Insurance Agents & Brokers Liability

We obtained summary judgment dismissal, following Oral Argument, in a Philadelphia Commerce Court commercial litigation matter involving allegations of unfair competition and tortious inference with contract and business relationships, brought by one adult day care center against our client, a competing adult day care facility.  The plaintiff’s suit stemmed from alleged violation of regulations set forth by the Pennsylvania Department of Aging and its Office of Long-Term Living. The plaintiff’s final demand was $2 million, and no settlement offers were made before the trial court granted summary judgment.

We obtained dismissal of our insurance broker client on Motion for Summary Judgment in the Montgomery County Court of Common Pleas, Pennsylvania, on the basis of no duty breached, and lack of causation. Claimants asserted a professional negligence theory for allegedly allowing a commercial insurance policy to lapse, failing to notify the policyholder claimant of the lapse or cancellation, and allowing a subsequent gap in coverage to exist after the policy cancelled, when an underlying loss occurred. However, after completed discovery depositions and expert discovery, we successfully moved for summary judgment, arguing the policy cancelled because of the policyholder’s own failure to comply with premium audit requirements, rather than any liability or breach of standard of care by the insurance broker.

In a case where an insurance broker faced claims of professional negligence, Carol VanderWoude (Philadelphia) successfully defended the plaintiff’s appeal from a verdict obtained by Tim Ventura and Dana Gittleman (Philadelphia). The verdict against our client, an independent insurance broker, was well below the lost value of UIM coverage (i.e., $1 million), which the plaintiff sought to recover based on an alleged breach of the professional standard of care in failing to procure an endorsement for $ 1 million in UIM coverage on the plaintiff’s decedent’s commercial auto policy.  The verdict is notable because, at trial, the client gave unexpected testimony which impacted liability, and when confronted with the client’s new trial testimony, our standard of care expert conceded a breach of the professional standard of care. Still, causation/damages were contested, and it was disputed at trial that the plaintiff’s decedent would have actually received $1 million in coverage. Tim elicited testimony on cross-examination of the plaintiff’s expert to show that there was no evidence establishing the insurer would have provided additional UIM coverage even if the endorsement had been purchased.  Prior to trial the parties entered into a stipulation stating that damages were capped at the value of the lost coverage, $1 million. Plaintiff’s counsel challenged the low verdict on various grounds, focusing on the fact that our expert conceded a breach of a standard of care based on the client’s unexpected trial testimony. He argued that, as a matter of law, the damages amount was the lost value of the coverage and the verdict should be increased to $1 million. The trial court agreed with our arguments, raised in opposition to the plaintiff’s post-trial motions, that the low verdict amount was supported by the record and that the plaintiff’s requests for post-trial relief were otherwise waived for various reasons.  The Superior Court affirmed in a unanimous decision.   

We obtained dismissal of our insurance broker client on Motion for Judgment on the Pleadings in the Philadelphia County Court of Common Pleas on the basis of a statute of limitations defense. Plaintiff alleged a failure to procure insurance that would cover an employee’s death in the course of business operations. We successfully argued that the four-year statute of limitations applicable to breach of contract claims barred plaintiff’s claims based upon several instances of notice of the insurance policy terms and coverages, and a claim determination, all of which preceded the suit inception by more than four years. 

The agent was sued by a condominium association, that alleged the insurance agent inappropriately and unlawfully inserted himself into the insurance company’s investigation and tortuously interfered with a contract that resulted in the insurance company paying far less than the $1.3 million in damages alleged by the condominium association. After taking depositions of the individuals from the condominium association, the insurance company and defending his client’s deposition, we convinced the plaintiff’s attorney to dismiss all claims against the insurance agent.

We obtained a defense verdict in a one-week trial in Hudson County, New Jersey, in a case where the plaintiff alleged the defendant insurance producer failed to alert the plaintiff of a policy renewal coming up and then failed to advise him that the policy had lapsed, and he had no insurance.  The plaintiff claimed the defendant breached a contract to provide the plaintiff with notices by email and that the defendant breached a duty of care in a claim for professional negligence. Due to the breadth of the insurance policy at issue, the claim against the defendant was for $500,000. At trial, the plaintiff relied upon his testimony that he did not receive the notices or any calls from the defendants regarding the lapse. We argued and established that any potential breach of contract or breach of a professional duty of care was not the proximate cause of the plaintiff’s damages because he failed to take any steps to either calendar or diary his insurance renewal deadlines and also failed historically to timely renew his insurance policies in the eight years preceding this loss. After an hour and fourteen minutes of deliberation, the jury agreed with the defense and found that the plaintiff could not establish a proximate cause between the alleged breach of a duty of care and plaintiff’s damages.   

We successfully defended an insurance broker in a negligence claim. After a tornado damaged his property, the third-party plaintiff rented an excavator that was damaged due to a collision during its operation. Before renting the excavator, the third-party plaintiff contacted our client, an insurance broker, requesting that the agency procure insurance to protect him against loss to the excavator. Our client arranged for third-party plaintiff’s purchase of two policies; however, the specific collision that occurred was not covered under either policy. The insurance company for the rental facility paid for repairs to the excavator and demanded reimbursement from the third-party plaintiff who, in turn, requested our client satisfy the claim. The third-party plaintiff eventually dismissed his claims against our client after we argued: (1) the third-party plaintiff could not satisfy the elements needed to establish a negligence claim; (2) our client made no negligent misrepresentation of fact; and (3) our client did not owe a fiduciary duty to the third-party plaintiff. There were no facts to support a finding that there was negligence just because this specific instance was not covered by the policies in place. An insurer has a duty to read his policies and a failure to do so does not impute negligence. Additionally, there were no misrepresentation of facts and there was no fiduciary duty between the agent and the insured. For there to be a fiduciary duty between an agent and insured, there must be a mutual understanding of such, which was not the case here. 

We effectively shut down a Maryland Insurance Department investigation of a life insurance agent who was the subject of a customer complaint. The complaint alleged the agent oversold life insurance to a couple who contended the amount of insurance was excessive, unsuitable and unnecessary. We were able to demonstrate to the regulators that the agent did a thorough job in explaining the need and purpose for the coverage, and that the couple could afford the coverage and actually drove the decision to purchase the coverage, only changing their mind later, after the client was criticized by a subsequent insurance agent. We also defeated a Certified Financial Planner Board investigation involving the same matter. 

We successfully argued for the dismissal of an action in Wyoming County on a matter involving the sale by an agent of a number of mutual funds (with IRA retirement funds). In this case, the plaintiff contended the mutual funds were excessive and unsuitable. We convinced the trial court judge that plaintiff’s counsel’s lack of activity for several years on the case, and his failure to respond to long-outstanding discovery, warranted dismissal of the lawsuit.

The plaintiff, who owns a restaurant, sustained personal injuries in a car accident while on a business errand. He collected the tortfeasor’s liability limits of $100,000, and then filed underinsured motorist claims with his own insurance carrier who had issued the personal auto and commercial auto policies. The underinsured claims were denied by the carrier. There was no UIM coverage under the personal auto policy because the $100,000 UIM limits equaled the liability carrier’s limits. Further, although the plaintiff had $1 million UIM limits on his commercial policy, the Mazda he was driving at the time of the accident was not listed on the commercial policy; rather, it was listed on the personal auto policy. The court granted our motion for summary judgment on several bases: the Statute of Limitations began to run when the Mazda was first put on the personal auto policy, not when the accident occurred; despite the plaintiff’s and the agent’s friendship and long-standing business dealings, there was not a fiduciary relationship between the agent and insured customer; and the agent’s alleged statement to the plaintiff that he was covered in “every single possible way you can think of” did not amount to a misrepresentation of fact. 

We obtained dismissal of claims asserted against our insurance broker client for breach of contract and declaratory judgment in connection with a COVID-related business interruption loss. The Court granted our Motion to Dismiss, determining that plaintiff restaurant lacked a viable breach of contract claim against the insurance broker, and thus that the derivative declaratory judgment claim also failed as a matter of law.  The lawsuit arose from pandemic-related, government-mandated business closures and plaintiff’s claim for business interruption losses, which was denied by its insurer.  The allegations against our client pertained to alleged breach of the insurance policy and coverage obligations under the policy, which unequivocally stated that the parties to the insurance policy were plaintiff as policyholder and the insurer – not our insurance broker client.   In the Magistrate Judge’s Opinion, adopted by U.S. Middle District of PA Judge Mariani, the Court concluded that our client was not a party to the insurance policy contract and did not agree to undertake any responsibilities or liabilities for the insurer’s coverage determinations, but merely acted as an agent for a plainly disclosed principal (insurer) and facilitated the contract between the parties thereto.  

In a case where we represented an insurance broker, a Federal District Judge from the Southern District of West Virginia granted our motion to dismiss and dismissed the suit in its entirety. The plaintiff was a women’s fashion and accessory boutique. The suit arose from a dispute over the plaintiff’s insurance coverage for damages it sustained while being ordered to close by West Virginia’s COVID-19-related orders. The insurance carrier filed a motion to dismiss, and, thereafter, the plaintiff voluntarily dismissed the carrier. The broker filed a motion to dismiss all of the claims plead against it, including bad faith, West Virginia’s Unfair Trade Practices Act, estoppel and breach of fiduciary duty. The court dismissed the counts of bad faith and Unfair Trade Practices Act, finding that the plaintiff failed to provide sufficient allegations to support such claims. The court further explained that the plaintiff alleged very few facts specific to the broker and that the allegations plead did not support any unreasonable conduct by the broker, which is required to establish bad faith or deception. For similar reasons, the court held that the plaintiff’s estoppel claim failed. The plaintiff alleged the broker advised that they would have coverage as a result of the COVID-19 orders. The court found that the plaintiff failed to allege how it relied on those representations or how that reliance was detrimental. The alleged representations occurred months after the plaintiff accepted the policy and did not appear to have any impact on the plaintiff’s request for payments from its insurance carrier. Finally, the court explained that the plaintiff failed to identify any West Virginia authority to establish a breach of fiduciary duty against the broker. Regardless, the court found that the plaintiff failed to allege that it requested specific coverage before the broker procured the policy.

The plaintiff, who owned his own restaurant business, sustained personal injuries in a car accident while on a business errand. He collected the tortfeasor’s liability limits of $100,000 and then filed underinsured motorist claims with his own insurance carrier that had issued the personal auto and commercial auto policies. The underinsured claims were denied by the carrier. There was no UIM coverage under the personal auto policy because the $100,000 UIM limits equaled the liability carrier’s limits. Further, although the plaintiff had $1 million in UIM limits on his commercial policy, the Mazda he was driving at the time of the accident was not listed on the commercial policy; rather, it was listed on the personal auto policy. The plaintiff then sued the insurance agent and broker who listed the Mazda on the personal rather than commercial policy. He argued professional negligence, breach of fiduciary duty and negligent misrepresentation. Extensive discovery was conducted, including depositions of insurance standard of care experts for each side. The court granted Ray’s motion for summary judgment on several bases: the statute of limitations began to run when the Mazda was first put on the personal auto policy, not when the motor vehicle accident occurred; despite the plaintiff’s and the agent’s friendship and long-standing business dealings, there was not a fiduciary relationship between the agent and insured customer; and the agent’s alleged statement to the plaintiff that he was covered in “every single possible way you can think of” did not amount to a misrepresentation of fact.    

In a case where we represented an insurance broker, a Federal District Judge from the Southern District of West Virginia granted our motion to dismiss and dismissed the suit in its entirety. The plaintiff was a women’s fashion and accessory boutique. The suit arose from a dispute over the plaintiff’s insurance coverage for damages it sustained while being ordered to close by West Virginia’s COVID-19-related orders. The insurance carrier filed a motion to dismiss, and, thereafter, the plaintiff voluntarily dismissed the carrier. The broker filed a motion to dismiss all of the claims plead against it, including bad faith, West Virginia’s Unfair Trade Practices Act, estoppel and breach of fiduciary duty. The court dismissed the counts of bad faith and Unfair Trade Practices Act, finding that the plaintiff failed to provide sufficient allegations to support such claims. The court further explained that the plaintiff alleged very few facts specific to the broker and that the allegations plead did not support any unreasonable conduct by the broker, which is required to establish bad faith or deception. For similar reasons, the court held that the plaintiff’s estoppel claim failed. The plaintiff alleged the broker advised that they would have coverage as a result of the COVID-19 orders. The court found that the plaintiff failed to allege how it relied on those representations or how that reliance was detrimental. The alleged representations occurred months after the plaintiff accepted the policy and did not appear to have any impact on the plaintiff’s request for payments from its insurance carrier. Finally, the court explained that the plaintiff failed to identify any West Virginia authority to establish a breach of fiduciary duty against the broker. Regardless, the court found that the plaintiff failed to allege that it requested specific coverage before the broker procured the policy.

We defended an insurance agency and agent in the Twelfth Appellate District of Ohio. The plaintiffs contacted the insurance agent to obtain insurance for two residential properties. The agent obtained the requisite information for the insurance applications from the plaintiffs, including their primary mailing address, a post office box address. The agent advised them that their only insurance option was through the Ohio Fair Plan (OFP), as neither property had been insured in the prior three years. The plaintiffs gave the agent a check for the premium. The agent explained that the OFP would inspect both properties prior to issuing coverage and that coverage would be cancelled if any required repairs were not made. The OFP sent a notice of cancellation to the post office box listed on the insurance application. It also sent a refund check to the agent. The plaintiffs claimed that they never received the notice of cancellation or the refund check. They sued OFP, the agent and insurance agency. After written briefs and oral argument, the court of appeals affirmed summary judgment in favor of the agent and agency on the grounds that there was no evidence that the agent represented to the plaintiffs that the property had insurance coverage prior to a fire at one of the properties. Further, although the plaintiffs claimed that they never received notice of cancellation, the insurance application indicated that they would be informed directly from the insurer whether or not coverage was going to be provided. Therefore, the agent was not required to inform the plaintiffs of the cancellation. The court also held that the plaintiffs failed to present any evidence the agent fraudulently concealed the refund check from them, even if they did not receive the check.

We obtained summary judgment on behalf of an insurance agency and insurance agent in a fraud action. Venued in Cincinnati, the case involved a dispute over the agent’s alleged failure to procure insurance coverage for a residence that sustained extensive, uncovered fire damage. The client had assisted the two homeowners in procuring insurance coverage for their residential properties with the Ohio Fair Plan Underwriting Association, an entity created by the Ohio legislature to provide insurance for property that is not insurable in the normal insurance market. After completing an inspection of the property, Ohio Fair Plan issued a notice that the carrier was cancelling the homeowners’ insurance contract. Ohio Fair Plan also issued a refund check to the homeowners. Sometime thereafter, a fire occurred at the homeowners’ residence. It was later conclusively determined that the homeowners did not have coverage with Ohio Fair Plan for the loss as a result of the cancellation of the contract. The homeowners alleged that they never received the cancellation notice or the refund check from Ohio Fair Plan or their insurance agent. The homeowners filed suit against the insurance agent and his agency, alleging claims of fraudulent misrepresentation and fraudulent concealment as a result of the homeowners’ purported failure to receive the notice or check prior to the time of the fire, which the homeowners alleged would have enabled them to procure alternative coverage. The defense moved for summary judgment, arguing that the fraudulent misrepresentation claim lacked merit because the insurance agent never misrepresented any fact relating to the homeowners’ insurance coverage and never concealed any material fact from the homeowners. The court agreed and granted summary judgment.