Wednesday, October 10, 2018

Summary Judgment Entered on Claims of Negligence Against Insurance Agent Regarding Request for Increased Auto Coverage

The Opinion of Judge Thomas F. Burke, Jr. in the case of Feist v. Andes, No. 2013-2678 (C.P. Luz. Co. July 19, 2017 Burke, J.), a decision from over a year ago, was recently published in the Luzerne Legal Register.  

In this decision, Judge Thomas F.  Burke, Jr., of the Luzerne County Court of Common Pleas granted a carrier’s Motion for Summary Judgment case where the Plaintiffs asserted that their insurance carrier and agent refused to provide them with the increase UIM coverage they had requested before one of the Plaintiff was involved in a motor vehicle accident.

Judge Thomas F. Burke, Jr.
Luzerne County
The Plaintiffs alleged that they had met with the insurance agent on two (2) separate occasions and had requested increase UIM coverage at each meeting but were not granted the same by the insurance agent.  The Plaintiffs asserted that the insurance agent allegedly attempted to talk them out of such increase coverage and/or did not provide them with such coverage. 

The court emphasized that the Plaintiff’s knew at the end of their meetings with the agent that they did not secure that increased coverage. The court also noted that the Plaintiffs admitted that they were aware that they could have sought out another insurance agent or another insurance company but did not do so.

The Plaintiffs sued the insurance agent and the carrier under counts of negligence, breach of fiduciary duty and/or duty of loyalty, and breach of a duty of good faith and fair dealing.  

The court granted summary judgment on each of these theories of liability.  On the negligence theory, the court found that, as a general rule of law in Pennsylvania, insurance agents have no common-law duty to their customers unless the insurance agent receives consideration for his services apart from the premium which is paid by the customer for the insurance policy itself, or whether the agent acts as an insurance counselor through an extensive and complex course of dealings with regards to the client’s business matters.  

The court reiterated that even accepting the facts noted above as being true, the Plaintiffs knew when the left the meeting with the insurance agent that they had not been granted increased coverages and that they likewise knew that they could have switched to a different insurance agent and/or carrier.   

Applying the principles of negligence law, the court was unwilling to find that an exception to the general rule of law that insurance agents have no common law duty to their customers existed in this case.  

Given this ruling on the negligence claim against the insurance agent, the court also entered judgment in favor of the carrier on the claim that the carrier owed a duty to the Plaintiff under the doctrine of respondeat superior.   The court also noted that there is no independent cause of action for respondeat superior liability under Pennsylvania law. 

The court additionally entered summary judgment in favor of the agent and the carrier on the claim of a breach of fiduciary duty and/or duty of loyalty.  

Judge Burke noted that, under Pennsylvania law, the purchase of an insurance policy is considered to be an “arm’s length” transaction, in which the carrier owes no fiduciary duty apart from the terms defined in the insurance contact.   

The court also noted that, generally, the relationship between an insurance agent and a customer cannot be characterized as a fiduciary relationship, except in limited circumstances in which the policyholder has authorized the insurance agent to make decisions on behalf of the policyholder.  

Such was not the case in this matter based upon the court’s review of the facts.   Judge Burke found that the record was devoid of any evidence that would show that the Plaintiff had relinquished their decision-making authority to the insurance agent or that the insurance agent had an “over-mastering” influence over the Plaintiffs.  

In this regard, the court noted that both Plaintiffs indicated that they had business knowledge with regards to purchasing automobile and homeowner’s insurance over the years.   Both Plaintiffs also acknowledged that they had consulted with and received legal advice from an attorney about increasing their coverage limits.   As such, the court found that the Plaintiffs were not relying upon the insurance agent’s advice, but rather, were relying upon their own knowledge as well as the advice of their attorney.

The court ruled in this case that the Plaintiff did not rely upon any purported statement by the insurance agent that they had sufficient UM/UIM coverage limits.   Rather, the Plaintiffs testified that they did not agree with the insurance agent’s assessment in this regard and had every intention of increasing their limits at some future time. 

The court emphasized the Plaintiffs nevertheless continued to renew their insurance policies during the ten (10) month time period leading up to the accident by paying the premiums by being completed away as to the current status of their limits.  

Lastly, the court also granted summary judgment in favor of the carrier on the Plaintiffs’ claim of a breach of a duty of good faith in fair dealing.   In so ruling, the court found that there was no evidence of any contract between the Plaintiffs and the Defendant insurance agent.   The court noted that the breach of a duty of good faith and fair dealing are intertwined and arise out of contract law.  

Given that there is no contract with the insurance agent, the court entered summary judgment in favor of the insurance agent on these claims.   The court additionally entered summary judgment in favor of the carrier as the Plaintiffs attempted to latch this theory on the carrier by way of a theory of respondeat superior.   The court noted that, since there is no contract found between the Plaintiffs and the insurance agent, there could no liability on the part of the carrier as well under a respondeat superior theory of liability.  

Overall, the court entered summary judgment on all of the claims presented. 

At the end of this Opinion is an Editor’s note indicating that the Pennsylvania Superior Court affirmed Judge Burke’s decision by way of an August 21, 2018 non-precedential decision under docket number 1326 MDA 2017 (Pa. Super. Aug. 21, 2018).  

Anyone wishing to review a copy of this case may click this LINK.

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