ALIENT AGENT: CLIENT/AGENT: THE NEW "SPECIAL RELATIONSHIP" DECISION.

• Date: 22 March 2021
• Author: Kronberg, Howard S.
• Published date: 22 March 2021
• Author: Kronberg, Howard S.

* On February 10, 2021 the Appellate Division First Department[l], affirmed the dismissal of a failure to procure action against a broker in the case of Trimasa Restaurant Partners[2]. This case is a significant decision in that it narrows, limits and thus clarifies the application of the special relationship doctrine, which has been used by plaintiff's attorneys in E&O lawsuits since 1997 to attempt to hold insurance agents and brokers liable for things that they never agreed to do for their customers, like procuring coverage not specifically requested. Here, we will review the special relationship doctrine and the court's decision in the Trimasa case.

In 1997 the Court of Appeals, the highest court in the New York State, in the Murphy[3] case, reiterated well established law that an insurance broker can only be sued for failing to get coverage specifically requested or where the broker fails to tell the insured that the coverage requested cannot be obtained. But, in Murphy the insured tried a new argument suggesting that based on a long term relationship the broker had a duty to advise them to, in that case, procure higher auto liability limits even though not discussed or requested. Simply, the insured tried to shift the liability to the broker from itself.

While it may seem like a contradiction, the law treats an affirmative duty to speak (advise), as a subset of the existing and well-known negligent misrepresentation cause of action with the same elements. One of those basic, prima facie, elements is a special relationship. Simply, a special relationship means that you have a status with another party that allows them to rely on your statements. An exaggerated...