Suing Insurance Agent

Suing insurance agents who do wrong is something an insurance lawyer needs to look at closely.  Here is a 2022, opinion from the Southern District of Texas, McAllen Division, that deals with an insurance agent.  The opinion is styled, J & G Trejo Enterprises, Inc. d/b/a Best Medical Supply vs. Western World Insurance Company.

This is an opinion decided on a motion for summary judgment.

The loss here is an MRI machine held off premises that was destroyed in a fire on August 21, 2021.  Due to a sublimit of liability for business personal property held offpremises, Defendant paid only the cap ($10,000.00) on the claim, whereas Plaintiff assessed its own actual loses at around $200,000.00.

Plaintiff claims that nonparty insurance agent, Rick Villareal, represented that property held at the warehouse would be fully insured, and Plaintiff detrimentally relied on that representation.

Under Texas law, the plain language of an insurance policy is regarded as the complete agreement between the parties and knowledge of its terms is charged to Plaintiff. Generally, a claim for misrepresentation cannot stand when the party asserting the claim is legally charged with knowledge of the true facts.   According to the plain terms of these parties’ policy for insurance, the most Defendant will pay for loss or damage under the Propery Offpremises Extension is $10,000.  Therefore, Defendantas a matter of lawis not liable for breach unless the insurer or agent made some specific misrepresentation about the insurance.

Plaintiff responds that Rick Villarreal represented to him that he had blanket coverage, which included coverage of the MRI machine held off premises. Defendant denies that Villarreal
is its agent, while Plaintiff attests that “Mr. Villarreal made several misrepresentations to him surrounding coverage, and at all times, held himself out as an agent of Western World Insurance Company.

But whatever Villarreal’s agency relationship with Defendant, the statutory authority
granted an agent under the insurance code does not authorize an agent to misrepresent policy coverage and bind the insurer to his misrepresentations unless the insurer approved the agents conduct by authorizing the agents wrongful acts or subsequently ratified the wrongful acts.  Retail agents may be considered agents of the insurer for purposes of a lawsuit, but they may not alter or waive a term or condition of the application or policy.  Plaintiff is deemed to know that Villarreal cannot waive a policy provision or give him something that the policy does not give him.  Therefore, Plaintiff’s detrimental reliance argument turns on Defendant’s
representations to Plaintiff, not Villarreal’s.

On this point, Plaintiff asserts that “at the very least, Defendant showed a lack of ordinary
care such that it clothed Mr. Villarreal with indicia of authority to act as its agent. But on review of the record, that alleged clothing is threadbare at best The Court cannot find evidence that Defendant took any action that could lead Plaintiff to reasonably belief that the sublimit of liability had been waived.  Villarreal’s disclosures in a state court action30 do not attest to Defendant’s misrepresentation, nor does Plaintiff’s affidavit. The contractual provision creating a sublimit of liability is quite clear, and Plaintiff is charged with knowledge of it. Therefore, Defendant is entitled to summary judgment as to the claim for breach of contract, and the noncontractual claims fall along with it.

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