No Right to Sue Broker Who Does Not Have Special Relationship With Insured
Post 4899
Posted on September 26, 2024 by Barry Zalma
See the full video at https://rumble.com/v5gatm5-when-insurance-agent-controlled-action-of-broker-no-action-against-broker.html and at https://youtu.be/DfMnGZdF-Ek
Plaintiff Green Technology Lighting Corporation (“Green Tech”) appealed the order of the District Court for the District of Idaho granting summary judgment in favor of Defendant Crouse and Associates Insurance Services of Northern California (“Crouse”).
In Green Technology Lighting Corp. v. Crouse And Associates Insurance Services Of Northern California, Inc., a California Corporation, No. 24-66, United States Court of Appeals, Ninth Circuit (September 20, 2024) resolved the dispute over the existence of a special relationship between an insured and its broker.
FACTUAL BACKGROUND
The district court granted summary judgment to Crouse on Green Tech’s claim of negligence and broker malpractice for two independent reasons: First, the court held that Crouse did not owe Green Tech a duty of care, an essential element of negligence claims under Idaho law; and Second, the court determined that Idaho’s economic loss rule bars recovery for any negligence committed by Crouse.
Idaho prohibits the recovery of purely economic losses in all negligence actions.. A purely economic loss is one that is not connected to an injury to a person or property because the economic loss rule limits the actor’s duty so that there is no cause of action in negligence. Summary judgment is only appropriate in cases where the rule applies. Green Tech alleged only economic losses connected to the recall of its products. Unless some exception applies, Green Tech has no cause of action for negligence under Idaho law.
Idaho generally recognize two exceptions to the economic loss rule:
where a special relationship exists between the parties, or
where unique circumstances require a reallocation of the risk.
The district court concluded that neither applied in Green Tech’s case.
ANALISYS
The special relationship exception is extremely narrow and applies in only limited circumstances. Idaho recognizes two situations in which a special relationship has been held to exist:
where a professional or quasi-professional performs personal services; or
where an entity holds itself out to the public as having expertise regarding a specialized function, and by so doing, knowingly induces reliance on its performance of that function.
The Ninth Circuit concluded that neither situation fits the facts of this case. The district court correctly held that, although Crouse was a professional insurance broker, it lacked the “custody or control” over Green Tech’s insurance coverage that would justify recognizing a special relationship giving rise to liability. Crouse did not have ultimate authority over which insurance policies Green Tech obtained rather, it was Insure Idaho-Green Tech’s insurance agent-that instructed Crouse to bind the policy with less coverage. Crouse did not unilaterally control the level of liability coverage that Green Tech would receive.
The Ninth Circuit concluded there was thus no special relationship between Crouse and Green Tech based on the professional services Crouse offered. Nor did a special relationship exist due to Green Tech’s reliance on Crouse’s expertise. This exception requires that an expert have actively sought to induce reliance on the part of the plaintiff.
Where there is no indication in the record that the plaintiffs relied upon or were even aware of the defendant’s provision of its special services, there is no special relationship.
The district court found that Green Tech had no knowledge of Crouse’s existence as it interfaced only with Insure Idaho in seeking to procure insurance for its business. Green Tech failed to raise a genuine factual dispute as to this finding. The economic loss rule thus prohibited Green Tech from recovering for any alleged negligence on Crouse’s part.
Assuming that Crouse owed some duty of care to Green Tech in how it performed its brokering services, the Ninth Circuit agreed with the district court that the economic loss rule is fatal to Green Tech’s negligence suit.
ZALMA OPINION
The economic loss rule prevented a suit against a broker who had no relationship with the insured and only contact with the insured’s agent. Since the broker acted, basically, as an order taker for the insurance agent and provided no advice or counsel to the insured nor hold itself out as a specialist giving advice to the insured, there was insufficient contact with the plaintiff-insured to allow it to maintain a suit because of the economic loss rule since the plaintiff only lost money.
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Notice of Claim Later than 60 Days After Expiration is Too Late
Post 5089
Injury at Massage Causes Suit Against Therapist
Read the full article at https://lnkd.in/gziRzFV8, see the full video at https://lnkd.in/gF4aYrQ2 and at https://lnkd.in/gqShuGs9, and at https://zalma.com/blog plus more than 5050 posts.
Hiscox Insurance Company (“Hiscox”) moved the USDC to Dismiss a suit for failure to state a claim because the insured reported its claim more than 60 days after expiration of the policy.
In Mluxe Williamsburg, LLC v. Hiscox Insurance Company, Inc., et al., No. 4:25-cv-00002, United States District Court, E.D. Missouri, Eastern Division (May 22, 2025) the trial court’s judgment was affirmed.
FACTUAL BACKGROUND
Plaintiff, the operator of a massage spa franchise, entered into a commercial insurance agreement with Hiscox that provided liability insurance coverage from July 25, 2019, to July 25, 2020. On or about June 03, 2019, a customer alleged that one of Plaintiff’s employees engaged in tortious ...
ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Posted on June 2, 2025 by Barry Zalma
Post 5087
See the full video at and at
Read the full article and the full issue of ZIFL June 1, 2025 at https://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-06-01-2025.pdf
Zalma’s Insurance Fraud Letter – June 1, 2025
See the full video at https://lnkd.in/gw-Hgww9 and at https://lnkd.in/gF8QAq4d, and at https://zalma.com/blog plus more than 5050 posts.
ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Read the full article and the full issue of ZIFL June 1, 2025 at https://lnkd.in/gTWZUnnF
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at ...
No Coverage if Home Vacant for More Than 60 Days
Failure to Respond To Counterclaim is an Admission of All Allegations
Post 5085
See the full video at https://lnkd.in/gbWPjHub and at https://lnkd.in/gZ9ztA-P, and at https://zalma.com/blog plus more than 5050 posts.
In Nationwide Mutual Insurance Company v. Rebecca Massey, Civil Action No. 2:25-cv-00124, United States District Court, S.D. West Virginia, Charleston Division (May 22, 2025) Defendant Nationwide Mutual Insurance Company's (“Nationwide”) motion for Default Judgment against Plaintiff Rebecca Massey (“Plaintiff”) for failure to respond to a counterclaim and because the claim was excluded by the policy.
BACKGROUND
On February 26, 2022, Plaintiff's home was destroyed by a fire. At the time of this accident, Plaintiff had a home insurance policy with Nationwide. Plaintiff reported the fire loss to Nationwide, which refused to pay for the damages under the policy because the home had been vacant for more than 60 days.
Plaintiff filed suit ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:
Health Care Fraud Trial Results in Murder for Hire of Witness
To Avoid Conviction for Insurance Fraud Defendants Murder Witness
In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...
Professional Health Care Services Exclusion Effective
Post 5073
See the full video at https://lnkd.in/g-f6Tjm5 and at https://lnkd.in/gx3agRzi, and at https://zalma.com/blog plus more than 5050 posts.
This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.
In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:
Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
A Heads I Win, Tails You Lose Story
Post 5062
Posted on April 30, 2025 by Barry Zalma
"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime."
Immigrant Criminals Attempt to Profit From Insurance Fraud
People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.
The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...
