to Omni’s inquiry for confirmation that its steel was covered while at
Port Metal.  Fourth, in N. Am. Shipbuilding, the insured failed to provide
summary judgment proof that the insurer misrepresented the coverage to
include faulty workmanship.  The summary judgment proof here reveals
that appellees told Port Metal that the storage exclusion did not apply.
 
Id.  The court followed Black v. Victoria Lloyds Insurance, 797 S.W.2d 20 (Tex.
1990), in holding that a fact issue existed concerning misrepresentation of liability
insurance coverage for personal use when an insurance company represents that
“complete . . . insurance” has been provided when it has not.  Omni Metals, 2002 WL
1331720, at *5; see Black, 797 S.W.2d at 24 (holding that insurance identification card
provided to driver of leased vehicle by lessor’s insurance company, which stated only
that policy complied with “the compulsory auto laws of the State of Texas,” but did
not indicate that driver of leased vehicle did not have liability insurance coverage for
personal use of vehicle, raised fact issue concerning misrepresentation of insurance
coverage).  The court concluded that Omni had raised a fact issue with respect to
“whether [Poe & Brown] misrepresented the coverage afforded by the policy.”  Omni
Metals, 2002 WL 1331720, at *5. 
          We adopt the Fourteenth Court of Appeals’ statement of the law and apply the
law of the case.  
          At trial, the jury was asked in Question 1 whether Poe & Brown made a
negligent misrepresentation.  In Question 3, it was asked whether Poe & Brown had
engaged “in any unfair or deceptive act or practice that caused damages to Omni
Metals.”  It responded ‘yes’ to both questions.  We consider, therefore, whether the
evidence is legally and factually sufficient to support the jury’s findings. 
          The facts presented to the jury in this case comport with the facts presented to
the Fourteenth Court of Appeals in the summary judgment evidence.  See id. at *1–2. 
The unrebutted evidence shows that the bailee policies issued to Port Metals contained
an exclusion for stored goods.  Port Metals was concerned about insuring all of the
steel stored with it.  Its president, McKnight, read the 1992 policy and asked its
insurance agent, Sparks, about the exclusion.  Sparks assured him the exclusion did
not apply to the steel stored at Port Metal, and McKnight conveyed this information
to Omni.  Indeed, Omni’s president, Tomes, asked McKnight on several occasions
whether Omni’s steel stored at Port Metal’s warehouse was insured and was assured
by him that it was.  
          Omni’s bank required that Omni request certificates of insurance from Jacobe
and later Poe & Brown to document Port’s Metal’s coverage, and Omni did.  Sparks
delivered the certificates to Omni knowing that Omni wanted the certificates to
provide to its secured lender to show that all of its steel at Port Metal was covered by
insurance.  Despite knowing that Port Metal relied upon him to obtain coverage for all
of its customers’ steel, as well as knowing, from at least June 28, 1993, that Port Metal
received revenues from its customers of $6,000 a month for storage fees, and knowing,
by at least July of 1993, that Port Metals’ bailee policy excluded from coverage goods
“for which a storage charge is made,” Sparks did nothing to inform Port Metal or its
customers of the exclusion.  Rather, he typed into the 1993 certificate on Port Metal’s
$3,000,000 bailee policy that he delivered to Omni the statement that Port Metal’s
bailee policy “INCLUDES PROPERTY OF OTHERS IN CUSTODY OF INSURED,”
a statement Sparks admitted was “untrue.”  He then delivered two more “All Risk”
certificates to Omni without mentioning the exclusion.
          Considering the evidence in the light most favorable to the jury’s verdict, we
hold that the evidence would enable reasonable and fair-minded people to conclude
that Poe & Brown, Transcontinental’s agent, made a negligent misrepresentation.
Merrell Dow, 953 S.W.2d at 711.  There was no evidence that Poe & Brown did not
make the representations complained of.  Therefore, considering and weighing all the
evidence neutrally, we hold that the jury’s finding that Poe & Brown and
Transcontinental made negligent misrepresentations is not so contrary to the
overwhelming weight of the evidence as to be clearly wrong and unjust. Arias, 265
S.W.3d at 468.  We hold, therefore, that the evidence is both legally and factually
sufficient to support the jury’s finding that Poe & Brown and Transcontinental made
negligent misrepresentations to Omni.  We further hold that the evidence was both
legally and factually sufficient to support the jury’s finding that Poe & Brown,
Transcontinental’s agent, represented to Omni that Port Metal’s bailee policy had a
characteristic it did not have, namely the characteristic of covering Omni’s steel coils
stored at Port Metal, and that Poe & Brown and Transcontinental represented to Omni
that the bailee policy conferred a right that it did not confer, namely the right to
recover insurance proceeds for damage to Omni’s steel stored at Port Metal.
          We overrule the first part of Brown & Brown’s first issue.
 
b.       Justifiable Reliance and Causation
          In the second and third parts of its first issue, Brown & Brown argues that the
evidence is legally and factually insufficient to establish that a representation by Poe
& Brown caused Omni’s damages.  Brown & Brown contends that there is no
evidence that Omni read Poe & Brown’s 1995 certificate of insurance before the 1995
fire and that, as a matter of law, Omni Metals could not detrimentally rely on the term
“all risk” in the certificate of insurance to mean that its steel coils were covered under
Port Metal’s bailee policy or that the policy would have “no conditions, no terms, no
exclusions” limiting coverage.  Transcontinental argues in the first and second parts
of its third issue that no one at Omni read the certificates.  Both Brown & Brown and
Transcontinental also argue that the fact that the certificates contained a disclaimer is
conclusive evidence of a lack of justifiable reliance.
          “Under the DTPA, a consumer may bring an action when he has relied to his
detriment on a false or misleading representation, and the reliance is a producing cause
of damages.”  Am. Home Shield, Inc. v. Kortz, No. 01-99-00380-CV, 2000 WL
1262617, at *3 (Tex. App.—Houston [1st Dist.] 2000, pet. dism’d) (not designated for
publication); see also Leyendecker & Assocs., Inc. v. Wechter, 683 S.W.2d 369, 373
(Tex. 1984).  The plaintiff may recover either “the value of that which he has
received” (“out of pocket” damages) or “the difference between the value as
represented and the actual value received” (“benefit of the bargain” damages).  Am.
Home Shield, 2000 WL 1262617, at *3; see also Leyendecker, 683 S.W.2d at 373. 
Evidence that a misrepresentation as to the terms or benefits of coverage prevented an
insured from taking steps to prevent a loss is sufficient to support a jury finding that
the misrepresentation was a producing cause of damages.  Gros, 818 S.W.2d at 914
(holding that evidence that insureds could have taken steps to prevent damage to their
home caused by landslide, such as re-engineering retaining wall, had they known
retaining wall failure would not be covered by homeowner’s policy, was sufficient to
support jury’s finding that insurer’s misrepresentations regarding coverage were
producing cause of insureds’ damage).
          In addition, Texas has long recognized the tort of negligent misrepresentation
as described in section 552 of the Restatement (Second) of Torts and its application
to professionals.  McCamish, Martin, Brown & Loeffler v. F.E. Appling Interests, 991
S.W.2d 787, 791 (Tex. 1999).  Section 552(1) provides:
One who, in the course of his business, profession or employment, or in
any transaction in which he has a pecuniary interest, supplies false
information for the guidance of others in their business transactions, is
subject to liability for pecuniary loss caused to them by their justifiable
reliance upon the information, if he fails to exercise reasonable care or
competence in obtaining or communicating the information.
 
Id. at 791 (emphasis added) (quoting Restatement (Second) of Torts § 552 (1977)
and applying section to define scope of duty of attorney to non-client to whom he has
made representation); see Sloane, 825 S.W.2d at 442 (applying section 552 to define
scope of lender’s duty); Stone v. Lawyers Title Ins. Corp., 554 S.W.2d 183, 188 (Tex.
1977) (holding that title insurer can be liable for fraud in misrepresenting state of
title); Great Am. Mortgage Investors v. Louisville Title Ins. Co., 597 S.W.2d 425, 430
(Tex. Civ. App.—Fort Worth 1980, writ ref’d n.r.e.) (applying tort of negligent
misrepresentation to title insurer).  
          Under this law, “[i]t is well settled that even though one does not have a duty
to act, if one acts voluntarily, he must do so with due care and is generally liable for
negligence.”  Great Am. Mortgage, 597 S.W.2d at 430 (holding that title binder who
had no duty to disclose existence of deed restriction but who “actually represented that
no deed restrictions were in existence . . . is held to the standard of reasonable care and
may under the proper circumstances be liable in tort for damages caused by a negligent
misrepresentation”).  In the context of title insurance, the law imposes a duty on the
title insurer to know whether a statement he makes to the seller is true, and it holds
him responsible for an affirmative representation that is the “producing cause” of
damages to the party purchasing the insurance.  First Title Co. v. Garrett, 860 S.W.2d
74, 76 (Tex. 1993).  Similarly, the theory of negligent misrepresentation permits
plaintiffs who are not parties to a contract for the professional services of lawyers to
recover from the contracting professionals in situations in which the attorney who
provides the false information is aware of the non-client and intends that the non-client
rely on the information.  McCamish, 991 S.W.2d at 792.  
          However, liability is limited to the loss suffered
(a) by the person or one of a limited group of persons for whose benefit
and guidance [one] intends to supply the information or knows that the
recipient intends to supply it; and (b) through reliance upon it in a
transaction that [one] intends the information to influence or knows that
the recipient so intends or in a substantially similar transaction.
 
Id. at 794 (quoting Restatement (Second) of Torts § 552(2)) (emphasis added). 
          In determining whether the justifiable reliance element of negligent
misrepresentation is met, the court must consider the nature of the relationship
between the professional, his client, and the nonclient.  See McCamish, 991 S.W.2d
at 794.  The professional must have invited reliance.  See id. (holding that attorney
owes duty of care to nonclient only if attorney invites reliance); see also Sloane, 825
S.W.2d at 442 (finding evidence sufficient to support borrowers’ claim that bank has
duty to use reasonable care whenever it provides information to its customers or
potential customers which it breached when it allegedly encouraged borrowers to incur
expenses in reliance on false information provided by bank in relation to their loan
application).
          The misrepresentation must have been the cause in fact of the plaintiff’s
damages.  The damages recoverable for a negligent misrepresentation are those
necessary to compensate the plaintiff for the pecuniary loss to him of which the
misrepresentation is the legal cause, including, inter alia, “pecuniary loss suffered . . .
as a consequence of the plaintiff’s reliance on the misrepresentation.”  Sloane, 825
S.W.2d at 442 (quoting Restatement (Second) of Torts § 552B).  The two
elements of proximate cause are (1) that an omission or act was a substantial factor in
bringing about the plaintiff’s injury, without which no harm would have occurred, or
cause in fact, and (2) that the actor would have anticipated the danger that his
negligent act created for others, or foreseeability.  City of Gladewater v. Pike, 727
S.W.2d 514, 517 (Tex. 1987); see also Havner v. E-Z Mart Stores, 825 S.W.2d 456,
458–59 (Tex. 1992).  The act or omission need not be the sole cause of the plaintiff’s
harm, and causation need not be supported by direct evidence; circumstantial evidence
and inferences therefrom are a sufficient basis for finding causation.  Havner, 825
S.W.2d at 459.
(1) Legal Sufficiency of the Evidence of Justifiable Reliance and Causation
          Brown & Brown argues that because Tomes, Omni’s president, testified that he
did not specifically recall reading the certificates of insurance, “the evidence is legally
and factually insufficient to support the cause in fact and reliance elements of Omni’s
claims.”  Brown & Brown also argues that “Omni could not have justifiably or
reasonably relied on the term ‘All Risk’ to mean that all of its steel coils were covered
under Port Metal’s policy or that the policy would have ‘no conditions, no terms, no
exclusions’ limiting coverage” because of the disclaimer in the certificate that “THIS
CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND
CONFERS NO RIGHTS ON THE CERTIFICATE HOLDER.  THIS CERTIFICATE
DOES NOT AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY
THE POLICIES DESCRIBED BELOW.”  Transcontinental likewise argues that the
fact that the certificates contain a disclaimer is conclusive evidence of a lack of
justifiable reliance.
          We construe Brown & Brown’s and Transcontinental’s argument to be that
Omni could not justifiably rely on Poe & Brown’s representation that Port Metal had
an “all risk” bailee policy; rather, Omni was barred by the disclaimer as a matter of
law from relying on appellants’ representation of coverage of “all risks” in the
certificate of insurance, and it had a legal duty to read the policy referenced in the
certificate of insurance to determine the scope of any exclusions.  Because Omni did
not ask for and read the policy, the evidence was legally insufficient to support its
negligent misrepresentation and DTPA claims under the Insurance Code.
          We hold that the law of the case again controls.  In Omni Metals, in response
to Omni’s appeal of the summary judgment entered against it, Poe & Brown and
Transcontinental argued, as they do here, that Omni had a duty to read the policy itself. 
Reversing the summary judgment, the Fourteenth Court of Appeals pointed out that
“[c]ertain persons, other than the direct recipient of a misrepresentation, can sue for
negligent misrepresentation.”  Omni Metals, 2002 WL 1331720, at *7 (citing
Restatement (Second) of Torts § 552(2)) (describing persons who may sue for
negligent misrepresentation as including person or persons “for whose benefit and
guidance [the defendant] intends to supply the information or knows that the recipient
intends to supply it” and “through reliance upon it in a transaction that [the defendant]
intends the information to influence or knows that the recipient so intends or in a
substantially similar transaction”).  The court also observed that, in the cases upon
which Omni relied, “the failure to read the policy was no apparent bar to a claim for
misrepresentation.”  Id. at *8 (citing Lexington Ins. Co., 993 S.W.2d at 197–98 (stating
that any misconduct by agent that is within actual or apparent scope of agent’s
authority and that insurer’s recording agent’s misrepresentation of coverage is
considered that of insurer); Black, 797 S.W.2d at 24–25.  It held, “Omni’s failure to
read the policy does not support the granting of summary judgment.”  Omni Metals,
2002 WL 1331720, at *8.  In other words, the court held that Omni Metals had no
legal duty to  read the policy upon which judgment against it could be based. 
          The Fourteenth Court of Appeals specifically rejected the argument that the
disclaimer on the certificate of insurance put Omni on notice that there could be
exclusions that would prevent its stored steel from being covered by Port Metal’s “all
risk” bailee policy and that it placed on Omni a duty of due diligence to read the bailee
policy to determine the extent of Port Metal’s coverage.  The court stated,
[I]ssuance of a certificate of insurance [the 1993 certificate] without
disclosure of additional information about the storage fee exclusion and
issuance of another certificate [the 1995 certificate], coupled with the
circumstances under which it was sent to Omni and the assurances of
coverage to Port Metal, give rise to causes of action for
misrepresentation.  We reject appellees’ arguments that, as a matter of
law, issuance of an insurance certificate does not create a duty; presence
of disclaimers precludes the creation of a false impression; no duty to
disclose arises because there is no duty to explain policy exclusions to an
insured; and the use of “all risk” cannot convey a false impression.
 
Id. at *7.  Adopting the law of the case, we hold that Omni’s negligent
misrepresentation and DTPA claims were not barred as a matter of law by the failure
of its president to read every word in the certificate of insurance or to request and read
the policy to determine whether its steel was excluded from coverage.
          Our conclusion is not changed by the cases relied upon by Brown & Brown to
support its claim.  In none of its cases was there a direct misrepresentation to the
plaintiff or any evidence that the plaintiff received and relied upon a false or
misleading representation.  See Rocky Mountain Helicopters, Inc. v. Lubbock County
Hosp. Dist., 987 S.W.2d 50, 53 (Tex. 1998) (stating, “the record contains no evidence
that [the plaintiff] was aware of the [representation] or that [the defendant] had
communicated its content or existence to anyone outside of the company”); Sw. Bell
Tel. Co. v. Boyce Iron Works, Inc., 726 S.W.2d 182, 187 (Tex. App.—Austin 1987)
(holding there was no proof that plaintiff had “even heard of any representations,
much less misrepresentations”), rev’d on other grounds, 747 S.W.2d 785 (Tex. 1988);
Rivera v. Philip Morris, Inc., 395 F.3d 1142, 1155 (9th Cir. 2005) (stating there was
“no admissible evidence identifying what statements attributable to [the defendant] the
decedent actually saw, heard, or read and relied upon”).
          Nor is our conclusion changed by Transcontinental’s argument that, as a matter
of law, reliance is never justified when a party receives a disclaimer.  Rather, we agree
with Omni’s argument that all of the cases cited by Transcontinental on this point are
factually distinguishable and inapplicable in that “they relate solely to binding
contractually disclaimed reliance.”  See Coastal Bank SSB v. Chase Bank of Texas,
N.A., 135 S.W.3d 840, 844 (Tex. App.—Houston [1st Dist.] 2004, no pet.);
Bluebonnet Sav. Bank F.S.B. v. Grayridge Apt. Homes, Inc., 907 S.W.2d 904, 910
(Tex. App.—Houston [1st Dist.] 1995, writ denied); Airborne Freight Corp. v. C.R.
Lee Enters., 847 S.W.2d 289, 298 (Tex. App.—El Paso 1992, writ denied).  Here there
was no contract between Omni and Brown & Brown, and there was specifically no
contractually binding agreement by Omni not to rely on the certificate provided to it
for use in its business dealings.  Rather, the certificate was delivered to Omni by Poe
& Brown for the express purpose of conveying to Omni’s lender the assurance that
Omni’s steel stored at Port Metal was insured and with Poe & Brown’s knowledge that
it would be so relied upon.  Thus, Poe & Brown invited Omni’s reliance on its
representations.  See McCamish, 991 S.W.2d at 794.  
          Moreover, Poe & Brown’s delivery of the requested certificate to Omni and its
failure to correct information regarding coverage that it knew to be incorrect caused
Omni not to take other steps to assure the coverage of its steel stored at Port Metal. 
This is essentially the same scenario as in Hermann Hospital, in which we opined,
To insulate the insurance carriers from liability leaves the [third-party
plaintiff to whom coverage was misrepresented for use in its business
dealings] without recourse against the party causing its damage, if it acts
in reliance on the representation of coverage.  Had the insurance carrier
not falsely or negligently provided information, appellant could have
sought alternative means to ensure that it received payment for service
before rendering them.
 
776 S.W.2d at 252.  We declined to find that such a suit was barred as a matter of law
in Hermann Hospital, and we similarly decline to find that a suit for misrepresentation
is barred in this case. 
          Finally, our holding that Omni justifiably relied on Poe & Brown’s false
representations and that those representations caused it pecuniary damages is not
changed by Brown & Brown’s and Transcontinental’s reliance on new authority since
Omni Metals was decided, namely the Southern District of Texas’s construction of
Texas law in TIG Insurance Co. v. Sedgwick James, 184 F. Supp. 2d 591 (S.D. Tex.
2001)(Via Net I), and the Texas Supreme Court’s subsequent per curiam opinion in a
companion case, Via Net v. TIG Insurance Co., 211 S.W.3d 310 (Tex. 2006) (Via Net
II).
          In Via Net I, the named insured, Corporate Express, Inc., purchased two
commercial general liability (CGL) insurance policies from Lumbermens Mutual
Casualty Company for itself and its subsidiaries, Policies 300 00 and 300 01.  184 F.
Supp. 2d 591 at 594.  The named insureds on Policy 362 00 were “U.S. Delivery
Systems [USDS] and its subsidiaries, United Transnet, Inc. and its subsidiaries, and
Corporate Express, Inc. [CEI] (the parent company of [USDS] and united Transnet).” 
Id.  Policy 362 00 contained no provision for additional insured coverage.  Id.  Policy
300 01’s named insured was CEI.  While subsidiaries of CEI were included on Policy
300 01, which did provide for additional insureds, the policy specifically excluded
Corporate Express Delivery Systems, Inc. (CEDS) and its subsidiaries, which included
USDS, whose Houston subsidiary was Via Net.  Id.  Via Net was thus insured only
under Policy 300 00.  Id.  
          One of Via Net’s customers was Safety Lights Sales & Leasing, Inc. (Safety
Lights).  In March 1996, Safety Lights demanded that it be added as an additional
insured to Via Net’s insurance policy in order for Via Net to remain a vendor with
Safety Lights.  See id.  As evidence that it had been added as an additional insured,
Safety Lights requested a certificate of general and auto liability insurance from Via
Net, and it further required that the certificate “evidence ‘waiver of subrogation and
additional insured in favor of Safety Lights Company.’”  Id. at 594–95.  CEDS’s
insurance agency, Sedgwick, issued a certificate to Safety Lights under Policy 362 00
listing Via Net and USDS as the insureds.  Id.  The certificate stated, “Certificate
holder is added as additional insured re: general liability.”  Id. at 595.  The certificate
contained the same disclaimer as in this case.  Safety Lights did not ask for or seek to
read Policy 362 00 to which the certificate of insurance referred.  See id. at 598. 
Policy 362 00 did not provide for additional insureds.
          Subsequently, an employee of Via Net was injured while delivering a steel plate
to Safety Lights.  He sued Safety Lights under various theories, including violations
of the Texas Insurance Code, the DTPA, negligence, misrepresentation and fraud, 
claiming that Lumbermens should provide coverage under Policy 362 00.  The United
States District Court rejected Safety Light’s claim that it was entitled to coverage
under Policy 362 00.  The court held that a “certificate of insurance will not suffice to
create insurance coverage if such coverage is precluded by the terms of the policy.” 
Id. at 597 (citing Wan v. Metropolitan Life Ins. Co., 41 S.W.2d 50, 52 (Tex. Com.
App. 1931) for proposition that “certificate of insurance does ‘not constitute the
complete contract of insurance’ and must be construed in connection with underlying
insurance policy”).  Observing that under Texas law, “[a]n insured has a duty to read
the insurance policy and is charged with knowledge of its provisions,” the court
concluded that Safety Lights, claiming to be an additional insured under Policy
300 01, “should be held to the same obligation as a named insured to review a policy
of insurance on which it seeks to rely, and its reliance solely on the agent’s certificate
of insurance is not reasonable under the circumstances presented by the admissible
evidence.”  Id. at 603 (citing Ruiz v. Gov’t Emp. Ins. Co., 4 S.W.3d 838, 841 (Tex.
App.—El Paso 1999, no pet.)).  It concluded that Safety Lights’ reliance upon the
certificate of insurance to provide it additional insured status was not reasonable.  Id.
at 604. 



          After its unsuccessful federal suit to recover as an additional insured under the
Lumbermens policy, Safety Lights sued Via Net in Texas state court for breaching its
promise to provide additional insured coverage.  Via Net II, 211 S.W.3d 310.  The
issue when the suit was eventually appealed to the Texas Supreme Court was whether
the discovery rule applied to Safety Lights’ suit, which arose less than four years after
coverage was denied but more than four years after the promise to provide coverage
was breached.  Id. at 311–12.  The court observed that Via Net’s policy with
Lumbermens “did not provide for additional-insured coverage and no endorsement
adding it as an insured was ever issued.”  Id. at 312.  It held that, as a contracting
party, Safety Lights had a duty to use ordinary care for the protection of its own
interests and to use due diligence to verify contract performance.  Id. at 314.  Because
the breach would have been easily discoverable merely by Safety Lights’ “asking [its]
contract partner for information needed to verify contractual performance,” the Texas
Supreme Court held that, under the circumstances of the case, the discovery rule did
not apply, although it might apply to contract cases under other circumstances.  Id. at
314–15.  The court commented in dicta, “Given the numerous limitations and
exclusions that often encumber such policies, those who take such certificates at face
value do so at their own risk.”  Id. at 314.
          We decline to extend the reasoning in Via Net I and Via Net II regarding the due
diligence obligations of a person claiming to be entitled to insurance proceeds as a
party to an insurance contract to persons bringing claims under the Texas Insurance
Code alleging negligent misrepresentation and violations under the DTPA based on
false representations of the contents of insurance policies by insurance agents and
companies upon which the plaintiff relied in its business dealings and which caused
the plaintiff to suffer economic damages.  In Via Net I, the relevant holding was that
a party claiming to be entitled to insurance coverage as an additional insured under an
insurance policy, and therefore claiming to be in contractual privity with the insurance
company, cannot rely on a certificate of insurance to extend more coverage than is
actually conveyed by the policy itself, any more than the named insured can.  Rather,
a party claiming to be an additional insured is held to the same burden as the named
insured of reading the policy to ascertain its right to coverage.  See Via Net II, 211
S.W.3d at 314.  Here, under a far different set of circumstances, Omni was not an
additional insured, but a customer of an insured, and the question is whether Omni
could justifiably rely upon the affirmative misrepresentations of the insurance agent
for a third party, Port Metal, that Port Metal was insured and, therefore, that Omni’s
steel  was protected by Port Metal’s insurance, which were made both orally and in
certificates of insurance solicited and relied upon by Omni for use in its own business
dealings.
          It is well established that, unlike a party to an insurance contract claiming to be
an insured and therefore entitled to recover insurance proceeds, a party to whom a
third party’s insurance agent has made misrepresentations regarding the extent of the
third party’s insurance coverage for use in the business dealings of the recipient has
no duty of due diligence to seek out and read the third party’s insurance policy and to
verify its terms and conditions in order to maintain a suit for misrepresentation and
deceptive acts and practices against the agent and his principal under the Insurance
Code and the DTPA.  See Omni Metals, 2002 WL 1331720, at *8 (holding that Omni’s
failure to read Port Metal’s policy was no bar to claim for misrepresentation by Port
Metal’s insurance agent); see also Royal Globe, 577 S.W.2d at 693 (holding false
representations of local recording agent regarding coverage afforded by policy for
vandalism actionable under former article 21.12, section 16 and DTPA section
17.46(b)(12)); Celtic Life Ins. Co., 831 S.W.2d at 596 (holding misrepresentation by
health insurance agent as to benefits actionable under article 21.21, section 16 and
DTPA); Gros, 818 S.W.2d at 912–13 (same with respect to homeowner’s policy);
Hermann Hosp., 776 S.W.2d at 253 (same with respect to representation to hospital
regarding coverage of worker’s compensation insurance policy).  These cases stand
in contrast to contract law, where it is equally well established that a contracting party
has a duty of due diligence regarding formation and performance of the contract.  See
Via Net II, 211 S.W.3d at 314 (stating, “Due diligence may include asking a contract
partner for information needed to verify contractual performance”); Coastal Bank SSB,
135 S.W.3d at 843 (holding that contract and circumstances surrounding its formation
determine whether disclaimer of reliance in contract is binding and bars fraudulent
inducement claim by party to contract).  
          The only requirement for a party seeking to hold liable the principal of an
insurance agent who made a false representation about coverage is that the recipient
look to the acts of the principal “to see if those acts would lead a reasonably prudent
person using diligence and discretion to suppose that the agent had the authority he
purported to exercise.”  Shandee, 880 S.W.2d at 412 (quoting Guthrie v. Rep. Nat’l
Ins. Co., 683 S.W.2d 634, 637 (Tex. App.—Houston [1st Dist.] 1984, writ ref’d
n.r.e.)).  Here, there was nothing to indicate that Transcontinental had not authorized
Poe & Brown to represent the extent of Port Metal’s insurance coverage to Omni. 
And, as Transcontinental’s recording agent, Poe & Brown did, in fact, have such
authority.  See Royal Globe, 577 S.W.2d at 694 (local recording agent of insurer has
authority to represent coverage afforded by policies it sells).  If representations about
the extent of coverage by an authorized agent are false, “under the explicit language
of Section 16, Article 21.21 and Section 17.46(b)(12) of the DTPA,” those actions
constitute a deceptive act or practice for which not only the agent but his principal is
accountable.  See id.
          We hold that Omni had no legal duty to obtain and read Port Metal’s bailee
insurance policy or to verify its terms in order to maintain its suit for misrepresentation
and violations of the DTPA under article 21.21 of the Insurance Code.  We therefore
address whether the evidence was factually sufficient under the circumstances of this
case to show that Omni justifiably relied on Poe & Brown’s misrepresentations.
          (2)     Factual Sufficiency of the Evidence of Reliance and Causation
 
          Here, at Omni’s request, Sparks, a Poe & Brown insurance agent, delivered
certificates of insurance stating that Omni’s steel stored at Port Metal was covered
under Port Metal’s “all risk” bailee insurance policy.  Sparks knew the request was
made so that Omni could provide the certificate to its secured lender to prove that its
steel was insured.  Sparks also knew by mid-1993 that Port Metal charged Omni a
storage fee for its metal stored at Port Metal, that goods for which Port Metal charged
a storage fee were excluded by the terms of the bailee policy, and that that information
was not contained on any of the certificates.  Rather, the information on each of the
certificates was, by Sparks’ own admission, “untrue” and, by Poe & Brown’s expert’s
admission “misleading.”   
          While Tomes, Omni’s president, testified at trial that he did not “personally read
and review every single certificate of insurance that came across to Omni” and that he
did not ask for or “actually receive the insurance policy rather than the certificate of
insurance,” he also testified that he “just look[ed] at ‘all risks’” and saw that the
certificates sent him confirmed what McKnight, Port Metal’s president, had told him
and that nothing on the certificates gave him any reason to doubt McKnight.  Tomes
testified that the certificates would also have been reviewed by Debbie Hiner at Omni,
that they were then forwarded to Omni’s secured lender as proof that the steel was
insured, and that “they were satisfied too.”  He stated that he did not ask for the policy
because the company “would think that the certificate of insurance would be adequate
to cover what we needed.”  In addition, Omni’s president was assured that its steel was
insured by Port Metal’s president, McKnight, who had read the policy and who
received the misinformation directly from Sparks in response to his question about the
exclusion he saw in the 1992 bailee policy.  That misinformation was never corrected
by appellants prior to the fire that damaged Omni’s steel.
          Considering the evidence in the light most favorable to the jury’s verdict, we
hold that the evidence would enable reasonable and fair-minded people to find that
Omni justifiably relied on Poe & Brown’s negligent misrepresentation and that the
negligent misrepresentation caused Omni’s pecuniary damages, and therefore the
evidence in support of these elements of Omni’s claim was legally sufficient. See
Wilson, 168 S.W.3d at 827.  Considering and weighing all the evidence neutrally, we
further hold that the evidence on these elements was not so contrary to the
overwhelming weight of the evidence as to be clearly wrong and unjust and was thus
factually sufficient.  See Arias, 265 S.W.3d at 468.
          We overrule the third part of Brown & Brown’s first issue and
Transcontinental’s third issue.
c.       Poe & Brown’s Knowledge
          Brown & Brown also argues in its first issue that the evidence is legally and
factually insufficient to support the jury’s finding that Poe & Brown “knowingly”
engaged in an unfair or deceptive act or practice, as required for an award of additional
damages of up to three times actual damages under former article 21.21.  See former
Tex. Ins. Code art. 21.21, §16 (b)(1).  Brown & Brown contends that it sends out
thousands of certificates of insurance a week nationwide and that “[o]ther than Poe &
Brown’s 1995 certificate sent to Omni less than two (2) months before the December
5, 1995 fire, there is absolutely no evidence of any other communication between
Omni and Poe & Brown.”
          The charge tracked the language of the DTPA in defining “knowingly” as 
actual awareness, at the time of the conduct, of the falsity, deception, or
unfairness of the conduct in question or actual awareness of the conduct
constituting a failure to comply with a warranty.  Actual awareness may
be inferred where objective manifestations indicate that a person acted
with actual awareness.
 
See Tex. Bus. & Com. Code Ann. § 17.45(9).  Actual awareness “means that a person
knows that what he is doing is false, deceptive, or unfair” and does it anyway.  St. Paul
Surplus Lines v. Dal-Worth Tank Co., 974 S.W.2d 51, 53–54 (Tex. 1998).  The term
“knowingly” lies on a continuum of “gross negligence, ‘knowingly,’ ‘willful’ and
intentional” with “gross negligence being the lowest mental state and intentional being
the highest.”  Id. (quoting Luna v. N. Star Dodge Sales, Inc., 667 S.W.2d 115, 118
(Tex. 1984)).
          Here, the evidence shows that Sparks, Poe & Brown’s agent, knew by at least
July, 1993 that Port Metal’s bailee policy excluded from coverage goods for which a
storage charge was made.  He also knew from approximately the same time that Port
Metal received revenues from its customers of $6,000 a month for storage fees.  He
knew that Port Metal relied on him to obtain coverage for all of its customers’ steel. 
Sparks also knew that Omni stored its steel at Port Metal and that Omni’s request for
a certificate of insurance was for the purpose of providing its secured lender assurance
that the steel stored at Port Metal was covered by Port Metal’s bailee policy.  When
Sparks sent the requested certificate to Omni stating that it covered “all risks,” Sparks
knew that representation was false and misleading.  Indeed, on the day of the fire two
months later, Sparks advised both Port Metal and one of its customers not to mention
the word “storage” to anyone.  None of this evidence is controverted.
          Considering the evidence in the light most favorable to the jury’s verdict, we
hold that the evidence would enable reasonable and fair-minded people to find that
Sparks, an insurance agent with Poe & Brown, knew that his representations to Omni
that Port Metal’s insurance policy covered “all risks” was false and misleading and
that he knew Omni would rely on the false information to satisfy its own and its
secured lender’s concerns that the steel be insured.  Thus we hold that the evidence in
support of Poe & Brown’s knowledge of its misrepresentation was legally sufficient
to support the jury’s finding. See Wilson, 168 S.W.3d at 827. Considering and
weighing all the evidence neutrally, we further hold that the evidence regarding Poe
& Brown’s knowledge of the misrepresentation was not so contrary to the
overwhelming weight of the evidence as to be clearly wrong and unjust, and thus it
was factually sufficient.  See Arias, 265 S.W.3d at 468.
          We overrule Brown & Brown’s first issue and Transcontinental’s third issue.
 
F.  Additional Damages Awarded Omni
          In its fifth issue, Transcontinental argues that additional damages of $1,080,000
awarded Omni against Transcontinental are erroneous because Transcontinental had
no contact with Omni and there is no evidence Transcontinental knew of any wrongful
act, as required for an award of additional damages.
          Former article 21.21, section 16 of the Insurance Code permitted an award of
additional damages of up to three times actual damages “[i]f the trier of fact finds that
the defendant knowingly committed the acts complained of.”  Former Tex. Ins. Code
art. 21.21, § 16(b)(1) (current version at Tex. Ins. Code Ann. § 541.152(b)).  In its
answer to question 3, the jury found that both Poe & Brown and Transcontinental had
committed an unfair or deceptive act or practice by either “(1) representing that goods
or services had or would have characteristics that they did not have; or
(2) representing that an agreement confers or involves rights that it did not have or
involve.”  In its answer to Question 5, the jury found that both defendants engaged in
this conduct “knowingly.”  In its answer to Question 6, the jury found that Omni
should be awarded $1,620,000 against Poe & Brown and $1,080,000 against
Transcontinental because their conduct was committed knowingly.  The issue
presented by Transcontinental is whether those damages can be attributed to a
principal whose agent has made the misrepresentation.
          The assessment of additional damages under former article 21.21, section 16 of
the Insurance Code is not dependent on rules of common-law negligence but on the
existence of corporate knowledge and therefore may be taken against a principal based
solely upon the vicarious or imputed knowledge or intent of its agent.  Maryland Ins.
Co. v. Head Indus. Coatings & Servs., Inc., 906 S.W.2d 218, 229–30 (Tex.
App.—Texarkana 1995), rev’d on other grounds, 938 S.W.2d 27 (Tex. 1996). 
Companies “are responsible for the knowledge possessed by those whom they appoint
as agents.”  See id. at 229 (imputing to insurance company knowledge of terms of
policy that should have been issued that was possessed by local recording agent).  
          In Royal Globe, the supreme court held that an insurance company that
authorizes an agent to sell its policies may not escape liability for misrepresentations
made by the agent that violate section 17.46 of the DTPA or former article 21.21 of
the Insurance Code merely by establishing that the agent had no actual authority to
make the misrepresentation.  577 S.W.2d at 693.  The insurance company can be
found to have vicariously committed the deceptive act or practice.  Id.; Celtic, 885
S.W.2d at 99 (stating that insurer “cannot escape liability on the basis that it did not
authorize particular representations concerning the policy”).  The proper inquiry is
whether the agent was acting within the scope of the agency relationship at the time
of the wrongful act.  Celtic, 885 S.W.2d at 99 (holding that misrepresentation made
by agent in course of explaining terms of policy was within scope of his authority). 
          Here, Sparks, an agent for Poe & Brown, Transcontinental’s local recording
agent, falsely represented that Port Metal’s Transcontinental “All Risks” bailee policy
covered Omni’s steel stored at Port Metal.  We hold that Poe & Brown was acting
within the scope of its authority in doing so and that, therefore, Transcontinental could
be held vicariously liable for Poe & Brown’s misrepresentations.  Poe & Brown’s
knowledge of the falsity can be attributed to Transcontinental, its principal, which had
appointed Poe & Brown as its recording agent with authority to make representations
about the terms of the insurance policies it sold.  See Maryland Ins. Co., 906 S.W.2d
at 229; see also Ins. Co. of N. Am., 928 S.W.2d at 145 (deeming apparent authority of
surety to make representations about quality of securities knowledge or acquiescence
by principal).  Since the jury found that both Poe & Brown and Transcontinental acted
“knowingly” and we have held that evidence in the record is sufficient to support that
finding under both legal and factual sufficiency standards, we hold that the trial court
did not err in entering judgment on the verdict finding Transcontinental liable for
additional damages for knowingly misrepresenting the coverage provided by Port
Metal’s bailee insurance policy in violation of the Insurance Code and the DTPA.
          We overrule Transcontinental’s fifth issue.
G.  Attorney’s Fees and Costs Incurred in Prior Litigation
 
          In its fourth issue, Transcontinental argues that Omni may not recover attorney’s
fees of $740,000 it incurred in pursuing a separate tort action against the third parties
responsible for starting the fire.  In its third issue, Brown & Brown joins in and adopts
Transcontinental’s arguments as its own.



          After the fire in which its steel at Port Metal was damaged, Omni filed suit
against Port Metal and the parties it alleged were responsible for the fire, Electrical
Wire & Cable Company and others.  Omni subsequently amended its pleadings to
name Poe & Brown and Transcontinental as defendants.  On January 9, 1998, the trial
court entered its Supplemental Order on Severance, severing all actions against Poe
& Brown and Transcontinental from the actions against the parties allegedly
responsible for the fire.  The instant appeal is taken from the severed action against
Poe & Brown and Transcontinental.  Omni contends that the litigation against the
alleged responsible parties was prior litigation for which an equitable exception
against wrongdoers applies that permits recovery of its attorney’s fees.
          Omni acknowledges that the general rule in Texas is that “attorney’s fees may
not be recovered from an opposing party unless such recovery is provided for by
statute or by contract between the parties.”  Travelers Indem. Co. v. Mayfield, 923
S.W.2d 590, 593 (Tex. 1996); see also Turner v. Turner, 385 S.W.2d 230, 233 (Tex.
1965).  However, in Turner, the supreme court recognized, without adopting, an
exception to the general rule provided for in the Restatement of the Law: Torts, Vol.
4 § 914.  Id. at 234.  The exception provides that “where a plaintiff has been involved
in litigation with a third party as a result of the tortious act of another, the plaintiff may
recover in a separate suit for his reasonable and necessary expenses of the prior
litigation.”  Id.  Certain prerequisites must, however, be met.  Id.  These include: (1)
the plaintiff must have incurred attorney’s fees in the prosecution or defense of a prior
action, and (2) the litigation must have involved a third party and must not have been
brought against the defendant in the same action in which the fees are sought.  Id.
(holding that section 914 did not cover case where, in cross-action, defendant former
husband sought recovery from former wife of attorney’s fees incurred defending
alienation of affections suit brought against both).  
          Subsequent to Turner, this Court and other Texas courts of appeals have held
that “equitable principles may allow the recovery of attorney’s fees and other litigation
expenses ‘where a party was required to prosecute or defend the previous suit as a
consequence of the “wrongful act” of the defendant.’”  Massey v. Columbus State
Bank, 35 S.W.3d 697, 701 (Tex. App.—Houston [1st Dist.] 2001, no pet.) (awarding
bank recovery of attorney’s fees incurred in suit against former director for damages
due to filing of false and defamatory complaints and groundless grievances with
regulatory agencies); see also Standard Fire Ins. Co. v. Stephenson, 963 S.W.2d 81,
90–91 (Tex. App.—Beaumont 1997, no pet.) (stating that “fees may be recoverable
where the natural and proximate results and consequences of prior wrongful acts have
been to involve a plaintiff in litigation with and against third parties and other parties”
and holding that insured could recover attorney’s fees incurred in prior litigation
between insurer and insured as result of insurer’s bad faith claim); Baja Energy, Inc.
v. Ball, 669 S.W.2d 836, 838–39 (Tex. App.—Eastland 1984, no writ) (in third-party
action brought by oil well operator against assignor lessee for contribution and
indemnity, awarding oil well operator recovery of attorney’s fees incurred in defense
of bad faith action for trespass to try title and conversion brought by assignee). 
However, our sister court, the Fourteenth Court of Appeals, has refused to adopt an
equitable exception to the general rule.  See Martin-Simon v. Womack, 68 S.W.3d 793,
797–98 (Tex. App.—Houston [14th Dist.] 2001, pet. denied).
          Here, the trial court awarded Omni its attorney’s fees incurred in an earlier stage
of the instant litigation, which was brought initially against the parties allegedly
responsible for the fire and to which appellants were added.  After the settlement of
Omni’s claims against the other defendants, Omni’s suit against Poe & Brown and
Transcontinental was severed into a separate cause of action and tried and is now the
subject of this appeal.  The litigation for which fees were awarded can thus not
properly be styled “prior litigation.”  Rather, it is a suit for recovery of fees incurred
in the original cause of action from which this suit was severed after settlement of the
causes of action brought against the other parties.  Thus, the award violates the
prerequisites for recovery of attorney’s fees in the absence of a contractual or statutory
provision set out in Turner, namely that the plaintiff must have incurred attorney’s
fees in the prosecution or defense of a prior action and that the litigation must have
involved a third party and must not have been brought against the defendant in the
same action in which the fees are sought.  Turner, 385 S.W.2d at 234.  We hold that,
under the circumstances of this case, the general rule that attorney’s fees may not be
recovered unless such recovery is provided for by statute or by contract between the
parties applies.  See Mayfield, 923 S.W.2d at 593.  It is undisputed that no statute or
contract provided for the recovery of attorney’s fees incurred by Omni in the prior
stage of this litigation involving the settling defendants. We hold, therefore, that the
trial court erred in awarding Omni its attorney’s fees of $740,000 under the equitable
exception to the general rule.
          We sustain Transcontinental’s fourth issue.
 
H.  Settlement Credit
          In its sixth issue, Transcontinental argues that the trial court erred in not giving
it the full $1,660,000 settlement credit that Omni received from the settling
defendants.  In its fourth issue, Brown & Brown joins in and adopts Transcontinental’s
argument as its own.  Specifically, Transcontinental argues that it is entitled to a credit
for the full amount of the settlement under the one satisfaction rule.  Omni argues that
Transcontinental is not entitled to the full settlement credit because a non-settling tort-feasor may claim a credit only for damages for which all tortfeasors are jointly liable. 
          The trial court’s judgment granted Poe & Brown and Transcontinental
settlement credit against (1) the $704,267 awarded Omni by the jury for “the value of
the loss less any amounts Omni received from the sale of the steel or from
Transcontinental”; (2) the $370,964.72 awarded Omni by the jury for “reasonable and
necessary expenses incurred in attempting to sell the steel”; and (3) $169,213.61 for
prejudgment interest on the principal of (1) and (2) from December 13, 1996 through
April 13, 1999.  The total amount of the settlement credit granted was $1,244,445.33.
          Transcontinental argues that it should have been granted a settlement credit for
the entire amount of the settlement, $1,660,000.  It argues that a dollar for dollar
settlement credit is applied first to past damages and prejudgment interest that have
accrued on the damages as of the time of the settlement.  It states that the damages in
the case prior to settlement amounted to $1,075,231.72 for the steel and mitigation
costs.  The settlements for $1,660,000 were entered into on April 13, 1999.  Using the
7% prejudgment interest rate used by the trial court and its accrual date of December
13, 1996, it argues that prejudgment interest that would have accrued on these
damages as of the time of the settlement would be $175,690.06, or approximately
$6500 more than the prejudgment interest credit granted it by the trial court.  
          Transcontinental argues that Omni’s total recovery, after subtracting the
$740,000 in attorney’s fees damages and the $1,080,000 in additional damages, which
Transcontinental contends were not properly recoverable against it, should have been
$1,412,554.78, consisting of the $1,075,231.72 granted it as a settlement credit for
past damages, plus $175,690.06 in accrued prejudgment interest at the time of the
settlement, plus  attorney’s fees of $161,000 through trial, and costs of $633.00. 
Transcontinental argues that Poe & Brown was held jointly liable for these amounts. 
Therefore, since the total amount of recoverable damages was $1,412,554.78 after
adjustments for the improper award of additional damages and past attorneys fees,
Transcontinental argues that it is entitled to a settlement credit for the entire
$1,660,000.  Since the amount of the credit it contends it is due exceeds the total
amount of the judgment against it, Transcontinental argues that judgment should be
had in its favor.
          Omni agrees that Transcontinental was entitled to a settlement credit for actual
damages awarded by the jury for the loss on its steel inventory and the expenses of
mitigating the damages, together with prejudgment interest on those amounts
calculated through the date of the original settlements, April 13, 1999.  But it contends
that Transcontinental is not entitled to settlement credit for the $740,000 awarded as
damages for litigation expenses Omni incurred in prior litigation due to
Transcontinental’s and Poe & Brown’s wrongful actions and that Transcontinental is
not entitled to a credit for the additional damages assessed against it for its knowing
participation in violations of the DTPA and Insurance Code.  It observes that “Texas
law does not provide for such a credit.”  See Tex. Civ. Prac. & Rem. Code Ann. §
33.002 (Vernon 2003).
          The Texas Supreme Court has held that “[u]nder the one satisfaction rule, the
nonsettling defendant may only claim a credit based on the damages for which all
tortfeasors are jointly liable.”  Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378, 391
(Tex. 2000); Garrett, 860 S.W.2d at 78; Paschall v. Peevey, 813 S.W.2d 710, 712
(Tex. App.—Austin 1991, writ denied).  
          Here, Poe & Brown and Transcontinental were found jointly liable for actual
damages of $704,267 for the value of the steel and $370,964.72 for mitigation
damages; $740,000 in prior litigation attorney’s fees; and $161,050.07 in attorney’s
fees, plus $50,000 for appeal to the Court of Appeals and $25,000 for appeal to the
Supreme Court of Texas.  The trial court awarded Poe & Brown a total settlement
credit of $1,244,445.33, which did not include the $740,000 for prior attorneys fees. 
We have held that the $740,000 was improperly awarded to Omni.  We have also held
that the additional damages of $1,620,000 and $1,080,000 awarded Omni for Poe &
Brown’s and Transcontinental’s violations of the DTPA were properly assessed
separately against Poe & Brown and Transcontinental respectively and are not subject
to settlement credit.  See Tex. Civ. Prac. & Rem. Code Ann. § 33.002); Maryland
Ins. Co., 906 S.W.2d at 230. 
          We hold that the trial court did not err in awarding settlement credit to
appellants.  We overrule Transcontinental’s sixth issue and Brown & Brown’s fourth
issue.
I.  Admissibility of Prior Federal Judgment
          In its seventh issue, Transcontinental argues that the trial court erred in not
admitting evidence of a prior federal judgment in Transcontinental’s favor over
Omni’s hearsay and irrelevance objections.  Transcontinental states that it “sought to
introduce this evidence to show that it could not have ‘knowingly’ refused to pay any
amounts Omni was claiming, because a federal court had long ago ruled that it had no
liability, even to its own insured, Port Metal.”
          The general rule in Texas is that a judgment in another cause finding a fact in
issue in a case at bar is not admissible.  Davis v. Zapata Petroleum Corp., 351 S.W.2d
916, 922 (Tex. Civ. App.—El Paso 1961, writ ref’d n.r.e.).  “The fact that another jury
had theretofore, in another case, determined the very questions at issue in the present
trial would have had a strong tendency to induce the jury in the subsequent case to
reach the same conclusion, and would therefore have been very prejudicial.  Such
judgment, under well settled rules, could not have been introduced in evidence to
establish the facts on which it was rendered.”  Id.  While a judgment may be
introduced to show its own existence, a judgment “is not admissible for the purpose
of showing what matters were adjudicated except where the parties and the subject
matter in each suit are the same, or where the matter determined was of a public nature
(in rem) and from public considerations should be considered binding upon all
persons.”  Id. 
          Here, Transcontinental has failed to show that the prior federal judgment was
admissible.  We hold that the trial court did not err in excluding it.
          We overrule Transcontinental’s seventh issue.
 
 
 
 
CONCLUSION
          We modify the judgment to deduct the $740,000 in attorney’s fees damages
awarded appellee Omni Metals, Inc. from appellants Transcontinental Insurance
Company and Brown & Brown of Texas, Inc.  We affirm the judgment of the trial
court as modified.
 
 
                                                             Evelyn V. Keyes
                                                             Justice
 
Panel consists of Justices Keyes, Higley, and Nuchia.



Justice Nuchia, dissenting.
 
