No Duty of Care Exists in Arms-Length Negotiations Between Insurer and Insured
Post 5011
Read the full article at https://lnkd.in/gUUtFnYe, see the full video at https://lnkd.in/gmPWMdVj and at https://lnkd.in/gTZ5a7vU and at https://zalma.com/blog plus more than 5000 posts.
Failure to Read Insurance Quote Carefully Can Cause the Failure of Negotiation and an Expensive Failure of Intent to Insure
The Plaintiff, Association operates a “planned community” in Eden Prairie, Minnesota. Defendant Burns & Wilcox, Ltd. (“B&W”) helps its clients secure specialized insurance, and Defendant Commercial Industrial Building Owner’s Alliance, Inc. (“CIBA”) sells insurance policies. The Association requested a quote for property insurance from Burns & Wilcox, Ltd. (B&W), which obtained a quote from CIBA with a wind/hail deductible of “$50,000 per location per occurrence”. The issued policy contained what the Association claimed was a different deductible, leading to a significant financial impact on the Association when their property suffered damage from wind and hail.
In Lodges at Oakparke Estates Homeowner’s Ass’n, Inc. v. Burns & Wilcox, Ltd., et al., No. 24-cv-1682 (ECT/SGE), United States District Court, D. Minnesota (March 5, 2025) resolved the dispute.
BACKGROUND
The Association requested a quote for property insurance from Burns & Wilcox, Ltd. (B&W), which obtained a quote from CIBA with a wind/hail deductible of a minimum of “$50,000 per location per occurrence”.
The Association sued for negligence and breach of fiduciary duty against B&W and sought reformation of the insurance policy as an equitable remedy. The Association filed a motion to amend its Complaint to add claims of unjust enrichment and negligence against CIBA.
The Association instructed B&W to bind coverage with CIBA consistent with the quote. CIBA then issued a policy containing a wind/hail deductible that included a percentage deductible not in the quote. CIBA’s issued policy stated that the deductible would be “FIVE PER CENT (5%) of the total insurable values, subject to a minimum of $50,000 per location per occurrence.” The Association only relied on the per location per occurrence deductible.
After the policy came into effect the Association’s property suffered damage from wind and hail. CIBA’s claims adjusting group determined the replacement cost value was $1,446,736.43.
Under what the Association contended was the quoted policy the Association’s deductible would have been $600,000.00. According to the issued policy, however, the Association must pay the entire repair cost because the adjusted value did not exceed the purported 5% deductible, or approximately $1,546,766.00.
The Association sought reformation of the insurance policy as an equitable remedy. The court granted the motion for the unjust enrichment claim but denied it for the negligence claim, as the Proposed Amended Complaint failed to allege that CIBA owed a duty of care.
ANALYSIS
Although courts should freely give leave to amend pleadings when justice so requires, changing a deadline in the scheduling order after the deadline has passed requires a good cause showing. Because there are no allegations of bad faith, dilatory motive, undue delay, or resulting prejudice, the Court granted the motion as it relates to the Association’s proposed unjust enrichment claim.
The Association and CIBA were two parties to an arm’s length transaction, and Minnesota law does not recognize a duty of care in such situations. The Proposed Amended Complaint did not allege any facts giving rise to a special relationship that imposes a common law duty on CIBA. Because the Association failed to allege facts giving rise to a duty, allowing amendment of the pleadings to add a negligence claim would be futile.
The Motion was DENIED as to Plaintiff’s claim for negligence.
ZALMA OPINION
Purchasing a major insurance policy protecting valuable and extensive property is a difficult task that takes serious consideration by the insured who must read the quotation for insurance carefully. The insurer, CIBA, issued the quote and a policy with two different deductibles which exceed the actual replacement cost that the insured have considered before it agreed to acquire the policy.
(c) 2025 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
Concurrent Cause Doctrine Does Not Apply When all Causes are Excluded
Post 5119
Death by Drug Overdose is Excluded
See the full video at https://lnkd.in/geQtybUJ and at https://lnkd.in/g_WNfMCZ, and at https://zalma.com/blog plus more than 5100 posts.
Southern Insurance Company Of Virginia v. Justin D. Mitchell, et al., No. 3:24-cv-00198, United States District Court, M.D. Tennessee, Nashville Division (October 10, 2024) Southern Insurance Company of Virginia sought a declaratory judgment regarding its duty to defend William Mitchell in a wrongful death case pending in California state court.
KEY POINTS
1. Motion for Judgment on the Pleadings: The Plaintiff moved for judgment on the pleadings, which was granted in part and denied in part.
2. Duty to Defend: The court found that the Plaintiff has no duty to defend William Mitchell in the California case due to a specific exclusion in the insurance policy.
3. Duty to Indemnify: The court could not determine at this stage whether the Plaintiff had a duty to ...
GEICO Sued Fraudulent Health Care Providers Under RICO and Settled with the Defendants Who Failed to Pay Settlement
See the full video at https://lnkd.in/gDpGzdR9 and at https://lnkd.in/gbDfikRG, and at https://zalma.com/blog plus more than 5100 posts.
Post 5119
Default of Settlement Agreement Reduced to Judgment
In Government Employees Insurance Company, Geico Indemnity Company, Geico General Insurance Company, and Geico Casualty Company v. Dominic Emeka Onyema, M.D., DEO Medical Services, P.C., and Healthwise Medical Associates, P.C., No. 24-CV-5287 (PKC) (JAM), United States District Court, E.D. New York (July 9, 2025)
Plaintiffs Government Employees Insurance Company and other GEICO companies (“GEICO”) sued Defendants Dominic Emeka Onyema, M.D. (“Onyema”), et al (collectively, “Defendants”) alleging breach of a settlement agreement entered into by the parties to resolve a previous, fraud-related lawsuit (the “Settlement Agreement”). GEICO moved the court for default judgment against ...
ZIFL – Volume 29, Issue 14
Post 5118
See the full video at https://lnkd.in/geddcnHj and at https://lnkd.in/g_rB9_th, and at https://zalma.com/blog plus more than 5100 posts.
You can read the full 20 page issue of the July 15, 2025 issue at https://lnkd.in/giaSdH29
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
This issue contains the following articles about insurance fraud:
The Historical Basis of Punitive Damages
It is axiomatic that when a claim is denied for fraud that the fraudster will sue for breach of contract and the tort of bad faith and seek punitive damages.
The award of punitive-type damages was common in early legal systems and was mentioned in religious law as early as the Book of Exodus. Punitive-type damages were provided for in Babylonian law nearly 4000 years ago in the Code of Hammurabi.
You can read this article and the full 20 page issue of the July 15, 2025 issue at https://zalma.com/blog/wp-content/uploads/2025/07/ZIFL-07-15-2025.pdf
Insurer Refuses to Submit to No Fault Insurance Fraud
...
Rulings on Motions Reduced the Issues to be Presented at Trial
Read the full article at https://lnkd.in/gwJKZnCP and at https://zalma/blog plus more than 5100 posts.
CASE OVERVIEW
In Richard Bernier v. State Farm Mutual Automobile Insurance Company, No. 4:24-cv-00002-GMS, USDC, D. Alaska (May 28, 2025) Richard Bernier made claim under the underinsured motorist (UIM) coverage provided in his State Farm policy, was not satisfied with State Farm's offer and sued. Both parties tried to win by filing motions for summary judgment.
FACTS
Bernier was involved in an auto accident on November 18, 2020, and sought the maximum available UIM coverage under his policy, which was $50,000. State Farm initially offered him $31,342.36, which did not include prejudgment interest or attorney fees.
Prior to trial Bernier had three remaining claims against State Farm:
1. negligent and reckless claims handling;
2. violation of covenant of good faith and fair dealing; and
3. award of punitive damages.
Both Bernier and State Farm dispositive motions before ...
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 ...
