Aguilar v. Liberty Bankers: Refunding the Premium Defeats a Ratification Theory

Background

The pro se plaintiff alleged that his number had been on the National Do Not Call Registry since 2012 and on the Texas registry since 2023, and that he received at least 163 calls from spoofed numbers soliciting final expense life insurance. To identify the source, he bought a policy. When the policy arrived he alleged that it confirmed the calls were made on behalf of the insurer, and that the policy had the signature of an agent he'd spoken with. He then cancelled the policy and revoked any consent. The insurer returned his $90.36 in premiums by check, which he did not cash because the check had release language.

Standing Versus Merits

The insurer moved to dismiss for lack of standing, the calls not traceable to it. The court denied that motion. Whether the insurer is responsible under actual authority, apparent authority, or ratification is a merits question.

Actual Authority

Under the Federal Communications Commission (FCC) 2013 Dish Network ruling, sellers can be vicariously liable under federal common law agency principles, but agency is not presumed. The plaintiff must allege actual authority to make the unlawful calls, not just the existence of an agency relationship. The complaint offered only conclusory labels. The court also considered the insurer's agent contracts under Rule 10(c), which expressly prohibited autodialers, prerecorded messages, calls to do not call numbers, and any conduct violating telemarketing laws.

Apparent Authority

Apparent authority depends on the principal's own conduct and the third party's reasonable reliance on it. The plaintiff did not allege that he spoke with any insurer employee or relied on any representation by the insurer itself. Statements by the agents could not create apparent authority.

Ratification

Ratification occurs when a principal retains the benefits of a transaction with full knowledge of it. Purchases made through unlawful telemarketing, combined with knowledge and retained profits, can support ratification. But here the insurer returned the premium after cancellation, so it didn't keep anything. The court found it immaterial that the plaintiff had not cashed the refund check. The insurer had ceded back all benefits, and any release language on the check did not convert the refund into ratification.

Disposition

The court granted the motion to dismiss for failure to state a claim without prejudice and required any renewed motion to explain in five pages or fewer how a proposed amended complaint would adequately plead vicarious liability.

Practical Implications

For insurers and other sellers using independent agents, written prohibitions on unlawful telemarketing can be considered at the pleading stage when the complaint relies on the agency relationship, and a prompt refund on a policy procured through a complained-of call may undercut ratification. For plaintiffs, a test purchase can help identify the seller, but it does not by itself establish authority. Pleading facts about the seller's control over the calling campaign, or its knowing retention of benefits, remains essential.

Read the Southern District of Texas memorandum and opinion in Aguilar v. Liberty Bankers.