Opinion ID: 2801672
Heading Depth: 5
Heading Rank: 2

Heading: Lincoln’s Claims

Text: We next turn to whether U.S. Auto owed these same fiduciary duties directly to Lincoln. The district court did not focus on this issue given its ruling that any duty, even that owed to S&C, did not extend to mishandling of premiums prior to them being deposited in the trust account. The parties spend much of their briefs arguing whether a duty was owed to Lincoln under either the common law, the Insurance Code, or the parties’ agreements. Once again, we find that the Reinsurance Agreement answers the question: In connection with this Agreement, [S&C] and the Agent [U.S. Auto] have entered into the Agency Agreement. [Lincoln] has selected the Agent [U.S. Auto] to administer the business reinsured hereunder. While for regulatory purposes, the Agent [U.S. Auto] will need to be appointed as [S&C’s] agent, it is recognized that the Agent [U.S. Auto] is acting on behalf of [Lincoln]. 21 Case: 13-10589 Document: 00513046323 Page: 22 Date Filed: 05/18/2015 No. 13-10589 ROA 743 (emphasis added). In addition, the General Agency Agreement states in the specific context of handling premiums that U.S. Auto is acting as Lincoln’s agent: [S&C], at [Lincoln’s] request, further authorizes the Agent [U.S. Auto] to perform all acts and duties under policies of insurance issued by [S&C] as would otherwise be performed by [S&C], including . . . remitting and/or receiving monies due from or to [S&C], and adjusting and paying losses or other claims. . . . In performing each of the acts mentioned above, the Agent [U.S. Auto] shall be under the direct supervision and control of [Lincoln General], and [Lincoln] shall be solely responsible for the acts of the Agent [U.S. Auto]. ROA 759 (emphasis added). These provisions recognize the obvious: given S&C’s limited role as the fronting entity, it is Lincoln that has an interest in the premium funds as only it is liable for paying claims. With respect to the handling of premium funds, the agreement thus sensibly extends the duties owed the nominal beneficiary of U.S. Auto’s fiduciary role (S&C) to the party actually affected by those fiduciary decisions (Lincoln). U.S. Auto contends that National Plan Administrators, Inc. v. National Health Insurance Co., 235 S.W.3d 695 (Tex. 2007), supports its argument that it does not owe a fiduciary duty to Lincoln. Although the Supreme Court of Texas in that case found no general fiduciary duty that would have governed the plan administrator’s marketing of policies to other insurers, it also recognized that the parties’ contract imposed specific fiduciary duties. Notably, those included duties relating to the handling of claims. Id. at 702– 03. The parties’ agreements in this case also are the source of the fiduciary duty we have recognized, and it is a specific one that that involves U.S. Auto’s 22 Case: 13-10589 Document: 00513046323 Page: 23 Date Filed: 05/18/2015 No. 13-10589 conduct in “accept[ing] and maintain[ing] at all times all premiums collected and other funds relating to the” policies. Because Lincoln’s breach of fiduciary duty claim against U.S. Auto relies on that specific duty governing management of funds and not a general one that would apply to all business activity, the grant of summary judgment on this claim is reversed.