Perfit Vision et al v. Mount Vernon Fire Insurance Company
Filing
57
OPINION on Judgment. (Signed by Judge Lynn N Hughes) Parties notified. (ghassan, 4)
SOUTHERN DISTRICT OF TEXAS
UNITED STATES DISTRICT COURT
United States District Court
Southern District of Texas
ENTERED
Perfit Vision, et al.,
Plaintiffs,
'Versus
Mount Vernon Fire Insurance Company,
Defendant.
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September 22, 2016
David J. Bradley, Clerk
Opinion onJudgment
1.
Introduction.
John Luong will not recover from Mount Vernon Fire Insurance
Company on the policy covering an optician's store.
2.
Background.
John Luong owns some portion of Eyewear Express, Inc. In
2013,
Eyewear bought a store and renamed it Perfit Vision. Mount Vernon Fire
Insurance Company issued Loung a one-year casualty policy for the business
with coverage starting February 21,2014. The policy's assured is 'John Luong
DBA Perfit Vision."
Luong reported to Mount Vernon that sometime over the weekend of
March 8-9 the store had been burgled. He filed a claim with Mount Vernon for
the losses. Mount Vernon denied it.
3·
Policy.
The policy was predicated on Luong' s (a) warranty that the information
he supplied in the application was true and
(b) payment of 25% of the premium
as a down payment. When he applied for the policy, the insurer required him to
disclose earlier insurance policies, including information about claims and
cancellations of coverage.
A.
Earlier Policy.
From 2.0I I to 2.0I 3, Luong was insured under a policy with Allstate. He
claimed benefits twice on it. In September of 2.0I 3, Allstate cancelled the policy
because Luong had not paid the premium. In the application for Mount Vernon,
he expressly warranted that he had not claimed under a policy in the preceding
three years. In reality, he had had the Allstate policy and had filed two claims somewhat similar to the ones against Mount Vernon. These clear
misrepresentations are material to the underwriting decision. They void the
policy.
I
B.
Non-payment.
On April I, 2.0I4, Mount Vernon learned that Luong had not paid the
premium. On April 3, 2.0I4, Mount Vernon sent Luong a notice of cancellation
for nonpayment, telling him the cancellation would be effective April 2.2., 2.0I4Non-payment cancels the policy. 2.
4.
Claim.
On March Ioth, Luong reported a loss to Mount Vernon and filed a
claim. During an apparent burglary, optometry equipment and the hard drive for
the security camera were stolen. In denying the claim, Mount Vernon said (a)
the policy did not insure Perfit or Eyewear,
(b) burglar alarm was not armed, (c)
policy's premium was unpaid, and (d) Luong had lied on his application.
Luong sued Mount Vernon for breach of the policy. He added a cluster
of potentially related claims: good faith and fair dealing, Texas Prompt Payment
of Claims Act, Texas Unfair Settlement Practices Act, and Deceptive Trade
Practices Act.
I
Lane 1!. Tra1!clers Indem., Co., 391 S.W.2d 399, 402 (Tex. 1965).
2.
California-Western States Ufe Ins. Co.
Civ. App.-El Paso 1938, writ dism'd).
1!.
Williams, 120 S.W.2d 844, 846 (Tex.
5.
Standing.
Perfit is an assumed name of Eyewear Express, Inc., a Texas corporation.
Luong is apparently a part owner of Eyewear. The policy's assured is Luong
doing business as Perfit Vision. In this instance, the appending of "DBA Perfit
Vision" to Luong's name is a nullity because it was registered to the company.
Luong cannot buy insurance in his name on a distinct company's assets nor sue
for their loss. Luong has not shown precisely what his interest is in Eyewear.
Eyewear and Perfit are the same thing. One is its formal name; and the
other its nickname - they are an identity in the senses both oflogic and persona.
If the policy had been issued to Luong and Perfit Vision, Eyewear might have
been an assured, but it was not issued with two parties.
An insurance policy - like other contracts - may only be enforced by a
party to it or in rare circumstances a true third;party beneficiary - those to
whom the insurer promised performance and to whom the party performed its
consideration. 3
Eyewear and Perfit have no standing to complain of a breach of the policy.
They also have no claim under laws that protect parties to a contract or their
transaction. Mount Vernon, having never dealt with them, cannot be liable for
misdealing them. Eyewear and Perfit will take nothing from Mount Vernon.
6.
Alarm.
The policy required Luong to "maintain" a burglar alarm at the store "in
complete working order." An alarm is not in working order when it is off.4
Luong claims the burglary was between March 8th and March loth. The alarm
company's records say:
•
Alarm turned on at 5:11 p.m., Saturday, March 8th
•
Alarm turned off at 9:10 p.m., Sunday, March 9th
3
Palma 'U. Vmx Assure., Inc., 79 F.3d 1453, 1456 (5th Cir. 1996).
4
Phoenix Ins. Co.
'U.
Ross Jewelers, Inc., 362 F.2d 985,989 (5th Cir. 1966).
It was still off when employees discovered the burglary at 9:50 a.m., Monday,
March 10th. Luong did not maintain the alarm for 12 hours overnight when the
store was closed - unattended by workers, the time it was needed.
Luong says that the alarm worked and continues to work. He also
quibbles that he maintained the alarm - without a single supporting fact - and
that the alarm company's reports are unreliable. He mentions what he calls
idiosyncracies on days unrelated to his claim, like the report showing that the
alarm was turned off twice consecutively. He admits that his son may have been
the one who turned the alarm off; Luong is responsible for those to whom he
gives the code. We have no testimony from the son.
In another case, the policy required the insured to exercise due diligence
in maintaining its alarm and specifically mentioned training its employees. The
trial court examined the training procedures and concluded that the insured did
all that could be expected to ensure that the alarm system was in complete
working order. 5 This case is distinct. First, Luong's son was not at the store on
business but to study. Second, Luong's policy did not require him to exercise due
diligence but to maintain the alarm. With Luong's permission, his son was using
the office for something wholly unrelated to the business - a frolic. Third, it
required him use the alarm, id est, turn it on; he did not.
7.
Unpaid Premium.
Luong did not pay the down payment required by the policy. Insurance
policies - like other contracts - are promises of indemnity in exchange for cash
consideration. Mount Vernon promised to pay Luong for some potential losses
to him of business property. In exchange, he promised to pay it a cash premium.
He did not pay. His nonpayment is a failure of consideration of the policy. He
cannot now sue Mount Vernon for failing to cover his losses.
Luong says that he paid the premium on April
II,
2014. His payment
was due well before that; his tender, if it was one, was one month after the loss.
On April 3, 2014, Mount Vernon notified him that the policy would be
cancelled for nonpayment. He did not perform on time.
5
SFl,
Inc.,1J. United States Fire Insurance Company, 634 F.2d 879 (5th Gr. 1981).
8.
Procurement Fraud.
Luong's application for insurance said that he had not made a claim, he
had not had a policy cancelled in the last three years, and he signed a warranty
certifying that he agreed that if those statements were not true the insurer could
void the policy.
Luong concedes that his statements were knowingly false. Mount Vernon
promised to insure Luong if he was honest on his application. He was not.
Luong cannot lie about these underwriting risks yet still enforce the promise he
tricked Mount Vernon into making.
9.
Other Claims.
Luong also sues Mount Vernon for violation of the Texas Prompt
Payment of Claims Act, Texas Unfair Settlement Practices Act, and Deceptive
Trade Practices Act, as well as breach of the duty of good faith and fair dealing.
These claims need Mount Vernon's wrongful denial of his insurance
claim. Mount Vernon's denial was justified. Luong will take nothing on these
claims. That John Luong would invoke something called good faith and fair
dealing is peculiar.
Conclusion.
John Luong, Perfit Vision, and Eyewear Express, Inc., sued Mount
Vernon for denying their claim on an insurance policy. Perfit is Eyewear, and it
ro.
was not a party to the policy, it will take nothing.
The policy required Luong to tell the truth in his application, pay the
premiums, and maintain an alarm. Luong did none. John Luong, the only party
with standing, will take nothing from Mount Vernon Fire Insurance Company,
having voided the policy by his actions, defaults, and dishonesties.
Signed on September
22, 20r6,
at Houston, Texas.
cq;:
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4S.' ~k-·
Lynn N. Hughes
United States DistrictJudge
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