Opinion ID: 2540396
Heading Depth: 1
Heading Rank: 4

Heading: duties assumed by contract or course of conduct

Text: This Court's analysis does not mean that Marsh was free to obtain insurance that did not meet Emerson's needs or that was unreasonably costly or imprudent. Marsh had a fiduciary duty to use reasonable care, skill and diligence in procuring insurance for Emerson. Any such failure would be actionable, not because it is a breach of a duty of loyalty or of an independent obligation to disclose Marsh's financial arrangements, but because it would constitute a failure to exercise the degree of care required in procuring a policy for the insured. Moreover, while this Court holds that a duty to disclose the receipt of premium interest or contingent commissions and a duty to obtain the lowest possible cost insurance are not inherent parts of the broker-insured relationship, such additional duties may be assumed by brokers. Although Emerson's petition is very brief and may be subject to a motion for a more definite statement, it is sufficient to raise the issue of whether Marsh, either by contract, course of conduct during its more than 20-year association with Emerson or a combination of both, assumed obligations beyond the normal duty of all insurance brokers to use reasonable care, skill and diligence in procuring insurance on behalf of insureds. That appears to be what happened in Zeff, in which this Court found that the long-term relationship between the broker and the insured justified the insured's reliance on the broker to notify the insured if a policy expired or was cancelled. 389 S.W.2d at 795. Zeff thereby implicitly recognized that the nature of a broker's duty may vary depending on the relationship of the parties and any agreements between them. Id. This is in accord with the Restatement (Third) of Agency, which states: Subject to any agreement with the principal, an agent has a duty to the principal to act with the care, competence, and diligence normally exercised by agents in similar circumstances. Special skills or knowledge possessed by an agent are circumstances to be taken into account in determining whether the agent acted with due care and diligence. If an agent claims to possess special skills or knowledge, the agent has a duty to the principal to act with the care, competence, and diligence normally exercised by agents with such skills or knowledge. § 8.08; see also Manzella, 965 S.W.2d at 227 (finding an insurance agent's duties to the insured may expand if there is a special relationship or extended agency agreement between them); Kap-Pel Fabrics, 402 S.W.2d at 53-54 (accord). Because Marsh was granted judgment on the pleadings, there is no factual record showing the nature of the more than 20-year relationship between Marsh and Emerson, nor does the record show whether the parties entered into any written or oral agreements imposing additional duties on Marsh during some or all of the parties' long relationship. The parties were unable to agree in this Court whether such agreements exist or whether expectations arose through the parties' course of dealing that imposed additional duties on Marsh to disclose contingent commissions or interest it earned on premiums or to acquire the lowest cost insurance that went beyond the normal duty of brokers to use good faith, reasonable care, skill and diligence in procuring insurance for their clients. Furthermore, there is no evidence showing whether lower cost insurance was readily available from insurers that did not offer Marsh contingent commissions, much less whether Marsh's failure to obtain it was costly to Emerson and, if so, whether this constituted a breach of its duty to use reasonable skill to procure insurance in light of the fact that a broker normally has no duty to scour the market for the best priced insurance or to advise the insured as to what insurance would best meet its needs. [11] In sum, the record is devoid of the evidence necessary to determine the scope of the fiduciary duties Marsh owed to Emerson or whether Marsh's conduct violated those duties.