Carolina v. Cummings

• Court: Court of Appeals for the First Circuit
• Decided: April 8, 1997
• Docket: 96-2220
• Status: Published

Opinion

USCA1 Opinion

UNITED STATES COURT OF APPEALS
                            UNITED STATES COURT OF APPEALS



                                FOR THE FIRST CIRCUIT
                                FOR THE FIRST CIRCUIT



                                 ____________________



        No. 96-2220



                         CAROLINA CASUALTY INSURANCE COMPANY,



                                Plaintiff, Appellant,



                                          v.



                              THE CUMMINGS AGENCY, INC.,



                                 Defendant, Appellee.



                                 ____________________


APPEAL FROM THE UNITED STATES DISTRICT COURT



                              FOR THE DISTRICT OF MAINE



                     [Hon. D. Brock Hornby, U.S. District Judge]
                                            ___________________



                                 ____________________



                                        Before



                                Boudin, Circuit Judge,
                                        _____________



                            Aldrich, Senior Circuit Judge,
                                     ____________________



                              and Lynch, Circuit Judge.
                                         _____________



                                 ____________________


Robert  W.  Kline with  whom  Lisa  M.  Fitzgibbon  and Kline  Law
            _________________             ____________________      __________

        Offices were on brief for appellant.
        _______

            Wendell G. Large with whom John  B. Lucy and Richardson,  Whitman,
            ________________           _____________     _____________________

        Large & Badger were on brief for appellee.
        ______________



                                 ____________________



                                    April 7, 1997

                                 ____________________



ALDRICH, Senior Circuit  Judge.  After  eliminating
                               _____________________



            irrelevancies,   unsupported   statements   and,   unhappily,



            misstatements, a  core remains  that requires us  to consider



            whether  there was  error  in the  district court's  granting



            summary judgment  for the  defendant.   On this  appeal,1 the



            basic facts are these.



                      Plaintiff    Carolina   Casualty    Insurance   Co.



            ("Carolina"), a transportation specialist, wrote  a liability



            policy  on Geary  and Judith  Bonville, d/b/a  Bonville Farms



            ("Bonville  Farms").   Subsequently,  while a  Bonville Farms



            truck was carrying crushed (scrap) cars the load shifted, and



            for  the  resulting  accident  Carolina was  obliged  to  pay



            $750,000  in  damages.   It  sues The  Cummings  Agency, Inc.



            ("Cummings")  for having  "produced" the  policy, negligently



            failing to identify that Bonville Farms carried scrap cars --



            a higher risk and an undertaking that Carolina would not have



            accepted.  The application,  on Carolina's form, as submitted



            to its general agency for Maine, Surplex Underwriters, Inc. -



            -  who  investigated Bonville  Farm and  approved --  read as



            follows:   "Type of  Cargo Carried:   (Be specific)  Produce,



            Potatoes, Potash  (bagged) and  Lumber."   It could  be found



            that  Cummings  had completed  the  application  for Bonville



            Farms' signature.   Even in  this court Carolina  claims that



                                
            ____________________



            1.  There is  no merit in  defendant's claim that  the appeal

            was  filed too late.   See Lopez v.  Corporacion Azucarera de
                                   ___ _____     ________________________

            Puerto Rico, 938 F.2d 1510, 1514 (1st Cir. 1991).
            ___________



                                         -2-



Cummings signed, too.   Very conspicuously,  it did not;  nor



            was its signature requested.   Cummings' name simply appeared



            as the "Non-Licensed Producer."  Carolina maintains, however,



            that Cummings "knew or should have known" of Bonville  Farms'



            scrap car operation  and should have reported  it.  Obviously



            this assumes a  duty to inform.   The  court ruled there  was



            none.  We affirm.



                      In order to  defeat summary judgment, Carolina  was



            required to  come forward with  an affirmative showing.   See
                                                                      ___



            Wightman v. Springfield Terminal Ry., 100  F.3d 228, 230 (1st
            ________    ________________________



            Cir.  1996); Fed.  R. Civ.  P. 56(c).   It  showed none  with



            respect to a producer's duty.  The court stated it knew of no



            special meaning  for the term producer.   Nor do we.   In the



            absence of evidence,  we equate  it with broker.   A  broker,



            under the Maine  statute, is  "any person who,  not being  an



            agent of the insurer,  as an independent contractor solicits,



            negotiates, or procures insurance or annuity contracts or the



            renewal  or continuation  thereof  on behalf  of insureds  or



            prospective  insureds other  than himself."   Me.  Rev. Stat.



            Ann.  tit. 24-A,    1506.   This  means  no duty  toward  the



            insurer,  see Giberson v. York County Mut. Fire Ins. Co., 142
                      ___ ________    ______________________________



            A. 481 (Me. 1928), 127 Me. 182, 185 (1928); cf. 3 Lee R. Russ
                                                        ___



            & Thomas  F. Segalla,  Couch on  Insurance 3d    45:4 (1995),
                                   ______________________


-3-



witha heavy burden on Carolinato make a special showing here.



                      As  there  was  no  independent  writing   on  this



            subject,  nor evidence of a  trade practice,2 we  turn to the



            application.   Over  the "Applicant's  Signature" line  it is



            stated that  the applicant  "represents that the  information



            above is true."  As noted ante, the  "Non-Licensed Producer,"
                                      ____



            elsewhere identified as  the applicant's "agent,"  represents



            nothing.



                      We ask a simple question.  If the producer is to be



            taken as making a  representation, why is not this  the place



            to ask him to make it?  The implication speaks loudly.



                      Viewed independently, what  are the  practicalities



            of Carolina's  contention?  How can a broker afford to make a



            study in depth of every customer, to the extent that, in case



            of loss, he is  accountable for what he "should  have known,"



            not   only  about   the  customer,   but  of   the  insurer's



            underwriting  standards?     Correspondingly,  no   insurance



            company is going to depend upon the ability (and industry) of



            every, non-licensed by it,  broker.  Plaintiff here  did not;



            it followed its usual  custom and commissioned an independent



            investigation.  This makes business sense, both ways.


____________________



            2.  It  does appear  that Cummings  received from  Carolina a

            share  of   the  premium,   manifestly  payment  for   having

            "produced"  the insured, but it assumes the point to say that

            this activity implied any specific obligations.  See 3 Lee R.
                                                             ___

            Russ  &  Thomas F.  Segalla,  Couch  on  Insurance 3d    45:4
                                          _______________________

            (1995).



                                         -4-



At   the  same   time,  might   there  not   be  an



            intermediate ground?   Suppose a broker  actually knows facts



            about his customer that he knows would make him unacceptable,



            and  knows  that  the  would-be  insured  is  filing  a false



            application.  Should not  the insurer have a right  to expect



            good  faith?  If some  of the hearsay  proffers Carolina made



            here could be broadly accepted, it might have made out a case



            of fraud.   See   Giberson, ante.   We need  not reach  this,
                        ___   ________  ____



            however.  Carolina's brief  expressly disclaims making such a



            claim.



                      Carolina  has  failed  to  produce   evidence  that



            Cummings' status gave  rise to any duty.   Therefore Cummings



            is  entitled  to  summary  judgment.    The  decision  of the



            district court is Affirmed.
                              ________


-5-