Opinion
DOCKET NO. A-5797-11T4
07-21-2014
MARY B. DUFFY, Plaintiff-Appellant, v. CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON SUBSCRIBING TO POLICY NUMBER 09ASC185004, Defendant, and WHARTON/ATLANTIC INSURANCE, Defendant-Respondent.
Robert W. Beattie argued the cause for appellant. Audrey L. Shields argued the cause for respondent (Golden, Rothschild, Spagnola, Lundell, Boylan & Garubo, P.C., attorneys; Ms. Shields, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Sapp-Peterson and Lihotz.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-2558-10.
Robert W. Beattie argued the cause for appellant.
Audrey L. Shields argued the cause for respondent (Golden, Rothschild, Spagnola, Lundell, Boylan & Garubo, P.C., attorneys; Ms. Shields, on the brief). PER CURIAM
Plaintiff Mary B. Duffy appeals from a June 15, 2012 order granting defendant Wharton/Atlantic Insurance Group summary judgment and dismissing her professional negligence complaint with prejudice. Defendant was plaintiff's insurance broker, which procured a homeowner's property and casualty insurance policy covering plaintiff's Ocean Grove home and the amount of coverage was inadequate to satisfy restoration after a fire loss. The trial judge determined the policy was drawn as instructed and granted summary judgment to defendant. On appeal, plaintiff argues summary judgment was erroneously granted to defendant because discovery was incomplete, the judge relied on defendant's documents which were inappropriately authenticated, and material facts remained disputed. Following our review of the arguments, in light of the record and applicable law, we affirm.
After the Law Division complaint was filed, plaintiff passed away on April 16, 2011. Prior to that date, John D. Duffy, plaintiff's son, was appointed as plaintiff's guardian ad litem. Throughout the trial court proceedings, the caption was not amended and remained as initially filed. To avoid confusion, we continue to refer to Ms. Duffy as plaintiff.
Plaintiff's complaint also included causes of action against defendant surplus lines carrier Lloyd's of London, which she released on August 17, 2010 in exchange for Lloyd's tender of the total policy. Because Lloyd's has not participated in this appeal, we use "defendant" to denote Wharton/Atlantic Insurance Group.
We recite the facts found in the summary judgment record viewed in a light most favorable to plaintiff. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Plaintiff owned three residential dwellings: her primary home in Trenton; a small beach bungalow in Seaside Park; and a three-story Victorian home in Ocean Grove. The Ocean Grove property suffered an electrical fire on May 25, 2009, and is the subject of the instant litigation (the property). Plaintiff procured a homeowner's policy (No. 09ASC1850004) issued by Lloyd's of London (the policy), insuring the home against property and casualty losses. The amount of coverage available through the policy was $150,000. The amount of fire damage exceeded the policy limits. Plaintiff filed her complaint alleging defendant's procurement of inadequate insurance coverage constituted professional negligence and caused her loss.
Defendant began as plaintiff's insurance broker in 1996, when it acquired another insurance agency that had been servicing plaintiff's needs. In 2002, plaintiff received a notice from Newark Insurance Company (Newark) that her homeowner's insurance would not be renewed effective March 10, 2003. Plaintiff contacted defendant and spoke to Patricia Browne, a licensed insurance producer and defendant's Eatontown office manager, who ultimately placed plaintiff's new coverage.
The summary sheet for plaintiff's former Newark policy provided $150,000 coverage. Plaintiff asserts the Newark policy was an actual cash value policy, limited to the amount of placed coverage, and not a replacement value policy.
An actual cash value policy "provides for insurance to the extent of the actual cash value of the property at the time of loss but not to exceed the amount it would cost to repair or replace the property with material of like kind and quality." Elberon Bathing Co. v. Ambassador Ins. Co., 77 N.J. 1, 7 (1978).
During her deposition, Browne testified the policy with Lloyd's was placed through the Atlantic States Group (ASG). In applying for plaintiff's insurance, Browne acknowledged she never met plaintiff, but spoke to her approximately three or four times regarding the property and the desired coverage. Browne admitted she took notes during these conversations; however, she did not complete any standardized information forms because none were required by ASG.
Browne recalled she started her questions seeking information regarding plaintiff's primary residence. When Browne repeated similar questions to gain information with respect to the beach bungalow and the property, plaintiff grew impatient. Browne told plaintiff the questions were designed to determine the adequacy of the insurance coverage. Plaintiff expressed she "wanted those homes to remain covered under the amount that was on the policy at that time[,]" that is, under the Newark policy, because they were second homes and unencumbered by mortgages. Browne described plaintiff as "extremely feisty" and as "the most tenacious person I've ever spoken to . . . ."
Regarding the property, Browne testified she asked plaintiff for the total square footage of the dwelling, the age of the property, the number of rooms, its distance from a fire hydrant and from a fire department. Browne stated plaintiff told her the property totaled 900 square feet (it was actually closer to 1900 square feet) and advised the home was built in 1955 (when it was constructed in approximately 1875). Browne recalled plaintiff resisted probing questions regarding the home's features, even though Browne explained the information was aimed at calculating replacement cost. Browne recalled plaintiff expressed concerns for the premium and repeatedly asked how much the new coverage would cost, to which Browne replied she did not know. Browne thought plaintiff believed she was asking the questions in an effort to increase the premiums, which plaintiff opposed. As a result, Browne streamlined her inquiry. She also asked plaintiff to speak to a family member to verify the accuracy of the information; however, plaintiff stated she handled her own affairs.
Browne completed a form used by a different carrier to calculate the replacement cost of the dwelling, noting ASG did not have or require a specific cost estimator. Using the limited details plaintiff revealed, Browne calculated the replacement value by multiplying the reported 900 square feet times $160 per square foot. Browne determined the previous $150,000 coverage adequately covered the property.
Browne sent plaintiff the drafted homeowner's application and requested she correct any errors. Plaintiff wrote to Browne, asking why the property was described as "seasonal" and advising it was occupied all year by a family member. Further, plaintiff's letter informed Browne the "whole town [wa]s only one mile square," so she challenged the statement the fire department was within five miles. Brown satisfactorily responded to plaintiff's questions and plaintiff signed and returned her application for insurance. Browne advised the company may ask plaintiff to confirm the adequacy of the coverage each year.
Examining the May 2, 2003 homeowner's insurance application, we note the designated square footage of the home does not appear, but the year of construction is listed as "1955." When Browne submitted plaintiff's homeowner's application to ASG, she believed the coverage limits were sufficient to protect plaintiff's interest in the event of a fire.
ASG issued an insurance certificate to plaintiff. The insurance policy was underwritten by Lloyd's, under the New Jersey Surplus Lines Law, N.J.S.A. 17:22-6.40 to -6.65. Coverage included: (1) dwelling in the amount of $150,000; (2) other structures in the amount of $15,000; (3) personal property in the amount of $25,000; and (4) loss of use in the amount of $30,000. The annual premium was $833.27. The policy was renewed each year thereafter, utilizing the same coverage limits and was in place on May 25, 2009, when the fire loss occurred.
When there is a "New Jersey risk[,] which insurance companies authorized or admitted to do business in this State have refused to cover by reason of the nature of the risk[,] . . . coverage may be obtained through a surplus lines agent, licensed under 'the surplus lines law' of New Jersey, N.J.S.A. 17:22-6.40 [to -6.65], to 'export' the insurance coverage—place it with an 'unauthorized' insurer." Railroad Roofing & Bldg. Supply Co. v. Fin. Fire & Cas. Co., 85 N.J. 384, 389 (1981). See also N.J.S.A. 17:22-6.41 (providing definitions). The surplus lines law regulates licensed surplus lines agents and "also imposes limited requirements on unauthorized insurers who wish to become 'eligible' to have surplus lines coverage placed with them." Railroad Roofing & Bldg. Supply Co., supra, 85 N.J. at 389 (citing N.J.S.A. 17:22-6.43(b), (c), -6.45, -6.46).
Plaintiff obtained an estimate, which reported the property's repair and restoration cost at approximately $460,000. Plaintiff filed her professional negligence action against Lloyd's and defendant. Ultimately, Lloyd's tendered the policy limits, with accrued interest, in satisfaction of plaintiff's claim. The action proceeded against defendant.
Plaintiff alleged defendant breached its fiduciary duty to protect her interests. Plaintiff believed Browne confused the square footage of the beach bungalow, which is 936 square feet, and suggested this error resulted in the inadequate protection for the property. More specifically, plaintiff's complaint asserts defendant failed "to properly complete the application, by failing to properly review [p]laintiff's insurance coverage needs"; defendant "had a duty to properly analyze [p]laintiff's insurance coverage needs and risks of loss"; and defendant was obligated "to warn that the insurance coverage procured had insufficient building and contents limits" to insure the home's replacement cost. In her brief, plaintiff maintains "[d]efendant voluntarily accepted the duty to determine the replacement cost of [p]laintiff's home, then utilized the wrong square footage for the wrong house and an incorrect cost per square foot, resulting in an underinsured building loss . . . of $310,000."
Defendant moved for summary judgment. The judge rejected plaintiff's argument suggesting summary judgment was premature because discovery was incomplete. Noting the only outstanding discovery was the deposition of defendant's expert, the judge concluded, "here, I don't find this outstanding deposition really hinders the [c]ourt from deciding this case on a motion for summary judgment." Focusing on whether defendant had a duty that was breached and proximately cause plaintiff's loss, the judge concluded that although an insurance broker has a duty to act with reasonable skill and diligence, the duty is not unlimited, and did not include an obligation "to advise an insured to consider higher amounts of homeowner's insurance." She found no evidence countering Browne's testimony plaintiff sought coverage matching her prior Newark policy or somehow showed plaintiff requested coverage for "full replacement cost." Rather, the judge identified the facts showing plaintiff was willing to obtain coverage of $150,000. Defendant's motion was granted and this appeal ensued.
Defendant's motion also sought sanctions alleging the complaint was frivolous. See R. 1:4-8(b). The judge denied this relief, concluding plaintiff's claim was objectively reasonable and filed in good faith. Defendant has not filed a cross-appeal challenging this decision.
When reviewing a grant of summary judgment, we employ the same standards used by the motion judge under Rule 4:46. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). First, we determine whether the moving party has demonstrated there were no genuine disputes as to material facts, and then we decide whether the motion judge's application of the law was correct. Atl. Mut. Ins. Co. v. Hillside Bottling Co., 387 N.J. Super. 224, 230-31 (App. Div.), certif. denied, 189 N.J. 104 (2006). In so doing, we view the evidence in the light most favorable to the non-moving party. Brill, supra, 142 N.J. at 523. We accord no deference to the motion judge's conclusions on issues of law, Estate of Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, 382-83 (2010); Manalapan Realty, L.P., v. Twp. Comm. of Manalapan, 14 0 N.J. 366, 378 (1995), which we review de novo. Dep't of Envtl. Prot. v. Kafil, 395 N.J. Super. 597, 601 (App. Div. 2007).
On appeal, plaintiff presents arguments to suggest the grant of summary judgment was erroneous. Plaintiff contends the motion was premature because certain discovery was outstanding, defendant did not produce Patricia Browne's certification filed in support of its motion, and defendant relied on documents attached to its motion that were not authenticated. Further, plaintiff argues material factual issues were disputed, including whether defendant breached its duty of care. We separately address these procedural and substantive challenges.
Plaintiff maintains summary judgment should not have been considered before plaintiff deposed defendant's expert. Although summary judgment motions may be denied because discovery is incomplete, such a determination centers on the materiality of the facts to be discovered, not merely because some aspects of discovery remain outstanding. When continued discovery would shed light on unresolved factual issues, summary judgment should not be granted. See Crippen v. Cent. N.J. Concrete Pipe Co., 176 N.J. 397, 399-404, 409-11 (2003) (finding summary judgment premature where further discovery would reveal evidence relevant to the determination of whether the defendant employer had knowledge of risks associated with hazardous conditions); Laidlow v. Hariton Machinery, Co., 170 N.J. 602, 607-09, 619-20 (2002) (finding summary judgment inappropriate where the injured worker's supervisor had not yet been deposed and such discovery could have shed light on whether the employer appreciated the risk of injury associated with its decision to remove a safety guard potentially responsible for harming the plaintiff); Velantzas v. Colgate-Palmolive Co., 109 N.J. 189, 193 (1988) (finding summary judgment premature and the plaintiff was entitled to obtain discovery regarding factual questions supporting claims for gender discrimination and whether she was subject to retaliatory discharge).
In this matter, plaintiff identifies the defense expert's deposition as the only discovery not completed. The expert's opinion as to the duty defendant owed plaintiff had already been articulated in his written report, which offered no independent information related to the facts surrounding the amount of homeowner's insurance sought by plaintiff. The motion judge properly found plaintiff could not identify any facts expected to be obtained during the expert's deposition that would obviate consideration of summary judgment.
Plaintiff also expressed concerns regarding the timing of the summary judgment motion, asserting it represented a sharp tactic. Specifically, defendant rescheduled the expert's deposition and filed its motion. However, the record reflects a delay in communication regarding scheduling by both sides occurred and, thereafter, defendant expressed its concern for incurring unnecessary expenses because it was filing for summary judgment. Also, while these issues were discussed, plaintiff passed away.
Plaintiff also argues summary judgment should have been denied because defendant's motion included Browne's certification, which was not attached to plaintiff's copy of the motion. When defendant learned the document was omitted it sent a copy to plaintiff by facsimile on May 1, 2012. Oral argument was held June 15, 2012. We are hard-pressed to determine how prejudice resulted to plaintiff, a point plaintiff did not raise at oral argument before the trial judge or address in its merits in her brief. We reject the contention as meritless. R. 2:11-3(e)(1)(E).
In a related argument, plaintiff suggests defendant's exhibits attached to support its motion should not have been considered because they were not authenticated as Browne's certification was missing. This too is rejected. R. 2:11-3(e)(1)(E).
We turn to plaintiff's assertion that material factual disputes precluded entry of summary judgment. Plaintiff's arguments focus on whether defendant, through Browne, breached the recognized duty of care.
It is well-settled that "to render a person liable on the theory of negligence there must be some breach of duty, by action or inaction, on the part of the defendant to the individual complaining, the observance of which duty would have averted or avoided the injury." Brody v. Albert Lifson & Sons, Inc., 17 N.J. 383, 389 (1955). Determination of whether a duty exists turns on questions of "fairness and policy that, in turn, implicate many factors." Fackelman v. Lac d'Amiante du Quebec, 398 N.J. Super. 474, 486 (App. Div. 2008) (citing Carvalho v. Toll Bros. & Developers, 143 N.J. 565, 572 (1996)). "Th[is] inquiry involves 'a weighing of the relationship of the parties, the nature of the risk, and the public interest in the proposed solution[s].'" Cheng Lin Wang v. Allstate Ins. Co., 125 N.J. 2, 15 (1991) (quoting Kelly v. Gwinnell, 96 N.J. 538, 544 (1984)).
"The existence of a duty to exercise reasonable care to avoid a risk of harm to another is a question of law," Farkelman, supra, 398 N.J. Super. at 486, subject to our de novo review. "Of course, the legal determination of the existence of a duty may differ, depending on the facts of the case. Wang, supra, 125 N.J. at 15.
An insurance broker's liability for negligent acts affecting an insured has been addressed by our Supreme Court, which noted "[t]he import of the fiduciary relationship between the professional and the client is no more evident than in the area of insurance coverage." Aden v. Fortsh, 169 N.J. 64, 78 (2001).
Insurance intermediaries in this State must act in a fiduciary capacity to the client "'[b]ecause of the increasing complexity of the insurance industry and the specialized knowledge required to understand all of its intricacies.'" Walker v. Atl. Chrysler Plymouth, Inc., 216 N.J. Super. 255, 260 (App. Div. 1987) (quoting Sobotor v. Prudential Prop. & Cas. Ins. Co., 200 N.J. Super. 333, 341 (App. Div. 1984)); see also N.J.A.C. 11:17A-4.10 ("An insurance producer acts in a fiduciary capacity in the conduct of his or her insurance business."). The fiduciary relationship gives rise to a duty owed by the broker to the client "to exercise good faith and reasonable skill in advising insureds." Weinisch v. Sawyer, 123 N.J. 333, 340 (1991).
[Ibid.]
The scope of the duty an insurance broker owes an insured was initially discussed in Rider v. Lynch, 42 N.J. 465 (1964). The facts in Rider reflect a prospective insured, who requested automobile liability coverage to address a unique set of circumstances, relied on the insurance broker's recommendation of the type of policy to procure to insure the potential risk from the intended use. Id. at 470-71. Actually, the policy's limitations, which were not revealed to the insured by the broker, excluded the identified risks. Id. at 471-74. Coverage was denied when a collision occurred. Id. at 474.
The broker who advised the insured to obtain a specific policy was held liable for damages resulting from the negligent procurement of insurance. Id. at 476. "The Court noted that because of the nature of the principal-agent relationship the broker was charged with the knowledge that the policy did not fit his client's need and, even if the broker was not aware of the limited policy coverage, he was under a duty to examine and reject the policy himself before delivering it to the [insured]." Aden, supra, 169 N.J. at 80 (citing Rider, supra, 42 N.J. at 481). An insured is "entitled to rely upon and believe that the broker had fulfilled his [or her] undertaking to provide the coverage . . . agreed upon, and that the policy sent . . . represented accomplishment of that undertaking." Rider, supra, 42 N.J. at 482. The Court noted:
One who holds himself [or herself] out to the public as an insurance broker is required to have the degree of skill and knowledge requisite to the calling. When
engaged by a member of the public to obtain insurance, the law holds him [or her] to the exercise of good faith and reasonable skill, care and diligence in the execution of the commission. He [or she] is expected to possess reasonable knowledge of the types of policies, their different terms, and the coverage available in the area in which his [or her] principal seeks to be protected. If he [or she] neglects to procure the insurance or if the policy is void or materially deficient or does not provide the coverage he [or she] undertook to supply, because of his [or her] failure to exercise the requisite skill or diligence, he [or she] becomes liable to his [or her] principal for the loss sustained thereby.
[Id. at 476 (internal citations omitted).]
In President v. Jenkins, 180 N.J. 550 (2004) the Court clarified the scope of an insurance broker's obligations to a prospective insured, stating the broker is responsible: "(1) to procure the insurance; (2) to secure a policy that is neither void nor materially deficient; and (3) to provide the coverage he or she undertook to supply." Id. at 569. However, "[t]he duty of a broker or agent . . . is not unlimited." Carter Lincoln-Mercury, Inc., Leasing Div. v. EMAR Group, Inc., 135 N.J. 182, 190 (1994).
In Carter Lincoln-Mercury, Inc., Leasing Division v. EMAR Group, Inc., 135 N.J. 182 (1994), the Court identified opinions which clarified "the existence and scope of the duty owed by one acting on behalf of an insured or prospective insured," noting
that duty encompasses claims alleging that the agent or broker: failed to obtain coverage after the client's policy had been canceled and that the agent failed to inform the client that coverage could not be obtained, DiMarino v. Wishkin, 195 N.J. Super. 390, 393 (App. Div. 1984); failed to advise a client of insurance options, Weinisch, supra, 123 N.J. at 340, and Sobotor, supra, 200 N.J. Super. at 339; obtained insurance that failed to meet the insured's needs, Rider, supra, 42 N.J. at 481-82; failed to place the requested insurance, Eschle v. [E]. Freight Ways, Inc., 128 N.J. Super. 299, [303-06] (Law Div. 1974); misrepresented to the insurance company information supplied by the insured, Milliken [v. Woodward], 64 N.J.L. [444], 448 [(Sup. Ct. 1900)]; failed to take action after discovering during an inspection that the insured's sprinkler system was inoperative, Indus[.] Dev. Assocs. v. F.T.P., Inc., 248 N.J. Super. 468, [472] (App. Div.), certif. denied, 127 N.J. 547 (1991); failed to inform the insured that she was without insurance, Auger v. Gionti Agency, 218 N.J. Super. 360, 366-67 (App. Div.), certif. granted, 109 N.J. 504 (1987), appeal dismissed, 113 N.J. 348 (1988); and failed to inform the insured of the availability of immediate insurance coverage through a temporary binder, Bates v. Gambino, 72 N.J. 219, 222-25 (1977).
[Id. at 189-91.]
Reciting these general principles, plaintiff maintains defendant had a duty "to ensure that the replacement cost insurance policy provided a sufficient amount of building coverage to in fact replace [p]laintiff's Ocean Grove residence if it was [sic] destroyed by fire." The claim asserted is based on the broker's negligent failure to procure the appropriate coverage. However, the specific facts at hand materially differ from those in Rider and the other cases cited, inasmuch as there is no evidence advanced in this matter showing plaintiff requested a replacement policy. In fact, there is no evidence at odds with Browne's testimony plaintiff sought coverage similar to her Newark policy; advised the $150,000 coverage was adequate because the home was unencumbered; or expressed a concern to avoid possible modifications in coverage because of the concomitant increase in premiums. Factual divergence, which is material, is necessary to defeat summary judgment. Atl. Mut. Ins. Co., supra, 387 N.J. Super. at 230-31.
Moreover, when plaintiff received the policy, which stated the total coverage, she did not object. The amount of coverage is clearly and prominently stated and easily understood. Were plaintiff dissatisfied with the extent of coverage, an opportunity to raise such concerns presented itself with each annual renewal.
Absent a special relationship, "there is no common law duty of a carrier or its agents to advise an insured concerning the possible need for higher policy limits upon renewal of a policy." Wang, supra, 125 N.J. at 11-12.
In Wang, the Court reviewed the parameters of liability, starting with Rider, "the seminal case . . . concerning a broker's liability to an insured," and its progeny. Id. at 12. The Court distinguished the basis for the duty this court found in Sobotor, wherein we ordered the automobile insurance policy reformed to increase the uninsured/underinsured motorist coverage because of the agent's failure to have provided the insured with the "best available" package of insurance, as the insured had requested. Sobotor, supra, 200 N.J. Super. at 336, 341-43. In that instance, we determined a "duty arises when there is a special relationship between the insurance agent and the client which indicates reliance by the client on the agent." Id. at 338. The Court acknowledged that the existence of a "special relationship" evincing reliance by the insured on the broker or agent could trigger liability. Wang, supra, 125 N.J. at 15.
In Wang, however, because there were "no allegations of special relationship," the Court rejected the plaintiff's argument to impose a duty upon insurers that "required them to periodically and regularly advise [the insureds] of a need to increase the limits of [their] insurance coverage in light of the appreciated value of their home[s], inflationary trends in the area, and increased recoveries being awarded to tort victims." Ibid. (alterations in original) (internal quotation marks omitted). Consequently the Court determined "the policies had been routinely renewed, probably without any contact between the parties," id. at 16, and "the obligation to inform homeowners renewing their policies to consider higher liability limits was not encompassed by the recognized duty of care owed by agents to their insureds and, therefore, should be imposed, if at all, by the Legislature." Carter Lincoln-Mercury, supra, 135 N.J. at 190 (citing Wang, supra, 125 N.J. at 18-19.).
Reviewing a different issue, the Court cited its holding in Wang with approval, in Carter Lincoln-Mercury, supra, 135 N.J. at 190.
--------
The Court also distinguished automobile liability policies, which were subject to detailed legislation regarding mandatory and optional coverages, from homeowner's insurance, which was not subject to a similar "statutory duty to notify or provide a buyer's guide or coverage selection form . . . ." Id. at 18. Finally, with respect to imposing a duty to recommend increased homeowner's insurance coverage, the Court recognized
it is difficult to fix the limits of such a proposed duty. The areas of potential liability are many and growing. Defining the scope of the duty would require us to address issues such as whether a broker or agent should be required to inform the insured of the availability of an umbrella
policy to increase the coverage limits. Those and other difficult questions are best left to the legislative process. In that setting, such questions can be fully explored and debated with input from the public and the insurance industry before the creation of such a duty.
[Id. at 19.]
It is clear Wang is factually distinguishable from the matter at hand: Wang addressed renewal of homeowner's policies, while plaintiff's claims are directed to the initial coverage provided in 2003; and Wang considered the obligation to advise an insured to increase limits of a policy's personal liability protection coverage, while plaintiff's concern is the main coverage insuring the structure against loss. Id. at 11-12. Nevertheless, the Wang holding identifies important policy considerations we are obliged to follow when analyzing whether a broker's duty to advise exists.
Following our review, we find no error in the trial court's analysis of the facts or her legal conclusion that defendant did not breach a legal duty owed plaintiff when the homeowner's policy was provided. As we noted, the facts reflect plaintiff's desire to obtain a level of homeowner's coverage that was consistent with her expired Newark policy; she did not desire modifications that would raise her premium; and she did not have a need to protect the interests of a third-party mortgagee. An examination of plaintiff's complaint fails to reveal allegations that she requested defendant to estimate the cost of a full replacement value policy or that she desired to increase the limits of her coverage. To the contrary, plaintiff insisted the amount of the Newark policy was adequate and that was what she wanted. Simply, the facts of record show defendant obtained the coverage plaintiff requested. Also, the facts do not trigger a breach of the special relationship exception because defendant acted as instructed.
Alternatively, plaintiff suggests Browne voluntarily assumed the duty to calculate replacement cost of the property, yet failed to accurately do so or recommend the replacement cost policy to plaintiff. Although Browne admits she estimated replacement cost, she did so based on the information provided in her telephone calls with plaintiff and plaintiff resisted providing more detailed information, stating she did not want her premiums to increase. Nothing in this record supports the assertion plaintiff requested or even desired to consider replacement coverage for this second home. As we have noted the evidence shows plaintiff insisted on the same coverage for the secondary residences as she had carried under the expired policy and was resistant to Browne's questions aimed at determining the replacement cost of the property. Also, although plaintiff theorizes Browne confused the square footage of the beach bungalow and the property, there is no evidence supporting this suggestion, such as proof the beach bungalow was over-insured.
Importantly, in this matter, plaintiff had no mortgage encumbering the property, allowing her to obtain an amount of insurance she desired or no insurance at all. Plaintiff is legally permitted to decide to assume the greater risk associated with lower coverage, in exchange for the payment of lower premiums.
Finally, suggesting defendant should have inspected the property to assure the appropriate amount of coverage, plaintiff quotes this passage taken from the Court's discussion in Aden: "Brokers . . . hold themselves out as having more knowledge than members of the public with regard to the insurance policies and coverage they procure. A broker is not an 'order taker' who is responsible only for completing forms and accepting commissions." Aden, supra, 169 N.J. at 82. However, plaintiff has removed the comments from their context, which, when considered, align with the standards we have already discussed.
In Aden, the plaintiff requested that his long-time broker obtain a policy covering his newly purchased condominium. Id. at 70. The broker procured a minimal policy, assuming insurance provided by the condominium association covered the unit. Id. at 72. The condominium owner did not read the policy. Ibid. When a fire broke out, the secured coverage was inadequate to cover the damages suffered. Ibid. The question considered by the court was whether an insured's "failure to read the insurance policy" could "be asserted as comparative negligence in an action against the broker for negligent failure to procure insurance." Id. at 82. Confronting the issue of whether such an instruction was warranted, the Court held that "professionals may not diminish their liability under the Comparative Negligence Act when the alleged negligence of the client relates to the task for which the professional was hired." Id. at 78. The Court stated the above passage after concluding: "This case demonstrates why a comparative negligence charge places undue emphasis on [the insured's] behavior than on [the broker's] negligence." Id. at 82.
The broker in Aden was requested to perform a specific task and failed to do so. This negligence triggered liability. Generally, an insurance broker has no duty to establish the replacement value of property and here, defendant was never tasked with doing so. Rather, defendant acted in accordance with plaintiff's instructions to continue the amount of homeowner's coverage she had under the expired Newark policy and maintain lower premiums.
In light of the established legal principles we have discussed, we reject plaintiff's broad assertion to enlarge the scope of duty, claiming "[i]nsurance agent[s] should know all the details of the home to be insured. The agent should inspect the property and obtain all the underwriting information to have a full understanding of the property, and provide insurance to eliminate the risk of loss." As the Court has held, a broker's liability is not unbounded, Carter Lincoln-Mercury, supra, 135 N.J. at 190, and in the area of homeowner's insurance the Legislature should construct the parameters of responsibility, not the courts, Wang, supra, 125 N.J. at 19. Aside from a broker receiving specific requests and directives from an insured, we decline the invitation to impose a more stringent duty upon any insurance broker, by mandating an obligation to inspect or possibly appraise real property when originating a policy. We similarly decline to obligate brokers to inform clients their present coverage is inadequate or calculate the replacement value of the home in circumstances where the insured does not request or desire such coverage. We can only speculate as to the cost consequences of such a mandate and cannot know the impact on a broker's or underwriter's ability to do business under such circumstances. We continue to follow the Supreme Court's directive in this regard; the Legislature is best equipped to obtain expert input from the Department of Insurance and other interested parties allowing it to discern the most appropriate requirements for brokers and agents originating homeowner's insurance policies to do so in accordance with the needs of citizens in this state.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION