MLR INVESTMENT GROUP LLC et al v. PATE INSURANCE AGENCY INC

Filing 40

ORDER granting 34 Motion for Summary Judgment. Clerk is directed to enter final judgment and terminate the case. Ordered by Judge Hugh Lawson on 10/10/2013. (nbp)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
VALDOSTA DIVISION

MLR INVESTMENT GROUP, LLC and
GILBERTO MARTINEZ,
Plaintiffs,
Civil Action No. 7:12-CV-118 (HL)
v.
PATE INSURANCE AGENCY, INC.,
Defendant.

ORDER
This case is before the Court on Defendant’s Motion for Summary
Judgment (Doc. 34). For the reasons discussed herein, the motion is granted.
I.

FACTS
Plaintiff MLR Investment Group, LLC (“MLR”) owns certain real property

located at 2763 Howell Road, Valdosta, Georgia. Plaintiff Gilberto Martinez
(“Martinez”) is the sole member in MLR. State Farm Fire and Casualty Company
insured the Howell Road property with a homeowners policy of insurance
designated as policy number 81-BPZ904-3, with an effective date of September
11, 2009. Martinez was the named insured. Defendant is the insurance agency
which sold the policy to Martinez.
The policy provided coverage for “the dwelling principally used as a private
residence on the residence premises shown in the Declarations.” The “residence

premises” is defined as “the one, two, three or four-family dwelling, other
structures and grounds; or that part of any other building; where you reside and
which is shown in the Declarations.” In other words, the policy would only cover
the Howell Road property if Martinez or his wife resided at the property at the
time of a covered loss.
In January of 2010, Plaintiffs rented out the property. Plaintiffs did not
inform State Farm or Defendant of the change in the use of the property until
immediately before the policy was due for renewal. On September 10, 2010,
Martinez spoke with Ludie Porter, an employee of Defendant, and told her that
he was now renting the property out and would need to change the insurance
policy to cover the property as a rental property. Martinez specifically asked
Porter to provide a DP-3 policy, which is a policy Martinez was familiar with from
his rental properties in Florida. Porter advised Martinez that State Farm did not
sell DP-3 policies, and offered him two choices: he could move his business to a
different insurance company that did sell DP-3 policies or he could increase his
deductible with State Farm and his rental property would be covered. Martinez
decided to stay with State Farm.
State Farm renewed the policy on September 11, 2010. Instead of issuing
a rental policy, State Farm again issued a homeowners policy. The renewal
policy had the same policy number, the same coverages, the same terms and
conditions, and the same limits of liability. The deductible was increased from

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$1,000 to $5,000, which resulted in a decreased premium. Because the terms
and conditions of the policy did not change, State Farm did not send a new policy
to Martinez.
In November of 2010, it was discovered that the Howell Road property was
being used as a marijuana grow house. Believing that the terms and conditions
of the insurance policy had been changed so that the Howell Road property was
covered as a rental property, Plaintiffs submitted a claim to State Farm for
damage to the structure and loss of personal property. But the terms and
conditions of the policy had not changed, and State Farm denied the claim
because neither Martinez nor his wife resided at the Howell Road property at the
time of the loss.1 After receiving the denial of coverage letter, Plaintiffs did not
sue State Farm, but rather filed suit against Defendant for negligently failing to
procure the appropriate insurance. Defendant now moves for summary judgment
on Plaintiffs’ negligence claim.
II.

SUMMARY JUDGMENT STANDARD
Federal Rule of Civil Procedure 56 requires that summary judgment be

granted “if the movant shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). “The moving party bears ‘the initial responsibility of informing the . . . court
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The claim was also denied because Plaintiffs did not file suit against State Farm within
one year of the date of the alleged loss. State Farm reserved its rights concerning
whether the damage to the property was intentional.
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of the basis for its motion, and identifying those portions of the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, which it believes demonstrate the absence of a genuine issue of
material fact.’” Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1259 (11th Cir.
2004) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548,
2553, 91 L.Ed.2d 265 (1986) (internal quotations omitted)). Where the moving
party makes such a showing, the burden shifts to the non-movant, who must go
beyond the pleadings and present affirmative evidence to show that a genuine
issue of material fact does exist. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
257, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986). In resolving a motion for
summary judgment, the court must view all evidence and draw all reasonable
inferences in the light most favorable to the non-moving party. Patton v. Trial
Guar. Ins. Corp., 277 F.3d 1294, 1296 (11th Cir. 2002).
III.

ANALYSIS
In Georgia,
[t]o state a cause of action for negligence . . . there must
be (1) a legal duty to conform to a standard of conduct
raised by the law for the protection of others against
unreasonable risks of harm; (2) a breach of this
standard; (3) a legally attributable causal connection
between the conduct and the resulting injury; and (4)
some loss or damage flowing to the plaintiff’s legally
protected interest as a result of the alleged breach of
the legal duty.

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Hayes v. Lakeside Vill. Owners Ass’n, Inc., 282 Ga. App. 866, 870, 640 S.E.2d
373, 377 (2006). Defendant argues that as a captive agent of State Farm, it did
not owe any duty to Plaintiffs, and therefore cannot be held liable for any alleged
negligence.
“[I]ndependent agents or brokers are generally considered the agent of the
insured, not the insurer.” Pope v. Mercury Indem. Co. of Ga., 297 Ga. App. 535,
540, 677 S.E.2d 693, 698 (2009). That agency relationship gives rise to various
fiduciary duties, including a duty to procure the insurance coverage requested by
the principal. Johnson v. Pennington Ins. Agency, Inc., 148 Ga. App. 147, 147,
251 S.E.2d 116, 117 (1978). However, there is no evidence in this case of an
agency relationship between Plaintiffs and Defendant. Defendant is not an
independent insurance agent or broker, but instead is a captive agent of State
Farm. It is undisputed that Defendant is prohibited from selling insurance policies
for companies other than State Farm Mutual Automobile Insurance Company,
State Farm Fire and Casualty Company, and other State Farm Companies. This
makes Defendant State Farm’s agent, not Plaintiffs’ agent. See Nat’l Indem. Co.
v. Berry, 136 Ga. App. 545, 548, 221 S.E.2d 624, 627 (1975); contra Beavers
Ins. Agency, Inc. v. Roland, 135 Ga. App. 263, 263, 217 S.E.2d 484, 484 (1975)
(finding issues of fact where there was an allegation of an agency relationship
between the plaintiff and defendant, as well as evidence in the record from which
a jury could believe that defendant was an independent insurance agency which

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placed insurance business with several companies). The fact that State Farm’s
agents are agents of the company, and not of the insured, was acknowledged by
the Court of Appeals in Kersey v. State Farm General Insurance Co., 148 Ga.
App. 763, 764, 252 S.E.2d 670, 672 (1979) (“It has long been recognized that by
contract State Farm’s agents are agents of the company only.”) Because
Defendant was State Farm’s agent, it owed a duty only to State Farm. As
Defendant did not owe Plaintiffs any duty, Plaintiffs cannot establish a cause of
action for negligence under Georgia law against Defendant.
The Court further notes that “’[a]bsent actionable fraud and deceit, . . . it
appears settled that there is no liability in tort for failure of the defendant
insurance agent or broker to procure or have renewed a policy of insurance
where the defendant is the insurance company’s agent and not the plaintiff’s
agent.’” Thompson v. Pate, 193 Ga. App. 418, 418, 388 S.E.2d 30, 31 (1989)
(quoting Sutker v. Penn. Ins. Co., 115 Ga. App. 648, 653, 155 S.E.2d 694, 689
(1967)). As Defendant was State Farm’s agent, unless actual fraud or deceit has
been shown, Plaintiffs’ negligence claim must fail. See Thompson, 193 Ga. App.
at 418. Plaintiffs have not alleged any actionable fraud or deceit, and the Court
does not find support in the record for either claim.2 Therefore, Plaintiffs cannot
assert a negligence claim for failure to procure the appropriate coverage.
2

Even if Defendant told Martinez that the Howell Road property would be fully covered
as a rental property after the renewal of the policy, such representation “can amount to
no more than an opinion as to coverage or a legal opinion as to the effect of the
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Even assuming, however, that Defendant was acting as Plaintiffs’ agent
rather than State Farm’s agent, Plaintiffs’ negligence claim still could not survive
summary judgment. For the sake of completeness, the Court will explain why.
The general rule in Georgia is that an insurance agent who negligently fails
to procure insurance may be held liable for any resulting loss. Robinson v. J.
Smith Lanier & Co. of Carrollton, 220 Ga. App. 737, 738, 470 S.E.2d. 272, 273
(1996); Atlanta Women’s Club, Inc. v. Washburne, 207 Ga. App. 3, 4, 427 S.E.2d
18, 20 (1992). However, an insured generally has an obligation “to read and
examine an insurance policy to determine whether the coverage desired has
been furnished.” MacIntyre & Edwards, Inc. v. Rich, 267 Ga. App. 78, 79-80, 599
S.E.2d 15, 17 (2004). There are two exceptions to the obligation to read and
examine: (1) where the agent has held himself out as an expert and the insured
has reasonably relied on his expertise in identifying and acquiring the correct
type and amount of insurance; or (2) a special relationship of trust exists such
that would have prevented or excused the insured from a duty to exercise
ordinary diligence. Heard v. Sexton, 243 Ga. App. 462, 463, 532 S.E.2d 156, 158
(2000).
It is undisputed that Plaintiffs did not read the renewal policy prior to the
loss. Plaintiffs argue, however, that they were relieved from their obligation to
read and examine the policy because Defendant held itself out as an expert in
contract, which does not give rise to actionable fraud.” Parris & Son, Inc. v. Campbell,
128 Ga. App. 165, 169, 196 S.E.2d 334, 337 (1973) (listing cases).
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the field of insurance and Martinez relied upon that expertise in acquiring the
correct type of insurance.3 Assuming without finding that Defendant held itself out
as an expert,4 the Court finds that Plaintiffs have not satisfied the second part of
the expert exception test. While Plaintiffs claim that Martinez relied on Defendant
to identify the proper coverage, Martinez knew the type of coverage he wanted
before talking with the agent. In fact, he even knew the specific policy he wanted
- a DP-3 policy. The evidence belies Plaintiffs’ contention that Martinez relied
upon Defendant in acquiring the correct type of insurance and bars any recovery.
See Canales, 261 Ga. App. at 531 (“According to Canales’s affidavit, he knew

3

While Plaintiffs mention the special relationship of trust exception in their response
brief, they make no argument on that point, and have produced no evidence to establish
that Martinez enjoyed a confidential relationship with Defendant. A confidential
relationship exists “where one party is so situated as to exercise a controlling influence
over the will, conduct, and interest of another or where, from a similar relationship of
mutual confidence, the law requires the utmost good faith.” O.C.G.A. § 23-2-58;
Canales v. Wilson Southland Ins. Agency, 261 Ga. App. 529, 531, 583 S.E.2d 203, 205
(2003). The party asserting the existence of a confidential relationship has the burden of
establishing its existence, Canales, 261 Ga. App. at 531, 583 S.E.2d at 205; Yarbrough
v. Kirkland, 249 Ga. App. 523, 527, 548 S.E.2d 670, 673 (2001), but Plaintiffs have not
done so. Thus, the Court will address only the expert exception.
4

A ruling on the issue is not necessary, but the Court is doubtful of Plaintiffs’ contention
that Defendant held itself out to be an expert. Martinez states that he subjectively
believed Defendant held itself out to be any expert in the field of insurance. This belief
was apparently based on the company’s website and its credentials listed on the
website. But there is no evidence in the record as to the content of Defendant’s website
or what its listed credentials were at the time Martinez selected it in 2009. While
Plaintiffs argue in their response that someone in Martinez’s position could go to
Defendant’s website or LinkedIn page or Yelp listing and get the impression that
Defendant had a level of expertise in the insurance business, all of the internet listings
cited are from 2013, not 2009 when Martinez was making his decision. Further, the
language cited from Defendant’s Yelp listing is nothing more than a general
advertisement for an insurance agency.
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what kind of insurance policy he wanted for the van before he approached
Wilson. Thus, he did not rely on Wilson’s expertise to identify and procure the
correct type of insurance for him.”); Hunt v. Greenway Ins. Agency, 213 Ga. App.
14, 14, 443 S.E.2d 661, 662 (1994) (“[T]he prospective insured here admitted to
informing the agent of the type of insurance desired. There is no evidence that
the agent had any discretion in the type of insurance procured or that the
proposed insured relied on the agent to decide what type of insurance was
needed.”); Greene v. Lilburn Ins. Agency, Inc., 191 Ga. App. 829, 829, 383
S.E.2d 194, 195 (1989) (“In his deposition, appellant states that he specifically
requested theft coverage. Therefore, ‘[t]here is no evidence that appellee[s] had
any discretion in the type . . . of insurance.’”) (citation omitted).
In any event, even if the Court assumes that Defendant exercised
discretion as to the type or amount of coverage, the exception to the expert
exception would still preclude any recovery by Plaintiffs. The expert exception
does not apply if an examination of the policy would have made it readily
apparent that the coverage requested was not issued. Heard, 243 Ga. App. at
463; Greene, 191 Ga. App. at 829. Plaintiffs admit in their response to
Defendant’s statement of material facts that an examination of the renewal policy
would have made it readily apparent that there would be no first party coverage
for the dwelling or contents if neither Martinez nor his wife resided in the Howell
Road property. Nevertheless, Plaintiffs contend they were excused from their

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duty to examine the policy because they did not receive a copy of it. It is
undisputed that State Farm did not send a copy of the policy to Martinez after the
renewal; however “plaintiff’s failure to receive a copy of the insurance policy is
not alone sufficient to discharge him.” Brasington v. King, 167 Ga. App. 536, 537,
307 S.E.2d 16, 19 (1983). Plaintiffs were “chargeable with knowledge of [the
policy’s] contents regardless of who had possession of it.” Brown v. Mack Trucks,
111 Ga. App. 164, 166, 141 S.E.2d 208, 210 (1965). Like the plaintiff in
Brasington, Plaintiffs have “present[ed] no reason why plaintiff could not or need
not have examined the policy issued.” 167 Ga. App. at 537. The Court finds that
Plaintiffs were charged with knowledge of the terms of the policy and are barred
from recovery.
III.

CONCLUSION
Defendant’s Motion for Summary Judgment (Doc. 34) is granted. The

Clerk of Court is directed to enter final judgment in Defendant’s favor and close
this case.
SO ORDERED, this the 10th day of October, 2013.

s/ Hugh Lawson_______________
HUGH LAWSON, SENIOR JUDGE

mbh

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