Agent Responsibility For Coverage

Dallas insurance lawyers need to be able to discuss with clients when an insurance agent may or may not have liability for their actions or lack thereof. A 2003, Beaumont Court of Appeals case is good reading on this subject. The case is styled, Stroman Realty, Inc. v. State Farm Lloyds.
Stroman sued State Farm for breach of contract, violations of the Texas Insurance Code, and breach of the duty of good faith and fair dealing. State Farm filed a motion for summary judgment.
Stromans’ Insurance Code claims focused on alleged false, misleading, or deceptive representations on the part of Barnhill as the insurance agent representing State Farm Lloyds. However, an examination of the deposition of Wayne Stroman, president of Stroman Realty, Inc., upon whose testimony they rely, provides no support for Stromans’ allegations. By Stroman’s own testimony, he was responsible ultimately for there not being named as an insured on any insurance policy. The entirety of Stroman’s testimony consisted of admitting to being unaware of even very basic or generalized knowledge of the insurance circumstances. Stroman’s deposition contains many responses using the ambiguous word “we” with regard to insurance coverage for his many companies and business interests. Stroman was under the mistaken impression that his company was covered by liability insurance as an entity separate and distinct from Stroman Realty, Inc. But nowhere in Stroman’s deposition testimony does he explicitly state that he or anyone else in his employ ever made a specific request to Mack Barnhill to cover Ad-Net, Inc. in a separate liability insurance policy. Nor does his deposition indicate that at any time Stroman specifically requested that Barnhill add Ad-Net, Inc. to the existing policy for Stroman Realty, Inc.
The documentary evidence submitted by both parties in support of their respective positions are virtually identical. Stromans’ documents indicate a single insurance policy listing the policyholder as, “Stroman Realty, Inc. dba ERA Stroman,” was issued by State Farm Lloyds. The only additional named insureds reflected on the face of the policy were “ERA, L.P.” and “G & M Properties.” Thereafter, the documentary evidence indicates several occasions in which faxes from Stroman Realty were sent to Barnhill requesting various office inventory be added to “our Policy” or “our Insurance Policy, or “our Insurance.” Although these faxes included various receipts, cancelled checks, and inventory reports containing the words “Ad-Net, Inc.,” the cover-sheet for each set of faxes bore a large “Stroman Realty” logo prominently displayed. Taken out of context, these documents are no evidence in support of either the Insurance Code or DTPA causes of action. Taken in context with Stroman’s deposition testimony and the single insurance policy naming Stroman Realty, Inc. as insured, the documents do not rise to the scintilla of evidence necessary to raise a fact issue on either the Insurance Code or DTPA causes of action. Summary judgment was proper as to these claims.
An insured’s expectation of the agent to either renew his policy or at least inform him of the impending lapse is different from an expectation for extended coverage . . . . The Court is to be understood as holding that no legal duty arises on the part of an insurance agent to extend the insurance protection of his customer merely because the agent has knowledge of the need for additional insurance of that customer, especially in the absence of evidence of prior dealings where the agent customarily has taken care of his customer’s needs without consulting him.
Stretching Stroman’s deposition testimony to its limits, all that can be said is that Barnhill knew of the existence of Ad-Net, Inc., that Ad-Net, Inc. was part of Wayne Stroman’s various business interests, and that Stroman had insured Stroman Realty, Inc. with State Farm Lloyds through Barnhill.