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

Supreme Court of Texas

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No. 21-0843

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American National Insurance Company,

Petitioner,

v.

Bertha Arce, Individually

and as Representative of All Others Similarly Situated,

Respondent

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On Petition for Review from the

Court of Appeals for the Seventh District of Texas

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JUSTICE YOUNG, concurring.

To defeat an insured’s recovery under a life-insurance policy on

the grounds of misrepresentation, § 705.051 of the Insurance Code lists

two elements that an insurer must establish: that the misrepresentation

(1) was of a material fact and (2) affected the risks assumed. The Court

holds today that the insurer must establish a third element: that the

misrepresentation was made with the intent to deceive. This third

element comes not from the statutory text but from the common law.

How can our text-centered approach to statutory interpretation

generate such an outcome? I write separately to address this question,

which implicates the interrelated roles of stare decisis, the common law,

and statutes. I also write to discuss what today’s decision does not

mean—specifically, it does not mean that courts may freely draw from

the common-law well to “supplement” statutory requirements.

I

A

Petitioner asks us to declare that the intent-to-deceive element is

no longer good law. According to petitioner, the common-law rule is

inconsistent with § 705.051 of the Insurance Code; the two cannot coexist;

and the statute must therefore take precedence. Yet the two have

coexisted—for over a century. The statute was enacted in 1909. See ante

at 2. If there is fatal inconsistency today, there was fatal inconsistency

then and at every point in between. Neither the statute nor the common

law (which, importantly, predated the statute) has changed in any

material way. If we were writing on a blank slate—if, for example,

§ 705.051 were enacted for the first time today—we would have to resolve

as a matter of first impression whether the statute’s enumeration of two

discrete requirements to defeat recovery would exclude an unenumerated

intent-to-deceive element. But that ship sailed long ago. As the Court’s

scholarly examination reflects, this Court’s cases have jointly applied

the statutory and common-law requirements from the start. Whether

those requirements can coexist is not an open question. As a matter of

law, they can, because that legal question was settled long ago.

This conclusion does not require me to believe (or disbelieve) that

it was correct to maintain the common-law intent-to-deceive element

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upon the enactment of the statute. Even conclusively establishing the

wrongness of that choice would be, in and of itself, insufficient to

overcome stare decisis.1 “After all, [that] doctrine exists to protect

wrongly decided cases.” Mitschke v. Borromeo, 645 S.W.3d 251, 260

(Tex. 2022). How could it be otherwise? Stare decisis would protect a

null set if it protects only precedents with which we already agree. To

overcome precedent, we need more than asserted (or even proven) error.

See id. at 263–66. Our traditional guideposts that direct our path when

considering overruling an erroneous precedent—efficiency, fairness, and

legitimacy—do not point toward a change in this context.

“Efficiency” does not support tearing down a longstanding

precedent that is clear and easily administrable. See id. at 263–64.

Insurers may find it challenging to prove intent, of course. But the

question is whether the substantive requirement of proving intent to

defeat recovery is clear, and it is.

Nor is there any “fairness” ground for changing course now.

Instead, “[o]ur reluctance [to unsettle precedent] is particularly acute in

property and contract cases,” like this one, because citizens are

especially entitled to rely on the stability of legal rules in such private-

law areas. Id. at 264. To the extent that a precedent involves statutory

construction (including interpreting a statute in a way that has allowed

this coexistence), stare decisis is at its peak. Id. at 265. “Even there,”

however, “circumstances may require the correction of seriously mistaken

1 As I describe in Part II, infra, I conclude that the courts were likely

correct to have maintained the intent-to-deceive element. But my vote in this

case would be the same even if I reached the opposite conclusion.

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and harmful precedents.” Id.; see id. at 265 n.24 (noting cases in which

this Court and the U.S. Supreme Court overruled statutory-interpretation

precedents). But I see no plausible argument that the coexistence of the

statutory and common-law elements was especially wrong or harmful,

much less both.

This last point dovetails with “legitimacy,” the final stare decisis

guidepost. Legitimacy requires adhering to precedents for the sake of

stability and reliability, even if they were conceived in error, but

“adhering to or entrenching a precedent that is egregiously wrong or

that has lost its underpinnings does not foster legitimacy.” Id. at 266.

If subsequent law has shaken (or destroyed) a precedent’s foundations,

then the precedent may stand like a hollowed tree—ready to fall for lack

of vitality. That was the reason stare decisis did not impede overruling

the precedent at issue in Mitschke itself. Id. It is mistaken to think of

stare decisis as interested only in preserving a precedent at all costs; the

doctrine’s role is to help us determine, in a principled and neutral way,

what to preserve. But legitimacy interests do not support changing the

status quo here. The fact that the common law and the statute have

dwelled together in comparative quietude for so long supports the notion

that it was not egregious (even if it was wrong) to allow such coexistence.

Taken together, these points confirm that there is nothing

extraordinary about this corner of the law that warrants repudiating

longstanding precedent and practice. Accordingly, as I see it, the most

we could muster is a sense that, had we been the ones to make the

decision in the first instance, we may have decided things differently.

That cannot be enough. If retrospective doubts about statutory

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decisions justify overturning long-settled legal principles, there would

be no long-settled legal principles. “Every day would be a new day in

the life of the law; every case would present an opportunity to refashion

settled principles and a temptation both for parties and courts to

disregard disliked precedents.” Id. at 258.

Petitioner’s argument, however, largely depends on revisiting

decisions already made. Petitioner invokes principles—like our plain-

text approach to statutory interpretation—with which I agree and that

would require careful consideration if we were confronting a truly open

question. In my view, however, stare decisis applies and has not been

overcome. That is enough to resolve the case even if the statute would

otherwise not bear the reading that the Court gives it.

B

This conclusion would be true regardless of whether the intent-

to-deceive element, which originated in the common law, remains part

of the common law or if, like the inosculation of two trees, it has merged

into the statute by judicial interpretation and legislative consent.

Suppose that the intent-to-deceive requirement is still nothing

but a freestanding common-law doctrine. If so, we could abrogate it

using our own authority. All common-law courts can do that. See, e.g.,

Price v. Price, 732 S.W.2d 316, 319 (Tex. 1987) (abolishing the common-

law doctrine of interspousal tort immunity); Rogers v. Tennessee, 532

U.S. 451, 453–55 (2001) (describing the consequences of the Tennessee

Supreme Court’s abolition of the old common-law “year and a day rule,”

under which a defendant could not be convicted of murder if the victim

survived longer than that period of time).

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The question is not of authority but of propriety. Stare decisis

would counsel against doing so here, at least based on the arguments we

have before us. For one thing, petitioner has not asked us to simply

abrogate the common-law rule by exercising our common-law authority.

Instead, petitioner argues that the statute itself requires this result.

But this contention, too, implicates stare decisis. The relevant precedent

has at least two components: (1) the substantive principle (the part that

compels insurers to establish the insured’s intent to deceive) and (2) a

jurisprudential principle (under which the common law’s scienter

element permissibly stands alongside the statute’s requirements).

As Mitschke illustrates, even when stare decisis applies, its

default presumption of retaining a challenged precedent can be

rebutted. That is true in contexts like this one, where the common law

is challenged on the ground of its incompatibility with a statute. Indeed,

that is a very powerful ground because of the primacy of statutory law.

Under our constitutional system, in which the People govern themselves,

statutes enacted by elected political representatives are the chief vehicle

for the People to exert their authority. This Court can and should

overrule a common-law precedent when developments external to the

judicial system undermine the precedent’s vitality, as we did, for example,

in Texas Mutual Insurance Co. v. Ruttiger, 381 S.W.3d 430 (Tex. 2012).

In Ruttiger, we recognized that intervening statutory law

provided a basis to doubt the viability of the cause of action that this

Court had created in Aranda v. Insurance Co. of North America, 748

S.W.2d 210 (Tex. 1988). See Ruttiger, 381 S.W.3d at 447. Significantly,

Aranda was followed by massive statutory revisions indicating legislative

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intent to achieve a comprehensive and exclusive method to resolve the

kind of claims that Aranda addressed. Id. at 441–44, 449–50. The new

statutory regime and the Court-created tort coexisted uneasily for a time.

In Ruttiger, we did not hold that the legislature had directly eliminated

the common-law action; rather, we concluded that the legislation so

thoroughly demolished the basis for our precedent that we should take

the step of overruling Aranda. Id. at 451. The decision was ours and

not compelled by the legislature. Id. at 450. But as Ruttiger illustrates,

the proper way for us to make such a decision is to account for the

separation of powers and the preeminence of statutory over common law.

This case is markedly different. Unlike in Ruttiger, no legislative

action has either expressly or functionally changed the status quo once

the courts made clear that the statutory and common-law requirements

would coexist. Unlike the highly reticulated statutory program that (at

best) fit awkwardly with the existence of the Aranda cause of action, the

intent-to-deceive requirement became no less compatible with the

Insurance Code. And whereas the short-term coexistence of Aranda and

the new statute was always fraught, the coexistence of the statutory and

common-law requirements at issue here has been lengthy and peaceful.

I agree with the Court that the intent-to-deceive element is not

fatally inconsistent with the statute. But, again, I believe that we could

reach this result without accepting petitioner’s invitation to relitigate it

“de novo.” Cf. ante at 11. Our standard application of stare decisis

presents a barrier that could be overcome upon showing something new

and material in statutory or other law or, even without that, on

identifying some exceptional irregularity in our precedent. But unlike

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in Ruttiger, no new developments have been added to the equation, and

there is nothing extraordinary about the precedent itself. There is no

real work for us to do here.

C

But there is more. Not only has nothing new happened that

would make this case like Ruttiger (or otherwise demonstrate the need

for the common-law rule to recede), but the contrary is true. The

legislature has not merely failed to do anything that would change the

status quo, but has taken no such action despite repeatedly revisiting,

revising, and recodifying the Insurance Code.

As the Court rightly notes, we presume that the legislature “acts

with full knowledge of . . . extant law.” Ante at 9 n.14. Thus, in the

legislature’s recurring visits to the Insurance Code, it has brought along

the knowledge that leaving § 705.051 intact amounted to leaving the

common-law requirement intact, too. Hence the significance of the

Court’s observation that, “[i]n over a hundred years, there has been no

indication that the Legislature disagrees with the common-law approach

to enforcement of insurance contracts.” Ante at 21.

This statutory history suggests that the common-law requirement

has never been foreign to the statute’s operation. Indeed, because of the

presumption of the retention of the common law, it would not have been

unreasonable (as I describe below, see infra Part II) for early twentieth-

century courts to have regarded the legislature’s enactment as embracing

the intent-to-deceive requirement from the start. One way or another,

one could conclude that the common-law requirement began as, or for

all practical purposes became, part of the larger statutory scheme.

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If so, the stare decisis analysis would be even stronger, because

adherence to a stable understanding of statutory precedents is especially

important. Mitschke, 645 S.W.3d at 265. The more tightly linked a

common-law principle is to the statute itself, the more cautious we

should be about disturbing it. One important reason even to have a

concept of legislative ratification or acceptance (whether formally

applicable here or not) is that uprooting law that is intertwined with

statutory enactments risks undermining the statutes. At the very least,

destabilizing preexisting common law of which the legislature was aware

should be done, if at all, with great care and for only compelling reasons.

Said differently: If preexisting common law has become closely

linked with the administration of a statutory program, and if the

legislature has revisited the general statutory terrain but done nothing

to change the specific part of the law at issue, further changes should

normally come from the legislature and not from the courts. The

legislature at any time could have, and at any time still may, abrogate

the intent-to-deceive element, either expressly or by necessary

implication. The affected public, relevant industries, bar organizations,

and other interested parties are always free to present their arguments

to the legislature whenever that body meets. If the legislature becomes

persuaded to change course, it need only say so, and the courts will apply

the new law as cheerfully as they applied the old.

II

The foregoing analysis can assume, at least for argument’s sake,

that Texas courts have been wrong all these years to retain the intent-

to-deceive requirement despite § 705.051’s silence regarding scienter.

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At the very least, petitioner’s textual arguments are far from trivial.

I conclude, however, that the Court’s reading is correct—not just,

or even primarily, because the statute uses the word “unless.” It would

be too much, and too judicially self-aggrandizing, to assert that any time

the legislature uses that conjunction, it leaves a gaping hole for the courts

to fill at will. Even if the statutory requirements are linguistically a

“floor” rather than a “ceiling,” that hardly means that the courts are

empowered to drag furniture onto the floor whenever the spirit moves

them. I do not understand the Court to say any such thing, of course;

instead, I join the opinion for its correct and properly modest holding

that the statute’s choice of language fails to expressly foreclose the

preexisting common-law requirements.

This holding is correct because new legislation, merely by its

passage, neither supplants existing common-law doctrines nor repeals

existing statutory provisions. To the contrary, either sort of law that

antedates a new enactment can serve as a useful reference point for

determining what that later law means.2 Historically, the common law

is especially valuable. “[W]e construe statutory language against the

2 See, e.g., Brown v. City of Houston, 660 S.W.3d 749, 755 (Tex. 2023)

(“Statutory history concerns how the law changed, which can help clarify what

the law means.”); Gilbert v. United States, 370 U.S. 650, 655 (1962) (“For in the

absence of anything to the contrary it is fair to assume that Congress used that

word [forgery] in the statute in its common-law sense.”); In re Soza, 542 F.3d

1060, 1071 (5th Cir. 2008) (Wiener, J., concurring) (“I can only justify providing

content to the Insurance Code’s fraud provision by giving ‘fraud’ its common

law meaning, not by torturing other incompatible statutes.”); Felix

Frankfurter, Some Reflections on the Reading of Statutes, 47 Colum. L. Rev.

527, 537 (1947) (“[I]f a word is obviously transplanted from another legal source,

whether the common law or other legislation, it brings the old soil with it.”).

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backdrop of common law, assuming the Legislature is familiar with

common-law traditions and principles.” Marino v. Lenoir, 526 S.W.3d

403, 409 (Tex. 2017). “Congress is understood to legislate against a

background of common-law . . . principles, and when a statute covers an

issue previously governed by the common law, we interpret the statute

with the presumption that Congress intended to retain the substance of

the common law.” Samantar v. Yousuf, 560 U.S. 305, 320 n.13 (2010)

(internal quotations omitted). This principle applies to all positive law—

not just statutes, but constitutional texts, too.3 And given this State’s

rich common-law history, see, e.g., JDH Pac., Inc. v. Precision-Hayes

Int’l, Inc., 659 S.W.3d 449, 450–51 (Tex. 2022) (Young, J., concurring),

law is seldom written on a blank slate.

The statute and the common law that existed at the time of the

statute’s enactment thus cannot be read as separate, independent rules

of decision. As we observed last year in Taylor v. Tolbert, “we follow an

‘opt-out’ approach that incorporates common-law principles absent the

Legislature’s clear repudiation.” 644 S.W.3d 637, 650 (Tex. 2022). We

3 See, e.g., D’Oench, Duhme & Co. v. FDIC, 315 U.S. 447, 471 n.9 (1942)

(Jackson, J., concurring) (“Particularly in the clauses dealing with the rights

of the individual, the Constitution uses words and phrases borrowed from the

common law, meaningless without that background, and obviously meant to

carry their common-law implications.”); Stephen Sachs, Constitutional

Backdrops, 80 Geo. Wash. L. Rev. 1813, 1822 (2012) (“Our founding document

is firmly rooted in the common-law tradition, in which each new enactment is

layered on top of an existing and enormously complex body of written and

unwritten law.”); William Baude, Sovereign Immunity and the Constitutional

Text, 103 Va. L. Rev. 1, 9–22 (2017) (arguing that state sovereign immunity is

a “constitutional backdrop”—that is, a background rule of common law that

the Constitution insulates from change).

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must, therefore, essentially read the statute with a common-law gloss.4

It is only based on this understanding that I can make the assertions

that I made about stare decisis in Part I, supra, and that the Court can

rightly say that stare decisis “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.” Ante at 21 (quoting

Mitschke, 645 S.W.3d at 265).

The law of defenses to statutory actions—especially but not

exclusively in criminal prosecutions—is comfortable with statutory

silence. In Staples v. United States, the Supreme Court observed that a

federal statute

is silent concerning the mens rea required for a violation. . . .

Nevertheless, silence on this point by itself does not

necessarily suggest that Congress intended to dispense with

a conventional mens rea element . . . . On the contrary, we

must construe the statute in light of the background rules

of the common law, in which the requirement of some mens

rea for a crime is firmly embedded.

511 U.S. 600, 605 (1994) (internal citation omitted). And as Taylor put

it in a civil context, “[w]hen the Legislature makes [new] law, it does so

against a backdrop in which common-law defenses abound, and those

4 This concept is abstract but important, full of real-world implications.

One particularly prominent (and controversial) one is the defense of qualified

immunity in suits brought under 42 U.S.C. § 1983. I take no position on the

recent scholarly debates about that defense, but the conventional belief is that

in passing the Civil Rights Act of 1871 and providing individuals a cause of

action for violations of their constitutional rights, the Reconstruction Congress

did not abrogate—and thus incorporated into the law—the applicable and

preexisting common-law immunities that state officials could originally claim

in analogous tort suits. See, e.g., Pierson v. Ray, 386 U.S. 547, 555 (1967).

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defenses are generally available unless the Legislature clearly indicates

otherwise.” Taylor, 644 S.W.3d at 650. The observation that lawmaking

bodies act in light of the common law’s well-established background

norms, often regarding defenses, is not novel. As Judge Easterbrook put

it, defenses like “justification,” which have been around for “thousands

of years,” operate as background assumptions baked into the law, much

like “grammar and diction.” Frank H. Easterbrook, The Case of the

Speluncean Explorers: Revisited, 112 Harv. L. Rev. 1913, 1913–14 (1999).

Here, the common law’s scienter requirement—which amounts to

a defense by the insured if an insurer seeks to invalidate the policy—

was clear when the legislature acted. The legislature easily could have

but did not exclude that requirement. We must assume that legislative

choice to have been purposeful; it was at least consequential. Much as

in the cases cited above, its result was to retain the common law. I thus

agree with the Court that petitioner’s plain-text arguments are

unavailing, because petitioner would need text that excludes the intent-

to-deceive element; silence is petitioner’s enemy, not its friend. This

result remains true even though the legislature expressly codified some

parts of the common law while leaving the intent element unwritten.

That pattern is not particularly rare; the statutes that draw from

criminal and civil common-law actions, yet are silent about intent, all

mimic it. Nor does the retention of the intent-to-deceive requirement

render the codified portions of the law superfluous. The very act of

codification ensures that no matter what this Court were to do with the

common law, the requirements’ presence in a statute book would prevent

further judicial modification; they would endure in the form that the

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legislature adopted.5 Thus, the legislature either left it to the courts to

determine the compatibility of the intent-to-deceive element or it assumed

the continuation of the existing standard without need of codification.

That is just an academic question now, since the courts reaffirmed that

the intent-to-deceive requirement would remain and the legislature has

never said otherwise. Stare decisis takes over at this point.

In saying all this, however, I distinguish between, on the one

hand, the intent-to-deceive requirement that the legislature knew was

already part of the common law (much as a car owner’s knowledge that

a key is also required to operate a car, see ante at 14) and, on the other,

some hypothetical wholly different and unexpected requirement. The

courts may not simply add whatever additional requirements they

desire based either on statutory silence about such a requirement or on

the use of “unless” in the statute’s text. Notably, this Court has not

purported to add new requirements—we have simply adhered to the

common-law principles that the legislature knew to already exist.

Equally important—and far more so today than in 1909—we

should be wary of new common-law innovations altogether, whether

framed as a “gloss” on a statute or a new cause of action. As I have

previously observed, “it is increasingly less likely than ever before that

there are [statutory or regulatory] gaps that judges alone can (much less

should) fill.” Elephant Ins. Co. v. Kenyon, 644 S.W.3d 137, 157 (Tex.

2022) (Young, J., concurring). By the same token, we must also be

5For similar reasons, I agree with the Court’s detailed explanation for

why § 705.104’s intent requirement does not become superfluous unless we

adopt petitioner’s construction of § 705.051. See ante 18–19.

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mindful of the truism that we may not “rewrite the statute under the

guise of interpreting it.” In re Ford Motor Co., 442 S.W.3d 265, 284 (Tex.

2014). But today’s decision involves no innovation of any sort, much less

any improper judicial adventurism. The Court merely leaves intact

principles that have been part of Texas law for the bulk of Texas history.

Indeed, for all the reasons I have described, I am persuaded that

any judicial impropriety would come not in retaining but in abandoning

the intent-to-deceive requirement. I say that not because of any policy

preference (I have none), but because dispensing with the scienter

element would unjustifiably destabilize settled law. Doing so would not

reflect judicial humility or deference to a statute, as it might seem at

first glance; it instead would be an aggressive flexing of judicial muscle.

* * *

At this point, the scienter element must be regarded as within the

legislature’s exclusive authority. That body, not this one, should hear

any arguments concerning the wisdom of requiring proof of intent to

deceive or complaints about Texas law not being in accord with the law

of other states. If and when the legislature determines that the intent-

to-deceive requirement has outlasted its usefulness, it can say so. Or it

could take other steps that, by necessary implication, may justify this

Court’s reconsideration of that requirement, comparable to the Court’s

analysis in Ruttiger. Either way, to avoid the common-law intent-to-

deceive element that has become part and parcel of the statutory scheme,

petitioner must have something from the legislature (and something

material—not a mere stylistic change in the statutory language).

Nothing less can surmount the formidable stare decisis obstacle of

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“unsettling that which has been settled so long and with such clarity.”

Ante at 21.

I therefore gladly join the Court’s opinion affirming the judgment

below.

Evan A. Young

Justice

OPINION FILED: April 28, 2023

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