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Click here for the full text of this decision FACTS:Billy “Rex” Turner bought two group policies from Philadelphia American Life Insurance Co. (PALIC) in 1999. One was a major medical expense certificate of insurance policy, nicknamed the 55P policy. The other was a hospital medical-surgical expense certificate policy, nicknamed the 70P policy. PALIC sold both of these policies in at least 18 states, including Texas. Turner’s 55P policy included a page listing the types of fees Turner was to pay. It listed the $173.16 monthly premium, which was to be automatically deducted from Turner’s bank account. The policy also included a certificate of coverage and a schedule of benefits, which again included the premium amount. The certificate included a non-renewal provision, too, which stated that PALIC could terminate the policy only upon 90 days written notice if another PALIC policy option was offered, or upon 180 days written notice if all policies in the state were being discontinued. The policy contained two conversion options (one with the same coverage, one with less), and one continuation option. On Dec. 31, 2001, PALIC sent all Texas 55P holders a notice terminating the group policy effective no earlier than April 5, 2002. PALIC offered further coverage with the only other plan being offered in Texas at the time, which had very small coverage amounts, and encouraged policy holders to get more comprehensive coverage through another carrier. Turner filed a class action suit on March 5, 2002, on behalf of himself and all other 55P and 70P policyholders in the country, alleging that PALIC had breached both contracts by charging an unauthorized monthly administration fee. The $7.50 fee was apparently included within the premium. Turner also alleged that the attempted cancellation of the 55P policy was also in breach. First, PALIC was required to give 180-day notice, not 90-day, of the cancellation because PALIC wasn’t offering alternative coverage. Second, the conversion policy that was offered as a replacement offer was substantially inferior. Six days after Turner filed his suit, on March 11, PALIC sent out another letter to Texas 55P policyholders offering an additional plan. The trial court entered an injunction prohibiting PALIC from canceling all 55P plans for six months. The Texas Department of Insurance later granted PALIC’s application to withdraw from writing association coverage in the state. On July 1, 2002, a few days after the TDI’s approval of the withdrawal plan, PALIC sent another letter to Texas 55P policyholders announcing its exit from the state. All coverage would be terminated as of Jan. 1, 2003. The letter offered three conversion policies. The trial court certified two classes to proceed against PALIC: the Administrative Fee Class, and the First Improper Cancellation Class. The sole issue in the latter class was the recovery of attorneys’ fees; the sole common issue of fact was what constituted a reasonable and necessary attorney fee. PALIC appealed. HOLDING:Reversed and remanded. The court sets out the four elements necessary to meet the threshold requirement for class certification under T.R.Civ.P. 42(a): 1. numerosity; 2. commonality; 3. typicality; and 4. adequacy of representation. The court also notes that under Rule 42(b), class actions must satisfy at least one of four additional criteria, and one of two that the trial court used in this case was Rule 42(b)(4), which mandates that a court must find “that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” This is the most stringent of the four additional criteria, the court notes. The second criteria the court applied was Rule 42(b)(2), which requires proof that a defendant has acted on grounds generally applicable to the class in a manner that makes final injunctive of declaratory relief appropriate with respect to the class as a whole. The court turns to examine the Administrative Fee Class, specifically whether the class met the typicality and adequacy of representation elements of Rule 42(a), and the predominance and superiority elements of Rule 42(b)(4). The court explains that in its trial plan, the trial court anticipated a two-step process in determining whether PALIC breached its contract regarding administrative fees. First, the court will decide on competing summary judgment motions whether the contract’s terms do anticipate the assessment of an administrative fee. Then, if PALIC’s interpretation of the contract is correct, a judgment will be rendered that Turner and the class take nothing; if Turner’s interpretation is correct, the trial court will then have to decide whether the administrative fee is simply a premium. The court notes that Turner does not dispute that the contract allows PALIC to charge a premium; Turner only argues that the fee is not a premium, which is a fact issue that would have to be decided by a jury. The trial court’s acknowledgement that there may be some ambiguity in the contract necessitates an analysis on how that ambiguity impacts the class certification. The court adds that the trial court was free to determine on its own accord whether the contract was ambiguous; it did not have to rely on the parties’ assertions. The court also finds the trial court’s plan unnecessary: “If the contract is unambiguous and there is a certain or definite legal meaning for the term ‘premium,’ the trial court should construe the contract as a matter of law. If, on the other hand, the contract is ambiguous, the issue becomes a fact question for the jury and the trial court should allow the parties to present parol evidence of their intentions.” Furthermore, the trial court will need to determine whether there is a definite legal meaning or interpretation for the word “premium” if it is to properly analyze whether the policy was ambiguous. Keeping in mind the absence of any “meaningful” analysis of the contract’s ambiguity, the court then turns to whether Turner’s injury is typical of other class members’ injuries. PALIC says parol evidence will reveal that Turner’s claim is based on his subjective intent; Turner says parol evidence should only be used to contradict the express terms of the agreement. Turner’s argument only has merit if the policy is unambiguous, the court holds. “If the contract is ambiguous, we are faced with a record reflecting that [Turner] did not introduce evidence, and the trial court made no finding, that the class uniformly believed that the administrative fee only applied to the first month or that the fee was uniformly misrepresented by [PALIC's] agents either at the time of the application or at the time the insureds received the schedule of benefits stating the total amount of premium. In that event, the typicality requirement of Rule 42(a) was not established. On the other hand, if the contract is worded so that it can be given a certain or definite legal meaning, and is therefore unambiguous, the trial court should construe the contract as a matter of law.” Anyway, Turner failed to establish that his contract is typical of all 55P and 70P policies issued in the four years preceding the suit. An expert called by PALIC indicated that the application forms for each policy differed over the years from state to state. The court reiterates that the trial court must interpret each application form to determine if they are ambiguous or unambiguous. Without this analysis, there is nothing to support the class in terms of typicality of claims. The court finds, however, that the trial court rightly found Turner would adequate represent the class, owing to his understanding of the class’ scope, the damages being sought and the fee arrangement made with counsel. As for the predominance element of Rule 42(b)(4), the court finds that “because the ambiguity issue essentially turns on the definition of ‘premium,’ the predominance requirement is inadequate without a choice-of-law analysis on whether each state permits an insurance company to charge a premium that includes a component that is treated internally as an administrative fee.” Though the trial court applied Texas law because of PALIC’s location, the court points out that Texas does not automatically apply the law of the state where the defendant is headquartered. Maybe Texas law will apply, but Turner did not establish that it should apply to the issues that will predominate the litigation. Superiority under Rule 42(b)(4) means that a class action would be more fair and efficient than other means of settling the dispute. The sole factor found in support of the superiority element by the trial court was the small economic value to the class members and that the class members might not bring individual claims to recoup such a small amount. The court disagrees that this is enough to meet the superiority element, noting that the class action is not a vehicle to make sure that no claim goes untried. The court concludes that the Administrative Fee Class does not meet the typicality, predominance and superiority elements of class certification. Turning to the Cancellation Class, the court agrees that the class fails to meet the commonality, typicality and adequacy of representation elements of Rule 42(a) and the predominance element of Rule 42(b)(4). Most notably, the court finds Turner would not be an adequate representative since the temporary injunction he already got would affect class members differently, since some had already cancelled their policies by that time. Noting that such speculative affect has been viewed differently by other courts, and that trial courts have broad discretion, the court nonetheless finds that the Texas Supreme Court has indicated that that discretion should be narrowed in class-certification circumstances, and Turner has not established his adequacy as a representative. OPINION:Holman, J.; Dauphinot, Holman and McCoy, JJ.

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