NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3.
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-2182-15T4
C.S. OSBORNE & CO., INC.,
Plaintiff-Appellant,
v.
THE CHARTER OAK FIRE INSURANCE CO., and THE TRAVELERS COMPANIES INC.,
Defendants,
and
BOLLINGER, INC., n/k/a ARTHUR J. GALLAGHER & CO.,
Defendant-Respondent. ———————————————————————————————————
Submitted February 2, 2017 – Decided May 1, 2017
Before Judges Lihotz, Hoffman and O'Connor.
On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L- 0211-14.
Paray Law Group, LLC, attorneys for appellant (Paul E. Paray, on the briefs).
White and Williams, LLP, attorneys for respondent (Christopher P. Leise, Marc L. Penchansky, and Alicia M. Van Sciver, of counsel and on the brief). PER CURIAM
Plaintiff C.S. Osborne & Co., Inc. appeals from a December
8, 2015 order granting summary judgment to defendant Bollinger,
Inc. (Bollinger), and dismissing plaintiff's claims against
Bollinger with prejudice.1 Bollinger served as plaintiff's
insurance broker from 2001 until 2012, when Superstorm Sandy
flooded and damaged plaintiff's commercial facilities in Harrison.
Plaintiff filed a complaint alleging professional negligence and
related claims against Bollinger2 because its flood insurance
policy provided only $1,000,000 of coverage, well below the amount
of damage to plaintiff's facilities. Plaintiff alleged Bollinger
had a duty to provide quotes for higher policy limits. Judge
Francis B. Schultz disagreed and granted summary judgment to
Bollinger, and denied plaintiff's cross-motion for partial summary
judgment.
1 Plaintiff also appeals from a separate December 8, 2015 order denying its cross-motion for partial summary judgment, as well as an order denying reconsideration. Plaintiff further claims the court erred in failing to order a change of venue.
2 Plaintiff also sued its insurance carrier, The Charter Oak Fire Insurance Company, and its underwriting issuing company, The Travelers Companies, Inc. (collectively, Travelers). After the entry of the orders dismissing Bollinger from the case, plaintiff proceeded to trial against Travelers, reaching a settlement prior to verdict. 2 A-2182-15T4 Plaintiff repeats the same argument on appeal. After
reviewing the record and applicable law, we conclude Judge Schultz
correctly concluded Bollinger had no duty to provide quotes for
higher policy limits. We therefore affirm.
I.
We recite the facts found in the summary judgment record
viewed in a light most favorable to plaintiff. Brill v. Guardian
Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Plaintiff, a
family business in operation since 1826, manufactures tools used
for leatherwork, upholstery, and other purposes. Plaintiff has
its headquarters, along with manufacturing facilities, in
Harrison; it also has manufacturing facilities in St. Louis,
Missouri.
After meeting with Bollinger, plaintiff purchased an
insurance policy from Travelers covering three commercial
buildings in Harrison, along with its Missouri property. The
policy was in effect from sometime in 2004 through the date of
Superstorm Sandy. The policy excluded water loss but included
"Broad Form Flood" coverage of $1,000,000 for flood damage.
Bollinger's March 2012 insurance renewal proposal3 stated, "Higher
limits or sub-limits may be available so please advise us if you
3 The proposal listed a total replacement cost of $11,746,950 for plaintiff's buildings and contents at its Harrison location. 3 A-2182-15T4 are interested in higher limits options so that we may secure
quotations for your consideration." On October 29, 2012,
Superstorm Sandy flooded and damaged plaintiff's three buildings.
In March 2012, plaintiff provided Bollinger with an appraisal
dated January 14, 2011, which stated, "The subject property is
situated within flood hazard zone 'X' as depicted on Community
Panel #340221 0081 D, dated August 16, 2006[,] and published by
the Federal Emergency Management Agency (FEMA)." The appraisal
stated, "[T]he effect of the flood plain on the value of the
subject property is considered limited." The appraisal valued the
property at $1,600,000.
Steve Marshall, a Bollinger insurance broker with thirty
years of experience, handled plaintiff's account since 2001.
Marshall and his team worked with plaintiff to assist with any
insurance or risk management issues. Marshall testified he managed
client relationships, made sure clients were happy, made sure
"things [were] done proper[ly]," and replaced canceled policies
with more suitable policies to meet his clients' needs. In his
deposition, Marshall stated he toured plaintiff's Harrison
facilities in 2001 and 2004.
Beginning in 2004, Marshall and plaintiff's president saw
each other at monthly board meetings of a local cemetery. Marshall
testified that unlike most clients, plaintiff's president had
4 A-2182-15T4 access to him on almost a monthly basis to discuss any follow-up
issues regarding insurance renewals. Plaintiff's expert witness
opined that because elevations were low with a river nearby, a
discussion about flooding should have occurred.
On March 20, 2003, Bollinger wrote plaintiff suggesting it
purchase terrorism coverage, which plaintiff purchased. On June
2, 2004, after meeting plaintiff's president, Marshall advised
plaintiff to explore coverage for Employment Practices Liability
Insurance (EPLI). The message also stated, "If the cost
[outweighs] the benefit then [plaintiff] can always decline to
purchase the coverage." On March 24, 2005, while advising
plaintiff of revised premiums, Marshall detailed a "Package
policy," which included earthquake coverage, and recommended the
higher deductible.
On June 28, 2006, Kelly Lamb, an account executive with
Bollinger, provided plaintiff's president with a products recall
coverage application for review after noticing the absence of such
coverage in plaintiff's policy. Lamb concluded, "If you are
interest[ed] in purchasing this coverage in the future, kindly
forward this completed application . . . so that we may obtain
pricing on your behalf."
On March 30, 2007, Lamb wrote plaintiff's president regarding
insurance renewals. In the letter, Lamb confirmed a conversation
5 A-2182-15T4 on March 30, 2007, between plaintiff's president and Marshall,
during which plaintiff's president declined coverage for Pollution
Liability, Directors & Officers Liability, and Employment
Practices Liability. On April 13, 2009, Lamb confirmed plaintiff's
purchase of a new Directors & Officers Liability Policy, and an
EPLI policy.
On February 8, 2010, Lamb informed plaintiff it may need to
increase the amount of its "ERISA Bond" in order to comply with
The Employee Retirement Income Security Act (ERISA), depending on
the amount of assets in its retirement plan. On March 28, 2011,
Lamb provided plaintiff's president with a Workers Compensation
Renewal Quotation and a Management Liability Renewal Proposal for
review. Lamb also included optional Crime Coverage and Increased
Directors & Officers Liability limits for review.
On March 31, 2011, Lamb confirmed plaintiff's president
declined primary flood coverage as originally quoted on a renewal
proposal and noted, "Flood Coverage will be excess to the Missouri
location as a result of this location being situated in a hazardous
flood zone[,] according to Travelers' records." The email also
noted plaintiff retained the Management Liability Program but
declined optional Crime Coverage quotations. In a November 23,
2015 certification in support of plaintiff's cross-motion for
partial summary judgment, plaintiff's counsel asserted unsolicited
6 A-2182-15T4 flood coverage quotations were provided solely for plaintiff's
Missouri facility in 2011 and 2012. In a December 1, 2015
certification, Marshall explained that once the high-hazard flood
zone was determined, the policy would leave plaintiff without
flood coverage in Missouri up to $500,000 on building loss and
contents; therefore, Bollinger proposed the new coverage.
On September 5, 2014, plaintiff filed an amended complaint
against Bollinger, alleging broker malpractice, negligence, breach
of contract, violation of the implied covenant of good faith, and
consumer fraud. On May 8, 2015, plaintiff filed a motion to
disqualify the initial judge assigned to the case, vacate an April
10, 2015 order granting Bollinger's motion to compel and extend
discovery, and transfer the venue from Hudson County to Essex
County. Bollinger opposed plaintiff's motion.
On May 29, 2015, the initial judge granted plaintiff's motion
to disqualify herself4 and vacate her April 10, 2015 order. The
initial judge declined to consider plaintiff's motion for a change
of venue, but specifically stated, "If any party seeks a discovery
extension and/or a change of venue, two motions must be filed as
the Assignment Judge will hear all change of venue applications
4 The judge noted, "This court failed to realize that Travelers is a party inasmuch as Travelers was neither the movant [nor] the opposing party on the [April 10, 2015] motion." The record shows the judge previously worked for a law firm that handled matters for Travelers. 7 A-2182-15T4 and all matters in which this court has a conflict."
Notwithstanding this direction, plaintiff did not file a change
of venue motion with the Assignment Judge.
The case was then reassigned to Judge Schultz, who decided
the cross-motions for summary judgment under review, granting
Bollinger's motion for summary judgment and denying plaintiff's
cross-motion for summary judgment. In a concise written opinion,
Judge Schultz summarized each party's arguments. Bollinger
contended it was not required "to advise a client of the need to
raise its already existing limits or to provide any other manner
of risk assessment services absent a 'special relationship[,]'
which Bollinger asserts never existed." Plaintiff countered that
a "special relationship" existed, but did not contend the
relationship required Bollinger to merely advise plaintiff of
higher policy limits; instead, plaintiff asserted the special
relationship required Bollinger to solicit additional quotes for
higher flood insurance limits and offer the quotes for higher
coverage to plaintiff.
The judge noted, "Those cases that have found a special
relationship involve situations where the special relationship was
related to the special duty that was breached." In this case,
The extensive discovery covering the twelve[-]year relationship between [plaintiff] and Bollinger involving many different insurance products provides fertile 8 A-2182-15T4 ground for either proving a special relationship regarding providing actual quotes for specified higher limits or showing that there was no such relationship. The court is well satisfied that no such special relationship has been established. The plaintiff is in effect saying "you go first" meaning it was not sufficient for Bollinger to advise plaintiff of higher limits at higher costs and invite a request for same. Rather Bollinger should have listed all the possible quotes for all the possible higher limits. Since flood was only one type of insurance Bollinger provided [plaintiff], assumedly Bollinger was obligated to do the same with all the various categories of insurance it provided [plaintiff].
It is rather clear that there was no history of such a thing between the two. Bollinger's motion to dismiss counts alleging negligence and malpractice is granted.
The judge further concluded, "The record discloses no
suggestion that 'but for' any alleged wrongdoings by Bollinger,
Travelers would have paid more than they did. In fact, the record
clearly establishes no proximate cause can be shown regarding
these theories." Therefore, the court dismissed plaintiff's
remaining claims against Bollinger.
Plaintiff moved for reconsideration, essentially arguing that
when the court decided whether the parties' relationship gave rise
to a legal duty, it decided issues of credibility and questions
of fact not subject to summary judgment. Following oral argument,
Judge Schultz denied plaintiff's motion, finding he did not
9 A-2182-15T4 "overlook[] any law," misstate "any fact," or make "a credibility
determination." This appeal followed.
II.
When reviewing a grant of summary judgment, we employ the
same standards used by the motion judge under Rule 4:46.
Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162,
167 (App. Div.), certif. denied, 154 N.J. 608 (1998). First, we
determine whether the moving party has demonstrated there were no
genuine disputes as to material facts, and then we decide whether
the motion judge's application of the law was correct. Atl. Mut.
Ins. Co. v. Hillside Bottling Co., 387 N.J. Super. 224, 230-31
(App. Div.), certif. denied, 189 N.J. 104 (2006). In so doing,
we view the evidence in the light most favorable to the non-moving
party. Brill, supra, 142 N.J. at 523. We accord no deference to
the motion judge's conclusions on issues of law, Estate of Hanges
v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, 382-83 (2010);
Manalapan Realty, L.P., v. Twp. Comm. of Manalapan, 140 N.J. 366,
378 (1995), which we review de novo. Dep't of Envtl. Prot. v.
Kafil, 395 N.J. Super. 597, 601 (App. Div. 2007).
It is well-settled that "to render a person liable on the
theory of negligence there must be some breach of duty, by action
or inaction, on the part of the defendant to the individual
complaining, the observance of which duty would have averted or
10 A-2182-15T4 avoided the injury." Brody v. Albert Lifson & Sons, Inc., 17 N.J.
383, 389 (1955). Determination of whether a duty exists turns on
questions of "fairness and policy that, in turn, implicate many
factors." Fackelman v. Lac d'Amiante du Quebec, 398 N.J. Super.
474, 486 (App. Div. 2008). "Th[is] inquiry involves a weighing
of the relationship of the parties, the nature of the risk, and
the public interest in the proposed solutions." Cheng Lin Wang
v. Allstate Ins. Co., 125 N.J. 2, 15 (1991) (quoting Kelly v.
Gwinnell, 96 N.J. 538, 544 (1984)).
"The existence of a duty to exercise reasonable care to avoid
a risk of harm to another is a question of law," Fackelman, supra,
398 N.J. Super. at 486, subject to our de novo review. "Of course,
the legal determination of the existence of a duty may differ,
depending on the facts of the case." Wang, supra, 125 N.J. at 15.
An insurance broker's liability for negligent acts affecting
an insured has been addressed by our Supreme Court, which noted
"[t]he import of the fiduciary relationship between the
professional and the client is no more evident than in the area
of insurance coverage." Aden v. Fortsh, 169 N.J. 64, 78 (2001).
Insurance intermediaries in this State must act in a fiduciary capacity to the client "[b]ecause of the increasing complexity of the insurance industry and the specialized knowledge required to understand all of its intricacies." Walker v. Atl. Chrysler Plymouth, Inc., 216 N.J. Super. 255, 260 (App. Div. 1987) (quoting Sobotor v. Prudential 11 A-2182-15T4 Prop. & Cas. Ins. Co., 200 N.J. Super. 333, 341 (App. Div. 1984)); see also N.J.A.C. 11:17A-4.10 ("An insurance producer acts in a fiduciary capacity in the conduct of his or her insurance business."). The fiduciary relationship gives rise to a duty owed by the broker to the client "to exercise good faith and reasonable skill in advising insureds." Weinisch v. Sawyer, 123 N.J. 333, 340 (1991).
[Id. at 78-79.]
The scope of the duty an insurance broker owes an insured was
initially discussed in Rider v. Lynch, 42 N.J. 465 (1964). The
facts in Rider reflect a prospective insured, who requested
automobile liability coverage to address a unique set of
circumstances, relied on the insurance broker's recommendation of
the type of policy to procure to insure the potential risk from
the intended use. Id. at 470-71. Actually, the policy's
limitations, which were not revealed to the insured by the broker,
excluded the identified risks. Id. at 471-74. Coverage was denied
when a collision occurred. Id. at 474.
The broker who advised the insured to obtain a specific policy
was held liable for damages resulting from the negligent
procurement of insurance. Id. at 476. "The Court noted that
because of the nature of the principal-agent relationship the
broker was charged with the knowledge that the policy did not fit
his client's need and, even if the broker was not aware of the
limited policy coverage, he was under a duty to examine and reject
12 A-2182-15T4 the policy himself before delivering it to the [insured]." Aden,
supra, 169 N.J. at 80 (citing Rider, supra, 42 N.J. at 481). An
insured is "entitled to rely upon and believe that the broker had
fulfilled his [or her] undertaking to provide the coverage . . .
agreed upon, and that the policy sent . . . represented
accomplishment of that undertaking." Rider, supra, 42 N.J. at
482. The Court noted:
One who holds himself [or herself] out to the public as an insurance broker is required to have the degree of skill and knowledge requisite to the calling. When engaged by a member of the public to obtain insurance, the law holds him [or her] to the exercise of good faith and reasonable skill, care and diligence in the execution of the commission. He [or she] is expected to possess reasonable knowledge of the types of policies, their different terms, and the coverage available in the area in which his [or her] principal seeks to be protected. If he [or she] neglects to procure the insurance or if the policy is void or materially deficient or does not provide the coverage he [or she] undertook to supply, because of his [or her] failure to exercise the requisite skill or diligence, he [or she] becomes liable to his [or her] principal for the loss sustained thereby.
[Id. at 476.]
In President v. Jenkins, 180 N.J. 550, 569 (2004), the Court
clarified the scope of an insurance broker's obligations to a
prospective insured, stating the broker is responsible: "(1) to
procure the insurance; (2) to secure a policy that is neither void
nor materially deficient; and (3) to provide the coverage he or 13 A-2182-15T4 she undertook to supply." However, "[t]he duty of a broker or
agent . . . is not unlimited." Carter Lincoln-Mercury, Inc.,
Leasing Div. v. EMAR Group, Inc., 135 N.J. 182, 190 (1994).
Absent a special relationship, "there is no common law duty
of a carrier or its agents to advise an insured concerning the
possible need for higher policy limits upon renewal of a policy."
Wang, supra, 125 N.J. at 11-12. In Wang, the Court reviewed the
parameters of liability, starting with Rider, "the seminal case .
. . concerning a broker's liability to an insured," and its
progeny. Id. at 12. The Court distinguished the basis for the
duty this court found in Sobotor, wherein we ordered the automobile
insurance policy reformed to increase the uninsured/underinsured
motorist coverage because of the agent's failure to have provided
the insured with the "best available" package of insurance, as the
insured had requested. Sobotor, supra, 200 N.J. Super. at 336,
341-43. In that instance, we determined a "duty arises when there
is a special relationship between the insurance agent and the
client which indicates reliance by the client on the agent." Id.
at 338. The Court acknowledged that the existence of a "special
relationship" evincing reliance by the insured on the broker or
agent could trigger liability. Wang, supra, 125 N.J. at 15.
In Wang, however, because there were "no allegations of
special relationship," the Court rejected the plaintiff's argument
14 A-2182-15T4 to impose a duty upon insurers that "required them 'to periodically
and regularly advise [the insureds] of a need to increase the
limits of [their] insurance coverage in light of the appreciated
value of their home[s], inflationary trends in the area, and
increased recoveries being awarded to tort victims.'" Ibid.
(alterations in original). The Court consequently determined "the
policies had been routinely renewed, probably without any contact
between the parties," id. at 16, and "the obligation to inform
homeowners renewing their policies to consider higher liability
limits was not encompassed by the recognized duty of care owed by
agents to their insureds and, therefore, should be imposed, if at
all, by the Legislature." Carter Lincoln-Mercury, supra, 135 N.J.
at 190 (citing Wang, supra, 125 N.J. at 18-19).
Plaintiff argues Bollinger had a duty to provide additional
flood quotes for plaintiff's Harrison facilities and breached that
duty when it never provided additional quotes over their twelve-
year relationship. Plaintiff contends the court improperly relied
on the "special relationship" analysis without considering the
three other prongs of the four-prong Carter test. Plaintiff also
emphasizes a fiduciary duty New Jersey imputes on brokers. See
Aden, supra, 169 N.J. at 79.
Under the four-factor test, plaintiff first argues its
relationship with Bollinger was strong, special, and unique
15 A-2182-15T4 relating to procurement of flood insurance. It asserts Bollinger
was its exclusive broker for over a decade, would unilaterally
review its insurance and make recommendations, and obtained
additional flood limit quotes for plaintiff's Missouri location.
Plaintiff further claims Bollinger's representative toured the
facility on multiple occasions, and had a long relationship with
plaintiff's president through their positions on an outside board.
In its statement of facts, plaintiff suggests Marshall's visit put
him on notice to the risks associated with the property and gave
rise to a duty. See Indus. Dev. Assocs. v. F.T.P., Inc., 248 N.J.
Super. 468, 471 (App. Div. 1991).
We disagree. Carter did not overrule Wang's holding that
absent a special relationship, "there is no common law duty of a
carrier or its agents to advise an insured concerning the possible
need for higher policy limits upon renewal of a policy." Wang,
supra, 125 N.J. at 11-12. Moreover, Bollinger told plaintiff that
"[h]igher limits or sub-limits may be available so please advise
us if you are interested in higher limits options so that we may
secure quotations for your consideration." Bollinger never told
plaintiff anything that would reasonably cause plaintiff to rely
on his quotes as recommendations for the proper amount of insurance
coverage.
16 A-2182-15T4 Next, plaintiff argues Marshall knew of the catastrophic risk
of flood. Plaintiff stresses that Bollinger's 2012 renewal
proposal listed $11,746,950 as the replacement cost for its
Harrison buildings and their contents, an amount over ten times
greater than the $1,000,000 flood limit for a property located in
a flood plain. Bollinger's insurance proposal also clearly
informed plaintiff of its ability to offer more insurance coverage.
Bollinger did not have any more information than plaintiff, and
nothing in the record shows Bollinger acted to cause plaintiff to
rely on it to recommend the proper amount of insurance coverage.
Plaintiff also claims Bollinger could have requested
additional quotes from Traveler's underwriter, Karen Ladner, who
had authority to provide $5,000,000 in total flood limits.
Assuming this is true, we find it irrelevant to whether or not
Bollinger had a duty to provide additional quotes to plaintiff.
Finally, under the fourth factor, plaintiff cites the
National Flood Insurance Act of 1968, 42 U.S.C.A. § 4011(c), to
support its contention Bollinger's duty is in the public interest.
According to plaintiff, reasonable skill, judgment, and experience
dictate Bollinger should have known the $1,000,000 flood limit was
inadequate. Plaintiff asserts finding a duty in this case comports
with the broker's responsibility to exercise good faith and
reasonable skill. We disagree. An insurance broker is not an
17 A-2182-15T4 insurance consultant; if plaintiff wanted an insurance consultant,
it could have retained one. Bollinger's policy proposal clearly
stated it would receive payment from the insurer or another third
party, and Bollinger did nothing to suggest it worked for anyone
else.
Plaintiff cites various dicta in Wang, supra, 125 N.J. 2,
which found the absence of a duty, to argue the duty of a broker
may differ depending upon the facts of the case. However, Wang
explicitly stated, "We conclude there is no common law duty of a
carrier or its agents to advise an insured concerning the possible
need for higher policy limits upon renewal of the policy." 125
N.J. at 11-12.
Plaintiff next contends Bollinger had a duty to provide
quotes, not to advise on specific purchases. Plaintiff cites
Walker, supra, 216 N.J. Super. at 260-61, in which this court
considered reliance on specialized, professional expertise to find
a duty to inform of available coverage, and plaintiff argues
Bollinger told plaintiff to purchase other insurance coverage but
never additional flood coverage, thereby creating this sort of
reliance. Given Bollinger's offer to provide additional quotes
of more flood insurance, we disagree.
Plaintiff argues Bollinger did not satisfy its duty when its
proposal advised plaintiff that higher limits may be available.
18 A-2182-15T4 Plaintiff asserts the motion judge should not have focused upon
the presence or absence of a "special relationship" in determining
Bollinger's duty, and additionally erred by improperly acting as
a factfinder when she determined no such relationship existed. We
disagree because we conclude Wang, supra, 125 N.J. at 11-12,
required the trial court to determine whether the parties' past
dealings established a special relationship. We further reject
plaintiff's argument the judge improperly acted as a factfinder.
The record reveals no genuine disputes as to any material facts.
Plaintiff further argues the judge should not have dismissed
its claims for breach of implied duty of good faith and breach of
contract. Plaintiff argues it sufficiently pled the failure to
act as a claims advocate and a conflict of interest with Travelers,
so the judge should not have dismissed these claims. This argument
lacks merit. The record not only fails to support these
alternative claims, but we also agree with Judge Schultz that "the
record clearly establishes no proximate cause can be shown
regarding these theories."
We further agree with Bollinger that the issue of venue is
not appropriately before us because the initial judge declined to
rule on the motion to transfer venue. Plaintiff does not argue
the first judge erred when she declined to order a change of venue.
Plaintiff should have secured a ruling from a subsequent judge if
19 A-2182-15T4 it intended to challenge venue on appeal. Zaman v. Felton, 219
N.J. 199, 226-27 (2014); see also Nieder v. Royal Indem. Ins. Co.,
62 N.J. 229, 234 (1973) ("[O]ur appellate courts will decline to
consider questions or issues not properly presented to the trial
court when an opportunity for such a presentation is available
unless the questions so raised on appeal go to the jurisdiction
of the trial court or concern matters of great public interest").
We therefore decline to address the issue further.
Affirmed.
20 A-2182-15T4