Opinion ID: 2276887
Heading Depth: 2
Heading Rank: 1

Heading: Green Mountain's Liability

Text: [¶ 41] Green Mountain disputes that it is liable for any of the damages. It argues that it cannot be held responsible on a breach of contract theory because the contract is the insurance policy, and it was not a party to the insurance contract. County Forest argues that the court did not premise its finding of Green Mountain's liability on the basis of breach of the insurance contract. The trial court stated that Green Mountain breached its duty to procure the requested increase in policy limits. County Forest did not specifically plead tort or contract theories of liability, nor did the court expressly use the words contract or tort in its discussion of Green Mountain's liability. [¶ 42] If the cause of action against Green Mountain is construed as one for breach of the insurance contract, Green Mountain would not be liable. When an agent is not a party to a contract between the principal and a third party, the agent is not liable to the third party for a breach of that contract. See Mueller v. Penobscot Valley Hosp., 538 A.2d 294, 299 (Me.1988) (finding hospital administrator who was not a party to contract between hospital and employee not liable for breach). However, it may be possible to construe the cause of action against Green Mountain as one sounding in contract in which the contract is one to procure insurance and the parties to the contract are Green Mountain and Peabody or County Forest. See Bates v. Anderson, 614 A.2d 551, 552 (Me.1992) (upholding jury verdict for prospective insured against insurance agent for breach of agent's contract with insured to procure flood insurance); Miller v. Liberty Ins. Co., 161 Me. 438, 443, 213 A.2d 831, 833 (1965) (same). Under this theory, Green Mountain, as a party to the contract to procure insurance, is liable for its breach. [¶ 43] Cases in which an insurance agent has breached a duty to procure insurance generally refer to the cause of action as one for negligence. In McAlvain v. General Ins. Co. of America, 97 Idaho 777, 554 P.2d 955 (1976), the court surveyed authorities and cases from other jurisdictions and concluded that an insurance agent who fails to procure complete coverage can be liable in tort or contract. See id. at 958. The McAlvain court held that an insurance agent who performs negligently is liable for that negligence. See id. at 959. The court affirmed the jury verdict against the agent and noted that the insurer's liability for its agent's negligence was not in issue, but an agent can always be held personally liable for his own negligence under ordinary torts principles. Id. See also Joseph Forest Prods., Inc. v. Pratt, 278 Or. 477, 564 P.2d 1027, 1029 (1977) (referring to the action as one for breach of contract to procure insurance and for negligence in failing to procure insurance and stating that liability may be based on either or both); Appleton Chinese Food Serv., Inc. v. Murken Ins., Inc., 185 Wis.2d 791, 519 N.W.2d 674, 678 (Ct.App.1994) (stating that an agent may be liable in tort to the insured for failing to procure insurance). [¶ 44] Whether we view the failure to procure the insurance as a breach of a contract or as a tort, there is sufficient authority for the proposition that Green Mountain is liable for failing to procure the requested insurance. In a case where an insurance agent neglected to increase the coverage limits on a fire insurance policy after being requested to do so by the insured, we said: It is the law in Maine that when an insurance broker or agent undertakes to provide insurance for another but fails to do so, the agent is liable in the amount that would have been due if the policy had been obtained. Bramson v. Chester L. Jordan & Co., 379 A.2d 730, 732 (Me.1977). See also McAlvain, 554 P.2d at 959 (affirming judgment against insurance agent for negligent failure to obtain requested coverage); Joseph Forest Prods., 564 P.2d at 1029-30 (holding that insurance agent is liable for failure to obtain fire insurance and vacating denial of consequential damages); Appleton Chinese Food, 519 N.W.2d at 678 (affirming liability of insurance agent, following settlement by insured with insurer, for failure to procure insurance); RESTATEMENT (SECOND) OF AGENCY §§ 217B, 359C (1958) (an action may be brought jointly against a principal and agent for the tortious conduct of the agent). The trial court did not err in holding Green Mountain liable for failing to procure the increased insurance limits.