Fink v. Brown & Brown Program Insurance Services Incorporated
Filing
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ORDER denying 9 Motion to Dismiss (see Order for details). Signed by Judge Douglas L Rayes on 4/11/2018. (MMO)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE DISTRICT OF ARIZONA
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Edward Fink,
No. CV-17-03869-PHX-DLR
Plaintiff,
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v.
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ORDER
Brown & Brown Program Insurance
Services Incorporated,
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Defendant.
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At issue is Defendant Brown & Brown Program Insurance Services, Inc.’s motion
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to dismiss, which is fully briefed. (Docs. 9, 11, 12.) For the following reasons, the
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motion is denied.1
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I. Background
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On August 21, 2013, Plaintiff Edward Fink was injured in an accident caused by
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non-party Cole Cantreel’s negligence. (Doc. 1-1 at 8.) Cantreel was underinsured to pay
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Plaintiff’s damages, and Plaintiff’s own underinsured motorist policy also was
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insufficient. (Id.)
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Before the accident, Plaintiff obtained insurance coverage from non-party James
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LaVerdi, an insurance salesman for non-party All Insurance, LLC, which was owned and
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operated by non-party Charles Fritsinger. (Id. at 6-8.) Plaintiff claims he requested
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Defendant’s request for oral argument is denied because the issues are
adequately briefed and oral argument will not aid the Court’s resolution of the motion.
See Fed. R. Civ. P. 78(b); LRCiv. 7.2(f).
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uninsured and underinsured motorist coverage equal to his liability coverage of two
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million dollars, but LaVerdi did not procure such coverage. (Id. at 7.)
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On August 10, 2015, Plaintiff sued Fritsinger and other defendants for negligence.
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(Id. at 9.) He sought damages in the amount of the underinsured motorist coverage he
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would have had but for Fritsinger’s negligence in adequately training, supervising, or
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instructing LaVerdi. (Id. at 8-9.)
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Fritsinger had purchased an error and omissions (“E&O”) policy from Defendant,
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effective December 2012 through December 2013, and renewed the policy through
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December 2014. (Id. at 9.) Defendant, however, did not recommend or address the need
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for retroactive coverage when Fritsinger purchased the policy, nor did Defendant
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recommend or address the need for tail coverage when Fritsinger cancelled his E&O
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policy in October 2014. (Id. at 10.) Fritsinger consequently did not have E&O coverage
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to defend against Plaintiff’s claim because his policy was effective after the date Plaintiff
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procured his policy, and Fritsinger cancelled his E&O policy prior to the date Plaintiff
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filed the initial lawsuit. (Id. at 9.) Fritsinger therefore agreed to assign his right to pursue
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a professional negligence claim against Defendant to Plaintiff. (Id. at 10.)
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Plaintiff, standing in Fritsinger’s shoes, filed this professional negligence action
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against Defendant in Arizona state court on September 15, 2017. The complaint alleges
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that Defendant negligently failed to “explain the need for or recommend” retroactive or
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tail coverage when Fritsinger purchased and cancelled his E&O policy. (Id. at 10-11.)
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Defendant removed the action pursuant to this Court’s diversity jurisdiction, and now
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moves to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). (Docs. 1, 9.)
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II. Legal Standard
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A successful Rule 12(b)(6) motion must show that the complaint lacks a
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cognizable legal theory or fails to allege facts sufficient to support such a theory. See
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Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). A complaint that
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sets forth a cognizable legal theory will survive a motion to dismiss only where it
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contains “sufficient factual matter, accepted as true, to ‘state a claim to relief that is
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plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
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Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the
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plaintiff pleads factual content that allows the court to draw the reasonable inference that
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the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at
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556). Although the court must take “the well-pled factual allegations in the complaint as
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true, [it is] ‘not bound to accept as true a legal conclusion couched as a factual
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allegation.’” Id. (quoting Twombly, 550 U.S. at 555).
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III. Discussion
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Defendant asserts that insurance brokers do not have a duty “to advise insureds
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about the adequacy or appropriateness of the insurance coverage they purchase, or to
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inform them about optional coverage that might be available.” (Doc. 9 at 4 (quoting
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BNCCORP, Inc. v. HUB Int’l Ltd., 400 P.3d 157, 166 (Ariz. Ct. App. 2017)). Instead,
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Defendant contends that, as a matter of law, insurance brokers need only provide the
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insurance coverage that the client requests. (Id.) Because Plaintiff’s complaint at most
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alleges that Defendant failed to recommend additional coverage, Defendant argues that
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Plaintiff has not pled facts that establish Defendant breached its duty of care under
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Arizona law.
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Defendant’s argument rests entirely on the Arizona Court of Appeals’ description
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of the applicable duty in BNCCORP. Plaintiff asserts that, in relying on BNCCORP,
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Defendant improperly conflates duty and breach. (Doc. 11 at 1, 5.) Specifically, in
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Arizona a licensed insurance agent owes his or her client a duty “to exercise reasonable
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care, skill and diligence in carrying out the agent’s duties in procuring insurance.”
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Darner Motor Sales, Inc. v. Universal Underwriters Ins. Co., 682 P.2d 388, 402 (Ariz.
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1984). Plaintiff asserts that whether an insurance agent must explain the need for or
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recommend retroactive or tail coverage in order to satisfy this duty is a question of fact
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that cannot be resolved on a motion to dismiss. The Court agrees.
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To establish negligence, Plaintiff must prove: (1) Defendant had a duty to conform
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to a certain standard of care; (2) Defendant breached that standard of care; (3) a causal
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connection between Defendant’s conduct and the resulting injury; and (4) actual
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damages. Gipson v. Kasey, 150 P.3d 228, 230 (Ariz. 2007). “The first element, whether
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a duty exists, is a matter of law for the court to decide,” but the other elements, including
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breach, are factual issues typically decided by the jury. Id.
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“[T]he existence of a duty is not to be confused with details of the standard of
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conduct.” Markowitz v. Ariz. Parks Bd., 706 P.2d 364, 367 (Ariz. 1985). Arizona courts
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have acknowledged the difficulty in distinguishing these two concepts. Coburn v. City of
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Tucson, 691 P.2d 1078, 1080 (Ariz. 1984); Sw Auto Painting & Body Repair, Inc. v.
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Binsfeld, 904 P.2d 1268, 1270 (Ariz. Ct. App. 1995).
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A duty exists when the relationship between the parties is “such that the defendant
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was under an obligation to use some care to avoid or prevent injury to the plaintiff.”
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Markowitz, 706 P.2d at 368. Plaintiff has alleged the existence of such a relationship,
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and Defendant does not argue otherwise. (Doc. 9 at 4; Doc. 11 at 4.); see Darner, 682
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P.2d at 402. The precise conduct required to comply with the applicable duty “ha[s] to
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do with whether the defendant breached the applicable standard of care, not whether a
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duty and attendant standard of care exist.” Sw Auto, 904 P.2d at 1271. For example, in
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Coburn, the court distinguished the city’s duty to keep the streets reasonably safe from
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the specific conduct—posting warning signs, installing traffic control devices, fixing
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potholes—required to comply with that duty. Coburn, 691 P.2d at 1080. The court
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reasoned that “[a]ttempting to define or evaluate conduct in terms of duty tends to
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rigidify the concept of negligence—a concept which, by definition, must vary from case
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to case, depending upon the relationship of the parties and the facts of each case.” Id.
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In BNCCORP, the appeals court credited the trial court’s factual finding—
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following a bench trial—that the applicable standard of care did not require the insurance
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agent to “inform [insureds] about optional coverage that might be available.”
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BNCCORP, 400 P.3d at 166. Contrary to Defendant’s argument, the court did not hold
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as a matter of law that such conduct could never breach the duty applicable to the insurer-
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insured relationship. Instead, the court recognized “the general rule is that ‘brokers have
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no [obligation] to advise insureds about the adequacy or appropriateness of the insurance
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coverage they purchase, or to inform them about optional coverage that might be
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available.’”
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2.05(5)(a)) (emphasis added). The court reiterated, however, that “[q]uestions as to the
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applicable standard of care are for the trier of fact” and should be “determined on a case-
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by-case basis.” Id. at 165; see Coburn, 691 P.2d at 1080 (“[T]he duty remains constant,
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while the conduct necessary to fulfill it varies with the circumstances.”).
Id. (quoting 1-2 New Appleman on Insurance Law Library Edition §
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It therefore is inappropriate for the Court to rule as a matter of law that the
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omissions Plaintiff has alleged constitute breaches of the general duty of care. Breach of
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duty is a quintessential fact question not appropriate for disposition on a motion to
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dismiss. Accordingly,
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IT IS ORDERED that Defendant’s Motion to Dismiss (Doc. 9) is DENIED.
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Dated this 11th day of April, 2018.
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Douglas L. Rayes
United States District Judge
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