Opinion
Civil Action No. 3: 03-CV-0007-B.
October 26, 2004
MEMORANDUM ORDER
Before the Court are Plaintiff JD Aircraft Sales L.L.C.'s ("JD") Motion for Partial Summary Judgment and Defendants Continental Insurance Company, Federal Insurance Company, Associated Aviation Underwriters, Inc., and Global Aerospace Underwriting Managers Limited's ("Defendants") Motion for Summary Judgment. Both motions were filed August 2, 2004. Having reviewed the pleadings and evidence on file, the Court DENIES JD's motion in its entirety, GRANTS Defendants' motion in part, and DENIES Defendants' motion in part, for the reasons that follow.
I. Factual and Procedural Background
The facts are derived from the parties' pleadings and on the evidence contained in the summary judgment record. Unless characterized as a contention by one of the parties, these facts are undisputed.
A. JD Purchases an Airplane and Lists it on an Insurance Policy with Defendants
JD is a Washington limited liability company that buys and sells airplanes. (Pl.'s App. 3; Pl.'s 1st Am. Compl. ¶ 1). Doug Watts, JD's managing member, formed the company in Fall 2000. (Pl.'s App. 2). On March 22, 2001, JD purchased a 1976 Beechcraft C-90 King Air plane (the "Plane") from Piedmont. (Pl.'s App. 5; Defs.' App. 6). In March 2001, JD also purchased an insurance policy (the "JD Policy") from Defendants. (Defs.' App. 57, 355). The Policy provided coverage from March 8, 2001 through March 8, 2002 for airplanes listed on an attached schedule. (Defs.' App. 57-83, 355). On March 29, 2001, the Plane was scheduled on the Policy for a value of $400,000. (Defs.' App. 5-6, 356).
The Policy contains the following provision:
5. CERTIFICATION AND OWNERSHIP. The Named Insured represents that . . . the Named Insured is and will remain the sole and unconditional owner of [the aircraft listed in the schedule].
(Defs.' App. 57) (emphasis in original). The Policy also contains an exclusion denying coverage for loss to any aircraft of which JD was not the sole and unconditional owner at the time of the loss unless the Policy was endorsed to acknowledge some other person or entity's interest. (Defs.' App. 62).
B. JD Enters into a Sales Contract for the Plane with Reynolds Baldwin
In or around August 2001, George Reynolds and Peter Baldwin, on behalf of their respective companies, Reynolds Texas Properties, L.C. and Baldwin Properties, Inc. (collectively, "Reynolds Baldwin"), began negotiating with JD for the purchase of the Plane. (Defs.' App. 7, 153; Pl.'s 1st Am. Compl. ¶ 11). In September 2001, JD and Reynolds Baldwin entered into a written purchase agreement (the "Sales Contract") for the sale of the Plane from JD to Reynolds Baldwin. (Pl.'s App. 115). The Sales Contract included, among others, the following terms and conditions of sale:
• a satisfactory pre-purchase inspection would be completed;
• the Plane would be in compliance with all airworthiness directives and mandatory service bulletins;
• all log books and records would be in proper order;
• the Plane would be delivered free of all liens;
• a final acceptance flight check would be completed prior to closing;
• Reynolds Baldwin would pay a purchase price of $555,000.00;
• Reynolds Baldwin would place a $10,000.00 deposit in escrow upon the acceptance of the offer to purchase, the balance of the purchase price to be paid at closing.
(Defs.' App. 84). Watts, on behalf of JD, and Reynold and Baldwin, on behalf of their respective companies, all signed the Sales Contract, and Reynolds Baldwin placed $10,000 in escrow on September 18, 2001 as a down payment. (Defs.' App. 84, 151, 202).
All inspections on the Plane were completed. (Defs.' App. 13-14, 28, 178; Pl.'s 1st Am. Compl. ¶ 13). The Plane needed some minor repair work, for which Reynolds Baldwin agreed to assume responsibility in return for a $10,000 reduction of the purchase price. (Defs.' App. 158-60, 166-67, 185). The Plane's log books were tendered and in order, and the Plane complied with the necessary airworthiness directives and service bulletins. (Defs.' App. 12-15, 155, 263).
With respect to the final acceptance flight check, JD contends that both of the Reynolds Baldwin principals, George Reynolds and Peter Baldwin, were to perform a flight check, while Defendants argue that the Sales Contract contemplated that only one final flight check would be completed. On October 7, 2001, George Reynolds had the Plane flown to Rockport, Texas for an acceptance flight. (Defs.' App. 17, 164). From Rockport, Reynolds and Wayne Tillet (JD's sales agent) flew in the Plane to Meacham Airport in Fort Worth, Texas. (Defs.' App. 163-65, 280-81). There, Tillet deplaned and Reynolds had the Plane flown to Dallas Love Field. (Defs.' App. 164, 281). Reynolds was satisfied with the Plane's performance. (Defs.' App. 163, 178). Reynolds Baldwin and JD agreed that the purchase price would be wired to the escrow agent on the next banking day. (Defs.' App. 27-29, 168-69, 174-75, 210). Because October 7, 2001 — the day Reynolds conducted his acceptance flight — was a Sunday, and because Monday October 8 was Columbus Day, the next banking day was Tuesday, October 9. (Pl.'s 1st Am. Compl. ¶ 12).
On October 9, 2001, Peter Baldwin and some guests flew in the Plane to his home in Taos, New Mexico. (Defs.' App. 243-44). He had hired Michael Short, a pilot for Southern Direct Air, L.L.C. ("Southern Direct"), to fly the Plane. (Defs.' App. 297). Prior to his flight on the morning of October 9, Baldwin gave instructions to wire his share of the purchase price for the Plane to the escrow agent, and those instructions were completed on October 9. (Defs.' App. 29-30, 35, 176-77, 362). Reynolds wired his share of the purchase price to the escrow company that same day. (Defs.' App. 29-30, 35, 176-77, 362). Douglas Watts had also signed a blank bill of sale which was delivered to the escrow agent. (Pl.'s Ap. 22-23; Defs.' App. 362, 365).
C. The Plane Crashes
After flying Baldwin and his guests to New Mexico on October 9, 2001, Short immediately flew back to Dallas Love Field. (Pl.'s App. 104). Unfortunately, the Plane crashed (the "crash") in a residential alley on approach to the airfield in Dallas. (Pl.'s 1st Am. Compl. ¶ 15). Short suffered multiple, though non-fatal, injuries, and the Plane was rendered a total loss. (Pl.'s 1st Am. Compl. ¶ 16). Damage was also sustained to residences and other property in the area. (Farmers's Plea Intervention ¶ 3). Plaintiff-Intervenor Texas Farmers Insurance Company ("Farmers") paid claims of property damage to the homeowners whose houses were damaged and is subrogated to those homeowners' rights. (Farmers's Plea Intervention ¶ 4).
Upon learning of the crash, Reynolds immediately instructed the escrow agent to withhold the funds from release to JD. (Defs.' App. 181-84, 211; Pl.'s 1st Am. Compl. ¶ 18). JD, in turn, promptly notified Defendants, on December 14, 2001, about the crash and made a claim for the value of the Plane. (Pl.'s 1st Am. Compl. ¶ 19). Defendants denied the claim on October 15, 2002, asserting that JD was not the sole and unconditional owner of the Plane at the time of the crash, as required for coverage under the Policy. (Pl.'s 1st Am. Compl. ¶ 20; Pl.'s App. 166, 173).
D. JD Brings Suit Against Reynolds Baldwin for Breach of Contract
JD then sought to obtain the purchase price from Reynolds Baldwin, asserting that the sale of the Plane had been completed before the crash and that Reynolds Baldwin was responsible for the loss. (Defs.' App. 90). In a demand letter to Reynolds Baldwin, for example, JD maintained that Reynolds Baldwin had "accepted the aircraft at the end of the `acceptance' flight on October 7th"; "took possession through their agent"; "tendered the balance of the purchase price without condition"; and "signed a certificate of October 8th that they were the owners of the aircraft." (Defs.' App. 92-93). In early 2002, JD filed suit against Reynolds Baldwin in Texas state court (the "Reynolds Baldwin litigation") for breach of contract, alleging that a sale had been consummated before the crash and that JD was entitled to recover the funds held in escrow for the purchase of the Plane. (Defs.' App. 95-103). In Fall 2002, JD and Reynolds Baldwin settled the litigation between them by agreeing to split the funds held in escrow (adjusted for JD's receipt of the salvage value of the Plane) and to share in any recovery against Defendants. (Defs.' App. 46-48, 124-36, 190-93).
E. The Southern Direct Policy
Southern Direct, the company hired by Reynolds Baldwin to pilot the Plane and to perform various other services, purchased a policy of insurance (the "Southern Direct Policy") from Defendants, effective from July 9, 2001 through July 9, 2002. (Defs.' App. 300, 357; Pl.'s App. 52, 95, 111). The Southern Direct Policy provides coverage for aircraft owned or "newly-acquired" by Southern Direct. (Defs.' App. 302-03, 357). It also provides liability coverage for damage to the property of others resulting from Southern Direct's operation of certain non-owned aircraft; however, aircraft that are "the subject of a lease or service agreement with [Southern Direct] for a period of thirty (30) days or more" are excluded by the policy. (Defs.' App. 304, 357). The Southern Direct Policy further excludes liability coverage for "injury to or destruction of property owned, rented, occupied or used by, or in the care, custody or control of the Insured or a Named Insured. . . ." (Defs.' App. 306, 357).
Prior to the crash, Michael Short, on behalf of Southern Direct, and Reynolds Baldwin negotiated the terms of a Management Agreement whereby Southern Direct would furnish various services with respect to the Plane. (Defs.' App. 194-96, 254, 272, 282-84, 345-53). Short and Reynolds executed a written agreement on October 8, 2001, the day before the crash. (Defs.' App. 197, 225-31). Baldwin did not sign the agreement. (Defs.' App. 225-31). As mentioned above, Short flew Baldwin and several of his guests to Taos, New Mexico in the Plane on October 9, 2001 and flew back solo to Dallas that same day. (Defs.' App. 179-80, 259-60, 285-86, 289, 294). Short was flying on behalf of Southern Direct and pursuant to the Management Agreement. (Defs.' App. 279, 294).
Southern Direct made a claim under the Southern Direct Policy for damage done to the Plane, to certain residences damaged as a result of the crash, and for personal injuries sustained by Short. (Pl.'s 1st Am. Compl. ¶ 22). After investigation, Defendants determined that the Southern Direct Policy did not afford coverage. (Defs.' App. 358). Farmers, as subrogee to the homeowners whose residences were damaged, filed suit against Short and Southern Direct. (Defs.' App. 293, 358). JD also sued Southern Direct for negligence to recover property damage to the Plane. (Defs.' Mot. 15). JD and Farmers eventually obtained judgments on their claims against Southern Direct, and Southern Direct subsequently assigned its rights under the Southern Direct Policy to JD and Farmers. (Pl.'s 1st Am. Compl. ¶ 24; Farmers's Plea in Intervention ¶¶ 8-9).
F. Procedural History
JD brought suit against Defendants Continental Insurance Company and Federal Insurance Company in Texas state court on August 30, 2002. (Defs.' Notice Removal, Ex. 1). Defendants removed the case on grounds of diversity on January 2, 2003. JD alleges that Defendants breached both the JD and Southern Direct policies. JD also brings claims for unjust enrichment, violations of the Texas Insurance Code and the Texas Deceptive Trade Practices Act, and for common law bad faith. Farmers intervened in this action on March 4, 2004. Like JD, Farmers brings declaratory judgment and breach of contract claims against Defendants arising out of Defendants' obligations under the Southern Direct Policy. Farmers also brings common law bad faith and statutory claims under the Texas Insurance Code and the DTPA. Defendants, in turn, have asserted counterclaims against both JD and Farmers to recover their attorney's fees, claiming that JD and Farmers's Insurance Code and DTPA claims are groundless and brought in bad faith.
Both JD and Defendants have moved for summary judgment. Defendants seek summary judgment on all claims brought against them by JD and Farmers. JD requests that the Court find that JD and Southern Direct fulfilled their obligations under the insurance policies at issue, while Defendants breached their contractual obligations. Though Farmers did not formally join in JD's motion, Farmers claims to have done so in JD and Farmers's joint response to Defendants' motion. The motions are now ripe for review and determination.
II. Analysis
A. Legal Standard
Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is appropriate when the pleadings and record evidence show that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). "[T]he substantive law will identify which facts are material." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Only disputes about material facts will preclude the granting of summary judgment. Id.
The burden is on the summary judgment movant to prove that no genuine issue of material fact exists. Latimer v. Smithkline French Lab., 919 F.2d 301, 303 (5th Cir. 1990). If the non-movant bears the burden of proof at trial, the summary judgment movant need not support its motion with evidence negating the non-movant's case. Rather, the movant may satisfy its burden by pointing to the absence of evidence to support the non-movant's case. Id.; Little, 37 F.3d at 1075.
Once the movant has met its burden, the non-movant must show that summary judgment is not appropriate. Little, 37 F.3d at 1075 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986)). "This burden is not satisfied with `some metaphysical doubt as to material facts,' . . . by `conclusory allegations,' . . . by `unsubstantiated assertions,' or by only a `scintilla' of evidence." Id. (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). The non-moving party must "come forward with `specific facts showing that there is a genuine issue for trial.'" Matsushita, 475 U.S. at 587 (emphasis in original) (quoting FED. R. CIV. P. 56(e)). To determine whether a genuine issue exists for trial, the court must view all of the evidence in the light most favorable to the non-movant, and the evidence must be sufficient such that a reasonable jury could return a verdict for the non-movant. Munoz v. Orr, 200 F.3d 291, 302 (5th Cir. 2000); Anderson, 477 U.S. at 248.
B. Choice of Law
JD argues that the Court should apply Texas, as opposed to Washington, law because it has the most significant relationship to the substantive issues raised in JD's complaint. JD also argues that the resolution of the issues presented in its motion would be the same regardless of whether Texas or Washington law applies. In its motion for partial summary judgment, JD relies primarily on Texas law. Defendants rely almost exclusively on Texas law in their motion and cite no Washington authority. In their response to Plaintiff's motion, Defendants concede that there is no significant difference between Texas and Washington law concerning relevant provisions of the Uniform Commercial Code and what constitutes an "insurable interest," but Defendants "reserve[d] the right" to argue the applicability of Washington law to other legal issues that might be involved in this case.
Presumably Washington is the alternative forum because JD is a Washington limited liability company and negotiated the JD Policy with Defendants from Washington. (Pl.'s Mot. 11-12).
A party has "an obligation to call the applicability of another state's law to the court's attention in time to be properly considered." Kucel v. Walter E. Heller Co., 813 F.2d 67, 74 (5th Cir. 1987). Nevertheless, a court may determine the choice-of-law issue on its own motion where manifest justice would otherwise result. Am. Int'l Trading Corp. v. Petroleos Mexicanos, 835 F.2d 536, 540 (5th Cir. 1987). Manifest injustice exists only in extreme circumstances, however, and requires more than a mere showing that the application of another state's law would produce a different result. Id. Because the parties appear to agree that Texas law should apply, and because there is no showing that manifest injustice would otherwise result, the Court will apply Texas law to the issues presented in the parties' summary judgment papers. See Roth v. Mims, 298 B.R. 272, 284 (N.D. Tex. 2003) ("Because the choice of law issue was not raised below, the issue was waived, and the court finds no manifest injustice in refusing to decide the issue on appeal.") (emphasis omitted).
C. JD's Declaratory Judgment/Breach of Contract Claims under the JD Policy
(i) Sole and Unconditional Ownership
In its motion for partial summary judgment, JD contends that it had an insurable interest in the Plane, which is a requirement for insurance coverage under Texas law. Gulf Ins. Co. v. Winn, 545 S.W.2d 526, 527 (Tex.Civ.App.-San Antonio 1976, writ ref'd n.r.e.). But an insurable interest, alone, will not entitle JD to recover because the Policy at issue required sole and unconditional ownership. Old Reliable Fire Ins. Co. v. Alduro-Raynes Arabians, Inc., 717 S.W.2d 124, 127 (Tex.App. — Houston [14th Dist.] 1986, writ ref'd n.r.e.) (finding that sole ownership was condition precedent to policy's validity despite insured's contention that it had an insurable interest in the subject matter of the policy).
In construing "sole and unconditional ownership" clauses, Texas courts have defined "sole" as meaning that "no one else has any interest in the property as owner," and "unconditional" as meaning "that the quality of the estate is not limited or affected by any condition." Am. Eagle Ins. Co. v. Lemons, 722 S.W.2d 229, 232 (Tex.App.-Amarillo 1986, no writ); Hicksbaugh Lumber Co. v. Fid. Cas. Co. of New York, 177 S.W.2d 802, 804 (Tex.Civ.App.-Galveston 1944, no writ). The ownership determination is a conclusion of law based on established facts. Foust v. Old Am. County Mut. Fire Ins. Co., 977 S.W.2d 783, 787 (Tex.App.-Fort Worth 1998, no writ). But where the facts surrounding the transaction are contested, the factual issue may be submitted to a jury while the court resolves the legal question. Smith v. Allstate Ins. Co., 467 F.2d 104, 106 (5th Cir. 1972).
JD contends that it was the sole and unconditional owner of the Plane because of "two main factors": 1) a bill of sale was never executed or delivered; and 2) consideration never exchanged. Each of these contentions will be addressed in turn.
First, JD's argument that ownership had not transferred because the bill of sale for the Plane was neither executed nor delivered is unfounded in law. The law in Texas is clear that the delivery of a bill of sale is not a condition precedent for the transfer of ownership, or the transfer of an ownership interest, to be effected. See Roach v. Dickenson, 50 S.W.3d 709, 713 (Tex.App.-Eastland 2001, no pet.) (delivery of bill of sale not necessary for buyer to purchase or own plane); Borger v. Morrow, 87 S.W.2d 758, 759 (Tex.Civ.App.-Amarillo 1935, no writ).
Furthermore, under the Uniform Commercial Code, title to goods is determined, not by the passage of paper (i.e. a document of title) but rather by the seller's actual physical delivery of the goods. TEX. BUS. COMM. CODE ANN. § 2.401(b). See Hudson Buick, Pontiac, GMC Truck Company v. Gooch, 7 S.W.3d 191 (Tex.App. — Tyler 2000, pet. denied) ("Under the Code, title to goods passes to the buyer when the seller completes physical delivery of the goods, even if a document of title is to be delivered at different time and place."). In Fidelity Casualty Co. of New York v. Jefferies, a seller-insured executed a contract for the sale of a business along with various of the business's assets. 545 S.W.2d 881 (Tex.Civ.App.-Tyler 1977, writ ref'd n.r.e.). Part of the purchase price was paid in cash with the remainder to be deferred with interest. Id. at 883. The contract of sale provided that title and ownership of the property did not pass until the note given as consideration for the business was paid. Id. Over two months after the buyer went into possession of the property and began operating the business, the business and its contents burned. Id. at 883-84. At the time of the fire, none of the deferred payments had been made. Id. at 883. The sellers sued their insurance companies to recover the loss, asserting as a matter of law that there had been no change in ownership, relying on section 2.401(b) of the U.C.C. Id. at 885. The court held that, notwithstanding the contractual provision stating that title and ownership of the property would not pass until the buyer paid the note, the seller had completed its performance of the contract when it delivered possession of the property. Id. The court found that the indicated provision of the sales contract did not establish as a matter of law that no change in ownership of the property had occurred. Id.
Section 2.401(b) of the U.C.C. provides:
Unless otherwise explicitly agreed title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods, despite any reservation of a security interest and even though a document of title is to be delivered at a different time and place; . . .
TEX. BUS. COMM. CODE ANN. § 2.401(b).
Second, consideration need not exchange before an ownership interest may transfer. For example, in Hudson Buick, the court determined as a legal matter that ownership had transferred from a seller to a buyer despite the apparent lack of payment. 7 S.W.3d 191 (Tex.App.-Tyler 2000, pet. denied). Shirley, the buyer, informed Newton, Hudson Buick's President, that he was interested in purchasing four cars. Id. at 193-94. After negotiations, Shirley and Newton settled on a package price and signed a contract of sale for each car. Id. at 194. Although Shirley was short on cash at the time of purchase and the banks were closed, Newton knew Shirley and his family and agreed to give Shirley possession of the cars and to receive payment the next day, with the certificates of title to be transferred after Newton had received payment. Id. at 194. While driving one of the cars and before making payment, Shirley was involved in an accident. Id. at 194. The court found as a matter of law that Hudson Buick was not the owner of the car at the time of the accident. Id. at 198.
Texas courts have also found that a conditional sale of personal property, together with delivery of possession, may constitute a change of interest within the meaning of insurance policy exclusion clauses, even where no payment is made before the loss. In Phillips v. Providence Washington Insurance Company, the policy at issue excluded insurance coverage on a car if it had been sold under a conditional sale. 298 S.W.2d 181 (Tex.Civ.App.-Fort Worth 1957, no writ). The seller-insured delivered the car to the purchaser's agent and instructed the agent to forward a draft in the amount of the agreed upon purchase price to the purchaser for payment. Id. at 181. Title papers to the car were to be delivered to the purchaser only on payment of the draft. Id. While the agent was en route to the purchaser's place of business, the car was damaged in a collision. Id. The purchaser refused to pay the draft because of the damage done to the car. Id. The court found that the transaction between the buyer and seller constituted a conditional sale falling within the exclusion of the policy voiding coverage upon the occurrence of a conditional sale. Id.
Defendants primarily rely on Hicksbaugh Lumber Co. v. Fidelity Casualty Co. of New York to support their position that JD was not the sole and unconditional owner of the Plane at the time of the crash. 177 S.W.2d 802 (Tex.Civ.App.-Galveston 1944, no writ). The insurance policy at issue in Hicksbaugh contained a sole and unconditional ownership clause. Id. at 802-03. The seller-insured entered into a contract to sell its truck and trailer. Id. at 803. The buyer paid $1000 and executed a promissory note for the balance of the purchase price to be paid in 30 days. Id. The equipment was then delivered to the buyer, but no certificate of title was transferred. Id. Five days after receiving possession, the equipment was damaged in a collision. Id. The court held that the buyer "had unquestionably paid for and acquired some interest in" the property and that the seller-insured was not the sole owner of the equipment at the time of the loss. Id. at 804.
The case of Borger v. Morrow, also relied on by Defendants, further illustrates that complete payment need not be made for an ownership interest to become less than sole and unconditional. 87 S.W.2d 758 (Tex.Civ.App.-Amarillo 1935, no writ). Borger, the seller, entered into a contract of sale for a car with Ayres. Id. at 759. Ayres was to pay a $400 deposit in part cash and part credit. Id. Ayres received possession of the car and was in possession when the car was destroyed by fire. Id. The seller contended that there was no sale because Ayres never paid the $400 down payment, although there was some testimony indicating that the seller credited the amount of indebtedness he owed Ayres on the down payment. Id. The court found that although no cash was paid, a conditional sale was effected, undermining the seller's "absolute and unconditional ownership" of the car and triggering the exclusion of the insurance policy voiding coverage if the insured's interest in the car was anything other than sole and unconditional. Id.; see also Hedges Enter., Inc. v. Fireman's Fund Ins. Co., 225 N.Y.S.2d 779, 785 (Sup.Ct. 1962) (finding that purchasers were the sole and unconditional owners of a Cessna airplane at the time of the accident where the purchasers accepted delivery of the plane, even though payment of the total purchase price was deferred and the documentary indicia of title were not delivered until after the accident).
Similar to the holding in Hicksbaugh, in London Assurance Corporation v. Dean, the buyer and seller had made a contract of sale for a car, the seller received part of the purchase price, the buyer had received possession of the car, and the parties agreed on certain conditions upon the satisfaction of which a bill of sale would be executed. 281 S.W. 624 (Tex.Civ.App. — Waco 1926, writ ref'd). According to the court, "a conditional sale of personal property where the possession thereof has been delivered is a change of interest therein." Id. at 625. The court held that the transaction between the parties changed the seller's interest in the property such to void his insurance coverage under the policy at issue, which provided that coverage under the policy would be voided if the seller's interest in the car became other than sole and unconditional ownership. Id. at 625-26.
JD relies on Alamo Cas. Co. v. William Reeves Co. as support for its view that it did not relinquish its sole owner status because it never received payment for the Plane. 258 S.W.2d 211 (Tex.Civ.App.-Fort Worth 1953, no writ). Alamo held that "where nothing has been paid to an automobile owner for an interest therein and no interest has been otherwise acquired in the automobile, the owner thereof is the sole owner." Id. at 214. (emphasis added). The italicized language implies that an owner's interest may be other than "sole" if the purchaser "otherwise acquires" some interest in the property, even when there is no payment. Significantly, the Alamo Court found that there had been no showing that possession of the automobile at issue had transferred from the seller to the buyer. Id. Thus, in Alamo there had been no payment and no transfer of possession.
The court also found that there was no express or implied agreement regarding the time limit for payment, and that no payment had in fact been made or become due. Id. at 214.
As illustrated by the foregoing discussion, a critical factor in determining whether a seller-insured retains sole and unconditional ownership of property when a conditional sales contract has been entered into is whether there has been a transfer of possession of the property. The parties here hotly contest whether JD had delivered and Reynolds Baldwin had acquired possession of the Plane prior to the crash. The sales contract provided that the Plane would be "delivered clear of all liens including but not limited to just the FAA records in Oklahoma City, OK." (Defs.' App. 84). It is undisputed, however, that the parties agreed that delivery would occur at Dallas Love Field at Alliance Aviation. (Pl.'s App. 130). The question is if and when delivery occurred.
JD erroneously contends several times throughout its motion that delivery was to take place in Oklahoma. (See Pl.'s Motion 5, 25, 30). This, despite the fact that JD represented, in the same motion, that the parties had orally agreed that the Plane would be delivered to Dallas Love Field. (Pl.'s Mot. 5).
Defendants maintain that the Plane was delivered on October 7, 2001, after Reynolds had satisfactorily completed his acceptance flight check. (Defs.' App. 163-65). The Plane was left at Dallas Love field that day, where Reynolds Baldwin had agreed to hangar it. (Defs.' App. 165). JD, on the other hand, contends that Reynolds and Baldwin were each to conduct a final acceptance flight check before the Plane was delivered, even though the sales contract only refers to the completion of a single "final acceptance flight check". (Pl.'s Mot. 6; Defs.' App. 17). As Baldwin explained it, he was intending to charter another airplane to transport himself and some guests to his home in Taos, New Mexico on October 9, 2001, when Reynolds called to tell him that he could fly in the Plane so that he could see it before closing. (Defs.' App. 243-44). Baldwin acceded to this suggestion and hired Short, of Southern Direct, to pilot the Plane. (Defs.' App. 257-59). Baldwin admitted that the purpose of the trip was "personal" and "recreational". (Defs.' App. 241, 243-44).
As Defendants point out, the testimony of the principals involved — Watts, Reynolds, and Baldwin — on the question of delivery is rife with contradictions. All contend that Reynolds Baldwin had not accepted delivery of the Plane prior to the crash. (Pl.'s App. 123, 158, 203). At the same time, however, all three contend that before the crash occurred, all pre-purchase conditions set forth in the sales contract (necessarily including delivery) had been met, but for the release of funds for the purchase price of the Plane from escrow to JD. (Defs.' App. 28, 178, 241-43, 248-49). And Reynolds testified that, pursuant to the parties' agreement, he would "wire the money to the title company upon acceptance of the aircraft . . ." (Defs.' App. 168). Reynolds did, in fact, wire money to the title company on October 9, 2001, thereby implying that the Plane had been accepted. (Defs.' App. 176-77).
"A delivery may be said to have been made whenever, at the time and place which the law fixes or the parties have agreed upon, the seller has done everything which is necessary to be done in order to put the goods completely and unconditionally at the disposal of the buyer." Fox v. Young, 91 S.W.2d 857, 859 (Tex.App.-El Paso 1936, no writ). It is undisputed here that Reynolds conducted an acceptance flight check on October 7, 2001 and received physical possession of the Plane at Dallas Love Field as agreed by the parties. What remains at issue is whether Reynolds Baldwin received possession of the Plane in consummation of the contract, or whether the delivery was merely subject to Baldwin's completion of an acceptance flight check. As a treatise has explained with reference to automobiles:
To be significant, a delivery of possession by the insured seller to the buyer must be referable to, and in performance of, the contract of sale. So it has been held that the surrender by the insured of the physical occupancy or possession of the automobile covered by the policy to the vendee under a contract of sale does not constitute a change of interest which violates a stipulation in the policy against change of interest, where the contract of sale is executory and the surrender of possession is made, not in consummation of the contract, but merely to enable the vendee to use the automobile subject to the right of the insured to repossess the vehicle at any time prior to the completion of the sale.
Lee R. Russ, 6 COUCH ON INSURANCE § 92:52 (2004); Providence Washington Ins. Co. v. Pass, 12 S.E.2d 460, 462 (Ga.App. [Div. No. 1] 1940) (finding that the jury was authorized to find that agreement between parties was only an executory agreement to sell and that seller's relinquishment of car to buyer for demonstration purposes did not violate provision in contract against change of interest in the insured property); see also Am. Gen. Ins. Co. v. Bell, 116S.W.2d 877, 881 (Tex.Civ.App. — Fort Worth 1938, no writ) (jury found that buyer was not in possession of furniture pursuant to contract of sale even though buyer was in possession of property under lease contract).
The issue of delivery is determined by facts, and when the facts are disputed, the determination of delivery is decided by the jury. Adkins-Polk Co. v. John Barkley Co., Ltd., 297 S.W. 757, 761 (Tex.Civ.App.-El Paso 1927, writ dism'd w.o.j.). Because of the conflicting testimony in the record on the question of delivery, the Court finds that credibility determinations will need to be made — a function of the jury. See Conquest Drilling Fluids, Inc. v. Tri-Flo Int'l, Inc., 137S.W.3d 299, 305 (Tex.App.-Beaumont 2004, pet. granted June 29, 2004). "Delivery is legally regarded as a question of mutual intent and purpose of parties, and ordinarily one for the jury." Bynum v. Peoples State Bank of Turkey, 243 S.W.2d 190, 192 (Tex.App.-Amarillo 1951, no writ). Thus, the Court finds that a fact issue exists on the question of delivery, and it will accordingly deny the motions of JD and Defendants as they relate to Defendants' obligations under the JD Policy.
(ii) Quasi-Estoppel/Election of Remedies
Defendants also contend that JD is barred from asserting in this lawsuit that it was the sole and unconditional owner of the Plane because JD, in the Reynolds Baldwin litigation, asserted that ownership of the Plane had passed to Reynolds Baldwin prior to the time of the crash. There can be no doubt that JD's factual assertions in the prior litigation directly contradict those made in this lawsuit. For example, in the Reynolds Baldwin litigation JD alleged the following in its First Amended Petition:
• [JD] satisfied all conditions set forth in the purchase agreement [between JD and Reynolds Baldwin]. (Defs.' App. 105).
• On or about October 7, 2001, the Plaintiff [JD] transferred possession of the Plane and its logbooks to Reynolds, Baldwin Partners and PWB, by delivering to their agents, Southern and Short, upon the condition that the balance of the purchase price would be paid to the Plaintiff on or before October 9, 2001. (Defs.' App. 105).
• At the time of the crash, the sale of the Plane had been consummated and Reynolds, Baldwin Partners and PWB were the owners. (Defs.' App. 106).
Now, in this lawsuit, JD is asserting:
• At the time of the crash, the Plane had not been delivered as contemplated by JD and Reynolds Baldwin. (Pl.'s Mot. 25).
• [A]t the time of the crash, title to the Plane remained in seller and, therefore, Plaintiff retained an insurable interest in the Plane. (Pl.'s Mot. 19-20).
• Under the express terms of the sale, no ownership interest had passed to Reynolds Baldwin on October 9, 2001. (Pl.'s Mot. 30).
• The facts clearly show that JD Aircraft was the sole owner of the aircraft in question. (Pl.'s Mot. 31).
Defendants argue that JD is barred, under the doctrine of quasi-estoppel, from asserting its breach of contract claims against them in this lawsuit because of JD's inconsistent positions. The doctrine of quasi-estoppel "precludes a party from asserting, to another's disadvantage, a right inconsistent with a position he has previously taken." Missouri Pac. R.R. Co. v. Harbison-Fischer Mfg. Co., 26 F.3d 531, 537 (5th Cir. 1994) (quoting Enochs v. Brown, 872 S.W.2d 312, 317 (Tex.App. — Austin 1994, no writ)). Quasi-estoppel may be applied "in those cases where it would be unconscionable to allow a person to maintain a position inconsistent with one in which he accepted a benefit." Id. No detrimental reliance or false representation need be shown. Stuebner Realty 19, Ltd. v. Cravens Road 88, Ltd., 817 S.W.2d 160, 164 (Tex.App.-Houston [14th Dist.] 1991, no writ).
The Court finds that Defendants' quasi-estoppel argument should more appropriately be evaluated under the election of remedies doctrine, one of the bases for quasi-estoppel. El Paso Nat'l Bank v. Southwest Numismatic Inv. Group, Ltd., 548 S.W.2d 942, 948 (Tex.App.-El Paso 1977, no writ); Twelve Oaks Tower I, Ltd. v. Premier Allergy, Inc., 938 S.W.2d 102, 111 (Tex.App. — Houston [14th Dist.] 1997, no pet.) ("Quasi-estoppel is in essence a term applied to certain legal bars such as ratification, election, acquiescence, waiver, or acceptance of benefits."). Although election is a somewhat slippery concept, generally it "will bar recovery when the inconsistency in the assertion of a remedy, right, or state of facts is so unconscionable, dishonest, contrary to fair dealing, or so stultifies the legal process or trifles with justice or the courts as to be manifestly unjust." Bocanegra v. Aetna Life Ins. Co., 605 S.W.2d 848, 851 (Tex. 1980). The doctrine may be employed to bar relief when (1) one successfully exercises an informed choice (2) between two or more remedies, rights, or states of facts (3) which are so inconsistent as to (4) constitute manifest injustice. Id. The doctrine is waning in Texas jurisprudence, however, and it is not a favorite of equity. Les Mendelsohn, Election of Remedies and Settlement — New Lyrics to an Outworn Tune, 12 ST. MARY'S L.J. 367, 394 (1980).
The election doctrine does not bar recovery when a party has simply taken inconsistent positions. Under alternative pleading, for example, a party may plead alternative and inconsistent facts. Bocanegra, 605 S.W.2d at 851. And a party may plead alternative or inconsistent facts or remedies against two or more parties, settle with one party based on one remedy or state of facts, and then recover judgment against other parties based on the pleaded alternate or inconsistent remedies or facts. Id. at 852. According to the Texas Supreme Court in Bocanegra, a party "may also receive something by way of settlement, even of substantial value, under an uncertain claim without making an election which bars recovery against another person." Id. at 853.
Applying the foregoing principles, the Court first must examine whether JD, by settling the Reynolds Baldwin litigation for 50% of its claims, "successfully exercised an informed choice." One's choice between inconsistent rights or facts does not amount to an election unless that choice is made "with a full and clear understanding of the problem, facts, and remedies essential to the exercise of an intelligent choice." Id. at 852. The Court in Bocanegra appeared to correlate the certainty of the facts or claims asserted with one's "success" in the prior matter, with success being defined by the amount recovered in settlement. Id. at 853-54 (distinguishing cases where election was found when party received nearly the whole of its claims in settlement); Mendelsohn, supra, at 398. Here, JD recovered approximately 50% of its claims in the Reynolds Baldwin litigation. (Defs.' App. 46-48, 125-27, 190-93). This shows that JD was sufficiently uncertain of its claims in the prior matter to agree to settle the case for only half of the sought-after recovery. Although JD recovered $240,950.00 — not an insignificant amount — under the logic of Bocanegra, that settlement reflected on the uncertainty of JD's claims and does not bar its recovery from the Defendants in this suit. Id. at 853 (noting that party may receive settlement of substantial value under an uncertain claim without making an election). Thus, the Court finds that JD, in settling the Reynolds Baldwin litigation, did not successfully make an informed choice between inconsistent facts or remedies such to constitute manifest injustice, and JD is not barred or estopped from asserting its claims here.
D. JD and Farmers's Claims under the Southern Direct Policy
Defendants claim that they are not liable under the Southern Direct Policy as a matter of law because 1) the Plane was not a "covered aircraft" within the meaning of the policy because Southern Direct was operating the Plane pursuant to a one-year service agreement at the time of the crash; and 2) coverage for the damage occurring to the Plane was excluded by reason of the policy's use, care, custody or control exclusion.
The Southern Direct Policy provides liability coverage for certain non-owned aircraft, but excludes liability coverage if the aircraft is "the subject of a lease or service agreement with [Southern Direct] for a period of thirty (30) days or more." (Defs.' App. 304). Defendants contend that the Plane was embraced by this exclusion because it was the subject of a Management Agreement between Southern Direct and Reynolds Baldwin which qualifies as a service agreement under the Southern Direct Policy. The Management Agreement clearly contemplates that Southern Direct would render services for Reynolds Baldwin, and JD appears to concede this point, inasmuch as its response describes the Management Agreement as a "service agreement." (Pl.'s Resp. 32). JD and Farmers nevertheless contend that the Management Agreement was ineffective at the time of the crash because it was not fully executed.
The Management Agreement includes the following terms:
• the Client [Reynolds Baldwin] desires SDA to furnish aircraft management services with respect to the Aircraft;
• 1. SERVICES: During the term hereof, SDA shall provide to the Client the services set forth on Schedule A hereto;
• The services to be provides by SDA to Client under this Agreement are intended to assist Client in the operation by the Client of the Aircraft[.]
(Defs.' App. 347-50).
Under Texas law, a contract may be binding even in the absence of a written agreement signed by all parties if the parties intended it to be mutually binding. In re Bunzl USA, Inc., 2004 WL 42615, at *5 (Tex.App.-El Paso June 8, 2004, orig. proceeding [mand. denied]) (not designated for publication). Although the determination of the parties' intent is ordinarily a jury function, where no genuine issue of fact exists, the question may be settled by summary judgment. Scaif v. Assoc. Air Ctr. Inc., 100 F.3d 406, 411 (5th Cir. 1996) (finding summary judgment appropriate where evidence failed to raise a genuine issue of material fact about parties' intent).
That all parties to the Management Agreement at issue manifested their assent to its terms is eminently clear from the record. Reynolds and Short signed the agreement. (Defs.' App. 197, 225-31); In re Bunzl, 2004 WL 42615 at *4 ("a party's signature on a written contract is `strong evidence' that the party unconditionally assented to its terms."). And although Baldwin did not sign the agreement, he told Reynolds that he agreed to its terms. (Defs.' App. 256-58, 279, 287, 295-96). Moreover, Short's deposition testimony indicates that the parties believed that the agreement was effectual at the time Short flew the Plane to and from New Mexico on the day of the crash. (Defs.' App. 256-58, 279, 287, 295-96). Therefore, the summary judgment evidence demonstrates as a matter of law that all parties to the Management Agreement manifested their assent to its terms, and the Court finds that the agreement constituted a service agreement falling within the reach of the exclusion.
JD's argument that the service agreement exclusion did not apply because the Management Agreement had not been in effect for 30 days at the time of the crash is unavailing. The exclusion provides that there is no coverage for non-owned aircraft that "are the subject of a service agreement with [Southern Direct] for a period of thirty (30) days or more[.]" (Defs.' App. 304). JD maintains that the exclusion only becomes operative after any service agreement has been in effect for 30 days or more. Because the Management Agreement had only been in effect, if at all, one day before the crash, JD argues that the exclusion was not triggered. Defendants contend, on the contrary, that the 30-day requirement refers to the term of the service agreement and that the Management Agreement meets this requirement because it was for a one-year term. The Court agrees with Defendants that the exclusion clearly refers to the duration of the service agreement, not how long the agreement had been in effect. The Court thus finds that the exclusion applied, and Defendants are entitled to summary judgment on JD and Farmers's coverage claims under the Southern Direct Policy.
Additionally, Defendants are entitled to summary judgment on JD's claims under the Southern Direct Policy because coverage for the loss of the Plane was excluded by the Policy's "care, custody and control" provision. Exclusion (e) excluded coverage for "injury to or destruction of property owned, rented, occupied or used by, or in the care, custody or control of" Southern Direct. (Defs.' App. 306). The phrase "care, custody and control" as used in insurance policies means to have the right to exercise dominion over the subject matter. Hi-Port, Inc. v. Am. Int'l Specialty Lines Ins. Co., 22 F.Supp.2d 596, 599 (S.D. Tex. 1997). There is no dispute that Short was operating the Plane and was its only occupant at the time of the crash. (Defs.' App. 289, 294). Short even admitted at his deposition that the Plane was in his care, custody, and control. (Pl.'s App. 108; Defs.' App. 290). Because Short was exercising dominion over the Plane when it crashed, the Court finds that the Plane was within Southern Direct's care, custody or control when the Plane was destroyed and that coverage for the Plane was consequently excluded under the Southern Direct Policy.
E. Plaintiff's Unjust Enrichment Claim
Under Texas law, there can be no recovery for unjust enrichment when a valid and express contract controls the subject matter of the parties' dispute. Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684 (Tex. 2000). Here, JD seeks recovery for payment under the policies Defendants had with JD and Southern Direct. Thus, because there existed valid and express agreements governing the subject matter of the parties' dispute, summary judgment is appropriate as to JD's unjust enrichment claim arising out of those agreements.
F. The Extra-Contractual Claims
JD and Farmers contend that Defendants committed violations under the Texas Insurance Code and the DTPA, and breached the common law duty of good faith and fair dealing with respect to their handling of the claims made by JD and Southern Direct. Defendants first contend that because there has been no showing that Defendants breached the policies, JD is precluded from recovering on its extra-contractual claims. Defendants also maintain that there is no evidence that they committed any "unfair method of competition or an unfair or deceptive act or practice in the business of insurance" within the meaning of article 21.21 of the Texas Insurance Code. TEX. INS. CODE ANN. art. 21.21 § 3. Section 4 of article 21.21 defines various acts constituting unfair methods of competition and unfair and deceptive acts or practices in the business of insurance. JD and Farmers allege that Defendants violated sections 4(10)(a)(i)(ii)(iv) and (11)(a)(b)(c)(e) of article 21.21. (Pl.'s 1st Am. Compl. ¶¶ 69-72; Farmers's Plea in Intervention ¶¶ 38-39).
(i) Bad Faith Claims
Because the elements necessary to establish bad faith under Texas common law or article 21.21 § 4(10)(a)(ii) are identical, the Court will address those claims together. Lias v. State Farm Mut. Auto. Ins. Co., 45 S.W.3d 330, 335 (Tex.App.-Dallas 2001, no pet.); Greil v. Geico, 184 F.Supp.2d 541, 545 (N.D. Tex. 2002). The Texas Supreme Court has held that, generally, an insured cannot prevail on a bad faith or other extra-contractual claim without first proving that the insurer breached the contract. Republic Ins. Co. v. Stoker, 903 S.W.2d 338, 341 (Tex. 1995). Because the Court has held that JD and Farmers's contractual claims arising under the Southern Direct Policy fail as a matter of law, JD and Farmers cannot prevail on their claims of bad faith under that policy. JD's extra-contractual claims arising out of the JD Policy, however, cannot be dismissed on these grounds because the Court has found the existence of a factual issue on such claims.
There has been no allegation nor any showing that in denying coverage Defendants committed an act so extreme as to cause injury independent of the claim under the insurance policies. Stoker, 903 S.W.2d at 341.
Nonetheless, the Court agrees with Defendants that JD has presented no evidence that Defendants acted in bad faith. "An insurer breaches its duty of good faith and fair dealing when the insurer had no reasonable basis for denying or delaying payment of a claim, and the insurer knew or should have known that fact." Lias, 45 S.W.3d at 334. To withstand a no-evidence challenge under Texas law, "a plaintiff in a bad faith case must present evidence that the insurer failed to attempt a prompt, fair settlement where the insurer's liability has become reasonably clear." Id. at 334.
Plaintiff believes that it has established the reasonable clarity of Defendants' liability by showing that JD was the sole and unconditional owner of the Plane. But the evidence in this case establishes that there was a bona fide dispute regarding ownership of the Plane, as demonstrated in the Reynolds Baldwin litigation where JD took a position diametrically opposed to the one it asserts here. Furthermore, the Court finds that JD has pointed to no evidence demonstrating that Defendants' liability was reasonably clear. Defendants are therefore entitled to summary judgment on JD's common law and statutory bad faith claims.
Indeed, the Court finds it disturbing that JD is asserting bad faith claims against Defendants, given that, in the Reynolds Baldwin litigation, JD represented to a Texas court (presumably in good faith) that Reynolds Baldwin owned the Plane prior to the crash, a fact which, if true, would unquestionably void coverage under the JD Policy.
(ii) Claims Under Article 21.21 § 4(10)(a)(iv)
Under section 4(10)(a)(iv) of article 21.21, an insurer engages in an unfair or deceptive act or practice by failing to promptly provide a reasonable explanation of the basis in the policy for denying the claim. Again, the Court finds that JD has referred to no evidence and indicated no authority showing that Defendants' explanation for denying the claim was unreasonable. And JD's willingness to plead the very basis of Defendants' denial of coverage in the prior litigation speaks to the reasonableness of Defendants' explanation. Defendants are therefore entitled to summary judgment on JD's claims under article 21.21 § 4(10)(a)(iv).
Again, because neither JD nor Farmers prevailed on their contractual claims under the Southern Direct Policy, Defendants are entitled to summary judgment on JD and Farmers's claims under article 21.21 § 4(10)(a)(iv) as to that policy.
(iii) Misrepresentation Claims
JD and Farmers complain that Defendants violated section 4(10)(a)(i), (11)(a)(b)(c)(e) of article 21.21, as well as section 17.46(b)(5), (b)(12) of the DTPA by making various misrepresentations. JD contends in its response to Defendants' motion that:
Defendants violated Article 21.21 by representing to Plaintiff that as long as they [JD] were the sole and unconditional owner of the airplane, the aircraft would be covered under the JD Policy. Defendants also stated under the Southern Direct policy that they would provide coverage for the plane as long as it was a non-owned aircraft that fell outside the exclusions.
(Pl.'s Resp. 36). JD is essentially arguing that Defendants represented that it would provide coverage under the terms of the policies and that Defendants' denial of coverage means that they misrepresented that they would perform under the contract.
JD cites to deposition testimony from Watts, JD's managing member, some of which is incomprehensible, but Watts essentially complains that Defendants did not live up to their contractual promise to provide full insurance coverage for the Plane. (Pl.'s Supp. App. 41-42).
Texas courts are clear that "[w]hen the alleged misrepresentations concern a party's failure to fulfill its contractual duties, the alleged failure to later perform those duties does not constitute a misrepresentation" within the meaning of article 21.21 or the DTPA. Delaurentis v. United Serv. Auto. Assoc., 2004 WL 2186753, at *8 (Tex.App.-Houston [14th Dist.] September 30, 2004, no pet.) (not designated for publication) (citing Crawford v. Ace Sign, Inc., 917 S.W.2d 12, 14 (Tex. 1996)); Gulf States Underwriters of Louisiana, Inc. v. Wilson, 753 S.W.2d 422, 430 (Tex.App.-Beaumont 1988, writ denied) (rule that a simple breach of contract claim cannot be a violation of the DTPA applies equally to claims under article 21.21). Because there is no evidence that JD or Farmers complain of any representation made by Defendants apart from their alleged failure to abide by their contractual obligations, Defendants are entitled to summary judgment on all of JD and Farmers's misrepresentation claims under the JD and Southern Direct policies.
iv) Claims under article 21.55
Section 3(f) of article 21.55 of the Texas Insurance Code provides in pertinent part:
if an insurer delays payment of a claim following its receipt of all items, statements, and forms reasonably requested and required, as provided under Section 2 of this article, for a period exceeding the period specified in other applicable statutes or, in the absence of any other specified period, for more than 60 days, the insurer shall pay damages and other items as provided for in Section 6 of this article.
TEX. INS. CODE ANN. art. 21.55 § 3(f). To recover under article 21.55, an insured must establish: (1) a claim under an insurance policy; (2) that the insurer is liable for the claim; and (3) that the insurer has failed to comply with one of the requirements of article 21.55 with respect to the claim. Evergreen Nat'l Indemn. Co. v. Tan It All, Inc., 111 S.W.3d 669, 678 (Tex.App.-Austin 2003, no writ). Because the Court has found that Defendants are not liable for denying coverage under the Southern Direct Policy as a matter of law, Defendants are entitled to summary judgment as to JD and Farmers's article 21.55 claims under the Southern Direct Policy. Id. at 768-79.
Defendants are not entitled to summary judgment on JD's article 21.55 claims as they relate to the JD Policy, however. "The wrongful rejection of a claim, even if made in good faith, may be considered a delay in payment for purposes of the 60-day rule and statutory damages under article 21.55." Nat'l Am. Ins. Co. v. Columbia Packing Co., 2003 WL 21516586, at *7 (N.D. Tex. April 7, 2003). JD notified Defendants of its loss on December 14, 2001. Defendants denied the claim on October 15, 2002 and have yet to pay the claim. (Pl.'s 1st Am. Compl. ¶ 20). Thus, Defendants failed to pay the claim within 60 days. Should the jury find that JD's claim under the JD Policy was wrongly denied, Defendants may be held liable under article 21.55. Because the jury has yet to make that determination, summary judgment is inappropriate. Id.
G. Defendants' Counterclaims
Defendants seek summary judgment on their counterclaims against JD and Farmers under section 16(c) of article 21.21 and section 17.50(c) of the DTPA, both of which allow for a defendant to recover its reasonable and necessary attorney's fees and costs if a plaintiff's claims are groundless, brought in bad faith, and brought for purposes of harassment. The Court finds that fact issues remain as to whether JD and Farmers's claims under the Texas Insurance Code are groundless and were brought in bad faith or for harassment. TEX. INS. CODE ANN. art. 21.21 § 16(c); TEX. BUS. COMM. CODE ANN. § 17.05(c). The Court accordingly denies Defendants' motion for summary judgment on their counterclaims.
III. Conclusion
For the reasons set forth in this order, it is ORDERED that JD's Motion for Partial Summary Judgment be, and it is hereby, DENIED in its entirety. It is further ORDERED that Defendants' Motion for Summary Judgment be, and it is hereby, GRANTED in part and DENIED in part. Specifically, the Court GRANTS Defendants' Motion for Summary Judgment with respect to the following claims asserted against them:
• JD's declaratory judgment claim for property damage to the Plane under the Southern Direct Policy;
• JD and Farmers's claims for breach of contract under the Southern Direct Policy;
The Court assumes, based on the parties' briefing, that this order disposes of JD and Farmers's claims for breach of contract for the negligence of Southern Direct. (Count 4, Pl.'s Am. Compl.; Count 3, Farmers's Plea Intervention). Both of those counts, however, make reference to Defendants' AGL Policy 409133, which the Court was unable to locate in the record. Because the parties' briefing addressed only Policy No. FHL 210653, which has been referred to throughout this order as the "Southern Direct Policy", and did not address AGL Policy 409133, the Court assumes, unless informed otherwise, that no claims under AGL Policy 409133 remain for resolution.
• JD's claim for unjust enrichment;
• JD and Farmers's claims under article 21.21 of the Texas Insurance Code;
• JD and Farmers's claims under the DTPA;
• Farmers's claims under article 21.55 of the Texas Insurance Code and JD's claims under article 21.55 as they relate to the Southern Direct Policy;
• JD and Farmers's claims for breach of the duty of good faith and fair dealing.
The following claims thus remain for resolution:
• JD's claim for breach of contract under the JD Policy;
• JD's claims under article 21.55 as they relate to the JD Policy;
• JD's claims for attorney's fees as they relate to JD's remaining claims;
• Defendants' counterclaims under article 21.21 and the DTPA.
SO ORDERED.