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Insurance Law No. 06-02-00097-CV, 5/29/2003. Click here for the full text of this decision FACTS: Ranger Insurance Co. appeals the trial court’s judgment regarding the enforceability of a purported release between Ranger and its insured. The appellees, John Ward, et al., are injured third-party landowners. On competing motions for summary judgment, the trial court determined the policy in effect at the time of the loss in 1991 remained in effect despite the insurer’s and insured’s attempt to retroactively cancel the policy in 1996. HOLDING: Affirmed. The court holds that the statutory and contractual notice provisions at issue do not represent conditions precedent to cancellation of the compulsory insurance policy. The court affirms the trial court’s judgment that the parties’ retroactive release after notice of loss is void as contrary to public policy, and maintains the trial court’s determination that the insurance policy that was in effect at the time of loss remains in full effect. Here, Texas Agricultural Code �76.111 provides that, when the party fails to give the requisite notice, the liability of the insurer is limited to the face amount of the insurance policy. From this language, it is apparent the drafters intended the insurer to remain liable only to a limited extent if its failure was simply that of notice to the Texas Department of Agriculture. From this limitation, it necessarily follows that the Legislature did not intend the policy to remain in full effect as a result of failure to give notice. Ranger argues it complied with the statutorily imposed liability by paying Thompson $100,000 in consideration for the Release of Ranger’s obligation. Contrary to Ranger’s position, the statute was intended to have the insurance protect an injured third party rather than just its insured. The statutory announcement of the intended policy goal is quite clear. Ranger reads the statute to allow it to remain in compliance by paying its insured the policy limits in exchange for a release. The court does not. From the unambiguous language in the statute, the release cannot act as a complete bar to recovery as Ranger contends, nor as a condition precedent to a cancellation. Ranger remains liable in spite of its actions. The statute, however, also makes clear that the extent of the insurer’s liability will not exceed the policy amount, a limitation that relieves an insurer of other duties of an insurer under a policy that is in full effect. A policy that remains in full force carries various duties, such as an insurer’s duty to defend and its duty as set out by the Stowersdoctrine, each duty having the capacity to cause an insurer’s liability to exceed the dollar amount of the policy. The statute does not reflect legislative intent to continue these duties under a policy, unlike the statutory provision in Trinity Universal Ins. Co. v. Fid. & Cas. Co., 837 S.W.2d 202 (Tex. App. – Dallas 1992, no writ), which stated “the coverage shall remain in effect” until proper notice is given. So, a cancellation without compliance with the notice requirements of this former code provision might have been partially effective had the cancellation otherwise been an enforceable agreement. Presumably, the Legislature balanced competing interests by maintaining the minimum amount of liability insurance to give effect to the statute’s policy goal while still offering limited protection to an insurer who simply failed to meet the notice requirement. The notice requirement in the statute at issue does not act as a condition precedent, the failure of which could render entirely void any change or cancellation of a policy. Ranger does not, however, point to authority to support its proposition that two parties can agree to cancel a policy after notice of a loss covered by the policy and thereby release its legal obligations in a manner inconsistent with the intent of the law requiring that insurance. The cases that delineate the rule on which Ranger relies can be easily distinguished from the facts at hand. The public policy goal, as expressed in the former �75.014 in the instant case, is obvious: “protecting persons who may suffer damages as a result of the operations of the applicant.” �76.111(a)(2). While the court recognizes that enforcing a release can serve a policy goal by promoting freedom of contract and voluntary settlements of disputes, the danger in enforcing the release far outweighs the policy considerations in enforcing it. Ranger’s and Thompson’s attempt to circumvent the intent of the required insurance clearly violates public policy. The insurer and insured would benefit from this attempted manipulation of time, but the injured parties would “suffer adverse effects,” losing even the statutory minimum protection to the scheming of Ranger and Thompson. Such an attempt to avoid legally imposed duties and to undermine the intent of the laws of the state violates public policy. OPINION: Morriss, C.J.; Morriss, C.J., Ross and Carter, JJ.

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