Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg
appeal from the 105th District Court of Nueces County, Texas.
Justices Rodriguez, Contreras, and Longoria.
case concerning the alleged fraudulent sale of a life
insurance annuity, appellant John Hubbard challenges the
trial court's summary judgment dismissing claims he made
against appellees Jackson National Life Insurance Company
("JNL") and Jackson National Life Distributors LLC
("JNL Distributors"). We affirm.
March 31, 2009, Hubbard purchased a $1 million JNL variable
annuity contractfrom William Erik Byrne. According to
Hubbard's live petition, Byrne held himself out to be a
licensed insurance and securities broker. Hubbard contends
that Byrne represented to him that JNL's variable annuity
contracts did not provide guaranteed returns, but that Byrne
himself "would make and manage the investments held by
any variable annuity contract purchased by Hubbard, which
would produce a much greater annual return than 5% on the
later discovered that the contract was not earning a greater
than 5% return on his investment. Instead, his June 2010
statement from JNL stated that the annuity had decreased in
value to $911, 081.68. Further, the statement listed CUE
Financial Group ("CUE") as the broker and Patrick
Douglas Way as Hubbard's representative, though Hubbard
had no knowledge of CUE or Way. Hubbard also allegedly
learned that Byrne's representations that he was a
licensed broker, and that JNL's annuity contracts do not
provide guaranteed returns, were false.
on various occasions, Byrne directed trades under the annuity
contract by calling JNL's trading desk and falsely
identifying himself as Hubbard.
filed suit against Byrne, JNL, CUE, and Foothill Securities,
Inc. ("Foothill"),  alleging various causes of
action. Specifically as to JNL, Hubbard asserted that, under
the doctrines of respondeat superior and vicarious liability,
JNL is jointly and severally liable for fraud and violations
of securities and insurance statutes committed by Byrne and
Way. See Tex. Ins. Code Ann. §§ 541.051,
541.057 (West, Westlaw through 2015 R.S.); Tex. Rev. Civ.
Stat. Ann. art. 581-33-1 (West, Westlaw through 2015 R.S.).
Hubbard further asserted that JNL was negligent and committed
breach of contract. Specifically, he alleged that JNL had a
duty under a negligence theory and under the contract
"to implement and execute security procedures that were
reasonably designed and calculated to avert or reduce the
risk of trading in the accounts of its customers by
unauthorized persons" but that, "[i]n failing and
neglecting to design and/or implement and/or execute adequate
security procedures, Hubbard was unreasonably exposed to the
risk that an unauthorized person, such as Byrne, could and
would direct [JNL] to execute trades on Hubbard's behalf
that were not authorized by Hubbard." Hubbard sought
actual damages of over $300, 000 representing "trading
losses" as well as exemplary damages and attorney's
moved for summary judgment on November 21, 2013, arguing in
part that it is not vicariously liable for Byrne's
conduct because Byrne lacked actual or apparent authority to
act on its behalf. The motion alleged that, though all of
Hubbard's claims are based on oral representations by
Byrne, "Byrne was not authorized to sell JNL products,
did not have any agreement with JNL, was not an agent of JNL,
and was not affiliated with JNL in any manner." The
motion also alleged that JNL is not vicariously liable for
Way's conduct because his acts were "outside the
course and scope of his agency authority." Evidence
attached to JNL's motion included excerpts of sworn
deposition testimony from Hubbard, Byrne, and Way. The
testimony showed that, after meeting with Hubbard, Byrne
completed the annuity application and gave it to Hubbard to
sign. Hubbard signed it, and Byrne then sent the completed
application to Way, who signed it and submitted it to JNL.
Way testified that he never met Hubbard, never spoke to
Hubbard, and never personally reviewed Hubbard's
financials prior to submitting the application.
filed a response arguing in part that "[w]hen Way was
selling JNL's annuity insurance policies for [CUE], he
was acting on behalf of his principal, [CUE], and on behalf
of JNL, whether those sales were made directly by Way or by
Byrne acting on Way's behalf" and that "[CUE]
and JNL are both liable for the consequences of those sales,
irrespective of whether [CUE] or JNL knew of the fraud or
benefited from it."
hearing on the motions, Hubbard filed an amended petition
adding a claim under the federal Securities Act of 1933.
See 15 U.S.C.A. § 77q (West, Westlaw through
P.L. 114-254). JNL then filed a second summary judgment
motion addressing the newly-raised claim.
trial court granted both summary judgment motions filed by
JNL as well as a summary judgment motion separately filed by
CUE and Foothill. Hubbard then filed the instant appeal. In
September 2015, after he filed his appellate brief, Hubbard
reached a settlement agreement with CUE and Foothill.
Therefore, at Hubbard's request, we severed and dismissed
his appeal against those parties. Hubbard v. CUE Fin.
Group, Inc., No. 13-15-00406-CV, 2015 WL 5626231, at *1
(Tex. App.-Corpus Christi Sept. 17, 2015, no pet.) (mem.
op.); see Tex. R. App. P. 42.1(a).
raises five issues on appeal, the first three of which
concern only Foothill and are now moot. See Hubbard,
2015 WL 5626231, at *1. By his remaining two issues, Hubbard
argues that the trial court erred by rendering summary
judgment in favor of JNL.
Standard of Review
review summary judgments de novo. Neely v. Wilson,
418 S.W.3d 52, 59 (Tex. 2013). In doing so, we view the
evidence "in the light most favorable to the party
against whom the summary judgment was rendered, crediting
evidence favorable to that party if reasonable jurors could,
and disregarding contrary evidence unless reasonable jurors
could not." Mann Frankfort Stein & Lipp
Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.
2009); City of Keller v. Wilson, 168 S.W.3d 802, 827
moving for traditional summary judgment has the burden to show
that no genuine issue of material fact exists and that the
movant is entitled to judgment as a matter of law.
Tex.R.App.P. 166a(c); Neely, 418 S.W.3d at 59. The
movant meets that standard if, in light of all of the
evidence presented, reasonable and fair-minded jurors could
not differ in their conclusions. Goodyear Tire &
Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex. 2007).
summary judgment motion, JNL argued in part that it is
entitled to judgment as a matter of law because neither Byrne
nor Way were acting as its agents. By his first issue,
Hubbard claims that the trial ...