Opinion ID: 764976
Heading Depth: 3
Heading Rank: 3

Heading: Ostensible agency

Text: 54 Zweig contests the district court's ruling that he was not an additional insured because Morton/SEIS, who issued the certificate of insurance on which Zweig relies, was not American Casualty's ostensible agent. As the court noted, Zweig apparently conceded that Morton/SEIS was not the actual agent of American Casualty, and thus had no actual authority to issue the certificate of insurance naming Zweig as an additional insured. Morton/SEIS was an insurance broker who procured insurance for his clients, not an agent of any particular insurance company. See Marsh & McLennan of Cal., Inc. v. City of Los Angeles, 62 Cal. App. 3d 108, 132 Cal. Rptr. 796, 802 (Ct. App. 1976) (An independent insurance broker is not an agent of the insurer, but rather is an agent of the insured.). The court concluded that Zweig had failed to raise a triable issue of fact whether Morton/SEIS was an ostensible agent of American Casualty. 55 An agency is ostensible when the principal intentionally, or by want of ordinary care, causes a third person to believe another to be his agent who is not really employed by him. Cal. Civ. Code 2300. To establish a triable issue of fact that Morton/SEIS was American Casualty's ostensible agent, Zweig had to produce some evidence that American Casualty, not Morton/SEIS, intentionally or by want of ordinary care has caused or allowed [Zweig] to believe the agent possesses such authority . . . . Ostensible authority must be established through the acts or declarations of the principal and not the acts or declarations of the agent. Preis v. American Indem. Co., 220 Cal. App. 3d 752, 269 Cal. Rptr. 617, 622-23 (Ct. App. 1990). In general, ostensible authority is for a trier of fact to resolve . . . . [It] should not . . . [be] decided by an order granting a summary judgment. Thompson v. Occidental Life Ins. Co., 276 Cal. App. 2d 559, 81 Cal. Rptr. 37, 40 (Ct. App. 1969). 56 Zweig presented no evidence that he had any direct contact with American Casualty or AON, its underwriter, before the bungee jumping accident. That does not end our inquiry, however. American Casualty could still be liable where the principal knows that the agent holds himself out as clothed with certain authority, and remains silent. Preis, 269 Cal.Rptr. at 623. 57 In Preis, the court held that the defendant insurance company gave its own certificate of insurance forms to the broker who issued the certificate, thus creating at least a triable issue of fact whether the broker had ostensible authority. Id. at 623. By contrast, in this case the certificate was a standard form in wide use in the insurance industry, issued by the Acord Corporation. American Casualty's name is not printed on the form. American Casualty, however, does not have its own customized form certificate for indicating additional insureds. American Casualty argues that because the form used is a standard form, there is no evidence that American Casualty performed any acts or made any declarations to make Zweig believe that Morton/SEIS was authorized to add him as an insured. 58 There was evidence in the record, however, that American Casualty knew that Morton/SEIS issued certificates of insurance. Morton testified that he fielded requests on many occasions for additional certificates of insurance. The record also contains facsimile correspondence between Morton/SEIS's office and AON, American Casualty's underwriter, forwarding Krieger's initial application for insurance, and requesting the policy number by return fax so that I may issue necessary Certificates for the first jump this weekend. There thus was evidence that AON (who is admittedly the agent of American Casualty) knew that Morton was planning to issue certificates of insurance before particular jumps took place. 59 American Casualty counters that it generally required an additional fee, reviewed proposed certificates, and issued an endorsement to the policy before adding an additional insured. While the certificate states that its policy names Zweig as an additional insured, it also indicates This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not amend, extend or alter the coverage afforded by the policies below. That evidence, however, goes only to the question whether Zweig actually was added to the policy as an additional insured (which the parties agree he was not). It is not relevant to whether Morton/SEIS had ostensible authority to issue the certificates, which, while not formal amendments to the policy, were used as the notification to insureds that they were covered. Thus, there was evidence in the record from which a reasonable juror might infer that AON was aware of Morton's practice of using standard form certificates in this fashion. If AON remained silent in the face of such knowledge, it may be held responsible under the ostensible agency theory. 60 There is also evidence that American Casualty knew that Morton/SEIS issued certificates of insurance to Krieger, that Morton/SEIS used the standard form, and that the standard form certificates were issued to others as proof that they were covered under the policy. There is thus a question of fact whether, because American Casualty knew that Morton/SEIS held itself out as authorized to issue standard form certificates of insurance on American Casualty's behalf, American Casualty conveyed the impression to one named as an additional insured that these certificates reflected an actual amendment to the policy. 61 There is no dispute that Krieger obtained his bungee jumping insurance from American Casualty through Morton/SEIS. Once the policy was issued by American Casualty at Morton's request, there was a triable issue of fact whether Morton/SEIS was an ostensible agent of American Casualty for the purpose of Krieger's obtaining an additional insured endorsement to that policy. An insurance company that issues a policy through the services of a broker may create an ostensible agency whereby the broker would have apparent authority to add an additional insured to that policy. There is a triable issue whether by issuing the policy at Morton/SEIS's request, American Casualty made Morton/SEIS an ostensible agent for the limited purpose of adding an additional insured to that policy. 62 Stated another way, it is arguable that one who has obtained insurance through a broker would ask the same broker to have an additional insured covered by the policy. There is a triable issue of fact whether the insurance company, having issued the policy at the request of that broker, has clothed the broker with ostensible authority to add an additional insured to that policy. 63 We thus conclude that Zweig raised an issue of material fact regarding ostensible agency.