Court Opinion

ID: 1041407
Source: CourtListenerOpinion
Date Created: 2013-09-19 20:28:20.816974+00
Date Added: 2024-06-11T12:49:59.751278
License: Public Domain

FILED
                           NOT FOR PUBLICATION                           SEP 18 2013

                                                                     MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                     U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

SMS SERVICES LLC, a Virginia limited           No. 12-35249
liability company,
                                               D.C. No. 2:11-cv-00336-MJP
              Plaintiff - Appellant,

  v.                                           MEMORANDUM*

HUB INTERNATIONAL NORTHWEST,
LLC, a Washington limited liability
company,

              Defendant - Appellee.

                  Appeal from the United States District Court
                     for the Western District of Washington
                Marsha J. Pechman, Chief District Judge, Presiding

                      Argued and Submitted August 28, 2013
                               Seattle, Washington

Before: HAWKINS, McKEOWN, and CLIFTON, Circuit Judges.

       In this action for professional negligence and malpractice, SMS Services LLC

(“SMS”) appeals the summary judgment grant in favor of its aviation insurance

broker, HUB International Northwest, LLC (“HUB”). The district court concluded

         *
           This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
HUB did not owe a duty to SMS to advise it about the amount of insurance required

under certain leases to which SMS was a party. We affirm.

       The district court did not err by applying the “special relationship” test to

HUB. Although a broker represents the insured while an agent represents the

insurance company, both are insurance intermediaries paid by commission from

insurance premiums, and no Washington cases have distinguished between the two

in terms of general agency duties. See, e.g., AAS-DMP Mgmt., L.P. v. Acordia

Nw. Inc., 63 P.3d 860, 863 (Wash. Ct. App. 2003). Nor did the district court err in

determining that SMS could not demonstrate the requisite special relationship with

HUB. Even if HUB held itself out as an insurance specialist, it did not receive

compensation for giving consultation and advice “apart from” the commission on the

insurance premiums. See Suter v. Virgil R. Lee & Son, Inc., 754 P.2d 155, 157 (Wash.

Ct. App. 1988).

      Moreover, SMS and HUB did not have a “longstanding relationship.” See id.

NII Holdings, Inc. (“NII”) had acted as SMS’s agent for only one year and procured

only one prior policy for SMS through HUB at the time of the renewal. Even if we

were to impute to SMS the benefit of NII’s pre-existing relationship with HUB, SMS

cannot show it specifically interacted with HUB on the question of the required

amount of coverage under the leases or that it relied on HUB’s advice to its detriment

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regarding those requirements. See Lipscomb v. Farmers Ins. Co., 174 P.3d 1182,

1186-87 (Wash. Ct. App. 2008).

      While a broker or agent’s duty may also be expanded by “a specific promise

by an agent as part of the agency relationship,” it extends only to the additional task

to which the agent specifically agreed. Peterson v. Big Bend Ins. Agency, Inc., 202

P.3d 372, 377-78 (Wash. Ct. App. 2009). Here, HUB agreed in its service plan with

NII to “[r]eview contracts to assure adequacy of coverage in relation to exposures and

contract requirements, as needed.”

       Looking at the document as a whole, including the numerous similar provisions

in which HUB indicates services it would be willing to perform if called upon to do

so, the only reasonable construction of this language is that HUB did not promise to

automatically review any and all contracts for the insured, but only when the client

identifies such a need for review and advice. For example, “contracts” is undefined;

only the insured could know which contracts it might have entered into which could

potentially impact insurance coverage and only the insured would be in possession of

such documents.

       Indeed, in this case, HUB did not even possess relevant portions of the

documents SMS now contends the broker should have reviewed. In addition, to

construe the provision otherwise would render the clause “as needed” superfluous,

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because there would be no way for HUB to determine if review was “needed” without

performing the very task it offered to perform—reviewing the contracts. The district

court correctly concluded that HUB did not affirmatively agree to expand its duties

to review third-party contracts without some prompt by the client.

      Finally, SMS was a party to and had access to the very agreements that required

the higher coverage amount. Nonetheless, SMS chose the lower coverage.

      AFFIRMED.

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