Gordon Rees Scully Mansukhani Boston Partner William Chapman obtained summary judgment in favor of the firm’s insurance agency client.
The case involved an HVAC contractor that complained that, after it was sued twice and its liability insurer terminated its coverage, it paid more than it should have for replacement liability coverage through the defendant agency. The contractor claimed that it later switched to a different agent and paid a “much reduced premium.”
The plaintiff sued the agency for professional negligence, premised on the defendant’s alleged breach of a “duty to obtain the best insurance products for the lowest premiums.” The plaintiff also alleged that the agency misrepresented that the new liability coverage would be placed with an admitted market carrier, and not in the surplus lines market.
As to the negligence count, GRSM successfully argued that the agent is not duty-bound to search the entire market. Rather, the applicable duty in Massachusetts is that “(t)he duty of making a diligent market search may be fulfilled if the agent tries to place the risk with one of the insurers for which the agent customarily acts.” The court held that the agency satisfied this requirement and also found that the relationship between the plaintiff and the agency did not involve “special circumstances,” which would support the imposition of a heightened legal duty upon the agency. Further, the plaintiff failed to establish the causation element of its claim by virtue of its failure to show there was a less expensive or better market available to the defendant when the replacement coverage was secured.
Finally, the court ruled that the misrepresentation count also failed as a matter of law because the plaintiff did not establish that it suffered any harm as a result of the alleged misstatement. The court also rejected the plaintiff’s argument that, if not for the misrepresentation, it would have searched the market itself for an admitted insurer. In so holding, the court noted that the plaintiff did in fact search the market, without success, in the wake of receiving the high price quote from the defendant. The decision concluded the case in the client’s favor, saving it the time and expense of an upcoming trial.
This outcome underscores the strength of the firm’s Insurance practice and GRSM’s ability to secure favorable results for our clients.