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.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to my substack at https://barryzalma.substack.com/subscribe
Go to X @bzalma; Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01; Go to Barry Zalma videos at Rumble.com at https://rumble.com/account/content?type=all; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg
Go to the Insurance Claims Library – https://lnkd.in/gwEYk
The Largest Residential Burglary of All Time
Post 5407
Fraud & the Fear of Bad Faith Suits
Posted on July 22, 2026 by Barry Zalma
See the full video at https://lnkd.in/gWQQEySW and at https://lnkd.in/gyhdK6wv
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help 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.
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help 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.
After ...
Chutzpah is not Enough
Post 5397
Posted on July 20, 2026 by Barry Zalma
See the video and at https://lnkd.in/gNUs2XzT and at https://lnkd.in/g2MawyzX
Magistrate Issues a Search Warrant if there is a Fair Probability that Contraband or Evidence of a Crime will be Found in a Particular Place.
In United States Of America v. Frank Suess, et al., CRIMINAL No. 3:24-308, United States District Court, M.D. Pennsylvania (July 16, 2026) a federal grand jury indicted Frank Suess, Melissa Driscoll, and others in a 55-count health care fraud and anti-kickback prosecution arising from an alleged scheme involving medically unnecessary prescription “foot baths.”
As part of the investigation, the FBI obtained an August 19, 2022 warrant to search Driscoll’s Sterling Pharmacy Yahoo email account for emails from January 1, 2018 through December 31, 2020. Driscoll moved to suppress the resulting evidence, arguing that the warrant lacked probable cause, was overbroad, and rested on material misstatements and omissions.
LAW:
The ...
Fraud Shouldn’t Pay
Post 5396
See the video and at https://rumble.com/v7ctgmq-the-great-jewel-theft.html at https://youtu.be/aRbQ2sJfGwA
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help 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.
The Insured purchased, for the first time in his life, a policy of Personal Articles Floater Insurance (PAF) scheduling $125,000 worth of ladies jewelry. He advised the insurer that the jewelry was always kept in a class E safe at his residence. He also told the insurer that he was employed full time as the owner of a gasoline service station and that he had never been canceled or suffered a previous loss.
One month after the policy was ...
Day Care Owner Loses Subsidies Because She Criticized State
Post 5421
Posted on August 11, 2026 by Barry Zalma
First Amendment Right Will be Allowed to Go to Trial
In Betsey J. Grant v. Maine State Department Of Heath And Human Services, No. 1:25-cv-00490-JAW, United States District Court, D. Maine (August 6, 2026), Betsey J. Grant, a licensed childcare provider and operator of Tiny Tikes Daycare in Trenton, Maine, sued Maine DHHS and several employees after she publicly criticized DHHS before Maine’s Government Oversight Committee and alleged that officials retaliated against her.
She claimed DHHS imposed and extended a conditional license, published stigmatizing information, interfered with subsidies and program funding, removed her from a food program, rescinded an expansion grant, and used biased or falsified evidence in licensing proceedings. Following the March 10, 2023, GOC testimony, Ms. Grant alleges that foster children's subsidies (approximately $30,000) were withheld; she was removed from the ...
Rescission for Material Misrepresentation
Post 5418
Posted on August 5, 2026 by Barry Zalma
An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.
In Union Mutual Fire Insurance Company v. 844 Knickerbocker, LLC, et al. No. 2024-10359, Index No. 602824/22, 2026 NY Slip Op 04789, Supreme Court of New York, Second Department (July 29, 2026) Union Mutual Fire Insurance Company issued commercial insurance policies to 844 Knickerbocker, LLC, and Sanjaya Mallick based on applications stating that the insured property contained two apartment units. After an underlying personal injury action was filed, Union Mutual determined that the property actually contained three apartment units and rescinded the policies on the ground that the defendants had made a material misrepresentation in the applications.
LAW:
A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true ...
Rescission for Material Misrepresentation
Post 5418
Posted on August 5, 2026 by Barry Zalma
An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.
In Union Mutual Fire Insurance Company v. 844 Knickerbocker, LLC, et al. No. 2024-10359, Index No. 602824/22, 2026 NY Slip Op 04789, Supreme Court of New York, Second Department (July 29, 2026) Union Mutual Fire Insurance Company issued commercial insurance policies to 844 Knickerbocker, LLC, and Sanjaya Mallick based on applications stating that the insured property contained two apartment units.
LAW:
A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true facts been disclosed. To establish materiality as a matter of law, the insurer must submit documentation of its underwriting practices, such as manuals, guidelines, bulletins, or rules addressing similar risks.
DISCUSSION/ANALYSIS:
As a result, the...
