The Supreme Court of Arizona ruled that an insurance agent’s clients may assert claims for professional negligence against the client and may assign such claims to third parties.
According to D. Jere’ Webb v. Victoria Gittlen, in 2000, Neal and Gail Berliant bought a liquor store called The Liquor Vault and purchased a business and umbrella liability policy from Victoria Gittlen. Gittlen worked for G&G Insurance, and later moved to CDS Insurance Agency. The Berliants alleged that Gittlen did not advise them that they could also purchase liquor liability coverage.
In 2001, the store sold beer to a minor, who gave it to another youth who drove his car into a cement barrier, killing his passenger. The passenger’s father, D. Jere’ Webb, filed a wrongful death claim against the Berliants and The Liquor Vault. The Berliants tendered the claim to their insurance company, which refused to defend the Berliants because they lacked liquor liability coverage.
To settle the wrongful death claim, the Berliants stipulated to enter into a $3 million judgment. Webb agreed not to execute on the judgment and, in exchange, the Berliants assigned to Webb their rights to sue both their insurer and their insurance agent and her employees.
Webb then sued Gittlen, G&G and CDS, alleging negligence and breach of fiduciary duty. The trial court dismissed the claims, noting that claims against an insurance agent for professional negligence are not assignable. The court of appeals affirmed the decision.
Gittlen argued that claims against insurance agents for professional negligence cannot be assigned because claims against lawyers for legal malpractice are not assignable, and the court of appeals extended the rule to insurance agents, as their relationship is analogous to the attorney-client relationship, court documents indicate.
However, the Supreme Court said the relationship between an insurance agent and client differs from that between an attorney and client. “Insurance agents generally are not fiduciaries, but instead owe only a duty of ‘reasonable care, skill and diligence’ in dealing with clients,” the court wrote. “The relationship between insurance agents and their clients, while perhaps personal, is not ‘uniquely personal’ in a sense comparable to an attorney-client relationship. The differences are substantial and the similarities do not justify holding that claims against agents cannot be assigned. … In short, the policy concerns identified by Gittlen do not support a rule generally barring the assignment of professional negligence claims against insurance agents.”
The Supreme Court held that the Berliants may assign to Webb their claims for professional negligence and reversed the decision of the court of appeals and the judgment of the trial court. The Supreme Court remanded the case for further proceedings.
Source: Arizona Courts
Was this article valuable?
Here are more articles you may enjoy.