Plaintiff, a reinsured company, sued defendant broker, alleging, among other things, that the broker failed to secure the best available terms. The Superior Court of Los Angeles County, California, eliminated a breach of fiduciary duty claim as a matter of law during pretrial proceedings, and a jury decided negligence and breach of contract claims in favor of the broker. The company appealed.
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Overview
The court of appeal held that an insurance broker could not be sued for breach of fiduciary duty. The court rejected the company’s argument that the broker, as the company’s agent, had heightened duties not imposed by or subsumed within the negligence duty of care, including duties of honesty, loyalty, integrity and faithful service as well as a duty to make a full and fair disclosure of facts. An insurance broker’s duties were defined by negligence law, not fiduciary law, and the agency of a broker had to be viewed only through the lens of insurance law, which was a constellation of rules and policies all its own. To the degree the fiduciary duty cause of action mimicked the negligence cause of action, which was argued to the jury, the former cause of action was redundant and any error was harmless. The court also held that discovery was not required under Code Civ. Proc., § 2017.010, with regard to a price fixing allegation, even though the broker was implicated in a price-fixing conspiracy in another state.
Outcome
The court affirmed the judgment.