The U.S. government awarded Shihche Lin (Lin), an electrical engineer, a contract to perform work on a hydroelectric plant in Michigan. The contract required Lin to provide a performance bond and to procure commercial general liability (CGL) insurance. Lin purchased the bond from a surety company and obtained quotes for CGL insurance from two insurance agencies–Metro Allied Insurance through its agent Michael McGlothlin (collectively, Metro), and Elbert Insurance. Lin testified that he obtained the Elbert quote because he did not feel comfortable with the original quote from McGlothlin as it lacked detail. Lin forwarded the Elbert quote to McGlothlin as an example of the type of coverage he sought.

The federal government terminated Lin's contract and required Lin's surety company to complete the contract under the performance bond. To recoup the money it spent to complete the contract, the surety company sued Lin in November 2000. Lin asked Metro to provide him with an attorney. McGlothlin repeatedly assured him that a CGL policy was in place and that a lawyer would be provided to Lin to assist in his defense under Lin's CGL policy. In 2002, McGlothlin discovered that no policy existed and reported the situation to Metro's errors and omissions insurer. Metro's errors and omissions insurance company refused to defend Lin, and Metro did not provide a defense for Lin in the suit filed by Lin's surety company. Lin settled the lawsuit for $175,000, which was less than the surety company had paid to the federal government after it terminated Lin's contract.

Metro acknowledged the failure to procure a CGL policy for Lin and that this failure was negligent. However, Metro disputed that the negligence caused Lin any damages.

The jury awarded damages against “Metro and/or McGlothlin” of $175,000 for negligence, actual damages of $200,000 under the DTPA and additional damages of $300,000 for knowingly violating the DTPA.

The Texas Supreme Court noted that the harm would have occurred only if the CGL insurance that Metro agreed to procure would have actually covered the injury suffered by Lin. Otherwise, Lin would have obtained an insurance policy that did not provide coverage for his surety's claims against him and the injury would have been the same regardless of whether Metro procured the insurance or not.

Because a more stringent causation standard of the current DTPA statute requires proof that the coverage sought was actually available in a CGL policy as sought by Lin, he was required to prove that the broker could have obtained the coverage he needed or that had the coverage he requested been obtained coverage would have been provided to Lin.

Because both producing cause and proximate cause require proof that a CGL insurance policy would have covered the damages, we consider whether Lin submitted legally sufficient evidence to carry his burden. Lin, at trial, produced no CGL insurance contract that provided coverage of his breach of contract damages that would have been, or normally was, sold by Metro. In fact, no CGL insurance agreement available in the market that would have provided coverage for the claims against him existed at the time of the application for insurance.

Lin argued only to his testimony that McGlothlin told Lin that the CGL policy McGlothlin believed was issued would cover the claims. McGlothlin testified that he never made any specific assurances as to what the putative policy covered, but that it would include “standard CGL coverages.” Even accepting Lin's characterization of McGlothlin's assurances as true, Lin is required to present legally sufficient evidence that the coverage he sought is obtainable to surmount the causation hurdle. The law is clear that misrepresentations about insurance coverage cannot, under the doctrine of estoppel, expand coverage provided in an insurance policy. An insurance agent's independent representations may affect his responsibilities to his client, but they cannot add to or alter the coverages of any insurance contract or provision. Therefore, Lin's testimony regarding McGlothlin's statements about coverage is no evidence that a contract, had one existed, would actually have covered his damages. There must be proof of an insurance policy that would cover the alleged injury.

In 1979, the Legislature amended the provision in the DTPA to change the causation standard from “adversely affected” to the current “producing cause” standard (Tex. Bus. & Com Code ? 17.50). The “producing cause” standard requires proof that the act was a substantial factor in bringing about the injury, without which the injury would not have occurred.

In this case, the Texas Supreme Court clarified the proof required under the amendment to the DTPA's 1979 causation standard. The material change in the statutory language indicates a legislative intent to create a different standard. The Legislature's amendment of the causation standard in the DTPA to “producing cause” establishes a higher standard for proof of causation in cases brought under the DTPA, including failure to procure insurance cases.

At trial, McGlothlin testified correctly that CGL policies may cover contractual liability for damages, but not performance or nonperformance of work. McGlothlin never opines that any contractual endorsement would have covered, or that he could have procured a policy that covered, Lin's nonperformance on the construction contract from any of the insurers contracting with Metro. Neither Elbert's agents nor any expert in insurance provided any testimony explaining what the Elbert quote covered. In fact, McGlothlin was the only witness presented by either side who had some knowledge of insurance and he both disclaims being an expert on insurance coverage and expressed his understanding that contractual coverage under a CGL policy does not cover performance under a contract. Concluding that the only evidence from the trial regarding the insurance coverage Metro was to provide was McGlothlin's testimony that contractual liability coverage is “rare,” that “violat[ing] a legal provision of a contract” is covered, but “performance on a contract” is not, and that providing CGL insurance that would have satisfied the Elbert quote likely provide some type of contractual coverage.

Because Lin brought forth no evidence of cause in fact as required to prevail under both his negligence and DTPA claims, the Texas Supreme Court reversed the court of appeals and remanded the case to the trial court to reinstate the judgment notwithstanding the verdict.