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Click here for the full text of this decision FACTS:Sondra Hayes-Jenkins and her husband, Alvin, purchased a mortgage from NovaStar Mortgage. An escrow account was created, and the Jenkinses were sent at invoice on the 10th of every month for the mortgage and amortized portion of the annual insurance and taxes. Pursuant to an agreement NovaStar had with Monumental Life Insurance Co., NovaStar sent the Jenkinses a brochure letting them know they could sign up for a mortgage insurance policy underwritten by Monumental. The insurance was to pay off amounts owing on the mortgage should one of the parties die. NovaStar was to collect premiums for the insurance as part of its standard invoicing procedure, and then retain a percentage of the premiums before forwarding the remainder to Monumental. An application was included with the brochure, as well as a cover letter. The cover letter explained the policy’s purpose and limits, promising to let the Jenkinses try out the policy for a 30-day risk-free period starting on the day they received their certificate of insurance. The Jenkinses would be able to examine the policy without cost or obligation during this period, return it if not satisfied and owe nothing. The brochure also touted the advantages of the 30-day risk-free period. The brochure also emphasized that the Jenkinses would not have to mail a separate check for their premium to either Monumental or to NovaStar, as the premium would be “conveniently added” to their mortgage payments. The application contained the same assertions and also said that the Jenkinses would be “fully covered” by the insurance policy during the 30-day period while they examined the policy. The Jenkinses filled out the application and returned it to Monumental, which received it on Jan. 17, 2001. Because of the assertion that they need not send a separate check, the Jenkinses did not send additional payment. Nor did they unilaterally add the amount of the insurance premiums to the next invoice they got from NovaStar for the mortgage amount. NovaStar sent an invoice on March 10 for the standard amount. The Jenkinses paid that amount on March 25. In the meantime, Monumental notified the Jenkinses by letter on March 14 that they had been approved for the mortgage life insurance policy. Their policy was to “arrive shortly,” but there was no mention of when a first premium payment was due. Monumental did not notify NovaStar of the Jenkinses’ approval at this time, because of a prior arrangement between the two companies that Monumental would notify NovaStar of new policies on the 9th of each month. Alvin Jenkins died on April 4. On April 5, Sondra received the policy from Monumental, and it said that the policy was effective as of April 1. The cover page of the policy stated that coverage was being provided “[i]n consideration of your application and payment of the first premium.” In reference to the 30-day examination period, another section said that if the Jenkinses were not satisfied, their premium would be refunded. In the “Premiums” section, the policy said that policy required the Jenkinses to pay their first premium “before the Effective Date of Insurance.” Monumental notified NovaStar about the Jenkins’ new policy on April 9. On April 10, NovaStar mailed an invoice for the regular mortgage payment, plus the insurance premiums. Sondra paid this bill on April 26. In May, Sondra filed a claim with Monumental for benefits under the policy. Monumental denied her claim, saying that the insurance wasn’t in effect at the time of Alvin’s death. Monumental stated that, because the first premium had not been paid by either the April 1 effective date or the April 4 date when Alvin died, then the policy was not in effect at the time of Alvin’s death. Monumental filed a declaratory judgment that it did not owe Sondra anything. Sondra answered the petition and filed a counterclaim against Monumental and a cross-claim against NovaStar for breach of the insurance contract and the escrow agreement, negligence, negligent misrepresentation and DTPA violations. The district court granted the summary judgment motions filed by Monumental and NovaStar. HOLDING:Affirmed in part; reversed and remanded in part. The court started by reviewing the summary judgment for Monumental on the breach-of-contract claim. The court found that Sondra created a fact issue as to both estoppel and waiver, so summary judgment was improper. As to the estoppel argument, Sondra provided evidence that she and Alvin reasonably relied to their detriment on the assertions made in the brochure, application, and cover letter sent by NovaStar, as well as on the approval letter sent by Monumental. She said they was particularly swayed by the 30-day risk-free period to look over the policy and were not aware that the coverage would become effective only upon Monumental’s receipt of the first premium payment. The court stated that the language explaining the start of coverage was in fine print. When balanced against the multiple assertions that the 30-day period was risk free, the fine-print disclaimers may not have been sufficient to place an applicant on notice about the relationship between premium payment and coverage. The court further noted that there was no mention of how, when, where or to whom this first premium payment should be made. Additionally, the reference in the acceptance letter that their policy would arrive shortly could have implied that the Jenkinses had done everything it needed to do in order to activate their coverage. “Based on the totality of these writings, any reasonable applicant could justifiably conclude that separately and independently paying the first premium before coverage would become effective was simply not required.” On Sondra’s defense of waiver, the court first found that, to the extent that statements in Monumental’s application form and insurance policy would make prepayment of the first premium a condition precedent to commencement of coverage, that condition was susceptible to waiver. The court then found that “because [Monumental] chose to adopt notification procedures that would not permit the Jenkinses (or anyone similarly situated) to comply with the policy’s requirement that the first premium be paid prior to the date selected by [Monumental] as the effective date of coverage, [Monumental] might well be held to have waived the right to assert that commencement of coverage was barred by the Jenkinses’ failure to pay the first premium before (1) the effective date (which was not communicated to them until April 5, 2001) or (2) Alvin’s death (on April 4, 2001). This too will depend on the results of more complete factfinding.” Turning next to summary judgment for NovaStar on the breach of contract claim, the court noted that it was NovaStar’s decision to ask Monumental for only monthly updates of new insureds, instead of weekly or even daily updates. The court called both companies’ treatment of the notification “cavalier.” Additionally, as Monumental’s agent for the collection of premiums, NovaStar was deemed to know the contents of both the policy and the application and should have known of its obligation to make efforts to collect the first premium. Both of these actions raised a genuine fact issue as to whether NovaStar breached its obligation under the modified escrow agreement (modified because it changed what was going to be due on the invoice once the policy went into effect) to timely collect and bill the Jenkinses. The court also ruled that summary judgment was improper on the alleged DTPA violations, which were based on the allegedly false implication created by the 30-day “risk free” statement. The court found enough evidence to establish that Monumental and NovaStar failed adequately to disclose information concerning the policy (that they knew or should have known was crucial to the potential insured’s decision to apply or not apply for coverage) with the intent of inducing the Jenkinses to purchase the insurance. The court did, however, find that summary judgment for NovaStar was proper on Sondra’s breach of fiduciary duty claim. NovaStar was Monumental’s agent for the solicitation of applications and collection of premiums, but that relationship did not give rise to a fiduciary duty between NovaStar and the Jenkinses. OPINION:Jacques L. Wiener Jr., J.; Jones, Wiener and Prado, JJ. CONCURRENCE AND DISSENT:Edith H. Jones, Circuit Judge. “In occasionally caustic terms, the majority overturns the district court’s grant of summary judgment and reverses for trial on multiple causes of action. Unlike the majority, I do not find in the circumstances of this case an occasion for condemning the defendants’ practices so much as for sorting out the confusion that existed between the defendants’ handling of mortgage life insurance applications and the provisions specifying when and how the necessary first premium payments would be made.” Judge Jones would uphold summary judgment the DTPA claims and rule that the estoppel theory would not apply. She agreed with the court’s decision regarding the waiver theory in the Monumental breach of contract claim and the breach of contract claim against NovaStar.

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