                           NUMBER 13-12-00509-CV

                              COURT OF APPEALS

                      THIRTEENTH DISTRICT OF TEXAS

                        CORPUS CHRISTI - EDINBURG


JUAN M. ESPINOSA,                                                         Appellant,

                                          v.

ALLSTATE INSURANCE
COMPANY, ET AL.,                                                          Appellees.


               On appeal from the County Court at Law No. 7
                        of Hidalgo County, Texas.


                           MEMORANDUM OPINION

  Before Chief Justice Valdez and Justices Rodriguez and Longoria
           Memorandum Opinion by Chief Justice Valdez

      By one issue, appellant, Juan M. Espinosa, appeals from the trial court’s entry of

a final summary judgment in favor of appellees, Allstate Insurance Co., Allstate County

Mutual Insurance Co., and Allstate Property and Casualty Insurance Co. We affirm.
                                      I. BACKGROUND

       Appellant purchased two automobile insurance policies from appellees.

Subsequently, appellant filed suit against appellees for fraud, alleging that appellees

had fraudulently concealed information about their internal policies and procedures for

handling claims, which according to appellant, was material to his decision to purchase

the policies. In relevant part, appellant’s live petition alleged a single cause of action for

fraud as follows:

       At times relevant to this case, [appellant] purchased personal automobile
       insurance policies from [appellees]. In connection with such purchase,
       [appellant] paid premiums corresponding to policy periods with respect to
       which [appellees] paid no amounts to [appellant] or on [appellant’s] behalf
       to third parties.

       At times relevant to this case, [appellant] purchased said policies because
       [appellees] fraudulently concealed from [appellant] that [appellees] treat
       their policyholders less favorably if those policyholders choose to be
       represented by legal counsel when making claims for benefits under such
       policies by making the claims settlement process more protracted,
       burdensome and costly, while [appellees] pay substantially less on
       average to unrepresented policyholders than [appellees] pay to
       policyholders represented by legal counsel to settle such claims. Such
       claim handling by [appellees] puts [appellant] in a “damned if you do and
       damned if you don’t” position, with respect to employing legal counsel in
       connection with obtaining policy benefits.          [Appellees] fraudulently
       concealed from [appellant] that [appellees’] claims practices were such,
       that the policies sold to [appellant] were treated by [appellees] as defined
       benefits policies.

       ...

       Such concealed information was material to [appellant’s] decision to
       purchase such automobile insurance policies from [appellees].

       On account of [appellees’] conduct described herein, [appellant] is entitled,
       under the common law of Texas, to: (1) restitution to [appellant] of the
       premiums paid by [appellant] to [appellees] for policy periods with respect
       to which [appellees] paid no amounts to [appellant] or on [appellant’s]
       behalf to third parties; and (2) exemplary damages.



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       Thereafter, appellees filed a motion for summary judgment. Among other things,

appellees argued that they were entitled to judgment as a matter of law because there

is no evidence that appellant suffered an injury as a result of the conduct alleged in his

live petition. Specifically, appellees argued that appellant had no evidence that (1) the

form and contents of his policies were not promulgated or approved for use by the

Texas State Board of Insurance; (2) the policies did not provide the coverages appellant

requested; (3) the premiums paid by appellant were other than those required by the

filed-rates; (4) the value of the policies for the policy periods when no claim was made

was less than the premiums appellant paid for those policy periods; and (5) appellant

sustained any legally cognizable injury by virtue of how a claim would or might have

been handled under the policies if a claim had been made.

       In response, appellant produced evidence that he argued established that (1) in

or about July, 1995, appellees adopted new practices, procedures and forms for

handling policyholder claims; (2) appellees did not disclose these new practices,

procedures and forms to appellant; and (3) if appellees had disclosed these practices,

procedures and forms to appellant, appellant would not have purchased or renewed

either policy.

       The trial court granted appellees’ motion for summary judgment. In relevant part,

the trial court’s corrected final summary judgment recites the following:

       [Appellant] is the named insured on two, and only two, automobile
       policies: (a) Policy Number 029-230-389 issued by Allstate Insurance
       Company effective September 7, 1990 and renewed and in continuous
       effect until September 15, 1999; and (b) Policy Number 516-511-324
       issued by Allstate Property and Casualty Insurance Company effective
       September 15, 1990 and renewed and in continuous effect until
       September 15, 2004.



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Three (3) claims were made against Policy Number 029-230-389: (a)
Claim No. 7120721365, Date of Loss 08/07/1999; (b) Claim No.
2744259124, Date of Loss 08/08/1992 and (c) Claim No. 6020769292,
Date of Loss 09/03/1991. Benefits were paid to or on behalf of [appellant]
on each of these claims, and each of these claims has been fully resolved.

There were no claims made against Policy Number 516-511-324.

There is no evidence that the form and contents of either these policies
were not promulgated or approved for use in Texas by the State Board of
Insurance.

There is no evidence that either of these policies did not provide the
coverage requested by [appellant].

There is no evidence that the premiums Allstate charged and [appellant]
paid for either of these policies were not the amounts required under the
insurer’s rate for the coverages provided by the policies filed under the
State’s flexible rating program for personal automobile insurance.

[Appellant] seeks to recover restitution of the premiums he paid for policy
years in which he had no claims for benefits under these automobile
insurance policies, together with interest and punitive damages, for fraud
by which he was induced to buy all of the insurance in question.
[Appellant] claims that with respect to such “no benefit years,” the Texas
public policy against permitting perpetrators of fraud to keep the fruits of
their fraud requires that [appellant] be allowed to recover restitution of the
premiums he paid for such “no benefit years.”

[Appellees] claim that [appellant] had the benefit of coverages sold to
[appellant] for such “no benefit years,” even if [appellant] made no claims
for benefits in those years, so that restitution is not a remedy available to
[appellant], even if he were induced by fraud to buy the insurance in
question.

The Court concludes under these facts the Motion should be granted for
the sole reason that [appellant] had the benefit of coverages sold to him
for such “no benefit years,” even though he made no claims for benefits in
those years.

This appeal ensued.




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                                      II. ANALYSIS

A. Standard of Review

      We review summary judgments de novo. Alejandro v. Bell, 84 S.W.3d 383, 390

(Tex. App.—Corpus Christi 2002, no pet.).         In a traditional motion for summary

judgment, the movant has the burden of showing both that there is no genuine issue of

material fact and entitlement to judgment as a matter of law. TEX. R. CIV. P. 166a(c);

see also Swilley v. Hughes, 488 S.W.2d 64, 67 (Tex. 1972); Ortega v. City Nat’l Bank,

97 S.W.3d 765, 772 (Tex. App.—Corpus Christi 2003, no pet.). In deciding whether

there is a genuine issue of material fact, evidence favorable to the nonmovant is taken

as true, and all reasonable inferences are made, and all doubts are resolved, in favor of

the nonmovant.     Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997).

Summary judgment is proper if the movant disproves at least one element of each of

the plaintiff's claims or affirmatively establishes each element of an affirmative defense

to each claim. Id. The nonmovant has no burden to respond to a traditional summary

judgment motion unless the movant conclusively establishes its cause of action or

defense. Swilley, 488 S.W.2d at 68.

      A no-evidence summary judgment is equivalent to a pretrial directed verdict, and

this Court applies the same legal sufficiency standard on review. Zapata v. Children's

Clinic, 997 S.W.2d 745, 747 (Tex. App.—Corpus Christi 1999, pet. denied).           In an

appeal of a no-evidence summary judgment, this Court reviews the evidence in the light

most favorable to the nonmovant, disregarding all contrary evidence and inferences.

Merrell Dow, 953 S.W.2d at 711; Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497,

499 (Tex. 1995). If the nonmovant produces evidence to raise a genuine issue of



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material fact, summary judgment is improper.       TEX. R. CIV. P. 166a(i).    All that is

required of the non-movant is to produce a scintilla of probative evidence to raise a

genuine issue of material fact. Zapata, 997 S.W.2d at 747. “Less than a scintilla of

evidence exists when the evidence is ‘so weak as to do no more than create a mere

surmise or suspicion of a fact.’” Id. (citing Moore v. K Mart Corp., 981 S.W.2d 266, 269

(Tex. App.—San Antonio 1998, pet. denied) (quoting Kindred v. Con/Chem Inc., 650

S.W.2d 61, 63 (Tex. 1983))).      Conversely, more than a scintilla exists when the

evidence “rises to a level that would enable reasonable and fair-minded people to differ

in their conclusions.” Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 25 (Tex. 1994). The

burden of producing evidence is entirely on the non-movant; the movant has no burden

to attach any evidence to the motion. TEX. R. CIV. P. 166a(i).

B. Applicable Law

      The gist of fraud is successfully using cunning, deception or artifice to cheat

another to the other’s injury. McEwin v. Allstate Tex. Lloyds, 118 S.W.3d 811, 816 (Tex.

App.—Amarillo 2003, no pet.).        The elements of fraud are (1) that a material

representation was made; (2) the representation was false; (3) when the representation

was made, the speaker knew it was false or made it recklessly without any knowledge

of the truth and as a positive assertion; (4) the speaker made the representation with

the intent that the other party should act upon it; (5) the party acted in reliance on the

representation; and (6) the party thereby suffered injury. See Aquaplex, Inc. v. Rancho

la Valencia, Inc., 297 S.W.3d 768, 774 (Tex. 2009) (per curiam).



C. Discussion



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       In this case, appellant alleged that because of appellees’ fraud, he purchased

two automobile insurance policies that he otherwise would not have purchased.              In

response to the no-evidence grounds for summary judgment raised in appellees’

motion, appellant produced an affidavit in which he states that, if the information at

issue had been disclosed to him, he would not have purchased or renewed either of the

two automobile insurance policies he purchased from appellees.                According to

appellant, this is a sufficient injury to support a cause of action for fraud. We disagree.

       The fraud alleged in this case is fraud in the inducement. In a claim of fraudulent

inducement, the elements of fraud must be established as they relate to an agreement

between the parties.     See Haase v. Glazner, 62 S.W.3d 795, 798–99 (Tex. 2001)

(“Fraudulent inducement . . . is a particular species of fraud that arises only in the

context of a contract and requires the existence of a contract as part of its proof.”). The

existence of a contract establishes the element of detrimental reliance, not the element

of an injury. See id. at 798 (“Without a binding agreement, there is no detrimental

reliance, and thus no fraudulent inducement claim.”).

       To establish the element of an injury, appellant was required to produce evidence

of either (1) an economic loss related to the policies or (2) a distinct tortious injury with

actual damages. Formosa Plastics Corp. United States v. Presidio Eng’rs & Contrs.,

960 S.W.2d 41, 45 (Tex. 1998). Appellant produced no evidence of an economic loss

related to the policies. Nor did appellant produce evidence of a distinct tortuous injury

with actual damages. In fact, appellant concedes that appellees provided him with the

benefit of coverage under the policies. Appellant concedes that “[a]bsent [appellees’]

fraud, it could rightly be said that [appellees] earned the premiums [they] collected from



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[appellant] for the ‘no benefit years.’” Accordingly, we conclude that the trial court was

correct in ruling that appellant received the benefit of coverage, that there is no

evidence of an injury for purposes of maintaining a cause of action for fraud, and that

appellees were therefore entitled to judgment as a matter of law.

      Appellant’s issue is overruled.

                                    III. CONCLUSION

      The judgment of the trial court is affirmed.

                                                       ____________________
                                                       ROGELIO VALDEZ
                                                       Chief Justice

Delivered and filed the
14th day of February, 2013.




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