(Reuters) - A national insurance brokerage is failing to fulfill an additional obligation to its customers by luring them with sales pitches that demonstrate its sophistication, expertise and ability to meet their insurance needs, a Federal appeals court ruled.
The U.S. Court of Appeals for the Eighth Circuit on Wednesday upheld Truist subsidiary McGriff Insurance Services' victory in a lawsuit brought by hotel renovator I Square Management and its affiliates, which suffered millions in uninsured damages when the property was stored off-site. . when in 2019 the flood damaged the repair works.
There is no evidence the company mentioned the camp to its agent, McGriff, let alone instructed him to obtain coverage for the property there, the court said.
However, I Square argued that McGriff developed a "special relationship" that required it to identify and close the coverage gap, posing as a "highly qualified expert" at the 2017 sales meeting and acting as an "integral" member of the team as whole. . then.
The 8th Circuit disagrees.
"Some agents who are not qualified and some insureds who do not trust the agent's ability to make insurance selections," wrote Circuit Judge Maurice Arnold, joined by Circuit Judges James Locken and Jonathan Cobb. .
Attorneys for both sides did not immediately respond to requests for comment Wednesday. Just like Truist, which is based in North Carolina.
Arkansas-based I Square Hotels manages, builds and renovates, according to the 8th Circuit. The Tennessee Hotel, renovated in 2019, is owned by Arkansas Knoxville Hotel (AKH), a limited partnership formed by CEO I Square.
After hiring Square McGriff, I asked their agent to provide coverage for furniture, fixtures and equipment stored on site for three of their other projects. However, no such request was made for the Knoxville update.
Usually, it's the agent's job to get the protection the client wants, 8th Circle explains. Courts in many states have recognized special relationship exceptions to this rule, but differ as to how the exceptions arise.
The Arkansas Supreme Court recognized the exception in 1986 but never applied it, the 8th Circuit said. There is also no appellate court in Arkansas.
Given the Supreme Court's "dark opinions" on the exclusion and "an uninterrupted line of Arkansas appellate decisions rejecting the theory" spanning more than 36 years, the panel said McGriff and its subsequent settlement with I Square and AKH lacked the selling point alone. . is sufficient to establish a special relationship under state law.
The cases are I Square Management LLC and Arkansas Knoxville Hotel LP v. McGriff Insurance Services Inc., United States 8th Circuit, No. 21-3256.
For I Square Management and Hotel Arkansas Knoxville, Scott Poynter of Poynter Law Group; Cody Kees of Bequette, Billingsley & Kees; and E. Clarke Tucker IV by Clarke Tucker Law
For McGriff Insurance Services Inc., Christine Jones of Kilpatrick & Townsend; Karen "Betsy" Baker and BJ Walker of Rose Law Firm
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