Court Finds No Valid Cause of Action Against Insurance Agent for Negligence

In the case of The Original Apostolic Faith Church v. Geico, No. April Term, 2019 No. 04027 (C.P. Phila. Co. March 23, 2022 Djerassi, J.), the trial court, in a Rule 1925 Opinion, ruled that a Plaintiff could not maintain negligence claims against the retail insurance agent and the wholesale insurance broker that the Plaintiff had used to secure commercial insurance policy as those two parties did not owe the Plaintiff any duty to review or provide advice upon notice of a renewal of the policy.

The court also found that those two Defendants did not owe the Plaintiff any duty to assist the Plaintiff in finding any replacement coverage.

As such, the trial court requested the Superior Court to affirm the trial court’s entry of summary judgment in favor of the Defendants.

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

Source: “Digest of Recent Opinions.” Pennsylvania Law Weekly (June 7, 2022).

Source of image:  Photo by Andrea Piacquadio on www.pexels.com.

Daycare and Preschool Loses Bid To Secure Coverage Under Its All-Risk Policy for COVID-19 Losses

In the case of BSD-360, LLC v. Phila. Indem. Ins. Co., No. 20-4719 (E.D. Pa. Jan 13, 2022 Pratter, J.), an insurance carrier’s Motion to Dismiss was granted in a COVID-19 coverage case after the court ruled that the “insured gets what protection he pays for” and found that, while the policy in question covered losses for property damages and contains provisions related to communicable diseases, the Court found that the Plaintiff's claims were not covered.

According to the Opinion, the insured in this case was a daycare and preschool facility.  The court noted that the insured has purchased an “all-risk insurance policy.”

In early 2020, the daycare was forced to suspend operations due to the COVID-19 global pandemic. The insured sought to recovery under its insurance policy and the carrier denied the claim.

When the claim was denied, the insured sued both the insurance company and its insurance broker.

As noted above, the court found that the insured’s claim was not covered under the plain language of the insurance contract.  The Court noted that there was no claim that there was an "outbreak" of a communicable disease on the insured's premises or any "physical loss" of the premises.  As such, the case against the insurance company was dismissed under an application of New Jersey law.

After reviewing the records, the court also found that the Plaintiff had not alleged any negligence on the part of its insurance broker. As such, the broker’s Motion to Dismiss was also granted although this decision was based on an application of Pennsylvania law.

No leave to file an Amended Complaint was granted.

Anyone wishing to review a copy of this decision may click this LINK.  The Court's companion Order can be viewed HERE.


I send thanks to Attorney John Gerard Devlin of the Philadelphia law firm of Devlin Associates, P.C. for bringing this case to my attention.

Source of image:  Photo by Magda Ehlers on www.pexels.com.

Plaintiff Found To have Asserted Valid Cause of Action Against Insurance Agency and Agents for Faulty Advice on Coverage

In the case of Process Technologies and Packaging, LLC v. Agent K. Inc., No. 21-CV-3021 (C.P. Lacka. Co. Nov. 24, 2021 Nealon, J.), address Preliminary Objections in a case in which a cosmetics company being sued for $65 million by L’Oreal asserted that its insurance agents should have warned them and provided them with the appropriate liability coverage. 

The Plaintiffs averred that the insurance agencies at issue allegedly gave the cosmetic company officials faulty advice and left the company with no insurance to coverage against L’Oreal’s claims that the cosmetic company allegedly mishandled production of a certain cosmetic product.

In their Complaint, the cosmetic’s company maintained that the insurance agency failed to exercise the required professional care by recommending and securing readily available liability coverages under a manufacturer’s errors and omissions policy that would cover the claims being asserted by L’Oreal.

The Plaintiffs additionally asserted breach of contract claim against two (2) of the insurance agencies based upon an alleged oral agreement to assess the cosmetic company’s insurance needs on a semi-annual basis, to advise of any gaps in the insurance coverage, to recommend appropriate coverages for its business risk, and to obtain proper coverage for those risks.

Two (2) of the Defendant insurance agencies filed preliminary objections in the form of demurrers to the breach of contract claim on the grounds that there was no consideration to support the allegation of the creation of an enforceable contract. The Defendants also asserted that any contract claim was barred by the “gist of the action” doctrine. One insurance agency additionally challenged the legal sufficiency of the negligence claims against them and asserted that they cannot be liable individually absent an allegation that any of the insurance agents acting outside of the scope of their agency or employment.

Judge Nealon ruled that since the brokers and the agencies received a portion of these insurance premiums that the cosmetic company paid to the insurance company’s procured by the insurance agencies, the cosmetic company was found to have asserted an adequate consideration to sustain its claim of a valid oral contract with the insurance agencies.

Relative to the arguments under the gist of the action doctrine, Judge Nealon noted that that doctrine precludes a party from recasting an ordinary breach of contract claim as a tort claim, not vice-versa. Here, the court ruled that the insurance brokers or agencies could be sued in tort for failing to exercise the ordinary skill and knowledge required in their license profession. These Defendants could also be separately sued in contract for breaching their duty to provide professional services in compliance with the standards of the industry.

In his decision, Judge Nealon additionally held that the agents or employees may be liable for their own torts, even if they were acting within the scope of their employment when they engaged in the tortious conduct, and regardless of whether their principal or employer also may be vicariously liable for that conduct.

As such, Judge Nealon overruled all of the Preliminary Objections in the nature of a demurrer that were asserted and allowed the case to proceed.


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

Source of image: Photo by Kindel Media from www.pexels.com.

Claim Against Insurance Agent For Failing to Sell Insurance That Would Cover Business Interruption Claims Caused by COVID-19 Allowed to Proceed

In the case of Brown’s Gym, Inc. v. The Cincinnati Insurance Company, No. 20-CV-3113 (C.P. Lacka. Co. Dec. 18, 2020 Nealon, J.), Judge Terrence R. Nealon of the Lackawanna County Court of Common Pleas overruled an insurance agent’s Preliminary Objections filed in a case in which a gym and fitness center, which was required to close its premises and cease its business operations in compliance with the government orders issued in response to the COVID-19 pandemic.

In addition to suing its commercial insurer under a declaratory judgment action seeking coverage for its pandemic related losses under an “all risk” policy, the gym also sued its insurance agent under claims of negligence and negligent misrepresentation for failing to provide the gym with the insurance coverage it allegedly requested. 

Based upon a review of the allegations of the Complaint, the court noted that the insurance agent arguably breached its duty to exercise reasonable care, skill, and judgment in securing and providing insurance coverage that was specifically requested by the gym. The court additionally ruled that the insurance agent need not be a named party to the insurance contract in order for the gym to state valid claims of negligence against the agent.

As such, the court overruled the Preliminary Objections in the nature of a demurer filed by the insurance agent.


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

The Case of the Missing Email

In the case of Live Face On Web, LLC v. Merchants Insurance Group, No. 2:19-CV-00528-JDW (E.D. Pa. April 1, 2020 Wolfson, J.), the court addressed cross motions for summary judgment on claims involving request for declaratory judgment, breach of contract, statutory bad faith, negligence, and vicarious liability law.

This case was filed under allegations that an insured requested that a vehicle be added to an insurance policy and that the insurance agent failed to notify the carrier of the same. According to the Opinion, the insurance agent denied ever receiving the emailed request from the insured to add the vehicle.  The Court opened the Opinion by call this "the case of the missing email."

The claims against the carrier in this matter included claims of bad faith violations of the Unfair Insurance Practices Act and vicarious liability with regards to the insurance agent’s alleged negligence.

The court granted summary judgment on all claims except for the negligence claim. Notably, Judge Wolfson reaffirmed the rule of law that there is no private right of action against the carrier under the Unfair Insurance Practices Act.

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

I send thanks to Attorney Brigid Q. Alford of the Camp Hill, PA office of Marshall Dennehey for bringing this case to my attention.

Judgment in Favor of Carrier on Bad Faith Claim Affirmed

In the non-precedential decision of the Pennsylvania Superior Court in the case of Lewis v. Erie Insurance Exchange, 2115 EDA 2018 (Pa. Super. Aug. 21, 2019), the Court affirmed a trial court's dismissal of a bad faith claim relative to the purchase of automobile insurance coverage.

In one issue of note, the Superior Court affirmed the trial court's ruling that precluded the Plaintiff from utilizing an insurance agent as an expert at trial.

The Opinion is also notable for the Court's handling of the word limit Rule for appellate Briefs and confirms that the Court apparently does keep an eye out for violations of the same.

In this case where the Appellant raised 11 issues, the Pennsylvania Superior Court also turned to its oft-repeated advice for appellate litigants to only raise their strongest issues as "[a] brief that raises every colorable issue runs the risk of burying good arguments[.]  Lewis citing Com. v. Showers, 782 A.2d 1010, 1015-1016 (Pa. Super. 2001)[other citations omitted].

Anyone wishing to review this non-precedential decision may click this LINK.

I send thanks to Attorney Robert J. Cahall of the Wilmington, DE office of McCormick & Priore for bringing this case to my attention.

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.

Bad Faith Statute Applies to Insurers Not Insurance Agents

In the case of Fertig v. Kelley, No. 16-CV-4801 (C.P. Lacka. Co. Sept. 27, 2017 Nealon, J.), Judge Terrence R. Nealon of the Lackawanna County Court of Common Pleas granted judgment on the pleadings in favor of an automobile insurance agent named as a party defendant in a Post-Koken bad faith suit.

The decision was based, in part, on the court's reaffirmation of the law providing that the bad faith statute under 42 Pa.C.S.A. Section 8371 only applies to an "insurer" and not an insurance agent.

To review this decision, click this LINK.