Delivery of Policy Starts the Running of the Statute of Limitations
Wooten purchased seven Northwestern Mutual insurance policies. Three are
disability income policies. Four are various whole-life policies.
Wooten purchased and reviewed the last of the policies in December 2005.
He sued claiming he was deceived about what he bought ten years before
the suit.
In Wrenn Wooten v. The Northwestern Mutual Life Insurance Company,
Jimzara, And Patrick Matthews, No. 05-20-00798-CV, Court of Appeals of
Texas, Fifth District, Dallas (July 31, 2023) the Court of Appeals
resolved Wooten's complaint that the trial court's grant of summary
judgments in favor of appelees, was wrong.
BACKGROUND
On April 17, 2018 Wooten sued. He alleged he was sold policies based on
misrepresentations on coverage and benefits, wrongfully advised him, and
concealed misrepresentations.
Wooten bought the disability policies to provide income if he became He
alleged a waiver-of-premium term would have allowed him to receive
disability income without paying premiums. Wooten has not filed a
disability claim under the policies.
The suit alleged claims for fraud, negligent misrepresentation, breach
of fiduciary duty, and violations of the Texas Insurance Code and the
Texas Deceptive Trade Practices-Consumer Protection Act (DTPA).
Wooten alleged he did not discover the injury "and/or" misconduct that
forms the basis of this lawsuit until within two years of his filing the
lawsuit. The trial court granted Northwestern Mutual's traditional
motion for summary judgment.
STATUTE OF LIMITATIONS
Wooten alleged causes of action with two- and four-year periods of
limitation. The statute of limitations for Wooten's claims for negligent
misrepresentation and for violation of the Texas Insurance Code and the
DTPA is two years.
The court concluded that the appellees carried their summary judgment
burden of conclusively proving Wooten's claims for violations of the
Insurance Code and DTPA, negligent misrepresentation, and fraud accrued
at the time Wooten purchased each policy.
Much to the surprise of Mr. Wooten and most insureds, an insured has a
duty to read the policy, and failing to do so, is charged with knowledge
of the policy's terms and conditions.
Appellees conclusively demonstrated Wooten purchased his last
Northwestern Mutual policy in December 2005. The longest applicable
statute of limitations for his claims on that policy-and all his
policies-is four years.
The Discovery Rule
Even in a breach of fiduciary duty case where a fiduciary's misconduct
is inherently undiscoverable, a breach of fiduciary duty claim accrues
when the claimant knows or in the exercise of ordinary diligence should
know of the wrongful act and resulting injury. The Court of Appeals
concluded that by 2005, at the latest, Wooten knew, or exercising
reasonable diligence, should have known of the facts giving rise to the
cause of action.
An insurance agent has no duty to explain policy terms to an insured.
Instead, an insured has a duty to read the policy, and failing to do so,
is charged with knowledge of the policy terms and conditions.
Therefore, appellees carried their summary judgment burden to
conclusively prove Wooten's last claim accrued in December 2005 and to
negate applicability of the common-law discovery rule to his common-law
claims of fraud, negligent misrepresentation, and breach of fiduciary
duty.
ZALMA OPINION
An insured has a duty to read a policy to confirm that it received the
coverage the sales person represented. Although Wooten was neither dead or disabled, he sought damages against the insurer and sales persons
when, ten years late, he found the policies did not cover the events he
was promised. He sat on his rights well past the running of every
applicable statute of limitations.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
