Insurance agents and brokers are in the business of transacting insurance with insurers on behalf of their clients. Unless they take on a fiduciary responsibility, they're only expected to obtain the insurance requested by the prospect. But after a loss, insureds who incur a loss greater than the limits purchased may try to recover the losses from the agent, who they claim should have forced them to buy more insurance.
On Aug. 28, 2013, Gale and Douglas Hernandez sued State Farm General Insurance Co., Dale Adams (individually and as a State Farm agent), Allstate Insurance Co. and Frank Capella (individually and as an Allstate agent). The plaintiffs claimed that Allstate negligently miscalculated the damage to their home caused by Hurricane Isaac and failed to pay amounts owed under the policy. The plaintiffs allege that they were not paid any amounts by State Farm under the homeowners' policy.
The amended complaint alleged that Capella and Adams were negligent in procuring policies in not properly valuing the plaintiffs' property and failing to properly advise plaintiffs on the correct coverage limits to fully cover their home. They also alleged that Capella and Adams were negligent in procuring insurance, the limits of which could never be obtained given the property insured.
In Hernandez, et al., v. State Farm General Insurance Co., et al., Capella asked the U.S. District Court to dismiss the suit, asserting that the amended complaint fails to state a claim under Louisiana law, although the plaintiffs did not file an opposition to Capella's motion to dismiss.
STANDARD OF LAW
A district court may dismiss a complaint for failure to state a claim upon which relief may be granted if the plaintiff has not set forth factual allegations to support his claim that would entitle him to relief. These must be enough to raise a right to relief above the speculative level. A claim has factual plausibility when the plaintiff pleads factual content that allows the court to conclude that the defendant is liable for the misconduct alleged. It follows that where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not shown—that the pleader is entitled to relief.
The court cannot look beyond factual allegations in the pleadings to determine whether relief should be granted. In assessing the plaintiffs' complaint, the court must accept all well-pleaded facts as true and liberally construe all factual allegations in the light most favorable to the plaintiffs. Dismissal is appropriate when the complaint on its face shows a bar to relief.
CASE ANALYSIS
Capella argued that Louisiana law does not impose a duty on an agent to independently appraise an insured's property and advise him that he is underinsured or lacks the proper insurance. The plaintiffs argued that Capella, as an Allstate agent, had a greater duty than procuring insurance and was obligated to value the property and obtain sufficient insurance to replace the property.
The allegations against Capella were only that he negligently procured insurance for the plaintiffs because he failed to properly value the property and advise the plaintiffs on the correct amount of insurance to cover their home. The complaint did not allege that Capella knew of any specific risk for which the plaintiffs had expressed concern. Therefore, the amended complaint only alleges Capella's failure to properly advise them of the correct amount of insurance coverage, which is not legally cognizable in Louisiana.
A detailed file will protect the agent and the insurer from unnecessary and expensive litigation.
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