Opinion
June 10, 1999
Appeal from the order of the Supreme Court (Bradley, J.).
Weg Myers P.C. (Joshua L. Mallin of counsel), New York City, for appellant.
Lustig Brown (Robert M. Sullivan of counsel), New York City, for respondent.
Before: CARDONA, P.J., MERCURE, PETERS, SPAIN and GRAFFEO, JJ.
OPINION AND ORDER
After it sustained losses far in excess of its insurance coverage, plaintiff, a manufacturer and seller of food storage equipment, commenced this action against defendant, its insurance agency, claiming that defendant had been negligent in failing to provide plaintiff "with accurate information with respect to the proper amount of coverage to obtain to adequately protect [plaintiff]". Plaintiff had initially obtained insurance in 1982 through defendant's predecessor. In late 1988 or early 1989, defendant determined that plaintiff's business interruption coverage of $40,000 was inadequate and requested that plaintiff complete a "business income worksheet" (hereinafter worksheet) to aid in determining the proper amount of such coverage. As a result, plaintiff's business interruption coverage was increased to $800,000 effective in January of 1990, although the policy contained what was, in essence, a 50% coinsurance clause which effectively reduced the value of plaintiff's coverage. While plaintiff's business expanded and grew over the next few years, defendant did not ask plaintiff to complete another worksheet and plaintiff did not ask about doing so.
In 1991, defendant offered plaintiff an alternative policy that would have, inter alia, increased its business interruption coverage limit to $3.7 million without a coinsurance obligation, but plaintiff rejected that policy as too costly and thereafter renewed its existing policy containing only $800,000 of such coverage. In 1993, the roof collapsed at plaintiff's facility in the City of Kingston, Ulster County, causing damage, rendering a portion thereof unusable and resulting in an alleged loss in business of over $2.1 million, which, of course, far exceeded its insurance coverage.
Plaintiff then commenced this negligence action against defendant essentially premised upon defendant's failure to annually advise plaintiff to complete a worksheet and to advise plaintiff with respect to a proper and adequate amount of coverage. Plaintiff argued that it had a special relationship with defendant which imposed upon defendant an affirmative duty to advise and guide plaintiff regarding the adequacy of its insurance coverage. Following discovery, defendant moved for summary judgment and plaintiff cross-moved for summary judgment on liability. Supreme Court, in a well-reasoned decision, granted summary judgment to defendant dismissing the complaint, finding that defendant owed no duty to advise plaintiff to obtain additional coverage in the absence of any request by plaintiff for additional coverage or of a special relationship between the parties giving rise to such a duty. Plaintiff now appeals and we affirm.
As a general rule, "insurance agents have a common-law duty to obtain requested coverage for their clients within a reasonable time or inform the client of the inability to do so; however, they have no continuing duty to advise, guide or direct a client to obtain additional coverage" (Murphy v. Kuhn, 90 N.Y.2d 266, 270 [emphasis supplied]; see, Hennessey v. General Acc. Ins. Co. of Am., 257 A.D.2d 750, 751, 683 N.Y.S.2d 342, 343; Brownstein v. Travelers Cos., 235 A.D.2d 811, 813; Madhvani v. Sheehan, 234 A.D.2d 652, 654; Wied v. New York Cent. Mut. Fire Ins. Co., 208 A.D.2d 1132, 1133). The rationale underlying this rule is that, ordinarily, insureds are in a better position to know both their own assets and ability to protect themselves more so than agents or brokers (see, Murphy v. Kuhn, supra, at 273) and, thus, the insureds are the final decisionmakers in such risk management determinations (see, Madhvani v. Sheehan, supra, at 655). To be sure, "[i]nsurance agents or brokers are not personal financial counselors and risk managers, approaching guarantor status" (Murphy v. Kuhn, supra, at 273). The insurance agent-insured relationship is not a generally recognized professional relationship in which continuing obligations to advise might exist but, rather, is an ordinary commercial relationship which does not usually give rise to a duty to provide such ongoing guidance (see,id., at 270-271; Kimmel v. Schaefer, 89 N.Y.2d 257, 263-264). Thus, an insurance agent's duty to its customer is generally defined by the nature of the customer's request for coverage (see, Madhvani v. Sheehan, supra; Empire Indus. Corp. v. Insurance Cos. of N. Am., 226 A.D.2d 580, 581; see also, Wied v. New York Cent. Mut. Fire Ins. Co., supra, at 1133).
It is undisputed that plaintiff never requested that defendant increase its business interruption coverage and never specifically requested such coverage in an amount higher than $800,000; plaintiff never asked to complete subsequent worksheets for recomputation of its coverage, and defendant never assured plaintiff that he would do so annually or otherwise. Even if plaintiff's representatives had requested that it be "fully insured" and informed defendant that its business was rapidly expanding, as it claims, this did not constitute a specific request for additional coverage and, hence, defendant had no continuing duty to advise plaintiff to increase its coverage (see,Murphy v. Kuhn, supra; see also, Madhvani v. Sheehan, supra, at 654;L.C.E.L. Collectibles v. American Ins. Co., 228 A.D.2d 196, 197;Empire Indus. Corp. v. Insurance Cos. of N. Am., supra, at 581;Chaim v. Benedict, 216 A.D.2d 347). Further, plaintiff does not dispute that it received the subject policy containing the $800,000 coverage and coinsurance provision and, thus, plaintiff's representatives are presumed to have known its contents and to have assented to them (see, Brownstein v. Travelers Cos., 235 A.D.2d 811, 814, supra; Madhvani v. Sheehan, supra, at 655; Rogers v. Urbanke, 194 A.D.2d 1024).
Plaintiff's contention that, unlike the insured in Murphy v. Kuhn (supra), it had a special relationship with defendant that gave rise to defendant's duty to advise plaintiff to obtain additional coverage is unavailing. While the Court of Appeals recognized in a noninsurance case that such a special relationship may exist and give rise to an exceptional duty regarding commercial speech in the context of a nonprofessional, commercial relationship and justifiable reliance on such speech (see, Kimmel v. Schaefer, 89 N.Y.2d 257, supra [special relationship existed between officer of limited partnership and its potential investor requiring officer to speak with care regarding profitability of an investment]), the court subsequently noted that no court in this State has applied this special relationship analysis to add such continuing advisement duties to the agent-insured relationship (see, Murphy v. Kuhn, supra, at 270; see also, Wied v. New York Cent. Mut. Fire Ins. Co., supra, at 1133). While leaving the issue open, the court in Murphy found that there were no facts before it to establish "the high level required to recognize the special relationship threshold that might superimpose on defendants the initiatory advisement duty, beyond the ordinary placement of requested insurance responsibilities" (Murphy v. Kuhn,supra, at 271).
The record sub judice is similarly deficient. Here, as inMurphy, we are presented with a "standard consumer-agent insurance placement relationship, albeit over an extended period of time", in which the insured, who was responsible for obtaining appropriate coverage, failed to ever specifically request that its agent obtain additional insurance to meet its needs; such a relationship does not give rise to an ongoing duty to advise (id., at 271; see, Wied v. New York Cent. Mut. Fire Ins. Co., supra, at 1134). The only "interaction regarding a question of coverage" or "course of dealings" which plaintiff cites to meet its burden of proving a specific undertaking by defendant is the worksheet defendant provided plaintiff in 1989 to aid in the assessment of plaintiff's insurance needs and brief, general meetings between the parties (see, Murphy v. Kuhn, supra, at 272-273 [and cases cited therein]). In our view, this course of dealing does not constitute the type of "exceptional situation" contemplated byMurphy which could justify overriding these settled principles and recognizing additional advisement duties on insurance agents and brokers (see, id.; see also, Wied v. New York Cent. Mut. Fire Ins. Co., supra). Further, unlike the investor in Kimmel v. Schaefer ( 89 N.Y.2d 257, supra), who justifiably relied upon the officer's negligent representations based upon the latter's unique and specialized expertise in projecting the rate of return for the investment project, any claim of reliance by the insured herein is belied by its refusal to purchase additional coverage when it was offered by defendant in 1991 (see, Kimmel v. Schaefer, supra; see also, Murphy v. Kuhn, supra, at 271).
Moreover, the assertions of plaintiff's expert that defendant was negligent in failing to have plaintiff complete annual worksheets and failing to advise plaintiff to obtain additional coverage do not create a duty where none exists at common law (see, Murphy v. Kuhn, supra, at 270) and are legal conclusions beyond the proper realm of an expert (see generally,Eiseman v. State of New York, 70 N.Y.2d 175, 187). Additionally, the expert's affidavit regarding the customs and standards of practice in the insurance industry is "wholly lacking in competent foundational data and thus entitled to no weight" (Guldy v. Pyramid Corp., 222 A.D.2d 815, 816; see, Stevens v. Bast Hatfield, 226 A.D.2d 981; Tashjian v. Strong Assocs., 225 A.D.2d 907, 910).
Accordingly, in the absence of either a specific request by plaintiff to procure additional insurance coverage or a special relationship between the parties, defendant had no duty to advise plaintiff to obtain greater coverage or to determine the appropriate amount of such coverage, and Supreme Court properly granted defendant's motion for summary judgment dismissing the complaint.
CARDONA, P.J., MERCURE, PETERS and GRAFFEO, JJ., concur.
ORDERED that the order and judgment are affirmed, with costs.