American National Insurance Company v. Bertha Arce, Individually and as Representative of All Others Similarly Situated

Supreme Court of Texas
══════════
No. 21-0843
══════════

American National Insurance Company,
Petitioner,

v.

Bertha Arce, Individually
and as Representative of All Others Similarly Situated,
Respondent

═══════════════════════════════════════
On Petition for Review from the
Court of Appeals for the Seventh District of Texas
═══════════════════════════════════════

Argued January 12, 2023

JUSTICE DEVINE delivered the opinion of the Court.

JUSTICE YOUNG filed a concurring opinion.

For more than a century, Texas courts have applied the settled
rule that insurers may not avoid liability under an insurance policy
based on a misrepresentation in an insurance application unless, among
other things, the insurer pleads and proves the insured intended to
deceive or induce the insurer to issue the policy. The primary issue
before us is whether the common-law scienter requirement is repugnant
to the plain language of section 705.051 of the Texas Insurance Code,
which provides that “[a] misrepresentation in an application for a life,
accident, or health insurance policy does not defeat recovery under the
policy unless the misrepresentation: (1) is of a material fact; and
(2) affects the risks assumed.” Section 705.051, which dates back to
1909, has long functioned side by side with the common law, having been
reenacted and recodified without substantive change, most recently in
2003.
We hold that section 705.051 does not displace the common-law
rule because the statute prescribes necessary, not exclusive or sufficient,
conditions for denying recovery under a contestable policy. Finding no
compelling reason to otherwise repudiate clear and longstanding
precedent, we affirm the court of appeals’ judgment in part and remand
the case to the trial court. We also reverse the court’s judgment in part
and render judgment that, as a matter of law, the insurer was exempt
from complying with the ninety-day notice provision in section 705.005.
I
During a chance encounter with an insurance agent at a
motorcycle shop, Sergio Arce, Jr. spontaneously applied for a $25,000
life insurance policy with American National Insurance Co. (ANIC). The
application process consisted of ANIC’s agent reading questions to Arce
from an electronic application form and documenting his responses
using a computer tablet. Arce disclosed some adverse medical history
and provided the name and address of his medical provider, but the
agent recorded his answers to all other medical-history questions as
“no.” At the conclusion of the application interview, Arce electronically
signed the application form, affirming that his answers were “full,

2
complete and true to the best of [his] knowledge and belief.” By signing,
Arce also authorized ANIC to secure his medical records.
One month later, ANIC issued a life insurance policy to Arce but,
for undisclosed reasons, declined accidental-death coverage and
required payment of an additional premium on delivery. As required by
statute, the policy would become incontestable two years after issuance,
but in a tragic turn of events, Arce died a mere thirteen days later from
injuries sustained in an automobile accident. 1
Arce’s mother, Bertha, submitted a claim under the policy as his
designated beneficiary, but ANIC denied the claim and refunded the
premium. During the claims-investigation process, ANIC reviewed
Arce’s medical records and determined that he had incorrectly answered
“no” to an application question inquiring about diagnoses, treatment, or
medical advice for “any disease or abnormality of the stomach,
intestines, rectum, pancreas, or liver, including cirrhosis, hepatitis and
colitis.” In refusing to pay the claim, ANIC informed Bertha that it
would not have issued the policy if the application questions had been
answered correctly.
Bertha sued ANIC for policy benefits, statutory penalties, and
attorney’s fees, alleging breach of contract and related violations of the
Texas Insurance Code. ANIC answered and moved for summary
judgment on the contract and statutory claims. The following week,
Bertha amended her petition to add class claims and a new Insurance

1 The incontestability provision in Arce’s insurance policy states: “This
Policy will be incontestable after it has been in force during the Insured’s
lifetime for 2 years from the Issue Date except for nonpayment of premium.”
See TEX. INS. CODE § 1101.006 (mandating the inclusion of a policy provision
with this exact language).

3
Code claim. ANIC never amended or supplemented its motion to
address the amended petition
In a traditional summary-judgment motion limited to the claims
in Bertha’s previous filing, ANIC argued that the breach-of-contract and
statutory claims were fatally infirm because ANIC was entitled to
rescind the policy. Relying principally on Insurance Code
section 705.051, ANIC claimed that no benefits were due under the
policy because, as a matter of law, (1) Arce’s insurance application
included material misstatements of fact that affected the risks ANIC
assumed in issuing the policy and (2) the Insurance Code does not
require insurers seeking rescission of a life insurance policy during the
contestability period to prove misstatements were made with intent to
deceive or induce the insurer to issue the policy. 2
ANIC acknowledged the common-law rule requiring proof of
intent to deceive but argued that the scienter requirement was
incompatible with section 705.051’s plain language following its
recodification in 2003. Under ANIC’s view of the statute, an insurer
could avoid an obligation to pay on an insurance policy based on an
innocent, unknowing, or careless misstatement in an insurance
application, so long as the misstatement was of a material fact and
either induced the policy’s issuance or affected the premium charged.

2 Compare id. § 705.051 (precluding an insurer from denying recovery
under the policy based on a misrepresentation that is not “a material fact” and
does not “affect[] the risks assumed”), with id. § 705.104 (precluding a defense
based on misrepresentation in an insurance application asserted in a suit on
the policy more than two years after the policy’s issuance unless notice of
rescission has been given to the insured or the insurer proves the
misrepresentation was “material to the risk” and “intentionally made”).

4
ANIC did not take the alternative position that intent to deceive
was conclusively established. However, it argued that even if proof of
intent is required to avoid paying on the policy, Bertha’s claims under
Insurance Code sections 541.060 and 541.061 would still fail because
ANIC denied Bertha’s claim based on a “bona fide” and “good faith”
dispute about the continued vitality of the common-law rule.
Bertha’s summary-judgment response, filed months later, joined
issue on the necessity of pleading and proving intent to deceive before
an insurer may decline to pay benefits based on a misrepresentation in
the insurance application. She argued that section 705.051’s language
does not conflict with the common law and noted that the two have
coexisted for more than a hundred years without any substantive
modification to the statute.
Bertha further asserted that ANIC had forfeited any
misrepresentation defense by failing to timely notify her about its intent
to rescind the policy, as required by section 705.005 of the Insurance
Code. 3 That notice requirement is inapplicable to life insurance policies
with a statutorily compliant incontestability clause, like the one in
Arce’s policy, but only if premiums have been “duly paid.” 4 Bertha
argued that ANIC was not exempt from providing notice because the

3 See id. § 705.005 (prohibiting an insurer from relying on an insured’s
misrepresentation in an insurance application as a defense to coverage absent
proof at trial that, before the 91st day after discovering the misrepresentation,
the insurer gave notice to an insured or a deceased insured’s beneficiary that
it refused to be bound).
4 See id. § 705.105 (“Subchapter A [which includes section 705.005] does
not apply to a life insurance policy: (1) that contains a provision making the
policy incontestable after two years or less; and (2) on which premiums have
been duly paid.”).

5
summary-judgment evidence did not establish that the additional
premium due on delivery had, in fact, been paid. ANIC refuted the
assertion, pointing to affidavit testimony confirming the insurer’s
receipt of all premiums due and payable. Although Bertha had lodged
myriad objections to that affidavit, ANIC stated the obvious: if the
additional premium had not actually been paid, Bertha’s claims would
fail due to nonpayment of the initial premium or lapse of the policy.
The trial court granted ANIC’s motion and rendered a final
take-nothing judgment rescinding Arce’s life insurance policy. No
grounds were stated. On motion for rehearing, which was denied, the
trial court expressly overruled Bertha’s objections to ANIC’s
summary-judgment evidence.
The court of appeals affirmed the trial court’s ruling on Bertha’s
objections, but otherwise reversed and remanded. 5 After rejecting
ANIC’s argument that the common-law scienter requirement did not
survive section 705.051’s recodification, the court held that ANIC could
not avoid its contractual obligation without pleading and proving that
Arce intended to deceive ANIC. 6 Measured against that standard, the
court held that summary judgment was not proper on the
breach-of-contract claim because: (1) intent often involves fact
questions; (2) ANIC’s evidence did not conclusively establish intent;
(3) mere knowledge of a health condition does not conclusively establish
intent to deceive; and (4) “[t]he undisputed summary judgment evidence
shows [ANIC] asserted rescission well beyond the ninety-day period set

5 633 S.W.3d 228, 230 (Tex. App.—Amarillo 2021).
6 Id. at 234-36.

6
in section 705.005 of the Code.” 7 The court also reversed summary
judgment on the related Insurance Code violations, which alleged
wrongful denial of policy benefits. 8 Finally, the court reversed summary
judgment on the class claims because ANIC did not move for summary
judgment on those claims or address them in any way. 9
II
ANIC’s petition for review presents three issues: (1) whether
section 705.051 grants insurers a misrepresentation defense without
proof of intent, as required under the common law; (2) whether the court
of appeals erred in failing to hold section 705.005’s notice requirement
inapplicable as a matter of law; and (3) whether the court of appeals
erred in reversing summary judgment on Arce’s Insurance Code and
class claims because it had no contractual obligation to pay policy
benefits. 10
We granted ANIC’s petition to resolve an incipient conflict
between Texas state cases, which consistently apply the common-law
rule, and a handful of federal district court cases that have recently
departed from it. 11 But before beginning our analysis of that issue, we

7 Id. at 234-37.
8 Id. at 237-38.
9 Id. at 238.
10Amicus briefs supporting ANIC’s construction of the statute were
submitted by Texas Association of Life & Health Insurers; The American
Council of Life Insurers; RSUI Group, Inc.; and Andrew Whitaker, Esq.
11See generally Brown v. Bankers Life & Cas. Co., No. H-20-136, 2021
WL 2325448 (S.D. Tex. Mar. 30, 2021); Guzman v. Allstate Assurance Co.,
No. 2:19-CV-187-BR, 2020 WL 7868100 (N.D. Tex. Dec. 3, 2020), rev’d on other
grounds, 18 F.4th 157 (5th Cir. 2021); Landeros v. Transamerica Life Ins. Co.,

7
address, as a preliminary matter, the effect of the 2003 nonsubstantive
recodification of the Insurance Code.
In the courts below, ANIC argued that the 2003 recodification
rendered the common-law intent requirement inoperative because the
Legislature substantively changed section 705.051. There, as here,
ANIC leaned heavily on two cases: (1) Fleming Foods v. Rylander, in
which we held that when the language adopted in a recodification
substantively changes the meaning of a statute, courts must consider
the prior law repealed and apply the current law according to its plain
language even if the Legislature stated no substantive change was
intended; 12 and (2) Colonial Penn Life Insurance Co. v. Parker, in which
a federal district court treated section 705.051 as having been
“amended” and, on that basis, applied a presumption that the
Legislature intended to make a substantive change to the statute. 13
Neither is an accurate description of the 2003 recodification of
section 705.051.
Having lost on that argument in the court of appeals, ANIC
changed tack in this Court, asserting that section 705.051’s plain and
unambiguous language—now and since its original enactment in 1909—
provides insurers a misrepresentation defense on the terms stated
therein and allows no other limitations. In clarifying its argument in

No. 7:17-CV-00475, 2020 WL 3107795 (S.D. Tex. May 8, 2020); Colonial Penn
Life Ins. Co. v. Parker, 362 F. Supp. 3d 380 (S.D. Tex. 2019).
12 6 S.W.3d 278, 284 (Tex. 1999). ANIC has also extensively cited and
discussed State Farm Life Insurance Co. v. Martinez, in which we held courts
could no longer apply a common-law rule following substantial changes to a
recodified law. 216 S.W.3d 799, 800, 803-04 (Tex. 2007).
13 362 F. Supp. 3d 380, 399-402 (S.D. Tex. 2019).

8
this Court, ANIC now acknowledges—quite correctly—that the
Legislature not only declared that the 2003 recodification was
nonsubstantive, it also left section 705.051’s language materially
unchanged. 14 Accordingly, we do not consider the prior law repealed.

14 Compare TEX. INS. CODE § 705.051 (“A misrepresentation in an
application for a life, accident, or health insurance policy does not defeat
recovery under the policy unless the misrepresentation: (1) is of a material fact;
and (2) affects the risks assumed.”), with Act of May 22, 2003, 78th Leg., R.S.,
ch. 1274, §§ 1, 2, 2003 Tex. Gen. Laws 3611, 3611, 3752, 4138 (repealing former
Article 21.18 and recodifying it as section 705.051 in a “nonsubstantive
revision of statutes” made effective April 1, 2005), Act of June 7, 1951, 52d
Leg., R.S., ch. 491, 1951 Tex. Gen. Laws 868, 1075, 1091-92 (repealing and
codifying former Article 5045 as Article 21.18 using identical language and
“preserving the substantive law as it existed immediately before the passage
of this Act except as to laws affecting the business of insurance passed at the
Regular Session of the 52nd Legislature”), TEX. REV. CIV. STAT. art. 5045
(1925) (recompiling and renumbering former Article 4959 using its same
language) [adopted at the 39th Leg., R.S.], TEX. REV. CIV. STAT. art. 4959
(1911) (recompiling statutes but retaining numbering and the same language)
[adopted at the 32d Leg., R.S.], and Act approved Mar. 22, 1909, 31st Leg.,
R.S., ch. 108, § 68, 1909 Tex. Gen. Laws 192, 215 (enacting former TEX. REV.
CIV. STAT. art. 4959, now section 705.051, which said: “No recovery upon any
life, accident or health insurance policy shall ever be defeated because of any
misrepresentation in the application which is of an immaterial fact and which
does not affect the risks assumed.”); see also Researching Texas Law:
Constitution & Statutes, TEX. A&M SCHOOL OF L.,
https://law.tamu.libguides.com/c.php?g=513877&p=4146200 (providing links
to the 1911 and 1925 statutory recompilations with the text of former
Article 4959 at page 1037 of the 1911 statute and the text of former
Article 5045 at page 1410 of the 1925 statute) (last visited Apr. 25, 2023).
One amicus brief takes the position that the 2003 recodification
substantively changed section 705.051 by not materially changing its language
to expressly include an intent-to-deceive element. We cannot endorse this
approach to construing the statute in light of authority making prior judicial
interpretations applicable to statutes that have not substantively changed and
other well-settled principles like the legislative-acceptance doctrine and the
presumption that the Legislature acts with full knowledge of (and subject to)
extant law. See In re Ford Motor Co., 165 S.W.3d 315, 318 n.1 (Tex. 2005)
(applying precedent to the current version of a statute); Grapevine Excavation,

9
This brings us to the main issue on appeal: whether
section 705.051 is an exclusive misrepresentation defense that
effectively renders the common-law rule a dead letter.
III
“[A]n insurance policy is a contract that establishes the respective
rights and obligations to which an insurer and its insured have mutually
agreed.” 15 Insurance policies are construed as contracts and enforced as
contracts. 16 Under our precedent, an insurer cannot avoid contractual
liability based on a misrepresentation in an application for any type of
insurance without pleading and proving: (1) the making of the
representation; (2) falsity of the representation; (3) reliance by the
insurer; (4) the intent to deceive on the part of the insured in making
the same; and (5) the materiality of the representation. 17 The
requirement of intent to deceive is well settled, longstanding, and clearly

Inc. v. Md. Lloyds, 35 S.W.3d 1, 5 (Tex. 2000) (discussing the
legislative-acceptance doctrine); Monsanto Co. v. Cornerstones Mun. Util. Dist.,
865 S.W.2d 937, 940 n.5 (Tex. 1993) (observing that the Legislature was
presumed to be aware of this Court’s precedent in enacting and amending a
statute).
15 USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479, 488 (Tex. 2018)
(internal quotation marks omitted).
16Id.; see Anadarko Petroleum Corp. v. Hous. Cas. Co., 573 S.W.3d 187,
192-93 (Tex. 2019); RSUI Indem. Co. v. Lynd Co., 466 S.W.3d 113, 118-19
(Tex. 2015).
17 Mayes v. Mass. Mut. Life Ins. Co., 608 S.W.2d 612, 616 (Tex. 1980)
(collecting cases and articulating the elements of the common-law
misrepresentation defense); see Union Bankers Ins. Co. v. Shelton, 889 S.W.2d
278, 282 (Tex. 1994) (plurality op.) (stating that the Mayes elements apply to
all types of insurance contracts); id. at 284-85 (Phillips, C.J., concurring)
(agreeing that intent to deceive is required); id. at 286 (Cornyn, J., concurring
and dissenting) (joining the concurring opinion as to the requirement of intent).

10
articulated. 18 But even though our body of law has operated in harmony
with section 705.051 since its original enactment, 19 ANIC insists that—
no matter how entrenched in our jurisprudence—the intent requirement
cannot be squared with the statutory language and must therefore yield.
Whether ANIC is correct depends on the proper interpretation of
the statute, which is a question of law we consider de novo according to

18 E.g., Union Bankers, 889 S.W.2d at 282 (plurality op.), 284-85
(Phillips, C.J., concurring), 286 (Cornyn, J., concurring and dissenting)
(collectively reflecting the Court’s unanimous opinion that proving intent to
deceive is necessary to avoid liability based on a misrepresentation in an
application for any type of insurance); Mayes, 608 S.W.2d at 616 (life
insurance); Washington v. Reliable Life Ins. Co., 581 S.W.2d 153, 160 (Tex.
1979) (life insurance); Allen v. Am. Nat’l Ins. Co., 380 S.W.2d 604, 607 (Tex.
1964) (life insurance); Clark v. Nat’l Life & Accident Ins. Co., 200 S.W.2d 820,
822-23 (Tex. 1947) (life insurance); Great S. Life Ins. Co. v. Doyle, 151 S.W.2d
197, 201 (Tex. [Comm’n Op.] 1941) (reinstatement application for life
insurance); Colo. Life Co. v. Newell, 78 S.W.2d 1049, 1051 (Tex. Civ. App.—El
Paso 1935, writ ref’d) (life insurance); Westchester Fire Ins. Co. v. Wagner, 57
S.W. 876, 878 (Tex. Civ. App. 1900, writ ref’d) (fire insurance proof of loss).
ANIC contends two cases—one of ours and one from the Commission of
Appeals—implicitly reject the common-law intent requirement in light of the
1909 Insurance Code enactments. However, no issue of intent was presented
in either case. See generally Robinson v. Reliable Life Ins. Co., 569 S.W.2d 28
(Tex. 1978) (considering whether statutory conditions listed disjunctively are
actually conjunctive requirements for rescission and holding that former art.
21.16 [now section 705.004] requires proof of at least one, not both); Wright v.
Fed. Life Ins. Co., 248 S.W. 325 (Tex. Comm’n App. [Sec. A] 1923, judgm’t
adopted) (considering whether the “policy never took effect nor became a
binding obligation” of the insurer, and holding that the predecessors to
sections 705.051 and 1101.007 “in no way prohibit or invalidate the stipulation
[in the insurance application] that the policy sued on should not take effect
unless the insured was [actually] in good health at the time it was delivered”).
Neither case holds that intent is not required to rescind an insurance policy
based on a misrepresentation in an insurance application, but even if they
could be so construed, the great weight of our precedent is to the contrary. In
making this observation, we express no opinion as to whether these cases were
otherwise correctly decided or whether their analytical viability endures.
19 See supra notes 14 & 18.

11
established principles. 20 As always, our primary objective is to give
effect to the Legislature’s intent as manifested in the enacted language,
which we apply according to its plain and grammatical meaning unless
doing so would produce absurd results or a different meaning is
contextually apparent. 21 While “we must never ‘rewrite [a] statute
under the guise of interpreting it,’” 22 the issue here is not whether the
common law alters the statutory language but whether the Legislature’s
enacted language expressly or effectively forecloses the common law. It
goes without saying that statutes can modify or displace common-law
rules, but to resolve the instant dispute, we must ascertain whether
section 705.051 actually does so.
A
Section 705.051 is in Chapter 705 of the Insurance Code’s
“Consumer Protection” title, which governs misrepresentations by
policyholders in applying for insurance or filing a proof of loss. The
chapter is divided into three subchapters. 23
Subchapter A is composed of sections 705.001 to 705.005, which
apply to all types of insurance policies except (as stated in Subchapter C)
life insurance policies with two-year incontestability provisions “on
which premiums have been duly paid.” 24 Sections 705.003 and 705.004
govern enforcement of insurance policy provisions addressing,

20 Colorado County v. Staff, 510 S.W.3d 435, 444 (Tex. 2017).
21 Id.
22 Id. (quoting In re Ford Motor Co., 442 S.W.3d 265, 284 (Tex. 2014)).
23 TEX. INS. CODE §§ 705.001–.105.
24 Id. § 705.105 (exempting certain life insurance policies from
Subchapter A).

12
respectively, misrepresentations in proofs of loss and
misrepresentations in insurance applications. As a precondition to
invoking a misrepresentation defense at trial, section 705.005 requires
the insurer to give an insured or a deceased insured’s beneficiary notice
of the insurer’s intent to rescind within ninety days after discovering a
misrepresentation in an insurance application.
Subchapter B contains a single “special” provision,
section 705.051, that applies only to misrepresentations in applications
for life, accident, and health insurance. Subchapter C provides
additional special provisions—sections 705.101 to 705.105—that apply
only to life insurance policies. If premiums have been “duly paid,”
Subchapter C effectively exempts all life insurance policies from
Subchapter A, including the notice requirement, because all life
insurance policies are required to include a two-year incontestability
clause. 25
The principal provision at issue here, section 705.051, provides:

§ 705.051. Immaterial Misrepresentation in Life, Accident,
or Health Insurance Application

A misrepresentation in an application for a life, accident,
or health insurance policy does not defeat recovery under
the policy unless the misrepresentation:

25See id. §§ 705.105, 1101.006. Section 705.105’s phrasing is a curiosity
because it suggests that a life insurer that has not been duly paid would be
subject to section 705.005’s ninety-day notice requirement while one who has
been duly paid would be excused from providing the required notice. Why that
would be the case is not immediately apparent, but presumably, nonpayment
of premiums would carry other consequences distinct from the effect of any
misrepresentation in the insurance application.

13
(1) is of a material fact; and

(2) affects the risks assumed. 26

ANIC views this provision as effectively encompassing all the
common-law rescission elements, except intent to deceive, 27 and as
establishing an insurer’s right to rescind if both statutorily stated
conditions are satisfied. We disagree with ANIC’s preferred reading of
the statute and hold that section 705.051 is not discordant with the
common law, either expressly or by necessary implication.
Both the statutory and the common-law elements govern an
insurer’s misrepresentation defense because, grammatically,
section 705.051 states conditions that are necessary, not sufficient, to
defeat recovery. Conditions that are sufficient guarantee a result, while
conditions that are merely necessary do not. Take for example the
statement: “My car does not function unless it has gas and motor oil.”
Gas and motor oil are necessary, but not sufficient, for my car to
function. Though not expressly stated, the law of mechanics also
precludes my car from functioning unless it has an engine, tires, and a
key.
As written, section 705.051 does not guarantee that the insurer
can “defeat recovery under the policy” if both of the stated conditions are

26 Id. § 705.051.
27Although reliance is not expressly stated, ANIC admits it is inherent
in the materiality and risks-assumed conditions. The parties disagree about
whether the term “misrepresentation” inherently connotes some knowledge of
the true facts, and thus some intent to deceive, and whether the term can
encompass even innocent falsehoods. Our construction of section 705.051
renders these disputes immaterial.

14
satisfied; it only guarantees that recovery cannot be defeated if one or
the other is not. Consistent with its status as a consumer-protection
statute, section 705.051 sets a floor that cannot be avoided by contract
or under the common law, but it does not purport to grant insurers a
rescission defense at all, let alone on exclusive terms.
ANIC’s contrary construction works only if the statute is
rewritten to change “does not defeat” to “does defeat” and “unless” to “if”.
We might consider ANIC’s point well taken if that were what the statute
actually said, but it does not. Even taking “unless” to mean “except if”,
as ANIC urged in post-submission briefing, does not alter the plain
meaning of section 705.051 as establishing minimum conditions that do
not guarantee denial of recovery. So construed, the statute does not
inherently or necessarily conflict with settled law requiring pleading
and proof of intent to deceive in addition to the statutorily mandated
conditions.
ANIC argues we must conclude differently because the
Legislature knows how to impose an intent requirement and
conspicuously did so in section 705.104, which applies (1) only to
applications for life insurance policies and (2) only to a
misrepresentation defense raised once a life insurance policy is
incontestable. 28 Similar to section 705.051, section 705.104 constrains

28 Two federal district courts employing different rationales recently
held that the 2003 recodification effected a substantive change to
section 705.104. See Pruco Life Ins. Co. v. Villareal, No. H-17-2795, 2021 WL
4155250, at *12 (S.D. Tex. Sept. 13, 2021); Landeros v. Transamerica Life Ins.
Co., No. 77-CV-00475, 2020 WL 3107795, at *6-7 (S.D. Tex. May 8, 2020). Both
courts concluded that the 2003 recodification effectively reanimated
section 705.104’s plain language, which both courts said had been rendered
essentially superfluous by a 1909 legislative enactment that produced a

15
an insurer’s ability to avoid an insurance obligation based on a
misrepresentation in an insurance application, but the minimum
conditions the statute imposes are different:

§ 705.104. Misrepresentation in Application for Life
Insurance

A defense based on a misrepresentation in the application
for, or in obtaining, a life insurance policy on the life of a

conflict with language in section 705.104’s predecessor. The conflicting
enactment was said to be the requirement—in section 1101.006 and its
predecessor—that an insurance-policy provision contain an incontestability
clause stating the policy is incontestable after two years “except for
nonpayment of premium.”
Although section 1101.006 is still on the books, the district court in
Landeros concluded that section 705.104 was revived because it was recodified
in 2003—two years after the ostensibly conflicting statute had been
recodified—and the sequence of recodification events worked to amend
section 1101.006 to encompass the additional grounds for contract avoidance
beyond a contestability period in section 705.104. 2020 WL 3107795, at *6-7.
The district court in Pruco, on the other hand, concluded that the 2003
recodification substantively altered section 705.104 by reorganizing it and
altering its language. 2021 WL 4155250, at *12. Both cases said that, despite
section 705.104’s plain language, this Court had held that its predecessor had
become inoperative as to policies issued after 1909, but in light of the 2003
recodification, section 705.104 may now be enforced according to its plain
language. Pruco, 2021 WL 4155250, at *12 (citing Patton v. Am. Home Mut.
Life Ins. Co., 185 S.W.2d 420, 422 (Tex. 1945), as approving the analysis in Am.
Nat’l Ins. Co. v. Welsh, 22 S.W.2d 1063, 1064 (Tex. Comm'n App. 1930, judgm't
adopted)); Landeros, 2020 WL 3107795, at *6-7 (citing Am. Nat’l Ins. Co. v.
Tabor, 230 S.W. 397, 399 (Tex. 1921)).
We express no opinion as to whether either Pruco or Landeros was
correctly decided on that issue, which is not presented here. For purposes of
our analysis, the Legislature either rendered section 705.104 superfluous in
1909, so it has no bearing on section 705.051’s meaning, or the Legislature
intended it to be effective according to its plain language. We need not consider
whether section 705.104 has been substantively altered in word or legal effect
because that provision is relevant to the analysis here only to the extent its
plain language informs section 705.051’s proper construction, and for purposes
of addressing ANIC’s arguments on appeal, we assume that it does.

16
person in or residing in this state is not valid or enforceable
in a suit brought on the policy on or after the second
anniversary of the date of issuance of the policy if
premiums due on the policy during the two years have been
paid to and received by the insurer, unless:

(1) the insurer has notified the insured of the insurer’s
intention to rescind the policy because of the
misrepresentation; or

(2) it is shown at the trial that the misrepresentation was:

(A) material to the risk; and

(B) intentionally made. 29

ANIC contends that the intent element in section 705.104 would serve
no purpose unless section 705.051 is construed as excluding intent as a
prerequisite to denying benefits. Federal district courts have been
persuaded by this argument and, notwithstanding clear precedent from
this Court, have held that intent cannot be required to avoid liability on
a contestable insurance policy 30 (or by necessary implication, health and
accident policies, which are also governed by section 705.051 but not
section 705.104). For at least two reasons, we do not regard
section 705.104’s language as carrying the same interpretive import.

29 Emphasis added.
30See Colonial Penn Life Ins. Co. v. Parker, 362 F. Supp. 3d 380, 402-03
(S.D. Tex. 2019); see also Brown v. Bankers Life & Cas. Co., No. H-20-136, 2021
WL 2325448, at *3 (S.D. Tex. Mar. 30, 2021) (following Colonial Penn);
Guzman v. Allstate Assurance Co., No. 2:19-CV-187-BR, 2020 WL 7868100, at
*4-6 (N.D. Tex. Dec. 3, 2020) (same), rev’d on other grounds, 18 F.4th 157 (5th
Cir. 2021); Landeros v. Transamerica Life Ins. Co., No. 77-CV-00475, 2020 WL
3107795, *7-8 (S.D. Tex. May 8, 2020) (same).

17
First, making intent a statutory requisite to rescission when a life
insurance policy is otherwise incontestable is not inconsistent with
leaving it to the common law to impose an intent condition, or not, for
other types of policies (like accident or health insurance) or before a life
insurance policy is incontestable. Section 705.104 simply sets a
different statutory floor for a materially different situation.
Second, a review of the common law when section 705.104’s
predecessor, former Article 3096eee, 31 was enacted in 1903 suggests
that intent may have been expressly stated in that provision because,
before the statutory enactment, a life insurance policy that became
incontestable could only be canceled for a reason specifically stated in
the policy, which was strictly construed to avoid a forfeiture. 32 By

31 Act of March 27, 1903, 28th Leg., R.S., ch. 69, 1903 Tex. Gen. Laws
94-95, recompiled and renumbered as TEX. REV. CIV. STAT. art. 4951 (1911),
recompiled and renumbered as TEX. REV. CIV. STAT. art. 5049 (1925), repealed
and replaced by Act of June 7, 1951, 52d Leg., R.S., ch. 491, 1951 Tex. Gen.
Laws 868, 1084-85, 1092 (adopting former art. 21.35 without changes),
repealed and replaced by Act of May 20, 2003, 78th Leg., R.S., ch. 1274, § 2,
2003 Tex. Gen. Laws 3611, 3753-54, 4138-39 (adopting current TEX. INS. CODE
§ 705.104 as part of a nonsubstantive recodification effective April 1, 2005); see
Researching Texas Law: Constitution & Statutes, TEX. A&M SCHOOL OF L.,
https://law.tamu.libguides.com/c.php?g=513877&p=4146200 (providing links
to the 1911 and 1925 statutory recompilations with the text of former Article
4951 at page 1035-36 of the 1911 statute and the text of former Article 5049 at
page 1411 of the 1925 statute) (last visited Apr. 25, 2023).
32 See Mut. Rsrv. Fund Life Ass’n v. Payne, 32 S.W. 1063, 1065 (Tex.
Civ. App. 1895, no writ) (although the policy excluded coverage for suicide, the
court ordered the insurer to pay on the policy because the insured’s death “by
his own hand” occurred in the incontestability period, so that was no longer a
valid defense); see also Hibernia Ins. Co. v. Bills, 29 S.W. 1063, 1064 (Tex. 1895)
(language in an insurance policy effecting a forfeiture is strictly construed);
Franklin Life Ins. Co. v. Villeneuve, 68 S.W. 203, 206 (Tex. Civ. App. 1902, writ
ref’d) (the insurance policy was incontestable despite a misrepresentation on

18
changing the standard to permit cancellation if (among other things) the
misrepresentation was intentionally made, the Legislature effectively
made the standard after incontestability equivalent to the standard
Texas followed under the common law during the contestability period.
For either reason, our construction of section 705.051 does not
render section 705.104’s intent requirement meaningless. If
sections 705.051 and 705.104 are enforced according to their plain
language, the conditions stated in those provisions would prevent courts
and insurance policies from avoiding those minimum requirements for
rescission. 33 We therefore hold that more than one hundred years of
precedent is not repugnant to or displaced by the equally mature
legislative enactment now codified without substantive change as
section 705.051.
B
ANIC nonetheless urges us to abandon the scienter requirement,
bemoaning the common-law rule as a product of “judicial drift” that has
placed Texas in the minority. 34 ANIC’s proffered reasons are

the application); Franklin Ins. Co. v. Villeneuve, 60 S.W. 1014, 1015 (Tex. Civ.
App. 1901, no writ) (same);.
33 See supra note 28 (discussing cases analyzing whether
section 705.104 is enforceable according to its plain language).
34 See Mark C. Dillon, The Extent to Which “Yellowstone Injunctions”
Apply in Favor of Residential Tenants: Who Will See Red, Who Can Earn Green,
and Who May Feel Blue?, 9 CARDOZO PUB. L. POL’Y & ETHICS J. 287, 358 (2011)
(defining “judicial drift” as “the unintended expansion of case law by applying
one innocuous sentence of a decision to a broader set of circumstances in a later
case that was never initially intended or foreseen”).

19
insufficiently compelling to warrant destabilizing a body of
jurisprudence that is not in conflict with the statutory scheme.
It is true, as ANIC says, that some of the earliest authority
declaring the law “settled” is more conclusory than explanatory, 35 but
brevity is not unusual for opinions of the era. Conciseness of the
articulated rule makes the law clear and unmistakable, not infirm.
ANIC further assumes from precedential pith that the rule was
subsequently applied without a critical eye. Maybe so. But by 1941 we
had pointedly acknowledged the existence of divergent viewpoints and
reconfirmed our commitment to what was already considered to be
settled law in Texas. 36 Though Texas may be aligned with a minority of

35 See, e.g., Westchester Fire Ins. Co. v. Wagner, 57 S.W. 876, 877 (Tex.
Civ. App. 1900, writ ref’d) (“It is the settled rule that false statements, to avoid
a policy, must have been willful, and with design to deceive or defraud.”); Colo.
Life Co. v. Newell, 78 S.W.2d 1049, 1051 (Tex. Civ. App.—El Paso 1935, writ
ref’d) (life insurance) (“’The rule may indeed be regarded as well established
that to avoid a policy on the ground of misrepresentation it must be made
willfully and with intent to deceive, must have been material, and relied on by
the insured.’” (quoting Nat’l Life & Accident Ins. Co. v. Kinney, 282 S.W. 633,
644 (Tex. Civ. App.—Fort Worth 1926, no writ)).
36 See Great S. Life Ins. Co. v. Doyle, 151 S.W.2d 197, 201 (Tex. [Comm’n
Op.] 1941) (observing that “[m]any decisions [from other jurisdictions] are to
the effect that where untrue answers are given as to material matters[,] the
policy may be avoided without regard to whether [the] insured knew or should
have known that the answers were not true” while “[c]ourts of other
jurisdictions have held that before the defense of misrepresentations of
material facts may be maintained, it is necessary, not only to prove that the
representations were false, but also that they were made with intent to deceive
or defraud” and holding that this Court had already expressed its commitment
to the rule reflected in the latter line of cases by refusing the writ in Colorado
Life Insurance Co. v. Newell, 78 S.W.2d 1049, 1051 (Tex. Civ. App. 1935, writ
ref’d), which described the rule as “well established”).

20
jurisdictions in requiring intent to deceive, we are neither newly nor
unwittingly so. 37
We conclude that principles of efficiency, fairness, and legitimacy
counsel against unsettling that which has been settled so long and with
such clarity. “Adherence to precedent remains the touchstone of a
neutral legal system that provides stability and reliability,” so
“[d]epartures from precedent must be carefully considered and should
be rare.” 38 But while stare decisis is “not an inexorable command,” it
has its “greatest force” in areas where the Legislature may rightfully
flex its constitutional power, like enactment of the Insurance Code
provisions at issue here. 39 In over a hundred years, there has been no
indication that the Legislature disagrees with the common-law
approach to enforcement of insurance contracts.
Adhering to our precedent, we therefore hold that insurers must
plead and prove intent to deceive to avoid contractual liability based on
a misrepresentation in an application for life insurance, whether the
policy is contestable or not. Proof of a material inaccuracy is not enough.
We express no opinion as to whether the record bears legally sufficient
evidence of intent because ANIC’s summary-judgment motion did not
argue that intent was conclusively established.

37 Union Bankers Ins. Co. v. Shelton, 889 S.W.2d 278, 285 (Tex. 1994)
(Phillips, C.J., concurring) (noting the Court’s awareness that Texas had
adopted the minority rule); see id. at 282 (plurality op.), 284-85 (Phillips, C.J.,
concurring), 286 (Cornyn, J., concurring and dissenting) (unanimously
embracing the minority rule).
38 Mitschke v. Borromeo, 645 S.W.3d 251, 263 (Tex. 2022).
39 Id. at 260, 265.

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C
We do not reach the third issue—whether ANIC’s denial of
benefits was proper as a matter of law—because, as presented in this
Court, success on that issue is premised on the common-law rule’s
invalidity. But to the extent ANIC contends Arce’s statutory bad-faith
claims are not viable based on a bona fide dispute about that matter, we
hold that summary judgment is not proper because the record bears
some evidence to the contrary. 40 When deposed, ANIC’s claims adjuster
testified that Bertha’s claim was not denied based on a dispute about
whether the law requires proof of intent to deceive but, rather, on the
adjuster’s conclusion that Arce’s misrepresentation was, in fact,
intentional. Because ANIC’s summary-judgment motion only asserted
a good-faith dispute about whether intent to deceive is required—not
about whether it exists—summary judgment is not proper on Bertha’s
claims under sections 541.060 and 541.061 of the Insurance Code.
However, the court of appeals erred in reversing summary
judgment based on ANIC’s alleged failure to give timely notice under
section 705.005. The court held that, as a matter of law, ANIC did not
give notice within ninety days after discovering the alleged
misrepresentation, which is true but beside the point. 41 The question is
whether notice was required at all. It was not, because section 705.105
makes section 705.005 inapplicable to life insurance policies with a
two-year incontestability period, like Arce’s policy, when premiums have

40 See Kachina Pipeline Co. v. Lillis, 471 S.W.3d 445, 449 (Tex. 2015).
41 633 S.W.3d 228, 236-37 (Tex. App.—Amarillo 2021).

22
been duly paid. 42 ANIC submitted affidavit evidence that the premiums
were paid; the court of appeals upheld the trial court’s decision
overruling Bertha’s objections to that evidence; 43 and Bertha has not
appealed the adverse appellate ruling. Accordingly, we reverse and
render judgment that section 705.005’s notice requirement is
inapplicable to Arce’s life insurance policy as a matter of law. 44
IV
For the reasons stated, we reverse and render judgment that
section 705.005’s notice requirement does not apply to Arce’s life
insurance policy, but we otherwise affirm the court of appeals’ judgment
and remand to the trial court for further proceedings.

John P. Devine
Justice

OPINION DELIVERED: April 28, 2023

42 See TEX. INS. CODE § 705.105.
43 633 S.W.3d at 232-33.
44See Kachina Pipeline, 471 S.W.3d at 449 (summary judgment is
proper when no genuine issue of material fact exists and the movant is entitled
to judgment as a matter of law).

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