Opinion ID: 2276887
Heading Depth: 1
Heading Rank: 8

Heading: damages owed by green mountain

Text: [¶ 40] In the amended judgment, the court clarified that Green Mountain was jointly and severally liable with the insurers for the consequential damages resulting from the forced sale of the undamaged equipment and the interest and attorney fees owing to creditors. With regard to the $743,542.05 in insurance proceeds, the court held that the insurers are primarily liable and Green Mountain is secondarily liable. [7]
[¶ 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.
[¶ 45] Green Mountain contends that its only malfeasance was the failure to obtain the increased coverage limits, and once the court construed, either on a reformation or an estoppel theory, the insurance contract as containing the increased coverage, the situation was the same as if it had procured the increased coverage. It cites several cases for the proposition that an insurance agent is not liable for damages for failing to procure a policy when a court construes the policy as requested and finds the insurer liable. One of those cases neither cites authority nor offers reasoning as to why it held that the claim against the agent for negligence should have been dismissed. See John Hancock Mut. Life Ins. Co. v. McNeill, 27 Ariz.App. 502, 556 P.2d 803, 809 (1976). [8] Green Mountain also relies on Trible v. Tower Ins. Co., 43 Wis.2d 172, 168 N.W.2d 148 (1969), in which the court held that an insured was not entitled to recover both on his contract action against the insurer and his tort action against the agent. The Trible case has been distinguished by Appleton Chinese Food, 519 N.W.2d at 679, on the basis that Trible invoked the doctrine of election of remedies, and because the purpose of the doctrine is to prevent double recovery, the doctrine is not applicable when there is no threat of a double recovery. See also Zubek v. Edlund, 228 Wis.2d 783, 598 N.W.2d 273, 276 (Ct.App. 1999) (holding that insured's settlement with insurer did not preclude negligence claim against insurance agent for failure to procure insurance). [¶ 46] Green Mountain urges us to apply the election of remedies doctrine and argues that it is inconsistent to hold Green Mountain liable for failing to procure the increased limits and hold the insurers liable for the increased limits. We disagree and find no inconsistency. The insurers are liable to pay the proceeds of the insurance policy up to the increased limits because they are estopped from denying the higher limits due to the actions of their agent, Green Mountain. Green Mountain is independently liable for breach of its duty to procure the increased limits. The fundamental purpose, of the doctrine of election of remedies is to prevent double recovery for a single wrong or injury. ANDREW M. HORTON & PEGGY L. MCGEHEE, MAINE CIVIL REMEDIES § 2-3 at 23 (3d ed.1996). In this case there is no possibility of a double recovery; County Forest cannot collect the entire judgment from both the insurers and Green Mountain; it is entitled to be made whole only once. The election of remedies doctrine is inapplicable. We see no justifiable basis to release Green Mountain from secondary liability for the insurance proceeds simply because the insurers are estopped from denying the increased coverage limits. [9]
[¶ 47] Green Mountain further argues that it should not be liable for any of the consequential damages that were caused by the bad faith refusal of the insurers to pay the increased coverage amount. It contends that the consequential damages were not the proximate result of Green Mountain's actions and were not foreseeable. [¶ 48] Green Mountain is responsible for the damages its conduct proximately caused. It told Peabody that it would obtain the increased coverage. It did nothing further to indicate that the increased coverage was declined, thereby causing Peabody and County Forest to assume that the increased coverage was in effect. When the fire occurred, instead of recognizing that it had failed to procure the increased coverage and had failed to so notify Peabody, it persisted in denying the increased coverage. At one time it asserted that it had decided to deny the increased coverage, and at another time it said it tried to obtain additional information from Peabody in order to effectuate the increase. The court found Green Mountain made no attempt to obtain additional information from Peabody. [¶ 49] The trial court implicitly found that the refusal of the insurers to pay the increased policy limits and the specific direction of the insurers to its adjuster to arrive at an adjustment within the lower policy limits were caused by the refusal of Green Mountain to acknowledge that it neglected to obtain the increased coverage. This leads to the conclusion that Green Mountain's failure to acknowledge its error directly led to the nonpayment of the increased coverage limits by the insurers and was the cause of the consequential losses sustained by County Forest. [10] Green Mountain's failure to procure the requested insurance and failure to admit its error after the fire do not have to be the sole cause of County Forest's consequential loss in order for Green Mountain to be liable for such consequential damages. There may be more than one proximate cause, and Green Mountain's conduct only needs to be a substantial cause of the damages. See Wheeler v. White, 1998 ME 137, ¶ 10, 714 A.2d 125, 127-28. [¶ 50] In Lindsey v. Mitchell, 544 A.2d 1298 (Me.1988), we noted that the plaintiff's claim against the insurance agent was not limited to the agent's failure to procure insurance, but it was also based upon the agent's repeated representations to the plaintiff that the insurance was in effect. We affirmed the jury's finding of the agent's negligence and the finding that the agent's actions proximately caused the plaintiff's loss of a commercial driver's license which caused the loss of his trucking business. See id. at 1301. We affirmed the award of damages for loss of business and for the forced sale of the plaintiff's trucks. See id. at 1301-02. As in Lindsey, County Forest's claim against Green Mountain, as it was presented to the court, was not limited to failure to procure insurance, but extends to all of Green Mountain's actions. Green Mountain's failure to procure the increased insurance coverage before the fire, its refusal to acknowledge its error after the fire, and its obfuscation of its actions, all contributed substantially to County Forest's consequential damages. [¶ 51] With regard to the foreseeability of the consequential damages, it is possible that the consequential damages were not foreseeable at the time Green Mountain failed to procure the increased coverage, but they were foreseeable and readily capable of identification after the fire and during the time Green Mountain persisted in its actions of obfuscation and delay. The court did not err in concluding that Green Mountain was jointly and severally liable for the consequential damages with the insurers.