Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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Tuesday, January 10, 2017

Equitable Promissory Estoppel theory barred by contract


ELEMENTS OF PROMISSORY ESTOPPEL CLAIM 

The elements of a claim for promissory estoppel are: (1) a promise; (2) foreseeability of reliance on the promise by the promisor; and (3) substantial detrimental reliance by the promisee. Leach v. Conoco, Inc., 892 S.W.2d 954, 959 n. 2 (Tex. App.-Houston [1st Dist.] 1995, writ dism'd w.o.j.). Although promissory estoppel is normally pleaded as a defense, it may be asserted by a plaintiff, as here, as an affirmative ground for relief. Fertic v. Spencer, 247 S.W.3d 242, 250 (Tex. App.-El Paso 2007, pet. denied). If a valid contract exists covering the alleged promise, a plaintiff cannot recover under promissory estoppel. See id.; Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 226 (Tex. 2002) (the doctrine of promissory estoppel presumes that no contract exists); Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684 (Tex. 2000) (allowing for no recovery under a quasi-contract or unjust enrichment theory where a valid express contract covers the disputed subject matter). Here, because a contract governed the terms under which AIG would pay insurance proceeds to the Investment Trust following Dr. Lombana's death, promissory estoppel does not apply.

"Waiver by custom and estoppel are the same concept." MacIntire, 27 S.W.3d at 89 (quoting Blanton v. John Hancock Mut. Life Ins. Co., 345 F. Supp. 168, 170 (N.D. Tex. 1971), aff'd per curium, 463 F.2d 421 (5th Cir. 1972)). "Waiver is the intentional relinquishment of a right actually known, or intentional conduct inconsistent with claiming that right." Ulico Cas. Co. v. Allied Pilots Ass'n, 262 S.W.3d 773, 778 (Tex. 2008). The elements of waiver are: (1) an existing right, benefit, or advantage held by a party; (2) the party's actual knowledge of its existence; and (3) the party's actual intent to relinquish the right held or intentional conduct that is inconsistent with the right. Id.

Lombana further asserts that she presented "sufficient evidence of an agreement to waive requirements to reinstate other than the payments of the premium" and she entered into an "agreement" with AIG on January 22, 2009 in which she was "reassured . . . that the Policy was still in force, and had no requirements other than payment of the reinstatement premium." In support of her position, Lombana relies on Equitable Life Assurance Society v. Ellis, 147 S.W. 1152 (Tex. 1912). She argues that she should not be held to any additional reinstatement requirements because the parties' "past dealing," along with the January 22, 2009 "agreement," eliminated any other requirements for reinstatement. Lombana asserts that to hold otherwise would be to "attach a condition that the proposal itself did not impose." See Ellis, 147 S.W. at 1157.

In Ellis, after the expiration of the grace period for the policy in question, the insured was involved in active and continuous back-and-forth written negotiations regarding the payment of premiums, changing the premium due dates, and discussing a loan using the policy as security so that the insured could pay the premiums. 147 S.W. at 1155-56. These negotiations were conducted by "a general officer of the company," the "superintendent of its extension and loan department" through the cashier of a local office, who had the requisite authority to so negotiate. Id. at 1153, 1155-56. The court concluded that the fact that the insurer was willing to offer the insured a loan on the policy showed that the insurer believed that the policy possessed value, noting "[i]t is unbelievable that this company would have been offering to make a loan and take as security for it something that it recognized and held to be defunct and void and incapable of possessing any value." Id. at 1156. By acting as if the policy had value, the insurer showed that it "desired to be understood as willing to forego its right of forfeiture and continue the policies in force as security for its loan and as protection upon Ellis' life." Id. at 1157. In other words, the insurer acted as if the policy had "continued validity," and its negotiations with the insured evidenced a waiver of conditions of reinstatement that were contained in the policy itself. Id.
Lombana asserts that AIG waived termination of the Policy, even after the death of Dr. Lombana, noting that in Ellis the insurer had made an offer to the insured to reinstate the policy in question and the offer was still open at the time of his death. Id. at 1158 ("As the question of waiver is to be determined by the company's conduct and not by any failure by Ellis to act in the premises . . . that the transaction was not so completed by Ellis did not relieve its act of its force as an affirmative evidence of waiver, or at least as tending to establish it."). Lombana argues that because AIG never rescinded or withdrew the AIG call representative's January 22, 2009 "agreement" to reinstate the Policy, it was "still operative, despite [Dr. Lombana's] death, for a reasonable period." And she asserts that she raised a fact question as to whether she responded to AIG's waiver of additional requirements in a reasonable fashion based on AIG's failure to update the contact information, AIG's failure to forward the reinstatement forms to the Wirt Road address and fax, and the fact that she was dealing with Dr. Lombana's final illness and death.

Here, however, the express terms of the Policy prohibit the type of "agreement" that Lombana asserts the AIG call representative made with her on January 22, 2009. The Policy expressly states that it "may not be changed, nor any of [AIG's] rights or requirements be waived, except in writing by one of our authorized officers." (Emphasis added.)

Moreover, AIG took no further action after it sent notification of termination of the Policy on June 27, 2008. There were no written communications with Dr. Lombana or with Lombana as trustee for the Investment Trust demonstrating that AIG believed that the Policy had "continued validity" or value. The summary-judgment evidence shows that when Lombana telephoned the AIG call center on January 22, 2009, she was told that she had to "reinstate" the Policy because it had lapsed seven months earlier on April 28, 2008. Lombana presented no evidence that AIG negotiated with her or treated the Policy as if it was still in force after Dr. Lombana had died.

Regardless, AIG could not have waived termination of the Policy after the death of its insured. See MacIntire, 27 S.W.3d at 90. Because the lapsed Policy had terminated when Dr. Lombana died, there was no contract to reinstate. See id.

Lombana further argues that the performance of the condition precedent of payment of premiums was excused because AIG prevented her performance by various actions. However, she presented no evidence that AIG prevented her performance. After her initial request on January 22, 2009 for forms to reinstate the lapsed Policy, she, despite asserting that she never received the forms, made no further request of AIG for the forms. And there is no evidence that AIG did anything to prevent Lombana from paying the Policy premiums to reinstate the Policy before the death of Dr. Lombana. In fact, she did not contact AIG again until after Dr. Lombana's death on April 30, 2009.

Lombana did not present evidence creating a question of material fact regarding her payment of premiums, any excused nonpayment, or waiver or estoppel based on negotiations with AIG demonstrating that AIG recognized the continued validity of the policy. Similarly, Lombana points to no evidence demonstrating that AIG actually in any way prevented her from paying the Policy premiums. Accordingly, we hold that the trial court did not err in granting AIG summary judgment on Lombana's claim for promissory estoppel.

We overrule Lombana's fourth and fifth issues.

SOURCE: HOUSTON COURT OF APPEALS - No. 01-12-00168-CV. - 2/27/2014

In her fourth and fifth issues, Lombana argues that the trial court erred in granting AIG summary judgment on her claim for promissory estoppel because she presented evidence that "AIG made representations to her and remained silent on other matters [AIG] would later claim were necessary for reinstatement of a lapsed policy." Lombana further argues that AIG is estopped and has waived its argument that her non-payment of premiums caused the Policy to terminate because of AIG's "course of dealing of repeatedly sending late payment offers," by accepting her late payment of the Policy premiums in 2010 and keeping the payment for an extended period of time, and by violating the terms of the Policy including its "multiple failures to change the Policy contact information and send the reinstatement forms."